Good morning and welcome to the audit committee meeting of October 8th, 2025.

Our committee liaison, Natalie Kessler, will go over instructions for today's meeting.

Thank you, Chair.

Well, members of the public are able to attend the meetings in person.

This meeting is being televised and live streamed on the city's website, and the council administration will continue to make arrangements for the public to comment using the Zoom webinar platform.

Members of the public who wish to provide virtual testimony must enter the virtual queue by raising their hand before the virtual queue closes.

The queue will close when the last virtual speaker finishes speaking or five minutes after in-person testimony ends, whichever occurs first.

This will allow for better meeting management between the two platforms and ensure the committee is able to manage and conduct city business.

We appreciate the public's cooperation.

Chair.

Natalie, please call the roll.

Vice Chair Whitburn.

Committee member Halburn.

Present.

Committee member Mafia.

Present.

Committee member Tapseri.

And Chair, Councilmember Marino.

Present.

Also attending the meeting today is Andy Hanao, our city auditor.

Christiana Gauger, Chief Compliance Officer.

David Carlin with the City Attorney's Office.

Aaron Noel with the IBA.

Kevin Smith, committee consultant, and Natalie Kessler, committee liaison.

Natalie, please continue with public comment instructions.

If you're in person, please complete a speaker slip located at the entrance of chambers and place it in the box near the public comment microphone.

Please do so in a timely manner to ensure proper meeting management.

In-person testimony will conclude before virtual testimony begins.

Members of the public can join the webinar by computer, tablet, or smartphone by accessing the link which is listed online in the preamble language of the agenda on the city's website.

If you need to participate by phone, please dial 1669-2545252.

The webinar ID is 1600337422 pound.

This information is also available on the agenda and will appear on the screen during the public comment period for each agenda item.

Members of the public who wish to provide virtual testimony must enter the virtual queue by raising their hand before the queue closes.

The queue will close when the last virtual speaker finishes speaking, or five minutes after in-person testimony ends, whichever occurs first.

Please note that if you're watching via City TV 24 or online, there may be a delay.

Please participate via the audio on your phone and mute your TV or computer when it is your turn to speak.

And if you wish to speak on a particular item, wait for that item to be called and then raise your hand to speak by tapping the raise your hand icon, or if you're a con participant, press star nine on your phone.

If you raise your hand during a non-comment period, your hand will be lowered.

Chair.

Thank you for reviewing those instructions for the benefit of the public.

A quorum is now present.

We're now going to take up non-agenda public comment.

The council members respect and appreciate the public's input and are fully committed to protecting every participant's free speech rights at council and at committee meeting.

Natalie, please proceed with non-agenda public comment.

Parole 2.7, non-agenda public comment is an opportunity for members of the public to comment on items that are not on the agenda but within the subject matter jurisdiction of the committee.

Each speaker will have two minutes.

And if you've joined the Zoom webinar online or by phone and have non-agenda public comment, please raise your hand at this time if you wish to speak.

Hi, uh Blair Beekman.

Happy uh audit meeting, committee meeting for the month.

An always really interesting meeting, I find this to be.

It's a bit unique among the committee meetings.

So thank you today.

Um there was a really important uh city council item that yourselves are probably aware of that took place on Monday, I guess, uh, about the future of uh contract issues uh within the city and how city staff has a way to create the contract process that often extends past the contract deadlines.

They they just work really on their own terms without much input or or uh help from city council itself.

And they made agreements on Monday to really create a better set of oversight and accountability practices for the future of the process.

Councilperson Von Wilpert has really led the charge uh in that effort.

She's done really good work openly and publicly.

I'm sure Councilperson Moreno has been working behind the scenes on on it as well.

Uh keep up the good efforts with this item.

This is one of those items that really needs council input on how it develops in the future, and where a strong mayor system has helped uh create this kind of problems we've been having with this item.

And it's not just a strong mayor issues.

We have been trying desperately to come out of the era of 9 11 and continue a war.

So we've developed some pretty bad practices over the years that we're trying to get out of.

This is one of the great ones that you're working on right now that's gonna define our future really well.

The work I do with tech accountability, it really is part of the same uh class where I mean it's just we do things more openly uh and organize ourselves and be more accountable.

A better future is there in doing that work.

It's just a matter of doing the work.

You're doing the work now.

Good luck in this goodover.

Thank you.

This does conclude your time.

Our next speaker is Becky Rapp.

Please begin.

Good morning, Chair Moreno and committee members.

My name is Becky Rapp, and I appreciate this opportunity to address you this morning.

I want to acknowledge the uh tense and difficult conversations that took place during yesterday's city council meeting.

Those discussions clearly reflect the public's as well as council members' growing frustration with the lack of transparency and accountability in certain city operations.

One such department I'd like to address is the cannabis business division.

The public would like a detailed report showing the taxes collected and allocated from the marijuana department.

Residents deserve to know this revenue is being indeed tracked, where it's going, and whether it's being used to address the serious public health and safety impacts tied to the industry.

Years ago, the city auditor reported that fewer than 50% of San Diego's permitted marijuana businesses were paying taxes and recommended that the city develop a plan to investigate and correct this issue.

Yet no plan has been implemented and no follow-up audit has been scheduled.

The marijuana program should be recognized as a high priority as it directly correlates with air within areas identified in the audit work plan, specifically revenue collection, equity, legal compliance, and public safety.

Recently, Dr.

Ken Finn stated that state leaders talk about how much money they're gonna make, but they never talk about the societal loss.

For every dollar generated, it costs about $4.50 to regulate.

If this is indeed the case here in San Diego, then the system is already out of balance.

It's long overdue for this information to be shared publicly.

Thank you.

Thank you.

Our next speaker is Terry Ann Skelly.

Please begin.

Good morning, audit committee chair Moreno.

My name is Terry Ann Skelly.

I'm a parent of young adult sons, a planning group member, and a community volunteer who has worked in youth programs for decades.

And I have followed the unfolding of the marijuana business permitting process and accompanying fees and taxes.

Perhaps this committee could provide an agenda item that describes any audit of the fees and taxes related to marijuana businesses so the public could understand the risk-benefit ratio associated with marijuana storefronts in our city.

Of special interest to me is whether we are receiving law enforcement minor decoy operations for storefronts and especially for the deliveries.

And if the city code enforcement checks for the removal of all flavored inhale marijuana products as required by the state department of cannabis control, the DCC.

An annual City Code Enforcement Check at a minimum is important because the Department of Cannabis Control does no enforcement at all of its permitties.

This audit would be very welcome to parents, educators, public health advocates, and others who work on behalf of youth.

It's a beginning in recognizing that there are real costs of marijuana consumption to young adults, families, neighborhoods, and our society in general.

The costs are extremely high in mental health costs alone, which is becoming more clear with each new study, and which parents in the city could describe to you in heartbreaking detail.

Thank you for your consideration of this investigation into the marijuana marketplace and the access of young people to it.

This could be important work for the audit committee.

Thank you for hearing my concerns this morning.

Thank you.

The five-minute timer has concluded.

We have three hands remaining in the virtual queue.

We will take no additional callers after these three.

Madison, please unmute and begin.

Hi, thank you.

Good morning, audit committee.

I appreciate the opportunity to speak with you today about a growing financial and oversight concern related to the commercial marijuana industry.

As you know, this committee is charged with avoiding exposure to liabilities that could impact city services or taxpayer dollars.

A recent national law review article from October 1st warns that the cannabis industry nationwide is facing a six billion dollar debt wall by the end of 2026.

Many of the largest marijuana companies, multi-state operators with licenses here in California, are deeply overleveraged and burning cash.

Several are already selling off licenses, laying off staff, or shutting down operations entirely just to keep up with debt payments.

What does this mean for San Diego?

If we expand or continue permitting marijuana businesses, we risk tying city resources like regulatory oversight, public safety zoning, and tax collection to companies with a high probability of default.

The report also warns of zombie operators, which are businesses that are financially insolvent but still active.

These pose long-term risks for compliance enforcement, tax collection, and local neighborhood impacts.

This committee should be aware of the potential mess from this unstable industry and consider whether further investment or partnership with the cannabis industry aligns with the city's long-term financial stability and risk management goals.

Thank you.

Our next speaker is Madison.

Please unmute and begin.

I'm so sorry, Peggy Walker, please unmute and begin.

Well, thank you.

Good morning.

I've worked in the public health area over 20 years and have followed the marijuana industry.

And I want to echo the concerns of those who've already called for an audit with a cost analysis of city dollars spent in staff time, tax breaks, and otherwise promoting and supporting the pot industry versus actual tax revenues received.

The public deserves a transparent picture of the value of what seems like a very timely and costly investment by the city in this precarious industry.

As uh mentioned before, somebody said the Wall Street Journal calls pot stocks a risky bet, with the industry owing more than two billion in unpaid taxes.

And the national law review puts that industry debt at 6 billion, calling it a debt avalanche coming due by the end of 2026 and setting the state for they call a messy reckoning.

The bottom line is that this debt will catalyze the shake out.

It's a real risk financial institutions underwriting debt-ridden companies.

And I would say, pardon me, a risk for cities like San Diego, who have invested heavily in this business.

The law review predicts more sales of licenses, retail footprints, and cultivation access.

The spillover could be negative for industry employee employees.

Some businesses may not be salvageable.

And smaller operators may consolidate or just exit an abrupt failure.

It just doesn't seem right that the city should invest in addiction for profit businesses in the first place.

At best, we deserve a transparent picture of the cost and finance.

And chair, this concludes non-agenda public comment.

Thank you.

We're now going to move to committee members, uh, mayoral staff, city attorney, or the IBA for any comments.

And my understanding is that um Aaron Noel with the IBA has comments.

Um, thank you, and good morning, Chair Marino and members of the committee.

Um, providing a reminder that the city continues to have an open recruitment for Mr.

Tab Jury's public member position for the audit committee for anyone who may be interested in serving.

Uh eligible applicants must have at least 10 years of experience as a certified public accountant, a certified internal auditor, or other professional financial or legal experience in audit management.

There is a link on the audit committee website with information and an application.

And anyone interested can reach out to our office for additional information, or if you have any questions.

This concludes my comments.

Thank you.

Thank you.

Do we have any requests for continuances?

No.

Okay, we're gonna now take up our consent agenda.

Do we have any requests to pull an item from the consent agenda?

Hearing none, uh, we will now move forward with public comment on the consent agenda.

Natalie, please proceed.

Thank you, Chair.

The excuse me, the public comment period for the consent agenda is now open, and the consent agenda includes item number one approval of the committee minutes of July 25th, 2025.

Please note that each speaker will have one minute per item, and we have not received any speaker slips in chambers.

So we'll move to the virtual queue.

There's one hand raised in the virtual queue.

Blair Beekman, please unmute and begin.

All right, thank you.

Uh Blair Beekman.

I'm a little gung-ho on on the good that we're doing as a city.

And I'm mentioning our previous efforts of uh continual war and 9-11.

Um, I think it's important.

We're at a crossroads and how to deal with the future war at the international level.

So um that's why my words are a little strong.

Sorry about that.

Good luck in your efforts.

Uh, I wanted to comment for your uh consent agenda that you had an item last time in July about uh disaster uh or uh emergency preparedness practices uh you know for fire and stuff like that.

We had a pretty big uh August with fire issues and evacuation things, and I think people did a really good job.

And uh it was a good learning experience for me to under better understand how San Diego works its systems, and uh it was just kind of nice to be uh seeing that in in action and uh good luck and continue good work in emergency preparedness for uh San Diego.

And that is a big uh process for everybody.

This does conclude your time, thank you.

And Chair, this concludes public comment on the consent agenda.

Thank you.

I'm now gonna turn it over to committee members for questions and comments and also to entertain a motion on the consent agenda.

Thank you.

We have a motion by council member Whitburn.

I'm happy to second that motion.

And Natalie, please call the roll.

And that motion passes unanimously with um committee member Tap Shuri absent.

And now we're gonna take up our discussion agenda.

Natalie, please introduce item number two.

Item number two, Office of the City Auditors recommendation follow-up report.

And if you're watching on City TV or the live stream and wish to call in to provide comment to item two, please call 16692545252 when prompted, input webinar ID 1600 7422 pound.

Chair.

Thank you.

And now before we get started, um, as the audit committee has done in the past, I will be splitting uh this item up into two sections.

Uh first we will hear staff's presentation, would include which includes the auditors' recommendated recommended action in section A.

We will then take public comment on the recommended action.

Uh the committee will then discuss and take action.

Um we will entertain a motion at that time.

And after that, we will then discuss the list of audit recommendations for discussion by the city auditor in the staff report that are in section B of the recommended follow-up report.

This will be an informational discussion and no motion will be needed.

At that time, committee member Halpern and Mafia will walk us through the discussion of those selected audits.

Uh committee members may ask uh department staff any question they have, any questions they have during the discussion.

Um if there are audits the committee committee members have questions on that are not included in the list of audits that the auditor has highlighted.

Please state what those audits are at the end of our discussion, and I will make sure we have an item to discuss those audits on the agenda next month, and also um have city staff present to answer, have city staff present to answer any question.

Um at the conclusion of the discussion, we will take public comment again where the public will have the opportunity to comment on section B of the auditor's recommended follow-up report.

I will be strict about staying focused on section B of the auditor's recommended follow-up report.

After public comment, committee members will have an opportunity to provide uh some final comments or questions if we have any.

And staff, please introduce yourself for the record and tell us how much time you need for your presentation and begin when you're ready.

Uh good morning, Chairman.

I know committee members Andy Hano City Auditor, and as you mentioned, we're here to present our recommendation file report for the period ending June 30th, 2025.

I'm joined by Assistant City Auditor Matt Helm.

And can we have about 12 minutes, please?

Thanks.

Uh so just to give you an overview up front, uh, we'll cover a summary of the implementation status of all open recommendations uh as of June 30th, 2025.

We have one recommendation in Section A for the audit committee's attention and action.

Uh we will cover highlights of newly implemented recommendations as well as highlights of recommendations with potential fiscal benefits to the city once implemented.

And lastly, we will uh cover the list of audits for committee discussion today.

And as you mentioned, uh committee members Haupern and Mafia will be taking the lead on that.

So thank you in advance for for um quarterbacking that.

As you know, we produced the recommendation flop report twice a year to help the audit committee perform your responsibility of overseeing the city's internal controls.

As shown here during this reporting period, we made 60 new recommendations to improve the efficiency, effectiveness, uh, equity, and transparency of city government, and city management agreed to 100% of those recommendations.

And as shown here during the reporting period, management implemented 27 recommendations.

Uh so I want to thank management for all of their efforts, uh, and we'll cover uh as we'll cover in the presentation.

There's a lot of notable accomplishments in the report and a lot of good work uh being done that will improve city operations for our residents and taxpayers.

And that leaves 169 recommendations that are still uh in progress, uh, many of which are on the list for discussion today.

