Mar 16, 2021 Audit and Accountability Committee on 2021-03-16 10:00 AM

[00:00:06]

WELL, GOOD MORNING EVERYBODY.

NICE TO SEE YOU ALL HERE.

WELCOME TO THE, UH, MEETING OF THE AUDIT AND ACCOUNTABILITY COMMITTEE OF, UH, TUESDAY, MARCH 16TH.

UH, GLAD EVERYBODY IS HERE ATTENDING, AND WE HAVE A LENGTHY AGENDA TODAY.

MANY OF THOSE ITEMS ARE ON CONSENT, AND HOPEFULLY MANY OF OUR COMMITTEE MEMBERS HAVE HAD AN OPPORTUNITY TO REVIEW THESE IN ADVANCE AND MAYBE GET ANY QUESTIONS ANSWERED THAT THEY MAY HAVE, UH, SO THAT WE CAN, UM, EXPEND A LITTLE MORE TIME ON THE INDIVIDUAL ITEMS FOR CONSIDERATION.

BUT TO BEGIN THE MEETING, I'LL ASK FOR APPROVAL OF THE MINUTES FROM JANUARY 19TH FROM ANY OF THE COMMITTEE MEMBERS.

UH, TINA, YOU HAVE YOUR HAND UP? YES, YES, CHAIR.

MAY I DO A ROLL CALL, PLEASE? OH, YES.

THANK YOU.

THANK YOU, CHAIR.

COUNCIL MEMBER SANDOVAL.

COUNCIL MEMBER PERRY HERE, CITIZEN MEMBER SOTO PRESENT, CITIZEN MEMBER TREVINO, PRESENT AND CHAIRMAN, COURAGE PRESENT.

WE HAVE A QUORUM.

THANK.

YES.

THANK YOU ALL COMMITTEE MEMBERS FOR BEING HERE AND OUR GUESTS.

[1. 21-2068 Approval of the minutes from the Audit and Accountability Committee meeting on January 19, 2021 1. 21-2068]

I WOULD ENTERTAIN A MOTION TO APPROVE THOSE MINUTES UNLESS THERE ARE ANY QUESTIONS TO THEM.

SO MOVED.

SECOND.

OKAY.

I HEAR A MOTION BY PERRY AND SECOND BY SANDOVAL.

THANK YOU VERY MUCH.

ANY QUESTIONS OR CHANGES TO THE MINUTES? HEARING NONE.

ALL IN FAVOR SAY AYE.

AYE.

AYE.

ANY OPPOSED? HEARING NONE.

THE MINUTES ARE APPROVED.

THANK YOU.

[CONSENT AGENDA]

WE HAVE A CONSENT AGENDA THAT IS RATHER LENGTHY, BUT, UH, JUST TO REMIND EVERYBODY, MANY OF THESE ISSUES HAD BEEN FORWARDED TO THE COMMITTEE IN FEBRUARY AND, UH, WE ENDED UP POSTPONING THE FEBRUARY MEETING.

AND SO WE HAVE A COMBINATION OF FEBRUARY AND MARCH ITEMS FOR OUR CONSIDERATION.

UH, THE CONSENT AGENDA HAS SOME PRES SOLICITATION, HIGH PROFILE ITEMS, ITEMS 2, 3, 4, 5, 6, 7, 8, AND NINE.

ALSO, THE CONSENT AGENDA HAS POSTS SOLICITATION ITEM NUMBER 10, AND THEN FINAL INTERNAL AUDIT REPORTS.

UH, ITEMS NUMBER 11, 12, 13, OR 14 ALL ARE ON CONSENT.

AS I SAID, I THINK THEY WERE FORWARDED TO YOU.

IS THERE ANY COMMITTEE MEMBER THAT HAS A QUESTION OR WOULD LIKE TO PULL ANY OF THE ITEMS ON OUR CONSENT AGENDA FOR INDIVIDUAL ATTENTION AND ACTION? ANY CONSENT AGENDA ITEMS TO BE PULLED? OKAY, HEARING NONE.

THEN I WOULD ENTERTAIN A MOTION TO APPROVE THE CONSENT AGENDA FOR ITEMS TWO THROUGH 14.

DON'T EVERYBODY VOLUNTEER AT ONCE? I'LL VOLUNTEER.

I'LL SECOND.

OKAY.

UH, COUNCILMAN PERRY, MOVED TO APPROVE THE CONSENT AGENDA, SECONDED BY, UH, MEMBER TREVINO.

THANK YOU VERY MUCH.

ANY QUESTIONS OR DISCUSSIONS ABOUT IT? OKAY, HEARING NONE.

ALL OF ALL IN FAVOR OF IMPROVING, APPROVING THE CONSENT AGENDA, PLEASE RAISE YOUR HAND AND SAY, AYE.

AYE.

CHAIR, MAY I ASK THAT MS. SOTO TURN ON HER CAMERA IF SHE CHOOSES TO VOTE, PLEASE? I'M WORKING ON THAT.

OKAY.

THANK YOU.

ALRIGHT.

SO ARE YOU AN AYE, MS. SOTO? SHE'S STILL WORKING ON IT.

I BELIEVE SHE WAS.

OKAY.

WELL, WE DO HAVE A MAJORITY FOR APPROVAL OF THE CONSENT AGENDA.

THANK YOU EVERYBODY.

UH, NOW WE'LL PROCEED TO THE ITEMS FOR INDIVIDUAL CONSIDERATION.

AND WE HAVE FOUR ITEMS. THE, AND THE MOST SIGNIFICANT

[15. 21-1694 Results of the FY 2020 External Financial Audit and Presentation of Related Reports [Ben Gorzell, Chief Financial Officer; Troy Elliott, Deputy Chief Financial Officer]]

AND, UH, IS THERE A STAFF MEMBER WHO WANTS TO INTRODUCE THIS? GOOD MORNING, UH, CHAIRMAN, THIS IS BEN.

UM, TROY ELLIOT, OUR DEPUTY CHIEF FINANCIAL OFFICER, WILL INTRODUCE THE ITEM.

TROY, UH, THANK YOU FOR THE INTRODUCTION, BEN, AND GOOD MORNING.

MEMBERS OF THE COMMITTEE AND, AND CHAIRMAN COURAGE.

UM, TODAY WE'RE GONNA BE, UM, I'M PLEASED TO REPORT OUT THE RESULTS OF THE 2020 EXTERNAL AUDIT.

[00:05:01]

THE, UM, TO START OFF THE PRESENTATION, IF YOU CAN GO TO THE NEXT SLIDE, LAUREN.

UM, EACH YEAR WE COME, WE COME BEFORE Y'ALL AND TALK ABOUT THE AUDITS.

WE, UM, LIKE TO REMIND THE COMMITTEE THAT THERE REALLY IS A DIFFERENCE BETWEEN THE INDEPENDENT AND EXTERNAL AUDITS AND THE INTERNAL AUDIT THAT TYPICALLY YOU'LL SEE ON A MONTH TO MONTH BASIS PRESENTED BY KEVIN AND HIS TEAM.

THE INTERNAL AUDITS TYPICALLY HAVE A MORE NARROW FOCUS, UM, USUALLY FOCUS ON A PROCESS OR A CONTRACT OR A FUNCTION WHERE THE INDEPENDENT EXTERNAL AUDIT WILL TAKE A BROADER FOCUS ACROSS THE ENTIRE ORGANIZATION AND REPORT OUT THEIR FINANCIAL RESULTS OF THAT.

DURING THE COURSE OF THE AUDIT, UM, ANGELA DUNLAP AND HER TEAM WILL SIT DOWN WITH KEVIN AND HIS TEAM AND SEE IF THERE ARE ANY AREAS OF CONCERN OR ANY AREAS OF RISK THAT B K D SHOULD REALLY DIVE DOWN IN AND TAKE A DEEPER FOCUS.

SO THERE IS THAT COORDINATION BETWEEN THE TWO, BETWEEN THE INTERNAL AUDIT AND THE EXTERNAL AUDIT.

ADDITIONALLY, THE EXTERNAL AUDIT IS REQUIRED UNDER THE PROVISIONS OF OUR CITY CHARTER.

UM, IT'S DESIGNED TO PROVIDE A TRUE AND FAIR VIEW OF THE FINANCIAL POSITION OF THE CITY.

FOR OUR USERS OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT, OUR USERS TYPICALLY IN TELL THE PUBLIC, UM, INVESTORS, UM, WHO INVEST IN OUR BONDS IN THE CITY OF SAN ANTONIO.

IT'S ALSO REQUIRED BY STATE STATUTE.

