Friday, December 30, 2016

Fourteen Noteworthy 3 January 2017 Regular Meeting Agenda Items

ABSTRACT: Fourteen Noteworthy 3 January 2017 Regular Meeting Agenda Items are featured including CLOSED SESSION, PUBLIC APPEARANCES, ANNOUNCEMENTS, Monthly Reports for November 2016, Receive and file a report on the Fiscal Year 2016-2017 Quarter One Financial Performance, Consider a resolution authorizing and approving the City of Carmel-by-the-Sea current pay rates and ranges (salary schedule) for At-Will classifications as of January 1, 2017, Consideration of resolutions authorizing the City Administrator to execute amendments to professional services agreements with Fasulo Investigations and Wildan Engineering for code compliance and building inspection services for a total not to exceed amount of $106,800, Consideration of resolutions authorizing the City Administrator to execute amendments to professional services agreement with Viva International LLC and with Krista Brassfield for project management assistance for a total not to exceed amount of $73,000, Consideration of a resolution approving the Fiscal Year 2017-2018 budget schedule, Consider resolutions authorizing the City Administrator to execute a memorandum of understanding with the County of Monterey for tobacco retail license administrative and enforcement services and approving the fee schedule for tobacco retail licenses for the period of January 3, 2017 through June 30, 2018, Consideration of City Council Goals for 2017, Consideration of an Ordinance (First Reading) amending Municipal Code sections 17.14 and 17.68 to: 1) Require a conditional use permit for certain land uses, 2) Add new land use definitions, 3) Add use permit voting requirements, and 4) Add an allowance for authorization of temporary uses on private property, Consideration of an Ordinance (Second Reading) amending Title 8 and Title 15 of the Carmel Municipal Code and adopting the 2016 California Building, Residential, Energy, Fire, Mechanical, Plumbing, Electrical, and California Green Codes with Amendments and Consideration of an Ordinance (First Reading) of an ordinance amending Title 5, Business Taxes, Licenses and Regulations, of the Municipal Code amending Chapter 5.04 (General Licensing Provisions), Chapter 5.16 (Bingo Games) and Chapter 5.28 (Filming). CITY COUNCIL AGENDA REGULAR MEETING and Staff Reports document copies are embedded.
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL AGENDA
REGULAR MEETING
Tuesday, January 03, 2017
CLOSED SESSION 3:30 p.m.
OPEN SESSION 4:30 p.m.

CALL TO ORDER AND ROLL CALL

CLOSED SESSION


A. REAL PROPERTY NEGOTIATIONS – LEASE
Pursuant to Government Code Section 54956.8
Between Chip Rerig, Carrie Theis, and Carolyn Hardy and Sunset Cultural Center, Inc.

B. LITIGATION ONE MATTER
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA 
54956.9(c)
Order Instituting Investigation and Order to Show Cause on the Commission’s Own Motion into the Operations and Practices of Pacific Gas and Electric Company with respect to Facilities Records for its Natural Gas Distribution System Pipelines. Investigation 14-11-008 (Filed November 20, 2014)

C. Antonio Simonelli & Jacqueline Simonelli, Plaintiff v. City of Carmel-by-the-Sea, et al., Defendant - Monterey County Superior Court Case No. M123079

PUBLIC APPEARANCES Members of the public are entitled to speak on matters of municipal concern not on the agenda during Public Appearances. Each person’s comments shall be limited to 3 minutes, or as otherwise established by the City Council, Board or Commission. Matters not appearing on the City Council, Board or Commission’s agenda will not receive action at this meeting but may be referred to staff for a future meeting. Persons are not required to give their names, but it is helpful for speakers to state their names so that they may be identified in the minutes of the meeting.

ANNOUNCEMENTS 

A
. Announcements from Closed Session

B. Announcements from City Council Members

C. Announcements from City Administrator

D. Announcements from City Attorney

CONSENT AGENDA
Items on the consent agenda are routine in nature and do not require discussion or independent action. Members of the Council, Board or Commission or the public may ask that any items be considered individually for purposes of Council, Board or Commission discussion and/ or for public comment. Unless that is done, one motion may be used to adopt all recommended actions.

2. Monthly Reports for November 2016.
Monthly Reports 01-03-17 by L. A. Paterson on Scribd
Monthly Reports for November 2016.

6. SR 2017-004 Receive and file a report on the Fiscal Year 2016-2017 Quarter One Financial Performance.
Fiscal Year 2016-2017 Quarter One Financial Performance 01-03-17 by L. A. Paterson on Scribd
Receive and file a report on the Fiscal Year 2016-2017 Quarter One Financial Performance.

7. SR 2017-005 Consider a resolution authorizing and approving the City of Carmel-by-the-Sea current pay rates and ranges (salary schedule) for At-Will classifications as of January 1, 2017.
Salary Schedule 01-03-17 by L. A. Paterson on Scribd
Consider a resolution authorizing and approving the City of Carmel-by-the-Sea current pay rates and ranges (salary schedule) for At-Will classifications as of January 1, 2017.

8. Consideration of resolutions authorizing the City Administrator to execute amendments to professional services agreements with Fasulo Investigations and Wildan Engineering for code compliance and building inspection services for a total not to exceed amount of $106,800.
Amendments to Professional Services Agreements 01-03-17 by L. A. Paterson on Scribd
Consideration of resolutions authorizing the City Administrator to execute amendments to professional services agreements with Fasulo Investigations and Wildan Engineering for code compliance and building inspection services for a total not to exceed amount of $106,800.

9. SR 2017-007 Consideration of resolutions authorizing the City Administrator to execute amendments to professional services agreement with Viva International LLC and with Krista Brassfield for project management assistance for a total not to exceed amount of $73,000.
Amendments to Professional Services Agreement With Viva International LLC 01-03-17 by L. A. Paterson on Scribd
Consideration of resolutions authorizing the City Administrator to execute amendments to professional services agreement with Viva International LLC and with Krista Brassfield for project management assistance for a total not to exceed amount of $73,000.

10. SR 2017-008 Consideration of a resolution approving the Fiscal Year 2017-2018 budget schedule.
Fiscal Year 2017-2018 Budget Schedule 01-03-17 by L. A. Paterson on Scribd
Consideration of a resolution approving the Fiscal Year 2017-2018 budget schedule.

11 SR 2017-009 Consider resolutions authorizing the City Administrator to execute a memorandum of understanding with the County of Monterey for tobacco retail license administrative and enforcement services and approving the fee schedule for tobacco retail licenses for the period of January 3, 2017 through June 30, 2018.
MOU With the County of Monterey 01-03-17 by L. A. Paterson on Scribd
Consider resolutions authorizing the City Administrator to execute a memorandum of understanding with the County of Monterey for tobacco retail license administrative and enforcement services and approving the fee schedule for tobacco retail licenses for the period of January 3, 2017 through June 30, 2018.

ORDERS OF BUSINESS Orders of Business are agenda items that require City Council, Board or Commission discussion, debate, direction to staff, and/or action.

