HomeMy WebLinkAbout02/08/2006 B A K E R S F I E L D
Mike Maggard, Chair
Irma Carson
Harold Hanson
Staff: John W. Stinson
SPECIAL MEETING NOTICE
BUDGET AND FINANCE COMMITTEE
of the City Council - City of Bakersfield
Wednesday, February 8, 2006 - 10:00 a.m.
City Manager's Conference Room, Suite 201
Second Floor- City Hall, 1501 Truxtun Avenue, Bakersfield, CA
AGENDA
1. ROLL CALL
2. ADOPT DECEMBER 13, 2005 AGENDA SUMMARY REPORT
3. PUBLIC STATEMENTS
4. DEFERRED BUSINESS
A. Discussion and Committee recommendation on growth of the City and impacts on
refuse collection - Rojas/Barnes
5. NEW BUSINESS
A. Land Based Financing / Community Facility Districts (CFD) - Smith 1. Review draft ordinance to allow establishment of special tax districts (CFD)
2. Review policy regarding Land Based Financing (CFD's and Assessment Districts)
B. Staff report and Committee recommendation regarding Audit Reports for fiscal year
ending June 30, 2005 - Smith
· 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
· Independent Auditors Report - Rabobank Arena & Convention Center and Ice
Sports Center
Page I of 2 Pages
SPECIAL MEETING NOTICE - Continued
BUDGET AND FINANCE COMMI'I'FEE
Wednesday, February 8, 2006 - 10:00 a.m.
5. NEW BUSINESS - Continued
C. Discussion and Committee recommendation regarding amending and adopting the
2006 Committee meeting schedule - Stinson
6. COMMI'I'I'EE COMMENTS
7. ADJOURNMENT
Page 2 of 2 Pages
[~_.~ Mike Maggard, Chair
· Irma Carson
For: Alan Tandy, City Manager Harold Hanson
AGENDA SUMMARY REPORT
BUDGET AND FINANCE COMMITTEE MEETING
Tuesday, December 13, 2005 · 4:00 p.m.
City Manager's Conference Room - Suite 201
City Hall, 1501 Truxtun Avenue, Bakersfield, CA
1. ROLL CALL
Called to Order at 4:06 p.m.
Present: Councilmembers Mike Maggard, Chair; and Irma Carson
Absent: Councilmember Harold Hanson
2. ADOPT NOVEMBER 7, 2005 AGENDA SUMMARY REPORT
Adopted as submitted.
3. PUBLIC STATEMENTS
4. DEFERRED BUSINESS
A. Discussion and Committee recommendation on design and funding of
Fire Station No. 5
City Manager Tandy explained construction pricing has increased dramatically and
the project cost estimates are coming in well over what the City has appropriated
to build the station.
Councilmember Carson, City staff and design representatives have met and gone
through a proceSs to value engineering concepts and there were 15 items where
savings could be achieved. Some of the items were not essential; however, some
were substantive elements including the community room. Even with the value
engineering, the project budget is short $709,139. Staff suggested project savings
from the Community Development Block Grant (CDBG) funds be used for the
additional funding.
D AFT
AGENDA SUMMARY REPORT Page 2.
BUDGET AND FINANCE COMMITTEE MEETING
Tuesday, December 13, 2005
Committee Member Carson was still interested in having a community room added
at some later time. If it is shown as a design option, it may be possible that
developers in the area would be willing to contribute the funding.
Fire Chief Fraze expressed the design for Fire Station 5 will be functional, but there
are no extras included. The City pays for video equipment used for required
training. The Association (a non-Fire Department entity) provides the television
and workout equipment used after regular working hours.
The Committee expressed they would like to get a fire station prototype in order to
save on architect and design costs.
Fire Chief Fraze responded that Fire Station 5 includes a Police substation, so this
design is unique. Staff could come up with a prototype of the elements needed in
a fire station, which could be used to help save architect and design funds.
However, an architectural design for a fire station cannot be used and then put out
to bid for the next fire station. Some elements of a design are site specific and the
civil/structural engineer's and architect's signatures (license) are on the design.
Committee Member Carson made a motion to approve for staff to proceed with the
design for Fire Station 5 and advertising the CDBG revised appropriation. The
Committee unanimously approved the motion (Committee Member Hanson
absent). The CDBG amendment will be brought to the Council after the first of the
year.
5. NEW BUSINESS
A. Discussion and Committee recommendation on 2006 Committee meeting
schedule
The Committee reviewed a draft schedule and requested staff to find a different
meeting date in June and move the July meeting to the 10th. The Committee
- ad0pted the following 2006 meeting dates at 10:00 a.m. (Committee Member
Hanson absent).
Wednesday, January 4
Monday, February 6
MOnday, March 6
Monday, May 1
Monday, July 10
Monday, August 7
Monday, October 2
MOnday, November 6
Monday, December 4
DRAFT
AGENDA SUMMARY REPORT Page 3
BUDGET AND FINANCE COMMITTEE MEETING
Tuesday, December 13, 2005
6. COMMITTEE COMMENTS
7. ADJOURNMENT
The meeting adjourned at 4:35 p.m.
Attendance: Staff: City Manager .Alan Tandy; Deputy City Attorney Bob Sherry;
Assistant City Manager John W. Stinson; Finance Director Nelson Smith; Public Works
Director Raul Rojas; Economic Development Director Donna Kunz; Fire Chief Ron
Fraze; Deputy Fire Chief Kirk Blair; Police Captain Tim Taylor; Public Works Civil
Engineer Ralph Braboy; and Economic/Community Development Business Manager
Rhonda Barnhard
Others: Jim Duffy and Mike Scott, RRM Design Group
cc: Honorable Mayor and City Council
S:~JOHN\Council Committees\05Budget&Finance~bf05dec13surnmary.doc
KERN REFUSE DISPOSAL, INC
1412 17th Street, Suite409
Bakersfield, CA 93301
Ph: 661.328.1957 Fax: 661.328.1091
January 3, 2006 Via Hand Delivery
Mr. Raul Rojas
Public Works Director
1501Truxtun Avenue
Bakersfield, CA 93301
Dear Mr. Rojas:
The member companies of Kern Refuse Disposal, Inc. have maintained an excellent
public/private partnership with the City of Bakersfield for over fifty years. Kern Refuse
highly values this relationship and their long, vibrant commitment to the City. They enjoy
their ability to serve this community and desire to continue this business relationship with
the highest standards of service possible.
The purpose of this correspondence is to officially request, on behalf of Kern Refuse
Disposal, Inc. ("Kern Refuse"), an extension of the existing contract between Kern
Refuse and the City of Bakersfield for refuse collection and hauling services. This
request is to extend Contract 91-71, Agreement 96-63 (Supplement to City Agreement
No. 91.-71) and all subsequent mutually agreed upon Amendments thereof, from the
present termination date of June 30, 2014 to June 30, 2025 (adding eleven years to the
existing contract).
A variety of circumstances precipitate this request. The haulers finance their truck
purchases for seven years. Currently down to only eight years remaining on their
Contract and taking approximately or~e year from the time of order to delivery, their next
round of purchases will come under specific review of the length and stability of their
contract arrangement with the City. Their County franchise was extended out to the year
2025 several years ago. Dropping to a minimum number of years for debt service may
cause lenders to decline continued financing or favored rates for future financing.
The financing of the Metropolitan Recycling Corporation's ("MRC") facility and operation,
located at 2601-B South Mt. Vernon Ave., is directly tied to Kern Refuse and its member
companies. As you know, Kern Refuse consists of six separate refuse hauling
companies. MRC was newly incorporated to exclusively operate the C & D facility, and
loans provided were on the merits and varue of each of Kern Refuse's members'
separate companies. This financing agreement continues to June 1, 2020. Further, Kern
Refuse's Recycling Facility Ground Lease Agreement with the City of Bakersfield
(subleased to the MRC for use as the aforementioned C & D recycling facility),
Mr. Rojas
Page 2
terminates December 1, 2019 unless both parties agree to one five-year extension
option. With such a short term on our City contract we may be denied the continued
opportunity to draw down on our remaining loan funds for the purposes of expanding
operations, fully opening to the public, adding new product lines, and other additional
and related needs. In essence, our current contract expires in 2014, yet we are
burdened with existing debt to 2020.
As the City of Bakersfield continues to grow and annex County lands, the hauling
companies of Kern Refuse experience a growing tide of negative financial impacts
directly related to this growth and the annexation process. With each new house added
to the City the Kern Refuse haulers must, by City policy, give up 50% of their accounts to
the City haulers. Accordingly, their rate is decreased from what is paid by the County to
what is paid by the City: Further, for each newly annexed account, the remaining time to
service said account, decreases from twenty years (pursuant to their Franchise
Agreement with the County), to the current eight years with the City. These, alone, are
very dramatic consequences.
As we look to the future our trucks, equipment, and the escalating demands for more
recycling will mount in cost. The cost to purchase, maintain, and operate in the refuse
hauling business has become more complicated and significantly more expensive.
These dramatic changes and ever escalating costs necessitate our request at this time.
In an effort to assist in evaluating this request I am attaching several communications
from the financial and banking interests asSociated with the haulers and their business
activities.
I seek your earliest review of this request for a contract extension for the haulers of Kern
Refuse Disposal, Inc. Please contact me at 979-5790 (c), 393-6699 (business and fax),
or by e-mail at Imoxle¥~aol.com.
Respectfully submitted,
Larry D. Moxley
President, Kern Refuse Disposal, Inc.
President, MRC
cc: Councilperson Sue M. Benham
Councilperson Irma Carson
Councilperson David R. Couch
Councilperson Harold W. Hanson
Councilperson Mike Maggard
Councilperson Zack Scrivner
Councilperson Jacquie Sullivan
Bakersfield City Attorney Virginia Gennaro
Mayor Harvey L. Hall
ANDREW S. ROSE
Attorney at Law
1200 East Balboa Blvd.
Newport Beach, CA 92661
949-723 -5806 (Office)
949-723-4909 (Facsimile)
andrewrose~wastefinance.com
Of Counsel,
Cantey & Hanger, L.L.P., Austin, Texas
December 22, 2005
Mr. Paul, Rojas
Planning Director
City of Bakersfield
1501 Truxton Avenue
Bakersfield, CA 93301
Dear Mr. Rojas:
I write today at the request of Vernon Vamer of Kern Refuse Disposal, Inc. ("KRD") and its
"sister"company, Metropolitan Recycling Corporation ("MRC") relating to discussions I
understand you are having with Kern Refuse relating to an extension of their current solid waste
collection contract. I have separated my discussion into four areas and while I apologize for its
length, I believe the discussion is important on issues that have been faced by most municipalities
and solid 'waste companies over the last feTM years.
IntroduCtion
By way of introduction, I was financial advisor and special counsel to MRC in connection with its
California Pollution Control Financing Authority bond issue in 2000, the proceeds of which were
used to build and equip MRC's current construction and demolition and recycling facility and to
provide collection vehicles, carts, and a maintenance facility for the trucks that are now used by
the constituent companies that make up MRC and KRD.
MRC is one of over 70 clients in the solid waste and recycling industry that I 'serve as both an
attorney specializing in the negotiation of franchise and service agreements, and as financial
advisor to those clients in assisting them with obtaining financing for projects such as MRC's. As
such, I am responsible for structuring and obtaining financing for such things as transfer stations,
material recovery facilities, C&D projects, related equipment, landfills, collection vehicles and
waste and recycling containers. Over the last eleven years, our team has completed over $1.2
billion of such f'mancings. I necessarily work very closely with banks that either provide
conventional financing to such projects or, as in MRC's case, letters of credit to support the
issuance of tax exempt bonds whose lower interest costs benefit both companies and ratepayers.
In MRC's case, I solicited a number of banks and then assisted the Company with f'mal.'
negotiations with Comerica Bank which they selected from the responding institutions.
Mr. Paul Rojas
December 22, 2005
Page Two
I work as an informal team with bond underwriters and investment bankers, Westhoff, Cone &
Holmstedt, and together we have been responsible for approximately 80-90% of all the tax
exempt bond financings done for privately owned solid waste projects in California in that same
ten year period (plus a few for public entities). WcJrepresent almost all of the medium to large
independent solid waste/recycling companies in California and have also arranged multi-million
dollar financings for public companies Waste Management, Inc., Republic Industries and Waste
Connections, Inc. over the past few years. I would be happy to provide more information upon
request.
My job has been to work with my clients and the cities/counties they serve to achieve project
development and financing that is fair to all parties at the lowest possible cost to the solid waste
ratepayer. Happily, there seems to be an emerging consensus among most public and private
entities, staffs, and consultants alike on some general principles as to how best to accomplish
those goals. When this has been true, we have been able to set up some real, rather than
theoretical "public-private partnerships".
Contract Versus Financing Terms
I will start by discussing the term of agreements between cities and service providers. Even
before recycling became so important, the parties recognized that there was capital expense
involved in providing service and that borrowings to pay that capital expense would have to be
paid back. As a result, solid waste contracts generally were in effect at least seven to ten years and
often significantly more so that the banks could be relatively certain of pay back. As you know,
this concept is also recognized in state law for non-franchised solid waste service providers who
are given a five year "wind down" if a municipality decides to franchise its previously "open"
solid waste collection operations. The automatic annual renewal (unless either party declined)
contract was another response to this need and allowed companies to update and modernize
equipment on an ongoing basis without fear of being terminated and left with no contract and
substantial debt left on equipment.
On the other hand, until about 10-12 years ago, most companies did not need much more than
trucks and some commercial containers and even those items were a lot less costly than, for
example, the new vehicles and related pollution control equipment that are now required by law
and regulation. Today, cities and counties face different and more difficult issues including
achieving and maintaining AB 939 diversion requirements and the shorter term agreement no
longer serves either the Service providers or the municipalities particularly well, especially when
as in your case, a facility financing (as opposed to merely equipment) is involved.
That is because any recycling, materials recovery and/or transfer or composting facility is an
integral part of the solid waste/public works system and should be financed over a term more
related to its useful life which is at least 30 years. In fact, the banks insist upon it. They want to be
sure that there are sufficient net revenues over the life of any financing to comfortably pay debt
service. While they will take the risk that a solid waste company will violate its service or .
franchise agreement and be terminated, they do not wish to take the risk that a short, contract term
will not be extended due to political or other reasons notwithstanding excellent performance
under the contra, ct by the service provider, leaving the company and the bank "holding the bag"
Mr. Raul Rojas
December 22, 2005
Page Three
with a large project on which significant principal payments are still due. Can we finance a
project over a shorter term? Sure, but the rates which support that project would have to be much
higher because the project needs more cash to service debt.
The Kern County/City of Bakersfield Situation
Here you are faced with a unique situation that actually increases the importance of these contract
term issues. As you are aware, MRC and KRD have identical ownership and operate under three
agreements, two with Kern County and one with the City of Bakersfield. The MRC facility is an
integral part of both the City and County's ability to comply with AB 939 diversion requirements
and also aids in preserving the life of the County"s landfill. Its importance will only increase over
the years as MRC and KRD try to assist the City in meeting its current and.possibly expanded
future obligations under AB 939. However, its ability to continue to operate rests almost entirely
with the ability of KRD to "feed" it through its collection activities and, in fact, to subsidize it. In
other words, the KRD contracts with both the City and the County are crucial to MRC's ability to
be economically viable. (The Bank has recognized this by requiring that the hauling companies
that own MRC and KRD and those companies' individual owners guarantee the debt of MRC.)
