The URL can be used to link to this page

Home My WebLink AboutIAR Measure A Transportation Fund FYE 06/30/2019�E STAFF REPORT CITY OF PALM DESERT FINANCE DEPARTMENT MEETING DATE: February 13, 2020 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, 2019 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, 2019. Strateqic Plan Obiective Not applicable. Committee Recommendation The Audit, Investment and Finance Committee received the Independent Accountants' Report at their February 11, 2020 meeting, and recommended that the report be received and filed by the City Council. Background 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, 2019. 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, 2019. G \Finance\Jessika Peltz\Staff Reports\Audit Staff Reports 2019\SR - Council audit 2019 Measure A.docx Staff Report Approval of Report on Procedures for Measure A Fund for Fiscal Year ended June 30, 2019 February 13, 2020 Page 2 of 2 Fiscal Impact There is no fiscal impact associated with this action. LEGAL REVIEW DEPT. REVIEW FINANCIAL REVIEW N/A Robert W. Hargreaves et M. Moore ?netM. Moore City Attorney Director of Finance Director of Finance ASSISTANT CITY MANAGER N/A Andy Firestine Assistant City Manager City Manager Lauri Aylaian: s ATTACHMENTS: Independent Accountants' Report on Agreed -Upon Procedures JLE:jp CITY COUNCIL ACTION . APPROVED DENIED RECEIVED `- F) IPd . OTREF MEETING DATE Oa ` 1 �? � a n� O AYE,S."arniKj p Kellq_,u?2hpr�.� N�. t e NOES: Nt)n2 ABSENT: N"P1 ABSTAIN' None VERIFIED BY:.WC 1 Sr Original on File with City Clerk's Offic® r G:\Finance\Jessika Peltz\Staff Reports\Audit Staff Reports 2019\SR - Council audit 2019 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, 2019 Conrad � Independent Accountant's Report On Applying Agreed -Upon Procedures The Board of Commissioners Riverside County Transportation Commission Riverside, California 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 Desert, California ("City") was in compliance with the Measure A — Local Streets and Roads Program grant terms and conditions for the year ended June 30, 2019. The City's management is responsible for the accounting records. This agreed -upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in the report. Consequently, we make no representation regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested, or for any other purpose. Our procedures and related findings are as follows: Obtain the 2009 Measure A (Ordinance 02-001) compliance requirements. Western County jurisdictions are required to participate in the Transportation Uniform Mitigation Fee ("TUMF") program and in the Multi -Species Habitat Conservation Plan ("MSHCP") which are administered by the Western Riverside Council of Governments ("WRCOG") and the Western Riverside County Regional Conservation Authority ("RCA"), respectively. Coachella Valley jurisdictions are required to participate in the TUMF program administered by the Coachella Valley Association of Governments ("CVAG"). Indicate participation in TUMF and/or MSHCP programs. Finding: No exceptions were noted as a result of applying this procedure. The City participates in the TUMF program administered by CVAG. Obtain the City's approved 5-Year Capital Improvement Plan ("CIP") from RCTC for the fiscal year ended June 30, 2019. Finding: No exceptions were noted as a result of applying this procedure 3. Obtain a detailed general ledger and balance sheet from the City for the fiscal year ended June 30, 2019. a. Identify the amount of Measure A cash and investments recorded at June 30, 2019. Compare amount to Measure A fund balance and provide an explanation for any difference greater than 25% fund balance. Finding: Measure A cash and investments were $40,119,143 (which includes cash with fiscal agent in the amount of $15,429,953) at June 30, 2019. The difference Board of Commissioners Riverside County Transportation Commission Riverside, California between Measure A cash and investments of $40,119,143 and fund balance of $25,124,688 is $14,994,455 or 60% of the fund balance. The variance is due to accounts payable of $89,012, retention payable of $18,614, deferred revenue of $15,429,953, and due from other governments of $543,124. Cash with fiscal agent in the amount of $15,429,953 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. Finding: There were no amounts due from other funds at June 30, 2019. c. Identify the components of ending fund balance for Measure A activity. Finding: Ending fund balance for Measure A activity was restricted in the amount of $25,124,688 at June 30, 2019. d, Identify the existence of any restatement of Measure A fund balance and inquire of management as to the reason for any restatement. Finding: We noted no restatement of Measure A fund balance at June 30, 2018. 