Uh as we have done in past reports, we flag certain recommendations for your attention.

Uh, for example, during this period, management indicated that there are 43 recommendations where they require additional budget or staff uh to implement the recommendations, and those are marked uh in the report by the money bag icon shown here at the top of the slide.

Um and I also want to highlight a new feature in this report, which we added in recognition of the city's budgetary constraints uh this year and for the foreseeable future, which are 32 recommendations that once implemented can provide a fiscal benefit to the city.

And for some of those, it's difficult to precisely estimate the fiscal benefit, but just very conservatively uh the benefits to the city would be on the order of 10 million dollars a year, but probably a lot more than that.

Uh these benefits could include increased revenue, reduced costs, cost avoidance, or operational efficiencies, and those items are uh indicated in the report by the green uh graph and arrow icon, we can which you can see here at the bottom of the slide.

Uh, which with that I'll turn it over to Assistant City Auditor Matt Helm for the rest of the presentation.

Thanks, Andy.

Good morning, Chair, uh, members of the committee, Matt Helm, Assistant City Auditor.

So I'm gonna step you through the sections that um Andy mentioned.

I'll try to do that as expeditiously as possible because I know we have a lot of discussion ahead of us.

Um so on this slide you'll see uh our interactive dashboard, which allows users to view data on the status of all recommendations by department going back to the inception of our office.

On the right are some key figures.

Um, Andy kind of touched on a few of those, but that's from this round of follow-up.

I'll go through the next few slides quickly, but we wanted to call your attention and daylight several useful new features from our recommendation dashboard and thank Nikki Kalmas from our office for all the great work she did in developing this.

Um, there are three new features, which in total provide users with historical audit recommendation data going back to 2010.

I'll show you a couple screen grabs on the new features, but we'd plan to give you kind of a live action run through at a future audit committee meeting.

So, as you see for the screen, you've seen this screen capture before, but it's a summary of recommendation status by period.

The difference here is that users can now click into the chart and get full information on any report from any reporting period.

So previously that data wasn't um supported, it wasn't filled by the back uh by the underlying data from each report.

That's that's a new addition.

Uh the new dashboard also allows uh searches and to be filtered by reporting period.

And this uh feature is one that we've already found to be really useful.

We often get a lot of questions like whatever happened to that PUD recommendation from the 2015 report on so-and-so.

Um, before we would have to search through each recommendation follow-up to be able to pull the data on that and find the status.

Now you can go into the dashboard and search by department topic, and the dashboard will pull the original report.

As you see on the left there, along with the status of each recommendation and when it was implemented or if it still remains open.

So it's kind of a good one-stop shop for that information.

You I know the committee is well aware of this, but just uh quick note on how we categorize recommendations in the report.

Um, shown here are the three main status categories.

And I won't walk through each of the ones here, but I'll call your attention to the categories on this page.

Sorry, Danny, I'll go back one.

I apologize.

Um, based on input for management, we added these categories to provide granularity on the recommendations where, for example, management has disagreed uh with some but some alternate action is underway to address the underlying risk identified in the recommendation.

Let me shift now to the item on which we are seeking audit committee action.

Uh this item pertains to recommendation seven from our 2020 report on strategic human capital management.

If you look at the right side of the slide, there's lots of good news there.

Uh HRM personnel have fully implemented 13 of the 14 recommendations.

And I'll bottom line, there's a lot of words on the slide, but I'll try and bottom line it for you.

So recommendation seven called for HR and personnel to produce annual uh a workforce report.

And they have done that for the past three years, and the content of those reports satisfies the intent of that portion of the recommendation.

However, one element remains unimplemented, and that's the portion of the recommendation calling for establishing policy process, Municode, administrative regulation, something, or other formal guidance that would ensure that these reports would continue to be produced on a recurring basis.

So we've had lots of numerous and lengthy uh conversations with management over the past several years, and we determined that management will not implement that element of the recommendation.

And so, in light of that, we're requesting that we close the recommendation as partially implemented no further action.

Uh committee may have alternate uh solutions to that issue, and we'll look forward to the discussion on that.

Uh let's shift gears a little bit here.

So we wanted to highlight a few of the recommendations as we've done in the past that have been implemented and some of the positive impacts.

So collectively, we you know, this is not the sum and substance of everything that was implemented.

As Andy mentioned, they they got 27 implemented, so these are just a couple.

But collectively, these illustrate management's commitment to address key risk areas, and as you'll see, the results of their efforts benefit city operations and services to our residents across many important areas.

First, from our citywide audit of data classification and encryption, uh, the city recently adopted an administrative regulation which centralizes oversight, strengthens areas, including coordination accountability, and data security.

Another highlight uh from performance and analytics added uh estimated completion times and developed a plan to add interim status updates to service requests, and that will help communicate expectations to customers and keep them informed.

The next implementation highlight is from our audit of the city's CIP approval process, capital improvement plan process.

Newly adopted policies will help reduce delays and cost overruns while ensuring public resources are invested in projects that best serve community needs.

Next from streets, uh, and I think we're well aware of this report, but the transportation department updated the pavement management plan in fiscal 25, which includes strategies to improve street maintenance capacity, efficiency, and equity.

Next from fleet, lots of good discussion on this one uh at council on Monday.

But fleet services has made progress in increasing coordination with operating departments, working to update designated liaisons and going above and beyond our recommended coordinary uh recommended quarterly coordination meetings by leading monthly sessions with departments.

We've already seen some benefits from that.

Um it's improved the safety inspection rate, and so that's on the uptake.

Next one from contracting, so great news here.

Uh lots of progress implementing recommendations from our previous audits.

In sum, the newly created policies and procedures will help ensure hundreds of millions of dollars uh contract alterations are presented to city council timely and to facilitate proper oversight.

Sorry, got lost in my pages here.

Um, and I'll we're getting close to concluding here, I promise, but we wanted to leave you with a brief summary of a handful of in-process recommendations with which, if implemented, could benefit the city's financial information.

Andy give you a quick flyby on these um at the outset.

So, as Andy noted, those recommendations are flagged throughout the report with the arrow icon in the bar chart shown on the left side of the slide.

Um, the three listed here.

So, one is from the stormwater inspection fee.

So we recommended recovering reinspection costs from noncompliant properties, which stormwater estimates would generate 1.5 million per year.

From the lease management audit, we recommended updating leases of city property because undercharging even a small percentage due to holdover could result in millions of dollars of foregone revenue.

Uh and from workplace safety, we found that the city's costs from workplace injuries could could be more than 200 million a year.

We recommended the city improve workplace safety programs to reduce workplace injuries as the city workers' compensation claims rate was 17% higher than similar agencies.

And just continuing on here from the environmental services audit, you may recall we heard this one at committee uh a while back.

We found that the city does not increase private waste hauler franchise fees by inflation, is not conducted a franchise fee study to ensure costs are fully recovered.

Conducting such a study would help ensure those fees, which amount to approximately 14 million a year, can withstand a legal challenge in that the city is recovering all allowable costs.

And then this was from a hotline investigation on the boat storage program uh operated by parks and recreation.

We found that the city charges significantly lower boats storage fees than other jurisdictions, leading to a loss of revenue.

And the increasing the fees and improving management of the program would increase revenues by approximately 70,000 per year and allow the program to serve many more users.

So that would greatly improve the access to those people who uh seek that service.

So the good news here uh rather than cover all the all the open recommendations as the chair mentioned, uh, we're proposing that we cover those listed here.

Uh we've made best efforts to pare the list down to focus the discussion based on recommendations significantly passed due, recommendations addressing significant risk and those recommendations that may require resources to implement.

So department management and our auditing teams are available virtually here or available virtually to assist the committee.

Um and as the chair mentioned, uh if the committee identifies other reports for discussion, we can take those up in a few future session.

And we'll have those reports on the screen.

Uh Daniel Kirch from our office here is part of our senior assistance team to help me uh guide guide you through the report.

So we'll get through those and thanks in advance to uh committee members Halpert and Mafia for being our SHERPAS today.

And lastly, I promise uh the proposed actions today are for the audit committee to accept the report and for the performance audit of the city city strategic human capital uh human capital management recommendation seven to close that is partially implemented.

No further action.

That concludes our comments.

We'll look forward to the discussion.

Thanks.

Thank you.

Uh Natalie, please proceed with public comment related to section A.

Thank you, Chair.

The public comment period for item two, section A is now open.

Each speaker will have two minutes, and we do not have any speakers' lips admitted in chambers, but we have one hand raised in the virtual queue.

Blair Beekman, please unmute and begin.

Hi, Blair Beekman.

Thanks for this report.

Thanks that you're working on uh CIP project things and uh transportation things.

Um I wanted to remind the work I do with tech accountability that uh efficiency uh is important uh in our build in our building uh of our future auditing programs.

Uh organization uh is important.

It to me, I come from a place of tech accountability where accountability is how to define organization, and that's what creates the efficiency.

Sometimes when we create efficient practices, it uh I I'm sorry to interrupt you, but um, can you please speak uh to comments pertaining to uh section A of this report?

I am speaking exactly to Section A.

I'm speaking to CIP reporting, the future of that reporting, and I'm speaking to the future reporting of your transit uh transportation uh efficiency practices you better work on.

I'm speaking directly to it.

Okay, please proceed.

Well, thank you.

Thank you ever so much.

I just wanted to offer yourselves a reminder, as I just said, in the importance that you are practicing a new efficiency with these things, that you don't lose sight of best practices of what accountability is about.

It is about sharing communication, uh identifying things and making things clear to each other.

Uh our future of efficiency sometimes overrelies on skipping over best practices.

And I just wanted to offer that important reminder.

Uh, tech accountability it asks that we're we're clear with the with each other, and we have to be.

And so um good luck in learning the price of efficiency and the importance of uh accountability with the future of efficiency and organization.

Thank you.

Thank you.

And Chair, this concludes public comment on section A.

Thank you.

I'm now going to turn it over to committee members for questions and comments and to entertain a motion.

Um, I will start us off.

First off, thank you for the presentation.

Uh, the creation of the workforce report has been a positive development over the last few years.

Uh, this is a tool that helps the public and the city council have a better understanding on key elements of concern within the workforce, such as recruitment, development, satisfaction, um, engagement, and retention problems.

I appreciate the human resource department commitment uh to continuing to produce this report.

However, I strongly believe that this commitment needs to be reflected in an official city policy, such as the municipal code, council policy, or administrative regulations.

The fact of the matter is that right now we have a very good department head in human resources in Ms.

Rasco, and also including her department staff.

You guys are dedicated to it to producing this report.

Ten years from now, I don't know who will be here, and I don't want to lose the momentum we have built in producing this report on a regular basis.

As such, the recommendation to close recommendation seven of the performance audit of the city's strategic human capital management is something that I disagree with.

Instead of closing the recommendation, I will make a motion to instead leave it open and request that the department provide uh for the uh audit committee and the next recommend recommendation follow-up report, an alternative proposal to implement the recommendation with an alternative time frame for producing workforce reports that is acceptable to the department, and also a recommendation on where a requirement to produce a report should be reflected within the city's regulations.

Um that is my motion on the floor, and we have committee member halper.

Um thank you, Chair.

I would uh second the motion, and I have one question, and frankly, I'm not sure who's best to address this to, but um my question is what's the issue of having the requirement to produce the report?

Can somebody speak to that?

Thanks.

Good morning, and thank you for the question.

Um we're not we're not apprehensive about doing that.

We've just been incredibly busy with a lot of other um commitments.

We are currently working on a policy to affirm that we will be doing this on an annual basis.

However, I would be remiss if I didn't let you know that we did have substantial um reductions in our staff, and so it may take us a little time, however, it is in the process, and we will bring it be bringing that back to committee.

Perfect, thank you.

Does that conclude your comments?

Okay, wonderful.

Uh council member Whitburn.

Thank you.

Uh Ms.

Rasco, you don't have to come back up unless you want to, but I do you have an objection to the motion that is currently on the floor.

If you'd like to speak to that, feel free.

Can you describe what your objection is?

I'm sorry, I was asking you if you have an objection to the motion that is currently on the floor as well.

I do not.

Okay.

So you're okay.

I I just wanted to be sure that we were clear that we did um incur significant reductions in our staff.

We took a 24% reduction.

We had 12 employees reduced in our department.

As you know, we're going into contract negotiations.

We've been in negotiations regarding the reductions in the FY26 budget.

So it has just taken us some time.

We are in the process of drafting a policy to affirm that we will be producing the workforce report in the future.

Okay, thank you.

Sounds like we're on the same page, except that you need more staff.

Okay, thank you.

Thank you.

Um City Auditor Hannel.

Uh yes, and we're we're fine with that as well.

I just wanted to clarify why we made the recommendation that we did, is because our it was our understanding based on the updates that were provided.

This is the 11th recommendation follow up cycle that we've been working with HR on this, and our understanding was that they were not going to do that policy.

So it's good to hear that they are, and we're happy to keep working with them on that.

Thank you.

Thank you for that.

Um, not seeing anybody else on the lights.

Uh, let's call, let's take the roll.

Wonderful.

And that motion passes unanimously with committee member Tap Shuri absent.

Uh, next, we're gonna move to committee members Halpern and Mafia to take us through the audit highlight in the auditor staff report, which are all in Section B of the recommended follow-up report.

If committee members have any questions on any audit recommended recommendation, please ask please ask them during uh this time.

After the committee completes its presentation, the pub the public is gonna have uh the opportunity to comment on the content of section B on the auditor's report.

So, committee member halpern and mafia, please begin.

Uh thank you, Chair.

I think I'm gonna kick this off.

So, first I'd like to thank the city departments as well as the auditors for all the work that goes into the report uh and it's a lot of work.

Um, process-wise, our awesome team here is gonna put the report excerpts on the screen as we discuss each item.

So for those who are uh presenting from the departments, there's no need to reiterate with prepared remarks because hopefully we'll have your updates up on the screen.

And then out of respect for everybody's time, we're gonna just jump right to the questions.

Um, when relevant, we'll do the recommendations one at a time.

So I would invite my colleagues that if you have questions, jump in per each recommendation that we're talking about as opposed to saving them all to the end.

Um so the first one that we have up is audit report 23-001.

This is the police department performance audit of um use of management of body cameras.

The report starts on page 100 of the document.

Do we have anybody from the department who's either here or on the line that's gonna speak to this?

While he's coming up, I'll say that um so six of the seven in-process recommendations are about improving procedures to ensure officers turn on their body cameras when applicable.

This has been in meet and confer discussions for three years, but the update shows the current target implementation date is December 2025 for all six of the ones in process with a big caveat that it's very hard to predict the the specific timing of that.

That said the update notes that the police officers association has some concerns, so I guess we all have to assume that there's some need for more discussion.

Um I've got a quick question, but who do we have with us today?

My name is Charles Laura, I'm the I'm a captain uh for the research analysis and planning.

