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Home My WebLink About09/20/2004 B A K E R S F I E L D Mike Maggard, Chair Harold Hanson Mark Salvaggio Staff: John W. Stinson SPECIAL MEETING NOTICE BUDGET AND FINANCE 'COMMITTEE of the City Council - City of Bakersfield Monday, September 20, 2004 - 4:15 p.m. City Manager's Conference .Room, Suite 201 Second Floor- City 'Hall, 1501 Truxtun Avenue, Bakersfield, CA AG.E N DA 1. ROLL CALL 2. ADOPT FEBRUARY 12, 2004 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A..Review and Committee recommendation on outstanding issue .regarding park development fees - Rojas a. Request from the North Bakersfield Recreation and Parks District to have construction of required developer street improvements apply to the full street next to a park as it does in the City, instead of half the street improvements B. Staff report and Committee recommendation regarding Audit 'Reports for fiscal year ending June 30, 2003 - Klimko · Reportable Conditions Report- Management Letter · Required Communication with Audit Committee - SAS 61 · Comprehensive Annual Financial Report (CAFR) · Independent Auditors Report - Single Audit Report - Schedule of Federal Expenditures for the City of Bakersfield · Independent Auditors Report - Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan · Independent Auditors Report on Appropriations Limit Worksheet (GANN Limit) of the City of Bakersfield 'Page 1 of 2 Pages SPECIAL MEETING NOTICE continued BUDGET AND FINANCE COMMITTEE MOnday, September 20, 2004- 4:15 p.m. 5. NEW BUSINESS A.. Staff report and ~Committee recommendation on Amendment (No. 1) to Noriega · House Agreement 99-9 regarding repayment ~of Economic' Development Loan - Kunz B. Staff report and Committee recommendation regarding Promoting Curbside Recycling - Rojas/Barnes C. Staff report and Committee recommendation-regarding Independent Auditor's Report and FY 2002-03 Transportation Development Act Funds Financial Statements - Rojas D. Staff report and Committee ~recommendation regarding proposed road repair funding policy using facility replacement reserve or one-time funds - Stinson 6. COMMI3'I'EE COMMENTS 7. ADJOURNMENT S:\Darnel~004Bud&FinCom~bf04sept20agen.doc Page 2 of 2 Pages B A .K E .R S F I E L D Alan Tandy City~la~ger Harold Hanson Staff: Darnell W~ Haynes Mark Salvaggio AGENDA SUMMARY REPORT SPECIAL MEETING BUDGET AND FINANCE COMMITTEE Thursday, February 12,~2004 · 4:00 p.m. City Manager's Conference Room - City Hall 1. ROLL CALL Called to order.at 4:15 p.m. Present: Councilmembers Mike Maggard, Chair; Harold Hanson and Mark Salvaggio - arrived at 4:16 p.m. 2. ADOPT NOVEMBER 24, 2003 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. 'NEW BUSINESS A. Staff. report and Committee recommendation on Fiscal Year 2004,05 Community Development Block Grant (CDBG), Home Investment Partnerships (HOME), and Emergency Shelter Grant (ESG) Annual Spending ,Plan City Manager Alan Tandy explained due to the fiscal crisis, there are more demands than customarily on this grant source. The FebrUary 6th memorandum in the packet outlines a spending plan based on responses to .the recent draft plan that was sent out to the Council and to Council discussions regarding swimming pool closures and the fiscal crisis. After the memorandum was prepared, there were additional Council questions on the feasibility of CDBG funding for public safety salaries. Economic Development Director 'Donna Kurtz provided an overview of the February 6th memorandum written in response to City Council question concerning using CDBG funds for spray parks, Police and Fire services, street reconstruction and other 'Public Services Activities currently charged in the General ~Fund. Staff recommended the following budget amendments: BUDGET AND FINANCE COMMITTEE MEETING Thursday, February 12, 2004 Page - 2 - · $300,000 for Wayside spray park (Transfer the proposed funding for a spray park at 'Martin .Luther King, Jr. Park) · $33,.000 for recreation programs at Wayside and Lowell and busing swimmers to open pools (Transfer from the Eowell Park Trailers .project) · $100,000 for street resurfacing (Transfer from Economic Development SE Business Loan Program, Which would reduced the total to $277,000) · $250,000 Pianz Park spray park (Transfer the balance of the Lowell Park Trailers project of $93,000 and $157,000 from Economic Development SE Business ~Loan Program, which would leave a balance of $t20,000 in the Loan Program) Committee Member Salvaggio .expressed concerns that Councilmember Carson may not be supportive of using all the Economic Development Loan 'Program money and she had also indicated she would rather the.funding for Planz spray park come from anOther source. Staff explained the Economic Development Loan Program money has been set aside for a long time and has not been :useful since the passage.of SB 975 mandating payment of prevailing wage when building projects with government funding. There is $600,000 in Southeast Tax Increment money, which could be used for loan program requests and also for Fire Station No. 5. This information has been shared with Councilmember-Carson. The Committee discussed the serious need to fund Streets and the ability to use Tax Increment monies to fund loan program requests. The Committee unanimously approved staff's recommendation on the above budget transfers, and also transferring the balance in the Economic Development Loan Program to street resurfacing. Community Development Coordinator George Gonzales gave an overview of the total applications received. This year 14 applications were submitted from non- profit and 'public entities totaling over $3.4 million for FY 2004-05. There were 19 proposals received requesting CDBG assistance for CIP projects from City departments totaling approximately $7.1 million. HUD has provided estimates of FY 2004-05 funding: CDBG at $3,933,000 (plus program income of approximately $50,000) for a total of $3,983,000; HOME~ Investment Partnership Program at.$1,775,000 and HUD Will be.funding another first-time home buyer program called "American Dream" with an estimated allocation of $146,326, which will provide down payment assistance for qualified families; and Emergency Shelter Grant (ESG) at $146;000. Economic Development Director Donna Kunz .explained HUD has a "cap" on the amount that may be spent on. eligible Public Services Programs. The City is allowed to calculate 15% of its annual entitlement plus prior year program income to establish the "cap." The calculation determined $612,450 is available for Public Services Programs. Staff proposed the -following programs for a total of $308,000 be charged to the Public Services category for FY 2004-05: AGENDA SUMMARY REPORT ~': "~;, ' .~* '~" Thursday, February 12, 2004 Page - 3 - Fair Housing - mandated 'by HUD $- 90,000 Graffiti 'Removal Program 50,000 ReCreation Program 33,000 Bakersfield Senior Center Operations 50,000 S.E. Bakersfield Police substation 85,000 This.left a balance of $304,4§0 that could-be charged for FY 2004-05 to the PUblic Services category without exceeding the allowed 15% "cap." Police Captain Taylor presented a proposal/request that $270,000 of the CDBG Public Services monies be used to fund three officers (one in the satellite-office, one Baker Street Officer and one PAL Officer all assigned to the east 'side of Bakersfield). This would ~free up ~the funding to sponsor four candidates to go through the police academy. These officers along with the eight officers that would be sponsored by a ~grant would provide 12 officers for the academy. HUD identifies Police Officers for crime prevention services as an eligible' CDBG expense when they are serving in Iow and moderate income neighborhoods. This also falls under the Public Services category and is subject to the 15% cap rule. Fire Chief Ron Fraze presented a proposal/request that $252,000 of the CDBG Public Services :Program monies be used to fund three Firefighters for Fire Station No. 5. CDBG funds may be used to-fund Fire personnel provided the following criteria are met: 1) the service must be a new; 2) serve a qualified Iow and moderate income neighborhood; and 3) be classified under the Public Services category subject to the 15% cap rule. The Economic Development Director suggested in. order to make additional capped monies available, the $90,000. for Fair Housing - mandated by HUD be charged to the Affordable Housing Fund in Redevelopment. 'If the. request from Fire and Police were granted, this would leave a funding gap of $128,000. The City Manager stated to achieve seven safety positions, because of the 15% "cap" on CDBG funding, with Committee/Council approval the $128,000 could be funded with General Fund money. For seven safety positions, this is a very Iow General Fund cost. ' Economic Development Director Donna Kunz explained the $304,450 (capped monies) came from the reduction in funding for the new Fire Station Five in 2004- 05 from $800,000 to $250,000, which is the amount needed for land and design in 2004-05. The balance in CDBG funding of $567,500 less $304,000 leaves a balance of approximately $263,500 thatis not in the Public Services cap. Public Works Director Raul Rojas requested the $263,500 because of the need for street resurfacing/asphalt in the Carnation Tract and other Iow income neighborhoods. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Thursday, February 12, 2004 Page -4 - Committee Member Salvaggio explained the City has never been in a budget crisis this severe in recent history. The Council has had to make some very difficult decisions. He stated he was very supportive of using CDBG funds for essential services, such as Police, Fire, Streets.and Recreation, which means not funding the CDBG applications received this year from non-profits. The COmmittee agreed with-the need to make providing essential services, especially PUblic Safety, Streets and Graffiti, to the public a funding priority this year 'due to .budget constraints in the General Fund. Staff recommended taking the FY 2004-05 Action Plan to the City Council in May and moving forward with the Public Notice, .which would need to be published at · least 30 days prior to the Council .meeting to allow for public comment. Committee Member Hanson made a mOtion to approve staff's recommendations to move forward with the Public Notice and forward the FY 2004-05 Action ~Plan to the City Council; and als0 include the Committee's recommendations to approve the -budget'transfers recommended by staff and funding for the following: · Approve request for CDBG funding from the Police Department for three Police Officers to free up funding to sponsor four officers to go through the academy. These officers along with the eight officers that would be sponsored by a.grant would provide 12 officers for the academy. · Approve request for CDBG funding from the ~Fire Chief for three Firefighters for Fire Station Five. · Transfer $90,000 Fair Housing - mandated by HUD to Affordable Housing/or other funding not under the cap. · Fund up to $128,000 from the General Fund to add to capped.funding to achieve 7 safety positions .under the cap. · Transfer the balance in .the Economic Development 'Loan Program to street resurfacing. ' · Approve request for CDBG funding from the Public works Director for the CDBG funding .of $263,500 (not under the cap) for street resucfacing in HUD eligible areas. The Committee unanimously approved the motion. Committee Members Hanson and Salvaggio further reviewed the Home Investment Partnerships (HOME) and Emergency Shelter Grant (ESG) 2004-05 Annual Spending Plans proposed by staff. The Emergency Shelter Grant program included funds for the Bakersfield Rescue Mission, Bethany Homeless Shelter, and Alliance Against Family Violence. Committee Member Hanson made a motion to approve the spending plans, public notice, and forward to the City Council as part of the FY 2004-05 Action Plan approved above. The Committee unanimously approved the motion (Committee Chair Maggard absent for this item). AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Thursday, February 12, 2004 Page - 5 - B. Staff report and Committee recommendation regarding' Audit Reports 'for fiscal year ending ..June 30,' 2003 · Reportable.Conditions Report- Management Letter · ' Required Communication with Audit Committee - SAS 61 · Comprehensive Annual Financial Report (CAFR) · Independent Auditors Report - Single Audit Report - Schedule of Federal Expenditures for the City of .Bakersfield · Independent Auditors Report- Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan · Independent 'Auditors Report on Appropriations Limit Worksheet (GANN -Limit) of the City of ~Bakersfield Committee Member Hanson made a motion to defer this item. The Committee unanimously-approved the motion '(Committee Chair Maggard absent for this item), C. Discussion and Committee approval of 2004 Budget and Finance Committee meeting schedule Committee Member Salvaggiomade a .motion to defer this item. The Committee unanimously approved the motion (Committee .Chair Maggard absent for this item), 5. COMMITTEE COMMENTS 6. ADJOURNMENT The meeting adjourned at 5:27 p.m. Attendance: City Manager Alan Tandy; Assistant City Manager John W. Stinson; City Attorney Ginny Gennaro; Assistant City Manager Alan Christensen; Finance Director Gregory Klimko; Assistant to the City Manager Darnell Haynes; Economic Development Director Donna Kunz; Public Works Director Raul Rojas; Community Development Coordinator George Gonzales; Fire Chief Ron Fraze; Public Works Operations Manager Brad Underwood; Public Works street Superintendent Luis Peralez; Deputy City Attorney Allen Shaw; Economic/Community Development Business Manager-Rhonda Barnhard; Assistant Recreation and Parks Director Allen Abe; Deputy Fire Chief Gary Hutton; Police Captain Tim Taylor; Superintendent of Recreation Sally Ihmels; Sergeant Joe Grubbs, Police Department/PAL; and Assistant Finance Director Nelson Smith Others: 'Randy Coates, Housing Authority-Kern Affordable Housing; Louis Gil, Bakersfield Homeless Center; Mildred Moore; and Dennis Wallace Habitat for Humanity cc.' Honorable .Mayor and City Council S:\Darnell\04Budget and Finance~f04feb12summary B A K E R S F I E L'D PUBUC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, City Manager FROM: RAUL M. ROJAS, Public Works Director ~_./~____..~ DATE: August 17, 2004 SUBJECT: Park Development-'Outstanding Item This memo addresses the one remaining issue regarding the park development fee. Specifically, the issue is a request from the North Bakersfield Recreation.and Parks District (NBRPD) to have construction of required developer street improvements apply -to the full street next to a park as it does in the City, instead of half the street improvements. Staff's recommendation is provided at the conclusion of this memo. BACKGROUND As a~reminder, the revised park development fee adopted on September 10, 2003, eliminated the street improvements line item since developers are required to construct local streets adjacent to a park site as a condition of development. This was done since.the City acquires park sites as part of the subdivision, and the developer is responsible for putting in the full street. NBRP. D normally acquires park sites by directly purchasing the land; therefore, the park site is not part of land being subdivided. On February 10, 2004, NBRPD and.City staff discussed the following ideas: · Adding back the offsite street improvements back into the park development fee for development within NBRPD's boundaries: Drawbacks to this include establishing two different park development fees within the City limits. Staff does not recommend this alternative. As a side note, the City's original estimate for street improvements was $12,000 per acre. This estimate includes mobilization, contingency, and design/construction services. NBRPD's estimate was $20,000 per acre. The reason for the large difference is that the City's estimate for street improvements is for local streets while NBRPD's estimate is for collector or arterial streets. Adding NBRPD's street improvement costs to the existing park development fee will increase it by $150 (a 12% increase to the current $1,275 single family' fee). · NBRPD staff indicated that, in their opinion, the most appropriate method to handle offsite street improvements is through the park acquisition ordinance. NBRPD staff indicated that the best mechanism available to fund collector and arterial street Park Development Fee - Outstanding Item August 17, 2004 Page 2 of 2 improvements would be to amend the City's ordinance on park land appraisals to allow appraisals to include future improvements on unimproved real property. NBRPD indicated that the City's current appraisal .guidelines do not allow improvements to be included in the appraisal price. Their position is that the appraisal for parkland property should be flexible enough to allow future site improvements to be part of the valuation process when needed. Section 15.80 of the Bakersfield Municipal Code is entitled "Dedication of Land, Payment of Fees, or Both for the Purposes of Parks and Recreation Land". Section 15.80.100 of this Section defines the process for the determination of fair market value. The current ordinance states that the determination of fair market value for both dedication of parkland and/or payment of in-lieu fees shall be based upon the value of unimproved .real property. At this meeting, City staff agreed to further research this idea. The City's Real Property Manager was contacted for his input. He stated that appraising raw land with future site improvements is problematic. Directions to the appraiser would have to be very specific, i.e. width of streets, does it include street lights, landscaping, utilities, etc. Currently, some developers submit appraisals used for financing purposes to determine the payment of in-lieu fees. This is acceptable-since the appraisal sets forth an "unimproved/raw land" value and the in-lieu fee amount can be extrapolated from this type of appraisal. However, to do what NBRPD proposes would require a separate appraisal that would 'have to be independently .reviewed versus-the current review by the -City's Real Property Manager. This would cost the developer time and money. Typically, developers submit the appraisal late in the subdivision process and can not record their maps until the in-lieu fees have been determined. What NBRPD proposes may cause delays in subdivisions maps which may cause other problems. ADDITIONAL INFORMATION It should be noted that the City and NBRPD are not treated differently regarding offsite street improvements. If the park site is adjacent to a local street, the developer would be responsible for putting in the full street, irregardless if the site is within or outside NBRPD's boundaries. If the park site is adjacent to an arterial or collector, the developer would not be responsible for the full width of the street improvements, again regardless if the site is within or outside NBRPD's boundaries. STAFF RECOMMENDATION Staff does not recommend any changes at this time to either the park development fee or park acquisition ordinances. Both the Planning Division and the Real Property Manager feel any changes are inappropriate at this time. The park development and acquisition ordinances were written using City standards as the foundation. Both the City and NBRPD are treated the same under both Ordinances. G:\GROUPDAT~Georgina~Park Development FeesXNBRPD park fees.doc ADMIN.ISTRATIV E REPORT MEETING DATE: January 14, 2004 AG~A SECTION: ConSent Calendar TO: Honorable Mayor and City Council AP_PROVED FROM: Gregory J. Klimko, Finance Director DEPARTMENT HEAD~,~"~ O~,d-¢' ~ DATE: December 23, 2003 CITY ATTORNEY ~ CITY MANAGER ~ SUBJECT: Audit Reports to be Referred to Budget and Finance Committee: 1. Comprehensive Annual-Financial Report (CAFR) for the fiscal year ended June 30, 2003. 2. Independent Auditors 'Report - Single Audit Report - Schedule of Federal Expenditures for the City of ~Bakersfield for the fiscal year-ended June 30, 2003. · ' 3. Independent Auditors Report - Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan for the year ended June 30, 2003. 4. Independent Auditors Report on Appropriations Limit Worksheet (GANN Limit) of the City of Bakersfield for the fiscal year ended June 30, 2003'. RECOMMENDATION: Staff recommends referral to the Budget and Finance Committee. 'BACKGROUND: 1. Attached is the City's Comprehensive Annual Financial Report (CAFR), commonly referred to as the City's Annual Audit Report, for the fiscal year ended June 30, 2003. The CAFR represents the City's financial statements as of June 30, 2003, .which are audited by the accounting firm of Brown, Armstrong, Paulden, McCown, Hill, Starbuck & Keeter. 