UM, AND, AND THIS REQUIREMENT BASICALLY ENSURES THE CITY RECORDS ARE PROPERLY MAINTAINED AND FREE OF MATERIAL MISSTATEMENTS AND COMPLY WITH OUR ESTABLISHED CONCEPTS, PRINCIPLES AND ACCOUNTING STANDARDS SUCH AS G.

NEXT SLIDE.

LAUREN GRANT THORNTON WAS AWARDED THE CONTRACT IN JUNE OF 2017.

IT IS A FIVE YEAR CONTRACT WITH A THREE YEAR BASE AND TWO ONE YEAR EXTENSION.

WE'RE CURRENTLY IN THE FIRST EXTENSION FOR THE FISCAL YEAR OF 2020.

UM, WE BROUGHT THE EXTENSION TO, UM, THIS COMMITTEE IN JUNE OF 2020.

AND AT THE SAME TIME WE ALSO THEN, UH, GRANT THORNTON ASSIGNED ITS, UH, PUBLIC SECTOR PRACTICE FOR EXTERNAL AUDITS TO B K D.

SO WE STARTED THE CONTRACT WITH GRANT THORNTON, AND NOW WE'RE WORKING WITH, UM, THE SAME AUDIT TEAM WITH ANGIE AND HER TEAM, BUT UNDER A DIFFERENT NAME WITH B K D.

NEXT MONTH THERE IS ONE EXTENSION AND WE'LL BE BRINGING THAT EXTENSION BACK TO YOU FOR YOUR APPROVAL TO, TO MOVE FORWARD TO, UM, THE FULL CITY COUNCIL WITH THAT EXTENSION.

WE ALSO PLAN ON BEING IN THE LAST YEAR OF THE EXTERNAL AUDIT, BRINGING THE PRES SOLICITATION FORWARD FOR A NEW CONTRACT THAT WILL START, UM, NEXT FISCAL YEAR.

SO, AS I MENTIONED, THIS PRESENTATION WILL GO OVER THE RESULTS OF THE FISCAL YEAR 2020 EXTERNAL AUDIT, AND THERE'S ALSO REQUIRED COMMUNICATIONS THAT B K D IS REQUIRED TO COMMUNICATE TO THE COMMITTEE.

NEXT SLIDE.

AS FAR AS EXTERNAL AUDIT, THERE'S SEVERAL PARTS TO IT.

WE HAVE OUR COMPREHENSIVE ANNUAL FINANCIAL REPORT.

THIS ANNUAL FINANCIAL REPORT IS AVAILABLE OUT ON OUR TRANSPARENCY PAGE, AND YOU CAN GET TO THAT REPORT THROUGH OUR CITY OF SAN ANTONIO HOMEPAGE AND NAVIGATING, NAVIGATING.

TO THE BOTTOM LEFT, THERE IS A, UM, RADIO BUTTON FOR FINANCE AND BUDGET.

AND IF YOU CLICK ON THAT, THERE IS A WHOLE HOST OF TRANSPARENCY INFORMATION, WHICH INCLUDES OUR COMPREHENSIVE FINANCIAL REPORTS FOR 2020 AND ALSO OUR PAST ANNUAL FINANCIAL REPORTS.

UM, IN ADDITION TO OUR COMPREHENSIVE ANNUAL FINANCIAL REPORT, WE ALSO HAVE A REPORT ON FEDERAL AND STATE GRANTS AND OTHER REPORTS.

UM, OUR FINANCIAL AND COMPLIANCE REPORT ON OUR P SS C, OUR PASSENGER FACILITY CHARGE PROGRAM.

AND THEN IF APPLICABLE, UM, WHEN THERE ARE FINDINGS, THERE WILL BE A REPORT ON THE INTERNAL CONTROL OR WHAT WE REFER TO AS THE MANAGEMENT LETTER.

UM, AND WE'LL GO OVER KIND OF THOSE FINDINGS TODAY.

UM, AND COMMUNICATIONS NEXT ONE EACH YEAR WITH THE AUDIT, I'D LIKE TO SIT DOWN AND SHOW YOU KIND OF THE HISTORICAL RESULTS TO GIVE YOU A COMPARISON OF WHERE WE ARE TODAY TO WHERE WE HAVE BEEN IN THE PAST.

UM, IN 2006 THROUGH 2008, YOU CAN SEE THAT THIS IS THE AMOUNT OF TIME THAT TOOK TO ACTUALLY ISSUE THIS REPORT, GIVEN THE CHALLENGES THAT WE WERE HAVING AT THAT TIME.

UM, AND A NUMBER OF FINDINGS.

WE JUST CAME OFF A CONVERSION FROM S A P.

UM, AS A RESULT OF THAT CONVERSION, THERE WERE A LOT OF PROCESSES THAT NEEDED TO BE STABILIZED.

OUR FINANCIAL REPORTING NEEDED TO BE IMPROVED, AND IT TOOK A LOT OF EFFORT TO DO THAT.

UM, BEN AND I CAME BACK TO FINANCE IN 2006, SO I LIKE TO SAY THIS ISN'T THESE INCREASED NUMBER OF DAYS IN THE FINANCE.

ARE NOT THE RESULT OF BEN AND I COMING BACK.

BUT ACTUALLY THE RESULTS, UM, THAT YOU SEE IN THE FUTURE IS WHAT WE ACTUALLY, UM, CONTRIBUTED TO.

SO OVER TIME, YOU SEE IN 2006 AND 2007, IT'S TAKEN ABOUT 317 DAYS TO ACTUALLY PRESENT THE COMPREHENSIVE ANNUAL FINANCIAL

[00:10:01]

AND WHEN IT COMES TO INFORMATION, TIMELINESS IS ALWAYS BETTER.

OLDER INFORMATION, IT'S HARD TO MAKE, UM, HARD, HARD TO, UM, MAKE MANAGEMENT, UM, DECISIONS AND RESULTS BASED ON THAT OLD INFORMATION.

SO WE'VE GOTTEN MUCH BETTER, UH, THROUGH TWENTY EIGHTEEN, A HUNDRED FORTY FIVE DAYS, TWENTY NINETEEN, A HUNDRED FORTY THREE DAYS.

AND EVEN IN, IN LIGHT OF ALL THE CHALLENGES THAT WE, UM, WE EXPERIENCED THIS YEAR WITH THE PANDEMIC, HAVING TO ACTUALLY TAKE OUR ENTIRE TEAM AND REMOTE THAT ENTIRE TEAM.

UM, AND ALSO THE WINTER EVENT, WE ACTUALLY, I THINK, DID QUITE WELL WITH 161 DAYS.

UM, REALLY PROUD OF THIS TEAM AND THEIR ABILITY TO REALLY PIVOT AND GO FROM AN ONSITE, UM, ONSITE ENVIRONMENT TO REMOTING AND PUTTING ALL THIS PROCESS IN PLACE.

SO, REALLY PROUD OF THIS TEAM AND WHAT THEY'VE BEEN ABLE TO ACCOMPLISH IN LIGHT OF ALL THE CHALLENGES THAT WE'VE HAD.

NEXT SLIDE, LAUREN, SIMILAR TO THE AMOUNT OF DAYS THAT TOOK TO ACTUALLY DISTRIBUTE OR, UM, COMPLETE THE COMPREHENSIVE, COMPREHENSIVE ANNUAL FINANCIAL REPORT, IF YOU LOOK BACK AT THE FINDINGS HISTORICALLY, BACK IN 2006 THROUGH 2009, THERE WERE AN ENORMOUS AMOUNT OF FINDINGS WITH THE MOST OF THEM BEING IN 2008.

THESE FINDINGS ARE CLASSIFIED, UM, AS MATERIAL WEAKNESS, WHICH IS THE WORST, THAT THERE IS A MATERIAL, UM, AMOUNT OR MATERIAL, UM, DISCREPANCY WITHIN THOSE FINANCIAL REPORTS AND IMPACTS RELIABILITY OF THOSE FINANCIAL REPORTS.

A SIGNIFICANT DEFICIENCY IS KIND OF THE SECOND.

AND THEN YOU HAVE A REPORTABLE CONDITION AND A CONTROLLED DEFICIENCY IN MANAGEMENT ADVISORY.

ONE OF THE CHALLENGES THAT YOU CAN SEE HISTORICALLY THAT WE WERE, THAT WE WERE COMBATING WITH IS THAT IF YOU LOOK AT IN 2008, FOR EXAMPLE, THAT TOP GRAY BAR, UM, THOSE ARE PRIOR FINDINGS.

SO IN ADDITION TO WORKING ON CURRENT FINDINGS, WE WERE STILL TRYING TO DIG OURSELF OUT OF A HOLE, CORRECTING ALL THE PRIOR FINDINGS AT THE SAME TIME.

