Port Hueneme City Council
August 17, 2026

participate in the short-term rental market. The resulting draft ordinance was presented during public hearings on November 3 and November 17, 2025. Following the November 17 discussion, the Council directed staff to revise the ordinance with a focus on the posting requirement and remove the proposed minimum separation requirement, and then return to Council with revisions.

On June 15, 2026, the City Council considered alternatives to exterior posting and provided further direction on the regulatory framework. The Council directed staff to return with an ordinance incorporating a 200-foot neighbor notification requirement in place of exterior signage, short-term-rental-specific penalties, restrictions addressing corporate ownership, and a one-year review of the program following implementation. The proposed ordinance (Attachment A) reflects that direction and is presented for public hearing and consideration of introduction.

Short-Term Rentals
Short-term rentals (STRs) are residential dwelling units, or portions of dwelling units, rented for fewer than 30 consecutive calendar days through platforms such as Airbnb and Vrbo or by other means. STRs can provide visitor accommodations, support tourism, supplement homeowner income, and generate Transient Occupancy Tax revenue; however, they may also create concerns related to noise, parking, trash, neighborhood character, and the availability of long-term housing.

Because much of Port Hueneme lies within the California Coastal Zone, any STR regulation must be consistent with the California Coastal Act and the City’s Local Coastal Program (LCP). The California Coastal Commission (CCC) has historically supported balanced approaches that preserve visitor access while addressing community impacts.

Programs that ban or severely restrict STRs within the Coastal Zone often face scrutiny unless justified by clear community welfare or environmental protection concerns. Any ordinance regulating STRs in the Coastal Zone must ultimately be reviewed and certified by the CCC.

Proposed Ordinance Overview
The proposed ordinance creates a comprehensive regulatory framework for short-term rentals that aligns with the City Council’s direction to implement a moderate, balanced approach for short-term rentals in Port Hueneme. Key elements include:
• Permit, Business License, and TOT Requirements: All short-term rental operators would be required to obtain an annual City permit, maintain a valid City business license, and hold a registration certificate for collection and remittance of Transient Occupancy Tax. The annual short-term rental permit fee would be $995 and would be separate from and in addition to any applicable business license tax.

Permits would be valid for one year, non-transferable, and would expire upon a transfer of ownership.
• Ownership Eligibility: A permit would not be issued for property owned in whole or in part by a corporation, partnership, limited liability company, or other legal entity unless every person holding a direct or indirect beneficial ownership interest is a natural person. Property held in trust may qualify when each beneficial owner Agenda Item No. 07 Page 2 of 15 CC Agenda 08-17-2026
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is a natural person. Applicants would be required to disclose ownership interests and provide supporting documentation reasonably required by the City. • Operating “Good Neighbor” Standards: The ordinance establishes occupancy limits of two persons per legal bedroom plus two additional persons, not to exceed ten occupants; quiet hours from 10:00 p.m. to 7:00 a.m.; minimum off-street parking requirements; trash management requirements; interior posting of house rules and contact information; a minimum stay of one consecutive night; life-safety requirements; and a prohibition on events or commercial gatherings that exceed permitted occupancy. Short-term rentals would not be permitted in accessory dwelling units, affordable housing units, or mobile homes. • Neighbor Notification and Local Contact: As a condition of initial permit issuance and each annual renewal, the operator would be required to provide written notice to owners and occupants of properties within 200 feet of the shortterm rental. The notice would include the rental address, permit number, 24-hour local contact number, a summary of the nuisance response plan, and complaintreporting instructions. An updated notice would be required within ten calendar days after a change in the local contact or contact information. For properties located within a homeowners association or other common-interest development association, the operator would also be required to notify the association and provide it with a complete copy of the City-approved Nuisance Response Plan as a condition of initial permit issuance and each annual renewal, with updated copies provided within ten calendar days of any changes to the plan or contact information.
• Complaint Response and Nuisance Plan: Each operator would be required to maintain and follow a City approved nuisance response plan. The local contact must acknowledge complaints within 15 minutes during quiet hours and 30 minutes at other times and, when necessary, appear on-site within 30 minutes during quiet hours and 60 minutes at other times. Operators would also maintain complaint logs and submit incident response reports to the City. The proposed complaintresponse framework is intended to make the STR operator and designated local contact the primary points of contact for routine, non-emergency complaints. By requiring timely acknowledgment, on-site response when necessary, and corrective action, the goal is for operators to resolve most complaints directly without requiring an immediate City response, particularly during overnight hours when Code Compliance staff are not available. Initial direction from the City Council was to develop a program that would keep costs low for residents, including annual permit fees, etc., and the key to being able to do that is ensuring that STR operators are responsible for addressing any issues created by their STR’s, as providing around-the-clock City code enforcement would require additional staffing.
• Permit Cap and Monitoring: The total number of permits would be capped at ten percent of the City's housing units. If permits later drop below 10%, a lottery would be used to award replacement units from any potential waitlist. The City may use a third-party compliance service to identify unpermitted rentals, monitor listings, and verify TOT compliance.
• Enforcement and Program Review: Violations may be subject to administrative fines of up to $1,500 for a first violation, $3,000 for a second violation within one Agenda Item No. 07 Page 3 of 15 CC Agenda 08-17-2026
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year, and $5,000 for each additional violation within one year, subject to applicable state-law limitations. Three confirmed violations within 24 months may result in permit revocation, and operation without a valid permit would constitute a misdemeanor or infraction. The City Manager or designee would return to the City Council within one year after implementation with an evaluation of permit activity, complaints, enforcement, TOT compliance, program costs and revenues, and neighborhood and housing impacts.

STR Monitoring and Compliance
The City coordinates with HdL Companies, which administers the City's STR-related TOT compliance program and monitors major rental platforms to identify active listings. HdL assists staff in comparing advertised properties with City licensing and tax-registration records, contacting operators that may be unregistered, and following up on compliance.

HdL has previously estimated that approximately 40 to 55 STR listings may be active within the City, with many located in the Coastal Zone.

If the ordinance is adopted, this monitoring would support implementation by identifying potentially unpermitted rentals, verifying that online advertisements display City permit numbers, and assisting the City in confirming continued business license and TOT compliance. These efforts are intended to provide consistent treatment for registered operators and improve collection of revenue owed to the City.

Short-Term Rental Transient Occupancy Tax Revenue
The City's HdL remittance reports reflect the following short-term-rental-related TOT payment activity for the last three years. Gross payment amounts and the resulting net disbursements to the City after HdL and bank fees are shown below:

Calendar Period Gross STR TOT Payments Net City Disbursement 2024 $37,161.55 $31,512.08
2025 $55,874.28 $47,428.97
2026 through April 30 $21,995.35 $18,634.42
The 2026 amount reflects activity reported through April 30, 2026, and is not a full-year total. The increase between 2024 and 2025 may reflect a combination of rental activity and the City's expanded identification and compliance outreach to operators.

Next Steps
If the City Council introduces the ordinance on August 17, 2026, staff will return the ordinance for a second reading and consideration of adoption at the next regular meeting.

If adopted, the ordinance will take effect 30 days after adoption only in areas of the City located outside the Coastal Zone. The ordinance will not take effect or be enforceable within the Coastal Zone unless and until the California Coastal Commission certifies the ordinance as an amendment to the City’s Local Coastal Program.

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Following adoption, staff will prepare the application materials, permit forms, neighbornotification materials, administrative procedures, and public outreach necessary to implement the ordinance in the non-coastal areas of the City. Staff will also submit the ordinance to the California Coastal Commission for review. The Coastal Commission review process can be lengthy, and the timing and outcome cannot be guaranteed.

Typically, the more strict requirements that a city includes may result in rejection of the ordinance – in this case, several unique requirements were included that could result in rejection, however as noted by the Council and public there was a desire to craft a unique ordinance to address local or unique concerns as a first effort. The Commission may certify the amendment as submitted, certify it with suggested modifications, or deny certification. If modifications are suggested, the City Council would need to consider whether to accept them and may need to amend the ordinance before the regulations can take effect within the Coastal Zone. If certification is denied and no acceptable modified version is approved, the ordinance will remain ineffective and unenforceable within the Coastal Zone.

One year after implementation, staff will return to the City Council with the program review required by the ordinance and any recommended amendments based on operating experience, enforcement activity, fiscal results, neighborhood impacts, and the status or outcome of Coastal Commission review.

FISCAL IMPACT:

The ordinance establishes a $995 annual permit fee intended to recover costs associated with program administration, application review, inspection, complaint response, enforcement, and compliance monitoring. Short-term rental operators would also remain responsible for applicable business license taxes and Transient Occupancy Tax. Actual program costs and revenues will depend on the number of applications, enforcement workload, and the timing of Coastal Commission certification. These items will be evaluated as part of the required one-year program review, and the City Council may adjust the permit fee by resolution if necessary to recover the City's costs.

