HomeMy WebLinkAboutRS2- Economic Development ECONO '- IC DEVELOPMENT AG ' TCY
O. t HE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
FROM: TIMOTHY C. STEINHAUS SUBJECT: MANAGEMENT AUDIT OF
Agency Administrator THE ECONOMIC
DEVELOPMENT AGENCY
DATE: July 29, 1993
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Synopsis of Previous Commission/Council/Committee Action (s):
On May 10, 1993, the Community Development Commission continued this item to June 21, 1993.
On July 19, 1993, the Community Development Commission referred the proposed management audit of the
Economic Development Agency to the Chairman.
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Recommended Motion(s):
(Community Development Commission)
Mayor Minor's Recommendation
MOTION: That the Community Development Commission authorize and direct the Chairman of
the Commission to negotiate an agreement for professional services with Harvey M.
Rose Accountancy Corporation in connection with a management audit of the
Economic Development Agency. Further, that the Chairman be directed to negotiate
a reduced cost of the Agency's management a "r combining said audit with the
management audit to be conducted in the of ice o the ity Attorney.
TIMOTHY C. STEINHAUS
Agency Administrator
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Contact Person(s): Timothy C. Steinhaus Phone: 5081
Project Area(s): All Ward(s): 1 - 7
Supporting Data Attached: Staff Report
FUNDING REQUIREMENTS: Amount: $ N/A Source: N/A
Budget Authority: N/A
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Commission/Council Notes:
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TCS:lag:mgmt.cdc COMMISSION MEETING AGENDA
Meeting Date: 08/02/1993
Agenda Item Number: / �)—a�
ECvNOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COMMISSION/COUNCIL ACTION
From: TIMOTHY C. STEINHAUS Subject: MANAGEMENT AUDIT OF THE
Agency Administrator ECU,'OO 1IC DEVELOPMENT
AGENCY
Date: June 16, 1993
—_------------------------------------ -----------------------
—
Svnonsis of Previous Comm ission/Council/Committee Action (s):
On May 10, 1993, the Community Development Commission continued this item to June 21, 1993.
-------------------------------------- ------------------------
Recommended Motions :
(Community-Development 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 to exceed 559,125.
TIMOTHY C. STEINHAUS
Agency Administrator
------------ -- ---------------- ----- -----------------------
Contact Person(s): Timothy C. Steinhaus. Agency Administrator Phone: 5081
Project Area(s): All Ward(s): 1 _7
Supporting Data Attached: Staff Report
FUNDING REQUIREMENTS: Amount: $59.125 Source:
Budget Authority
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Commission/Council Notes:
TCS:SMM:pc:mgtaudit COMMISSION MEETING AGENDA
Meeting Date: 06/21/93
Agenda Item Number
�.T
S-
it
x'
ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
STAFF REPORT
Management Audit
The Mayor and Common Council and the Community Development Commission have previously taken certain
actions in connection with the Economic Development Agency (EDA) reorganization. It has been approximately
two and one-half(2'/,) years since the reorganization, and it is appropriate that certain reviews be conducted to
analyze the Agency's current situation and future direction. On May 10, 1993, this item was presented to the
Community Development Commission and continued to June 21, 1993.
It is recommended that the services of Harvey M. Rose Accountancy Corporation be obtained to conduct said
reviews. This firm specializes in public sector management audits and is highly recommended by the California
Redevelopment Association (CRA). The firm has worked exclusively in the public sector for the past ten years,
and has performed over 225 such analyses. Staff has reviewed their qualifications statement, which includes
extensive management audits and budget analyses for the City of San Francisco RDA and the County of San
Bernardino Economic and Community Development Department, to name a few. They are currently completing
a management audit of the City of Adelanto, including the Adelanto RDA for the San Bernardino County Grand
Jury.
