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OKAY,

[00:00:01]

THANK YOU EVERYONE.

WELCOME TO

[Audit Committee Meeting]

THE IDES OF MARCH, MARCH 15TH, 2020, UH, AUDIT COMMITTEE MEETING FOR THE GARLAND CITY COUNCIL.

MY NAME IS RICH ALBAN.

I AM THE CHAIR OF THE AUDIT COMMITTEE WITH ME TODAY.

I HAVE DEPUTY MAYOR PRO TEM, DEBRA MORRIS, AND COUNCILMAN BJ WILLIAMS CALLS OUR CITY AUDITOR, TED JOHNSON, CITY MANAGER, BRIAN BRADFORD, AND OTHER LUMINARIES.

UH, WHY DON'T WE GO AHEAD AND GET STARTED.

THE FIRST ITEM ON THE AGENDA IS APPROVAL OF THE DECEMBER 15TH, 2020 MEETING MINUTES.

SO RENEE HAD A CHANCE TO LOOK THEM OVER ANY QUESTIONS OR ISSUES, ALL CONTAIN EMOTION.

CHERA SOMO FOUR-POLE.

CAN WE HAVE A MOTION TO HAVE A SECOND? I'LL SECOND IT, BUT I CAN'T SEE ANYBODY ANYMORE BECAUSE OF THE SCREEN.

SO, YEAH.

UM, I DON'T THINK WE NEED THE RIGHT.

UH, WE HAVE A MOTION TO SECOND ALL IN FAVOR.

AYE, AYE.

AND WITH THAT THERE UNANIMOUSLY APPROVED.

UM, GET, IF YOU WANNA SEND THOSE TO ME OR I'LL SEND A COPY TO YOU, I'LL SIGN IT ELECTRONICALLY AND SEND THEM TO YOU.

UH, ITEM NUMBER TWO ON THE AGENDA IS THE WEAVER PRESENTATION.

SO JEN, I'LL TURN IT OVER TO YOU.

THANK YOU, CHAIRMAN.

GOOD AFTERNOON, EVERYONE.

THANK YOU FOR BEING HERE TODAY.

TODAY WE HAVE SARAH DEMPSEY, WHO IS THE PARTNER IN CHARGE AND CLAIRE WOOTEN, WHO IS THE SENIOR MANAGER FROM VIVRE.

UM, I DON'T NEED TO INTRODUCE THEM ANYMORE.

THEY ARE FAMILIAR FACES, UH, SINCE THEY'VE BEEN COMING BACK FOR A NUMBER OF YEARS NOW, UH, THE REASON WHY THEY'RE HERE, UH, THEY HAVE COMPLETED THEIR FINANCIAL AUDITS.

THEY'RE SINGLE AUDITS.

AND SO THEY HAVE PREPARED A PRESENTATION FOR THE COMMITTEE.

UH, SO I WILL TURN IT OVER TO SARAH AT THIS POINT TO GO OVER THE PRESENTATION.

OKAY, GREAT.

I'LL SHARE MY SCREEN.

OKAY.

CAN YOU SEE IT? YES.

OKAY.

WELL THANK YOU FOR HAVING US TODAY.

MY NAME IS SARAH DEMPSEY AND CLAIRE IS LITERALLY TODAY.

SHE'S THE SENIOR MANAGER ON THE ENGAGEMENT.

WE'RE GOING TO DO A QUICK INTRODUCTION, UH, GO THROUGH OUR AUDIT PROCESS AND THE AUDIT RESULTS, AND THEN DO SOME OF OUR COMMUNICATIONS.

WE HAVE, UM, THEY'RE PRETTY STANDARD EVERY YEAR.

UH, AND IF YOU HAVE ANY QUESTIONS AT THE END, WE'D LOVE TO ANSWER ANY QUESTIONS THAT YOU HAVE ABOUT THE AUDIT OR ANYTHING THAT WE CAN HELP WITH.

SO I'M IN CHARGE OF OUR GOVERNMENT SERVICES GROUP FOR THE FIRM.

AND CLAIRE HAS BEEN A LONG MEMBER OF THE GROUP AS WELL.

FOR 11 YEARS, WE DO A LOT OF CITY AUDITS.

SO, UH, IT WAS GOOD TO HAVE PERSPECTIVE OF GARLAND VERSUS A LOT OF THE CITIES THAT WE HAVE.

WE HAVE ABOUT, UM, 12 STUDIES THAT ARE IN THE TOP ONE 50 IN THE NATION.

UM, AND UH, ONLY HAS ABOUT 18 OF THOSE.

SO WE'RE DOING A LOT OF THE LARGE ONES AND A GOOD COMPARISON.

UH, ONE THING THAT WE NOTICED ON THE AUDIT WAS THAT GARLAND STARTED ON TIME.

THIS YEAR WAS VERY CHALLENGING AND THAT DID NOT HAPPEN ON A LOT OF OUR CITY AUDITS.

SO WE REALLY APPRECIATE THAT.

THEY STUCK TO THE TIMELINE, AND I KNOW IT'S A LOT OF EFFORT TO GET THROUGH EVERYTHING THAT HAD TO BE DONE THIS YEAR AND, AND GET THE AUDIT READY AS WELL.

SO, SO WE DO APPRECIATE THAT OUR AUDIT PROCESS IS A RISK-BASED APPROACH.

SO EVERY YEAR WE TAKE A LOOK AT WHAT'S NEW THAT'S HAPPENED, WHERE COULD THERE BE A RISK OF MATERIAL MISSTATEMENT IN THE FINANCIAL STATEMENTS? SO WE RECEIVED THE COMPREHENSIVE ANNUAL FINANCIAL REPORT FROM THE CITY.

THEY PREPARE THE DOCUMENT, UH, AND DURING THAT PROCESS, WE'RE AUDITING THE BALANCES WITHIN THAT DOCUMENT.

SO WORKS FOCUSING ON ENTERPRISE FUND REVENUES, YOUR ELECTRIC, YOUR WATER.

UH, WE'RE ALSO LOOKING AT THE GRANT REVENUES AND EXPENDITURES.

ANYTHING THAT COULD GET A GRANT PULLED AWAY WOULD BE CONSIDERED MATERIAL, UH, YOU KNOW, A LOSS OF SIGNIFICANT FUNDING, CAPITAL PROJECTS, THE BIDDING PROCEDURES, UNRECORDED LIABILITIES, MEANING SOMETHING THAT SHOULD BE RECORDED AS A LIABILITY AND EXPENDITURE AT YEAR END.

UM, BUT IT WAS MISSED.

SO, UH, UH, SEARCH FOR UNRECORDED LIABILITIES.

AND THEN WE DO SOME DATA MINING, UH, WHERE WE RECEIVE THE CHECK REGISTERS AND THE GL DETAIL.

AND WE GO THROUGH WITH, UH, OUR ANALYTICS SOFTWARE AND JUST PULL OUT UNUSUAL ITEMS THAT ARE DEEMED UNUSUAL AND NEED TO BE TESTED FURTHER.

WE ALSO DO COMPLIANCE AND CONTROL RELATED TESTING.

SO THIS YEAR FOR THE SINGLE AUDIT, YOU HAD YOUR CORONA VIRUS RELIEF FUNDS THAT WE AUDITED, UH, YOUR DRINKING WATER LOAN,

[00:05:01]

REVOLVING FUND LOAN, AND THEN THE PLEASANT VALLEY ROAD.

SO THOSE THREE PROGRAMS ARE YOUR MAJOR PROGRAMS THIS YEAR.

UH, THE CORONAVIRUS RELIEF FUNDING AND THE DRINKING WATER WAS ABOUT 40% OF FEDERAL REV, UH, FEDERAL EXPENDITURES THIS YEAR.

SO WE GOT A SIGNIFICANT AMOUNT OF COVERAGE, UH, BASED ON THE LARGE DOLLAR AMOUNT THAT, THAT YOU DID RECEIVE.

WE ALSO TEST INTERNAL CONTROLS.

SO WE'RE LOOKING AT THE CONTROLS OVER PAYROLL CASH, DISBURSEMENTS JOURNAL ENTRIES, MAKING SURE THAT THERE'S NOT MANAGEMENT OVERRIDE OF CONTROLS FOR AREAS THAT WE TEST, JUST TO GIVE YOU AN IDEA OF WHAT WE'RE DOING FOR ALL THOSE WEEKS OUT THERE.

