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August 21, 2026
The Honorable Monique Limón The Honorable Robert Rivas
Senate President pro Tempore Assembly Speaker
California State Senate California State Assembly
1021 O Street, Suite 8518 1021 O Street, Suite 8330
Sacramento, CA 95814 Sacramento, CA 95814
RE: Opposition to Forthcoming Wildfire Liability Reform Package that Would Limit Public Agency Recovery
Dear Senate Pro Tem Limon and Assembly Speaker Rivas,
On behalf of the League of California Cities (Cal Cities), the California State Association of Counties (SAC), the Rural County Representatives of California (RCRC), and the undersigned local elected officials, cities and counties, we are calling on you to reject efforts to limit public agency recovery when private electric utilities cause wildfires, as proposed in the Governor's wildfire liability reform package, prompted by the SB 254 Report.
This proposal will wrongly shift costs to taxpayers and force devastating consequences on public agencies and wildfire victims already struggling to rebuild their communities.
The proposal relies on the false hopes that public property, infrastructure and the Legislature to reject them outright from being included in any wildfire package that will advance this legislative session.
1. Limiting Public Property and Infrastructure Damages Imperils Public Agencies Tasked with Rebuilding their Communities
The proposal will have negligent private electric utilities pay just pennies on the dollar to rebuild critical infrastructure and public facilities that are destroyed. Limiting such costs to the mere depreciated value of the public facility or infrastructure will impact the rebuilding of:
Public facilities and buildings
• Water, sewer, roads, communication, and traffic signal infrastructure • Parks, schools, libraries, and fire stations
When a private electric utility causes a wildfire, they are required to fully compensate for property damage. Public agencies cannot rebuild damaged infrastructure on recovery dollars that only cover the depreciated value of an asset. Rebuilding public facilities and infrastructure is not a luxury - it is an essential public service for homeowners, businesses, and communities to return home.
2. Limiting Recovery for Emergency Response and Mutual Aid Forces Public Agencies to Absorb Costs and Increase Financial Risk, Waiting Years For FEMA Reimbursement While Communities Struggle to Recover
The proposal prevents public agencies from recovering emergency response and mutual aid costs from the very private electric utilities who cause these devastating wildfires and inappropriately suggest FEMA as the solution. Limiting emergency response cost recovery will be catastrophic for small jurisdictions and fracture our mutual aid system upon which the state and communities rely on. There is a federal obligation to pursue negligent parties per the Stafford Act. This will create ambiguity when negligent parties must meet that requirement and will jeopardize federal reimbursement. FEMA has strict rules on recoverability, and some events aren't even eligible for FEMA reimbursement. Since FEMA is a reimbursement model, funds must be spent upfront.
Interpretations in FEMA change from Administration to Administration, creating uncertainty whether future relief will even be available for these incidents.
3. Eliminating Property Tax Losses Leaves Communities Financially Stranded Schools, cities, counties, and special districts rely on property taxes to fund basic needs in our communities. The proposal will financially strand public agencies by eliminating the ability to bring claims for lost property taxes. This has tremendous consequences for essential public services, including fire, police, social services programs, drinking water, public infrastructure, and drastically risks school closure.
There is no evidence in the SB 254 Report to suggest that public agency claims are unreasonable or unjustified. Public agency damages amounted to merely 4% of the total wildfire claims that utilities paid from 2017 to 2024. Public infrastructure, lost tax revenue, emergency response, and mutual aid are necessary and critical for local governments to function while struggling to rebuild their communities. If public agencies cannot recover costs from negligent private electric utilities, local taxpayers will pay more instead. The very survivors whose community burned will foot the bill which is NOT We respectfully request the Legislature to protect public infrastructure, safeguard emergency response and our mutual aid system, and protect taxpayers from this private electric utility bailout - and to reject the Governor's proposal to limit public agency recovery when such utilities cause wildfires.