Great, thank you.

So my first question would be um can you tell us when the next uh meeting is scheduled in the meet and confer process?

I I cannot.

I just I spoke with the POA uh just yesterday and to get some fresh information, and they're saying that the uh December 3031st uh deadline is still a viable date, but then the negotiations are active and ongoing, but have to remain a kind of a black box.

I don't want to speak to the substance of those negotiations because I don't want to harm them.

Okay, um, but uh uh you can you or you can't speak to actually the timing of the next discussion?

Do you do you know?

I do not have that date, but I can't but I can reply I can find that out when that next discussion is and I can report back out to you folks.

Well, I think the key thing that you've helped us with is that you think the December 31st is still viable.

Yeah.

Yes.

And out of total respect for the way that these discussions are handled, not expecting anybody to go into detail about that.

Um can you tell us that based on the discussions, would you characterize that any of the open recommendations as substantially dead in the water, or is there confidence that you'll be able to substantially um uh conform to the recommendations as you get through the process?

I will say this.

The recommendations obviously pertain to working conditions.

Working conditions are part and parcel of the meet and confer.

So if there are they're gonna be part of this process, but again, I'm not gonna expose those those uh the substance of those uh discussions.

Okay, let me try to reframe that as I'm hearing it.

At a minimum, there's nothing in the recommendations that we're discussing here that based on conversations you would say are just simply not gonna happen.

There is movement or possibility of movement for all of the recommendations that are on the table.

I would say there's possibility of movement, but again, it depends on how these processes um play out in the in the meet and confer.

Got it.

Okay.

Anyone else have anything on that one?

Okay.

I don't know if it's you or somebody else is gonna speak to our next item, which is also a police department item.

Um 24-08, which is the performance audit of police overtime.

I'm your guy.

You're the guy.

Okay, great.

So um this in the report is on page 145.

Um the report has four open recommendations.

Recommendation 1.1 on page 146, actually, is got a target completion date of December 2025 in meet and confer.

For people like me who don't really understand the meet and uh confer process.

Can you tell us will this item be discussed as part of the other discussions, or do you have like separate discussions for each individual item if you know?

Well, every every meet and confer item well, we meet and confer with the with the bargaining unit of the POA on issues that basically affect the working conditions of the officers.

So I believe each would be taken independently, you know, over time versus body-worn camera.

They're all part of a the same process of meet and confer, but each one speaks to a different issue separately.

Okay, got it.

Um now for the prior one, you referenced the fact that 1225 as a target date was still achievable.

Would you say something similar as far as this one or not clear with regard to this?

I have I have three responses that are broken out into 1.2A, 1.2B, and 1.3.

That I can I can take each in their turn.

I actually have a little more uh detail to bring forward on those.

Okay, that would be great.

Why don't you do that?

Thanks.

All right, so jumping right into uh 1.2a.

Um this is about prioritization of overtime as requested.

The sign-up for scheduling patrol overtime has been centralized.

Uh Sergeant Drake Lasley provided training a few weeks ago uh to the commanding officers on how to sign up for uh overtime through our PD enterprise.

It's uh it's a technology we already have at the department.

Um then the so he provided training on the to commanding officers on that process uh the then so that the staffing sergeant uh or personnel at every command uh could follow to post the available overtime shifts and how officers sign up for those open slots that are available uh at the patrol commands.

Patrol commands are now more accountable and data-driven in their approach to overtime.

The chief has provided an overtime allocation to commanding officers, and the commands can now see in essentially real time if they're meeting or missing uh their overtime allocation marks.

Divisions are utilizing uh call volume and out of service time to determine the hours most critical for uh staffing, not just assigning to the traditional uh shifts.

Sergeant Laslie, who was uh kind of heading up that project, said that he's seeing commands employing more of what he refers to as split shifts instead of simply assigning officers to the classic three shifts of first watch, second watch, or graveyards.

Um commanding officers are placing shifts where the needs are greatest.

Uh commands are targeting their overtime to maximize its impact.

And the area stations are becoming more data-driven and accountable in that regard.

Every unit has been placed on an overtime budget for uh fiscal year 2026, and the department is in an RFP process for scheduling software to allow centralized overtime requests department-wide for dispatch for traffic for all the uh for special events, et cetera.

So that process obviously RFP takes a minute, uh, but to have uh a process by which other entities, not just patrol, uh, can uh can do uh their uh do and prioritize and schedule their overtime.

So that's for 1A.

And then if ma'am, shall I proceed?

Or is there questions or comments?

All right.

Then moving on to uh uh 1.2b.

Uh this is gonna be a little more pithy response.

This uh pertains to limitations on officers' hours.

Uh inspections and control, uh formerly RAP uh uh that that the police department has spoken to other agencies about best practices, and the POA has stated that the uh police department has initiated this meet and confer and that we're working with city human resources with December 31st still being a viable target for implementation.

Moving on to 1.3, and this is about uh uh who m who uh monitors overtime negotiation um uh who whoever is who monitors overtime negotiat uh notifications and that the POA stated that the police department again same thing has initiated this meet and confer working with city human resources with December 31st still being a viable date.

Uh when the meet and confer process has come to conclusion and uh and is codified, the department will work to employ the agreed uh upon limits within our SAP system so that they they can they can come up or be flagged appropriately so that they know when the if people are meeting their their uh appropriate parameter.

So so if I could follow up on that with regard to the um SAP system work, is that um work that is already funded, or is there a funding need for that, or do you already have that in the budget so that work can proceed?

Well, SAP is something that we already have.

There may be costs associated with reconfiguring uh if there's you know if we have types and lines of code, uh that is something we can we can report back to as terms with costs.

It's not having to get another product, which we obviously have costs associated with it, but SAP is something that we already bring to bear to do this.

Got it.

Okay, so this one is the the little money bags is not so much that you need it additional money, it's just that additional work needs to get done.

And and there may be, again, I don't I don't want to speak prematurely, there may be some costs if we have to uh reprogram or recalibrate the the the thing that we have, but I imagine that's going to be less expensive than buying an off-the-shelf product.

Great, thank you.

Um did you have any comments on uh 2.1, which is on page 148, because I just have one um question on that one.

Oh, is this about the October 15th presentation to public safety committee?

I think is the next step in this and whether that is on track to happen or was and it got pushed to the 29th.

But yes, it's on track.

We'll be uh I will be reporting out on the uh 29th to public safety to bring that to finality.

Perfect, thank you.

Um my colleagues have any questions?

No.

Okay, great, thank you so much.

Really appreciate that.

Appreciate you, thank you.

Regarding regarding the body worn camera.

Um the draft policy is with POA for their review, so we anticipate that it will be completed before the end of the year.

Perfect.

Excellent.

Thanks so much.

So the next one we have up is um audit report 22-009, which is code enforcement for uh and it's the development services department.

Um this is on page 89 of the report.

Thank you for getting that up.

Do we have any representatives here in the room?

Thank you.

While you're coming up, um I want to say first really appreciate the way that you guys broke out the implementation plan into discrete tasks.

That's really very helpful for us.

Um there are 10 recommendations which are passed due.

Eight of them, however, require additional resources to complete, and therefore don't have estimated completion dates.

And we're not gonna beat you up about the need for additional resources.

We understand that.

But let me see if I could just handle all of the all those requiring the additional resources all at once.

This is recommendations one, three, four, five, six, seven, eight, and ten.

All have that as their first staff task, the hiring of a program officer.

So would it be the case that for all of these there's really no ability to make much progress until the program officers hide hired?

Is that pretty much the way this works?

No, my name is Leslie Sennage, deputy director for um building and land use enforcement division.

And so we've pivoted and we're using our current staff to implement those um recommendations.

Um we actually have most of them drafted.

We just needed to complete the reduction in force so that we can um finalize our new uh procedures manual to reflect what we will and won't enforce moving forward, and then we'll be able to move forward with those um recommendations.

Oh, well, that's good news.

Um you've kind of answered my question on recommendation two on page 91, which is the one that doesn't have specific resources required.

I was gonna ask what the sort of the critical path here is if those other things have to take place before you can get to recommendation number two.

And it sounds like you've got everything in process.

We have everything teed up, and we do believe they all kind of work together, and that once we know we'll have better stats moving forward once we know what we will continue to enforce.

Got it.

Okay.

Um well, first I should stop.

Does anybody have any questions on those so far?

Andy, do you have a quizzical look on your face?

I did push the wrong button.

Uh I just wanted to ask about um uh the recommendations on the KPIs.

Those didn't seem to require resources either.

I just wanted to see where that is at.

So um the KPIs, we we um and I think I indicated in the report that the department after the audit started following the new city recommendations for the key performance indicators, and so that's being done by IT.

Um so we did use it for the last budget um process, and we wanted to make sure if any of our changes that are coming up will impact that, so then we'll be ready to report on it.

Gotcha.

Okay.

So you've already made made improvements, but just want to make sure it's yes tightened up before you send a test.

Okay, sounds good.

Okay, thanks, Andy.

Thank you.

So I've got one more.

So on uh recommendation nine, which is on page ninety-eight.

Also doesn't have an estimated completion date.

Um just to confirm, so this one would also need to wait for the implementation of the other recommendations.

I'm assuming regarding the first task it references updating of a s of a CELA.

Does that updating depend on any incremental budget dollars, or is that something that's already within the budget, and it's just it's a function of the work needs to be done.

We're using current staff for that, our current management team, and and what we've done is we've implemented some of this in the test environment.

We just haven't gone live yet to be able to report and provide the documents needed.

Great.

Thanks.

Sounds like there's good news ahead.

Appreciate it.

Thank you.

Any other thank you.

Um thank you for the presentation.

Um definitely sounds a lot better than uh what we were reading just a few days ago.

So I appreciate you guys.

Um I always say trying to make a dollar out of 15 cents over at DSD.

You guys do a phenomenal job.

Um, the only question that I have and the concern that I have is um all of the um implementation dates are unknown.

What are the implementation dates?

So I would anticipate we didn't put we put unknown because we weren't sure of the timing for the reduction in force.

Um blue's reduction enforce is anticipated to be completed by the end of this month.

And so then we should be able to move forward with finalizing our procedures manual.

Anticipate that to be by the end of the um calendar year, and then we will meet with our IT team to come up with dates of when they can do the um Excel upgrades that are needed to um generate the reports requested.

But I I'm hopeful that the end of this fiscal year.

I might be being too optimistic, but um that is our our goal.

Okay, wonderful.

Thank you for your response.

Thank you.

Thank you.

Thank you.

Appreciate it.

Okay, so the next um report up is um audit report 18-023, which is the performance audit of the stormwater division.

I don't know if we have any representation.

There we go.

Okay, um, this is on page 25.

While you're walking up, I'll just sort of set the background here.

So eight of the nine recommendations from this 2018 audit have been implemented.

Recommendation nine, which is about the reinspection fee is the last one that needs to get closed.

That's on pages 26 and 27 of the report.

Um, the target implementation date has been pushed out to July of 2026.

Um first like to say I also appreciate that you broke out the project into uh task segments, the first task of which is completed, so now it's just the second piece, which apparently requires investment.

Um, in addition to requiring investment, this is one of those that has expected revenue after the investments made.

So I'm wondering if you can speak to what is the current estimate of the investment required, and if you can just give us any kind of ballpark as to what order magnitude of revenue might be expected after the investments made and the works done.

Thanks.

And then introduce yourself, sorry.

Oh yeah, good morning.

My name is Brianna Mickey.

I'm a planning uh sorry, deputy director of the planning division for the stormwater department to oversee the conduct commercial and industrial inspections program.

Um so the additional resources that we scoped to require to implement this recommendation include two FTEs and approximately one time NPE of 50 to 75,000.

And it would take approximately one year to stand up the inspection fee program before we could start realizing revenue.

And the um different revenue scenarios that we've discussed with the mayor's office include uh 50% cost recovery in year one, scaling up 10% every year after that for an additional five years till we get to 100%.

Um those are subject to discussion.

You know, we've estimated different scenarios.

We never finalized one.

Um, so again, we would need approximately one year before we would realize any sort of revenue, and then the scope of revenue, the scale of revenue is is up for discussion still.

Okay, um, I'm just wondering um if there's a way to just even again ballparking, putting some numbers around this.

So you you said two FTEs?

Two FTEs, yeah, stormwater inspector three and an admin aid two.

Got it.

Okay, so the total cost of those is ballparky.

Oh gosh.

I don't have that in front of me.

I can get back to you with that number.

It's not a million dollars, it's gonna be like you know, 150 to 100, maybe something like that-ish.

And then any just broad guesstimates as to what incremental revenues might be annually.

I think I I have a vague recollection of the audit report, correct me.

Speaking to like perhaps a million plus a year, is that out of line?

Um, not no.

So the initial estimate for this audit recommendation of what our inspections program costs was about 1.5 million dollars total per year, but those were based on 2019-2020 numbers, so we do need to update those.

Um, but given those numbers, eventual revenue could be approximately 1.5 million dollars per year once we update those numbers.

Got it.

Okay, so so question this may not be for you, but what comes to mind if there's anybody other than you who would want to step in, it sounds like what you're saying is for an investment of maybe a couple of hundred thousand, we get a return of what could be a couple of million.

And I'm just curious if that notion of like a return on investment is part of the discussions about budgeting, or if that's not the way budgeting works.

I don't know who I don't know who would answer that question.

Maybe it's something else.

Christiana Gogger, the city's chief compliance officer.

Um, I'm happy to read out a statement from um our department of finance that we were able to anticipate that question.

Get something for you this morning.

So each adjustment that would be offered up by different departments across the city is evaluated from multiple perspectives, including cost benefit analysis, policy priorities, critical operational needs, and equity considerations.

Well, these are opportunities for investments that could reduce costs over time.

The city remains significantly underfunded, particularly in areas related to infrastructure maintenance.

As a result, certain funding decisions may appear counterintuitive when viewed individually, but they must be considered within the broader context of the city's overall operating and capital budget.

So I hope that was helpful.

If you have more specific questions or like additional follow-up, we'd be happy to respond back to you in writing.

Really appreciate that.

And look how predictable I am that you knew that I was gonna ask that question.

I don't have any other questions, but does anybody recommendation nine uh concerns establishing a reinspection fee and developing policy for one uh reinspection fee should be issued.

Uh the staff update indicates that as part of the scoping of the workflow and processing, there would need to be uh that would need to be implemented um uh cost recovery program for stormwater reinspection.

The department identified the need for additional resources, as was mentioned to administer the program, but was not granted those resources in fiscal year 25 or fiscal year 26.

Um the audit committee.

So because the budget um, even if these things do not fit in the budget, it is still our responsibility to continue to let the city and the public know that these things are still very much needed.

Um, and I wholeheartedly agree with this uh recommendation.

Having a reinspection program will ensure that additional funding is collected to help prevent flooding events from happening by keeping our storm drains and channels clear and well maintained.

