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Home My WebLink About2021/02/10 - Agenda Packet - Agenda Packet - Community Parks and Landscape Citizens' Oversight Committee Mayor L.Dennis Michael I Mayor Pro Tem Lynne B.Kennedy Council Members Ryan A.Hutchison,Kristine D.Scott,Sam Spagnolo City Manager John R.Gill ison 10500 Civic Center Drive I Rancho Cucamonga,CA 97 730 1909,477.2700 1 www.CityofRC.us ■ AGENDA COMMUNITY PARKS AND LANDSCAPE CITIZENS' OVERSIGHT COMMITTEE Wednesday, February 10, 2021 In response to the Governor's Executive Orders, the San Bernardino County Department of Public Health requirements, and to ensure the health and safety of our residents by limiting contact that could spread the COVID-19 virus, there will be no members of the public in attendance at the Community Parks & Landscape Citizens' Oversight Committee Meeting. Members of the Community Parks & Landscape Citizens' Oversight Committee and staff will participate in this meeting via a teleconference. In place of in-person attendance, members of the public are encouraged to participate in the meeting remotely, either telephonically or electronically. VIEW MEETING VIA ZOOM APP OR ZOOM.COM AT: zoom.us/join using Webinar ID: 897 9591 7787 or Dial-in: +1 (669) 900-6833 Access Code: 897 9591 7787 If you are an individual with a disability and need a reasonable modification or accommodation pursuant to the Americans with Disabilities Act ("ADA"), please contact Melanie Morris at Melanie.Morris(@-CityofRC.us or (909) 774-2402, at least 24-hours prior to the meeting for assistance. A. 6:00 P.M. -CALL TO ORDER Al. Pledge of Allegiance A2. Roll Call: David DeMauro Otis Greer Jaime Garcia, Chair April McAllister Denise Garzaro, Vice-Chair Lisa Morgan-Perales Velma Gilbert Dave Terry A3. Approval of Minutes: April 14, 2020 Community Parks & Landscape Citizens' Oversight Committee Agenda February 10, 2021 Page 2 B. PUBLIC COMMUNICATIONS This is the time and place forthe general public to address the Community Parks and Landscape Citizens' Oversight Committee on any item listed or not listed on the agenda. State law prohibits the Committee from addressing any issue not previously included on the Agenda. The Committee may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to three minutes per individual. C. ITEMS FOR DISCUSSION C1. Review and Discussion of Annual Independent Auditors' Report Pages 5-24 C2. Review and Approval of Annual Written Report to the City Council Pages 25-26 C3. Community Parks and Landscape Citizens' Oversight Committee Updates C4. Election of Committee Chair and Vice-Chair D. ADJOURNMENT I, Melanie Morris, Executive Assistant of the City of Rancho Cucamonga, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted on at least Seventy-two (72) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website. Melanie Morris Executive Assistant Page 3 CITY OF RANCHO CUCAMONGA APRIL 14, 2020 COMMUNITY PARKS AND LANDSCAPE CITIZENS' OVERSIGHT COMMITTEE MEETING MINUTES A. CALL TO ORDER - CITY HALL - TRI-COMMUNITIES ROOM The Regular meeting of the Community Parks and Landscape Citizens' Oversight Committee was scheduled on Tuesday, April 14, 2020, remotely via teleconference by dialing (669) 900-6833, meeting code 502-203-325, or electronically via https:Hzoom.us/m/502203325. Al. Pledge of Allegiance: There was no Pledge of Allegiance since the meeting was held remotely. A2. Roll Call: Present Committee Members: David DeMauro, Jaime Garcia, Denise Garzaro, Velma Gilbert, Otis Greer, Karen Hruby, Theresa Brennan, April McAllaster, Lisa Morgan- Perales, and Dave Terry Staff Present: Lori Sassoon, Deputy City Manager; Tamara Layne, Finance Director; Bill Wittkopf, Public Works Services Director; Jason Welday, Engineering Director/City Engineer; Anne McIntosh, Planning Director; Daryl Polk, DoIT Director; Gianfranco, Laurie, Principal Civil Engineer; City Auditor, Richard Kikuchi; Noah Daniels, Finance Manager; and Kelly Guerra, Special Districts Analyst. A3. Approval of Minutes: Committee Member Greer motioned to approve the minutes from the meetings of October 29, 2019 and February 29, 2020. The motion was seconded by Committee Member DeMauro and was unanimously approved. The minutes from the meeting of March 17, 2020 indicate it was cancelled due to a lack of quorum. JIB. PUBLIC COMMUNICATIONS B1. No public communications were made. C. ITEM(S) OF DISCUSSION Cl. Review and Discussion of Annual Independent Auditors' Report City Auditor Kikuchi provided information about the purpose of the letters and financial report, the role of the auditor, audit procedures, and the results of the audit to the Committee. A discussion ensued regarding the fund balances, uses of funds, and the purpose of specific accounts. City Staff provided information to the specific questions. The Committee Members thanked City Auditor Kikuchi and the item was closed. C2. Review and Approval of Annual Written Report to the City Council A discussion concerning the draft report to City Council ensued. Vice-Chair Garzaro provided a few corrections to the draft report and the suggestions were agreeable to the Page 4 COMMUNITY PARKS AND LANDSCAPE CITIZENS' OVERSIGHT COMMITTEE MEETING MINUTES APRIL 14, 2020 PAGE 2 Committee. Committee Member Terry motioned to approve the Annual Report to the City Council with the suggested corrections. The