Sincerely,
Melissay. Sparks-trang
Melissa Sparks-Kranz John Kennedy
Legislative Advocate Senior Policy Advocate
League of California Cities Rural County Representatives of California
Jordan Wells
Legislative Advocate
California State Association of Counties
And on behalf of the following cities, counties and local elected officials:
City of Arcata City of Lake Elsinore City of Santa Rosa City of Artesia City of Lakeport City of Sierra Madre
City of Atascadero City of Lake Forest City of Stanton
City of Albany City of Lakewood City of Sunnyvale
City of Agoura Hills City of Lomita City of Santa Monica City of Azusa City of Los Alamitos City of Santa
Alameda County City of Livermore Barbara
City of Benicia City of Manteca Santa Barbara
City of Buena Park Lassen County County
City of Beverly Hills Marin County San Bernardino
City of Big Bear Lake Mariposa County County
City of Brea Mendocino County Santa Clara County
Calaveras County Monterey County San Joaquin County
Contra Costa Modoc County San Mateo County
County Mono County San Luis Obispo
City of Camarillo City of Monrovia County
City of Coachella City of Morgan Hill Sonoma County
City of Poway City of Mission Viejo Stanislaus County
City of Claremont City of Napa Sutter County
City of Colton Napa County Sacramento County
City of Clearlake Nevada County Tehama County
City of Daly City City of Oceanside City of Temecula
City of Del Mar City of Orinda City of Torrance
City of Diamond Bar City of Palm Desert City of Thousand City of Downey City of Petaluma Oaks
City of El Cerrito Placer County City of Tracy
El Dorado County City of Pleasanton City of Vacaville
Fresno County City of Portola City of Visalia
City of Glendora City of Rosemead City of Vista
City of Greenfield City of Rancho Palos Ventura Council of City of Hayward Verdes Governments
City of Half Moon Redwood City City of Walnut
Bay City of Rio Dell City of Walnut Creek
City of Hemet City of Riverside City of Weed
City of Hesperia City of Rolling Hills City of West
City of Highland City of San Fernando Hollywood
City of Irvine City of San Jose City of Whittier
City of Jackson City of San Marcos City of Willits
Kern County City of Santa Cruz City of Yreka
Lake County City of Santee Yolo County
City of La Mirada City of Seal Beach Town of Apple Valley City of La Verne Santa Cruz County Yuba County
Supervisor Anne Contrell, Napa County
Mayor Brett Taylor, City of Visalia
Mayor David Tennessen, City of Camarillo
Councilmember Debby Stegura, City of Rolling Hills Estates Councilmember Evan Branning, City of Livermore
Mayor Frank J. Navarro, City of Colton
Supervisor Gary Bradford, Yuba County
Mayor Glenn R. Sylvester, City of Daly City
Councilmember Holly Tillman, City of Clayton
Supervisor Jake Withrow, Glenn County
Supervisor Jill Cox, Trinity County
Supervisor Justin Cummings, Santa Cruz County
Mayor Kevin Wilk, City of Walnut Creek
Supervisor Kim De Serpa, Santa Cruz County
Councilmember Larry Spicer, City of Monrovia
Supervisor Manu Koenig, Santa Cruz County
Supervisor Monica Martinez, Santa Cruz County
Councilmember Nathan Steele, City of Seal Beach
Councilmember Pamela Campos, City of San Jose
Mayor Stephanie Hellman, City of Fairfax
Mayor Sylvia Lemus, City of Cotati
Councilmember Xouhoa Bowen, City of San Leandro
Councilmember Dorothy Pemberton, City of Downey
Mayor Bill Powers, City of Portola
Councilmember Norma Martinez-Rubin, City of Pinole
Mayor Mike Hannon, City of Newark
Vice Mayor Jaime Patino, City of Union City
Mayor Betsy Smegal Andersen, City of Piedmont
Vice Mayor Conna McCarthy, City of Piedmont
Councilmember Jen Long, City of Piedmont
Councilmember Tom Ramsey, City of Piedmont
Councilmember Lorrel Plimier, City of Piedmont
Mayor Kerry Hills, City of Moraga
Chair of Supervisors Sukhminder S. Dhaliwal, San Joaquin County Vice Mayor Steve "Woody" Culleton, Town of Paradise
Mayor John Stephens, City of Costa Mesa
cc: The Honorable Governor Gavin Newsom
Members, California State Senate
Members, California State Assembly
Page ó of 6
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From: Nicholas Cabeza <[email protected]>
Sent: Friday, August 21, 2026 1:26 PM
To: Nicholas Cabeza <[email protected]>
Subject: Re: CAL CITIES ACTION ALERT: Oppose Forthcoming Reforms to Limit Public Agency Recovery from Utility- Caused Wildfires
Hello Mayors and Council Members,
Attached is an updated Cal Cities coalition letter urging lawmakers to reject any wildfire package that limits public agency recovery when private electric utilities cause wildfires.
If you would like to join this coalition letter in your individual capacity, please let me know and I can add your name to the growing coalition.
I also wanted to flag a Politico article (attached) that describes how a Paradise city official was "duped" by the group Wildfire Victims First Coalition, funded by utility companies.
Feel free to reach out if you have any questions.
Best regards,
Nicholas Cabeza
Regional Public Affairs Manager
Los Angeles County Division, League of California Cities [email protected] | www.calcities.org
LEAGUE OF
CALIFORNIA
CITIES
Strengthening California Cities
through Advocacy and Education
X Facebook | Youtube Linkedin
From: Nicholas Cabeza
Sent: Friday, August 14, 2026 12:51 PM
To: Nicholas Cabeza <[email protected]>
Subject: CAL CITIES ACTION ALERT: Oppose Forthcoming Reforms to Limit Public Agency Recovery from Utility-Caused Wildfires
Hello Mayors and Council Members,
Cal Cities is asking for your help in opposing a proposal by the Governor for an end-of-session, gut-and- amend package to bail out electric utilities and limit how cities can recover damages following a utility- 2 caused wildfire. You can do this by signing on to the attached NASCAR letter urging Legislators to oppose any reforms that Limit Public Agency Recovery. I already sent this request to your city management team, but if you would like to join this coalition letter in your individual capacity, please let me know and I can add your name to the growing coalition.
What the Proposal Does: The Governor's Wildfire Liability Reform is not in writing but shared verbally that the package includes a variety of changes, including caps on what utilities would be required to pay to public agencies when there is a utility-caused wildfire. The proposal would:
• Limit damage claims of public property or public infrastructure to the depreciated value of the asset that the utility would need to pay. Utilities would not have to pay for the full replacement costs of essential water, sewer, fire stations, schools, parks, and libraries that are damaged from the utility-caused fire.
• Eliminate emergency response and mutual aid as recoverable costs from the utility. • Eliminate property tax loss revenue as a recoverable cost from the utility.