The attached proposal provides a detailed management audit work plan which specifies the scope 8 p pe of work. It is
anticipated that a total of 575 professional hours are required to perform a comprehensive management audit for the
Economic Development Agency. The estimated cost of the project is$59,125. It is important to note that this cost
is a maximum cost and includes all clerical,report production,travel and other costs. No additional costs would
be charged to the Agency.
The firm proposes to relocate project staff to San Bernardino and work full time on site at the Agency offices. Due
to previous commitments and responsibilities to San Francisco and Santa Clara County, it is proposed that the
San Bernardino audit begin in July and be completed no later than September 15, 1993.
Staff recommaa ' f the form m otion.
TIMOTHY , Agency Administrator
Economic Development Agency
TCS:SMM:pc:mgtaudit COMMISSION MEETING AGENDA
Meeting Date: 06/21/93
Agenda Item Number
A u g'1N1au.�yus�F7iyLs\��n�lr AUDIT OF TIM�NOMC
DL V ELOPul��r�NT AGT�
FOR THE
HE
CITY OF SAN O
Prg*redfi=
Eby:
fey M Rose��
a vevw
ose � � •�
1390 MaUt $swot. Sufte 1025. San Fraviwo. CA 94102 (416)562-9292. FAX(415)252-0461
LOS Arm*eS.CA
(213)965-717.5
June 3.5, 1.993
Honorable Tom I4imar,Mayor
04 of San Ban rchno
300 North D`St ma
San Bernardino,California 924-i$.
Dear lbyor Minor-
In
accordance with y cur request,we have prepared the aaached proposal to conduct
a management audit of the Economic Development Agency for the City of San
Bernardino. Our audit scope is comprehensive and will include all aspects of
staffing levels,managelne]34 and motional issues.
Based on our most recut discussio3ns,-we have reduced the number of hours and
related costs for this COMAMhengy@ m_sn g ment gm� C cw total m um Co?t f� .
the Tn_an�o�amp„{ �t is $59,M based on a totul of 575 estimated professi5)rW
staff hours. This M=MUM cost includes all dmc&I, report Proms, travel and
other costs no additional cysts would be charged. if ad_rlitional professional staff
hours in ex0ess of 675 are required to complete the bighest quality prof�sioad
Prc)duct, such additional homy•would be provided at no cast to the City of San
Bernardino.Alternatively,if fewer hours are required,the mum cost would be
iced on an hour-for-how basis,based an the appheable staff hmuly rates_
In order to Beep you and the ConncilI � to date on this audik we will ,,-epaf°e
wr'Ltea Pis rePurts and cord act Progress brieFmgs an.a k fly ba> i&
Our REM aud budget exclusively is the public sec oar, specializin 9 in manazTament ourV tz
analyses of coun-tr,city and specUd district age Over the past tAn
years,our firm has performed over 225 such analysm
_Mnoorrable Tom Minor,Mayor
City of San Bernardino
June Ifi, 1993
Page 2
In our capacity as Budget Analyst,under contract to the Board of Supervisors of the
City and County of San Francisco, we are respon.sfle for annually reviewing the
budget of the San Francisco Redevelopment Agency. Additionally, as Budget
Analyst, we are responsible for the program and fiscal analyses of all economic
development matters which are considered by the Board of Supervisors. We have
conducted management anmts of the San Francisco Redevelopment Agency, the
Community Redevelopment Ageades of Los Angeles County,the Oakland and San
Frauctisco Convention and Visitar s Bureaus and the Economic Development
Department$ in San Bernardino County,Oakland and San F`ranci`sco_
It should be noted that we axe preset*completing a management audit of the City
of Adelanto including the Adelanto Redevelopment Agency for the 1992^93 San
Bernardino County Grand Jury_ Our firm has served the San Bernardino County
Grand Jury as their management auditor during Fiscal Years 19834K 1.986-87,
1987-88, 1988-89, 1990--91,1991-92 and 1-992-93-
We believe that the most important prerequisites of our work in conducting
management audits of government agencies is independence and objectivity. Our
exerie in working with numerous Board of Supervisors, City Councils and
Grand Juries is that our clients want the facts and insist on such independence and
objectivity. We do not perceive our role as winning a.popularity contest With
employees Rather, we strongly behave that our job is to report the fasts, regardless
of where the cbips might fall
It should be noted that our staffworks full timsosrte at the gvvem=ental favlities
being audited In that connection, we would relocate our project staff in the City of
San Bernardino for the duration of the manage mt audit.AlOwngh we baive both a
San Francisco office and a Los Angeles office,management auditors cannot conduct
a professional, comprehensive management audit from the firm's office Iomdons.