13. SR 2017-011 Consideration of City Council Goals for 2017.
City Council Goals for 2017 01-03-17 by L. A. Paterson on Scribd
Consideration of City Council Goals for 2017

PUBLIC HEARINGS

14. SR 2017-012 Consideration of an Ordinance (First Reading) amending Municipal Code sections 17.14 and 17.68 to: 1) Require a conditional use permit for certain land uses, 2) Add new land use definitions, 3) Add use permit voting requirements, and 4) Add an allowance for authorization of temporary uses on private property.
Ordinance (First Reading) Amending Municipal Code Sections 17.14 & 17.68 01-03-17 by L. A. Paterson on Scribd
Consideration of an Ordinance (First Reading) amending Municipal Code sections 17.14 and 17.68 to: 1) Require a conditional use permit for certain land uses, 2) Add new land use definitions, 3) Add use permit voting requirements, and 4) Add an allowance for authorization of temporary uses on private property.

15. SR 2017-013 Consideration of an Ordinance (Second Reading) amending Title 8 and Title 15 of the Carmel Municipal Code and adopting the 2016 California Building, Residential, Energy, Fire, Mechanical, Plumbing, Electrical, and California Green Codes with Amendments.
Ordinance (Second Reading) Amending Title 8 and Title 15 01-03-17 by L. A. Paterson on Scribd
Consideration of an Ordinance (Second Reading) amending Title 8 and Title 15 of the Carmel Municipal Code and adopting the 2016 California Building, Residential, Energy, Fire, Mechanical, Plumbing, Electrical, and California Green Codes with Amendments.

16. SR 2017-014 Consideration of an Ordinance (First Reading) of an ordinance amending Title 5, Business Taxes, Licenses and Regulations, of the Municipal Code amending Chapter 5.04 (General Licensing Provisions), Chapter 5.16 (Bingo Games) and Chapter 5.28 (Filming).
Ordinance (First Reading) Amending Title 5 01-03-17 by L. A. Paterson on Scribd

Consideration of an Ordinance (First Reading) of an ordinance amending Title 5, Business Taxes, Licenses and Regulations, of the Municipal Code amending Chapter 5.04 (General Licensing Provisions), Chapter 5.16 (Bingo Games) and Chapter 5.28 (Filming).

City Administrator Chip Rerig: FRIDAY LETTER, December 30, 2016

FRIDAY LETTER December 30, 2016
Police Chief and Director or Public Safety Paul Tomasi
Jeff Watkins Promoted to Corporal
Chief Calhoun Retires
Former Council Member Dick Ely's Father Turns 105
Happy New Year

Saturday, December 24, 2016

City Administrator Chip Rerig: FRIDAY LETTER, December 23, 2016

FRIDAY LETTER December 23, 2016
Flanders Water Line Leak Repair
Police Department Begins Using Body Cameras
In the news
Scenic Pathway
Breakfast with Santa
Harrison Memorial Library
Happy Holidays!  

Tuesday, December 20, 2016

City of Carmel-by-the-Sea Administration Department Organizational Assessment, Lisa M. Sullivan, Consultant Municipal Resource Group, LLC, October 2016

ABSTRACT: The City of Carmel-by-the-Sea Administration Department Organizational Assessment, prepared by Lisa M. Sullivan, Consultant Municipal Resource Group, LLC, October 2016, document copy is embedded. The EXECUTIVE SUMMARY, Conclusions and Next Steps are reproduced. MRG recommends immediate implementation of:
§ Recommendation #1: Define reporting structures to reflect current duties and provide clear reporting relationships and direction.
§ Recommendation #15: Retain a third party to conduct an objective audit of its payroll and benefits administration.
§ Recommendation #18: Upon completion of a payroll and benefits administration audit, the Department should contract for payroll services.
§ Recommendation #32: Hire the new Assistant City Administrator before implementing significant departmental changes that are less then immediate.
§ Recommendation #2: Identify the position with primary responsibility for the front counter and City Hall phone answering and which positions will have secondary and tertiary responsibilities.
§ Recommendation #25: Contract with a qualified vendor for sufficient IT support services to enable IT Manager to meet immediate needs.

EXECUTIVE SUMMARY

The City of Carmel-by-the-Sea Administration Department is staffed by dedicated individuals who are committed to providing their customers and clients with excellent service. The Administration Department delivers Finance, Human Resources, Information Services, City Clerk, and Contracts and Budgets services to the City’s operating departments. It also provides front counter and general phone service to City Hall customers.

In the past six years, the City has had five different City Administrators, including the current City Administrator, Chip Rerig. As a result, the Administration Department (overseen by the City Administrator) has lacked clear leadership and direction. To provide a clear future for the Department, Mr. Rerig engaged Municipal Resource Group, LLC (MRG) to assess the current state of the Department and make recommendations regarding its organization and service delivery that reflect contemporary best practices.

This report contains 36 separate recommendations for improving the Administration Department’s structure and the delivery of services to its clients and City Hall customers. These recommendations are intended to provide the City of Carmel-by-the-Sea with a menu of choices to consider as it continues to perfect administrative services delivery. Any decision to implement the provided recommendations should be aligned with the City’s values, mission, and objectives, and the City is best suited to make those determinations.

The immediate recommendations are to:

1. Define the Administration Department reporting structure to reflect current duties and provide clear reporting relationships and direction.

2. Retain a third-party to conduct a payroll and benefits audit.
a. Contract for payroll administration services upon completion of the audit.

3. Fill the vacant Assistant City Administrator position.

4. Identify the position with primary responsibility for the front counter and City Hall phone answering and which positions have secondary and tertiary responsibility.

5. Contract for sufficient technology support services to meet immediate needs.
The next tier of urgent recommendations addresses longer term organizational improvements within the Administration Department, followed by important process recommendations, and finally recommendations for future initiatives. A chart of recommendations in order of priority is included in this report as Attachment L.

The following recommendations result in a significant reorganization of the Administrative Department. Using the collaborative approach described by MRG, which is intended to foster cultural, as well as organizational change, the City should expect a three to five year transition period. It is relatively easy to implement the recommended structural changes; however, every organization is only as good as its people. The City should use this opportunity to ensure that the Administration Department staff is provided ample opportunity to engage in and evolve with the organizational changes.

MRG presented this report and its recommendations to Administration Department staff on Friday, October 28, 2016. A copy of the staff presentation is included in this report as Attachment M.

The Administration Department is facing an exciting evolution. The City is committing attention and resources to the Department, and the staff has proven itself to be ready, willing, and able to do its best for the City. The Department is perfectly poised to exceed even its own high standards.

Conclusions
Department has lacked leadership

Staff has delivered services and met mandates to the best of its abilities

Duties and roles have evolved as needed

• Roles unclear, reporting unclear and Unbalanced

Staff has not had the benefit of a supportive organizational structure; feel under appreciated, over tasked, and disorganized

Staff is dedicated and enjoys working for the City

City is committing resources to the department and staff is ready and able to do its best for the City

• You are uniquely situated to succeed

Next Steps
MRG recommends immediate implementation of:
§ Recommendation #1: Define reporting structures to reflect current duties and provide clear reporting relationships and direction.

§ Recommendation #15: Retain a third party to conduct an objective audit of its payroll and benefits administration.