STRATEGIC PLAN:

Primary Strategic Pillar(s) and Initiative(s):

Optimal Levels of Service for Residents and Businesses
• Increase communication, outreach and proactive engagement of all members of our population
Fiscal & Economic Excellence
• Explore the value of City rebranding as a strategy to attract tourism and increase economic investment
ATTACHMENTS:

A. Short-Term Rental Ordinance
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ORDINANCE NO. XXX

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PORT HUENEME, CALIFORNIA, ADDING ARTICLE V, CHAPTER 10 OF THE PORT HUENEME

MUNICIPAL CODE PERTAINING TO SHORT-TERM RENTALS
WHEREAS, the City recognizes that short-term rentals have become an increasingly common use of residential properties through online platforms such as Airbnb and Vrbo; and WHEREAS, short-term rentals can provide economic benefits, visitor accommodations, and support local tourism, but may also create potential impacts related to noise, parking, trash and neighborhood character; and
WHEREAS, the Council directed staff on August 18, 2025, to prepare a “moderate regulatory framework” establishing a balanced program that allows short-term rentals to operate with reasonable limitations and clear enforcement mechanisms; and WHEREAS, this Ordinance establishes a permitting process, operational standards, nuisance-response requirements, a citywide permit cap, neighbor notification requirements, and enforcement provisions designed to protect neighborhood livability as well as maintain a level playing field among lodging providers; and
WHEREAS, the City has a limited residential housing supply, short-term rentals may remove dwellings from long-term residential use, and short-term rentals also provide visitorserving overnight accommodations suitable for families and groups; and WHEREAS, short-term rentals provide visitor-serving overnight accommodations that support coastal access and the public’s ability to enjoy the recreational, scenic, and other resources of the Coastal Zone; and
WHEREAS, short-term rentals expand the range and diversity of lodging options available to visitors, including accommodations that may be more affordable, flexible, or suitable for families and groups than traditional hotels, thereby contributing to the Coastal Act’s objective of protecting and enhancing lower-cost visitor-serving opportunities; and WHEREAS, the City recognizes that appropriately regulated short-term rentals constitute a visitor-serving use that can provide economic benefits, support local businesses, and promote public access to and enjoyment of coastal resources while remaining compatible with surrounding residential neighborhoods; and
WHEREAS, the City therefore finds that permitting short-term rentals subject to reasonable operating standards, a citywide permit cap, and exclusions for sensitive housing types appropriately balances coastal access with protection of the City's housing supply; and WHEREAS, the Council finds that these regulations are necessary to protect the public health, safety, and welfare by ensuring short-term rentals operate responsibly and contribute fairly to the community through transient occupancy tax and permit fees.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT HUENEME, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1: RECITALS AND FINDINGS. The above recitals are all true and correct.

SECTION 2: ADOPTION OF ARTICLE V, CHAPTER 10. Article V, Chapter 10, Short-Term Rentals, commencing with Section 5661 is hereby adopted within the Port Hueneme Municipal Code as follows:

Attachment A
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Section 5661 Purpose
The purpose of this Chapter is to regulate the use of residential dwellings as short-term rentals, to preserve the residential character of neighborhoods, minimize adverse impacts related to noise, parking, trash, and overcrowding, ensure fair contribution to public services through taxes and fees, and provide a balanced regulatory framework consistent with the California Coastal Act.

Section 5662 Definitions
For purposes of this Chapter, the following definitions shall apply:
(a) Short-Term Rental (STR): The rental of a dwelling unit, or any portion thereof, for occupancy of fewer than thirty (30) consecutive calendar days. (b) Owner: The individual or entity that has legal title or control of the property. (c) Operator: The owner or other responsible person who holds a valid short-term rental permit and is legally responsible for compliance with this Chapter. (d) Dwelling Unit: A single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation.
(e) Guest: Any person renting, occupying, or otherwise using a short-term rental for lodging or sleeping purposes, including invitees and occupants other than the operator or local contact person.
(f) Local Contact Person: A person designated by the operator who is available twenty-four (24) hours per day, is capable of responding to complaints within the required timeframes, and has authority to direct guests to comply with this Chapter and the approved Nuisance Response Plan, arrange for the lawful removal of vehicles, respond to City or law enforcement personnel, and terminate occupancy when necessary to abate a violation.
(g) Rent: Any form of monetary or non-monetary consideration, including but not limited to payment, fee, service, credit, gift, exchange, or donation, whether paid directly or indirectly, received by the owner, operator, or any person acting on their behalf, in return for the occupancy or use of a dwelling unit, or any portion thereof, as a short-term rental.
(h) Nuisance Response Plan: A City-approved plan describing measures to prevent and address potential nuisances including noise, parking, trash, and disorderly conduct, and outlining procedures for timely complaint response. The Nuisance Response Plan shall be approved when it contains all information and procedures required by Section 5666. The City may require correction of incomplete or nonconforming provisions but shall not impose property-specific operating conditions except as expressly authorized by this Chapter. (i) Confirmed Violation: A violation of this Chapter supported by a City inspection, law enforcement report, code enforcement documentation, an admission by the owner or operator, platform or rental records, photographs, video, audio recordings, sound-level measurements, or other reliable evidence determined sufficient by the City Manager or designee. An uncorroborated complaint alone shall not constitute a confirmed violation.

Section 5663 Permit Requirements
(a) No person shall operate a short-term rental without first obtaining a short-term rental permit issued by the City.
(b) The City Manager or designee shall issue a short-term rental permit when the application is complete, the applicant and property satisfy all objective eligibility requirements of this Chapter, all required fees have been paid, and a permit is Agenda Item No. 07 Page 8 of 15 CC Agenda 08-17-2026
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available under the citywide permit cap or has been allocated to the applicant through the applicable lottery. Permit issuance pursuant to this Article is a ministerial administrative action and does not require a public hearing. (c) A valid City business license and registration certificate for collection of transient occupancy tax (TOT) are required in addition to the permit. (d) Permits shall be issued for one (1) year, are non-transferable, and shall expire upon transfer of ownership.
(e) Renewal of a short-term rental permit may be denied if the operator has accrued three (3) or more confirmed violations within the preceding twenty-four (24) months, failed to pay required Transient Occupancy Tax, permit fees, administrative fines, or other amounts due to the City, failed to comply with the approved Nuisance Response Plan, or otherwise failed to maintain good standing with the City. An application submitted after expiration of a permit shall be processed as a new application and shall be subject to the citywide permit cap and any established waiting list in effect at the time of application. (f) The City may require an inspection or updated Nuisance Response Plan prior to renewal to ensure continued compliance.
(g) No short-term rental permit shall be issued for a property that is owned, in whole or in part, by a corporation, partnership, limited liability company, or other legal entity unless every shareholder, partner, member, or other person holding a direct or indirect beneficial ownership interest in the entity is a natural person. The applicant shall disclose all direct and indirect ownership interests and provide documentation reasonably required by the City. A property held in trust may qualify if each person holding a beneficial interest in the trust is a natural person.

Section 5664 Application Requirements
An application for a short-term rental permit shall include:
(a) Completed application form and payment of an annual fee of nine hundred ninetyfive dollars ($995). (b) Proof of ownership or notarized authorization from the property owner. (c) Floor plan identifying the number of bedrooms and a site plan showing available parking spaces and trash storage areas.
(d) Identification of the local contact person, including name, address, email address, and phone number.
(e) Applicants must provide proof of property liability insurance for the short-term rental unit.
(f) A nuisance response plan addressing how the operator will mitigate potential noise, trash, parking, disorderly conduct, and other nuisance-related issues. (g) A certification by the applicant that operation of the short-term rental is permitted by and complies with all applicable leases, covenants, conditions and restrictions, homeowners association rules, and other private restrictions. The certification shall acknowledge that issuance of a City permit does not authorize a violation of any private restriction and that the City does not interpret or enforce private agreements.
(h) A life-safety certification, on a form approved by the City, confirming that the dwelling has functional smoke alarms in each sleeping room and other required locations, carbon monoxide alarms where required, portable fire extinguishers, unobstructed emergency exits, evacuation information, and, where applicable, compliant pool and spa safety features, and otherwise complies with applicable building and fire requirements including no use of garages, tents, vehicles, storage rooms or non-habitable spaces for sleeping. The City may require an inspection or supporting documentation before permit issuance or renewal.