2. Attached is the City's Single Audit Report for the fiscal year ended June 30, 2003. The Single. Audit Report pertains to federal program monies expended by the City during the specified fiscal year. An Independent Audit is performed annually to review internal Control procedures and compliance with federal guidelines in accordance with Office of Management & Budget (OMB) Circular A-133. This annual audit was performed by Brown, Armstrong, Paulden, McCown, Hill, Starbuck & Keeter as part of their contract to provide auditing services to the City of Bakersfield. The current compliance report issued by the oUtside auditors indicates that the City complied, in all material respects, with federal grogram guidelines. ' 3. Contract requirements contained in City of Bakersfield Agreement 76-153 as amended by Agreements 76-153(5), 76-153(4), 77-44, 85-197 and 92-106 apply to operations of the Bakersfield Subregional Wastewater management Plan. The City's COmpliance with contract requirements is audited on an annual basis. The current Compliance Report, issued by the outside auditors, indicates that the City complied, in all material respects, with the program's guidelines. I of 2 S:\KimG\Forms & LablesgAdmin--Cafr2003.doc' ,~anuary 6. 2004.3:18PM AD!MINISTRATlVE REPORT 4. Attached is a letter form the City's independent auditors Brown, Armstrong, Paulden, McCown, Hill, Starbuck & Keeter indicating they have completed their annual review of the Appropriations Limit Worksheet prepared by the City in accordance with Section 1.5 of Article XIIIB of the California Constitution (GANN Limit). This annual review.iSPerformed by the auditors as part of their contract to pro'vide auditing services to the City of Bakersfield. The agreed .upon review procedures are substantially less in scope than an audit and therefore no audit opinion is expressed regarding the calculation. klg 2 of 2 S:U(imG\Forms & Lablesg~,dmin_Caff2003.doc January 6, 2004, 3:18PM Peter C. Brown, CDA Burton H. Armstrong, CPA, MST .Andrew.[. Paulden, CPA TO the Honorable Mayor and HarveyL M~Co~,n,C?A Members of the City Council City of Bakersfield, California 5teven R. 5tarbu~k, CPA Aileen K. Keeter, CPA _ In planning and performing our audit of the basic 'financial statements of the City of Bakersfield, California (City) for the year ended. June 30, 2003, we considered its internal ChtisM. Thoraburgh, C?.a. control structure in order' to determine our auditing procedures for the purpose of L>~ R. ~au~se, C?A, ~ expressing our opinion on the basic financial statements and not to provide assurance on Bradley M. Hankms, CPA the internal control structure. Our consideration of the internal c°ntrol structure would not necessarily disclose all matters in the internal control structure that might be material EdcH. Xin, C?A weaknesses or reportable conditions under standards established by the American MelmdaA. bicDaniels, Cp^ Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the interna'l control structure elements does not Thoma$."A.'[bung, CF.-% reduce to a relatively Iow level the risk that errors or irregularities in amounts that would AmandaE. WEsomCPA be material in relation to the financial statements being audited' may occur and not be detected within a timely-period by employees in the normal course of performing their 5haronlones, CPA, MST assigned functions. However, we noted no matters involving the internal control structure Rosalva Flores, CP.& and its operation that we consider to be material weaknesses as defined above. Debbie A. Rapp, CPA Reportable conditions involve matters coming to our attention relating to deficiencies in J~e.~.Au¥iLC?A the design or operation of the internal control structure that, in our judgment, could CortrueM. Perez, C?A adversely affect the organization's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. However, we noted no matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions: This report is intended solely for the information and use of the Audit Committee, City Council, management, and other authorized regulatory agencies. However, this report is a matter of public record, and its distribution is not limited. BROWN ARMSTRONG PAULDEN McCOWN STARBUCK & KEETER ACCOUNTANCY CORPORATION By: Andr~,P'auiden Bakersfield, California October 3, 2003 1:\...\7934%audit03\CAFR'.reportable conditions report Section o[ the American institute .. , }. .... . ......... , .... .,..:, .-/,~ , .,~ .,- ..... , ,-.? :: · . 7,- ~'~' '~ · :: ;.' .~ :-:~ .' ?:'/': .~:, ::,' . :? ~'" :;~-~ ~::~ ;: /-. % ':.: "...:.'¥~;'t~.:~.~,.- ',. ...... ':'"' Bu~on ~..~on~, CPA, MST Andrew J. Padden, CPA Hz~,'eyI. M~own, CPA REQUIRED COMMUNICATION WITH AUDIT COMMI~EES IN ACCORDANCE WITH STATEMENT oN-AUDITING ~te~'~n ~. 5ur~uck, CPA STANDARDS NUMBER 61 · ~ K. K~ter, CPA C'.~ M. I'hombur§h, CPA L?n R. Ia'ausse, CPA, MST Brz.'ie?' %[. Hartke, CPA To the Budget and Finance Committee E~: ~. ~,cP^ City of Bakersfield, California .MeZada A. McDardels, CPA · ~¢..-,.asSt¥o~g, cp.~, We have audited the basic financial statements of the City of Bakersfield for the year A--.'.zndaE. Witson, Cp.~ ended June 30, 2003, and have issued our report thereon dated October 3, 2003. Professional standards require that we provide you with the following information related $::-:-~.jones, C?A, .~IST to our audit. Rc~!va ~ores, CPA Our Responsibility under Generally Accepted Auditin.q Standard,-; ~'.-'--.ie.~.~?p, Cp.~, As stated in our engagement letter, our responsibility, as described by professional !~:~?,..~,....v~,c?.~, standards, is to plan and perform our audit to obtain reasonable, but not absolute, C:::.:e M. Perez.'CPA assurance that the basic financial statements are free of material misstatement and are fairly presented in accordance with generally accepted accounting Principles. Because of ?;--.aa", .... the concept of reasonable assurance and because we did not perform a detailed ~'~":-:,,,,'.~.C~,n.C?.z examination of all transactions, there is a risk that material errors, fraud, or other illegal acts may exist and not be detected by us. ~'.~','~ M C~r, adav. As part of our audit, we considered the internal control of the City of Bakersfield. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. Significant Accountinq 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 City of Bakersfield are described in Note 1 to the basic financial statements. There are no new accounting policies were adopted during the fiscal year 2003-2003. We noted no transactions entered into by the City of Bakersfield 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 !ack of authoritative guidance or consensus. .~,~l~{~ of S~C ?r~cnce ~ecfion oj :he ,American Inwitute oi Certiiied ?ublic lccounr~,n:~ .Accountinq Estimates Accounting estimates are an-integral part of the general _purpose financial statements prepared by management .and are based on rnanagement'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 basic financial statements and because of the possibility that future events affecting .them may differ significantly from those expected. There were no sensitive estimates, except.for accrued claims and judgments payable in the self insurance internal service fund, affecting the financial statements. _Si_qnificant Audit Adiustments For purposes of this letter,~rofessional standards define a significant audit adjustment asa proposed correction of the basic financial statements that, in our judgment, may not have been detected except through our auditing procedures. These adjustments may include those proposed by us but not recorded by the City of Bakersfield 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 judgment, either individually or in the aggregate, have a significant effect on 'the City of Bakersfield's financial reporting process. Disa.qreements with Manaqement For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to .our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the general purpose financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the'course of our audit. ..Consultations with Other Independent Aocountant,s 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 governmental unit's general purpose 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. !ssues 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 retent on as the City of Bakersfield's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition for our retention. pifficult es Encountered in Performin.q 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 City of Bakersfield and management of the City of Bakersfield and is not intended to be and should not be used by anyone other than these specified parties. BROWN ARMSTRONG PAULDEN McCOWN STARBUCK & KEETER ACCOUNTANCY CORPORATION Bakersfield, California October 3, 2003 I:\DATA\Word\7934~audit03~S R~SAS61 .doc CITY Of .BAKERSFIELD, CALIFORNIA SINGLE AUDIT REPORTS FOR THE.YEAR ENDED JUNE 30, 2003 (With Auditor's Reports Thereon) CITY, OF BAKERSFIELD, CALIFORNIA SINGLE AUDIT REPORTS FOR THE YEAR ENDED JUNE 30, 2003 TABLE OF CONTENTS Paqe Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ....................................................... 1 · Auditor's Report on Compliance with Requirements Applicable to Each Major Program-and Internal Control Over Compliance in Accordance with OMB Circular A-133 ......................................................... ' ................................... 3 Schedule of Expenditures of Federal Awards .................................................................................... 5 Notes to Schedule of Expenditures of Federal Awards ...................................................................... 7 Schedule of Findings and Questioned Costs ..................................................................................... 10 . ~,,;,~ v ~,.,. ~- :~ .'-'lip '~' " " · BuowNA s ON'C' 4 :.., Peter C. Brown, CPA Burton H. A~mstrong, CPA, MST .~ndre.'I. Paulden, CPA AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL Han'e?'I. McCown. CPA CONTROL OVER FINANCIAL REPORTIN~ BASED ON AN AUDIT Ste,'en R. $tarbuck. CPA OF FINANCIAL STATEMENTS PERFORMED IN WITH ~OVERNMENT AUDITIN~ STANDARDS A~een K. Kee~er, CPA Chris M. ~'tornburgh, CPA L',':'.n R. Krausse, C?.:`. MST To the Honorable Mayor and ...... - Members of the City Council ~r~,~:e? Nl. HanK:ns, CPA City of Bakersfield, California Eric H. X!n. CPA Me!:nda .:` McDan eis, C?A T:-,,,-,,~Xl '?ou~<,Cp.:` We have audited the financial statements of the City of Bakersfield, California, as of and for the year ended June 30, 2003, and have issued our report thereon dated October 3, .:`msnda E Wilsor~,CPA 2003. We conducted Our audit in accordance with auditing standards generally accepted Sba:on [ones. C?.~.. MST .in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United xo_~a',,, a F:,~,:~s, C ?.~', States. Dt'kb~e A Rap? CPA .i~!:e .:`..~,;...c cp.:, Compliance As part of obtaining reasonable assurance about whether the City of Bakersfield, Ce?,n e M Perez, 7PA California's, financial statements are free of material misstatement, we performed tests of ?.~::~cia~,'~;Ve!ch, CP.:` its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of ~,~t~,,-.~ ¢~ih~:.