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HomeMy WebLinkAbout14- Economic Development Agency OW OW* . ECONOMIC THE CTT AGENCY OF Y OF SAN BERNARDINO REOUEST_FOR COMMISSION/COUNCIL ACTION From: TOM MINOR Subject: ECONOMIC DEVELOPMENT AGENCY MANAGEMENT AUDIT Chairman Date: August 31, 1993 ---- - ------------------------------------ Synogsis of Previous Commis sion/Councit/Committee Actions : On May 10, 1993, the Community Development Commission continued this item to June 21, 1993. On June 21, 1993,the Community Development Commission requested staff to prepare a Request for Proposals to professional management audit firms and bring back for Commission approval. On July 19, 1993,the Community Development Commission authorized staff to solicit proposals to professional management audit firms to perform a management audit of the Economic Development Agency. --------------- ----------------------------------------- Recommended Motion s : (Community evert Commission' MOTION: That the Community Development Commission authorize the Agency Administrator to enter into a contract for services with Harvey M. Rose Accountancy Corporation to perform a management audit of the Economic Development Agency for an amount not toe eed $59,125. T 'M MINOR Chairman - --- ----- - ------ ---------------------------------------------------------- --- - - - - Phone: 5051 Contact Person(s): Tom Minor. Chairman Ward(s): 1 =7 Project Area(s): All Supporting Data Attached: Staff Re ort FUNDING REQUIREMENTS: Amount: $59,125. Source: N/A Budget Authority Commission/Council Notes: -------------------------------------- -------------------------COMMISSION MEETING AGENDA TCS:SMM:pc:mgtaudit Meeting Date: 09/07/93 Agenda Item Number J__.L �_ f , ' ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDIN O STAFF REPORT ------------------------------------ Mana em _ entAudit The Mayor and Common Council and the Community Development Commission have previously taken certain actions in connection with the Econom1/ZDevelopment ince the reorganization) reorganization. It has been approximately two and one-half(21/2) the s sine Agency's current situation and it is appropriate that certain reviews be conducted to analyze and future direction. On June 21, 1993, the Commission asked staff to prepare a Request for Proposals ("RFP") for professional management audit firms to prepare a comprehensive management audit of the Economic Development Agency. Pursuant to the Commission's direction, staff distributed Request for Proposals to nine (9) firms. The two firms that responded by the August 13, 1993 deadline are as follows: McGladrey & Pullen $33,200 Harvey M. Rose Corporation $59,125 After a thorough review by Timothy J. Sabo and myself, we unequivocally a fact feel could no find Rose is the most qualified. We base this assessment mostly where McGladrey & Pullen have ever done a management o t ai dit for an agency they have done where Harvey M. Rose has listed at least eight (8) cities management reviews for economic development or redevelopment agencies. McGladrey & Pullen's experience centers around financial audits, not management audits. tained It is recommended that the services of Harvey M. Rose Accountancy omanagement audit and isbhighly to conduct said reviews. This firm specializes in public sect g The firm has worked recommended by the California Redevelopment Association (CRA). exclusively in the public sector for the past ten years, extensive management an such analyses.budget We have reviewed their qualifications, which inc analyses for the City of San Francisco RDA and the County ofeSan Bernardino recently Economic and a Community Development Department, to name a few. Y management audit of the City of Adelanto, including the Adelanto RDA for the San Bernardino County Grand Jury. ---- -----------------COMMISSION MEETING AGENDA TCS:SNIM:pc:mgtaudit Meeting Date: 09/07/93 Agenda Item Number 4 Community Development Commission Staff Report PageTwo---------------------------------------------------------------------------------------------------------- attached Proposal provides a detailed management audit work plan which a specifies the scope perform a The P of work. It is anticipated that for the Economic professional evelopment Agency. The estimated cost comprehensive management au of the project is $59,125. It is important to note that this co t Is a l cost would belcharged to all clerical, report production, travel and other costs. No additions the Agency. The firm proposes to relocate project staff to San Bernardino and work full time on site at the Agency offices. I recommend adoption of the form motion. TOM MINOR, Chairman Community Development Commission ----------- ---------------------------------------------------------------COMMISSION MEETING AGENDA TCS:SMM:pc:mgtaudit Meeting Date: 09/07193 