SR-11-13-2012-3MSuccessor Agency Meeting: November 13, 2012
Agenda Item: 3® M
To: Chairperson and Successor Agency
From: Andy Agle, Director of Housing and Economic Development
Subject: Due Diligence Reviews for the Successor Agency
Recommended Action
Staff recommends that the Successor Agency authorize the Executive Director to
negotiate and execute an amendment to the professional services agreement
No. 9373 (CCS) with Macias, Gini and O'Connell to perform two Due Diligence Reviews
in accordance with ABX1 26 and AB1484, in an amount not to exceed $78,281.
Executive Summary
Pursuant to Assembly Bill (AB) 1484, the Successor Agency is required to employ a
licensed accountant, approved by the Los Angeles County Auditor - Controller, to
conduct Due Diligence Reviews (DDRs) of the Successor Agency's accounts. The
purpose of the DDRs is to determine the unobligated balances available, if any, for
transfer from the Successor Agency to the affected taxing entities (ATEs). On August 2,
2012, the County Auditor - Controller approved the Successor Agency's request to retain
Macias, Gini and O'Connell (MGO) to undertake the preparation of both DDRs.
Background
Sections 34179.5 and 34179.6 of the California Health and Safety Code require that
each successor agency employ a licensed accountant, approved by the county auditor -
controller and with experience and expertise in local government accounting, to conduct
DDRs of the remaining assets of each former redevelopment agency and determine the
unobligated balances available for transfer from each successor agency to the county
auditor- controller's trust fund for redistribution to other ATEs.
AB 1484 requires two separate DDRs to be prepared. The first DDR relates to the
housing assets of the former Redevelopment Agency and the second DDR relates to all
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other assets. The DDRs must be submitted to the Santa Monica Redevelopment
Successor Agency Oversight Board (Oversight Board) for review and approval.
Following Oversight Board approval, DDRs must be submitted to the state Department
of Finance (DOF), Los Angeles County Auditor - Controller, Los Angeles Chief
Administrative Officer and the State Controller's Office, as required by AB 1484.
Both DDRs must be completed according to strict schedules.
Following a competitive process, Council approved a five -year contract with MGO for
$675,000 to provide auditing services for various City departments, including the former
Redevelopment Agency, now the Successor Agency, on May 10 2011. To date, MGO
has conducted an audit of the former Redevelopment Agency for the year ending
June 30, 2011, and was recently retained by the Los Angeles County Auditor - Controller
to complete the Redevelopment Agreed -Upon Procedures Audit of the former
Redevelopment Agency as required per AB 1X26.
Discussion
Based on MGO's extensive audit experience, their familiarity with the former
Redevelopment Agency's accounting records, and the limited time constraints for
completion of the DDRs, staff forwarded a written request to the Los Angeles County
Auditor - Controller requesting approval for MGO to conduct and prepare the DDRs.
The County Auditor - Controller approved MGO as the DDR auditor for Santa Monica.
Staff recommends that the Successor Agency amend the existing contract with MGO to
include preparation and completion of the DDRs in order to provide the necessary
auditing services required by state law.
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Financial Impacts & Budget Actions
The professional services agreement amendment to be awarded to Macias, Gini and
O'Connell to conduct due diligence reviews in accordance with ABX1 26 and AB1484 is
not to exceed $78,281, for a new agreement total of $753,281. Expenses will be paid
from funds received by the Successor Agency from Redevelopment Property Tax Trust
Fund (RPTTF) distributions, to the extent authorized by DOF. The contract costs will be
charged to account 01263.555060.
Prepared by: Elsa Trujillo, Senior Development Analyst
Approved:
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Andy Agle, Director < --J
Forwarded to Council:
Rod Gould
Housing and Economic Development City Manager
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Reference
Amended Contract
No. 9373 (CCS).