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Section 5665 Operating Standards
(a) Occupancy shall be limited to two (2) persons per bedroom plus two (2) additional persons, not to exceed ten (10) persons in any dwelling. Maximum occupancy is based on legal bedrooms only.
(b) Quiet hours shall be observed daily between 10:00 p.m. and 7:00 a.m. (c) Operators shall maintain sufficient off-street parking for short-term rental use. One (1) off-street parking space shall be required for a short-term rental consisting of a single bedroom, and two (2) or more off-street parking spaces shall be required for a short-term rental consisting of two (2) or more bedrooms. Garage spaces, driveway spaces, or a combination thereof may be counted toward the required spaces, provided they are made available for guest use. Tandem parking may be permitted, provided it does not obstruct sidewalks, driveways, or fire access. No parking space may be counted if use of the space would obstruct a sidewalk, bicycle lane, alley, fire lane, required emergency access, or access to a garage or driveway serving another dwelling. The City may inspect garages, driveways, and other parking areas relied upon to satisfy the off-street parking requirement, upon reasonable notice, to verify continued compliance with this section. (d) Trash shall be stored in proper containers and placed for collection only in accordance with the City schedules. Instructions shall be posted inside the unit. (e) House rules, occupancy limits, quiet hours, trash instructions, parking requirements, permit number, and local contact information shall be posted conspicuously inside the dwelling within six (6) feet of the main entrance. (f) Prior to commencing short-term rental operations, the operator shall provide written notice to properties located within two hundred (200) feet of the property line of the short-term rental property. The notice shall include the address of the short-term rental, the City-issued permit number, the telephone number of the twenty-four-hour local contact person, and instructions for reporting disturbances or suspected violations. The operator shall provide proof of notification to the City in a form approved by the City. Updated notice shall be provided upon any change in the operator or local contact information.
(g) Each short-term rental shall have a minimum stay requirement of at least one (1) consecutive night. The City Council may, by resolution, adjust the minimum stay requirement if warranted to address community impacts or California Coastal Commission certification conditions. Nothing in this subsection shall prohibit an operator from imposing a longer minimum stay.
(h) Every online advertisement for a short-term rental shall display the City permit number.
(i) Short-term rentals shall not host events, weddings, or other commercial gatherings that exceed permitted occupancy.
(j) Operators shall maintain functional smoke alarms, carbon monoxide alarms, portable fire extinguishers, unobstructed emergency exits, and evacuation information, and shall comply with all applicable building, fire, and life-safety requirements.
(k) Short-term rentals shall not be operated in accessory dwelling units , affordable housing units, or mobile homes.

Section 5666 Nuisance Response Plan
(a) Each operator shall submit and adhere to a Nuisance Response Plan approved by the City Manager or designee.
(b) The plan shall, at a minimum, include:

1. Procedures for responding to noise, parking, trash, or disorderly conduct complaints within the timeframes specified in Section 5667; Agenda Item No. 07 Page 10 of 15 CC Agenda 08-17-2026
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2. Contact information for the owner, operator, and local contact person;

3. A method for guests to be informed of neighborhood expectations, including delivery of written “Good Neighbor Guidelines” to all guests upon arrival;

4. Procedures for monitoring guest compliance with occupancy and parking limits;

5. Actions the operator will take to prevent recurrence of violations, including guest eviction procedures where appropriate; and

6. A statement acknowledging that repeated nuisance activity may result in permit suspension or revocation.
(c) Each failure to adhere to the approved Nuisance Response Plan shall constitute an independent violation of this Chapter and may result in administrative citation, permit suspension, or permit revocation.

Section 5667 Complaint Response
(a) The local contact person shall acknowledge complaints within fifteen (15) minutes during quiet hours and within thirty (30) minutes at other times. (b) The local contact person shall appear on-site within thirty (30) minutes during quiet hours and within sixty (60) minutes at other times if necessary to resolve complaints.
(c) The local contact person must maintain a physical residence or business address within thirty (30) miles of the City of Port Hueneme.
(d) Operators shall maintain a complaint log, documenting the date, time, nature of complaint, response time, and resolution, and provide copies to the City upon request. Failure to maintain or produce the complaint log upon request shall be deemed a violation subject to administrative citation.
(e) Within one (1) hour after receiving a complaint, the operator or local contact person shall notify the City through the City designated reporting method. The notification shall include the short-term rental address, the date and time the complaint was received, a brief description of the complaint, the corrective action taken or underway, and the current status of the complaint, including whether the complaint has been resolved.
(f) Within 24 hours after receiving a complaint, the operator or local contact person shall submit an incident response report in a form approved by the City. Failure to submit a complete report constitutes an independent violation. (g) Failure of the local contact person or operator to acknowledge a complaint, appear on-site when required, take reasonable corrective action, terminate occupancy when necessary to abate an ongoing violation, or otherwise comply with the approved Nuisance Response Plan shall constitute an independent violation of this Chapter, regardless of whether the underlying complaint results in a separate confirmed violation.

Section 5668 Density Cap
The purpose of this cap is to prevent over-concentration of short-term rentals and preserve the availability of long-term housing consistent with the City’s General Plan and Coastal Act policies.
(a) The number of short-term rental permits issued by the City shall not exceed ten percent (10%) of the City’s total housing units.
(b) If applications exceed the allowable cap, the City shall allocate permits by lottery.

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Section 5669 Neighbor Notification
(a) As a condition of initial permit issuance and each annual renewal, the operator shall provide written notice of the short-term rental to the owners and occupants of all properties located within two hundred (200) feet of the short-term rental property, measured from the exterior boundaries of the subject parcel. (b) The notice shall be provided on a form approved by the City and shall include the short-term rental address, City permit number, the twenty-four-hour telephone number of the local contact person, a summary of the approved Nuisance Response Plan, and instructions for reporting complaints or suspected violations to the City.
(c) If the short-term rental property is located within a homeowners association or other common-interest development association, the operator shall provide the association with written notice of the short-term rental and a complete copy of the City-approved Nuisance Response Plan as a condition of initial permit issuance and each annual renewal. The operator shall provide the association with an updated copy of the Nuisance Response Plan within ten (10) calendar days after any change to the plan or the contact information contained therein. (d) The notification required by subsection (c) is informational only and does not require the homeowners association’s approval, authorization, or signature as a condition of City permit issuance. Issuance of a City permit does not authorize an operator to violate any applicable covenants, conditions and restrictions, bylaws, operating rules, or other private governing documents, and the City shall not be responsible for interpreting or enforcing such private restrictions. (e) The operator shall submit proof of mailing or delivery in a form acceptable to the City before a permit is issued or renewed. Notice may be provided by first-class mail or personal delivery.
(f) On an annual basis, the operator shall submit to the City an affidavit, on a form approved by the City, certifying under penalty of perjury that the notice required by this section has been provided to all owners, occupants, and homeowners associations entitled to receive notice and that the information contained in the notice remains current and accurate, or identifying any changes thereto. (g) The operator shall provide updated notice to the City and to the owners and occupants of all properties located within two hundred (200) feet of the short-term property within ten (10) calendar days after any change to the local contact person or the contact information contained in the notice.

Section 5670 Inspections and Monitoring
(a) Complaint-based inspections may occur at any time during the permit term. (b) The City may contract with a third-party compliance monitoring service to identify unpermitted short-term rentals, track listings, and verify TOT collection.

Section 5671 Enforcement and Penalties
(a) Violations of this Chapter are declared public nuisances and are subject to administrative fines, permit suspension or revocation, and any other civil, criminal, or administrative remedy available to the City.
(b) For a violation of this Chapter the City may impose an administrative fine not exceeding one thousand five hundred dollars ($1,500) for a first violation, three thousand dollars ($3,000) for a second violation of this Chapter within one (1) year, and five thousand dollars ($5,000) for each additional violation of this Chapter within one (1) year. Any fine imposed under this subsection shall comply with Government Code Section 36900, including restrictions applicable to a first-time failure to register or pay a business license fee and any required hardship-waiver Agenda Item No. 07 Page 12 of 15 CC Agenda 08-17-2026
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procedure. Notwithstanding the foregoing, a first-time failure to register or pay a business license fee may still be subject to the fines set forth in Chapter 6 of Article 1 of this Code.
(c) Three (3) confirmed violations within a twenty-four (24) month period may result in permit revocation. A former permittee whose permit was revoked shall not reapply for twelve (12) months following the effective date of revocation. (d) Each day of continued violation constitutes a separate offense. (e) Multiple violations arising from the same continuous incident shall constitute one violation event for purposes of permit suspension or revocation, although each separate violation may be subject to an administrative citation. (f) Operation of a short-term rental without a valid permit shall constitute a misdemeanor or infraction, as determined by the City Attorney.

