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HomeMy WebLinkAbout02/16/2018 B A K E R S F I E L D Staff: Committee members: Chris Huot, Assistant City Manager Andrae Gonzales, Chair Willie Rivera Ken Weir SPECIAL MEETING OF THE BUDGET AND FINANCE COMMITTEE of the City Council - City of Bakersfield Friday, February 16, 2018 12:00 p.m. City Hall North 1600 Truxtun Avenue, Bakersfield, CA 93301 First Floor, Conference Room A AGENDA 1. ROLL CALL 2. ADOPT MAY 30, 2017 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Discussion and Committee Recommendation Regarding Annual Audit Reports ending FY 2017 – McKeegan B. Discussion and Committee Recommendation Regarding FY 2018-19 CDBG, HOME, ESG Action Plan – Tandy / Kitchen C. Discussion and Committee Recommendation Regarding Adoption of the 2018 Committee Meeting Schedule – Huot 5. COMMITTEE COMMENTS 6. ADJOURNMENT B A K E R S F I E L D Committee Members Staff: Chris Huot Councilmember, Andrae Gonzales, Chair Assistant City Manager Councilmember, Willie Rivera Councilmember, Ken Weir SPECIAL MEETING OF THE BUDGET AND FINANCE COMMITTEE Tuesday, May 30, 2017 10:30 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue, Bakersfield, CA 93301 The meeting was called to order at 10:30 a.m. 1. ROLL CALL Committee members Present: Councilmember, Andrae Gonzales, Chair Councilmember, Ken Weir Councilmember, Willie Riviera City Staff Present: Alan Tandy, City Manager Chris Huot Assistant City Manager Caleb Blaschke, Management Assistant – City Manager’s Office Joshua Rudnick, Deputy City Attorney Nelson Smith, Finance Director Randy McKeegan, Finance Supervisor Additional Attendees Present: Members of the Bakersfield Association of Realtors Members of the PACE Program Members of the Media Members of the Public 2. ADOPT APRIL 27, 2017 AGENDA SUMMARY REPORT The Report was adopted as submitted. 3. PUBLIC STATEMENTS There were a total of 7 public speakers who spoke in opposition to the Property Assessed Clean Energy (PACE) Program. They were: Sherry Anthis, Bakersfield Association of Realtors; Michael Turnipseed; Nick Ortiz; Margaret Smith; Melissa Domeny; Scott Dick; and Gary Crabtree. /s/ Chris Huot   ____________________________________________ Budget and Finance Committee Meeting Agenda Summary Report – May 30, 2017 Page 2 There were a total of 14 public speakers who spoke in support to the PACE Program. They were: Ray Mathers; Sharon Dickey; Kevin Harbor; Ken Greer; Mathew Martin; Lyn Rincon; Ben Dominguez; Chris Morgan; Paul Vince; Laura Booker; Bert Alton; Jose Augilar; Brian McCardy; and Fred Thomas. During a rebuttal period, additional statements were provided by: Sherri Anthis, Bakersfield Association of Realtors and Glen Porter who spoke in opposition to the PACE Program; followed by Jeremy Human; George Ygrene; and Dustin Reilich who spoke in support of the PACE Program. 4. NEW BUSINESS A. Discussion and Committee Recommendation Regarding the PACE Program– Tandy City Manager Tandy provided a brief summarization of the PACE Program by means of a PowerPoint presentation. City Manager Tandy provided details regarding the history and recent developments related to the program. There was no staff recommendation presented to the Committee. Committee member Rivera expressed his appreciation to everyone who provided testimony regarding the PACE Program. He stated that the program was considered a great incentive for the community; in particular those who would not be able to otherwise afford energy efficient home improvements and a reason the City chose to allow it within city limits. He asked if research had been compiled regarding the effectiveness of the participation agreement in other jurisdictions and if it would address the issues being experienced locally. City Manager Tandy stated that the city authorized the program to be used locally through a joint powers agreement and that the program is regulated by the State. The City has no enforcement and compliance tools to monitor the program. City Attorney Gennaro agreed with City Manager Tandy’s comments. In addition she stated that she was unaware of any amendments being made to the joint powers agreement. The PACE Participation Agreement is only a sample agreement between the PACE provider and the property owner; without being physically present during the execution of the agreement there is no way to know exactly what is said or what takes place. Committee member Rivera asked if the City could withdraw from the joint powers agreement and cancel the PACE Program. City Attorney Gennaro stated that the Council could withdraw from the joint powers agreement by passage of a resolution. The termination would only have an effect on future consumer agreements; those previously signed would remain in place.   ____________________________________________ Budget and Finance Committee Meeting Agenda Summary Report – May 30, 2017 Page 3 Committee member Rivera requested staff reach out to the City of Los Angeles, find out what changes they have made to make the program work in their jurisdiction. He also acknowledge the comments written by Mr. John Lifquist, Kern County Assessor, and stated it did not sway his current position. Committee member Weir also thanked those present for providing testimony and expressed concern regarding several statements made. He stated that the example participation agreement included in the packet only jeopardized the city further into responsibility. Committee member Weir stated the question regarding the matter being poor public policy needs to be address by the full City Council. He made a motion to direct the matter without a recommendation back to the full City Council on for discussion at an appropriate date. Committee Chair Gonzales reiterated and agreed with the comments made by Committee members Rivera and Weir. Given the program has been in effect since 2010 and there being over 2,700 projects completed to date, he requested staff gather additional information regarding the 26 cases provided by the Board of Realtors in order to have a better understanding of the current circumstances 5. COMMITTEE COMMENTS There were no Committee comments. 6. ADJOURNMENT The meeting adjourned at 12:27 p.m. S:\ACCOUNTING\RANDY\ADMIN\AUDIT REPORTS MEMO.DOCX MEMORANDUM TO: Budget and Finance Committee FROM: Randy McKeegan, Assistant Finance Director DATE: February 12, 2018 RE: 2016/17 Audit Reports The annual audit of the City’s financial reports for the fiscal year ended June 30, 2017 was completed in December 2017. At the December 13, 2017 City Council meeting, six reports were referred to the Budget and Finance Committee for review and discussion. Each report was completed by outside auditors and are required to comply with regulations at the Federal, State, or Local level. The audit reports referred to the committee were: • The City’s annual audit report, also known as the Comprehensive Annual Financial Report (CAFR), was audited by the local accounting firm Brown Armstrong Accountancy Corporation who issued an unqualified opinion. This indicates that, in all material respects, the financial report was presented fairly and in accordance with generally accepted accounting principles. • The auditors issued an Agreed Upon Conditions report with regards to any reportable conditions noted during their field work. These could include any issue related to improving efficiency, internal controls, or financial reporting. There was one condition noted in the current year that related to deficiencies in cash receipts during tests of internal controls. The issue has been addressed by the identified department and the Finance department has followed up with our own reviews to insure that corrective actions have been implemented. • The SAS 114 letter is a required communication with this committee identifying the auditor’s responsibilities connected with the audit. It also describes the scope and timing of the audit, significant audit findings, and any uncorrected misstatements. There were no finding identified. • The auditors report on the City’s compliance with provisions of a number of contracts connected with the Bakersfield Sub-regional Wastewater Management Plan as of the end of the fiscal year ended June 30, 2017. No issues of noncompliance were noted. • The auditor’s review of the annual appropriations limit calculations as defined by State regulations (GANN Limit). Their letter states that no exceptions were noted in their review procedures. • The annual audit report for the City facilities managed by AEG (including the arena, theater, ice center and amphitheater) was audited by the local accounting firm Barbich, Hooper, King, Dill & Hoffman who also issued an unqualified opinion on the AEG financial statements. In addition to the reports referred to the committee at the December 13th Council meeting, there were three additional reports related to financial audits that the Finance Department would like to submit for review and discussion. These reports include: • The Single Audit Report for fiscal year ended June 30, 2017 has been completed by Brown Armstrong. The report is required to ensure a recipient of federal funds has adequate internal controls and is in compliance with the federal program's requirements for applicable grant awards. No internal control weaknesses or issues of non-compliance were noted in the audit. • Brown Armstrong issued a second Agreed Upon Conditions report specifically connected to a review of the internal control structure and operations of the City’s information technology services. The report identified seven conditions that needed to be corrected which range from updating policies and procedures to physical access to server rooms. The Technology Services division of the City agreed with these findings and the department will begin corrective action to address them. • The State Department of Transportation (Caltrans) completed an “incurred cost audit” in October 2017 with the purpose of insuring the City was properly expending state and federal transportation related funds. The auditors from Caltrans identified five findings that, in their view, needed to be addressed. These findings related to issues with procurement of contracts, unallowable expenditures, and project management. It should be noted that the projects audited incurred over $68.5 million in costs of which, $16,924 were noted as non-compliant (0.02%). These reports will be submitted to the full Council for acceptance at a future meeting after the Committee’s review process is complete. Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Consolidated Financial Statements June 30, 2017 C O N T E N T S Page(s) Independent Auditors’ Report 1 - 2 Management’s Discussion and Analysis (Required Supplementary Information) 3 - 8 Consolidated Financial Statements Consolidated statement of net position 9 Consolidated statement of revenues, expenses and change in net position 10 Consolidated statement of cash flows 11 - 12 Notes to consolidated financial statements 13 - 19 Supplementary Information Consolidated schedule of operating expenses 20 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 21 - 22 Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Management’s Discussion and Analysis - 3 - JULY 2016 TO JUNE 2017 RABOBANK ARENA, THEATER, CONVENTION CENTER, ADVENTIST HEALTH ICE CENTER OF BAKERSFIELD AND SPECTRUM AMPHITHEATRE MANAGEMENT DISCUSSION AND ANALYSIS This section of Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre’s (the Facilities) annual financial report presents our discussion and analysis of the Facilities’ financial performance during the fiscal year ended June 30, 2017. Please read it in conjunction with the Facilities’ consolidated financial statements, which follow this section. FINANCIAL HIGHLIGHTS  In FY 2016-2017 our top six events were as follows: o Lady Antebellum, Live Nation, Net Income of $92K o CIF State Wrestling Championship, CIF, Net Income of $92K o Disney On Ice, Feld Entertainment, Net Income of $88K o Carrie Underwood, AEG, Net Income of $85K o Blake Shelton, Messina Touring Group, Net Income of $80K o Monster Trucks, FORCE Entertainment, Net Income of $64K  The Rabobank Theater and Convention Center was host to 12 concerts in FY 2016-2017. Those 12 concerts resulted in an attendance of over 18,000 people and net income of over $92K.  The Broadway in Bakersfield Theater Series produced by Jam Theatricals from Chicago held their 12th season of shows at Rabobank Theater with good results. There were three shows in the series which resulted in a net income of $38K.  The Condors did not make the playoffs in 2016-2017, but their net income of over $212K was an improvement over the previous fiscal year. OVERVIEW OF THE FINANCIAL STATEMENTS The annual report includes this management’s discussion and analysis report, the independent auditors' report and the basic consolidated financial statements of the Facilities. REQUIRED FINANCIAL STATEMENTS The financial statements of the Facilities report information using accounting methods similar to those used by private sector companies. These statements offer short and long term financial information about its activities. The Statement of Net Position includes all of the Facilities’ assets and liabilities and provides information about the nature and amounts of investments in resources (assets) and the Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Management’s Discussion and Analysis - 4 - obligations to the Facilities’ creditors (liabilities). It also provides the basis for evaluating the Facilities’ capital structure as well as assessing the liquidity and financial flexibility of the Facilities. All of the current year’s revenues and expenses are accounted for in the Statement of Revenues, Expenses and Change in Net Position. This statement measures the success of the Facilities’ operations over the past year and can be used to determine whether the Facilities has successfully recovered all its costs through its user fees and other charges, profitability and credit worthiness. The final required financial statement is the Statement of Cash Flows. This statement reports cash receipts, cash payments, and net changes in cash resulting from operations, investing, and financing activities and provides answers to such questions as where did cash come from, what was cash used for, and what was the change in the cash balance during the reporting period. FINANCIAL ANALYSIS OF THE FACILITIES One of the most important questions asked about the Facilities’ finances is, “Are the Facilities as a whole better off or worse off as a result of this year’s activities?” The Statement of Net Position, and the Statement of Revenues, Expenses and Changes in Net Position report information about the Facilities’ activities in a way that will help answer this question. These two statements report the net position of the Facilities and the changes in net position. One can think of the Facilities’ net position - the difference between assets and liabilities - as one way to measure financial health or financial position. Over time, increases or decreases in the Facilities’ net position is one indicator of whether its financial health is improving or deteriorating. However, one will need to consider other non-financial factors such as changes in economic conditions, population growth, and new or changed government legislation. Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Management’s Discussion and Analysis - 5 - Below is a summary of the Consolidated Statements of Net Position, Table A-1: $% 2017 2016 Change Change Current assets 3,074,106$ 2,835,524$ 238,582$ 8% Noncurrent capital assets 6,703 18,778 (12,075) 100% 3,080,809$ 2,854,302$ 226,507$ 8% Current liabilities 2,830,809$ 3,027,399$ (196,590)$ -6% Other liabilities 250,000 250,000 - 0% Total liabilities 3,080,809 3,277,399 (196,590) -6% Invested in capital assets 6,703 18,778 (12,075) 100% Unrestricted (6,703) (441,875) 435,172 -98% Total net position - (423,097) 423,097.00 -100% 3,080,809$ 2,854,302$ 226,507$ 8% Table A-1 Condensed Consolidated Statements of Net Position  Asset and liability balances for both years are very consistent. The slight change in net position (-7%) is primarily due to a decrease in accounts receivable and an increase in accounts payable balances. Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Management’s Discussion and Analysis - 6 - $% 2017 2016 Change Change Operating revenues 7,621,593$ 7,420,662$ 200,931$ 3% Less direct event expenses 4,614,108 4,307,851 306,257 7% Gross profit 3,007,485 3,112,811 (105,326) -3% Operating expenses 3,856,239 3,991,689 (135,450) -3% Operating loss (848,754) (878,878) 30,124 -3% Nonoperating income 433,036 463,160 (30,124) -7% Change in net position (415,718) (415,718) - 0% Net position, beginning of year (423,097) (423,097) - 0% Contributions 838,815 415,718 423,097.00 102% Net position, end of year -$ (423,097)$ 423,097$ -100% Table A-2 Condensed Consolidated Statements of Revenues, Expenses and Changes in Net Position Results from operations were $30k better than the prior year. Sponsorship revenues were $92k higher than the previous year, but event expenses were much higher this year than the previous year and that offset the increases in the operating revenues. The improved results can solely be attributed to departments managing their operating expenses. Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Management’s Discussion and Analysis - 7 - Over (Under) % Actual Budget Budget of Budget Operating revenues 7,621,593$ 4,805,739$ 2,815,854$ 59% Less direct event expenses 4,614,108 1,649,051 2,965,057 180% Gross profit 3,007,485 3,156,688 (149,203) -5% Operating expenses 3,856,239 3,538,682 317,557 9% Nonoperating income 433,036 - 433,036 100% Change in net position (415,718)$ (381,994)$ (33,724)$ 9% Year Ended June 30, 2017 Table A-3 Change in Net Position, Actual to Budget Gross operating revenue for the year was higher than budget due to the additional events that were held. Increases were found across rent, parking, facility fees and event suite revenue. Although revenues were in excess of budget, direct event expenses were significantly over budget. The increase in actual expense was due to increases in event labor and associated expenses that were necessary to put those events on. Operating expenses came in higher than budget overall, the main factors were a full time position was added to the security department that was not budgeted and utilities came in over budget as well. $% June 30, 2017 June 30, 2016 Change Change Small Equipment 18,896$ 18,896$ -$ 0% Less accumulated depreciation 12,193 10,099 2,094 21% Net property and equipment 6,703$ 8,797$ (2,094)$ 100% Table A-4 Capital Assets Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Management’s Discussion and Analysis - 8 - ECONOMIC FACTORS AND NEXT FISCAL YEAR Several key factors are expected to affect next fiscal year:  The economic climate in Bakersfield and Kern County continues to play a large part in the financial performance of the Facilities. The oil prices have stabilized, but have not bounced back and that still remains a factor in the community that has a continued negative impact on ticket sales for family shows, sponsorship sales and suite leases; we are still exploring different markets to combat the loss in the sponsorship revenues and suite lease agreements. We are continuing to actively seek new and different ways to advertise events, package new items into sponsorship entitlements, and are finding new ways to increase suite revenues. Additional growth in sponsorship revenues is expected, as we continue to pursue new relationships with sponsors.  In FY 2017-2018, the Condors will be playing their third season as the AHL affiliate to the Edmonton Oilers NHL hockey team. The higher caliber of play in the AHL is expected to continue to bring in higher attendance, which will result in higher ancillary revenues across the board.  We continue to work closely with the Aramark management and staff to strive to maximize food and beverage commission revenues at every opportunity. Two new portable stands have been acquired that will increase points of sale and give a much needed new variety of food choices for the patrons. In addition, a new craft beer bar has been built to appeal to the patrons’ interest in craft beers.  