SO OVER TIME, THROUGH PUTTING IN PLACE, UM, WE WENT THROUGH A REORGANIZATION OF FINANCE.

WE PUT, UM, NEW PEOPLE IN PLACE WITH THE RIGHT SKILL SET, THE RIGHT EXPERIENCE TO PUT THE RIGHT PEOPLE IN THE RIGHT SEAT ON THE BUS.

UM, WE INTRODUCED SHARED SERVICES, WHICH WAS A CONCEPT THAT, UM, EMBEDDED FINANCE AND PROCUREMENT PEOPLE OUT INTO THE CITY DEPARTMENTS TO ALLOW US TO CONTROL AND KIND OF REDUCE THOSE SILOS BETWEEN THE CITY DEPARTMENTS AND, AND INCREASE THAT STANDARDIZATION AND THEN ALSO STANDARDIZED OUR PROCESSES.

SO THROUGH ALL THOSE EFFORTS AND PUTTING NEW PEOPLE IN PLACE AND NEW FINANCE ORGANIZATIONS SHARED SERVICES AND STABILIZING THE FINANCIAL INFORMATION, WE WERE ABLE TO REDUCE THOSE SYSTEMS. AND I'M PROUD TO SAY SINCE 2018, WHEN IT COMES TO ACTUALLY FINDINGS, WE HAVE NOT HAD ANY FINDINGS AS AN ORGANIZATION THAT WERE FINANCIAL IN NATURE.

AND FOR FISCAL YEAR 2020, WE'VE CONTINUED THAT, THAT TREND WITH NO FINDINGS.

SIMILAR TO THE INTERNAL AUDIT, THERE ARE ITEMS LIKE KEVIN WILL BRING FORWARD THINGS THAT, UM, HE WANTS TO MENTION TO MANAGEMENT.

HE THINKS THEY'RE IMPORTANT, BUT DON'T REALLY RISE TO THE LEVEL OF A FINDING.

AND ANGIE WILL BE DOING THAT AS WELL.

WE HAD SOME OF THOSE ITEMS THAT SHE WILL DISCUSS WITH Y'ALL AND COMMUNICATE WITH Y'ALL THAT WERE AREAS THAT WE PROBABLY JUST NEED TO FOCUS ON AND, AND REALLY IMPROVE ON.

THEY'RE VERY MINOR AND AT LEAST IN MY OPINION, VERY IMMATERIAL IN NATURE.

NEXT SLIDE.

WITH THE FINDINGS, AUDITORS WILL ACTUALLY COME THROUGH WHEN THEY'RE ANALYZING OR SCRUBBING OUR, UM, FINANCIALS.

THEY WILL PROPOSE AUDIT ADJUSTMENTS.

SO IN THE EVENT THEY FIND SOMETHING THAT WAS INCORRECTLY RECORDED WAS NOT RECORDED AT ALL, UM, THEY PROPOSE ADJUSTMENTS.

AND IN 2006 YOU CAN SEE THESE ADJUSTMENTS WERE FAIRLY LARGE.

SO FOR EXAMPLE, IN 2006, THE NUMBER OF RECLASSIFICATION OR FINANCIAL INFORMATION WAS IN THE TUNE OF 636 MILLION.

OUR BOTTOM LINE WAS IMPACTED, UM, BY ABOUT 134 MILLION ASSETS WERE MODIFIED BY 153 IN LIABILITIES, ABOUT 20 MILLION, A TOTAL OF 46 ADJUSTMENTS.

TAKE THAT FORWARD TO 2020.

AS WE COMPARE TO TODAY, IT WAS ONLY $2 MILLION.

AND ANGIE WILL TALK ABOUT THAT $2 MILLION.

AND WHAT IT RESULTED AS REALLY WAS JUST A MISCLASSIFICATION OR A TIMING OF, UM, AN EXPENDITURE RELATED TO THE CARES, THE CARESS, UM, CARES ACT.

SO 20 18, 20 19, 20 20 CONSIDERABLY BETTER, UM, WITH NO FINE, NO ADJUSTMENTS IN 2019 AND MINIMAL IN 2020.

NEXT SLIDE.

AS I MENTIONED EARLIER, IN ADDITION TO OUR COMPREHENSIVE ANNUAL FINANCIAL REPORT, WE HAVE SINGLE AUDIT FINDINGS.

IT IS A SIMILAR STORY WHEN YOU LOOK AT IT HISTORICALLY.

BACK TO 2006, LARGE NUMBER OF FINDINGS BASED ON THE ITEMS I MENTIONED GOING TO 2018 FORWARD, WE STARTED TO MINIMIZE THOSE NUMBER OF FINDINGS.

AND WITH 2020, UM, NO, NO ACTUALLY FINDINGS PRESENTED.

NEXT SLIDE, AS I MENTIONED, JUST WANNA WRAP

[00:15:01]

UM, WE WENT FROM A HUNDRED PERCENT ON SITE TO ACTUALLY A HUNDRED PERCENT REMOTING.

SO OUR CONTROLLER OFFICE AND THE AUDIT WAS DONE COMPLETELY ELECTRONICALLY THIS YEAR.

NO FACE-TO-FACE, UM, NO FACE-TO-FACE INTERACTION BASED ON THAT, CONVERTING TO THAT REMOTE, REMOTE ENVIRONMENT, WE HAD TO SET UP THE TECHNOLOGY, WE HAD TO SET UP THE CONTROLS, WE HAD TO SET UP NEW PROCESSES AND CONTINUE TO PROVIDE THE SERVICES TO THE CITY DEPARTMENTS AND TO THE PUBLIC AS FAR AS GETTING CHECKS OUT TO THEM, ESPECIALLY IN A TIME WHEN THAT, THAT MONEY WAS REALLY NEEDED.

SO WE WANTED TO KEEP THAT, THAT LINE OF MONEY FLOWING OUT TO THE, UM, OUT TO THE COMMUNITY.

SO EVEN WITH THESE CHALLENGES, WE WERE ABLE TO PIVOT.

WE WERE ABLE TO ENSURE THE MONTHLY FINANCIALS, THE ANNUAL REPORT WERE ACCURATE, COMPLETE, AND TIMELY.

AND IN LIGHT OF ALL THESE CHALLENGES, WE'RE ABLE TO BRING FORWARD AN AUDIT WITH NO FINDINGS.

I'D LIKE TO ESPECIALLY THANK A COUPLE OF KEY, UM, INDIVIDUALS IN THE FINANCE DEPARTMENT.

WE HAVE VICTORIA RADER, WHO IS OUR CITY CONTROLLER, AND SHE'S ONLINE.

I DON'T KNOW IF SHE CAN SEE HER, BUT IF SHE, IF SHE CAN WAIVE, WE HAVE ELIZABETH DARD AND KIMBERLY NUNEZ, OUR FINANCIAL REPORTING MANAGERS, JAY BLACKWELL, OUR GENERAL LEDGER MANAGER.

AND THEN MELANIE KEATON'S, WHO I THINK IS ONLINE AS WELL.

OUR ASSISTANT DIRECTOR WHO LEADS THIS GROUP, HAS DONE A TREMENDOUS JOB, UM, AS WELL AS OUR ENTIRE FINANCE TEAM.

AND IF YOU FLIP TO THE NEXT SLIDE, LAUREN, THIS IS A PICTURE OF OUR CONTROLLER'S OFFICE AND ACTUALLY WITH THEIR FAMILIES IN THE REMOTE ENVIRONMENT, ACTUALLY TELLING THE COMMUNITY THANK YOU FOR ALL THEY'VE DONE.

UM, AND THIS IS A TEAM THAT ACTUALLY MAKES ALL THIS POSSIBLE DURING THIS TIME.

I'D LIKE TO ESPECIALLY THANK THEM AS WELL.

WITH THAT, UM, CHAIR, I'LL TURN IT OVER TO ANGELA DUNLAP TO INTRODUCE HER TEAM AND GO THROUGH THE DETAILS IN THE EXTERNAL AUDIT.

ANGELA, THANK YOU, TROY.

GOOD MORNING, EVERYONE.

GOOD TO SEE YOU.

UM, I'M ANGELA DUNLAP, AS TROY INDICATED, AND I SERVED AS A PARTNER ON THE ENGAGEMENT THIS YEAR.

UH, PART OF MY TEAM, UH, IS NOT WITH US TODAY, BUT, UH, WE HAD, UH, ERICA BROWN WHO, UH, JUST RECENTLY HAD A BABY, UH, THIS PAST WEEK.