Section 5672 Fees
(a) The annual permit fee shall be nine hundred ninety-five dollars ($995). (b) All operators shall remit transient occupancy tax in accordance with Article II, Chapter 7, Part B of the Port Hueneme Municipal Code.
(c) Fees shall be used to fund program administration, inspection, complaint response, and enforcement activities.
(d) The City may amend the permit fee by resolution as necessary to recover costs associated with program administration.
(e) The permit fee set forth herein is solely for administration of the regulatory provisions herein and separate and in addition to any business license tax set forth in Chapter 1 of Article 5 of this Code.

Section 5673 Program Review
Within one (1) year after implementation of this Chapter, the City Manager or designee shall evaluate the effectiveness of the short-term rental program, including permit activity, complaint history, confirmed violations, enforcement actions, transient occupancy tax compliance, program revenues and costs, and identified neighborhood and housing impacts, and shall present a report to the City Council with any recommended amendments.

Section 5674 Recordkeeping
(a) Operators shall maintain records of all rental transactions, including guest names, dates of stay, gross rent collected, cleaning fees, platform fees charged to guests, and TOT remitted, for a period of three (3) years.
(b) Records shall be furnished to the City within five (5) business days upon request.

Section 5675 Appeals
Any person aggrieved by a decision of the City Manager or designee may appeal such decision in writing to the City Council within ten (10) calendar days of the decision. The City Council’s decision shall be final.

SECTION 3: ENVIRONMENTAL REVIEW. The Council exercises its independent judgment and finds that the proposed ordinance is not subject to California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment), and Section 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because the proposed ordinance has no potential for resulting in any significant physical change to the environment, either directly or indirectly.

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SECTION 4: ENFORCEABILITY. Repeal of any provision of the Port Hueneme Municipal Code does not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before this Ordinance’s effective date. Any such repealed part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Ordinance.

SECTION 5: SEVERABILITY. If any section, subsection, sentence, clause, phrase, or portion of this Chapter is held to be invalid or unconstitutional by any court of competent jurisdiction for any reason, such decision shall not affect the validity of the remaining portions of this Chapter. The Council declares that it would have adopted each section, subsection, sentence, clause, phrase, or portion of this Chapter irrespective of whether one or more sections, subsections, sentences, clauses, phrases, or portions of this Chapter be declared invalid or unconstitutional.

SECTION 6: EFFECTIVE DATE AND COASTAL ZONE CERTIFICATION. This Ordinance shall take effect thirty (30) days after its adoption in all areas outside the Coastal Zone. As applied within the Coastal Zone, this Ordinance shall not become effective or enforceable unless and until the California Coastal Commission certifies this ordinance as an amendment to the City's Local Coastal Program, or the amendment otherwise becomes effective in accordance with the California Coastal Act.

SECTION 7: CERTIFICATION. The City Clerk of the City is hereby directed to certify to the passage and adoption of this Ordinance and to cause it to be published as required by law.

PASSED and ADOPTED on this ___ day of _________________2026.

Martha R. McQueen-Legohn
Mayor
ATTEST:
________________________________
Georgianna Nicole Alvarez
City Clerk
APPROVED AS TO FORM:
________________________________
Paul Early
City Attorney
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CERTIFICATION

STATE OF CALIFORNIA )
COUNTY OF VENTURA ) SS.

CITY OF PORT HUENEME )
I, Georgianna Nicole Alvarez, City Clerk of the City of Port Hueneme, California, do hereby certify that the foregoing Ordinance No. ____ was introduced at the regular meeting of _____, 2026, and duly adopted at the regular meeting of ________, 2026, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

Dated:

Georgianna Nicole Alvarez
City Clerk
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DATE: August 17, 2026
TO: Honorable City Council
FROM: James Vega, City Manager
Ashley Chaparro, Finance Director
SUBJECT: FISCAL YEAR 2024-25 ANNUAL COMPREHENSIVE FINANCIAL

REPORT (ACFR)
RECOMMENDATION:

It is recommended that City Council receive and file the Fiscal Year 2024-25 Annual Comprehensive Financial Report.

BACKGROUND/ANALYSIS:

Government Accounting Standards Board (GASB), state law and City procedures require the completion of an independent audit of each fiscal year’s financials known as the Annual Comprehensive Financial Report (ACFR). Annually, the ACFR is formally presented to the City Council in a public meeting. The purpose of the City’s ACFR is to provide relevant financial information to the City Council, citizens, current and future employees, grant entities, creditors, bond investors, rating agencies, and other interested parties. The ACFR also includes an opinion from a qualified independent accounting firm on the fairness of the City’s financial statement presentation in accordance with generally accepted accounting principles.

The annually audited financial reports are a testament to a city’s financial condition and how well it fiscally carried out its mission of providing public services to the community for the year. Moss, Levy & Hartzheim LLP, has conducted an independent audit of the financial statements of the City of Port Hueneme and the Port Hueneme Successor Agency for the fiscal year ended June 30, 2025 and has issued an Unqualified Opinion thereon. An Unqualified Opinion is the highest rating possible and means that the auditors found nothing in the City’s financial and bookkeeping practices that could preclude a fair representation of the City’s operations and financial condition for the fiscal year. Along with detailed reviews of the City’s financial transactions, the auditor also conducts a thorough evaluation of the agency’s accounting and internal control systems.

The ACFR includes all funds of the City and is presented in three sections: Introductory, Financial and Statistical. The Introductory Section contains a letter of transmittal and Agenda Item No. 08 Page 1 of 158 CC Agenda 08-17-2026
FY 2024-25 Annual Comprehensive Financial Report
August 17, 2026

directory of City Officials. The Financial Section contains the independent auditor’s report, management’s discussion and analysis (MD&A), the basic financial statements, notes to the financial statements and required supplementary information. The Statistical Section includes selected financial and demographic information, generally presented on a multiyear basis.

The ACFR was issued on July 1, 2026 as evidenced by the date on the transmittal letter and the published final was received July 16, 2026. The ACFR has been prepared by the staff of the Finance Department in conformity with Generally Accepted Accounting Principles (GAAP). The ACFR is made available to the public on the City’s website.

The Management’s Discussion and Analysis (MD&A) section of the ACFR provides a narrative overview of the City’s financial activities, and this information should be read in conjunction with the basic financial statements. The MD&A includes the prior year and the current year financial health comparisons, highlighting major changes that occurred within the fiscal year. The Notes to the Financial Statements section provide the reader an accurate overall representation of financial health. The Notes explain the financial statements by providing narrative information about the City’s significant accounting policies and detailed disclosure on key financial matters.

Government-Wide Financial Statements
The City’s ACFR begins with government–wide financial statements that report information on all activities of the City combined. Governmental activities, which normally are supported by taxes and grant revenues, are reported separately from business-type activities, such as the Water Department, which instead rely to a significant extent on user fees and charges that come from receiving the service.

A major difference in the Government Wide Financial Statements in the ACFR the past few years is the Governmental Accounting Standards Board (GASB) No. 68 requirement for public agencies to disclose liability for pension obligations. GASB No. 68 does not require agencies to fund pension obligations; its purpose is to make existing obligations more transparent.

At June 30,2025, the total net position for governmental activities and business-type activities was $68.8 million and $43.8 million respectively for a total of $113 million citywide (ACFR page 15). This represents a total increase of $5.4 million versus prior fiscal year. The increase is primarily due to capital work-in-progress recognition which increased governmental activities (in other words, increased value of assets owned by the City, not an increase in funds available).

Fund Financial Statements
The City’s Governmental Funds include the General Fund and Non-Major Restricted Funds, such as Gas Tax, the Assessment Districts, and the Surplus Property Authority, for example.

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At June 30, 2025, the City’s Governmental Funds reported combined ending fund balances of $59.7 million (page 20). This represents a decrease of about $900 thousand in comparison with the prior year fund balances.

The General Fund is the chief operating fund of the City. The General Fund balance at June 30, 2025 was $44.1 million, which represents a decrease of $6.3 million from the prior fiscal year. This is primarily due to completion of large capital improvement projects such as the Bubbling Springs Park project (see fund balance and capital outlay expenditures noted on page 67).

There are five components or segregations of fund balance that were created by the Government Accounting Standards Board (GASB) organization. This organization regulates governmental accounting. The five components are Non-spendable Fund Balance, Restricted Fund Balance, Committed Fund Balance, Assigned Fund Balance, and Unassigned Fund Balance.