Why this is Important to Cal Cities Members: Cities must strongly oppose the wildfire liability reforms that limit public agency recovery from utility-caused wildfires and urge the Legislature to reject them outright from being included in any wildfire package. When a utility causes a wildfire, they are required to fully compensate for property damage. Public infrastructure, lost tax revenue, emergency response, and mutual aid are necessary and critical for local governments to function following such catastrophic utility-caused wildfires. If public agencies cannot recover costs from negligent utilities, local taxpayers will pay instead. The very survivors whose community burned will foot the bill. Limiting public agency recovery will only shift costs to survivors and taxpayers and financially strand local governments, increasing severe strain on municipal budgets or even bankruptcy.
Links and Attachments: Local Government Primer on Wildfire Liability Reform Package Background information:
• SB 254 (Becker, 2025)
• SB 254 Report
Recent news coverage:
• Politico - The election year gamble behind California's wildfire talks • Cal Matters - LA fire survivors say Newsom is trying to help utilities reduce their wildfire costs again
• Cal Matters - California cannot keep rewarding utilities after catastrophic wildfires • Politico - Wildfire's risky business
• LA Times - Wildfire Survivors angered as utility-funded group claims to represent them We are asking for sign-on to the letter as soon as possible. The first version of the coalition letter will go out middle of next week - so sign-ons by Tuesday would be helpful. We will keep adding and updating the coalition letter every couple of days. Feel free to reach out if you have any questions.
Best regards,
Nicholas Cabeza
Regional Public Affairs Manager
Los Angeles County Division, League of California Cities [email protected] | www.calcities.org
•
CITY OF AVALON CITY COUNCIL
6 MEETING DATE: September 1, 2026 AGENDA ITEM:
ORIGINATING DEP: Administration CITY MANAGER:
PREPARED BY: David Maistros, City Manager
SUBJECT: CPUC Draft Resolution T-17934
RECOMMENDED ACTION(S): 1. Discuss submittal of a written communication to the California Public Utilities Commission (CPUC) in response to the Draft Resolution T-17934 on behalf of the City of Avalon. 2. If consensus exists, approve letter to be submitted prior to filing deadline of September 3, 2026 at 5:00 PM.
REPORT SUMMARY: On December 18, 2025, the California Public Utilities Commission passed Resolution T-17896 awarding grant funding in the amount $37,571,833 to AVX Networks for a proposed project would bring high-speed broadband service to more than 1,100 unserved locations and 10 community anchor institutions through the installation of undersea cables (the "Project"). The approved Project contemplated service of up to 10 Gbps and represented a significant public investment in communities, including Avalon, where modern broadband infrastructure remains inadequate. The Project received wide support from community stakeholders and local, county and state elected officials. In particular, the City of Avalon supported the Project and continues to strongly support the Project today.
On August 6, 2026, it was first brought to the attention of the City that the Communications Division of the CPUC prepared Draft Resolution T-17934 proposing to rescind and terminate the $37,571,833 Federal Funding Account awarded to AVX Networks. Even though AVX had been engaged in continual discussions about the Project, AVX did not inform the City of the CPUC concerns. The City was informed by the CPUC about its proceedings. A copy of Draft Resolution T-17934 is attached hereto as Exhibit A. The Draft Resolution sets forth its "Findings and Conclusions" for rescission as follows:
1. On April 19, 2026, AVX Networks submitted a reimbursement request for $2,559,284.03 Digital Equity for Coastal and North Orange County and Catalina Island project.
2. On April 27, 2026, Communications Division sent an email to AVX Networks requesting additional documentation and information.
3. On April 27, 2026, AVX Networks submitted a response.
4. On May 1, 2026, Communications Division sent an email to AVX Networks stating that the invoices submitted with the payment request raised concerns, and to stop all spending related to its Federal Funding Account award until a review of reasonableness and appropriateness could be completed.
5. On May 8, 2026, Communications Division sent a letter that raised concern about the requested expenses, lack of supporting documentation, requested additional information and justification, and stated any expenses that do not meet the requirement threshold would be denied payment. (Attached hereto as Exhibit B)
6. On May 15, 2026, AVX Networks submitted a response.
7. On July 7, 2026, Communications Division, pursuant to Decision 22-04-055, Appendix A:
Federal Funding Account Program Rules and Guidelines, Section 17, sent to AVX Networks notification of its intent to prepare for Commission approval a draft resolution to rescind AVX Networks' Federal Funding Account grant due to nonperformance. (A copy of the July 7, 2026 Letter is attached as Exhibit C)
The May 8, 2026 and July 7, 2026 communications from the CPUC to AVX Networks detail the "concerns" of the Communications Division and the Draft Resolution provides a summary of those "concerns" as follows:
"Under the Federal Funding Account Rules and Guidelines, Section 17, the Commission, through Resolution initiated by the Communications Division, may terminate an award at its sole discretion. Based on the totality of the circumstances, including AVX Networks' inability, after multiple opportunities, to substantiate and document expenses sufficient to demonstrate compliance with federal and state requirements, including Capital Projects Fund (Title 2 of the Code of Federal Regulations Part 200) and Commission (Decision 22-04-055, Appendix A) criteria of allowable / eligible expenses, AVX Networks does not demonstrate the expertise necessary to administer a publicly funded grant.
