HomeMy WebLinkAboutAGENDA REPORT 2003 0507 CC REG ITEM 10CMOORPARK CITY COUNCIL
AGENDA REPORT
TO: Honorable City Council
FROM: Cynthia L. Borchard, Administrative Services Director 9b
DATE: April 30, 2003 (meeting of May 7, 2003)
SUBJECT: Consider GASB Statement No. 34 Implementation Proposals
SUMMARY
The City is required to comply with Government Accounting
Standards Board (GASB) Statement No. 34 which establishes new
financial reporting guidelines including infrastructure
reporting. Proposals from our audit firm to restate our
financial statements and from engineering firms to value our
infrastructure have been obtained. Staff is recommending
approval of the proposal from our audit firm, Vavrinek, Trine,
Day and Co., LLP, in an amount not to exceed $20,000 and from
Harris and Associates in the not to exceed amount of $24,990.
Also recommended is an additional appropriation of $24,990.
BACKGROUND
In June 1999, the Governmental Accounting Standards Board (GASB)
- which sets "generally accepted accounting principles"
(financial reporting rules) for all state and local governments
- established a new framework for the financial reports of state
and local governments. The new framework or financial reporting
model represents the biggest single change in the history of
governmental accounting. Known as Statement No. 34: Basic
Financial Statements - and Management's Discussion and Analysis
- for State and Local Governments, it represents a fundamental
revision of the current financial reporting model, which has
been in place since 1979.
DISCUSSION
Statement 34 covers the basic financial statements, note
disclosures, and the new Management Discussion and Analysis
(MD&A). Governments need to report capital assets with
consideration of depreciation, including infrastructure assets
and "historical treasures ". This means that the government
needs to report in a complete, accurate and detailed manner to
adequately account for and report their capital asset activity.
The objective of the new Statement is that anyone with an
interest in public finance - citizens, the media, bond raters,
creditors, legislators, and others - will have additional and
easier -to- understand information in a business -like format about
any government in the United States.
Key Features of the New Reporting Model. Even though the new
governmental financial reporting model has deep roots in
traditional public sector accounting and financial reporting, it
offers many new features. The most important of these new
features are:
1. Government -wide financial reporting. For the first
time, users of state and local government financial
reports have access to government -wide financial
statements that provide a clear picture of the
government as a single, unified entity. These new
government -wide financial statements complement
rather than replace traditional fund -based financial
statements.
2. Additional long -term focus for governmental
activities. Traditional reporting for tax - supported
(governmental) activities has focused on near -term
inflows, outflows and balances of spendable
financial resources. The new financial reporting
model retains this short -term focus in the
governmental fund financial statements while
providing a long -term perspective on these same
activities in the government -wide financial
statements.
3. Narrative overview and analysis. The new
governmental financial reporting model provides
financial report users with a simple narrative
introduction, overview and analysis of the basic
financial statements in the form of management's
discussion and analysis (MD&A).
2 (00OOCG
4. Information on major funds. It is widely agreed
that fund information is most useful when presented
for individual funds rather than for aggregations of
funds (e.g., all special revenue funds).
Accordingly, the new governmental financial
reporting model presents individual fund data for
each of a government's major funds.
5. Expanded budgetary reporting. Currently, budgetary
comparisons are based solely on the final amended
budget. Under the new governmental financial
reporting model, information on the original budget
also is presented. In addition, the new model
eliminates aggregated budget presentations (e.g.
totals for all budgeted special 'revenue funds) in
favor of comparisons for the general fund and each
individual major special revenue fund.
6. Infrastructure reporting. Current accounting
principles do not require reporting the cost of
infrastructure such as roads, bridges, storm drains,
street lights and traffic signals as capital assets
- not because they aren't major community
investments, but because they are immovable, and
only of value to the government. The new
governmental financial reporting model requires that
infrastructure be reported at its "historical" (not
current) value, and then depreciated like other
assets.
Under GASB 34, our financial statements will become longer and
more complex - and thus more difficult to prepare and audit.
This increased difficulty and complexity directly translate into
increased costs - both one -time during implementation and
ongoing thereafter - for staff resources as well as audit fees
and consultant services.
With GASB 34 being such a significant change, one question is:
Why implement GASB 34? The three most important reasons are:
1. It's Generally Accepted Accounting Principles
(GAAP). This is probably the most compelling reason
for implementing the new model. GASB is the
acknowledged authoritative body in setting generally
accepted accounting principles (GAAP) for local and
state agencies. Maintaining citizen confidence in
the stewardship of public assets requires
credibility and integrity in the City's accounting
3 00,06 -1
and financial reporting systems. And preparing
audited financial statements in accordance with
industry standards is an essential foundation in
gaining and sustaining this trust.
2. The new model is supported by a number of users and
professional associations. The National Association
of State Auditors, Comptrollers and Treasurers has
endorsed the new model, and so have the credit
rating agencies (who are the primary "users" of
these reports). There are many public works'
officials who believe the new reporting model will
result in a better understanding of infrastructure
needs. And a number of well- respected municipal
finance professionals think the new reporting model
better tells a city's fiscal story, and is a
significant improvement over the current model.
3. Usually required for grants and long -term financing.
In most cases, grant agencies and those who review
and monitor long -term financing, require the
submission of audited financial statements. Those
entities that do not implement GASB 34 will receive
a qualified opinion (as opposed to an unqualified
opinion) on their financial statements. Such
opinions will have a negative impact with respect to
grant compliance and long -term financing.
