Recommendation to receive and file a report from the City Auditor on the findings and recommendations of the recently completed audit on the City's Business Improvement District oversight.
Excellent. Thank you. Very nice and thank you, of course, everyone that staying late for these items. We appreciate that. We're moving on to item ten, please. Communication from Councilman Austin, Councilwoman Price Councilmember Super Non recommendation to receive and file a report from the City Auditor on the findings and recommendations of the recently completed audit on the city's business improvement district oversight. Came into preference over. Councilman Alston. Thank you, Mr. Mayor. And I'd like for first of all, a staff report on this. I know our economic development department was involved in this as well, but Mr. City Manager is there staff. Report I'm assuming we're going to have that reported in our section. We weren't expecting the staff report. I'm sure we can ask John some questions, but I think we're just expecting a report from the auditor. Okay. Well, that's great, too. And I'll turn it over to to Laura Doubt, our auditor, we brought this item forward requesting a audit of our bids several months ago and our city ordered it, took it our our department took it upon themselves to to move forward with the the audit. I think the findings were very interesting. We got it in a24 from that which is commonly mentioned. I don't know if everybody understands at home with a24 from is but it is a memo or a report back and we got a great report from the city auditor and I thought it merited attention before the floor because it was an excellent job. I think it did. The the findings will will certainly help us improve the efficiency and accountability to all stakeholders in our bids and inspire public confidence. I think the report I'll just say was, was, was excellent and overall the outcomes were pretty good and there were some great recommendations. And so with that, I'd like to turn it over to you, Madam Auditor. Thank you, Councilman Austin. And thank you. For to Councilwoman Pryce and Councilman to Vernon for your support in. This item. Mayors and mayor, members of the City Council. I have been observing you tonight for over 6 hours. And I want to say that it's really impressive. It's I think it shows a lot of your devotion to public service. I've noticed that none of the issues have been rushed tonight and that you've asked very good questions and been extremely focused on the issues to serve the public. And it's been impressive to me. And a night that I'll remember. Is a clicker. I just have a couple of slides. If I can just start out with a couple thank you's and I would like to specifically thank the bids and the executive directors of each one of the bids. I'd like to thank Craig Kurkjian for being here this evening and for his work with the downtown big welcome for the Bixby North Degrassi for Thelma Shaw, Steve Goodman for CVB, Kristine Hammon for East Anaheim's of area. Christopher for Fourth Street, Annie Greenfeld for Magnolia Mono with for Midtown and Tosha Hunter for Uptown. All of the bids were extremely cooperative and open during the whole entire process. I also want to thank City Management and John Keisler, the director of Economic Development, and Eric Romero for their cooperation throughout this whole process. They have been nothing but cooperative. And. Open to our audit and our suggestions, and this really could not have gone any smoother than it did. So I want to. Thank them for that. As I mentioned earlier, one of the reasons why we chose to do this bid is because we had not looked at the bids over the past 12 years. We know in 2016 that the bids brought in approximately $17 million to be invested in the city's business corridors. And we know 9 million of it was passed through to the city. And we know that the bids play a very important role in the economic vitality of our city and do tremendous work for our city. So and also, the city has a stake in the business. You know, the city's of property owner within for the property based bids. And they all about $630,000 in assessments in 2016. And it's important to the city council because you approve the formation of the bids, the agreements established, the assessment formulas and the the annual activities that they report, as well as their budgets. So I believe this is an important item to the city council so that, you know, that, that you're approving a plan that is consistent with what you're expecting from them. And we wanted to make sure that the city was supporting them in the best possible manner so that they can continue to work and have a positive impact on our on our community. And we know that they are doing great work. This has been a great experience for me and learning more about the the investment of time and resources the bids put into our city, the improvements for crime and security and cleaning efforts for their innovation, and putting events together like the taste of downtown and the car shows and the holiday parades and just as strong savers and security efforts, social media advertising. It's been a great partnership, we believe, between the city and the bids. And we wanted to make sure that the city was providing the best possible services that they could. So I just had a brief three slide PowerPoint this evening and just wanted to touch on a couple of things. Our audited focus on the city's management and oversight of the bids, including how the city handles the agreements and the reporting. We did find that there is room for improvement in the city's oversight. We had five key findings and some multiple recommendations for this. Just wanted to say that regarding state law, that that rules the bids. They're required to submit annual reports to the City Council, proposing activities and budgets for the upcoming year. And after reviewing annual report submitted for fiscal year 2017, we found that many of the reports were missing several components and did not provide a full picture of the bid operations. There were some estimated amounts of surplus in carryovers from the previous fiscal year and the amount of contributions received from sources other than the assessment levies. We believe that a budget to actual comparison would help identify these missing items such as these, and we recommend that in order to be compliant with state law and simplify the reporting, we recommend that the city reassess which reports the bids need to submit. We also recommend that they create templates