Good morning and welcome to the special audit committee meeting of Thursday, April 23rd, 2026.

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

Thank you, Chair.

While 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 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 Foster.

Committee member Halpern.

Present remotely.

Committee member Mafia.

Present.

Committee member Tapsuri.

Here.

And Chair Councilmember Moreno.

Present and also attending.

Oh, I'm sorry, I was gonna ask Committee Member Halburn to please provide your virtual declaration.

Yes, thank you.

I'm notifying the audit committee and the public that I'll be attending the meeting today remotely due to just cause related to illness.

Pursuant to the Brown Act, I'm disclosing that there are no individuals, 18 years of age or older present in the room with me.

I will update this disclosure if it changes during the course of the meeting.

Also attending the meeting is Matthew Helm, Assistant City Auditor.

Jeff Peel, Chief Accountant with the Department of Finance, David Carlin with the City Attorney's Office, Trish Attack with the IBA, Robert Broomfield is our committee liaison, and Natalie, I'm sorry, community uh committee consultant and our um committee liaison, Natalie Kessler.

Uh Natalie, please continue with public comment instructions.

If you're in person, please complete a speaker slip located at the entrance of the committee room and place it in the box near the front of the room.

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 listed online in the preamble language of the agenda on the city's webpage.

If you need to participate by phone, please dial 16692545252.

The webinar ID is 1612 1114 pound.

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

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 computer or TV when it is your turn to speak.

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 calling participant, press star and I on your phone.

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

Chair.

A quorum is now present, and for the public's awareness, we're going to be hearing our agenda out of order today.

After the consent agenda, we're gonna go to item five on our discussion agenda, then items three, four, and lastly, six, which is our informational agenda.

We will now move to committee members, mayoral staff, city attorney, or the IBA for any comments.

Seeing and hearing none.

Do we have any requests for continuance?

Seeing and hearing none, we're now gonna take up our consent agenda.

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

Hearing none, we're now going to move forward with public comment on the consent agenda.

Natalie, please proceed.

The public comment period for the consent agenda is now open and the consent agenda includes item one city auditors' quarterly fraud hotline report, fiscal year 2026 quarter three, and item two, city auditors monthly activities report.

Each speaker will have a one-minute per item for a maximum time of two minutes.

And chair, we have not received any speaker slips in the committee room for the consent agenda items, nor do we have any hands raised in the virtual queue.

So this will conclude public comment on the consent agenda.

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

May I have a motion and a second?

Oh motion.

Wonderful.

Thank you, Member Tapsuri.

May I have a second?

Oh, second.

Thank you.

And we got a second from committee member Mafia.

Natalie, please call the roll.

Committee member Halburn, can you please register your vote?

I vote in favor.

Wonderful.

And the motion passes with Vice Chair Foster absent.

Four to zero.

Thank you.

We're now gonna take up our discussion agenda and we'll begin with item number five.

Natalie, please proceed.

Item number five is request for approval of independent legal counsel contract.

Chair.

Thank you.

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.

Sure.

Good morning, Chair.

Good morning, members of the committee.

Matthew Helm, Assistant City Auditor.

I think we need about five minutes, and I'll probably get it done faster than that if I can.

So good morning.

So this uh this item is uh perhaps misnomed as uh our advisory attorney uh it uh just informed me.

This is we are not actually seeking formal approval from the audit committee.

This is uh we're we're requesting that the audit committee uh recommend to the full council uh approval of the contract that uh we've been working on for a while.

So I'm going to step you through kind of the process if we can go to the next slide uh and kind of how we got here.

So uh you may recall that in March 24, 70% of voters approved measure A, which established city charter provisions permitting the city auditor and audit committee to retain and use independent legal counsel in certain circumstances.

In April 24, the Office of the City Attorney issued a memorandum outlining several issues for consideration related to measure A implementation.

And subsequently, the audit committee uh convened an ad hoc subcommittee for implementation of measure A.

Uh the city auditor met with the ad hoc subcommittee and the city attorney six times to consider the measure A implementation issues and developed at uh implementing S uh San Diego Municipal Code requirements.

Then in May 2025, City Council approved the amendments to the Muni Code and establish processes for the retention and use of independent legal counsel.

Uh in consultation with the audit committee's ad hoc subcommittee, we then drafted the our request for proposals uh in consultation with the city attorney and purchasing contracting.

If you recall in July 2025, the audit committee then approved that RFP, and in August, it was the solicitation was opened and that closed on September 8th, 2025.

The bottom line, it was a successful solicitation with with no issues or protests.

Uh it adhered to all political or all applicable requirements.

We had five qualified proposals.

Our proposed contract awardee is the RENI public law group.

Uh the contract scope aligns closely with the RFP and per guidance from the city attorney's office.

The contract is not appended to the public uh to the public materials that was circulated confidentially as it will be uh with all other remaining contract documents uh when it goes to council for full approval.

So consistent uh with the information provided to voters in the fiscal impact statement for measure A.

The proposed contract is for a five-year term with a not to exceed amount of nine hundred thousand dollars, and that's one hundred and eighty thousand dollars per year.

So our requested action and and uh counselor, you can help me with the with the action here, but is to uh recommend that the proposed contract, so I'm gonna modify it a little bit here, Chair, if you will.

Uh would be to recommend the proposed contract for independent legal counsel uh for the office of the city auditor and audit committee for a not to exceed amount of 900,000 for a five-year period be recommended to the city council for approval consistent with the city charter in San Diego municipal code requirements.

Um Mr.

Carlin, you can put that in English because I kind of trundled through that if you will.

I think you did a great job.

That's it.

That concludes your comments.

Okay, thank you.

Natalie, please proceed with public comment.

Thank you, Chair.

The public comment period for item five is now open.

And Chair, we have not received any speaker slips from individuals in the committee room, and we do not have any hands raised in the virtual queue.

So this will conclude public comment.

Thank you.

I will now turn it over to committee members for any questions or comments.

Comments.

Wonderful.

Well, um, thank you for the presentation.

Um, and thank you to the work uh that the audit committee's ad hoc subcommittee for implementing measure a.

Uh, thank you for all your work.

I was a staunch supporter of measure a and I'm glad to see that an overwhelming number of voters in San Diego agreed with this uh measure.

Uh former city attorney Elliott did not make this process easy.

And I do want to publicly thank City Attorney uh Heather Ferbert for not standing in between the will of the voters.

Uh this has been a very long time coming, and I'm glad to see it reach this point.

Uh, this represents another important tool for the city auditor to ensure that taxpayers' funds are being used responsibly and transparently.

Uh, this is important because the city attorney represents the same departments being audited, uh, and securing independent legal counsel helps ensure objectivity and minimizes the risk of bias in the process.

So uh I do want to extend my public thanks to uh committee member halbert and mafia for their outstanding work in helping guide this effort.

Thank you so much.

Um this um and also I wanted to point out that the economic statement presented to voters when they considered measure A is consistent with the contract amount before us today.

And ultimately, this advances the mission of the city auditor to advance open and accountable government through independent, objective, and accurate audits and investigations that seek to improve the efficiency, effectiveness, and equity of city government.

And with that, I am happy uh to move staff's recommendation, and that concludes my comments.

If I may have a second.

Madam Chair, can I can I just add one thing?

I neglected to uh give appropriate gratitude.

We had two external members that served on the evaluation panel that added a lot of value to that.

And also Joan Dawson from the city attorney's office was instrumental in getting this one to where it is today.

So we really appreciate that.

Thank you so much.

And I did hear vice chair foster.

Wonderful.

So we got um a motion and a second.

So Natalie, and now let's take the roll.

Committee member Halburn, can you please register your vote?

Yes, I would vote in favor of the motion.

Thanks.

Wonderful motion passes unanimously.

Thank you so much.

Uh Natalie, please introduce item number three.

Item number three is Office of the City Auditors recommendation follow-up report.

Chairman, wonderful, thank you.

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

Uh first, we're gonna hear staff's prep uh presentation, which includes the auditors' recommended action in section A.

Uh, we're then gonna take public comment on the recommended action in section A.

Uh the committee will then discuss and take action on section A.

I will entertain a motion at that time.

After that, we're gonna move to section B, which is gonna be an informational item.

And uh committee member Tap Shuri will walk us through the discussion of section B.

Uh committee members may ask department staff any questions they have on outstanding audit recommendations during this discussion.

At the conclusion of the discussion, we're gonna take public comment again, where the public will have the opportunity to comment on the content in section B.

Um, after public comment, I will move to committee discussion where committee members will have an opportunity to provide some final comments or questions if they should choose.

Staff, please introduce yourself for the record and let us know how much time you need for the presentation.

And I do want to let the everybody know that we are supposed to be out of this room by 12 o'clock.

So um I will be checking in from time to time.

Thank you.

Thank you, ma'am.

With that as prologue, I need uh about 15 minutes.

I'm gonna try to do it faster.

Uh so once again, I'm Matthew Helm, Assistant City Auditor.

Fortunately for me, and maybe unfortunately for you, I am not Andy Hanell.

Uh, you might see that he's logged in.

Please do not call on him today.

I don't think a 104-degree temperature is compatible with uh discourse on city uh city business, but um he he is here nonetheless, and uh I am filling in, so you've got the junior varsity today.

Um we are here to present our recommendation follow-up report for the period ending December 31st, 2025.

So, as the uh chair mentioned, uh, in the interest of time, I'm going to skip through some of the slides here.

We're happy to circle back if you have any questions on the things that I passed through quickly.

Uh we do have a number of the departments represented here, both in chambers and online.

I thank them for being here.

We know this is a lift to get here in a chunk out of your day, and we appreciate that and all of the work that you've put in to uh to getting this report prepared and providing us your your updates.

Uh you can go to the next slide.

So, just to give you a quick fly by on what we'll cover today with the summary of implementation status as of uh December 31st, 2025.

Uh recommendations.

We have a number of recommendations for audit committee's attention, so we'll be seeking action on those items.

We have highlights of newly implemented recommendations, highlights of recommendations with potential benefits uh once implemented, if when they are implemented.

And at the conclusion of our presentation, we'll offer proposed list of audits for committee discussion.

And as the chair mentioned, uh committee member Tab Shuri will quarterback that.

So we thank him for for taking the uh taking the bullet on that one.

So as you know, we produced the recommendation follow-up report twice a year to help the audit committee perform your responsibility of overseeing the city's internal controls.

And as shown here, uh during this reporting period, we made 10 new recommendations to improve the efficiency, effectiveness, equity, and transparency of city operations, and management agreed to implement 100% of those recommendations, which is good.

Next slide.

So, as shown here during the reporting period, management implemented 19 recommendations.

That's a little bit uh that's a lower number than what we've seen in past cycles.

So we're hopeful that number goes back up.

There's a number of things that contribute to what gets implemented in which cycle, but uh I I think we'll we'll see that number right sizes going forward.

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

There are many notable accomplishments in the report and a lot of good work underway that will improve city operations for our residents and taxpayers.

So that leaves about 162 recommendations still hanging in the branches that that is in progress, many of which we'll be discussed later this morning.

Uh just as in past reports, we flag certain uh recommendations for your intent for your for your attention, uh, and we flag them using these different icons.

For example, during this period, management has indicated that there are 46 recommendations that require additional budgetary or staff resources to implement.

Those items are marked with the money bag as you see at the top there.

I'll call your attention to the category at the bottom.

That's the bar chart, uh, the the kind of XL looking thingy there, uh, which we added last cycle.

We've identified a number of inde uh recommendations, 28 actually, this cycle that once implemented could provide a fiscal benefit to the city.

These benefits could include increased revenue, cost avoidance, uh reduced costs or operational efficiencies.

You've seen uh this graphic before, but this is a screen grab from our dashboard.

Uh, the left side, you see that interactive dashboard, which allows users to view the status of all recommendations by department going back to the inception of our office.

And on the right are some key figures from this round of follow-up, which I won't force you to read, but they're posted right there.

Uh, just one of the new developments that we had, and we we daylighted this for the committee last uh last time we presented uh is the historical dashboard.

I I won't we since we talked about it last time, I won't go into the details of it, but it is a really useful tool to be able to look up recommendations.

You can click into those things.

If anybody would like a tutorial, I can uh certainly volunteer uh of my staff who spent a lot of time putting this together.

So they're they're happy to spread the gospel.

Just a quick note on the follow-up process.

You you're quite familiar with how we categorize these um shown are the three main recommendation status categories on this slide.

And then on the next slide, uh you'll see that we added some categories in previous cycles.

Uh those were done in in consultation with management to try to get more granularity in how we're categorizing certain of the implementation status for the recommendations.

So I'm gonna turn to section A, and uh this is this is the part where I'm gonna have to spend a little bit of time just to make sure the committee's up to speed on it.

But there are three items in attachment A or in section A where we're asking for committee action, and as the chair said, we'll do that at the conclusion here.

Um the first is from our 2019 audit on public utilities departments AMI, uh, which is the advanced metering infrastructure, which may be familiar to you because we've asked, we've requested action from this committee on these recommendations in the past.

So note the number of recs not implemented and a you see that at the right, so all the ones in yellow there on the screen.

Those were closed with your approval previously.

So let's skip to slide 13, if we could.

Is it 13 or 12?

And I'll just give you a quick recap on how we got here.

Yeah, that's fine.

Um, so at the time that we conducted this audit, PUD was engaged in an in-house effort to implement AMI.

The 2019 uh audit identified shortcomings in PUD's project management for the AMI implementation.

And that I won't go into the granularity of the details, but that was the bottom line.

In 2023, PUD reported that it planned to use a vendor instead of city crews for the AMI implementation.

PUD requested that the remaining nine recommendations uh that the rec that the remaining nine recommendations be vacated uh due to the new approach.

But the audit committee at that time passed a motion at the September 23rd meeting that closed three of the recommendations as not implemented, but the remaining six recommendations remained in process.

The rationale at that time was that those recommendations would apply regardless to who was implementing, be it city crews or a vendor.

So that was the determination of the committee at that time.

Then in June 2024, PUD reported that it would be using a performance-based request for proposal to select a vendor to design and implement a smart metering system.

At the September 18th, 24, meaning the audit committee uh voted to close five recommendations as not implemented, not applicable.

And that was the determination at that time.

But recommendation three remained, and the one that's the one that we're seeking action on today, remained open in process in order to verify that PUD enters into a performance-based contract that includes adequate provisions to hold the vendor responsible for smart meter implementation.

Most recently, and this is what brings us to today.

In January 26, uh 2026, PUD informed City Council and the Independent Rates Oversight Commission that it is pausing advancement of its AMI program and canceling the current smart meter solicitation.

As the solicitation is now canceled without an expected restart to the AMI deployment, recommendation three is also no longer applicable in our view.

So our requested action on this item is that we propose that recommendation three, the last remaining recommendation from this report be closed as not implemented NA, not applicable.