Implementation. As set forth in the following table, the
effective date for the new model varies depending on the
financial size of the agency and its fiscal year. (The chart
assumes a fiscal year beginning July 1 and ending June 30).
Also, there are different effective dates for implementing the
new model and prospective reporting of infrastructure assets
(assets added or deleted from the effective date of the new
model) versus retroactive reporting of infrastructure back to at
least 1980:
Basic Model
(Prospective Retroactive
Total Infrastructure Infrastructure
Revenues Reporting) Reportinq
$100 million or more
$10 to $100 million
Under $10 million
2001 -02
2002 -03
2003 -04
4
2005 -06
2006 -07
Not Required
The City of Moorpark falls within the $10 to $100 million
revenue category and therefore we need to implement the required
changes for fiscal year 2002 -03. Retroactive Infrastructure
reporting is not required until 2006 -07, however, the
consultants recommend completing the retroactive valuations now
so we don't have to go back and restate our financial statements
and possibly incur additional costs.
Following are comments on each of the required elements of the
new reporting model and the status of same:
ELEMENT
STATUS
Management Discussion and
Some of this information is
Analysis (MD&A)
currently in the introduction
section of the City's
Comprehensive Annual Financial
Report (CAFR), but it will need
to be expanded to cover all the
required items.
Government -Wide Financial
A new element requiring
Statements
conversion of current
Statements.
Governmental Fund Financial
In current reports, but new
Statements
requirement changes the format.
Proprietary Fund Financial
The City does not have any
Statements
proprietary funds.
Fiduciary Fund Financial
In current reports. No
Statements
significant changes are
anticipated.
Notes to the Financial
In current reports, but changes
Statements
and additions are required in
order to meet the new model's
disclosure requirements.
Required Supplementary
New element. Added requirement
Information Other than MD&A
for presentation of both
original and final budget.
Infrastructure Reporting and
Not an independent element, but
Depreciation
a significant new requirement.
Will be the most costly change
to implement. The City does
not have infrastructure
valuations at the present time.
In planning for GASB 34 implementation, staff met
City's audit firm, Vavrinek, Trine, Day & Co., LLP.
proposed to assist the City in the conversion at
rates in effect for their auditing services and have
with the
They have
the hourly
estimated
5 10 06
our cost at $15,000 to $20,000. This will include re- formatting
the financial statements and reviewing the work performed by the
Valuation consultant during their preparation of the
infrastructure inventory and calculations of estimated net book
value to ensure compliance with GASB 34.
Prior to the adoption of the New Reporting Model, the financial
statements of public agencies generally included land, buildings
and equipment only. After adoption of the New Reporting Model,
the City's financial statements will include roadways, sewer
systems, drainage systems and other infrastructure assets.
In other cities and governmental agencies, many of these
infrastructure systems were constructed using debt financing,
rather than cash reserves. After the adoption of the New
Reporting Model, financial advisors and other interested parties
will be able to compare the agency's cost and depreciated value
of roads, storm drains, and other infrastructure assets with the
amount of debt used to finance their construction. In addition,
the City Council, staff, financial advisors and the City's
residents will be able to analyze the amount of its investment
and depreciated book value of the entire infrastructure of the
City.
Infrastructure Valuation and Capitalization Threshold
GASB 34 requires governments to establish and disclose a
capitalization policy for infrastructure assets. The policy
sets forth the dollar value above which such asset acquisitions
are capitalized and included in the City's Statement of Net
Assets (the balance sheet). Infrastructure falling below this
capitalization threshold will be expended when acquired. The
threshold does not indicate that individual assets with costs
less than $100,000 have not been, or in the future will not be,
counted. Infrastructure inventory records will continue to
include historical costs of assets less than $100,000. A
capitalization threshold is a practical tool to serve a
government's financial reporting needs.
Fixed Asset (Equipment) Capitalization Threshold
Currently, the City designates capitalization of fixed assets
with a value of $500 or more. In 1997, the Governmental Finance
Officers Association (GFOA) approved a recommended practice,
"Establishing Appropriate Capitalization Thresholds for Fixed
Assets." The key elements are:
6 °C
1) Fixed assets should be capitalized only if they have an
estimated useful life of at least two years following the
date of acquisition;
2) Capitalization thresholds should be applied to individual
fixed assets rather than groups of fixed assets;
3) As a general rule, capitalization thresholds should be
designed to encompass approximately 80 percent of a
government's total non - infrastructure assets;
4) In no case should a government establish a fixed asset
threshold of less than $5,000 for any individual item;
5) In establishing capitalization thresholds, governments that
are recipients of federal awards (i.e. Community
Development Block Grants and Department of Justice awards)
should be aware of federal requirements that prevent the
use of capitalization thresholds in excess of certain
specified maximum amounts; and
6) Governments should exercise control over non - capitalized
fixed assets by establishing and maintaining adequate
control procedures at the departmental level.
If the City's policy were modified to adhere to the GFOA set of
recommended practices (establishing a $5,000 and $100,000
thresholds for fixed assets and infrastructure), the capitalized
items will include infrastructure, computer software,
photocopiers, and vehicles, but exclude furniture and some
computer equipment and hardware. Non - compliance with the
recommended infrastructure capitalization and fixed asset
thresholds will likely draw criticism by the National Council of
Government Accounting in its review of the City's annual report.
Additionally, non - compliance will cause the City's assets to be
overstated and expenditures understated in the future, when
compared with other agencies.