UH, WE'RE LOOKING AT GOVERNANCE, WE'RE READING THE MINUTES, WE'RE DOING ACCOUNT INQUIRIES ON SIGNIFICANT CHANGES AND ACCOUNT BALANCES.

AND THEN WE'RE PULLING THE DOCUMENTS THAT SUBSTANTIATE THOSE BALANCES.

WE'RE DOING FRAUD DEPRESSIONS WITH EMPLOYEES, UH, IN MANAGEMENT POSITIONS AND THEN IN LOWER LEVEL POSITIONS AS WELL.

WE DO, I TEACH CONTROL REVIEW FROM OUR IT WE'VE HEARD THAT IT SERVICES.

AND THEN WE'RE LOOKING AT THE, THE ADEQUACY OF THE NOTE DISCLOSURES WHEN WE RECEIVED THE REPORT, IS EVERYTHING IN THERE THAT SHOULD BE THAT YOUR TAX COLLECTIONS, UM, CAPITAL ASSETS, INVESTMENTS, BOND ISSUANCES, AND THEN A LANDFILL CLOSURE AND POST CLOSURE INFORMATION FOR THE AUDIT THIS YEAR, YOU HAVE AN UNMODIFIED OPINION IN YOUR FINANCIAL STATEMENTS.

THAT'S THE HIGHEST LEVEL OF ASSURANCE THAT WE CAN PROVIDE FROM OUR AUDIT.

THERE'S NO MODIFICATIONS OR ANYTHING TO POINT OUT TO YOU.

WE HAD NO MATERIAL WEAKNESSES AND NO SIGNIFICANT DEFICIENCIES TO REPORT.

THOSE WOULD STEM FROM OUR INTERNAL CONTROL TESTING, AS WELL AS OUR FINANCIAL STATEMENT.

UM, OUR AUDIT WORK AND WE'RE ALSO DOING, UM, TESTING OVER COMPLIANCE WITH NOT ONLY GRANTS AGREEMENTS, BUT CONTRACTS, AND THEN THE PUBLIC FUNDS INVESTMENT ACT, STATE REGULATIONS AS WELL.

AND THERE ARE NO, UM, DIRECT MATERIAL NON-COMPLIANCE ISSUES TO BRING TO YOUR ATTENTION, UH, FOR THE FEDERAL AND STATE AWARDS.

AGAIN, IT WAS CORONAVIRUS RELIEF FUNDING THIS YEAR AND THE DRINKING WATER PROGRAM, AS WELL AS PLEASANT VALLEY ROAD THAT YOU SEE DOWN AT THE BOTTOM HIGHLIGHTING THOSE MAJOR PROGRAMS. WHAT WE HAVE TO DO IS WE ISSUE THE SINGLE AUDIT REPORT, AND WE HAVE TO ISSUE AN OPINION ON THOSE PROGRAMS AND DETERMINE, YOU KNOW, WERE THEY DIRECT MATERIALLY IN COMPLIANCE WITH THE COMPLIANCE SUPPLEMENT THAT, THAT WE RECEIVE FROM THE OMB ON THOSE PROGRAMS AND, AND THEY WERE, SO YOU HAVE AN UNMODIFIED OPINION ON YOUR THREE MAJOR PROGRAMS THAT YOU SEE THERE.

GARLAND IS A LOW-RISK ODDITY.

SO WE'RE ONLY REQUIRED TO GET 20% COVERAGE, BUT BECAUSE OF THE DOLLAR AMOUNTS THAT WE HAD THIS YEAR, UH, WE ENDED UP GETTING 40%.

SO THAT WOULD BE 40% IS THE HIGH-RISK ODDITY THRESHOLD THAT YOU WOULD HAVE TO TEST, BUT GARLAND IS THE LOWER SCOTTIE.

AND WHAT THAT MEANS IS THERE HASN'T BEEN MATERIAL WEAKNESSES IN THE PREVIOUS TWO AUDITS.

UM, AND IF THERE HAD BEEN, YOU HAD JUMPED TO A HIGH RISK ODYSSEY AND WE WOULD SELECT MORE FOR TESTING.

UM, THERE ARE NO MATERIAL WEAKNESSES THAT WE FOUND WHEN WE AUDITED THE PROGRAMS, UH, CORONAVIRUS RELIEF FUNDING WAS NEW.

THE COMPLIANCE SUPPLEMENT DIDN'T COME OUT UNTIL DECEMBER OF 2020, BUT DURING THE YEAR, UH, FREQUENTLY ASKED QUESTIONS WERE COMING OUT.

THE COUNTY WAS PROVIDING SOME GUIDANCE.

THE STATE WAS PROVIDING GUIDANCE AS WELL.

SO WE WERE ABLE TO CREATE A PROGRAM.

IT WAS JUST A MOVING TARGET IF YOU WILL, BECAUSE NOTHING HAD NECESSARILY BEEN SOLIDIFIED, BUT UNTIL THE END OF THE YEAR.

SO WE WERE KEEPING UP WITH THE FREQUENTLY ASKED QUESTIONS.

UM, AND THAT WAS A DIFFICULT PROGRAM THIS YEAR, FOR SURE.

UH, THE DRINKING WATER REVOLVING LOAN IN THE PLEASANT VALLEY ROAD.

UM, ALSO NO MATERIAL WEAKNESSES AND, UH, NO SIGNIFICANT DEFICIENCIES TO REPORT ON THOSE PROGRAMS AS WELL.

I GO THROUGH THESE REQUIRED COMMUNICATIONS WITH YOU, BUT WE CAN STOP AND PAUSE IF ANYONE WANTS ANY QUESTIONS ABOUT WHAT I'VE TALKED ABOUT AT THIS POINT, OR WE CAN KEEP GOING.

LET'S SEE, EXCUSE ME.

I DON'T SEE ANY QUESTIONS.

SO WHY DON'T WE GO AHEAD AND KEEP GOING BACK.

OKAY, GREAT.

ALL RIGHT.

WELL, I'M GOING TO GO AHEAD AND JUMP IN HERE AND GO OVER THE REQUIRED COMMUNICATIONS.

SO FIRST OF ALL, UM, WE AS AUDITORS HAVE A RESPONSIBILITY UNDER THE GENERALLY ACCEPTED AUDITING STANDARDS.

SO THE FINANCIAL STATEMENTS THAT ARE PREPARED BY MANAGEMENT ARE THE RESPONSIBILITY OF THE CITY IN OUR AUDIT,

[00:10:01]

WHICH WE'RE ISSUING THE OPINION ON, UM, WAS DESIGNED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING STANDARDS TO PROVIDE REASONABLE RATHER THAN ABSOLUTE ASSURANCE, THAT THE FINANCIAL STATEMENTS WERE FREE FROM MATERIAL MISSTATEMENT.

AND WE, OUR AUDIT HAS BEEN COMPLETED AND WE'VE ISSUED AN UNMODIFIED REPORT JUST LIKE SARAH SAID, THE NEXT IS OUR RESPONSIBILITY UNDER GOVERNMENT AUDITING STANDARDS.

SO IN ADDITION TO THOSE GENERALLY ACCEPTED AUDITING STANDARDS, WE ALSO ARE REQUIRED TO ISSUE A WRITTEN REPORT REPORT OVER THE CONSIDERATION OF INTERNAL CONTROLS AND IDENTIFY ANY OF THOSE SIGNIFICANT DEFICIENCIES OR MATERIAL WEAKNESSES AND BRING THOSE TO YOUR ATTENTION.

BUT LIKE SARAH MENTIONED IN THE RESULTS, UM, WE HAD NO FINDINGS, NO SIGNIFICANT DEFICIENCIES OR MATERIAL WEAKNESSES TO BRING TO YOUR ATTENTION.

NEXT IS OUR RECENT RESPONSIBILITY UNDER UNIFORM GUIDANCE.

AND THAT COVERS THE FEDERAL SIDE AND THEN THE UNIFORM GRANT MANAGEMENT STANDARDS, WHICH COVERS THE STATE SIDE.

UM, SO AGAIN, LIKE SARAH SAID, OUR TESTING INCLUDES THE MAJOR FEDERAL AND STATE PROGRAMS, AND WE'RE REQUIRED TO REPORT ON THAT TESTING, UM, TO DISCLOSE ANY SIGNIFICANT DEFICIENCIES IN INTERNAL CONTROLS, SILVER COMPLIANCE, ET CETERA.