At the Adventist Health Ice Center, the youth hockey program continues to grow with great success. A new practice rink is being presented to City Council that will give an additional half sheet of ice that will increase revenues with the added space if it is approved.  The event calendar for the first six months of the fiscal year is fairly full with a wide variety of events. A major setback to this fiscal year is the loss of the Circus. This event has been a staple in our family show schedule and will be missed. The booking department continues to work hard in trying to secure additional events for the Facilities overall. CONTACTING RABOBANK ARENA This financial report is designed to provide a general overview of the finances and accountability of Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre. If you have questions about this report contact Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre, 1001 Truxtun Avenue, Bakersfield, California 93301, Attention Director of Finance. - 9 - ASSETS Current Assets Cash 2,182,763$ Accounts receivable, trade, net of allowance for doubtful accounts of $8,750 327,636 Accounts receivable, related party 69,408 Accounts receivable, other 24,685 Receivable from the City of Bakersfield 423,097 Prepaid expenses 46,517 3,074,106 Capital Assets , at cost 18,896 Less accumulated depreciation 12,193 6,703 3,080,809$ LIABILITIES AND NET POSITION Current Liabilities Accounts payable, trade 209,815$ Accounts payable, related party 99,412 Accrued expenses 302,332 Deferred revenues 2,177,567 Advance from the City of Bakersfield 41,683 2,830,809 Other Liabilities 250,000 Net Position Invested in capital assets, net of related debt 6,703 Unrestricted (6,703) - 3,080,809$ See Notes to Consolidated Financial Statements. Rabobank Arena, Theater, Convention Center, June 30, 2017 Consolidated Statement of Net Position and Spectrum Amphitheatre Adventist Health Ice Center of Bakersfield - 10 - Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Consolidated Statement of Revenues, Expenses and Change in Net Position For the Year Ended June 30, 2017 Net revenues: Facilities rent 1,365,520$ Suites 1,307,412 Signage and advertising 982,898 Concession commissions 833,669 Ice Sports Center, general admissions 422,060 Ticketing fees 384,262 Parking 243,205 Facility fees 1,747,225 Ice Sports Center, other revenue 267,588 Merchandise 46,801 Other income 20,953 7,621,593 Direct event expenses: Event labor 1,175,959 Other direct event expenses 3,438,149 4,614,108 Gross profit 3,007,485 Operating expenses 3,856,239 Operating loss (848,754) Nonoperating income: Management reimbursement of operating loss 433,036 Change in net position (415,718) Net position, beginning of year (423,097) Contributions received from the City of Bakersfield 838,815 Net position, end of year -$ See Notes to Consolidated Financial Statements. - 11 - Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Consolidated Statement of Cash Flows For the Year Ended June 30, 2017 Cash flows from operating activities: Cash received from customers 2,173,866$ Cash received from contracts for services 5,798,211 Cash payments to suppliers for goods and services (6,082,234) Cash payments to employees for services (2,330,483) Net cash used in operating activities (440,640) Cash flows from noncapital and related financing activities: Reimbursement from AEG for current year operating loss 433,036 Net decrease in cash and cash equivalents (7,604) Cash and cash equivalents, beginning of year 2,190,367 Cash and cash equivalents, end of year 2,182,763$ See Notes to Consolidated Financial Statements. - 12 - Reconciliation of operating loss to net cash used in operating activities: Operating loss (848,754)$ Adjustments to reconcile operating loss to net cash used in operating activities: Depreciation 1,256 Changes in operating assets and liabilities: Accounts receivable 179,340 Accounts receivable, related party (69,408) Prepaid expenses 66,979 Accounts payable, trade 213,104 Accounts payable, related party (284,366) Accrued expenses 138,455 Deferred revenues 162,754 Net cash used in operating activities (440,640)$ Noncash investing and financing activities: Contribution to unrestricted net position of advances from the City of Bakersfield 838,815$ Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Notes to Consolidated Financial Statements - 13 - Note 1. Nature of Business and Significant Accounting Policies Nature of business: The City of Bakersfield (the City) owns the Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre (the Facilities). The Rabobank Arena was built by the City and began operations in October 1998. It is the only building of its kind in the Bakersfield area. In December 2003, the City opened the Adventist Health Ice Center of Bakersfield (Ice Center). The Ice Center is used for public skating, hockey leagues, figure skating, and other community events. In February 2007, the City opened the Spectrum Amphitheatre (the Amphitheatre), an outdoor theatre located in Bakersfield. The activities of the Arena, Theater, Convention Center, Ice Center and Amphitheatre (the Facilities) are recorded in a special revenue fund of the City’s accounting records. The City owns all the assets of the Facilities, and accordingly, all amounts related to the operation of the Facilities belong to the City. The management company operating the Facilities has a fiduciary responsibility under the management agreement to maintain and operate the Facilities in the best interests of the City and the community. In an agreement dated March 20, 2013, the City contracted with AEG Management Bakersfield, LLC and AEG Facilities, LLC (the Company or AEG) to begin overseeing the operation and management of the Facilities for a term of ten years. The City, at its sole discretion, may terminate this agreement effective June 30, 2018, if the City provides the manager with notice of termination no later than six months before June 30, 2018. On mutual agreement between both parties, the term may be extended one five-year period. AEG was hired by the City for its expertise in the management, operation and marketing of public assembly facilities. Principles of consolidation: The consolidated financial statements of the Facilities include the accounts of the Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre after elimination of all significant inter-company accounts and transactions. Basis of accounting: The Facilities’ basic financial statements are presented on the full accrual basis of accounting and conform to accounting principles generally accepted in the United States of America. The Facilities utilize accrual basis accounting in which revenues are recognized when earned and expenses are recorded when a liability is incurred or economic assets are used. Proprietary funds distinguish operating revenues and expenses from nonoperating Notes to Consolidated Financial Statements - 14 - items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. Revenues and expenses not meeting this definition are reported as nonoperating. Revenue recognition: Suite contracts Revenues from suites are recognized over the contract period per the contract terms. Contracts are billed throughout the year. The suite payments are recorded as deferred revenue until earned and are recognized over the contract period. Naming rights, signage and advertising contracts Revenues from naming rights, signage and advertising contracts are recognized over the contract period per the contract terms. Contracts are billed according to the contract terms. Payments are recorded as deferred revenue until earned and recognized over the contract period. Ticket sales The Facilities, through its contract with Outbox AXS, LLC, sells tickets to events as an agent of the event holder at the on-site box office location and through the telephone and internet. All proceeds from the sale of tickets belong to the event holder. The ticket sales are recorded as deferred revenue when sold. After the event has occurred, settlement with the event holder takes place. The net of total ticket sales less event expenses such as facility rent and reimbursement of direct event expenses is then paid to or received from the event holder. The event ticket proceeds are removed from the deferred revenue account in the month the event occurred. The Facilities earn a ticketing fee on the sale of event tickets that take place through the telephone and internet. Revenues from these fees are recorded as deferred revenue at the time of sale and are recognized in the month the event occurred. Event revenues Revenues from the Facilities’ events such as facilities rent, direct event expense reimbursements, concession commissions, parking and merchandise are recognized in the month the event occurred. Net position: The Facilities utilize a net position presentation in accordance with GASB Statement 34, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments, as amended by GASB 63, Financial Reporting of Deferred Outflows or Resources, Deferred Inflows of Resources, and Net Position. Net position is categorized as invested in capital assets, net of related debt, restricted components of net position and unrestricted components of net position. These categories are defined as follows: Notes to Consolidated Financial Statements - 15 - Invested in capital assets, net of related debt - This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net position component as the unspent proceeds. Restricted components of net position - This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Generally, a liability relates to restricted assets if the asset results from a resource flow that also results in the recognition of a liability or if the liability will be liquidated with the restricted assets reported. Unrestricted components of net position - This component of net position is the net amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position. Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents: For purposes of reporting cash flows, the Facilities considers highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents also include cash on hand and amounts deposited with banks. Custodial credit risk: The California Government Code and the Facilities’ investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits and investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure the Facilities’ deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Notes to Consolidated Financial Statements - 16 - Concentration of credit risk: Credit is extended, in the form of accounts receivable, to customers located primarily in the County of Kern, California. Trade accounts receivable: Trade accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to valuation allowance based on its assessments of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, it has concluded that an allowance for doubtful accounts is necessary; therefore, an allowance of $8,750 has been recorded as of June 30, 2017. Capital assets: The Facilities’ capital assets are recorded at cost. Depreciation is computed using the straight line method over estimated useful lives of 3 - 10 years. Maintenance and repairs of capital assets are charged to operations and major improvements are capitalized. Upon retirement, sale or other disposition of capital assets, the cost and accumulated depreciation are eliminated from the accounts and gain or loss is included in the consolidated statement of revenues and expenses. The following is a summary of changes in the Facilities’ capital assets for the year ended June 30, 2017: Balance Balance 6/30/16 Acquisitions Retirements 6/30/17 Small equipment 18,896$ - - 18,896$ Balance Depreciation Balance 6/30/16 Expense Retirements 6/30/17 Small equipment 10,937$ 1,256 -$ 12,193$ Assets - At Cost Accumulated Depreciation Note 2. Advance from City of Bakersfield During the normal course of business, the City pays expenses that are allocated to the operation of the Facilities. These expenses include payroll and related expenses for the City employees and equipment rent. The amount of the advance fluctuates throughout the year depending on allocated monthly expenses and additional cash flow needs. The advance is an intercompany account that is eliminated in the consolidation for the preparation of the City's financial statements. The amount charged by the City to the Facilities was $457,401 Notes to Consolidated Financial Statements - 17 - for the year ended June 30, 2017 and the amount due to the City at June 30, 2017 was $41,683. Note 3. Deferred Revenue Deferred revenue at June 30, 2017 consists of the following: Suite contracts 676,857$ Ticket sales, future events 923,835 Naming rights 252,016 Sponsorship agreements 188,475 Ticket rebates 60,679 Event deposits 75,705 2,177,567$ Note 4. Administrative Services Agreements AEG provides administrative services to the City for the Facilities. Compensation for these services is a base fee of $400,000 for the first year, paid in equal monthly installments. The base fee will be adjusted annually (up or down) by the Consumer Price Index, but in no event will any increase or decrease exceed three percent. For the year ended June 30, 2017, AEG received $420,387 in total management fees from the City for the three respective facilities. In addition to the base fee, AEG receives an incentive equal to a percentage of the difference between the actual net operating profits or net operating losses for each facility and a benchmark. AEG receives an incentive of: 1) 25% of the difference between the actual net operating profit (loss) and a $332,575 loss realized by the Arena, Theater and Convention Center; 2) 50% of the difference between the actual net operating profit (loss) and a $20,785 loss realized by the Ice Center and 3) 50% of the difference between the actual net operating profit (loss) and a $62,358 loss realized by the Amphitheater. The incentive fee was $-0- for the year ended June 30, 2017. The management agreement also includes a net loss guarantee where if the net operating loss in any given fiscal year for all of the Facilities taken in the aggregate exceeds a base amount of $415,718, AEG will reimburse the Facilities in the amount the net operating loss exceeds $415,718. For the year ended June 30, 2017, AEG reimbursed $433,036 to the Facilities for net operating losses that exceeded the base amount. Per the management agreement, AEG was to make a one-time contribution of $250,000, from its own monies, to an event development account and is to be utilized for future events. In the event of early termination, AEG is authorized to withdraw any amounts remaining in the event development account as of the date of the early termination. The City is entitled to any balance in the account upon the expiration of the management agreement. The contribution from AEG is included in other liabilities on the consolidated statement of net position. Notes to Consolidated Financial Statements - 18 - The following is a summary of the other liabilities transactions for the year ended June 30, 2017: Payable Payable 6/30/16 Additions Deletions 6/30/17 Other liability 250,000$ -$ -$ 250,000$ ARAMARK The Facilities is currently operating under a contract with ARAMARK to operate concession and catering services for the Arena, Theater and Convention Center (the Facilities), effective through June 30, 2018. The Facilities is entitled to receive 35% of the first $600,000 in gross concession receipts and 40% of receipts in excess of $600,000 but less than $2,000,000 and 45% of any amount exceeding $2,000,000 annually. For the year ended June 30, 2017, the Facilities received $824,138 in gross concession and catering receipts from ARAMARK. Note 5. Commitments The Facilities have entered into various long-term contracts and leases. At June 30, 2017, outstanding commitments consist of the following: Rabobank naming rights: The City has entered into a license and naming rights agreement with Rabobank N.A (Bank) for the exclusive naming rights of “Rabobank Arena, Theater, Convention Center”. The agreement calls for the City and AEG to use reasonable efforts to identify the Arena as the “Rabobank Arena, Theater, Convention Center” in all official documents, press releases, advertising, announcements, answering of telephones, as well as all promotion and print material produced or disseminated by or for the account of the City. The Bank has agreed to pay $350,000 per year with the contract terminating January 31, 2025. Ticket sales: The Facilities have entered into a licensed user agreement with Outbox AXS, LLC (AXS) to be the exclusive provider for ticket sales for any event presented at the Facilities. Under the agreement, AXS has the authority to act as an agent for the Facilities for ticket sales to the general public by any and all means including telephone and internet. AXS earns fees from the ticket sales such as inside ticket charges, customer convenience charges, credit card charges, handling charges and ticket sale royalties. AXS collects these fees as tickets are sold and the net amount is remitted to the Facilities weekly. This agreement began in July 2015 and is effective through the date which the AEG management agreement expires. Hockey lease: The City has entered into a lease agreement, which has been assigned to KG Oilers Corporation, for exclusive use of the Facilities for East Coast Hockey League (ECHL) games. KG Oilers Corporation has agreed to pay $3,500 for each Preseason home game Notes to Consolidated Financial Statements - 19 - played, $6,525 for each Regular Season home game played and $1,525 for each Post Season home game played. The fees will be subject to change at two-year intervals beginning on February 1, 2016. The change in payment will be based on the changes in the Consumer Price Index. No change in pricing was made during the current year. The KG Oiler Corp. (Tenant) receives $5,370 per luxury suite leased by the Arena or $145,000 if all twenty-seven suites are leased. In addition to the suite payment, on suite leases sold or renewed after the effective date, an advertising and promotional inventory package will be included that will be provided by the Tenant as part of each new sale or renewal of a suite lease. The suite lease pricing will be adjusted to incorporate the fair market value of the advertising and promotional inventory, which will be estimated to be 10% of the new suite lease price. Tenant will receive the entire amount of the portion of the advertising and promotional inventory package for each new sale or renewal of the suite lease after the effective date. In no case will Tenant receive a sum less than $6,500 when combining the suite lease payment and suite advertising package payment for each suite lease sold or renewed after the effective date. The $6,500 threshold will be subject to change at two-year intervals beginning February 1, 2016. The change in payment is to be based on the changes in the Consumer Price Index. No change in pricing was made in the current year. For the year ended June 30, 2017, KG Oiler Corp. received $129,790 for the twenty four suites leased. Concession and catering services: The Facility has entered into an agreement with ESC Enterprises (ESC) to provide concession and catering services for the Ice Center. The City will receive 15% of gross concession receipts throughout the term of the new contract. This agreement was renewed in March 2016 and is effective through June 30, 2019. For the year ended June 30, 2017, the City received $9,531 in concession commissions from ESC. Note 6. Insurance The Facility has insurance coverage for general liability, auto, crime and workers’ compensation. The general liability insurance has a $100,000 retention level per occurrence for all claims with the maximum amount of coverage being $20,000,000. Workers compensation insurance has a $250,000 retention level per occurrence with the combined maximum amount of coverage being $1,000,000. The auto liability insurance has a $-0- retention level per accident for all claims with the maximum amount of coverage being $1,000,000. The crime insurance has a $250,000 retention level with the maximum amount of coverage being $10,000,000. The Facility also has an umbrella policy which has a $25,000 retention level, which covers all claims up to a maximum amount of coverage of $25,000,000. All buildings are covered under the City’s insurance as the City owns all structures within the Facilities. - 20 - Rabobank Arena, Theater, Convention Center, Adventist Health Ice Center of Bakersfield and Spectrum Amphitheatre Consolidated Schedule of Operating Expenses For the Year Ended June 30, 2017 Utilities 1,204,693$ Salaries and wages 907,780 Management fees 420,387 General and administrative 222,427 Equipment rental 186,339 Employee benefits 175,737 Hockey premium 129,790 Supplies 100,929 Miscellaneous 74,474 Payroll taxes 71,007 Travel 48,182 Bank fees 41,023 Dues and subscriptions 34,462 Office supplies 32,672 Professional fees 30,800 Computer expenses 26,033 Repairs and maintenance 25,823 Insurance 19,891 Training 18,796 Telephone 15,836 Security 13,997 Marketing 12,687 Uniforms 11,436 Postage 9,136 Bad debt expense 8,750 Meals and entertainment 8,599 Licenses and permits 1,632 Other taxes and licenses 1,515 Depreciation 1,256 Contract labor 150 3,856,239$ CITY OF BAKERSFIELD, CALIFORNIA SINGLE AUDIT REPORTS FOR THE YEAR ENDED JUNE 30, 2017 CITY OF BAKERSFIELD, CALIFORNIA SINGLE AUDIT REPORTS FOR THE YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS Page Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................. 