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Home My WebLink About10/04/2001 BAKERSFIELD Mike Maggard, Chair Harold Hanson Mark Salvaggio Staff: Darnell Haynes BUDGET AND FINANCE COMMITTEE of the City Council - City of Bakersfield Thursday, October 4, 2001 4:00 p.m. City Manager's Conference Room, Suite 201 Second Floor - City Hall, 1501 Truxtun Avenue, Bakersfield, CA AGENDA 1. ROLL CALL 2. ADOPT AUGUST 30, 2001 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Review and Committee recommendation regarding Bakersfield Senior Center request for financial assistance - Stinson 5. NEW BUSINESS A. Review and Committee recommendation regarding Bakersfield Senior Center - Senior Housing Project- Kunz B. Review and Committee recommendation regarding First Night Bakersfield request for financial assistance - Stinson C. Review and Committee recommendation regarding application of the business license ordinance to commercial and residential rental property businesses - Thiltgen D. Review and Committee recommendation regarding Bakersfield Centennial Garden and Convention Center Financial Statements - Klimko 6. COMMITTEE COMMENTS 7. ADJOURNMENT S:~Darne[~001 BFCommittee~bf01oct04agen.wpd BAKERSFIELD Alan Tandy, City Mah~er Harold Hanson Staff: Darnell W. Haynes Mark Salvaggio AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMrl-rEE Thursday, August 30, 2001, 4:00 p.m. City Manager's Conference Room 1. ROLL CALL Call to Order at 4:05 p.m. Present: Councilmembers Mike Maggard, Chair; Harold Hanson; and Mark Salvaggio 2. ADOPT AUGUST 2, 2001 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS Milt Younger, Attorney at Law and Executive Committee Member of the Bakersfield Symphony Orchestra, spoke about additional funding for the Symphony and provideda letter requesting a City contribution of $100,000 to the Bakersfield Symphony Orchestra for the coming year and a line item in the 'budget for the arts. He suggested that the City route the contribution through the Arts Council of Kern so they can obtain matching funds. Committee Chair Maggard asked staff .to check on the possibility of routing contributions differently in order to obtain matching funds. 4. DEFERRED BUSINESS A. Review and Committee recommendation-on policy regarding requests for financial assistance Assistant City Manager John Stinson gave an overview of an August 22nd memo from the City Manager regarding requests for financial assistance from nonprofit groups for community activities, Due to the limited funds available, staff is looking for direction relative to the Council policy on these requests. Finance Director Gregory Klimko explained every year when the budget is prepared there are budget considerations on items that must be evaluated within the context of what the City can afford BUDGET AND FINANCE COMMITTEE Thursday, August 30, 2001 Page -2- to do. He briefed the Committee on the General Fund and provided the following information regarding outstanding financial commitments and other budgetary considerations: · Negotiated Salary Settlements @ 5% per year for three years thru 2003. · Increased Public Safety Retirement costs for Police and Fire. Police commencing 2003-04, $3.0 million and Fire commencing 2008-09, $2.5 million · Maintain Police ration @ 1.3 sworn personnel per 1,000 population Annual cost per officer $77,000 Initial equipment per officer $48,000 · Additional Southwest Fire Station - July 2003 Facility construction $1,500,000 - $2,500,000 Annual recurring personnel/operating cost - approximately $1.7 million · Additional Northeast Fire Station - July 2005? · Annual Capital Improvement to City buildings, parks, etc. $2 - $3 million · County airport terminal - $500,000 annually thru 2004-05 · Police substations · Replace Police Mobile Data Terminals with Mobile Data Computers · Replace/Convert Citywide Microwave Telecommunications system from analog to digital by January 2005 estimated cost - $8 .million · Street and road repair and maintenance backlog $80 million The slowing national economy has an affect on our general fund as the City's single largest revenue is from sales tax. With a slowing economy, there may be a need to be very selective when considering expenditures. Committee member Salvaggio stated :he felt the Committee should make a recommendation to the Council regarding the City's policy for financial assistance to nonprofit 'groups. He read from an August 22, 2001 memo from the City Manager: "As you are aware, requests for financial assistance from non-profit groups have been on a very rapid rise lately. Some examples include Kern County Museum, Bakersfield Museum of Art, Bakersfield Music Theatre, First Night, DBA, Bakersfield Symphony and Bakersfield College, among others. Not only is the number increasing, but also the amounts requested. All of these groups do good work - as do literally hundreds of other non-profits in town - all of whom need more money." "For many years, the Council had a policy of not funding the ongoing operation and maintenance costs of non-profit groups. There have been certain exceptions including the Symphony and periodic assistance to two groups that had a long-term relationship with the City by renting City facilities - the Museum of Art and Bakersfield Senior Center. Start up or one-time activities are also done such as First Night and Vision 2020. Those, however, are not ongoing operation and maintenance costs. We also have service contracts with SPCA, CVB and KEDC - those are really purchase of services and fall into a different category." "Until the Council clarifies its policy, we will continue to be besieged by additional requests - all good causes, all in need of money, but which .cumulatively we cannot afford." AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, August 30, 2001 Page -3- "A few weeks ago, staff recommended a policy that would disallow assistance to non- profits for ongoing operation and maintenance purposes with the exception of those with who we have had an ongoing relationship - the Bakersfield Senior Center, Bakersfield Museum of Art and the Symphony. The Council did not act on that recommendation due, in part, to the press of other business. Since that time, we have received four other requests." "Staff now wants to add to the previous recommendation by adding sources and amounts as follows: Bakersfield Senior Center - $50,000 per year from the Housing and Community Development Grant (beginning with the FY 2002-03 budget) Bakersfield Museum of Art - $25,000 per year from the General Fund (beginning with the FY 2002-03 budget) Bakersfield Symphony - rent equivalent at the Convention Center (currently $46,000 per year) "In addition, staff would be instructed that when requests are received, we would write the requesting agency back indicating their request is outside of adopted Council policy. Pending requests for the *DBA, Symphony (additional funding) and First Night would be included in the decision." "If this does not meet Council's expectations or desires, staff requests a full Council policy discussion of alternatives. This is.a serious matter which needs policy control that is consistently applied." *It was noted that the DBA .request for assistance with the banners is already on the agenda to be considered under new business today. Committee member Salvaggio said he could be supportive of the following: 1) The Bakersfield Senior Center. The Committee needs to meet the new director and consider the financial stipulations requested by the Finance Director; 2) The Bakersfield Museum of Art, but felt we must hold the line to the $25,000 per year, as we have previously deeded the land to them valued at $295,000, recently gave $30,000 for the Sculpture Garden and $28,500 toward the Russell and Remington .Exhibit; and 3) Rent equivalent at the Convention Center for the Bakersfield Symphony, currently $46,000 per year. Committee member Salvaggio stated he would like the Committee to make a recommendation to the full Council. He requested staff provide the Mayor and Council with a copy of the March 8, 2001 memo regarding requests for funds from non-profit groups. The memo contained the following: 'q'he City annually receives a variety of requests for City funds from non-profit groups. Most are requesting use of Community Development Block Grant Funds but there are some which request General Funds as well. In order to fairly evaluate these requeststhe AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, August 30, 2001 Page -4- City Council has had a policy that these requests meet a certain criteria. The Council in the past has considered the following criteria when reviewing requests: · One-time expenditures rather than ongoing costs; · Capital expenditures rather than general operating expenditures; · One-time activities which are tied to specific high priority City Council goals; and · Use of City facilities by the non-profit group. The Council in the past has carefully considered how these requests are considered since there are limited funds available to meet such requests due to the financial demands of normal city operations and needs including police and fire protection, public works and other City services. The Council has also looked tonon-profits making requests to provide matching funds so the City does not bear the .entire costs of the proposed project or activity. The matChing fund requirement is a demonstration of community support for the proposal." The Committee reviewed recent contributions which included: First Night Bakersfield, 2 years @ $15,000 = $30,000; Bakersfield Museum of Art for Russell'Remington Exhibit $28,500; Centennial Celebration Foundation for Centennial Plaza $15,788 plus another $10,000; Bakersfield Senior Center, $25,000; Bakersfield Symphony annual rent, $46,000; Arts Council of Kern, $16,500; Bakersfield Museum of Art for Sculpture Garden $30,000 and deeded the land with approximate value of $295,000; Vision 2020, $25,000; Kern County Museum, $35,000 plus $300,000 CDBG funding over the next two years. Committee member Salvaggio stated he would like the Committee to support staff's recommendations. Mr. Younger spoke regarding the City's policy and that it seemed to him a "one-fits-all-policy" is unreasonable. The Committee should consider each request individually on its own merit. He presented a letter and asked the Committee to consider an additional $100,000 contribution to the Symphony. City Attorney Bart Thiltgen explained under the Brown Act because this request was not on the agenda, the Committee could not consider it today. However, the Committee could at the conclusion of this item go back to Public Statements and allow Mr. Younger to speak about his request. The Committee unanimously approved the above action. Committee member Hanson stated he supports staff's recommendations, but has concerns when looking back at recent contributions, such as the $50,000 to the Bakersfield Music Theatre and current requests, and he would like to add that anyone requesting funds should have complete financial information available to support their request. As the Council is responsible for Police, Fire, roads, road maintenance, and general operation of the City, we must have parameters. There is worthiness in every organization, but he felt organizations should not just come to the government for money, but should get their people together for fund-raising. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, August '30, 2001 Page -5- Committee Chair Maggard stated he is comfortable with staff's recommendation as it is worded. One word of concern he has is that over time the City may be queried as to why these three non- profits are the three that receive City assistance, and should there be sometime in the future when another non-profit should take the place of one of the three, but this discussion' can wait for further consideration. In order to move this item forward, he would support the motion. Committee member Salvaggio stated that the Committee has reviewed requests on a case by case basis but if we do not have a policy, the line of requests will continue to get longer and longer. He clarified his motion that staff draft an administrative report and include the following: 1) using the March 8th memo and the June 13th administrative report, draft a Council policy regarding requests for funding from non-profits; 2) include staff's recommendations from the August 22nd memo including funding the 'Bakersfield Senior Center, $50,000 per year, the Bakersfield Museum of Art, $25,000 per year and the Bakersfield Symphony currently $46,000 per year, and 3) any contribution made to the Senior Center will be contingent upon approval of the financial documentation, further review and recommendation of the funding request by the Budget and Finance Committee and approval by the City Council. The .Committee unanimously approved the motion. Staff will prepare the administrative report and- resolution establishing Council Policy for evaluating requests for financial assistance from non-profit groups Economic Development Director Donna Kunz spoke about the CDBG funding for the Bakersfield Senior Center and the stringent requirements of HUD. There will be an audit cost of approximately $7,500 for the Block Grant funds, a contract is required and there are monitoring requirements. The Committee recommended that any agreement with the Bakersfield Senior Center include the Finance Director's recommendations: · An audit of the Records at June 30, 2001 to obtain a clear picture of the Senior Center's financial standing. · Annual Audits if City financial assistance is to be ongoing. · Require compliance with all Federal and State laws, rules and regulations especially as they pertain to payroll records and the timely payment of employees and payroll taxes. · Require all accounting records to be kept in accordance with Generally Accepted Accounting Principles in order to have an ongoing understanding of the Senior Center's financial condition. B. Review and Committee recommendation regarding Bakersfield Senio, r Center request for financial assistance After the agenda was prepared, the City received a call from the Bakersfield Senior Center to request this item be deferred as they were not ready to present their financial information to the Committee. The Committee voted unanimously to defer this item. