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Home My WebLink About07 Measure A Transportation Fund Accountants Rprt STAFF REPORT CITY OF PALM DESERT FINANCE DEPARTMENT MEETING DATE: January 28, 2021 PREPARED BY: Jose Luis Espinoza, CPA, Assistant Finance Director REQUEST: Receive and file the Independent Accountants' Report on Agreed-Upon Procedures Performed on the Measure A Transportation Fund for the fiscal year ended June 30, 2020 Recommendation By Minute Motion, that the City Council receive and file the Independent Accountants' Report on Agreed-Upon Procedures Performed on the Measure A Transportation Fund for the fiscal year ended June 30, 2020. Strateqic Plan Obiective Not applicable. Committee Recommendation The Finance Committee received the Independent Accountants' Report at their January 26, 2021 meeting, and recommended that the report be received and filed by the City Council. Backqround The Measure A fund is a special revenue fund that was created to keep track of funds received by the Riverside County Transportation Commission. In 1988, Riverside County voters approved a half cent sales tax, known as Measure A, to fund a variety of highway improvements, local streets and roads maintenance, commuter assistance and specialized transit projects. Conrad LLP performed the procedures which were agreed to by the Riverside County Transportation Commission, Riverside, California (RCTC) solely to assist RCTC with respect to an evaluation of the City of Palm Desert's Measure A Transportation Fund and degree of the City's compliance with RCTC requirements for the year ended June 30, 2020. Staff requests that the Council receive and file the Independent Accountants' Report on Agreed- Upon Procedures Performed on the Measure A Transportation Fund for the fiscal year ended June 30, 2020. W:\Staff Reports-Shared 2\Staff Reports 01-28-2021\4-City Clerk-01-28-2021\07 MEASURE A FINANCIALS STAFF REPORT 2021\01 SR-Council audit 2020 Measure A.docx Staff Report Approval of Report on Procedures for Measure A Fund for Fiscal Year ended June 30, 2020 January 28, 2021 Page 2 of 2 Fiscal Impact There is no fiscal impact associated with this action. LEGAL REVIEW DEPT. REVIEW FINANCIAL ASSISTANT REVIEW CITY MANAGER N/A N/A �awrfi�'l, �'loou �a.u�'?�'l. �'loo-w Robert W. Hargreaves Janet M. Moore Janet M. Moore Andy Firestine City Attorney Director of Finance Director of Finance Assistant City Manager Interim City Manager Randy Bynder: R 8 vu�e,r ATTACHMENTS: Independent Accountants' Report on Agreed-Upon Procedures CTTY COUNCTL ACTION APPROVED DENiED RECEIVED �� OTHER Nr�,r�rnv�DA � Zg - 20 2� avFs: ix. ona+han,Ne ndPT4 ,; n;It �clly NOES: N on� ABSENT: �on� ABSTAIN: N OYI� VERIFIED BY: 6��2 I sr S Original on File with City Clerk's Office W:\Staff Reports-Shared 2\Staff Reports 01-28-202114City Clerk-01-28-2021\07 MEASURE A FINANCIALS STAFF REPORT 2021\01 SR-Council audit 2020 Measure A.docx CITY OF PALM DESERT CALIFORNIA Report on Agreed-Upon Procedures Applied to Measure A — Local Streets and Roads Fiscal Year Ended June 30, 2020 onrad l Indeper�dent Accoun#ant's Repo�t On Applying Agreec�-Upan Procedures The Baard af Commissioners Riverside County Transportation Cammission Riverside, Califarnia We have performed the procedures enumerated below, which were agreed to by Riverside County Transportation Commission ("RCTC"), solely to assist RCTC in determining whether the City of Palm Desart, California ("City")was in campliance with the Measure A— Local Streets and Roads Program grank terms and conditions for the year ended June 30, 2020. The City's management is respansible for the accaunting recards. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Insti#ute af Certified Public Accountants. The sufficiency flf these procedures is salely the res�onsibility of those pa�ties sp�cified in the report. Consequently, we make no representatian regarding the sufficiency of the procedures described below, either for the purpose far whic� #his report has been requested, or for any ather purpose. Our pracedures and reiated findings are as follows: 1, Obtain the 2�(}9 Measure A (Ordinance 02-d01} compliance requirements. Western County jurisdictions are required to participate in thE Transportation Uniform Mitigation Fee ("TUMF") program and in the Multi-Species Habitat Conser�atian Plan ("MSHCP") which are administered by the Western Ri�erside Council of Governments ("WRCOG") and the Western Riverside County Regianai Conser�ation Authority("RCA"}, respectively. Coachella Valley jurisdictions are required ta participate in the TUMF pragram administered by the Coachella Valley Association af Go�ernments ("CVAG'}. Indicate partici�ation in TUMF andlor MSHCP programs. Findinq: No exceptians were noted as a result flf applying this procedure. The City partici�ates in the TUMF program administered by CVAG. 2. Obtain the City's appra�ed 5-Year Capital Improvement Plan ("CIP°) from RCTC for the fiscal year ended June 30, 2D2Q. Findin : No exceptior�s were noted as a resuit of applying this procedure. 