UM, AND THEN SHAQUITA RAW SERVED AS OUR MANAGERS, AND THEN WE CONTINUED TO HAVE AS OUR TEAMING PARTNERS, UH, FOUR DIFFERENT FIRMS, UH, THAT WE'VE BEEN WORKING WITH OVER THE LAST, UH, FOUR YEARS.

SO I DID WANNA TAKE THIS TIME TO GO THROUGH THE RESULTS OF THE AUDIT.

AND, UM, AS USUAL, IF YOU DO HAVE ANY QUESTIONS, DEFINITELY FEEL FREE, UH, TO LET ME KNOW AT ANY POINT IN TIME.

SO WE'LL START OFF WITH THE FIRST SLIDE, WHICH RELATES TO, UM, OUR AUDIT SCOPE.

UH, THIS IS A SIMILAR COMMUNICATION THAT WE HAD WITH YOU, UH, EARLIER, UH, LAST YEAR, I GUESS IT WAS WHEN WE WERE DOING OUR PLANNING CONSIDERATIONS JUST IN TERMS OF, UH, WHAT OUR AUDIT SCOPE WAS, UM, IN RELATION TO THE CITY OF SAN ANTONIO.

AND THEN, UH, THOSE IN ESSENCE REPRESENT THE FIRST TWO SLIDES.

AND SO IF WE CAN MOVE ON TO THE AUDIT DELIVERABLES, UH, COMPLETED SLIDE, PLEASE.

AND, UH, TROY ACTUALLY KIND OF MENTIONED THIS PREVIOUSLY JUST IN TERMS OF THE, UM, UH, DELIVERABLES THAT WE HAD.

SO WE HAVE THE COMPREHENSIVE ANNUAL FINANCIAL REPORT.

UM, WE DID THE SINGLE AUDIT BOTH FOR THE FEDERAL AND STATE SIDE, AND THEN WE DID A COMPLIANCE AUDIT RELA RELATED TO THE PASSENGER FACILITY CHARGE.

AND THEN WE ALSO DO AN AGREED UPON PROCEDURES FOR THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY.

UM, T C E Q.

NEXT SLIDE, PLEASE.

SO, JUST IN TERMS OF THE RESULTS OF THE AUDIT, UM, WE ARE ISSUING, UH, UNMODIFIED CLEAN OPINIONS ON THE FINANCIAL STATEMENTS OF THE CITY OF SAN ANTONIO.

UH, WE CONTINUE TO HAVE NO SCOPE LIMITATIONS, AND I THINK, UM, THIS IS PARTICULARLY, UH, IMPORTANT THIS YEAR BECAUSE WE WERE IN A REMOTE ENVIRONMENT.

MY TEAM WAS, UH, HERE IN HOUSTON, UM, AND IN SAN ANTONIO, UH, WORKING REMOTELY.

AND, UM, WE WERE ABLE TO GET, YOU KNOW, BASICALLY ANY INFORMATION THAT WE NEEDED TO, IN ORDER TO, UH, PERFORM OUR AUDIT PROCEDURES.

WE WERE STILL ABLE TO TALK TO WHOEVER WE NEEDED TO TALK TO IN ORDER FOR US TO, UH, GAIN INFORMATION RELATIVE TO THE AUDIT.

SO WE DIDN'T HAVE ANY SCOPE LIMITATIONS.

AGAIN, WE DIDN'T HAVE ANY UNRESOLVED AUDIT ISSUES AS WE DO EACH YEAR.

UH, WE MEET ON A WEEKLY BASIS TO TALK THROUGH MATTERS, UH, AS THEY COME UP AND GET RESOLUTION ON THOSE.

AND, UM, AS ALWAYS, WE CONTINUE TO HAVE OPEN AND EFFECTIVE COMMUNICATION, UH, WITH MANAGEMENT, MELANIE VICKY, UM, THE ENTIRE FINANCE TEAM, UH, TO MAKE SURE THAT WE'RE ABLE TO EFFECTIVELY, UH, EXECUTE ON THE AUDIT.

[00:20:02]

UM, WE, I THINK WE KINDA ALLUDED TO THIS AT THE BEGINNING, UH, OF OUR AUDIT.

AND SO FOR THE FEDERAL SIDE, WE HAD THREE PROGRAMS, UH, HIGHWAY PLANNING HOME PROGRAM, AND THEN THE CORONAVIRUS AID RELIEF AND ECONOMIC SECURITIES ACT.

SO, UH, THE C R F FUND WAS THE, THE SIGNIFICANT ONE THAT WE LOOKED AT THERE.

AND THEN AS IT RELATES TO THE STATE SIDE, WHICH IS THE NEXT SLIDE, WE LOOKED AT, UM, LOCAL PARK GRANT PROGRAM, CHILDCARE SERVICES, HIGHWAY PLANNING AND CONSTRUCTION, HURRICANE LAURA, AND THEN S T D PREVENTION.

AND SO I'LL TALK, UH, A LITTLE BIT LATER ABOUT SOME OF THE, UH, MATTERS THAT WE DID, UH, IDENTIFY DURING THE COURSE OF THOSE AUDITS.

BUT AGAIN, AS TROY MENTIONED, THEY WEREN'T, UH, REPORTABLE IN TERMS OF BEING, UH, MATERIAL NON-COMPLIANCE OR MATERIAL WEAKNESSES AND INTERNAL CONTROL, BUT JUST SOME OPPORTUNITIES FOR, UH, ENHANCEMENT.

SO I WANTED TO TOUCH BASE ON THE NEXT SLIDE WITH RESPECT TO THE STATUS OF THE PRIOR YEAR FINDINGS.

UM, AS TROY MENTIONED, ALSO, THERE WAS ONE FINDING LAST YEAR, UH, RELATED TO CONFISCATED PROPERTIES AND, AND CASH MANAGEMENT.

AND SO, UH, AS OF THE END OF THE YEAR, UH, 9 30, 20 20, THAT WAS CURRENTLY IN PROGRESS WHERE SS A P D WAS NEGOTIATING A NEW AGREEMENT, UM, OR A NEW PROVISION IN THE AGREEMENT.

AND THEN THAT WAS, UH, CORRECTED SUBSEQUENT TO YEAR END, AND WE, UH, HAD AN OPPORTUNITY TO REVIEW THAT DOCUMENTATION AND THE MODIFICATION THAT WAS MADE WITH RESPECT TO THE TIMING OF, UH, THE DEPOSITING OF THE FUNDS.

SO ON THE NEXT SLIDE, UM, JUST IN TERMS OF THE RESULTS OF THE AUDIT FOR THE FEDERAL AND STATE SINGLE AUDIT AND THE P F C COMPLIANCE AUDITS, UM, AGAIN, FOR ALL OF THE PROGRAMS, UH, WE'RE ISSUING UNMODIFIED OPINIONS ON COMPLIANCE.

UH, THERE WERE NO FINDINGS, UH, FROM A COMPLIANCE STANDPOINT, AND THEN THERE WERE NO INTERNAL CONTROL MATTERS, UM, THAT WERE IDENTIFIED.

I WILL PAUSE RIGHT HERE AND JUST TALK A LITTLE BIT ABOUT, UM, SOME OF THE MATTERS THAT WE DID COMMUNICATE WITH MANAGEMENT, UH, DURING THE COURSE OF THE AUDIT THAT DID RELATE TO, UH, THE SINGLE AUDIT.

ONE OF 'EM, UH, WAS IN RELATION TO THE CORONAVIRUS RELIEF FUND AS UH MENTIONED EARLIER AS WELL, UH, THERE WAS A TIMING DIFFERENCE IN TERMS OF A $2 MILLION PAYMENT, UH, THAT WAS MADE IN OCTOBER OF 2021, BUT WAS ACTUALLY RECORDED, UH, AS OF NINE 30, EXCUSE ME, OCTOBER, 2020.

THAT WAS, UM, ACTUALLY RECORDED AS OF NINE 30.

AND SO THERE WAS AN ADJUSTMENT MADE, UH, TO REFLECT THAT IN THE PROPER PERIOD.

AND THAT'S REFLECTED IN THE FINANCIAL STATEMENTS THAT HAVE BEEN PRESENTED.

HURRICANE LAURA, THERE WAS ONE MINOR, UM, OUT OF THE SAMPLE THAT WE LOOKED AT.

THERE WAS ONE MINOR, UH, TRANSACTION THAT WAS, UH, INAPPROPRIATELY RECORDED TO, UH, HURRICANE LAURA.

BUT AGAIN, IT WAS A VERY IMMATERIAL ITEM, UM, THAT WAS IDENTIFIED FOR HIGHWAY PLANNING.

UH, THERE WAS A MATTER THAT WE COMMUNICATED, JUST IN TERMS OF THE PRESENTATION ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS.