To adequately maintain control over non - capitalized fixed
assets, staff will utilize bar -coded tags and handheld bar -code
scanning equipment to conduct annual inventories of all
equipment. Department heads will continue to be responsible for
all property charged to their department, establishing each
employee's accountability for asset security and care.
Depreciation Reporting Method
Standard Approach
The standard depreciation reporting method is currently utilized
for the City's buildings and equipment. In accordance with
GAAP, land is never depreciated. The City's buildings, computer
hardware and software, equipment and furniture are depreciated
000071
using the straight -line method with the following estimated
useful lives:
Buildings and Improvements 50 years
Furniture and Fixtures 10 -15 years
Equipment and Vehicles 5 -10 years
Computer Software and Hardware 3 years
The accounting concept of depreciation allows for the systematic
reduction of the carrying value of assets (e.g. buildings,
equipment, roadways, etc.) over the period of time they are
used. The historical cost is divided by the estimated useful
life (in years) to determine the annual charge for depreciation.
The resulting "net book value" is computed by subtracting the
total accumulated annual depreciation from the historical cost,
as the following example demonstrates:
Assumptions:
Est. historical cost - computer network installed FY 99 -00 $250,000
Estimated useful life 3 years
Annual charge for depreciation $83,333
Net book value of computer network installed in FY 99 -00:
Historical cost - computer network installed in FY 99 -00 $250,000
Less: total accumulated depreciation through the end of FY 01 -02
($250,000 divided by 3 years estimated useful life, multiplied
by 3 years service equals $250,000) ($250,000)
Net book value as of June 30, 2002 $ 0
If the standard depreciation reporting method is used for
reporting infrastructure assets, a one -time determination of the
estimated historical cost, useful life and net book value will
be necessary. Annual depreciation is calculated and recorded as
an expense in the current reporting period and a proportionate
reduction of the net book value of the asset.
The use of the standard depreciation reporting method offers the
following advantages to the City:
➢ Comparability - Based upon discussions with the City's
auditors, other California municipal finance officers and
GASB 34 consultants, only major metropolitan cities will
adopt the modified approach;
➢ Simplicity - The use of the
method enables integration
currently used by the City
organizations;
standard depreciation reporting
of the accounting method
and all other non - governmental
8 000072
➢ Cost Savings - Based upon discussions with other municipal
finance officers and the City's auditors, Finance staff
believes the cost of implementing the Modified Approach
(the alternative described below) would probably exceed
$40,000 immediately, followed by the cost of performing
future evaluations, recordkeeping, and reporting that would
exceed $40,000 annually.
Modified Approach
The City has the option of choosing the "Modified Approach" for
infrastructure assets, but only if it satisfies the following
requirements.
➢ The City must develop and maintain an up -to -date inventory
of its infrastructure assets.
➢ The City must perform or obtain condition assessments of
the infrastructure assets and summarize the results using a
reliable measurement scale. It is essential that such
condition assessments be replicable by other measurers to
reach substantially similar results.
➢ The City must determine an annual estimate of the cost to
maintain and preserve the infrastructure at a condition
level established and disclosed by the City.
➢ The City must assert and document that infrastructure
assets are being preserved at or above the condition level
established and disclosed by the City.
If the modified approach is elected for its infrastructure, the
City would be required to present two types of information
regarding the assets. First, the results of the three most
recently completed condition assessments must be presented to
demonstrate that infrastructure assets have been maintained at
or above the condition level established by the City. Second,
an estimate of the dollar amount needed to maintain or preserve
infrastructure assets at the level established by the City, and
actual amounts of expense for each of the past five reporting
periods must be disclosed. The purpose of the second disclosure
is to allow readers of the financial statements to make their
own assessment of the City's long -term commitment to maintaining
infrastructure assets.
As described previously in this report, Finance staff believes
the cost of performing the conditional assessment of the three
previous years would exceed $40,000. Finance staff believes the
9'
cost of performing future evaluations, recordkeeping, and
reporting using the modified approach would exceed $40,000
annually. Because of the significant cost, it appears that only
very large local governments will elect to use the modified
approach. In addition, governmental accounting industry leaders
have stated that in the event infrastructure assets are not
maintained at the established condition level, the local
government's bond rating is likely to fall to an unacceptable
risk category and may even require the return of Federal and
State funds.
It should be noted that selecting a method does not permanently
commit the City to that method. The method may be changed at a
future date, as the City's needs change. Upon review of both
methods and consultations with the City's auditors, staff
recommends the use of the depreciation reporting method for
infrastructure assets.
Services Required by Public Work's Professional Advisors
Regardless of whether the City decides to use either the
depreciation reporting method or the modified approach, a
detailed inventory of the City's infrastructure is required.
Some of the City's infrastructure was inherited from Ventura
County upon incorporation of the City in 1983. No reliable
infrastructure records were provided at that time. Because it
has not been necessary to include the City's infrastructure
assets in the City's financial statements prior to the adoption
of GASB 34, a detailed inventory of the entire infrastructure of
the City does not exist. This is consistent with other
municipalities.
The City's budget includes an appropriation of $5,000 for Public
Work's consultants and $15,000 for Finance consultants in FY
2002 -2003. This was intended to enable a preliminary review
with the expectation that additional services would be necessary
to complete the infrastructure inventory. Based upon findings
during planning meetings with the City's auditors and staff, it
has become obvious that it will be necessary to retain Public
Work's consultants to prepare the infrastructure inventory.