3. Obtain a detailed general ledger and balance sheet from the City for the fiscal year ended June 34, 2020. a. Identify the amflunt af Measure A cash and investments recordEd at June 34, 2020. Compare amount to Measure A fund balance and pravide an explanation for any differer�ce greater than 25% fund balance. Findinq: Measure A cash and in�estments were $35,410,988 (which includes cash with fiscal agent in the amount of $15,136,406} at June 30, 2020. The difference � , � � � � , 1 . , Board of Commissioners Riverside County Transportation Commission Riverside, California between Measure A cash and investments of $35,410,988 and fund balance of $20,463,902 is $14,947,086 or 73% of the fund balance. The variance is due to accounts payable of$363,510, unearned revenue of$15,136,406, and due from other governments of$552,830. Cash with fiscal agent in the amount of $15,136,406 is for the CVAG-Portola Interchange project, which is held in CVAG's California Asset Management Program ("CAMP") account. These funds are RDA bond funds for an approved project with no repayment expected from Measure A. b. Identify amounts due from other funds. Findinq: There were no amounts due from other funds at June 30, 2020. c. Identify the components of ending fund balance for Measure A activity. Findinq: Ending fund balance for Measure A activity was restricted in the amount of $20,463,902 at June 30, 2020. i. Identify the existence of any restatement of Measure A fund balance and inquire of management as to the reason for any restatement. Findin : We noted no restatement of Measure A fund balance at June 30, 2020. ii. Compare ending fund balance to total revenues for the current year and prior two years. If ending fund balance is greater than sum of total revenues for the three- year period, inquire of management as to the reason(s) for the accumulation of fund balance. Findinq: We noted that the City's ending fund balance was greater than the cumulative total revenues for the 3-year period as illustrated below. Revenue for year ended June 30, 2020 $ 3,882,375 Revenue for year ended June 30, 2019 3,979,663 Revenue for year ended June 30, 2018 3,295,835 Total Revenue for the 3-year period $ 11.157.873 Fund balance for year ended June 30, 2020 $ 20 463 902 City management stated that the accumulation of funds was due to a delay in budgeted projects and that the new 5-year plan has the City using up all but $13,673 of Measure A funds in year 5 of the new CIP approved by RCTC. 2 Board of Commissioners Riverside County Transportation Commission Riverside, California The City's plan to use the fund balance of $20,463,902 in the next five years is illustrated below. Estimated Estimated Ending Measure A Measure A Fund Allocation Expenditure Balance Fund balance at 6/30/2020 $ - $ - $ 20,463,902 5-yearClPfor2020/21 2,391,000 16,561,229 6,293,673 5-year CIP for 2021/22 2,415,000 4,000,000 4,708,673 5-year CIP for 2022/23 2,439,000 3,875,000 3,272,673 5-year CIP for 2023/24 2,463,000 3,810,000 1,925,673 5-year CIP for 2024/25 $ 2,488,000 $ 4,400,000 $ 13,673 4. Obtain an operating statement for Measure A activity for the fiscal year ended June 30, 2020 (see Exhibit A), including budget amounts. a. Review the revenues in the operating statement. i. Inquire of management as to what fund was used to record Measure A revenues received from RCTC and document total revenues for the fiscal year ended June 30, 2020. Findin : The City accounts for Measure A revenues in its Measure A Fund (Fund #213). The City recorded total revenues in the amount of$3,882,375 for the fiscal year ended June 30, 2020. ii. Obtain a listing of Measure A payments made from RCTC to the City. Compare the Measure A revenues recorded by the City to the listing of payments made by RCTC. Findin : We identified no variances. The Measure A revenue recorded by the City and RCTC Measure A payment schedule was$2,869,576 for the fiscal year ended June 30, 2020. iii. Determine the amount of interest allocated to Measure A activity for the fiscal year ended June 30, 2020. Findin : The City allocated interest in the amount of $470,536 to the Measure A activity for the fiscal year ended June 30, 2020. b. Review the expenditures in the operating statement. i. Inquire of management as to what fund is used to record Measure A expenditures and document total expenditures for the fiscal year ended June 30, 2020. Findin : The City accounts for Measure A expenditures in its Measure A Fund (Fund #213). The City recorded total expenditures in the amount of$8,543,161 for the fiscal year ended June 30, 2020. 