The recommendation will continue to be available for reference on in OECA's recommendation follow-up dashboard.

And should PUD decide to re-initiate the project, uh OCA will evaluate whether to reopen the relevant recommendation or include AMI in our annual risk assessment and subsequently in an audit.

So we we do have some it doesn't go away completely.

Uh it remains in our records.

So let me move to the next item.

That was the first one.

So the second one has to do with the Department of Uh the Development Services Department Code Compliance Audit, which we conducted in 2020 in 2020.

Uh that audit found issues with program timeliness, staffing imbalances, and the need for more reliable metrics on case progress and outcomes.

And as you can see, most of the recks are on hold.

You see all the money bags on the slide there, are on hold pending additional resources as in as the committee is uh likely aware.

D uh this program has undergone an uh uh a number of budget cuts over the years.

So we are seeking your action on recommendation one only, and here's why.

You can go to the next slide.

Uh the development services department has indicated it will not implement recommendation number one, which proposed re-establishing a voluntary compliance program for selected low priority complaints.

And I'll bottom line what that means.

The recommendation was intended to reduce investigator workload by diverting low priority complaints from a formal case assignment and instead address them via a voluntary compliance program.

However, due to fiscal year budget reductions and a reduction in force, code enforcement no longer enforces these complaint types intended for the program, which includes things like fences and walls, mobile food trucks, excessive garage storage, outdoor merchandise displays, outdoor storage, vehicle repairs, and notably roosters.

Might be a good time to get a rooster for everybody.

Um as these complaints are no longer in force, the voluntary compliance program is no longer necessary.

So given these changes, we're proposing that recommendation one be closed as not implemented NA.

And obviously any of these uh proposals are subject to committee discussion, and you can take whatever action you like.

Uh but those are our proposals so far on those two.

Turning now to the last one, which is not an audit, but was a public hotline complaint of unsafe driving by city employees.

And I'll bottom line this issue as well.

Our 2023 public report uh on a hotline investigation noted that the city paid over 30 million in liability claims between 2017 and 2021.

I'm sorry, liability claims pertaining to vehicles.

Our recommendations noted that management should take additional steps to increase accountability when city staff are determined to be at fault in a vehicle accident more fully fully utilize existing technology and policies to prevent accidents.

Essentially, the vehicles are outfitted with uh telematics or GPS.

There is a system accessible to the city to be able to monitor driving uh habits, and uh that system is not being fully utilized at the time of this audit.

So at the time this item was heard at committee, the compliance department was the respondent to this audit and disagreed with recommendations one and four.

However, following discussion with the committee, the committee requested other action from compliance to monitor whether the risks were being addressed, which is within the purview of this committee as it was an internal control issue.

So come we now to today.

So the risk management department has assumed responsibility for implementation of the open recommendations related to this report following the dissolution of the compliance department late in the reporting period.

So what we're asking for today is proposed changing recommendations one and four from disagree audit committee requested action to in process.

Um and this is good news because the new responsible department risk management has agreed to implement the recommendations, provided an implementation plan, and has taken action to uh improve driver safety in line with the recommendations.

So that's a good news story.

Recommendation two pertained to 39 incidents uh that we identified in the investigation that had not been investigated per established guidelines and no corrective actions had been implemented.

Do so uh due to the prior department's delay in addressing recommendation two records related to those investigations that were never completed as required are no longer available because they've we've gone basically past the uh retention schedule.

Risk management has uh is established a process to prevent that from happening going forward, and they provided departments with what's called a notice of delay template uh for city departments, uh, which will enable them to uh avoid having go going past the uh the the uh essentially the statute of limitations on those investigations.

So, in that re in that vein, we are proposing that recommendation two be closed as partially implemented, no further action.

Okay, we'll shift gears.

Um, this is normally a section of the rec follow-up that we like to spend a little bit of time on because it highlights a lot of the accomplishments from some of the recommendated uh the implemented recommendations, highlights the good work that the departments are doing, and I think uh also highlights the value of the recommendations in general.

But I'm gonna I'm gonna speed through these and just kind of hit the high notes.

Um, the first one was the recommendation that was implemented from our uh audit of PD overtime.

So to help ensure that overtime is used for the most critical operational needs.

SDPD implemented part of a recommendation which centralized the assignment and tracking of overtime.

And according to SDPD, this is expected to save approximately 6.5 million in fiscal 2026 compared to 25 actuals, and those savings would accrue going forward.

So we can't take all the credit for this, obviously.

I mean, PD is the one who had to implement it, but it the the I think the uh the recommendation in and of itself was uh levered to get that change effectuated.

The next uh item for highlights was the fleet audit.

So to help ensure vehicles receive preventative maintenance and safety inspections timely.

Fleet operations has enabled departments to monitor the status of their fleet maintenance work orders and has been conducting coordination meetings to share information and create accountability.

As a result, the percentage of city vehicles receiving preventative maintenance uh safety inspections on time has more than doubled to 8085%, which is great.

They're they're way ahead of uh even what we recommended.

So credit to them.

Um the next slide is the disaster response.

I'm gonna table that one because I think Chief uh Melendez and Chief Heiser are in the audience, so I'll let them cover that when we get to the items so they can give you a better overview uh of what they've done.

But the the uh spoiler alert, they've implemented some uh important uh aspects of those recommendations, and I'll let them cover that.

Slide 20 are our uh familiar face from purchasing and contracting, I believe is here or online, but we wanted to highlight a couple things.

So to help ensure that the city administers contracts effectively and consistently, PNC has finalized a contract administration guide, which has been a long time in the making, but that's been put out.

Also to help provide in transparency and accountability for contracting, PNC has established a quarterly report to the city council with various information on each contract.

And I know I'm over time chair, so I will continue to speed along here.

I'm using my best auctioneer voice.

Um the last one is the grant as uh uh implementation from our grants audit.

So to inform budgetary decisions for the grants program, the Department of Government Affairs has analyzed the potential costs and benefits of grant identification software and contracted grants writers, and it's included its analysis in its annual grants report.

This is consistent with a recommendation that we made, and that is uh been implemented and is uh significant in terms of increasing transparency over that program.

These next slides, there's two slides here.

Uh, and I and I'm I'm actually not gonna cover these, but we these are a number of recommendations that are still in process that have financial benefit potential financial benefits attached to them once implemented.

And I'll just give you an example.

For example, uh the second one on this slide is we recommended updating leases of city property because over undercharging even a small percentage due to holdover could result in millions of dollars of foregone revenue each year.

This is a familiar drum beat from us, and and I know that EDD is working on that, but that's that's money that's out there, and I think the other items that we have listed here uh fall into that same vein.

Let me cut to the end here.

If you go to the to the grid.

So this slide and we'll keep this up on the screen.

And Daniel Kish and Jeff Teal from my office are there for part of our elder assistance program to help me go through these.

But as Tofik is running through them, we will um we'll go to uh we'll take the reports if if it pleases the chair in this order.

Uh the page number is listed there, so we'll try to pull the report up on screen, and hopefully that will help facilitate the discussion.

Um let me turn to the uh requested action.

So our proposed actions today are for the audit committee to accept the report.

And then from section A for the performance audit of public utilities uh advanced metering infrastructure implementation, we're proposing that recommendation three be closed as not implemented NA.

And for the performance audit of DSD code compliance, we're proposing that recommendation one be closed as not implemented NA.

And for the fraud hotline uh report of unsafe driving by city employees.

We're proposing that recommendations one and four be changed from disagree audit committee requested action to in process past due.

Uh and recommendation two be closed as partially implemented, no further action.

That's as fast as I could talk.

And I'm sorry we didn't get through it faster, but that's that's where we're at, and we're happy to take any questions if you'd like me to circle back on anything.

Thank you.

Natalie, please proceed with public comment.

Thank you, Chair.

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

And Chair, we have not received any speakers' lips in the committee room, and we do not have any hands raised in the virtual queues.

This will conclude public comment on item three, section eight.

Thank you.

I'm now gonna turn it over to committee members for any final questions or comments.

I don't see anybody on the lights, so I'm happy to kick us off.

Oh, okay.

Go ahead.

Committee member Halpern.

Oh, uh okay, thank you, Chair.

Um so I have a question.

I'm wondering if there's a representative from the public utilities department here, because I've got one question for them, and then I've got two questions for the auditors.

Is there anybody from public utilities?

Yes.

Yes, Lisa Salaya.

Okay.

Oh, thank you.

So my question for you guys is that if the money was available, would the AMI implementation still be the preferred approach to mitigate the original issues?

Yes, sir.

Okay, cool.

Thank you.

And then so then for the auditors, I'm curious if you could just elaborate on how would this be different from any of the variety of recommendations which are overdue due to lack of resources, but are still being kept open.

Council member uh or committee member, I can take first hack at that.

I think it's it's the it's the it's the fact that the program is being suspended without a further without any uh indication of what the restart date might be.

It's not just pending it.

I don't know if it's fully pending resources, Lisa, it might be.

Um, but it it's it in our mind um because there's no anticipated restart date, or it's not just waiting on um a council action.

This was our understanding in course of the the discussion with with PUD.

Uh not to say that it's final and we couldn't ever resurrect it, but we we think that we have a we have a failover in case they in case they do resurrect the program, uh we would we would be able to um revisit that recommendation or more likely put it on our our uh work plan and and risk assess it against the other items that we could potentially investigate because it probably would be distinctly different from the work that we conducted previously and might merit uh a future audit if they do resurrect it.

And I'll let Lisa elaborate if you had anything to add.

I think the only thing that I would add also is that it is based on um approval of rates, and at this current time, we're looking at a cost between 170 and 200 million dollars, and what we are forecasting needs for the water system over the next five years, we cannot fiscally um address that, especially in consideration of affordability.

Um, so I I don't see this unless something significantly changes in that um, you know, there's an influx of external money, this being anything that we're looking at any time in the future.

Gotcha.

Okay, so then my second question would be uh also for the auditors, although the department may want to weigh in as well.

Is so what's the current confidence level that the proposed alternative approach will be successful in mitigating the original risk, and how and when would that be followed up on uh again committee member?

I'll take first swipe at it, and Joe Pisek from our team uh is is here in the audience if we want to get into more detail.

Um I I think you're referring to the uh to the performance-based uh RFP that they were that they were going to issue.

And the short answer is is that we don't we don't know.

Um the recommendation that remained open had to do with just kind of uh mitigating the risk that we identified in the earlier report.

So we have not we have not assessed the the that process as a whole.

Uh again to my earlier comment.

I think that would be an issue that we could put on the risk assessment and and consider undertaking uh a separate audit on it if they do move forward with that process.

Got it.

Any anybody else care a comment or hi?

Uh committee member Joe Pisek, principal performance auditor.

Uh the proposed contract that we reviewed would have addressed many of these concerns.

Obviously, it's been canceled because they're not implementing it anymore.

So unfortunately, we can't necessarily evaluate what any future proposed contract would do, but at the time it it appeared that it would address the concerns.

Got it.

Okay.

Um I guess I'm just still a little bit wondering, you know, how the original um related to you know revenue collection, et cetera.

Um people's bills is going to be successfully resolved, but I guess we'll we'll find out.

Can I add can I add something?

So the original audit identified our implementation of the AMI was um was what was at risk.

So it was specifically only to implementation of our AMI and how we are previously doing it.

I don't believe there's that risk right now because we are not implementing any portion of an AMI.

Um and so this would only be applicable if we are to move forward with that.

Thanks for the clarification.

I hear you.

Okay.

Um further questions, Chair.

Thank you.

Thank you.

Um I'll still don't see anybody on the light, so I'll go ahead.

Yeah.

I'm sorry, Chair.

Um just with that.

Yeah, thank you.

Hello, okay.

Um just for the AMI.

So we say we're not implementing.

I I guess just if you can help me to clarify, I thought there was one point in time where we were moving forward, so do we now have a dual system or something, or what do we have in place and what's not in place?

Because I believe we did a pilot at one point.

And so, how does that now function?

We have a little bit of a um a AMI systems in place.

Um, and so they are mainly monitoring, so we can electronically read those meters.

And those are primarily for commercial businesses, and they are very helpful because of certain areas where they are, because it is very difficult to send out a manual meter meter reader.

So we have a crew that is maintaining that system.

Um, so they are inspecting them and they'll replace them as needed.

So we are maintaining and we have one itron system that can do both the manual meter reading and um incorporate the um automated system to that way transmit that data over to our customer support so that way they can do billing.

Okay, and then uh I I guess just when we did this original work, were were there federal dollars involved with this process at all?

I would have to follow up, but I'm not aware of any federal dollars.

Okay.

All right, if you can just check on that for me, I'd appreciate it.

And so when you say we have a separate crew that takes care of these, what does that crew entail?

What does that mean from the fiscal perspective?

So is that all they're doing just monitoring those those units?

They're also doing other um any um any inspections of other meters, so whether or not it's an AMI in regards to that.

So it's maintaining our infrastructure, yes, it's the entire system.

Okay.

Um and then I guess um, I think I'm done there.

Thank you.

Um it looks like we have um part of this is our contract management.

Um I guess I'll move on to that.

That's part of this.

I is that part of this portion, Section A.

Sorry, no uh or no.

Sorry, uh council member, you mean for the for the act action?

Items we're seeking action on uh PNC is not part of that.

Okay, discussion.

And I'll pause here.

Thank you.

Wonderful.

Well, thank you.

Um I'll if you don't mind uh staying up there.

Um the first item that pertains to the performance audit of PUD's advanced metering infrastructure implementation.

Um I do understand the department's effort to maintain affordability for water and wastewater customers.

Um halting the advanced metering infrastructure implementation effectively pauses the modernization of aging infrastructure, I think which leads to higher cost in the long term and overall reduces the efficiency of uh the system.

You said we have 20,000 um entities uh in place for commercial that are using AMI.

Uh what are other uh how many other meters do we have that are not AMI?

Oh, that's about 10% of our system.

So we've had about over 250,000 uh meters in our entire system.

Got you.

Okay, and so what I'm hearing, and maybe I'm I'm hearing wrong, and correct me if I'm right.

Um it's about the scope of the audit.

It's about um Mr.

Helm.

It's you know, it's about the scope of the audit.

The scope of the audit basically is just for advanced metering infrastructure implementation.

So maybe something that the audit um the auditor can consider is enhancing the scope of a new audit.

And exactly.

I think the program is substantially changed enough that it that it would merit consideration for a separate audit in the event that it's uh as I said resurrected is not the right word, but it in the event that that that AMI moves forward, I think it would uh we would uh consider scoping an audit based on the current program, not what we did uh in several years ago.

Wonderful, thank you.

And um what percentage of accounts are read by AMI right now?

Can you just clarify that?

So about 10 percent.

10 of accounts are read by AMI.

Yeah.

And the other 10 per and the other 90 percent are done manually.