§ Recommendation #18: Upon completion of a payroll and benefits administration audit, the Department should contract for payroll services.

§ Recommendation #32: Hire the new Assistant City Administrator before implementing significant departmental changes that are less then immediate.

§ Recommendation #2: Identify the position with primary responsibility for the front counter and City Hall phone answering and which positions will have secondary and tertiary responsibilities.

§ Recommendation #25: Contract with a qualified vendor for sufficient IT support services to enable IT Manager to meet immediate needs.

City of Carmel-by-the-Sea Administration Department
Organizational Assessment
Prepared by Lisa M. Sullivan, Consultant 
Municipal Resource Group, LLC, 
October 2016

Saturday, December 17, 2016

Friday, December 16, 2016

Michael Calhoun, Chief of Police/Public Safety Director, City Overcompensation (March 2016-September 2016)

ABSTRACT: After reverting to his position of chief of police/public safety director after he served as interim city administrator, Michael Calhoun, Chief of Police/Public Safety Director, continued to be compensated at taxpayer expense as if he was still interim city administrator collecting over $10,000. MICHAEL CALHOUN, CHIEF OF POLICE/PUBLIC SAFETY DIRECTOR, CITY COMPENSATION FACTS are compiled. Calhoun’s overcompensation occurred during the tenures of City Administrator Chip Rerig, Human Resource Manager Maxine Gullo, Finance Manager Paul Wood, Finance Specialist/Deputy City Clerk Deanna Allen, City Attorney Don Freeman and Mayor Steve Dallas, Mayor Pro Tem Carrie Theis, Council Member Jan Reimers, Council Member Bobby Richards and Council Member Carolyn Hardy. Michael B. Calhoun’s employee detail history (October 2015-December 2016) document copy is embedded.

MICHAEL CALHOUN, CHIEF OF POLICE/PUBLIC SAFETY DIRECTOR, CITY COMPENSATION FACTS:

1. Prior to November 2, 2015, Michael Calhoun, as Public Safety Director, had a “Rate Distribution” of 74.40.

2. Between November 2, 2015 and March 1, 2016, Michael Calhoun served as Public Safety Director/Interim City Administrator; Calhoun’s “Rate Distribution” 84.1346.

3. Chip Rerig’s employment as city administrator commenced on March 1, 2016.

4. From March 1, 2016 through September 2, 2016, Michael Calhoun, serving as Public Safety Director, continued with a “Rate Distribution” of 84.1346.

5. Overcompensation between March 1, 2016 and September 2, 2016 (six months) amounts to over $10,000.

6. In September 2016, Michael Calhoun’s “Rate Distribution” changed to 81.8399.

NOTES:
Rate Distribution 74.40, $154,752. Annual salary
Rate Distribution 84.1346, $175,000. Annual salary
Rate Distribution 81.8399, $170,227. Annual salary

In sum, Michael Calhoun, after he was no longer serving as public safety director/interim city administrator, from March 1, 2016 to September 2016, continued with a “rate distribution” of 84.1346 collecting over $10,000.  Calhoun’s overcompensation occurred during the tenure of City Administrator Chip Rerig, Human Resource Manager Maxine Gullo, Finance Manager Paul Wood, Finance Specialist/Deputy City Clerk Deanna Allen, City Attorney Don Freeman and Mayor Steve Dallas, Mayor Pro Tem Carrie Theis, Council Member Jan Reimers, Council Member Bobby Richards and Council Member Carolyn  Hardy. 
MICHAEL B. CALHOUN
City of Carmel-by-the-Sea
Employee Detail History Print
October 6, 2015-December 6, 2016

REFERENCES:
A little personnel news dribbles out of Carmel City Hall
by Royal Calkins on December 8, 2016
Monterey Bay PARTISAN


Carmel-by-the-Sea Municipal Code
Article I. Code of Ethics

2.52.010 Code of Ethics.
As public employees we are entrusted with the confidence of those we serve to fulfill the responsibilities of our roles. Our actions are deemed representative of those we serve and our function, therefore, carries with it a greater responsibility than that of the private enterprise employee. Our system of government is viewed by the public through our acts as we fulfill the demands of our positions. We must demonstrate competency, integrity, honesty, courtesy and fairness in all relationships, private and public, to best represent the type of government desired by all. We have a patriotic duty to fulfill our roles in the highest standard possible for the purpose of assuring exemplary government for all people. A departure from this ideal creates an injustice for all. (Ord. 87-1 § 2, 1987).

Wednesday, December 14, 2016

Three Noteworthy 15 December 2016 Special Meeting AMENDED Agenda Items (10:30 A.M.)

ABSTRACT: Three Noteworthy 15 December 2016 Special Meeting AMENDED Agenda Items, namely PUBLIC APPEARANCES, Appoint Agency Negotiators for Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8; Property: Sunset Center, Agency Negotiators: Chip Rerig, Carrie Theis, and Carolyn Hardy; Negotiating Parties: Sunset Cultural Center, Inc.; Under Negotiation: Terms and Conditions for Lease Agreement and CLOSED SESSION, are featured. CITY COUNCIL AGENDA SPECIAL MEETING AMENDED and Staff Report - Amended document copies are embedded.
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL AGENDA
SPECIAL MEETING

Thursday, December 15, 2016
10:30 a.m.


CALL TO ORDER AND ROLL CALL

PUBLIC APPEARANCES Members of the public are entitled to speak on matters of municipal concern not on the agenda during Public Appearances. Each person’s comments shall be limited to 3 minutes, or as otherwise established by the City Council, Board or Commission. Matters not appearing on the City Council, Board or Commission’s agenda will not receive action at this meeting but may be referred to staff for a future meeting. Persons are not required to give their names, but it is helpful for speakers to state their names so that they may be identified in the minutes of the meeting.

ORDERS OF BUSINESS Orders of Business are agenda items that require City Council, Board or Commission discussion, debate, direction to staff, and/or action.

1. Appoint Agency Negotiators for Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8; Property: Sunset Center, Agency Negotiators: Chip Rerig, Carrie Theis, and Carolyn Hardy; Negotiating Parties: Sunset Cultural Center, Inc.; Under Negotiation: Terms and Conditions for Lease Agreement.
Staff Report - Amended 12-15-16 by L. A. Paterson on Scribd
Staff Report - Amended
Appoint Agency Negotiators for Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8; Property: Sunset Center, Agency Negotiators: Chip Rerig, Carrie Theis, and Carolyn Hardy; Negotiating Parties: Sunset Cultural Center, Inc.; Under Negotiation: Terms and Conditions for Lease Agreement

CLOSED SESSION

A. REAL PROPERTY NEGOTIATIONS – LEASE
Pursuant to Government Code Section 54956.8
Between Chip Rerig, Carrie Theis, and Carolyn Hardy and Sunset Cultural Center, Inc.

B. LITIGATION ONE MATTER
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA 54956.9(c)
Order Instituting Investigation and Order to Show Cause on the Commission’s Own Motion into the Operations and Practices of Pacific Gas and Electric Company with respect to Facilities Records for its Natural Gas Distribution System Pipelines. Investigation 14-11-008 (Filed November 20, 2014)

Two Noteworthy 15 December 2016 Special Meeting Agenda Items (11:30 A.M.)