3 Board of Commissioners Riverside County Transportation Commission Riverside, California ii. Select expenditures for testing that comprise at least 20% of total Measure A expenditures. Findinq: The City recorded Measure A expenditures in the amount of$8,543,161. We selected $1,740,838 or 20.4% for testing. 1. For the expenditures selected for testing, compare the dollar amount recorded in the general ledger to the supporting documentation. Findinq: No exceptions were noted as a result of applying this procedure. 2. For the expenditures selected for testing, review the 5-Year CIP and note whether the projects claimed were included in the 5-Year CIP and whether they constitute allowable costs. Findin : Expenditures selected for testing were included in the 5-Year CIP and were allowable costs. No exceptions were noted as a result of applying this procedure. iii. Inquire of management as to the nature of any transfers (in and out) recorded in the Measure A Fund. For any transfers out, determine if nature of transfer out was included in the 5-Year CIP. Findin : There were no transfers recorded in the Measure A Fund that were noted as a result of applying this procedure. iv. Inquire of management as to the amount of general or non-project-related costs, if any, included in expenditures. If indirect costs exceed 8% of Measure A revenue, inquire of management as to the basis for indirect costs charged to Measure A. If indirect costs are identified, determine if such costs are included in the 5-Year CIP. Findinq: Per discussion with management, there were no indirect costs recorded for the fiscal year ended June 30, 2020. v. Inquire of management as to the amount of debt service expenditures recorded in the Measure A fund. 1. For cities with advance funding agreements with RCTC, compare debt service expenditures to Measure A payments withheld by RCTC. Findinq: There was no advance funding agreement with RCTC noted. 2. For cities with other indebtedness, determine if such costs are included in the 5-Year CIP. Findin : There were no debt service expenditures recorded in the Measure A Fund that were noted as a result of applying this procedure. 4 Board of Commissioners Riverside County Transportation Commission Riverside, California 3. Compare the debt service expenditures to prior year amount. If debt service expenditures have increased or decreased at least 25%, inquire of management as to the reason for the change in debt service expenditures. Findinq: The City did not record debt service expenditures. 5. Obtain from RCTC a listing of jurisdictions that participate in the Western County or Coachella Valley TUMF programs. a. If the jurisdiction is a participant in the TUMF program, select at least one disbursement for validation as to the amount remitted to WRCOG or CVAG, as applicable. Findinq: We selected one disbursement of $241,850 for validation. The payment selected for testing indicated that the TUMF is collected and remitted to CVAG as required. b. Indicate the total amount of TUMF fees collected and remitted during the fiscal year ended June 30, 2020. Findin : The total amount of TUMF collected and remitted during fiscal year ended June 30, 2020 were $815,533 and $776,608, respectively. The difference of $38,925 is illustrated below. Collected Remitted Total TUMF recorded for FY 2020 $ 815,533 $ 776,608 June 2019 TUMF remitted in July 2019 - (2,310) June 2020 TUMF remitted in July 2020 - 41,235 TUMF reconciled $ 815 533 $ 815,533 The $38,925 variance between TUMF collected and remitted was due to the City remitting June 2019 TUMF payment of $2,310 to CVAG in July 2019 and the City remitting June 2020 TUMF payment of$41,235 to CVAG in July 2020. 6. Obtain from RCTC a listing of jurisdictions that participate in the Western County MSHCP program. a. If the jurisdiction is a participant in the Western County MSHCP program, select at least one disbursement for validation as to the amount remitted to RCA. Findin : The City is not a participant in the Western County MSHCP program. b. Inquire of management as to the existence of any fees collected in prior years that were not remitted to RCA by the end of this fiscal year. Findinq: The City is not a participant in the Western County MSHCP program. 5 Board of Commissioners Riverside County Transportation Commission Riverside, California c. Indicate the total amount of Western County MSHCP fees collected and remitted during the fiscal year. Findinq: The City is not a participant in the Western County MSHCP program. 