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, August 30, 2001 Page -6- 5. NEW .BUSINESS A. Review and Committee recommendation regarding property located at 720 Lakeview Avenue Community Development Coordinator George Gonzales reported the City has received two proposals to buy City property located at 720 Lakeview Avenue. · One proposal for $14,000 was from Marty Reyna, owner of Nutri Kids, 800 Lakeview Avenue who also owns adjacent property, which he has rehabbed. He is offering market value for "as is condition" and has given the City an estimate of the cost for rehabilitating the property. He has shown evidence that he does have the money for the rehabilitation. It was noted that the other proposal was from one of his tenants. · The other proposal (verbal) for $5,000 was from the Groomed for Greatness, Inc. This non- profit agency currently operates its programs for career training and job readiness at 800 Lakeview Avenue. They stated that their plan would be to tear it down and rebuild at a cost of $70,000. They have shown evidence they have the money, $5~000, to acquire the property and they have a contribution for $70,000. Staff had concerns that $70,000 may not be sufficient to rebuild. Staff recommended the proposal from Mr. Reyna be accepted as Mr. Reyna is a for-profit business and if the property is sold to him, it will be returned to the tax rolls. Mr.-Reyna spoke regarding his proposal and his commitment to the area shown by the purchase and improvement of surrounding properties, which benefit-the area. Evelyn Nelson, Executive. Director and Founder of Groomed for Greatness, Inc., spoke regarding their proposal. They have a welfare to work program and work with Employers Training Resource and -the Department of Human Resources to assist people in transition from welfare rolls to employment. They are looking for larger space to be able to do workshops. The Committee discussed the fact that the $14,000 offer is much higher and Mr. Reyna has a good track record and has demonstrated his commitment with the purchase and improvement of surrounding properties and the operation of Nutri Kids at.-800 Lakeview Avenue. In addition, Mr. Reyna is a for-profit business and when the property is sold to him, it will be returned to the property tax rolls. Committee member Hanson made a motion that the Committee support staff's recommendation to accept the offer of $14,000 from Mr. Reyna to purchase the surplus property located at 720 Lakeview Avenue. The Committee unanimously agreed and directed staff to forward the administrative report to the City Council. Committee Chair Maggard would like staff to nominate Mr. Reyna and his family for a BeaUtiful Bakersfield Award. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, August 30, 2001 Page -7- B. Review and Committee recommendation regarding the Downtown Business and Property Owners Association .and banner responsibilities Economic Development Director Donna Kunz stated the City has received a letter from the Downtown .Business and Property Owners Association (DBPOA) requesting the City take back the responsibility of hanging the banners on Chester Avenue in the downtown. There was an agreement for several years and the DBPOA has been hanging the banners. The agreement expired in 1999 and the DBPOA although under no obligation has continued to hang the banners at their own expense. The DBPOA had contracted the work out and are in arrears for $1,760. They are requesting the City pay the $1,760 in order to get the banners back. The City originally purchased the-banners and the cost to replace the banners would exceed $20,000. There are four seasons of banners. Staff recommended the City pay the $1,760 as the agreement had expired and the DBPOAdid not have an ol:iligation to continue at their own expense. It was discussed that this type of project falls under the Council goal of beautification and landscaping. Also staff is recommending because Public Works hangs the banners at.the Convention Center and the Amtrak Station, they take over hanging the banners on Chester Avenue as well. City Attorney Bart Thiltgen explained under the original agreement with the first hanging of the banners, they would be the property of the DBPOA. If the City pays the $1,760, the banners will be returned to the City. Committee member Salvaggio directed staff to include the City Attorney's comments in the administrative .report and the information that the DBPOA has continued to hang the banners when not obligated to do it. This does satisfying the criteria of a one-time expenditure tied to Council goals in the downtown. Committee Chair Maggard asked what the response is to other organizations that want to hang banners. Donna .Kunz responded, the City has a program for a fee that allows organizations to hang banners in the Cit~ at their own expense. Committee member-Hanson made a motion to approve staff's recommendations and buy back the banners-from the DBPOA for $1,760. The Committee unanimously approved the motion. Staff will include the.language requested by Committee member Salvaggio.in the administrative report and forward to the City Council. C, Review and Committee recommendation regarding request for additional fUnding for Police overtime Committee Chair Maggard stated he spoke with Police Chief Matlock and would like to defer this item. The Committee unanimously agreed. 6. COMMII'I-FEE COMMENTS I Committee Chair Maggard said in his Friday packet he had received a notice from Time Warner ~ regarding an increase in rates for RoadRunner service and he wanted to know if this is in alignment with our agreement. City Attorney Bart Thiltgen wiltlook into the matter and report back. BUDGET AND FINANCE COMMITTEE Thursday, August 30, 2001 Page -8- 7. ADJOURNMENT The meeting adjourned at 5:50 p.m. Staff present: City Attorney Bart Thiltgen; Assistant City Manager John W. Stinson; Assistant City Manager Alan Christensen; Police Chief Eric Matlock; Finance Director Gregory Klimko; Assistant to the City Manager Darnell Haynes; Economic Development Director Donna Kunz; Recreation and Parks Director StanFord; Community Development Coordinator George Gonzales; and'Real Property Manager Don Anderson Others present: Marti Reyna, Nutri-Kids; James Burger, reporter, The Bakersfield Californian; Mike Russo, Downtown Business Association; Attorney Milt Younger, Chain Younger/Bakersfield Symphony; and Evelyn-Nelson, Groomed for Greatness, Inc. cc: Honorable Mayor and. City Council DWH:jp S:\Damell~2001 BFCommittee~bf01 aug30sumrnary.wpd BAKERSFIELD MEMORANDUM August 13, 2001 FROM: nna L. Kurtz, Economic Development Director SUBJECT: Staff Review of Potential Budget & Finance Committee Plan to Provide Permanent Funding for the Bakersfield Senior Center The following information is provided in response to your request regarding Budget & Finance Committee consideration of permanent funding for the Bakersfield Senior Center of approximately $50,000 per year. Eligibility: Under HUD regulation §570.201e., to be eligible for CDBG assistance, a public service entity must be either a new public service or present a quantifiable increase in the level of existing service above that provided by or on behalf of the unit. In other words, the public service must be new or expand current service levels annually to be eligible for funding. A waiver can be requested from HUD to grant an exception to the new services/quantifiable increase requirement. This would require the generation of financial/client data from prior years from the Senior Center in order to complete a report to HUD for their review. Additionally, the Budget and Finance Committee's request is for a plan to provide "permanent financing". The non-profit must continually demonstrate that specific programs are expanding each funding year to remain eligible. Therefore, the status of permanent funding would be subject to annual review in compliance with HUD regulations. - Public Service Admin. Cap: The amount of CDBG funds used for public services cannot exceed 15 % of each CDBG grant. Last fiscal year 2000-01,8.48% of our entitlement was spent on governmental public services such as graffiti removal, fair housing and Enterprise Zone Marketing with the current year budget being at a comparable level of funding. Based on these current budgetary levels, we have the financial capacity to fund this request ($50,0000 per year) without exceeding the public service administrative cap. Other issues for consideration: If the committee recommends a funding plan for the Bakersfield Senior Center, we foresee that it will open the door for all local non-profits to request funding. We could however, incorporate a competitive application for Public Service activities into our Notice of Funds Available (NOFA) application process. The department has distributed the NOFA for the next funding cycle which is due October 31, 2001. Therefore, if the Bud.qet and Finance Committee s~r~'L~_-~ incorporating public service activities into the application process, we recommend dCv_e!~t::QLa.'.funding, policy and technical guidelines which could be implemented during next~ye~'s funding cycle., i $:\Rhonda\MfiMO\$onio~enterFundin~Mamo.wpd t ~ .......... BAKERSFIELD Economic and Community Development Department MEMORANDUM TO: Budget and Finance Committee~od/¢¢;¢~'~ September 18, 2001 FROM: Donna L. Kunz, Economic Development Director SUBJECT: Bakersfield Senior Center Funding Application Alternatives We have completed the financial and technical review of the Bakersfield Senior Center request for HOME CHDO funds for the Bakersfield Senior Housing Project. There is approximately $420,000 of CHDO (Community Housing Development Organization) restricted HOME funds currently unprogrammed. These funds consist of federal entitlement monies accumulated over the past two fiscal years. At this time, there are insufficient CHDO funds available to fund the Bakersfield Senior Center request of $585,982. As such, staff has identified two financially feasible alternatives for committee consideration. In either case, the assistance will need to be structured as a grant since the operations of the project can't support any debt service. Also, the Senior Center's application to be certified is a CHDO was found to be incomplete. They were given until September 27, 2001 to provide the City with additional information regarding their organizational structure and financial capacity. Background: The Bakersfield Senior Center Inc. is a co-sponsor of a planned 80-unit senior housing project with Retirement Housing Foundation. The two co-sponsors have received a HUD 202 Capital Advance Allocation in the amount of $7,005,500. Bakersfield Senior Center, Inc. has requested financial assistance from the City's HOME entitlement program for the project. The City's HOME CHDO funds requested, are planned to be used for land acquisition and associated relocation costs. The City Council previously made a financial commitment of $25,000 to the project. $25,000 is the minimum private contribution requirement under the HUD Section 202 Capital Advance Program and must be used as a loan reserve and deposited with HUD. The HUD 202 Capital Advance Program is designed to pay the acquisition, design and construction costs for a senior housing project with occupancy restrictions to Iow income seniors aged 62 or older. There is no debt service requirement on a HUD 202 Capital Advance and it is forgiven at the end of forty years. The project also receives project based Section 8 Certificates to help assure an income stream to offset the operating costs. The income stream for these projects is typically very limited and does not allow for much in the way of operating reserves or emergency contingencies. Any construction funds saved from the HUD 202 Capital Advance allocation may be placed in an operating reserve for later use by the project. The HUD 202 reservation sets a maximum amount of reservation dollars based on the number of units being constructed. The original project approved by HUD depicts its location on land currently owned by Bakersfield Senior Center, Inc. Staff received a construction pro forma from the co- sponsor- Retirement Housing, Inc. The cost pro forma indicates a sales price of $250,000 to the Bakersfield Senior Center Inc. for their land and planned for payment from the HUD 202 funds. The co-sponsors do not have a formal written agreement and the definitive price of $250,000 for the Bakersfield Senior Center land has not been agreed to between them. However, for our analytical purposes, this amount was used as it is representative of the current per square foot value of vacant land in this location. It is also important to note that the HUD 202 commitment is time sensitive. Construction must begin within 18 months after an award notice is received. A six month extension may be obtained for good cause. Alternative 2 will require a new phase1 environmental to be completed and an amendment to HUD 202 requesting a one year or longer extension. The co-sponsor, Retirement Housing, Inc. indicated this should not be a problem in obtaining. Alternatives for consideration: Alternative 1 - Proposed Assistance of $335,000 Use of Funds - Acquisition of Bakersfield Senior Center (for about a 1.8 acre site) land and eligible off sites 1. Bakersfield Senior Center believes the original site causes traffic issues as an elementary school is located directly across from the proposed project. This could be mitigated by site design - this was determined from discussions with the co- sponsor. There is an existing senior housing project on "P" Street in close proximity to the school with little traffic impact. 