Another unique factor relating to MRC is that as you know, its "tip fee" charged for receiving
materials is set at the same rate as the County's tip. fee at the landfill even though. MRC is
providing additional necessary recycling and construction and demolition recovery services, all of
which contribute to AB 939 diversion. Frankly, this is virtually unheard of with almost all
municipalities having had to raise their rates when it became necessary for their service provider
to develop a capital intensive project like MRC's. Some of those rate increases in other areas
exceeded 40%! (In the one or two cases of which I am aware where no rate increase was initially
necessary, the local landfill fees were extremely high and/or thc landfills were located far from
the service area. Therefore, even taking into account the extra costs of diversion and processing of
a ton of~recyclables, it was cheaper to do so than to pay the transportation and disposal costs at
the landfill tip fee rate for that same ton. And, they also generally had high solid waste transfer
volume and merely transferring is much cheaper than diversion and processing. Neither situation
applies here where the County's landfill fee is not anywhere near high enough to offset MRC's
costs relating to diversion and there is no transfer activity.) To sum up, MRC cannot simply raise
its rates to cover the fact that it needs to amortize its debt very quickly if it is to survive, much
less increase its services and diversion. (I won't discuss the negative impact on KRD revenues
that continues due to rate differentials as the City continues to annex County areas---the Company
can better discuss that. But, coupled with these other factors, it makes the contract extension even
more important.)
So, why is the KRD/City contract an issue? It is because the term of KRD's contract with the City
does not match (or even come close) to the County's contracts with KRD and MRC. The KRD
contract extends until 2025 and the MRC contract has a 2020 expiration but provides for a five
year extension. On the other hand, your contract with KRD expires in 2014. Why are the different
terms an issue? Because MRC cannot raise its rates at will and must in effect be subsidized by the.
whole enterprise, including KRD. As a result, MRC has expanded its capacity m, ore slowly than
otherwise would be the case because again, unlike other projects, the more it does the higher its
costs relative to. revenues and the more difficult it is to amortize its debt. So, without an extension
Mr. Paul Rojas
December 22, 2005
Page Four
of the KRD contract with the City, not only would the Bank be unlikely to allow MRC to
continue to spend money to improve the project and increase its capacity (and resulting ability to
contribute to AB 939 diversion), but the Project itself could be in economic jeopardy. Why?
Because the largest component of MRC's incoming waste stream and revenues is represented by
materials collected by KRD and no one could be sure they would be there after 2014 unless the
contract is extended and meanwhile, MRC is faced with high debt service bills. However, if the
revenue stream is assured for a longer period, MRC can continue phased development.
The 2014 end of term looms large for one other reason which directly relates to the service
provided to the ratepayers of Bakersfield. That is that KRD must continue to update its fleet due
to new air pollution rules and prices for the new trucks meeting those standards continue to rise.
Trucks have-a useful life of at least 7-10 years and the banks finance them over that term. If the
agreement is not extended, beginning next year (given lag time on ordering), the Company cannot
be certain that it can fully amortize new debt incurred for truck purchases in the time remaining in
the agreement. And if the mounts cannot be fully amortized, the bank is not going to loan them
money to purchase them. Since new tracks provide a number of benefits, including lower air
pollution, efficiency, esthetics, etc., that would not seem a good idea.
So, although there are some unique factors relating to the two municipal entities and the tip
fee/rate structure, the bottom line is the same---financing for facilities such as MRC should be
done over a longer period and the 2014 expiration date of the KRD contract is now too short to
assure successful future expansion and operations, and for KRD, periodic fleet replacement. In
fact, all those unique factors make it even more important that the contracts stay in place at least
until 2020, the end of the current financing term for MRC.
Comparisons with Other Municipalities
This issue has been faced by most municipalities in California. I have attached a chart which
shows a comparison between contract and financing term for various projects, most but not all of
which we financed. Note that while they all started with fairly lengthy financing and contract
terms, a number of the contract terms have been extended even more in the last year (generally
extending from 15 to 20 years or 20 to 30 years). It shows that most companies and municipalities
have agreed on the need to finance major facilities over a longer period in order to avoid negative
rate impacts of trying to amortize large borrowings over short periods. And remember, most listed
projects also involved a large rate increase in order to pay for them even with the extended term.
I hope this information proves helpful to you in working with KRD on an extension of their
contract for a term appropriate for the type of expenditures and useful life of the MRC facility, its
improvement plans and the continued modernization of KRD's fleet and equipment. I would be
happy to discuss these or other issues relating to your plans with you or your staff.
Si~(~
ANDREW S. ROSE
1994-2005 REPRESENTATIVE SOLID WASTE FINANCINGS--- CONTRACTS/FINANCING TERMS
[ Project ---'---'---' Location T~ of lin Contract Term Financ
Athens Dis os.p..?.~ln extension~ ~d ust..~.~ CPCFA 15 Years 15 .Years
BLT Fremont B ~Extended in 2005) Fremont, Newark, ~ ---"-'-~PCF~ 30 Years.__.~..~ 3..___.~0 Year._._.~_~s
BLT Sacramento [Extended in 2005) Sacramento _.-.-..-.- CPCFA 20 Years 20 Years
Blue Line Transfer South San Francisco._.~___~ CPCF~ 30 Years 25 Years
Burrtec A~.?a Manse ~xtension Contract~___. "~"~rside .___------ CPCFA 20 Years..~_.~ _~..ea.rs .
California Waste Solutions San Jose CPCF-'~~- 11 Years 10 Years
-----'---"-- ~ CPCFA 10 Years 15 Years
Calsan, Inc. ~ --------- - -"-'"'--'---
Contra Costa Di~xtension Co.ntrac. q.~__ ~ ___.....__ CPCFA *Various, 15-20 15 Years
CR&R Stanto~xtension Contract) Stanton ~ Other *Vadous._....~ NA
"~R&R Perris ~verside C~__._._ CPCF'-~*-'--'-- *Various~ 20 Year.~__..~s
Eastern Placer Regional Landfill MRF Placer C Tahoe, Truckee CPCF~ **Renewab~ 16._.__._Years~
EDCO La Mes~xtension Contract) La Mesa San Die o C ) CPCFA 40 Years 20 Yea.~._.~m
Escondido Disposal Escondido~ CPCFA 15 Years 15 Yeam__._.~
Green Waste of Tehama --'-'"'"-- Tehama Coun_~...~.~ CPCFA 10 Years 15 Years
'---------'--' Santa Barbara CPCF-"~~~-- 18 Years 20 Yeam_....~_~
~ Industries ------------
Matin Sani~.~.~,ry~ -"-'---- San Rafael ___------ Bank__.~ *Various 20 Years
Mohave Desert/Mountain _.__------ Ale Valle Public Own/Finance__.~d 20 Years 25 Years
Norcal Waste Systems San Francisco CPCFA Unlimited ~ 20 Yeam._.__~
-------'--' CPCF~=-'--"-- 20 Years 25 Years
Om_.~e Avenue Tresno .___----- ~
Oxnard ~ Public Own/Financed 20 Years.._..~.~ 25 Year.~s
Solid Waste of Willits ~ndocino Cbj.).____ CPCFA 25 Years 20 Yea._.._.~m
Ukiah Mendocino C -- CPCFA 15 Years 15 Years
Solid Waste S..~tems ~ tT-)~ --'------- ~
'~'~set Waste Paper(Extended in 2005~._ Fresno ....__.-----.- CPCFA 15+ Years~ 15 Years
-S~o Sacramento Pr..~ect Finance Sacramento CPCFA 22 Years 21 Years
Taormina Industde~Extension Contract~..__.. Anaheim -'---'-"-- CPCFA/Othe'-'"'--~ *Vadous 15-20 20 Year.__.~s
~ MRF & Transfer Tracy ------'---- CPCFA 20 Years_._.._._ 20.___~Yeam_..._.~.~
West County Resource Recovery Richmond CPCF"-~-"-~ 20 Years 15 Yeam__~__._
West Placer County MRF Rosaville Public Own/Finance-'-'--~- 20 Yeam._~..~ 20 Yea~
~ Val~xtension Contract_~__..~ San Bernardino Coun---'--"-~ CPCF-~"--'"~ 15 Yr./Various 15 Years
In the Contract Term column, "various" means that the facility was developed pursuant to the disposal provisions of existing franchise agreements and
;hat the company has more than one franchise with various maturities within the range indicated. Also based on decades long relationship between parties.
** The Facility is on County owned land. While the term is short, the contract has been routinely renewed for over 12 years AND, if not renewed by the
County, it must purchase all the Company's facilities for multi-million dollar payment thereby providing a huge disincentive were the County ever to fail to renew.
Note that 'Rolling Extension Contract" means that the facility is based on franchise agreements with automatic annual extensions unless either party obiects
and that they have been continually extended since project inception.'
Comerica Bank
December 21, 2005
Raul Rojas, Planning Director
City of Bakersfield
1501 Truxton Avenue
Bakersfield, CA 93301
Dear Mr. Rojas:
This letter is written at the request of Vernon Varner of Kern Refuse Disposal, Inc. CKRD")
and its "sister" company, Metropolitan Recycling Corporation ("MRC") relating to a possible
extension of the solid waste collection contract between KRD and the City of Bakersfield. I
represent Comerica Bank, which is the Company's principal lender. As such, we provided the
letter of credit securing the California Pollution Control Financing Authority bonds (the
"Bonds") that originally financed the MRC facility and provided funds for the purchase of
collection vehicles, carts, and the development of a truck maintenance facility for the
companies making up the ownership of KRD and MRC.
Mr. Vamer has told me that you are considering extending the KRD/City contract to at least
match the term of the contracts currently in place between Kern County and both KRD and
MRC. On behalf of the bank, we fully support this proposal and in fact, consider it very
important to the continued financial health of the companies. We recognized from the
beginning of our relationship with the companies in 2000 that the hauling companies making
up the ownership of MRC and KRD and the two entities themselves were inextricably
related. In other words, although technically the "borrower" for the bond issue described
above is MRC, without KRD and the constituent companies support, we would not have
approved the financing. Our belief is illustrated by the fact that we have required all the
constituent companies and their individual owners to guarantee the debt of MRC.
As you know, the development of MRC's construction and demolition and recycling facility
has been done and will continue to be done in phases and as a matter of fact, significant
amounts of bond funds remain unspent. The Company plans to continue this phased
development but our approval will be necessary to release any further bond funds and/or to
provide other funds for that development. And, of course, the Company must remain in
compliance with its financial covenants even if it does not drawdown additional bond funds
or borrow more money.
KRD's contract term with the City is therefore an issue because the phased development
described above requires additional time for implementation and stabilization of revenue and
expense and, more importantly to us, enough time to comfortably repay principal on the
Bonds. Kern County's contracts with both MRC and KRD provide that time but
unfortunately, the tonnage provided from the City of Bakersfield is the mqst important.
component of the waste stream and due to continued annexation activities by the City, is
becoming more important each year. Yet that contract's expiration is many years shorter than
either of the County contracts. That fact, and the above described interdependence of lVlRC,.
KRD and their constituent companies, make it even more important to us to have all the
relevant contracts extend to a term long enough to allow the MRC project to continUe
development and comfortably pay its debt service.
We value our relationship with the companies and believe that they have served Kern County
and the City of Bakersfield well in both providing traditional collection and disposal services
but also, through MRC, helping both municipal governments to meet their AB 939 diversion
requirements. We believe your granting of an extension of the collection contract with KRD
will assure you of their ability to continue to provide those services while at the same time
allowing them to maintain their strong financial relationship with us.
Sincerely,
Comerica Bank
MEMORANDUM
TO: Budget and Finance Committee Members
FROM: Nelson K. Smith, Finance Director
DATE: February 3, 2006
SUBJECT: Draft Ordinance Allowing Formation of Community Facilities Districts (CFD)
The City has recently entered into development agreements with local land owners associated with
the Old River Ranch and Rosedale Ranch projects. The City also entered into a pre-annexation
agreement with Sun Cal regarding the McAllister Ranch project. Each of these agreements includes
a commitment by the City to provide a mechanism for financing public facilities and/or services
commonly known as Community Facilities Districts (CFD); also known as Mello-Roos Financing.
The first steps the Cits,' needs to take in providing this type of financing are to:
1. Adopt an ordinance allowing for the formation of CFD's
2. Adopt a policy document that provides guidelines regarding the formation of CFD's.
Enclosed is a draft ordinance for your review and consideration. The document was prepared by our
City Attorneys office, with input and assistance from outside bond counsel.
Upon your review and recommendation, we will place this item on the next available Council
meeting for first reading of the ordinance.
City staff are also working on a draft policy document for your future consideration.
The policies associated with CFD's are very similar in manv respects to Assessment District
financing, which is another t.~pe of land based financing currently'offered by the City. The City has a
policy document regarding Assessment District financing (Policy Resolution 86-95), which was last
reviewed and amended by City Council in 1995.
Staff is recommending that the City have one policy document that addresses both .types of land
based financing; thus incorporating many of the existing Assessment District policies with additional
language to address items unique to CFD's.
Staff has been working with a broad group of interested parties to receive comments and suggestions
regarding the policy document. Input has been received from developers, engineers, underwriters,
financial advisors, attorneys and others regarding the draft policy language. We hope to have a draft
policy document to you for review at your March 2006 committee meeting.
Attachment - Draft Ordinance
cc: Alan Tandy, City. Manager
File name: nks:/p:/cfd/memo-draft policy to bud and fm com feb 8, 2006.doc
ORDINANCE NO,
AN ORDINANCE OF THE CITY OF
BAKERSFIELD, ADDING CHAPTER 13.10
TO THE BAKERSFIELD MUNICIPAL CODE,
TO ESTABLISH CERTAIN PROCEDURES
RESPECTING SPECIAL TAX DISTRICTS.
BE IT ORDAINED by the Council of the City of Bakersfield as follows:
SECTION 1.
Chapter 13.10 is hereby added to the Bakersfield Municipal Code to read as
follows:
CHAPTER 13.10
SPECIAL TAX DISTRICTS
Sections:
13.10.010 Authority.
13.10.020 Title.
13.10.030 Definitions.
13.10.040 N o n excl us ivity.
13.10.050 Conflict of Law..
13,10,060 Nature of Districts,
13.10.070 Construction.
13.10.080 Incorporation of the Mello-Roos Act.
13.10.090 Compliance with Chapter.
13.10.100 Extraterritorial Jurisdiction.
13.10.110 Adopting goals and Policies.
13.10.120 Authorized Services.
13.10.130 Authorized Facilities.
13,10.140 Services Existing Befo. re District Formation,
13,10,150 Lease of Facilities,
13.10.160. Joint Community Facilities Agreement or Joint Exercise of Powers
Agreement.
~ 13.10.170 Hearing, Continuances.
13.10.180 Special Tax Levy Election.
13.10.190 Public Agency as Qualified Elector.
13.10.200 Refunding Bonds, Use of Savings.
13,10.010 Authority,
The city is a municipal corporation, organized and existing under its Charter and
the State constitution, with the power to make and enforce all laws and regulations
I of 8
respecting municipal affairs, subject only to any restrictions and limitations provided in
the Charter and in the State constitution. The Council finds and declares that providing
for special tax districts, to finance certain facilities and services, is .necessary, essential,
a public purpose, and a mUnicipal affair of the city.
13.10.020 Title.
This chapter may be cited as the City of' Bakersfield Special Tax Financing Law.