AVX Networks did not comply with state and federal requirements or demonstrate awareness of program requirements, an understanding of the breadth and magnitude of its non-compliance, or an ability to substantiate compliance. In light of demonstrating a lack of ability to comply with state and federal requirements, Communications Division recommends the Commission terminate the grant based on an inability of the grantee to successfully execute on the grant as outlined in the award Resolution.14 The circumstances giving rise to this recommendation are described below and in the attached communications.
In addition, AVX Networks' documentation and comportment does not indicate policies, procedures, and subject matter expertise to implement a project and grant of this size consistent with program requirements. The attached communications summarize many of the issues. As one non-exhaustive example, a transaction concerns the purchase of residential property that AVX Network's Chief Executive Officer appears to have sold from one company of which he is the President to another of which he is also the President to serve as a central office without pre-approval, the need for which may not be justified.
Reasonable justification for this non-arm's length transaction was not provided. Further, a nepotism policy or other process would need to be in place in order to potentially justify a transaction, supported by grant funds, where the seller and buyer were the same. In response to a request for additional information the awardee provided a Conflict of Interest and Nepotism policy dated May 11, 2026—three days after the Communications Division May 8, 2026, letter raising concerns on a related matter. This indicates the buyer bought a property from themselves, without prior approval, without following their own processes, where the property appears not to be necessary or reasonable, and then responded to the Communications Division with a policy document that was created after the fact.
The aforementioned state and federal rules exist to ensure the proper use of public funds.
They aid in protecting against self-dealing, conflicts of interest, and other misuse of public monies. The CPUC, through Communications Division, acts as stewards of such funds and must ensure grantees act in accordance with these rules, as clearly outlined in the awarding resolutions. Awardees are expected to review and comply with all state and federal requirements and Communications Division may provide technical assistance and monitor grant performance to ensure compliance. Recommendation to rescind this award has been made after careful consideration of the totality of facts, the comportment of the grantee, and a weighing of the risk to the program should this grantee be allowed to further utilize public funds."
[Draft Resolution T-17934, Pages 9-10]
Based on the foregoing assertions, the Draft Resolution concludes with the recommendation that the "grant awarded to AVX Networks on December 18, 2025, in Resolution T-17896, be terminated and the grant amount of up to $37,571,833 be made available for future Federal Funding Account Projects."
In light of the seriousness of the allegations set forth in the Draft Resolution, City Staff is concerned that the entire Project is in jeopardy. Nothing in the Draft Resolution references or diminishes the originally stated need or objectives for the Project. To the contrary, the cross- channel fiber component represents far more than an ordinary broadband expansion project.
Catalina's geographic isolation makes reliable telecommunications infrastructure essential to public safety, emergency response, healthcare, education, government operations, economic activity, and the daily lives of residents. Those entities represent the bigger picture and they should not have to suffer by losing this critical funding over non-Project related matters.
The attached draft letter to the CPUC strongly supports the need to preserve the funding should the CPUC decide to terminate the grant relationship with AVX Networks.
GOAL ALIGNMENT: Broadband infrastructure improvements.
FISCAL IMPACTS: None.
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The City of Avalon will not have conveyed its desire for the CPUC to preserve the funding.
FOLLOW UP ACTION: Implement City Council Direction regarding the Draft letter to the CPUC and file accordingly.
ADVERTISING, NOTICE AND PUBLIC CONTACT: Pursuant to the Brown Act.
ATTACHMENTS:
1. Draft Letter to CPUC regarding Draft Resolution T-17934
2. Copy of Draft Resolution T-17934.
3. Copy of May 8, 2026 letter from CPUC.
4. Copy of July 7, 2026, Notice of Termination Letter from CPUC.
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The City of Avalon will not have conveyed its desire for the CPUC to preserve the funding.
FOLLOW UP ACTION: Implement City Council Direction regarding the Draft letter to the CPUC and file accordingly.
ADVERTISING, NOTICE AND PUBLIC CONTACT: Pursuant to the Brown Act.
ATTACHMENTS:
1. Draft Letter to CPUC regarding Draft Resolution T-17934
2. Copy of Draft Resolution T-17934.
3. Copy of May 8, 2026 letter from CPUC.
4. Copy of July 7, 2026, Notice of Termination Letter from CPUC.
September 1, 2026
Dear President Reynolds and
Members of the California Public
Utilities Commission:
Draft Resolution T-17934 — Request to Preserve Funding for the Catalina Island Cross- Channel Fiber Project
Please accept this communication submitted by the undersigned, Avalon City Council. On behalf of the City of Avalon and the residents, businesses, public agencies, and visitors who depend upon reliable communications infrastructure on Catalina Island, we write regarding Draft Resolution T-17934 and the proposed termination of the Federal Funding Account grant previously awarded to AVX Networks.
The City recognizes and respects the Commission's responsibility to safeguard public funds and ensure that grant recipients possess the administrative, financial, technical, and operational capacity necessary to successfully administer substantial public investments. The allegations and findings described in Draft Resolution T-17934 concerning AVX Networks are serious. We do not write to defend AVX Networks, nor do we ask the Commission to disregard its concerns regarding AVX's performance or continued suitability as the recipient of these funds.
We do, however, strongly urge the Commission to distinguish between the grant recipient and the underlying infrastructure project.