1 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ....................................................................... 3 Schedule of Expenditures of Federal Awards .................................................................................... 5 Notes to Schedule of Expenditures of Federal Awards ..................................................................... 6 Schedule of Findings and Questioned Costs ..................................................................................... 8 1 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council City of Bakersfield, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bakersfield (the City), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 8, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this report is not suitable for any other purpose. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California December 8, 2017 3 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the Honorable Mayor and Members of the City Council City of Bakersfield, California Report on Compliance for Each Major Federal Program We have audited the City of Bakersfield, California’s (the City) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2017. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2017. 4 Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated December 8, 2017, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California January 16, 2018 The accompanying notes are an integral part of this schedule. 5 CITY OF BAKERSFIELD, CALIFORNIA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2017 Federal Grantor/ Pass-Through Passed Through Pass-Through Grantor/CFDA Grant Identifying to Federal Program Title Number Number Subrecipients Expenditures U.S. Department of Housing and Urban Development: Direct Programs: Community Development Block Grants - Entitlement Grants 14.218 N/A-$ 3,818,536$ Emergency Shelter Grant 14.231 N/A - 248,781 Housing Opportunities for Persons with AIDS 14.241 N/A - 221,552 Home Investment Partnerships Program 14.239 N/A - 2,498,605 Home Investment Partnerships Program - Current Year Loans 14.239 N/A - 60,000 Subtotal - Home Investment Partnership Program - 2,558,605 Total U.S. Department of Housing and Urban Development - 6,847,474 U.S. Department of Justice: Passed through California Emergency Management Agency: Edward Byrne Memorial Formula Grant 16.738 N/A - 91,934 Equitable Sharing Program 16.922 N/A - 6,373 Total U.S. Department of Justice - 98,307 U.S. Department of Transportation: Direct Program: Airport Improvement Program 20.106 N/A - 201,192 Passed through California Office of Traffic Safety: State Community Highway Safety 20.600 PT1478 - 402,803 Passed through California Department of Transportation: Highway Planning and Construction Grants: Surface Transportation Program 20.205 STPL-5109 - 5,158,668 Transportation Equity Act 20.205 HTP2IL-5109; PRNS-5109; and NCIIP-5109 - 80,795,785 State Highway Operation and Protection Program (SHOPP) 20.205 ACNHP-P099(591)- 3,855,334 Highway Bridge Replacement 20.205 BRLSZD-5109 (046)- 357,766 Congestion Mitigation and Air Quality Program 20.205 CML-5109 - 1,232,595 Subtotal - Highway Planning and Construction Grants - 91,400,148 Total U.S. Department of Transportation - 92,004,143 U.S. Department of Homeland Security: Direct Program: Assistance to Firefighters 97.044 N/A - 1,884 Total U.S. Department of Homeland Security - 1,884 Total Expenditures of Federal Awards, Excluding Beginning Loan Balances -$ 98,951,808$ U.S. Department of Housing and Urban Development: Direct Programs: Community Development Block Grants - Entitlement Grants 14.218 N/A-$ 11,446$ Home Investment Partnerships Program 14.239 N/A - 17,325,302 Total Beginning Federal Loan Balances with Continuing Compliance Requirements - 17,336,748 Total Expenditures of Federal Awards, Including Beginning Loan Balances -$ 116,288,556$ Beginning Federal Loan Balances with Continuing Compliance Requirements 6 CITY OF BAKERSFIELD, CALIFORNIA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2017 NOTE 1 – GENERAL The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the activity of all Federal Financial Assistance programs of the City of Bakersfield, California (the City). As defined in Note 1 of the Notes to the City’s basic financial statements, those financial statements and the accompanying SEFA present the City and its component units, if any, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations and so data from these units are combined with data of the City. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements of the City to emphasize that they are legally separate from the City. Each blended and discretely presented component unit has a June 30 year-end. The City’s Comprehensive Annual Financial Report (CAFR) may be obtained at the Finance Department. Federal financial assistance received directly from Federal agencies as well as Federal financial assistance passed through other government agencies are included on the schedule. NOTE 2 – BASIS OF ACCOUNTING The accompanying SEFA is presented using the accrual basis of accounting, which is described in Note 1 of the Notes to the City’s basic financial statements. NOTE 3 – RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Amounts reported in the accompanying schedule, on page 7, agree with the amounts reported in the related periodic Federal financial reports. NOTE 4 – INDIRECT COST RATE The City has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. NOTE 5 – LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS Outstanding federally-funded program loans with a continuing compliance requirements had the following balances and activities for the fiscal year ended June 30, 2017: BALANCE BALANCE CFDA Number Program Title 6/30/2016 INCREASE DECREASE 6/30/2017 14.218 Community Development Block Grants/Entitlement Grants 11,446$ -$ 690$ 10,756$ 14.239 Home Investment Partnerships Program 17,325,302 60,000 194,568 17,190,734 Total 17,336,748$ 60,000$ 195,258$ 17,201,490$ 7 NO T E 6 – R E C O N C I L I A T I O N T O B A S I C F I N A N C I A L S T A T E M E N T S Th e f o l l o w i n g i s a r e c o n c i l i a t i on o f t h e a m o u n t s l i s t e d i n t h e SE F A t o t h e C i t y ’ s b a s i c f i n a n c i a l s t a t e m e n t s : U. S . D e p a r t m e n t o f H o u s i n g a n d U. S . D e p a r t m e n t o f Ur b a n D e v e l o p m e n t Ho m e l a n d S e c u r i t y Co m m u n i t y H o u s i n g De v e l o p m e n t E m e r g e n c y O p p o r t u n i t i e s f o r H o m e A i r p o r t S t a t e a n d H i g h w a y E d w a r d B y r n e Bl o c k G r a n t s Sh e l t e r P e r s o n s I n v e s t m e n t I m p r o v e m e n t C o m m u n i t y P l a n n i n g a n d A s s i s t a nc e t o M e m o r i a l - E n t i t l e m e n t G r a n t s G r a n t w i t h A I D S P a r t n e r s h i p s P r o g r a m H i g h w a y S a fe t y C o n s t r u c t i o n F i r e f i g h t e r s G r a n t Fe d e r a l F i n a n c i a l A s s i s t a n c e R e c o g n i z e d 3 , 4 1 5 , 3 7 2 $ 2 4 8 , 7 8 1 $ 2 2 1 , 5 5 2 $ 2 , 5 5 8 , 6 0 5 $ 2 0 1 , 1 9 2 $ 4 0 2 , 8 0 3 $ 9 1 , 4 0 0 , 1 4 8 $ 1 , 8 8 4 $ 9 1 , 9 3 4 $ 6,373 $ To t a l 3 , 4 1 5 , 3 7 2 $ 2 4 8 , 7 8 1 $ 2 2 1 , 5 5 2 $ 2 , 5 5 8 , 6 0 5 $ 2 0 1 , 1 9 2 $ 4 0 2 , 8 0 3 $ 9 1 , 4 0 0 , 1 4 8 $ 1 , 8 8 4 $ 9 1 , 9 3 4 $ 6,373 $ Re i m b u r s a b l e D i s b u r s e m e n t / E x p e n d i t u r e 3 , 8 1 8 , 5 3 6 $ 2 4 8 , 7 8 1 $ 2 2 1 , 5 5 2 $ 2 , 5 5 8 , 6 0 5 $ 2 0 1 , 1 9 2 $ 4 0 2 , 8 0 3 $ 9 1 , 4 0 0 , 1 4 8 $ 1 , 8 8 4 $ 9 1 , 9 3 4 $ 6,373 $ To t a l D i s b u r s e m e n t / E x p e n d i t u r e 3 , 8 1 8 , 5 3 6 $ 2 4 8 , 7 8 1 $ 2 2 1 , 5 5 2 $ 2 , 5 5 8 , 6 0 5 $ 2 0 1 , 1 9 2 $ 4 0 2 , 8 0 3 $ 9 1 , 4 0 0 , 1 4 8 $ 1 , 8 8 4 $ 9 1 , 9 3 4 $ 6,373 $ Un p a i d B i l l i n g s a s o f J u n e 3 0 , 2 0 1 7 - $ - $ - $ - $ - $ - $ 8 , 9 7 8 , 1 7 8 $ - $ - $ -$ Du e f r o m S t a t e / L o c a l G o v e r n m e n t s - - - - - - 1 1 6 , 0 7 4 - - - Ac c r u e d R e v e n u e J u n e 3 0 , 2 0 1 7 1 , 0 8 2 , 0 6 0 7 0 , 0 1 9 2 2 1 , 5 5 2 1 , 2 0 1 , 1 5 5 - - 1 9 , 0 9 6 , 7 7 8 - 4 2 , 9 6 5 - Du e f r o m O t h e r G o v e r n m e n t a l A g e n c i e s 1 , 0 8 2 , 0 6 0 $ 7 0 , 0 1 9 $ 2 2 1 , 5 5 2 $ 1 , 2 0 1 , 1 5 5 $ - $ - $ 2 8 , 1 9 1 , 0 3 0 $ - $ 4 2 , 9 6 5 $ -$ U. S . D e p a r t m e n t o f T r a n s p o r t a t i o n Fe d e r a l G ra n t o r / P r o g r a m T i t l e U.S. Department of Justice Equitable ProgramSharing Th e f o l l o w i n g i s a r e c o n c i l i a t i on o f t h e v a r i a n c e s b e t w e e n E x p e nd i t u r e s a n d F e d e r a l F i n a n c i a l A s s i s t a n c e r e c o g n i z e d : U. S . D e p a r t m e n t o f Ho m e l a n d S e c u r i t y