1.3.10.030 Definitions.
Unless the context otherwise requires, the following definitions shall govern the
construction of this chapter.
a. "District" means any special tax district formed pursuant to this chapter.
Facd~t~es means any or all facilities that a district may finance, purchase,
construct, expand, improve, or rehabilitate pursuant to Government Code Section
53313.5.
c. "Mello-Roos Act" means the Mello-Roos Community Facilities Act of 1982
(Chapter 2.5, commencing with Section 53311, of Part 1 of Division 2 of Title 5 of the
Government Code, as amended from time to time). Government Code Sections
referenced in this chapter shall mean that Section as amended from time to time.
d. "Private residential purposes," when considering property use, shall not
include property used primarily for hotel or residential hotel purposes. Such property
shall be deemed used for commercial and nonresidential use.
e. "Services" means any or all of the following:
1. Maintaining, servicing, or replacing (aa) any street, highway, road,
alley, lane, boulevard, pedestrian mall, parkway, bike path, trail easement, or other way
2 of 8
dedicated to public use or used by the public and (bb) all appurtenances and
improvements therein including, but not limited to, medians, street signs, other signage,
street lights, traffic signals, hydrants, soundwalls, drains, tunnels, sewers, curbs,
gutters, sidewalks, conduits, culverts, and channels for drainage purposes, with
necessary outlets, cesspools, manholes, catch basins, flush tanks, septic tanks,
disposal plants, connection sewers, ditches, drains, conduits, channels, landscaping,
and hardscaping.
2. Maintaining or servicing any lakes, streams, rivers, creeks,
channels or other bodies of water and the streambeds, riverbeds, creekbeds,
channelbeds or lakebeds, or replacing infrastructure necessary to maintaining or
servicing any of the foregoing.
3. Maintaining, servicing, or replacing any landscaping, hardscaping,
lighting or signage next to any right-of-way or other way dedicated to public use or used
by the public and described in (1), above, or next to any canal, basin, or ditch.
4. EstabliShing and maintaining a reasonable reserve for replacement
under (1) through (3), above. The reserve for replacement shall be a service cost or
expense and shall not be deemed payment for public facilities under Government Code
Section 53321(d) when the property subject to the special tax is used for private
residential purposes.
5. Maintaining health and safety services including, without limitation,
police, fire, traffic signal control, and recreational services.
6. Maintaining, caring for, or preserving any facilities defined in this
chapter.
7. Any other services allowed pursuant to Section 53313 of the
Government Code.
3 of 8
13.10.040 Nonexclusivity.
The procedures provided in this chapter are not exclusive, but are alternative to
any other procedures provided in this Code or under State ~law.
13.10.050 Conflict of Law.
This chapter is to be read and construed with the incorporated Mello-Roos Act.
In any conflict between' this chapter and the provisions of the Mello-Roos Act, this
chapter shall govern.
13.10.060 Nature of Districts.
Districts created pursuant to this chapter shall be deemed financing districts and
not separate governmental agencies distinct from the city.
13.10.070 Construction.
This chapter shall be liberally constructed.
13.10.080 Incorporation of the Mello-Roos Act.
The Mello-Roos Act is incorporated in and made a part of this chapter. Except
as otherwise provided by this chapter, the mode and manner for financing facilities, for
levying and collecting special taxes, and for issuing bonds shall be as prescribed in .the
Mello~Roos Act.
13.10.090 Compliance with Chapter.
Any proceedings taken, special tax levied, or bonds issued pursuant to this
chapter shall not be held invalid for failure to comply with the provisiOns of this chapter
provided such failure is not a constitutional defect.
13.10.100 ' Extraterritorial Jurisdiction.
Any district may be created pursuant to this chapter within the territorial
jurisdiction of the city or, upon compliance with the procedures set forth in Streets and
4 of 8
Highways Code Sections 5115 through 5118, may extend beyond the territorial limits of
the city.
13.10.110 Adopting Goals and Policies.
The city may initiate proceedings to establish a district or to annex territory to a
district pursuant to this chapter without first considering and adopting goals and policies.
Establishing goals and polices as provided in Government Code Section 53312.7,
concerning .the adoption of local goals and policies, shall be permissive and not
mandatory to initiating proceedings pursuant to this chapter.
13.10.120 Authorized Services.
A .district special tax, whether approved by vote of landowners or registered'
voters, may finance services specified in the Mello-Roos Act or services as defined in
this chapter. Services financed may supplant services already available in the territory
when the district is created or when the territory'is annexed to a district.
13.10.130 Authorized Facilities.
A district special tax, whether approved by vote of landowners or registered
voters, may finance facilities specified in the Mello-Roos Act or facilities as defined in
this chapter. Facilities financed may supplant facilities already available in the territory
when the district is created or when the territory is annexed to a district.
13.10.140 Services Existing Before District Formation.
Notwithstanding Government Code Section 53313, a special tax imposed
pursuant to this chapter may finance any facilities or services authorized in this chapter,
which were being provided in the territory of the district before the district was created or
the territory annexed. The special tax imposed may finance facilities or services that
are in addition to existing facilities or services, or that supplant existing facilities or
services.
5 of 8
13.10.150 Lease of Facilities.
Notwithstanding Government Code Section 53313.5, the city may lease out
facilities financed pursuant to this chapter if the Council determines that it is in the best
interest of the city to do so.
.13.10.150 Joint Community Facilities Agreement or Joint Exercise of Powers
Agreement.
Notwithstanding Government Code Section 53316.2(b), the city, at any time,
may enter a joint community facilities agreement with any local agency or public
agency, or a joint exercise of powers agreement with any local agency.
13.10.170 Hearings, Continuances.
The hearing on the proposed formation of a district as required by subdivision (e)
of Government Code Section 53321, and the hearing on a proposed annexation to an
existing district as required by subdivision (f) of Government Code Section 53339.3,
shall be held not less than 10 or more than 60 days after the date that the Council
adopts the resolution of intention to establish the district, or to annex territory, and may
be continued from time to time without further notice, but shall be completed within one
year of the original hearing date.
13.10.180 Special Tax Levy Election.
The Council shall submit the levy of any special taxes to the qualified electors of
the proposed district or to the qualified electors of the territory to be annexed to the
district in the next general election or in a special election to be held, notwithstanding
any other requirement, including any requirement that elections be held on specified
dates, contained in the Elections Code, at least thirty days, but no more than one
hundred eighty days following the adoption of the resolution calling the election.
6 of 8
13.10.190 Public Agency as Qualified Elector.
A public agency shall be a qualified elector and entitled to vote in any election in
which landowners are the electors.
13.10.200 Refunding Bonds, Use of Savings.
The city may use any savings, from issuing refunding bonds, within the district in
any manner that Council determines to be in the interests of the district and consistent
with the purposes for imposing the special tax.
SECTION 2.
This Ordinance shall be posted in accordance with the provisions of the
Bakersfie!d Municipal Code.and shall become effective thirty (30) days from and after
the date of its passage.
........ oo0oo ........
7 of 8
I HEREBY CERTIFY that the foregoing Ordinance was passed and adopted by
the Council of the City of Bakersfield at a regular meeting thereof held on
by the following vote: ,
AYES: COUNCILMEMBER MAGGARD, CARSON, BENHAM, COUCH, HANSON, SULLIVAN, SCRIVNER
NOES: COUNCILMEMBER
ABSTAIN: COUNCILMEMBER
ABSENT: COUNCILMEMBER
CITY CLERK and EX OFFICIO of the
Council of the City of Bakersfield
APPROVED:
By:
HARVEY L. HALL, Mayor
CI,TY OF BAKERSFIELD
APPROVED AS TO FORM:
VIRGINIA GENNARO
City Attorney
By:
ROBERT M. SHERFY
Deputy City Attorney
RMS:dll
p:nks~--fd\13.10-SpeciarraxDistricts draft ordinance 2006.doc
8 of 8
MEMORANDUM
TO: Budget and Finance Committee Members
FROM: Nelson K. Smith, Finance Director ~/',~
DATE: February 2, 2006
SUBJECT: June 30. 2005 Audit Reports
Enclosed are copies of the City's June 30, 2005 audit reports for your review.
The various documents enclosed include the following:
> Comprehensive Annual Financial Report'(CAFR), which are the audited financial
statements for the Ci'ty.
> 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)
> Independent Auditors Report - Rabobank Arena & Convention Center and Ice
Sports Center
The City's management letter and compliance letters are also included for your review. The
outside audit firm of NI. Green and Company gave the City an "unqualified" opinion regarding our
financial statements and there were no findings to report in their manaaement and compliance
letters. ~ -
The Wastewater report did have a couple of minor findings regarding some contractual details
found in the 30 year old wastewater multi-agency agreement. Managements' response to the
auditors' f'mdings and recommendations are provided in the body of the 3eport. It is of course the
City's intent to comply with all of the contractual requirements of the a~eement.
As part of this packet distribution process, copies of all the various reports are being provided to
the Mayor and all City Council members at the same point in time. Upon recommendation of the
Budget and Finance Committee, these reports will be placed on the next available Council agenda
for acceptance by the full Council.
Enclosures
cc: Mayor and Council
Alan Tandy
File name: nks:/p:/mcmo-audit t .. ~rtsjune 2005.doc
reen and Company LLP
CERTIFIED ? UBL[C ACCOUNTANTS ~
LARRy w. AY~]~, C.P.A.
~ D. BORGE~, C.P.~.
To the Honorable Mayor and
~,.,~. s~.~, c.~.^. Member of the CitY Council
~,,~. ~-~,'~,, c.~.,. City of Bakersfield, CalifOrnia
KATHI...~_ M. LA.MY'r_, C.P.A.
L~,.~.V.~,~E.C.~.^. In planning and performing our audit of the basic financial statements of the City of
,~,s. Moo~.c.~.^. Bakersfield, Califomia (City) fOr the year ended June 30, 2005, We considered its internal _
control structure ir~ order to determine oUr auditing procedures for the PurPose of expressing
~ Mo,~.,,., c.,.^, our opinion On the basic financial statements'and not to Provide assurance On the' internal
~',~,~,.~,c.~.^. control structure, our ConSideration of the internal control structure' wOUld not necessarily
~E~,c.~.^. diSclose all matters in the internal control structure that' might be matedal weaknesses Or
reportable conditions Under standards established'by the Amedcan 'Institute Of Certified
~-~,~,w. ,,~,~,,,., c.,,.^. Public Accountants~' A material weakness is a COnditiOn in WhiCh the design or OperatiOn of
one Or more of the internal control structure elements does not reduce to 'a relatiVely'loW level
~Ec~^~,~,.~o,c.~.^. the dsk that errors 'or irregularities in amounts that would be matedal in relation to the
financial statements being audited may OCcUr and not be detected Within a timely Period by
~.-~,^s.^.,~so,,c.,,.^. employees in the normal course Of performing their assigned functions. However, We noted
o^,~^.,~.~.~,.,~.c.~.^, no matters involving the intemal 'control structure and its operation that we consider to' be
~ ~. ,~_, c.~.^., c.~.^, matedat weaknesses as defined aboVe.
~^~,~.,,. ,,~,,~s, c.,,.,,. Reportable conditions involve matters coming to our attention relating to deficiencies in the
~.~.c.~.^. design or operation of the internal' control structure that, in our judgment, coUld adVersely
.~c¥~.~-~s~,~.~,c.~.^. 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
,o,~L. ~,~,~. c.,.^. We consider to be reportable conditiOnS.' '
~^,~. ~. c.,.^. This report is intended solely for the information and use of the audit committee, Mayor, City
co,,~,,,, Council, management, and other authorized regulatory agencies.
DONALD G. GORDON, C.P.^.
MA~'RIC~ M. GR~F~4, C.P.A.
FOR~' ^. MCQUF_~N, C.P.A.
c:-~., so~.,,.~, c.~,.^. October 18, 2005
~*-., Visalia, California
Tulare
Visalia
Hartford
Dinuba .
3900 We. st Caldwell . Post Office Box 3330 ,'Vi~alia, C~!¢ornia 93278-3330. TeJ. ephone (:559) 627-3900, FAX (559) 6~-1606
~-rnail: visaiia@rngreencpas, como Web Site: www. mgr~t:pax, corn
· :,,*L~, ": *..; ';.'//-~-'. *'.*;:., -
and Company LLP
CERTIFIED PUBLIC A CCO U.WTANTS
,_~.~y ~,. ,.,~, ¢.,.,. To the Honorable Mayor and
M '
embers of the City's Audit Committee
~ ~. ~oRo~. c.P.~. City of Bakersfield, California
~ .~. o,u~.,, c.P.^.
We have audited the financial statements of the City of Bakersfield,'Califomia (City) for the
~,'.~.~.,~.,c.~.^. year ended June 30, 2005, and have issued our report thereon dated October 18, 2005.
L~,.~.~.~P._.c.p.^ Professional standards require that we provide you With the folloWing information related to
our audit.
Ju~.~ Mo,.,~.~, ~., c,.^. Our Responsibility under U.S. Generally Accepted Auditing Standards
~-~,,~ ~. Nc~,c.p.^. As stated in our engagement letter dated July 11, 2005, our responsibilityl as described by
professional standards, is to plan and perform our audit to obtain reasonable, but not
o,um,,,~c.^m, c.~.^, absolute, assurance about whether the financial statements are 'free of material misstatement
~'~.~m~,~..c.p.^. and are faidy presented in accordance With accounting principles generally accePted in the
United States of Amedca. Because an audit is designed to provide reasonable, but not
absolute assurance and because we did not perform a detailed examination of all
~c,^o~.~o, ~.,.^. transactions, there is a risk that material misstatements may exist and not be detected by us..
In planning and performing our audit, we considered the City's internal control over financial
~,,~,.~,~,,,c.~.^. reporting in order to determine our auditing procedures for the purpose of expressing our
c~.~.,~,c.~.^.,c.~.^, opinion on the financial statements and not to prOVide assurance on the internal control over
~^,~,.~.,,~.,.,,s, ~,.^. financial reporting. We also considered internal control over compliance with requirements
that Could have a direct and matedal effect on a major federal program in order to determine
~-~. ~-~. c.P.^, our auditing procedures for the purpose of expressing our opinion on comPlianCe and to test
· ~^~ R. ~-sc~.~-~. c.~.^, and report on internal control over compliance in accordance with OMB Circular A-133.
As part of obtaining reasonable assurance about whether the City's .financial statements are
~O.~T ~. ~^,,~. c,.^. free of matedal misstatement, we performed tests of its compliance with certain pi'oVisions of
c~,..~,~ laws, regulations, contracts and grants, noncompliance With which could have a direct and
,^~,~.~w.~,,c.~.^. material effect on the determination of financial statement amounts. HOWever, providing an
Co~,~,~,~ opinion on compliance with those provisions was not an objective of oUr audit. Also, in
~o,^u~.c,o,.~o.~,c.p.^. accordance with OMB Circular A-133, we examined, on a test basis, evidence about the
co,~,,~ City's COmpliance with the types of compliance requirements described in the U.S. Office of
co,,,.,,~ Management and Budget (OMB) Circular A-133 Compliance Supplement applicable to each
of its major federal programs for the purpose of expressing an opinion on the City'S
~o~-~^.,~,_~.,c..~.^. compliance with those requirements. While our audit proVides a reasonable basis for our
opinion, it does not provide a legal determination on the City's compliance with thoSe
c~.~s ~. sou-m,~, c.~.^, requirements.