7. Obtain from RCTC the Maintenance of Effort ("MOE") base year requirement, including its supporting detail calculations for the City, and the carryover amount allowed as of the beginning of the fiscal year. a. Obtain from the City a calculation of its current year MOE amount in a format similar to its base year calculation. See Exhibit B. Findinq: No exceptions were noted as a result of applying this procedure. b. Compare the current year MOE amounts from the General Fund to the general ledger. Findinq: No exceptions were noted as a result of applying this procedure. c. Scan the General Fund general ledger to determine if there were any transfers in to fund any MOE amounts. Findin : No transfers in were noted as a result of applying this procedure. d. Compare the amount of current year MOE expenditures to the MOE base requirement and add any excess to, or subtract any deficiency from, the carryover amount. Findinq: We noted that current year MOE expenditures of $3,632,656 were greater than the MOE base requirement of $2,398,146 resulting in an excess of $1,234,510 for fiscal year ended June 30, 2020. e. If the amount of discretionary funds spent is less than the MOE base requirement ("MOE deficiency"), determine the amount of any prior year MOE carryover using the information obtained from RCTC and reduce the MOE deficiency by any available MOE carryover to determine an adjusted current year expenditure amount. Findinq: No exceptions were noted as a result of applying this procedure. The City's discretionary funds spent in the fiscal year ended June 30, 2020 exceeded the MOE base year requirement. The City's MOE carryover at June 30, 2020 is calculated as follows: MOE excess at July 1, 2019 $ 10,672,996 Current year MOE expenditures 3,632,656 Less: MOE base requirement (2,398,146) Excess MOE for fiscal year ended June 30, 2020 1,234,510 MOE excess at June 30, 2020 $ 11.907.506 6 Board of Cornmissioners Riverside County Trans�ortation Commission Riverside, Califarnie We were not engaged to, and did not, conduct an examination, the objective of which would be the expression af an opinion on the accounting recards. Accordingly, we da not express such an opinion. Had we pe�formed additianal procedures, ather rr�atters might have came to our attention that wauld have been reported to you. This repart is intended salely for the information and use of the Board of Commissioners and managemer�t of RCTC and the City Cauncil and management ofi the City af Palm Deser# and is not inkended to be, and should not be, used by anyone att�er than these specified parties. �Y� i� Lake Farest, Califarnia November 16, 2020 7 EXHIBIT A CITY OF PALM DESERT, CALIFORNIA Measure A Operating Statement Fiscal Year Ended June 30, 2020 (Unaudited) Variance From Final Budget Favorable Budget Actual (Unfavorable) Revenues: Measure A $ 2,842,000 $ 2,869,576 $ 27,576 Intergovernmental - 542,263 542,263 Interest income 200,000 470,536 270,536 Total revenues 3,042,000 3,882,375 840,375 Expenditures: Construction and maintenance 31,862,398 8,543,161 23,319,237 Totalexpenditures 31,862,398 8,543,161 23,319,237 Deficiency of revenues under expenditures $ (28,820,398) $ (4,660,786) $ 24,159,612 8 EXHIBIT B CITY OF PALM DESERT, CALIFORNIA Measure A MOE Calculation For the Fiscal Year Ended June 30, 2020 (Unaudited) FY 2019/20 Construction and Maintenance Expenditures Report as of June 30, 2020 (Round to nearest dollar) Funding Breakdown Special Project Expenditures Included in General Ledger Total Cost Generel Fund Meas A Federal State Revenue Other Construction: Accessible Pedestrian P562-19 $ 151,121 $ - $ 151,121 $ - $ - $ - $ - Alessandro Improvements P817-16 63,217 11,517 51,700 San Pablo Street Improvement P691-16 9,602,231 26,339 2,399,195 2,490,137 4,686,560 Portola Interchange @ 1-10 P637-02 483,923 661 483,262 Jefferson Interchange 2,752 - 2,752 Traffic Signal Coordination P571-19 282,500 282,500 Washington Street Improvement(P551-17, P555-18) 215,642 5,507 210,135 CV Link Project P707-20 22,107 - 22,107 EI Paseo Roadway Improvements P810-20 946,188 14,617 931,571 Line 4 Drainage Improvements P522-16 2,528,234 63,154 2,465,080 Maintenance: TraHic Signal Maintenance 291,766 291,766 Corporation Yard Facility 103,553 103,553 StreetMaintenance 2,187,146 2,187,146 Street Resurtacing(P751-19, P751-19A, P752-17, P752-19) 4,483,126 17,656 3,609,088 837,040 19,342 Curb and Ramp Modifications P753-19 558 558 Drainage Maintenance P502-19 84,502 55,453 29,049 PW-St Lighting/Safety P550-18 217,393 18,490 51,869 11Q250 27,784 Cabinet Upgrade P571-20 143,710 - 143,710 Street Striping P564-19 279,238 1,280 277,958 Median Landscape Maintenance 834,959 834,959 Engineering/Administretive Overhead Not Allocated to Specific Projects: 2,328,458 2,328,458 Expenditure Totals $ 25,252,324 $ 5,961,114 $ 8,543,161 $ - $ - $ 3,468,534 $ 7,279,515 Deductions for Special Consideration(Deductions Must Also Be Included in Pro'ect Ex enditures Above : Total Project Cost Generel Fund State Reason Why Project Expenditure Should Be Deducted from MOE Construction: $ - $ Maintenance: Engineering/Administrative Overhead Not Allocated to Specific Projects: 2,328,458 2,328,458 Deduct Totals $ 2,328,458 $ 2,328,458 Total GF Expenditures $ 5,961,114 minus Deductions 2,328,458 MOE Total 3,632,656 Base Year Amount 2,398,146 Excess-June 30,2020 $ 1,234,510 9