motion was seconded by Committee Member Brennan and was unanimously approved. Chair Garcia agreed to present the report to the City Council remotely on May 6, 2020. Finance Manager Daniels to follow-up with instructions to provide the report remotely. Committee Member DeMauro encouraged Chair Garcia to highlight in his report to City Council that funds received have only been expended on operations and improvements in each of the districts. C3. Review and Discussion of Trail Bridge Project Staff Report Principal Civil Engineer Laurie provided an overview of the Heritage Park Trail Bridge Project and City Staff's recommendation to replace the bridges to provide access to the Equestrian Center and monitoring two other bridges at Heritage Park. A discussion ensued regarding the recommendation and the plans to only monitor the the other two bridges. Committee Member Greer motioned to approve a City Staff's recommendation to City Council. The motion was seconded by Committee Member Terry and was approved by Committee Members DeMauro, Garcia, Garzaro, Greer, McAllaster, Morgan-Perales, and Terry. Committee Member Hruby abstained and Committee Member Brennan voted against the recommendation. C4. Community Parks and Landscape Committee Updates Chair Garcia requested an update on the drought tolerant landscaping in the districts discussed at the October 29, 2019 meeting. Public Works Services Director Wittkopf provided information on the drought tolerant landscaping and provided an anticipated timeline. D. ADJOURNMENT Chair Garcia motioned to adjourn the meeting at 7:37 p.m. Respectfully submitted, Jaime Garcia, Chair Date: Page 5 CITY OF RANCHO CUCAMONGA DATE: February 10, 2021 TO: Community Parks and Landscape Citizens' Oversight Committee FROM: Lori Sassoon, Deputy City Manager/Administrative Services BY: Noah Daniels, Finance Manager SUBJECT: SUMMARY OF THE FISCAL YEAR 2019/20 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE DISTRICTS. BACKGROUND: Established by Resolution No. 19-075, the Community Parks and Landscape Citizens' Oversight Committee's core purpose is to review the Districts' annual financial audit and report to the City Council and the community. The Committee accomplishes this task by reviewing the financial report with City staff and the City's independent auditors, including matters required to be communicated to the Committee under generally accepted auditing standards. The purpose of an audit is for the auditor to provide an opinion on whether the financial statements and disclosures are presented accurately and free from material misstatement. In other words, the auditor's purpose is to provide a degree of confidence in the financial statements. As the basis for the auditor's opinion, the auditor must obtain a high level of assurance that the financial statements are free from a material error by obtaining sufficient audit evidence. Audit evidence includes both information in accounting records underlying the financial statements and other information and is measured by both the quantity and quality. The Committee has neither budgetary nor operational decision-making authority, nor the authority to allocate financial resources or direct staff. ANALYSIS: While the Committee is not directly involved with the audit or the examination of accounting records, the Committee's responsibility is to provide community oversight of the financial reporting process. At the meeting, dialogue with the auditors and City staff is encouraged to learn more about the financial reports' audit process and preparation. The Statement of Revenues, Expenditures and Changes in Fund Balances for the Fiscal Year Ended June 30, 2020, report the Districts' operating results. In summary, the Districts reported positive changes in fund balance for the reporting period, and the following are some highlights to accompany the report: • The City's General Fund contributed, through a general benefit equivalent as described in Note 3, $150,800 to LMD#1 General City; $43,680 to LMD #6R Caryn Community; $363,500 to SLD#2 Residential; and $217,060 to PD-85. Unlike the general benefit contribution to LMD #2 Victoria of$323,730, which is required by the measure approved by the property owners, Page 1 of 2 Page 6 the City Council sets the general benefit equivalent by policy to assist a district that lacks sufficient financial resources. However, these general benefit equivalent contributions are limited by Council policy so that there is general equity across the districts. For LMD #1 General City and PD-85, where there are service level reductions, the general benefit equivalent provides funding to build reserves for maintenance and capital projects. It also funds the PD-85 Red Hill Water Feature operation in its entirety because it is a community-wide amenity. • Use of Money and Property includes both realized interest earnings and other rental or lease income as well as unrealized gains that result from a temporary adjustment of the investment portfolio to fair value at the end of the fiscal year. • The City experienced disruption and delays with regular maintenance services for all Districts from the primary contract landscapers due to the COVID-19 pandemic during Fiscal Year 2019/20. As a result, the Districts' contract work expenditures, particularly LMD #2 Victoria and LMD #4R Terra Vista, were