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HomeMy WebLinkAbout05-21-2015 C2 CodronRE(_-ETV MAY 202013 j Sl -O CITY CLERK council CMOIZA city of san Luis oBispo, aaministuation 6epautment DATE: May 20, 2013 AGENDA TO: City Council CORRESPONDENCE Date ��� � Item# FROM: Michael Codron, Assistant City Manager By: Claire Clark, Economic Development Manager VIA: Katie Lichtig, City Manager SUBJECT: C2 - San Luis Obispo Downtown Association Agreement A council member has requested clarification of a proposed term in the 2013 -15 Agreement between the City and the San Luis Obispo Downtown Association ( SLODA). At issue is the proposed provision that eliminates the requirement for a biennial audit. In addition, there is a typo in the agreement that staff would like to ensure is changed as part of Council's action on this item. Under the City's first contract with the SLODA in 2008, an annual audit was required. Since then, the requirement has been extended from annual audits to biennial audits as a result of financial management outcomes confirmed by the independent auditors. For the proposed contract, the SLODA requested that the audit requirement be extended further such that an audit be required every four to six years. In lieu of more frequent audits, the City will be receiving an annual Compilation of Downtown Parking and Business Improvement Area (DPBIA) financial transactions detailing the expenditure of these revenues. The proposed contract language states that the Compilation (Page 2, 10th line from bottom, typo noted): "shall show the purposes to which the DPBIA funds were put such as the name and date of the event and the allocation of T-PBID DPBIA funds relative to the costs of the event." This requirement allows the City to verify on an annual basis that the SLODA, a 501(c)(6) non- profit organization, is using DPBIA revenues in a manner consistent with the law and with its contractual obligations. Furthermore, the SLODA is required to provide quarterly financial reports showing qualifying expenditures made by SLODA and shall, upon request by City, produce supporting invoices, receipts, vouchers and statements showing how the DPBIA revenues have been expended consistent with the Agreement. Such financial reports are required to include a line -item schedule that matches expenditures with specific, budgeted amounts and activities. This reporting obligation subjects the submitted quarterly reports to a review by the Finance Division to identify any potential questions or concerns within a timeframe that allows these matters to be addressed quickly. This quarterly reporting requirement provides the city with a thorough Council Memorandum May 20, 2013 Page 2 accounting of the SLODA's spending that is more timely than waiting for the completion of an audit an annual or biennial basis. If, after receiving this information, there were any remaining questions or concerns that need to be addressed, the contract terms provide staff with the ability to request and review the invoices and other detail items supporting the reported costs and receipts. With the annual Compilation and the .quarterly reporting requirements, the proposed contract actually enhances staff s ability to identify irregularities in a timely manner. As a result, staff supports extending the audit period per the draft contract, which gives the City the right to require an audit not more than every four years or less than every six years. Because the City and the SLODA utilize a two -year contract term aligned with the City's financial plan period, the audit requirement would next become part of the contract for 2015 -17, applicable to the 2015 -16 fiscal year.