Manually.

Okay, so that's very concerning.

Um by the time the city reactivates that advanced metering infrastructure implementation, I think the current AMI will already be um basically close to its lifespan.

Um that's obviously one of the issues I have.

Um what is the anticipated end of life for the already deployed system?

And um does PUD um have any thoughts about replacing the 10 percent?

So the useful life is about 20 to 25 years, and so they've been in place for about 10 years, so we still have about another 10 to 15 years.

And as that gets closer, we will evaluate in regards to what that replacement looks like and um plan for that accordingly.

Got you.

And I and like I said, I I get the the we're uh stuck in between a rock and a hard place here.

We obviously we implement a system that is gonna give residents and our I should say our customers uh a better response.

That system is gonna cost money there for the money, the what it costs the end user will actually have to pay for it.

Um but we have a system that's not working and hasn't been working for quite some time.

I I would argue, based on uh my history here in the city of San Diego.

Um and so this is a really important um topic, I think for us here in the city of San Diego.

And I'm wondering um, has the department taken a look at potential state grants or federal grants uh to uh move forward with the metering system?

Yes, we have evaluated all of our options.

Um and I would sit there and say we've made considerable progress in improving our manual our manual meter reading accuracy.

It is a priority of this department to ensure that we are um providing um accurate bills, and so over the last like two years we've really seen that, and we're in the high 90 percents in regards to the accuracy.

So I think we understand that if we're not gonna be doing this in an automated basis, that we do need to have the appropriate controls and oversight for manual meter reading to ensure and we do monitor that routinely.

Um but yes, we have explored all options as it relates to identifying outside funding for this and have not been able to um procure enough resources for that.

Got you.

So you were saying we've applied to grants and we just haven't been accepted.

We have in the past in regards to it, but we can usually get a couple million and we need about 200 million.

200 million.

Okay.

Um I do understand the closure, as I said, of the recommendation due to the current budget.

Um, but it is frustrating to see that this recommendation was issued back in 2019, which was seven years ago.

Um and I will be supportive of the recommendation to close um to close item number three with the status of not implemented.

Thank you.

Um for the performance audit of DSD's code enforcement division uh due to the fiscal year 26 budget reduction and uh reduction in force.

Um I understand code enforcement no longer enforces um a few of the items that Mr.

Helm read out that could be a nuisance.

I know that um uh some of the issues that you brought up are absolutely a nuisance in D eight, uh, but I will be supportive of the auditor's recommendation to close recommendation one with the status of not implemented.

Um for the fraud hotline report of unsafe driving by city employees.

Um I I do appreciate risk risk management for having a pilot program that addresses a recommendation one and recommendation four.

Uh as this uh pilot program is expanded, I would urge the department to work with city auditor so that the recommendations are fully implemented.

Um, and I will be supporting the auditor's recommendation as um uh recommendation one and four as in process past due.

Uh let's see what else.

Um so with that, I will move to approve the auditor's recommendation in section A.

So that is a motion on the floor, and if I may have a second.

I'll second.

Thank you.

Can I ask you?

Absolutely.

Um just with things such as um item number three, the unsafe driving, where we say we're going to change it from in process to pass due.

Why is it past due?

It's passed.

It's past due.

Yeah, that's it's a good question.

Um I think that was the determination based on our discussion with risk management.

I they they've already effectuated a number of things that that will do this as we indicated it was initially disagree, but enough time has elapsed since that that it would have rationally exceeded any kind of target time frame.

So I think we're we're our our proposal is to put it into past due because that would keep it on this committee's radar and on our radar, and we would bring it back to you with updates.

Um if we do it not yet, uh not yet due, then um we usually don't discuss that at those at this meeting, so it's just a way to keep it on the committee's radar.

Okay.

I'm just uh I'm just bringing it up because uh one I'm new to the committee.

We're auditing very specific items throughout the year, and I'm concerned about as we are the audit committee and receiving things that indicate past due.

I think that's a pattern.

I think it speaks to our best practices throughout the city.

And uh quite frankly, I'm looking for improvement.

We're all sitting around this table or or around this dais.

I hate to make this discussion about past due items.

So I just want to make sure we're clear, especially as we're talking about a a uh structural deficit where we're looking at the organizational structure, addressing our our our departments at our top heavy, and and quite honestly, as we have executive teams that consist of chiefs or DCOs, I don't know what whatever we're we're framing them as of today.

And then we have directors, assistant directors, interim direct, assistant deputy directors, deputy directors, and yet we have past due items that seem to be very consistent.

So I'll leave that there.

Um I see um Angela's here if you would like to expand by all means.

Hi, Councilor, thank you.

Angela Colton Risk Management Director.

I just from risk management department's perspective, we do not see this as past due.

We are currently running a pilot program assessing the value of the telematics and having departments and supervisors review that data.

We are seeing positive results during this pilot program.

I do want to caution though that this is a cost to the city to we currently have telematics on about a thousand vehicles.

If we wanted to expand that to the entire city's fleet, that's going to cost more money, and we are currently in a very tight budget situation.

So, yeah, would it have been nice to have been further along?

Sure, but do we have the funding to do so?

That becomes the question.

So from risk management's perspective, we're not past due.

We are moving along really honestly at a good pace considering the resources available to us.

Thank you.

I understand and and appreciate that.

And know you can only do what you can do.

I'm just coming from the position of, especially if you isolate this item.

I understand the conversations that took place.

So I understand the corrective action.

Don't think that excuses, you know, I guess at some point, you know, that's where the administration needs to figure out how to get the job done within the budgetary constraints that they have.

Doesn't mean you just don't do it.

It means you got to figure it out, right?

And so that's where I'm coming from.

So thank you again for the clarification.

Thank you.

And and Ms.

Colton, I I would argue that the city didn't have 30 million dollars uh to pay out, uh, but we did.

So um and this is this is a position.

We are our job here is to audit uh management and and the work that they do in the city to make sure that they're doing it in a way that best suits the residents of the city of San Diego.

In this case, it's not happening, so it behooves us to uh leave this item the way it is.

But we do thank you for your work, and we are seeing progress.

It's just it's it's been a long time.

And we'll keep pushing.

Thank you.

Because I see the other side of the coin as well, just like you do.

Thank you.

And and chair, I apologize for jumping in.

Um just I just want to point out that the recommendations pertain to monitoring the vehicles that we currently have the telemedics in.

That's that was the focus that I completely understand Angela's point about the additive cost of expanding it to the whole fleet.

But we have the cap we have the technology and the and the capability uh now.

And like I said, we've had good discussion with risk management, and I and I think that uh we have a trajectory and a flight plan to kind of get those monitored for the ones that we do have.

Thank you.

Now, with that, there is a motion on the floor uh by myself and a second by a vice chair foster.

So if we could take the role.

Committee member halburn, can you please register your vote?

Yes, I vote in favor of the motion.

Okay.

Wonderful, thank you.

Uh and the motion passes unanimously.

Uh so next we're gonna move to committee member Tap Shuri to take us through section B.

Now, this is a reminder to committee members.

If you have any questions on any audit recommendations, please ask them during this time after the committee completes its presentation on section B.

The public will have an opportunity to comment on the content of section B.

Now, um uh committee member Tap Shuri, I recognize that you do not have uh a monitor telling you when folks are raising their hands.

So if you guys don't mind just doing it manually so he could see you.

Um go ahead and take the floor.

Um thank you, Chair.

And I wanted to thank you also for your kind comments during my reappointment.

Uh I I was not able to attend that hearing, but thank you.

So today I'm gonna try to go over approximately 18 reports that pertain to 10 different departments.

Um if there's somebody from the department that can come up and uh discuss those reports, especially if the recommendations are passed due.

And then uh my fellow committee members can just jump in and ask questions, and I might as well.

I think are we gonna start with fire, Mr.

Helm is uh that's correct.

Yeah, is there somebody from the fire department present?

And committee member, I believe this pertains to the disaster uh preparedness and response.

There are a couple, but yes, one of them is um that that would be report number 25-10, the uh the merger of OES with fire rescue.

Good morning.

Good morning.

How are you?

Uh William Lendez, assistant chief uh strategic operation for fire rescue.

I'm joined today by uh executive director Chris Heiser and Battalion Chief Robert Zende, who will be assuming a deputy chief role over OBS in June.

Welcome.

Thank you.

So um how is the merger of I guess a question would be how is the merger of OES gonna uh impact the implementation of uh some of those recommendations if at all.

Um I I do not foresee any um any issues with the implementation of these uh recommendations, um especially the deadlines are on track.

Um actually incorporating OVS and our fire rescue, I think is gonna be a benefit to the audit in the direction that we're going.

Um I think there's a lot of crossover, and which is gonna help um our working relationship uh with multiple departments have actually helped kind of progress this this these audit recommendations over the past couple months, and so there's a lot of a lot of work in progress.

A lot of the recommendations are there's a lot of overlay.

Um but we are um we're we are made we're moving forward.

Okay, thank you.

I I have another question that pertains to a different audit.

I don't know if you're gonna be the one that can take it, and that would be uh report number 24-01.

And um that's about brush management on city owned properties.

Is that would you be able to kind of answer that or no?

No, we wouldn't okay.

We'll leave that to another time then.

Oh, the chair, go ahead.

Thank you.

I do have comments.

Um I requested this audit following the January 2024 floods uh that devastated district eight to ensure that the city develops a more effective and reliable system for responding during times of crisis, and particularly um obviously the floods were unprecedented for the whole um so I think the whole state of California.

Um I thought the city's enact it inadequate response to the flood is was deeply concerning for me and underscores the need for meaningful improvement.

So I look forward to the fire department taking uh the all these recommendations on and for a speedy implementation.

Um it doesn't look like the floods are gonna stop, right?

Uh if it looks like that's Mother Nature uh moving in that direction, and the city must be um ready uh to respond to that.

So thank you for that.

Absolutely.

Um anyone any further questions?

No, thank you.

Thank you.

Yeah.

Next, we're gonna go to uh purchasing and contracting.

We have uh recommendations outstanding from six, I think different reports.

If there's somebody I see, Ms.

Albarca.

Welcome.

Good morning, Claudia Barca, Director of Purchasing and Contracting.

It's kind of scary.

You know my name already.

I'm here too often, I guess.

Okay.

Um I'll start with report 15-016.

So uh we have two outstanding recommendations.

Recommendation seven, um, it was deemed in process.

The department had actually created the uh contractor performance evaluation procedures and documentation for departments and have been training departments on that.

Uh however, it was deemed um not implemented because we do not have actual completed contractor performance evaluations just yet.

Um however, we have started to request that all departments when if they are requesting an option renewal or a new contract, we have to have a form on file before purchasing moves forward.

We have started to receive some of those, and we will be sending them to the auditor to show that we have actually um fully implemented the recommendation for item number eight under this report.

This is related to department procedures.

It is in process.

Uh we are working with um the city attorney's office and um OLSC staff because they recently did a debarment and wanted some feedback to see what other procedures may be necessary.

There are any questions with this report.

No, no, okay.

For report 16.

Oh, sorry.

I'm sorry, just um, as we go through this, do you want them to finish their deal or kind of do it piecemeal?

Because we're stuck here.

That's no, um, that was that when you see uh an item, you need a flag uh committee member Tap Shuri to let them know he hasn't he doesn't have the screen.

Um and with that um committee member uh Halpern uh would like to speak on this item, but thank you.

Okay.

Uh go ahead, Mr.

Halper.

Thank you.

Uh yeah, thanks.

Uh so I'm just curious for each of the two that recommendations that were just mentioned.

We've got a long series of targets and then uh changes in target dates.

Could you just review for us in each case?

What is the next activity or milestone that needs to be accomplished along the path to completion?

Uh for recommendation seven at this point is to show the auditor's office completed contractor performance evaluations that they are actually being used by the departments to note that the recommendation is fully implemented.

And then I think you were also speaking to number eight, wasn't it for recommendation eight?

We have to develop the procedures.

So we have a draft document.

Uh we are working with the city attorney's office and uh we will work with OLSE to get their comments in as they recently did a department themselves to ensure that the procedures make make sense and align with with uh the what with what we're trying to achieve.

And once that's completed, it will be sent over to the auditors for recommendation to implement.

So if I'm looking in the right place, it's what I'm seeing is the target deadline is March of 2026.

Is there an update on that?

Yes, we need an additional time.

So at this point, we are looking at the end of this fiscal year.

Okay.

Okay.

Thank you.

I think we can.

Oh, sorry.

Um I I guess just as you what was the need for additional time?

Resources.

We we've got those resources mean you need you have this directors are in place, right?

Can uh I'm sorry, can we have your chief come up?

Who who's over your division?

Uh my chief is Bethany Bisak.

Can we have your chief, please?

Good morning, Bethany Bizak, Chief Performance and Logistics Officer.

So I uh after taking on this role, worked really closely with Claudia, and we've established some best practices.

We put out some memos to provide additional guidance to staff, and then we've been trying to work through these audit items uh as quickly as possible.

So I think it's it's just been um balancing overall workload generally, uh, but there's absolutely a commitment to get this done, most certainly so uh I guess I'll go back to I'm not understanding what resources or workload means, right?

Who how are we making our way through this?

What are the directors doing in regards to resolving this?

Because we are uh I guess just for clarification, are we a centralized system or a decentralized system when it comes to purchasing and contracting?

We are centralized, most certainly.

And uh, I'm not sure if you're referring to specifically the item that's with this the city attorney at this point.

No, no.

Which one is the same thing?

Just process just process, right?

And as we're talking about contractor evals, are we talking goods and services?

Yes.

Is that where we're talking?

Yes.

Because we have a process in place on the CIP side that's been in place for a while.

Right.

So I'm not again, I'm gonna go back to I'm not understanding the the lag or the lack of resources.

I'm not aware of any vacant director positions or any vacant, you know, upper management positions.

So what's the delay?

Uh understood.

I think it's just been a capacity issue, but as Claudia's mentioning, we you have the full this committee has the full commitment of myself and Claudia.

Um she's indicated uh that she needs till the start of July to get this one finished, but you have the commitment that we are not intending to push audit recommendation deadlines any further than they have already been pushed.

Okay.

On the CIP side, I've been in meetings with contractors where they've raised their own questions in regard to performance e-vals, where they say they're not done uh too well by our engineering and capital projects department where most contractors just simply get a satisfaction and there's no delineation on the good, the bad, the ugly.

So what are we doing in place to make sure that the vows that are coming through are of value and taken into account because I assume they are to be taken into account as we are continuing to business with to do business with contractors.

So what are we doing on the on this side of the goods and services size as we're implementing this to make sure we're getting a good product?

Yes, so every program manager is expected.

Uh everyone who is managing that contract, I should say, not as a classification, is expected to ensure that those um are completed in a timely manner and that they are provided and that they're taken seriously uh so that we can ensure that the city is getting the best use of resources across those contracts.