ABSTRACT: Two Noteworthy 15 December 2016 Special Meeting Agenda Items, namely PUBLIC APPEARANCES and City Council Training Meeting with former Monterey City Administrator Fred Meurer covering the following topics: 1. Campaign to governing; 2. Maximizing Council effectiveness; 3. How you govern effectively; 4. Council roles and responsibilities; 5. Staff roles and responsibilities; and 6. Code of conduct, are featured. CITY COUNCIL AGENDA SPECIAL MEETING document copy is embedded.
CITY COUNCIL AGENDA
SPECIAL MEETING
Thursday, December 15, 2016

11:30 a.m.

CALL TO ORDER AND ROLL CALL

PUBLIC APPEARANCES Members of the public are entitled to speak on matters of municipal concern not on the agenda during Public Appearances. Each person’s comments shall be limited to 3 minutes, or as otherwise established by the City Council, Board or Commission. Matters not appearing on the City Council, Board or Commission’s agenda will not receive action at this meeting but may be referred to staff for a future meeting. Persons are not required to give their names, but it is helpful for speakers to state their names so that they may be identified in the minutes of the meeting.

ORDERS OF BUSINESS Orders of Business are agenda items that require City Council, Board or Commission discussion, debate, direction to staff, and/or action.

1. City Council Training Meeting with former Monterey City Administrator Fred Meurer covering the following topics: 1. Campaign to governing; 2. Maximizing Council effectiveness; 3. How you govern effectively; 4. Council roles and responsibilities; 5. Staff roles and responsibilities; and 6. Code of conduct.

Monday, December 12, 2016

PLANNING COMMISSION REGULAR MEETING AGENDA, December 14, 2016

ABSTRACT: The CITY OF CARMEL-BY-THE-SEA PLANNING COMMISSION REGULAR MEETING AGENDA and Planning Commission Reports documents copies for December 14, 2016 are embedded. CONSENT AGENDA, including Consideration of the Final Design Study (DS 16-403) and associated Coastal Development Permit for the construction of a new single-family residence on a vacant lot located in the Single-Family Residential (R-1) Zoning District (Greg Mussallem, S/W Corner of Casanova St. and 10th), Consideration of a Combined Concept and Final Design Study (DS 16-239) for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District McLaughlin, Brian Congleton, Architect, First Ave., 2 SE of San Carlos), Consideration of a Combined Concept and Final Design Study (DS 16-383) for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District (Bressler, Adam Jeselnick, Architect, Mission Street, 2 SW of Alta Avenue), and PUBLIC HEARINGS including Consideration of recommendations to the City Council for an Ordinance amending Municipal Code Sections 17.14 and 17.68 to: 1) Require a conditional use permit for certain land uses, 2) Add new land use definitions, 3)Add use permit voting requirements, and 4) Add an allowance for authorization of temporary uses on private property (Carmel-by-the-Sea Commercial (CC, SC, RC) Districts), Consideration of recommendations to the City Council for an Ordinance amending Municipal Code Sections 17.14, 17.56 and 17.68 to amend the restaurant and food store regulations (Carmel-by-the-Sea Commercial (CC, SC, RC) Districts), Consideration of a Concept Design Study (DS 16-378) and associated Coastal Development Permit for the construction of a new single-family residence located in the Single-Family Residential (R-1) Zoning District (Henkel, Adam Jeselnick, Architect, NE Corner of Monte Verde & 9th), Consideration of Final Design Study (DS 16-397) and Coastal Development Permit for the construction of a new single-family residence on a vacant lot located in the Single-Family Residential (R-1) Zoning District (Carr, Bolton Design Group, Inc., Torres Street, 5 NE of 4th Avenue), Consideration of a Combined Concept and Final Design Study (DS 16-412) and associated Coastal Development Permit for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District (Weigel, Mackenzie Patterson, Architect, 25990 Junipero Avenue), Consideration of Use Permit (UP 16-440) and the associated Design Study (DS 16-387) applications for the conversion of two existing office buildings into a single family residence as well as an addition to connect the two buildings. The project site is located in the Service Commercial (SC) Zoning District (Mark, Paul McEnroe, Mission Street, 2 NE of 6th Avenue) and Consideration of the replacement of an existing bus shelter with a new bus shelter (MP 16-490) located near the southeast corner of Mission Street and Fifth Avenue on the north side of Devendorf Park (Carmel-by-the-Sea, SE Cor. Of Mission and 5th Ave, North side of Devendorf Park), are presented.
CITY OF CARMEL-BY-THE-SEA
PLANNING COMMISSION
REGULAR MEETING AGENDA

December 14, 2016

A. CALL TO ORDER AND ROLL CALL
Commissioners: Don Goodhue, Chair
Michael LePage
Julie Wendt
Gail Lehman
Karen Sharpe

H. CONSENT AGENDA
Items placed on the Consent Agenda are considered to be routine and are acted upon by the Commission in one motion. There is no discussion of these items prior to the Commission action unless a member of the Commission, staff, or public requests specific items be discussed and removed from the Consent Agenda. It is understood that the staff recommends approval of all consent items. Each item on the Consent Agenda approved by the Commission shall be deemed to have been considered in full and adopted as recommended.

2. DS 16-403 (Mussallem)
Greg Mussallem

S/W Corner of Casanova St. and 10th
Blk: K; Lot: 1 & 3
APN: 010-272-017
Consideration of the Final Design Study (DS 16-403) and associated Coastal Development Permit for the construction of a new single-family residence on a vacant lot located in the Single-Family Residential (R-1) Zoning District.
Greg Mussallem 12-14-16 by L. A. Paterson on Scribd
Consideration of the Final Design Study (DS 16-403) and associated Coastal Development Permit for the construction of a new single-family residence on a vacant lot located in the Single-Family Residential (R-1) Zoning District.

3. DS 16-239 (McLaughlin)
Brian Congleton, Architect

First Ave., 2 SE of San Carlos
Block: 11; lot: E ½ of 2 and 4
APN: 010-121-024
Consideration of a Combined Concept and Final Design Study (DS 16-239) for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District
Thomas & Irene McLaughlin 12-14-16 by L. A. Paterson on Scribd
Consideration of a Combined Concept and Final Design Study (DS 16-239) for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District

4. DS 16-383 (Bressler)
Adam Jeselnick, Architect

Mission Street, 2 SW of Alta Avenue
Block: 4.5; lot: 5
APN: 010-115-021
Consideration of a Combined Concept and Final Design Study (DS 16-383) for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District
Richard and Roseann Bressler 12-14-16 by L. A. Paterson on Scribd
Consideration of a Combined Concept and Final Design Study (DS 16-383) for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District

I. PUBLIC HEARINGS
If you challenge the nature of the proposed action in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the Planning Commission at, or prior to, the public hearing.