The City’s Governmental Funds currently utilize four which are:
• Non-spendable Fund Balance – Primarily General Fund notes receivable from the Water Operating Fund
• Restricted Fund Balance- Used by Nonmajor Governmental Funds that are limited to use for specific purposes
• Committed Fund Balance – Reserves per Council-approved Fiscal Policies • Unassigned Fund Balance – Funds available for appropriation to address financial uncertainties
The following are the General Fund fund balance amounts at June 30, 2025 (page 18):

Fund Balances:

Nonspendable 10,328,891
Committed 21,585,381
Unassigned 12,199,868
Total: 44,114,140
It is important to note that this ACFR is a review or look back to financials at a set point in time- June 30, 2025; it does not include changes after that date that are reflected in more recent budget discussions.

Utility Enterprise Funds:

Business-type activities, which are called Enterprise or Proprietary Funds, for the City’s utilities consist of the Water Operations Fund, Water Plant Operations Fund, Wastewater Operations Fund, and Solid Waste Operations Fund. The financial goals of the utilities are to operate on a more or less “break-even” basis, without the need for General Fund subsidies to cover their annual operating, maintenance and planned capital improvement project costs. Proprietary funds’ fund balances are instead presented as “net position”.

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August 17, 2026

The Proprietary Fund financials are illustrated on pages 22-31 of the ACFR. Following is a summary of the utility enterprise fund revenues and expenses in FY 2024-25 (page 26):

Water Water Plant Wastewater Solid Waste
Revenue 8,616,135 1,295,488 3,690,075 5,278,079
Expense 8,655,318 1,295,488 3,796,313 5,933,070
Change in Net Position: (39,183) - (106,238) (654,991)
The Enterprise Funds net position includes Investment in Capital Assets and Unrestricted Funds as follows (page 24):

Water Water Plant Wastewater Solid Waste
Net Investment in Capital
Assets

3,745,950

-

10,116,790

3,213,166
Unrestricted
18,105,073

434,341

3,822,949

3,433,473
Total Net Position:
21,851,023

434,341

13,939,739

6,646,639
Capital Assets:

The City’s net investment in capital assets for Governmental and Enterprise Funds was $41.4 million and $22.4 million, respectively (page 51-52). This includes land, construction in progress (ongoing capital improvement projects), depreciable assets and leased assets (primarily vehicles).

Long Term Liabilities:

As of June 30, 2025, the City’s long-term liabilities were $59.4 million (page 56). This includes the City’s debt of Pension Obligation Bonds, Wastewater Revenue Bonds and loans to Sterling Bank and the State of California for the Engie renewable energy project.

The City is required to measure and report the remainder of the long-term liabilities (compensated absences, leases payable, subscriptions, OPEB and pension) per standards set by the Governmental Accounting Standards Board (GASB).

In closing, the city is pleased to have received an unqualified “clean” audit opinion. We would like to acknowledge the Finance team and the contribution from all departments by following procedures year-round and for providing data necessary to prepare the City’s FY 2024-25 ACFR.

FISCAL IMPACT:

No fiscal impact as this is a receive and file report.

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August 17, 2026

STRATEGIC PLAN:

Primary Strategic Pillar(s) and Initiative(s):

Optimal Levels of Service for Residents and Businesses
• Promote operational excellence in all City functions and embody best practices as a municipality
ATTACHMENT:

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CITY OF PORT HUENEME

ANNUAL COMPREHENSIVE FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2025
Attachment A
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July 1, 2026
Honorable Mayor, City Councilmembers, and the Residents of Port Hueneme:

I am pleased to present the Annual Comprehensive Financial Report (ACFR) of the City of Port Hueneme, California for the fiscal year ended June 30, 2025. The format and content of this ACFR complies with the principles and standards of accounting and financial reporting adopted by the Governmental Accounting Standards Board (GASB) and contains all information needed for readers to gain a reasonable understanding of City of Port Hueneme's financial affairs.

INTRODUCTION
This report was prepared by the City's Finance Department. City Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal controls should not exceed the anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

Moss, Levy & Hartzheim, LLP, a Certified Public Accountant firm selected by the City Council to perform the audit of the financial statements for the fiscal year ended June 30, 2025, has audited the City’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, the financial statements of the City of Port Hueneme for the fiscal year ended June 30, 2025 are fairly presented in conformity with GAAP. The auditors have issued an unqualified ("clean") opinion on the City's financial statements. The independent auditors' report is located at the front of the financial section of this report.

Management's discussion and analysis (MD&A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it.

CITY OF PORT HUENEME PROFILE
Port Hueneme (pronounced "Wy-nee'mee") is a seaside community in Ventura County, California. Port Hueneme is located 60 miles northwest of Los Angeles and 40 miles south of Santa Barbara. The City's name derives from a Chumash word (Wene'mu) that means "resting place". Today's Port Hueneme is located halfway between two larger Chumash settlements, today's Malibu and Ventura. The first post office in the community was in Wynema. When Thomas R. Bard laid out the town in 1872, he called it Hueneme. The name was changed to Port Hueneme after the Port of Hueneme was built in 1939.

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Incorporated in 1948, Port Hueneme has a 5-member City Council which functions as the policy making governmental body. The five individuals serve staggered four-year terms in office, with the Mayor and Mayor Pro-Tem being selected by the City Council each year. City services are structured around seven departments: City Administration, Finance, Community Development, Police, Public Works, Recreation & Community Services and Housing & Facilities.

The City Council members also serve as the governing body of the following:
 Housing Authority of the City of Port Hueneme
 Surplus Property Authority
 Port Hueneme Successor Agency
In addition, the City Council appoints the members of the following advisory Commissions and Boards:
 Citizen Advisory Commission
 Measure U Oversight Committee
The annual budget serves as the foundation for the City’s financial planning and control. The budget also contains detailed goals and objectives and financial projections for the departments and agencies that comprise the City’s governmental structure. The City reports on a fiscal year basis from July 1 to June 30. Throughout the year, the Finance Department monitors economic changes that may affect revenue streams, coordinates with departments in identifying changing needs and demands, and presents budget adjustments to City Council as part of the mid-year review.

FINANCIAL OUTLOOK
As shown in the Annual Comprehensive Financial Report (ACFR), starting on page 16, the FY2024-25 City revenue faced some increases and some decreases. The City’s increases were found within the Grants and Contributions category, brought about by one-time revenues such as grant funds for the Bubbling Springs Park Project ($7.5 million) and recognition of American Rescue Plan Act dollars ($3 million). In the Charges for Service category, the city began to experience a moderate decline in Sales Taxes ($400,000 estimate) and Cannabis business fee revenue ($800,000 estimate) resulting from slowed down consumer spending due to pressures on disposable income. Food and Drugs, including cannabis, started to see continued significant decreases due to saturation of the market.

In preparation for future economic challenges, the city will continue to monitor the current budget, covering all foreseeable elements of revenues and expenditures, by seeking out ongoing cost savings measures and new revenue sources.

For capital projects, the city maintains a capital improvement plan which is updated annually during the budget. This plan provides a long-term forecast of identified capital improvement projects and serves as a tool for management and City Council to plan, prioritize and monitor the city’s projects.

The city has recently established a General Fund reserve for capital projects. Following are the current relevant financial policies in place.

RELEVANT FINANCIAL POLICIES
The City has established sound financial policies that will serve as guidelines to the City Council and Agenda Item No. 08 Page 16 of 158 CC Agenda 08-17-2026
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staff for responsible and prudent decision making related to financial matters, and maintaining minimum and targeted reserves. The City Council has committed to maintaining General Fund reserve balances at appropriate levels to protect City assets, assure availability of cash to meet short-term obligations, address unforeseen events and avoid future debt.

The city has the following Committed General Fund Reserves:

1. Economic Emergency Reserve – The policy is to set aside a minimum reserve amount equal to six (6) months of General Fund expenditures, with a target reserve amount equal to eight (8) months of General Fund expenditures from current fiscal year adopted budget. The minimum and target General Fund balances are intended to be a prudent and conservative fiscal policy, which should contribute to the fiscal security of the City. The reserve levels can be changed or used for specific purposes at the discretion of the City Council. There is no maximum unreserved General Fund balance and any reasonable additional reserve above the minimum reserve would provide a greater level of fiscal security for the City.

2. Stability Reserve – The minimum target is set to 10% of the current year’s annual General Fund operating expenditures (minus one-time expenditures). The reserve will be maintained to mitigate financial and service delivery risk due to unexpected revenue shortfalls or unanticipated critical expenditures. It is intended to provide budgetary stability.

3. Risk Management- The policy is to set aside an amount equal to 50% of the annual property, liability and worker’s compensation insurance expenses from the current fiscal year’s adopted budget with a minimum target of no less than $500,000.

4. Capital Reserve – The purpose of this policy is to establish and maintain a long-term capital funding policy to ensure the needs of the city are met and provide a funding source for long-term, large value capital projects.

At the end of fiscal year 2024-25, the City’s General Fund Committed Reserves are as follows:

INVESTMENTS
City investments are made in accordance with State Government Code and the city’s investment policy.