So it's it's ensuring that we are getting those in a timely manner.

And then quite honestly, that they're taken into consideration as future procurements are developed.

Sometimes we see some process issues in those evaluations that might be not specific even to a specific vendor.

And then it's our job as the city team to ensure that we're putting out contracts that then have specific standards in them that we can hold the contractors uh accountable for in new contracts that we put forward.

All right, I just think it'd be just make sure if we're implementing a process.

Let's just make sure we're doing it not just to the value of because the auditor checked it, but that it's actually a valuable tool, and it's helping to improve our process and who we're doing business with, is where I'm going.

So agreed.

Thank you.

Council members just want to uh Rany Amin, city engineer.

I want to address your comment in regard to a contractor's performance evaluations, and then the fact that uh uh we have put a considerable effort to update those evaluations to make them more useful as a tool for uh the resident engineers and the project manager to uh demand certain level of performance with the contractor throughout the course of construction, not waiting all the way to the end.

So those updates have been reflected in those performance evaluations.

And as a matter of fact, we have presented recently unsatisfactory performance evaluation to one of our pipelines contractor.

So uh we see the the new effective of uh of those evaluations and we'll continue to press staff uh to use them as a tool to ensure the quality of the work and the performance of the work.

Thank you for that.

That concludes my question at this time.

So that was one report as a far five more.

Okay.

Oh gosh, I lost my place here.

Okay.

Uh we have um report sixteen-zero one six.

We have two uh recommendations that are passed due.

Recommendation number one is actually partially implemented.

We have discussed this with the auditor's office.

Um we have developed the the procedures, however, we need um staffing resources to fully implement the item for recommendation number two.

Um it is also in process, and item number two is re uh I don't have the relation.

Um it will be implemented prior to the fiscal year as well.

Any questions here?

I'm sorry, which report would I would 16-016 recommendations one and two.

And that would be on page 28, I believe, council member Foster.

We're gonna pull them up on the screens just so that we're on the same page.

This can be very confusing.

Danielle, can you do you have the report there so we can project the page?

Okay.

Uh Madam Chair, if I suggest in in the interim until we've resolved our tech issue, um, if Mr.

Tab Sheri and I can call out the page numbers at least for the for the report, so we can follow along in our hymnals and hopefully we can get up on the screen here in a second.

So that was that was 16-016 on page 28, correct?

Oh just give us a second.

I think we're gonna have to visit on screen.

All right, here we go.

So that's page one.

If we could move on to the next page, or no, to the top of page two.

There we are.

We're right there.

Sixteen-zero one six audit of selected contracts, purchasing and contracting department report page number two.

We're all we're all good.

I'm sorry, twenty-eight.

We're good.

We should keep it up though, just it makes it easy.

Thank you.

Um so unless somebody has any questions on that, we can move on to the next report.

Okay, the next report is 24-03, the fraud hotline report on purchase orders.

We have one outstanding recommendation.

Um for this for this one, it is in process.

This we are um it's related to developing um language on how to process requests when departments um either receive a good or service without a purchase order.

That was what the fraud hotline report was for.

We intended to package that up as a uh multi-item report to uh counseling council with recommended changes to the municipal code.

Uh we've gotten some feedback and we intend to take this hopefully before the end of the fiscal.

Um we are making some updates to the language now, um, but it should be moving forward as well.

Thank you.

Any questions?

Okay.

So the next report is 25-02, and that is on page 153.

25 25 02 is our performance audit on the city's contract management process.

We do have three outstanding recommendations.

Recommendation 1.2, which is to uh provide updated approval thresholds or at least a mechanism for that.

1.3 was which is to propose changes to the municipal code clarifying approval requirements for contract alterations, and 1.4, which um is an updated written guidance from the city attorney's office for 1.4, it is dependent on items 1.1, I'm sorry, 1.2 and 1.3.

Uh for items 1.2 and 1.3, we've already developed some draft language that we propose to bring forward as well.

Um we've gotten some feedback on that and intend to bring that forward hopefully before before the end of the fiscal year.

Thank you.

Any questions?

No.

I do I I do have a question, I'm sorry, and no.

I appreciate I appreciate the audit, but it looks like at the end of the day, this is increasing increasing certain authorities.

And I guess just when this was done, uh I can I can understand the concept and intent.

But if we're doing so badly with our contract management, why would we recommend increasing authorities?

Just from a logical perspective when we did this, because that's what this is about, correct?

If I understand what you just noted.

That is that is uh how we've interpreted, yes.

You're right.

So if we're doing polar managing contracts at five million dollars, why we increase capacity to 30 million dollars and then manage those contracts poorly.

Is my logic wrong?

I guess I'll ask the auditors because this is a audit recommendation, right?

So I'm a little lost as to in theory.

I can say a few things, Matt too.

Go ahead.

Hey, good morning, everyone.

Uh my name is Nathanato.

I was a principal performance auditor on this.

So it's a it's a fair question.

Part of it is just adjusting for inflation over time.

Those threshold amounts hadn't been changed in a while.

I think the other argument is trying to free up organizational capacity to folk focus on some of the larger contracts.

Um, but your point is is well taken.

Yeah, because the results were were definitely a mixed bag.

Okay.

Okay.

And committee member, the the uh the recommendation at the time was focusing on making sure that the process follows existing municode.

The changes, so we we did we took no position and we haven't audited what the prospective changes are.

So those are uh whatever's coming forward in terms of the meaning code revisions that's outside of that.

We haven't looked at that yet.

So that would be something that we could look at going forward.

Okay, I can appreciate that.

Um, but just even as we um have talked about other recommendations previously, where now we have um this large manual that folks are using.

Uh I'm unclear as to I thought we always had a um manuals on a point of authority and um what was it called?

Tools of discipline or whatever we all these manuals, yeah, dimensions and discipline, all of these manuals that we have.

I can appreciate producing more, but um just can't caution enough.

If we're even having conversations about authority, we should balance that on the other side on accountability as we continue to move forward.

So thank you.

Thank you.

Uh can we move on to the next report?

And that would be um 2100 five on page 59, I believe.

Good morning.

Uh Christian Silva, program manager with the equal opportunity contracting program under uh purchasing contracting department.

Uh so for item uh recommendations, should I say number four?

Um the race and equity program um had agreed to provide oversight of the SLBE program.

Um we met over course of last year several meetings to um discuss that.

Um and we are currently in process of working with the city auditors to close that item out.

For recommendation number five, uh PNC has developed new partnerships with uh various organizations uh to increase outreach efforts to small minority and women-owned businesses.

Uh some of those partnerships include veterans in business, the American Indian Chamber of Commerce, uh Black Entrepreneurs, leaders, and learners, um, and the San Diego Women in Business Center.

Um so currently we're working on a drafting a plan uh and hopefully present then close that out with the city auditors as well.

For recommendation number nine, uh we're currently working with the city auditors to see if we can close that uh recommendation out.

Um in terms of uh partially met or just closing it out.

Um so hopefully we'll have an update in the next uh report for you.

And then lastly, for recommendation 12, uh PNC has developed a new centralized data tracking system uh to capture contract awards for construction professional services and goods and services.

Um so that new system went live last um last month, and that was developed by CGI.

Um and now we're working on drafting policies, and then once that's concluded, uh we'll work with the city auditors as well to close this item out.

So that concludes my items.

Uh take any questions.

Um Councilmember Foster.

I'm sorry.

Um I I think I'll try and make this as easy as I can um and just on the onset, just request a separate briefing um with you, Mr.

Silva, to make sure I understand um where we're at.

I am concerned in the proposed budget for FY27.

I believe it was indicated that as we look at the progress we were trying to make with a disparity study.

It looks like what's being proposed will now impact um that.

So as we are trying to do this work that we are doing, um I'm concerned um as we continue to uh move forward.

Sure.

I would also add so in addition to a reduction of a position to support that, there was also not a request for an updated disparity study.

So there's no update that's going to happen with the disparity study, right?

That's my understanding.

So is is the council you know is this body in the public to take that?

That's not a priority for the administration and how we do business with our minority firms.

I don't want to speak for the administration.

Okay.

Is that was there anyone here from the mayor's office?

Uh what I can speak to is that I I know that uh this committee very much values the implementation of these audit items.

The executive team, as we were developing the budget, really had to look very carefully at where to put funds, and it is uh it has been very challenging to meet all the priorities and the needs that we have.

As we go into the May revise, the executive team has already discussed to the best extent possible.

We'd like to bring back some of the items specifically related to the audit recommendations to see if more can be implemented.

Um, but at this time it's been very challenging.

We understand that this is an impact.

Okay.

I just want to make sure, and I can appreciate as we have to again address this structural deficit, but it does not mean important things such as how we do business with minority firms goes away.

So I just want to make sure we're clear on that.

So Mr.

Silva, I'm here to help in any way I can.

Right.

I know how to do a review of a procurement.

Um, so um let's not stop our efforts.

And um, quite honestly, um, I don't like that we have to have uh separate departments to determine something as such.

I think our directors and our buyers, it should be part of their businesses, should be in their performance plans, and it should be how we conduct ourselves with this as the city of San Diego.

So thank you.

Continue.

Thank you.

Uh I have no further questions.

Okay.

Thank you, Mr.

Silva.

Um, so next we are gonna move on to the Department of Finance.

There's one report, and that's report number 17-013, and that is on page 31 of the recommendation follow-up report.

It is uh it pertains to the uh audit of the San Diego Convention Center.

And are you gonna take it?

Actually, I think uh Ronnie is gonna be uh speaking about this.

Okay.

And just for record keeping, just for time, we're doing great.

I have a I'm I have I'm making sure.

Good morning, welcome.

Good morning.

Yes.

Um a lot of the implementation was on hold due to the uh litigation for measure C.

Uh now we have prevailed.

Um we're uh moving forward with uh reinitiating conversations with the convention center and the Port of San Diego about uh the future of the expansion.

As a matter of fact, uh staff took an item recently to council uh for approving uh almost a hundred and eighty million dollars allocation from measure C to the revitalizations of uh necessary work needed for the existing building.

Well, in the meantime, we start the conversation about uh the future of the expansion and uh negotiation with the with the Port of San Diego.

I I have a couple of questions.

Have there been uh any revenues collected so far from that?

Yes, there have been.

Yes, that has been.

And then I think uh for FY 26, we're looking at 45 million dollars as going toward uh the expansion and the revitalizations of the project.

However, we're not allocating the entire amount for those necessary renovations project for the existing building, a portion of it while we're trying to preserve the rest for the expansion.

And and are there any projections for FY27 about about I think it's it's around the same number uh for uh the annual uh revenue projected from measure C.

Thank you.

I I have no further questions.

Okay.

Thank you.

Thank you.

Thank you.

Next, we have a report 18023, and that pertains to the stormwater department.

It's on page 33 of the recommendation follow-up report.

Good morning, Todd Snyder, Stormwater Department Director.

Good morning.

This um, so this item pertains to actually was not an item from 2019, pertains to um imposing a inspection fee for certain facilities and properties that we inspect as a requirement of the municipal stormwater permit.

Um so the department for several years requested additional staffing to help stand up this inspection program and then administer the the inspection program.

Um those requests were never funded.

So what we're proposing for the FY27 budget is a little bit change of approach, trying to get more creative with how we can get this inspection program developed without adding new staff, which is difficult in this budget situation.

We are proposing to um present to the mayor's office, coming out with an inspection fee that is gradually imposed on businesses with the goal of getting towards full cost recovery by approximately year three of that inspection fee.

Our goal currently is to impose the inspection fee beginning in early 2027.

Um again, this is these inspections take place specifically to reduce the risk of pollution entering our storm drain system and subsequently the ocean phase and creek.

So this is a pollution prevention inspection program.

Um so we are actively updating all of our costs to be able to create what that inspection fee would look like quantitatively.

Um we're gonna present that to the mayor's office.

Planning to do significant outreach with industry, businesses that are potentially impacted, and then subsequent to mayor's office approval would require a municipal code update.

We would bring that to council.

So if all those things progress, the mayor's office approves, council approves.

Um we would hopefully have an inspection fee in place by 2027.

Thanks.

To get closer to full cost recovery.

That's that's currently the thought process, but we of course want to hear um input from industry and the businesses that would be impacted as well.

So we're we're flexible on that, but our recommendation is going to be to gradually increase the fee.

Uh and and are the number is the number crunching, was that done internally, or did you get a consultant to do that or we're actively doing that with a little bit of consultant support, but it's mostly driven by existing staff.

Okay.

Thank you.

Uh Chair, please.

Uh thank you for that.

Um I this just to reiterate, it establishes an inspection fee uh recommendation nine and develops policy for when uh reinspection fees should be issued.

Um I wholeheartedly agreed and have agreed with this recommendation for quite some time.

Uh having a reinspection program is gonna ensure additional funding is collected to help prevent flooding events from happening by keeping our storm drains and channels clear and also well maintained.

Uh the cost of the program in my eyes is quite low compared to what it would recover, and importantly, would update stormwater fees that have not been updated in 30 years, which is really scary.

And have consistently advocated for their funding for several years now.

If we had included them in fiscal year 25 budget, we uh would have had um we would have had them on board now for two years and probably would have been in a situation where we achieved cost recovery for the position uh by this time.

Um thank you uh for updating one of the questions I had was uh if the department is requesting these positions for fiscal year 27.

Um my question is uh how might the uh proposed reassignment of existing staff um uh impact other storm compliance and inspection um inspection functions and what should the council be aware uh of what are the trade-offs we're talking about here?

Sure.

So we currently have about 10 inspectors that implement this program with two supervising inspectors.

We're gonna have to pull some of those resources off of doing active inspections in the field to develop the program to do the outreach with the impacted stakeholders to be able to collect invoices, that type of work.

So essentially we're gonna be doing fewer inspections on the ground initially until we get to a point where we could add additional staff to make up for that.

Um we do have a regulatory mandate to inspect all of our businesses in the city every five years.

Um we're currently doing get pretty close to that requirement, but it's falling a little bit short.

So it's just gonna be falling a little bit further short of that permit mandate.

Okay.

And um uh you said you're you guys are chopping up the numbers right now.

Um you mentioned 2027, and I just want to put on the record is that fiscal year 2027 that you're proposing to bring something forward to the council?

Yeah, given all the stakeholder outreach that's gonna be required, more likely early calendar year 27.

Early calendar year 2027, okay.

Um, let me see.

Um it's my great hope that um that at some point the city can move forward with establishing this program.

Um I have it on record since 2020.

You mentioned 2019.

I mean, if we would have implemented this in, you know 2021, I think uh we definitely would be seeing different numbers than what we're seeing today.

Uh but I do appreciate you being here and I appreciate what you do with what you have.

Um obviously this is a um a very important topic in my district, and look forward uh to hearing from you in January 2027.