under budget. Assessment revenues were not increased for Fiscal Year 2020/21 in anticipation of these positive operating results. • Staff completed rubberized surface improvements at various parks in LMD #1 General City ($313,000), LMD #2 Victoria ($127,300), LMD #4R Terra Vista ($47,800), and PD-85 ($205,700). The specific parks included Church Street Park, Hermosa Park, West Beryl Park, Bear Gulch Park, Old Town Park, Windrows Park, Kenyon Park, Milliken Park, Heritage Park, and Red Hill Park. • The City completed the designs for drought-tolerant landscaping in LMD#2 Victoria and LMD #4 Terra Vista. These designs will further the Districts' commitment to drought-tolerant landscaping, reducing the Districts' recurring operational expenditures. The projects are scheduled to begin April 2021 • In prior fiscal years, SLD #2 Residential reported a negative fund balance for the interfund loan advance from the City's General Fund to purchase the street lights from SCE several years ago. In Fiscal Year 2019/20, the City restated SLD #2 Residential's beginning fund balance for the authorized $4,286,054 interfund advance for the stand-alone financial reporting. A detailed explanation for the restatement is provided in Note 5. • As a result of budget-balancing measures over the past several years, there is growth in the fund balances of LMD #1 General City and PD-85. However, the fund balances are still closely monitored as the general benefit equivalent contributions from the City's General Fund continue to make up a significant portion of the positive increases to fund balances. Due to service reductions and contributions from the City, these Districts have slowly established a capital replacement reserve for emergency repairs and long-term capital maintenance. However, at the rate at which these reserves grow, any large capital expenditure or significant increases in operating costs could quickly deplete the capital reserves. Not reflected in the financial statements is an extensive list of deferred maintenance and capital repairs. These items will ultimately result in high costs, likely in the millions, that these districts are currently financially incapable of funding. Thus, any significant expenditure must be carefully evaluated on a case by case basis. Page 2 of 2 Page 7 LSU19 !o• 10*• 99 December 21, 2020 To the Community Parks and Landscape Citizens' Oversight Committee City of Rancho Cucamonga, California We have audited the statement of revenues, expenditures and changes in fund balances of Landscape Maintenance Districts#1 General City, #2 Victoria, #4R Terra Vista, #6R Caryn Community, and #7 North Etiwanda, Street Lighting District #2 Residential, and Park and Recreation Improvement District #85 (collectively, the Districts) of the City of Rancho Cucamonga, California (the City), for the year ended June 30, 2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to the City Council of the City of Rancho Cucamonga dated April 27, 2020. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Districts are described in the notes to statement of revenues, expenditures and changes in fund balances. No new accounting policies were adopted and the application of existing policies was not changed during Fiscal Year 2019/20. We noted no transactions entered into by the Districts during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. The statement of revenues, expenditures and changes in fund balances disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. No misstatements were found. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the statement of revenues, expenditures and changes in fund balances or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. 5 PrimeGlobal adrpd»u« a.«,su ro-nr 203i203 " 714.672.0022 Page 8 LS L::::00 To the Community Parks and Landscape Citizens' Oversight Committee City of Rancho Cucamonga, California Management Representations We have requested certain representations from management that are included in the management representation letter dated December 21, 2020. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Districts' revenues, expenditures and changes in fund balances or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Districts' auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters New Accounting Standards The following new Governmental Accounting Standards Board (GASB) pronouncements were effective for Fiscal Year 2019/20 audit: GASB Statement No. 95, Postponement of Effective Dates of Certain Authoritative Guidance — The following pronouncements have been postponed as a temporary relief to governments and other stakeholders in light of the COVID-19 pandemic and the new effective date are reflected in the following fiscal years. GASB Statement No. 88, Certain Disclosure Related to Debt, including Direct Borrowing and Direct Placements. The following Governmental Accounting Standards Board (GASB) pronouncements are effective in the following fiscal year audit and should be reviewed for proper implementation by management: Fiscal Year 2020/21 GASB Statement No. 84, Fiduciary Activities. GASB Statement No. 90, Majority Equity Interests - an Amendment of GASB Statement Nos. 14 and 61. Fiscal Year 2021/22 GASB Statement No. 87, Leases. GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. Page 9 LS L::::00 To the Community