Co m m u n i t y Ho u s i n g De v e l o p m e n t Em e r g e n c y O p p o r t u n i t i e s f o r Ho m e Ai r p o r t St a t e a n d Hi g h w a y Edward Byrne Bl o c k G r a n t s Sh e l t e r Pe r s o n s In v e s t m e n t I m p r o v e m e n t C o m m u n i t y P l a n n i n g a n d As s i s t a nc e t o Memorial - E n t i t l e m e n t G r a n t s G r a n t wi t h A I D S Pa r t n e r s h i p s Pr o g r a m H i g h w a y S a fe t y C o n s t r u c t i o n Fi r e f i g h t e r s Grant Fe d e r a l F i n a n c i a l A s s i s t a n c e R e c o g n i z e d 3, 4 1 5 , 3 7 2 $ 24 8 , 7 8 1 $ 22 1 , 5 5 2 $ 2, 5 5 8 , 6 0 5 $ 20 1 , 1 9 2 $ 40 2 , 8 0 3 $ 91 , 4 0 0 , 1 4 8 $ 1, 8 8 4 $ 91,934 $ 6,373 $ Ot h e r - - - - - - - - - - To t a l 3, 4 1 5 , 3 7 2 $ 24 8 , 7 8 1 $ 22 1 , 5 5 2 $ 2, 5 5 8 , 6 0 5 $ 20 1 , 1 9 2 $ 40 2 , 8 0 3 $ 91 , 4 0 0 , 1 4 8 $ 1, 8 8 4 $ 91,934 $ 6,373 $ To t a l D i s b u r s e m e n t / E x p e n d i t u r e 3, 8 1 8 , 5 3 6 $ 24 8 , 7 8 1 $ 22 1 , 5 5 2 $ 2, 5 5 8 , 6 0 5 $ 20 1 , 1 9 2 $ 40 2 , 8 0 3 $ 91 , 4 0 0 , 1 4 8 $ 1, 8 8 4 $ 91,934 $ 6,373 $ Va r i a n c e o f R e v e n u e s R e c o g n i z e d O v e r / ( U n d e r ) E x p e n d i t u r e s (4 0 3 , 1 6 4 ) - - - - - - - - - Pr o g r a m I n c o m e U s e d (4 0 3 , 1 6 4 ) - - - - - - - - - To t a l - $ - $ - $ - $ - $ - $ - $ - $ -$ -$ Fe d e r a l G r a n t o r / P r o g r a m T i t l e Sharing Program U. S . D e p a r t m e n t o f T r a n s p o r t a t i o n U.S. Department of Justice Equitable U. S . D e p a r t m e n t o f H o u s i n g a n d U r b a n D e v e l o p m e n t 8 CITY OF BAKERSFIELD, CALIFORNIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2017 SECTION I – SUMMARY OF AUDITOR’S RESULTS Financial Statements: Type of auditor's report issued Unmodified Internal control over financial reporting: Material weakness(es) identified? yes x no Significant deficiencies identified not considered to be material weaknesses? yes x no Noncompliance material to financial statements noted? yes x no Federal Awards: Internal control over major programs: Material weakness(es) identified? yes x no Significant deficiencies identified not considered to be material weaknesses? yes x no Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? yes x no Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster 14.218 14.239 Community Development Block Grants – Entitlement Grants HOME Investment Partnerships Program Dollar threshold used to distinguish between Type A and Type B programs: $ 3,000,000 Auditee qualified as low-risk auditee? x yes no SECTION II – FINDINGS RELATING TO FINANCIAL STATEMENTS REQUIRED UNDER GENERALLY ACCEPTED GOVERNMENT AUDITING STANDARDS (GAGAS) None. 9 SECTION III – FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT None. SECTION IV – STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS None. B A K E R S F I E L D Community Development Department Jacquelyn R. Kitchen, Community Development Director MEMORANDUM February 16, 2018 TO: Budget & Finance Committee FROM: Jacquelyn R. Kitchen, Community Development Director SUBJECT: Non-Profit & For-Profit Applications for HUD FY 2018/19 Funding Background. As an entitlement City under the U. S. Department of Housing and Urban Development (HUD), the City of Bakersfield receives annual funds to improve low-income neighborhoods in the City. Funds are distributed pursuant to the following programs: Community Development Block Grant (CDBG), Home Investment Partnership (HOME), Emergency Solutions Grant (ESG), and Housing Opportunities for Persons with AIDS (HOPWA). Available Funds. Last year (FY 2017/18), HUD provided entitlement funds to the City in the amount of $5,096,817 with an additional $7,000 in program income for CDBG and $30,000 for HOME. Thus, the total proposed HUD budget for FY 17/18 was $5,133,817. As of the preparation of this Memo, HUD has not released the entitlement amount for FY 18/19; however, Staff anticipates Congress will reduce CDBG and HOME funding by three percent (3%) and 10 percent (10%) respectively. Therefore, Staff anticipates a funding level of $4,888,600. There is no indication that ESG and HOPWA will be reduced. Therefore, Staff is using last year’s entitlement, less the anticipated reductions, as our current projection. Applications Received. The deadline for the submission of CDBG, HOME, and ESG applications for FY 2018/19 funding was October 27, 2017. This year, 13 applications were submitted (one application was brought forward from last year) from non-profit and private entities totaling $5,496,531, and 12 applications from Public Works and Recreation and Parks totaling $3,748,995. The requested projects are intended to improve the quality of life and infrastructure for low- income neighborhoods. Recommendation. After reviewing the requests for funding, Staff has prepared a proposed budget for FY 18/19. A summary of the proposed budget for consideration by the Budget and Finance Committee and recommendation to City Council, as well as memoranda summarizing the funding requests from nonprofits and City Departments is attached. Staff anticipates that the FY 18/19 HUD Action Plan will be considered by the City Council on April 11, 2018. This is the fourth funding year of the Consolidated Plan 2015-2020. Attachments 1. Proposed CDBG Budget (FY 18/19) 2. Proposed HOME/ESG/HOPWA Budget (FY 18/19) 3. Memo – Overview of Applications Received S:\EDCD_Shared\ACTION PLANS\Action Plan 2018-19\2 2018-19 Funding Request Non Profit Memo.Docx Description FY 18/19 Requested FY 18/19 Recommende FY 17/18 Budget CDBG Entitlement (Projected for FY 18/19 w/ 3% decrease)5,130,718 3,164,421 3,262,290 Program Income (Projected for FY 18/19)7,000 7,000 Total Available Resources 5,130,718 3,171,421 3,269,290 Administration (not to exceed 20% or $634,284)634,284 634,284 653,858 Section 108 Loan Payment on $4.1M 292,758 292,758 282,692 Section 108 Loan Payment on $800K 54,711 54,711 53,244 Total Admin and Debt Payment 981,753 981,753 989,794 Total Resources minus Admin and Debt Payments 2,189,668 2,189,668 2,279,496 Fair Housing Program Services 100,000 100,000 100,000 Bakersfield Senior Center 152,838 85,000 85,000 Bakersfield Police Department 312,600 290,713 305,394 Total Public Service Projects 565,438 475,713 490,394 Total Resources minus Public Service Projects 1,624,230 1,713,955 1,789,102 Home Access Rehabilitation 40,000 40,000 40,000 East Terrace: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.300,000 300,000 0 Old Town Kern/Beale Curb, Gutter, Sidewalk, Drainage, Accessibility Impr 300,000 300,000 301,212 Wilson Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.500,000 350,000 0 Madison Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.300,000 0 0 Oleander Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.300,000 0 301,212 East California: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.500,000 0 0 La France Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.300,000 0 273,441 2017-2018 Union-Brundage: Curb, Gutter, Sidewalk, Drainage 0 0 602,027 Baker Street Neighborhood LED Lighting Improvements 60,870 61,000 0 Oleander Neighborhood Street Lights Upgrade 473,000 179,955 0 Central Park Playground Structure Surfacing Replacement 79,350 0 0 McMurtrey Aquatic Center Improvements 319,025 316,000 0 Dr. Martin Luther King, Jr. Recreation Center Improvements 316,750 0 0 2017-2018 Lowell Park Improvements 0 0 132,000 2017-2018 Stiern Park Improvements 0 0 139,210 BARC Tire Recycling Program 167,000 167,000 0 CAPK Food Bank Expansion 749,285 0 0 Total Projects 4,705,280 1,713,955 1,789,102 Total Requests for Public Services + Projects 5,270,718 2,189,668 2,279,496 Total Available Resources Remaining -3,081,050 $0 $0 Note: RDA (Redevelopment Agency Successor) Funds are not part of the HUD Entitlement PROPOSED CDBG BUDGET FY 2018-19 RESOURCES ADMINISTRATION AND DEBT SERVICE PUBLIC SERVICES (MAX. 15% or $475,713) PROJECTS PROPOSED HOME BUDGET FY 2018-19 HOME Entitlement (Projected for FY 18/19 based on 10% decrease) 993,131$ 993,131$ 1,103,479$ Program Income (Projected for FY 18/19)30,000$ 30,000$ 30,000$ Total Available Resources 1,023,131$ 1,023,131$ 1,133,479$ Administration (not to exceed 10%)102,313$ 102,313$ 110,348$ Total Resources minus Admin 920,818$ 920,818$ 1,023,131$ CHDO Set Aside (15%)-$ 148,970$ -$ New Construction -$ 771,848$ -$ DANCO 1,200,000$ -$ -$ HACK-Residences at East Hills 1,000,000$ 920,818$ -$ Tegeler Hotel SRO Associates, LP - Rehab of Tegeler SFR 1,500,000$ -$ -$ Total (All Requests)3,700,000$ 920,818$ -$ Total Available Resources Remaining (2,779,182)$ -$ 1,023,131$ PROPOSED ESG BUDGET FY 2018-19 ESG Entitlement (Projected for FY 18/19)292,879$ 292,879$ 292,879$ Administration (not to exceed 7.5%)21,966$ 21,966$ 21,966$ Total Resources minus Admin 270,913$ 270,913$ 270,913$ Flood Ministries - Street Outreach 22,500$ 22,500$ 25,500$ Bakersfield Homeless Center - Shelter 70,000$ 63,363$ 62,330$ Bakersfield Homeless Center - Rapid Rehousing 95,000$ 95,187$ 95,186$ The Mission at Kern County - Shelter 76,000$ 63,363$ 62,397$ Alliance Against Family Violence - Shelter 32,000$ 26,500$ 25,500$ Total (All Requests)295,500$ 270,913$ 270,913$ Total Available Resources Remaining (24,587)$ 0$ 0$ PROPOSED HOPWA BUDGET FY 2018-19 HOPWA Entitlement (Projected for FY 18/19)438,169$ 438,169$ 438,169$ Administration (not to exceed 3%)13,145$ 13,145$ 13,145$ Total Resources minus Admin 425,024$ 425,024$ 425,024$ Kern County Public Health 425,024$ 425,024$ 425,024$ Total (All Requests)425,024$ 425,024$ 425,024$ Total Available Resources Remaining (0)$ (0)$ -$ PROJECTS Description FY 18/19 Requested FY 18/19 Recommended FY 17/18 Actual RESOURCES ADMINISTRATION AND DEBT SERVICE Description FY 18/19 Requested FY 18/19 Recommended FY 17/18 Budget RESOURCES RESOURCES ADMINISTRATION AND DEBT SERVICE HOPWA SPONSOR/PROVIDER ADMINISTRATION PROJECTS Description FY 18/19 Requested FY 18/19 Recommended FY 17/18 Budget 1 | Page S : \EDCD_Shared\ACTION PLANS\Action Plan 2018-19\CC_Budget & Finance\CDBG_HOME_ESG_2018-19 Funding Request.Docx Community Development Department M E M O R A N D U M January 24, 2018 TO: Jacquelyn