Agenda Item Number d E �i AUG - 41993 A PROPOSAL TO CONDUCT A MANAGEMENT AUDIT OF THE ECONOMIC DEVELOPMENT AGENCY FOR THE CITY OF SAN BERNARDINO � IDEI�TIA� COIF Prepared for. City of San Benuw&no Pr%xu-ed b3n. Harvey K Rose Accountancy Corporation August 39, 1993 a r vey ose 1390 Market Street, Suite 1025, San Francisco, CA 94102 (415)552-9292 • FAX(415)252-0461 Los Angeles, CA (213)965-7175 August 3, 1993 Timothy C. Steinhaus Agency Administrator Economic Development Agency 201 North"E" Street, 3rd Floor San Bernardino, CA 92401-1507 Dear Mr. Steinhaus: In accordance with your Request for Proposals dated July 26, 1993, we have prepared the attached proposal to conduct a comprehensive management audit of the Economic Development Agency include all aseects of San taffing levels,Bernardino.nagement,cand is comprehensive and will i P organizational issues.. Our total maximum cost for the management audit is $59,125 based on a total of 575 estimated professional staff hours. This maximum cost includes all clerical, report production, travel and other costs; no additional costs would be charged. If additional professional staff hours in excess of 575 are required to complete the highest quality professional product, such additional hours would be provided at no the cost to the City of San Bernardino.d on an hour -hour basis, based on the apple maximum cost would be reduce able staff hourly rates. In order to keep you up to date on this audit, we will prepare written progress reports and conduct progress briefings on a biweekly basis. Our firm works exclusively in the public sector, specializing in management audits and budget analyses of county, city and special district agencies. Over the past ten years, our firm has performed over 225 such analyses. Timothy C. Steinhaus Agency Administrator Economic Development Agency August 3, 1993 Page 2 In our capacity as Budget Analyst, , w under contract responsible ble or annually reviewing the City and County of San Francisco, we P Additionall as Budget budget of the San Francisco Redevelopment Agency. Y� ic Analyst, we are responsible for the program the Board of Supervisors. We have development matters which are considered y conducted management audits of the Francisco An Angeles Redevelopment the Oakland San, an e Community Redevelopment Agencies o f Los g Francisco Convention and Visitor's Bureaus lnd and San Francisco Development Departments in San Bernardino County, It should be noted that we recently completed ge Agency for the 992e931 San anagement audit of th Adelanto including the Adelanto Redevelopment Bernardino County Grand Jury. Our firm has served the San Bernardino County Grand Jury as their management auditor during Fiscal Years 1983-84, 1986-87, 1987-88, 1988-89, 1990-91, 1991-92 and 1992-93. We believe that the most important prerequisites of our work in conducting management audits of government agencies is independence and d of Supervisors, City Councils and experience in working with numerous Boar Grand Juries is that our clients want the facts and insist onsuch independence contest with objectivity. We do not perceive our role as winning apop Y employees. Rather, we strongly believe that our job is to report the facts, regardless of where the chips might fall. It should be noted that our staff works full relocate onsite at the our p ogect staff in the City of being audited. In that connection, we San Bernardino for the duration of the g Although San Francisco office and a Los Angeles office, management auditors cannot conduct the firm's a professional, comprehensive management audit you authorization to We are prepared to begin this pr proceed. of I am enclosing three copies of our corporate qualifications age 109 statement. Section direct prof ct this document on pages 102 throug h 106 and P experience in economic development, redevelopment and convention and visitor's bureau agencies. The detailed resumes of our staff are shown in Section IV on pages 24 through 52 and our references are shown in Section V on pages 53 through 68. Please don't hesitate to contact any of our references listed in Section V of our corporation qualifications statement. I believe these government officials, located throughout California, will independently verify the professionalism, independence, objectivity, quality and timeliness of our management audit reports. irvey ose Accow"ncYCArpomfion Timothy C. Steinhaus Agency Administrator Economic Development Agency August 3, 1993 Page 3 please contact either myself at If you have any questions pertaining to this proposal, (415) 552-9292 or our Vice President, Roger Mialocq at (408) 299-2323. We look forward to serving the City of San Bernardino. Respectfully submitted, Harvey M. Rose, CPA President Enclosure arvey ose AccountwwY COrPors"C& l TART F OF CONS Page SECTION Detailed Management