For City Council Meeting [September 14, 2021]
TO: Honorable Mayor and City Council
APPROVAL: Marcus Fuller, City Manager
FROM: Stephen Erlandson, Director of Finance
Title
Request City Council to Approve a Professional Services Agreement for Specialized Audit Services to Moss, Levy, and Hartzheim, LLP for a Not-To-Exceed Amount of $272,000.
(ACTION)
Body
BACKGROUND:
On August 3, 2021, the Economic Development Committee (Mayor and Mayor Pro Tem), the City Manager, and Deputy City Manager interviewed independent accounting firms to conduct the City’s annual financial audits for fiscal years 2020-21, 2021-22, and 2023. At that time, the auditing firm of Lance, Soll, and Lunghard, LLP (LSL) was selected as the most qualified firm to provide the annual financial audits; however, the EDC also recommended that the auditing firm of Moss, Levy, and Hartzheim, LLP (MLH) perform specialized audits for the City.
On August 10, 2021, the City Council approved an agreement with LSL to provide the independent annual financial audit services, with a condition that the City also proceed to with a separate agreement with MLH to perform the specialized audit/agreed upon procedures engagements related to:
• The 30-Year Concession Agreement and Service Contract for the Design, Construction, and Financing of Upgrades and for the Operation of the Rialto Utility Authority Wastewater Facility and Water Facility among Rialto Water Services, LP, the Rialto Utility Authority; and the City (Concessionaire Agreement); and
• The Rialto Airport/Renaissance Project/Lewis-Hillwood Agreement
ANALYSIS/DISCUSSION:
The City desires to engage a professional accounting firm to perform specialized audit/agreed upon procedures engagements as aforementioned to ensure that the terms and transactions related to the various agreements have been adhered to from inception to present day. MLH was deemed to be highly qualified to handle these types of engagements based on the assessment of the EDC and staff during the independent auditor interview process.
Quotes, which are attached to this agenda item, were obtained from MLH to conduct these agreed upon procedures based upon a cursory review of key agreements provided to the firm by staff. The proposed total fee for both engagements ranges from a low of $246,500 to a high of $272,000. The proposed fee for each individual agreed upon procedures engagement is as follows:
• Concessionaire Agreement: $42,500 to $68,000 based on an average hourly rate of $170 and estimated person hours ranging from 250 hours to 400 hours.
• The Rialto Airport/Renaissance Project/Lewis-Hillwood Agreement: $204,000 based on an average hourly rate of $170 and estimated person hours of 1,200 hours.
Staff recommends that the City Council approve the Professional Services Agreement with MLH for specialized audit services for a not-to-exceed amount of $272,000.
ENVIRONMENTAL IMPACT:
The request is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY:
The request is consistent with Guiding Principle 3A of the Rialto General Plan:
Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW:
The City Attorney has reviewed and approved this staff report and contract.
FINANCIAL IMPACT:
Operating Budget Impact
Funds are budgeted and available in General Fund Account No. 010-500-2150-2011.
Capital Improvement Budget Impact
The proposed action will not affect the Capital Improvement Budget.
Licensing
Prior to execution of the Professional Service Agreement MLH shall submit a business license application and pay a Business License tax at the applicable rate, as well as Administration and State fees.
RECOMMENDATION:
Staff recommends that the City Council:
1. Approve a Professional Services Agreement with Moss, Levy, and Hartzheim, a Limited Liability Partnership in the amount of $272,000; and
2. Authorize the City Manager to execute all documents.