~>-~^. woou_~, c.P.^. Other Information in Documents Containing Audited Financial Statements
Professional standards require that we read other information in documents containing the
City's audited basic financial statements. We read the other information 'contained in the
City's comprehensive annual financial report (CAFR) and concluded SUch information, and
the manner of its presentation, is materially consistent with information appearing in the
audited basic financial statements.
Significant Accounting Policies
T~-s Management is responsible for the selection and use of appropriate accounting policies. In
v~¢.~ accordance with the terms of our engagement letter, we will advise management about the
ttanfora apPropriateness of acCounting POliCies and their application. The sign'rficant acCounting
D/nuba POlicies used by the City are described in Note I to the financial statements. As deScn'bed in
Note 1 to the basic financial statements, the City adoPted Statement Of the GoVernmental.
3900 We.vt CaJdweld o Post _Office Box 3330 · t,~alia, Caliy'ornia 93278-3330 · Telephone ¢~59) 627-3900, F.4X (559) 6~-1606
... .EqrmiL. vi~ah'a@rngreencpas, cora · Web Site: www. rngreenc~ax, corn
Accounting Standards BOard No. 40, Deposit and Investment Risk Disclosure. We noted no transactions
entered into by the City du~ing the Year that were both significant ahd unusual, and of. Which, 'under
professional Standards, we a~'e required to inform you, or transactions for Which there is a lack of aUthoritative
guidance Or 'consensus.
Accounting Estimates
Accounting eStimates are an integral part of the financial statements prepared by management and are based
on management's knowledge and experience about Past and current events and aSsUmPtiOns.about fUture
events. Certain accounting estimates are particularly sensitive because of their significance to the financial
statements and because of the pOssibility that fUtUre events affecting them may differ significantly from thOSe
expected.
Audit Adjustments
For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the
financial statements that, in Our judgment, may not have been deteCted except through our auditing
procedures. An aUdit adjustment may or may not indicate matters that Could have a significant effect on the
City's financial reporting process (that is, Cause future financial statements to be materially misstated). In Our
judgm'ent, none of the adjustments we proposed, whether recorded or unrecorded by the City, either
individually or in the aggregate, indicate matters that could have a significant effect On the City's financial
reporting process.
'Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter,
whether or not resolved to our satisfaction, concerning a financial acCOUnting, reporting; Or auditing matter
that Could be Significant to the financial statements or the auditor's report. We are Pleased to report that no
:such disagreements arose during tl~e cOUrse of oUr audit.
Consultations with Other Independent Accountants
In some cases, management may.decide to consult with other accountants about auditing and accounting
matters, Similar to obtaining a "second opinion" on certain Situations. If a consultation inVolves application of
an accounting Principle to the governmental Unit's financial statements Or a determination Of the tYpe of
auditor's opinion that may be expressed on those Statements, our Professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other acCOuntants.
Issues Discussed Prior to Retention of' Independent Auditors
We generally discuss a vadety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retentiOn as the City's auditors. HoWever, these discussions
occurred in the normal course of Our professional relationship and our responses were not a COndition to our
retention.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing our audit.
This information is intended solely for the use of audit committee, Mayor, City Council, management, and
other aUthorized regulatory agenCies of the City and is not intended to be and shoUld not be used by anyone
other than these specified parties.
CITY OF BAKERSFIELD
SINGLE AUDIT REPORTS
FOR THE YEAR ENDED JUNE 30, 2005
M. Green and Company, LLP
, Certified Public Accountants
Visalia, California
CITY OF BAKERSFIELD
FOR THE YEAR ENDED JUNE 30, 2005
.TABLE OF CONTENTS
?ape No.
Independent Auditors' Report on Schedule of Expenditures of
Federal Awards ................................. ; .....
Schedule of Expenditures of Federal Awards ..........
Notes to Schedule of Expenditures of Federal Awards
.................. 3-5
Schedule of Findings and Questioned Costs...
Independent Auditors' Report on Internal Control over Financial Reporting
and on Compliance and Oth'er Matters based on an Audit of
Financial S[atements performed In Accordance with Governmental
Aud/ting Standards ...................................................................................................
7
Independent Auditor's Report on Compliance with Requirements Applicable
To Each Maior Program and Internal Control over Compliance
In Accordance with OMB Circular A-133
................................ 8-9
and Company'LLP
C£R TZ~ZED 10 UB £ Z C A C C 0 UNTddVT~ ~
.",,'~ o. ~o~o~, c.~.~. INDEPENDENT AUDITORS' REPORT ON
~'~"-~. ~'~',, c.~..~. SCHEDULE oF EXPENDITURES OF FEDERAL AWARD,";
The Honorable Mayor and
~,T~.~. ~,.~, c.:.,. Members of the City Council
.AL-kN $. MOORE, C.P.A.
We have audited the financial statements of the governmental activities, the business-type
~'~'~,',~o~.~--~,,~.,c.,,..,.. activities, the discretely presented component unit, each 'major fund; and the aggregate
~-~'~:.~...~,c.~.^. remaining fund information of the City of Bakersfield, California (the City), as of and for the
'fiscal year ended June 30, 2005, which' collectively compdse the City's basic financial'
~,~s~.-_-sc~, c.~.,. Statements. These basic financial statements are the 'responsibility 'Of the City of Bakersfield'S
~.'~ ~,. ~,~,T~,2,., c.~.^, management. 'Our responsibility is to express an opinion on these'basic financial statements
based on our audit.
~:,.,o~.,~o,c.~.^. We Conducted our audit in accordance with auditing standards generally accepted in the
~'~^s..,.,-~o,~,c..~.,. United States of Am'efica and the standards applicable t'o financial" audits Contained in
Government Auditing Standards;' issued by the Comptroller General' of the' United 'States.
o^~=,.,~:<~,.,~,c.~.^. ThoSe standards require'that' we Plan and Perform the au'dit'to'obtain.reas0nable assurance
c~s.~.,~, c..,..,., c.~.^,about whether the financial statements are free of material' misstatement. An audit includes
exami'ning, on 'a te§t basiS, evidence sUppOrting the amounts and disclosures' in the basic'
~,,,~.',,.,,~,,$,c.:..~,. financial statements. An audit also includes assessing the' accounting 'Principles used and
~,-~.~,~,~,c.~..,. the significant estimates made by management, as well as evaluating the overall finandal
~.~c~.=c,~$c~?~.c.~..~. statement presentation. We believe that our audit provides a reasonable basis for our
opinions. '
~o,~-~?:.~,~,,c..~..,. Our audit was conducted for the purpose of forming an opinion on the basic financial
Co~ statements taken as a whole. The accompanying Schedul'e of Expenditures of Federal
,,,-,,~. ~,c.:.^. AWards is presented'for purposes of'additional analysis as required"by OMB Circular A-133,
co,,,~.~ and is not a required part of the basic financial statements. Such information has been
~,u~.c~,..~,c.~.,. subjected to the auditing procedures applied in the audit of the basic financial'Statements
Co,~,,,,~,, and, in our opinion, are fairly stated in all matedal respects in relation to the 'basic finandal
,,~c~.~. ~ .~.~, c.~..,, statements taken as a whole.
FORES? A. MC,,QU~__N, C.~.3..
October 18, 2005
Visalia, California
Tulare
V'~alia
Hanford
Dinuba
3900 We. vt Caldwell . Po, rr Or, ce Bax $$$0: l,~aiJ, a, California 952/-'8-3330. Telephone (-559) 627-3900. FAX (559) 6..D--1606
E-mail: vi~_alia~mgreencpas, corno Web Size: www. mgrea-.a:nrz, com
CITY OF BAKERSFIELD
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
JUNE 30, 2005
Program Accrued Financial Disburse- Accrued
CFDA or Award Revenue Assistance Other merits/ Revenue
Number Amount July 1 2004 Recognized Revenue Expenditures
U,S Depadment of Housing and Urban Development: - -- - ' June 30, 2005
Direct Program -
Community Development Block Grant
Entitlement 14.218 $ 6,890,890 $ 865,385 $ 3,9.'16,165 $ 387,972 $ 6,703,523 $ 239,733
Em ergency Shelter G rant 14.231 172, 329 124,902 124,902 24,802
-I-Iome Program 14.239 5,339,662 49,336 342,419 852,751 674,095 41,146
Economic Developmenl Initiative Granl 14.246 ... 36,000 35,845 _
Total Deparlmenl of Housing and Urban Development 12,438,881 914,721 -:1,449,331 1,240,723 7,502,520 305,681
U.S Depadment of Transportation:
· Passed through California:
Department of Transpodafion:
Surface Transportation Program 20.205 21,305,994 117,094 12,651,126 1,684,599 14,335,725 4,887,087
Transportation Enhancement Act 20.205 - 29
Congestion Mltigallon and Air Quality Program 20.205 1,339,465 56,405 235,719 235,71g 238,255
Safe Routes to Schools Program 20.205 89,173 96,347 91,947 91,947 _
Highway/Bridge Replacement 20.205 66,190 19 23 _ 23 42
Tolal Department of Transporlation 22,800,822 269,894 12,978,815 1,684,599 14,663,414 5,125,384
Environmental Protection Agency:
Brownfleld Economic Development Initiative (~rant 66.818 250,000 250,000 250,000
Federal Aviation Administration:
Airport Improvement Program 20.106 326,000 4,882 4,882
U.S, Deparlment of Jusllce:
Metropolilan Medical Response System 16.610 476,396 83,041 83,041
Metropolitan Medical Response S.yslem (Continuation) 16.610 400,000 - 159,790 159,790
Cops In Schools Grant 16.710 1,000,000 - 247,654 - 247,654 247,654
Local Law Enforcement Block Grant 16.710 196,912 '- 92,695 - 92,695
High Intensity Drug Task Force '16.XXX 1,704 1,704
OCDETF - Overtime and Aulhorized Expense Program 16.207 - 2,558 2,558 . .
FEMA- Protective Uniforms for Blook Born Pathogens 97.044 14,000 14,000 14,000 _
Total Depa~'tmenl of Justice ... 2,087,308 - 601,442 601,442 247,654
Total Grants ,.$37,_9..0_3,__0_1_1 $ 1,184,615. $ 18,284,470_.. $2,925,322 _$___23,022,258 $ 5,678,719
The accompanying notes are an integral part of these financial statements.
.. CItY OF BAKERSFIELD '
~. NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
JUNE 30, 2005
NOTEI~ GENERAL~
The accompanying Schedule of Expenditures of Federal Awards presents the activity of all Federal
Financial Assistance programs of the City of Bakersfield, California (City). As defined in Note 1 of the
Notes to the City's 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 entitles, 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 Bakersfie!d Redevelopment Agency (the Agency) is responsible for the development and financing
of projects wit?n (1) the Southeast Bakersfield Project Area, (2) the Old Town Kern-Pioneer Project
Area, and (3) ,he Downtown Bakersfield Project Area. The A°e '
of members appointed by the City Council The A ...... ~ .... ~n_c,y is governed by a board comprised
· - · , ,~ .... ~, ,~ ,:pur~e(] as a Governmen!al Fund type.
2. Blended Component Units
The Bakersfie!d 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, throu§h the issuance of bonds or other
instruments of indebtedness, public capital improvements and working capital pursuant to the Marks-
Roos 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 Agency.
The Authority js governed by a board consisting of the Mayor and the City Council· The Authority is
reported as a Governmental Fund Type.
Complete financiai statements for each of the individual compone.~t units may be obtained at the City's
Finance Departmec:.
Federal financial assistance received directly from Federal agencies as well as Federal financial
assistance passed t~'~roucjh other government agencies is included on the schedule..
NOTE 2- ~BASIS OF'ACCOUNTINg,
The accompanyinG Schedule of Expenditures of Federal Awards is presented usino the accrual basis of
accounting, which is described in Note 1 of the Notes to the City's Basic Financial Statements.
NOTE 3- ~OTHERREVENUF
Amounts reported as other revenue relate primarily to interest inccme and reimbursements for the year
ended June 30, 2005.
NOTE 4- RELATIONSHIP TO FEDERAL FINANCIAL REPORTS
Amounts reported in the accompanying schedule agree with the r~mounts reported in the related periodic
Federal financial reports.
CITY OF BAKERSFIELD
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
JUNE 30, 2005
NOTE 5 - RECONCILIATION TO GENERAL PURPOSE FINANCIAL STATEMENTS
The following is a reconciliation of the amounts lisled in tile Schedule of Financial Assistance to the City's basic financial statements:
Federal Granior/Pr?.~Lram Title
IJ.S. I')epaCtment U.S. Environmenlal Federal
of I Iou~lnu and r)epaftnlenl el Pfoteclion Avlallcn
_l~lJufl Devol~)[~nlafll I'rarl~pollall~rl ~ Admi~lslrallnn U.S. De~artmenl of Justice
Inlermodal Brownflelct
Communlly S~utace Trans- Economic Airport . Metropolitan Cops Local Law High Inlensily Ove~ime Federal
Developmenl poflalion and Developmenl Improvement Medical Response in Enforcement Drug Task & Autl)brlzed Emergency
Block Grant Efficiency Acl Initiative Grant Program System Granl Schools Block Grant Force ~xpense Pro,ram ~gt Assoc.
FederaIFlnanclalAsslslanco Recognized $ 4,449,333 $ f2.978.815 $ 250,000 $ 4,882 $ 242.831 $ 247,654 $ g2,695 $ 1,704 $ 2,558 $ 14.000
Olher 1,24D723 1,684,599
Tolal ~ 5,600,054 $ 14,663.414 $ 250,0~ $ 4,882 $ 242,831 $ 247,654 $ 92.695 $~1,704' $~2.558 $ 14,000
Relmt)t~rsahle Dlshureemont/Expendllnro $ 7~502,25~,, ~ 1~_$ 250~000 $ 4.B82 $ 242,831 $ 247,654 $ 92,695 ,.$ 1~704 $ 2,558 $ 14.~0
Tolal DlsbursemenEExpondllure . $ 7~=250 ~,~6~,414 $ 250,0~ $ 4,882 $ 242,831 $ 247,654 $ 9~,695 $ 1,704 $ 2,558 $ 14.000
Accrue~ Revenue June 30, 2005 $ 305t~81 $ 5, I~84 $ $ $ $ 247.654 $
Due~romFederaIGovernment ,.~ 305,681 $ 5,125,384 $ $ ' $ $ 247,654
4
CITY OF BAKERSFIELD
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
JUNE 30, 2005
NOTE 5 - RECONCILIATION TO GENERAL PURPOSE FINANCIAL STATEMENTS (Continued}
The following is a reconciliation of {he variances between Expenditures and Financial Assistance recognized:
Federal GranlodProrjram Tille
IJ.S. rieparlnle~lt , U.S. F.'nvlronmenlal Federal
Ihl~en I)uvol(~,nlonl f r~n~l~ll(,i Agency Admi~d~lr,li(,i
h~lclra~dal ~rowatield U.S. De~arlmenl o~ J,slice
Communlly Surface rca,s- Economic ~rporl Melropolilan Cops Local Law High Intensily Overllme Federal
Developmenl I)orlalio~ a~ld ~evelopmenl Improvement Medical Response J~l Enforcement Drug*rask & Authorized Emergency
IJlock Graltl E'iciency Acl Inifialive Grant Pro, ram System Granl Schools Block Granl Force ~xpense Pro,ram Mgt Assoc.