UM, THE AMOUNT WAS REPORTED A HUNDRED PERCENT, WHERE WITH HIGHWAY PLANNING, THERE'S A, UH, MATCHING REQUIREMENT OR KIND OF A SHARING OF, UH, RESOURCES.

SO ONLY, UH, 80% OF THOSE FUNDING SHOULD HAVE BEEN REPORTED ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, AS THAT IS THE AMOUNT THAT GETS REIMBURSED BY TXDOT.

UM, BUT IT WAS PROPERLY BILLED, UM, TO TDOT.

SO THERE WERE NO ISSUES THERE FROM A BILLING STANDPOINT AND A REIMBURSEMENT, IT WAS JUST A PRESENTATION ON THE, UH, SCHEDULE.

AND THEN THE LAST ITEM FROM A SINGLE AUDIT STANDPOINT WAS WITH RESPECT TO THE SS D D PREVENTION PROGRAM.

UH, THIS IS A PROGRAM THAT ACTUALLY, UH, IS A FEDERAL PROGRAM, BUT ALSO, UH, RECEIVES FUNDING BY THE STATE AND THE STATE, UH, BASICALLY DETERMINES HOW MUCH IS, UH, ALLOCATED BETWEEN THE TWO.

AND SO, UM, THAT'S SOMETHING THAT THE CITY IS NOT NECESSARILY AWARE OF.

BUT THE REQUIREMENT IS, AS IT RELATES TO VENDORS, IS TO ENSURE THAT THERE'S NO SUSPENDED OR DEBARRED VENDORS.

THE CITY DID LOOK AT THAT, UH, FROM A FEDERAL STANDPOINT, WHICH WAS, UM, APPROPRIATE, UH, BUT THEN THERE'S ALSO A STATE REQUIREMENT AS WELL.

AND SO ONCE THEY WERE MADE AWARE OF THAT IN, UM, LATE OCTOBER, UH, THEY RECOGNIZED THAT THEY, UM, UH, WOULD CONTINUE OR THAT THEY WOULD IN THE FUTURE, ENSURE THAT, UH, THEY LOOK AT STATE, UM, IN THOSE SITUATIONS WHERE THERE MIGHT BE DUAL FUNDING BETWEEN THE FEDERAL AND THE STATE SIDE.

AND THEN THE LAST ITEM WAS JUST ON THE PASSENGER FACILITY CHARGE PROGRAM.

[00:25:01]

AND SO SUBSEQUENTLY, UH, WHEN THAT INFORMATION WAS PROVIDED, THOSE QUARTERLY REPORTS WERE UPDATED AND SUBMITTED TO THE F A A ACCORDINGLY.

SO THOSE WERE JUST SOME OF THE ADDITIONAL MATTERS THAT WE HAD COMMUNICATED, UM, TO MANAGEMENT DURING THE COURSE OF THE AUDIT.

AND THEN THE NEXT SLIDE JUST TALKS ABOUT THE AUDIT ADJUSTMENT THAT TROY ALREADY TOUCHED BASE ON, AND, AND WE, UH, ALLUDED TO IN THE FINDINGS, AND THAT WAS THAT $2 MILLION ADJUSTMENT.

AND THEN THE LAST COUPLE OF SLIDES WE GET INTO THE, UM, QUALITATIVE ASPECTS.

UH, THE SIGNIFICANT ACCOUNTING POLICIES ARE DESCRIBED IN NOTE, ONE OF THE FINANCIAL STATEMENTS.

THERE WERE NO ALTERNATIVE ACCOUNTING TREATMENTS THAT WERE IDENTIFIED WITH RESPECT TO THE FINANCIAL STATEMENTS.

THERE ARE JUDGMENTS AND ACCOUNTING ESTIMATES THAT ARE INCLUDED IN THERE.

WE'VE LISTED, UH, WHAT THOSE ARE FAIR VALUE ALLOWANCES, YOUR ARBITRAGE REBATE LIABILITY OF WHICH THERE ARE NONE, UH, SELF-INSURANCE AND OCCURRED BUT NOT REPORTED LIABILITY.

AND THEN OF COURSE, THE ACTUARIAL ASSUMPTIONS THAT ARE RELATED TO THE PENSION AND OPEP PLANS.

AND THEN FROM A FINANCIAL STATEMENT DISCLOSURE, UH, ALL OF THOSE KIND OF JUDGEMENTS AND ESTIMATES ARE INCORPORATED INTO THE NOTES THAT ARE IDENTIFIED ON THIS SLIDE.

AND THEN THE REQUIRED COMMUNICATIONS, WHICH IS THE NEXT SLIDE, IS, UM, AUDITOR ADJUST AUDITOR'S JUDGEMENTS ABOUT THE QUALITY OF CITY'S ACCOUNTING PRINCIPLES.

THERE'S NO MATTERS REPORTABLE THERE.

UM, WE'RE NOT AWARE OF ANY OTHER INFORMATION AND DOCUMENTS CONTAINING THE AUDITED FINANCIAL STATEMENTS AT THIS POINT IN TIME.

WE HAD NO DISAGREEMENTS WITH MANAGEMENT, AND ALSO WE ARE NOT AWARE OF ANY CONSULTATIONS WITH OTHER ACCOUNTANTS.

UM, DURING THE COURSE OF THE AUDIT, THERE WERE SOME MATTERS THAT WE DISCUSSED WITH MANAGEMENT REGARDING THE APPLICATION OF ACCOUNTING PRINCIPLES OR AUDITING STANDARDS.

AND ONE OF THOSE WAS IN RELATION TO, UH, THE METHODOLOGY FOR ALLOCATING FIRE AND E M S SALARIES AND BENEFITS FOR THE CORONAVIRUS RELIEF FRONT FUND PROGRAM.

THE ACTUAL ACCOUNTING FOR THE CORONAVIRUS RELIEF FUND WITHIN THE FINANCIAL STATEMENTS WE ALSO TALKED ABOUT.

AND, UM, WHAT'S PRESENTED IN THE FINANCIAL STATEMENTS IS THERE WERE CERTAIN COMPONENT UNITS THAT WERE EMITTED THIS YEAR BECAUSE THEIR FINANCIAL STATEMENTS WERE NOT AVAILABLE, UH, AT THE TIME WE WERE READY TO ISSUE.

AND SO THERE WERE FOUR, UM, COMPONENT UNITS THAT ARE NOT INCLUDED.

AND THEN, UH, WE TALKED ABOUT THE CITY TOWER FUND PRESENTATION THAT WENT FROM A SPECIAL REVENUE FUND, UM, TO AN INTERNAL SERVICE FUND, UH, THIS YEAR.

AND THEN THE LAST COUPLE OF THINGS, THERE'S TWO SLIDES THAT JUST TALK ABOUT THE ACCOUNTING PRONOUNCEMENTS, UM, THAT WERE IMPLEMENTED THIS YEAR.

SO IF YOU CAN GO TO THE NEXT SLIDE.

UH, THERE WERE THREE, UH, THAT WERE MINOR.

THE BIGGEST ONE WAS IN RELATION TO GSS B STATEMENT NUMBER 95, WHICH ACTUALLY DELAYED A NUMBER OF, UH, ACCOUNTING STANDARDS, UH, THAT WILL BE EFFECTIVE IN FUTURE YEARS.

AND THEN THIS LAST SLIDE, I WON'T GO INTO DETAIL, BUT THIS BASICALLY REPRESENTS ALL OF THE G A SS B STANDARDS THAT ARE, UH, OUTSTANDING RIGHT NOW THAT COULD HAVE SOME APPLICABILITY TO THE CITY THAT WILL HAVE, UM, FUTURE YEAR IMPLEMENTATION.

THE ONE THAT IS IN BOLD, UH, G A SS B STATEMENT NUMBER 84, IS ACTUALLY THE ONE THAT WILL BE EFFECTIVE FOR FISCAL YEAR 2021.

SO, UH, FROM AN OVERALL STANDPOINT, WE WERE VERY PLEASED WITH THE AUDIT.

WE APPRECIATED ALL OF THE, UM, COLLABORATION THAT WE HAD WITH THE ENTIRE FINANCE TEAM, UM, AND JUST ENJOYED KIND OF WORKING THROUGH THIS UNIQUE, UH, SITUATION THIS YEAR.

SO WE'RE HOPING THAT WE'LL GET AN OPPORTUNITY TO INTERACT WITH THE TEAM IN PERSON, UH, FOR THE FY 2021 AUDIT.

BUT IF THERE ARE ANY QUESTIONS THAT ANYBODY HAS, THEN I'M MORE THAN HAPPY TO ADDRESS THEM AT THIS TIME.