Thanks.

Councilmember Foster, please.

All right, sorry.

Um, Mr.

Halpern.

Uh thank you.

Um I'm I'm curious about the January 1st, 2027 initiation of collecting fees.

Is there already a system in place?

So that's kind of like a flip the switch, and that just starts happening, or is there a whole process um project that needs to get implemented in order to enable the actual uh billing and collection of the fees?

Yeah, there's definitely a process in place, and that's why it's gonna take staff resources to stand up and implement that program.

Um, and just procedurally wise, like I mentioned, this is gonna require municipal code updates and adoption of a fee schedule by city council, and so plus with all the outreach.

So that is going to be the lead time to get us to January 1st.

Um, but then part of what we're working on now is how would we issue the invoices, collect the invoices, um, and all that.

So, yeah, that's that's the sort of the protocol and the SOPs that are currently under development for consideration right now.

Gotcha.

Um it just it strikes me, just based on what you just said that um that's a lot of stuff to get done in order to actually go live January 1st.

Um is there any way you could give us sort of your confidence level that all that will in fact get done by January?

Well, we're so what I'd say is we're not starting from scratch as um council member Moreno indicated.

This has been a concept for several years now, and so we have been working at this over several years in bits and pieces, so we've definitely got elements that we're drawing from.

So we're not starting from scratch by any means.

Um we've picked up old um you know, SOP drafts that have been developed over the years, and we're we're starting from there.

So work has been done prior to today over the last five years because this has been under consideration, it's just never formally moved forward.

Gotcha.

Okay, thank you.

Committee member, uh Council Member Foster, sorry.

Thank you.

I just want to uh just quickly reiterate as my colleague um did, you know, stormwater is important to me as well.

Um, in something that um and Chris uh you know I gotta um pull you in because we need to figure out how we prioritize and um get done what we need to get done.

Um we just can't have another 2024.

Um in just even as important as our stormwater system is when we talk about making sure um things that are bad for the system are not in the system.

I think that's uh very very very important.

So uh just need to figure out how we prioritize that and um continue these conversations and move this forward, right?

Uh one thing I don't want to do is to be in uh you know, when you look at what we're faced with, this I don't know if it's paralysis by analysis or what it is, but we just got to get better at moving things forward in um in quite honestly capacity, I don't think is the best statements old.

So thank you.

Thank you.

I don't have any further questions.

Thank you.

Thanks.

Uh next we're gonna move to the um economic development department.

There are two reports that pertain to real estate, and real estate now falls under economic development.

So the first one is report number 19-002, and that is on page 35 of the recommendation follow-up report.

Hello, welcome.

Hi, hello, welcome.

Lizzie Contreras, Deputy Director, um, real estate in the economic development division, um, economic development department.

I think um, given the um we do have three audit um out three performance audits.

We currently have six outstanding recommendations across three performance audits, um, all of which are assigned actively tracked and in various stages of implementation.

We're monitoring them through our formal audit response process with defined owners and working towards those target dates.

Um of the items that I think is of interest and has been kind of monitored across audit committees that we've come in the past is related to the holdovers um in one of the reports.

We currently have about 183 holdovers out of eight approximately 847 or 850 agreements.

Um do you want me to go backwards?

Please, yeah, if we could just go with one report of the process.

Okay, no problem.

I was trying to save you guys a little bit of time.

Um so the first audit would be 1900-2.

Is that correct?

Yes, okay, perfect.

So with that recommendation um has to do with um the land man land department managing departments conducting analysis of our city property.

I think we've uh been able to implement a portion of this recommendation through our implementation of amendments to council policy 700-10.

The second portion would rely on the implementation or the creation of the real property management plan.

Um the department has been working towards the development of a scope of work and a framework for the real property management plan.

But of course, related to departmental priorities and budgetary constraints, it's unlikely that we would be initiating hiring a consultant until the budget is made available.

I think one of the questions that perhaps you could have related to that is, you know, can staff do this?

And yes, staff can do similar work, but this is a matter of prioritization.

Um we do have 10 agents who oversee the 850 plus agreement real estate portfolio.

Um, so we want to make sure we're using our limited um capacity and our resources um so that the internal teams can stay focused on the uh priority work of the department um and those audit recommendations that are currently in flight.

Thank you.

I believe Chair Moreno, you had a comment on that.

I think well, first of all, uh I do want to recognize that the department has moved forward on many of the recommendations, and um it seems that the remaining one is in process or past due.

Uh recommendation two was issued in 2018 with an original implementation date of 2019.

Um so it's been six years since the department um, I guess more than six years, it's been seven years since the department uh could produce an analysis of city property that ensures a good match between the property and its functions.

Um I think 10 people should have been able to do that in seven years, given even with the workload that they have.

So officially, what is the status of this analysis and what are the reasons for the delay so we could hear it on record?

Sure, no problem.

I think as I mentioned, the the development of the real property management plan includes taking the entire portfolio, including putting together a strategy of acquisitions, dispositions, lease administration, et cetera.

It is pretty comprehensive and would lay out the strategy on how to manage the portfolio, you know, over two years because we per our council policy changes, we indicated that would be coming back every two years.

As I said, um we're in the process of finalizing the working on the framework and the scope of work at the moment.

So that is currently the status of that effort.

And until we are able to obtain the budget for bringing on a consultant, um, we will need to continue to work through that.

So, what is the expected timeline for the completion?

I don't have an expected um specific date for you.

I know that we are tracking it, we're monitoring it and working really hard to try to push it.

It's not a lack of not wanting to move it forward.

It really is just a matter of prioritization and um budget.

Okay.

Um, in the recommended follow-up report, it was mentioned that I quote the department will be uh initiating the development of a scope of work and framework for the real property management plan.

However, due uh to other departmental priorities and ongoing budgetary constraints, it is unlikely that the department will initiate hiring a consultant until budget is made available.

Um, we see the excuse of budgetary constraints.

And I do acknowledge that we do have budgetary constraints, uh, but this recommendation was given before uh the current budgetary climate.

So it does look like this is not a priority to that administration.

Um I would say that any agency, any uh business doing business, uh, you know, what you have in your assets is probably the most important information that you could possibly have.

So I would urge this administration to prioritize something that has been pending uh since the mayor came into office now.

Um and so um that concludes my comments.

Thank you.

Thank you, Chair.

Okay, committee member Halpern, please go ahead.

Uh I just want to get um clarification on the TBD in terms of the target.

Is that completion of the entirety of the recommendation?

Because it strikes me that there are two little pieces here that we're talking about.

One is the completion of the scope of work and framework, and then the second is the um hiring the consultant.

And I'm wondering if you could speak to those separately.

Thanks.

Um, yes, I mean, and I can you know also defer to Matt if you have any clarifications on the actual recommendation, but you know, it's my understanding that we've completed a portion of that recommendation was to which was to make sure that we had a framework and council policy 700-10 that set out the stage for the work to be done on a real property management plan for that work to then come back to council every two years.

So that portion of the recommendation from my point of view has been completed.

The second portion from what I understand, and it won't be marked as implemented until we have a complete real property management plan that has been presented to council that we can then share with the auditors to mark implemented.

Okay, so I apologize again, I'm just a little bit confused.

So the report says the department will be initiating the development of a scope of work and framework.

It sounded to me like you said that that was that was completed.

So that's currently in process.

Okay, so that's currently in process.

Yes.

And that's being done by internal staff.

Correct.

And so do you have a time frame by which you would expect that piece alone to be completed?

That could potentially be completed within the next six months, if not sooner.

Great.

Good news.

Thank you so much.

I just want to point out that um Christina Bibler, the director uh or not director, I think, um, is on yet directors.

Thank you, Chair Moreno.

I wanted to add to um committee member Halburn's question and and also add to Lucy's response.

The department did put out a request for qualified consultants in order to help the city with the real uh portfolio management plan.

We do have that list of consultants that are qualified.

And so once we can identify the funding in order to help the department, we are working internally, but it's not going to be the robust real property portfolio management plan that we need, because for the first time, the structure of the department now fully encompasses all of the city's portfolio where it never has previously.

It now includes not just what uh real estate assets previously had managed, it also includes the um former real estate um, I'm sorry, redevelopment and housing successor properties.

So now we have one full look at all of the properties the city has under its portfolio.

Thank you.

Well, and thank you.

So now I'm confused again.

So are you saying that the scope and the framework now will have to be changed?

Or might no the department in its current structure put forward the request for those consultants to help us with the entire portfolio.

So we have the bench.

Now we need to finish the scope so that we can understand what the potential budget implications are.

Thank you.

No further questions, Chair.

Thank you.

And I guess we can move on to the next report then.

That would be um 2207 on page 87 of the recommendation follow-up report.

Yes, thank you.

Um, and then that'll go back to where I had had started.

So apologies for that.

Um, and again, this this is related to um the the holdover and and the leases.

I think what where I was going with that is that we currently have about 183 holdovers out of approximately 847 or 850 agreements, which is roughly 22 percent of the overall portfolio.

The last time we were here was at about 25 percent.

And so we've been able to reduce that down to 22 percent.

Well, that's not significant.

Again, I emphasize that this portfolio is managed across 10 agents.

Um that percentage is a little bit higher, of course, um, but it does reflect timing gaps between lease expirations and completions of renewals, relocations, et cetera.

We do recognize the concentration and have moved actively to reduce it.

We've implemented um a prioritization system where we're focusing on revenue generating agreements, um, long, you know, the longest running highest impact cases, um, and and really kind of setting that work in motion.

Um, I'll note that um as of today, we have approximately 55 agreements that are actively in negotiation or in process for some form of competitive solicitation.

The remaining agreements will continue to advance through our internal processing coordination with our you know, auditor's office, the treasury department, the city attorney's office, um, and ongoing tenant engagement.

Um, this work um is being being carried out in a very highly complex real estate portfolio.

Lots of things get uncovered when we open up every single lease.

Um, and we are doing the best to make this an operational and policy priority.

Uh Chair Moreno, please.

Oh, sorry, thanks to P.

Um Lucy, what one of the issues that we've talked about with you and Christina is um the ability of the department to we we understand that there's reasons that leases are in holdover why they may remain in holdover for a period of time.

So taking that as a given, uh I think you had indicated to us at a separate meeting that there's the ability of the department to mark those holdover leases to to effectuate increases on the holdover leases.

And I didn't have an understanding at the time of how uh how we're triaging that, how are we prioritizing those and how kind of what the status of that is for the ones that are in holdover, how many of we adjusted the sure.

I don't have that exact number for you today.

Um, but what I can tell you is the mere fact that an agreement is in holdover doesn't hold over or month to month because there's two um in holdover doesn't preclude us from continuing to uh collect rent, continuing to do annual CPI increases to those agreements, which the agents do do on a regular basis.

That is they manage the lease just the way they would any other.

Um so it's not like they're not um collecting the increases over time.

So as soon as those increases are due within the you know the lease language, those are happening regularly.

So um I don't have an exact number for you, but uh like at this moment, but I can tell you that the holdover provision language in every lease um all of the terms and conditions remain the same.

Including to the increases, pertaining to the increase.

Um just just to follow up on that.

The those increases pertain usually just to the operation and maintenance portion of a lease, right?

Uh not necessarily like not necessarily.

So the all of the provision and the lease remain active and effective as if the lease was, you know, it's it's active all of the the terms and conditions.

Um the increases in the rent continue to occur if and it's going to depend on what is the lease say related to the rent, right?

Is this a CPI adjustment?

Is it a three and a half flat percent increase?

Um if that's what was originally in the lease, that's going to continue to occur until uh a new agreement has been put into place.

And so um hopefully that clarifies.

Yeah, it does.

I've just in the past when I've looked at leases.

I haven't usually seen provisions for rent increases beyond the the ONM, but I could be wrong on that.

Um, one more thing.

So when do you expect like these recommendations to be fully implemented?

Let's say recommendation nine or um I think they'll vary.

I from if I could go through if unless there's any questions more on the holdovers, uh, council member Marino.

Chair Chair Moreno, that's yeah.

Okay.

Um I'm sorry.

Halpern is also on the lights, just so you know.

This makes it a little bit more difficult.

Um multiple O OCA audits, um, Mission Bay and golf course, um, they were recently identified um that the city may not be getting competitive rents for the properties that we own uh and lease and the recommendation from let me point out a 2022 audit, recommendation nine was to provide a list of um all of our properties, their market rental value, and how much we actually collect in rent for them.

Um I think this may have prevented some of the issues or at least provided more public transparency, which I think is very um important.

Uh the recommendation is several years overdue now.

The target date was July 1st, 2022.

Um it's a shame that you don't have uh a date to when this is going to be implemented because essentially what we're telling uh uh residents of San Diego that in a budget crisis, we cannot say for certain when we are going to have a number of what the value is uh of the properties that we own and how much we could be charging more for them.

Um and I I've mentioned this before.

I think a lot of folks in the city of San Diego would love to be paying rents from you know 10, 15 years ago.

Uh but at the end of the day, um those are um the mayor is proposing to cut programming in my park and rec for my kids um in library hours, and and here is potential funding.

Uh and we can't say how much.

Um I would speculate given uh today's market that it's in the millions of dollar number, which is extremely extremely disappointing.

Um, especially when I consider some of the work that this department is focused on right now, um, primarily uh City Hall, a new city hall.

Um this we need to be getting our books right, and we are not, and this we don't even have a date to propose uh for uh the public.

So to say that it is um frustrating, I think is an understatement.

Um it is extremely frustrating.

We do have um 10 folks in this department that are professional.

Um should we have more?

Absolutely, we should.

Uh but this I think is one of the audits that shows that we are just leaving money behind.

Um and we're focusing on other projects in the city of San Diego, which is just it makes me sick to my stomach.

Um yeah, I just I don't I mean, I don't I don't know, I don't know what else to say or do.

We're talking about um maximizing value for the public, uh making informed decisions about renewals and whole holdovers.

I mean, I have a theater in Balboa Park that is contacting their city council member from D eight about a lease.

Like that, I don't have 10 folks that are real estate professionals um under me that I could turn to to help negotiate these deals.

So um to see this here, especially at a time when we're at a hundred and what was the number, hundred and nineteen million dollar budget deficit, just it makes me, you know, this this is the reason why folks do not trust City of San Diego.

This is one of the main reasons, and it's just it's disgusting to me.

On that note, Mr.

Halpern.

Uh yeah, so um two questions.

One is whether the uh draft budget will have any impact on the department, and then and thereby the ability to um you know get more of these leases up to date.

That's part one for the department.

And secondly, as a legal matter, if the lease is in holdover, if it's got an escalation clause, um, does the when the lease is finally renegotiated, is does the escalation get applied retroactively or how does that work as a legal matter?

Um, I'll answer your second question.

And if Christina's on the line, I can ask her to respond related to the the budget inquiry and the impacts to the department.

