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HomeMy WebLinkAbout13- Economic Development Agency - - ---4. ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION From: TIMOTHY C. STEINHAUS Subject: MANAGEMENT AUDIT OF THE Agency Administrator ECONOMIC DEVELOPMENT AGENCY Date: June 16, 1993 --------—------ ----------------------------------------------------------------------- Svnoosis of Previous Commission/Council/Committee Actions : 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 $59,125. TIMOTHY C. STEINHAUS Agency Administrator --------------------------------- -------------------- ---------------------------- Contact Person(s): Timothy C. -----aus. A enc Administrator Phone: 5081 Project Area(s): All Ward(s): 1 _7 Supporting Data Attached: Staff Re ort FUNDING REQUIREMENTS: Amount: $59.125 Source: Budget Authority ------------------------------------------------------------------------- Commission/Council Notes: TCS:SMM:pc:mgtaudit COMMISSION MEETING AGENDA Meeting Date: 06/21/93 Agenda Item Number 13 ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO STAFF REPORT ------------------------------------------------------------------------------------------------------------------------------------------- Manalement 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'/z) 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 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. 1 Staff recommen a ption of the form motion. i TIMOTHY C 51 EINHAS, Agency Administrator Economic Development Agency ----------------------------------------------------------- TCS:SMM:pc:mgtaudit COMMISSION MEETING AGENDA Meeting Date: 06/21/93 Agenda Item Number APPJR3OSAL TO CONDUCT A%ANACMMENT ABDYP OF TEIE ECONOMIC DEVELOPMRNTACECY FORTHE CITY OF SAN BE MATUNNO Preourcdfim city of s=Bemamymo Prqpmedb3r. Hervey�R�A�'oY(',�rp�Eiuun June 15,M3 arvey Ose 1390 NFafaYt Slsaot. 'St" 1025. Sm Trams= CA 94102 (415)552-9242' FAX(415)252-0461 —Los AmjelM CA {2133 9EirT1 TS June 15,1993 Hanarable'TomE ll+i"mor,Mayor C&y of San gern,archno 3()0 North y Street San Bernardino,California 92413. Dear Mayor 1V#mor_ in accordance with Your request,we have prepared the attached proposal to conduct a management alot of the Economic Development Agency for the City Of San € Bernard ono. Our audit scope is comprehensive and wM include all aspects of staffing levels,management,and orpnizational issues. of hours and Based on our most recut c#iscuss'ons,ice have reduced dit.Our total maximmn °'st� related.costs for this vomXdm the man Bement audit is $59,125 based on a total of 575 estimated professional staff hours.This maximum cost induces all dencal,report production, travel and other costs; no additional costs would be charged- If additional professional staff hours in eXess of 575 are regained to complete the highest quality professional product, such additional hours would be provided at no cost to the City of San Be arditln_Alternatively-,if fewer hours am recp�the mmim=cast would be recbaeed on an hour for-hour basis,based on the apple able staff hourly rates. In order to keep you and the Council up to date on this audit, we will prepare written progress reports and conduct proms briefings an a biweeW basis. Our arm wcrim eacluweJ9 in the public sector, spedal z M management audits and budget analyses of county,city and special district agen -Over the past ten years,our f-n has performed over 225 such analyses_ Honorable Tom Acnor,Mayes (,amity of San Barnsr.&M June 15, LM Page 2 In our capacity as Budget Anal undue contract to the Board of Supervisors of the of San Francisco, we are re-'Pmale for annually reviewing the Cif and County budget of the San Additianatly, as Budget Francisco Redevelopment Agency. s of all economic Analyst, we are responsible for the program and fiscal analyse development maths vvbich are considered by the Board of Supervisors. We have rnent ants of the Sari Francisco IiedOveloPment Agency, the conducted na mage Community Redevelopment Agenciee of Los Angeles CO untY,the()akiand and San. Francisco Convention and V1sitor's Bureans l theFco� DeveloP�nent and Departments in�Bemard'ino C�tY, completing a management audit of the City of Afield t noted tint�Adel�Redevelopment Agency for the 1992-93 San B vard no including Our �bas served the San Bernardino County g .a Ca-antY Grand Jam- ��Years 1953-84, 7.98fi-87, (wand Jury as their management auditor during 1987-58, 1985-89=199G-91,Ml-92 and 1992-93- We believe that the most important prerequisites of our work in conducting managem it audits of government agues is independence and o C s and experience m worlring with numerous Board of Supervisors, City Grand Juries is tbat our clients want the facts and insist on such independenre objectivity_ We do not perceive our role as g Popularity coute-st with employees.Rather,we�y 1e�e that our job is to report the facts, regardless of where the fps might It should be noted that our staff worl�s full.time ensue at the govermental i�lities berg audited In that cannectaon,we would relocate our project staff in the City of San$ernardina for the duxatil.of the management audit_Althou we have both-a. San.Francisco office and a Los