In Resolution T-17896 (awarded on December 18, 2025), the Commission approved up to $37,571,833 for the Digital Equity for Coastal and North Orange County and Catalina Island project. The Commission determined at that time that the project would bring high-speed broadband service to more than 1,100 unserved locations and 10 community anchor institutions. The approved project contemplated service of up to 10 Gops and represented a significant public investment in communities where modern broadband infrastructure remains inadequate.
For Catalina Island in particular, the cross-channel fiber component represents far more than an ordinary broadband expansion project. Catalina's geographic isolation makes reliable telecommunications infrastructure essential to public safety, emergency response, healthcare, education, government operations, economic activity, and the daily lives of residents.
Draft Resolution T-17934 itself recognizes that terminating the grant means the affected areas "will not benefit from the communication and resilience improvements from broadband infrastructure investments." Those public benefits have not become less important because of concerns regarding the entity originally selected to construct the project.
Indeed, the circumstances described in the Draft Resolution support preserving the funding rather than abandoning the investment. The Commission states that no reimbursements or payments have been made to AVX Networks under the award. Consequently, the Commission has an opportunity to protect public funds while protecting the very real public purpose for which those funds were originally committed.
The City of Avalon therefore respectfully chooses not to take apposition on who the grant recipient is provided the Commission not release the $37,571,833 allocation into the general pool of funding for unrelated future projects and preserve those funds for the Project.
The loss of funding for this Project would be devastating. We urge the Commission to preserve, reserve, or otherwise prioritize these funds for the construction of the originally contemplated broadband infrastructure serving Catalina Island and the other eligible communities within the project area, including the critical cross-channel fiber connection.
Draft Resolution T-17934 currently provides that terminating AVX's award would make the full $37,571,833 available for future Federal Funding Account opportunities and merely make the affected unserved locations eligible to compete for future funding. That approach unnecessarily places the communities intended to benefit from this project at risk of losing an infrastructure investment that the Commission has clearly determined serves an important public need. That need is real and that need has not diminished
We respectfully request that the Commission modify Draft Resolution T-17934 to accomplish two separate objectives:
1. Address the Commission's concerns regarding A VX Networks independently. If the Commission determines that AV should no longer administer or receive this grant, the City respects the Commission's authority and responsibility to make that determination.
2. Preserve the approximately $37.6 million for the underlying broadband project and affected communities. The Commission should establish an expedited process to identify a qualified alternative provider, public agency, consortium, or other eligible entity capable of completing the project, with particular emphasis on preserving the cross-channel fiber connection to Catalina This approach would protect taxpayers while also protecting the communities for whom these funds were intended.
California has made extraordinary investments in broadband because reliable high-speed communications are now fundamental infrastructure. The Commission's own description of the Federal Funding Account recognizes broadband's importance to internet-based safety applications, telehealth, emergency services, and communications among first responders. Those needs are especially acute for the City of Avalon.
Catalina Island should not lose a once-in-a-generation opportunity to establish resilient fiber connectivity because of alleged deficiencies attributable to the originally selected grant recipient.
Accordingly, we respectfully urge the Commission to preserve the $37,571,833 commitment to the project area, maintain funding for the Catalina Island cross-channel fiber component, and establish an expedited and transparent process for selecting a qualified entity to complete the project.
Such an outcome would demonstrate that the Commission can exercise rigorous oversight of public funds without sacrificing the critical public infrastructure those funds were intended to deliver.
Thank you for your consideration and for the Commission's continued commitment to expanding reliable broadband infrastructure throughout California. The City of Avalon stands ready to work collaboratively with the Commission, Communications Division, and other qualified partners to ensure that this important project moves forward responsibly and successfully.
Respectfully,
Mayor Ann H. Marshall Mayor ProTem Michael Ponce
Councilmember Lisa Lavelle Councilmember Donna Lopez
Councilmember Yesenia De La Rosa
MILITIES
PCOMMIANION
STATE TRORNIN
PUBLIC UTILITIES COMMISSION
STATE OF CALIFORNIA
505 VAN NESS AVENUE | SAN FRANCISCO, CALIFORNIA 94102
300 CAPITOL MALL 1 SACRAMENTO. CALIFORNIA 95814
May 8, 2026
Lance Ware
AVX Networks
[email protected]
Re: Last Mile Federal Funding Account Project - Digital Equity for Coastal and North Orange Couty and Catalina Island
Dear Lance Ware,
On December 18, 2025, the California Public Utilities Commission (Commission) approved AVX Network's Digital Equity for Coastal and North Orange County and Catalina Island application for $37,571,833.00 in last mile Federal Funding Account funding in Resolution T-17896.
Reimbursement requests must meet both Capital Project Fund (2 Code of Federal Regulation Part 200, Subpart E) and Commission (Decision 22-04-055, Appendix A) criteria of allowable / eligible expenses in order to be reimbursed. Awardees are required to follow both State and Federal guidelines to be reimbursed. Any expenses that do not meet the requirement threshold will be denied payment.
On April 19, 2026, AVX Networks submitted a 10% reimbursement request for $2,559,284.03.