Staff has received proposals from four (4) qualified engineering
firms with GASB 34 experience. Staff interviewed the top two
qualified bidders. Although both firms are competent and
professional, based upon their experience and knowledge, Harris
& Associates is clearly the most qualified consultant to perform
the infrastructure inventory and valuation. They have worked
with our audit firm and their approach would require less city
staff time and result in a lower overall cost. The Personnel
10 100001,4-
Profiles of the Harris & Associates team that would serve the
City during the GASB 34 project are attached to this staff
report. If retained, the Public Work's professional advisor
would perform the following:
➢ Compile inventories of infrastructure assets;
➢ Determine the actual acquisition date or estimate the
acquisition date;
➢ Determine the useful life of each type of infrastructure
asset;
➢ Establish unit costs of infrastructure assets or components
in order to establish replacement cost in the event the
modified approach is elected;
➢ Discover actual historical cost of infrastructure assets,
or apply an industry index to arrive at estimated
historical cost; and
➢ Calculate the current net book value of infrastructure
assets utilizing straight -line depreciation.
Harris & Associates has proposed the following scope of work:
➢ Task 1 - Kickoff and Preliminary Review City Inventories
and Records.
➢ Task 2 - Inventory work including in -depth review of city
inventories, determination of asset classification and
network subsystems, determination of useful life and
evaluation of existing and appropriate capitalization
levels /policy.
➢ Task 3 - Acquisition and Valuation Effort.
➢ Task 4 - Comprehensive Maintenance and Perpetuation
Procedures.
➢ Task 5 - Project Planning and Coordination.
➢ Task 6 - Preparation of GASB 34 Final'Report(s).
Their proposal includes a time -line to completion of 11 weeks
which would meet our needs.
Services Required by Finance's Professional Advisors
As described previously, the net book value of the
infrastructure inventory will be integrated into the audited
financial statements of the City upon the adoption of the New
Reporting Model. Therefore, Finance staff believes it's in the
best interest of the City to retain the City's auditors to
supervise the preparation of the infrastructure inventory that
they will opine thereon as follows:
➢ Plan and review the work performed by Public Work's
consultants during their preparation of the infrastructure
inventory and calculations of estimated net book value to
ensure compliance with GASB 34; and
➢ Re- format the audited financial statements of the City to
conform to GASB 34.
FISCAL IMPACT:
The FY 2002 -2003 City budget includes an appropriation of $5,000
for Public Work's consultants and $15,000 for Finance
consultants. The attached budget resolution increases the
appropriation in the amount of $19,990 for the Public Work's
consultant and $5,000 for Finance consultant, resulting in an
increased appropriation of $24,990.
STAFF RECOMMENDATION: (Roll Call Vote)
1) Adopt the recommended infrastructure capitalization
threshold of $100,000 and fixed asset (equipment)
capitalization threshold of $5,000 effective July 1, 2002;
2) Approve the use of the standard depreciation reporting
method for the entire infrastructure of the City upon
adoption of the New Reporting Model;
3) Authorize the City Manager to execute a professional
services agreement with Harris & Associates subject to
final language approval by the City Attorney and City
Manager not to exceed $24,990;
4) Accept the proposal from Vavrinek, Trine, Day & Co., LLP,
for assistance in implementation of GASB 34 in accordance
with their current hourly rates not to exceed $20,000;
5) Adopt Resolution No. 2003- amending the FY 02/03
Budget to revise the amount of funding for this project per
Exhibit "A ".
12 000E 7
ATTACHMENTS:
Vavrinek, Trine, Day & Co., LLP Proposal
Harris & Associates Schedule of Fees
Harris & Associates Project Team
Professional Services Agreement Draft
Summary of Proposals Received
Resolution and Budget Amendment Exhibit "A"
13
Vavrinek, Trine, Day & Co., LLP
Certified Public Accountants & Consultants
April 4, 2003
Johnny Ea
Budget and Finance Manager
City of Moorpark
799 Moorpark Avenue
Moorpark, CA 93021
Dear Johnny:
[VALUE THE DIFFERENCE
As you are aware the City of Moorpark is a phase II government and is required to implement GASB Statement
No. 34 this year. I have prepared a summary of the assistance that we will provide to the City of Moorpark for the
implementation the new pronouncement. Our firm has completed more than 50 phase I governments including 4
CSMFO and GFOA award winning GASB 34 reports.
Based upon our experience, the most efficient implementations have been accomplished by preparing a proforma
financial statement using the prior year's audited numbers as a base. The proforma is then used to prepare the
actual 2002 -2003 GASB 34 financial statements. We have also learned that waiting until the last minute causes
unnecessary frustrations and delays in issuing the audit report. Therefore we are suggesting that we begin the
proforma process as soon as possible with your assistance. To start the process we need your approval to begin to
incur time for the development of the 2002 -2003 proforma. We expect the implementation to be performed in
different segments.
GASB 34 Planning meetings
(Proposed timeline April/May 2003)
• Meet with City staff to formalize timelines and to agree upon the division of work required to implement
the new GASB pronouncement.
Meetings with city engineers /consultants
(Proposed timeline April 2003 — August 2003)
• We would expect the infrastructure valuation to be completed during these months. We will need to be
involved in a preliminary planning meeting, if this has not already occurred, and at least one progress
meeting to review the assumptions used in the valuations.
• This assumes that the City contracts, or uses in -house engineers to complete the infrastructure valuation
during this time period.
�,Q
8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 rwww.vtdcpa.com
FRESNO LAGUNA HILLS PLEASANTON RANCHO CUCAMONGA SACRAMENTO SAN JOSE
Johnny Ea
Budget and Finance Manager
City of Moorpark
April 4, 2003
Page 2
Preparation of the Citv's Financial Statements in the new format
(Proposed timeline April — July 2003)
• It is during this time period that the majority of the work on the City's proforma financial statements will
be performed.