4. Obtain an operating statement for Measure A activity for the fiscal year ended June 30, 2019 (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, 2019. Finding: The City accounts for Measure A revenues in its Measure A Fund (Fund #213). The City recorded total revenues in the amount of $3,979,663 for the fiscal year ended June 30, 2019. 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. Finding: We identified no variances. The Measure A revenue recorded by the City and RCTC Measure A payment schedule was $2,928,433 for the fiscal year ended June 30, 2019. iii. Determine the amount of interest allocated to Measure A activity for the fiscal year ended June 30, 2019. 2 Board of Commissioners Riverside County Transportation Commission Riverside, California Finding: The City allocated interest in the amount of $650,593 to the Measure A activity for the fiscal year ended June 30, 2019. 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, 2019. Finding: The City accounts for Measure A expenditures in its Measure A Fund (Fund #213). The City recorded total expenditures in the amount of $824,994 for the fiscal year ended June 30, 2019. Select expenditures for testing that comprise at least 20% of total Measure A expenditures. Finding: The City recorded Measure A expenditures in the amount of $824,994. We selected $400,637 or 49% for testing. 1. For the expenditures selected for testing, compare the dollar amount recorded in the general ledger to the supporting documentation. Finding: 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. Finding: 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. Finding: 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. Finding: Per discussion with management, there were no indirect costs recorded for the fiscal year ended June 30, 2019. v. Inquire of management as to the amount of debt service expenditures recorded in the Measure A fund. 3 Board of Commissioners Riverside County Transportation Commission Riverside, California 5 N. 1. For cities with advance funding agreements with RCTC, compare debt service expenditures to Measure A payments withheld by RCTC. Finding: 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. Finding: There were no debt service expenditures recorded in the Measure A Fund that were noted as a result of applying this procedure. Compare budgeted expenditures to actual amounts and inquire of management as to the nature of significant budget variances. Finding: The following schedule compares budgeted expenditures to actual amounts. Budget Actual Variance Construction and maintenance $ 28.112,421 $ 824,994 $ 27,287,427 Total expenditures $ 28.112.421 $ 824.994 $ 27.287.427 Per discussion with City management, the construction and maintenance variance is due to projects not commencing as anticipated or in the beginning stages at June 30, 2019, and was mainly attributed to the TS-111 Parkview/Painter Path, Accessible Pedestrian, Cabinet Upgrade, PW-Street Resurfacing, Curb & Gutter-ADA Retrofit, PW-Striping, San Pablo/Hwy 111 Improvements, Gerald Ford Improvements, Bridge, 1-10 Interchange, Cook Street Improvements, Bikeway Construction, Traffic Signal Coordination, Washington Street Improvement, and Triple Turn Washington projects. 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. Finding: We selected one disbursement of $250,414 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, 2019. Finding: The total amount of TUMF fees collected and remitted during fiscal year ended June 30, 2019 were $442,138 and $476,615, respectively. The difference of $34,477 is illustrated below. 4 Board of Commissioners Riverside County Transportation Commission Riverside, California Total TUMF recorded for FY 2019 June 2018 TUMF remitted in July 2018 June 2019 TUMF remitted in July 2019 TUMF refund TUMF reconciled Collected Remitted $ 442,138 $ 476,615 - (37,260) - 2,310 473 $-442.1M $. _ 442,138 The $34,477 variance between TUMF fees collected and remitted was due to the City remitting June 2018 TUMF payment of $37,260 to CVAG in July 2018, the City remitting June 2019 TUMF payment of $2,310 to CVAG in July 2019, and the City issuing a refund to a developer in January 2019 in the amount of $473, due to an over collection of TUMF. 7. 