Audit Work Plan.................................. I SECTION II Relevant Management Audit o Economic Development Experience Pertaining Agencies, Redevelopment Agencies and Convention and Visitor's Bureaus..................................................................................4 S SECTION III Project Cost........................................................,.................................. e SECTION I CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY Estimated Professional Task 1 E.jr_a,ten n' ference • Conduct an entrance conference with Economic Development Agency officials. Purpose of the entrance conference will be to introduce the project staff, respond andt establish appropriate audit Agency staff and officials 5 procedures and protocols. 2. Preecece&rvey • Review requested documentation including detailed information for all completed or ongoing Agency projects, copies of policies and procedures manuals, professional services or consulting of budgets for sampling of produced consultant reports, cop 25 previous three years and other related materials. 3 Or „ ization and Structures Interview agency administrative managers, project and program • managers and individuals responsible for contract monitoring, and project financing to gain an understanding of Agency organization, lines of authority, Agency activities and financing mechanisms. • Examine organizational structure of the Agency and compare to other Economic Development, Redevelopment and Convention and Visitor's Bureau agencies in large cities in the State of California. - Conduct a detailed review of staffing levels and responsibilities. • Compare the recent organizational structure of the Agency to the 105 previous structure prior to consolidation of development entities. 1 Section I cont. Estimated Professional Hours T�k 4. h4ana emen Information • man Conduct interviews with project and program ager staff and laps. review and evaluate project plans with previously app roved P • Review ongoing project revenues and financing sources such as proceeds from the sale of property, rental and lease revenue, prior year surpluses, bond proceeds and tax increment financing as needed for organizational analysis. • Review long term needs for debt financing sources such as proceeds from the sale of property, rental and lease revenue, prior year surpluses, bond proceeds and tax increment financing as needed for organizational analysis. • Evaluate operational objectives and management controls for g0 Agency and for each project and program within the Agency. 5. Policies and Procedures_ • Review and evaluate specific goals and objectives of the Economic Development Agency. • Evaluate what performance measurement system has been implemented to measure grant recipient accomplishments relative to Agency economic development objectives. • Evaluate the level of coordination between the Agency's goals and objectives and other City organizations with responsibility for 105 economic development. 2 / Section I cont. Estimated Professional Hours s Business Management • Evaluate the Agency's use of professional services and consulting contracts. • Evaluate what performance measurement system has been implemented to measure grant recipient accomplishments relative to Agency economic development objectives. • Evaluate the usefulness of consultant reports to meet Agency 125 objectives and enhance Agency operations. 7. Dra ,,,.+ v.-eparation and Exit Conf r n • Prepare draft report, including all findings, conclusions and recommendations. • Conduct exit conference with Agency officials, modify the draft report as necessary and prepare final report. • Conduct public workshop presentation of final report to Community 1?�4 Development Commission. Estimated Total Management Audit Hours: 575 3 / t SECTION II RELEVANT MANAGEMENT AUDIT AND BUDGET ANALYSIS EXPERIENCE PERTAINING TO ECONOMIC DEVELOPMENT AGENCIES, REDEVELOPMENT AGENCIES AND CONVENTION AND VISITOR'S BUREAUS The following projects have been selected from the more than 225 conducted by the management audits and budget analyses which economi cdevelopm development agencies, Corporation. These projects include studies of redevelopment agencies and convention and visitor's s s bureaus. brii f description the each of the management audit and budget analysis P r following page and in Section VI of our corporate qualifications statement. avian^ Pmnt Audi*a� ;D * I Proiects- City of Adelanto Redevelopment Agency FY 1992-93 • • City and County of San Francisco Redevelopment Agency FY 1991-92 City and County of San Francisco Community Development 1979-present • San Bernardino County Economic Development Department FY 1986-87 • City of Cerritos Redevelopment Agency FY 1986-87 • City of Oakland Economic Development and Employment; Grants Management Office FY 1985-86 • Los