2. Loss of Lowell Community Center Activities - See enclosed memo received from Park and Recreation for issues and suggestions. 3. Loss of rental stream of $12,000 per year to Bakersfield Senior Center from Recreation and Parks for lease of community center space. This is correct, however, the Senior Center will be selling more land to the project under this alternative. 4. Perception that project would be better designed if moved to the new site. Staff believes there is adequate acreage available on the original site to accommodate a well designed housing project. A Chart is attached depicting density of other comparable senior projects in town. Also, an original site versus expanded site analysis map is attached which compares the two alternatives. The new site will increase the available land for construction by .8 acres. 5. Acquisition funds saved from the HUD 202 allocation could be used for other construction/design amenities or be placed in an operating reserve for the project providing living amenities such as game room furnishings, library, etc. 6. Open space and community activities will be provided by the existing Bakersfield Senior Center which is directly adjacent to the proposed project and will be available to the residents for use. Alternative 2 - Proposed Assistance of $495,000 (for about a 2.6 acre site) Use of Funds - City acquires additional land for the amended site and provides relocation and demolition oversight services for the homes and apartments. Land is transferred to Bakersfield Senior Center to be donated to the project in tri-party escrow agreement with the new ownership entity. This alternative assumes eminent domain is not required for the acquisitions. 1. The City's Redevelopment Agency would have to use eminent domain powers if we encounter unwilling sellers or have property value disputes. The City has an adopted policy with HUD that states that eminent domain will only be used as a last resort method for federally funded projects. (Any eminent domain action may be questioned by HUD, since the original site can accommodate the project scope and has been previously approved by HUD under the 202 program.) 2. BSC has concerns of crime activity in houses and apartments proposed to be taken out (police statistics indicate a 66% drop in crime in that immediate neighborhood in the past 18 months). Homes and' apartments proposed to be demolished are in fair condition and occupied. 3. Cost savings over the original proposal can be achieved by using staff to do the acquisition and relocation activities. City staff analysis confirmed lower estimates on demolition costs, relocation and property values (informal appraisals were conducted using the comparable sales approach). 4. No funds will be available for operating reserves or project amenities from construction savings (none are currently anticipated according to co-sponsor cost estimates). Lastly, a copy of the formal agreement between the Bakersfield Senior Center and Retirement Housing, Inc as to the responsibilities of each co-sponsor has not been provided to the City for review. This information, along with a few outstanding items has been requested from the Bakersfield Senior Center in our recent correspondence. It is our understanding that a new non-profit entity must be created to own and manage the project upon completion. Attachments: Budget and Finance Minutes E-Mail from Stan Ford - concerning park issues Density Chart Original site vs. expanded site analysis map ~NT..BY~ O~TY OF BAKER~FIELB; 3241850; 8EP-12-Ot 4:BIPM; PA~E 2 BAKERSFIELD ~an Tandy, C~.Mana~er Harold ~nson S~ff: Darnell Haynes Ma~ Salvaggio AGENDA SUMMARY REPORT BUDGET ~D FIN~CE COMMI~E Monday, Feb~a~ 5, 2~1 4:00 p.m. Ci~ Managers Conference Room 1. ROLL CALL Call to Order at 4:08 p.m. Present: Councilmembers Mike Maggard, Chair; Harold Hanson and Mark Salvaggio 2. ADOPT AUGUST 11, 2000 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Discussion and Committee recommendation regarding Bakersfield Senior Housing Project on Fourth Street and CDBG/HOME/Housing Set A. Ide financial assistance Economic/Community Development Director Donna Kunz explained that this request is foran additional $280,000 bringing the applicants total request to $560,000. CHDO funds are available for the first request for $280,000 to build 80 Iow-lncome units of housing for seniors. The applicants are now requesting an additional $280,000 for acquisition of adjoining tots to shift the project 110 feet north. This shift will allow the existing recreation building, after school programs and parking lot to remain. Staff has met with the applicants and is recommending positive consideration of the extra land purchase; however, all of the HOME allocations for next year are pre-committed, so we do not have a budget on hand t~ accommodate this request in the form of a cash grant; Staff requested the Committee's concurrence to work with rne applicants to structure some kind of flr~nclng plan (a note or loan) to allow them to proceed and then phasing the funding when it is available, Mr. Lynn Edwards and Mr. Vernon Strong spoke regarding their pro, oct. The Bakersfield Senior Center and Retirement Housing Foundation, co-applicants, received their entitlement for a HUD Section 202 grant award of $6.75 million in November 2000. Time ls an issue as HUD established a time frame of 18 months for the project to be completed. 2001 ~ENT BY: ~TY OF BAKERSFIELD; 3241850; ~EP-t~-OI 4:BtP~; PA~E ~/~ AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, February 5, 2001 Page -2- The Committee unanimously approved allocating $280,000 of CHDO funds for the Bakersfield Senior Housing Project and directed staff to meet with the applicants to assist them in~working out some type of financing for the additional $280,000 being requested. When completed, the Committee directed staff to prepare and forward the documents to the City Council. B. Discussion and Committee recommendation regarding amendment to KCEOC Agreement/ CDBG Action Plan On December 13, 2000, the City Council approved an agreement with Kern County Economic Opportunity Coq)oration (KCEOC) for $255,000 for acquisition of an 18 acre pamel on Washington Street and Feliz Drive. The property has been annexed to the City and escrow will be closing in two to three weeks. This amendment is .for the second Installment approved-by the Council .last year as part of the Action Plan, which provides $275,000 of addi~onal CDBG funds toward the design, engineering and construction of the facility. Approval of this amendment will keep the project moving forward. It was noted that the City's Property Manager is working with KCEOC on their relocation, as it will free up the current location for additional Centennial Garden parking. The Committee unanimously approved the amendment, which will increase the agreement to $530,000. Staff was direCted to_complete the amendment to the agreement and forward to the Council for approval. C. Discussion and Committee recommendation regarding request received from Bethany Services for the City to consider transferring ownership of the Bakersfield Homelee~ Center, 16o0 E. Truxtun Avenue, to Bethany Sen4ces The City received a request from Bethany Services to transfer the ownership of the Bakersfield Homeless Center to them. In 1990, Bethany Services, a non-profit corporation, entered Into a lease agreement with the City to lease the Homeless Center from the City for an annual rent of $1.00 for the purpose of providing food, emergency shelter and transitional services to the .homeless. Mr. Louis Gill spoke regarding their request. Bethany Services would like to have ownership of the facility in order to purchase land and expand the facility to accommodate the increase of single women .with children and families by providing larger segregated areas. Ownership of.the property would allow them to obtain financing for the expansion and establish a line of credit for operating expenses. Economic Development Director Donna Kurtz stated that staff is recommending approval of their request, but recommended covenants or restrictions be added to the deed because the original source of funding was block grants that are restricted to .Iow and moderate individuals, and services for the homeless were allowed. Mr. Gill stated that the loan they will be applying for has some of the same restrictions and their long-term plans are to provide services to the homeless. The Committee unanimously approved Bethany Services' request to convey ownership of the Bakersfield HomeJess Center property to them, but directed staff to meet with Bethany Services staff and their t~nk lenders to work out language that will allow appn3val of their loan, continued use as a homeless center and an equity share provision on any future sale of the property. After the details are work out, staff was directed [~ prepare and forward the documents to the City Council BENT BY:,OITY OF BAKERSFIELD; 3241850; 8EP-12-OI 4:52PM; PA~E 4/6 AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, February 5, 2001 Page -3- D. Discussion and Committee recommendation regarding request from Bruce Dolgin for Conditional Use Permit exception to operate Sno-Shack shaved Ice kiosks In C-1 zones Mr. Bruce Dolgin.spoke regarding his reques,t to continue operating his Sno-Shack shaved.ice kiosks in a C-1 zone. Last year, he thought the ordinance had been changed to allow operating in a C-1 zone as stated in the first reading, but at the second reading of the ordinance, it was changed to a C-2 (which corrected an error). Due to the confusion, the City issueda temporary conditional use permit for last year so he could operate at two Rite Aid locations, which were received well and very successful. Although his business falls under a transient business with the City, he feels his business locations are established over a long-te~m and he would like to see a change in the ordinance to allow him to continue operating his two locations in the C-1 zone. Staff explained that Transient Outdoor Businesses are allowed to operate in C-2 or less.restrictive zones and when the term of the ordinance was changed from 90 to 180 days, it was always intended that it remain in a C-2 zone. However, due to the confusion between the first and second reading of the ordinance and to resolve the situation last season, Mr. Dolgin was granted, at no cost to him, two 180- day Conditional Use Permits (CUPs) that expired at the end of October. A CUP could be issued that would allow Mr. Dolgin to keep operating his two sites in their present C-1 zone, with notification to residents within 300 feet of the site. However, it is very expensive, $1,325 per'location. The Committee did not want to impair the integrity of the zoning ordinance or go through the process of amending the ordinance. Due to the odginal confusion, the Committee recommended that Mr. Dolgin reapply for the CUP's and that the City absorb half of the cost. Mr. Dolgin agreed with the recommendation. The Committee unanimously approved the recommendation and directed staff to follow through with Mr. Dolgin. E. Committee discussion and adoption of 2001 Budget and Finance Committee meeting schedule. The Committee unanimously adopted the calendar, with the provision that if scheduling conflicts occur, meetings can be canceled and rescheduled at the direction of the Committee Chair. F. Committee review and recommendation on financial and audit reports: 1. Comprehensive Annual Financial Report (CAFR) (This item has previously been approved by the Council to meet legal reporting dates.) Finance Director Gregory Klimko bdefed the Committee. It was noted that the format of the CAFR will be changing dramatically due to the implementation of GASB 34 (Government Accounting Standards Board) to put government entities on more of a measurable basis with private business. The reporting will stay the same for the coming year, but will change format for FY 2001-02. Committee Chair Maggard stated it was discussed a year ago the possibility of changing the governmental fund accounting method that we use on accounting for Centennial Garden activities. The Finance Director explained that with the implementation of GASB 34 a year from now, it will be presented differently, more of an enterprise fund - propriety fund accounting. However, when this new accounting format is implemented, there will be a downside as It will make it appear in the General Fund like it has huge losses, when in fact it bglances every year. BENT BY: ~TY OF BAKERSFIELD; 3241850; ~EP-12-01 4:53PM; PAOE 5/8 AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMIT'tEE Monday, February 5, 2001 Page -4- The Committee unanimously accepted the audit report as filed. 