UM, AND SO WE HAVE COMPLETED THAT SINGLE AUDIT TESTING AND WE'VE, UM, ISSUED AN UNMODIFIED OPINION OVER BOTH THE STATE AND FEDERAL SINGLE AUDIT PROGRAM, MAJOR PROGRAMS. UM, NEXT IS ANY UNUSUAL TRANSACTIONS AND THEN THE ADOPTION OF NEW ACCOUNTING PRINCIPLES.

SO FIRST OF ALL, THE, UM, SIGNIFICANT ACCOUNTING POLICIES THAT ARE USED BY THE CITY ARE DESCRIBED IN NOTE ONE TO THE FINANCIAL STATEMENTS.

UM, SO THOSE ARE THERE FOR YOU ALL TO SEE.

UM, NEXT IS THE CITY IMPLEMENTED TWO NEW GASPE STATEMENTS IN FISCAL 20.

THE FIRST IS GASPE STATEMENT 89, WHICH, UM, DISCONTINUED THE CAPITALIZATION OF INTEREST PREVI PREVIOUSLY, THE CITY HAD BEEN ALLOWED TO, UM, CAPITALIZE INTEREST ON CAPITAL PROJECTS.

UM, BUT NOW IT'S NOT ALLOWED TO ANYMORE BECAUSE OF GATSBY 89, EXCEPT FOR THOSE UNDER-REGULATED OPERATIONS AS DEFINED BY 89.

AND SO THAT INCLUDES NOW ONLY THE ELECTRIC FUND.

SO THEY, THE CITY IS STILL ALLOWED TO CAPITALIZE INTEREST ON THOSE ON THE ELECTRIC FUND, BUT NOW HAS TO CONSIDER THE ASSETS THAT THEY'RE CAPITALIZING A REGULATORY ASSET.

SO THAT HAS BEEN IMPLEMENTED IN FISCAL 20.

THE OTHER ONE THAT WAS IMPLEMENTED IN 20 IS GASPE STATEMENT 95, AND THAT WAS ISSUED BY GATSBY PRETTY EARLY ON IN FISCAL 20 DUE TO THE PANDEMIC.

AND THAT WAS IT JUST, YOU LAID BE EFFECTIVE DATES OF MANY, UM, UPCOMING STATEMENTS.

SO GASBY 84, WHICH WAS THE BIG ONE THAT WAS SUPPOSED TO BE IMPLEMENTED THIS YEAR.

UM, IN FISCAL 20 IS NOW GOING TO BE IMPLEMENTED NEXT YEAR IN 21, AND THEN GATSBY 87, WHICH IS THE BIG ONE ON LEASES IS NOW GOING TO BE IMPLEMENTED IN 22, THE SCHOOL 22.

SO THAT ONE JUST EXTENDED THE EFFECTIVE DATES.

NEXT IS ANY DIFFICULTIES ENCOUNTERED.

AND THE, UM, CAME INTO NO DIFFICULTIES OR DISAGREEMENTS WITH MANAGEMENT DURING THE COURSE OF THE AUDIT.

THE AUDIT WENT REALLY SMOOTHLY AND ON TIME, UM, ALSO WE REQUESTED CERTAIN REPRESENTATIONS FROM MANAGEMENT AND THEY, UM, PROVIDED THEIR MANAGEMENT REPRESENTATION LETTER TO US DATED MARCH 10TH.

AND THAT WAS THE DATE.

UM, WE ISSUED THE OPINION NEXT IS, UM, UH, AUDITOR INDEPENDENCE.

AND SO THERE ARE NO INDEPENDENCE ISSUES, UM, ON THE AUDIT TEAM OR AS WELL WITH THE FIRM, UM, BETWEEN US AND THE CITY OF GARLAND.

AND THEN, UM, ALSO THE THERE'S, UH, WE'RE REQUIRED TO POINT OUT TO YOU THAT THERE IS INFORMATION IN THE COMPREHENSIVE ANNUAL FINANCIAL REPORT, UM, THAT YOU ALL HAVE THAT IS CONSIDERED UNAUDITED, AND THAT IS THE MANAGEMENT'S DISCUSSION AND ANALYSIS AND THE REQUIRED SUPPLEMENTARY INFORMATION.

UM, THOSE WE PROVIDE PERFORM LIMITED PROCEDURES ON, UM, LIKE WE COMPARE THE MTNA TO LIKE THE INFORMATION IN THERE TO THE BASIC FINANCIAL STATEMENTS, UM, AND MAKE SURE EXPLANATIONS AND FOR REASONS FOR INCREASES AND DECREASES ARE COMPARABLE TO WHAT WE'VE AUDITED.

UM, BUT WE DO NOT PROVIDE AN OPINION ON, UM, THE M DNA OR THE R OR THE REQUIRED SUPPLEMENTARY INFORMATION.

UM, NEXT IS, UH, MANAGEMENTS, UH, ACCOUNTING ESTIMATES, OUR ESTIMATES THAT ARE INCLUDED IN THE COMPREHENSIVE ANNUAL FINANCIAL REPORT THAT WE TEST AND MAKE SURE APPEAR REASONABLE IN COMPARISON TO THE FINANCIAL STATEMENTS.

AND THOSE INCLUDE ALLOWANCES FOR UNCOLLECTABLE RECEIVABLES.

SO ON YOUR TAXES OR ON YOUR UTILITY RECEIVABLES, YOUR ESTIMATED USEFUL LIVES OF CAPITAL ASSETS, PENSION, AND OPEB.

AND SO THOSE ARE ONES WHERE THEY'RE ACTUARIAL VALUATIONS.

THEY COME FROM ACTUARIES, YOUR POST CLOSURE COSTS, IB AND OUR LIABILITY.

SO FOR YOUR SELF-INSURANCE FUNDS, A FAIR VALUE OF DERIVATIVE INSTRUMENTS AND INVESTMENTS, AND THEN THE ASSET

[00:15:01]

RETIREMENT OBLIGATION, AND THOSE ARE, UH, EVALUATED INDIVIDUALLY AND THEN DETERMINED TO BE REASONABLE IN RELATION TO THE FINANCIAL STATEMENTS.

AND THEN NEXT, THIS IS KIND OF TALKING ABOUT, UM, WHAT I WAS JUST TALKING ABOUT USING, UM, OTHER, UM, ENTITIES TO MAKE SURE MANAGEMENT'S ESTIMATES ARE REASONABLE.

THERE'S A NUMBER OF, UM, DIFFERENT ENTITIES THAT WE UTILIZE TO, UM, ALONG IN OUR TESTING, LIKE DONE IN DILL, CPAS ARE THE AUDITORS OF THE GARLAND HOUSING FINANCE CORPORATION.

AND THAT G HFC IS CONSIDERED A DISCRETELY PRESENTED COMPONENT UNIT AT THE CITY.

AND SO WE OBTAIN THEIR AUDITED FINANCIAL REPORT AND UTILIZE THOSE NUMBERS IN THE CITY'S, UM, ANNUAL REPORT.

AND SO, UM, WE MAKE REFERENCE TO THEM IN OUR OPINION.

AND, UM, SO WE JUST PERFORM A COUPLE OF PROCEDURES TO MAKE SURE, UM, WE CAN UTILIZE THAT REPORT.

UM, ALSO NEXT IS OUR WEAVER IT ADVISORY SERVICES.

UM, THEY ARE THE ONES DOING THE TESTING OVER THE, UM, YOU KNOW, LOGICAL ACCESS AND DIRECT, DIRECT ACCESS OF, OF THE CITY'S, UM, INFORMATION TECHNOLOGY.

WE ALSO UTILIZE INTERACTIVE DATA COMPANY, WHICH IS A, UM, A COMPANY THAT WE LOG INTO TO MAKE SURE WE TEST THE FAIR VALUE OVER INVESTMENTS.

NEXT IS GRS WHO PROVIDES ACTUARIAL VALUATIONS FOR TLRS ON THE PENSION AND THE CITIES, UM, A SIMPLE MENTAL DEATH BENEFIT FUND, WHICH IS AN OPEB.

AND THEN HOME SMURFY PROVIDES THE ACTUARIAL VALUATION OF THE CITY.

AND OTHER OF THE CITY'S OPEC, THE, UH, MEDICAL PLAN, AND THEN MILLIMAN IS ANOTHER ACTUARY WE UTILIZE FOR WORKERS' COMPENSATION, GENERAL LIABILITY, AUTO LIABILITY AND LONGTERM DISABILITY PROGRAMS, WEAVER WEAVER BOOZE IS THE LANDFILL PROVIDES AN ESTIMATE OF THE LANDFILL CLOSURE COSTS.