Parks and Landscape Citizens' Oversight Committee City of Rancho Cucamonga, California Fiscal Year 2022/23 GASB Statement No. 91, Conduit Debt Obligations. Restriction on Use This information is intended solely for the use of Community Parks and Landscape Citizens' Oversight Committee and management of the Districts and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Brea, California LSUe iii /®i •• LANDSCAPE MAINTENANCE DISTRICTS #1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6R CARYN COMMUNITY, AND #7 NORTH ETIWANDA STREET LIGHTING DISTRICT #2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT #85 CITY OF RANCHO CUCAMONGA, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES YEAR ENDED JUNE 30, 2020 AND CHANGES IN FUND BALANCES Focused on YOU '+ 1 Page 11 LANDSCAPE MAINTENANCE DISTRICTS #1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6R CARYN COMMUNITY, AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2020 Page 12 LANDSCAPE MAINTENANCE DISTRICTS #1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6R CARYN COMMUNITY, AND #7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA YEAR ENDED JUNE 30, 2020 TABLE OF CONTENTS Page Number INDEPENDENT AUDITORS' REPORT............................................................................................... 1 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES.................................................................................................................... 3 NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCES.................................................................................................................... 5 Page 13 LSU19 !o• 0*• 99 INDEPENDENT AUDITORS' REPORT To the Community Parks and Landscape Citizens' Oversight Committee City of Rancho Cucamonga, California Report on the Statement of Revenues, Expenditures and Changes in Fund Balances We have audited the accompanying statement of revenues, expenditures and changes in fund balances of Landscape Maintenance Districts #1 General City, #2 Victoria, #4R Terra Vista, #6R Caryn Community, and #7 North Etiwanda, Street Lighting District #2 Residential, and Park and Recreation Improvement District #85 (collectively, the Districts) of the City of Rancho Cucamonga (the City), for the year ended June 30, 2020, and the related notes to the statement of revenues, expenditures and changes in fund balances, as listed in the table of contents. Management's Responsibility for the Statement of Revenues, Expenditures and Changes in Fund Balances Management is responsible for the preparation and fair presentation of these statement of revenues, expenditures and changes in fund balances in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on the Districts' statement of revenues, expenditures and changes in fund balances based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the State Controller's Minimum Audit Requirements for California Special District. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues, expenditures and changes in fund balances are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the statement of revenues, expenditures and changes in fund balances, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the statement of revenues, expenditures and changes in fund balances in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statement of revenues, expenditures and changes in fund balances. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. PrimeGlobal adrvd»« a.w,isu ro-n 203i203 " 714.672.0022 Page 14 LS L::::00 To the Community Parks and Landscape Citizens' Oversight Committee City of Rancho Cucamonga, California Opinions In our opinion, the statement of revenues, expenditures and changes in fund balances referred to above present fairly, in all material respects, the respective financial position of the revenues, expenditures and changes in fund balances of the Districts' of the City for the year ended June 30, 2020, in accordance with accounting principles generally accepted in the United States of America. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2020, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Districts' internal control over financial reporting and compliance. Brea, California December 21, 2020 Page 15 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY,#2 VICTORIA,#411 TERRA VISTA, #6R CARYN COMMUNITY,AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2020 Landscape Landscape Landscape Landscape Maintenance Maintenance Maintenance Maintenance District#6R District#1 District#2 District#4R Terra Caryn General City Victoria Vista Community Revenues: Taxes $ 1,250,133 $ 3,569,927 $ 2,808,859 $ 526,748 Charges for services 9,680 733 151 - Use of money and property 78,681 120,124 187,991 20,681 Contributions from City: General benefit contribution - 323,730 - - General benefit equivalent 150,800 - - 43,680 Miscellaneous - 1,605 - - Total Revenues 1,489,294 4,016,119 2,997,001 591,109 Expenditures: Personnel services 30,329 878,310 1,009,303 18,447 Operating costs: Operations and maintenance 67,461 62,730 71,276 4,464 Contract services 517,008 1,125,709 351,514 234,983 Tree maintenance 52,500 157,007 71,515 34,670 Utilities 375,109 879,249 405,623 163,425 Assessment administration 62,850 35,080 20,980 6,680 Interfund allocation - 80,430 - - General overhead allocation 