We could begin this project in May However due to our budget rues for
both the San Francisco and Santa Clara County Boards of Supervisors, as well as
our Other cuamt commi s, our staff would not be able to be is San Bernardino
for the month of dune_ Hbver-we would fully staff the audit on-site iu July and
would complete the audit by no later than.September 15, 1993.
I am enclosing a copy of our corporate qualifications statement Section VI of Ibis
doemnent on pages 102 thm gh 105.and page 108 details our erect project
Experience in economic development, redevelopment and convention and visitor's
bureau agencies..The detailed resumes of mw staff are stoma in Section IY on pages
22 tough 52 and our refer noes are shown in Section V an pages 63 through 68.
Please don't hesitate to contact any of our references listed in Section V of our
corporation Valificaw s statement. I believe these government officaals, located
tIu'oughOnt California,will duutb-verify the proressimahsm,indepencle ce,
objet vity,quality and-timehness of our management anditreport&
—Honorable Tcm M.K, Moor
City of San Ber.Hardin
,Tm - 15, 1993
Page 3
if
Yau have any questions Pertaining to this Proposal,Please contact either myself at
(415) 552-9292 or out Vice President, Roger WJalocq at (408) 299-2323. We look
forward to serving the City of San Berardino_
Respwtfuny submitted,
Harvey X Rose, CPA .
President
Eadure
arvey
13
. � .. TABLE OF CONTF1v�r�
SECUONI Detailed Management Audit Wow Pig.._._..,.... .--_.T.__.._.�..,�_�.a Z
SECTION TI RAevant Management Audit and Budget Analysis
LI'P""- ce 1'er� g to Economic Development
Agencies, Redevelopment Agencies artd Conv melon and
Visitor's$uus ......- .....- ............. .........._. ..4
SEC'T`ION ITT Project Cost..r.r...,.--•...
----------------�__�.._ -.......--------....._._.9
/2)
Sox I
CrrY OF SAWN BWLXAE )M
F-C-ONOAaC DRYPMOPMENT AGEvcy
F-Stimatea
TWA PrufeSfdonal
flours
I. ESQtaance Conference
• Conduct an entrance conference with Ectmomic Development
Agency officials: Purpose of the entrance conference will be to
intro�the project staff,respond to questions and cam-m-ents from
Agency staff and establish appropriate audit procedures and
protocols-
5
2. hm-Audit
• Review requested doc=enbiljon including detailed information fox
all completed or ongoing Agen,c T projects, copies of policies and
procedures manuals, Prional services or consulting contracts,
sampling of produced consultant reports, copies of budgets for
previous three years and other requested materials_ 25
3. Q=nization wid SUndure -
Interview
agency adminis'brative -
'ect and program
manages, P�J
managers and individuals respoEnsille for eontrad monitadng, and
Pixdect financing to gain'aa uncles Agency org�tion,
lines of autho ity,Agency activities a
Ermine organizational structure of the Agm3cy and compare to
other Economic Development, Redevdopm,eut and Convention-and
V=i toes Bureau age is large.cities in the State of CalifarBi,�L
• Conduct a detailed review of staffing levels and responsiib�. 105
Section I cont:
{ Proesgi�
Task
ff
AEON HAmrs
4• =neat nfnrirns►t�.,n
• Condurt interviews with project and Program
review and evaluate manager staff and
project plans with previously aped plans_
• Review ongoing project revenues and financing sources such as
proceeds from the sale of Prof , rental and lease revenue, prior
year mrpluses, bond Proceeds.and tax hxrement financing as
for organizational analysis_
• Review long term needs for debt king and tax increment
revenue to complete exIst ing approved plans as needed for
organizationd mss.