FederaIFInanclalAss/stance Recognized $ 4.449.331 $ 12.978.815 $ 250.000 $ 4,882 $ 242,832 $ 247,~54 $ 92,695 $ 1.704 $ 2.558 $ 14.000
giber 1 240.723., 1,684.599
Tolal $ 5,690,054 $ 14,~3,414 $ 250.000 $ 4.882 $ 242,832 $ 247,654 $ 92,695 $ 1,704 2,558 14.000
Tofal Dlel),reen~onllExpendllnre $ 7r502~520 ~ 1~,414 $ 250rOde $ 4,~2 $ 242.832 $ 247.654 $ 92.695 $ 1.704 $ 2.55~1 $ 14~O~
Vmlance of Revenues Recognized
Ovefl(UndeO Expenditures .. (I~812~468)
GurlJln~ of Program Income Io
Cmry Fo~ard (~466)
Tolal $ $ $ S $
CiTY OF BAKERSFIELD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
JUNE 30, 2005
1. >Summary of Audit Results
1. The auditor's repo~ expresses an unqualified opinion on the financial statements of the City
of Bakersfield, California.
2. No reportable conditions were disclosed during 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 during the audit. '
4. No reportable conditions were disclosed during the audit of the major federal award
programs.
5. The auditor's report on compliance for the major federal award program for the City of
Bakersfield, California expresses an unqualified opinion on the major federal program.
6. The audit disclosed no findings relative to the major federal awards program.
7. The program tested as a major program was: (1) U.S. Department of Transportation CFDA
Number 20.205).
8. The thresh~)ld for distinguishing Types A and B programs was $690,677.
9. The City of Bakersfield, California was determined to be a Iow-risk auditee.
2. Findinos Re!atino to Financial Statements Reouired under GAGAS___.______=
None.
3. Findincs and Questioned Costs - Maior Federal Award Procrams Audit
None.
, M. Green and Company LLP
CFR TIFZED p UBLIC ACCO U~'T.~ ~
~-~:'~. *~-'~, c,.^. REPORT ON INTERNAL CONTROL OVER FINANCIAL
,,~z~ ;. ~.~, ¢.~.^. REPORTING AND ON cOMPLIANCE AND OTHER MATTERs BASED
ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
~v~.,~. o~-~. c..~.,. ACCORDANCE WITH GOVERNMENTAUDI77NG STANDARD.';
VC'4. ~NT IENSE:A, C.P.A.
KATHL~w M. L.AM~E, C.?.A.
L~,,,-~ ~,~,_,. c.:.^. The Honorable Mayor and
,~-~ s. ~co~, c.~.^. Members of the city Council
City of Bakersfield, Califomia
SUSTIN MOR. ALE~,/R. , C.?.A.
~.~a..~c,~,c.?..,. We have audited the financial statements of the governmental activities, the business-type
activities, the diScretely Presented component unit, each major fund, and the aggregat'e
~,~,~c.,~,.c.~.^. remaining fund [nformation of the City of Bakersfield, California (the City), as of and for the
m,~,~. ~,m_-,,~..c.~.^. fiscal year ended June 30, 2005, and haVe issued Our report thereon dat'ed OctOber'18, 2005.
We conducted our audit in accordance With auditing standards generally accepted in the
~c~,^o~,.o,c.~.^. United States of' America and the standards applicable to financial audits contained in
GovernrnentAuditing Standards, issued by 'the Comptroller General of the United States.
L-WND^ $. A..N~EP~ON, C.?.A.
~^'~ ^. ~,'<s~, c..~..~. Internal Control over Financial Reporb'n~!
In planning and performing our audit, we COnsidered the City's internal control over financial
c.~-~.~,c.,..,..c.v.^, rePorting in order to determine our' auditing procedures for the purpose' of expressing our
~^w~.~.~_~.~s.c..,.,. opinions on the basic financial statements and not to :pr0vrde an opinion on the irrtemal
~,~..~L~.c.:.,, control over financi'al reporting. Our consideration of the internal control over financial
reporting would not necessarily disclose all matters in'the internal control over financial
,~^,~c~.,ursc:.-~.~.~. c.:..,, reporting that might be material weaknesses. A matedal weakness is a reportable condition
tn which the. design or operation of one or more of the internal control components does not
......... y Iow level the risk that misstatements caused by error or fraud in amounts
Co~-~ that would be material in relation to the financial statements being audited may occur and not
~^.~L~g.O,~S.~,C.:.^. be detected within a timely period' by emplOyees in the normal course of performing their
co,,,..,.~, assigned functions. We noted no matters involving the internal control over financial
~o,~u~. c~o.~, c.:..,, report[na and its operat[0n that we consider to be material weaknesses.
,~u~cs.~. ~.~, c.:.,. Compliance and Other Matte~,,
As part of 'obtaining 'reasonable assurance about whether the City's basic finandal
~o ~,ssr^.~c~.c.:.,. statements are free of material misstatement, we performed tests of its compliance with
C~r~.~, certain provisions of laws, regulations, contracts, and grants agreements, noncompliance
o~-,-~:, so~.-.~o, c.?..,, with which could have a direct and matedal effect on the determination of financi'al statement
amounts. However, providing an opinion on compliance with those provisions was not an
~--~,. ,,c~u_~., c.;..~, objective of our audit, and accordingly, we do not express such an opinion. The results 'of our
tests disclosed no instances Of'noncompliance or other matters that are required to be
reported under Government Auditing Standards.
This report is intended solely for the information and use of the audit committee, the
members of the City Council, the management of the City, the City's federal Oversight agency
and pass-through entities and is not intended'to be and should not be used by anyone'other
than these specified parties.
D/nuba October 18, 2005
VLsaJia, Car~omia
-, 7
3900 West C~!_~e~ . Post ~_~,co Box 3330 · ~,38al, ia, Calir'ornia 932/-8-3330. T.Je~hone {5£9) 627:-3900. FAX
-'--~,~' v~g~,c~&.com . w~ Size: ~,.,,~e~.'~- ~.cor~(ss~)
M _ Green and Company LLP
REPORT ON COMPLIANCE WiTH REQUIREMENTS APPLICABLE
~'.~Y,,. ^:-~.~, c.~..,. TO EACH MAJOR PROGRAM AND'iNTERNAL'CONTROL OVER COMPLIANCE
.,~ ,~, ~. ~o,~-~. c.P.,. IN ACCORDANCE WITH OMB' cIRCULAR A-13.1
K.~*']N M, GAE:."~, C.P.A.
v~..~,~ n~:,s--w, c.:.,.
~T.~:_~-~.,,. ~.,.,~_-, c.~.^. The Honorable Mayor and
L-.,.~,,..~. c~.,~_~, c.~.,. ' Members of the City Council
City of Bakersfield, California
ALA.,,' $, MCOI~5, C.I'.A. .
~'ST~ MOI~L.~. FR., C.?.A.
We have audited the compliance of City of Bakersfield, California (the "Oily"), with the types
~:,~sc.~.:,. c.~.^, of compliance 'requirements described in the' U.S. Office of Managemen! and Budget (OMB)
~,~-~,. ~,~..c.~.^. Circular A'-133 Compliance Supplement that are aPplicable 'to its major federal program for
the fiscal year ended June 30, 2005.' The City's major federal program is identified in the
,-~cc.,.,~.,.o.c.~..,. summary of auditOr's results section of t'he accomPanying schedule· of ·findings and
questioned costs. Compliance with the requirements of laws, regulations, contracts and
L'~,~,,s.,,,.~o~. c.:..,,grants applicable to its major federal program is the responsibility of the City's management.
~,,¥,,),,. ,,-<~^~, c.:.,. Our responsibility is to express an opinion on City's complianCe based on our' audit.
C~ R. B~' .', C.P.A., C.V..:t,
We Conducted our audit of compliance in accordance with auditing standards generally
,~^w~,~.,~.~-~s,c.~.^. accepted in the United States of America; the standardS applicable to' financial' audits
~-~,,~.~,:.c.~..,. contained in Government Auditing Standards, issued by the Comptroller 'General of the
~,-~ ~. T~t~_:~. c.:..,. United States; and OMB Circular A'-I33, AUdits of States, Local Governments, and Non-PrOfit
Organizations. 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
ao,~.~: ,_. ~,.~.¥. c.~..,, compliance =,-,, ,' ,=
r,.,~,.Ir,.ments referred to above that could have a direct and material effect on the
c~,~,,.,=, major federal Program occurred. An audit incl.udes examining, on a test basis, evidence
,^,,~o.~,~,_,~.:.: ..... about the City's compliance with those requirements and performing such 'other procedures
Co,~,,=, as we considered necessary in the circumstances. We believe· that our audit provides a
~o~,~.~.~o,~o,~.c.:..,. 'reasonable basis for our opinion. Our aUdit does not provide a legal determination of the
c~=..,~ City's compliance with those requirements.
MAUR~ M, G~, C,.~,.4.
co,~.~ In our opinion, the City complied, in all matedal respects, with the requirements referred to
~o-,.~,,. ~:q~,,. c.:..,., above that are applicable to its major federal program for the fiscal year ended JUne 30,
c~,~.=,, 2005.
c-~,z~ ~. ~-~, c.:.,.
Internal Control over Complianc,,
.~'~,. ,,c~ ,u_--~.c.:..,. The management of the City is responsible for establishing and maintaining effective intemal
control over compliance with requirements of laws, regulations, contracts, and' grants
applicable to federal programs. In ·planning and performing our audit, we considered the
CitY's internal control over compliance with requirements that could have a direct 'and
material effect on a major federal' program in order to de~ermine our auditing procedUres' for
the purpose of expressing our opinion on compliance and to test and report on the internal
control over compliance in accordance with OMB'Circular A:133.
Tulare
1,3salia
Hartford ~
Din~a
, 8 ·
3900 We. xt CaldweJl , Po.~ ? Bar $330 · ~nH~, Ca~,'o~ 93278.-3330, Telephone (-~59) 627-39~0 , F&X (559) 625-1606 '
~"-mail: visaiia~mgre~pa~.com o Web Si:e: www. mgre~"_.cpas, aom
Our consideration of the internal control over compliance would not necessarily disclose all matters in the
internal control that might be material weaknesses. A material weakness is a reportable condition in
which the design or operation of one or more of the internal control components does n'ot reduce to a
relatively low le~zel the risk that noncompliance with applicable requirements of laws, regulations,
contracts, and grants caused by error or fraud 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. We noted no matters involving the internal control over
compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the audit committee, the members of 'the City
Council, the management of the City, the City's federal oversight agency and pass-through entities and is
not intended to be and should not be used by anyone other than these specified parties.
October 18, 2005
Visalia, California
9
', Comp
M. Green and. any LLP
CZR TIFI£D PUBLIC ACCO U,WZ4NTS ~ ~
To the Technical Advisory Committee
Of the Bakersfield Subregional Wastewater
~.~¥ w. AinU, C.P.A. Management Plan, the City of Bakersfield,
.~_, D. Bo~o-~. c.P.^.California, the 'Kern Sanitation Authority,
r=--,~ M. c~_,-, c.P.^, and the East Niles Community Services Distdct
WM. K2.~. 'T JEN~'EN, C.P.A.
~,'~'.~.~--_.c.P.^. We have applied the procedures enumerated below to determine the City of Bakersfield's
~.~-.~.~.~mc.~.^. (the City) compliance with certain provisions of contractual requirements as specified in
Agreement 76-153, as amended by Agreements 76-153(6), 76-153(5), 76-153(4), 77-44, 85-
^:-~.~S..,~OO,~,C*.A. 197, and 92-106, regarding the Bakersfield Subregional Wastewater Management Plan.
~Cm~.',O~.,~S,~..C.P;A. These procedures, which were agreed to by the Technical Advisory Committee (TAC), were
~-~.~.~.NU~'~,C*.A. performed solely to assist you in meeting the requirements of Agreement 76-153, as
amended by Agreements 78-153(6), 76-153(5), 76-153(4), 77-44, 85-197, and 92-106. This
c~-~:,~_sc^u,, c.P.^, report is intended for the information of the Technical Advisory Committee of the Bakersfield
~.,,,.~w. w.~,T.~.,~..C.~.^. Subregional Wastewater Management Plan, the City's management, appropriate regulatory
agencies, and the City Council. This restriction is not intended to limit the distribution of this
report, which is a matter of public record.
[~NDAS..~'~,~O~,C.,.^. We reviewed and tested the City's compliance with certain provisions of contractual
requirements as specified in Agreement 76-153, as amended by Agreements 76-153(6), 76-
~^m,. ,~r.~,^,~, c.,.^. 153(5), 76-153(4), 77-44, 85-197, and 92-106.. These procedures resulted in the following
c,,~ ~. ~_,_. c.~.^'., C.V.A.. current year findings:
DAWN' M. PF. RKIN$, C.P.A,
~,_,~ ~. ~,~. ~.:.^. ·Current Year Finding #1 - Agreement Number 76-153. Secti~)n 23 - Record~ and Account~
The agreement requires the City to send ten copies of the annual financial reports to its User
',~A.~C~ ~. ~U.-SCm.,~.,. C..~.^. Agencies. We found no evidence of compliance with this provision as to the annual finanCial
reports for the pedod ending June 30, 2004.
ROBERT L. BANDy, C.P.A.
co,~:~ _Recommendation
~A.',-=O.~w,'~.C..~.^. We recommend that the City send ten copies of the annual financial reports to its User
co,,~,,~ Agencies or modify Agreement 76-153 to provide for an alternative provision. Such annual
~ON.~_~O. OO~O,~,C.p.^. reporting should include a copy of the report of the independent auditors.
Con~u/~ar, t
.,~[x.,c~ ,~. ~.~. c. ~..~. ResDo rise
co,~.= In the future, the City will send ten copies of the annual financial reports to its User Agencies
~om~, ^. ~,~, C.:.A. which includes a copy of the report of the independent auditors.
c.~_us ~. so,:r.~_~, c..~.^. Current Year Finding #2 -Aoreement Number 76-153. Section 12 - Estimate and Payment
co,-~ of Costs '
~,= ..... oo,._~¥.c.~ ....The agreement requires the City to conduct a public meeting to consider'the TAC proposed
co,,,,,,= budget 'at which meeting the User Agencies shall be given an opportunity to present
information and representation for consideration." The same paragraph requires the City to
"notify each User Agency of the budget and allocated costs thereof on or before July 1 ." We
were presented with no evidence that the User Agencies were given specific notice of the
City Council public meeting or that they were expressly notified of the Council approved
allocated costs before July 1.
Recommendation ·
Tular~ We recommend that the City send notification, and preserve evidence of such notification, of
V/s,,n~ the public meeting and the approved budget to the User Agencies, as specified in Agreement
Hartford 76-153 or modify the Agreement to provide for alternative procedures. We note that several
Dinuba .
3900 W'esr Cald',vei! .Pos7 "--'_~.--.ce 3o.r 3330. ~7.scdda. C~dir'orma 9327~-3330 · ie';.emhor2
E-,?,cdi.. ~saiia~rngreen~. cs. corn · W~b Sire: ~,'. rngree.-._?c.:.
Technical Advisory Committee
Page 2
of these procedures were adopted many years ago, prior to the City and the User Agencies developing the
policies and procedures now used for communication and audit control. Perhaps a general review of the
relational controls would be in order.
.Response
In the future, the City will send notification, and preserve evidence.of such notification, of the public meeting
and the approved budget to the User Agencies, aS specified in Agreement 76-153.