Angeles office,management auditors cannot conduct a prcessional., comgrehen ive managemaat audit from the firm's office locations. We could begin this project im may.However due to our budget rues. as both the San Francisco and Santa Clara CounLy Boards of Supervise n-ur other cana-ent c our staff would not be able to be in San Bernardino for the month.of Jmxe- However we would folly staff the audit on-site In July and would caaac+.pi te-the audit by no later than September 15,1993. a co of our corporate q�ons statement- Section VI of this I cu enclosing PY 1fl8 details our direct project dacrmient a�a. paw 102 � 7.05:and page experience in economic development, redevelopment and convention and visitor`s. b-tnrem age=es.The deta JW reo=es of our staff are show in Section IV on pages 22 d3racrgh 52 and our references are shown in Section V am pages 53 through 68- Please don`t hesitate to contact any of nur refu listed in Section V of our corporation chime tement_ I believe these government officals, located thmughont CaMrniia,will independent]Y verifY the professionahsm,independence, objectivity,gaahty and-tonehness of our manger. t auditTeP°xt�-'. arvey ose •cmr�i�s Honorable Tom fir,Mayor City of San Bernardi-no jrme 15,x-993 Page 3 If you have any questions Pertaft- du to this proposal,Please cmtact eat her myself at (415) 552-9292 or our Vice President, Roger Mialoccq at(408) 299-2323. We Look forward to swing the City-of San Beniffdino- RespwtfuRY submitted, Harvey ,Bose,CPA . president Erdosu e ar vey 13 case T E OF CONS SECTION I Detailed hTa nag meet Audit Wad Plan- ----------------•---......__._.,......_1 SECTION II Relevant Manager ent. Audit and Budget Analysis Experience Pertaining to Economic Development Agencies, Redevelopment Agencies and Convention and Vz�itor`s Bureaus..... ------------.--...........................4 SOGWONIII Project Cast..._.r........_._.._.�.4......�-----._......___--- -��....------------------._.9 $EMON I OTV Off'SAN BKNASDINO ECONOMIC DEVEWPHENT AOENC'r Istintrated ProfessivMMI Task Hours I. Eatn�ce Confer�n0e • Conduct an entrance conference with Economic Development Agency officials- Pnrpose of the entrance confereuce will be to intro�the project staff,respond to questions and comments from Agency staff and estAhhsh appropriate audit procedures and protocols- 2. Pre-Awdk SUCLOv • $eview requested documentation including detailed information for all completed or ongoing Agency projects, copies of policies and procedures manuals, professional- services or consulting contracts, sampling of produced consultant reports, copies of budgets for previous three years and other rimed materials- 3. 4rmn ization and sumcbm" _ • Intemew agency administrative managers, project and program managers and indivi&u s respon. le far oaniract monitoring, and pruiect financiag to gain.aa nader�i of Agency organization, lines of authority,Agency activities and franc ng mechmaldisras- • Ewe orgam2ational structure of the Agency and compare to other FA*nomic Development,Redevelopment and COnventian and Visitor's Btu agencies in large.cities in the State of California_ • Conduct a detafled review of staffing levels and responzbz]ities. 105 Section I coat_ Estimated Professional 4- M 9a2MMt Information • C'Dnduct interviews with project and program manager staff and review and evaluate project plans with previously approved plans- • 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 tag increment fnan.cing as needed for organizational analysis_ • Review long term needs for debt financing and tax increment revenue to complete existing approved plans as needed for (]j' "auization l _s. • Evaluate operational objectives and management controls for Agency and for each project and program within the may. gQ �. ��I,icies aD.d Fx�rimres • Review anal evaluate specific goals and objectives of the Econaoz�c Development Agency - • Evaluate what performance measurement system has been implem ted to zneamm get redpient accomphshmems relative: to.icy economic development objectives. • Evaluate the level of coordination between the Agency's goals and objectives and other City organizations with responsffiitity for economic development. 10S 2 Section.Y coat. Estimated I Professional TasR �� C. Business Ma agem=-t Evaluate the Agency's use of profesional services and consulting contacts_ • Evaluate whether appropriate contract monitoring procedures are present and the apPrePariaten�and extent to which such contracts are used_ Evaluate the usefulness of consdtannt reports to meet Agency objets and enhance Agency operations. .12 7. Draa Re_v_mt Pre ration and exit C�� • Prepare draft report including all findings, conclusions and recommendations. • Conduct eft Wince, modify the draft report as nemsary and prepare final report- Estimated Total Mauagsement Audit Homes: 575 ,MOON H REI &VANTMANAMMENT AUDIT AND BUD(Wr ANALYSIS EnMMME PERTAW NG TO ECONOMIC DEpADMENT AGENCIES,$"SP "PMK IT A[;MMM AND C NVI3,11MON AND VISrrOWS BUREAUS The- following projects have been selected from the more than 225 management audits and budget aaslyses which have been conducted by the Corporation. These projects include studies of eemomic development