~.cp.:` .financial statement amounts. However, providing an opinion on compliance with those s~-,~,.,, ~l. Ca,ad~,,', C?.~ provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reportinq In planning and performing our audit, we considered the City of Bakersfield, California'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 Iow level the risk that misstatements in amounts that would be material in relation to 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. ,~[~[~ o[ SIC Pr~dice Section ol the American Institute of Cedi[iecl Public This report is intended for the information of the audit committee, management and federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. BROWN ARMSTRONG PAULDEN McCOWN STARBUCI~ & KEETER ACCOUNTANCY CORPORATION Bakersfield, California October 3, 2003 : ,=.,.,:~:~.. , ~:=; " . ;, :~'~:~. - . ., .... ',," CERTIfiED PUBLIC ACCOUNTANTS :' ". ' ,. · SA ;r .,; . '7'. ~ ~1q~'2~5 F~ ~1'7~'1218 ?etcr C ~:~wn, CPA ~:rtc n ~ A:ms~ron~, CPA, ~dre:v ' 2aulden, CPA AUDITOR'S REPORT ON GO~PLIANOE WITH REqUIREmENTS Ha=,'e'. ~ ~.tcCown, CPA AP-PLICABLE .TO EACH MAJOR PROGRAM AND :INTERNAL ~:~'e~; ~:~r~ck, C~.~, CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 77,:!s ~,t .-.ncrnbur~h,.C?A To the Honorable Mayor and :-',':':,, % K:2us_~e. CPA, ~.tST Members of the City'Council .::.,~:.;,. !4 ~ar, k;,n.~. C?.:. City of Bakersfield, California ':::c .Y. X:: CPA !-:e!::.'.., :...k,. a,me :. ,..~ .-, iCom pliance 7-~,::....,:,: ',o~n~.c?.:. We have audited the compliance of the City of Bakersfield, California, with the types of compliance requirements described in the U. S. Office of Manaqement and Budqet :=.:::-,:- ',;':!sen. C?.-'. (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major -;:::::':::.~.C?.~,.).L~7 federal programs for the year ended June 30, 2003. The City of Bakersfield's major federal programs are identified in the summary of auditor's results section of the :..L~:.:F.:.~s. Cp.~ accompanying schedule of findings and questioned costs. Compliance with the :,:-= x:??.c??, requirements of laws, regu ations, contracts and grants applicable to each of its major ..:,.:. :.....'..c?;, federal programs is the responsibility of the City of Bakersfield's management. Our responsibility is to express an opinion on the City of Bakersfield's compliance based on :.':'..-:.- '.: ?e~,:. cF.~ our audit. :' ~:::c:: '.'. 'A'~!ch. C?.~. We conducted our audit of compliance in accordance with auditing standards generally '.:::::'~.'... ~ ,::~:!:,~.c?-'. accepted in the United States of America; the standards applicable to financial audits h.~...,: v :.,.~a,.-.c?:. contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circu ar A-133, "Audits of States, Local Governments. and Non- Profit Orqanizations." Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An'audit includes examining, on a test basis, evidence about the City of Bakersfield, California's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City of Bakersfield's compliance with those requirements. In our opinion, the City of Bakersfield, California, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2003. M[M3[I~ oJ.~,[C Practice Section aC the American Institute aC Certified Public Accounlonls Internal Control Over Compliance' The management of the City of Bakersfield, California, is responsible for establishing and maintaining effective internal control over compliance wi~h requirements of laws, regulations,, contracts and grants applicable .to federal programs. In planning and performing our audit, we considered the City of Bakersfield's .internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our. auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. Our consideration of the internal control over compliance would not necessarily disclos'e all matters in the internal control 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 Iow level the risk that noncompliance with applicable requirements of .laws, regulations, contracts and grants that would be material in .relation to a major federal program being audited may Occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. However, we noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. Schedule of Expenditures of Federal Awards. We have audited the financial Statements of The City of Bakersfield, California, as of and for the year ended June 30, 2003, and have issued our report thereon dated. October. 3, 2003. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the general purpose 'financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken'as a whole. This report is intended for the information of the audit committee, management and' federal awarding agencies and pass-through entities. However, this report ts a matter of public record and its distribution is not limited. BROWN ARMSTRONG PAULDEN McCOWN STARBUCK & KEETER ACCOUNTANCy CORPORATION .,..-: ....i:..?' // Bakersfield, California October 3, 2003 CITY OF BAKERSFIELD, CALIFORNIA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, 2003 Federal Program Accrued Financial Disburse- Accrued CFDA or Award Revenue A.ssistance 'Other menls/ Revenue Number Amount July 1, 2002 Recognized Revenue Expenditures June 30, 20'03 U.S. Department of Housing and Urban Development: Direct Program'- Community Development Block Grant Entitlement 14.218 $ 6,755,385 $ 168,489 $ 3,156,313 $ 420,746 $ 3,577,059 $ 131,078· Emergency Shelter Grant 14.231 151,338 112,259 112,259 Home Program 14.239 2,998,486 1,078,809 537,673 1 453,544 105,599 Total Department of Housing and Urban Development 9,905,209 168,489 4,347,381 958,419 5,14~2,862 236,677 U.S. Department of Transportation: Passed Through California: Department of Transportation: Surface Transportation Program 20.205 41,691,282 915,811 7,449,495 7,'449 495 1,258,192 Transportation Enhancement Act 20.205 212,690 230,2'16 18,576 18,576 2,865 Congestion Mitigalion and Air Quality Program 20.205 3,833,382' 652,740 1,611,715 1,611,715 1,564,620 Highway/Bridge Replacement 20.205 ~ 121,482 18 302,355 302,355 196,629 Total Department of Transportation 45,858,836 1,798,785 9,382,141 9,382,141 3,022,306 U.S. Department of Justice: Weapons of Mass Destruction Grant 16.006 259,221 259,221 Seized Asset Funds- Federal 16.579 40,453 40,453 Metropolitan Medical Response System 16.610 . ' - 120,000 120,000 Cops More Grant 16.710 130,735 130,735 Local Law Enforcement Block Grant 16.710 257,560 257,560 Overtime and Authori~'ed Expense Program 16.207 2,875 2,875 2,875 Total Department of Justice 810,844 810,844 2,875' Total Grants $ 55,764,045 $ 1,967,274 $ 14,540,366 $ 958 419 · $ 15,335,847 $ ~,261,858 The accompanyi, ng notes are an 'integral part of these financial statements. 5 CITY Of BAKERSF:IELD, CALIFORNIA NOTES TO SCHEDULE OF EXPENDITURES OF 'FEDERAL AWARDS JUNE 30, 2003 NOTE 1 - GENERAL The accompanying Schedule of Federal Financial Assistance presents the activity of all Fedex:al Financial Assistance programs of the City of Bakersfield, California (City). As ~defined in Note 1 -of the Notes to the City's General Purpose Financial Statements, those financial statements and the accompanying Schedule of Expenditures of Federal Awards .presents the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate-entities, are, in substance, part of the government's operations 'and so data from these units are combined with data of the primary government. 'Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to'emphasize that they are legally separate :from the Government. Each blended and discretely presented component unit has a June 30 year end. Blended and discretely presented component units are: 1. Discretely Presented Component Unit: The Bakersfield Redevelopment Agency (the Agency) is responsible for the development and financing of projects within (1) the Southeast Bakersfield Project Area, (2) the Old Town Kern-Pioneer Project Area, and (3)-the .Downtown Bakersfield-Project Area. The Agency is governed by a board comprised of members appointed by the City Councill The Agency is reported as a Governmental Fund Type. 2. Blended Component Unit: The Bakersfield Public Financing Authority (the Authority) is a joint exercise of powers authority formed on July 7, 1993 by 'and between the City of Bakersfield, California (the City), and the Bakersfield Redevelopment Agency (the Agency). The Authority was created to assist the City, the Agency and other local .public agencies in financing and refinancing, through the issuance of bonds or other instruments'of indebtedness, public capital improvements and working capital pursuant to the Marks- RoDs Local Bond Pooling Act of 1985. The Authority is authorized to make and enter into Bond Purchase Agreements and to purchase Obligations of any-Local Agen'cy. .The Authority is governed by a board consisting of the Mayor and the City Council..The Authority is reported as a Governmental Fund Type. Complete financial statements for each of the individual component units may' be obtained at the City's Finance 'Department. Federal financial assistance received directly from Federal agencies as well as Federal financial assistance passed through other government agencies are included on the Schedule. NOTE 2 - BASIS OF ACCOUNTING The accompanying Schedule of Expenditures of Federal Awards is presented using the accrual basis of accounting, which is described in Note 1 of the Notes to the City's Basic Financial Statements. 6 NOTE 3 - OTHER REVENUE Amounts reported as other revenue relate primarily to. interest income and reimbursements for the year ended June 30. 2003. NOTE 4 - RELATIONSHIP TO.-FEDERAL FINANCIAL REPORT,~ Amounts reported in the accompanying' schedule agree with the amounts reported in the related periodic Federal financial reports. 