48,030 289,680 235,870 35,510 Capital outlay 313,000 206,308 105,691 - Debt service: Principal retirement - - - - Interest and fiscal charges - - - - Total Expenditures 1,466,287 3,714,503 2,271,772 498,179 Net Change in Fund Balances 23,007 301,616 725,229 92,930 Fund Balances, Beginning of Year, as originally reported 1,799,327 4,247,967 6,600,071 678,239 Restatements - - - - Fund Balances, Beginning of Year, as restated 1,799,327 4,247,967 6,600,071 678,239 Fund Balances, End of Year $ 1,822,334 $ 4,549,583 $ 7,325,300 $ 771,169 See Notes to Statement of Revenues, Expenditures and Changes in Fund Balances Page 16 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY,#2 VICTORIA,#4R TERRA VISTA, #6R CARYN COMMUNITY,AND#7 NORTH ETIWANDA,STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2020 Landscape Park and Maintenance Street Lighting Recreation District#7 District#2 Improvement North Etiwanda Residential District#85 Revenues: Taxes $ 947,458 $ 377,664 $ 1,161,474 Charges for services 3,791 - 20,041 Use of money and property 94,288 7,635 209,775 Contributions from City: General benefit contribution - - - General benefit equivalent - 363,500 217,060 Miscellaneous - - - Total Revenues 1,045,537 748,799 1,608,350 Expenditures: Personnel services 204,269 - 214,726 Operating costs: Operations and maintenance 26,188 90,679 44,080 Contract services 358,873 689 241,381 Tree maintenance 15,820 - 14,241 Utilities 304,274 282,997 278,514 Assessment administration 16,130 38,080 144,590 Interfund allocation - - - General overhead allocation 93,960 1,900 52,650 Capital outlay - 5,480 229,678 Debt service: Principal retirement - 216,188 - Interest and fiscal charges - 38,253 - Total Expenditures 1,019,514 674,266 1,219,860 Net Change in Fund Balances 26,023 74,533 388,490 Fund Balances, Beginning of Year, as originally reported 1,394,365 (3,317,791) 2,471,858 Restatements - 4,286,054 - Fund Balances, Beginning of Year, as restated 1,394,365 968,263 2,471,858 Fund Balances, End of Year $ 1,420,388 $ 1,042,796 $ 2,860,348 See Notes to Statement of Revenues, Expenditures and Changes in Fund Balances Page 17 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6111 CARYN COMMUNITY, AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2020 Note 1: Description of the Reporting Entity The City of Rancho Cucamonga was incorporated on November 30, 1977, under the laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. It is governed by an elected five-member board. The City of Rancho Cucamonga, California, has formed certain maintenance districts and authorized the levy of assessments pursuant to the terms and provisions of the "Landscaping and Lighting Act of 1972," being Division 15, Part 2 of the Streets and Highways Code of the State of California (commencing with Section 22500). The City levies annual assessments to finance the costs and expenses necessary for maintenance and improvements in each assessment district. The City cannot levy and collect annual assessments within an assessment district without complying with the procedures specified in the Landscaping and Lighting Act of 1972. On an annual basis, an Engineer's Report must be prepared for each assessment district which contains a full and detailed description of the improvements and the proposed assessments upon assessable lots and parcels of land within the district. The City Council must also adopt a resolution of intention which: • Declares the intention of the City Council to levy and collect assessments within the assessment district for the fiscal year stated therein. • Generally, describes the existing and proposed improvements and any substantial changes proposed to be made in existing improvements. • Refers to the assessment district by its distinctive designation and indicates the general location of the district. • Refers to the Engineer's Report for a full and detailed description of the improvements, the boundaries of the assessment district and any zones therein, and the proposed assessments upon assessable lots and parcels of land within the district. • Gives notice of the time and place for public hearing by the City Council on the levy of the proposed assessment. • States whether the assessment is proposed to increase from the previous year. The improvements for the districts include, but are not limited to turf,ground cover,planter beds, shrubs, plants and trees, landscape lighting, irrigation systems, electrical energy for irrigation controllers, hardscapes, entry signs, sound walls, and all associated appurtenant facilities. A description of the specific improvements to be maintained and serviced within each assessment district is set forth in the Annual Engineer's Report. Maintenance may include the furnishing of services and materials for the ordinary and usual maintenance, operation, and servicing of any improvement, including repair, removal, or replacement of all or any part of any improvement; providing for the life, growth, health, and beauty of landscaping, including cultivation, irrigation, trimming,spraying,fertilizing,or treating for disease or injury;the removal of trimmings,rubbish, debris, and other solid waste; the cleaning, sandblasting, and painting of walls and other Page 18 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6111 CARYN COMMUNITY, AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2020 