Um asked the question about um the cost to begin a reinspection program.

Um I clearly heard you you don't have those numbers today, but in the next follow-up, I would like to get those numbers for the public and for the council.

Um I spoke strongly in favor of including these positions in fiscal year 25 and in fiscal year 26 budget.

However, they're ultimately were not included.

Uh, if we had included them in fiscal year 25, we um we would have had them on board for a year and a half now and probably be in a situation where we would uh be close to achieving a cost recovery for this position.

So I do want to put that put that on record.

Um it seems uh uh it seems that the staff update that the department that the department has does not plan to make this budget request for fiscal year 27.

Is that I just want to get that on record, is that correct?

We're still discussing internally, but given the current situation of the budget being very similar to last year, it's unlikely that this would be prioritized for inclusion against other flood risk requirements, um, protection of life and property.

Thank you.

Um, I would urge the department to at least include the request for funding this program in fiscal year 27, because this will eventually um achieve not only cost recovery but increase revenue for stormwater projects and just make our whole city a lot safer than what it is today.

So um, and there's no cost associated to that.

Uh so uh that concludes my comments on this uh matter.

Thank you.

Okay, I guess we're moving on.

Thank you so much.

Mr.

Halpern.

I apologize, but I did notice that we skipped over uh the performance audit of DSD administration on deposit accounts, and I did have uh questions and comments.

Oh, sorry to the one before uh 22009, the code enforcement development services.

Uh yes, uh performance audit of DSD's administration of deposit accounts.

2008 um page 35 of the report.

Oh, okay.

So that one's um we were actually gonna come back to that one later.

I apologize.

Sorry.

Did you so uh I don't know if you heard that um the auditor saying it's a different group in DSD, so we're gonna come to that later.

Sorry.

Yep.

Okay.

So um the next one I've got on my run of show is um 19-002, which is economic development performance audit of real estate portfolio management practices.

So on page 28.

Do we have a representative in the room or on the line?

I see somebody's getting up.

Um while you're walking up, um, and I'll ask you to introduce yourself in a second, but let me set the stage.

So a number of the recommendations related to portfolio management uh remain from several audits, not all of which we're speaking to right now, but um, but would help ensure the city has long-term real estate plan to guide properly the acquisition sales and gets adequate compensation for leased city property.

Many of them depend on a real property management plan, which is what recommendation two on page 29 is about.

Um the current target implementation date is June 2026.

Um I'll be honest to say I have to admit I wasn't able to fully understand the update that was provided here.

So if you could please introduce yourself and let me start by asking what would be the next thing that's supposed to happen on the critical path to getting this recommendation implemented.

Thanks.

Sure.

Absolutely.

For the record, Lucy Contreras, uh Deputy Director of Real Estate Division within the economic development department.

Welcome.

Thank you very much.

And you you are very correct in that audit the 1900 two and the 22007.

I think there's maybe two audit recommendations as well that refer back to the real property management plan.

The next steps on that is, you know, the department recently was able to uh through an RFP process up our bench of real estate consultants.

So our next step in order to move forward with the real property management plan, in addition to making sure that we do have the adequate funds to do that, which we are moving forward and working to prioritize that despite budget constraints, is to finalize the scope of work and the framework for that real property management plan to get you know a really good feel for what that could potentially cost and then work through the next steps of putting that out to our real estate consultants to get an idea of time frame and cost and how we can do that.

The department does plan on working and making this real property management plan in accordance with our council policies that we recently updated.

Great, thanks.

So for just for clarification, um is the money for that already in your budget, or is that something that's gonna have to wait for next budget cycle?

Something that we will have to wait for next budget cycle and request in the in the budget.

We do have some money for professional services, but again, since we don't know the full cost of what the real property management plan could be, we may or may not be able to cover it under our current professional services budget.

Okay, so um maybe somebody else helped me in terms of the city budget cycle.

Does that mean that June, if it's got to get pushed into the cost has got to get pushed into the net next budget cycle, would that mean that June 2026 is not achievable?

Do I have that right?

I I think it depends on on where we land in terms of what the cost may be of that real property management plan.

I think we're gonna make best efforts to try and cover it under what we currently have allocated, and if we can't, then we would have to move it and we would make the suggested um edit to the target implementation date.

Got it.

Thank you.

Anyone else have anything?

Thank you so much for coming.

Thank you for the update.

You're welcome.

Thank you.

Okay, so the next one on our list is audit report 22007.

This is um economic development uh performance audit report of the city's lease management renewal.

This is also gonna be you.

It is.

Okay.

So um we already know who you are, but um let me just set the stage.

So recommendation one is on pages 79 and 80 originally scheduled for February 2023, now June of 2026.

Um EDD indicates it's recently begun prioritizing leases for renewal, but we'll need support from real estate consultants.

Maybe this is analogous to what you were just speaking to to um maintain momentum, expand capacity.

Um is it the case that the funding issue for this is the same sort of funding issue that we're talking about before is it different?

This one is a little bit different.

I think recommendation number one has to do with addressing the lease holdovers in our portfolio.

Right.

Um, for that, you know, the department has developed and begun implementing a targeted strategy to address the leases and holdover status, um, recognizing that in a holdover status, you know, the tenant remains under the same lease terms and expiration and a month-to-month status.

It's not always necessarily a negative thing because we do keep the tenant in place.

They are subject to all lease terms and rental increases are occurring during this time.

It's a transition period between when they their leases expired and when we're moving forward to lease renewals and process of negotiations, et cetera.

Um we have um taken a deliberate approach to ensure continuity here with these holdovers and have strategically listed our holdovers uh in order of prioritization for those leases that are revenue generating versus those that are in our portfolio that are non-revenue.

We do have a number of leases that are public benefit that pay nominal rent or pay uh a standard nonprofit fee.

So we are prioritizing those.

The department did have uh a bit of a handicap, and that we did have a 35% vacancy in our division when we started looking at these at one point in time, but we are now in a position where we do have uh staff uh we're staffed up basically we have one position left that remains vacant.

We're staffed up basically we have one position left that remains vacant.

We are prioritizing the revenue generating agreements, and we've initiated a renewal efforts on a number of these leaseholds.

To further accelerate this process, we are also balancing other priorities within the department.

So we've already implemented some key corrective actions to move towards progress on uh moving the holdovers forward, and that's going to be something that's going to continue as we move along.

It may take some time, but our goal is to reduce the number of holdovers as well as as part of one of the recommendations, really take a look at how we're defining holdover versus month to month and making sure that our key performance indicator is appropriate to ensure that's an accurate reflection of our lease portfolio.

Got it.

So I think the um the last order report referenced approximately 25% of leases and holdover.

Do you actually have a at this point a target number of where you want to manage that down to or not yet?

We don't have a specific target number to which we want to manage that down to because oftentimes you know it kind of fluctuates, it goes up and down a little bit.

But our goal is to just try to keep it, you know, below that 25% if we can.

I mean, if we saw maybe a five percent reduction, that would be good.

Um we have so many agreements that um it's it's impossible to keep them all afloat with the number of resources that we have.

However, um we are making some very very good progress on those.

Okay.

Um I've got a question on recommendation six, which is on page 80, but do my colleagues have anything on this one?

I just wanted to clarify um uh one thing just based on my understanding.

So you mentioned um you know, when the leases and holdover rent increases still occur and things like that, so it may not be below market.

That's not the case for all of them though, right?

Because when we did the case for all of them, some of them are older and they don't have that correct provision.

They when a lease is on holdover, each lease has its individual provisions.

There are leases that have been that were that are so old that may not necessarily have the key provisions in them, but there are quite a few.

I think the large majority of them do have holdover provisions in them that do allow the city to it's all there, they're still subject to all the terms and conditions of the lease, including the three percent increases or whatever increases are built into the leases.

So there are a very large number of those that do have those provisions in them.

Gotcha, thank you.

Okay, so on um recommendation six, which is on page 80.

This is originally targeted for February 24, now December 2025, which is uh not so far away.

This is a priority one item.

And again, um just I was having a little bit of trouble uh assessing where we are in this based on the on the um the update in the report.

So given that we're pretty close to December 2025, can you give us a sense of like what's left that actually needs to get done?

And can you speak to the confidence?

I think um what's left uh to be done on these uh real estate procedures and processes is for us to do um quite frankly, a final pass through of the draft procedures and policies to roll them out to staff and to provide any requisite trainings that we may need to do with staff on any of these new procedures and policies.

We do have a number of them that are ready to roll up, but we'd like to do them a little bit more comprehensively.

So we do think we should be able to meet uh the target for the end of the year.

Worst case scenario, beginning of the year, but we do have a number of these procedures and process improvement that that we have been working through for quite some time now.

Great good news, thank you.

Anyone else?

Great.

Oh, sorry.

I do, yeah, I have comments on this.

Um, I appreciate all the work done by this department to move the recommendation for this audit forward.

Um there are some remaining recommendations that are very important.

Uh, number one, uh, recommendation one is to document and execute a strategy for addressing the number of leaseholder holdovers in the city's uh portfolio.

Uh can you also speak to what the current holdover percentage is?

Sure.

The current leaseholder percentage is approximately 24 percent.

24 percent.

Uh the staff update also mentions that the department has compiled a comprehensive list of all leases and agreements and holdover for more than five years, uh, categorizing them by duration, revenue generation, and other relevant factors.

How many properties are on that list?

You know, I don't have that off the top of my head, but I can certainly um bring that back to you and give you that specific number.

And we're only talking about the ones that are more than five years old.

That is correct.

Okay.

Yes, I would recommend that you share that list to my office.

No problem.

Recommendation eight is for the department to perform and document a property inspection for all properties that have not had a documented inspection within the last three years.

How long is that list and how many inspections can we perform each year with existing real estate division staff?

I can also provide you with a follow-up list of the number of inspections completed as well as the number of inspections outstanding.

I can tell you that the staff is doing inspections on a yearly basis of all properties.

The real estate portfolio software now is providing some additional ticklers to staff, not only on the holdovers where they're getting notified 90 to 120 days prior to expiration, as well as notifications related to inspections and updated forms and procedures on that too.

So I'd be happy to provide you with that list as well.

Thank you.

And how many spec inspections are we performing each year?

Right now, the number that I had most current was about 250.

Okay, thank you.

Recommendation nine says that the department should create a plan that includes a list of all city lease outs.

This list should include leases, most uh recent market rental value, the date of set value, and the annual actual annual rent paid to the city.

Um I think this is incredibly important for obvious reasons.

Uh, number one, we need to maximize the value of our properties that we lease.

Um this doesn't just mean a market value payment uh for the use of the land, but also takes into account the value of the activities taking place on that land and whether the city could negotiate a lease that includes a percentage of revenue produced.

Um obviously we're here um to represent the city of San Diego, but I don't think um I don't think any nonprofit wants to be on a month to month.

Um I think it's extremely difficult, and I know we've made tremendous headway uh with the World Beat Center getting a lease after 20 something years.

Um I have nonprofits, not that one specifically, but nonprofits have shared that it makes it really difficult to uh get funding.

Um a lot of lenders will not lend to you if you are on a month to month.

Um so um I just wanted to point that out.

Um seeing that a consultant um to do this uh will not take place.

I don't the consultant will not take place um until mid-2026.

Is that correct?

Correct.

That's correct.

Um disappointing to me because once again uh the investment in staffing and resources uh we put into updating our leases will likely result in additional revenue uh for the city.

And so I would again urge the department to find a way to move more quickly on this because we're losing money each day on underperforming leases while we're in the middle of a major multi-year budget deficit.

Um I often um I often make comparisons to everyday people, right?

And not that everyday people have are renting an apartment, but if you were renting an apartment and you hadn't changed the lease term for 20 plus years, and you were getting three percent every single year, you would be absolutely falling short of what your maximized maximum capacity is, and that was okay, you know, 10 years ago, but right now it is absolutely not okay.

Um, and so I would just continue to push on that.

Thank you, Councilmember Marino.

And I do want to um make sure it's clear that you know the real property portfolio management plan that will help us address kind of the long-term solution is what we would be looking for in terms of a consultant to move things forward, but in terms of the holdovers and the strategy, including those related to the nonprofits, because we are speaking and we have done a lot of outreach to the tenants and we are working through those.

We are using our current capacity with staff to move those along as best that we can along with the remainders of the holdovers as well.

Wonderful.

Do you want to add something?

Yeah, Councilmember Moreno, thanks for your comments.

Um one I can assure you.

Introduce yourself.

Nobody is more interested in maximizing the revenue from our portfolio than we are.

So do appreciate your attention on that.

Uh just wanted to speak to a couple of the nuances for some of the things you brought up.

And first, I I did want to address um you uh mentioned recommendation number one.

So recommendation one A is for our department to take a look at uh reevaluating or removing the 25% uh holdover threshold as a KPI.

Um we agree that's probably a good idea and to focus more on leases that are rolling uh in the near term and the timely execution of an update to the lease or um bringing that property to market as opposed to um leases that are in quote unquote holdover.

Um so we will be taking a a uh deep dive look at that um property by property as we uh look at the as we as we work internally on the portfolio management plan, even ahead of bringing the the consultant on board, there is plenty of headway to be made internally um to prepare for the work that consultant can help us with.

Um revenues, uh you mentioned the opportunity to get a piece of the revenue.

We have a um rough numbers about 75, I think it's 78 is is probably the exact number, but around 75 of our leases out our percentage rent leases where we participate in the revenue um that our our tenants are generating on that property, a lot of those are in mission bay, a lot of those might be hotel properties, um restaurant properties.

Uh and then as far as the um uh you know month to month and the challenges that that might present for anyone looking for funding, that is one of the ways that we prioritize um which leases should get a renewed or an extended turn.

So one is is there uh a larger revenue opportunity?

And if um a property is um needs a capital investment, an update to the real estate uh in order to to realize those additional revenues, then absolutely you uh make a good point.

Uh nobody's gonna lend on it, nor is um the existing tenant gonna sink a single equity dollar into that property when they only have 30 days of assurance.

So that is how we prioritize which ones we are going to work on.

A couple good examples are the three in Mission Bay that we've been attempting to bring forward right now, large revenue opportunities.

We're getting snagged by state law on those, but that's a good example.

There are two golf course properties, which are percentage rent revenues, which we believe will generate um higher percentage rents once they are reinvested in and generate uh and and those um fresh dollars and and updates to the property, uh create additional demand for people to use those golf courses.

So we've prioritize those two.

Those are in holdover now.

Um one has gone through the RFP process, the other one is about to.

Um so just wanted to provide those specific examples exactly to what you're talking about.

As far as the um nonprofits, and I'm glad you brought that up.

I you know, the close to a 20% of our portfolio are these public benefit leases, um, nonprofit leases.

And when those are in month to month, one of the um, yes, they would love another 20 years of lease term, but they also are not very excited about signing our new lease form, which includes all the new provisions that the attorneys have to include in there.