7 NOTE 5 - RECONCILIATION TO GENERAL PURPOSE FINANCIAL STATEMENTS The follOwing is a reconciliation of the amounts listed in the Schedule of Financial Assistance to the City's general purpose financial statements: Federal Granlor/Program Tille U.S. Department of Housing and Urban U.S. Department Development of Transportation U.S. Department of Juslice Weapon'of Melropolilan Overtime and Community Inlermodal Surface Mass Medical Local Law Authorized Development Transpo[tation and Destruclion Seized Response Cops More01 Enforcement Expense Block Granl Efficiency Act Grant .Assets System Grant Granl Block Granl Program Federal Financial. Assistance Recognized $ 4,347,381 $ 9,382,142 $ 259,221 $ 40,453 $ i20,000 $ 130,735 $ 257,560 $ 2,875 OIher 958,419 -' Total $ 5,305,800 $ 9,382,142 $ 259,221 $ 40,453 $ 120,000 $ 130,735 $ 257,560 $ 2,875 Reimbursable Disbursement/Expenditure $ 5,142,862 $ 9,382,142 $ 259,221 $ 40,453 $ 120,000 $ 130,735 $ 257,560 $ 2,875 Total Disbursement/Expend!ture $ 5,142,862 $ 9,382,142 $ 259,221 $ 40,453 $ 120,000 $ 130,735 $ 257 560 $ 2,875 Accrued Revenue June 30, 2003 $ 236,677 $ 3,022,307 $ $ $ $ $ $ 2,875 Due from Federal Government $ 236,677 $ 3,022,307 $ $ $ $ $ $ 2,875 NOTE 5 - RECONCILIATION TO GENERAL PURPOSE FINANCIAL STATEMENTS (Continued) The following is a reconciliation of the variances between Expenditures and Financial Assistance recognized: Federal Grantor/Pro§ram Tille U.S. Department of Housing and Urban U.S. Deparlment Development of Transpoftalion U.S. Department of Justice ' Weapof~ of , Melropolitan Overtime and Community Intermodal Surface Mass Medical Local Law Authorized Development Transportation and Destruction Seized Response Cops More01 Enforcement Expense Block Grant Efficiency Act Grant Assels System Grant Grant Block Grant Program Federal Financial Assistance Recognized $ 4,347,381 $ 9,382,141 $ 259,221 $ 40,453 $ 120,000 $ 130,735 $ 257,560 $ 2,875 Other 958,419 Total $ 5,305,800 $ 9,382,141 $ 259,221 $ 40,453 $ 120,000 $ 130,735 $ 257,560 $ 2,875 Total Disbursement/Expenditure $ 5,142,862 $ 9,382,141 $ 259,221 $ 40,453 $ 1.20,000 $ 130,735 $ 257,560 $ 2,875 Variance of Revenues Recognized Overl(Under) Expenditures $ 162,938 $ $ $ $ $ $ $ Surplus of Program Income to Carry Forward $ (162,938) $ $ $ $ $ $ $ Total $ $ $ - $ $ $ $ $ CITY OF BAKERSFIELD, CALIFORNIA SCHEDULE OF FINDINGS ANDQUESTIONED COSTS JUNE 30, 2003 Summary of Audit Results 1. 'The auditor's report expresses an unqualified opinibn on the 9eneral purpose financial statements of the City of Bakersfield, California. 2. No reportable conditions were disclosed durincj the audit of the financial statements. 3. No instances of non-compliance material to the financial statements of the City of Bakersfield, California were disclosed durin9 the audit. 4. No reportable conditions were disclosed durin§ the audit of the major federal award pro§rams. 5. The auditor's report on compliance for the-major federal award programs for the City of Bakersfield, .California expresses an unqualified opinion on all major federal programs. 6. The audit disclosed no findings relative to the maior federal awards programs. 7. The programs tested as major pr0§iams included: (l) U.S. Department of Transportation Highway Plannin9 and Construction Grant (CFDA Number 20.205), (2) Department of Justice Weapons of Mass Destruction Grant (CFDA Number 16.006). 8. The threshold for distinguishin§ Types A and B .programs was $460,075. 9. The City of' Bakersfield, California was-determined to be a Iow-risk auditee. 2. Findinqs Relatinq to Financial Statements Required Under GAGAS. None. 3. Findinqs and Questioned Costs - Maior Federal Award Proqrams Audit None. 10 Peter C. Br6wn, CPA Burton H. Armstrong, CPA, MST AndrewJ. Paulden, CPA To the Honorable Mayor and Members of the .City Council City of Bakersfield, California Harvey J. McCown, CPA 'Steven R. Starbuck, CPA We have applied the procedures enumerated below to the accompanying Appropriations AileenK. Keeter, CPA Limit Worksheet .Six of the City of Bakersfield, California, (the City) for the year ended June 30, 2003. These procedures, which were agreed to by the League of California ChrisM. Thomburgh, CPA Cities and presented in their Article XIIIB Appropriations Limitation Uniform Guidelines, were performed solely to assist you in meeting the requirements of Section 1.'5 of Article LvnnR. Krausse, CPA, MST XIIIB of the California Constitution. This report is intended for the information of Bradleyg. Ha_r~ki.ns, CPA management and the City Council. This restriction is not intended to limit the distribution of this report, which is a matter of public record. Eric H. Xin, CPA MetindaA. McDaaiels, CPA The procedures performed and our findings were as follows: ThomasM. Young, CPA 1. We obtained the City's completed worksheets required to determine that the Amanda E. Wilsor~,CPA correct annual adjustment factors were adopted by resolution of the City Council. Sharon Jones, CPA, MST 2. For the accompanying Appropriations Limit Worksheet Six, we added line A, last Rosalva Flores, CPA year's limit, to line E, total adjustments, and agreed the resulting amount to line F, DebbieA. Rapp,~PA this year's limit. Julie A. Auvil, CPA 3. We agreed the current year information presented in the accompanying ConnieM. Perez, CPA Appropriations Limit Worksheet Six to the other worksheets described in #1 above. 4. We agreed the prior year appropriations limit presented in the accompanying Appropriations Limit Worksheet Six to the prior year appropriations limit adopted by the City Council during the prior year. 'These agreed-upon procedures are substantially less in scope than an audit, the objective of which is the expression of an opinion on the accompanying Appropriations Limit Worksheet Six. Accordingly, we do not express such an opinion. Based on the application of the procedures referred to above, nothing came to our attention that caused us to believe that the accompanying Appropriations Limit worksheet six was not computed in accordance with Article XIIIB of the California Constitution. Had we performed additional procedures or had we made an audit of the accompanying Appropriations Limit worksheet six and the other completed worksheets described in 1. above, matters might have come to our attention that would have been reported to you. BROWN ARMSTRONG PAULDEN McCOWN STARBUCK & KEETER ACCOUNTANCY CORPORATION Bakersfield, California By: An~lden September 18, 2003 M[MSER of SEC Practice Section of the American Institute at Cer.ti[ied Public Accountants CITY'OF BAKERSFIELD APPROPRIATIONS LIMIT '- WORKSHEET SIX .. FOR THE FISCAL YEAR ENDED JUNE 30, 2003. A. Last year's limit $ 159,150,723' B. Adjustment factors: 1. Population % 103.13% 2. Inflation % 98.73% Total adjustment % 1.82025% C. Annual adjustment 2,896,940 D. Other adjustments Booking fees 878,650 Property tax administration fees 511,700 E. Total adjustments '4,287,290 F. This years limit $ 163,438,013 Peter C. Brown, CPA [3urton H. Armstrong, CPA, MST To the Technical Advisory Committee Andrew J. Paulden, CPA of the Bakersfield Subregional Wastewater HarveyJ. McCown, CPA Management Plan, the City of Bakersfield, California, the Kern Sanitation Authority, Steven R. Starbuck, CPA and the East Niles Community Services District ' , Aileen K. Keeter, CPA 'We have applied the procedures enumerated below to determine the City of Bakersfield's ChdsM. Thomburgh,.CpA compliance with certain provisions of contractual requirements as specified ini City of LynnR. Krausse, CPA, MST Bakersfield Agreement 76-153, as amended 'by Agreements 76-153(6), 76-153(5), 76~ 153(4), 77-44, 85-197, and 92-106,.regarding the Bakersfield Subregional WaStewater BradleyM. Hankins C?A Management Plan. These procedures, which were agreed to by the Technical Advisory EdcH. Xin, CPA Committee, were performed solely to assist you in meeting the requirements of City of Bakersfield Agreement .76-153, as amended by Agreements 76-153(6), 76-153(5), 76- .~lelindaA. McDaniels, CPA . 153(4), 77-44, 85-197, and 92-106. This report is intended for the information of the ThbrnasM. Young, CPA Technical Advisory Committee of the Bakersfield Subregional Wastewater Management lmandaE. Wilson, CPA Plan, management, appropriate regulatory agencies, and the City Council of the City of Bakersfield, California. This restriction is not intended to limit .the distribution of thiS report, Sharon Jones, CPA, MST which is a matter of public record. ! Rosab,'a Flores, CPA We .reviewed and tested the City of Bakersfield's compliance with certain provilsions of DebbieA, Rapp, CPA contractual requirements as specified in City of Bakersfield Agreement 76-153, as amended JulieA. AuviI, CPA by Agreements 76-153(6), 76-153(5), 76-153(4), 77-44, 85-197, and 92-106L These Comte M. Perez, CPA 'procedures resulted in no current year findings. These agreed-upon procedures are substantially less in scope than an audit, the Objective of which is the expression of an opinion on the City of .Bakersfield's compliance with certain provisions of contractual requirements, as specified in City of Bakersfield Agreement 76- 153, as amended by Agreements 76-153(6), 76-153(5), 76-153(4), 77-44, 85-197,!and 92- 106. Accordingly, we do not express such an opinion. Based on the application of the procedures referred to above, nothing came to our httention that caused us to believe that the City of Bakersfield .had not complied with certain provisions of contractual requirements as specified in City of Bakersfield Agreement 76- 153, as amended by Agreements 76-153(6), 76-153(5), 76-15'3(4), 77-44, 85-197,1 and 92- 106. Had we performed additional procedures or had we made an audit of thb City of -Bakersfield's compliance with certain provisions of contractual requirements'as spbcified in City of Bakersfield Agreement 76-153, as amended by Agreements 76-153(6), 76-153(5), 76-153(4), 77-44, 85-197, and 92-106, matters might have' come .to our attention that would. have been reported to you. BROWN AP,MSTP,ONG PAULDEN McCOWN STAP, BUCK & KEETEP, ACCOUNTANCY CORPORATION By: And~ Bakersfield, California September 17, 2003 MEM[~ER o[ SIC Practice Section o[ the American Institute of Certi[ied Public Accountants BAKERS, FIELD Economic and .Community Development Department ME M O RAND UM August 17, 2004. TO: Budget and Finance Comm~ izcttee.,.2 FROM: Donna L. Kunz, Economic Development Director SUBJECT: Noriega House Amendment No. 1 to Agreement 99-9 regarding repayment of economic development 10an. (Ward 2) The Economic and Community Development staff recommends restructuring the remaining 10an balance of $11,400, which was to be repaid at 0% interest no later than January 13, 2004, to a-fully amortized loan to be repaid in four annual installments at 5% interest on the outstanding balance, with the first annual payment to be made on January 13, 2005. Agreement 99:9 between the City of Bakersfield and N0riega House provided a $22,800 loan to the company. The loan is structured in two tiers: Tier One, $11,400, would be forgiven when Noriega House complied with the terms of the agreement, including specific hiring requirements, for each of the.loan's five years. These requirements included, · hiring six workers during the five year term, and · of those workers hired at least 51% must be Iow- and moderate-income individuals. Exercising forgiveness is a ministerial action and, thus, requires no Council action. Tier Two, comprised of the remaining $11,400, would be repaid at 0% interest no later than January 13, 2004. The company has exceeded the hiring requirements under Tier One