Um as it relates to the escalator, the escalator is gonna remain and it's going to continue while it's in holdover and in parallel to the negotiation.

If we enter into a new lease, there would be, you know, whatever the market rent rental rate would be, plus whatever escalator we have included in that new lease would trigger.

So it's going to continue through the life of the term.

There's no retroactive because we haven't stopped doing the increases in the adjustments that are in the actively held over agreement, if that makes sense.

Yes, that's very clear.

And then I'll defer to Christina.

Sorry.

Thank you, Lucy.

Chair uh Halburn.

Um the department is impacted with the proposed budget.

Um, as the mayor said, every department has cuts.

And so in the current proposed budget, um, there are positions associated with the real estate division that are impacted and and proposed to be reduced.

And and so then presumably that will have some impact on the ability to get the lease portfolio up to date if you're losing staff and capacity to do so.

Is that a fair conclusion?

Yes.

Gotcha.

Just out of curiosity, in the discussion about things of that nature.

Um, do you ever um whether you were in conjunction with the finance staff, whomever, uh, think in terms of you know, kind of like a return on investment notion that in other words, that the cost of the people and the incremental revenue that they might be able to generate if they are kept on and able to uh conclude uh lease negotiations might actually outweigh the savings of letting them go or or you know furloughing them or whatever the plan would be, if you understand my question.

I do understand the question.

I also understand the deficit is significant, and some of the budget mitigations that we were able to put forward in the current fiscal year severely reduced all of our non-personnel expenditures to a point where we got as trim as we could that the only thing left to cut now are positions.

Got it.

Yeah, okay.

Thank you.

Thank you, Mr.

Halburn.

I don't have any further comments.

I was gonna say something, but Mr.

Halpern preempted me as usual.

Thank you.

Anyone else?

No.

Thank you.

Thank you so much.

Thank you.

Next, we are gonna move to the development services department.

There's one report, it's report number two zero-008, and that's on page 40 of the recommendation follow-up report.

Good morning.

Good morning, everyone.

Uh my name is Andrew Grimaldo, Principal Accountant with Development Services.

And so uh to address all the audit recommendations, DSC has actually decided to move away from deposit accounts to a pay as you go module where actual hours are calculated against an hourly rate, and then invoice via SAP FICA through an interfacing process.

DC has requested an exception to section 4.1 of administrative regulations 6330 and section 1.41 of process narrative 0358, which requires all city receivables to be invoiced within three business days of determining the receivable has been established.

We're currently seeking to invoice monthly as we feel it would be more beneficial and efficient to send invoices on a monthly basis.

And then uh currently, this exception is actually pending city treasurer approval.

While we do wait for city treasurer approval, we have actually taken some sets to kind of mitigate some of the issues.

We've created with our data and analytics team a report to it through Power BI that allows staff to monitor account balances more closely.

DSD's finance team is also actively monitoring account balances and locking any projects that fall into deficits.

They're currently manually creating invoices via SAP FICA to recoup those receivables.

And then the project remains unlocked into both the SAP FICA invoice and uh payment for the minimum required balances received.

We are also actively ongoing closing our legacy system PTS.

I know that the audit report mentioned some of the issues with that legacy system of having automated features as opposed to what we have in ACELA.

So right now we're in the process of either closing out old projects that are inactive or transferring those over to a CLS so we can better monitor those.

That's kind of the update that I have.

Thank you.

Does anyone have any questions on that one?

Mr.

Alper.

I don't have a question.

Thank you.

Um I'm just kind of thinking this through.

I mean, we've been at this for a number of years.

Um, one let me ask this one thing.

Um, so the update says that you're awaiting approval from the city treasurer.

Can you explain why there's a need for approval?

Yeah, we're we because right now the AER and more specifically the process narrative defines when we should be able to issue uh receivables, and it's within three business days.

We're seeking to go monthly, which is a process that's used by several departments within the city because we feel like it's not uh beneficial to the customer.

For example, if I work on a project Monday, Tuesday, Wednesday, but not Friday, Thursday, and Friday, based on the AR, I owe you three three separate invoices.

So in a month, the customer could potentially receive, you know, just ballpark 20, 15 to 20 invoices for one project.

I just feel like that's going to create customer confusion, it's inefficient, um, and it just creates further issues.

But I unfortunately I can't speak on to what's causing the delay on city treasurers.

We have met with them several times throughout the past month, answered several other questions, provided them data analysis, but we're still pending the ultimately their approval.

We feel that we should not move forward because as I mentioned, you know, invoicing someone up to 20 different invoices in a month just doesn't seem beneficial to the customer or for us from an operation standpoint.

Got it.

Well, um, you know, Chair, I wonder if we should, as a separate matter, um, try to request someone from the treasurer's office speak to that because uh my vague recollection is that there was an audit that said there's something like five million dollars or so of uncollected uh fees that are um out there, and so uh again, you know, we've been at this for uh uh a few years.

It would be nice to try to get some closure.

Yeah, I can I can circle back with uh city treasurers and uh provide a response.

Great, thank you.

Thank you, Mr.

Halpern, Mr.

Peel.

Thank you.

Thank you, guys.

Uh next up, we have three reports that pertain to the Parks and Rec department, starting with the performance audit of equity and recreation programming.

That's report number 220-005, and that's on page 68 of the recommendation follow-up report.

Hi.

Good morning.

Good afternoon.

Oh, we good morning.

Sari Razzo, Deputy Director for Parks and Recreation Department.

Thank you.

I am here to speak to the audit of uh equity and recreation.

Um we do have 16 recommendations in this audit.

Four of them are complete, 12 are past due, but are actively progressing.

The department has been content committed and will continue to be committed to progressing to all of these recommendations, which we feel will certainly improve the services that we offer across the city of San Diego.

I'm happy to announce that we are nearing the completion of our community recreation needs assessment.

We do anticipate that report coming to council this summer.

And we're currently relying on the progression of four of these recommendations from that report.

So we do see that once that report is released, we will be able to progress on those four items and be able to wrap those up fairly quickly following that community needs report.

We have the cost of service study that will be going out to the market here shortly.

That will also address three additional items once we receive the cost of sterts, cost of service study back.

We do anticipate award uh early fall, probably September, in which we'll be able to proceed with those analysis and continue on uh those recommendations.

Seven of these recommendations do rely on positions and funding to support the expansion of equitable programming in our historically underserved communities.

We do realize that in tight budget years that we continue to progress with that we're going to have to shift and adapt and work with what we have.

We have relied heavily on our partnership with San Diego Parks Foundation, as you saw yesterday at committee, um, in that they provided 1.875 million dollars in fiscal year 2025 to support our goals and expanding equitable programming across the city.

Um and that's through our Complay Outside programming, our Parks After Dark programming, our expanded enrichment classes that we're offering across our underserved communities.

We do feel that we can um quickly proceed with closing out a lot of these recommendations again with the completion of these reports and analysis.

I do feel confident that many of them can be closed out uh by the end of next year, calendar year, um, if not all of them.

Um I do agree that even with uh the the lack of budget that we can complete the framework for all of these recommendations.

Even if the budget doesn't present itself in future years, that framework can be there, and that's something we can continue to work with our philanthropic partners to find ways to fund and continue to advance equitable programming across the city of San Diego.

I do want to highlight per your recommendation, Chair, uh, at our last meeting that the department has partnered with the communications department, and we are currently actively making a marketing plan to highlight what the department can do moving forward to ensure that we are um actively pursuing ways to communicate with folks across the city.

And as part of our community recreation needs assessment, we are seeking that information directly from constituents across the city on what is the best way to target communications to them to ensure they're aware of the programming that is in their facilities and that we want to hear what they want, what's in their facilities.

So I really do see that um per your recommendation, Chair, that was a great strategic move we were able to proceed with, and uh we're looking forward to the completion of that marketing plan at the end of this summer.

Um lastly, I do want to recognize that given the um the budget uh draft budget recommendations that there are potential impacts to our staff that support um this equity audit as well as the expansion of our equitable programming, as well as potentially recreation centers across the city of San Diego.

Um, it is the department's position to focus on maintaining services in our uh underinvested communities through maintenance of our Parks After Dark program, our Come Play Outside programs, um, and and everything that we've been working towards these last few years uh in this audit.

Um I will also highlight that while we may be impacted by uh having less staff to continue to build these uh policies and procedures and changes to our operations.

Uh, we're still committed to um using what staff we have remaining to ensuring that these recommendations are all put into play.

Um happy to answer any questions.

Yeah, thank you, Chair Moreno.

You guys know this is one of my favorite um departments.

So um I do appreciate um all the men and women at Park and Rec department.

Um just for everything you do and also for taking this very seriously and uh just to bring folks up to speed.

Uh one of the audits that we did showed that programming at Carmel Valley was 146 times higher than um South Bay Eger, which is um just you know, we're telling one very affluent part of the city that they matter uh 146 times more uh than an underserved community that happens to be, you know, brown and black.

Uh that was absolutely not something that I wanted to be a part of.

Uh so I appreciate the auditor uh bringing up a lot of these um issues at hand, and I appreciate you taking them very seriously.

Uh I am very happy to see that the community needs assessment consultant that was part of recommendation one being hired and that it's underway, and you said it should be completed by summer.

Did I get that right?

Yeah, we do anticipate the draft report um next month, actually, and we do plan to bring that forward to council this summer.

Wonderful.

Thank you for that.

Um, and um I also appreciate the updates that have been included uh in this recommended recommendation followed up uh follow-up report.

Um last year in fiscal year 25 uh there was um a budget request of 1.7 million um put into the request.

Uh a request made for the budget.

Um last year in fiscal year 25 uh there was um a budget request of 1.7 million um put into the request uh a request made for the budget uh was there a similar request made in fiscal year 27 yes there was there was okay um so you mentioned that there's gonna be uh an impact right and that's this is gonna impact the focus on equity uh can you elaborate on what exactly that means yes the current draft um includes the reduction of one recreation specialist which is um a direct support for our team that is focusing on this audit and the kind of restructure of how we're implementing programs across the city to ensure that our focus is on equitable expansion um so while we will if that reduction is taken um again we will still continue our focus on prioritizing our core programs park sector dark come play outside um it may impact um our timeliness on developing some of these policies that are more uh research driven um given that that reduction in that staff um we will also have a reduction of a therapeutic recreation specialist as well as this aging recreation specialist they also export support our equitable programs across the city um for those populations got you and is this position being eliminated or is this person simply moving to another responsibility within the department uh those positions are all being proposed for production elimination elimination okay um many of the recommendations require additional staffing and resources I do recognize this and I will continue to push um in fiscal year 27 budget for staff and resources needed to bring equity to our park south of the eight um a reduction of five percent at Carmel Valley's uh park and rec is very different than a reduction of five percent at South Bay Eger right especially when you have a hundred and forty six times more programming um so across the board cuts just do not work uh we've I've been saying this as a council member um and I will not stop advocating for this until we say until we see the same programming at the rec centers and um in I will mention my rec centers and district eight um I want to see I've I've always said this if you will if you walk into a park and rec in the city of San Diego it should look the same it should feel the same and it should smell the same right you shouldn't say hmm I'm in La Jolla I'm in San Isidro it should all be equitable and this is what this audit showed um and I do appreciate I've I've go often to a lot of uh the park and rec functions and and I know that your staff is doing a tremendous job uh and I do appreciate them um obviously this is an an administration proposal at this point with the budget and um but thank you for updating us on this that concludes my comments thank you chair uh council member foster thank you um and um I too do appreciate um the efforts of park and rec um I speak with Andy quite a bit I'm always at our parks um I even poke my nose into um D eight as Southcrest is so close to my district and utilized by so many right that is a an area where um the African American community was told where they could live right um in uh the conditions of the facility um I must say are just unacceptable right so um as I as as I do appreciate um I just it looks like most of the things that are um highlighted here are from 2021 we are now in 2026 and all throughout it appears as if any audit recommendation is tied to additional FTEs we have to um I don't think that's an acceptable answer.

I mean I think that's where leadership needs to determine how we will structure our departments.

If I look at recommendation item 15 it says to ensure the accuracy of key data fields in the parks and recreation department park and recreation department management software park and rec should develop automated controls where possible to ensure that recreation staff enter program information the recreation program management software consistently and accurately and as I look at this simple recommendation and then you go into what is it going to take to implement you hear FTEs where it seems like this should be a core function of the individuals that are running the rec centers and the programming and so I don't think everything that we do as part of this committee or any other committee that every item requires a new FTE I think that's where leadership and management come into play to get done what needs to get done in the best interest of the public and to bring some fiscal responsibility to the table.

And so I don't think everything that we do as part of this committee or any other committee, that every item requires a new FTE.

I think that's where leadership and management come into play to get done what needs to get done in the best interest of the public and to bring some fiscal responsibility to the table.

So just overarching, right?

Coming to this committee, and all we hear is capacity capacity FTEs.

It's unacceptable.

So I'll leave that there for today.

But thank you.

And again, I love park and rec, very important.

It's why I fight so hard since I've been on this council in making sure that we have those facilities open, that they are up to the standards that they need to be.

Um and that our folks this impacts quality quality of life for my community.

And so I can't stress that enough.

Thank you.

If we can move on to the uh next one, that would be uh a fraud hotline report.

That would be report number 25-05, and it's on page 157 of the recommendation follow-up report.

And I'm hoping some parks and rec as well.

No.

Can we skip to brush management?

Sure.

We we well, I have them on a different order, but yeah, we can do we could do brush management as well.

And so um that is that is uh 24 01.

Okay, I'm sorry.

Morning, committee.

Uh Patrick Hadley, Deputy Director of Mission Bay and Shoreline.

Good morning.

Happy to answer any questions you have regarding the beach bar audit.

Chair Moreno, please.

Uh this is uh just to catch people up.

Uh this is 25 05 fraud hotline report on board uh boat storage uh permitting.

Uh I I saw that in recommendation 2.1, the department was looking to publish an RFP for a consultant to do benchmarking studies uh of what other jurisdictions charge for similar boat storage permitting fees.

Uh why does the department need a consultant to benchmark when the city auditor already did the benchmarking study?

Happy to answer that.

Yes, so benchmarking is obviously part of a larger fee study.

Um it actually gave us the information that our fees were not in line with other jurisdictions that offer this service.

So, as part of that fee study that that Sarah actually mentioned earlier, that's going to be released to RFP soon.

Um that'll dig into whether or not we can actually move to a market rate versus the cost recovery model that we have now.

But why do we need that if the if the auditor already did it for you guys?

Uh so and I'll probably ask Matt here to chime in as well.

Um didn't do actually do the fee study, they did benchmarking to see if where our fee kind of fell in line with other comparable jurisdictions.

So the next step would be to actually do the fee study to see where our cost recoverable rate actually needs to be based on our costs here in the city, or if we can move to a market rate.