The City's investment portfolio of $76,347,702 at June 30, 2025 included $41.7 million invested in LAIF and $7.7 million in the Ventura County Investment Pool. New investments of Chandler Securities ended Reserve Category Definition/Parameters FY2024-25
Economic Emergency Reserve 6 months of operating expenses $ 13,814,142 Stability Reserve 10% of operating expenses $ 2,762,828 Risk Management 50% of insurance expenses $ 908,411
Capital Reserve Planned budgeted appropriations by Council $ 4,100,000 Total General Fund Committed Fund Balance: $ 21,585,381 Agenda Item No. 08 Page 17 of 158 CC Agenda 08-17-2026
the fiscal year at $21.9 million. The investments provide security and are consistent with the City's Investment Policy.

ACKNOWLEDGEMENT
In closing, I would like to thank the City Finance Team for their support in preparation of the ACFR, as well as City staff for its leadership in tackling budget challenges and moving our City forward in a positive direction. We would also like to thank the City Council for their continued interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner.

Respectfully submitted,
�
Ja es 4'City Manager Ashley Chaparro/Finance Director
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City of Port Hueneme

CITY COUNCIL
City Manager
James Vega
Department Directors
Charles Peretz – Deputy City Manager
Ashley Chaparro – Finance Director
Tricia Maier – Community Development Director
Michael Federico – Police Chief
Fred Camarillo – Public Works Director
Gabby Basua – Housing & Facilities Director
Misty Perez
Councilmember
Jess Lopez
Councilmember
Steven Gama
Councilmember
Laura Hernandez
Mayor Pro Tem
Martha
McQueen-Legohn
Mayor
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City of Port Hueneme
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2025
3 As management of the City of Port Hueneme, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2025. We encourage readers to consider the information presented here in conjunction with the City's financial statements, which begin on page 14.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City of Port Hueneme's basic financial statements. The City's basic financial statements are comprised of three components: 1) Government-wide financial statements, 2) Fund financial statements, and 3) Notes to the financial statements. This report contains other supplementary information in addition to the basic financial statements and required information.

Government-wide Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City's financial position, in a manner similar to that of a private-sector business. The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the overall financial position of the City is improving or deteriorating.

The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation leave.

The government-wide financial statements separate Governmental Activities that are principally supported by taxes and revenues from other agencies, from Business-type Activities that are intended to recover all, or a significant portion of their costs, through user fees and charges. The governmental activities of the City include General Government, Public Safety, Public Works, Recreation & Human Services, and Community Development. The City's Business-type activities include Water Utility, Wastewater Utility, Solid Waste Utility, Water Treatment Plant, and Housing Authority Funds.

The government-wide financial statements include not only the City, but also all legal entities for which the City is financially accountable. Accordingly, the financial information for the City's Housing Successor Agency (HSA), Surplus Property Authority (SPA), and the Housing Authority are included as an integral part of the City's financial statements and reported as blended component units.

The statement of net position presents information on all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources; the difference between the two is reported as net position. These assets include infrastructure and all assets previously included in the General Fixed Asset Account Group. The liabilities include all obligations previously reported in the General Long Term Debt Account Group. Evaluating increases or decreases in net position over time will serve as a useful indicator of whether the financial position of the City is improving or declining.

The statement of activities presents information on the net cost of each governmental function (activity) during the fiscal year. This statement also identifies the amount of general revenues needed to fully fund each governmental function.

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City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
4 Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories:

Governmental Funds, Proprietary Funds, and Fiduciary Funds.

Governmental Funds (General Fund, Surplus Property Authority, and other non-governmental funds) are used to account for the same functions reported as governmental activities in the Government-wide financial statements.

However, unlike government-wide financial statements, fund financial statements focus on short-term inflows and outflows of spendable resources. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. This information may be useful in evaluating the City's short-term financing requirements.

The focus of the fund financial statements is narrower than that of the government-wide financial statements. The various balance sheets and the statement of revenues, expenditures, and changes in fund balances require a reconciliation to facilitate the comparison between fund statements and the government-wide statements. This reconciliation is required because the government-wide statements are prepared on the full accrual basis of accounting while the fund statements are prepared on the modified accrual basis of accounting. These reconciliations can be found on pages 19 and 21, immediately following the balance sheet and statement of revenues, expenditures, and changes in fund balances for governmental funds.

Proprietary Funds include enterprise funds to account for the City’s Water Utility, Wastewater Utility, Solid Waste Utility, Housing Authority, and Water Treatment Plant. The proprietary fund statements provide information for the Water Operations, Wastewater Operations, Solid Waste Operations, Water Plant Operations and Housing Authority Operations.

Fiduciary Funds include funds that account for the balances and transactions of the Successor Agency to the Port Hueneme Redevelopment Agency Private-Purpose Trust Fund, the City’s Pension Trust Fund, and the City’s OtherPost Employment Benefits Trust Fund.

Notes to the Financial Statements provide additional information that is essential to the reader for a full understanding of the data provided in the government-wide and fund financial statements.

Required Supplementary Information is presented concerning the City's General Fund budgetary compliance and the City's progress in funding its obligation to provide pension and other post-employment benefits.

Other Supplementary Information connects the combined statements referred to earlier with non-major governmental funds and is presented immediately following the notes and required supplementary information.

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City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
5 FINANCIAL HIGHLIGHTS
Government Wide Financials
 Governmental activities posted an increase in the total net position of $10,902,982 while the business-type activities decreased by $1,062,684 for an overall increase of $9,840,298. The increase is primarily due to capital work-in-progress recognition.
 The City's governmental activities-related assets exceeded liabilities by $68,821,730 at the close of the fiscal year ending June 30, 2025.
 Total net position for government-wide is $112,580,395 as compared to $107,226,668 in the prior fiscal year.

FINANCIAL ANALYSIS OF THE CITY AS A WHOLE

Of the City-wide total assets and deferred outflows of resources of $181,493,040, 16% are other assets and deferred outflows of resources, and 84% reflects cash and investment in capital assets (i.e., land buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

Cash and investments decreased by $5,910,247 and Capital investment went up $12,638,477.

Total liabilities and deferred inflows of resources are $69,116,008 at June 30, 2025, a decrease of $5,575,918 as compared to prior year.

Government-wide Statement of Net Position
2025 2024 2025 2024 2025 2024 Change Percent
Assets
Cash and investments 48,900,833$ 54,552,123$ 39,445,474$ 44,236,908$ 88,346,307$ 98,789,031$ (10,442,724)$ -10.57% Other assets 16,527,376 15,337,059 (457,424) (6,160,538) 16,069,952 9,176,521 6,893,431 75.12% Capital and leased assets 41,421,140 30,531,641 22,361,694 26,076,768 63,782,834 56,608,409 7,174,425 12.67% Deferred outflows of
resources 10,107,801 13,177,091 3,186,146 4,177,542 13,293,947 17,354,633 (4,060,686) -23.40% Total assets and deferred
outflows of resources 116,957,150 113,597,914 64,535,890 68,330,680 181,493,040 181,928,594 (435,554) -0.24% Liabilities
Current liabilities 5,984,069 8,998,266 3,670,471 3,124,737 9,654,540 12,123,003 (2,468,463) -20.36% Long-term liabilities 40,471,777 41,376,752 16,505,031 17,372,734 56,976,808 58,749,486 (1,772,678) -3.02% Deferred inflows of resources 1,679,574 2,620,733 805,086 1,198,704 2,484,660 3,819,437 (1,334,777) -34.95% Total liabilities and
Deferred inflows of resources 48,135,420 52,995,751 20,980,588 21,696,175 69,116,008 74,691,926 (5,575,918) -7.47% Net Position
Net investment in
capital assets 34,858,840 23,983,127 17,627,027 15,070,665 52,485,867 39,053,792 13,432,075 34.39% Restricted 16,663,235 17,318,628 41,449 39,487 16,704,684 17,358,115 (653,431) -3.76% Unrestricted 17,299,655 19,300,408 26,090,189 31,514,353 43,389,844 50,814,761 (7,424,917) -14.61% Total net position 68,821,730$ 60,602,163$ 43,758,665$ 46,624,505$ 112,580,395$ 107,226,668$ 5,353,727$ 4.99% Governmental Business-Type Total
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City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
6 FINANCIAL ANALYSIS OF THE CITY AS A WHOLE – (Continued)  Government wide revenues for the fiscal year were $61,274,533 plus investment earnings of $3,369,026 resulted in total revenues for the governmental and business-type activities of $64,643,559 an increase of $11,183,879 or 21% higher than prior year. This was primarily due to the recognition of one-time revenues- reimbursable grant funds ($7.5 million) and American Rescue Plan Act dollars ($3 million) used for the construction of the Bubbling Springs Park Project.
 Government wide expenditures were $54,803,261, an increase of $4,656,229 or 9% higher versus prior year.