CHAIRMAN, THIS IS BEN.

I BELIEVE, I BELIEVE YOU'RE ON MUTE, SIR.

THAT'S RIGHT.

THANK YOU.

UH, YEAH, THANK YOU, ANGELA.

YOU DID A GOOD JOB ON THAT REPORT AND WE REALLY APPRECIATE THE THOROUGHNESS OF YOUR TEAM.

AND I WANTED TO THANK TROY FOR THE PREPARATION OF THAT, UH, KIND OF PREPORT THAT SET THE STAGE FOR US SO THAT, UH, WE CAN LOOK BACK AT THE HISTORY OF WHERE WE WERE TO SEE WHERE WE ARE TODAY AND RECOGNIZING IN FINANCE DEPARTMENT AND, AND THROUGHOUT OUR SYSTEM THAT HAD BEEN MADE.

SO, UH, UH, THANK YOU VERY MUCH.

I DON'T HAVE ANY QUESTIONS.

I OPEN IT UP TO ANY OF THE OTHER COMMITTEE MEMBERS WHO MAY HAVE A QUESTION.

UH, IF YOU'D LIKE TO JUST RAISE YOUR HAND OR SPEAK UP.

OKAY.

CHAIRMAN, CAN I JUST, WELL, THAT SOUNDS LIKE A CLEAN REPORT, CHAIRMAN, CAN I JUST MAKE A COUPLE OF COMMENTS REAL QUICK BEFORE

[00:30:01]

UH, THEY DID A TREMENDOUS JOB.

OBVIOUSLY THIS AUDIT WAS A BIT CHALLENGING OR MORE CHALLENGING GIVEN THE COVID ISSUES WE WERE ALL DEALING WITH.

BUT HER TEAM WAS, UH, GREAT.

THEY PUT THE PROCESSES IN PLACE TO ENSURE THAT WE STILL GOT A VERY QUALITY AUDIT, UH, AND THAT WE WERE THOROUGHLY TO USE THE WORD SCRUB.

UM, OBVIOUSLY IF THERE ARE ISSUES THERE, WE WANT TO FIND THEM, WE WANNA CORRECT THEM.

SO I FEEL LIKE ANGIE'S TEAM, EVERYTHING I'VE HEARD FROM THE STAFF, THEY DID A TREMENDOUS JOB.

SO WE APPRECIATE THEIR WORK.

AND THEN I WANT TO JUST, UH, ACKNOWLEDGE AND THANK, UH, TROY ELLIOT, MELANIE KEATON, VICTORIA ROTOR.

UH, TROY MENTIONED THE ENTIRE FINANCE TEAM, UH, JUST AN OUTSTANDING JOB.

UH, YOU SAW THAT THIS IS THE THIRD YEAR THAT THEY DIDN'T HAVE ANY FINDINGS ON AN AUDIT, WHICH I THINK IS A TREMENDOUS ACCOMPLISHMENT IN AND OF ITSELF.

UH, WE ARE A LARGE ORGANIZATION, A COMPANY OF COMPANIES, AND WE COME WITH A LOT OF COMPLEXITY.

UH, YOU SAW, UNFORTUNATELY, UH, ON THE LAST SLIDE THAT, UH, ANGELO WENT OVER.

THE COMPLEXITY CONTINUES 'CAUSE G A S B CONTINUES TO ISSUE ADDITIONAL STANDARDS.

SO THAT'S A CHALLENGE.

BUT IN F Y 20, IN PARTICULAR, WITH ALL OF THE FEDERAL FUNDING THAT WE RECEIVED IN ADDITION TO, UH, FOR THE COUNCIL MEMBERS, YOU'LL, YOU'LL RECALL ALL THE ADJUSTMENTS WE WERE MAKING THROUGHOUT THE YEAR IN ORDER TO DEAL WITH THE IMPACTS OF COVID TO MAKE SURE WE HAVE MAIN, UH, TO ENSURE WE MAINTAIN BALANCED OPERATIONS.

THERE'S A LOT OF DETAIL AND COMPLEXITY THAT GOES IN BEHIND THE SCENES ON THAT.

AND I JUST WANT TO THANK, UH, TROY AND MELANIE AND VICTORIA AND THE ENTIRE FINANCE TEAM FOR THEIR WORK.

'CAUSE I THINK IT IS A TREMENDOUS ACCOMPLISHMENT, UH, REALLY GREAT, UH, WORK AND REALLY PROUD OF THE TEAM.

SO JUST WANTED TO MAKE A FEW COMMENTS.

THANK YOU, CHAIR.

THANK YOU, BEN.

AND I, I'M SURE ALL OF US AS COUNCIL MEMBERS REALLY SHARE, UH, YOUR APPRECIATION, UH, ON AND WITH OUR APPRECIATION FOR THE WORK THEY DO.

UH, THEIR WORK, UH, REALLY PROVES THAT WE'VE GOT A VERY RESPONSIBLE, UH, GOVERNMENT WORKING FOR THE PEOPLE IN OUR COMMUNITY.

AND SO THANK YOU VERY MUCH FOR DOING THAT.

I THINK THAT, UH, THERE WERE NO OTHER QUESTIONS AND I WOULD ENTERTAIN A MOTION, UH, TO APPROVE THE REPORT AND RECOMMENDED IT TO CITY COUNCIL FOR THEIR CONSIDERATION.

MAD CHAIR, THIS IS PRISCILLA.

I'M SORRY, I DO HAVE A QUESTION.

OKAY, GO AHEAD, PRISCILLA.

THAT OKAY, PLEASE.

UM, I WAS JUST WONDERING IF THE CER OR ANY OTHER PART OF THE REPORTS ARE GONNA BE MADE AVAILABLE TO THE AUDIT COMMITTEE, AND IF WE HAVE SUBSEQUENT QUESTIONS AFTER REVIEWING IT, IF WE COULD, YOU KNOW, COME BACK TO THOSE IF WE DO HAVE 'EM .

WELL, I THINK THAT WOULD BE APPROPRIATE.

I THINK TROY HAD MENTIONED THE AVAILABILITY OF THAT.

TROY, YOU WANNA REITERATE THAT? UH, YES SIR.

IT, IT IS AVAILABLE NOW.

UM, HISTORICALLY WE USED TO PRODUCE ABOUT TWO TO 300 PAPER COPIES OF THE ANNUAL FINANCIAL REPORT.

UM, WE HAVE REDUCED THAT TO JUST A COUPLE A YEAR NOW.

IT IS AVAILABLE ELECTRONICALLY.

IF YOU'D LIKE A PAPER ONE, I CAN CERTAINLY MAKE THAT AVAILABLE FOR YOU.

BUT IF YOU GO TO THE CITY'S HOMEPAGE AND TO THE BOTTOM LEFT CORNER, THERE IS A, UM, BUTTON THAT SAYS FINANCE AND BUDGET.

AND IF YOU CLICK ON THAT, IT'LL TAKE YOU TO A FULL BUDGET AND FINANCE TRANSPARENCY PAGE, WHICH HAS THE CURRENT FISCAL YEAR, 2020 CAF R AS WELL AS ALL THE HISTORICAL CERS.

BUT IF YOU'D LIKE, UM, SOMETHING DIFFERENT THAT WE CAN CERTAINLY MAKE THAT AVAILABLE.

THANK YOU, TROY.

THAT WORKS.

I CAN ACCESS IT ELECTRONICALLY.

OKAY.

THANK YOU.

AND CHAIR, THIS IS BEN ON, ON THE, UH, ON THE ITEM ITSELF.

UH, I BELIEVE THE COMMITTEE WOULD JUST BE ACCEPTING THE REPORT.

UH, WE WOULDN'T NEED TO FORWARD IT TO THE COUNCIL.

WE, WE WILL POST IT ON OUR WEBSITE.

IT'LL BE AVAILABLE AFTER TODAY.

UH, UH, IT'S ALREADY AVAILABLE, BUT, UH, WE WILL MAKE SURE THE COUNCIL'S AWARE THAT IT'S THERE.

I THINK.

CHAIRMAN, YOU'RE ON MUTE, SIR.

OKAY.

I'VE GOT TOO MANY MUTE BUTTONS TO PUSH AROUND HERE ANYWAY, AND I'M SURE SOME OF YOU WOULD RATHER I'D BE ON MUTE, BUT ANYWAY, , UH, SO I WOULD ENTERTAIN A MOTION TO ACCEPT THE REPORT ON BEHALF OF THE COMMITTEE THAT MOVED.

OKAY, MOVED.

AND A SECOND.

SECOND.

OKAY.

