HomeMy WebLinkAbout1997-12-08 City CouncilTO:
City of Palo Alto
City Manager’s Report
HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE
SERVICES
DATE:DECEMBER 8, 1997 CMR:480:97
SUBJECT:BUDGET AMENDMENT ORDINANCE TO FUND AN AUDIT
OF THE COUNTY OF SANTA CLARA TRANSPORTATION
AUTHORITY AIRPORT ENTERPRISE FUND REGARDING
THE PALO ALTO AIRPORT, 1901 EMBARCADERO ROAD
RECOMMENDATION
Staff recommends that Council approval the attached Budget Amendment Ordinance (BAO)
in the amount of $41,500, to provide funds to pay for an audit of the County of Santa Clara
Transportation Authority (SCCTA) Airport Enterprise Fund to determine if the County is in
compliance with the terms and conditions of its lease with the City for the Palo Alto Airport.
BACKGROUND
At the Council meeting of September 8, 1997, staff presented Council with a report
(CMR:371:97), seeking direction on whether or not to undertake an audit of SCCTA Airport
Enterprise Fund and, if so directed, how the auditshould be funded. Staffalso recommended
that if the audit were to be performed, the accounting firm ofDeloitte & Touche, LLP (D&T)
be selected to perform the audit. The scope of the audit would include the preparation of an
integrated set of financial statements that would provide the City with the financial condition
of the Palo Alto Airport as of July 31, 1997 (income statement and balance sheet); the
identification of any amounts owed by the Airport to the County; recommendations for
revisions to the lease between the City and the County; and information regarding any issues
to be resolved along with recommendations. The City Auditor’s Office would participate as
part of the team overseeing the audit. D&T provided staffwith a proposed fee of $39,000
to perform the audit. ~
CMR:480:97 Page 1 of 3
SCCTA representatives appeared before Council at the meeting and agreed to the audit,
offering ~o fund one-half, or $19,500 of the cost, on the condition that they be able to
participate in defining the scope of the audit. Council accepted the SCCTA offer and
directed staff to: 1) proceed with the audit; 2) utilize the accounting firm of D&T to perform
the assignment; and 3) return to Council with a BAO for funding of the audit.
DISCUSSION,
On October 30, 1997, the City Auditor and staffmet with SCCTA representatives. At the
meeting, all parties agreed that the scope of the audit was acceptable, as written. Staff has
prepared an agreement with D&T. D&T will perform the work for $39,000, plus an
additional amount not-to-exceed $2,500 to cover incidental expenses (e.g., travel, printing,
mailing, etc.) D&T will begin work after funding is approved by Council; its report and
recommendations are expected to be completed by the end of January 1998.
SCCTA staffrequested that it be allowed to reimburse the City for its share of the cost of the
audit. SCCTA has only agreed to pay one-half of D&T’s cost of performing the audit
($19,500), and would not agree to pay one-half of the cost of the incidental expenses (not-to-
exceed $2,500). City staff agreed to SCCTA’s offer and will prepare a Memorandum of
Understanding between the two. parties.
RESOURCE IMPACT
The attached BAO requests funding in the amount of $41,500, to be added to the
Administrative Services Department operating budget, for D&T to perform an audit of
SCCTA. SCCTA has offered to reimburse the City for its share of the fee for audit services,
which is $19,500. The net impact of this adjustment is a use of the Budget Stabilization
Reserve in the amount of $22,000.
POLICY IMPLICATIONS
This recommendation does not represent a change to existing City policy.
ATTACHMENTS
Budget Amendment Ordinance
CMR:480:97 Page 2 of 3
PREPARED BY: William W. Fellman, Manager, Real Property
DEPARTMENT HEAD APPROVAL: "~~ _ (~’~
Melissa Cavallo
Acting Director
~ninistrative
CITY MANAGER APPROVAL:
Manager
CC:Santa Clara Valley Transportation Authority/Airport Division
Joint Community Relations Committee for the Palo Alto Airport
Palo Alto Airport Association
County of Santa Clara Airport Commission
CMR:480:97 Page 3 of 3
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE BUDGET FOR THE FISCAL YEAR 1997-98 TO
PROVIDE AN ADDITIONAL APPROPRIATION TO PAY FOR AN AUDIT
OF THE COUNTY OF SANTA CLARA TRANSPORTATION AUTHORITY
AIRPORT ENTERPRISE FUND
WHEREAS, pursuant to the provisions of Section 12 of Article
III of the Charter of the City of Palo Alto, the Council on June
23, 1997 did adopt a budget for fiscal year 1997-98; and
WHEREAS, in September 1997, Council directed staff to proceed
with the audit of the County of Santa Clara Transportation Authority
(SCCTA) Airport Enterprise Fund; and
WHEREAS, the purpose of the audit is to determine if the County
is in compliance with the terms and conditions of its lease of the
City-owned Palo Alto Airport; and
WHEREAS, staff recommended that the accounting firm of Deloitte
& Touche (D&T) be selected to perform the audit; and
WHEREAS, the estimated cost of the audit is $41,500, and SCCTA
offered to reimburse the City for its share of the cost $19,500; and
WHEREAS, City Council authorization is needed to amend the
1997-98 budget as hereinafter set forth.
NOW, THEREFORE, the Council of the City of Palo Alto does
ORDAIN as follows:
SECTION i. The sum of Forty One Thousand Five Hundred Dollars
($41,500) is hereby appropriated to non-salary expenses in the
Property Management Functional Area in the Administrative Services
Department.
SECTION 2. Revenue in the Property Management Functional Area
in the Administrative Services Department is increased by the sum
of Nineteen Thousand Five Hundred Dollars ($19,500).
SECTION 3. This transaction will reduce the
Stabilization Reserve from $17,007,253 to $16,985,253.
Budget
SECTION 4. AS specified in Section 2.28.080(a) of the Palo
Alto Municipal Code, a two-thirds vote of the City Council is
required to adopt this ordinance.
SECTION 5. The Council of the City of Palo Alto hereby finds
that the enactment of this ordinance is not a project under the
California Environmental Quality Act and, therefore, no
environmental impact assessment is necessary.
SECTION 6. As provided in Section 2.04.350 of the Palo Alto
Municipal Code, this ordinance shall become effective upon adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:City Manager
Senior Asst. City Attorney Acting Director, Administrative
Services Department