2. Centennial Garden.Financial Statements (This item has previously been approved 'by the Council to meet legal repoAing dates.) The Finance Director gave an overview of the financial operations of the Garden. The financial picture, which does not include the debt service or depreciation, is improving every year. The Convention center operated with losses every year, With the opening of Centennial Garden and contracting with professional management (currently SMG), the net loss for last year was $227,000; net loss the pdor year was $594,000, the year before with City management of the Convention Center the operating loss was $1,137,000, for an improvement of approximately $900,000. Committee Chair Maggard stated he has concerns that in the City's financial statement we don't match the debt service payment against the revenues from the ol~ration of the Center. it was discussed that there are revenues attributable to the Garden, as the City can now book many large events, that a financial statement does not articulate, such as Transient Occupancy Tax generated, sales tax, nearby redevelopment opportunities, visitors to local restaurants and retail shops, and other revenues that are not quantifiable. Committee Chair Maggard stated that perhaps it would serve to have a .memo for. reference to . answer questions-that could show the financial progress the City has made to lower the deficit or a spreadsheet, and show some of the other benefits the City receives. It was discussed that the City has not had a year since the Garclen was constructed in which the City did not adjust the size of staff to deal with increased population, there have been no cutbacks or restrictions in normal business activities and the Garden was absorbed without detriment to any City operations. The Committee unanimously accepted the audit report as filed. 3. Independent Auditor's Report on Compliance with Contra~uel Requirements relative to the Bakersfield Subregional Wastewater Management Plan for FY ended June :~0, 2000. This is a compliance audit which is required as part of an agreement between the City and the County service agencies. It provides a measurement that the City is 'in compliance wi~ the Wastewater Management Plan. The Committee unanimously accepted the audit report and Itwas forwarded to the Council. 4. 1999-00 Transportation Development Act Funds Financial Statements Public Works staff gave a bdef overview. Kern COG contracts with an accounting firm to provide a compliance audit of all the agencies that receive Transportation Development Act Funds. This includes Article 3 and Article 8 funds. It was noted that Article 3 money can be applied for everyyear and used for the Bike Path, which has been done In the past, and Article 8 money is being used for maintenance at the Amtrak Station. The Committee unanimously accepted the audit report and it was forwarded to the Council. 5. ADJOURNMENT The meeting adjourned at 5:20 p.m. ~NT.B¥-: '~ITY OF BAKER~FIELD~ 3241B50; ~EP-12-01 4:~3P~ PAGE e/~ AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, February 5, 2001 Page -5- Staff present: Mayor Harvey L. Hail; City Manager Alan Tandy; City Attorney Bart Thiltgen; Assistant City Manager Alan Christensen; Finance Director Gregory Klimko; Assistant tO the City Manager Damell Haynes; Econamic/Community Development Director Donna Kunz; Community Development Coordinator George Gonzales; Interim Public Works Director Jack LaRochelle; Planning Director Stan Grady; Assistant Finance Director Nelson Smith; Treasurer Bill Descary;, Deputy City Attorney Allen Shaw; Assistant to the Public Works Director Georgina Lorenzi; and Economic/Community Development Business Manager Rhonda Barnhard. Others present: James Burger, the Bakersfield Californian; LOUis Gill, Bnkersfield Homeless Center; Bruce Dolgin, Sno-Shack.; Kevin Ray, KCEOC; Lynn Edwards, Bakersfield Senior Center; Vernon Strong and Valerie Strong, Bakersfield Senior Center Project. cc: Honorable Mayor and City Council DWH:~ 5:Kiamell/203113FCom mtt~ee/bt01 feb0~Jmma~y.wgct DO~ KUnz. FWd: Lowell Memo From: Stan Ford To: Donna Kunz; Vince Zaragoza Date: 8/30/01 3:19PM Subject: Fwd: Lowell Memo See Attached memo. My recommendation to A.T wil be to relocate the Lowell program. DEPARTMENT OF RECREATION AND PARKS DATE: September 27, 2001 TO: Alan Tandy, City Manager FROM: Stan Ford, Director of Recreation and Parks SUBJECT: Lowell Center Attached is a memo from Linda McVicker that describes some issues at the Lowell center. The structural and maintenance problems have been ongoing and we have been told that the senior center is not in a position to make needed repairs. In addition, the senior center staff has advised that the Lowell building is on the site of their new housing project. Since I received her memo, I asked to Linda to meet with the principal of McKinley school (across the street) to find out the potential of relocating our program to the school and possibly having our mobile program there. Linda indicated that the principal is interested in both the mobile program and allowing us to use the school cafeteria but not until the next school year. I believe that since its inception, the Lowell program has been very successful and continues to meet a community need. However, the physical size and layout of the facility limits programming opportunities and creates challenges with providing proper supervision. With the addition of the maintenance problems, the facility is no longer suitable for our program. It is my recommendation that we relocate our program to McKinley school, or some other suitable site as soon as possible. This move will allow us to provide a needed level of programming and supervision for our participants, while also making it easier for the senior center to deal with the needed repairs or removal of the building. CITY OF BAKERSFIELD Recreation gcParl DATE: August 22, 2001 TO: Stan Ford, Director of Recreation & Parks FROM: Linda McVicker, Recreation Supervisor SUBJECT: LOWELL NEIGHBORHOOD COMMUNITY CENTER The Lowell Neighborhood Community Center is badly in need of repair. The roof is leaking, water from the sprinklers has warped the floor in the game room, the heating system is inefficient and outdated, there is water damage and dry rot in the office and storage area, several posts that hold up the roof were replaced and several more need to be replaced, the roof over the back .office area is concave and in need of repair, the gate between the buildings needs to be replaced, and the outside of the facility needs to be painted. We currently have approximately 25 to 35 participants attending on a dailybasis. During McKinley School's summer break, the attendance at the Lowell Center was between 15 to 20 participants a day. Programing is limited at the center due to the small size of the playground and game room. Only two structured activities may be held at the site at one time. The.types of activities we currently provide at the center include arts & crafts, reading, tutoring, board games, table games, sewing projects, science projects, cooking, Girl Scouts, outside games, basketball, tetherball and special events. In order to provide the highest quality facilities and programs possible, the center needs major repair and renovation. There are several options that could better serve the existing clientele which would be more cost effective than renovating a building. One is to utilize our mobile recreation program at Lowell Park. All of the current activities could be conducted except cooking. Other activities such as softball, flag football, soccer, volleyball and multiple activities at one time could all be held " in a park setting. During inclement weather, we could bus participants to the Dr. Martin Luther King Jr. Center or the PAL Center or conduct activities at McKinley School. Another option is to bus participants on a daily basis to the PAL Center or to the Dr. Martin Luther King J.r. Center. Participants could choose which facility they wish to attend or attend both. The PAL center offers arts & crafts, tutoring, community outreach, movie night, D.A.R.E., boxing, and 'soccer. The Dr. Martin Luther King Jr. Center offers arts & crafts, reading, tutoring, board games, table games, cooking, outside games, basketball, volleyball, tetherball, swimming, volleyball, soccer, scooter racing, tennis, computer games, build-a-bike, intemet access, cheerleading class, hip-hop · dance class, outside water games, and special events. Both centers are able to offer several activities at the same time. There is also the possibility of utilizing McKinley School. At the school site, we could offer all activities currently conducted at the Lowell Center. Programing would improve due to the added space. Our participants could also take part in the after-school sports league we conduct at other ai~er-school sites. The program would likely see an increase in attendance since the participants would not have to leave the school grounds. Rather than going to the expense of completely renovating the Lowell Neighborhood Community Center and paying rental fees for the facility, I would suggest we consider more cost effective options. The other options would also increase the amount and variety ofprograming. 09/24 ANALYSIS: SENIOR HOUSING UNITS PER ACRE St. John Manor 900 4th Street 79 1.9 41.58 California Ave Senior Housing (Proposed) Calif. & N St. 180 4.5 40.00 Alexnnder H. Lark Ph.D. M E M O R A N D U M Executive Director J TO: Mayor Hall, City Manager Tandy, and all City Council Board Members m~ Chairman LynnEdwards FROM: Dr. Alexander H. Lark, Executive Director (661) 325-1113 Bakersfield Senior Center V;ce Cha;r 503 4th Street Bryan Jeters (661)2034555 Bakersfield, CA 93304 Secretary Paul Cato SUBJECT: Audit report (661)325-1113 Treasure DATE: October 3, 2001 Polly Warren (661) 325-1113 Enclosed you will find a draft copy of a recent audit, performed in Helen Luslnger response to certain concerns regarding the financial status of the (661) 325-1113 Bakersfield Senior Center. In reading this report, you will f'md that Joe Washiugtonthe auditor'has found no discrepancies in the calculations submitted, (661) 325-1113 that all accounts and checks are justified, and that all funds received John Xurner and dispersed, are valid and accounted for. (He says the same thing Reha West however, using the jargon of an auditor.) (661) 325-1113 MarguriteBarton The Accountant just delivered this report to the Center yesterday. I (661) 325-1113 am responding to an obvious urgency for each of you to have a copy ~melda Nelso, of this report prior to any further discussions regarding plans for the (661) 325-1113Center. Roberta Young (661) 325-1113 Should you have questions about the report, kindly call me or our S.areTaylor finance officer Mrs. Essie Blue at 661-325-1113. Your concerns and (661) 6634441 assistance in this matter are greatly appreciated. Cc: Lynn Edwards and BSC Board Members 530 4* Street, Bakersfield, CA 93304 (661) 325-1113 Fax: (661) 325-8385, Email: bseniors~pacbell, net BAKERSFIELD SENIOR CENTER, INC. FINANCIAL STATEMENTS WITH INDEPENDENT AUDITOR'S REPORT JUNE 30, 2001 (AUDITED) JUNE 30, 2000 (REVIEWED) BAKERSFIELD SENIOR CENTER, INC. JUNE 30, 2001 TABLE OF CONTENTS PAGE NO. Independent Auditor's Report 1 Financial Statements Statement of Financial Position 2 Statement of Activities 3 Statement of Cash Flows 4 Statement of Functional Expenses 5-6 Notes to Financial Statements 7-8 Ame R. Oftedal, CPA 1412 17th Street, Suite 351 Bakersfield, Ca 93301 (661) 327-9284 Fax: (661) 327-9753 INDEPENDENT AUDITOR'S REPORT October 2, 2001 To the Board of Directors of the Bakersfield Senior Center, Inc. I have audited the accompanying statement of financial position of Bakersfield Senior Center, Inc., (a nonprofit organization) as of June 30, 2001, and the related statements of activities, functional expenses, and cash flows for the year then ended. The financial statements are the responsibility of the Organization's management. My responsibility is to express an opinion on these financial statements based upon my audit. I conducted my audit in accordance with generally accepted auditing standards. Those' standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bakersfield Senior Center, Inc., Inc as of June 30, 2001 and the changes in its net assets and its cash flows for the year then ended in conformity with generally accepted accounting principles. Respectfully yours, -1- BAKERSFIELD SENIOR CENTER, INC. STATEMENT OF FINANCIAL POSITION JUNE 30, 2001 and 2000 ASSETS 2001 2000 (Audited) (Reviewed) Current Assets Cash $3,613 $4,626 Accounts Receivable 1,000 4,391 Total Current Assets 4,613 9,017 Land, buildings and equipment, net of accumulated depreciation 536,930 541,196 Total Assets $541,543 $550,213 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable $39,593 $45,369 Total Current Liabilities 39,593 45,369 Net Assets Unrestricted net assets Net assets 504,844 518,937 (Deficiency) of support over revenues (2,894) (14,093) Total unrestricted - net assets 501,950 504,844 Total Liabilities and Net Assets $541,543 $550,213 See Independent Auditor's Report and Notes to Financial Statements -2- BAKERSFIELD SENIOR CENTER, INC. STATEMENT OF ACTIVITIES FOR THEYEAR ENDED JUNE 30, 2001 and 2000 2001 2000 (Audited) (Reviewed) Revenue Public Support received directly Contributions $7,681 $20,996 Special events, net o£ cost of direct benefit to participant of $240,556 in 2001 and $222,700 in 2000 10,752 15,167 Public support received indirectly Allocated by fund- raising organ ization 39,140 26,146 Total Public Support $57.573 $62,309 Other Revenue Membership dues 2,195 1,993 Rental income 26,806 28,408 Total Other Revenue 29~001 30,401 Total Revenue $86,574 $92,710 Expenses Program services Participatory recreation 72,022 89,066 Supporting Services Management and general 17,446 17,737 Total Expenses 89,468 106,803 Excess (deficiency) of support and revenue over expenses ($ 2,894) ($14,093) Net Assets, beginning of'year $504,844 518,937 Net Assets, end of year $501:950 $504,844 See Independent Auditor's Report and NOtes to Financial Statements -3-. BAKERSFIELD SENIOR CENTER, INC. STATEMENT OF CASH FLOWS FOR THEYEARS ENDED JUNE 30, 2001 AND 2000 2001 2000 (Audited) (Reviewed) Cash Flows from Operating Activities: Excess (deficiency) of support and revenue over expenses $ (2,894) $ (14,093) Adjustments to reconcile net excess (deficiency) to net cash provided (used) by operating activities: Depreciation 9,361 10,552 (Increase) decrease in: Receivables 3,391 (2,666) Equipment addition (5,095) 0 Increase (decrease) in: Accounts payable and accrued expenses (5,776) 5,614 Net Cash Provided (Used) by Operating Activities $ (1,013) $ (593) Cash at beginning of year 4,626 5,219 Cash atend of year $ 3,613 $ 4,626 See Independent Auditor's Report and Notes to Financial Statements. -4- BAKERSFIELD SENIOR CENTER, INC. STATEMENT OF FUNCTIONAL EXPENSESE FOR THEYEAR ENDED JUNE 30, 2001 (AUDITED) Program Supporting Total Services Services Program and Participatory Management Supporting Recreation And General Services Salaries $23,839 $4,207 $28,046 Employee benefits 3,970 700 4,670 Payroll taxes 2,463 435 2,898 Total Salaries and Related Expenses 30,272 5,342 35,614 Professional fees 0 2,743 2,743 Supplies 2,145 378 2,523 Telephone 1,927 340 2,267 Postage and shipping 0 243 243 Occupancy 26,234 4,629 30,863 Rental and maintenance of equipment 2,083 367 2,450 Bank charges 0 1,553 1,553 Taxes & licenses 0 i 99 199 Total Expenses Before Depreciation 62,661 15,794 78,455 Depreciation of Buildings and Equipment 9,361 1,652 11,013 Total Functional Expenses 72,022 17,446 89,468 See Independent Auditor's Reports and notes to Financial Statements -5- BAKERSFIELD SENIOR CENTER, INC. STATEMENT OF FUNCTIONAL EXPENSESE FOR THEYEAR ENDED JUNE 30, 2000 (REVIEWED) Program Supporting Total Services Services Program and ~Participatory Management Supporting Recreation and General Services Salaries $45,907 $8,101 $54,008 Employee benefits 639' 113 752 Payroll taxes 4,085 721 4,806 Total Salaries and Related Expenses 50,631 8,935 59,566 Professional fees 0 1,250 1,250 Supplies 858 151 1,009 Telephone 2,237 395 2,632 Postage and shipping 0 225 225 Occupancy 23,375 4,125 27,500 Rental and maintenance of equipment 2,996 529 3,525 Bank charges 0 397 397 Taxes & licenses 0 147 147 Total Expenses Before Depreciation 80,097 16,154 96,251 Depreciation of Buildings and Equipment 8,969 1,583 10,552 Total Functional Expenses $ 89,066 $ 17,737 $ 106,803 See Prior Year Accountant's Report and notes to Financial Statements -6- BAKERSFIELD SENIOR CENTER, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2001 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Bakersfield Senior Center (the center) is presented to assist in understanding the Center's financial statements. The financial statements and notes are representations of the Center's management, which is responsible for their integrity and objectivity. These accounting policies confirm to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Organization The Center was organized under the provision of the General Nonprofit Corporation law of California to provide recreation and transportation to the senior citizens of the community. Funds for public transportation are provided to the Center from Transportation Development Act allocations, which are legally restricted for specific purposes as detailed in applicable sections of the Public Utilities Code. The Center is a tax-exempt organization under Section 501(c)(3) of the.Internal Revenue Code. In addition, the Center has been determined by the Internal Revenue service not to be a private foundation within the meaning of Section 509(a). Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. All net assets and revenues, expenses, gains, and losses are considered unrestricted. No donor-imposed restrictions were made in fiscal year ending June 30, 2001. Fixed Assets All purchased fixed assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated fixed assets are capitalized at approximate fair market value at the date acquired. -7- NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The costs &normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related fixed assets, as applicable. Depreciation of fixed assets is computed using the straight-line method over their estimated useful lives ranging from three to thirty-nine and a half years. NOTE 2 - FIXED ASSETS At June 30, 2001, fixed assets consisted of the following: Accumulated Asset description: Cost Depreciation Book Value Transportation equipment $ 204,636 $ 204,636 $ 0 Furniture and fixtures 14,707 14,707 0 Equipment 21,257 15,185 6,072 Buildings 408,300 59,442 348,858 Land 182,000 _Q 182,000 Total $' 830,900 $ 293,970 $ 536,930 NOTE 3 - DONATED MATERIALS AND SERVICES Donated materials and equipment are reflected as contributions in the accompanying statements at their estimated values at the date of receipt. No amounts have been reflected in the statements for donated services, since no objective basis is available to measure the value of the services. Nevertheless, a substantial number &volunteers have donated significant amounts of their time in the organization's program services and fund-raising campaigns. NOTE 4 - PENSION PLAN The Center has a defined contribution money purchase plan that covers substantially all of its employees who meet specific age and length of service. The money purchase pension plan no contribution included in expense in 2001. NOTE 5 - FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing the various programs and other activities have been summarized on a functional basis in the statement &support revenues, and expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. -8- dakersfield Senior Housing Bakersfield Senior Housing ~EVELOPMENT COSTS - REVISED Prepared by: V. Zaragoza Bakersfleld~ CA Date: 12-Sep-01 Number of Dwelling Units: 80 Gross Building Area (sO Gross Land Area (~sf) 113,000 Gross Parking Area 0 Uses of Funds Development HUD HOME Funds Total Cost 202 l~lt~rsfleld Comments lAND COSTS a. Land Cost (not including building) 250,000 0 250,000 0 250,000 assumin b. Purchase Appraisal 2,500 0 2,500 0 2,500 1or about 80 K ~.fi. c. Closing Costs - escrow, title ins, legal, etc. 2,500 0 2,500 0 2,500 d. Demolition 10,000 10,000 0 0 I 0,000 e. Contigency 0 0 5000 0 5000 TOTAL LAND COSTS 265,000 10,000 260,000 0 265,000 DIRECT CONSTRUCTION COSTS a. Shell b. Amenities/Items not paid by HUD 4,142,488 4,142,488 0 0 4,142,488 c. General Conditions 225,000 225,000 0 0 225,000 d. Builder's Overhead 252,349 252,349 0 0 252,349 e. Builder's Profit 168,232 168,232 0 0 168,232 f. On-site 252,349 252,349 0 0 252,349 g. Off-site 335,125 335,125 '/5000 0 410,125 Subtotal Direct Construction Cost 75~000 0 0 0 0 f. Contingency 5,450,543 5,450,543 75,000 0 5,450,543 TOTAL CONSTRUCTION COSTS 317,913 317,913 0 0 317v913 5,768,456 5,768,456 75,000 ' 0 5,768,456 INDIRECT CONSTRUCTION COSTS a. Appraisal b. Architecture and Engineering 0 0 0 0 0 Civil Enginer 225,000 225,000 0 0 225,000 211590 c. Bond 25,000 25,000 0 0 25,000 d. Consultant 57,381 57,381 0 0 57,381 57.381 e. Environmental, Soils, Survey 45,000 45,000 0 0 45,000 48750 f. Escrow/Title 25,000 25,000 0 0 25,000 15000 g. Insurance 15,000 15,000 0 0 15,000 h. Legal 25,000 25,000 0 0 25,000 25,000 i. Marketing/Initial Oper. Costs 50,000 50,000 0 0 50,000 25000 j. Operating Reserves 51,223 51,223 0 0 51,223 k. Permi.t~Eee 0 0 0 0 0 I. Real Estate Taxes 150,000 150,000 0 0 150,000 m. Relocation (Parks & Rec Program) 0 0 0 0 0 n. Other 25,000 25,000 0 0 25,000 o. Security 0 0 0 0 0 Subtotal Indirect Construction Costs 15,000 15,000 0 0 15~000 p. Contingency 708,604 708,604 0 0 708,604 TOTAL INDIRECT CONSTRUCTION COS'I 39~302 39~302 0 0 39,302 747,906 747,906 0 0 747,906 FINANCING a. Construction Loan Points c. Construction Loan Interest 0 0 0 0 0 c. Permanent Loan Fees 0 0 0 0 0 d. Other/Appraisal 0 0 0 0 0 TOTAL FINANCING 0 0 0 0 0 0 0 0 0 0 OTHER a. Furnishings/Community Rooms b. Post-construction Audit 30,000 30,000 0 0 30,000 c. Cost Estimator 7,500 7,500 0 0. 7,500 d. Other 7,500 7,500 0 0 7,500 e. Organizational Costs During Construction 0 0 0 0 0 TOTAL OTHER COSTS 50~000 50,000 0 0 50~000 95,000 95,000 0 0 95,000 TOTAL PROJECT COSTS 6,876,362 6,621,362 335,000 0 6,876,362 ',akersfleld Senior Housing Sources of Funds HUD 202 Bakersfield-Commitment for demo. 6,670,500 . (49,138.00) 25,000 Bakersfield Additional Funds 25,000 (committed in HUD Application for demo on original site) 335r000 (expenses not paid for by HUD 202) 7,030,500 Total City Commitment - $25,000 - TI Funds $ 260~000 - HOME Funds S 285,000 Bakersfield Senior Housing Bakersfield Senior Housing .OPMENT COSTS (Revised by Cityb Staff) ~ Revised by: V. Zaral~oza Bakersfield? CA Date: 12-Sep-0 I Number of Dwelling Units: 80 Gross Building Area (sO 63,000 Gross Land Area (sf) I 13,000 Gross Parkin] Area 0 Uses of Funds Development HUD HOME Funds Total Cost 202 Bakersfield Comments to Bold Items In HOME Col. LAND COSTS a. Land Cost (not including building) 590,000 250,000 340,000 0 590,000 Dri~ by appraisal quote by M. Burger, MAI b. Purchase Appraisal 5,500 3,500 2,000 5,500 Quote by M. Burger c. Closing Costs - escrow, title ins, legal, etc. 8,960 5,460 3,500 0 8,960 Otx:~ by Fidelity Title d. Demolition 77,500 0 77,$00 0 77,500 Estimate by city staff- see attached demo cost TOTAL LAND COSTS 681,960 258,960 423,000 0 681,960 DIRECT CONSTRUCTION COSTS a. Shell 4,142,488 4,142,488 0 0 4,142,488 b. Garage 0 0 0 0 0 c. General Conditions 252,349 252,349 0 ' 0 252.349 d. Builder's Overhead 168,232 168,232 0 0 168,232 e. Builder's Profit 252,349 252,349 0 0 252,349 f. On-site 335,125 335,125 0 0 335,125 g. Off-site 75,000 75,000 0 0 75,000 Subtotal Direct Construction Cost ~.~ 5,225,543 5,225,543 0 0 5,225,543 f. Contingency 317,913 317,913 0 0 317~913 TOTAL CONSTRUCTION COSTS 5,543,456 5,543,456 0 0 5,543,456 INDIRECT CONSTRUCTION COSTS a. Appraisal 0 0 0 0 0 b. Architecture and Engineering 225,000 225,000 0 0 225,000 Civil Enginer 25,000 25,000 0 0 25,000 c. Bond 57,381 57,381 0 0 57,381 d. Consultant 45,000 45,000 0 0 45,000 e. Environmental, Soils, Survey. 25,000 25,000 0 0 25,000 f. Escrow/Title 15,000 15,000 0 0 15,000 g. Insurance 25,000 25,000 0 0 25,000 h. Legal 50,000 50,000 0 0 50,000 i. Marketing/Initial Oper. Costs 51,223 51,223 0 0 51,223 j. Operating Reserves 0 0 0 0 0 k. Permits/Fee 150,000 150,000 0 0 150,000 I. Real Estate Taxes 15,000 15,000 0 0 15,000 m. Relocation/Moving Expenses 107,178 35,178 72,000 0 107,178 R~ioc. estlmambycitystaff(50%ofodginal n. Relocation Consultant 20,000 0 0 0 reloc, osfimate from Sr. Center) - see attached o. Security 15?000 15.000 0 0 ] 5~000 relo~, estimate breakdown v/nich was Subtotal Indirect Construction Costs 825,782 733,782 72,000 0 805,782 about $68,000 (with 5% contingency it is S72 K) p. Contingency 39,302 39,302 0 0 39,302 Note: t~e oflglnal Bak. Sr. Center astlmats TOTAL IN DIRECT CONSTRUCTION COS' 865,084 773,084 72,000 0 845,084 had $20 K s~t aside for a consultant FINANCING 'this has been deleted since city staff Is peopo~lng to do the relocation wotg. a. Construction Loan Points 0 0 0 0 0 c. Construction Loan Interest 0 0 0 0 0 c. Permanent Loan Fees 0 0 0 0 0 d. Other/Appraisal 0 0 0 0 0 TOTAL FINANCING 0 0 0 0 0 OTHER a. Furnishings/Community Rooms 30,000 .30,000 0 0 30,000 b. Post-construction Audit 7,500 7,500 0 0 7,500 c. Cost Estimator 7,500 7,500 0 0 7,500 d. Other 0 0 0 0 0 e. Organizational Costs During Construction 50,000 50,000 0 0 50~000 TOTAL OTHER COSTS 95,000 95,000 0 0 95,000 TOTAL PROJECT COSTS 7,185,500 6,670,500] 495r000] 0 7,165,500 About $ 9f,000 reduction from odginal Sr. Center est]mate of $585.982 Bakersfield Senior Housing Sources of Funds HUD 202 6,670,500 0.00 25,000 ~ Bakersfield-Commitment for op. reserve 25,000 (TI committed in HUD Application on original site) Bakersfield Site Acquisition ~ (costs to purchase new site, demolition, & relocation) Bakersfield Sen Cntr. Housing Demo (Amended) Date 8/22/01 Prepared by R. Hall - EDCD Staff 508 R St R-3 4 units two story $15,000.00 500 R St R-3 4 units two story $7,000.00 612 5th St SFR $13,000.00 618 5th St SFR $8,000.00 604 5th St SFR $8,500.00 Removal of curb&gutter, asphalt s~'eet, sidewalks $26,000.00 (St. Center original demo estimate did no~ have this and ddveway approaches.