R. Kitchen, Community Development Director FROM: Hayward Cox, Community Development Coordinator SUBJECT: Non-Profit & For-Profit Applications for HUD FY 2018-19 Funding The deadline for the submission of CDBG, HOME, and ESG applications for FY 2018-19 funding was October 27, 2017. This year 13 applications were submitted (one application was brought forward from last year) from non-profit and private entities totaling $5,496,531, and 12 applications from Public Works and Recreation and Parks totaling $3,748,995. Attached are the tentative Action Plan approval schedule and summaries of the applications received from applicants requesting assistance from the various HUD programs for FY 2018-19. Attachment 1 Overall HUD Project Applications for FY 2018/19 Funding FY 2018/19 HOME APPLICATIONS HUD Category Applicant Ward Proposal Total Cost FY 18/19 Request HUD Eligible Staff Rating CD Recommendation and Notes Proposed for Budget HOME Rehabilitation Construction Tegeler Hotel SRO Associates, LLP 2 Acquire and Rehab 53- unit SRO hotel at 20th and H Streets $10,898,965 $1,500,000 Yes Staff recommends approval from fy14/15 and 16/17 funds. $1.3 million HOME Affordable Housing New Construction DANCO Construct 58-unit new affordable multi- family development on Brentwood Dr. $22,970,875 $1,200,000 Yes Staff recommends approval from 17/18 funds and program income. $1.1 million HOME Affordable Housing/New Construction Housing Authority of the County of Kern Construct 81-unit new affordable multi- family development near SW corner of Bernard/Oswell $21,539,000 $1,000,000 Yes Staff recommends tentative approval from fy18/19 funds and projected program income. $920,818 Projected HOME Funding: $993,131 Requested Funding: $3,700,000 Recommended Funding: $3.32 million (Includes prior fy funds) 2 FY 2018/19 ESG APPLICATIONS HUD Category Applicant Ward Proposal Total Cost FY 18/19 Request HUD Eligible Staff Rating CD Recommendation and Notes Proposed for Budget ESG Emergency Shelter Alliance Against Family Violence All Operating expenses related to emergency shelter $32,000 Yes Staff recommends approval $26,500 ESG Rapid Rehousing Bakersfield Homeless Center All Expenses to house homeless families and individuals. $90,000 Yes Staff recommends approval $95,187 ESG Emergency Shelter Bakersfield Homeless Center All Operating expenses related to emergency shelter $70,000 Yes Staff recommends approval $63,363 ESG Emergency Shelter Mission of Kern County All Operating expenses related to emergency shelter $76,000 Yes Staff recommends approval $63,363 ESG Outreach Flood Ministries All Expenses to operate outreach efforts to homeless persons. $22,500 Yes Staff recommends approval $22,500 ESG Emergency Shelter Clinica Sierra Vista All Emergency shelter operating expenses. $33,739 Yes Not recommended. ESG funds are too limited. Will go to CoC for comment. $0 Projected ESG Funding: $292,879 Requested Funding: $392,239 Recommended Funding: $270,913 3 FY 2018/19 CDBG Applications HUD Category Applicant Ward Proposal Total Cost FY 18/19 Request HUD Eligible Staff Rating CD Recommendation and Notes Proposed for Budget CDBG Fair Housing GBLA All Fair housing services to low income persons throughout city limits. $100,000 $100,000 Yes 30 Approve $100,000 CDBG BPD Officers City of Bakersfield 2 Three officers to increase police presence in selected area of city. $312,600 $312,600 Yes 30 Approve $290,713 CDBG Senior services Bakersfield Senior Center 1 Services for low income seniors $152,838 $152,838 Yes Approve partial funding $85,000 CDBG Section 108 City of Bakersfield Na Annual Debt service for infrastructure loan. $292,758 $292,758 Yes 30 Approve. Annual Debt service for infrastructure loan. $292,758 CDBG Section 108 City of Bakersfield CD Na Annual Debt service for infrastructure loan. $54,711 $54,711 Yes 30 Approve. Annual Debt service for infrastructure loan. $54,711 CDBG Home Access City of Bakersfield CD All Provide implements to assist with mobility in homes of low income disabled individuals. $40,000 $40,000 Yes 30 Approve at current funding level. $40,000 CDBG Economic Development BARC 1 Purchase tire recycling equipment to preserve /create jobs for low income persons. $365,000 $167,000 Yes 25 Approve at $167,000 or what CDBG funds are available. $167,000 CDBG Facility Expansion CAP of Kern County 1 Expand food bank facility from 20K-s.f. to 40K-s.f. $1.5 million $749,285 Yes 26 Deny funding because CAPK is not offering funds for the project and C.O.B. recently participated in their solar roof project. -0- CDBG Public Facilities and Services Funds Requested: $2,253,759 CDBG Funding Recommended: $1,030,182 4 FY 2018/19 CDBG Applications – Public Works Department HUD Category Applicant Ward Proposal Total Cost FY 18/19 Request HUD Eligible Staff Rating CD Recommendation and Notes Proposed for Budget CDBG CG&S City of PWKS 1 East Terrace Way area: curb, gutter and sidewalk and drainage /accessibility improvement. $300,000 $300,000 Yes Approve $300,000 CDBG CG&S City of Bakersfield PWKS 2 Old Town Kern/Beale area: curb, gutter and sidewalk drainage/accessibility improvement. $300,000 $300,000 Yes Approve $300,000 CDBG CG&S City PWKS Wilson area: curb, gutter and sidewalk drainage/accessibility improvement. $500,000 $500,000 Yes Approve $350,000 CDBG CG&S City PWKS 2 Baker Street area: neighborhood LED lighting improvement. $60,870 $60,870 Yes Approve $61,000 CDBG CG&S City PWKS 1 Madison area: curb, gutter and sidewalk, drainage/accessibility improvement. $300,000 $300,000 Yes Do not fund based on PWks priority ranking. -0- CDBG CG&S City PWKS 2 Oleander area: curb, gutter and sidewalk, drainage/accessibility improvement. $300,000 $300,000 Yes Do not fund based on PWks priority ranking. -0- CDBG CG&S City PWKS 1 East California area: curb, gutter and sidewalk, drainage/accessibility improvement. $500,000 $500,000 Yes Do not fund based on PWks priority ranking. -0- 5 HUD Category Applicant Ward Proposal Total Cost FY 18/19 Request HUD Eligible Staff Rating CD Recommendation and Notes Proposed for Budget CDBG CG&S City PWKS 1 La France area: curb, gutter and sidewalk, drainage/accessibility improvement. $300,000 $300,000 Yes Deny funding based on PWks priority ranking. -0- CDBG CG&S City PWKS 2 Oleander area: Street lights upgrade. $473,000 $473,000 Yes Partial funding based on PWks priority ranking. $179,955 Public Works CDBG Funding Requested: $3,033,870 CDBG Funding Recommended: $1,190,955 6 FY 2018/19 CDBG Applications – Recreation and Parks Department HUD Category Applicant Ward Proposal Total Cost FY 18/19 Request HUD Eligible Staff Rating CD Recommendation and Notes Proposed for Budget CDBG Rec & Parks City of Bakersfield Rec & Parks 2 Central Park Playground Surfacing Replacement $79,350 $79,350 No Do not fund; CDBG National Objective cannot be met. -0- CDBG Rec & Parks City of Bakersfield Rec & Parks 2 McMurtrey aquatic Center Improvements $319,025 $319,025 No Approve $316,000 CDBG Rec & Parks City of Bakersfield Rec & Parks 1 Dr. Martin Luther King Jr. Recreation Center Improvements $316,750 $316,750 Yes Do Not Fund based on priority ranking. -0- Rec and Parks CDBG Requested Funding: $715,125 Funding Recommended: $316,000 Notes: Projected HOPWA Funding: $438,169 Requested Funding: $425,024 Recommended Funding: $425,024 Projected CDBG Funding: $3,171,421 Requested Funding: $5,270,718 Recommended Funding: $2,537,137 (Recommended funding mount is less 20% CDBG Admin. The amount includes Section 108 Loan repayments) All meetings will be held at City Hall North, First Floor, Conference Room A Adopted: DRAFT Budget & Finance City Council Meetings Committee Meetings 3:30 Closed Session, 5:15 p.m. Public Session 12:00 p.m. Budget Hearing 06/06, Budget Adoption 06/20 Budget Departmental Workshops Holidays - City Hall Closed 12:00 p.m. SMTWTHF S SMTWTHF S SMTWTHF S 123456 123 123 78910111213 45678910 45678910 14 15 16 17 18 19 20 11 12 13 14 15 16 17 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 25 26 27 28 29 30 31 SMTWTHF S SMTWTHF S SMTWTHF S 1234567 12345 12 891011121314 6789101112 3456789 15 16 17 18 19 20 21 13 14 15 16 17 18 19 10 11 12 13 14 15 16 22 23 24 25 26 27 28 20 21 22 23 24 25 26 17 18 19 20 21 22 23 29 30 27 28 29 30 31 24 25 26 27 28 29 30 SMTWTHF S SMTWTHF S SMTWTHF S 1234567 1234 1 891011121314 567891011 2345678 15 16 17 18 19 20 21 12 13 14 15 16 17 18 9 10 11 12 13 14 15 22 23 24 25 26 27 28 19 20 21 22 23 24 25 16 17 18 19 20 21 22 29 30 31 26 27 28 29 30 31 23 24 25 26 27 28 29 30 SMTWTHF S SMTWTHF S SMTWTHF S 123456 123 1 78910111213 45678910 2345678 14 15 16 17 18 19 20 11 12 13 14 15 16 17 9 10 11 12 13 14 15 21 22 23 24 25 26 27 18 19 20 21 22 23 24 16 17 18 19 20 21 22 28 29 30 31 25 26 27 28 29 30 23 24 25 26 27 28 29 30 31 League of California Cities Annual Conference - September 12 - 14, 2018 League of California Cities Mayors and Council Members Executive Forum - June 27 - 29, 2017 Budget & Finance Committee Calendar January 2018 Through December 2018 JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH APRIL MAY JUNE Documents Presented At The Budget & Finance Committee February 16, 2018 Meeting 20 1 8 ‐19 Dr a f t  Ac t i o n  Pl a n   1 • HU D ’ s Mi s s i o n : Cr e a t e s t r o n g , s u s t a i n a b l e , i n c l u s i v e c o m m u n i t i e s a n d qu a l i t y a f f o r d a b l e h o m e s f o r a l l . • En t i t l e m e n t Co m m u n i t y : Pa r t i c i p a t i n g c o m m u n i t i e s w h o a r e e l i g i b l e t o re c e i v e m o n e y t h r o u g h H U D ’ s f u n d i n g f o r m u l a . • Me t r o p o l i t a n c i t i e s w i t h a t l e a s t 5 0 , 0 0 0 p e o p l e • Ur b a n c o u n t i e s w i t h i n M A s a n d h a v e a p o p u l a t i o n o f 2 0 0 , 0 0 0 o r mo r e • Fu n d i n g So u r c e s : Th e C i t y o f B a k e r s f i e l d r e c e i v e s f u n d i n g a n n u a l l y th r o u g h f o u r s o u r c e s : • Co m m u n i t y D e v e l o p m e n t B l o c k G r a n t ( C D B G ) • HO M E I n v e s t m e n t P a r t n e r s h i p P r o g r a m ( H O M E ) • Em e r g e n c y S o l u t i o n s G r a n t ( E S G ) • Ho u s i n g O p p o r t u n i t i e s f o r P e o p l e w i t h A I D S ( H O P W A ) Pr o g r a m  Ov e r v i e w  – D e p a r t m e n t  of   Ho u s i n g  an d  Ur b a n  De v e l o p m e n t  (H U D ) Fi v e ‐Ye a r  Co n s o l i d a t e d  Pl a n  (2 0 1 5 ‐2020)  Ci t y re q u i r e d to ad o p t a “C o n Pl a n ” to re c e i v e fe d e r a l HU D funds:  CD B G – C o m m u n i t y D e v e l o p m e n t B l o c k G r a n t  HO M E – H O M E I n v e s t m e n t P a r t n e r s h i p P r o g r a m  ES G – E m e r g e n c y S o l u t i o n s G r a n t  HO P W A – H o u s i n g O p p o r t u n i t i e s f o r P e r s o n s w i t h H I V / A I D S  Pl a n re v i e w s co m m u n i t y ne e d s an d se t s pr i o r i t i e s fo r fu t u r e funds:  De c e n t a n d A f f o r d a b l e H o u s i n g  In v e s t i n E c o n o m i c & C o m m u n i t y D e v e l o p m e n t  Pr o v i d e I n f r a s t r u c t u r e i m p r o v e m e n t s i n l o w / m o d i n c o m e a r e a s  Pr o v i d e P u b l i c S e r v i c e s & F a c i l i t i e s  Ne w pl a n ev e r y 5 Ye a r s ; Cu r r e n t Pl a n Ap p r o v e d by Co u n c i l in 2014 2 Im p l e m e n t a t i o n :  An n u a l  Ac t i o n  Plan  An n u a l Ac t i o n Pl a n to Im p l e m e n t th e 5 Ye a r Co n s o l i d a t e d Pl a n Cu r r e n t l y i n 4 th ye a r ( F Y 2 0 1 8 / 1 9 ) A c t i o n s  Es t i m a t e d FY 18 / 1 9 HU D Al l o c a t i o n :  CD B G : $ 3 , 1 6 4 , 4 2 1  HO M E : $ 9 9 3 , 1 3 1  ES G : $ 2 9 2 , 8 7 9  HO P W A : $ 4 3 8 , 1 6 9  TO T A L : $ 4 , 8 8 8 , 6 0 0 ( a 9 . 