1. Carmel-by-the-Sea
Commercial (CC, SC, RC) Districts

Consideration of recommendations to the City Council for an Ordinance amending Municipal Code Sections 17.14 and 17.68 to: 1) Require a conditional use permit for certain land uses, 2) Add new land use definitions, 3)Add use permit voting requirements, and 4) Add an allowance for authorization of temporary uses on private property
Ordinance Amending Municipal Code Sections 17.14 and 17.68 12-14-16 by L. A. Paterson on Scribd
Consideration of recommendations to the City Council for an Ordinance amending Municipal Code Sections 17.14 and 17.68 to: 1) Require a conditional use permit for certain land uses, 2) Add new land use definitions, 3)Add use permit voting requirements, and 4) Add an allowance for authorization of temporary uses on private property

2. Carmel-by-the-Sea
Commercial (CC, SC, RC) Districts

Consideration of recommendations to the City Council for an Ordinance amending Municipal Code Sections 17.14, 17.56 and 17.68 to amend the restaurant and food store regulations
Ordinance Amending Municipal Code Sections 17.14, 17.56 and 17.68 12-14-16 by L. A. Paterson on Scribd
Consideration of recommendations to the City Council for an Ordinance amending Municipal Code Sections 17.14, 17.56 and 17.68 to amend the restaurant and food store regulations

3. DS 16-378 (Henkel)
Adam Jeselnick, Architect

NE Corner of Monte Verde & 9th
Block: 94; lot: 20
APN: 010-193-009
Consideration of a Concept Design Study (DS 16-378) and associated Coastal Development Permit for the construction of a new single-family residence located in the Single-Family Residential (R-1) Zoning District
Michael and Frances Henkel 12-14-16 by L. A. Paterson on Scribd
Consideration of a Concept Design Study (DS 16-378) and associated Coastal Development Permit for the construction of a new single-family residence located in the Single-Family Residential (R-1) Zoning District

4. DS 16-397 (Carr)
Bolton Design Group, Inc.

Torres Street, 5 NE of 4th Avenue
Block: 38; lot: E
APN: 010-103-012
Consideration of Final Design Study (DS 16-397) and Coastal Development Permit for the construction of a new single-family residence on a vacant lot located in the Single-Family Residential (R-1) Zoning District.
Andrea Carr 12-14-16 by L. A. Paterson on Scribd
Consideration of Final Design Study (DS 16-397) and Coastal Development Permit for the construction of a new single-family residence on a vacant lot located in the Single-Family Residential (R-1) Zoning District.

5. DS 16-412 (Weigel)
Mackenzie Patterson, Architect

25990 Junipero Avenue
Blk: 1; Lot: 20
APN: 009-353-009
Consideration of a Combined Concept and Final Design Study (DS 16-412) and associated Coastal Development Permit for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District.
Angela Weigel 12-14-16 by L. A. Paterson on Scribd
Consideration of a Combined Concept and Final Design Study (DS 16-412) and associated Coastal Development Permit for alterations to an existing residence located in the Single-Family Residential (R-1) Zoning District.

6. UP 16-440/DS 16-387 (Mark)
Paul McEnroe
Mission Street, 2 NE of 6th Avenue
Block: 58; lot: 12
APN: 010-098-011
Consideration of Use Permit (UP 16-440) and the associated Design Study (DS 16-387) applications for the conversion of two existing office buildings into a single family residence as well as an addition to connect the two buildings. The project site is located in the Service Commercial (SC) Zoning District
Joe and Sheila Mark 12-14-16 by L. A. Paterson on Scribd
Consideration of Use Permit (UP 16-440) and the associated Design Study (DS 16-387) applications for the conversion of two existing office buildings into a single family residence as well as an addition to connect the two buildings. The project site is located in the Service Commercial (SC) Zoning District

7. Carmel-by-the-Sea
SE Cor. Of Mission and 5th Ave
North side of Devendorf Park
Consideration of the replacement of an existing bus shelter with a new bus shelter (MP 16-490) located near the southeast corner of Mission Street and Fifth Avenue on the north side of Devendorf Park
Replacement of an Existing Bus Shelter 12-14-16 by L. A. Paterson on Scribd
Consideration of the replacement of an existing bus shelter with a new bus shelter (MP 16-490) located near the southeast corner of Mission Street and Fifth Avenue on the north side of Devendorf Park

PLANNING COMMISSION REGULAR MEETING – MINUTES, November 9, 2016


PLANNING COMMISSION REGULAR MEETING – MINUTES, November 9, 2016

Friday, December 09, 2016

CITY OF CARMEL-BY-THE-SEA MANAGEMENT REPORT AND AUDITOR’S COMMUNICATION LETTER, June 30, 2015

ABSTRACT: The CITY OF CARMEL-BY-THE-SEA MANAGEMENT REPORT AND AUDITOR’S COMMUNICATION LETTER, June 30, 2015 document copy, prepared by MOSS, LEVY & HARTZHEIM, LLP, CERTIFIED PUBLIC ACCOUNTANTS, is embedded. CURRENT YEAR RECOMMENDATIONS, including Material Weakness (Finding #2015-01), Significant Deficiencies (Finding #2015-02 to #2015-15). and Other Matters (Finding #2015-16 through #2015-26) sections with Finding, Effect, Recommendation and Management’s Response subsections for each section item, are reproduced.
NOTE: 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 entity’s financial statements 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.
CITY OF CARMEL-BY-THE-SEA
MANAGEMENT REPORT AND AUDITOR’S COMMUNICATION LETTER
June 30, 2015

CURRENT YEAR RECOMMENDATIONS

Material Weakness


2015-01 Finding – Deficiencies in recording of pooled cash:
During our audit of cash, we noted the pooled cash accounts were not reconciled.

Effect:
Without proper reconciliation of pooled cash on a monthly basis, it is difficult to determine if the cash balance is correct at the end of each month. Also, a misappropriation of funds could occur and remain undetected for an extended period of time.

Recommendation:

We recommend that the City reconcile the pooled cash on a monthly basis and the reconciliation be approved by a responsible employee.

Management’s Response:

Agreed. Like all of the actual bank accounts, the pooled cash fund should be reconciled on a monthly basis. Our pooled cash accounting structure is a bit different than normal. Because of this difference, the importance of reconciling the actual bank accounts is greater than the reconciliation of the pooled accounts. As mentioned in earlier responses, the Finance Department is short staffed due to covering of the Human Resources and Risk Management areas and does not have the resources to complete in a timely manner many of the tasks that accrue to it on a monthly basis. With the implementation of the new finance system, we anticipate many of the tasks and duties that are required now will be easier to implement or will go away entirely.

Significant Deficiencies

2015-02 Finding – Cash receipts function has overlapping duties:
During our review of internal controls, it was noted the cash receipting function has overlapping duties. The overlapping duties are: preparing/posting receipts, preparing deposit slips, making the deposit, maintaining custody of petty cash, replenishing petty cash, and resolving complaints.

Effect:
With overlapping duties within the cash receipting function, there is an increased risk of a misappropriation of assets to occur and remain undetected.

Recommendation:
We recommend the cash receipting function has adequate segregation of duties in order to decrease the risk of misappropriation of assets.