** Total estimated cost $77,500.00 ** We assume very little underground utlity work for demo. (The underground utlities are located in the alley - north boundary line of the amended project site & offof R St.) Acquisition, Relocation.and Moving Expenses Estimate for the Bakersfield Senior Center Housing Project - Voluntary Acquisitions Address SFD of MF Units AppraisedValue Occupancy Est. Relocation C. Est. Moving Costs Total 604 5th Street SFD $61,000 Tenant $8,4002 $2,5003 $71,900 612 5th Street SFD $67,000 Owner $0 $0 $67,000 618 5th Street MF - Triplex $75,000 Tenants $18,0004 $2,400s $95,400 500 R Street SFD $33,000 Tenant $7,5006 $2,000 $42,500 508 R Street MF - Fourplex $90,000 Tenants $24,000 $3,200 $117,200 APN009-401-12 > a~c~tl~ ...~ ~.[!$10,000' Vacant S0 S0 $10,000 Totals $336,000 $57,900 $10,100 $404,000 ~Because acquisition is not involuntary (i.e., with the threat of imminent domain - implied or otherwise), certain benefits such as business relocation and moving costs, and owner relocation and moving costs are not federally required relocation benefits. 2 Single Family Dwelling tenant is not presumed to be low income, and to need $200 for 42 months to rent a comparable housing unit. All other tenants are presumed to be low income. 3 All renters are presumed to take actual and not fixed moving costs 4 All Multi Family Dwelling tenants are presumed to be low income and to need $100 for 60 months to rent a comparable housing unit. 5 All apartment actual moving costs are presumed to be $800 per unit. 6 Presumed low income tenant presumed to need $125 for 60 months to rent a comparable housing unit. 7Not appraised. Presumed to be worth slightly more than its assessed value of $9,054. (8/22/01) - PREPARED BY D. BATES db:P:Repo~cs/Bkfld. Sen.Ctr. Acq.&Reloc.Est. Acquisition, Relocation and Moving Expenses Estimate for the Bakersfield Senior Center Housing Project - Voluntary Acquisitionsl Address SFD of MF Units Appraised Value Occupancy Est. Relocation C. Est. Moving Costs Total 604 5th Street SFD $61,000 Tenant $8,4002 $2,5003 $71,900 612 5th Street SFD $67,000 Owner $0 $0 $67,000 618 5th Street MF - Triplex $75,000 Tenants $18,0004 $2,4005 $95,400 500 R Street SFD $33,000 Tenant $7,5006 $2,000 $42,500 508 R Street MF - Fourplex $90,000 Tenants $24,000 $3,200 $117,200 APN009-401-12 Vacant lot $10,0007 Vacant $0 $0 $10,000 Contingency to cover appraisals, escrow closing costs, etc. Estimate is 7% of costs $28,280 ~Because acquisition is not involuntary (i.e., with the threat of imminent domain - implied or other, vise), certain benefits such as business relocation and moving costs, and owner relocation and moving costs are not federally required relocation benefits. 2 Single Family Dwelling tenant is not presumed to be low income, and to need $200 for 48 months to rent a comparable housing unit. All other tenants are presumed to be low income. 3 All renters are presumed to take actual and not fixed moving costs 4 All Multi Family Dwelling tenants are presumed to be low income and to need $100 for 60 months to rent a comparable housing unit. 5 All apartment actual moving costs are presumed to be $800 per unit. 6 Presumed low income tenant presumed to need $125 for 60 months to rent a comparable housing unit. 7Not appraised. Presumed to be worth slightly more than its assessed value of $9,054. (8/22/0 I) db:P:Reports/Bkfld. Sen. Ctr. Acq.&Reloc. Est. Bakersfield Senior Housing Bakersfield Senior Housing VELOPMENT COSTS (amended site) ~ Prepared by:. J. Yokota Bakersfield. CA Date: ! 2-Sep-01 Number of Dwelling Units: 80 Gross Building Area (st') 63,000 Gross Land .M'ea/sf) 113,000 Gross Parkin~ Area 0 Uses of Funds Development HUD HOME Funds Total Cost 202 Bakersfield LAND COSTS a. Land Cost (not including building) 612,000 250,000 362,000 0 612,000 b. Purchase Appraisal 7,500 3,500 4,000 0 7,500 c. Closing Costs - escrow, title ins, legal, etc. 12,000 5,460 6,540 0 12,000 d. Demolition 48,620 0 48,620 0 48,620 TOTAL LAND COSTS 680,120 258,960 421,160 0 680,120 DIRECT COY,'STR UCTION COSTS a. Shell 4,142,488 4,142,488 0 0 4,142,488 b. Garage 0 0 0 0 0 c. General Conditions . 252,349 252,349 0 0 252,349 d. Builder's Overhead 168,232 168,232 0 0 168,232 e. Builder's Profit 252,349 252,349 0 0 252,349 f. On-site 335,125 335,125 0 0 335,125 g. Off-site 75,000 75,000 0 0 75,000 Subtotal Direct Construction Cost ~t$~82~9~ 5,225,543 5,225,543 0 0 5,225,543 f. Contingency 317,913 317,913 0 0 317,913 TOTAL CONSTRUCTION COSTS 5,543,456 5,543,456 0 0 5,543,456 INDIRECT CONSTRUCTION COSTS a. Appraisal 0 0 0 0 0 b. Architecture and Engineering 225,000 225,000 0 0 225,000 Civil Enginer 25,000 25,000 0 0 25,000 c. Bond 57,381 57,381 0 0 57,381 d. Consultant 45,000 45,000 0 0 45,000 e. Environmental, Soils, Survey 25,000 25,000 0 0 25,000 f. Escrow,'Title 15,000 15,000 0 0 15,000 g. Insurance 25,000 25,000 0 0 25,000 h. Legal 50,000 50,000 0 0 50,000 i. Marketing'Initial Oper. Costs 51,223 51,223 0 0 51,223 j. Operating Reserves 0 0 0 0 0 k. Permits/Fee 150,000 150,000 0 0 150,000 1. Real Estate Taxes 15,000 15,000 0 0 15,000 m. Relocation 180,000 35,178 144,822 0 180,000 n. Relocation Consultant 20,000 0 20,000 0 20,000 o. Security 15,000 15,000 0 0 15,000 Subtotal Indirect Construction Costs 898,604 733,782 164,822 0 898,604 p. Contingency 39,302 39,302 0 0 39,302 TOTAL INDIRECT CONSTRUCTION COS~ 937,906 773,084 164,822 0 937,906 FINANCING a. Construction Loan Points 0 0 0 0 0 c. Construction Loan Interest 0 0 0 0 0 c. Permanent Loan Fees 0 0 0 0 0 d. Other/Appraisal 0 0 0 0 0 TOTAL FINANCING 0 0 0 0 0 OTHER a. Furnishings/Community Rooms 30,000 30,000 0 0 30,000 b. Post-constxuction Audit 7,500 7,500 0 .0 7,500 c. Cost Estimator 7,500 7,500 0 0 7,500 d. Other 0 0 0 0 0 e. Organizational Costs During Construction 50,000 50,000 0 0 50,000 TOTAL OTHER COSTS 95,000 95,000 0 0 95,000 TOTAL PROJECT COSTS 7,256,482 6,670~500 585,982' 0 7,256,482 Bakersfield Senior Housing Sources of Funds HUD 202 6,670,500 0.00 0 Bakersfield-Commitment for demo. 25,000 (committed in HUD Application for demo on original site) Bakersfield Site Acquisition 560,982 (costs to purchase new sites and demolition) First Night Bakersfield 10~0~Ol Balance Sheet ' As of October 2, 2001 Oct 2, '01 ASSETS Current Assets Checking/Savings 104.00. Operating cash 8,264.11 105.00. Petty cash 134.66 Total Checking/Savings 8,398.77 Accounts Receivable 120.00 · Accounts receivable 8,500.00 Total Accounts Receivable 8,500.00 Total Current Assets 16,898.77 TOTAL ASSETS 16,898.77 LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 320.00 · Accounts payable 97,669.75 Total Accounts Payable 97,669.75 Total Current Liabilities 97,669.75 Total Liabilities 97,669.75 Equity 3900. Retained Earnings -100,548.53 400.00 · Fund Balance -21,345.64 Net Income 41,123.19 Total Equity -80,770.98 TOTAL LIABILITIES & EQUITY 16,898.77 Page1 First Night Bakersfield 0 0=01 Profit & Loss April 2001 through March 2002 Apr '01 - Mar '02 Income 501.00 · Income 501.01 · Sponsorships 12,500.00 501.02 · Donations 64.00 Total 501.00 · Income 12,564.00 502.00 * Contributions 502.02 · Gifts 12,848.12 502.04 · Fundraisers 502.05 · Door's Auction 10,375.00 502.04 · Fundraisers - Other 120.00 Total 502.04. Fundraisers 10,495.00 Total 502.00 · Contributions 23,343.12 503.00 · Sales revenue 503.02 · Merchandise 22.00 Total 503.00. Sales revenue 22.00 590.00 · Returned items 173.25 Total Income 36,102.37 Expense 702.00 · Administration 702.40 · Debt Service 100.00 72~1.00 · Bank charges 42.00 835.00 · Printing 180.22 642.00 · Rent · 67.00 Total 702.00 · Administration 389.22 703.00 · Administrative payroll 781.00 · Insurance, employees 305.96 Total 703.00. Administrative payroll 305.96 705.00 · Advertising/Promotion 705.01 · Graphic Arts 195.50 705.40 · P.R. Promotions 100.00 Total 705.00 · Advertising/Promotion 295.50 757.00 · Event expense 87.00 780.00 · Fund raising Expenses 780.05 · Door's Auction 4,309,73 Total 780.00. Fund raising Expenses 4,309.73 805.00 · Merchandise 805.10. First Lights -10,690.00 805.30. Freight 281.77 Total 805.00 · Merchandise -10,408.23 Total Expense -5,020.82 Net Income 41,123.19 Page1 First Night Bakersfield 10~0=01 Profit & Loss April 2000 through March 2001 Apr '00 - Mar '01 Income 501.00 · Income 501.01 · Sponsorships 52,000.00 501.02 · Donations 1,560.20 Total 501.00 · Income 53,560.20 502.00 · Contributions 502.01 · Grants 1~,167.00 502.02 · Gifts 1,000.00 502~03 · Municipal 30,000.00 502.04. Fundraisers 502.06 · Mayor's Preview Party 875.00 502.07 · Drawing -Aidine Tickets 2,414.00 Total 502.04 · Fundraisers 3,289.00 Total 502.00. Contributions 52,456.00 503.00 · Sales revenue 503.01. Buttons 47,564.40 503.02. Merchandise 10,147.47 503.03 · Vendors 4,394.63 Total 503.00 · Sales revenue 62,106.50 Total Income 168,122.70 Expense 6999 · Uncategorized Expenses 20.00 702.00 · Administration 706.09 · Supplies/office 182.69 721.00 · Bank charges 47.63 725.00 · Credit Card Merchant Expense 93.42 730.00 · Community Relations 80.00 751.00 · Dues and subscriptions 795.00 778.00 · Insurance 4,429.35 790.00 · Licenses 695.00 835.00 · Printing 1,414.10 837.00 · Professional fees 185.70 889.00 · Travel 543.86 891.00- Food 803.67 Total 702.00 · Administration 9,270.42 703.00. Administrative payroll 703.01 · Management 58,305.06 703.03 · Temp Employees 5,262.33 703.04. Payroll fee 396.60 781.00. Insurance, employees 420,00 882.00. Taxes, payroll, 6,741.45 Total 703.00 · Administrative payroll · 71,125.44 705.00 · Advertising/Promotion 705.01 --Graphic Arts 3,500.00 705.02 · Agency Fees 3,293,59 705.03 · Video/Photography 1,486.50 705.04 · Web Site 300.00 705.10 · Buttons/entrance 4,376.82 705.11 Button volunteer 2,265.51 705.12 Button Cards 4,678.33 708.20 Event Program 3,727.47 705.21 Brochures fnb 800.00 705.22 Posters 1,976.62 705.33 Other Print 2,368.97 705.40 P.R. Promotions 705.41 · Mayor preview 1,536.66 705.40 · P.R. Promotions -Other 219.07 Total 705.40 · P.R. Promotions 1,755.73 Page First Night Bakersfield ~0~0~0~ Profit & Loss April 2000 through March 2001 Apr '00 - Mar '01 705.00 · Advertising/Promotion - Other 104.00 Total 705.00 · Advertising/Promotion 30,633.54 710.00 · Artists/Performers 710.20- Performing artists 44,245.00 710.30 · Visual Artists 4,842.76 710.40. Production Coordinator 2,000.00 Total 710.00 · Artists/Performers 51,087.76 757.00 · Event expense 757.02 · Creation Stations 4,013.11 757.03 · Kids Countdown 670.53 757.04 · Merry Makers March 440.00 757.06 · Sand Sculpture 4,070.00 757.07 · Resolution Star 563.06 757.1 · Countdown Spectacular 8,199.00 Total 757~00 · Event expense 17,955.70 795.00 · Logistics 795.10. Sound Systems 12,500.00 795.20. Lighting/stagee 10,758.00 795.30. Stages 1,188.12 795.31 · Fence Rental 700.00 795.40 · Electrical 795.42. Lite-als 3,990.35 Total 795.40- Electrical 3,990.35 795.50 · Tents 795.51 · Heaters 642.00 ' 795.50 · Tents - Other'... 1,026.50 · Total 795.50 · Tents ~i' ' 1,668.50':' '~'" ' 795.60.Tables & Chairs . 1,879.71.· · . 795.61 · Volunteer Food &Bev 1,019.29 " 795.70 · Rent Venues 15,279.25 795.80 · Security 4,221.26 795.86- Decorations Street Art 1,025.00 795.90 · Storage 114.00 Total 795.00 · Logistics 54,343.48 805.00 · Merchandise 805.10. First Lights 20,562.22 805.30. Freight 1,256.64 805.40 · Other merchadlse 3,964.69 805.50. Strobe Stars 2,369.15 805.60. Flutter Fetti 3,619.69 805.70- Glow Glasses 2,472.50 Total 805.00 · Merchandise 34,234.89 Total Expense 268,671.23 Net Income -100,648.63 Page 2 First Night- In-Kind City Contributions Costs Police Department 2-$gts,4-Det., 16 Officers $10,000.00 Fire Department Bike Patrol, other Labor $ 2,000.00 Public Works General Services Labor &Equip. Rental $ 2,600.00 Streets Labor $ 1,000.00 Sanitation Labor $ 440.00 Public Works Total $ 4,040.00 Recreation and Parks Labor $ 3,000.00 Materials $ 1,000.00 $ 4,000.00 Economic and Community Development Labor & Office Expense $ 20,000.00 Total estimated In-Kind Costs for last year $ 40,040.00 Additional costs: Prior Year amount oWed Centennial Garden (labor) $14,000.00 Cost of scaled down event for next year $ 7,500.00 Estimated building cost (currently City absorbs as city sponsored event) $ 2,500.00. $10,000.00 Past Cash Contributions Dec-00 Council Contribution $ 20,000.00 Aug-00 Council Contribution $10,000.00 O :\ccoullta/lt? (]orporalio~ A-ugust 15, 2001 SMG, Inc. Bakersfield Centennial Garden & Convention Center 1001 Truxtun Avenue Bakersfield, CA 93301 We have audited the financial statements of Bakersfield Centennial Garden 8,: Convention Center, ("the Facility") for the year ended June 30, 2001, and have issued our report thereon dated August 15, 2001. Professional standards require that we provide you with the following information related to our audit. Our responsibility under Generally Accepted Auditing Standards As stated in our engagement letter dated January 22, 2001, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement. Because an audit is designed to provide reasonable, but not absolute assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or other illegal acts may exist and not be detected by us. As part of our audit, we considered the internal control of SMG, Inc., ("SMG"). Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we assessed the risk of SMG's compliance with certain provisions of laws, regulations, contracts, and grants. We concluded that the risk of such material misstatement was sufficiently low and that it was not necessary to perform tests of SMG's compliance with such provisions of laws, regulations, contracts, and grants. 5001 15 (:ommercenter Drive, Suite 350 · 12(). Box 11171 · Bakersfield. C:flifomia 93389 · F:LX (66l) 631-02~ · (661) 631-1171 1319 Marsh Street · S:m l,uis Obispo, California 93401 · F:Lx (~5) 541-4024 · (805) 541-2500 I010 South Broadwa}5 Suite I · Santa Maria, California 93454 · Fxx (8O5) 349-7702 · (805) 34%7705 August 15, 2001 SMG, Inc. Page two Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the Facility and SMG are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended June 30, 2001. We noted no transactions entered into by the Facility during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authority guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the financial statements preparedby management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. There are no significant accounting estimates affecting the financial statements. Significant Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the financial statements that, in our judgement, may not have been detected .except through our auditing procedures. These adjustments may include those proposed by us but not recorded by the Facility that could potentially cause future financial statements to be materially misstated, even though we have concluded that such adjustments are not material to the current financial statements. We proposed no audit adjustments that could, in our judgement, either individually or in the aggregate, have a significant effect on the Facility's financial reporting process. ..Disagreements.with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, conceming a financial accounting, reporting or auditing matter that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. August 15, 2001 SMG, Inc. Page three Consultations with Other Independent Accountants, In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Facility' financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Facility' auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of the management of SMG, Inc. and the City of Bakersfield and is not intended .to be and should not be used by anyone other than these s~ecified~parties. BAR~ II 2p//LONGCRII] ~R HOOPER & KING By: ~ Kin ' · G:\clients\8347xs fasltr B~bich Longcrier Hooper Accountancy Corporatio--'~- Bakersfield Centennial Garden & Convention Center Financial Statements Year Ended June 30, 2001 I I I I I CONTENTS I Page(s) Independent Auditors' Report On The Financial Statements 1 I Financial Statements I Balance sheet 2 Statement of revenue and expenses 3 i Statement of changes in retained deficit 4 Statement of cash flows 5 I Notes to Financial Statements 6 - 14 Independent Auditors' Report on the I Supplementary Information 15 Supplementary Information I Schedule of operating expenses 16 I Independent Auditors' Report On Compliance And On Internal Control Over Financial Reporting Based On An Audit Of Financial Statements Performed In I Accordance With Government Auditing Standards 17 ,! I I 0 Indepen ' Report SMG, Inc. Bakersfield Centennial Garden & Convention Center Bakersfield, California We have audited the balance sheet of Bakersfield Centennial Garden & Convention Center as of June 30, 2001, and the related statements of revenue and expenses, changes in retained deficit and cash flows for the year then ended. These financial statements are the responsibility of the City's facility management company, SMG, Inc. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bakersfield Centennial Garden & Convention Center as of June 30, 2001, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. 5001 E. Commercenter Drive, Suite 350 · P.O. Box 11171 · Bakersfield, C. alifomia 93389 ° Fax.(661) 631-0244 · (661) 631-1171 1319 Marsh Street ° San Ix]is Obispo, California 93401 Fax (805) 541-4024 (805) 541-2500 1010 South Broadway; Suite I · Santa Maria, California 93454 ° Fax (805) 349-7702 · (805) 349-7705 I I I I I I In accordance with Goverment Auditing Standards, we have also issued a report dated August 15, i 2001 on our consideration of SMG, Inc.'s internal control over financial reporting and our assessment of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing I Standard and should be read in conjunction with this report in considering the results of our audit. ~~ gom~c~ ~oo~ ~ ~i~ By: G IBakersfield, California~ August 15, 2001 I I I I I Bakersfield Centennial Garden & Convention Center Balance Sheet June 30, 2001 ASSETS Current Assets Cash $ 1,448,578 Accounts receivable, trade 350,712 Accounts receivable, other 130,364 Prepaid expenses 130,844 2,060,498 Property and Equipment, at cost 39,584 Less accumulated depreciation 16,237 23,347 $ 2,083,845 LIABILITIES AND RETAINED DEFICIT Current Liabilities Accounts payable, trade $ 236,709 Accounts payable, other 242,462 Accrued expenses 92,159 Deferred revenue 1,352,635 Advance from City of Bakersfield 1,445,815 3,369,780 I Commitments Retained Deficit I Unappropriated (1,285,935) $ 2,083,845 I See Notes to Financial Statements. 1 Bakersfield Centennial Garden & Convention Center Statement of Revenue and Expenses For the Year Ended June 30, 2001 Net revenues: Facilities rent $ 1,405 741 Event expense reimbursements 795 378 Suite and premium seats 651. 648 Concession commission 451. 847 Signage and advertising 446.779 Parking 126.650 Ticketing fees 130.528 Merchandise 63,035 4,071,606 Direct event expenses: Event labor 1,002,111 Other direct event expenses 309,023 222,371 Event advertising 1,533,505 Gross profit 2,538,101 Operating expenses 3,025,046 Operating loss (486,945) Nonoperating income: Interest income 22,741 22,741 Net loss $ (464,204) See Notes to Financial statements. 1 Bakersfield Centennial Garden & Convention Center Statement of Changes in Retained Deficit Year Ended June 30, 2001 Retained deficit, beginning of year $ (821,731) Net loss (464,204) Retained deficit, end of year $ (1,285,935) See Notes to Financial Statements. -4- Bakersfield Centennial Garden & Convention Center Statement of Cash Flows For the Year Ended June 30, 2001 Cash flows from operating activities: Operating loss $ (486,945) Adjustments to reconcile operating loss to net cash used in operating activities: Depreciation 10,887 Increase in accounts receivable (158,128) Decrease in prepaid expenses 16,106 Increase in accounts payable 326,123 Decrease in accrued expenses (110,673) Increase in deferred revenue 564,108 Net cash provided by operating activities 161,478 Cash flows from investing activities: Payments for purchase of property and equipment (13,843) Interest income 22,741 Net cash provided by investing activities 8,898 Cash flows from financing activities: Net increase in advances from the City of Bakersfield 494,497 Net increase in cash and cash equivalents 664,873 Cash and cash equivalents at beginning of year 783,705 Cash and cash equivalents at end of year $ 1,448,578 See Notes to Financial statements. 5 ! I Bakersfield Centennial Garden & Convention Center I Notes to Financial Statements Note 1. Nature of Business and Significant Accounting Policies Nature Business: of The City of Bakersfield ("the City") owns the Bakersfield Centennial Garden and Convention Center ("the Facilities"). The Centennial Garden is an arena, built by the City, which was completed and began operations in October 1998. It is the only building of its kind in the Bakersfield area. On August 6, 1997, the City issued a request for proposals for services prior to the opening of the Centennial Garden and the operation and management of the Facilities thereafter. In an agreement dated January 28, 1998, the City contracted with Ogden Entertainment, Inc. ("the Company") for these services for an initial period of five years. The contract term was subsequently extended .for an additional five-year term and the agreement is effective through June 30, 2008. The Company worked during the January 14, 1998 through June 30, 1998 pre-opening phase and assumed management responsibilities of the Facilities on July 1, 1998. The Company was hired by the City for its expertise in the management, operation marketing public assembly Company currently manages and of Facilities. The similar Facilities throughout the United States. The Company sold its entertainment business division to ARAMARK Corporation effective June 2, 2000. The operation of the Facility is still being conducted under the Company's name. All contracts and leases, with the exception of the administrative services agreement with the City, are transferable to ARAMARK Corporation. See Note 4 for terms of the administrative services agreement. The City has approved the transfer of the administrative services agreement to ARAMARK Corporation. On September 13, 2000, the Company sold and assigned all of it's rights, obligations, liabilities and indemnities as manager of the Facilities to SMG, Inc. for $10. All contracts and leases, with the exception of the administrative service agreement with the city, are transferable to SMG, Inc. See Note 4 for terms of the administrative service agreement. The city has approved the transfer of the administrative services agreements to SMG, Inc. I I Notes to Financial Statements I The activity of the Facilities is 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 Company has a fiduciary responsibility under the management agreement to maintain and operate the Facilities in the best interests of the City and the community. Fund accounting: Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or, (b) where the governing body has decided that periodic determination of revenue earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purpose. Revenue Recognition: Suite and premium seat contracts premium seat contracts are recognized over contract Revenues from suite and the period per the contract terms. Contracts are billed twice a year with the entire contract amount payable prior to the contract period. The suite and premium seat payments are recorded as deferred revenue until earned and recognized over the contract period. Signage and advertising contracts Revenues from 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. 1 I I I Ticket sales The Company, through its contract with Ticketmaster, sells tickets to Facility events as an agent of the event holder at the on site box office location and through telephone, internet and outlet locations. All revenues 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 to received from the event holder. The event ticket removed paid or revenues are from the deferred revenue account at the time of settlement. The Facilities earn a ticketing fee on the sale of event tickets that take place through telephone, internet and outlet locations. Revenues are recorded as deferred revenue at the time of sale and are recognized at the time of event settlement. Event revenues Revenues from Facilities' events such'as facilities rent, direct event expense reimbursements, concession commissions, parking and merchandise are recognized at the time of event settlement. Basis of accounting: The accompanying financial statements have been prepared on the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned and expenses are recognized when incurred. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles 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, cash and cash equivalents include cash on hand and amounts with banks. deposited -8- Categories of deposit risk: In accordance with the Governmental Accounting Standard Board Statement No. 3, the City's deposits are categorized to give an indication of the level of risk assumed by the City at June 30, 2001. The categories are described as follows: Category 1 - Insured or collateralized with securities held by the entity or by its agent in the entity's name Category 2 - Collateralized with securities held by the pledging financial institution's trust department or agent in the entity's name. ~ Category 3 - Uncollateralized. (This includes any bank balance that is collateralized with securities held by the pledging financial, institution, or by its trust department or agent but not in the entity's name). Catego~ Carrying 1 2 3 Value Cash and cash equivalents $ 837,445 $ -0- $ 611,133 $ 1,448,578 At June 30, 2001, the amount of financial institution carrying was $1,448,578 and the bank balance was $1,490,162 of which only $300,000 is covered by federal depository insurance. Concentration of credit risk: Credit is extended, in the form of accounts receivable, to customers located primarily in California. Property and equipment: Property and equipment are recorded at cost. DePreciation is computed using the straight line method over estimated useful lives of 3 years. Maintenance and repairs of property and equipment are charged to operations and major improvements are capitalized. Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and gain or loss is included in the statement of income. Note 2. Deferred Revenue Deferred revenue at June 30, 2001 consists of the following: Suite contracts $ 417,500 Advertising contracts 146,680 Ticket sales, future events 702,694 Event deposits 43,245 Event sponsorship 2,500 Ticket rebates 40,017 $ 1,352,635 Note 3. 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 rent and utilities for the office space used by the Company. The amount of the advance fluctuates throughout the year depending on allocated monthly expenses and additional cash flow needs. The advance is an inter-company account that is eliminated in the consolidation for the of the financial preparation City's statements. The amount due at June 30, 2001 was $1,445,815. Note 4. Administrative Services Agreement The Company provides administrative services for the City under an original five-year agreement, which was subsequently extended for an additional five-year period. Compensation for these services is a base fee of $150,000 for the first year, paid in equal monthly installments. The base fee increases by 3% per year each year thereafter until the agreement has terminated. ,! I I In addition to the base fee, the Company receives an incentive relative to the amount of the reduction, if any, in net operating loss for each fiscal year. The incentive is calculated based upon the net operating income or loss after the base fee. The Company receives an incentive of 1) 10% of the first $350,000 in net operating loss reduced; 2) 20% of the next $500,000 in net operating loss reduced; 3) 30% of any net operating surplus in any one fiscal year. All of the incentive calculations are based upon a projected annual net operating loss of $850,000. Beginning July 1, 2003, the incentive is $25,000 for every year the net operating loss is below $300,000. If the net in fiscal reaches then the incentive fee will operating surplus any $350,000, year cease. For the year ended June 30, 2001 the Company received $266,344 in management and incentive fees. The computation of the incentive fee is based upon the books and records of the Facilities maintained by the Company. The accounting records for the Facilities must be maintained in accordance with generally accepted accounting principles and industry standards. The Company is required under the agreement with the City to have an annual audit at the end of the fiscal year. Under the management agreement with the City, the Company has the right to operate or contract with others to operate concession and catering services for the Facilities during the initial five-year term of the contract, effective through June 30, 2003. The City has not extended this portion of the management agreement. The Company has contracted with its food and beverage division to operate these services. The food and beverage division is a related entity under common management at the Company's corporate level. Operations of this food and beverage division are not included in the Facilities' financial statements. The Facility is entitled to receive 35% of the first $1.2 million in gross concession receipts and 40% of receipts in excess of $1.2 million and 15% of gross concession receipts to the suites. For the year ended June 30, 2001 the Facility received $626,054 in gross concession and catering receipts from the Food and Beverage division. The Facility is entitled to receive 75% of the net novelty receipts and the Company receives the remaining 25%. For the year ended June 30, 2001 the Facility received $62,200 and the Company received $19,284 in net novelty receipts from the Food and Beverage division. I I I I Note 5. Commitments I The Company has entered into various long-term contracts and leases. At June 30, 2001 outstanding commitments consist of the following: I Ticket sales The Company has entered into a licensed user agreement with Ticketmaster to be the I provider any event presented by the Company at the exclusive for ticket sales for Facilities. Under the agreement, Ticketmaster has the authority to act as an agent for i the Company for ticket sales to the general public by any and all means including telephone, internet, and outlet locations. Ticketmaster earns fees from the ticket sales such as inside ticket charges, customer convenience charges, credit card charges, i handling charges and ticket sales royalties. Some fees are subject to increases throughout the contract term. Ticketmaster collects these fees as tickets are sold and the net amount is remitted to the Company weekly. The initial term of the agreement I is for five years and the agreement is effective through August 31, 2003. The contract automatically renews for one two-year period unless terminated in accordance with the provisions of the contract. I Concert promoter I The Company has entered into a booking service agreement with Nederlander- Bakersfield, Inc. as the exclusive musical concert promoter for the Facilities. Nederlander has contracted to pay a minimum annual guarantee of $175,000 in I rent of direct event expenses through the concerts it facilities and reimbursement promotes at the Facilities. Nederlander is entitled to 25-50% of amounts in excess of i the minimum annual guarantee based upon various target levels. The facilities rent and annual guarantee amounts are subject to escalation each year over the contract period based upon increases in the Consumer Price Index, but not more than 4% per I year. For the year ended June 30, 2001, Nederlander paid $173,543 in facilities rent less reimbursement of direct expenses with an estimated amount of $-0- due for the excess of the minimum annual guarantee. The contract year is different than the I Facilities fiscal year. Therefore, the excess of the minimum annual guarantee is allocated over two of the Facilities' fiscal years. The agreement is effective through December 31, 2003 unless terminated earlier in accordance with the provisions of the I agreement. I I I I Personnel services The Company has entered into an independent contractor's agreement with Staff Pro, Inc. to provide personnel services for the Facilities, which include ushers, ticket takers and security. Under the agreement, Staff Pro, Inc. receives the actual wages for personnel working at the Facilities plus a payroll overhead mark-up of 33.7% of the wage rate and a management fee of 10% of the actual wages plus overhead mark-up. The Company guarantees $30,000 for the minimum annual management fee for the initial The management fee is subject to negotiation on the anniversary date of year. the agreement. The agreement is effective through August 1,2001 unless terminated earlier in accordance with the provisions of the agreement. Subsequent to year end, the Staff Pro, Inc. agreement was extended for 60 days while the parties negotiate to a renewal of this agreement. Maintenance staff The Company has entered into an independent contractor's.agreement ~vith Maintenance Staff, Inc. for janitorial; set-up, breakdown and related services at the Facilities. Maintenance Staff, Inc. receives a contracted hourly rate of pay for personnel working at the Facilities. The rates are subject to increases based upon increases in the state or federal minimum wage, FICA or Medicare rates. The agreement is effective through July 15,2001 unless terminated earlier in accordance with the provisions of the agreement. This agreement was not renewed and the Company hired employees in-house to perform services previously performed by Maintenance Staff, Inc. Hockey lease The City has entered into a lease agreement, which has been assigned to Flying Puck, Inc. for exclusive use of the Facilities for West Coast Hockey League (WCHL) games. Flying Puck has agreed to pay a minimum of $160,000 per season for use of the Facilities. The $160,000 consists of lease fees of $5,000 per game played plus 7.5% of ticket sales above certain levels per year, which increase over the contract term. The lease fees are subject to increase beginning in the third year of the contract and every two years thereafter based upon the Consumer Price Index adjustments. I I I Flying Puck receives $5,000 for each suite leased for hockey tickets. For the year ended June 30, 2001, Flying Puck received $120,000 for the twenty-four suites leased. The agreement is effective through June 30, 2004 or ten days following the date the last WCHL playoff game of 2004 is played, whichever occurs first unless terminated earlier in accordance with the provisions of the agreement. The contract has two options for renewal for terms of seven years each. Prior to the exercise of either option, the parties shall negotiate new lease fees. Basketball lease The Company has entered into a lease agreement with the Cal State University Bakersfield Foundation (Cal State) for exclusive use of the Facilities for Cal State University Bakersfield men's basketball games. A lease fee of $4,000 per game plus 7.5% of ticket sales above certain levels is charged for use of the Facilities. Cal State receives $2,500 for each suite leased that includes basketball tickets. For the year ended June 30, 2001, Cal State received $52,500 for suite ticket options. The agreement is effective through October 31,2001 unless terminated earlier in accordance with the provisions of the agreement. The contract has two options for renewal for terms of five years each. Prior to the exercise of either option, the parties shall negotiate new lease fees. The Company is currently.in negotiations with Cal State to renew the lease. I I 1 I O Barbich Accoun 'l~nc~ ~orpomtion Independent Auditors' Report on the Supplemental_ Information SMG, Inc. Bakersfield Centennial Garden & Convention Center Bakersfield, California The accompanying information shown on page 16 is presented only for purposes of additional analysis and is not a required part of the basic financial statements. Our audit of the basic financial statements was made for the purpose Of forming an opinion on those statements taken as a whole. The accompanying information has been subjected to the procedures applied in the audit of the basic financial statements. In our opinion, the accompanying information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. BARB¢I~NGCRIER.~IOOPER & KING By: ~o~SKing/A N~ Baker~forni~ ] August 15, 2001 ~ ~ - 15- 5001 E. Connnercenter Drixe, Suite 350 · PO. Box 11171 · Bakersfield, California 93389 ° Fax (66) 631-0244 ° (661) 631-1171 1319 Marsh Street ° San Luis Obispo, California 93401 ° Fax (805) 541-4024 · (805) 541-2500 1010 South Broadway5 Suite I ° Sm~ta Maria, California 93454 ° F,~ (805) 349-7702 · (805) 349-7705 Bakersfield Centennial Garden & Convention Center Schedule of Operating Expenses Year Ended June 30, 2001 Full time staff $ 1,101,387 Utilities 618 027 Management fees 211 834 Equipment rental 156 428 Security 134,286 Hockey premium 120,014 Supplies 97,095 Part time staff 73 074 Contract maintenance 56 937 Insurance 235 316 Credit card fees 40 538 Marketing 37 817 Travel 30 560 Repairs and maintenance 15 408 Telephone 22,682 Office supplies 11 743 Printing 15 548 Professional fees 12 600 Miscellaneous 8 807 Depreciation 10 887 Postage 7 124 Uniform 1 116 Dues and subscriptions 2 775 Training 785 Employment ad fees 2,258 $ 3,025,046 I I I Barbich [ Independent Auditors' Report on Compliance and on m Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards I SMG, Inc. Bakersfield Centennial Garden & Convention Center Bakersfield, California We have audited the financial statements of Bakersfield Centennial Garden & Convention Center as · 1 of and for the year ended June 30, 2001, and have issued our report thereon dated August 15, 2001. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards issued by m the Comptroller General of the United States. · Compliance I Compliance with laws, regulations, contracts and grants applicable to Bakersfield Centennial Garden & Convention Center is the responsibility of the City's facility management company, I SMG, Inc. As part of our audit, we assessed the risk that noncompliance with certain provisions of laws, regulations, contracts and grants could cause the financial statements to be materially misstated. We concluded that the risk of such material misstatement was sufficiently low and that l it was not necessary to perform tests of SMG, Inc.'s compliance with such provisions of laws, regulations, contracts and grants. · 1 m m m I 5001 E. Conmaercenter Drive, Suite 350 · PO. Box 11171 · Bakersfield, California 93389 · F,mx (661) 631-0244 · (6~1) 631-1171 1319 Mamh Street · San l,uis Obispo, California 93401 · Fmx (805) 541-4024 · (805) 541-2500 m 1010 South Broadxvay, Suite I · Santa Maria, California 93454 ° I%< (805) 349-7702 ° (805) 349-7705 1 I I Internal Control Over Financial Reporting In planning and performing our audit, we considered SMG, Inc.'s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in to relation the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of management, others within the organizatior~ and the City of Bakersfield and is not intended to be and should not be used by anyone other than/hese specified parties. BARBI/f [J~NGC ..RIER ~IOOPER & KING By: G~B~ing, Baker sfi' '~'Itt~if°rnia ~ ~1 August 15,' 2001 ~ I I