• During this time period we will work with City staff to ensure that the City of Moorpark financial report
is prepared in compliance with the new requirements.
• We will also review your policies and procedures to ensure that they the City's records will be maintained
in a GASB 34 compliant manner.
• Review of fund structure and account codes for proper presentation of accounting activity in the new
format required by GASB 34.
• Review City policies and procedures related to capitalization of fixed assets and related annual
depreciation.
• Review City policies and procedures related to the capitalization of infrastructure and related annual
depreciation (assuming the modified approach is not used).
• Review fixed asset listing for compliance with requirements for Land, Improvements, Buildings and
Equipment.
• Identification of all long -term liabilities and assets for recording in the new Full Accrual Financial
Statements.
• Assist in the development of format and structure of information to be included in the Management's
Discussions and Analysis.
• Development of reconciling and conversion entries that are necessary to bring the City's financial records
into the new required full — accrual, entity — wide financial statement format.
• Development of format for Statement of Cash Flows, if required.
The above services will be provided at our standard hourly billing rates. Our fees for these services will be based
upon the hours spent on the engagement. Based upon our experience with the City's that implemented last year
we estimate the total charge for our services to range from $15,000 to $20,000. The cost is affected by the level
of City staff assistance in the completion of the various tasks and assignments. Our invoices for these services
will be billed as the services are rendered.
Johnny Ea
Budget and Finance Manager
City of Moorpark
April 4, 2003
Page 3
Please sign the copy of this letter in the space provided and return to me in the enclosed envelope. We would like
to start the project as soon as possible to ensure that your 2002 -2003 financial statements are issued within your
timelines. It is our pleasure to work with your staff in the implementation of this new accounting pronouncement.
If you have any questions or concerns please call me at 909 - 466 -4410.
KTP:mcr
030248
Yours very truly,
��—/ —1 /v
Kevin T. Pulliam
of Vavrinek, Trine, Day & Co., LLP
000010
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6 - Schedule of Fees
GASB 34 Infrastructure Valuation Services
Scope of Work
Description
Project
Manager
Project
Engineer
Engineering
Analyst
Admin
Total by Task
$170/hr $150/hr
$75/hr
$55/hr
Task 1 - Kickoff & Prelim Review City Inventories and Records
4
4
10
$2,030
Task 2 - Inventory Work
Step 1
In -depth Review of Inventories and City Records
2
8
30
$3,790
Step 2
Determine Asset Classification and Network/Subsystem
1
$170
Step 3
Determination of Useful Life
1
1
$320
Step 4
Evaluation of Existing /Appropriate Capitalization Level/Policy
2
$340
Task 3 - Acquisition and Valuation Effort
2
8
30
$3,790
Task 4 - Comprehensive Maintenance and Perpetuation Procedures
Step 1
Establish Asset Modules (Spread sheets) via Microsoft Excel
8
30
$3,450
Step 2
Preparation of a Procedure to Capture Future Asset Information
2
1
$490
Task 5 - Project Planning and Coordination
8
8
12
$3,460
Task 6 - Preparation of GASB 34 Final Report(s)
Step 1
Prepare Summary of Findings (Draft Report)
18
4
4
2
$4,070
Step 2
Review Results with Appropriate City Staff
4
4
4
$1,580
Step 3
Final Report
4
4
4
$1,500
Total Hours per Staff
48
50
120
6
Total Cost per Staff
$8,160
$7,500
$9,000
$330
$24,990
Standard Hourly Billing Rates:
Jeffrey Cooper, PE, Project Director
Ronald D. Creagh
Dennis Anderson
Engineering Analyst
Clerical Staff
Project Cost
Lump Sum Not to Exceed Total Project Cost
$190.00
$170.00
$150.00
$75.00
$55.00
$24,990
$24,990
Indirect expenses (such as mileage, duplicating and postage) are included in the hourly rates
shown above.
F
F iT�l
Page 37
p�+eq(s
GASB 34 Infrastructure Valuation Services
4TEp �
Project Team
Jeffrey M. Cooper, PE, Project Directorr, As Senior Vice President and Member of the
Board of Directors, Mr. Cooper has over 26 years of professional consulting engineering
experience with public infrastructure planning, design, and finance. His projects have
included master plans for flood control, drainage, sewer, and water systems, which has
involved extensive inventory work and condition assessment. His projects have included
significant street rehabilitation, street widening, pavement management, traffic signal design,
and intersection signal modification. Mr. Cooper is an expert assessment engineer and has
directed the formation and /or management of over a hundred assessment and special
financing districts which funded numerous capital projects. These include 1913 and 1915 Act
districts, Mello -Roos districts, and special fee districts. As a result, he has worked extensively
with finance departments and has extensive knowledge of local government budget and
financial systems.
Ron Creagh, ProjectManaget. Upon joining Harris 5 years ago, Mr. Creagh brought with
him over 30 years of city management experience, serving as City Manager and Assistant
City Manager in a number of cities of varying sizes in California and Nevada. He has
directed a host of special projects and has overseen the operations of a multitude of
complex city departments. Mr. Creagh heads up our GASB 34 Program, and he has been
assigned as Project Manager for our GASB 34 compliance work in the cities of Palo Alto,
Rancho Palos Verdes, Piedmont, Walnut Creek, San Luis Obispo, Berkeley, Manhattan
Beach, and Vacaville. He has been assigned as Management Advisor for our GASB 34
projects in the cities of Lake Elsinore, Carson, and Foster City, and Tustin. Previously, he
worked in Harris' Tracy Office overseeing infrastructure planning, technical studies, and the
development of complex Finance and Implementation Plans for the City of Tracy. Mr.