AND THEN LASTLY, UM, HILLTOP FOR THE ARBITRAGE REBATE CALCULATION.

AND THEN, UM, LASTLY ON HERE WE USE INTERNAL AUDIT.

UM, DURING OUR TESTING, THEY HELP US PERFORM CASH, DISBURSEMENTS CONTROL, TESTING, PAYROLL, DISPERSANTS CONTROL TESTING, AND THEN THEY, UM, TEST UTILITY BILLING FOR US.

SO THAT'S, UM, RECALCULATING THE BILL.

UM, THE BILL IS SENT TO CUSTOMERS FOR ELECTRIC WATER, SEWER, SOLID WASTE AND STORM WATER.

AND THEN ALSO WE WERE ABLE TO, UM, PIGGYBACK OFF THE TESTING.

THEY'D ALREADY PERFORMED FOR THE CORONAVIRUS RELIEF FUND.

CAUSE I KNOW THEY DID A LOT OF THAT DURING THE YEAR.

AND SO WE WERE ABLE TO UTILIZE A LOT OF THEIR TESTING FOR THAT MAJOR PROGRAM AS WELL.

OKAY.

AND THEN, UM, LASTLY ON OUR REQUIRED COMMUNICATIONS, WE'RE JUST REQUIRED TO NOTIFY YOU ALL HAVE ANY AUDIT ADJUSTMENTS OR PAST AUDIT ADJUSTMENTS.

SO AUDIT ADJUSTMENTS, BEING THOSE ADJUSTMENTS THAT WERE, WE BROUGHT TO MANAGEMENT MANAGEMENT'S ATTENTION AND THEY, UM, UH, BOOKED, BUT WE DID NOT, UM, HAVE ANY ADJUSTMENTS THAT WE IDENTIFIED THAT THEY, THEY IDENTIFIED ANY CHANGES DIRECTLY OR AME AND BOOKED THOSE THEMSELVES.

UH, WE DID NOT IDENTIFY ANY, ONCE WE RECEIVED THE AUDIT OR ONCE WE RECEIVED THE CITY'S FINAL NUMBERS, AND THEN THERE WERE NO PAST ADJUSTMENTS.

AND SO THOSE ARE ADJUSTMENTS THAT ARE, YOU KNOW, UH, ABOVE OUR PAGGI THRESHOLD OR PAST ADJUSTMENT THRESHOLD, BUT, UM, LOW ENOUGH NOT TO PASS ON.

WE DIDN'T IDENTIFY ANY OF THOSE AS WELL.

AND THEN LASTLY, THERE WERE NO OTHER COMMUNICATIONS BETWEEN US AND MANAGEMENT THAT YOU ALL ARE NOT AWARE OF.

YOU'LL HAVE ANY FURTHER QUESTIONS OR WANT TO BREAK DOWN ANYTHING FURTHER THAT WE'VE TALKED ABOUT REAL QUICK, THANK YOU TO EVERYONE.

IT WAS A REALLY GOOD AUDIT, ESPECIALLY CONSIDERING THE YEAR THAT EVERYONE HAD AND ALSO COMPARING BERLIN TO OTHER CITIES.

I REALLY JUST WANT TO SAY, THANK YOU.

THEY STAYED ON TOP OF THE CORONAVIRUS RELIEF FUNDING AND MONITORING THAT, SO THAT HELPED MAKE THE AUDIT GO A LOT MORE SMOOTHLY AS WELL.

BUT IF, IF YOU HAVE ANY QUESTIONS, WE'RE HERE TO HELP COUNCIL MEMBER WILLIAMS. THANKS MR. CHAIR.

THANK YOU ALL FOR THE INFORMATION.

I'VE JUST GOT ONE GENERAL QUESTION REGARDING THE COVID RELIEF FUND AND A WATER RELIEF LOAN.

THERE WERE NO, THERE WERE NO MATERIAL FINDINGS OF WEAKNESSES.

WERE THERE ANY SIGNIFICANT AREAS OF RECOMMENDATIONS OR AREAS FOR IMPROVEMENT THAT YOU CAN SHARE? WHAT'S THE SNOWS OUT OF THOSE AREAS? NOT, NOT THAT REACHED A REPORTING LEVEL AND NOT BEING IDENTIFIED DURING OUR TESTING WHERE WE WOULD DO.

UH, SO THERE'S DIFFERENT LEVELS OF INTERNAL CONTROL ISSUES.

YOU CAN HAVE A DEFICIENCY WHICH CAN BE COMMUNICATED VERBALLY AND THEN SIGNIFICANT DEFICIENCY

[00:20:01]

AND MATERIAL WEAKNESS ARE REQUIRED TO BE REPORTED.

AND WE DIDN'T HAVE ANY THAT WE FELT NEEDED TO BE REPORTED.

WE DIDN'T HAVE ANY THAT WE, THAT WE TAUGHT EITHER BECAUSE THEY HAD DONE SO MUCH FRONT END WORK ON MAKING SURE THAT THE COSTS WERE ALLOWABLE AND THAT THE ACTIVITIES WERE ALLOWABLE FOR THOSE PROGRAMS THAT WHEN WE GOT TO IT, IT WAS EVERYTHING HAD BEEN SUBSTANTIATED.

ALL RIGHT.

THANKS VERY MUCH.

THANK YOU, MR. CHAIR, ANY OTHER QUESTIONS I, MAY I ASK SIR, OR SOMETHING? YES, PLEASE.

SO I KNOW WE HAD A FINDING LAST YEAR AND I KNOW YOU GUYS DID A UP ON THAT.

DO YOU MIND TO GIVE THE COMMUNITY AN UPDATE ON WHAT'S THE IMPLEMENTATION? THIS WAS ON THE SINGLE AUDIT.

YEAH.

SO EVERY YEAR, IF WE HAVE A FINDING, WE COME IN DURING INTERIM OR THROUGHOUT THE YEAR AND MAKE SURE THAT THAT FINDING HAS BEEN ADDRESSED.

UM, AND THAT'S, THAT'S WHAT WE DID.

IT WAS A, IT WAS A PRETTY SMALL FINDING LAST YEAR.

SO IT WAS ADDRESSED VERY QUICKLY.

AND, UH, WE DON'T HAVE ANYTHING TO REPORT ON ANY CO INCOMPLETE OR UNRESOLVED FINDINGS.

EXACTLY.

AND FOR THAT FINDING IT PRETTY MUCH WAS ONCE THE NEW PERSON B TOOK OVER THE RESPONSIBILITY OF THAT POSITION, HE MADE SURE THINGS WERE CORRECT GOING FORWARD.

AND THAT WAS REALLY JUST MAKING SURE HE HAD THE, UM, ALL THE REPORTING PIECES OF, OF THAT PROGRAM IN HIT, SAVED AND READY TO GO.

SO WE DIDN'T NOTE ANY ISSUES THIS YEAR WITH THE TESTING.

OKAY.

ANY OTHER QUESTIONS SEEING NONE? THANK YOU VERY MUCH.

UH, MS. DEMPSEY, MS. WOOTEN, UH, REALLY APPRECIATE YOUR OVER THE FIVE YEARS NOW THAT I'VE BEEN ON THE AUDIT COMMITTEE, YOU GUYS DONE A GREAT WORK FOR US.

UH, AND SO I REALLY APPRECIATE IT AND IT'S, IT'S GREAT OF COURSE, TO SEE A CLEAN AUDIT, A TOTALLY CLEAN AUDIT.

SO CONGRATULATIONS TO STAFF ON ALL OF THAT.

UM, THE GREAT WORK THAT YOU GUYS DO, UH, DAY IN AND DAY OUT, PARTICULARLY IN AN EXTREMELY CHALLENGING YEAR WHERE SO MUCH GOING ON WITH COVID AND SO MUCH GOING ON, REALLY WITH, WITH ALL KINDS OF NEW FEDERAL PROGRAMS AND OTHER REQUIREMENTS AND THINGS TO KEEP UP WITH TO, TO GET EVERYTHING DONE STRIKE TO THE T IS REALLY IMPRESSIVE.

SO MR. BRADFORD, KUDOS TO YOU AND TO MR. YOUNG, AND MR. WATSON REALLY APPRECIATE YOUR WORK IN JED, ALSO TO YOU AND YOUR TEAM.