So um that leaves us with the option of you kick them out or um which is uh uh obviously is not um very popular either.

So a lot of times we're uh between a rock and a hard place on some of these month-to-month ones that are non-revenue generating or public benefit.

So just wanted to put that out there so there's an appreciation for you know the political sensitivities and um sensitivity for a group that's been in there for 10 years and um they want what they want, they want their cake and and uh want to eat it too, but it's not um always the reality.

So um thank you for the explanation.

You brought up a lot of very good points.

Um I think you could leave the politicking to the politicians.

Um I did mention um that it it doesn't just mean the market value payment for the use of the land, but we definitely should take into account the value of that activity taking place.

So if there is a nonprofit that is having some issues, definitely bring that forward to the council.

We want to know about we want to be a partner in this.

Um thank you.

And they're you know, as you said, they're not all run equally and they all not they all don't present a value.

Um they all don't present the same value.

Uh the one thing that you did um spark my um uh spark my interest on uh you talk more.

I I think more so you uh the when is that um um you mentioned a um bringing on a consultant to look into uh the real estate assets portfolio.

When is that gonna be I don't know, and I'm sorry if you said it.

This is the one that we were talking about earlier related to the real property management portfolio plan and that is something that right now we're looking at the scope and the framework.

I don't have a specific time frame for when they would be on, but we're moving forward with trying to do that in in the next, you know, bringing back in the next one.

Okay, well, I would urge you to put it um even in the mid-year review, considering the funding that potentially can come out of this.

Thank you.

Thank you guys, and thank you for the um extra explanation.

And uh apologies, Lucy has reminded me to uh introduce myself as my first time at audit committee relatively new to the city.

I'm Jim Manler, uh program manager within the real estate's division of the economic development department.

Thank you all for your time.

Sorry, uh I just had one more question to to clarify.

Sorry.

Um so I think you mentioned you're you're currently doing uh like a pace of 250 inspections a year.

Is that what you said?

That was a two-year period, right?

You know what?

Uh probably thank you for the correct question.

I was just gonna say in your updates.

It's within the two-year period, we did 250.

Okay, yeah.

It was well, according to your update, it was January 1st, 2022 through July 22nd, 2025.

So, like three and a half.

So, I just yeah, no, I apologize for that.

I got tripped up with the number.

Okay.

Yeah.

So yeah, I mean that's like a 10-year pace on average for each property, right?

Because there's yeah, so okay.

All right.

Thank you.

Just wanted to clarify that.

Thank you guys.

Um, so then the next one that we're gonna be turning to is the one that the chair had referenced earlier, uh report uh 20-008.

This is uh performance audit of DOD's DSD's administration of deposit accounts.

Um we have somebody from development services coming up to the mic before you come and introduce yourself.

Let me set the stage.

So this is uh on page 35.

Um this audit has five open recommendations, and the update is identical for all five with target implementations for December of 2025.

So if you could introduce yourself, um, and then the starting question I've got for you is if it's the case that going live with the paygo system is gonna address all five of the open recommendations.

Thanks.

Um hi, my name is Aisha Givens.

I'm the principal accountant over the fiscal section in DSD.

Um, yes.

So the pay as you go implementation, it would it would close all five open recommendations.

Excellent.

Um so follow on to that.

Um has the pay-go system been approved by the city treasurer at this point?

Where does it stand sort of administratively as far as that goes?

Um it's still with city treasurer, they're still assessing our requests and our business process, um, which means that we are gonna have to update our uh go live date.

Um our goal was to do it by the end of the calendar year, but now we're shooting for the end of March of 2026.

Got it.

Okay, so assuming that it doesn't go live until then, um, we're still gonna have the deposit accounts, right?

Correct.

Got it.

Okay, so to the extent that we're gonna have those deposit accounts um and recognizing that March 2026 isn't all that far away, but you know, who knows?

Um there were a number of audit recommendations related to the deposit accounts.

So were you gonna make progress on the auditor recommendations relating to the deposit accounts, or were you gonna basically say, well, you know, we're gonna go live soon enough, we don't really need to do those.

I mean, we have made some updates.

Um, some of the concerns in the audit report, um, like we've addressed where previously, if an account went to deficit, the project wouldn't be locked and the uh project could continue.

That has changed.

If a project goes below its minimum required balance, the system automatically locks it where work cannot continue until they make a deposit, and um they are above the minimum required balance for the project to continue.

Um if a project goes into deficit and stays that way, we have our team manually creating FAP invoices in order to collect that, and if they and the project stays locked, and if they don't pay, then it eventually goes to the delinquent accounts division um and the treasury department.

So we have made some updates um using the new system, Mathella.

A lot of the issues came from use in PTS.

Um so we have addressed, I think deposit accounts are functioning more efficiently, but I think this pay as you go would be way more efficient, it would make manual processes automatic, and it would just be um better for the whole process.

Got it.

Okay.

Um I off the top of my head don't know when we're gonna do our next rec um follow-up, but maybe if this is still open the next time, maybe we can have somebody from the city treasurer's office um speak to the process about um approval and where that stands and if they have any issues.

Or let me ask you this.

Uh and I know that you can't speak for the treasurer, but do you know if they have any known objections or problems with the plan as far as you know?

They have a lot of questions about the process.

Um we detail we made a process document, and I think that they're not um super clear, and so we actually are going to schedule a meeting with them.

We're gonna respond to some of their questions, but I think it would be easier if we schedule a meeting and kind of go over exactly what the process is that we're I don't think that they have an issue with us doing the monthly invoice thing.

I think they're just trying to understand the whole business process around it.

Got it.

Okay, well, that's helpful.

Um anybody else?

Okay, I think um I am now gonna turn the floor over to my colleague, Mr.

Mafia, to handle the remaining before I go.

I just wanted to thank our staff for keeping up with me as I've bounced around getting those pages up on the screen has been immensely helpful for everybody who's following us, I'm sure.

So Mr.

Mafia.

All right.

Thank you, Mr.

Halburn.

Great job.

Uh also wanted to thank uh and I think we're done.

So yeah, thank you.

Oh thank you.

Thank you.

Uh I also wanted to thank all the departments for uh the updates and being here to uh give us the updates.

Um also the office is the city auditor for all your hard work.

We know a lot of work went into this, so we're halfway there.

Uh and uh we'll continue on.

So the next that we have up is report 20010.

Uh this is with the ethics commission.

So if we have anybody from the ethics commission who wants to uh make their way up uh originally uh this uh recommendation uh there are the four recommendations in this.

Uh three of those have been implemented uh dating back to 2020 uh with one remaining.

And uh before you introduce yourself, maybe I'll just have a kind of a uh a lead-in uh question for you.

Um so in the update, which uh is broken out by tasks, so we appreciate that.

Uh it's very helpful.

Uh it mentioned that uh although uh legislative work can proceed, uh meet and confer process will need to uh implement uh the recommendations, and this is on page 43.

Um maybe just for me, um has the meet and confer uh has that been uh initiated yet?

Good morning.

Brynn Kervin from the Ethics Commission.

Happy to be here.

Uh no, it has not.

Uh we recently, within the last um six weeks or so, have been working with the city attorney's office um with on the language that would need to be amended to take on the jurisdiction.

Um that's uh municipal code section 26.0413.

And so uh before that can happen, we do need to get a resolution directing the city's management team for labor relations.

Uh we need to get that authorized by city councils.

So the city attorney's office is working on that resolution.

We're working on the staff report that will go along with that, and we hope to move forward with that before the end of the year.

Okay.

Uh thank you.

Fantastic.

Um, so maybe along those lines, um, do you know kind of where the city uh city auditor's office city attorney's office is in that process?

Um have they completed their review or I believe so.

We we met and we went over some fine details.

Um the wrinkle in this though is um are you if you're familiar with measure D which uh is now uh part uh has been adopted by Charter Section 41.3.

Um that is part of the same division that this code section is in, and we're in the process of working with the city attorney's office to uh uh craft amended language to the entire division in which this particular code section sits.

So um we're not sure if uh this project will go to city council at the same time or if they're going to have separate tracks, and so um we're not entirely clear on how that's going to work out, but we do want to come to the city on um the c the city council uh with the request essentially to approve the meet and confer process.

Did that answer your question?

I'm sorry if I got a little sidetracked.

We we the bigger project right now is dealing with that entire division.

And I I your question was has the city attorney completed its review of this particular section?

And my understanding is yes.

However, any language that is amended or changed in the greater division may impact some details of that particular section.

So does that clarify?

Thank you for that question.

That's why I needed to go into the whole uh discussion of the greater changes that may or may not um be amended to the the greater division that this section sits in.

Yeah, understood.

Yeah, sometimes these can be complicated, absolutely.

Thank you.

Um I didn't have any further questions, any for my colleagues?

I just I just want to say thank you.

That's it.

Thank you.

Happy to be here.

I appreciate the opportunity.

Sorry, I just had one quick one.

Yeah.

Um, you're an independent department, which I'm familiar with.

Um and so you need you need the help of a lot of other departments to eventually make this happen, right?

Just want to make sure you're getting what y'all need.

Yes, it's always a pleasure to deal with the city attorney's legislative staff.

So um that's been really great.

They've been very supportive, especially given that I'm very new to this department.

And um also my predecessor laid a lot of the groundwork for us moving forward.

Um, given that we have not had this in our um purview for the entire five years that this recommendation has existed.

Um would note though, as far as support, uh, something that should be noted about this particular recommendation is that in order for us to take on the potential additional um 800 to a thousand um classified employees, it would require additional funding.

Sure.

Thanks for the opportunity to speak on that.

Thank you for being here.

Thanks.

Okay.

Uh we'll move on to the next item.

This is report 21001 with public utilities.

Uh, this is a follow-up performance audit of the industrial wastewater control program.

Thank you for being here.

Uh this uh original um audit had uh nine recommendations, seven of those have been implemented, uh, which is great news.

So we have just a couple left uh that uh we are focused on.

And this is uh maybe more just for for my understanding.

Um do the overall wastewater rates require negotiations or agreements uh with participating agencies.

I already have the tagger in, I'm sorry.

Lisa Slay, executive assistant director for public utilities.

Um so not the overall rates, what it is is so there are two funds within the city of San Diego.

One is the municipal fund.

That is for the ratepayers within the city of San Diego to collect their waste.

But as a region, as a metro system, in order to treat it and dispose of it properly, that does require um negotiations of who pays what in regards to that.

Understood.

Yes, thank you.

And and sorry if you had any any comments that you wanted to go through uh as far as updates are concerned, feel free to uh thank you.

Um Dan Manley, interim assistant deputy director for public utilities department.

Uh just regards for the two open recs.

Um we're pleased with the progress we've made up to date.

Um the negotiations for rec four, we just kind of laid out.

Um they they've been completed, and as of last week, the Metro JPA took an advisory vote to approve those.

Uh so the next steps for that uh for us to be able to close this recommendation out is for the the 13 bodies to go to their respective approvals um processes.

Um we are preparing, preparing to bring it to um to city council for for the beauties in spring after like the vast majority of the approvals have happened, so that's kind of our our our timeline, our goal for for the our part of the agreement to come to the city.

And then rec six is um kind of like a companion part of the rec where it's just changing the the funding from uni to metro, and that's that's on pace for FY27 as well.

Um we're assuming that agreements will go through, so our proposed budget for FY27 will have that incorporated.

So I think it indicated that both around July 2026 uh and so seemingly we're on track and pace for that.

Yeah, okay.

We're still we're still on pace, we're on track.

Okay.

As of now, yeah.

Understood.

Um I didn't have any other questions.

Yeah, Mr.

Halpern.

Um first I want to also thank you for breaking down your response into the different tasks that's really helpful to us.

Um the question I had was relating um to the participating agencies and the target time frame.

Are those public entities so there's actual visibility as to when they calendarize the meetings at which they're seeking approval, or is it not the case?

And so you're a little subject to does it happen, does it not happen, or you know what visibility or confidence level do you have on the timing with those participating agencies getting the approvals because that's like the critical step in getting this all done, right?

Absolutely.

And it is public, it is public information, so it'd be whether or not it is the county of San Diego, City of Elkahone, Otai Water District, all of those agencies are publicly would have public notices on that.

Um, from our meeting last week, we know uh there's probably about a handful of them want to actually get it done in the next like month or two.

Um, and that is why we didn't want to come forward until that we are looking at it in regards with the metro agencies, about two-thirds of them have gotten their approvals because we want to make sure we have forward progression, and this doesn't kind of keep extending on.

Great, thank you.

Any other questions?

I should absolutely I just I should say um thank you to the public utilities department um for your ongoing efforts to negotiate with uh participating agencies.

Um anybody's been watching the audit committee.

Uh this has been something that I've been following pretty closely, and uh by implementing these recommendations and concluding negotiations, we will ensure that participant agents participating agencies pay their fair share into the industrial wastewater program and uh thus prevent San Diego ratepayers from footing the bill for large agencies and big businesses.

So thank you for your efforts on this front, and um hopefully we can close this out soon, right?

Thank you.

Thank you.

Uh sorry, just one more question, I think.

Sorry, I just had one.

Um yeah, thanks for providing the the tasks and the updates.

So the last task you have after the agreements are hopefully approved, is just implement revised agreements.

It seems like it would be more complicated than that, but maybe I'm missing something because you'd have to implement the the billing system, or can you just kind of explain what's gonna happen once the agreements are in place?

Because as I understand it, the agreements call for full cost recovery for the industrial wastewater businesses outside the city, right?

Right.

So the user fees have already been concluded, so the permittees are paying their um components, though they have full cost recovery.

What is still outstanding is what is called general benefit.

Um, and there it that's about a million dollars, and so that is what is subject to the agencies that need the negotiations.

That is what is subject to the negotiations.

Um we have a planned effective date of going into effect July 1 of 2026.

That is why we want to get everybody um kind of gave everybody about nine months to get that approved.

Um, and then their billing thereafter will be able to include it in there.

It's um it's a lot it's a little bit easier because we send them a bill in totality.

Right.

So as but as of now, if I understood you, if you're at industrial wastewater primitive in Elkahon or wherever, they are already getting a bill for full casting.

Thank you.

Okay, thank you very much.

All right, uh the next one we have up is report 22005.

This is with Parks and Rec on page 60 of our report.

Uh, this is a performance audit of equity in recreation programming.

And if you want to introduce yourself and give us an overview.

Yeah, good morning.

My name is Sarah Irazzo.

I'm the deputy director with the parks and recreation department.

Um, so we have the audit of equity and recreation programming.

Um we haven't had much progress since our last update in April.

Um, but what I will say is we are actively working on the community recreation needs assessment, which is going to further feed into a handful of the remaining recommendations and help provide us the data and the resources and the models that will help us to be able to complete a good 50% of the recommendations on this list here.

So we did launch the uh needs assessment back in August with a media press release.