Note 1: Description of the Reporting Entity(Continued) improvements to remove or cover graffiti.Service may include the furnishing of electric current or energy, gas, or other illuminating agent for the lighting or operation of any improvements, and water for the irrigation of any landscaping,the operation of any fountains, or the maintenance of any other improvements. The accompanying statement of revenues,expenditures and changes in fund balances contains information relative only to the Landscape Maintenance Districts #1 General City, #2 Victoria, #4R Terra Vista, #6R Caryn Community, and #7 North Etiwanda, Street Lighting District #2 Residential, and Park and Recreation Improvement District #85 of the City of Rancho Cucamonga, which are an integral part of the City of Rancho Cucamonga. Landscape Maintenance District No. 1 General City(LMD 1)was formed in 1979 and consists of 8,347 single family homes, 10,280 multi-family units, and 8.83 acres of vacant land, seven parks,and trails. Landscape improvements provided in LMD 1 may include,but are not limited to: turf, ground cover, shrubs and trees, sprinkler and irrigation systems, ornamental lighting, drainage systems, masonry walls,entryway monuments,and associated appurtenances.These improvements include all necessary services; operations; administration; and maintenance required to keep the abovementioned improvements in healthy, vigorous, and satisfactory working condition. The assessment rates are as follows: Fiscal Year Fiscal Year Percentage 2019/20 2020/21 Change Single family home $ 92.21 $ 92.21 0.00% Condominium unit 46.11 46.11 0.00% Multi-family unit 46.11 46.11 0.00% Commercial/industrial parcel per acre 184.42 184.42 0.00% Victoria Neighborhood Parks and Landscape Maintenance District(LMD 2)was formed in 1982 and consists of 5,890 single family homes,641 condominiums,589 multi-family units,56.03 acres of commercial/industrial, 75.35 acres of public service parcels,and 21.70 acres of vacant land, six parks, and trails. On June 5, 2013, a Proposition 218 ballot proceeding was held, and residents approved a rate increase. The assessment rates are as follows: Fiscal Year Fiscal Year Percentage 2019/20 2020/21 Change Single family home $ 503.80 $ 503.80 0.00% Condominium unit 370.98 370.98 0.00% Multi-family unit 352.66 352.66 0.00% Commercial/industrial parcel per acre 2,381.60 2,381.60 0.00% Public service parcel per acre 137.40 137.40 0.00% Undeveloped parcel per acre 100.76 100.76 0.00% Page 19 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6111 CARYN COMMUNITY, AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2020 Note 1: Description of the Reporting Entity (Continued) Landscape Maintenance District No. 4R Terra Vista (LMD 4R)was formed in 1984 and consists of 2,652 single family homes, 1,441 condominiums, 3,809 multi-family, 35.41 acres of schools, 176.41 acres of commercial/industrial,and 64.85 acres of vacant land.On December 2, 2009, a Proposition 218 ballot proceeding was held, and residents approved a rate increase. The assessment rates are as follows: Fiscal Year Fiscal Year Percentage 2019/20 2020/21 Change Single family home $ 397.15 $ 397.15 0.00% Condominium unit 317.72 317.72 0.00% Multi-family unit 278.01 278.01 0.00% Commercial/industrial parcel per acre 1,290.74 1,290.74 0.00% Undeveloped parcel per acre 99.29 99.29 0.00% School parcel per acre 99.29 99.29 0.00% Landscape Maintenance District No. 6R Caryn Community (LMD 6R)was formed in 1986 and consists of 963 single family homes in Zone 1, 310 single family homes in Zone 2, 5.35 acres of schools,and 0.54 acres of vacant land. On September 1,2010,a Proposition 218 ballot proceeding was held, and residents approved a rate increase. The assessment rates are as follows: Fiscal Year Fiscal Year Percentage 2019/20 2020/21 Change Single family home-Zone 1 $ 438.75 $ 451.92 3.00% Single family home-Zone 2 329.06 338.94 3.00% School parcel per acre 109.69 112.98 3.00% Undeveloped parcel per acre 109.69 112.98 3.00% Landscape Maintenance District No. 7 North Etiwanda (LMD 7) was formed in 1989 and currently consists of 3,085 single family homes. The assessment rates are as follows: Fiscal Year Fiscal Year Percentage 2019/20 2020/21 Change Single family home $ 307.05 $ 307.05 0.00% Street Lighting Maintenance District No. 2 Residential (SLD 2)was formed in August 1983 and consists of 7,267 single family homes, 2,049 multi-family units, and 35.16 acres of non-residential land. The SLD 2 assessments pay for energy and maintenance for streetlights within the public right-of-way and dedicated easements within the boundaries of SLD 2. Page 20 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6111 CARYN COMMUNITY, AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2020 Note 1: Description of the Reporting Entity (Continued) The assessment rates are as follows: Fiscal Year Fiscal Year Percentage 2019/20 2020/21 Change Single family home $ 39.97 $ 39.97 0.00% Multi-family unit 39.97 39.97 0.00% Commercial/industrial parcel per acre 79.94 79.94 0.00% Park and Recreation Improvement District No. 85 Red Hill and Heritage Park District (PD 85) was formed in April 1985. PD 85 is a combination Improvement and Maintenance District. This special tax was issued to pay for bonds that were sold in 1985 and refinanced in 1993. The bonds that were