THE FACT THAT YOU GUYS ARE OUT THERE DOING GOOD AUDITS, REALLY HELPED KEEP EVERYBODY, UH, KEEPS EVERYBODY ON THEIR TOES.

AND SO I'M VERY APPRECIATIVE OF IT.

THANK YOU.

ALL RIGHT.

WELL WITH THAT, WE THANK YOU GUYS.

YOU'RE WELCOME TO STICK AROUND IF YOU WANT, BUT SURE YOU HAVE BETTER THINGS TO DO, AND I'M SURE WE'LL SEE YOU.

OH, MY DOG HAS SOMETHING TO SAY ABOUT IT, BUT THANK YOU SO MUCH.

AND WE'LL SEE YOU AGAIN SOON BECAUSE BEFORE WE KNOW IT, YOU'LL BE STARTING UP FOR THE NEXT ONE.

AND WITH THAT, WE WILL MOVE ON TO ITEM THREE, THE ECONOMIC DEVELOPMENT INCENTIVE PROGRAM, AUDIT JED, GO AHEAD.

TAKE IT AWAY.

SURE.

THANK YOU, CHAIRMAN.

UH, FIRST OF ALL, I WANT TO, UH, INDICATE THAT THIS AUDIT WAS REQUESTED BY THE CITY MANAGER, BRIAN BRADFORD SOME TIME AGO.

UH, UNFORTUNATELY, UH, DURING THE TIME WHEN HE REQUESTED, WE WERE NOT ABLE TO DO IT, BUT I'M GLAD TO, UH, REPORT THAT WE WERE ABLE TO COMPLETE IT AND REALLY WANT TO APPRECIATE HIS SUPPORT, UH, ECONOMIC DEVELOPMENT, ESPECIALLY I ARCO FOR WORKING WITH US.

THERE WAS A LOT OF INFORMATION GOING BACK AND FORTH WITH THAT DEPARTMENT.

ALSO WANT TO TAKE A MINUTE TO THANK THE LEGAL DEPARTMENT FOR STEPPING IN AND PROVIDE US WITH SOME, UH, LEGAL ADVICE DURING THIS AUDIT AS WELL.

UH, IN FACT, UH, I DON'T WANT TO MISS JED, UH, HE ACTUALLY STEPPED IN TOWARDS THE END AND HELPED US FINALIZING THIS REPORT.

OR DO YOU WANT TO APPRECIATE, AND THANK EVERYONE WHO HELPED US FINALIZING THIS REPORT? UH, THERE WERE TWO OBJECTIVES.

THE FIRST ONE WAS TO DETERMINE IF THE CITY HAS ESTABLISHED A STANDARDIZED PROCESS TO RECEIVE EVALUATE AND APPROVE REQUESTS FOR ECONOMIC DEVELOPMENT INCENTIVES.

UH, PART B WAS TO DETERMINE IF THE CITY MONITORS AND VERIFY COMPLIANCE OF ECONOMIC DEVELOPMENT AGREEMENTS PRIOR TO PROCESSING INCENTIVES.

I KNOW COUNCIL MEMBERS, YOU ARE VERY FAMILIAR WITH EDD PROCESS.

THEY USUALLY COME TO YOU FOR APPROVAL.

UH, SO BASICALLY WE WANTED TO SEE, UH, THE FRONT END PROCESS TO ENSURE THAT THERE IS A STANDARDIZED PROCESS TO RECEIVE, EVALUATE AND APPROVE.

AND IN THE BACKEND WE WANTED TO VERIFY THERE IS A MONITORING IN PLACE FOR THE FIRST OBJECTIVE, THE SCOPE COVERED, UH, ACTIVE INCENTIVE AGREEMENTS INITIATED BY THE ECONOMIC DEVELOPMENT

[00:25:01]

DEPARTMENT FROM JANUARY ONE 2018 THROUGH MAY 31, 2020, UH, FOR THE SCOPE OF OBJECTIVE B, WE COVER 24 ACTIVE AGREEMENTS CURRENTLY BEING MONITORED BY THE EDD DEPARTMENT.

UH, PATRICIA MOORE, UH, DID THE AUDIT.

SHE DID AN EXCELLENT JOB.

THERE WAS A LOT OF RESEARCH, EVEN READING THESE 30, 40 AGREEMENTS ITSELF AND ALL OF THEM VERY UNIQUE IN A WAY, AND SHE HAS DONE AN EXCELLENT JOB.

SO I'M JUST GOING TO TURN IT OVER TO HER.

THERE WERE A FEW OPPORTUNITIES FOR IMPROVEMENTS, UH, FOR US TO, UH, FOCUS ON.

AND SO, UH, I'LL TURN THIS OVER TO PATRICIA AND SHE WILL GO OVER THEM.

THANK YOU, JEN.

OKAY.

SO AS JEN MENTIONED, UH, THERE WERE 24 ACTIVE AGREEMENTS THAT, UH, WE REVIEWED AND 17 OF THEM HAD ACIDITY UTILITY SERVICE, UH, CLAUSE WITHIN THE AGREEMENT.

WE, UH, SOME OF THEM ARE USING ELECTRICITY, ONLY SOME OF THEM INCLUDED WATER, WASTEWATER, LANDFILL, ET CETERA.

SO OF THOSE 24 AGREEMENTS, 17 HAD THE UTILITY USAGE CLAUSE.

UM, AND 12 OF THEM WERE NOT, UH, USING THE CITY UTILITY SERVICES IN ONE FORM OR ANOTHER.

MOST OF THOSE, UM, WERE THE, UH, ENVIRONMENTAL WASTE SERVICES.

SO WE WORKED WITH THE, UH, DEPARTMENT EWS TO IDENTIFY THE SIZE OF THE CONTAINERS THAT WOULD BE USED AT THAT SITE, HOW OFTEN, UM, PICKUPS MIGHT BE REQUIRED.

UH, AND THE THIRD.

AND WE DID THAT BASED ON THE CONTAINERS THAT WERE ALREADY ON, UH, EWB S ACTUALLY WENT TO THE SITES, UM, LOOKED AT WHAT WAS ALREADY THERE AND THEN DID SORT OF A COMPARISON OF WHAT THEY WOULD PROVIDE.

UM, WE CAME UP WITH BASED ON THE LENGTH OF TIME OF THE CONTRACT AND, AND THE SERVICES THAT WOULD HAVE BEEN PROVIDED THE, UM, ESTIMATED REVENUE LOSS WAS $308,000 AFTER FURTHER DISCUSSION WITH THE CITY MANAGER'S OFFICE.

AND, UH, THE CITY ATTORNEY'S OFFICE, THE IDEA OF COURSE, WAS TO ENCOURAGE USE AS NOT MANDATE IT, UM, THROUGH THE AGREEMENT, BUT WE WENT THROUGH AND, UM, IDENTIFIED A COUPLE OF THINGS THAT COULD HAVE BEEN, UM, THERE WERE FOUR ENTITIES THAT ACTUALLY RECEIVED THE INCENTIVE WHEN THEY WERE PASSED YOU ON PAYING THEIR UTILITY, UH, BILLINGS, UM, AND ALSO IDENTIFIED THAT AWS WAS UNAWARE OF THE AGREEMENTS THAT HAD BEEN SIGNED, UM, THAT REQUIRED USAGE OF THE SOLID WASTE SERVICES.

SO WE, UM, MY APOLOGIES, SO WE DETERMINED THAT THE PRIMARY, UM, CAUSE WAS JUST LIMITED COMMUNICATION BETWEEN THE DEPARTMENTS.

UM, AND LIKE I SAY, AGAIN, THE IDEA WAS TO, UM, ENCOURAGE THE USE, NOT TO MANDATE IT.

UM, BUT EDS COMPLIANCE HAD BEEN FOCUSED ON THE INCENTIVE CRITERIA WITHOUT, UM, ALL THE TERMS AND CONDITIONS THAT WERE IN THE AGREEMENT AND THAT THERE WERE NO COMPREHENSIVE POLICIES AND PROCEDURES FOR THE DEPARTMENT.

SO WE RECOMMENDED THAT THEY COORDINATE EFFORTS WITH EWS TO ENCOURAGE THE B TO B ENTITIES, TO UTILIZE THE SOLID WASTE SERVICES AND CONSIDER REWORDING OR REEVALUATING THE CITY UTILITY, UTILITY USAGE CLAUSE AND FUTURE AGREEMENTS, CLARIFY SOME OF THE CONDITIONS AND INCENTIVE LANGUAGE, UM, TO INCLUDE SITUATIONS WHERE, UH, THE INCENTIVE AGREEMENT MAY HAVE BEEN SIGNED WITH A DEVELOPER AND, OR, BUT IT CHANGED TO MAYBE THEY WERE SELLING THE BUILDING AND, UM, OR HAD SOLD THE BUILDING TO SOMEONE ELSE.