We are currently and actively taking surveys across the city of San Diego, looking to receive feedback from the community on the types of programming they want in their respective communities.

We're working with the consultant, Keena Dependent, who is gathering this data.

They're going to be scheduling town hall meetings and public um excuse me, um, forums uh over the next four to five months, in which they will continue to further uh analyze that data, provide the council a comprehensive report we're anticipating at this point in summer of next year.

We are a little delayed on this project due to some budget restraints we had last fiscal year.

With that, we do have four recommendations completed.

We have eight that are actively in progress with our team working behind the scenes to make as much progress as we can given the limited resources that we have, and we have four that have not been started, either because we lack the budgetary or staffing resources or because they are contingent on the community recreation needs assessment comprehensive report.

I'm happy to take any questions if you'd like more detailed on each of the 12 remaining items.

I can go through them in more detail.

Sounds like limited resources is a common theme.

Absolutely.

Okay.

Um I'll open it up to uh my colleagues if there's any questions or comments.

Yeah.

Chair Moreno.

Number one, I appreciate the work by our park and rec department to implement the recommendations and bring equity to our park and rec programming.

Um I do want to note that the community needs assessment consultant that was part of recommendation one was hired and the community assessment is underway with a projected completion in May 2026.

Um I wish we could have started this a year ago.

Um my mom says there's no would have coulda should have, right?

But I am glad that it's happening now.

Uh task three under recommendation one says that upon receipt of the final community needs assessment report, the department will request budget for fiscal year 26 to implement uh programmatic and marketing recommendations.

Um, if the project uh completion is in May, will that be too late to request um budget for fiscal year 26, or are you anticipating making this request in the May revise?

Uh we are going to make this request in the May revise.

Um, we are going to ask for a starter of NPE of a million dollars to support uh a resource allocation model so that we can fund uh equitable programming as a result of the completion of the report.

Thank you.

And I I think I said fiscal year 26, but I meant fiscal year 27.

Um but you just said in the May revise, so here we go.

Um, I and once again I would request that your budget needs related to this be communicated to the city council and the IBA as early as possible so that this funding can be considered in the fiscal year 27 budget.

Recommendation four is to develop a resource allocation model that will evaluate resource equity between recreation facilities.

The staff update says that upon completion of this assessment, the department will develop the resource allocation model for council review in anticipation of the fiscal year 27 budget.

How will you be able to ensure that we can take this model into account for budgetary purposes of the assessment is not done until May 26?

Oh, that's a very good question.

Thank you.

There may be some delays in the implementation of a new resource allocation model.

Um the contractor is going to be providing some recommendations.

They're doing a lot of benchmarking across comparable cities, and we're hoping that those recommendations will be fruitful in providing us something that we could bring forth quickly so that we can keep this moving and make sure that we're giving these programs up and running as soon as possible.

Thank you.

Recommendation five is to develop document and implement a comprehensive method for measuring the quality of all recreation programs.

The staff response says that the department will need six FTEs to implement the recommendation.

Will those be requested in fiscal year 26 and what is the full personnel and non-personnel cost?

Um we have been requesting the six remaining positions for this audit each budget year that we've been allowed to.

And that's not just to achieve recommendation five.

That's going to be to support all of these recommendations on an ongoing basis.

We are requesting roughly $700,000 that figure changes each year to cover six uh positions, program manager, senior management analyst, associate management analyst, and administrative aid, one more recreation specialist and another information systems analyst, and this will help support our marketing communications plan, our public engagement, grants administration, contracts management, data analytics, process improvements, and policy updates.

And just to refresh my memory, um, did you request those six FTEs last budget?

We attempted to.

Let me rephrase this.

Did the council see a document where you requested six FTEs?

No.

Okay.

You you said a keyword, we're allowed to.

So I would stress that please put it in the budget request.

We need to see this.

Um you did hit a little bit on a recommendation seven and eight concerning marketing efforts to help reach more residents.

Um what would the cost of the consultant support staff be to implement the recommendations?

And couldn't the communications department fill this role?

Um, we were working on um uh looking at the program manager to oversee instead of a consultant, something that's gonna have to be an ongoing support role that can work in partnership with communications.

We're currently working with the small team that we have uh with the communications department to implement small strategies that are achievable, such as expanding our Instagram um and social media output, improving our web um uh interface so that the customers can find our programs a little bit easier.

Um, but having that program coordinator uh and as opposed to a consultant would be desirable.

And so is this like a PIO public information office?

The city used to have public information officers embedded into the departments correctly.

No, this would be a either a program manager or a program coordinator, as they would coordinate the department's entire efforts related to marketing, data analytics, communications, public engagement.

Sounds like a PIO.

But anyhow, thank you for that.

Um let me ask you one you don't think the communications department can fill this role?

Um, I'd be happy to follow up with the director of communications to see if this is something that's within their reach.

Thank you.

Um on recommendation nine regarding the fee waiver.

I'm glad that you've updated the fee waiver process to allow participants to apply once annually for entire for an entire family.

I am looking forward to completing the RFP so that the fee waiver approves approved families can enroll uh for programs online.

Do you still anticipate this will take until September 2026?

Correct.

We are about to release the RFP um closer to the end of this calendar year.

Um, so we are eagerly anticipating um on boarding uh a new provider.

Thank you.

Um many of these recommendations uh require additional staff and resources.

In the last budget, I advocated for alloc uh to allocate more funding to get these recommendations implemented.

Um I will continue to push in fiscal year 27 budget for the resources needed to bring equity to our parks south of the eight.

Um something that I'm not gonna stop fighting for until I see the same programming at rec centers in district eight uh that exist in wealthier areas of the city.

But again, thank you to the whole team at the park and rec department.

Don't tell engineering, but you guys are my favorite department.

Um I know that this uh I I absolutely know that you guys are taking this audit uh audit seriously.

Um and I'm very much looking forward to seeing this progress.

So thank you for all your work.

Thank you for your support.

Any other questions from the colleagues?

Thank you very much.

Thank you.

Okay, moving on to the next report.

This is report 241 with transportation.

So if we have anybody from the transportation department that would like to uh come up, uh this will be on page 151 of the overall report uh to date.

Um the initial um audit uh had 10 recommendations, nine of those have been implemented and uh new completion date for the last one, uh I believe June of 2026.

Um anybody from the transportation department?

Um can you hear me?

Oh, yes, fantastic.

Uh hello, uh Philip Lowry, deputy director with uh transportation department from uh streets division.

Fantastic, thank you.

Uh, did you have any opening comments?

Um the I understand there was a a question regarding the uh the last remaining um open item.

Uh would you like me to address that now?

Uh sure, if if one has been posed to you already, uh you can go ahead and address that.

Okay, the the the question is I understand it about the last remaining item, and if anyone has anything amplifying, then please let me know.

But um it was regarding the uh the equity component and how we are currently able to proactively address spot holes.

Um and to that I'd say that um when our get it done report backlog is low, so in the neighborhood of a hundred or so or below, um we will send trucks out proactively.

Now, this typically only occurs during the dry season.

Um that that we have that sort of manageable case level.

Um when we send trucks out uh proactively, we send them to areas where we know we have low PCI roads and haven't seen uh a lot of pothole reports coming in from get it done.

So these are our underreporting locations.

Um and our capacity for doing that is approximately one team uh three days a week uh to to perform those those proactive pothole repairs.

This uh the the intent is to codify this uh the next time we present at uh the PMP uh at ATI, and at that point we'll be able to close out this this last audit file.

Our audit recommendation, I should say.

Okay, uh thank you.

Um any additional questions from the colleagues?

Yeah, Mr.

Halpern.

Yeah, thank you.

So um first uh again appreciation for you guys breaking this into the tasks.

Um in the report, there are uh three tasks referenced.

Um task two is described as completed.

So I'm just trying to extrapolate from that.

Is it the case that task one, which you mentioned meeting with the Department of Race and Equity?

The task one is still open and task three is still open.

Task one was completed.

Um immediately following the audit we we held meetings and discussions with with DRE.

Got it.

Okay, so then it's just it's just task three, then that's the one that you're talking about.

Right.

So task two identifying the the approach, which is the proactive repairs.

Task three is the sole remaining item.

We're just waiting for the next time PMP goes to ATI.

Uh we'll have this language for this approach codified in the PMP at that point, and that will enable us to close out this uh this recommendation.

Great.

Thanks for the clarification.

Appreciate it.

Sir Chair Marino.

Thank you.

Um recommendation, and thank you for being here, by the way.

Uh recommendation 3.2 is for transportation to determine how we will address potential inequities in pothole repair operations, including the approach to improve equity in the pavement management plan and present this plan to ATI committee.

Um in the staff update, it says that the department met with race inequity and determined that relying on get it done creates inequities.

Um let me repeat that.

That relying on get it done creates inequities because populations within underserved communities are less likely to have the ability to use the app.

Uh the identified solution is to have a pothole repair truck proactively do pothole repairs in underserved areas.

Um I want to take this opportunity to note that this is an excellent example of why the city needs to invest in a 311 system.

Um it's a telephone system.

Um not everybody has access to smartphones and laptops.

Uh when we oh uh when we overly rely on an app like get it done, we are knowingly leaving people behind that cannot access city services in this manner.

And so I will continue to bring that up.

Um you had mentioned that you were gonna you're gonna be present presenting the pavement management plan to ATI.

Do you have a date for that?

Uh it should be in spring.

Spring spring, yes.

Thank you.

Um, and also is the pothole truck um currently deployed in underserved areas.

Uh I would have to check if it was this day.

It certainly is this week.

Um I don't have that information for for at this very moment though.

Let me let me ask it a different way.

Um you mentioned that you guys were gonna proactively repair potholes in underserved communities.

Is this happening currently, not today, but is this happening currently?

Yes, okay.

Okay, thank you.

And what percentage of repairs are being done proactively in underserved communities?

Uh it it varies day to day.

With when we're sending out a team on an average day, we have six to seven teams.

So when we send out this team, that would be one of those six or seven teams that is doing proactive work.

When a truck is doing proactive work, it's typically able to fill more potholes because they're not transiting from as many points to points across a district.

So I I don't have an exact number for a percentage, but hopefully that gives you an idea of sort of the the rough comparison of capacity to uh proactive repairs.

Um would you be able to come back and bring me information about what percentage of repairs are being done proactively in underserved communities?

We can work on generating that.

Thank you.

And also um I'd like to know what percentages uh what percent would need to be done to make pothole repairs more equitable, considering the number that um we repair.

And um my other question is what happens if one of the other trucks that serves other areas of the city um what if it's out of service?

Does the one serving underserved areas continue to operate, or does it go um to other to that to the other area?

We we currently have um uh a small bench of patch trucks uh thanks to thanks to uh council uh providing us an additional truck uh last year.

Um so we have not thankfully in in the recent months had had an issue with trucks being down.

But in effect, although there are nine teams and nine districts, um when we route our trucks, we frequently deviate um from strict district lines uh to to get maximum efficiency of where the potholes are in at that time.

Um so I guess the short answer is no, the truck would still be would still be going to do um the proactive potholing.

Um but it's not strictly being taken from another district.

Thank you for um your response.

And I do look forward uh to getting the percentages that I um that I asked for.

But I appreciate you being here and thank you.

That concludes my comments and questions.

Thank you, Chair.

Any other comments?

Questions?

All right, thank you so much for your time.

Thank you.

All right.

Um moving on to the next report.

This is 25-01.

Uh this is with the facilities department on page 154 of the report.

Uh this is actually a newer audit uh that had gone through just uh 2024 when we went through this.

So many of the recommendations were not actually due.

Um and we have uh a couple that have been newly implemented, it looks like, uh, with uh one overdue.

Uh and um maybe before you introduce yourself and make your initial comments, just kind of overall more broadly um is seemingly there's more resources that are needed uh to proceed and um maybe just what what the plan is for recommendations uh given that no budget is currently available for condition assessments, et cetera.

So if you want to introduce yourself and make some additional comments, thank you.

Surely thank you.

Um Shirel Little, I'm the director for the Department of General Services.

So there were 10 recommendations, two of which were uh recently implemented, and many of those do require resources.

Um we are giving our budget and where we are.

We are looking internally to try to determine what we can do within within our resources to partially satisfy some of the um recommendations.

However, a large part of those recommendations require funding, uh and one specifically for facility condition assessments, which then affect the other recommendations, but where we can, we are working on implementing the recommendations.

Okay, so doing what you can, but until until additional resources are provided um sort of at a standstill.

Yes.

Okay, understood.

Um did you have any other opening comments or okay?

Available for any questions if anybody has any.

Okay, fantastic.

Uh I'll open it up to the group.

Uh any comments?

Yes, Mr.

Halpern.

Uh yeah, so uh you know, appreciate the circumstance you find yourself in when you don't have budgetary resources to get things done.

Um very much appreciate also that you broke down the response into the different tasks.

Maybe um, you know, going forward when you come back, um you could try to think about how to frame the tasks in terms of which ones are achievable without budget resources versus which ones absolutely can't get done um because is it's really just following through with what you're saying.

You yourselves are trying to figure that out, right?

And maybe once you've had more time to assess that, if you can try to weave that into the report update, that'll give us a little bit more clarity.

But we certainly sympathize with the fact that you you know it's hard to get stuff done when you don't have the money to do it.

But we can do that.

Yeah, appreciate that.

Thank you.

Thank you.

Any other comments or questions?

Yeah, Mr.

Hanel.

Um thanks.

Uh I just wanted to ask real quick, it sounds like there's progress being made on updating the council policy 213, I think it is to include a target spending level, you know, understanding that you won't be able to meet it currently at budget red, but what's the goal for spending on facilities maintenance?

And is that making progress?

And is there is there kind of a goal that's been agreed upon?

Well, we are updating kind of outlining that council policy, and so we can have a format for how we were insert the different uh aspects of that policy.

But as regarding uh target, we have not agreed with the department of finance on it.

One of the key things to that is to understand where we are with what the requirements are, which uh FCAs would of course give us, and then try to develop a strategy uh with uh the idea of the overall funding that's required for our facilities in my but we have yet to agree on that target.

Okay, yeah, so it's dependent on that.

Okay, thank you.

All right, seeing no other questions.

Thank you so much for the update.

Appreciate it.

Okay.

Moving on to the next report, we have uh 2401.

This is with fire rescue and uh parks and recreation uh performance audit of the city's brush management on city owned land.

If anybody is involved from the fire rescue or parks and rec, please make your way up.

Thank you.

And with this, uh the original audit had uh seven recommendations.

Three of those have been uh implemented, one of those being newly implemented.

Uh we have uh about four of them that are uh past due and uh looking to get some updates on.

And so if you wouldn't mind uh introducing yourself and making any open comments.

Sure, good morning.

My name is Alex Kane, Assistant Fire Marshal, community risk reduction, and standing in for fire marshal Tony Tosca.