Management’s Response:
Agreed. As has been pointed out by other recent auditors, because of the size of the Finance Department staff, many of the financial internal controls are not as effective as they would be otherwise, were there a greater staff size. While there are certain tasks that, optimally, would be handled by multiple individuals to increase internal control, we have limited staff so that each staff member must complete more tasks in a given process, making the internal control potentially less effective. While we don’t have the staff size to maximize internal control strengths, we have analyzed the segregation of duties, and have implemented separation where the greatest risk of loss could occur.

2015-03 Finding – Payroll function has overlapping duties:
During our review of internal controls, it was noted the payroll function has overlapping duties. The overlapping duties are: maintaining personnel files, entering employees into the payroll system, making wage rate changes in the system, entering hours into the system, verifying hours input into the payroll system, reviewing the payroll register, preparing the payroll journal, and preparing payroll checks.

Effect:

With overlapping duties within the payroll function, there is an increased risk of incorrect reporting of payroll expenses or data and a misappropriation of assets to occur and go undetected.

Recommendation:
We recommend the City maintain adequate segregation of duties within the payroll function in order to decrease the risk of misreporting and/or misappropriation of assets related to payroll.

Management’s Response:Agreed. Again, as has been pointed out by other auditors in recent years, because of the size of the Finance Department staff, many of the financial internal controls are not as effective as they would be otherwise, were there a greater staff size. Especially in case of payroll, the City has been without adequate Human Resources personnel that would normally mitigate the internal control risk related to payroll activities. In this case, the staff member who has been taking care of the payroll is also processing as many of the HR tasks as possible. With the hiring of a Human Resources Manager in May, 2016, this risk should be mitigated substantially.

2015-04 Finding – Cash disbursements function has overlapping duties:
During our review of internal controls, it was noted the cash disbursements function has an overlapping duty. The overlapping duty is: preparing checks and also maintaining custody of the checks after they are signed.

Effect:
With overlapping duties within the cash disbursements function, there is an increased risk of misappropriation of assets to occur and remain undetected.

Recommendation:
We recommend the City maintain adequate segregation of duties within the cash disbursements function in order to decrease the risk of misappropriation of assets.

Management’s Response:
Agreed. Again, as has been pointed out by other recent auditors, because of the size of the Finance Department staff, many of the financial internal controls are not as effective as they would be otherwise, were there a greater staff size. While there are certain tasks that, optimally, would be handled by multiple individuals to increase internal control, we have limited staff so that each staff member must complete more tasks in a given process, making the internal control potentially less effective. While we don’t have the staff size to maximize internal control strengths, we have analyzed the segregation of duties, and have implemented separation where the greatest risk of loss could occur.

2015-05 Finding – No review or sign-off on fuel usage reports:
During our review of internal controls, it was noted appropriate management does not formally review or sign-off on fuel usage reports.

Effect:
Without proper review or sign-offs on fuel usage reports, there is an increased risk of unauthorized use of City fuel.

Recommendation:
We recommend the City implement review and sign-off procedures on fuel usage reports in order to help prevent unauthorized usage of City fuel.

Management’s Response:

Agreed. In the past, fuel reporting was not being monitored as closely as it is now. Currently, the fuel usage report is run quarterly and is reviewed for any anomalies by the Streets Supervisor and Public Works Director, signed when approved, and retained.

2015-06 Finding – No supporting receipts for numerous City credit card purchases:
During our review of credit card statements, we noted numerous purchases without receipts (check no. 129239).

Effect:
Without retention of receipts, there is no way to substantiate credit card purchases, and there is an increased risk of unauthorized/unreasonable purchases being charged on the City credit card.

Recommendation:
We recommend City employees retain and submit receipts for all credit card transactions in order to prevent unauthorized transactions from being charged on the City credit card and retain for future verification.

Management’s Response:
Agreed. The City has taken the following steps to prevent unauthorized transactions:
• A new card has been issued to Admin Services Dept. and use is strictly monitored. (The card is used only by the Finance and Planning Department if absolutely necessary).
• Receipts are mandatory, and
• The purchase order must be approved by the Director of Budgets and Contracts or the Finance Manager.
The past problem of all Finance and City Admin staff having free access to the Admin Cal-Card has been resolved.

2015-07 Finding – Excessive use of override function at refueling station and lack of vehicle number on vehicle log:
During our review of gasoline usage, we noted the override function was used 65 times in December 2014 and March 2015. Additionally, no vehicle number was logged during 18 different fuelings in December 2014 and March 2015.

Effect:
With an excessive use of the override function over gasoline usage, there is a higher likelihood of unauthorized use of the City’s refueling station. Additionally, without a vehicle number being logged, there is no way to validate that the vehicle being fueled was an authorized City vehicle.

Recommendation:

We recommend the City cease the use of or disable the override function, and require that vehicle numbers be logged each time the City’s refueling station is accessed.

Management’s Response:
Agreed. The override situation has been addressed with a new locking covering and the override switch has been disabled.

2015-08 Finding – No approved position schedule for the 2014-15 fiscal year for non-safety employees:
During our review of payroll, we noted there was no approved position schedule for the 2014-15 fiscal year for non-safety employees.

Effect:
Without an approved position schedule for the 2014-15 there is no way to verify if the employees are being paid at the correct wage rate for their step and range. Also, employee vs. employer litigation could result.

Recommendation:
We recommend the City prepare an approved position schedule every fiscal year for all employees, in accordance with employment agreements.

Management’s Response:
Agreed. The City has been without a Human Resources Manager for a number of years, and some of the duties (specifically the ones that are not required in order to get employees paid in a timely and accurate manner) were not attended to. The Finance staff that processes payroll has picked up the necessary duties in order to process payroll, but has not had the time to pick up all of the duties of the HR Manager. The good news is that we hired a new Human Resources Manager last month, and this finding is on her list of issues to address.

2015-09 Finding – Firefighters are using the same employee ID to refuel the fire vehicles:

During our review of internal controls, we noted firefighters are using the same employee ID (#4334) to refuel the vehicles rather than having one unique ID per person.

Effect:
When firefighters use the same employee ID to refuel the vehicles, there is no way to track who is accessing the refueling station. This could lead to a misappropriation of fuel to occur and remain undetected.

Recommendation:
We recommend each firefighter be assigned their own one unique ID and that each firefighter use their individual unique ID each time during refueling of vehicles.

Management’s Response:
Agreed. Every firefighter is being assigned their own unique ID and each firefighter will use that ID during refueling of the vehicles.

2015-10 Finding – Deficiencies in police cash receipts:
During our review of internal controls, we noted there was no verification by Finance that all police receipts are accounted for when brought over to the Finance department (no tracking to ensure all days are accounted for). Also, we noted the police department cash receipts are reconciled and the deposit is prepared by an employee who is also one of the employees who receives payments and issues receipts.

Effect:
Without proper review of police receipts to ensure that all days are accounted for, there is no way to verify if any days are missing. Also, there is an increased risk of a misappropriation of funds to occur and remain undetected when there is a lack of segregation of duties in the cash receipts process.

Recommendation:
We recommend the Finance Department verify that all days are accounted for at the time of receipt. We also recommend segregation of duties be implemented in the Police Department so that cash receipts are not reconciled and deposited by an employee who is also one of the employees who receives payments and issues receipts.