for the loan's five year term, as shown in the table below: Projected Actual % Low-Mod Year Hires Hires Hires I 3 2.25 60% 2 1 15.625 7'7.4% 3 1 3.0 100% 4 1 4.0 100% 5 0 0.0 N/A Total 6 24.875 82.21% Therefore, Noriega House has met the terms and conditions required in the agreement and J:~Noriega house amendmentl.doc qualifies to have the Tier One portion forgiven. Staff initiated a ministerial action to forgive the Tier One portion of the loan on July 8, 2004. Regarding theTier Two Portion of the loan, Noriega House owner Jerry Randall submitted a letter dated February 3, 2004 requesting the remaining $11,400 balance of the loan be forgiven. Staff advised Mr. Randall that any consideration of his request could not begin until his employment reports for the loan term were submitted and all other compliance issues met. Due to the busy tax season, Mr. Randall compiled and submitted these reports to our office on June 16, 2004. At that time, staff began to carefully review his request for loan forgiveness of the balance at that time. Staff commer~ds Jerry Randall for investing in the Baker Street area to bring to fruition one of the first major construction projects in many years. The project has brought much needed positive .press and-media attention to the-area. The restoration of Noriega House also brought renewed optimism and hope to merchants and residents of Old Town'Kem by serving as a center of community activity where an average of 200-600 people per week attend events ranging from weddings to business meetings. In addition, this .project has provided an average of two full time jobs and part time employment to over 30 young people each year the operation .continues. Mr. Randall submitted a very compelling request, however, staff informed Mr. Randall that we can-not support forgiveness of the loan. Mr. Randall recognizes that this is a very tight financial time for the Oity and we must carefully allocate and recycle our limited resources. We also agree with Mr. Randall's assessment that any new venture involves unknown expenses and extraordinary start up costs. We also believe that the value of the Noriega House property has significantly increased in value due to the improved general market conditions and other expected improvements for Baker Street. This is accurately demonstrated by the increase in the assessed valuation of this property. For.example, in 1998, the property was assessed at $107,000 and the most recent assessment at $215,216. Typically, the assessed valuation reflected is somewhat lower than the actual market value. Mr. Randall's investment is currently generating about $1,600 net tax revenue to the Bakersfield Redevelopment Agency annually. The City has also made significant investment in other public street improvements on Baker Street, with additional improvements planned in the near future which will ultimately benefit all business operations in the area. We understand that Mr. Randall has an SBA business loan on the property and the current operating cash flow of the business will not support a refinance of this loan at this time to pay off the City. With these.issues in mind, staff worked with Mr. Randall to restructure a new loan term that will .allow for total repayment of the remaining debt of $11,400 in four annual installments. Interest will accrue on the outstanding ~balance at 5% per annum. J:\Noriega house amendmentl.doc Mortgage Loan Payments Enter Values Loan Summary ,Loan Amount $ 11,400.0~- Scheduled Payment $ 3,214.93 Annual! Interest Rate 5.00 % ' Scheduled Number of Payments 4 Loan P6riod in Years 4 Actual Number of Payments 4 Number of Payments Per Year 1 Total Early Payments $ Start; Date of Loan 1/13/2004 Total Interest $ 1,459.74 Optional E~tra Payments $ -. Lender Name:I I · Pmt Beginning Scheduled Extra Ending Cumulative No. Payment Date Balance Payment Payment Total Payment Principal Interest Balance Interest 1 1/13/2005 $ 11,400.00 $ 3,214.93 $ $ 3,214.93 $ 2,644.93 $ 570.00 $ 8,755:07 $ .570.00 2 1/13/2006 8,755.07 3,214.93 3,214.93 2,777.18 437.75 5,977~88 1,007.75 3 1/13/2007 5,977.88 3,214.93 3,214.93 2,916.04 298.89 3,061.84 1,306.65 4 1/13/2008 3,061.84 3,214.93 - 3,061.84 2,908.75 ' 153.09 0.00 1,459.74, B A K E R S F I E L D PUBLIC WORKS DEPARTMENT CITY OF BAKERSFIELD MEMORANDUM June 16, 2004 TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC'WORKS DIRECTOR ~ SUBJECT: PROMOTECURBSIDE RECYCLING Council Referral #805 Councilmember Benham requested staff review the suggestions provided by Ms. Sandy Garrigan to promote curbside recycling and provide a response. Refer to Budget and Finance Committee for consideration. Staff is reviewing the suggestions provided by Ms. Garrigan. A report on these and other current promotional efforts will be ready for the Budget and Finance Committee by the time a meeting is scheduled. G:\GROUPDA'r~Referrals~2004\06-09~805 - Solid Waste.doc KeepBakemfi®ldBeautiful Ward I- Keith Stoller Ward 2- Dana K~rcher, Vice Chair Ward 3- Sherry Core June 9, 2004 W~t 4- I~cvin Burton Ward 5- David Taylor Ward 6- $oha Entiquez, Chair To Council Members a_nd Alan Tandy, Ward ?- Sandy Garrigan The Bakersfield residents take pride in their community and work hard to keep it clean. Curbsid¢ .recycling is a positive step for our community and its environment. Currently, nearly 2,500 homes have subscribed to do curbside recycling, but the Keep Bakersfield Beautiful Committee and Recycling Subcommittee would like to see more residents in Bakersfield participate in curbside recycling. The Keep ]3a~ersfield Beautiful program sponsors boast of having the "best participation for our Great American Clean-up" event with over 3,100 people turning out to cleanup out' community. We have students all over the city participating in recycling efforts at their school sites and in community organization, citizens lug .tons I of recycl~tbles to drop-off sites and thc city and county respond with a variety of recycling events-that collect hazardous and hard to dispose of irene. Everyday we see I more individuals signing up for.the blue carts but the pace is slow. In order' for the program to be successful, the numbers of participants need to increase. In order for I participation rates to incre~e, some important changes need to occur, the community can do it if only given a better chance. We feel that curbside recycling nce~ a positive boost from you, the City Council, if we a.~ to remain on track with the st~tte mandate of AB939, which requires landfill waste to be reduced by 50% by 2000. We identified the following support that would expand curbside recycling in Bakersfield. · Inc~ase the publicity surrounding curbside recycling. · Extend incentives to the participants in curbside recycling. · Increase education on recycling and also the harmful effect to our environment of not recycling in our community. The cOmmittee is well aware that the economic times are hard and that curbsicte recycling is ¢~pensiv¢ and out of reach for many citizens but we do rea]izo that the pro,'am has to pay for itself. We would like to propose some additional steps that. could be taken that would reduce the cost and increase the usage of the blue carts. Ci~ of Bakersfield. Solid Wasm Division 4101 Truxmn AYerlUe, Bakersfield, CA 93309 Phone: 661-86-CLEAN Fax: 661-852-2114 EmaJl: kbb(~cLbakersfleld.ca, us K pBakersfleldBeautiful · Provide the community with additional awareness by advertising more, and by creating promotions to foster sign-ups. An example might be to give a.subscriber a month off their service if they get a neighbor to sign-up for the service. · Provide parity 'between the cost of a second tan cart and the cost of the blue cart. Currently it is either free or.it costs $47.40 for the second tan cart compared .to $80.00 for a blue cart. (Residents can-keep their green 'cart and sec°nd tan for $47.40 or residents can-turn in their green cart and get the second' tan free). This encourages excess waste and discourages recycling. Proposal,~have both ems cost the same. · Provide neighborhoods-with high percentages of recYclers .at a reduced rate as the cost of the service in those areas declines. As participation is the key to reducing cost, reward those neighborhoods where participation is high with a lower per household charge. · Increase education of recycling at events and schools. Promote m/ni mal cost recycling programs (such as blue carts at fairs and concerts) and encourage the use of Keep Bakersfield Beautiful volunteers and' 1 staff to spread the KAB "Waste In Place" message to our schools. 1 Thank you so much for your support of Keep Bakersfield Beautiful and for the city's curbside recycling program. It is making a difference in our community and the 1 environment. Help us to heighten everyone's awareness and participation so we can all continue to KEEP BAKERSFIELD BEAUTIFUL Sincerely, Sandy Gar~an, R~cling ~beommittee Chair ' Keep Bakersfield l~autiful Committee Endorsed, Johnl~ riquez,~2i~'pe~' ' Keepl ttersfield Beauti fl~l ~ittee City of Bakersfield. Solid Was~ Division 410~ Truxtun Avenue, Bakersfield, CA 93309 Phone: 661.86-CLEAN Fax: 661-852.2114 Em~il: kbb~cLbakersfleld.ca.us ADMINISTRATIVE REPORT TO: Honorable Mayor and City Council APPROVED FROM: Raul M. Rojas, Public Works Director DEPARTMENT HEAD DATE: March 20, 2004 CITY A'I-FORNEY CITY 'MANAGER SUBJECT: Acceptance of 2002-03 Transportation DeveloPment Act Funds Financial Statements. RECOMMENDATION: Staff recommends referral to Budget and Finance Committee. BACKGROUND: In compliance with the Kern Council of' Governments Rules and Regulations, the California Public Utilities Code section 99245, and the California Code of Regulations section 6664, the attached financial statements for the Transportation Development Act Funds were prepared for-the fiscal year ending June 30, 2003. The financial statement summarizes fiscal activity for the Bikeway and Pedestrian Fund, and the Public Transit Fund. The accuracy and the fairness of the presentation is the responsibility of the City. The audit firm of Macias, Gini & Company has issued an unqualified opinion. No other reports were issued by the accounting firm in regards to the above audit report. March 10, 2004, 4:01PM G:\GROUPDAT~DMINRPT~004\04-14\Transp. Dev Act Funds Financial Statments.dot CITY OF BAKERSFIELD Transportation Development Act Funds Independent Auditor's Reports, Fund Financial Statements and Supplementary Information For the 'Fiscal Years Ended June 30, 2003 and 2002 Macias, Gini & Company Certified Public Accountants and Management Consultants CITY OF BAKERSFIELD Transportation Development Act Funds For the Fiscal Years Ended June 30, 2003 and 2002 TABLE OF CONTENTS Page(s) Independent Auditor's Report ................................................................................................................ 