AND WAS THAT STILL REQUIRED? UM, AND, YOU KNOW, RECOMMENDED THAT ED, UH, VERIFY COMPLIANCE OF THE TERMS AND CONDITIONS BEFORE PROVING PAYMENT OF THE INCENTIVES, UM, AND WORK WITH THE CITY ATTORNEY'S OFFICE, UH, ON A SOLUTION SUCH AS DELAYING PAYMENT OF THE INCENTIVE UNTIL THEY WERE CAUGHT UP.

NOW, WE'LL SAY THAT EACH OF THE TIMES THAT THE INCENTIVES WERE PAID, UM, AND THE COMPANY WAS PASSED YOU, THEY WERE, UH, IN COMPLIANCE EITHER THE NEXT MONTH OR WITHIN A COUPLE OF MONTHS, UM, IN ALL CASES.

SO IT WAS JUST THE PAST YEAR DURING THE TIME OF THE INCENTIVE PAYMENT.

UM, AND WE RECOMMENDED THAT, UH, THE ED DEPARTMENT OBTAIN ACCESS TO THE CITY UTILITY ACCOUNT SYSTEM IN ORDER TO VERIFY COMPLIANCE ON THEIR OWN, UM, AND TO PROVIDE A COPY OF THE AGREEMENT TO

[00:30:01]

EWS SO THAT THEY COULD BE AWARE AND WORK WITH THE ENTITIES, UM, AND THE ECONOMIC DEVELOPMENT DEPARTMENT, UM, CONCURRED WITH EACH OF THOSE AND SAID THAT THEY WOULDN'T NEGOTIATE DEE AGREEMENTS, UM, AND COMMUNICATE INFORMATION TO UWS AND, UH, WORK WITH THE CITY ATTORNEY'S OFFICE TO, UM, COME UP WITH APPROPRIATE CITY UTILITY USAGE, CAUSE LANGUAGE IN THE FUTURE AGREEMENTS.

UM, THEY DO HAVE A CHECKLIST WHERE THEY WOULD GO THROUGH AND, UM, MAKE SURE THAT THERE WAS COMPLIANCE.

SO THEY AGREED TO MODIFY THAT AND TO BE MORE INCLUSIVE, UM, AND WORKING WITH THE OTHER DEPARTMENTS AS WELL, FINANCE TAX, UM, IF IT INVOLVES PLANNING OR ENGINEERING, BUILDING INSPECTION WORK WITH EACH OF THOSE DEPARTMENTS FOR, UM, ANYTHING THAT THE AGREEMENTS NEED TO BE COORDINATED WITH, UM, THEY WILL VERIFY ALL OF THE TERMS AND CONDITIONS, UM, AND INCLUDE CITY POLICY, CITY COUNCIL, POLICY LANGUAGE THAT STATES, UM, INCENTIVES PAYMENTS WILL NOT BE MADE UNTIL THE LINK LOAN PAYMENTS ARE MADE CURRENT.

UM, AND THERE IS, UM, NOTIFYING THE, THE APPROPRIATE DEPARTMENTS WHEN THE AGREEMENT IS EXECUTED AND OBTAINING READ-ONLY ACCESS TO THE UTILITY ACCOUNT SYSTEM, AND THAT SHOULD BE IMPLEMENTED BY JUNE 30TH.

SO THAT WAS THE FIRST FINDING.

THE SECOND FINDING WAS AS TO BATEMAN'S, UM, WHICH OF THE 24 ACTIVE AGREEMENTS.

THERE WERE ONLY TWO THAT INCLUDED, UM, ABATEMENT INCENTIVES, AND IT WAS DETERMINED THAT, UM, THE ED DEPARTMENT WAS BASING, UM, COMPLIANCE ON THE PREVIOUS TAX YEAR INSTEAD OF THE CURRENT TAX YEAR.

SO THE ENTITIES ARE REQUIRED TO FILE, UM, FOR AN ABATEMENT BETWEEN JANUARY ONE AND APRIL 30TH.

UM, AND THE ENTITY IS SUPPOSED TO NOT A PRIVATE ED DEPARTMENT BY MARCH 31ST WITH THEIR COMPLIANCE DOCUMENTATION.

SO IF YOU CAN SEE THAT, THAT GRAPHIC THERE, I'M WALKING THROUGH THAT.

SO THE MAY 1ST, MAY 31ST, 80 NOTIFIES DECAB THAT THE ENTITY QUALIFIES FOR THE ABATEMENT BY JULY 25TH, DECAF CERTIFIES AND APPLIES THE ABATEMENT TO THE ACCOUNT FOR THE CURRENT TAX YEAR.

AND THEN BY OCTOBER 1ST, THE ENTITY PAYS THE ADJUSTED TAX BILL BASED ON THE ABATEMENT.

UM, BUT LIKE I SAID, THERE WAS A MISUNDERSTANDING OF HOW, UH, THAT THAT COMPLIANCE WAS TO TAKE PLACE.

UM, SO WE WENT THROUGH AND IDENTIFIED SEVERAL ENTITIES OR TWO ENTITIES, UM, ON THE ABATEMENT WHERE ONE OF THEM WAS TO GET A $222,000 ABATEMENT, UM, NOT TO EXCEED.

AND THE CALCULATION WAS DONE, UM, IN A COUPLE OF DIFFERENT WAYS, WHICH RESULTED IN THE ENTITY ACTUALLY HAVING TO RECEIVE ANOTHER TAX BILL.

SO THEY RECEIVED THE ABATEMENT THAN IT WAS MODIFIED, THEN THEY, WELL, IT WENT BACK AND FORTH A COUPLE OF DIFFERENT TIMES BASED ON THREE DIFFERENT METHODOLOGIES AND ENDED UP, THEY ENDED UP GETTING A TAX BILL FOR HAVING RECEIVED THE, AN INCORRECT ABATEMENT ORIGINALLY.

UM, AND SO YOU CAN SEE THE METHODOLOGIES BEAR, AS I SAID, IT, THERE WAS SOME DISAGREEMENT OR MISUNDERSTANDING AS TO HOW THE METHODOLOGY SHOULD BE CALCULATED.

THE COMPTROLLER'S OFFICE INDICATES THERE'S NOT A SPECIFIC METHODOLOGY.

DECAF SAYS THERE'S NOT A SPECIFIC METHODOLOGY, THE TAX OFFICE.

SO WHAT WE DETERMINED IS THAT REALLY, THAT SHOULD BE DEFINED WITHIN THE AGREEMENT SO THAT THERE IS NO MISUNDERSTANDING, UM, IN THE FUTURE.

UM, AND THEN ON ENTITY B, THAT ONE RECEIVED AGAIN, THEY APPLIED FOR THE ABATEMENT, DIDN'T MEET VALUATION IN THE FIRST YEAR.

AND THEN IN THE YEARS FOLLOWING, BECAUSE THERE WAS A MISUNDERSTANDING AS TO THE, WHEN YOU APPLY THE ABATEMENT AND ED DOING THE COMPLIANCE FOR THE PREVIOUS TAX YEAR, INSTEAD OF THE CURRENT TAX YEAR, THEY WERE DENIED THE ABATEMENT.

UM, AND AGAIN,

[00:35:01]

BECAUSE OF THE MISUNDERSTANDING THIS, THE NEXT YEAR, WHEN THEY APPLIED FOR THE ABATEMENT, THEY PUT THE PREVIOUS YEAR INSTEAD OF THE CURRENT YEAR.

AND SO THEY NEVER DID GET THEIR PAYMENT WITH THE EXCEPTION OF ONE YEAR.

AND AGAIN, WE WENT THROUGH AND, UM, IDENTIFIED THAT MAYBE THERE WAS JUST A MISUNDERSTANDING OF HOW YOU APPLY FOR THE ABATEMENT AND HOW YOU DETERMINE COMPLIANCE AND THE EXEMPTION.