Management’s Response:
Agree/Disagree. Agree that someone at PD, other than anyone who processes cash receipts should at least verify the reconciliation of cash receipts. The payments recap that Finance receives now has individual receipt numbers segregated by receipt type. Currently, no one reviews that each receipt number is accounted for, and that there are no gaps or double counting. Finance will develop a sign-off sheet that a supervisor at the Police Department can use to verify the numbering sequence is not broken. Finance will double check on our end before posting and depositing.
Finance currently receives the complete packet from the PD, re-counts the cash, checks and credit card receipts, verifies the reconciliation, signs as such, then makes the actual deposits (with the exception of the credit card deposits that are automatically posted by the bank).

2015-11 Finding – Payroll deficiencies:
During our test of payroll, we noted 3 timesheets lacked an employee signature, department signature or both; one W-4 form was missing an employee signature; one employment application was not obtained/retained; one PAR contained a different wage rate than what is being paid; two vacation accrual rates appeared to be incorrect; one employee is not having Medicare tax withheld; the salary schedule for safety employees with extra pay (2.5% and 5%) was calculated incorrectly; and two I-9 forms were not obtained/retained.

Effect:
Without proper approval and retention of personnel/payroll documents, we are unable to verify whether employees are being paid for the correct hours, whether they are being paid at the correct pay rate, or if compensatory time balances are correct. Additionally, missing I-9 forms could result in fines if the City were to be audited by the Department of Justice. Lack of employee signatures on W-4 forms and lack of an employment application could indicate fictitious employees.

Recommendation:
We recommend all timesheets, W-4 forms, I-9 forms, and employment applications be signed and retained for future verification. We also recommend vacation accrual rates be correctly calculated, that Medicare tax be withheld for all employees, and the salary schedule for safety employees with extra pay (2.5% and 5%) be correctly calculated.

Management’s Response:
Agreed. We have reviewed the documents in question as well as the policy that guides them.
There were oversights made related to procuring all required signatures and paperwork. We will institute a check and balance system to make sure that all signatures and paperwork are collected.

2015-12 Finding – Lack of procurement documentation:
During our test of procurement, we noted two instances out of four where proof of advertisement was not obtained/retained (Silveira and Government Staffing) and there was no record of the bid results for these two vendors.

Effect:
Without proper procurement documentation, we were unable to verify whether the City complied with required procurement procedures.

Recommendation:We recommend the City maintain records of all procurement procedures for future verification.

Management’s Response:
Disagree. There might be some confusion regarding where the relevant documentation resides. During the purchasing process, there are several people involved, and several files that get created: the project manager has important records, a copy of the contract will reside in the eventual accounts payable with Finance, the “advertisement” or relevant noticing will reside in the official publication of notice accounts payable file, also in Finance. In the two examples noted, there are files that contain either “tear sheets” or other methods that vouch for the fact that a noticing occurred. In the case of Government Staffing, the normal noticing requirements are not used, since we use Government Staffing to secure specialized governmental staffing, in this case, an interim City Clerk.

2015-13 Finding – Master fee schedule has not been approved annually:
During our test of cash receipts, we noted the master fee schedule has not been approved annually by the City Council.

Effect:
Without proper annual approval of the master fee schedule, we were unable to verify whether the City was charging the correct fees to customers.

Recommendation:
We recommend the City Council approve a master fee schedule on an annual basis.

Management’s Response:

Agree, but with a caveat. Agree with the fact that the City Council has not approved the master fee schedule for the past two years, but disagree with the assumption that the City Council does not routinely approve the master fee schedule annually. Last year, the City Council chose to not increase the master fee schedule by the normal CPI index amount, leaving it the same as the previous year, so the prior year rates were effectively adopted by default. For FY16-17, the Council is actively engaging with the public to change a number of fees and charges, but that dialog is not yet complete, and will be updated and approved when the new rates have been agreed upon.

2015-14 Finding – Deficiencies in cash disbursements:
During our test of cash disbursements, we noted the following: one purchase order was missing an approval signature (#130878); approval signatures are not recorded on the paid invoice; one purchase order was missing the preparer’s signature (#130941); and one invoice was not obtained/retained (#129896).

Effect:
Without proper approvals on invoices and purchase orders, and without the retention of invoices, we were unable to verify if the purchases were authorized. Also, there is an increase in the risk of unauthorized expenditures to occur and go undetected.

Recommendation:
We recommend there are approvals on invoice and purchase orders prior to payment. We also recommend all applicable invoices be retained for future verification.

Management’s Response:
Agreed. There have been instances where certain documents work their way through the process without the proper authorization. The issue here is not one of lacking a policy, but making sure that it is followed 100% of the time. We have modified our process a little in that two managers from the Finance Department are currently reviewing all purchase orders and initialing.

2015-15 Finding – Deficiencies in cash receipts:

During our test of cash receipts, we noted the following: two source documents were not obtained or retained (receipt numbers 02842 and 02932); three fees appeared to be calculated incorrectly (receipt numbers 02783, 02953, and 58922); one receipt could not be traced to the deposit slip or bank statement (receipt number 02783); and two fees could not be located in the fee schedule (receipt numbers 57653 and 59610).

Effect:
Without retention of source documents, we were unable to verify if the City charged the correct fees to the customer. Incorrectly calculated fees result in mischarging of customers.
Without being able to determine if the cash receipt was deposited to the bank, there is an increased risk of misappropriation of cash receipts to occur and remain undetected. Finally, with the lack of fees listed in the fee schedule, we were unable to verify whether the City was charging appropriate amounts for the services performed.

Recommendation:
We recommend the City retain all source documents involving cash receipts. We also recommend fees be calculated correctly and all cash receipts traceable to the bank statements.
Finally, we recommend the City includes all classifications of fees on the fee schedule.

Management’s Response:
Disagree. In reviewing the cash receipts cited, the City verified that, in some instances, the retention of source documents is not necessary. For example, a simple private tree trimming (2842) or a day use parking space that is documented in a log book (2932), we feel, is sufficient to verify correct fees. The application for a fixed location sign permit (59064) was properly accounted. The Police Department cash deposit receipt (2783) was verified as deposited on a combined July-August deposit and accounting was correct. Receipts 57653 and 59610 were verified as posting correctly to GL as storage fees and ASBS Storm Drain deposit respectively. The issue of the fee schedule is addressed in a separate finding. Additionally, starting immediately, the Planning & Building Department will start recording the receipt number in their database, as a cross reference.

Other Matters

2015-16 Finding – Lack of video cameras at the Corporation Yard:
During our review of internal controls, it was noted there are no video cameras installed at the Corporation Yard.

Effect:
Without a video camera at the Corporation Yard, there is a lack of oversight over the safeguarding of assets.

Recommendation:
We recommend the City place video cameras at the Corporation Yard to help detect unauthorized activity and to decrease the risk of a misappropriation of assets.

Management’s Response:
Agreed. The Police Department has agreed to include the purchase of a Corporation Yard surveillance system when they update their current police department surveillance system this fiscal year (FY16-17).