Creagh has also completed major, high profile projects for two of the fastest - growing cities
in the country (Las Vegas, Nevada, and Phoenix, Arizona) which resulted in numerous
process and organizational improvements, streamlined plan review /processing and
customer service. He also served as Interim Manager for the City of Las Vegas' Land
Development Office for 1 year. Mr. Creagh has extensive knowledge of the financial
reporting requirements for local government agencies and will be instrumental in ensuring
that the infrastructure valuation work will be GASB 34 compliant.
Dennis A. Anderson, Project Engineer. Mr. Anderson has served as Project Manager for
our GASB 34 projects in the cities of Lake Elsinore, Carson, Upland, Yorba Linda, and
Tustin. He is assigned as Project Engineer for other GASB 34 projects in the cities of Palo
Alto, Rancho Palos Verdes, Vacaville, and San Luis Obispo. He has more than 14 years of
professional experience in the areas of public infrastructure management and public finance.
He has been involved in a wide variety of public finance projects as project manager and
financial analyst, including assessment districts, CFD's, special tax districts, fee districts, public
grants, and loans. He has extensive experience in developing and implementing infrastructure
management systems and has assisted more than 25 agencies with their infrastructure asset
management needs. Mr. Anderson is also an expert in computer software applications
related to the development of databases and user - friendly interface development and
programming. He has prepared user manuals and conducted numerous trainin sessions.
0
Page 18
PROFESSIONAL SERVICES AGREEMENT BETWEEN CITY OF
MOORPARK AND (NAME OF CONSULTANT) FOR (SPECIFY
TYPE OF SERVICES)
THIS AGREEMENT, made and entered into this day of
200_, by and between the CITY OF MOORPARK, a
municipal corporation located in the County of Ventura, State of
California, hereinafter referred to as "CITY" and (NAME OF
CONSULTANT), A [insert capacity of CONSULTANT], ( "CONSULTANT ").
W I T N E S S E T H
WHEREAS, City is desirous of obtaining services necessary
to: ; and
WHEREAS, CONSULTANT is qualified by virtue of experience,
training, education, and expertise to accomplish these services;
and
NOW, THEREFORE, in consideration of the mutual covenants,
benefits and premises herein stated, the parties hereto agree as
follows:
I. COMPENSATION
City does hereby retain Consultant in a contractual
capacity to provide contract services. Consultant shall provide
City with an estimated cost quotation for each specific task
requested by City to be completed by Consultant, and shall not
proceed until written approval is granted by the City. The
compensation to Consultant shall be on an hourly fee basis or at
a negotiated lump sum amount, as approved by the City. Payment
by City to Consultant shall be in accordance with the provisions
of Article III, Paragraph M, of this Agreement.
II. TERMINATION OR SUSPENSION
This Agreement may be terminated or suspended with or
without cause by City at any time with no less than ten (10)
working days written notice of such termination or suspension.
Consultant may terminate this Agreement only by providing City
with written notice no less than thirty (30) days in advance of
such termination. In the event of such termination or
suspension, Consultant shall be compensated for such services up
to the date of termination or suspension. Such compensation for
work in progress shall be prorated as to the percentage of
progress completed at the date of termination or suspension.
Yrotessional Services Agreement 1
III. GENERAL CONDITIONS
A. Consultant covenants that neither they nor any officer
or principal of their firm have any interests, nor shall they
acquire any interest, directly or indirectly, which will conflict
in any manner or degree with the performance of their services
hereunder. Consultant further covenants that in the performance
of this Agreement, they shall employ no person having such
interest as an officer, employee, agent, or subcontractor.
B. City shall not be called upon to assume any liability
for the direct payment of any salary, wage or other compensation
to any person employed by Consultant performing services
hereunder for City.
C. Consultant is, and shall at all times, remain as to
City a wholly independent contractor. Neither the City, nor any
of its elective of appointive boards, officers, employees,
agents, or attorneys shall have control over the conduct of
Consultant or of Consultants officers, employees or agents,
except as herein set forth. Consultant shall not at any time or
in any manner represent that it or any of its officers, employees
or agents are in any manner employees of City.
D. At the time of 1) termination of this Agreement or 2)
conclusion of all work, all original plans, documents, designs,
drawings, reports, calculations, diskettes, computer files,
notes, and other related materials whether prepared by Consultant
or their subcontractor (s) or obtained in the course of providing
the services to be performed pursuant to this Agreement shall
become the sole property of City. Any word processing computer
files provided to City shall use IBM compatible, Microsoft Word
for Windows software.
E. Consultant shall hold harmless, indemnify and defend
City and its elective or appointive boards, officers, agents,
attorneys and employees from any and all claims, liabilities,
expenses, or damages of any nature, including attorneys' fees
arising out of, or in any way connected with performance of the
Agreement by Consultant, Consultant's agents, officers,
employees, subcontractors, or independent contractors hired by
Consultant.
City does not, and shall not, waive any rights that it may
have against Consultant by reason of Paragraph E, hereof, because
of the acceptance by City, or the deposit with City, of any
insurance policy or certificate required pursuant to this
Agreement. This hold harmless and indemnification provision
shall apply regardless of whether or not said insurance policies
are determined to be applicable to the claim, demand, damage,
liability, loss, cost or expense described in Paragraph E hereof.