Prior Year Finding #1 - _Agreement Number 76-153. Section 12 - Estimation and Payment of Cost.,;
The original agreement states that by March 1 a tentative capital-related and operations and maintenance
budget must be submitted to the TAC and each User Agency for review and approval. However, the budget
for the year ended June 30, 2005 was not formally reviewed by the TAC until March 3, 2004, two days after
the established deadline.
Resoonse
In the future, the TAC will meet each year in February to review the tentative budget.
_Current Year Status
The budget was presented during the February, 2005 TAC meeting, therefore the City was in compliance for
the current 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 City's compliance with certain provisions of contractual requirements as
specified in. 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 attention that caused us to
believe that the City had not complied with certain provisions of contractual requirements as specified in
Agreement 76-153, as amended by Agreements 76-153(6), 76-153(5), 76-153(4), 77-44, 85-197, and 92-106,
except as discussed above. Had we performed additional procedures or had we performed an audit of the
City's compliance with certain provisions of contractual requirements as specified in Agreement 76-153, as
amended by Agreeme,q~s 76-153(6), 76-153(5), 76-153(4), 77-44, 85-197, and 92-106, other matters might
have come to our attention that would have been reported to you.
October 18, 2005
Visalia,. California
CITY OF BAKERSFIELD
Independent Accountant's Report on
Applying Agreed-Upon Procedures
Related to Article XIIIB
Appropriations Limit Calculation
For the Fiscal Year Ended June 30, 2005
.M. GREEN AND COMPANY LLP
Certified Public Accountants
Visalia, California
M. Green and Company LLP
~v[,- ~,. o~s~. c.,..,. To the. Honorable Mayor and Members of the City Council
w~. ~,,~ ~s~-,. c.,.,.City of Bakersfield, California
,~,~ ~. '-,~P~. c.P.^. INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING
^~,.~ s. ~oo~. c.:.,. AGREED-UPON PROCEDURES RELATED TO THE ARTICLE XIIIB
~us'r~,~.~o~ ,,,_~, ~,.. c.,.^. APPROPRIATIONS LIMIT CALCULATION
o, us~m~c~.c.~..,. We have applied the Procedures enumerated below to the accompanying Appropriations
Limit Worksheet of the City of Bakersfield, California, (the City) for the year ended June 30,
~.'NETHw. w~=~,~,.,C.,.^. 2005. These procedures, which were agreed to by the League of California Cities and
presented in their Article XIIIB Appropriation Limitation Uniform Guidelines, were preformed
~Ecc^^o~,.~o. c.,.^, solely to assist you in meeting the requirements Of Section 1.5 of Article management and the
City Council. This restriction is not intended to limit the distribution of this report, which is a
~,~^ s. ^.~, c.~.^, matter of public record.
~^v~ ^. ~-c~^.~, c.~,.^.
c~ a. ~_,~. c..,.^., c.v.^.The procedures performed and our findings were as follows:
o^~,~,.~-,:~,~,c.~..,. 1. We obtained the City's completed worksheets required to determine that the
~o..~:~_-. c.~.,, correct annual adjustment ~actors were adopted by resolution of the City Council.
2. For the accompanying Appropriations Limit Worksheet, we added line A, last
year's limit, to line E, total adjustments, and agreed the resulting amount to line
~o,~,T ~. ~,~, c.~.,. F, this year's limit.
Conau/tatu
,^.,,~.~.¥~.~,c.~.,. 3. We agreed the current year information presented in the accompanying
Appropriation Limit .Worksheet to the other worksheets described in #1 above.
4. We agreed the prior year appropriations limit presented in the accompanying
· Appropriations Limit Worksheet to the pdor year appropriations limit adopted by
the City Council dudng the pdor year.
These agreed-upon procedures are substantially less in scope than an audit, the objective of
c.'-~u~.~,...~ccm,a.~.c.:.^, which is the expression of an opinion on the accompanying Appropriations Limit Worksheet.
~r.,. woc,.-~, c.~.,. Accordingly, we do not express such an opinion.
Con.m/~,.mt
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 was not
computed in accordance with Article XlIIB of the California Constitution. Had we preformed
additional procedures or had we made an audit of the accompanying Appropriations Limit
worksheet and the other completed worksheets described in 1. above, other matters might
have come to our attention that would have been reported to you.
V'ua//.a '
Hartford October 18, 2005
Z:)/nuba . Visalia. California
3900 West Caldwell , Pos: Or~,ce Bar 3330 · t,~salia, Cal~ornia 93278-3550, Te!evhon~ (559} 627-5900 · FC~' (-'-59) 625-1606
.E-mail.. visalia~mgreeru:pas, corn · Web Sire: w~,-w, rt~greo_..c-aas. ~om
CITY OF BAKERSFIELD
APPROPRIATIONS LIMIT - WORKSHEET
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
A. Last year's limit
$ 174,261,982
B. Adjustment factors:
1. Population %
2. Inflation % 104.13%
1 O3.28%
Total adjustment % 7.545464%
C. Annual adjustment
13,148,875
D. Other adjustments
Booking fees
Property tax administration fees 1,155,621
607,000
E. To[al adjustments
14,911,496
F. This years limit
$ 189,173,478
Rabobank Arena, Theater,
Convention Center &
The Bakersfield Ice Sports Center
Financial Statements
Year Ended June 30, 2005
0
Barbich
Longcrier
HoQper
&Kir!_g_
.~ccount:mcy Corporation
C 0 N TEN TS
Independent Auditors' Report On The Page(s)
Fin an cial Statem en ts
1
:¥Ianagement's Discussion an d A nalysis
(Required Supplementary Information) 2 - 7
Financial Statent ents
Statement of net assets
8
Statement of revenues, expenses and chanzes in net assets
· Statement of cash flows ' ~ 9
10
Notes to Financial Statements
11 -22
Independent Auditors' Report on the
Supplent en ta ry Info rma rio n
23
SttpplementatT Information
Schedule of operating expenses 24
Independent Auditors'Report On Compliance And On
Internal Control Over Financial-Reporting Based On
An Audit Of Financial Statements Performed In
Accordance }Vt'th Governntent Auditing Standards 25
The Required Supplementao, Information, as listed in the foregoing table o~'.contents, is not a required
part of the basic financial statements, but is supplementary information required by tt~e Governmental
Accounting Standards Board. The required supplementar?- information is the responsibility of the
City's facility management company. SMG. This required supplementary information has been
subjected to t.he auditing procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly presented in all material respects when considered in relation to the basic financial
statements taken as a v,'hole.
In accordance with Government Auditing Standards, we have also issued a report dated October 31.
2005 on our consideration of SMG's internal control over financial reporting and our assessment or: its
compliance with certain provisions of laws, regulations, contracts and grants. That report is an
integral part of an audit perl:brmed in accordance with Government Auditin¢, Standards and should be
read in conjunction with this report in considering the results of our audit.
Bakersfield~ California
October 31, 2005
RabobankARENA
JULY 2004 TO JUNE 2005
R. ABOBANK ARENA, THEATER, CONWENTION CENTER ANT) THE
BAKERSFIELD ICE SPORTS CENTER
MANAGEMENT DISCUSSION ANT) ANALYSIS
This section of P~abobank Arena, Theater, Convention Center and the Bakersfield Ice
Sports Center's annual financial report presents our discussion and analysis of the
complex's financial performance during the fiscal year ended June 30, 2005. Please read
it in conjunction with the arena's financial statements, which follow this section.
FINANCIAL HIGHLIGHTS
· The 2004-2005 hockey season marked the beginning ora new contract agreement
.between the Arena and the Bakersfield Condors. This along with the Condors on-
,ce success (a first time ECHL play-off berth) helped increase Arena rent for the
season by almost $50,000.
· The California State CIF Wrestling Tournament returned for the second ora three
year deal and proved that the first year's success was no fluke as they grossed
over a quarter ora million dollars at the box office for the second year in a row.
· The successful performance of Jam Theatrical's Lord of the Dance in January
2005 helped spawn a new partner for the Convention Center as Jam agreed to
bring "Broadway" back to Bakersfield with a 6 show theater season for the 2005-
2006 fiscal year; a significant accomplishment considering it marks the first true
theater season held at the Convention Center since 2000-2001.
The Arena and Rabobank, a stalwart in the San Joaquin Valley banking industry,
came to terms on a brand new Naming Ri~mhts agreement. The a,oTeement, which
became official on February 15, 2005, will bring the Arena $250'7000 in revenue
for each of the next 10 years.
OVERVIEW OF THE FIN.a2q'CIAL STATEMENTS
This annual report includes this management's discussion and analysis report, the
independent auditor's report and the basic financial statements of the arena.
-2·_
REQUIRED FINANCIAL STATEMENTS
The .basic financial statements include a Statement of Net Assets, a Statement of
Revenue, Expenses and Changes in Net Assets, and a Statement of Cash Flows..
FINANCIAL AN'ALYSIS OF THE ARENA
Below is a summary of the Arena's Statement of Net Assets, Table A-l:
Table A-1
Statements of Net Assets
Total
June 30, June 30, $ %
2004 2005 Chan~e Chanl~e
ASSETS
Cash $1,563,528 $2,101,835 $ 538,307 34%
AJR Other 28,119 62,588 34,469 122%
AJR Trade 714,142 690,818 (23,324) -3%
Prepaid Expenses 27,824 65,598 37,774 136%
Equipment 82,668 88,269 5,601 7%
Accumulated Depreciation- EquiP (56,099) (70,337) {14,2381 -25%
TOTAL ASSETS $ 2,360,182 $ 2,938,771 $ 578,589 24%
LIABILITIES & NET ASSETS
A/P Other $ 55,194 $ 33,338 (21,856) -39%
A/P Trade 443,529 124,213 (319,316) -72%
Accrued Expenses 109,318 99,293 (10,023) -9%
Defen'ed Revenue 1,584,681 2,698,453 1,113,772 70%
Advance from Client 2,589,049 2,950,939 361,890 14%
TOTAL LIABILITIES 4,781.769 5.906.236 1,124,467 24%
NET ASSETS (2.421,587) (2,967.465) (545,878) :23%
TOTAL LIABILITIES & NET ASSETS $ 2,360,182 $ 2,938,771 $ 578,589 24%
-3-
Upon first glance at the net assets for the fiscal year ending June 30, 2005 a decrease of
$545,878 versus the previous year is seen.
Typically, and this year was no exception, the level of cash is determined mostly by the
number of events on-sale at any given time. At year-end, the Eagles, Lakers, and Circus
events were all on-sale and this is where almost the entire increase of cash is created. As
can be seen from the totals, the other items on the statement of Net Assets were very
stable. A/R Other, which includes receivables from both TicketMaster and Aramark, was
up $34,469 which is, for the most part, a timing issue. The receivable from TicketMaster
was up because of an increase of events on-sale, and Aramark's receivable because of
merchandise commissions that have to be paid out of their corporate office in
Philadelphia. A/R Trade decreased slightly (3% overall) and is due to the timing of
receipts paid to the Arena. Prepaid expenses show's a relative spike in its account
balance, but this is caused by our theater season that has produced some prepaid
e. xpenditures since the Arena is partnering with Jam Theatricals and has placed numerous
ads on the show's behalf. Finally, on the liability side of the Statement of Net Assets it is'
business as usual with the normal timing fluctuations other than a huge increase in
deferred revenue which was caused by the increase of events on-sale and the naming
rights agreement the Arena entered into with Rabobank that did not take effect until
February 15, 2005; the first two years ($500,000) of this agreement were paid.
-4-
Table A-2
Statements of Revenues, Expenses and
Changes in Net Assets
Year ended June 30,
2004 2005 $ Change % Change
Revenue
Rent - 1,408.322 1,197,339 (210,98'3) -15%
Reimbursed Expenses 789,121 828.670 39,5~.9 5%
Suite Revenue 846,118 928,425 82 307 10%
Food & Beverage Commission 547,231 442.997 (104,23~4) -19%
Signage Revenue 408,179 4C:>4,170 55,991 -14%
Parking Revenue 185,461 154,895 (30.56~) -16%
Ticket Rebate 201,425 126,287 (75,138) -37%
Novelty Commission 46,779 34,495 (12,283) -26%
Ice Sports Center. general admissions 155,125 104,174 (50.95!) -33%
Ice Sports Center, other revenue 169,618 522.533 352,915 208%
Total Revenue 4,757,379 4.803,986 46,6(J7 1%
Event Expenses ,
Event Labor 900,563 866,652 (33,91 i ) -4%
Advertising Expense 178,729 147,600 (31,129) -17%
Direct Event Expenses 237,225 144.732 (92,493) -39%
Total Event Expenses 1,316,517 1.158,984 (157,533) -12%
Total G&A Expenses 3.994,568 4,195.252 200,68;4 5%
Interest Income 8,651 4,372 (4,27~) -49%
Prior Year Revenue 71';670 0 71.67~ 100%
Change in Net Assets $(473,385) $(545,878) $(823) 0%
Overall, revenue is up slightly from the previous year; however, this is not a measure, of a
new found efficiency at the Arena, rather the fact that revenue only increased $46,607 is
considered less than successful. This is considered sub-par for several reasons: 1) the
BakerSfield Ice Sports Center which was opened for its first full year helped to incre~e
revenue by over $300,000 from the previous year; 2) a naming rights deal was struck:that
increased revenue $83,333 this fiscal year alone; 3) suite and si_mqage revenue as a whole
increased by approximately $139,000. All of these reasons show that the Arena failed to
live up to financial expectations when looking at the "big picture." The biggest singl~
reason for this is simply a sharp decrease in live events booked at the Arena, Convention
Center, and Ice Rink. Concerts were down sharply, as well as the Arena and Convention
-5-
Center's related concession commission Simply put, this is an event driven industry; "no
events = no revenue." On a positive note, the trend has reversed and the forecast for the
'05/'06 fiscal year shows an increase in events.
Table A.3
Change in Net Assets Actual to Budget
Year ended June 30, 2005
Actual . Budget $ Budget % of Budget
Revenue
Rent 1.197,339 1,284,865 (87,526) -7%
Reimbursed Expenses 828,670 855,234 (26,564) -3%
Suite Revenue 928,425 937,271 (8,646) -1%
Food & Beverage Commission 442,997 507,968 (64,971) -13%
Signage Revenue 464,170 486,465 (22,295) -5%
Parking Revenue 154,895 166,649 (11,754) -7%
Ticket Rebate 126,287 134,347 (8,060) -6%
Novelty Commission 34,496 32,598 1,898 6%
Ice Sports Center, general admissions 104,174 0 104,174 N/A
Ice Sports Center, other revenue 522,533 693,762 (1711229) -25%
Total Revenue 4,803,986 5,099,159 (295.173) -6%
Event Expenses
Event Labor 866.652 1,129,501 (262,649) -23%.
Advertising Expense 147,600 98,121 49,479 50%
Direct Event Expenses 144.732 166,813 (22.081) -13%
· Total Event Expenses 1,158,984 1,394,435 (235,451) -17%
Total G&A Expenses 4,195,252 3.987,315 207,937 7%
Interest Income 4,372 559 3,813 682°,/0
Change in Net Assets (545,878) (282,032) , (263,846) 93%
For the second consecutive year the budget was not met. Once again, revenue was down,
as it is the hardest to budget due to the extreme uncertainty of the entertainment industry.