And when is that RFP going to be completed?

Uh I'll actually have to ask Sarah to come up andy Fields raises hand as well.

I don't know if we want to take it from the director.

I think we do.

Go for it.

Go ahead, Andy.

Good morning, audit committee.

Andy Field here, Parks and Recreation Director.

I just wanted to chime in on the reason why this particular uh study is necessary.

It's so that we can comply with proposition 26.

Proposition 26 is a state law that allows us to only charge for services up to the cost of recovering the um the service, but not like charging more beyond that amount.

So uh I'll let Ms.

Orazzo speak to the time frame for getting the request proposals out for the consultant to conduct that study to allow us to comply with Prop 26.

And just a side note, this will be for all of our fees, as the majority of fees that we charge, aside from permit fees, do require compliance of Prop 26.

So uh turn over to Sarah.

Thank you.

Um, as I mentioned, we anticipate award in September.

Our finance managers committed to undertaking any um analysis that can speed up this process as we understand the importance to the council on uh this for various aspects of our operations.

And Mr.

Helm, how long has this been pending?

This uh sorry the vote.

Um I I will say it just seems a little bit ridiculous to me.

We know how much it costs.

And even if we got that the that number changed, right?

Just how much it cost and not even comparing it to other jurisdictions.

We're just we're leaving money on the table, and once again, this is a shame.

2024 was the issue.

2024.

So we're two years late, and we're still waiting on an RFP that will be brought out in September, and we're looking at about eight to nine months after that.

Okay.

I think that's once again unacceptable, but I'm not the mayor.

Thank you.

If I if I just make may make one comment and and not it's a question, and I don't want to sound glib at all.

But um my question is does the city have the capacity internally to do these kind of cost analysis studies?

Because to me, it doesn't sound that hard.

That that and maybe it maybe that capacity doesn't exist within the parks department, but maybe the department of finance or somebody else has it.

But you know, that could be a way to speed up the process, assuming that the staff have the capacity to do that.

Sorry to put you on this part.

I'll take that questions.

Uh yeah, no, I think your point well taken.

I would explore it with our chief financial officer, Rolando, uh, about what's um available resources internally that we can expedite that study.

Okay, thank you.

Thank you.

We'll report back.

Um, Mr.

Halpern.

Um thank you.

You know, um uh I appreciate it perhaps the city attorney's office could weigh in here because it strikes me that what we're talking about here is not a cost of service issue, which is governed by the legal requirement that was referred to earlier.

I think what we're really talking about here is um related to the value of the property, which is should be determined by market rates, benchmarking, et cetera.

So I I think it would be helpful if we could get clear, at least for me, get clarification whether this truly is a cost of service situation under that um sort of legal constraint.

Um then I I would wholeheartedly agree with the point um my colleague just made about the capacity for us as a city um to be doing more of our own work on this.

I know uh I think it was a couple of meetings ago, uh, Chair, you'd asked the city attorney's office to look into what might be permissible and give some guidance in this regard, because it's it's certainly, and I'm sure you know the average citizen out there listens to us, and it certainly seems that the work of the auditor's office might be reasonable in uh reasonable enough to be used in the number of situations that we see where time and time again it feels like we're leaving as a city, we're leaving money on the table for lack of increases um you know fee studies, et cetera.

So I'll stop there.

Thank you, Mr.

Halburn.

Um we have one more, I think, report for uh sorry, can I get an answer to my question though?

Sorry.

Is is this an actual cost of service situation as opposed to if you will, a um a determination of um of property-based fee?

This is a property-based fee.

This is David Carlin from the city attorney's office.

So this particular fee has to comply not only with Prop 26, but also the um applicable city regulations.

But the rental of the fee, it this is I think again back to the department is choosing to put this into their entire fee schedule.

But the mission bay boat storage fees are property related and they would be exempt from Prop 26.

Thank you.

So I think we sort of have to go back and and and ask the question again, at least in the context of this particular case that came up as a um uh you know, a hotline case.

Why we have to wait.

I don't know what to think about, please.

Yeah, why we have to wait for a fee study?

Yeah, because I think uh the city attorney just opined that this is not a cost of service situation, and that um now the um these are my words that the that the test here should be more of one of a reasonableness um of the benchmarking which the auditors already done.

Yeah, Ronia also just mentioned that that we'll look into with with with DOF and to see if we can actually expedite that study.

Um the original plan was to was to go out um to bid and include this fee in the larger fee study, but we'll see if we can expedite um outside of that.

Thank you.

Thank you.

I think we have one last one for parks.

And that's um sorry.

Report number 2401, and that's on page um 120 of the recommendation follow-up report.

Good morning, Erica Ferrera, deputy director of the parks and recreation department open space division.

Uh just a brief update, need probably about five minutes.

Uh this details the park and recreations response and progress in implementing the brush management audit with the remaining three recommendations to or complete.

It's 2.1, 2.2, and 2.5, primarily concerning coordination budgeting and program consolidation across city departments.

Recommendation 2.1 includes paper streets defined as developed right-of-way areas requiring brush management, including those in the parks and rec open space um division's brush management schedule.

So essentially we have completed the identification of those acreage.

We completed that in November of 2023.

Uh and we also developed a service level agreement.

So as we when we are able to implement this consolidation, we'll enter into this agreement with transportation to be able to perform work.

Uh so as far as this recommendation, parks and recreation has at least completed the work and just waiting to be able to move forward with implementation.

Recommendation 2.2 is centralization of a proactive brush management program for all city departments within the park and recreation department.

Uh that acreage for all the city departments was completed in uh last year in 2025.

Full acreage proactive consolidation does require additional funding in FTE.

This essentially uh increases our current proactive program by 46%.

It adds approximately 430 acres to our current acreage of 925.

Uh the departments have collaborated and come to uh consensus.

Three departments, and and this is appropriate under the audit recommendation.

Three departments will continue to maintain their own programs.

That's a public utilities department, stormwater department, and economic development.

I'm sorry.

Uh public utilities, stormwater, and environmental services department will be maintaining their own independent programs.

This is essentially due to unique jurisdiction jurisdictional ownership as well as um enterprise funded programs that they have.

All the other remaining departments, which is the remainder of the parks and recreation divisions, environmental uh I'm sorry, transportation, economic development, fire, police, and libraries uh have asked to consolidate under parks and recreation.

So we've currently are actively uh discussing and evaluating a citywide consolidation of brush management under the parks and recreation department.

This initiative is still in development, but we do intend to include this in the May revise uh for FY27.

Uh and there was a uh there is uh a current discussion about a potential FY27 budget request uh for funding and possible FTEs.

Under the last recommendation 2.5, uh the resource analysis uh is complete and has been completed.

Uh as I mentioned, we have to identify additional resources needed to take on the additional 430 acres.

We identified two biologists, two positions uh which are required for the mandated biological reporting that's required for this activity, one GIS analyst to map all locations and trap completion of the brush management acreage, and one grounds maintenance manager to manage the expansion uh of the contract by uh 46%.

Thank you, and happy to take any questions.

I I just have one question.

So, what is the expected impact uh and the FY27 budget on your plans?

If we were to implement a full, a fully uh proactive program for the additional 430 acres, it comes to about 2.9 million dollars.

And that includes FT the FTEs as well as um funding to uh expand our contract.

And do you know how much of that you're likely to get, or is it at this point premature to I I would suggest it's premature at this time.

Okay.

Thank you.

Any questions?

Okay, thank you.

Thank you so much.

Just not a question, but just a statement.

And um I believe this is item 2401, right?

Is that what it is?

The performance out of the cities brush management also.

Right.

Um and as much as I typically when we talk about um breast management, high fires zones, we typically focus north of the A.

But my community does have several um neighborhoods that uh are high fire um zones.

And so I think we need to just make sure that we are being inclusive.

Um I have folks in the Oak Park community that we just went out yesterday, where we constantly have certain um issues where now that that um are adjacent to city-owned property, where now we're having um damages to fences and certain things.

So um just want to make sure we're doing our best to um as we're talking about programmatically adding doing certain things that you know, just the areas that we currently have that we are maintained appropriately and being inclusive in our efforts and not focused on one um part of the city.

I'm I'm happy to add a little context to our program.

Um as I mentioned, we have currently 925 acres in our open space that we do manage.

That's on about a 21 to 23 month rotation that we rotate through the 925 acres.

Um 99 percent of that acreage is within the high a very high hazard fire severity zone.

Um and as I mentioned, we do just rotate through on a time and on a timely perspective.

Thank you.

Thank you.

How am I doing on time, Chair?

We're not doing good, but I see it sounds like if if the committee can keep a quorum, we could just keep on chucking along.

Okay.

Um we have four items left.

If the presenters can, you know, go down to about a minute or two uh in their presentation and us limit our comments and questions, we should be fine.

So I I have four recommendation follow-up reports left.

And so the next one is for the transportation department.

It's a report um 24-04, and it's on page 135 of the recommendation follow-up report.

That is a um re-review of uh of an of a 2016 audit of uh programs for improving pedestrian safety.

Do we have anyone from transportation?

Online.

Okay, what page is that?

Good morning, Chair Moreno and committee members.

Naomi Chavez, interim director for the transportation department.

I'm here with uh staff Alex Ubaldo, deputy interim deputy direct director, and Everett Hauser, program manager, who will take any questions on these items.

Thank you.

Uh it doesn't seem like there are any questions unless Mr.

Halpern has it.

Nope.

Thank you.

Uh nice short and sweet.

Thank you for your thank you for showing for we'll go to the next one.

The next one is a performance audit report of the city's fleet maintenance.

It has report number 25-06, and it's on page 163 of the report.

And that one goes to the General Services Department.

Good morning.

Good morning.

Good morning, Chair and Committee members.

Uh Michael Tully, interim director, Department of General Services.

I'm joined today by Deputy Director Mike Simons and Assistant Deputy Director David Oignate.

This recommendation, this audit, this fleet maintenance audit had 10 recommendations, and I'll quickly go through there were three that were implemented: 1.1, 1.2, and 2.2.

Um and then there was actually three that were submitted in through MK Insights as of March 31st, 2.3, 2.4, and 2.5.

And then the last four, I just I want to refer back to Councilmember Foster's comments earlier related to past due.

I I thought it was very much on point.

And I I want to also thank the audit team for working with us on this and really shouting us out on this.

That that was wonderful.

I think one thing I would like to add, uh our department went to submit uh for three of these recommendations, 1.3, 1.4, and 1.5 back in June of 2025.

And it was the audit team at that point that worked with us and said that if we really wanted to implement and really make sure that this program moving forward was going to be a success, that we should really add a little bit more runway.

And it was for that reason that we really pushed it out a year to make sure that we gave it enough time, not only to look at our numbers, but to continue to work with our customer departments and get to where we needed to be.

So the only recommendation I would make in this uh for the audit team is to potentially look at still listing this as past due because to council member falter's point, I thought it was a great point that we're not really identifying what good work we're doing with the audit team.

And I I want to thank the audit team on this one.

They did a great job with us.

We're here to take any questions if you have them.

Chair Moreno.

Um I do appreciate Fleet's work in implementing the city auditors' recommendations, uh, preventative maintenance and safety inspections are key to reducing vehicle breakdowns and extending the life uh span of our fleet.

Can you provide an update on the progress of implementing the appointment systems, the appointment scheduling system?

Um, additionally, uh, is there any notable progress in reporting turnaround time metrics at this point?

So, to your first question in terms of the appointment systems that has been submitted, that is a part of what we did submit in uh May, or I'm sorry, March 3st.

Okay.

Yeah.

So in terms of the last recommendation, the last recommendation that we do have that will close out really all recommendations in June, is the 2.1 recommendation in terms of the overall numbers for PMs.

The overall numbers for PMs has gone down dramatically throughout all of our shops.

Uh when you when you look at all shops together, um it it is only it is only dipped down from about uh three days down to almost two days.

But when you remove heavy duty like heavy duty fire and some of uh Packers and some of the other things that the PMs take a lot longer, those numbers drop down dramatically.

So overall, just it beautiful progress with this audit, and again, we want to thank the audit team on this one.

Thank you.

Okay.

Thank you.

Thank you.

Um I'm sorry, just there's two.

I don't know if I'm looking at the right portion of the audit, but I see two big giant red question marks in the report.

What is I don't have the report in front of me.

Sorry, Mr.

Helm, we want to take that.

What is that?

I mean it says not responding or are you not getting information?

Yeah, that would be a good idea.

I don't know if it's needed.

Says it's not due, but it just has these big giant red question marks.

Correct.

That just indicates that we didn't receive an update for that one.

So for the ones that are due, it's usually not an issue.

We we just flag them as a matter of course so it's consistent throughout the report.

Okay.

Thank you.

Thank you.

Thank you.

Two more.

So the next one is report number 25-08.

It's a performance audit of the city's trash recycling and organics collection and handling, and that's um directed at the environmental services department.

Good morning.

Hey, good morning.

It's on the sorry page 181 of the recommendation follow-up report.

Thank you.

Hi, good morning.

Jeremy Caluco, Assistant Director with Environmental Services.

So this audit has seven recommendations recommendations, none of which are past due.

All of them are on target to meet our our target dates.

We've done quite a bit of work since this audit was released, um, staffing up our positions that um we needed to do the work.

We've been working closely with our franchise haulers, evaluating agreements, working on getting a care waste characterization study done so that we could look at what are the most common items that are not um that are ending up in the landfill and not um contributing to our diversion goals.

We have also um drafted RFP to look at the rate one one portion of this probably which generates the most interest is the rate study um looking at our um tipping fees at the Miramar Landfill AB 939 fees as well as our franchise hauler fees.

So that RFP has been drafted, is in the final stages of working with purchasing and contracts to be released.

Funding for that study has been requested in and is in the mayor's draft budget split between three of our um two of our enterprise funds and us and a portion of it on the general fund.

Yeah, that would have been my only question about the status of that, but thank you.

Uh any okay.

Thank you so much.

Thank you.

So the last report is uh 26-03, and it's uh directed at the performance and analytics department.

It's uh performance audit of the city's KPIs, basically.

It's uh performance audit of the city's KPIs, basically, and that's on page 207 of the recommendation follow-up report.

Good morning, committee and council members.

My name is Justin Ellsworth with the performance and analytics department.

So this audit had five findings, four of which were directed to the performance analytics department, all of which are in process, not due yet.

I'll speak really quickly to recommendation 2.1, which is the first recommendation we'll be able to deliver on.

That is drafting the city's KPI philosophy and guidance for departments.

We're currently targeting to bring that to budget and government efficiency committee this summer uh in the July committee.

Um, but I'm happy to speak to any other recommendations or answer answer any questions you might have.

I don't have any uh council member foster.

No questions, just to make sure we keep the IBA's office um in in the loop.

Um, as uh again, I'm gonna stay with key performance indicators.