Professional Services Agreement 2
The policy limits do not act as a limitation upon the amount of
indemnification to be provided by Consultant.
F. Consultant shall secure from a good and responsible
company or companies doing insurance business in the State of
California, pay for, and maintain in full force and effect for
the duration of this Agreement the policies of insurance required
by this paragraph and shall furnish to the City Clerk of the City
certificates of said insurance on or before the commencement of
the term of this Agreement. Notwithstanding any inconsistent
statement in any of said policies or any subsequent endorsement
attached thereto, the protection offered by the policies shall:
1. Name City and its elective or appointive boards,
officers, agents, attorneys and employees as
additional insured with Consultant.
2. Bear an endorsement or have attached a rider whereby
it is provided that, in the event of cancellation or
amendment of such policy for any reason whatsoever,
City shall be notified by mail, postage prepaid, not
less than thirty (30) days before the cancellation or
amendment is effective. Consultant shall give City
thirty (30) days written notice prior to the
expiration of such policy.
3. Be written on an occurrence basis.
G. Consistent with the provisions of Paragraph F,
Consultant shall provide general public liability insurance
including automobile liability and property damage insurance in
an amount not less than one million dollars ($1,000,000.00) per
occurrence and annual aggregate.
H. Consistent with the provisions
Consultant shall provide workers, compensat
required by the California Labor Code. If any
engaged by Consultant in work under this
protected by the workers, compensation law,
provide adequate insurance for the protection
to the satisfaction of City.
of Paragraph F,
;ion insurance as
class of employees
Agreement is not
Consultant shall
of such employees
I. Consultant shall not assign this Agreement, or any of
the rights, duties or obligations hereunder. It is understood
and acknowledged by the parties that Consultant is uniquely
qualified to perform the services provided for in this Agreement.
J. Consultant shall comply with all applicable laws,
ordinances, codes, and regulations of the federal, state, and
local government.
00001ILS
Professional Services Agreement 3
K. Consultant shall obtain a Moorpark Business
Registration, all permits, and licenses as may be required by
this Agreement.
L. The language contained in this Agreement shall take
precedence over the language contained in any exhibit to this
Agreement.
M. Payment to Consultant shall be made by City within
thirty (30) days of receipt of invoice, if the invoice is not
contested or questioned by City. If City identifies a
discrepancy between the invoice amount and the work tasks or
products completed, City shall within fifteen (15) workdays of
receipt of the invoice specify in writing the discrepancy.
Consultant shall then either 1) provide support materials to
satisfy City stated discrepancy, or 2) revise the invoice to
reflect stated discrepancy. City shall then pay the revised or
documented invoice within thirty (30) days of such revision or
documentation. Each Consultant invoice must show details of
hours and expenses in a format which is acceptable to City.
N. City shall have the right to audit and inspect all
payment and expense related books and records kept by Consultant
and any subcontractors in connection with the operation and
services performed under this Agreement. Notification of audit
shall be provided at least thirty (30) days before any such audit
is conducted.
O. Any notice to be given pursuant to
shall be in writing, and all such notices and any
to be delivered shall be delivered by personal
deposit in the United States mail, certified
return receipt requested, with postage prepaid, &
the party for whom intended as follows:
To: City Manager
City of Moorpark
799 Moorpark Avenue
Moorpark, California 93021
To: Address of Consultant:
this Agreement
other document
service or by
or registered,
id addressed to
Either party may, from time to time, by written notice
to the other, designate a different address or contact person,
which shall be substituted for the one above specified. Notices,
payments and other documents shall be deemed delivered upon
Professional Services Agreement 4
receipt by personal service or as of the second (2nd) day after
deposit in the United States mail.
P. Nothing contained in this Agreement shall be deemed,
construed or represented by City or Consultant or by any third
person to create the relationship of principal or agent, or of a
partnership, or of a joint venture, or of any other association
of any kind or nature between City and Consultant.
Q. This Agreement constitutes the entire agreement of the
parties concerning the subject matter hereof and all prior
agreements or understanding, oral or written, are hereby merged
herein. This Agreement shall not be amended in any way except by
a writing expressly purporting to be such an amendment, signed
and acknowledged by both of the parties hereto.
R. Should interpretation of this Agreement, or any
portion thereof, be necessary, it is deemed that this Agreement
was prepared by the parties jointly and equally, and shall not be
interpreted against either party on the ground that the party
prepared the Agreement or caused it to be prepared.
S. No waiver of any provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any such waiver constitute a
continuing or subsequent waiver of the same provisions. No
waiver shall be binding, unless executed in writing by the party
making the waiver.
T. In the event any action, suit or proceeding is brought
for the enforcement of, or the declaration of any right or
obligation pursuant to this Agreement or as a result of any
alleged breach of any provision of this Agreement, the prevailing
party shall be entitled to recover its costs and expenses,
including reasonable attorney's fees, from the losing party, and
any judgment or decree rendered in such a proceeding shall
include an award thereof.
U. Cases involving a dispute between City and Consultant
may be decided by an arbitrator if both sides agree in writing,
with costs proportional to the judgment of the arbitrator.
V. This Agreement is made, entered into, and executed in
Ventura County, California, and any action filed in any court or
for arbitration for the interpretation, enforcement or other
action of the terms, conditions or covenants referred to herein
shall be filed in the applicable court in Ventura County,
California.