Angeles County Selected Community Redevelopment Agencies FY 1983-84 • City and County of San Francisco Economic Development FY 1982-83 • City of Oakland Convention and Visitor's Bureau and the Northern California Black Chamber of Commerce Related to Services Funded by the City of Oakland FY 1989-90 • City and County of San Francisco Convention and Visitor's Bureau FY 1984-85 4 Section II Cont. • ent a„rl Fc►onoTnic Develou Client: Board of Supervisors, City and County of San Francisco Project: Budget Analysis--Community Development Agency: Mayor's Office of Housing and Community evelopment Period: 1979-present Since 1979, HMR has conducted annual analyses of San Francisco's of Community Development (CD) budgets as proposed hams receiving CDffifunds Housing and Community Development. Various Public Housing Rehabilitation include the following: Redevelopment Agency; Program; Housing Development Corporations; Housing Site Acquisition, Community Housing Rehabilitation, and Code Enforcement; Fair Housing Counseling and Technical Service; Neighborhood Facilities Improvement Program, Neighborhood Centers; Public Space Improvement; Public Services Program; Economic Development Program Administration; up to $1.2 million in savings Management. These annual analyses have yielded P that were reallocated to other needed programs. * * * * * * * * * * * * Client: Grand Jury, San Bernardino County Project: Management Audit Agency: City of Adelanto and the Adelanto Redevelopment Agency Period: 1993 The San Bernardino County Grand Jury retained HMR to conduct a management audit report which identifies oPP mo Agency operations; and, to unities to imrove the management and reporting of City and Redevelopment ensure that applicable State and federal laws as well as local ordinances are adhered to. * * * * * * * * * * * * Client: Board of Supervisors, City and County of San Francisco Project: Management Audit Agency: San Francisco Redevelopment Agency Period: 1992 The Board of Supervisors directed HMR t to Agency's management use of audit of the San Francisco Redevelopment Agency including increment financing, project management skills, level of reporting to the Board of endations included Supervisors and economic development activities. Our recomm From a performance perspective, approximately $400,000 in staff salary reductl project perspective, HMR recommended that the agency adopt better procedures and provide management, align senior ton to the salaries to Supervisors. City positions, more detailed information Section II cont. * * * * * * * * * * * * Client: Grand Jury, San Bernardino County Management � � tlopment Project. c Development Department Agency: Economi Period: 1986-87 with an economic HMR found that San Bernardino County's co County*t The contract was development firm was not in the best interests he the a fixed fee but did not related found deficient in that the County was paying service require the co ntrat firm to Provide a specific number of h s efforts onbehalf and of the hourly rates or any other measurement of the company professional County. We also found that the contractor's wereanot,adequatelyy monitored by the service and special departmental expenses allowing fora potential conflict of interest with the contractor authorizing County that the contractor had overstated their accomp We their own expenses, am as a whole was weakly administered.'s overall al that the economic development program the use of the contract several changes in the contract and changes in the County's overal recommended a reduction approach to economic development including firm. * * * * * * * * * * * * Internal Affairs Department, City of Cerritos Client: Director, Agreement Payment Provisions Project: Financial Analysis -- te' Agencies: Cerritos Redevelopment Agency Period: 1986 The Director of Internal Affairs retained HM R t College evaluate strict if under _ amounts may be owed to the Cerritos Community College agreements entered into in 1975 and 1977 wand the City to Cerritos. MR staff Agency District, the Cerritos Redrov..on annd records of payments made to the Community reviewed the agreement p determined from review of the College District by the Redevelopment Agency; Auditor-Controller's records the amount of incremental o through 985-86eand the County A for each of the years 198 the Redevelopment Agency amount thereof that would be allocable to the tate Chanc District or of Community agreements; contacted representatives of the eived funds from the d the Los Angeles County Superintendent a e recols to determine the Colleges an College District may h extent o which the Community se allocable to the District State to offset decreased revenues allocatoe��other District after passage o Proposition 13, and that might reduce the am a amount due to the College District under under th e agreements; and calculated the terms of the agreements. 