Communications Division staff reviewed the reimbursement request and supporting documentation, which raised significant concerns about the requested expenses meeting the Federal Funding Account's criteria for allowable and reasonable expenses. Specifically, the following concerns and questions have been identified:
1. Fleet vehicle. A fleet vehicle was purchased but the reimbursement request did not include a robust justification for why the specific make, model, and premium trim package was selected. In accordance with Code of Federal Regulation Part 200, Section 200.439, vehicle purchases require prior approval and costs are limited to a reasonable amount to complete the project. AVX Networks must:
a. Provide a justification why it chose a vehicle that costs double those with lower trim packages and greater tow capacity.
b. Explain how the purchase of the vehicle comports with Code of Federal Regulation Part 200, Section 200.404.
c. Explain why prior approval for the purchase of the vehicle was not sought.
2. Contracting costs and relationships. AV Networks has requested salary reimbursement through a contracting company, of which Lance Ware is the sole owner, to provide payment to Lance Ware and Julie Ware. It is unclear what the relationship is between Lance Ware and Julie Ware. Entities must have in place a documented nepotism and related policies. AVX must:
a. Explain who is Julie Ware in relation to this project and what her relationship is to Lance Ware.
b. Explain what services will be provided that justify the proposed yearly salary of $250,000 for Lance Ware and $200,000 for Julie Ware.
c. Provide payroll documents to show hours solely worked on this project. d. Provide copies of nepotism and related policies.
3. Purchase of a house. The reimbursement request includes the purchase of a house and a link to a podcast discussing property acquisition difficulties on Catalina Island. The reimbursement request did not include prior approval in accordance with Code of Federal Regulation 200 Section 200.439; why a home was purchased; or justification of why the purchase was necessary for the project. AVX must:
a. Explain why was a residential property purchased instead of a commercial building. b. Provide information about the seller and related purchase documentation. c. Explain why was this specific property chosen.
d. Explain why was the appraisal cost is higher than neighboring buildings. e. Explain why the appraisal cost of the property was submitted in the payment request.
f. Explain how the property comports with Code of Federal Regulations, Section 200.311?
g. Explain and provide documentation for why SC-special commercial zoning allows for the intended use case.
h. Provide architectural drawing(s) and construction cost estimates for how the building will be converted and utilized.
i. Provide cost analysis for why a brick and mortar central office will be more cost effective than a remote optical line terminal.
j. Explain what efforts were made to explore leasing office/commercial space for the duration of the project and why this was not done instead of purchasing a residential property?
4. Administrative Costs. AVX Networks submitted various expenses under administrative costs but did not provide sufficient documentation or explanation. AVX Networks must:
a. Provide an explanation for "Model Development" for the Wolf Advisory invoice. b. Provide a contract, a description of work completed, and record of hours worked for the Wolf Advisory invoice that demonstrates the work conducted was solely for the Digital Equity Project.
c. Provide a contract that demonstrates that the iCommLaw invoice is solely for services rendered for the Digital Equity project.
d. Provide a labor contract, a record for hours worked, proof of payment, and an explanation of work conducted, and how it is an allowable expense for the Kanatsiz Communications, Inc. invoice.
5. Engineering. AVX Networks submitted various invoices for engineering expenses but did not provide sufficient explanation or documentation. AV Networks must:
a. Provide a contract, an explanation of services rendered, and hours work for the HMB Solutions invoices.
b. Provide proof of payment for the EGS invoice. This program does not reimburse for advance payments or deposits.
c. Provide proof of payment for the Blue Meridian invoice.
AVX must provide justification for the above expenses and an explanation of why it failed to obtain prior approval for purchases by May 15, 2026.
Communications Division issued a stop work order on May 1, 2026. The CPUC will not reimburse any costs that were incurred after the stop work order was issued and the grant may not resume until written notification is provided to AV Networks.
The Communications Division will not pay for costs incurred on this project until concerns are addressed, fiscal controls are in place to comply with the grant terms and conditions, and corrective actions have been implemented if deemed necessary. Further, Communications Division may consider alternate actions, including re-evaluating AVX Network's viability, recommending a tinancial monitor, and / or recommending the Commission withdraw the award.
Additionally, you are directed to retain original, unaltered copies of any record, in whatever form, that relates to your performance under the grant or any claim of reimbursement under the grant.
Sincerely,
Mara Elis
Maria Isabel Ellis
Director of Broadband Initiatives
July 7, 2026
Lance Ware
Chief Executive Officer
AVX Networks
[email protected]
Re: AVX Networks' Federal Funding Account award FFA 00150
NOTICE OF TERMINATION
Dear Lance Ware,
Please be advised that, pursuant to Section 17 of the Federal Funding Account Program Rules, the Federal Funding Account Award to AVX Networks is hereby terminated, effective July 17, 2026.
On December 18, 2025, the California Public Utilities Commission (Commission) adopted Resolution T-17896 approving AVX Networks' Federal Funding Account application for up to $37,571,833 in grant funds for the Digital Equity for Coastal and North Orange County and Catalina Island project.
On April 19, 2026, AVX Networks submitted a reimbursement request for $2,559,284.03. On May 1, 2026, Communications Divion sent an email notifying AV Networks that the invoices submitted raised concerns and to stop all spending related to its Federal Funding Account award until a review of the reasonableness and appropriateness of the expenses could be completed. AVX Networks was reminded that Federal Funding Account awardees must meet Capital Project Fund and California Public Utilities Commission criteria of allowable / eligible expenses in order to be reimbursed.