G&A expenses were slightly above budget as well, but this can be attributed, in large
part, to a worker's compensation insurance increase from the previous year that could not
have been predicted and/or placed into the budget. As a whole, if concerts and other live
-6-
concerts are booked to the same extent as what is reflected in the budo~et; it is usually
certain that the budget ,,x411 then be met. ~
ECONOMIC FACTORS AND NEXT YEARS BUDGET AND RATES
Several key factors affect next year for the arena:
In addition to the increased competition from the two Fresno facilities; Stockton
will have a new arena opened in time for the upcoming Hockey season.
· While it was a slow start to the post Nederlander (exclusive concert provider) era
at the arena, the future shows promise. The first five months of being a non
exclusive building yielded only one concert but the next five month period
yielded three.
· The ability to maintain existing signage and suite levels at the current hi~ rates.
All suites and currently available signage is under contract at this time.
· The Convention Center will have a Broadway Theater Season for the first time
since 2000/2001. This undoubtedly will bring an increased revenue stream to the
Convention Center for the 2005/2006 year, but long-term success of the
Broadway Theater Season is most essential.
· As usual in this type of industry, the Arena is always subject to the desire of
events touring and the publics' taste in entertainment.
CONTACTING RABOBANK ARENA
This financial report is designed to provide a general overview of the finances and
accountability of Rabobank Arena, Theater, Convention Center and the Bakersfield Ice
Sports Center. If you have questions about this report contact Rabobank Arena, Theater,
Convention Center and the Bakersfield Ice Sports Center, 1001 Truxtun Avenue,
Bakersfield, California 93301, Attention Director of Finance.
-7'-
Rabobank Arena, Theater,
COnvention Center &
The Bakersjqeld ice Sports Center
Statem en t of ~N~t Assets
June 30, 2005
ASSETS
Current Assets
Cash
Accounts receivable, trade S 2,101,835
Accounts receivable, other 690,818
Prepaid expenses 62,588
65.598
2.920.839
Property and Equipment, at cost 88,269
Less accumulated depreciation 70.337
17.932
2.938.771
LL4BILITIES .-I.YD NET ASSETs
Cu rrent L labilities
Accounts payable, trade
.~4._13
Accounts Payable, other S 1 '~' V
Accrued expenses 33.338
Deferred revenue 99.293
Advance from City of Bakersfield _.698.4>..,
' 2.950.939
5.906.236
Co m tn itm en ts
3,'et Assets
Lnvested in capital assets
Unrestricted 17,932
(2.985.397)
(2.967.465)
S _.9_,8./,1
See :'Votes to Financial Statements.
-8-
Rabobank Arena, Theater,
Convention Center &
The Bakersfield Ice Sports Center
Statement of Revenues, Expenses and Changes itt :Yet .4ssets
For the Year Ended June 30, 2005
:\ret revenues:
Facilities rent
Event expense reimbursements $ 1.197,339
Suite and premium seats $28,670
Concession commission 928,425
Si~maage and advertising 442,997
Parking 464,170
Ticketing fees 154,895
Merchandise 126,287
34,496
Ice Sports Center, general admissions 104,174
Ice Sports Center, other revenue 522.533
4.803.986
Direct event expenses:
Event labor
Other direct event expenses -866,652
Event advertising 144,732
147.600
1.158.984
Gross profit 3.645,002
Operating expenses
4.195.252
Operating loss
(550,250)
Nonoperating income:
Interest income
4.37'~
Change in net assets
(545,878)
Total net assets, beginning t2.421.587)
Total net assets, ending S (2.967.465)
See zVotes to Financial statements.
-9-
Reconciliation of operating loss to net cash provided b)'
operating activities:
Operating loss
$ (5501250)
Adjustments to reconcile ol2erating loss to net
cash used in operating activities:
Depreciation
Increase ~n accounts receivable 14,238
Increase ~n prepaid expenses (11,145)
Decrease ~n accounts payable (37,774)
Decrease ~n accrued expenses (341,172)
Increase ~n deterred revenue (10,023)
1.113.772
Net cash provided by operating activities $ 177.646
- 10-
Rabobank Arena, Theater,
Convention Center & The Bakersfield Ice Sports Center
z¥otes to Financial Statements
Note 1. :Yature of Business and Significant Accounting Policies
:¥ature of Business:
The City of Bakersfield (the Cit.,,') owns the Rabobank Arena. Theater and Convention
Center (the Facilities). The Facilities were previously known as the Bakersfield
Centennial Garden and Convention Center. The Rab'obank Arena was built by the
City, and began operations in October 199~. It is the only building of its kind in the
Bakersfield area. ~
On August 6, 1997, the City issued a request lbr proposals for services prior to the
opening of the Rabobank Arena and the operation and management of the Facilities
thereafter. In an a~eement dated January. 28. 1998, the Citx~ontracted with Ogden
Entertainment, Inc. (Ogden) for these seIMces for an initial'period of five years. The
contract term was subsequently extended ]~br an additional five-year term and the
a~eement is effective through June 30, 2008. O.oden worked durin~ the January 14,
1998 through June 30, 199S pre-opening phase a~d assumed management
responsibilities of the Facilities on July 1. 1998.
Ogden was hired by the Git5' for its expertise in the management, operation and
marketing of public assembly facilities.
Ogden sold its entertainment business division to AI:L-XMARK Corporation effective
June 2. 2000. The operation of the Facilities are still bein_o conducted under Oaden's
name. All contracts and leases, with the exception of the ~dministrative serx,'ic~s
ageement with the City. are transferable to ARAMARK Corporation. The City
approved the transfer of the administrative services a~eement to AtL~kMARK
Corporation.
On September 13. 2000, AtL;k_MARK sold and assi2:ned all of its n~ts. obli_oations.
liabilities and indemnities as manager of the Faciliti~es to SMG (the~Compan~) for S'l 0.
SMG is owned bv a partnership that includes AtL, k.MARK and Hyatt. All contracts
and leases, with the exception of the administrative service am'eement with the city.
are transferable to the Company. The City has approved the transfer of the
administrative services agreements to the'Company. See Note 4 for terms of the
administrative ser~'ice ageement.
-11-
Notes to Financial Statements
In December 2004, the City opened the Bakersfield Ice Sports Center (Ice Center).
The Ice Center is used for public skating, hockey lea~es, fieure skatino and other
community events. In an am-cement dated November 5,
' ~ .:00_,. the City contracted
with the Company l;br the manaeementl concession and caterino sen'ices for the Ice
Center through June 30, 2008.
The activities of the Facilities and the Ice Center are recorded in a special revenue
fund of the City."s accounting records. The City owns all the assets of the Facilities
and the Ice Center and accordingly, all amounts related to the operation of the
Facilities and the Ice Center belong to the City. The Company has a fiduciao~
responsibility under the management a~eement to maintain and operate the Facilities
and the Ice. Center in the best interests ~)f the City and the community.
Fund accounting:
The focus ofproprieta~ fund measurement is upon deten'nination of operating
income, change in net assets, financial position, and cash flows. The U.S. generally
accepted accounting principles applicable are those similar to businesses in the private
sector.
Enterprise funds are required to be used to account tbr operations for which a fee is
charged to external users for goods or sen'ices and the activity (a) is financed with
debt that is solely secured bva pledze of the net revenues. (b)'has third party
reqmrements that the cost of providing sen'ices, including capital costs, be recovered
with fees and charges or (c) establishes fees and charges based on a pricing policy
designed to recover similar costs. ,.
Operating income reported in proprietaO, fund financial statements includes revenues
and expenses related to the primars-' continuing operations of the fund. Principal
operating revenues 1br proprietao, funds are charges to customers lbr sales or ser~'ices.
Principal operating expenses are the costs of providing goods or services and include
administrative expenses and depreciation of capital assets. Other revenues and
expenses are classified as nonoperating in the financial statements.
12-
Notes to Financial Statements
Revenue recognition:
Suite and premium seat contracts
Revenues from suite and premium seat contracts are reco~mized over the contract.
: period per the contract terms. Contracts are billed twice Jx'ea~ with the entire contract
amount payable prior to the contract period. The suite and premium seat payments are
recorded as deferred revenue until earned and recognized over the contract period.
:Yarning rights, signage and advertl'sh~g contracts
Revenues from naming rights, signage and advertising contracts are reco,onized over
the contract period per the contract terms. Contracts m:e billed accordin~to the
contract terms. Payments are recorded as deferred revenue until earned and reco,onized
over the contract period. ~
Ticket sales
The Facilities, through its contract with Ticketmaster, sells tickets to events (at the
Facilities) as an agent of the event holder at the on site box oil:ice location and through
telephone, internet and Outlet locations. All revenues from the sale of tickets belona to .
the event holder. The ticket sales are recorded as deferred revenue when sold. AftJr
the event has occurred, settlement with the event holder takes place. The net of total
ticket sales less event expenses such as facility rent and reimbursement of direct event
expenses is then paid to or received from the event holder. The event ticket revenues.
are removed from the deferred revenue account at the time of settlement.
The Facilities earn a ticketing lee on the sale of event tickets that take place through
telephone, internet and outlet locations. Revenues from these lees are recorded as
deferred revenue at the time of sale and are reco~m-fized at the time of event settlement.
Event revenues
Revenues from the Facilities' events such as facilities rent. direct event expense
reimbursements, concession commissions, parkin_o and merchandise are reco~smized at
the time of event settlement. ' ' ~
- 13-
Notes to Financial Statements
Basis of accounting:
The accompanying financial statements have been prepared on the accrual basis of
accounting. Under the accrual basis, revenues are recoanized when earned and
expenses are recognized when incurred. ~
Financial reporting:
On July 1, 2002, the Facilities adopted the provisions of Governmental Accounting
Standards Board Statement No. 34, "BaSic Financial Statements - and Manaaernent's
Discussion and Analysis - fbr State and Local Governments." Statement No. 34
established standards for external financial reporting fbr all state and local
governmental entities, which includes a statement of net assets, a statement of
activities and changes in net assets, and a statement of cash flows.' It requires the
classification of net assets into three components - invested in capital assets, net of
related debt; restricted; and unrestricted. These classifications are defined as follows:
Invested in capital assets, net of related debt - This component of net assets consists
of capital assets, includine restricted capital assets, net of accumulated depreciation
and reduced by the oUtstandina balances of any bonds, mortoao,=~
~ - · = ~--o, notes, or other
borrowings that are attributable to the acquisition, construction, or improvement of
those assets. If there are si~:nificant unspent related debt proceeds at year-end, the
portion of the debt attribut~-ble to the unspent proceeds are not included in the
calculation of invested in capital assets, net of related debt. Rather. that portion of
the debt is included in the same net assets component as the unspent proceeds.
Restricted- This component of net assets consists of constraints placed on net asset
use through external constraints imposed bv creditors (such as throu=h debt
covenants), ~antors. contributors, or laws or regulations of other governments or
constraints imposed bv law through constitutional provisions or enabling le=islation.
Unrestricted net assets - This component of'net assets consists of net assets that do
not meet the definition of "restricted" or "invested in capital assets, net of related
debt."
The adoption o£ Statement No. 34 affected the classification o£net assets in
accordance with the statement and the presentation of capital contributions as a chanae
in net assets. _
- 14-
Notes to Financial Statements
Use of estimates:
The preparation of financial statements in conformity with U.S. tenerallv accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of continzent assets
and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Cash and cash equivalents:
For purposes of reporting cash flows, cash and cash equivalents include cash on hand
and amounts deposited with banks.
Categories of deposit risk:
In accordance with the Gov, e, rnmental Accounting Standard Board Statement No. 40.
the City's deposits at June ,>0, 2005 are described as follows: '
Carrying 3larket
_ I"alue I/alue
Cash and cash
equivalents
2.101.835 S 2.~1101.835
At June 30. 2005. the caro-ing amount of financial institution deposits was S2,101.835
'and the bank balance was $2.194.126 of which only S100.000 is covered bv federal
depositor>.-insurance.
Concentration of credit risk:
Credi[ is extended, in the form of accounts receivable, to customers located primarily
in Calitbrnia.
Advertising:
The Company expenses advertising costs as they are incurred. Advertisine expense
was S147.600 at June 30, 2005. ' ~
Notes to Financial Statements
Trade accounts receivable:
Trade accounts receivable are stated at the amount manaeement expects to collect
outstanding balances. Management provides for probabl~ uncollectible amounts
through a charge to earnines and a credit to valuation allowance based on its
assessments of the current status of individual accounts. Balances that are still
outstanding after management has used reasonable collection efibrts are written off
through a charge to the valuation allowance and a credit to trade accounts receivable.
Changes in the valuation allowance have not been material to the financial statements.
ProperO, and equipment:
Pr0perty and equipment are recorded at cost. Depreciation is computed using the
straight line method over estimated useful lives of 3 - 5 years.
Maintenance and repairs of property and equipment are charged to operations an'd
major improvernents are capitalized. Upon retirement, sale or other disposition of
property and equipment, the cost and accumulated depreciation are eliminated from the
accounts and gain or loss is included in the statement 6f revenues and expenses.
Note 2. Deferred Revenue
Deferred revenue at June 30. 2005 consists of the tbllowinc-
Suite contracts S 1.00S,499
Advertising contracts 437.117
Ticket sales, future events I. 132.336
Event deposits 38,600
Ticket rebates 53.360
Ice Sports Center _. 28.541
..S 2.69S.453
- 16-
Notes to Financial Statements
Note 3. Advance From CiO. of Bakersfield
During the normal course of business, the City pays expensea that are allocated to the
operation of the Facilities. These expenses include pa.woll and related expenses for the
City employees and rent and utilities tbr the office space used by the Companv. The
amount of the advance fluctuates throuehout the year dependin~o on allocated ~nonthlv
expenses and additional cash flow needs. The advance is an inter-company account
that is eliminated in the consolidation for the preparation of the City's financial
statements. The amount due at June 30. 2005 was 52.950.939.
Note 4. Administrative Services Agreement
The Company provides administrative services for the City tbr the Facilities under
original five-year a~eement, which was subsequently extended tbr an addit' ,. -
." ~ . . ~ . '. _ . . . - an
xear period Compensation tor these 5er,.lces is a base fee of S 150,000 for t~lrsfitx e
>,'ear, paid in equal monthly installments. The base fee increases by 3% per year and
each year thereafter until the ageement has terminated.
In addition to the base fee, the Company receives an incentive relative to the amount of
the reduction, if any, in net operating loss for each fiscal >'ear. The incentive is
calculated based upon the net operating income or loss after the base tee. The
Company receives an incentive of.' 1) 10.°,4 of the first S350,000 in net operating loss
reduced: 2) 20°/0 of the next S500.000 in net operating loss reduced: 3) 30% of any net
operating surplus in anv one fiscal year. All of the incentive calculations are based
upon a projected annual net operatino loss of 5850.000. Beginnin~ July 1. _00o, in
addition to the above amounts, the Company will receive an imzentive amount of
525,000 for every'year the net operating loss is below 5300.000. If the net operating
surplus in any fiscal year reaches S350.000. then the incentive tee will cease.
The Company provides administrative, concession and caterina serx- the City
!ces four
for the Ice C~nter under an or/g-inal a~eement effective December 1, '~00, througl~
June 30. 2008. The annual mana~em'ent fee is S~tS.000. plus 20?/0 net operating
income of the Ice Center over S I00,000. of which the Company receives 50%.'
Iceoplex. the ice rink operations manager, receives the other 50%.
For the year ended June 30. 2005. the Companv received 5,>6 ,',4 in management and
incentive fees.