1-2 Fund Financial Statements: Balance Sheets - Bikeway and pedestrian Special Revenue Fund ............................................................ 3 Balance Sheets - Amtrak Operations Special Revenue Fund .................................................................... 4 Statements of Revenues, Expenditures and Changes in Fund Balance (Deficits) - Bikeway and Pedestrian Special Revenue Fund ...................................................................................... 5 Statements of Revenues, Expenditures and Changes in Fund Balances - Amtrak Operations Special Revenue Fund .............................................................................................. 6 Notes to the Fund Financial Statements ................................................................................................ 7-10 Supplementary Information: Budgetary Comparison Schedule - Bikeway and Pedestrian Special Revenue Fund .............................. 11 Budgetary Comparison Schedule - Amtrak Operations Special Revenue Fund ...................................... 12 Notes to Supplementary Information .................................. ~ .................................................................... 13 Other Report: Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements , Performed in Accordance with Government Auditing Standards and the Transportation Development Act ......................................................................................... 14-15 ['lrhtL'r~ 2497 W. Sha:v Avenue Kenneth .-\. Macias, 5, lana~ing Par.mCr Suite 107 Ernest [. Gini Fresno,CA 437! t-33~)4 Kevin O'Connell Macias, Gini &Companv ' Richard A. Green w'.,".v, mac~as<[ni.com .lames V. Gedscv To the Board of Directors Kern Council of Governments Bakersfield, California To the City Council City of Bakersfield Bakersfield, California INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund of the City of Bakersfield, California (City), as of and for the fiscal years ended June 30, 2003 and 2002, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 audits provide a reasonable basis for our opinions. As discussed in Note 1, the financial statements present only the Bikeway and Pedestrian.Special Revenue .Fund and the Amtrak Operations Special Revenue Fund and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2003 and 2002, and the changes' in its financial position for the fiscal years then ended in conformity with accounting principles generally accepted:in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund of the City as of June 30, 2003 and 2002, and the respective changes in financial position thereof for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America. Sacr,lmcnt,, * Lcq .\n:..;ulcq * Fre.~no * 5,m Fr,mcisc¢ .3,tv 1 In accordance with Government Auditing Standards, we have also issued our report dated August 18, 2003 on our consideration of the-City's internal control over financial reporting as it relates to the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund and our 'tests of its compliance with certain provisions of laws, regulations, contracts and grants for the fiscal year ended June 30, 2003. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was made for the purpose of forming opinions on the financial statements of the Bikeway and_ Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund. The supplementary information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements of the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund. This information~ has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial .statements taken as whole. Certified Public Accountants Fresno, California August 18, 2003 2 CITY OF BAKERSFIELD Bikeway and Pedestrian Special Revenue Fund Balance Sheets June 30, 2003 and 2002 2003 2002 ASSETS Current assets: Cash and investments (Note 2) $ $ 883 Due.from other governments 28,046 Total assets $ - $ .28,929 LIABILITIES AND FUND BALANCE (DEFICIT) Current liabilities: Accounts payable $ - $ 14,237 Due to local agencies - 30,996 Total current liabilities 45,233 Fund balance (deficit) (Note 4) (16,304) Total liabilities and fund balance (deficit) $ - $ 28,929 The notes to the financial statements are an integral part of these statements. 3 CITY OF BAKERSFIELD Amtrak Operations Special Revenue Fund Balance Sheets June 30, 2003 and 2002 2003 2002 ASSETS ~ Current assets: Cash and investments (Note 2) $ 83,275 $ 71,062 Accrued interest receivable 947 649 Total assets $ 84,222 $ 71,711 LIABILITIES Current liabilities: Accounts payable $ 19,320 $ 13,333 Deferred revenue (Note 3) 64,902 58,378 Total liabilities $ 84,222 .$ 71,711 The notes to the financial statements are an integral part of these statements. 4 CITY OF BAKERSFIELD Bikeway and Pedestrian Special Revenue Fund Statements of Revenues, Expenditures and Changes in Fund Balance (Deficits) For the Fiscal Years Ended June 30, 2003 and 2002 2003 2002. REVENUES Local transportation fund $ 44,045 $ 35,426 Other - 451 Total revenues 44,045 35,877 ExpENDITURES Bikeway and pedestrian 27,741 51,736 Change in fund deficits 16,304 (15,859) Fund deficits, July 1 (16,304) (445) Fund balance (deficit), June 30 $ - $ (16,304) The notes to the financial statements are an integral part of these statements. 5 CITY OF BAKERSFIELD Amtrak Operations Special Revenue Fund Statements of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Years Ended June 30, 2003 and 2002 2003 2002 REVENUES Local transportation fund $ 202,756 $ 155,035 Interest and other 5,089 2,938 Total revenues 207,845 157,973 EXPENDITURES Public transit 207,845 157,973 .Change in fund balances - - ' Fund balances, July 1 ' Fund balances, June 30 $ - $ The notes to the financial statements are an integral part of these statements. 6 CITY OF BAKERSFIELD Transportation Development ACt Funds Notes to the Fund Financial Statements Forthe Fiscal Years Ended June 30, 2003 and 2002 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the. Bikeway' and Pedestrian Special Revenue Fund and the Amtrak~ Operations Special Revenue Fund (Transportation Development Act (TDA) Funds) of the City of Bakersfield (City) have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reportingprinciples. The more significant of the City's accounting policies are described below. RepoSing Entity ~ The TDA provides funding for public transportation through regional planning and programming agencies. Funds are allocated to the City through the county transportation planning agency, Kern Council of Governments. The TDA Funds account for the City's share of the TDA allocations, which are legally restricted for specific purposes as detailed in applicable sections of the Public Utilities Code. The TDA 'Funds of the City are the Streets and Roads Special Revenue Fund (no activity in recent years), Amtrak Operations Special Revenue Fund and the Bikeway and Pedestrian Special Revenue Fund, and are included in the basic financial statements of the City. The TDA Funds are presented.combined as a nonmajor governmental fund (State (TDA) Transportation Special Revenue Fund in the City's basic financial statements. The accompanying financial statements present only the TDA Funds of the City and are not intended to present fairly the financial position and changes in financial position of the City in conformity with accounting principles generally accepted in the United States of America. Fund Accounting The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts _that comprise its assets, liabilities, fund equity, revenues, and expenditures. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The Bikeway and Pedestrian Fund and the Amtrak Operations Fund are governmental funds specifically categorized as a special revenue funds. Special revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Measurement Focus and Basis of Accounting The Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. CITY OF BAKERSFIELD Transportation Development Act Funds Notes to the Fund Financial Statements (Continued) For the Fiscal Years Ended June 30, 2003 and 2002 NOTE 1 - SUMMARY.OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus and Basis of Accounting (Continued) Revenues' are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, 'as under accrual accounting. Deferred Revenue The Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund report deferred revenue' on their balance sheets. Deferred revenue for these funds arises when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. In subsequent periods, when both revenue recognition criteria are met, or when the .City has a legal claim to the resources, the liability for deferred revenue is removed from 'the balance sheet and revenue is recognized. Net Assets The financial statements utilize a net assets presentation. Net assets are categorized as follows: Invested in Capital Assets, Net of Related Debt - This category groups all capital assets into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category. · Restricted Net Assets - This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. · Unrestricted Net Assets - This category represents net assets of City, not restricted for any project or other purpose. Inteffund Transactions The City's General Fund allocates payroll and payroll related expenditures incurred to the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund. Amounts allocat, ed to the Bikeway and Pedestrian Special Revenue Fund for fiscal years ended June 30, 2003 and 2002 were $467 and $30,911, respectively. Amounts allocated to the Amtrak Operations Special Revenue Fund for fiscal years ended June. 30, 2003 and 2002 were $19,212 and $21,971, respectively. In addition, premiums paid for various risk management programs to the Self Insurance Internal Service Fund by the Amtrak Operations Special 'Revenue Fund for the fiscal years ended June 30, 2003 and 2002 were $10,455 and $11,793, respectively. CITY OF BAKERSFIELD Transportation Development Act Funds Notes to the Fund Financial Statements (Continued) For the Fiscal Years Ended June 30, 2003 and 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Risk Management The City administers various risk management programs, some of which relate to the Bikeway and Pedestrian Special Revenue Fund and the Amtrak OPerations Special Revenue Fund. The Finance Department transfers funds from the Amtrak Operations Fund to the Self Insurance Fund for the purchase of property insurance for the Amtrak Station per direction from the City's Risk Manager. The