AND, UH, UH, BELIEVE THAT WE, THE RECOMMENDATIONS THAT HAD WERE TO IDENTIFY THE INCENTIVE CALCULATION METHODOLOGY WITHIN THE AGREEMENT TO PREVENT ANY FUTURE MISUNDERSTANDINGS, DEVELOP POLICIES AND PROCEDURES TO INCLUDE THE CALCULATION METHODOLOGY, UM, HAVE A SECONDARY VERIFICATION OF THE COMPLIANCE AND ACCURACY OF THE CALCULATION AND TO COORDINATE WITH THE CITY ATTORNEY'S OFFICE AND D ON HOW TO RESOLVE THE CURRENT SITUATION WITH THE ENTITY THAT DID NOT RECEIVE THE ABATEMENT THAT PERHAPS SHOULD HAVE, UM, EDD AGREED, UH, WITH OUR RECOMMENDATIONS AND SAID GOING FORWARD, THEY WILL INCLUDE, YOU KNOW, A WRITTEN EXPLANATION OF THE INCENTIVE CALCULATION METHODOLOGY.

AND WE'LL CONFIRM THAT INCENTIVES HAVE BEEN APPLIED APPROPRIATELY TO TIMES, UM, DURING THE PROCESS.

AND WE'LL EXPLAIN THE ABATEMENT PROCESS TO FUTURE ENTITIES THAT WE, UH, HAVE, UH, BATEMAN AGREEMENTS WITH.

IF THAT COMES UP AGAIN.

ANY QUESTIONS ON THAT ONE? I KNOW THAT WAS A LITTLE BIT CONFUSING.

WELL, ON DARWIN, IF I MAY ADD SOMETHING, UM, BECAUSE OF THE ABATEMENT CALCULATION ERROR TO ENTITY B, UM, THEY ENDED UP PAYING 50 CLOSE TO $54,000 IN PROFIT, MORE, MORE IN PROPERTY TAXES.

ONCE WE NOTIFIED, UH, THE ECONOMIC DEVELOPMENT DEPARTMENT, THEY HAVE CORRECTED THAT THEY HAVE WORKED WITH D CAD NOW, UM, UH, THE ENTITIES VALUE WILL BE ADJUSTED, UM, AND TH AND THEY WILL RECEIVE THE CREDIT FOR $54,000.

SO JUST WANTED TO MENTION THAT.

THANK YOU, JEN.

UM, AND ON THE THIRD FINDING WITH REGARD TO COMPLIANCE MONITORING, UM, AGAIN, THERE WERE, UH, 12 ACTIVE AGREEMENTS, UM, AND WE REVIEWED 12 OF THEM, THE INCENTIVES, THE TERMS, CRITERIA, AND STATUS FOR EACH OF THEM ON ENTITY C.

UM, THAT PARTICULAR ENTITY, THEIR INCENTIVE WAS A REBATE, A PERCENTAGE OF THE REAL PROPERTY AND BUSINESS, PERSONAL PROPERTY TAXES THAT WERE PAID, AND A WAIVER OF THE CITY FEES, UM, NOT TO EXCEED $550,000.

UM, THE ENTITY FILED EVALUATION PROTEST FOR TAX YEAR 2017, WHICH WAS UNSUCCESSFUL WHEN A PROTEST IS UNSUCCESSFUL, THEY MOVE FORWARD WITH AN APPEAL AND LAWSUIT, UM, WHICH THEY FILED IN SEPTEMBER OF 2017.

THEY DID NOT NOTIFY EDD OF THE PROTEST OR THE LAWSUIT, BUT ALSO APPLIED TO RECEIVE THEIR INCENTIVE, WHICH EDD PROCESSED, UM, WITHOUT VERIFYING THE STATUS OF THE PROTEST OR THAT THERE WAS NO PROTEST OR LAWSUIT PENDING.

AND AS A RESULT, THE, UH, ENTITY WAS OVERPAID $49,177 IN INCENTIVES.

UM, AND AS OF OCTOBER OF 2020 PER THE AGREEMENT, THE CITY HAS WAIVED ALL CITY FEES.

HOWEVER, THEY EXPECTED FEES TO BE CHARGED BY THE CITY WERE NOT CALCULATED ORIGINALLY.

AND THE AMOUNT WAVE WAS NOT ACCURATELY TRACKED BECAUSE OF THIS.

IT COULD NOT BE VERIFIED THAT THE TOTAL FEES WAIVED, UM, WAS, WAS WITHIN THE SPECIFIED LIMIT OF 550,000.

AND THE PROJECT DOES REMAIN ACTIVE AND WILL GO THROUGH 2027 INTO TD.

UM, THEIR INCENTIVE, UH, WAS A REBATE OF CITY FEES, NOT TO EXCEED 479,000.

THEY HAD TO MEET CERTAIN, UH, VALUATION CRITERIA THROUGH D CAD IN ORDER TO RECEIVE THAT, UM, THE AGREEMENT, UH, INDICATED THAT THE BUILDING WOULD BE, UH, LEED-CERTIFIED UH, DURING THE CONSTRUCTION PROCESS, THEY WOULD, UH, SEEK LEAD CERTIFICATION.

UM, HOWEVER, ACCORDING TO THE, UH, U S GBC WEBSITE, THEY HAD NOT ACHIEVED CERTIFICATION, UM, UP TO THIS POINT.

AND, UH, THEY, THEY DID MEET THE VALUATION.

UM, BUT

[00:40:01]

PROTESTED THAT PROTEST WAS UNSUCCESSFUL.

THEY ALSO FILED A LAWSUIT.

THERE WAS NO, UM, YOU KNOW, UH, FINANCIAL, UH, IMPACT TO IT.

UM, BUT AGAIN, IT WAS THAT ED WAS NOT AWARE OF THE STATUS OF THE LAWSUIT.

UM, AND IT COULD HAVE BEEN HAD IT GONE A DIFFERENT WAY ON ENTITY E UM, THAT ONE IS A REBATE OF THE PERCENTAGE OF THE BUSINESS, PERSONAL PROPERTY TAXES PAID.

UM, THIS ONE, THE ENTITY PROVIDED DOCUMENTATION THAT REVEALED ONLY ONE EMPLOYEE MET THE ANNUAL RACHEL W WAGE REQUIREMENTS.

THEY WERE SUPPOSED TO EMPLOY 25 FULL-TIME EMPLOYEES, EIGHT OF WHICH, WHO MUST MAKE $43,000 ANNUALLY, ONLY ONE, UM, OF THEIR LIST OF EMPLOYEES MET THAT WAGE REQUIREMENT.

BUT THE DEPARTMENT ED DEEMED THE ENTITY TO BE IN COMPLIANCE AND PAID THE INCENTIVE, UH, IN 2017 AND 18 FOR A TOTAL OF $65,517.

I APPRECIATE IF I MAY CLARIFY THAT WHEN THE DOCUMENTATION THAT ED RECEIVED, UH, ONLY HAVE ONE EMPLOYEE, UH, DETAILS, UM, THEY PROBABLY HAD OTHER EMPLOYEES THAT MET, BUT THEY DID NOT PROVIDE ALL THE DETAIL INFORMATION.

SO HE COULD ONLY VERIFY THAT ONE EMPLOYEE MET THE WAGE REQUIREMENT, THE OTHERS DIDN'T INFORMATION.

SO ANY QUESTIONS ON THAT ONE? OKAY.

I'LL MOVE TO ENTITY F UM, THIS ONE WAS A REBATE, ALSO A PERCENTAGE OF THE BUSINESS, PERSONAL PROPERTY TAXES.

UM, THEY WERE TO ACHIEVE A 5.85 MILLION IN BPP VALUATION EMPLOY 20 FULL-TIME EMPLOYEES WITH A PAYROLL GREATER THAN 800,000.

OKAY.

EXCUSE ME A MINUTE, MR. MR. CHAIR.

I'M SORRY.

CAN I RAISE THE QUESTION? ANDREAS DEPARTMENT'S CHAIR.

SURE.

GOOD.

OKAY.

OKAY.

UH, J J THE ONLY EXAMPLE THAT YOU JUST CASE, IS THERE ANY PROCESS FOR VERIFYING AND IF SO, WHAT IS COVERED FOR THE DD HAS FOR VERIFYING, UH, FOLLOWING UP ON THE INFORMATION THAT IS PROVIDED FOR EMPLOYEES FOR TAX PURPOSES? IS THERE ANY VERIFICATION PROCESS, OR DO WE JUST TAKE AS, AS SUBMITTED, THEY USUALLY PROVIDE SOME SORT OF DOCUMENTATION SUPPORTING DOCUMENTATION, BUT IN THIS CASE THEY DID NOT.