6 / Section II cunt. Client: City Manager, City of Oakland elopment Project: Management Audi Development and Employment Agency: Office of Economi Period: 1985-86 conducted a management audit of this agency, which administers HMR co employment and Oakland's redevelopment efforts, economic umbr umbrella.ewe and pooling Oa h attritio , training programs under one administrative positions through some dup out certain employment and clerical staff and deleting procedures, contracting implementing new budget bons deletion of three underutilized adm s forefede`ralnand they training func roved budgeting and monitoring procedures attrition, in rovements. The benefits resulting from economic development funds and other imp ' n of these recommendations will include improved services and cos implementation 1.3 million annually reductions of approidmatelY * * * * * * * * * * * * Client: Grand Jury, Los Angeles County Project: Management Community Redevelopment Agencies of Los Angeles County Agencies: Commune y Period: 1984 conducted a review of all community redevelopment agencies (CRAB) in HMR Angeles County Grand Jury. For this study, Los Angeles County in 1984 for the Los reviewed all existing we identified and surveyed each nR Cites and interviewed o 'numerous st o f and and pending state laws governing Issues identified as a result County officials with jurisdiction over CofR As, the drain on County property tax study included the lack of accoun financing mechanisms, the lack of regional revenue resulting from CRAproject nand anning between the individual d c Studies of six CR.As adequate n the stand ands PI blight- we also conducte standards for determining roaches to municipal County and analyzed and reported on their alternative app redevelopment. * * * * * * * * * * * * Client: Board of Supervisors, City and County of San Francisco Project: Management Audit—Economic Development Organizations (NEDOs) Agencies: Neighborhood Economico Development onOPmm. Devoe Development (MOED) and the Mayor's office Period: 1982 ' reviewed the use of Community Development Block Grant(CDBG) This audit funds used by NEDO and MOED. The major goals of this ov mall ply°fo�onomic need for economic development, to evaluate the City development, and to determine the impact that economic development had in 7 / Section II cont. roving small businesses, increasing low upgrading communities, increasing or imp .s tax base. HMR made ent, and increasing the Cityec ax ba development and moderate income empliym coordination of existing produce a more cost- recommendations to improve sectors, and to p activities between the public and p program. In addition, HMR recommended I ent effective economic centralize loan packaging program that would save $288,000 implementation of a in annual operating costs- con 7endaaAn&YWWJI'5 Burma Client: City Manager, City of Oakland of the Project: Management and Organizational Study Convention and Visitor's Bureau and the Northern California Black Chamber A en : Convention and Visitor's Bureau and Chamber of Commerce g Period: 1989 viewed the operations of these contractors This tors sales'phis study re convention Convention Center Management concerning 'ties and analyzed the organization of these services within promotion activities, Oakland. * * * * * * * * * * * * Client: Board of Supervisors, City and County of San Francisco f San Project: Management Audit o Francisco Convention an Visitors Bureau Agency: Convention and Visitor's Bureau Period: 1985 Our recommendations relate primarily to marketing the City's convention s and to methods by which the City's contract with the Convention an Visitors Bureau is monitored by facilitie the Chief Administrative Officer. - r 8 / SECTION III pun.rFC'T COST The table belo w P rovides our estimate of professional staff hours by staff level, proposed project of the Economic Development Agency. hourly rate and cost for this propo ement audit is comprehensive scope manag The estimated cost to the proposed rofessional staff hours. This cost is a $59,125, based on a total of 575 estimated �P travel and other costs; no maximum cost and includes all clerical, repo production, late the highest quality additional costs would be charged to the City of Soar Bernardino- If additional professional staff hour's in asdit5onalr hoursu would be provided be at no cost. reduced on professional product, such cost would Alternatively, if fewer hours based are the applicable staff hoiuirly rates. an hour for hour basis,ba Rate Estimated E"-HQ= $150 50 $7,500 Partner 220 27,500 Manager 185 215 18,275 Senior Analyst 65 0 Analyst 575 5__ Total work plan is designed to be flexible. It can tse altered as he City of an our proposed fiscal constrain order to best meet the needs and any $ernardino might have. I ' f 9 /