City's risk management programs are reported in the governmental activities and internal service funds in the City's basic financial statements. NOTE 2 - CASH AND INVESTMENTS Cash balances of the TDA funds are pooled with those of other funds of the City. Investment income resulting from this pooling is allocated among the funds based upon each respective fund's average cash balance in relation to the aggregate investment balance. Cash and investments for the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund include a fair value adjustment for the fiscal years ended June 30, 2003 and 2002 of. $0 and $450, and $249 and $56, respectively. Further information regarding the City's cash and investment pool may be found in the City's basic financial statements. NOTE 3 - DEFERRED REVENUE The Local Transportation Fund (LTF) and State Transit Assistance Fund (STA) are administered by the Kern Council of Governments, which allocates funds to the City to fund its TDA operations. The TDA requires that any funds not_used may be returned to their source. LTF and STA allocations are considered '~amed when they are properly spent for eli~ble projects. Allocations received but not earned are recorded as deferred revenue. Changes in the deferred revenue account for the fiscal years ended June 30, 2003 and 2002 are summarized as follows: Bikeway and Pedestrian Special Revenue Fund 2003 2002 Deferred revenue, July I $ - $ 38,415 Paid to KCOG - (40) Due to KCOG (30,996) TDA allocations earned (7,379) Deferred revenue, June 30 $ $ CITY OF BAKERSFIELD Transportation Development Act Funds Notes to the Fund Financial Statements (Continued) For the Fiscal Years Ended June 30, 2003 and 2002 NOTE3 - DEFERRED REVENUE (Continued) Amtrak Operations Special Revenue Fund 2003 2002 Deferred revenue, July 1 $ 58,378 $ 8,473 TDA Allocations received 209,280 - 204,940 TDA Allocations earned (202,756) (155,035) Deferred revenue, June 30 $ 64,902 $ 58,378 NOTE 4 - DEFICIT FUND BALANCE Bikeway and Pedestrian Special Revenue Fund The Bikeway and Pedestrian Special Revenue Fund reported a deficit fund balance due to the fact that it spent in excess of the TDA revenues allocated related to the Northeast Bike Path. The excess was funded bY borrowing funds from the City's General Fund. The deficit in the fund balance account was'eliminated when revenues received, in the fiscal year ended June 30, 2003 were recognized that were adequate to cover current expenditures as well as the deficit fund balance. l0 SUPPLEMENTARY INFORMATION CITY OF BAKERSFIELD Bikeway and Pedestrian Special Revenue Fund Budgetary Comparison Schedule For the Fiscal Year Ended June 30, 2003 Variance Original Final Positive Budget Budget Actual (Negative) REVENUES · Local transportation fund $ - $ 41,420 $ 44,045 $ 2,625 Total revenues - 41,420 44,045 2,625 EXPENDITURES Bikeway and pedestrian 41,420 27,741 13,679 Change in fund deficit $ $ - 16,304 $ 16,304 Fund deficit, July 1 (16,304) Fund balance-,'June 30 $ - See note to supplementary information. 11 CITY OF BAKERSFIELD Amtrak Operations Special Revenue Fund Budgetary Comparison Schedule For the Fiscal Year Ended June 30, 2003 Variance Original Final Positive Budget Budget Actual (Negative)- REVENUES Localtransportation fund $ 210,560 $268,938 $ 202,756 $ (66,182) Interest income 1,000 1,000 5,089 4,089 Total revenues 211,560 269,938 207,845 (62,093) EXPENDITURES Public transit 2 ! 1,560 269,938 207,845 62,093 Change in fund balance $ - $ ' $ ' Fund balance, July. 1 Fund balance, June 30 $ - See note to supplementary information. 12 CITY-OF BAKERSFIELD Transportation Development Act Funds / Note to Supplementary Information For the Fiscal Years Ended June 30, 2003 and 2002 NOTE 1 -BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund. The City Manager is authorized to transfer budgeted amounts between departments within any fund and approve reductions of budgeted amounts. Since expenditures may not exceed budgeted appropriations at the fund level, any decisions that alter the total appropriations of any fund are to be approved by City Council. Projects budgeted within the fiscal year but not.yet completed can be reappropriated the following fiscal year with City Manager approval. All other unencumbered appropriations lapse at year-end. Encumbered amounts are reappropriated in the ensuing fiscal year budget. 13 OTHER REPORT ?.~rmcr4 24q7 W. Shaw Avenue Kenneth .&. Macias. Managin!.j Partner ~uite Ernest J. Gini Fresno. CA 93711-3304 Kevin J. O'C,,nnell , 559-229.22~l Macias, Gini & Company ~,., ~chard A. Green c.,,.,.~ ,~,~ ~:~.,.~,, .~ 35o-22o.227l www. macMsgini.com James V. To the Board of Directors Kern Council of Governments Bakersfield, California To the. City Council City of Bakersfield Bakersfield, California INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND THE TRANSPORTATION DEVELOPMENT ACT We have audited the accompanying financial statements of the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund of the City of Bakersfield, California (City), as of and for the fiscal year ended June 30, 2003, and have issued our report thereon dated August 18, 2003: We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts and ~ants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Our audit was further made to determine that Transportation Development Act (TDA) funds allocated to and received by the City were expended in conformance with applicable statutes, rules and regulations of the TDA and the allocation instructions and resolutions of Kern Council of Governments as required by Section 6666 of Title 21 of the California Code of Regulations. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards and the TDA. Internal Control Over Financial Reporting In planning and performing our audit, we considered the internal control over the City's financial reporting as it relates to the Bikeway and Pedestrian Special Revenue Fund and the Amtrak Operations Special Revenue Fund in order to determine our auditing procedures for the purpose of expressing our S,~cramenh* · L,,.~ Angeles · Fresno · San Francisco Bav .\rea opinions 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 Iow level the. risk that misstatements in amounts that would be material in relation to 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 the Kern Council of Governments, Cit~ management, City Council, and the State Controller's office, and is not intended to be and should not be used by anyone other than these specified parties. Certified Public Accountants Fresno, California August 18, 2003 15 B A K E R S F I E L D CITY MANANGER'S OFFICE MEMORANDUM /~ ~~7' August 27, 2004 TO: ALAN 'TANDY, CITY MANAGER FROM: JOHN W. STINSOI~, A~-SISTANT CITY MANAGER SUBJECT: ROAD REPAIR FUNDING POLICY USING FACILITY REPLACEMENT RESERVE OR ONE-TIME FUNDS At the August 18th Council meeting Councilmember Maggard referred the issue of utilizing Facility Replacement Reserve funds or other one-time funds for road repairs to the Budget and Finance Committee for discussion. For nearly the last ten years, the City of Bakersfield has held money in an account called the Facility Replacement Reserve (FRR). The account-was initially created at the request first of the Budget and Finance Committee, then by the full City Council. The precipitating event was the discovery of substantial and costly damages to the heating, ventilating and air conditioning system, as well as concrete at the Convention Center. In Enterprise Funds (sewer, etc.) the City depreciates capital assets by setting aside money for replacement. Prior to the creation of the FRR, that was not done for General Fund Capital Assets, such as City Hall, Fire Stations, Police Headquarters, etc.' The FRR has been treated as a rainy-day account. That is, it is rarely used and is being saved for special circumstances. It was used, in total, to build Centennial Garden due to the exceptional benefits of that project. It was proposed to be used again for the City Center project, applying to the stadium, with a return coming to the City of $80 million in tax base. That project did not happen. The FY 2003-04 budget included $900,000 from the reserve to address the impacts of state budget actions on the General Fund during that fiscal year, however, due to larger than anticipated beginning fund balance those funds did not need to be transferred from the FRR to the General Fund. Additionally, in FY 2003-04 we transferred $1.5 million for the-emergency~canal crossing repairs that were needed at various locations. · In the FY 2004-05 budget $400,000 was dedicated from the Facilities Replacement Reserve to provide additional funding for the City Hall HVAC upgrade. The current remaining balance in the Facilities Replacement Reserve is $2.3 million. As discussed at the Council meeting, the city from time to time will receive revenue which is of a non-recurring or "one-time" nature. Council policy has been to utilize or set aside these funds for one-time purposes including capital projects .and setting additional funds aside in the FRR. Additionally, funds 'set aside in the FRR also serve as a form of insurance which can be available for significant one-time capital repairs or to address other significant one-time needs or priorities. It is important to keep as much in the fund as possible for unexpected capital replacement needs in the General Fund for such things as storm damage, canal failure, building roof or HVAC replacement etc. It is-a far less painful way to deal with emergencies as opposed to dipping into the General Fund operating budget. Staff is currently waiting on several pieces of financial information that relate to this issue. This includes: completion of negotiations with the County regarding booking fee payments, a portion of which is to be reimbursed by the state for this fiscal year; completion of the annual financial report to determine available General Fund year end balance figures; updated-sales and-property tax information; and completion of the workers compensation actuarial analysis and determination of it's impact on the Self Insurance fund. It appears that several of these items may experience positive trends that could result in additional revenues which may be available for the purposes suggested by Councilmember Maggard. However, until we receive specific information and resolution of these items it would be premature to appropriate or allocate any funds to specific purposes. It is anticipated that information on the above items will be forthcoming over the next several months and mid-year budget adjustments to both on-going and one-time expenditures would be brought to the Council for consideration at that time.