We're here to answer questions that I don't have anything prepared for opening.

Absolutely.

Um maybe first off, um since there have been kind of limited progress on the new administrative regulation, uh, what are we doing in the meantime to make sure that city-owned property is receiving regular and effective brush management?

Well, currently uh in regards to the administrative regulation, we've been meeting with the DCAs.

Uh the conversation has led to the administrative department will take the line share of the work to create the uh AR.

We're in the current process of hiring the third assistant fire marshal.

Uh we anticipate mid-November they'll be on boarded, and then they'll start working on that.

So we're we're working towards that.

In the meantime, in regards to the city-owned property, we have our internal team uh creating layers in the GIS to at least identify where they're at and identify the acreage and and kind of scope what the work is going to entail.

We're in the preparation portion at this point.

Okay.

Understood.

Um additional questions from any of my colleagues.

No, okay.

Um first I want to note that recommendation 1.2 was implemented by the department and resulted in the fiscal year 26 budget funding, an additional $335,000 in new funding for the fire rescue to support uh brush management efforts.

I will say um just as a side note.

Past September, I had the opportunity to have a town hall in O'Time Sinester, and I introduced uh Chief Logan, and uh I simply wanted to introduce the chief.

Uh I will say he took over about 70% of the meeting uh because I told folks, hey, if you have more questions, please go outside.

Um the chief has made himself available.

So this is a topic that is um very concerning to uh my residents and I'm assuming uh to my colleagues' residents as well.

Um so um just moving forward, uh recommendation 2.2 is for the chief operating officer to consider consolidating brush management responsibilities to the extent operationally and fiscally possible.

The staff update says that the target implementation date is unknown, and implementation of consolidating acreage will occur when the budget is made available.

What is the projected cost for the various departments to consolidate acreage?

Hi, good morning.

Um, Deputy Director Erica Ferrera of the Open Space Division and Parks and Recreation.

Um 2.1 through 2.5.

Um we have taken the lead on those.

So to your question for uh 2.2 um as far as the budget needed to consolidate all of the identified city-owned acreage uh is two million, a little over 2.9 million.

Thank you.

And since you said 2.5, I'll go into recommendation 2.5 is for park and rec department to conduct a resource analysis to determine whether it needs additional resources to perform brush management activities on paper streets and potentially other land management by other departments.

Um the staff update also indicates that adding 217 acres of additional acreage would increase its capacity by 47%.

Uh the additional staff that would be needed included two additional biologists three positions, a geographic information system analyst two, and a ground maintenance.

Will these be requested in fiscal year 27 budget?

Uh yes, and sorry, just to maybe be a little bit more clear, um, the total request would be for 2.9, it'd be about $2,913,000.

That does include the four positions as well as the budget needed to increase the contract capacity.

So 2.9, it will be requested in fiscal year 27.

That is correct.

Wonderful.

Thank you.

Um, now as we move forward with implementing this audit, I I will just say that tightening up our brush management practices is a matter of uh public safety at a very high level.

Um I think the city should always be striving to maintain our land in a way that we absolutely minimize the chance of rush fire breaking out because of overgrown um brush.

Um I will not ask this question because this has nothing to do with the audit.

So I will ask um so thank you again to your staff and all the work that you guys do.

Um you guys are a hot commodity in the community, literally.

So literally or no pun intended.

Um so we appreciate your work, and I'm happy to hear that the positions will be in the fiscal year 27 um budget request.

Thank you.

Thank you.

I think that's it.

Uh oh, I'm sorry.

Uh Councilmember Whitburn.

Thank you.

Um I will just uh echo what Chair Moreno had to say about the interest in the work that you're doing uh among my constituents as well.

So I'm gonna convey my thanks to uh parks and recreation at a fire rescue for uh really working uh to get this coordinated and and uh as effective as possible, uh certainly in district three with all the canyons that we have and uh other open space.

Um the risk of fire in our urban areas as we've seen elsewhere is very real.

So uh thank you very much for all your work on this.

Thank you.

Thank you.

Sorry, uh Mr.

Hammond.

Thank you.

Um I just wanted to clarify a couple things on the the 2.9 million.

Does that take into account um that some of the departments like public utilities or enterprise?

Um no, so to be specific, uh public utilities and stormwater department have decided to to implement their own programs internally, so uh through their own means um and methods of funding.

So the whole the 2.9 million actually includes um the remainder of the parks and recreation department, transportation, economic development, police, fire rescue, and library, as well as the four positions.

Right, okay, gotcha.

And it's not that it's not that the consolidating is more expensive than each department doing its own, it's that some departments aren't really doing a lot of brush management right now, right?

So that's why the cost is higher.

The cost is consistent with our current contract.

That's how we came up with the cost associated with it, um, and the staffing analysis to determine based on the staffing that we have now that does our proactive program in-house, which is right now we're the only proactive program within the well, when the audit started, we were the only proactive program at the time.

Um I know public utilities and stormwater um are actively implementing their proactive programs as well via their funding mechanisms.

So through our consolidation efforts via one of the recommendations was to meet with all the departments during those efforts, those departments that I listed, minus PUD and Stormwater agreed that it would not agreed, but determined that it would be just easier to consolidate it into us because we do have a new five-year contract for brush management, which has um we made sure that we did have increased capacity within that contract for when funding becomes available to implement that immediately.

So actually it's more efficient to consolidate it into the parks and recreation department.

Sure.

Yep, and that's why we made that recommendation.

So is the two million the 2.9 million, is that after whatever other funds departments may have been spending on brush management.

I don't think it was a lot are transferred to Parkson Rack.

So it's a new budget request, or the 2.9 million is the total cost, and it'll be partially offset by transfers from other departments.

There is no partial offset that we did not anticipate we would be receiving a partial offset from the different departments because theirs is uh at this time is more of a as needed.

Um so their funding is very limited for that.

Um so we just totaled out the full funding that would be needed to implement this as the audit has recommended.

Right, and you'll be taking on things like paper streets that currently aren't being all right.

So there's an additional cost to that.

They're they're being done as an as needed basis as get it done's come in or customer complaints are coming in and addressed um in that manner.

Okay.

But yes, it doesn't include that, yes.

Gotcha.

Thanks for clarifying.

Okay, I think that's it.

Thank you so much.

All right, moving on to the next report.

This is 22008 with the compliance department.

Um actually, probably the next two will be with compliance department.

Uh we'll focus on this report first.

This is on page 82 of the report.

Um the audit initially had uh 10 recommendations.

There are five uh outstanding and past due.

This is the performance audit of workplace safety and workers compensation.

Umliance department here?

That would be me.

That would be you.

All right.

Um thank you.

If you want to introduce yourself uh for the record, and if you had any opening comments.

Uh Christiana Gagger, the city's chief compliance officer and compliance department director.

Um, the last time we had uh audit recommendation follow-up, you heard me comment about the fact that um my occupational safety and health team has seven FTE.

We were down to about uh three filled positions at that time because of the hiring freeze.

Um in for the fiscal year 2026 budget, four of the vacant positions that we had, three of them were reduced.

Um we have one vacant position left.

We are working on filling that now.

So uh while we did implement one of the recommendations, um, it was tough going because we're we're reduced.

Uh, but we have been making progress on the other ones as well as much as we can.

Um we hope that when this other position is filled, that will go a little more quickly.

Um so you'll see with the recommendations, the responses to the recommendations tend to fall in one of two buckets.

Uh, one is we are working with the risk management department who's implementing a software solution for their claims management program that will be coming online with a safety module.

Um, we have a position in our on our team that will be helping to implement that, and you'll see I think there's two or three um maybe two recommendations that kind of address will be completed when that is implemented.

Departments are trained on it, and that becomes rolled out citywide.

The other ones speak to the resource constraints that um the department was facing this past fiscal year, um, but that we are continuing to work on those items.

So I'm happy to answer any um specific questions you might have.

Uh okay.

Um so I think the update notes that the department specific conclusions uh could not be drawn because uh the uh results were not statistically significant with um the at the department level.

Uh were there any overall conclusions or actions taken um based on the survey results thus far?

Uh we did not follow up with departments to find out what kind of work that they were doing.

Uh the city has a safety risk oversight committee that meets quarterly.

Um, so we had that discussion with them there.

We are hoping to do the survey on an annual basis.

So prior to the next one going out, um, we would talk to departments.

Uh surveys are helpful when you can have the same questions year over year, but if there were things that they wanted tweaked, or that would be more helpful for them kind of implementing what they do in their departments, we would like to take their feedback into consideration for that.

Sure.

Uh any anticipation of the time frame of when the next survey would go out.

The last time right now, the city, we work with the performance and analytics department on to push that survey out for us.

They do a lot of surveys for a lot of different departments.

Right now, the city has a, I believe, an employee sentiment survey that's going out.

We're mindful of survey fatigue.

And so we work with them on the timing for that.

So last year, I think we were ready to go in November, they requested that we push it off until January.

So we'll be ramping up those kind of discussions now.

Um and then we will take our cues on timing from them.

Understood.

I know that survey fatigue is real.

So any additional questions from any of my colleagues.

Okay.

Thank you.

I think we're on to our last one then.

Uh this is uh report 2308, uh, page 114 of the overall report.

Uh this is the hotline investigation of unsafe driving by city employees.

Uh there were four recommendations on this audit uh total.

And uh two of them uh were disagree.

One had been implemented and one is in process.

Um I believe in the report um that uh there weren't uh some follow-ups uh being provided.

Um I think there had been a request by the uh the audit committee uh to uh have those included.

Uh just curious as to from the compliance department um you know why those updates were not provided.

Yes, my apologies.

Um I can provide you a verbal one on recommendation one, recommendation four.

Again, these were both ones that we disagreed with.

It's difficult because the auditors like online system talks about what to do to close this.

So I'm still unclear about what to do, like how to address a recommendation that we disagreed with and how that would be considered closed, but I'm happy to continue to provide verbal updates or just continue in perpetuity to kind of respond.

Um but for recommendation one, um, we are we do have um a pilot project on the telematics data, which is going to be kicking off at the end of this month.

We expect that it'll run about three months.

What we're hoping to get from the five participating departments who will be part of that um telematics project is um does the user guide and the kind of telematic system that we've set up for them, does that meet their needs?

Are there any kind of um operationally, do they have feedback for us on changes that they would like to see so that we can make sure that the folks are actually out there doing the driving, all operational um departments where they use vehicles and drivers will operate different and have slightly different needs.

You can imagine that an environmental services department that has uh large trash trucks and folks driving around in that will kind of operate slightly different from departments that might use vehicles in different manners or uh occasionally as opposed to kind of perpetually.

So we're excited for that.

Um recommendation four, I believe, uh asked us to do a cost benefit analysis on that same program once it's out there.

We were hoping that we would get a year's worth of data before doing any sort of cost-benefit analysis.

Um so after the pilot, when we've actually rolled something out citywide, that's when we would be doing that kind of evaluation on is an additional module necessary.

Um for recommendation two, you'll see that my response in there kind of speaks again to the lack of resources and the vacancies within the compliance department.

But that is something what we're moving on, and um I'm hoping that this will be marked as implemented um by the next autorect follow-up.

Oh, fantastic.

Um thank you for that.

Uh certainly understand and recognize that as we go through the audit process, there are times when there are recommendations that you know just departments might want to take a different approach on, uh, which is certainly understandable.

Um we do appreciate the follow-ups when you do maybe deviate from the recommendation just to let us know you know what the department is doing, you know, uh on the maybe the alternative task.

But maybe I'll I'll kind of kick it over to the city auditor just to, you know, as far as the mechanism and being able to provide that information, is that something that you know is still done you know through the normal channels, or what would you recommend?

Uh well, that was the audit committee's request.

Right.

Um, I think as noted in the update.

And so if it's unclear what the deliver deliverables are, uh I I don't think it is.

Um as has been noted, compliance disagreed with two of the recommendations, but they basically agreed with the problem, right?

That the telematic system needs to be monitored, that unsafe driving needs to be proactively identified, etc.

Uh our recommendation was for the departments to monitor that because they know who's driving the vehicles.

They wanted to take a slightly different approach, whereas where whereby compliance is the one monitoring the system.

Um so fair enough if that's how they want to do it, but they are taking action to address the risk identified by the recommendation.

So I think what they need to do to close it is show that they're doing what they said they would do in their response.

Compliance is proactively monitoring the telematic system and taking action when the system flags unsafe driving.

So you can you know take action proactively before uh an accident occurs or something like that.

Because these are things, these are things that we found in the hotline investigation cost the city, I think 30 million dollars from FY17 to FY21.

So it's you know, significant.

Just a nuance there at the time, part of why we disagreed is because we had a concept that we weren't sure was gonna work, but that was differed very much from what the auditor had proposed.

Um, and so part of what the pilot is doing.

I don't know that compliance will be flagging things.

There's something kind of there's a different approach that we're looking at that doesn't quite fit what the conceptual um item that was laid out initially in the report.

Um so this is part of the fluidity of this.

There's a risk that we would or there's a program that we had had in process prior to the audit coming out that we were working to implement, and this is the path we're going on.

We're continuing to do this.

So we've made an investment in telematics data, but we want to make sure it really works for the departments.

As I noted, every operational department's a little different.

So even our concept that we put together that we're hoping um will be able and be helpful for folks might change within the three months of the pilot.

So okay.

Uh thank you both.

Um yeah, Mr.

Halpern.

Yeah, so so I guess I just got a little bit confused.

Um I just want to make sure I was hearing you correctly and also and you mentioned something.

Um what I thought I heard you say was that sort of the report, the software or the reporting mechanism to produce this report wasn't completely clear in terms of how to handle this particular situation.

Whereas um shaking his head suggesting that there's a disagreement as to what the actual deliverable is, and maybe if somebody just clear that up, because if it's the administrative, how do you fill out the form part?

I assume you guys can come to some agreement on that.

But if there's actual disagreement as to what the deliverable should be, then maybe there's a different discussion that needs to take place.

Yeah, so recommendation one, we recommend the chief operating officer established procedures to ensure that supervisors routinely review vehicle telematics data in order to provide proactive, timely and efficient training andor disciplinary action to unsafe city drivers.

So there's supervisor as a real class designation.

There's um that that that that's a that the way it's written prescribes a specific kind of process on all departments, regardless of their operational design size or um how they work.

So that was something that we didn't want to agree to.

Um I believe because this was a hotline report instead of like a normal audit normally that there would have been an exit conference or we would have had discussions with the auditors along the way and we would have been able to raise those concerns and kind of reach a recommendation that um kind of um more accurately reflected the city process and how that would roll out.

In this case, the recommendations were a little bit more set.

Um and I this was something we didn't want to be held to.

It was a little bit prescriptive, but that the vehicle telematics that there will be still some sort of reporting and intervention that happens.

Um and as that becomes clear at the after the pilot is concluded, um, we will need to meet and confer on this as well.