IT'S BEEN MOVED AND SECONDED.

UH, I DON'T BELIEVE THERE'S ANY OTHER QUESTIONS.

ALL THOSE IN FAVOR SAY AYE.

AYE.

AYE.

ANY OPPOSED? SAME SIGN.

HEARING NONE.

AND OPPOSITION.

THANK YOU VERY MUCH, ANGELA AND YOUR TEAM, AND BEN AND YOUR TEAM AND TROY AND ALL THE PEOPLE THAT WORKED WITH YOU ON THIS.

WE'LL NOW PROCEED TO ITEM

[16. 21-2094 FY 2021 Biannual High Profile Report Update [Ben Gorzell, Chief Financial Officer; Troy Elliott, Deputy Chief Financial Officer]]

AND I BELIEVE, TROY, YOU MAY BE PRESENTING THAT TO US.

UH, YES, SIR.

I'M GONNA, I'M GONNA APOLOGIZE.

I'M

[00:35:01]

BUT THIS PRESENTATION, WE COME TO YOU TWICE A YEAR AT THE BEGINNING OF THE FISCAL YEAR TO PRESENT THE FIRST SIX MONTHS FORECAST.

AS FAR AS THOSE HIGH PROFILE CONTRACTS THAT I'LL BE GOING THROUGH OCTOBER THROUGH MARCH.

UM, TODAY I'LL BE SHARING YOU KIND OF THE, UM, RESULTS OF THAT FIRST SIX MONTHS.

BUT IN ADDITION, I'LL ALSO BE SHARING WITH YOU THE FORECAST FOR THE SECOND SIX MONTHS OF THE FISCAL YEAR, GOING FROM APRIL THROUGH THE END OF SEPTEMBER, OF COURSE, COURSE AT THE BEGINNING OF THE, THE FISCAL YEAR, WITH THE ADOPTION OF OUR NEW BUDGET, UM, THERE IS GOING TO BE A LARGE AMOUNT OR LARGE VOLUME OF THESE HIGH PROFILE CONTRACTS COMING THROUGH.

SO WHEN WE LOOK AT THE SECOND, SECOND SIX MONTHS, A LOT OF WHAT YOU'LL SEE ARE A SMALLER NUMBER OF HIGH PROFILE CONTRACTS.

BUT THERE WILL, UM, AFTER WE GO THROUGH THE FIRST SIX MONTHS, YOU'LL SEE A LOT OF THESE WHERE THEY ARE IN PROGRESS, AND THEY'LL BE CONTINUING ON THROUGH THE BALANCE OF THE FISCAL YEAR.

NEXT SLIDE.

NOW, I'LL TRY TO MOVE THROUGH THESE FIRST SLIDES FAIRLY QUICKLY.

I THINK Y'ALL SEEN THESE A NUMBER OF TIMES, BUT JUST AS A REFRESHER FOR, UM, ANY, ANY INDIVIDUALS REVIEWING THIS IN THE PUBLIC, UM, THERE ARE SEVERAL HIGH PROFILE CATEGORIES.

WE HAVE THOSE THAT ARE SELECTED FOR, UM, HIGH PROFILE FOR THE B SESSION PRESENTATION TO THE FULL COUNCIL.

AND THEN WE HAVE THOSE THAT, UM, ARE PRESENTED TO THE AUDIT AND ACCOUNTABILITY COMMITTEE, UM, AS YOU MENTIONED EARLIER, CHAIR AS AN INDIVIDUAL OR A CONSENT.

UM, AND TODAY WE'LL REALLY BE SEEKING YOUR INPUT, UH, BASED ON OUR RECOMMENDATIONS AS FAR AS HOW WE ARE CLASSIFYING THESE IN THESE CATEGORIES.

UM, AND IF YOU'D LIKE TO STAY WITH STAFF'S RECOMMENDATION OR IF THERE'S CHANGES AS COMMITTEE YOU'D LIKE US TO INCORPORATE, UM, AND MAKE BEFORE, UM, THE B SESSION, I THINK IS ACTUALLY TOMORROW.

NEXT SLIDE.

UM, HIGH PROFILE VERY QUICKLY.

IT IS A DISCRETIONARY CONTRACT, NOT LOW BID, VALUED AT OVER $1 MILLION.

ALSO, IT CAN HAVE A HIGH LEVEL OF COMMUNITY INTEREST OR OTHER EXCEPTIONAL INTEREST, OR HIGHLY COMPLEX OR TECHNICAL IN NATURE ARE CONTRACT TERMS AND CONDITIONS THAT ARE NON-STANDARD ARE COMPLEX IN ADDITION TO THIS BASE DEFINITION, HIGH PROFILE DEFINITION.

ON THE NEXT SLIDE, WE ALSO HAVE THE CRITERIA THAT WE EXAMINE FOR THE SELECT HIGH PROFILE CRITERIA.

AND WE USE THIS DEFINITION AS A GUIDE TO, UM, IDENTIFY THOSE HIGH PROFILE PROCUREMENTS THAT WILL BE MOVING TO THE FULL COUNCIL FOR THEIR CONSIDERATION IN THE FORM OF A B SESSION.

THE CRITERIA INCLUDE TYPICALLY A FINANCIAL IMPACT WITH THE VALUE OVER 25 MILLION, UH, POLICY OR PUBLIC SAFETY IMP IMPLICATIONS, A CONTRACT WITH 10 YEARS OR MORE.

A HIGH LEVEL OF COMMUNITY STAKE STAKEHOLDER INPUT OUR IMPACT TO OUR INTEREST.

THEN ALSO PROFESSIONAL JUDGMENT JUST BASED ON, UM, OUR HISTORY IN MANAGING THESE HIGH PROFILE PROCUREMENTS AND PUTTING, PUTTING THESE SELECT HIGH PROFILE CRITERIA TOGETHER.

WE ACTUALLY WENT THROUGH AND LOOKED AT ALL THE HISTORICAL HIGH PROFILE PROCUREMENTS AND WHICH ONES ACTUALLY KIND OF MEET THESE CRITERIA, UM, ARE IN DEVELOPING THESE CRITERIA, UM, THAT, UM, HISTORICALLY COUNCIL HAS EXPRESSED INTEREST IN.

AND THAT'S HOW WE DEVELOPED OUR SELECT HIGH PROFILE CRITERIA FOR THE B SESSION PRESENTATIONS.

NEXT SLIDE.

UH, WE BRIEFED OUR FIRST, FIRST SIX MONTHS REPORT, UM, TO THE COMMITTEE IN OCTOBER OF 20 WITH, UH, CITY B SESSION ON OCTOBER 28TH.

AT THAT TIME, WE IDENTIFIED 34 HIGH PROFILE PROJECTS.

FIVE WERE RECOMMENDED AS A SELECT FOR B SESSION 29 WERE RECOMMENDED AS AN, UM, FOR THE AUDIT ACCOUNTABILITY OF WHICH 12 WERE INDIVIDUAL, AND 17 WERE CONSENT.

ONE THING I WOULD, UM, MENTION IS THAT WITH THE FORECAST, THE FORECAST IS REALLY OUR BEST ESTIMATE.

ESTIMATE AT THE TIME.

THERE ARE GONNA BE ITEMS THAT HAPPENED DURING THAT FIRST SIX MONTHS PERIOD THAT MAY IMPACT OUR ORIGINAL FORECAST, AND I'LL TRY TO HIGHLIGHT THOSE AS WE GO THROUGH THE DETAIL IN THE BACK.

UM, AND THE NEXT COUPLE OF SLIDES WILL ACTUALLY BE THE DETAIL WHERE THESE ARE IN THE ACTUAL LIFECYCLE OF THESE, UM, PROJECTS ARE SOLICITATIONS, AS I MENTIONED, EXCUSE ME, ON THE PRIOR SLIDE THAT WE HAD IDENTIFIED FIVE SELECT B SESSION ITEMS. YOU CAN SEE HERE THERE ARE FOUR THAT WE PRESENTED TO THE FULL COUNSEL IN A PRES SOLICITATION.

THOSE FOUR WERE THE ONE RECENTLY, UH, PRESENTED BY MELODY FOR THE FY 20 22, 20 23 CONSOLIDATED FUNDING.

WE HAD THE DISPARITY AND CAUSATION ANALYSIS STUDY, THE HEMISPHERE, CITY PARK, AND THE MUNICIPAL TOW MANAGER.

THERE WAS ALSO AN ITEM THAT WHEN WE ORIGINALLY CAME FORWARD WITH OUR ORIGINAL FORECAST THAT WE HAD IDENTIFIED AS SELECT, WHICH WAS THE AIRPORT TERMINAL B EXPANSION.