Governmental Funds - The focus of the City's governmental funds is to provide information on the near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

Government-wide Statement of Activities
2025 2024 2025 2024 2025 2024 Change Percent
Revenues
Program revenues:

Charges for services 6,799,148$ 7,774,891$ 18,058,248$ 18,874,495$ 24,857,396$ 26,649,386$ (1,791,990)$ -6.7% Operating contributions & grants 10,019,399 1,453,869 10,421 11,221 10,029,820 1,465,090 8,564,730 584.6% Capital contributions & grants 3,136,875 139,734 5,597,760 5,318,005 8,734,635 5,457,739 3,276,896 100.0% General revenues:

Property taxes 4,609,570 4,361,665 - - 4,609,570 4,361,665 247,905 5.7% Sales taxes 6,880,510 7,288,116 - - 6,880,510 7,288,116 (407,606) -5.6% Other taxes and fees 6,162,602 5,592,386 - - 6,162,602 5,592,386 570,216 10.2% Total revenues 37,608,104 26,610,661 23,666,429 24,203,721 61,274,533 50,814,382 10,460,151 20.6% Program expenses
General government 9,937,077 7,157,523 - - 9,937,077 7,157,523 2,779,554 38.8% Public safety 12,919,356 11,417,891 - - 12,919,356 11,417,891 1,501,465 13.2% Public works 4,790,806 4,554,261 - - 4,790,806 4,554,261 236,545 5.2% Recreation and human services 1,217,289 1,072,569 - - 1,217,289 1,072,569 144,720 13.5% Community development 1,986,160 2,459,848 - - 1,986,160 2,459,848 (473,688) -19.3% Interest on long term debts 48,129 45,028 - - 48,129 45,028 3,101 6.9% Water utility - - 8,062,261 7,335,241 8,062,261 7,335,241 727,020 9.9% Wastewater utility - - 3,302,742 3,244,884 3,302,742 3,244,884 57,858 1.8% Solid waste utility - - 4,877,529 4,353,419 4,877,529 4,353,419 524,110 12.0% Housing Authority - - 6,486,136 6,655,028 6,486,136 6,655,028 (168,892) -2.5% Water plant - - 1,175,776 1,851,340 1,175,776 1,851,340 (675,564) -36.5% Total Expenses 30,898,817 26,707,120 23,904,444 23,439,912 54,803,261 50,147,032 4,656,229 9.3% Increase (decrease) in net
position 6,709,287 (96,459) (238,015) 763,809 6,471,272 667,350 5,803,922 869.7% Transfers 2,555,340 2,618,065 (2,555,340) (2,618,065) - - - - Investment earnings 1,638,355 1,398,392 1,730,671 1,246,906 3,369,026 2,645,298 723,728 27.4% Change in net position 10,902,982 3,919,998 (1,062,684) (607,350) 9,840,298 3,312,648 6,527,650 197.1% Net position, beginning, as restated 57,918,748 56,682,165 44,821,349 47,231,855 102,740,097 103,914,020 (1,173,923) -1.1% Net position, ending 68,821,730$ 60,602,163$ 43,758,665$ 46,624,505$ 112,580,395$ 107,226,668$ 5,353,727$ 5.0% Governmental Business-Type Total
Agenda Item No. 08 Page 28 of 158 CC Agenda 08-17-2026
City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
7 FINANCIAL ANALYSIS OF THE CITY AS A WHOLE – (Continued) The fund financial statements include separate columns, by fund type, for all major governmental funds of the City.

All non-major governmental funds are consolidated into a single column labelled "Nonmajor Governmental Funds".

The details of these funds are included in the combining and Individual Fund Statements and Schedules located in the Financial Section of this Report.

At June 30, 2025, the City's governmental funds reported combined ending fund balances of $59,741,843 as follows:
 $10,328,891 is non-spendable consisting of advances, and loans receivable.  $15,973,732 is restricted primarily for Housing and Community Development projects.  $21,585,381 is committed for Economic, Stability, Risk and Capital Reserves.  $11,853,839 is unassigned, which is available to address financial uncertainties such as to offset revenue shortfalls or fund one-time expenditures.

Governmental Revenues and Expenditures:

Governmental revenues and expenditures were $39,620,072 and $40,982,207 respectively. Expenditures exceeded revenues primarily due to large capital improvement projects, such as the Bubbling Springs Park Renewal Project.

The following graph shows the Revenue Categories- taxes represent 43.5% of the revenues or $17,215,171 of the $39,620,072:

Agenda Item No. 08 Page 29 of 158 CC Agenda 08-17-2026
City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
8 Total Governmental fund expenditures for the fiscal year were $40,982,207. The following shows a comparison of governmental fund expenditures by category:

Business-Type Activities
The City operates five business-type activities: water utility, wastewater utility, solid waste utility, water treatment plant, and a housing authority. Total revenues and expenses (including transfers out) for fiscal year ended June 30, 2025 were $25,397,100 and $26,459,784 respectively. Business-type activities decreased the City's net position by $1,062,684.

Water Utility: Total revenues were $8,616,135 and total expenses plus transfers out were $8,655,318 for a change in net position of $(39,183). The net position at the end of the fiscal year was $21,851,023.

Wastewater Operations: Total revenues were $3,690,075 and total expenses plus transfers out were $3,796,313 for a change in net position change of $(106,238). The net position at the end of the fiscal year was $13,939,739.

Solid Waste Operations: Total revenues were $5,278,079 and total expenses plus transfers out were $5,933,070 for a change in net position of $(654,991). The net position at the end of the fiscal year was $6,646,639.

Water Plant Operations: Total operating revenues were $1,295,488 and the total operating expenses plus transfers were $1,295,488 for a change in net position of $0. The net position at the end of the fiscal year was $434,341.

Housing Authority Operations: Total operating revenues were $705,716; non-operating revenues were $5,811,607. Total expenses plus transfers out were $6,779,595. The housing authority change in net position was $(262,272). The net position at the end of the fiscal year was $886,923.

General
Government
19%
Public Safety
31%
Public Works
10%
Recreation and
human services
2%
Community
Development
5%
Capital Outlay
31%
Debt Service
2%
Agenda Item No. 08 Page 30 of 158 CC Agenda 08-17-2026
City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
9 The General Fund is the chief operating fund of the City. At the end of the fiscal year, the total General Fund balance was $44,114,140, a decrease of $6,248,136 from prior fiscal year.

Non-Spendable - $10,328,891 - Representing the balance of various Promissory Notes to other funds, prepaid items, and leases and loans receivable net of deferred inflows of resources.

Committed - $21,585,381 represents the balances in the Reserves per City Council Reserve Policies:
- Economic Emergency Reserve - $13,814,142
- Stability Reserve - $2,762,828
- Risk Management -$908,411
- Capital Reserve - $4,100,000
Unassigned Balance - $12,199,868, a decrease of $4,997,046 from prior fiscal year. The unassigned fund balance allows the City to address financial uncertainties by setting fiscal reserve policies. The policy’s policies are as follows:

Economic Emergency Reserve - To set aside a minimum reserve amount equal to six (6) months of General Fund expenditures, with a target reserve amount equal to eight (8) months of General Fund expenditures from current fiscal year adopted budget. The purpose is to sustain general fund operations in case of a public emergency such as a natural disaster or other unforeseen catastrophic event.

Stability Reserve – To set aside 10% of annual General Fund budgeted operating expenditures. The purpose is to mitigate financial and service delivery risk due to unexpected revenue shortfalls or unanticipated critical expenses. This reserve can provide budgetary stabilization.

Risk Management – To set aside an amount equal to 50% of annual property, liability and worker’s compensation insurance. The Risk Management fund is utilized to set aside funds to cover unanticipated insurance costs that exceed the regularly budgeted amount.

Capital Reserve - To establish and maintain a long-term capital fund to provide a funding source for long-term, large value capital purchases and projects. The reserve will be funded annually through planned appropriations approved by Council.

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City's capital assets for its governmental and business-type activities amounted to $63,782,834 (net of accumulated depreciation) for the fiscal year ended June 30, 2025. This investment in capital assets includes land, infrastructure, buildings and improvements, and equipment.

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City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
10 Additional information on the City of Port Hueneme's capital assets can be found in note 7 on pages 51 and 52 of this report.

Long-term Debt
On April 1, 2007, the City issued $10.7 million in Pension Obligation Bonds (POB). The proceeds of the sale, together with available monies, were used for the funding of the City's Unfunded Pension Liability, which is the gap between the amount of available funds and necessary funds to pay City pension benefits earned by eligible current and former City employees. The balance of the Pension Obligation Bonds as of June 30, 2025 is $6,435,727.

