FINANCE AND INFRASTRUCTURE COMMITTEE

Meeting Report

November 14, 2001

 

PRESENT:        Vice-Chair Chuck Reed, Councilmember John Diquisto, Councilmember Nora Campos

 

ABSENT:          Chair Pat Dando, excused

 

STAFF:             Kay Winer, Bill Hughes, Jerry Silva, Terry Roberts, Rajeev Batra, Larry Lisenbee, Terri Gomes

 

The meeting was convened at 2:30 P.M.

 

a.         Consent Items:

 

1.      Monthly Investment Report for September 2001 (Finance)

2.      Minutes from the Third Quarter 2001 Investment Committee Meeting (Finance)

 

Upon motion of Councilmember Campos, seconded by Councilmember Diquisto, the Committee approved the Consent Items.

 

b.         Monthly Financial Report for September 2001 (Manager)

 

Larry Lisenbee, Budget Director gave an overview of the report.  He stated that the report confirms that the City is suffering the impact of a significant economic downturn.  The downturn started prior to September 11th, and staff had been expecting it and prepared revenue estimates accordingly, but the tragedy of September 11th has exacerbated the situation.  It has also created an unprecedented disruption in the travel industry.  Staff will continue to monitor the situation.  Actions taken by the Budget Office so far have been to place close to $60 million in uncommitted reserves.  Staff has imposed targeted hiring freezes in several areas including the Airport, Convention Center and the Development Fee programs.  Additionally, staff has held off on distribution of TOT revenues until mid year.  $16 million in Capital Projects have been suspended at the Airport.

 

Vice-Chair Reed asked if it is important that the City get back to its previous level in the General Fund or would it be sufficient to just level off economically?

 

Larry answered that if the City levels out in the General Fund’s bottom line, it will be OK. The Airport is a different matter.

 

Vice-Chair Reed asked if staff is still comfortable that Airport reserves are sufficient.

 

Terri Gomes, Deputy Director of Aviation answered that at the Airport, this year’s projected downturn in revenues has provided a surplus.  That surplus, in addition to the projects that are now on hold, should be sufficient to cover the deficit.  Staff is currently looking at additional possibilities for reductions in case this downturn lasts a couple of years.  At the moment staff is looking at a 15% reduction.

 

Vice-Chair Reed asked if the Airlines are still current on their payments.

 

Terri answered that one Airline, America West, is having difficulties making payments and staff has tapped into their security deposit.  United, American and Delta are also being watched.  Rental Car companies are also having difficulties and Alamo has already filed for Bankruptcy.

 

Upon motion of Councilmember Diquisto, seconded by Councilmember Campos, the Committee accepted the staff report.

 

c.                   Annual Capital Project Status Report (Public Works)

 

Terry Roberts, Deputy Director gave a brief overview of the report.  He stated that the projects that will be presented today are projects that have been completed over the past 2 years.

 

Rajeev Batra, Acting Director, Public Works Department gave a portion of the presentation which included a definition of the Monitoring System.

 

Kevin Briggs, Public Works then gave a presentation and demonstration of the database/website development.

 

Rajeev concluded with the Next Steps and stated that the Department recommends that the next report be completed in the CSA Format.

 

Vice-Chair Reed asked the City Auditor to give his opinion on this.

 

Jerry Silva, City Auditor stated that the format is not important as long as all the information is included.

 

Vice-Chair Reed asked if Council staff members would receive training on the monitoring system.

 

Terry replied that access to the database is currently limited to Public Works staff on the intranet.  When the data is migrated to a web page, then it well be accessible to the public.

 

Councilmember Campos asked how the budget is affected by projects on hold(such as Cisco) and how the rebudgeting process is done.

 

Terry answered that the objective is to hold to the budget but, during the community process, the scope of a project may be changed which could affect the costs.

 

Councilmember Campos asked what staff is doing to remedy overbidding.

 

Rajeev answered that staff tries to estimate the projects as closely as possible in order to prevent overbidding.

 

Vice-Chair Reed asked if change orders from the client could be measured so that Public Works would not be blamed for being behind schedule.

 

Terry answered that the new system will monitor change orders.  There will be a tracking sheet for every project with separate line items listed as well as the individuals who are responsible for managing the projects.

 

Upon motion of Councilmember Campos, seconded by Councilmember Diquisto the Committee accepted the staff report, including the recommendation that the next report be changed to the CSA Format.

 

d.                  External Quality Control Review (including Activities and Accomplishments of the Office of the City Auditor July 1999) (Auditor)

 

Jerry Silva, City Auditor introduced Jim Williamson, Assistant City Auditor, Oklahoma City who is the Southwest Region Coordinator for the National Association of Local Government Auditors (NALGA) Peer Review Committee.

 

Jim gave a presentation of the Peer Review report that included information on:

§         Government Auditing Standards

§         The National Association of Local Government Auditors

§         The Peer Review Team

§         Review of Objectives

§         Results of the Review

 

He emphasized that the results of the review showed that the San José City Auditor’s Office was at the highest level in the NALGA Peer Review Program and that performance was exceptional.  The three suggestions for improvement are:

1.      Supervisory and quality control review staff should sign independence statements

2.      Ensure that supporting documentation is included in training files

3.      Ensure that staff are familiar with “Interpretation of Continuing Education and Training Requirements”

 

Jerry responded that the Auditor’s Office is dedicated to training staff and will ensure that, in the future, documentation of the training is maintained properly.  He added that he would also sign independence statements from now on.  He then commended his staff for their excellent work.

 

Jerry then gave a brief overview of the Auditor’s Office Activities and Accomplishments.

 

Vice-Chair Reed asked if the audits cost the department as much to conduct as it does the Auditor’s Office.

 

Kay Winer, Deputy City Manager answered that the front end portion of an audit can be very labor intensive for the department in gathering data for the audit, but, after the materials have been gathered, most of the expense is on the Auditor’s Office.

 

Upon motion of Councilmember Campos, seconded by Councilmember Diquisto, the Committee accepted the staff report.

 

e.         Oral Petitions

None

f.          Adjournment

The Committee was adjourned at 4:00 P.M.

 

 

Councilmember Chuck Reed, Vice-Chair,

Finance and Infrastructure Committee