By Charles M. Kelly
The council on Oct. 20 directed the city manager to execute an agreement with Catalina Transportation Services, Inc. to provide a temporary subsidy for a six-month taxi service in Avalon. The council also approved a budget amendment adding $102,000 to a city fund.
The vote was unanimous.
The maximum cost would be $102,000, according to the staff report.
The city manager told the council that the six-month period would allow Avalon to explore other options. City Manager David Maistros said he expected to present alternatives to the council for their consideration within the next month.
Maistros also said that a government subsidy for a private business was not sustainable on a long-term basis. He said you could make an argument for a short-term public benefit.
Council members discussed an email received the day of the meeting that raised several questions. Councilmember Lisa Lavelle said there was a concern that public funds should be used for the residents of Avalon. The email apparently raised the subject of auditing of books.
Council members also discussed services currently provided by Catalina Transportation Services, Inc.
One member of the public argued that the city was subsidizing transportation that was putting the taxi company out of business.
According to Maistros, the City of Avalon Seaside Transit moved more people than the previous transportation system did.
According to Maistros, the owner of Catalina Transportation Services, Inc. would set the taxi service’s rates.
Background
“In September 2026, Catalina Transportation Services, Inc. announced that it would discontinue taxi services on October 19, 2026, due to a number of financial reasons including rising cost of gas prices, labor, rent, insurance, and maintenance costs, as well as the onset of private property road fees,” according to the staff report by Maistros and Assistant City Manager Devin Hart.
During the meeting, Maistros said: “The city recognizes where we would be at if the taxi service closed and it was just left with COAST to operate, referring to the city’s public transportation program. He said the public transportation program only handling a percentage, he put it at less than half, of the city’s transportation services.
Maistros said the city would not be in a position financially to ramp up to full transportation services.
“That’s not what COAST was designed to do initially,” Maistros said.
According to the Maistros and Hart report, the company indicated that the City of Avalon Seaside Transit system had effected the company’s profit margin.
“Avalon residents and visitors have very limited, low-cost, practical transportation options,” Maistros and Hart wrote.
“Compared to other cities, in Avalon there are no options for private run ride share services such as Uber or Lyft, there are no low-cost micro-mobility (E-scooter or E-bike) rentals, no car share services, or any other low-cost vehicle rental services. The lack of affordable options significantly increases the demand on the City’s public transportation system which currently accommodates approximately 100,000 riders annually,” Maistros and Hart wrote.
“The City’s public transportation system is nearing its maximum capacity. Demand frequently exceeds operational capabilities. Without the existing taxi service provided by Catalina Transportation, Inc., or a viable alternative, the City anticipates excessive transportation delays and further reduced customer service for the public transit system. The City has received feedback from a number of hotel operators that the absence of the taxi service will have a negative impact on their business operations,” Maistros and Hart wrote.
“On October 6, City Staff met with the owner of Catalina Transportation Services, Inc. to better understand the situation as well as identify any potential measures to be implemented to either increase revenues or reduce expenses in order to support the continued operation of the private taxi service,” Maistros and Hart wrote.
“Other California cities have established programs to subsidize transportation services provide private taxicab operators. These programs illustrate the use of public funding to supplement existing transportation services and improve mobility for residents who may otherwise have limited transportation options,” Maistros and Hart wrote.
“Unlike programs that subsidize individual passenger fares, the proposed Avalon program would provide temporary operating assistance in exchange for maintaining minimum transportation service levels. The proposed subsidy would supplement the City’s existing COAST system by preserving additional transportation capacity for residents and visitors. The agreement would establish defined service obligations and reporting requirements to ensure that the expenditure serves an identifiable public transportation purpose,” Maistros and Hart wrote.
According to the report, Catalina Transportation would have at least three taxis serving 13 hours a day, seven days a week, through March.
“The proposed agreement would establish these minimum service obligations and require the company to provide periodic documentation of its operations. The subsidy is intended to preserve transportation availability for residents and visitors during a period of reduced seasonal demand and increased operating costs,” Maistros and Hart wrote.
“Any extension or additional financial assistance would require separate City Council authorization,” Maistros and Hart wrote.