and institute a review of all required reports. Part of our objective was looking at the city's management and transfer of the fees. The first was related to tracking and transfer of payments. The city receives assessment fees from business, property owners and the county, and ultimately the city passes this on to the revenue to the. These functions are incredibly important so the city can ensure the bears receive the revenue they're entitled to and that it occurs on a consistent schedule so that the Bears can receive the revenue when it's expected. We're talking about $9 million a year in assessment fees which are passed through to the city. So this is a significant amount of money we want to make sure we're tracking properly. And our recommendation was to address these issues centered around the simplifying of payment processes and have the city create a schedule to track the payments . Regarding assessment formula, this is number three on the slide. We found that the city was not facilitating, but that the city was not facilitating communication and assessment fee formulas, which led to some mistakes and how some of the businesses were billed and the assessment fees were not charged to all businesses due to errors in the system used to track the data and how processes were designed. So our recommendation was to have the city communicate more effectively on assessment fees with all involved parties, and to partner with the bids to identify unlicensed businesses in their districts. Our final slide here is when a bid forms the city, contracts with a nonprofit and creates an agreement outlining responsibilities for each party through interviews with the bids. We learned that the bids were either not aware that agreements existed or are not knowledgeable knowledgeable of the terms in their agreements. We also learned that the city is currently not enforcing all agreements as required, and after reviewing the agreements, we also found that agreement terms are outdated, ambiguous and cumbersome. So we found that there are too many reports they take too long to produce and they're often repetitive. We recommend that the city update the bid agreements to reflect current processes surrounding required reporting and payments, and the city should discuss the new agreements with the bids to ensure they are knowledgeable of the terms and enforce the new agreement terms. And finally, our communication of information. During the audit, we learned that each bid operates unique to the needs of their district. But there are certain topics that are universal to bid operations and oversight. The city's role is to be a liaison for the bids by collecting and passing on assessment revenue and facilitating the required and reporting. We found that with these responsibilities, the city has limited staff to perform all of these duties. And so the city we recommend use additional communication tools to help provide bids with the necessary information. The more effective the communication process we know, the more efficient the bids can be. And our recommendation is for a communication framework to be established in the form of a handbook and targeted trainings. In conclusion, overall, I'm very pleased that the city and the bid's agreed with our recommendations. They were open there, they were receptive. They came up with other ideas on how this whole process could be more streamlined. And the relationship between the city and the bids is a partnership that is working well here in the city to the right regarding the economic vitality of it. And we hope that the recommendations in our audit report provide a blueprint and guideline and framework for the bid program moving forward. So we thank you for your support. Excellent work. Thank you very much. Comes from us and we thank. You again for that great. Report and the excellent work by your your team of auditors. And I'm glad that our bids were supportive. Most of the feedback that I have received has been positive, especially from the out of town bid, which I understand was found a little bonus in there. So that through the process, can you. Explain that? Yes. There was an actual underpayment to the uptown of approximately $54,000 from the city to uptown. So they did receive a bonus of about $54,000, which was approximately 30% of their budget. So that was a big bonus as a result of the audit. So I know Councilmember Richardson. Is very supportive of that audit now. And to that point, I also want to. Just acknowledge that we do have some staff here. You made several recommendations in your your audit. And I want to give our staff an opportunity to just talk about how they are addressing some of those recommendations. Great. Mayor Councilman Hughes, before I give this over to John and Eric, I do want to point out that we've got you know, John is brand new handling the bids, so we've got brand new management of the bid's working with the auditor. And also Eric Romero is brand new as well. So I'm very, very confident with two fresh eyes here with the department head director and also Eric being brand new as well, will take a fresh look at the bids and be pay a lot of attention to to the audit and work with COBA to facilitate all this. So, John, any comments? Yeah. Honorable Mayor and members of the City Council, Eric Romero is our our. Bid coordinator and he'll provide a short. Update as to how we will respond to the audit recommendations. Thank you. Good evening, honorable man. Members of the city council. I'll try to keep this short. The Economic Development Department is in support of the auditors findings and is committed to implementing the recommendations included in the mid order report. We feel that this will help to create the appropriate program structure and transparency that is needed to better support our business improvement districts. And we would like to thank the Auditor's Office for putting together a great audit and the Business Improvement District staff for their cooperation. The Economic Development Department plans to implement all of the auditor's recommendations in either fiscal year 2018 or calendar year 2018, depending on the specific recommendation. We will primarily focus on three different areas of work, which are payments, policies and procedures and professional development. In regards to payments, we will focus on establishing the appropriate policy. Seasoned procedures to ensure that bin payments are made on time, that they are accurate, and that all staff involved across departments understands the appropriate