sold for the construction of the parks have been paid off as of 2005. However,all parcels in PD 85 will continue to be assessed for the on-going maintenance of both parks. The boundary of PD 85 is citywide except properties within the planned communities. The assessment rates are as follows: Fiscal Year Fiscal Year Percentage 2019/20 2020/21 Change Single family home $ 31.00 $ 31.00 0.00% Condominium unit 31.00 31.00 0.00% Multi-family unit 31.00 31.00 0.00% Commercial/industrial parcel <1.50 acres 15.50/Lot 15.50/Lot 0.00% 1.51 - 3.50 acres 46.50/Lot 46.50/Lot 0.00% 3.51 - 7.00 acres 108.50/Lot 108.50/Lot 0.00% 7.01 - 14.00 acres 217.00/Lot 217.00/Lot 0.00% 14.01 - 25.00 acres 434.00/Lot 434.00/Lot 0.00% >25.01 acres 775.00/Lot 775.00/Lot 0.00% Note 2: Measurement Focus, Basis of Accounting and Financial Statement Presentation The statement of revenues, expenditures and changes in fund balances is reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are generally recorded when a liability is incurred, as under accrual accounting except for sales tax and grant revenue where the government considers revenue to be available if collected within 180 days of the end of the current fiscal year period. However, debt service expenditures,as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Page 21 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6R CARYN COMMUNITY, AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2020 Note 2: Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Assessment Revenue Assessment revenue is recognized on the modified accrual basis, that is, in the fiscal year for which the assessments have been levied providing they become available. Available means then due,or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The County of San Bernardino collects the assessments for the Districts. Assessment liens attach annually as of 12:01 A.M. on the first day in January proceeding the fiscal year for which the assessments are levied.Assessments are levied on real property as it exists on that date.The assessment levy covers the fiscal period July 1 to June 30.One-half of the assessment is due November 1;the second half of the assessment is due February 1. All assessments are delinquent if unpaid on December 10 and April 10, respectively. Fund Type The Landscape Maintenance District#1 General City,#2 Victoria,#4R Terra Vista,#6 Caryn Community, and #7 North Etiwanda, and Street Lighting District #2 funds included in this report are accounted for in the City's financial records as special revenue funds. Special revenue funds account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes. Special revenue funds are designed to help determine and demonstrate resources that must be used for a specified purpose are, in fact, used for that purpose. The Park and Recreation Improvement District#85 fund included in this report is accounted for in the City's financial records as an agency fund. Agency funds are used to account for assets held by the City as trustee of agent for individuals, private organizations, or other governmental unites, and/or other funds. Note 3: Contributions from City A General Benefit Contribution quantifies the dollar value of a general benefit to parcels within a district which is required by law to be funded from sources other than special assessments.This general benefit is contributed from general revenues by the City's General Fund. In the event a district is operating at a deficit, lacks the resources for necessary maintenance or maintains insufficient operating reserves, a General Benefit Equivalent may be authorized by the City Council through the annual budget process. Per City policy, the amount of the General Benefit Equivalent will not exceed 11%of the adjusted total budget of the district under consideration for the subsidy. Note 4: Advances from City On August 16, 2017, the City Council authorized an advance of$4,286,054 from the General Fund to the Street Lighting District#2 Fund to provide funding forthe purchase and acquisition of Southern California Edison owned streetlights,the installation of LED lighting to streetlights,and other one-time costs necessary to inventory the streetlights. The advance was completed in phases and bears interest at 1.0% on the outstanding balance. The advance is payable in monthly installments and the final payment will occur in August 2037. At June 30, 2020, the outstanding balance amounted to $3,697,434. Page 22 LANDSCAPE MAINTENANCE DISTRICTS#1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6R CARYN COMMUNITY, AND#7 NORTH ETIWANDA, STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85 CITY OF RANCHO CUCAMONGA, CALIFORNIA NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2020 Note 5: Restatement of Fund Balance The Street Lighting District #2 Residential Fund reports a restatement of the beginning fund balance of$4,286,054 for the authorized advance from the City's General Fund to the District as described in Note 4. In the City's financial statements, the District reports an interfund liability offset by an interfund asset reported by the City's General Fund. The interfund liability and asset are reduced as the advance is repaid by allocating resources between the District and City's General Fund. In contrast, the District reports debt service expenditures to represent the repayment