Communications Division sent a follow-up letter on May 8, 2020, reiterating that the reimbursement request and supporting documentation raised significant concerns about the requested expenses meeting the Federal Funding Account's criteria for allowable and reasonable expenses. The letter further specified the additional information AV Networks must submit for Communications Division to evaluate the request and reinforced that the project is under a stop work order and that no further action on the grant should be taken by AVX Networks until it receives a written notification from Communications Division to resume. AVX Networks submitted a response on May 15, 2026.
After careful consideration, Communications Division has determined that AV Networks has not submitted adequate supporting documentation and justification of how project expenditures meet the Federal Funding account or Capital Project Funds requirements. The issues are summarized below.
1. Purchase of residential real estate
a. Communications Division requested a justification for the purchase of residential real estate for the project. AVX Network submitted a response, which included a podcast describing real estate challenges on Catalina Island. AVX Networks also provided information on the commercial property alternatives that were explored and an explanation of why AVX Networks considered a remote Optical Line Terminal (OLT) insufficient.
b. AVX Networks did not provide supporting engineering documentation to demonstrate that a remote OLT was insufficient. Further, AVX Network's response characterized a residential property as necessary because of climate change and rising sea levels while the property appears to be in a flood zone according to the Federal Emergency Management Agency (FEMA) flood map.
c. AVX Networks' response indicates a purchase price for the property of $1.5 million, and $2 million in renovations. AVX Network's responses do not provide documentation to demonstrate the $3.5 million real estate expenditure or how the expenditure is necessary to complete the project. The documentation and justification fails to meet the reasonableness standards in the Code of Federal Regulations Part 200 (CFR), Section 200.400. In addition, AVX Networks failed to request approval prior to the purchase of the property, and therefore, does not meet the requirements in CFR 200, Section 400.439.
d. Communications Division requested more information about the seller related to the purchase of the property. AVX Networks confirmed that the property is currently owned by Estamos Perdidos, an LLC of which Lance Ware is the sole member. It appears that Lance Ware sold a property from one company of which he is the President to another of which he is also the President. Reasonable justification for this non-arm's length transaction was not provided. The purchase of the property does not meet the reasonableness standards in CFR 200, Section 202.404.
2. Contracting Costs
a. Communications Division requested an explanation for the salary reimbursements submitted through a third party corporation, DEC, LLC of which Lance Ware is the sole owner, an explanation of contracting costs and relationships, a justification about salaries paid to Lance Ware and Julie Ware, payroll documents, and a copy of the nepotism policy. AVX Networks failed to submit an adequate justification for the use of a subcontractor for owner wages, adequate justification demonstrating that the salaries paid to Lance and Julie Ware are reasonable for a small company, and payroll documents detailing hours performed solely on this project. The invoices do not meet the reasonableness standards in the CFR 200, Section 200.404. This also does not follow competitive sourcing requirements, does not meet CFR 200, Section 200.319, and raises concerns about a conflict of interest.
3. Fleet Vehicle
a. Communications Division requested that AVX Networks explain why it chose a fleet vehicle with a luxury trim package and racing parts, including leather seats rather than a lower trim vehicle suitable to construction projects. AVX Networks cited island specific concerns such as access to maintenance and rugged terrain. AVX Networks has failed to provide sufficient documentation and explanation to support this purchase. AVX Networks did not obtain approval prior to the purchase of this vehicle and fails to meet the requirement in CFR 200, Section 400.439. This purchase does not comport with reasonableness standards outlines in the CFR 200, Section 404.
4. Administrative Costs
a. Communications Division requested the contract between AV and Wolf Advisory, and a description of work completed in the invoice. A justification and supporting documents were not provided and AX agreed to remove the expense. b. Communications Division requested a contract, record of hours worked, proof of payment and justification for work performed by Kanatiz Communications. AVX Networks provided proof of payment, but no sample work nor a Master Service Agreement (MSA) to justify the monthly retainer fee. AV Networks has failed to provide adequate explanation and documentation to support this invoice, and therefore, it does not meet the standard for adequate documentation in the CFR 200, Section 400.403.
c. Communications Division requested documentation demonstrating iComm Law invoice is solely for services related to the project. AV Networks provided an invoice with billed hours, a description of services attached, and an addendum to a retainer agreement. The itemized bill contains legal work completed outside of the scope of the Federal Funding Account project, including unallowable charges for legal work on AVX Networks' fixed wireless antennas, and does not meet the requirements in CFR 200, Section 200.459.
5. Engineering
a. Communications Division requested proof of payment for the EGS invoice. AVX Networks provided a contract but did not provide proof of purchase, copy of deliverables, or demonstrate that goods or services were obtained. The contract and Gnatt chart indicate the work included in the invoice is not expected to be completed until October 10, 2026. AVX Networks has failed to provide supporting documentation to support this invoice and therefore, does not meet the requirements for adequate documentation in the CFR Part 200, Section 400.403.
b. Communications Division requested a contract, explanation of services rendered and hours worked for HMB Solutions to demonstrate the type of work conducted and proof of payment for engineering work. AV Networks provided a copy of the contract with HMB Solutions and a billing backup document with a fixed fee schedule, which is not commensurate with the work completed. AVX Networks also failed to submit a schedule of hours worked. AVX Networks has failed to submit adequate documentation to support this invoice and does not to meet the cost reasonableness requirements in CFR Part 200, Section 200.404.
The foregoing analyses and citations to the Code of Federal Regulations are non-exhaustive and are subject to revision pending further investigation and review.