• Evaluate operational objectives and management controls for
Agent-7 and for each project and program Within the.Agency. 90
5. Policies and Ebxedures
• Review and evaluate specific goals and objectves of the Econ. is
Developnimt Agency.
• Evaluate what performance measurement system has been
imPlemented to mesa m grant recipient accomplishments relative
to Age=y economic development objectives.
• Evaluate the level of mordivati"on between the Ads goals and
objectives and other City organizations with responsgA ity for
econo�mt�development 105
2
Section I coax.
Estimated
Profesdonai
8• $uSinesa M=R meat
• Evaluate the Agency's use of Profes oral services and consnlbng
conb�aS_
• Evaluate whether appropriate contract maw
present and the a procedures aTe
PProPriateness and extent to whach sack contracts
are used-
' Evaluate the usefulness of cunsultant
Objectives and enhance reports to meet Agency
p Operations. IZb
7• Qma ReDOat Prensr Wou and cit C�r,fa
' Prepare draft report incl uding all findings, conclusions and
' Conduct exit canfereuce, may the draft report as nemssary and
prepare final report.
Estimated Tom Management Audit toms: 575
3
-z
S WnOPI II AND BDD�EL ANAL. MAMA Aunrr
YSI_S EXPFIumw
TO ECONOMIC DEVSIAPN904-T A(x]K`i m,REDEM I-MEW
AGEMEM AND CONMMON AND VISITOR`S BURrAUS
The following projects have been selected from the more than 225
n,_ 2n:Rge Met auchts and et anal e ',ads
Corporation. Zliese budg analyses which k�av,- '��a c. -*r, �� the
tied projects include studies of economic development agencies,
redevelopment agencies and convention and visitors bureaus. A brief description of
each of the management aunt and budget an*sis projects is included on the
fi g Page and in SSec On W o£our corporate qualifications statement.
Manaent AuditQ »aT -
Cit3r of Adelanto Redevelopment cy FY 1992-93
` City and County of San Fmncisoo ROdOveIOPIMent Agency FY 1991-92
CiLy and County of San Francasm CommTmitp Developmerit 1.979-hut
' San Bernc nn County FAMUMlie Development Depaz trn,mt FY 1986-87
• City of Cerritos Rtedevelopament Agmcy FY 1986-87
• City of Oakland gconoma c Development and Employment;
Offm FY 1.985-86 P Ym @IIi,Grants xrtA Management
Los Angdes County Selected C'.eta =Ay Redevelopment Agencies F'X 1983-84
• City and County ofSan Francisco Economic Development FY 1.982-83 _
City of OakUwA Convention and Visitor's Bureau and the North California
Black Chamber of Commerce Belted to Services Funded by the City of
Oakand FY 1989-90
City and Cody of San Fra.0 sec Convention and Pis Bureau FY 1984-85
j : 4
Section II coat.
Client Board of Supervisors,.City and County of San Franc co
Project: Budget Analysis-Community Development
Agen4r- Mayor's Office of lrousing and Community Development
Period: 1911-9-present
Since 1979, UMB has conducted annual analyses of San Frarrisco's
Community; Developia ut (CD) budges as proposed by the Mayors Office of
Housing and Commanity Development. Various programs receiving CD fonds
include the following: Redevelopment Agency; Public Housing Rehabilitation
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 hnprovement; Public Service$ Program;
Economic Development Program Administration; and Programming and
Management These annual analyses have yielded np to $L2 million iu savings
that were reallocated to other needed programs.