agencies, zdevelopment agencies and convention and visitor`s bureaus- A brief description of each of the management audit and budget analysis projects is included on the &Rowing page and in Secdoh'I of our corporate qualifications statement. Management AnA is/tiuecial Pmie City of Adelanto Redevelopment Agency FY 1992-93 • City and ounty of San.Francisco Redevelopment Agency FY 1991-92 City and County of San.Francisco Co my Development LW9-Present San Bernardino.Cazmty Eoonooie Development Department FY 198"7 i City of Cerritos Redevelopment Agency FY 1986-87 City of Oakland Economic Development and Employment;Grants Management Oboe FY 1.985-86 0 Los Angeles County Selected Commum-ity Bedevelupment Agencies FY 1983^84 City and County of San Francisco Economic Development FY 1982-83 • City of Oakland Convention and vu—atoes Bureau and the NOrtbfflm California Black Chamber of Commerce Related to Services Funded by the City of Oakhind FY 1989-90 • City and County of San.Frandsco Com moon and VI-KWs Bureau I{'Y 1984-85 4 /2 section 11 coat. �'7PF�i e`IIt °•n.Z Rn++'ROIti1C DQY�O�.LF'Af A��R'('x�S Client: Board of SupervmrS,CitY and County of San project Budget Awlysi Comm unity Developmen icy: *aayres Office of Housing and Community Development Period: IM-present Siaw 1979, HAM has conducted annual analyses of San. Francisco's Community Development (CD) budgets as proposed by the Mayor's Office of Housing and Community Development. Various programs receiving CD funds include the following: Redevelopment Agency; Public Hausiug Behahffitataion Program; Housing Development Corporations; Housing Site Acquisition, Community Housing Rehabilitation, and Code Enforcement; Fair Housing (,oiling and Technical.Service;Neighborhood Facilities Improvement Program? Neighborhood Centers, Public Space haprovemnt; Public Services Program; Economic Development Program. Administration; and Programu;ing and Management. These annual analyses have yielded np to $1.2 million in savings that were reallocated to other needed per. chmt: Land Jury,San Pefnardino County Project: City ofAdela to and the Adelanto Redevelopment AMY Audit Period: 1993 The San Bernardino County (hid Jury retained HMR to conduct a mainagement audit report which identifies opportunities to improve the financial management and reporting of City and Redevelopment Agency operations; and, to 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 Frandsm Redevelopment Agency Period: 1992 The Board of Supervisors directed HMR to conduct a anagement audit of the San Francisco Redevelopment Agency including the Agents use of tax- mcrement financing,project management sJull , level of reporting to the Board of Supervisors and economic development activities- Our reaomm ndAU m.s induded y$404,040 in staff salary reductions-From a petfo*man m perspective, HhM recommended that the agency adopt better procedures for project „_ a„gment, align se dor staff salaries to comparable City positions, and provide more detafled information to the Board of SuPOMsors- • 5 Sectiaon H coat..' Chent: Grand Jury,San Seniardino Couuity Project: Mar�ment Audit Ecouornie Development A an_w. Economic Developnertt Department Period; 1986-37 HMR found that San Bernardino Counts contract with an ecanamic development firm was not in the best interests of the County_ The contract was found deficient in tba.t the County was paying the firm a fixed fee but did not requrim the cwtrac t firm to provide a spec number of hours of service and related hourly rates or any other measurement of the oompan9's efforts on behalf of the County. We also found that the contractor's travel, enterUtbunent, professional semee and special departmental, expenses were not adegaatelY monitored by the County allowing for a potential conflict of interest with the contractor authoring their own expenses, that the caontrad or had avmstated their amomplishments and that the econ ric development program as a whole was weakly administered_ We recommended several changes in the comma and dianges in t'he Cou ntes overall approach to econamic development mcluding a redaction in the use of tlo contract firm. Client: Dkee atr,In ternal Affairs Inep t,City of Cen itas Project Financial.Analysis-Agreement Payment Provisions Agencies Cenitos Redeveloprnent'Agency .. Perm 1986 The Director of Lutemal Awaits retained HMR to evaluate what, if any, amounts may be owed to the Cerritos Communitg College District under agmeme is entered into in 1975 and 1917 among the Cerdtas Community College Di strict, the Cerritos Redevelopment Agency and the CAT of Cerritos. 