6 % d e c r e a s e f r o m F Y 1 7 / 1 8 )  Mi l e s t o n e Da t e s :  10 / 2 7 / 1 7 : A p p l i c a t i o n D e a d l i n e ( 2 5 A p p l i c a t i o n s ; $ 9 , 2 4 5 , 5 2 6 r e q u ested)  02 / 1 6 / 1 8 : B u d g e t & F i n a n c e C o m m i t t e e  03 / 0 9 / 1 8 : D r a f t A c t i o n P l a n C i r c u l a t i o n f o r R e v i e w  03 / 2 8 / 1 8 : A c t i o n Pl a n Co m m u n i t y Me e t i n g  04 / 1 1 / 1 8 : D r a f t A c t i o n P l a n t o C i t y C o u n c i l  05 / 1 6 / 1 8 : D e a d l i n e t o s u b m i t F i n a l A c t i o n P l a n t o H U D 3 4CD B G :  Av a i l a b l e  Re s o u r c e s RE S O U R C E S Pr o j e c t e d F Y 1 8 / 1 9 C D B G E n t i t l e m e n t $ 3 , 1 6 4 , 4 2 1 Pr o j e c t e d P r o g r a m I n c o m e $ 7 , 0 0 0 To t a l Av a i l a b l e Re s o u r c e s $ 3,171,421 AD M I N I S T R A T I O N AN D DE B T SE R V I C E Ad m i n i s t r a t i o n ( n o t t o e x c e e d 2 0 % o r $ 6 3 4 , 2 8 4 ) $ 634,284 Se c t i o n 1 0 8 L o a n P a y m e n t o n $ 4 . 1 M $ 2 9 2 , 7 5 8 Se c t i o n 1 0 8 L o a n P a y m e n t o n $ 8 0 0 K $ 5 4 , 7 1 1 To t a l Ad m i n an d De b t Pa y m e n t $ 981,753 To t a l Re s o u r c e s mi n u s Ad m i n an d De b t Pa y m e n t s $ 2,189,668 • Ad m i n ( 2 0 % ) : M a n a g e m e n t , O v e r s i g h t , C o o r d i n a t i o n $ 6 3 4 , 2 8 4 • Fa i r H o u s i n g P r o g r a m S e r v i c e s ‐ $ 1 0 0 , 0 0 0 • Se c t i o n 1 0 8 L o a n P a y m e n t s : o Aq u a t i c I m p r o v e m e n t s ‐ $ 2 9 2 , 7 5 8 o So u t h e a s t S t r e e t I m p r o v e m e n t s ‐ $ 5 4 , 7 1 1 5CD B G :  Fi x e d  Al l o c a t i o n s Ex a m p l e : H o m e A c c e s s R a m p Mc M u r t r e y A q u a t i c  Ce n t e r Mc M u r t r e y A q u a t i c  Ce n t e r 6CD B G :  Pr o p o s e d  Pr o j e c t s To t a l Re s o u r c e s mi n u s Ad m i n an d De b t Pa y m e n t s $ 2,189,668 PU B L I C SE R V I C E S (M A X . 15 % or $4 7 5 , 7 1 3 ) Fa i r H o u s i n g P r o g r a m S e r v i c e s $ 1 0 0 , 0 0 0 Ba k e r s f i e l d S e n i o r C e n t e r $ 8 5 , 0 0 0 Ba k e r s f i e l d P o l i c e D e p a r t m e n t $ 2 9 0 , 7 1 3 To t a l Pu b l i c Se r v i c e Pr o j e c t s $ 475,713 PU B L I C IM P R O V E M E N T P R O J E C T S Ho m e A c c e s s R e h a b i l i t a t i o n $ 4 0 , 0 0 0 Ea s t T e r r a c e W a y C u r b , G u t t e r , S i d e w a l k , I m p r o v e m e n t $ 3 0 0 , 0 0 0 Ol d T o w n K e r n / B e a l e A v e , G u t t e r , S i d e w a l k I m p r o v e m e n t $ 3 0 0 , 0 0 0 Wi l s o n A r e a C u r b , G u t t e r , S i d e w a l k I m p r o v e m e n t $ 3 5 0 , 0 0 0 Ba k e r S t . N e i g h b o r h o o d L i g h t i n g I m p r o v e m e n t s S 61,000 Ol e a n d e r N e i g h b o r h o o d S t r e e t L i g h t I m p r o v e m e n t $ 179,955 Mc M u r t r e y P a r k / A q u a t i c s C e n t e r I m p r o v e m e n t s $ 316,000 BA R C T i r e R e c y c l i n g P r o g r a m $ 1 6 7 , 0 0 0 To t a l Pu b l i c F a c i l i t i e s Pr o j e c t s $ 1,713,955 To t a l CD B G P r o p o s e d $ 2,189,668 Pr o p o s e d  Pr o j e c t s  Ma p 7 8CD B G :  Ap p l i c a t i o n s  No t  Pr o p o s e d  fo r  Funding Ap p l i c a n t Su m m a r y Amount Co m m u n i t y A c t i o n P a r t n e r s h i p of K e r n C o u n t y Fo o d B a n k W a r e h o u s e E x p a n s i o n $ 7 4 9 , 2 8 5 Pu b l i c W o r k s M a d i s o n / C o t t o n w o o d C u r b / G u t t e r / S i d e w a l k $ 3 0 0 , 0 0 0 Pu b l i c W o r k s O l e a n d e r A r e a C u r b / G u t t e r / S i d e w a l k $ 3 0 0 , 0 0 0 Pu b l i c W o r k s E a s t C a l i f o r n i a C u r b / G u t t e r / S i d e w a l k $ 5 0 0 , 0 0 0 Pu b l i c W o r k s L a F r a n c e A r e a C u r b / G u t t e r / S i d e w a l k $ 3 0 0 , 0 0 0 Re c r e a t i o n a n d P a r k s C e n t r a l P a r k P l a y g r o u n d R e s u r f a c i n g $ 79,350 Re c r e a t i o n a n d P a r k s D r . M a r t i n L u t h e r K i n g J r R e c C e n t e r R e h a b $ 118,000 TO T A L $ 2,346,635 Ba k e r s f i e l d S e n i o r C e n t e r ( W a r d 1 ) Pu b l i c S e r v i c e s ‐ $ 8 5 , 0 0 0 CD B G :  Pr o j e c t  De t a i l 9 10 CD B G :  Pr o j e c t  De t a i l Ho m e A c c e s s : $ 4 0 , 0 0 0 ( C o m m u n i t y ‐ w i d e ) • Gr a n t s u p t o $ 3 , 5 0 0 f o r p h y s i c a l l y d i s a b l e d r e s i d e n t s f o r h o m e ac c e s s i b i l i t y i m p r o v e m e n t s • Pr o g r a m i n c l u d e s : i n s t a l l a t i o n o f h a n d i c a p r a m p s , g r a b b a r s , ha n d h e l d s h o w e r h e a d s , h a n d r a i l s , a n d s i m i l a r i m p r o v e m e n t s b CD B G :  Pr o j e c t  De t a i l 11Ba k e r s f i e l d P o l i c e D e p a r t m e n t Im p a c t T e a m O f f i c e r s ( W a r d 1 a n d 2 ) Pu b l i c S e r v i c e s ‐ $ 2 9 0 , 7 1 3 Se r v i c e  Ar e a Cu r b , G u t t e r , S i d e w a l k a n d S t r e e t R e c o n s t r u c t i o n P r o j e c t s CD B G :  Pr o j e c t  De t a i l Be f o r e 12 Af t e r Ea s t T e r r a c e W a y A r e a ‐ $ 3 0 0 , 0 0 0 ( W a r d 1 ) CD B G :  Pr o j e c t  De t a i l 13 Be a l e S t r e e t / O l d T o w n K e r n A r e a ‐ $ 3 0 0 , 0 0 0 ( W a r d 2 ) CD B G :  Pr o j e c t  De t a i l 14 Wi l s o n A r e a ‐ $ 3 5 0 , 0 0 0 ( W a r d 1 ) CD B G :  Pr o j e c t  De t a i l 15 Ba k e r S t r e e t N e i g h b o r h o o d L E D L i g h t i n g I m p r o v e m e n t ‐ $ 6 0 , 8 0 0 (Ward 2) CD B G :  Pr o j e c t  De t a i l 16 Ol e a n d e r N e i g h b o r h o o d S t r e e t L i g h t U p g r a d e ‐ $ 1 7 5 , 9 5 5 (Ward 2) CD B G :  Pr o j e c t  De t a i l 17 Mc M u r t r e y A q u a t i c C e n t e r I m p r o v e m e n t s – $ 3 1 6 , 0 0 0 ( W a r d 2 ) CD B G :  Pr o j e c t  De t a i l 18 CD B G :  Pr o j e c t  De t a i l 19 BA R C T i r e R e c y c l i n g P r o g r a m ‐ $ 1 6 7 , 0 0 0 ( W a r d 1 ) Fu n d i n g f o r N e w T i r e S h r e d d i n g M a c h i n e HO M E  In v e s t m e n t  Pa r t n e r s h i p  Pr o g r a m 20 RE S O U R C E S Pr o j e c t e d F Y 1 8 / 1 9 H O M E E n t i t l e m e n t $ 9 9 3 , 1 3 1 Pr o j e c t e d P r o g r a m I n c o m e $ 3 0 , 0 0 0 To t a l A v a i l a b l e R e s o u r c e s $ 1 , 0 2 3 , 1 3 1 AD M I N I S T R A T I O N Ad m i n i s t r a t i o n ( 1 0 % m a x i m u m ) $ 1 0 2 , 3 1 3 PR O J E C T S CH D O S e t A s i d e ( 1 5 % m i n i m u m ) $ 1 4 8 , 9 7 0 Ne w C o n s t r u c t i o n $ 7 7 1 , 8 4 8 Ho u s i n g A u t h o r i t y – R e s i d e n c e s a t E a s t H i l l s $ 9 2 0 , 8 1 8 Pr o p o s e d To t a l $ 1 , 0 2 3 , 1 3 1 Em e r g e n c y  So l u t i o n s  Gr a n t  (E S G ) 21 RE S O U R C E S Pr o j e c t e d FY 1 8 ‐19 ES G En t i t l e m e n t $ 292,879 AD M I N I S T R A T I O N Ad m i n i s t r a t i o n ( 7 . 5 % m a x i m u m ) $ 2 1 , 9 6 6 SH E L T E R & OU T R E A C H PR O J E C T S (M A X . $1 7 2 , 7 3 7 ) Fl o o d M i n i s t r i e s ‐ S t r e e t O u t r e a c h $ 2 2 , 5 0 0 Ba k e r s f i e l d H o m e l e s s C e n t e r ‐ S h e l t e r $ 6 3 , 3 6 3 Ba k e r s f i e l d R e s c u e M i s s i o n ‐ S h e l t e r $ 6 3 , 3 6 3 Al l i a n c e A g a i n s t F a m i l y V i o l e n c e ‐ S h e l t e r $ 2 6 , 5 0 0 HO M E L E S S PR E V E N T I O N & RE H O U S I N G PR O J E C T S Ba k e r s f i e l d H o m e l e s s C e n t e r – R e ‐ H o u s i n g $ 9 5 , 1 8 7 Pr o j e c t s Su b ‐To t a l $ 270,913 Pr o p o s e d to t a l $ 292,879 Em e r g e n c y  So l u t i o n s  Gr a n t 22 Ho u s i n g   Op p o r t u n i t i e s   fo r  Pe r s o n s  wi t h  AIDS   (H O P W A ) 23 RE S O U R C E S FY 1 8 ‐ 1 9 H O P W A E n t i t l e m e n t $ 438,169 AD M I N I S T R A T I O N Ad m i n i s t r a t i o n ( 3 % ) $ 1 3 , 1 4 5 To t a l R e s o u r c e s m i n u s A d m i n $ 4 2 5 , 0 2 4 HO P W A SP O N S O R / P R O V I D E R Ke r n C o u n t y P u b l i c H e a l t h * $ 4 2 5 , 0 2 4 Pr o p o s e d To t a l $ 438,169 * F u n d s T e n a n t ‐ B a s e d R e n t a l A s s i s t a n c e , C a s e M a n a g e m e n t , a n d E m er g e n c y R e n t a l As s i s t a n c e f o r p e r s o n s w i t h H I V / A I D S CO M M U N I T Y  DE V E L O P M E N T  RE S O U R C E S 24 Pr o p o s e d Fu n d i n g FY 18 ‐19 To t a l Fu n d i n g FY 17 ‐18 CD B G $ 3 , 1 7 1 , 4 2 1 * $ 3 , 2 6 2 , 2 9 0 HO M E $ 1 , 0 2 3 , 1 3 1 * $ 1 , 1 0 3 , 4 7 9 ES G $ 2 9 2 , 8 7 9 $ 2 9 2 , 8 7 9 HO P W A $ 4 3 8 , 1 6 9 $ 4 3 8 , 1 6 9 To t a l Re s o u r c e s $ 4 , 9 2 5 , 6 0 0 * $ 5 , 0 9 6 , 8 1 7 *R e f l e c t s m i n o r d e c r e a s e ( 3 % C D B G a n d 1 0 % H O M E ) a n t i c i p a t e d i n t h e F Y 1 8 ‐ 1 9 H U D a l l o c a t i o n s . 20 1 8 ‐19 Dr a f t  Ac t i o n  Pl a n   Qu e s t i o n s ?