I'm looking for impact.

Right.

I appreciate counting how many phone calls we take.

But I'm looking at impact.

Okay.

Understanding thank you.

Thanks.

And that's the end of my portion, I think.

Wonderful.

And just for the record, uh, Natalie, if we could please proceed with public comment on section B.

We need to take public comment.

Thank you, Chair.

The public comment period for item three, Section B is open, and we do not have any hands raised in the virtual queue, nor do we have any slips submitted here in the committee room.

Wonderful.

Do we have any comments from our committee members?

No.

Okay.

Well, before we end this item, um, I want to make sure that we thank the auditor's office for your work on tracking the status of all recommendations that were agreed to by each uh department.

Um, I appreciate the time and effort that goes into producing this report by both the audit, the auditors team, and also for uh staff on your responses.

Uh thank you again to our fearless leader, committee member Tabsuri for once again doing an amazing job guiding us through this discussion.

It's one of the most difficult uh discussions I think we have every single well, twice a year.

Um, I also want to commend the departments responsible for implementing 19 recommendations during this period.

I know staff is working with far less resources, and I understand that makes your job uh a lot harder.

So um uh but at the same time I know how talented our department leadership is, and it's critical that in times when resources are scarce that you find innovative ways to continue serving the public.

Um this is to be honest, why I find it frustrating to see many responses through this follow-up report that simply blame budget constraints as a reason why a recommendation didn't get implemented.

I know that our department directors and your leadership team are very smart and very bright.

And uh I have seen you be innovative on many matters that are priorities to this administration.

So I know that you could be creative and think out of the box to find ways to implement many of the outstanding audit recommendations that will turn uh that in turn will keep services and equity alive during these very tough budget years.

Um I would ask that administration to prioritize implementing these outstanding audit recommendations and to do all you can to provide our departments the support they need to move forward on them.

Um I do look forward to the next uh rec follow-up to see the strategies that could be deployed to continue to move forward with implementing these audit recommendations during the upcoming fiscal year.

And that concludes my comments.

Um, unless anybody else, I don't think anybody else is wishing to be recognizing that that concludes item number three.

Natalie, please introduce item number four.

Item number four, Office of the City Auditors Fiscal Year 2027 proposed budget, April 2026 update.

Chair, staff, if you could please introduce yourself, let us know how much time you need.

Sure.

Good morning again.

Uh uh Chair Moreno.

I will take as many minutes as you tell me to take.

So I can give you the the floor.

We're looking at 1215 as a as a cutoff, and we have this item plus one more.

Okay, we'll play a little jazz on this item.

I think I can get through this in about in about three minutes, and I'll hit the highlights for you.

Um let me uh let me just let me just bottle line bottom line a couple things that I think had helped set up um where we are with the request.

So we came to this committee back in January.

At that time, we were asked to uh come up with seven percent in budget cuts.

We we made the case to you about why that was not feasible for us to do that given the the the percentage of our budget that's comprised of personnel expenditures, so basically salary and wages.

Those cuts at that time, the seven percent could only be uh effectuated through cuts to salaries or furloughing staff, right?

So the other thing that I want to there's two other points I want to make.

Um I think we've demonstrated uh at that time and on other items that OCA's return on investment is very high.

We we generate more revenue uh generate more opportunities for cost and avoidance that far exceed what we actually cost.

So that was kind of the premise for our rationale for not uh for asking this committee to recommend that we not absorb that cut.

Uh subsequently counts six of nine council members included similar uh a similar request in their budget priority memos, and so we think both this committee and and the council for their broad support for it.

Where we are today is that the budget is out, so it was out on on uh April 15th, as everybody knows.

Uh and there were cuts uh proposed for OCA once again, a 3.5% cut, uh, which is smaller than seven.

Joe, check my math, um, which is smaller than seven percent, but the impacts to OCA are are still the same.

So our arguments haven't changed.

I think if we take as a given that's uh that really what you need during a time of fiscal austerity is more of the type of the work that the city auditor generates, not less of it.

And these types of cuts, even a 3.5% one would significantly diminish our capacity to carry out what we're required to do in the charter.

So what we're proposing, and uh uh you can cut, you can um sorry, can you go to the bar chart?

You guys we we've we've shown you this uh before.

So um the amount of funding that that OCA receives as a percentage or as a proportional to every thousand dollars that the city spends has continued to decline.

I mean, the the arrow speaks for itself.

The amount that we'd end up now, given the mayor's cut would bring us to uh 91 cents for every thousand dollars that the city spends.

That would be almost our lowest funding level since the inception of the organization.

Uh all the reasons why that's a bad thing.

We've we've already talked about uh we haven't bored council member Foster with it enough, so he's been exempt, but I I think the the arguments have resonated when we've when we've talked to him individually on it.

So our request today, if you go to the to the action, uh we're asking essentially for this committee to basically read reiterate the action that they already took in January.

Um and the specifics of which are uh let me let me read it in so we have it.

Um sorry.

Uh so in order to preserve the Office of the City Auditors' ability to provide accountability for the efficient, effective, equitable, and transparent delivery of city city services, and execute our charter mandated responsibilities.

The proposed action for this item is the following.

We request that the audit committee recommend to the city count that the city council revise the fiscal year 27 draft budget for the Office of the City Auditor.

This would involve restoring the 3.5%, which is equates to 208,228 in personnel budget reductions.

And then there was the mechanical thing that happened last year.

So we we absorbed a uh what council had requested and what went uh what went forward from council was a one-time cut.

That cut was made ongoing.

So what we're asking, we and that would come from our training budget and and things like computers and sort of essential things that we need.

We can make do in fiscal 27.

So we're asking that you add back, add that back in and then cut it again, but only make it a one-time cut.

So that's it's a little bit convoluted, but it's it's uh from an accounting perspective.

Jeff can throw something at me if he disagrees, but that's that's the way that we would do it.

So we're asking to restore the 208, uh, add the 54 and cut it on a one-time basis.

And that concludes my presentation.

Wonderful, thank you.

And um, my understanding is the IBA has a few comments.

Thank you.

Thank you, committee chairmarino and members of the audit committee.

I'm Tricia Tacki from the office of the IBA.

Our office is currently reviewing the proposed budget, and our full report will be issued next Wednesday.

It'll include an analysis of the city auditor's budget as well.

And I want to thank the city auditor for meeting with me to help me understand how the proposed budget impacts his office.

To provide um some additional context, as you've heard a little bit about today, the overall proposed budget includes significant reductions across the organization that will have real impacts on the community.

While modest revenue growth of 3.3% is projected in the general fund.

The city's long-standing structural deficit means that very difficult decisions will need to be made during this budget process.

The total proposed budget for the city auditor actually reflects a just a slight net increase of $5,000 or 0.1% over the current year budget when you include personnel fringe non-discretionary adjustments and some restorations of one-time reductions from FY26.

However, as the auditor's office noted, that budget reduction of 208,000 in personnel expenditures would likely require furloughs or reducing staff to achieve if additional vacancies don't arise.

Finally, I just want to note that District 6 has proposed a ballot measure that would, among other things, establish a baseline funding, um, establish baseline funding for certain independent departments that does include OCA to support greater budget stability.

Um that proposal is expected to return to rules committee in May, and that concludes my comments.

Wonderful, thank you.

Natalie, please proceed with public uh comments on item number four.

Thank you, Chair.

The public comment period for item four is open, and we have not received any speakers' lips here in the committee room, and we do not have any hands raised in the virtual queues.

This will conclude public comment.

Thank you so much.

And I will um turn it over to committee members for final questions or comments.

Um I want to start off by thanking uh thank you for the presentation and the auditor's office for your work on each and every audit that you do.

Um we ask a lot of you each year in your office budget needs to have resources to finish items included in the annual um audit report.

Um not all cuts are felt the same across the board, and cutting the auditor's budget means less audits get done and more inefficiencies continue to exist in the city.

Uh the city auditor's office exists to advance open and accountable government through accurate independent and objective audits and investigations that seek to improve the efficiency, effectiveness, and equity of city government.

Um without the city auditor having enough staff and resources, we rob our constituents of good governance.

If you were to add up all the savings from all of the recommendations from the last few years, it would total millions and millions of dollars.

So it is concerning that during these challenging budget times, your office would be reduced to one of its lowest funding levels since voters established the office of the city auditor in 2008.

Um if these cuts were to move forward.

So uh the city auditor's office exists.

Um, I already mentioned it.

Your uh mission statement, it's always important for me to reiterate this and to remind folks that this wasn't made up of city council members or mayors, this was made up of citizens of San Diego um seeking uh an auditor.

So we need to make sure that you guys um have the budget to conduct audits, and um I do appreciate the work and the dedication and leadership um that um all the folks bring at the city auditors um office.

So I will move staff's recommendation and will call on committee member Tepshuri for any questions or comments.

Um thank you, Chair.

I'm gonna just echo your comments, and I'm gonna say that I'm supportive of this uh city auditor's budget.

Uh, I'm extremely mindful of the tough budget situation that the city's in uh and that a lot of the pain has to be shared.

I've scrutinized our budget.

The problem is that when you have a time where the budget is shrinking and you're doing a lot of reorganizations within department moving people around, that is a time where risks accrue and you can have more breakdowns.

The city does not have excess analytical capacity.

There are places like the IBA people at the controller and department of finance and all that that and the auditor that can kind of do this type of thinking and analysis, and now is now would not be the time to cut their budget.

That's my comment.

Wonderful.

Thank you.

We do have a motion on the floor with the set, and we do not have a second, so I will entertain a second, and we're gonna move on to committee member Halpern, who is on the lights.

Thank you, Chair.

I would second the motion.

Um I just wanted to um go back to something that Mr.

Helm referenced, the notion of the return on investment in the office.

Um with regard to the requested 200,000 dollar cut in the budget.

You know, I have a vague recollection.

It was a few meetings ago when we were talking about the opportunity to increase revenue from negotiation of golf course city owned golf course leases.

And I believe that the audit referenced something like a whether it was a high degree of confidence or a bare bones number, something in the nature of you know, two and a half million dollars plus an identified opportunity for increased revenue from city owned golf course leases.

Um, the boat storage that we were just talking about, my recollection is that simply adjusting for inflation that that could be a hundred plus thousand dollars a year.

So there's no question in my mind that not only does the auditor um find on a regular basis opportunities to pay for itself, they're finding huge opportunities to help mitigate the real pain of these other budget cuts.

And you know, I have huge sympathy for the mayor, the city staff, and certainly use counsel for having to find a way to plug these um budget holes.

But time and time again, we have auditor reports that help point at least partially the way to do it.

And now it's up to everybody just to um I think stop waiting for three years for consultant reports and start implementing some of these revenue enhancements that the auditor keeps finding.

So I'll stop there, but again, I I just uh I think cutting the budget for the auditors um would be the wrong thing to be doing.

Thank you.

Thank you.

Um council member Foster.

Um very well said um by my colleagues here today.

Um clearly um I don't think the issue is identifying opportunities, it's execution.

Um and so um you know I'll throw something on top of that to the IBA and the city attorney's office if there's a way to find more authority to um kind of do some things differently.

I'm open to the conversation and discussion.

Um but um I think the city auditor does do a very good job on identifying efficiencies.

Um but as we have um you know dates that are slipping in regards to implementation over a five year period.

Um that's just operational um things that need to be addressed.

So I do appreciate the work.

Um, I'll be supportive of the um item today.

Um, but just make sure we all understand um you you know the budget is um a very difficult conversation this year.

Um and so um I'll support it, move it there, and then um we can have the comprehensive conversation on the budget overall.

So um again, thank you to Andy.

Um thank you, Andy.

Uh, I know you're home with the fever still watching.

Um thank you, Matt, uh, for stepping out today.

You did a great job.

Um, and thank you to your team.

Um it's an important job that you do, and um hopefully the public identifies that, understands that, um, and further supports the efforts um of this body.

So thank you.

Thank you so much.

And I don't see anybody else on the lights, so we will now take the roll.

Committee member Halpern, can you please register your position?

Uh thank you.

I'm in favor of the motion.

Motion passes unanimously.

Uh that concludes item number four, and we will now take up our informational agenda.

Natalie, please introduce item number six.

This is our last item.

Item number six is fiscal year 2025 single audit.

Chair.

Um, staff, if you could please um introduce yourself and let us know how much time you need.

And go ahead and proceed.

Good morning.

Uh Chief Jeff Peel, Chief Accountant in the Department of Finance.

Uh, and we have uh Kathy Lai, uh, the partner with Crow LLP to uh provide the results of the fiscal year 2025 single audit, I believe five minutes, five to ten minutes.

Or less.

Uh good morning.

Uh almost afternoon.

I'm Kathy Lai and the lead engagement partner in the city of San Diego, and I'm pleased to present the single audit results for the fiscal year I did, June 30th, 2025.

Uh brief agenda.

We're gonna cover the single audit objectives, what we are engaged to do, the deliverables, and in other words, the reports, the single audit results, and certainly happy to address any questions you might have.

So, first and foremost, uh an entity is required to have a single audit uh when they expend more than 750,000.

Clearly, the city of San Diego has expended more than 200 million in fiscal year 25, and so they're required to have a single audit.

And our objective is to obtain reasonable assurance that the city complied with the types of compliance requirements that are listed in the OMB compliance supplement that could have a direct and material effect on the city's major federal programs under the the single audit guidelines.

Um we also are engaged to determine whether the schedule of expenditures of federal awards that management produces is fairly stated in relation to the financial statements as a whole.

Those are the objectives at the conclusion of the audit we have two reports.

First is the report on compliance of each major federal program, but also comments with respect to report on internal controls over compliance, and as I mentioned, there's also a report on schedule of expenditures, the federal awards.

And then at the conclusion of the single audit, their management is required to file their single audit report with a federal clearing house, which is that data collection form, which they did.

So on to the single audit results, we had identified five different major programs or federal grants in detail to test.

They're listed on the slide here.

And we have issued an unmodified opinion.

So essentially, our opinion states that the city complied with the compliance requirements that are direct and material to these particular federal grants that we tested in detail.

So excellent news.

So that concludes my presentation.

I'm happy to address any questions that you might have.

Thank you.

Natalie, please proceed with public comments.

Thank you, Chair.

The public comment period for item six is open, and we do not have any slips submitted here in the committee room, and we do not have any hands raised in the virtual queue.

I'll turn it over to committee members for questions and comments, seeing and hearing none.

That concludes item number six.

And this brings us to the end of today's agenda.

I told you guys I would get you out of here by 12.

And thank you so much to the members of the public and staff for your participation.

This uh I will now adjourn this meeting of the audit committee to our next regularly scheduled meeting, which is on Wednesday, June 10th, 2026 at 9 a.m.

And we are adjourned at 11 56 a.m.

Have a wonderful lunch, everybody.