AFTER WORKING WITH THE DEPARTMENT AND WORKING WITH PUBLIC WORKS,

[00:40:01]

SO IT FELL OFF.

SO, UM, WE ENDED UP WITH FOUR.

AS WE MOVE THROUGH THE NEXT SIX MONTHS, THESE WILL BE COMING BACK TO YOU IN THE FORM, UH, FULL COUNSEL IN THE FORM OF A POST SOLICITATION, AND OF COURSE, BE COMPLETED AND COMPLETED, MEANING GOING TO CITY COUNCIL FOR, UM, AWARD AND APPROVAL OF A CONTRACT.

WE DID HAVE EIGHT INDIVIDUAL AUDIT COMMITTEE ITEMS, FIVE OF WHICH CAME THROUGH IN A PRES SOLICITATION, AND THREE, WHICH ACTUALLY COMPLETED THE ENTIRE PROCESS AND WENT TO COUNCIL FOR THEIR, UM, FOR THEIR, UM, APPROVAL.

UH, THOSE THREE WERE RELATED TO THE HOUSING PROGRAMS FOR THE NEIGHBORHOOD IMPROVEMENT, UH, FOR THE RENTAL HOUSING DEVELOPMENT, GAP FUNDING, HOME OWNERSHIP, HOUSING DEVELOPMENT GAP FUNDING, AS WELL AS THE NEIGHBORHOOD IMPROVEMENT BOND PROGRAM FOR SAN PEDRO.

I WON'T GO THROUGH ALL THESE IN DETAIL, UM, BUT CERTAINLY IF Y'ALL HAVE ANY QUESTIONS, UM, YOU'D BE HAPPY TO ANSWER THESE WHEN WE WRAP UP THE PRESENTATION ON THE NEXT SLIDE.

THE, THE FOLLOWING TWO SLIDES WILL SHOW THE COMMITTEE THOSE ITEMS THAT WERE PRESENTED TO THE COMMITTEE ON THE CONSENT AGENDA.

THERE WERE A TOTAL OF 19 ITEMS THAT WENT THROUGH THE AUDIT COMMITTEE ON CONSENT, OF WHICH 18 HAVE PRE, UM, COMPLETED THE PRES SOLICITATION AND WILL BE BE FORWARD, UM, ARE CURRENTLY IN THE EVALUATION PROCESS.

AND ONCE THOSE ARE WRAPPED UP, WE'LL BE COMING BACK TO THE AUDIT COMMITTEE IN TERMS OF A POST, THEN ULTIMATELY COUNCIL APPROVAL.

AND THERE WAS ONE ITEM THAT WAS PRESENTED THAT HAD COMPLETED THE PRE AND COMPLETED THE POST SOLICITATION, AND NOW WE'LL BE MOVING FORWARD TO THE FULL COUNSEL FOR CONSIDERATION.

AS A REMINDER, THESE CONSENT ITEMS ARE TYPICALLY THOSE ITEMS THAT ARE FAIRLY ROUTINE IN NATURE, SUCH AS LANDSCAPING SERVICES OR ON-CALL HVAC SERVICES.

UM, AND AS THE COUNCILMAN MENTIONED EARLIER, UM, THERE'S A LOT OF PREPARATION THAT GOES INTO EACH ITEMS AS FAR AS GENERALIZING, UM, BRIEFING THE COUNCIL PEOPLE AND ACTUALLY HAVING THE INFORMA INFORMATION AVAILABLE THAT THEY CAN PULL WITH, UM, IF THEY, IF THEY WOULD LIKE.

NEXT SLIDE.

THIS IS A BALANCE OF THOSE CONSENT AUDIT ITEMS OF THE 19 I JUST MENTIONED.

AND AT THE BOTTOM YOU CAN SEE THE ONE ITEM, THE ON-CALL CONSTRUCTION INSPECTION SERVICES THAT COMPLETED THE POST.

AND NOW WE'LL BE MAKING ITS WAY TO THE FULL COUNCIL FOR THEIR CONSIDERATION.

YOU CAN GO TO THE NEXT SLIDE, LAUREN.

THESE NEXT COUPLE OF SLIDES WILL START THE PRESENTATION OF THE SECOND SIX MONTHS OF THE FISCAL YEAR, UM, FROM APRIL THROUGH SEPTEMBER.

WE IDENTIFIED 21 HIGH PRO HIGH PROFILE PROJECTS.

THREE WILL BE RECOMMENDED, UM, FOR B SESSION.

THESE WILL BE IN ADDITION TO THOSE ITEMS THAT WERE PRESENTED IN THE PRIOR SIX MONTHS THAT COMPLETED YOUR PRES SOLICITATION AND WILL BE COMING FORWARD AS POST.

SO IT'LL BE SOME, SOME DUPLICATION THERE.

AND AS A, AS A REMINDER, WHEN THESE ARE RECOMMENDED FOR B SESSIONS, THEY WILL COME FORWARD TO B SESSION IN THE FORM OF TWO PRESENTATIONS, ONE AS A PRES SOLICITATION TO GET THE, UM, INPUT FROM THE COUNCIL AND, UM, AS A POST ONCE THE EVALUATION HAS BEEN COMPLETED.

TO SHARE THE RESULTS OF THOSE, OF THE EVALUATION AND THE SOLICITATION.

WE'RE LOOKING AND RECOMMENDING 18 FOR THE AUDIT AND ACCOUNTABILITY.

UH, COMMITTEE CONSIDERATION SEVEN WOULD BE RECOMMENDED AS INDIVIDUAL AND 11 WOULD BE RECOMMENDED AS CONSENT.

NEXT SLIDE PLEASE.

THESE ARE THE THREE ITEMS THAT WE ARE RECOMMENDING FOR, UM, SELECT PRESENTATIONS TO THE FULL COUNSEL IN THE FORM OF A B SESSION.

THE FIRST ONE WOULD BE THROUGH ECONOMIC, UM, ECONOMIC DEVELOPMENT.

UH, FOR THE SA READY TO WORK PROGRAM IS A ONE YEAR WITH FOUR ONE YEAR OPTIONS, ROUGHLY 150 MILLION OVER THE CONTRACT PERIOD.

UM, THE SECOND ONE IS A PUBLIC WORKS ITEM WITH THE SAN SABA STREET, COMMERCE STREET TO SANTA ROSA STREET FOR ROADWAY IMPROVEMENTS, UM, FOR TOTAL COST OF 32 MILLION.

ANY LAST ITEM IS FROM A SOLID WASTE, UM, DEPARTMENT FOR RECYCLING PROCESSING SERVICES.

THIS WOULD BE A LONG-TERM CONTRACT, MOVE AND SELL RECYCLE COMMODITIES THROUGH THE BLUE CART PROGRAM, SUCH AS OUR CARDBOARD, ALUMINUM CANS, PLASTIC AND GLASS BOTTLES.

AND THIS IS A 10 YEAR WITH TWO FIVE YEAR OPTIONS FOR A TOTAL OF 20 YEARS AT A ESTIMATED VALUE OF $40 MILLION.

NEXT SLIDE, PLEASE.

THIS NEXT SLIDE REPRESENTS THOSE THAT WE'RE RECOMMENDING.

AS FOR INDIVIDUAL CONSIDERATION, UM, TO THE FULL AUDIT AND ACCOUNTABILITY COMMITTEE OVER THE NEXT, UH, SIX MONTHS, WE HAVE ONE FOR THE AVIATION DEPARTMENT FOR

[00:45:01]

THIS IS ACTUALLY A CITYWIDE, UM, CONTRACT, BUT CSEP IS ONE OF THE MAJOR PARTICIPANTS IN THIS CONTRACT.

SO THEY ARE, UM, DESIGNATED AS THE OWNER, BUT IT IS A CITYWIDE CONTRACT WHERE THEY, UM, THEY, UM, BASICALLY HAVE THE MAJORITY OF THAT CONTRACT PARTICIPATION FOR MY DEPARTMENT AND FINANCE.

WE WILL BRING, UH, FORWARD A DEPOSITORY AND LOCKBOX SERVICES CONTRACT FOR 1.6 MILLION MERCHANT BANKING SERVICES, UM, WHICH IS OUR CREDIT CARD MERCHANT, WHICH, UH, ACCEPTS OUR MAJOR BRANDS CREDIT CARD BRANDS FOR 9 MILLION.

AND THEN WITH NEIGHBORHOOD HOUSING SERVICES, WE HAVE OUR RENTAL HOUSING DEVELOPMENT GAP FUNDING FOR 4.5 MILLION AND HOME OWNERSHIP HOUSING DEVELOPMENT GAP FUNDING AT 3 MILLION.