As Communications Division has determined that AV Networks has not submitted adequate justification and documentation to support the reimbursement request, the request is denied without prejudice. To date, Communications Division has not made any reimbursement payments for this project. To safeguard and protect public funds, Communications Division does not make reimbursements for requests that do not provide adequate justification, prior approval, documentation, and meet federal and state program requirements.
This letter memorializes Communication Division's intention to formally begin the process to recommend rescinding the Federal Funding Account award pursuant to Section 17 of the Program Rules and further based on AVX Networks' inability to submit adequate documentation to support invoices and failure to meet the requirements in Title 2 CFR Part 200.
Please direct any questions to Legal Division's Ian Culver at Ian. [email protected].
Regards,
Main Elis
Maria Isabel Ellis
Director of Broadband Initiatives
Communications Division
CITY OF AVALON CITY COUNCIL
ACTING AS THE HOUSING AUTHORITY
MEETING DATE: September 1, 2026 AGENDA ITEM:
ORIGINATING DEP: Administration CITY MANAGER: DMM
PREPARED BY: Robert Greenlaw, City Engineer
Devin Hart, Senior Management Analyst
SUBJECT: 206 E. Whittley Retaining Wall Change Order #2 RECOMMENDED ACTION(S): 1. Authorize the City Manager or his designee to execute the second amendment to the construction contract between the City of Avalon and Jordahl Construction Inc. incorporating Change Order #2 and increasing the contract sum by $171,318 for a total not to exceed amount of $1,158,573. 2. Amend the Fiscal Year 26-27 Budget by allocating an additional $100,000 to Capital Improvement Project #205015, Fund #15325-6547.
REPORT SUMMARY: A multi-family property at 206 E. Whittley was purchased by the ACIA in 2008 with the intent to provide affordable housing units. In July 2019, the City Council, acting as the Housing Authority, approved final construction plans to renovate the structure.
In preparation of the total construction project, local contractors completed improvements to the sewer lateral and water lines from East Whittley to the property. As a result of this effort all utilities are onsite and at the needed capacity for the existing and the proposed additional building.
In developing the plan for a potential second building, geotechnical engineers determined the existing retaining walls at the property's boundaries need remediation to extend their service life in the case of the existing building or replacement in the case of the new building, due to corrosion on the existing tiebacks and age of the concrete.
In order to ensure the opportunity for highest and best use of the property, Staff proposed remediation of the existing retaining wall, and additionally leveling and backfilling of an adjacent area that will widen and recapture areas of the southern portion of the East Whittley public right- of-way at the 90-degree curve. The elevation and further frontage improvements of the right-of- way will allow for on-site parking for all nine (9) future housing units (four in the original building and up to five in the new structure) and also provide three additional public parking spaces on East Whittley. Additionally, the new site plan will repurpose the existing on-street parking area and provide a convenient stopping/loading/unloading area for large delivery or trash vehicles in the roadway, as well as provide better emergency access/staging. While this widening will reduce one informal unmaintained access to the back of the Hermosa Hotel, the primary access point at the "Museum" public stairway will continue to provide a safe direct connection to the upper rear walkway of the Hermosa complex. This access point will be further improved with the project.
A Request for Proposals to perform necessary site preparation work as well as construct the a retaining wall was issued on May 2, 2023.
Due to the complexity of the project and the formal bid requirements the project bid opening was extended until June 27, 2023. On June 27, 2023, the City Council, acting as the Housing Authority, held a Special Meeting to adopt a resolution rejecting the bids received and authorizing the City Manager to negotiate a contract with Jordahl Construction, Inc. A contract with Jordahl Construction, Inc. was executed on June 29, 2023 for a total not to exceed sum of $717,255.00.
Jordahl Construction, Inc. has been working diligently on this project. However, while working on the lower extent of the westerly side of the property it was determined the existing lower retaining wall at the property line did not have the required structural support for the proposed MSE retaining wall. In order to move forward, without impacting the Hermosa Hotel property, City Staff and Jordahl Construction, Inc. have redesigned the footing of the wall to stay well within the property boundaries. This redesign effort resulted in Change Order #1 from Jordahl Construction, Inc. This change order proposes a modification in contract scope of $441,240; however, Staff anticipated the net result to the contract to be offset by portions of work not completed due to this change in condition. This offset was anticipated to result in an approximate contract savings of $171,318. The City Council approved Change Order #1 on October 21, 2025 for an addition of $270,000 to the contract.
The contractor has clarified that that Change Order #1 did not represent a savings of $171,318 of work not completed. Therefore an additional second change order is necessary to provide the funds to finish the intended scope of work on the revised plans.
GOAL ALIGNMENT: Infrastructure reliability and safety. Affordable housing availability.
FISCAL IMPACTS: The Fiscal Year 26-27 Budget has $100,000 allocated to Capital Improvement Project #20515, Fund #15325-6547. A budget amendment of an additional $100,000 is necessary to have sufficient funds to complete this project.
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION: The City will not be able to utilize the entire parcel at its highest and best use. The expenditure of these funds will directly impact the availability of affordable housing.
FOLLOW UP ACTION: Implement City Council direction.
ADVERTISING, NOTICE AND PUBLIC CONTACT: This item was properly listed on the posted agenda pursuant to the Brown Act.
ATTACHMENTS: None.