1TIMR staff reviewed the agmement providaa and records of pMu=tts made to the Cammtmiiy College District by the Redevelopment Agency; determined frum review of the County Auditor-Controllers records the amount of MOMMentat taxes received bpr the Redevelopment Agency for each of the years 1980-81 through 1985-86 and to amount tbareof that would be allocable to the College District wader the agreements; contacted representatives of the State Chanoellor of Community Colleges ami the Los Angeles County Supedateudent of Schools to determine the eafient to whw-h the Community College Distict may have received funds from the State to offset demised revenues allocated .to the DisU t aftr passage of ProposiUm 13,and that might reduce the amount otherwise allocable to the District under the agreements-,and calculated the amount due to the College District under terms ofthe agreements_ :s Section U conk. Client City Manager,City of Oakland Project: Management Audit-Economic Development Amy: Office of Economic Development and Employment Period= 198&5486 IiMR conducted a m m9ement audit of this agency, which administers Oakland's redevelopment efforts, economic development and employment and- trying programs under one administrative umbrella We recommended pooling clerical staff and deleting some duplicative positions thorough attrition, implementing new budget procedures, contracting out certain. employment and gaining functions,deletion of three underrlt lined adunnictrative functions through attrition, improved budgeting and monitoring procedures for federal and other economic development funds and other improvements. The benefits resuiting fpm implementation of these reeommendatians wffi include improved services and cost reductions of ap $1.3 million azmuaIlp. Client_ Grand Jury,Los Angeles County Project Management Audit-Redevelopment Agencies Cornmun ty Redevelopm=t Agencies of Los Angeles County Period-- 1984- EMM conducted a review of all commumity redevelopment agencies(CRAB)in Los Angeles County m I984 for the Los Angeles County(rand Jury_ For this study, we identified and surveyed each CRA in Las Angeles County,reviewed all existing and pending state laws governing CRAB and -interviewed numerous state and County officials with juri t cuun over C:RA�s. Lssues identiffed as a result of this study included the lark of accountability of CR S,the drain on County propmV tax revenue resulting from CRA proJect finan mom, the lack of regional coordination and planning between the individual CRAB and the lack of adequate standards for deterniining blight We also conducted case studies of sa C RAs in the County and analyzed and reported on their alternative approaches to murlidPal retlevelop�t- - �x�***#*amass Client: Board of Supervisors,City and Cmmty of San Frandsoo Project Management Audit—lt.canm&Development Agencies: Neighborhood Esc Development Organizations(NEDOs) and the Mayor's Office of Economic Development(KOED) Period: 1982 This audit reviewed the use of Community Development Block Grant WDEG) f rods used by NEDO and MOED. `l$e major goals of this audit were to quantify the need for economic development, to evaluate the City's overall plan for economic development, and to determine the impact that economic development had zu 7 13 Soctian II cont- upgrading COMMIUKI itim, increasing or improving small businesses, increasing low and moderate mcmmme employment, and ir� the CiWs tag baser MM made recommendations to improve coordination of existing economic development activities between the public and private sectors, and to produce a more cost- effective economic development program- In addition, MM recommended %nap�lementation of a centratized loan paging program that would save $288,000 in annual operating costs. CcfflLvention and VW- or's Bureau Cliea : City.Manages,City of Oakland Project~ Management and Orgamizational Study of the Convention and Vas Bureau and the Northern California Black CbAmber of Commerce Agency: Convention andVisifcoes Bureau and Chamber of Commerce Period: 1959 This study reviewed the operations of these contractors and the Oakland Convention. Center Management concerning convention and visitors sales and promotion activities, and analyzed the organization of these services within Oakland_ client~ Board of Supervisors,City and County of Sag llrand Project Management Audit of San Francisoo Convention and Visitors Bureau Agency_ Convention and Visitor's Bureau Period. 1985 Our recommendatiom relate prix a to marketing the City's convention facilities and to methods by which the City's contract with the Convention and Visitors Bureau is monitored by.the Cbief Adnuni��Officer. SECTION III F `�CST 1—Ummam Au�rr Wow pr.A The table below provides our imamate of professional staff hours by staff level, houxly rate and ant for this proposed project of the Economic Development Agency_ The estir=ted cast of the proposed eomprehensive scope Tngnagem.ent audit is $63,950, based ou a total of 624 estimated professional staff hours. This cost is a maxnmum cost and includes all elencaL report production,travel and other costs,no additional eosW would be charged to the CAy of San Bernardino. If additional Vm&ssional staffhours in excess of 620 are required to complete the highest qua� professional product, such additional hours would be provided at no cost.. Altemativelg,if fewer hours are regained, the mammum cost would be reduced on an hour for hour basis,based an the applicable staff howdy rates. gate �stima#ed # T�vgi Per Romr HUM Cod Partaer 50 $7,500 Manager 125 220 27,500 Senior Analyst 85 215 18,275 Analyst 65 Tonal 575 Our proposed work plan is designed to be Hesble. It can be altered as necessary is order to best meet the needs and any fiscal constraints which the City of San. Bernardino Ini2b t have.