Um, when that is concluded and when this we're ready to roll that out to the city, we're more than happy to give a more detailed explanation to the committee if that's helpful.

Um yeah, uh it's it's not a system issue.

Um just to read back to you the audit committee's action, because again, she she's correct, you know, they disagree with the recommendation, they're taking what I consider to be a slightly different approach than what we recommended, but you know, they can characterize that however they would like.

But the audit committee, you know, recognize that the audit committee's action was uh the audit committee requests the compliance department to provide updates through the city auditors recommendation follow-up process on the alternative approach they plan to take on recommendations uh one and four.

So I think it's clear we're not asking for updates on what they're doing to the letter of the recommendation.

It's recognized that they're taking alternative approach, but happy to continue these conversations.

Okay.

Um okay.

Well, I think that takes us through uh the last report.

Thank you so much for uh the updates.

Really appreciate you being here.

Um, I guess you're always here, but um uh and I think that concludes uh so I'll turn it back over to you, Chair Moreno.

Uh-huh.

Thank you, Committee Member Halpern and Mafia.

Uh Natalie, please proceed with public comments related to section B.

Thank you, Chair.

The public comment period for item two section B is now open.

Each speaker will have two minutes, and we have not received any speakers' lips here in chambers.

We do have one hand raised in the virtual queue.

Blair Beekman, please unmute and begin.

You'll have two minutes.

Hi, uh Blair Beacon.

Thanks a lot for this item.

Really important.

I'm really surprised I'm the only person from the public speaking on it today.

Um to continue.

Hopefully, others can be here in the future.

We will review this meeting today.

I wanted to quickly comment on uh police auditing issues as they are going through their own uh uh what is it negotiations right now at this time about the future of body cam issues and stuff.

I I hate to bring it out, but in the importance of body camera use and what it does.

It's now about 10 years we've been practicing body cam things.

Is it possible that we need to consider the uh health effects of body cam use day after day on a person?

Will that be a part of the auditing process?

I figured it could be mentioned as a part of uh how to organize uh auditing questions.

Um I thought I'd mention it.

It's important, I think.

I I think we do need to have a public uh uh understanding of what health effects can be on body camera use.

Uh so thank you.

I also wanted to mention there was uh one other item.

Uh uh oh, yeah, I guess I guess about uh overtime issues with police things.

Um I had a few things, but I'll just limit it to this item.

Uh that the city of San Jose recently uh just had kind of a controversy around uh their their city auditing department created different forms of uh audit of uh making more efficient their uh overtime practices, and I um they got in trouble for it.

They it wasn't considered best practices.

I just wanted to mention it here, and if you guys can look it over and review and see if that it actually is good practices or not, and uh maybe it can be used better in the future.

Uh maybe not, but just to better understand it, then I thought I'd just mention it here at this time uh for yourselves to review.

Thank you.

Thank you.

And Chair, this concludes public comment.

Thank you.

I'm now gonna turn it over to committee members for any final questions or comments.

Um before we end this item, I do want to make sure I thank the auditor's office for your work on tracking the status of the recommendations agreed to by each department.

Um I appreciate the immense time and effort that goes into producing this report by both the auditors team and for staff's response.

Um thank you to Chief Compliance Officer Ms.

Gauger uh for coordinating all the responses, and um i I do want to note uh the amount of directors that were here to respond.

Um I think that speaks to the fact that they're taking it, everybody's taking um these recommendations uh very seriously.

So thank you to that.

Um also big thank you uh to committee member Halpern and Mafia.

Uh I think every single year it's getting better and better, smoother and smoother.

Um, and this uh year, this um not this year, but this um I guess this is the second one this year.

This time it just felt really smooth.

So thank you for that.

Um I do want to commend the departments uh responsible for implementing 27 audit recommendations during this period.

I think it's very good progress, and I want to recognize that.

And that does conclude my comments.

Um Natalie, and it can let's conclude um item number two.

Thank you, everybody.

And Natalie, please introduce item number three.

Thank you, Chair.

Item number three, agreed upon procedures related to the central store's physical inventory, fiscal year 2025.

Chair.

Uh staff, please introduce yourself for the record and tell us how much time you need for the presentation and begin whenever you're ready.

Uh good morning again.

Uh committee members Andy Henhouse City Auditor.

So, as you mentioned, this is uh the annual Central Stores Agreed Upon Procedures Review that's required by the municipal code.

Uh, as we have done in the past, we've engaged the city's outside auditor to conduct this uh review.

And so we have Kathy Lai here from Crow to walk you through the results.

And then, as you know, um there is a prior recommendation on uh the topic of central stores related to the the handheld inventory scanners, and I'm sure um an update will be provided on that as well.

Thanks.

All right, good morning.

Uh again for the record.

I'm Kathy Lyme, a partner with Crow, and I'm also the lead engagement partner on the city of San Diego.

Um I'm pleased to present the results of our engagement related to the agreed upon procedures over the inventory at the central stores.

We've got a brief uh presentation to cover, just it'll cover three areas.

First, the objectives.

I thought it was worthwhile to remind the committee what we were engaged to perform.

Second, our brief um overview of the methodology, and then certainly a high level summary of the results.

So, first off, with respect to the engagement uh objectives, as Andy alluded to, we were engaged to perform an agreed upon procedures over the central stores inventory, and that's in relation to management's need to comply with the San Diego Municipal Code.

Um, the purpose of those procedures were really to determine whether or not the inventory is in compliance with the accuracy with their own inventory records.

Um it's important to note that the accuracy, completeness and accuracy of those records lies with management, um, specifically with the purchasing and contracting department, and that we were engaged specifically by the city auditor's office.

We performed our agreed upon procedures in accordance with the AI CPA attestation standards.

Um that is limited assurance, it's not a review, it's not an audit.

Those procedures are actually established by management, and uh they determine the sufficiency of those procedures for uh their intended um use, which is to determine whether or not those inventory records are compliant and accurate.

With respect to the methodology, um just to give you a high level overview.

We did have a planning meeting with both management and likewise with the city auditor to establish the scope of the procedures.

Um high level with respect to the procedures.

We did obtain the inventory records.

We selected a sample, and then we performed our count, and here we are today to report the results.

A summary of the results um is within um your your packet today, um, but this is just an overview, and it's also an attachment one to the agreed upon procedures report, so just high level.

Uh, there were about 1,683 stock items in the inventory records, and the total value of that fairly consistent with prior years was about 1.7 million.

Uh, we selected a sample of about 253 items uh valued at 229,317, um, consistent with prior year, and on this slide and in the attachment one of the report, you'll see consistent with prior year, and we have 2024 and 2023 uh alongside our 2025 results that there were identified overstatements and understatements in the inventory records.

And when you take that percentage difference and you extrapolate that across the population of the inventory value, it suggests on a net basis that there's about um an overstatement of about 12,646 dollars.

That concludes my results.

I'm happy to address any questions you might have.

Natalie, please proceed with public comment for item number three.

Thank you, Chair.

The public comment period for item number three is now open, and we have not received any speaker slips in chambers, and we do not have any hands in the virtual queue.

So this concludes public comment.

Thank you.

I'm gonna turn it over to committee members for questions and comments, and also to entertain a motion, and I'm happy to kick it off here.

Um thank you for the presentation.

Um, thank you to Crow for conducting the audit.

Um, I did uh I had a question on the status of the outstanding recommendation from um the fiscal year 20 central store inventory audit.

Um it's been five years since these recommendations were made.

It seems like getting a system in place that could utilize handheld devices shouldn't take five years to get done.

The most recent update in the recommendation follow-up report says that the handheld devices meant to improve our inventory management still have not been put into place.

Can staff explain what happened with the most recent vendor and if they anticipate having this recommendation implemented by the end of year?

Good morning, Fanella Katapia, Deputy Director at Purchasing and Contracting.

So we did select a vendor last year, and there were issues with the integration with SAP.

So we had to we uh chose not to um renew our option with them.

Uh we did a one-year contract with the vendor, and when we realized that they were not going to be able to integrate the way we wanted it to be, uh, we decided not to exercise the one year option to continue with them.

So we are actively working on um we have we have found a viable solution.

Um we're currently um trying to see if we can um get an agreement within the next couple months with that vendor.

It's an SAP certified vendor that we have found.

Did we not certify that the other vendor was SAP?

So they were not an SAP certified vendor, but they had um expressed that they have done integrations with SAP in the past, and um the solution that they provided us after many meetings uh was not up to par to our integration standards.

And will this be a sole source contract?

We're looking into what we can do with the vendor that we have found.

Okay, and when are you presenting this to the council?

Um possibly within the next couple months.

Next couple months.

Okay.

Um thank you for that.

I look forward to seeing the handheld devices finally being utilized.

Um that concludes my comments um and um I'm happy to move staff's recommendation.

I'll make a motion and I see um committee member uh Mafia on the lights.

And all second.

Um maybe just uh a couple of clarifications and comments.

Thank you for your report.

I appreciate it very much.

So with an agreed upon procedure, um those procedures are identified by management, and then your firm essentially tests and reports what you find and identify, correct?

That's correct.

Um significant changes in the procedures uh from prior years that you can recall.

Again, the first year that we've performed these procedures is it is this fiscal year, but I have reviewed the predecessor auditor reports as well as the city auditors report in the prior year, since we were in the transition of uh being engaged as a firm.

Um, and there really aren't very many differences between the procedures and the the approach.

Okay.

Um do you uh since it's the first year you might not be able to answer this, but uh any significant variations or differences in the sample sizes uh that your firm uh went through and selected versus prior years.

No significant differences, but again, in an attachment one, it actually has the history of the summary of results for 25 fiscal year 24 and 23.

And we examined 253 items.

The predecessor firm, according to this report, examined 232 items in 2024.

I think that was the city auditor's office.

2023 it was 233 items, so just around the same amount.

Very consistent.

Okay, thank you very much.

I appreciate that.

Thank you.

Thank you so much.

I don't see anybody else on the lights, so we will now take the roll.

Thank you, Moshus.

Motion passes um with um vice chair Whitburn and committee member Tapsuri absent.

Thank you for that.

Um, we will now move over to our informational agenda.

Natalie, please introduce item number four.

Item number four is city auditors monthly activity report.

Chair.

Staff, if you could please introduce yourself and um let us know how much time you need for the item.

Uh good morning again, Andy Henas, City Auditor.

I'm just need about two minutes, please.

Thank you.

Um, we've issued several reports uh since we last met.

Uh, those are listed here on this slide, and you are familiar uh with all of them.

We have eight reports in progress overall, including two in the report writing stage.

Those are our annual mission bay audit and an audit of citywide performance monitoring and KPIs, and both of those will be presented at the November uh November 12th meeting.

We have six audits in the field work stage, including audits of cyber security, leased golf courses, brush management on private property, fire rescue dispatch, police internal affairs, and the unsafe camping ordinance.

Uh this slide uh lists the audits that we have not started yet, so I'll give you a second with that.

Um and as far as other activities, uh proposals uh for independent legal counsel have been received, uh and the evaluation committee is set to begin its work uh later this week.

Um the evaluation committee includes the audit committee designee, which is Mr.

Mafia.

Uh so thanks again uh for your help on on this.

Uh also includes OCA leadership and uh two external experts.

Overall, so far in FY25, we've issued four reports, including one audit report, one agreed-upon procedures review, our first quarterly fraud hotline report of the year, and our first rec uh recommendation follow up report of the year.

And we have made uh 10 recommendations uh to improve the efficiency, effectiveness, and equity of San Diego City government.

And that concludes my presentation.

Thank you.

Thank you.

Natalie, please proceed with public comment for item four.

Thank you, Chair.

The public comment period is now open, and we have not received any speakers' lips here in chambers.

We do have one hand raised in the virtual queue.

Blair Beekman, please unmute and begin.

Hi, Blair Beekman.

Uh thanks a lot for this item.

Um, and being from San Jose originally, um they would have monthly audit reports like this one.

And uh it's a great feature to have.

It really makes clear what you're doing as a city government, and it makes it uh an open public process.

So thank you.

Uh, you're working on um among other things right now, unsafe camping ordinance uh items and brush management, uh fire rescue dispatch process.

So you you're doing some important emergency planning work.

Um I really hope the work you do, and what often happens from this committee is that the work you do, um I hope it can be eventually more easy to talk about the future of the unsafe camping ordinance.

We don't talk about it enough in in the open public process, how it's going, what it's achieving, where it's lacking.

Um, this committee is awesome for that sort of effort.

It just makes something safe and trusting and understandable what exactly we're doing.

So uh good luck what you can be doing in this committee.

Um, from your previous reports, I mean, in a future, to me, I mean, that's the kind of item that communities should gather around at this time.

And there should be public comment and additional help and uh good luck that that can take place.

And I wanted to quickly try to uh comment that uh I meant previously uh that this to me uh when streamline our our projects that doesn't mean we should lose practicing good communication and accountability.

Uh we have to continue those practices as we streamline ourselves.

To me, um that's important.

That's the the work I do uh with tech accountability and um yeah, I just wanted to mention that I I had something additional to say.

Um but just thank you for your efforts here today, and um, I'm just gonna have to save it for another time.

Thank you.

Thank you.

And Chair, this concludes public comment.

Thank you.

We're gonna turn it over to committe members for questions and comments.

Committee member Halburn.

Uh thank you, Chair.

I'm just wondering if we were to go back to the slide that shows the reports not started.

Um if there's anything on there that at this point you could honestly say you're starting to have doubts as to whether you'd be able to get it in during the fiscal year if you've if you have your head around that at this point.

And if not, but that's fine too.

We're still early-ish in the year, but it seems like a pretty long list.

So thanks.

I mean, it's still relatively early in the fiscal year, right?

So you know, will we be able to complete all of these by June 30th next year?

You know, if everything goes perfectly, we can, but that doesn't usually happen.

So I don't have anything in particular that'll be delayed.

We are um experiencing some delays on the police internal affairs audit just because they have to redact a lot of things by law to give to us.

So there's a reason for that.

So we're gonna try to look at moving some staff, you know, part-time to a different project to get one of these started.

But as of now, we're looking pretty good, and we have a focus on trying to you know meet our KPI this year.

So cool.

And then the only other thing um is the ordering of this list uh reflective in any way of the ordering in which you expect to be approaching the audits.

You're shaking your head now, I guess.

Yeah, they're they're in no particular order.

Great, thank you.

We used to make a plan for the entire year of who is going to be assigned to which audit and when, but then you know the timelines never really work out with things like these delays and things like that.

So we always try to make sure we have the most appropriate staff for each one.

So thank you.

Uh seeing no other members on the light, this does conclude this item.

And this brings us to the end of today's agenda.

Thank you to the members of the public and staff for your participation.

And I will now adjourn the meeting of the audit committee to our next regularly scheduled meeting, which is on Wednesday, November 12th, 2025 at 9 a.m.

We are adjourned.