- 17-
Notes to Financial Statements
The computation of the incentive fee is based upon the books and records of the
Facilities maintained by the Company. The accounting records ]tbr the Facilities must
be maintained in accor~tance with U.k. ,oenerally accepted accountin~ principles and
industry standards. The Company is required under the a,o-reement with the City to
have an annual audit at the end of the fiscal year.
Under the management ageement with the City, the Company has the ri,oht to operate
or contract with others to operate concession and catering sen-ices for th~ Facilities
during the initial five-year term of the contract, effective through June ,20,
" _00.~. The
City is currently; operating under a contract with ARAMARK to operate these services.
effective through June 30, 2008. ,
The Facility (Rabobank Arena) is entitled to receive 35% of the first S600,00.0 in goss
concession receipts from the Rabobank Arena and 40% of receipts in excess of
$600,000 and 15% of~oss concession receipts to' the suites. For the year ended June
30, 2005. the Facility received S655,401 in ~oss concession and catering receipts frorn
the Food and Beverage division of the Rabobank Arena.
The Facility is entitled to receive 75% of the net novelty receipts of the Rabobank
Arena and the Company-receives the remaining 25%. For the year ended June 30,
2005 the Facility received S31,157'and the Company received S 10,386 in net novelty
receipts from the Food and Beveraoe division of the Rabobank Arena.
As of July 21. 2004, an amended ageement was made between the City and
AtLA. MARK to transfer concession and alcohol responsibilities to AR,Z~MARK ]%r the
Rabobank Convention Center, in addition to the Rabobank Arena. The division of the
net novelty receipts remains the same under the new ageements (75% to the Facilities,
25% to the Company) For concession sales, the Facility is entitled to receive 30°,,.0 of
the goss concession receipts in the Convent/on Center and AtL-XMARK receives
70°,/0. The same division of goss concession receipts applies to the alcohol sales in the
Convention Center. The Company does not receive a percentage.of food. beverage or
alcohol sales.
The Company also pays a minimum annual amount of S 180.000 to the Cit.,,- for
equipment rental. At June 30. 2005. the Company paid S 17S.464 for equipment
rentals.
- 18-
Notes to Financial Statements
Note 5. Commitments
The Facilities have entered into various lone-term contracts 'and leases.
At June 30, 2005. outstanding commitments consist of the following:
Ticket sales
The Facilities have entered into a licensed user ameement with Ticketmaster to be the
exclusive provider 1:bt ticket sales for any event l~resented at the Facilities. Under the
a~eefnent. Ticketmaster has the authority to act as an azent/:bt the Facilities for ticket
sales to the general public by any and all means including telephone, internet, and
outlet locations. Ticketmaster e~ms tees from the ticket sales such as inside ticket
.h.arges. customer convenience charges, credit card charges, handlino~ char~es and
~cket sale royalties. Some tees are subject to increases throu~ohout the contract tenn.
Ticketmaster collects these tees as tickets are sold and the ne~-amount is remitted to the
Facilities weekly. The initial term of the a~eement is Ibr five .','ears and the a~eement
is effective through August 31. 2009. The contract automatically renews tbr one two-
year period unless terminated in accordance with the provisions ~f the contract.
Con cert prom oter
The Facilities have entered into a bookino~ service am'eement with Nederlander-
Bakersfield.' Inc. as the exclusive musical-concert p~-omoter tbr the Facilities.
Nederlander has contracted to pay a minimum annual ~uarantee of 5120.000 in
facilities rent and reimbursement'of direct event expen~ses through the concerts it
promotes at the Facilities. Nederlander is entitled to 50°0 of amounts in excess of the
minimum annual guarantee based upon various target levels. The facilities rent and
annual guarantee amounts are subject to escalation each year over the contract period
based upon increases in the Consumer Price Index. but not more than 4% per year. For
the year ended June 30, 2005. Nederlander paid S188.105 in facilities rent less
reimbursement of direct expenses with an estimated amount of $17,027 due for the
excess of the minimum annual guarantee. The contract year is different than the
Facilities fiscal year. Therefore. the excess of the minimum annual guarantee is
allocated over two of the Facilities' fiscal ',.'ears. The am-cement is effective throuv, h
March 10. 2005. The Facilities have exercised their rig. hr to terminate the am:eement
earlier in accordance with the provisions of the a~eement.
Notes to Financial Statements
Hockey lease
The City has entered into a lease ageement, which has been assi~ed to Flvin~ Puck.
Inc. for exclusive use of the Facilities for East Coast Hockey Lea"_o-ue (ECI-I'L) ~ames.'
Fl.ving Puck. Inc. has ageed to pay a minimum of $160,000' per s~ason for use of the
Facilities. As of June 30, 2005, the S160,000 consists of lease tees ofS6.150 per ~ame
played plus 7.5% of ticket sales above certain levels per year. which increase over-the
contract term. The lease fees are subject to increase beginning in the third year of the
contract and every two years thereafter based upon the Consumer Price Index
adjustments.
Flying Puck, Inc. receives S51000 for each suite leased fbr hockey tickets. For the year
ended June 30, 2005, Flying Puck, Inc. received $142.000 for th~ twenty-four suit~s
leased. The a~eement is effective through June 30 '~011 or te~ da, .~
~ = . , - ~ __v_ followin~ the
date the last ECHL playoff game of2011 is played, whichever occurs first unless '
terminated earlier in accordance with the provisions of the ageement. The contract
has one option fbr a renewal term of seven years.
Basketball lease
The Facilities have entered into a lease a~eement with the Cal State University
Bakersfield Foundation (Cal State) f'or e.~clusive use of the Facilities for Cal State
University Bakersfield men's and women's basketball o_ames. As of June 30. 2005. a
lease lee of S4.120 per game plus 7.5% of ticket sales ~bove certain levels is'char_ed
for use of the Facilities. Cal State receives S2.500 lbr each suite leased that includes
basketball tickets. For the year ended June 30. 2005. Cal State received 560.000 fbr
suite ticket options. Cal State exercised its option to renew the lease ageement on
November 1. 2001 for five years through October 31. 2006.
- 20 -
Notes to Financial Statements
Arena Football lease
The Facilities have entered into a lease agreement with Bakersfield Arena Football,
LLC (Bakersfield Blitz) for exclusive use of the Facilities fbr Bakersfield Blitz arena
football games. For the season operating during April 2005 through June 2005, the
Blitz paid 53,500 per game plus 10% of concessions. Bakersfield Blitz receives 10%
of gross concession sales, excluding suit~e and caterino~ sales, when actual drop count is
5.000 or more. For· ' ~
· the vear ended June o0, 2005, Bakersfield Blitz received S11,926
for concession sales. B;kersfield Blitz is also entitled to all revenue generated from
advertising sales within the Arena,~ including: dasherboards, prom-am sales, and
temporau' signage. Bakersfield Blitz is responsible for sellimz, 100% of video
advertising l:br the scoreboard. The Facilities will r?ceive 10~video spots to use on
event da5-. Bakersfield Blitz is also entitled to 15% commission on all permanent
signage deals within Rabobank Arena. For the year ended June 30, 2005, Bakersfield
Blitz received S-0- ]~br sign.age income. The a~eernent is effective through the last
game of the 2005 Arena Football season, and shall be for all rezular season
professional indoor ]~botball home zames each year plus plavof~and tournament zames
and practice time. ' - ~
Ice Sports Center
As a result of the Ice Sports Center opening, the Company along with the City, entered
into various contracts. At June 30. 2005 outstandim-, commitments consist of the
~bllowing: =
Pro ShoR agreement
The City and the Company have entered into a license a~eement with Action Sports
which pants Action Sports sole and exclusive right to operate the retail business at the
Ice Center. Action Sports has the exclusive right to display and sell sporting goods.
apparel and products, including but not limited to hockey goods and apparel.
swimming goods and apparel and sports pertbrmance and nutritional supplements.
-21 -
Notes to Financial Statements
For the use of the premises. Action Sports is to pay according to a fixed rental
schedule which began January 15, 2004. The annual rent is based on S.85 per square
foot for the vears one and tw(J. and S 90 er s uare foot Il -
· · P q or x ear three F v4arsone
and two nnual rent ~s S9,894 (S824.>0;month) and for ,,,'ear three S 10.476
a ' _ , . . or.
(S873/month). The a~eement is effective through June 30, 2006. Action Sports may
exercise two options to renew for terms of three years each at a square foot increase
rate not to exceed 0.5 cents per square foot per year.
Concession and catering services
The City and Company have entered into an a~eement with ESC Enterprises (ESC) to
provide concession and catering services ]tbr t~e Ice Center. According to the
a~eement, the Company shall receive 15% of ~oss concession receipts in year one
and 209a of~oss concession receipts in years two through five. The Company shall
also receive 10% of sales on all vending machines. The ageement is effective through
June 30, 2008, and can be renewed for one additional term of five years, upon terms
satisfactoo, to the Company, the City and ESC. For the year endeci June 30. 2005. the
Company received S26,516 in concession commissions from ESC.
- 22 -
O
Longcfier
· Hoo.
.-~ccounk:m~- Corpor~on
IndePendent Auditors ' Report
on the Supplementarl, Information_
S.XIG
Rabobank Arena, Theater.
Convention Center & The Bakersfield Ice Sports Center
Bakersfield, California
For the 5"ear ended June 30. 2005. the accompanying information shown on page 24 is presented only
fbr purposes of additional analysis and is not a required part of the basic financial statements.
Our audit of the basic financial statements was made for the purpose of ~:brming an opinion on those
statements taken as a whole. The accompanying information has been subjected to the procedures
applied in the audit of the basic financial statements.
In our opinion, the accompanying information is fairly stated in all material respects in relation to the
basic financial staternents taken as a whole.
Bakersfield, California
October 31, 2005
- 23 -
5001 E. Commercenter Drive. Suite 350
P.O. Box 11171 100 Cross Street
Suite 103 1010 S. Broadway
Bakersfield. C.A 93389 San Luis Obispo. CA 93a. 01 Suite I
Phone: 661.631.I 171 Phone: 805.541.2500
Santa Maria. CA 93qSq
Fa.x: 661.631.024.4 Fax: 8,.~.05.5~1..i02.i Phone: 805.349.?05
Fax: 805.3.:/9.7702
Rabobank Arena, Theater,
Convention Center & The Bakersfield Ice Sports Center
Schedule of Operating Expenses
For the Year Ended June 30, 2005
Full time staff
Utilities S 1.>_6.64o
Insurance 831.256
Management fees 516.596
Part time staff 256.354
Equipment rental 212.937
Supplies 178.464
Hockey premium 144, 78
Marketing 142,000
Credit card fees 60,127
Professional fees 57.524
Security 5>. 074
Telephone 55 006
Travel 37.151
Repairs and maintenance 28.516
Depreciation -_.84o
Office supplies 14.238
Dues and subscriptions 9.141
Postage 6.363
Uniforms 6.286
Printing 1.742
Miscellaneous .325
Employment ad fees .303
, 85
$ 4.1~95.252
Internal Control Over Financial Reporting
In planning and performing our audit, we considered SMG'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 w0uldnot 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 de'sign or operation of one or more of the internal control
components does not reduce to a relatively low level the risk that misstatements in amounts that
would be material in relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the nornaal course ofpertbnnin_o tl~eir assitmed functions. We
noted no matters involving the internal control over financial reportin~ and its operation that we
consider to be material weaknesses.
This report is' intended solely for the inl:brmation and use of management, others within the
organization and the Citx-of Bakersfield and is not intended to be 7xnd should not be used by anyone
other than these specified parties.
Bakersfield, California
October 3 I, 2005
- 25 -
DRAFT CHANGES - BUDGET AND FINANCE COMMITTEE
2006 MEETING SCHEDULE
~ Budget and Finance Committee meetings ~ 10:00 a,m,
CITY COUNOL ~ BEGINS @ §:i§ Pg~ ~ CITY
COUNCIL
BUDGET
PRESENTATIONS
CONTINUED AT 6:30 PM Monday's @ Noon, Wednesday's ~ 5:lgpm
Hean~t~g on 6/7, Adccp~kt, n on 6/21
Holidays - City Hall Closed Joint City/County Meeting
JAN UARY FEBRUARY MARC H
APRIL MAY JUNE
JULY AUGUST SEPTEMBER
OCTOBER NOVEMBER DECEMBER
for February and March to be Amended and Adopted on February 8, 2006
The following documents pertain to the:
BUDGET & FINANCE COMMITTEE
meeting of Wednesday, February 8, 2006
at 10:00 AM.
CITY OF BAKERSFIELD
PUBLIC WORKS DEPARTMENT
MEMORANDUM
TO: Alan Tandy, City Manager
FROM: Raul Rojas, Public Works Director
DATE: February 6, 2006 ~
SUBJECT: Refuse Hauler Contract Extension
Kern Refuse Disposal, Inc. has requested an 11 year extension of the current refuse
hauling agreement until 2025, in order to obtain equipment financing and to match the
time of their hauling franchises in unincorporated Kern County. The hauling agreement
is currently set to end in 2014. The 2014 date was the result of an extension requested
by the haulers in 1996.
The following considerations are suggested for staff to enter into negotiations with the
contractor for a value exchange in retum for extending the contract:
Length of Term
The justification offered by the contractor indicates that current financing 'for their
subsidiary material processing company (MRC) runs through 2020, and that a hauling
revenue stream is desired through that date to help assure the bond holder. Although
the City has no obligation and the contractor obtained the current bond at their own dsk
without consulting the City regarding terms, the City may now choose to assist the
contractor by extending the agreement to 2020 in retum for certain consideration.
In addition to the 2020 extension above, the request seeks to match the expiration of the
City agreement with the County franchise in 2025, five years beyond the date needed for
the financial assurance for the subsidiary company. Therefore, the City may choose to
extend the agreement an additional five years to 2025 for the convenience of the
contractor, in return for additional consideration.
Rate Related Items
1. Stipulate that no rate increases other than the currently used CPI will be sought
during the term of the agreement.
2. Assurance that haulers Will maintain or replace carts as needed throughout the
term of the agreement, to satisfy public demand as judged by the City, as carts in
use age in their life cycle, without additional compensation.
MEMORANDUM Page 2
ALAN TANDY, CITY MANAGER
February 6, 2006
3. Stipulate that rates for new programs or service in response to future
requirements will be based on City cost studies or pilot programs.
4. Reduce and stabilize hauling rates in the event City provides for the use of a
refuse transfer station.
5. Provide residential "blue cart' curbside recycling service in lieu of ~extra tan'
refuse carts currently in use, if City chooses to convert these services. (May
include all paid and ~trade-in' extra tan refuse carts so that blue carts would be
provided in lieu of either or both types.)
6. Establish uniform rates and terms for miscellaneous charges historically made by
different hauling companies to the customers for various special cases, including:
a. Special and/or extra pick up charges
b. Return trip charges
c. Temporary bin delivery, pick up, and rental
d. Locking bin service fee
e. Handling overloaded containers
Contract Related Items
1. Include new clause for compliance with state air emission rules as required by
law, without cost to the City.
2. Open the C&D facility to the public as originally agreed or:
a. Terminate the C&D facility lease or reduce the acreage in the lease so
that the City can use the space to handle public C&D recycling.
b. Terminate the C&D operating agreement under which the City assists
MRC with costs.
3. Haul a proportionate share of reject material from the curbside greenwaste
sorting operation, according to the amounts of greenwaste brought to the facility.
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