W. The captions and headings of the various Articles,
Paragraphs, and Exhibits of this Agreement are for convenience
and identification only and shall not be deemed to limit or
10004817
Protessional Services Agreement 5
define the content of the respective Articles, Paragraphs, and
Exhibits hereof.
IV. RESPONSIBLE INDIVIDUAL
The individuals directly responsible for Consultant overall
performance of the Agreement provisions herein above set forth
and to serve as principle liaison between City and Consultant
shall be and no other individuals may
be substituted.
The City's contact person in charge of administration of
this Agreement, and to serve as principal liaison between
Consultant and City, shall be the
or his /her designee.
V. IMPLEMENTATION
City shall provide Consultant with written notice in
advance of the date at which these services are to be implemented
if different than the date of the Agreement.
IN WITNESS THEREOF, the parties hereto have executed this
Agreement on the day and year first shown above.
ATTEST:
City Clerk
CONSULTANT
By
CITY OF MOORPARK
By
Steven Kueny, City Manager
ssional Services Agreement 6
City of Moorpark
Administrative Services Department
Infrastructure Valuation Proposals
# of Years in
—company
Contact
Business
Fees
Comments
Maximus
Gregory Friz, V.P. Asset Mgmt. Div.
since 1989
Professional Services Fee & Expenses $ 9,200
Has local office, hired by Moorpark to
1445 E. Los Angeles Ave., Ste 301 -E
(805) 522 -0644
Optional Services:
value general fixed assets a few years
Simi Valley, CA 93065
GASB -34 Readiness Assessment $ 7,300
ago. Prior staff was not happy with the
Update 2001 -2002 Fixed Assets $ 4,800
final product. Some references were
Master File Diskett in Excel Format $ 300
happy so far with their work related to
Total of Optional Services $—1 2,400
GASB 34 valuation services, while others
claimed that their work was poorly
Total (including optional services) $ 21,600
completed.
Harris & Associates
Ronald D. Creagh, GASB 34 Group Mgr.
since 1974
Total Project Cost $ 24,990
Good experience, references are happy
34 Executive Park, Ste. 150
(800) 860 -3625
with their work. Will train staff on master
Irvine, CA 92614
(800) 827 -4901 X536
file for future use. Highly recommended
by our City auditors.
Muni Financial
Frank G. Tripepi, President & CEO or
since 1987
Standard Approach (including expenses) $ 23,100
Good experience, references are happy
27368 Via Industria, Ste 110
Scott Koppel, Project Manager
with their work. Gets job done on time
Temecula, CA 92590
(800) 755 -6864
Modified Approach (including expenses) $ 39,910
and within budget.
American Appraisal Associates
Jeanne Boom, District Manager
since 1896
Primary Service $ 14,500
Project team has minimal experience.
11835 W. Olympic Blvd., Ste 1050E
(310) 312 -8050
Optional Services: $5,000+
Proposal seems unclear as to the needs
Los Angeles, CA 90064
Dependent on the size /scope
of the City.
Total $19,500+
RESOLUTION No. 2003-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MOORPARK, CALIFORNIA, AMENDING THE FY 2002/03 BUDGET
BY APPROPRIATING $7,500 FROM THE GAS TAX FUND (2605 -
5500); $7,500 FROM THE GENERAL FUND (1000 -5500) AND
$9,990 FROM THE REDEVELOPMENT AGENCY FUND (2902 -
5500)TO SPECIAL PROFESSIONAL SERVICES (1000- 5110 -1016-
9103; 2605- 5110 - 0000 - 9103;2902 -5110- 0000 -9103) FOR GASB
34 IMPLEMENTATION SERVICES.
WHEREAS, on June 5, 2002, the City Council adopted the
budget for Fiscal Year 2002/03; and
WHEREAS, an appropriation was made for GASB 34
implementation in the amount of $20,000 from General Fund
($10,000) and Gas Tax Fund ($10,000); and
WHEREAS, proposals have- been received from our auditor and
public work's consultants to implement GASB 34 for amounts
exceeding current appropriations; and
WHEREAS, Exhibit "A" hereof describes said necessary budget
amendment and its resultant impacts to the budget line item(s).
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK
DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. A budget amendment appropriating $24,990 from
the funds listed above to the line item for implementation of
GASB 34 as more particularly described in Exhibit "A" attached
hereto is hereby approved.
SECTION 2. The City Clerk shall certify to the adoption of
this resolution and shall cause a certified resolution to be
filed in the book of original resolutions.
PASSED AND ADOPTED this 7th day of May, 2003.
Patrick Hunter, Mayor
ATTEST:
Deborah S. Traffenstedt, City Clerk
Attachment: Exhibit "A" - Budget Amendment
EXHIBIT A
BUDGET AMENDMENT FOR
FINANCE
FY 2002 -03
FUND ALLOCATION FROM:
Fund
Account Number
Amount
General
1000 -5500
$ 7,500.00
Gas Tax
2605 -5500
$ 7,500.00
Redevelo ment Agency
2902 -5500
$ 9,990.00
Total
$
$ 24,990.00
DISTRIBUTION OF APPROPRIATION TO EXPENSE ACCOUNTS:
Account Number
Current Budget
Revision
Amended Budget
1000 - 5110 - 1016 -9103
$ 47,310.00
$
7,500.00
$
54,810.00
2605- 5110- 0000 -9103
$ 10,000.00
$
7,500.00
$
17,500.00
2902 -5110- 0000 -9103
$ -
$
9,990.00
$
9,990.00
Total
$ 57,310.00
$
24,990.00
$
82,300.00
Approved as to Form: __E&