Cheat: (mod Jmim San Brno County
Prodect: Mna e t Audit.
Agency: City of Adelanto and the Adelanto Redevelopment Agency
Period: 1993
The San Bernardino County hand Jury retained HIM to conduct a
management audit repast whici identifies opportunities to improve the financial
\: t and reporting of City and Redevelopment Agency operations; and, to
ensure that applicable State and federal laws as well as Iocal. ord mans are
adhered to.
Client Board of Supervisors„City and County of San Fivmcisw
ProJect: Management Audit
Agency: San Francisco Redevelopment Agency
Period L992
The Board of Supervisors directed I33M to conduct a management audit of
the San Francisco Redevelopment Agency, including the Agency's use of taa-
iWrement financing,project management ski s, level of reporting to the Board of
Superviscirs and economic devatopm-ent activities. Our reCDMMenAaUCnS induced
a y$4110,000 is staff salary reductions.From a peafon ance perspective
HM:Et recommended that the agency adopt better procedures for project,
went, align senior staff salaries to comparable City positions, a-r d provide
more detailed fiSarmaiaon to the Board of Supervisors-
f
. 5
`J
section U coot.
Client; Grand Jury
San Bernardino County
Man.agement Audit' E=omic Development
P 1986-87 Economic D�opment Department
LEWR found that San Bernardo County's contras ?th an economic
development fl au j=. not in the best interests of the
found deficient in that the County was pa The contract Was
r8qu�����firm� Y� the firm a fixed fee but did not
hourly rates or any other in ode a ent of the nu�;ber of hours of service and�j8�
Y easmrement of t10 oonpany's efforts on behalf of the
Ca until. We also found that the r travel, euterW=
service and special departmental professsonal
County allowing for potential tenses were not adequately monitored by the
g P conflict of interest with the contractor authorizing
their own expenses, that the contractor had overstated their accompliSbinent$ and
that the econ.omc development program as a whole was wealthy administered_ We
Tecommended several changes in the contact and changes in the County's overall
approach to economic development including a reduction in the use of the contract
rum-
chent: Director,Taternal Ads Dept,City of Cerritos
Agencies: -went Payment Provisions
PAS Cerritos Redevelopment ggi�y.
1986
` The Director of Internal AMirs retained EIM to evaluate what,
amounts may be owed to the Cerritos Community College t' any,
agreements entered into in 1975 and 1977 am the Ceres District under
�`tTi�, � Cerritos Bedevelo went °� Cerritos Community College
P icy and the City of Cerritos. >� staff
reviewed the ag Provision and rec iar is of payments made to the Community
Counts Au�ar.{��xollei' reaao��t �ffi�' dew fz'vm review of the
rds the amount of incremental taxes received
amount thereof that Agency
bed each of 1980-81 College 1985-86 and the
Weements; contacted representatives of the �- ct under the
Colleges � the Los �� Chancellor of Community
extent to which the C�� Co=ty-Snper"agent of Schools to determine the
State to offset d�o�o��eaues allocated.�have received funds from then
to the Distact after
�P�tum 13,and that might reduce the amours otherwise allocable to the passage 'ct
wilder the agreeme�s, and a Iculated the amount due to the College District under
terms;Xthe agreamc ats.
6
13
Section a con,
*xs * � xmxsx :!
Client City Manager, Cty of Oakland
Pr*ct Management Audit—Economic Development
p � ice of Economic Development and Employment
1.9&5-86
EI�M conducted a managemPut audit of this agency, which administers
Oakland's redevelopment efforts, economic development and employment and
training prom Under one ailm st ative umbrella We recommended pooling
clerical staff and deleting some duplicative positions through
implementing new budget procedures contra attrition,
contracting out certain employment and
training functions,deletion of three underutilized ad Live Rinctions
atfritipn, improved. budgeting and monitoring procedures for federal and other
ee=Omic development fiords and other improvements. The benefits resulting from
']nPlOnlentfttiun of these recommendations wM include unproved services and cost
reductions of ap $L3 mffliun armually.