2015-17 Finding – The Public Works building has numerous inventory supplies that are not being used and are not properly safeguarded:

During our review of internal controls, we noted the Public Works building has numerous filters, brake pads, lights, belts, fuses and other auto supplies that are not being used anymore and are not properly safeguarded.

Effect:
With numerous outdated supplies not being safeguarded properly, there is an increased risk that those assets could be misappropriated and remain undetected.

Recommendation:
We recommend the City dispose of outdated inventory supplies and properly safeguard all remaining inventory supplies.

Management’s Response:
Agreed. We have changed our process related to this supplies inventory. For the existing auto parts inventory, it now resided in a locked cabinet, within a locked room at Public Works. Only three supervisors/managers have the keys. This inventory is obsolete and will be disposed of via auction. Current small auto parts will be purchased as needed.

2015-18 Finding – Petty cash was not safeguarded
During our audit of petty cash, we noted a majority of the petty cash for Community Services ($270) was not safeguarded in the petty cash box, but rather the cash and receipts were with an employee.

Effect:
There is the potential for the petty cash and receipts to be lost or misplaced when they are not properly safeguarded.

Recommendation:
We recommend petty cash and related receipts be safeguarded in a petty cash box at all times.

Management’s Response:
Agreed. In the incident cited, the employee had withdrawn petty cash, purchased items, and hadn’t yet returned the receipt and left over petty cash to the cash box. The process has been tightened up, and now the excess cash withdrawn and receipts are immediately returned to the cash box, which is kept in a locked safe.

2015-19 Finding – The COPS grant revenue was being recorded to fund balance instead of a revenue account:
During our audit of the financial statements, we noted COPS grant money was being recorded to fund balance instead of a revenue account.

Effect:
Misposting of revenues results in misstated financial statements.

Recommendation:
We recommend the City record COPS grant money to the appropriate revenue account instead of recording the revenue in the fund balance account.

Management’s Response:
Agreed. The “auto” coding for the receipt of our COPS grant was erroneously crediting this revenue to the fund balance instead of the revenue account. We have had this same error in prior years and corrected it for the financial statements.
For this year, we have corrected that coding, and now all COPS grant revenue is being posted correctly.

2015-20 Finding – No contract with Forest Theatre Guild for storage fees:
During our test of cash receipts, we noted there is no contract with the Forest Theatre Guild for storage fees of $135.

Effect:
Without a signed contract with Forest Theatre Guild, we were unable to verify whether the storage fees of $135 are correct.

Recommendation:
We recommend the City obtain and retain a signed contract with the Forest Theatre Guild.

Management’s Response:
Agreed. The contract had expired in the early 2000s, and the Guild has vacated the storage locker.

2015-21 Finding – Lack of approval signatures on credit card statements:
During our testing of internal control over credit card statements, we noted there were five out of six statements that did not contain an approval signature.

Effect:
Without proper approval signatures on credit card transactions, there is an increased risk of unauthorized credit card transactions occurring.

Recommendation:
We recommend responsible officials of the City review and approve all credit card transactions to ensure that the expenses are for allowable and appropriate purposes.

Management’s Response:
Agreed/Disagree. We do agree that we should have a policy where all credit card transactions are reviewed and signed by a responsible official of the City, but we do not agree that the examples do not have the above approval signatures. When we reviewed certain purchase orders/receipts, we did find that some of those receipts were signed by administrators in different places, not the designated areas. We will make sure that all approvers sign exactly where they are instructed, and that all purchases have approval signatures.

2015-22 Finding – Lack of audit committee:
During our review of policies and procedures, we noted the City does not have an audit committee.

Effect:
Lack of additional oversight occurs when there is no audit committee.

Recommendation:
We recommend the City form an audit committee for increased oversight.

Management’s Response:
Agreed. The addition of an Audit Committee to which the auditors would report would increase control and transparency to the City Council. If the City Council agrees, this could be in place for the next financial audit.

2015-23 Finding – Inconsistent use of time clocks:
During our review of internal controls, we noted only some departments, rather than all departments, were utilizing time clocks.

Effect:
Inconsistency in the reporting of hours worked could lead to misreporting of hours and incorrect payments to employees.

Recommendation:
We recommend all departments utilize time clocks in order to ensure consistent time reporting.

Management’s Response:
Agreed. In May, 2015, the City Administrator requested that time clocks be installed for use in the Public Works Department and the Library. In September, 2015 he requested they be removed. Time clocks are not currently being utilized for payroll timekeeping in any department.

2015-24 Finding – Deposit payable accounts and fee collection accounts have debit balances:
During our review of internal controls, we noted seven deposit payable accounts have debit balances and two fee collection accounts have debit balances.

Effect:
With deposit payable accounts and fee collection accounts having debit balances, the City has balances due from customers. Deposit accounts should never have balances due as the City may not be able to collect on the outstanding balances.

Recommendation:
We recommend the City attempt collection of all debit balances on deposit accounts. Fee collection accounts with debit balances should be investigated and adjusted accordingly.

Management’s Response:
Agreed. Of the seven non-fee collection accounts, one dates back to 6/30/2011, the others are more recent. We will work on figuring out what the balances represent and correct. The two fee collection accounts have had positive balances of similar balances since 6/30/2011. We will work on figuring out what that represents and correct. With the implementation of the new finance system, we will be utilizing a more proper accounts receivable system to track these types of transactions, and we should not have the same issues in the future.

2015-25 Finding – One check issued out of sequence and one outstanding check over one year old:
During our audit of cash, we noted one check was issued out of sequence (check #3140 was issued on July 2, 2015, while #3141-3142 were issued on June 30, 2015). We also noted one outstanding check that was over one year old (check #2167, dated April 23, 2013).

Effect:
Checks being issued out of sequence makes it more difficult to perform bank reconciliations as well as ensuring the accounting of all checks. Stale dated checks could cause the cash balance to be inappropriately understated.

Recommendation:
We recommend the City issue all checks in numerical sequence and all outstanding checks that are over one year old should be investigated, sent to the state as escheat property, or written off/voided.

Management’s Response:
Agreed. We will make sure that all checks are issued in sequence and that all stale dated checks have been voided and off of the bank reconciliations.

2015-26 Finding – Petty cash is listed at incorrect amount:
During our review of internal controls, we noted the petty cash is listed as $460, yet the actual petty cash count was $230.

Effect:
The petty cash is overstated in the general ledger, resulting in an incorrect balance on the financial statements.

Recommendation:
We recommend the City reconcile and count the petty cash on a regular basis, and that the petty cash be recorded in the general ledger accurately.

Management’s Response:
Agreed. The City has multiple petty cash locations: City Hall, Police Department and the Library (2 locations). The balances in each of these locations are as follows: City Hall - $250, Police Department - $100, Library #1 - $100, Library #2 - $275, for a total of $725.00. On the general ledger, the City shows two “Petty Cash” accounts. One is listed at $725.00, and the other at $150.00. In 2007, a petty cash fund was established for the Fire Department, but was discontinued in 2011. The lock box was returned to Finance, the contents (less receipts) were deposited to bank. The Petty Cash listed is now correct.