On October 1, 2006, the City's Wastewater enterprise fund issued $5,270,000 in California Statewide Communities Development Authority (CSCDA) Wastewater Revenue Bonds. The purpose of the bond proceeds was to construct approximately 5,000 lineal feet of new gravity lines and associated manholes, metering stations, and decommissioning of lift stations and other wastewater system capital improvements. The balance of the Revenue Bonds at June 30, 2025 is $3,035,000.

In 2019, the City issued loans to finance the energy conservation project as follows:

On January 27, 2020, the City entered into a loan agreement with the California Energy Resources Conservation and Development Commission in the amount of $840,272. The loan was used to implement energy efficient and renewable energy projects. The loan balance as of June 30, 2025 is $673,297.

On December 5, 2019, the City entered into an equipment lease purchase agreement in the amount of $1,240,068 with Sterling National Bank to implement energy conservation measures. The balance of the Equipment lease agreement at June 30, 2025 is $1,076,898.

Capital Assets
Governmental Business-type
Non-depreciable assets: 2025 2025 2025 2024
Land 6,531,290$ 2,245,911$ 8,777,201$ 8,777,201$
Construction in progress 7,093,333 577,327 7,670,660 7,431,236 Total non-depreciable assets 13,624,623 2,823,238 16,447,861 16,208,437 Depreciable assets (net):

Buildings, structure, and
improvements 18,962,809 4,255,538 23,218,347 13,385,047 Infrastructure 6,731,926 10,346,883 17,078,809 14,663,157 Equipment 1,312,057 4,610,193 5,922,250 5,764,184
Total depreciable assets 27,006,792 19,212,614 46,219,406 33,812,388 Right-to-use leased assets 789,725 325,842 1,115,567 1,123,532 Total assets 41,421,140$ 22,361,694$ 63,782,834$ 51,144,357$ Total
Agenda Item No. 08 Page 32 of 158 CC Agenda 08-17-2026
City of Port Hueneme
Management’s Discussion and Analysis (Continued)
For the Fiscal Year Ended June 30, 2025
11 Additional information on the City of Port Hueneme's long-term debt can be found in note 8 beginning on page 52 of this report.

Economic Factors and Next Year’s Budget
The City adopts a biennial budget. The two-year budget demonstrates a commitment to operate the City over the long term with the goal of avoiding deficit spending while pursuing a balanced budget. The fiscal year 2025-26 total city and related entities adopted budget is $64,370,214.

The City’s General Fund is the primary fund that accounts for all resources except for those where a separate fund is necessary for legal or administrative purposes. The General Fund includes the City’s general-purpose services that relate to public safety, public works, community development, finance and administration. The fiscal year 2025-26 General Fund adopted budget is $29,032,433.

The City’s financial position remains financially sound due to the continued efforts of City staff to make reasonable reductions to operating expenses for a more sustainable budget moving forward. Staff continue to explore revenue sources and cost reductions in order to maintain the City’s service levels in future years, to continue to focus on strategic priorities, to carry out essential infrastructure investments, and to reaffirm the commitment to sound and conservative financial practices into the future.

REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances. Inquiries regarding this information should be directed to Ashley Chaparro, Finance Director, City of Port Hueneme, at (805) 986-6508.

Formal requests may be submitted to City of Port Hueneme, 250 N. Ventura Road, Port Hueneme, California 93041.

Long-Term Debt
Ending Balance
June 30, 2025
Pension Obligation Bonds 6,435,727$
Wastewater Revenue Bonds 3,035,000
ECA Loan Agreement 673,297
Equipment Lease 1,076,898
Total 11,220,922$
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TO: Honorable City Council
FROM: James Vega, City Manager
SUBJECT: COMMUNITY BENEFIT FUND PROJECTS
RECOMMENDATION:

It is recommended that City Council provide direction regarding Community Benefit Projects and any desired process.

BACKGROUND/ANALYSIS:

In 2015, the City of Port Hueneme and the Oxnard Harbor District entered into a Settlement and Release Agreement that included provisions establishing a Community Benefit Fund, commonly referred to as the CBF. Under the agreement, certain funding was required to be made available by the District for community benefit purposes when the District’s gross operating revenues exceeded the applicable threshold set forth in the agreement. The CBF was intended to support public benefit projects within specified categories, including shoreline protection, community development, and other opportunities that support the shared interests of the City and District.

On July 20, 2026, both the City of Port Hueneme and the Port of Hueneme approved the First Amendment to the settlement agreement, which eliminates the prior jointly administered CBF committee process. Instead of depositing funds into a jointly governed fund, the amount that would otherwise have been deposited into the CBF would continue to be calculated in the same manner as provided in the original agreement and then allocated equally between the City and District. Each agency retains 50 percent of the applicable CBF allocation amount and would have discretion to identify and fund its own eligible project or projects.

With implementation of this first amendment, the City and Port are now able to streamline their process and utilize the funds for the community in a quicker manner, and ensure these funds are used in projects that benefit the community in a timely manner. Because no consensus for funding of projects was reached last year, and funding is currently available for projects (approximately $196,000 is available for reprogramming from prior years, and approximately $70,000 will be available on an annual basis each January), staff recommends that the City Council consider approving specific projects as Agenda Item No. 09 Page 1 of 5 CC Agenda 08-17-2026
Community Benefit Fund Projects and/or Process
August 17, 2026

Community Benefit Fund projects to utilize these funds for the community in a timely manner.

The agreement requires that projects fall into the following categories:

A. Shoreline Protection. Monitoring beach profiles, scrutinizing biannual sand replenishment operations and constructing associated improvements to protect the NCEL (owned by the District) and Hueneme Beach Park (owned by the City).

B. Community Development. Implementing initiatives that foster the community’s economic, social and environmental well-being including, but not limited to, public infrastructure improvements, sponsorship of special events, support of civic organizations, and similar activities which are based in the City of Port Hueneme or primarily support and benefit residents of the City of Port Hueneme.

C. Opportunistic Endeavors. Pursing opportunities that foster the shared mission and interest of the City and District not otherwise described above including, but not limited to, economic development grants, environmental mitigation, enterprise zone establishment, joint trade missions and similar activities.” Projects that the City Council has expressed interest in that fall into these categories are as follows:

To be funded annually each January 1 (approximately $70,000 annually available):

1. Beach Erosion Authority for Clean Oceans and Nourishment (BEACON) Annual Support: $38,143. (category A – shoreline protection)

2. Sponsorship of Sea Splash Color Dash Event Full Cost Recovery: $25,000 - $30,000 (Category B – Community Development – Sponsorship of Special Events).

One-time projects to be funded utilizing prior year funding (approximately $196,000 available on one-time basis):

1. Left Turn Signal Analysis at Hueneme and Ventura Road (analysis estimated at $25,000 –potential total project estimate $350,000) Category B – Community Development, Public Infrastructure Improvements. Additional Funding would be needed to complete this project following the analysis.

2. Economic Development City/Port Branding Project (i.e. Beach Branding or Wayfinding Signage Project (starts at $90,000 depending on number of signs, etc).

Category C: opportunistic endeavors, Economic Development. If this project is selected, future discussion would be necessary to identify specific project details.

3. Economic Development Grants: EDC-VC Business Assistance Loan Fund:

Explore the possibility of partnering with Economic Development Collaborative on a Business Assistance Loan Fund for City of Port Hueneme businesses. Additional research and investigation would be required before a proposal could be presented – Council may direct staff to initiate discussion to explore this opportunity.

Estimated cost $50,000 to $100,000.

Alternatively, the City Council may identify other projects or processes for review of Community Benefit Fund, as desired. Prior to the Amendment, the City had developed a Agenda Item No. 09 Page 2 of 5 CC Agenda 08-17-2026
Community Benefit Fund Projects and/or Process
August 17, 2026

thorough review process including the CAC and the City/Port Joint Committee. Under the agreement the City/Port Joint Committee is no longer included as part of the CBF process, and the City Council may determine whether to modify or maintain its process.

FISCAL IMPACT:

No general fund impact as these projects are proposed to be funded utilizing City/Port Community Benefit Funds.

STRATEGIC PLAN:

Primary Strategic Pillar(s) and Initiative(s):

Safe, Secure, & Beautiful Community
• Actively support on-going beach preservation efforts and funding for prevention of erosion
Strategic Partnerships
• Establish a mechanism for engagement, information sharing, dialogue and ongoing cooperative decision-making with key stakeholders ATTACHMENTS:

A. Historical CBF Project List
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Attachment A
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