Client: Grand duly,Los Angeles County
Prclert: Management Wit-Redevelopment
Agencies ' Community RedevelopnAmt Agencies of Los Angeles County
Period: 1984
HI�R conducted a review of aR community redevelopment agencies(CRAB)in
Taos Ales G xmty iveyed each CRA iu�geles City Grand Jury_ For this study',
we identa$ed and Angeles County, reviewed all existing
and pending state laws ��ng C� and interviewed numerous state and
County officials with jurisdiction over CRA& Lssues identiffed as a result of this
study included the lack of accountability of CRAs, the drain an County pro
revenue resulting from CEA project financing me6am��, the jack oral
coordination and planing between the individual CRAB and the lack of ate
standards�analyzed go�n their �studies of six CRAs in the
re�elopmentt- reported alternative approaches to municipal
!3*ale###*! ! ! !c
Client: Board of Supervisors,City ind County of San Frenci
Phoct: management Audit--Fconoric Development
Agenaes Neighborhood Economic Development Organiz$t2on, (NEDOs)
and the lfayor's Office of Em nowk Development 0,'OED)
Period: 1982
This audit reviewed the use of Community Development Mock Grant(CD E3G)
fbmds used by NEDO and WED. The major goals of this audit were to quantify the
need for economic development, to evaluate the City's overaII plan for economic
development, and to determine the impact that economic development had in
7
/3
k5--z
Section 11 cant..
upgrading commu�..des increa or im
and moderate income emplgym and ' p u b 5�' low
�e lions to im �a�g the City's tax base.F M a&
acizvities between � public and�n of e�ist%ng economic development
effective economic development Fnvat�e sectors, and to produce a more cost-
im program In addition, � recommended
implementation of a mwral ed loan
in annual operating mss,. patkag"W Prugr"au that would save $2$8,000
�ventic�n aad Vim, mat,
Client: City Mang ,City of Oakland
C�anay' boreal&Udy of the
Bureau and the Northern
Cali&rnia Black Chamber of Comxnorce
oc Conventum andP�sit s and Umber of Commence
1939
This
Convention study r reviewed 0 0ffi of these �nta~actM and the Oakland
concerning convention and visitors sales and
Promotion activities, and analyzed the organization of these services within
Oakland:
Cheer Board of Su
San dE= Gland Comity of
Pr&jecfz Nknagument Audit of San lranpsoo ConvEmti on and
Vfsito"Bureau
Pedoch convention and V'4tces B=169M
1985
C'ur recOmmendations relate
facilities and to m by Whiff tflF to mom' City's convenion
Visitors BMeau is +ed by the�City's contract with the Convention < ud
SECnON III
The table below provides our ;-I mate of
bowrly rate and cost for this Proposed project staff hours by -staff ,
Project of fhe Economic Development icy_
The estimated cost of the proposed � siv� carpe man
$63,950, based on a trig of 620 estimated profe�onal staff hours. bds audit a
maximum cost and includes all clerical;�t ProdII Tons cost . a
additional costs would be d to, the ' ° and other costs;no
Professiamal staffhozus in excess of 620 are eq of Sec Bernardino. If additional
PL a essiomal product, such additional honors wocomplete r the him
Al �p� if fewer hours are provided at no quality
as hour for hour basis,based one applicable °0A would be reduced on
staff howdy rates.
EaLfinated
Partner
Manager 5°
Q $7,500
Senior Analyst 85 2 22 2 27,500
Analyst 65 � 5,275
.854
TOW b'l5
Our Proposed work plea is designed to be Heaffilg. It caa be altered as necessary m
�d�night ham, needs a� any fiscal wastrOi is which the City of San
9