of the City's advance in these stand-alone component reports. The difference in the reported fund balance shown in the City's financial statements compared to the District's financial statements will be eliminated when the advance is fully repaid. Page 23 LSU's !!! !.0! !! INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Community Parks and Landscape Citizens' Oversight Committee City of Rancho Cucamonga, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the statement of revenues, expenditures and changes in fund balances of Landscape Maintenance Districts #1 General City, #2 Victoria, #4R Terra Vista, #6R Caryn Community, and#7 North Etiwanda, Street Lighting District#2 Residential, and Park and Recreation Improvement District #85 (collectively, the Districts), of the City of Rancho Cucamonga, California (the City), for the year ended June 30, 2020, and the related notes to statement of revenues, expenditures and changes in fund balances, and have issued our report thereon dated December 21, 2020. Internal Control over Financial Reporting In planning and performing our audit of the statement of revenues, expenditures and changes in fund balances, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions,to prevent,or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's statement of revenues, expenditures and changes in fund balances will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Districts'statement of revenues,expenditures and changes in fund balances are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of statement of revenues, expenditures and PrimeGlobal adrvd»« a.w,isu ro-n 203203 " 714.672.0022 Page 24 LS L::::00 To the Community Parks and Landscape Citizens' Oversight Committee City of Rancho Cucamonga, California changes in fund balances. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly,we do not express such an opinion.The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing,and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Brea, California December 21, 2020 Page 25 Sir JW CITY OF RANCHO CUCAMONGA DATE: February 10, 2021 TO: Mayor and Members of the City Council FROM: Community Parks and Landscape Citizens' Oversight Committee BY: Lori Sassoon, Deputy City Manager/Administrative Services SUBJECT: SUMMARY OF REVIEW OF RESULTS OF ANNUAL INDEPENDENT AUDIT CONCERNING THE FISCAL YEAR 2019/20 EXPENDITURES IN LANDSCAPE MAINTENANCE DISTRICTS #1 GENERAL CITY, #2 VICTORIA, #4R TERRA VISTA, #6R CARYN COMMUNITY, AND #7 NORTH ETIWANDA, STREET LIGHTING DISTRICT #2 RESIDENTIAL, AND PARK AND RECREATION IMPROVEMENT DISTRICT#85. RECOMMENDATION: It is recommended that the City Council receive and file this report. BACKGROUND: Established by Resolution 19-075, the Community Parks and Landscape Citizens' Oversight Committee is made up of members of the public that reside, and own property, within Landscape Maintenance Districts #1 General City, #2 Victoria, #4R Terra Vista, #6R Caryn Community, and #7 North Etiwanda, Street Lighting District#2 Residential, and Park and Recreation Improvement District#85 (collectively "the Districts"), and do not serve on any other standing City Commission or Committee. A primary purpose of the Committee is to review the annual audit after it is prepared and report the results of its review to the City Council and the community on an annual basis. The Committee has neither budgetary or operational decision-making authority, nor the authority to allocate financial resources or direct staff. ANALYSIS: At our meeting of February 10, 2021, Finance Director Tamara Oatman and Kirk Hamblin, Audit Manager of Lance, Soll & Lunghard, LLP, provided an overview of the audit for the Districts for Fiscal Year 2019/20. The reports generated by the audit include: • Audit Communication Letter • Independent Auditors' Report on Statement of Revenues, Expenditures, and Changes in Fund Balances • Independent Auditors' Report on Internal Control Over Financial Reporting It was noted that in accordance with the law, each of the Districts accounts for its own revenue and expenditures in its own funds. The auditor reviewed their work and a discussion was held regarding the audit process, and how the City ensures that funds collected for maintenance and operations are spent to the benefit of each District. The auditors and City Finance staff confirmed Page 1 of 2 Page 26 that the revenues received have been expended appropriately on maintenance, operations, and capital improvements in each of the Districts. We appreciate the opportunity to serve our community on this Committee. Unfortunately, due to COVID-19 social distancing guidelines, the Committee will not be present at the City Council meeting. Therefore we will participate telephonically to present this report. FISCAL IMPACT: There is no fiscal impact. COUNCIL GOAL ADDRESSED: This item addresses the City Council's core value of actively seeking and respectfully considering all public input for the Districts through the Committee Members' review and discussion of the annual financial report with City staff and the independent auditor. ATTACHMENTS: Attachment 1 —Audit Communication Letter Attachment 2 — Statement of Revenues, Expenditures and Changes in Fund Balances for the Districts for the year ended June 30, 2020 Attachment 3 — Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Page 2 of 2