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. Finding: 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. Finding: The City is not a participant in the Western County MSHCP program. c. Indicate the total amount of Western County MSHCP fees collected and remitted during the fiscal year. Finding: The City is not a participant in the Western County MSHCP program. 8. 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. Finding: 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. Finding: 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. y Board of Commissioners Riverside County Transportation Commission Riverside, California Finding: 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. Finding: We noted that current year MOE expenditures of $3,592,028 were greater than the MOE base requirement of $2,398,146 resulting in an excess of $1,193,882 for fiscal year ended June 30, 2019. 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. Finding: No exceptions were noted as result of applying this procedure. The City's discretionary funds spent in the fiscal year ended June 30, 2019 exceeded the MOE base year requirement. The City's MOE carryover at June 30, 2019 is calculated as follows: MOE excess at July 1, 2018 $ 9,479,114 Current year MOE expenditures 3,592,028 Less: MOE base requirement (2,398,146) Excess MOE for fiscal year ended June 30, 2019 1,193,882 MOE excess at June 30, 2019 $ 10.672.996 We were not engaged to, and did not, conduct an examination, the objective of which would be the expression of an opinion on the accounting records. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the Board of Commissioners and management of RCTC and the City Council and management of the City of Palm Desert and is not intended to be, and should not be, used by anyone other than these specified parties. Lake Forest, California November 8, 2019 0 EXHIBIT A CITY OF PALM DESERT, CALIFORNIA Measure A Operating Statement Fiscal Year Ended June 30, 2019 (Unaudited) Revenues: Measure A Reimbursements from CVAG Interest Total Revenues Expenditures: Construction and Maintenance Total Expenditures Excess of Revenues over Expenditures Variance From Final Budget Favorable Budget Actual (Unfavorable) $ 2,798,000 $ 2,928,433 $ 130,433 - 400,637 400,637 100,000 650,593 550,593 2,898,000 3,979,663 1,081,663 28,112,421 824,994 27,287,427 28,112,421 824,994 27,287,427 $ (25,214,421) $ 3,154,669 $ 28,369,090 7 EXHIBIT B CITY OF PALM DESERT, CALIFORNIA Measure A MOE Calculation For the Fiscal Year Ended June 30. 2019 (Uraudrted) FY 2018/19 Construction and Maintenance Expenditures Report as of June 30, 2019 (Round to nearest dollar) Funding Breakdown i City Funds Sppclal Project Expenditures Included In General Ledger Total Cost General Fund Measure A Federal State ! Revenue Other Construction. IQlessardro Improvements 5 38 88' 5 5 S S S S 3e 881 Sar Pah�o Sheet rnpro.en•ent _ __— _.. _. 7,^2 572 34 22_ 7 '9 CA2 P69 283 5 •raH�c �8^al E. Pasao C' San ,pis Rev _ 17 a15 — --_ _ _ it aff.c S.gnal ill Cm park—, Painter Pa:h 4 179 4 179 ij 1ef'e,— hterchange 10. 709 10 739 P-tola hie•change tww I t0 —_ 4C0 400 637 Deep Canyor D•a,nage lmp—eme,ts __ _637 _.5643 __—._—_ _ D-raga mprovrrrem, 53 020 53.020 Maintenance: -- -- Sheet Maroterance 2745,601 2.745601--��---- 51•ee1 Rr—'ad,,R _ 475 717 _ 32 363 8C 443 274 (t.rb F. C•urmr 555 555-- _ I iT•a4•c S.gr,al Me .ntenance 306 566 306.566 Street L gh; rf; &'rafbc SQvk & v -h.c o speed 5 Fri & C—,- -_ Inn 775 378 283 389.978 3C 514 Corp Yard Street _--_. 05 770 105 770 i -. Drainage 177 53' 46122 i 131 309 Slrec; Striping 2 770 2 44 329 Engineering/Adminlstrative Overhead Not Allocated to Specific _ Proiects: 2,OS00r3 2C90073 Expenditure Totals f 7.902,914 f 5.682.101 $ 824,994 i f • i S 443,274 I $ 76 578 S 875 967 Deductions for Special Consideration (Deductions Must Also Be Included In Project Expenditures Above): Total Project Cost General Fund Slate Reason Why Project Experdnure Should Be Dfaluuod from NICE Construction. $ S Maintenance: Enpineerinp/Administrehve Overhead Not Allocated to Specific I 2090.073 2,090073 --- -- -- _ Deduct Totals $ 2.090 073 S 2.090 073 Total GF Expenditures S 5,682 101 Less: Deductions 2.090 073 MOE Total 3.592 028 Base Year Amount 2.398 146 Excess as of June 30. 2019 $ 1.193 882 8