process moving forward. We're already moving forward with this recommendation by developing a property based Improvement District Payment Process Handbook in the Economic Development Department. It will define these policies and procedures for collecting and making payments to the bids. It will centralize key information required to make payments such as the assessments, amounts due per department and other government agencies such as Language Transit and Language Unified School District, that are also responsible for an assessment. It will centralize all of the index codes that are required to make payments. All of the contact information for key city personnel across departments that is involved in the PE bid payment process and payment tracking schedule for the bids as well. In regards to policies and procedures, we are moving forward with developing a bid handbook that will cover topics such as the roles and responsibilities of the city and the nonprofit organizations that we enter into agreement with. We will also include the agreements with the city in reporting requirements, payment and fee processes, PE bids, district management plans, and the annual reports of PBIS assessment formulas and the history on each bid. It essentially be a central clearinghouse of information that will help business improvement district leaders run successful business improvement district. We will also update each bids agreement with the city to reflect current processes and enforce and also enforce these agreements as much as we can will create templates for annual reports and other required reports as well. And in regards to professional development, will train bid staff on key legal requirements and city requirements that they are required to follow. We will also provide additional trainings with new executive directors or bid staff come on board and we will help bids, access and better understand data that they need to help run a successful bid such as business licensing information and property owner information. Our immediate next steps are to start scheduling meetings with individual business improvement districts to discuss in detail the implementation goals of the city. And it is not our intention to implement any of these recommendations in a vacuum. We will work closely with all of the bids to ensure we are all in alignment. This is just the beginning and we think this is going to be great to get the bids to where they need to be. We look to continue to support the bids and to ensure that we can continue to grow them in the city as well as are doing great work. And again, thank you, auditor down. Thank you. Thank you. And next, we have Councilor Rachael Brown. Thank you. Honorary Daoud, we really appreciate all your efforts here. You had mentioned that the process was embraced by the members. I know in the case of one of the bids in my district, they were really looking for structure and it appears that that you were able to provide that and not only just structure for that bid that will be consistent throughout the city. So thank you for that. Yes, thank you. Thank you, Councilwoman Mongo. I always love how you consolidate all the big thoughts into just a few slides that really drive home the points. Often those that are managing our beds are running corporations, little mini corporations. And to be able to distill it down in the way that you did. Every single person I've talked to has said. How helpful and supportive the entire process was. And so it only reinforces how we have the best auditor anywhere. Thank you. Thank you. But you really want to be on the city council? Yeah, please. I thought it was obviously a joke. Councilman Price Pryce. Good thing for me, the nomination period is over because she lives in my district and I do not want to be auditor. So I just wanted to say thank you to you and to your office for the great work that you did on this. It was a huge undertaking and clearly something that we hadn't really evaluated ever. And so I appreciate you doing that. And I appreciate Councilman Austin for having the foresight to to realize that there were some efficiencies that could be had and some consistent application of policies that the city and and the bids will benefit from. So I want just want to thank you. That was an excellent presentation. And I know that the bid that I work most closely with the Belmont Shore Business Association is aware of the report, and I think they're actually getting some money that is owed to them, is what I read in the report from the city. So anyway, thank you. Thank you. Thank you. Thank you very much. Utter doubt. Is there any public comment on this item? Mr. Mayor, members of the City Council, I'd be remiss if I didn't congratulate our out for the excellent work that she conducted on this audit. Following a spirited conversation year ago December here in these chambers relative to this subject matter. Auditor Dowd and I had a conversation. And what she said was, if she decides to do it, if she decides to do an audit on bids, it will be done in a strategic manner. It won't there won't be a witch hunt involved, and there'll be clear objectives involved in that process. And she kept her promise. All the bids collaborated. All the bids contributed to the process. You're reading the report that the artist's office presented. I want to feel as though the bids had a role in writing that report based on their contributions, based on the information, the contributions that they made to the report. There are some cities that go out of their way to help bids succeed because it is an economic tool that they can use to their benefit. There are some cities that don't do anything at all to help these bids. New York City is one of those. Prime examples that has 75 bids. Within their cities, within their city, and they go out of their way to help the bids become successful full time staff, full time manual, full time execution. And I think that's a model that we could look at as a successful model for bids to succeed and for cities to be able to work with these improvement district. So again, thank you very much for your patience. Thank you very much for your leadership. And thank Auditor Dowd for. The work that her team conducted on behalf of the business and the city. So we're looking forward to. Working with us on this in a very. Strategic manner. Thank you. Thank you. There's a motion and a second. Please cast your votes. Thanks. Yes. Motion carries. Great. Thank you. Item number eight and nine or both of the Parklets will take photos up.