UM, THERE, THERE WERE SATISFIED WITH THAT ONE EMPLOYEE INFORMATION.

THEY DID NOT FURTHER ASK FOR MORE DETAILS.

IS THAT TRUE, PATRICIA? IS THAT A CORRECT STATEMENT? YES.

UM, AND COUNCILMAN, AS I UNDERSTAND IT, THEY USE THE TEXAS WORKFORCE COMMISSION A WAY TO REPORTS IF THAT'S WHAT YOU'RE ALSO ASKING.

OKAY.

AND DOES THAT ADA POLICY REQUIRE ANY KIND OF VERIFIED VERIFICATION TOOLS BE USED? IS THAT WRITTEN IN POLICY ANYWHERE, OR IS THAT JUST ON A CASE BY CASE BASIS? THERE DID NOT HAVE ANY WRITTEN POLICIES OR PROCEDURES, OR AT LEAST WE DID NOT GET A COPY OF THAT.

UH, THAT IS SOMETHING THAT WE RECOMMENDED FOR THEM TO HAVE IT.

THEY DID HAVE A CHECKLIST THAT THEY DEVELOPED, UH, HOW IT WASN'T DETAILED ENOUGH AND YOU BELIEVE SOME OF THE ONES THEY IMPLEMENT SOME OF THESE RECOMMENDATIONS.

UH, THEY WILL HAVE THAT DETAILED PROCESS GOING FORWARD.

OKAY.

THANKS VERY MUCH.

THANKS MS. CHAIR ENGLISH.

OKAY.

SO, UM, BACK TO ENTITY AF UM, THE, THAT PARTICULAR ENTITY SOLD ITS BUSINESS AND THE TAX RULES WERE CHANGED, UM, TO THE NEWLY NAMED BUSINESS, BUT THERE'S A NOTIFICATION CHANGE FORM THAT IS TO BE, UH, COMPLETED FOLLOWING AN ENTITY WHEN SOMETHING CHANGES, WHETHER IT'S THE PERSON THAT IS THEIR CONTACT INDIVIDUAL, WHETHER IT'S ADDRESS, NAME, CHANGE, WHATEVER, BUT THERE WAS NO NOTIFICATION CHANGE FORM.

UM, ON FILE IN THE ED DEPARTMENT, IT WAS ALSO CHANGED ON THE TEXAS WORKFORCE COMMISSION.

UM, AND THEY HAD WRITTEN TWO INCENTIVE PAYMENTS TO THE ORIGINALLY NAMED ENTITY WITHOUT NOTICING THAT THE NAME HAD BEEN CHANGED, UM, ON THE DEAKIN WEBSITE AND, UH, TWC, UM, ON THE CAUSE.

UH, IT WAS VERIFICATION OF TERMS AND CONDITIONS AND WERE NOT CONSISTENTLY APPLIED IN ALL AGREEMENTS.

UM, ENGINEERING WAS TOLD TO

[00:45:01]

WAIVE THE CITY FEES ON THE $550,000 AGREEMENT, UM, WAY THE CITY FEES, BUT WITHOUT ADDITIONAL INFORMATION AS TO THE MAXIMUM AMOUNT, UM, THE NAME AND ADDRESS CHANGES WERE NOT CONSISTENTLY REVIEWED DURING THE COMPLIANCE VERIFICATION NOTIFICATION CHANGED FORMS ARE NOT SENT TO THE ENTITIES IN THE COMPLIANCE CERTIFICATION PACKET EACH YEAR.

UM, AND AGAIN, COMMUNICATION BETWEEN THE DEPARTMENT AND THE CITY'S TAX OFFICE IS LIMITED.

THE CITY'S TAX OFFICE DOES RECEIVE, UM, COMMUNICATION FROM THE APPRAISAL DISTRICT WHEN THERE'S A PROTEST OR, UM, A TAX LAWSUIT.

UM, SO THERE IS AN OPPORTUNITY FOR INCREASED COMMUNICATION THERE.

AND WE MADE THAT RECOMMENDATION ALONG WITH REQUESTING A REFUND OF THE OVERPAYMENT FROM THE ENTITY THAT HAD BEEN PAID 49,000 TOO MUCH.

AND WE HAVE RECEIVED THE CITY HAS RECEIVED, UH, A REFUND OF THAT 49,000 AND APPLY THE COMPLIANCE VERIFICATION CONSISTENTLY COMPLETELY FOR ALL AGREEMENTS DEVELOP WRITTEN POLICIES AND PROCEDURES, UM, WORK WITH THE CITY OF TEXAS OR ASSESSOR TO OBTAIN COPIES OF THE PROTESTS AND CORRESPONDENCE WITH, OR TO THE TECH, UH, THE LAWSUITS THAT ARE FILED.

OKAY.

AND CONSIDER OBTAINING READ ONLY ACCESS TO THE CUSTOMER RELATIONS MANAGEMENT SOFTWARE TO VERIFY CITI FEE PAYMENTS.

UM, AND WE, UH, WORKED WITH THE ENGINEERING AND PLANNING AND OTHER DEPARTMENTS TO SAY, YOU KNOW, WE NEED TO DO CALCULATIONS OF WHAT WE, THE EXPECTED FEES ARE GOING TO BE.

WHEN WE ASK FOR A BERWYN, WE, UH, PROVIDE A CITY FEE WAIVER ON ANY OF THESE AGREEMENTS AND ED, UH, CONCURRED.

AND AS I SAID, THAT 49,000 HAS BEEN REFUNDED BACK TO THE CITY OF GARLAND.

UM, THEY HAVE REFINED THE COMPLIANCE CHECKLIST TO INCLUDE VERIFYING ACTIVE TAX LAWSUITS.

UM, THEY WILL START, UH, SENDING THE NOTIFICATION CHANGE FORM WITH ALL COMPLIANCE CERTIFICATION PACKETS, AND THEY WILL CHECK THE PREVIOUS YEAR CERTIFIED VALUES AGAINST THE PRIOR YEARS COMPLIANCE AS PART OF THEIR CURRENT YEAR COMPLIANCE PROCESS.

SO IT WILL BE REVISITING LAST YEAR TO MAKE SURE NOTHING HAS CHANGED IN THE YEAR SINCE, UM, AND THAT THEY WILL CONTINUE TO TRACK THE REDUCED OR WAIVED FEES, UM, PROVIDED BY THE INCENTIVE AGREEMENT, ENGINEERING AND PLANNING, BOTH AGREED THAT THEY WOULD, UM, PROVIDE CALCULATIONS OF EXPECTED FEES THAT WILL BE WAIVED.

UM, AND ALL OF THAT WILL ALSO BE IMPLEMENTED BY JUNE 30TH.

IS THERE ANY QUESTIONS ABOUT ANY OF THIS? JEFF, DO I NEED TO GO THROUGH ANY OF THE EXHIBITS AT ALL? IF ANYBODY HAVE ANY QUESTIONS, IF YOU CAN UNSHARE THE SCREEN, I CAN SEE EVERYBODY.

SHE WAS VERY QUICK.

ANYONE HAVE ANY, ANY QUESTIONS? ANY COMMENTS? ANY THOUGHTS, DEBRA, DO YOU HAVE, I CAN'T TELL IF YOU'RE PUNCHING IN OR JUST SAYING, HI, YOU'RE MUTED.

SORRY.

MY, MY CONNECTION IS BAD AND SO IT KEEPS KICKING ME OFF AND I'M COMING SWIMMING BACK IN AND OUT.

SO IT MUTES AND UNMUTES ME.

AND SO SORRY.

UM, NO, I JUST HAD A, UM, A QUICK QUESTION ALL THE WAY BACK TO THE EWS, UM, PRESENTATION.

IT'S NOT, IT'S NOT A DEEP QUESTION, BUT THE, THE ENTITIES THAT ARE, UM, RECEIVING ENVIRONMENTAL WASTE SERVICES FROM OTHER COMPANIES, APPARENTLY WHEN THEY'RE SUPPOSED TO BE, UM, ARE THESE COMMERCIAL ENTITIES ARE THE BUSINESSES AROUND TOWN? WHAT KIND OF ENTITIES ARE THESE? OKAY.

AND SO DEBORAH, IF I UNDERSTAND YOUR QUESTION, YOU'RE WANTING TO KNOW WHICH, UH, WHICH ENTITIES OR WHAT TYPE OF ENTITIES ARE RECEIVING.

OKAY.

SO MOST OF THE AGREEMENTS THAT WE HAVE ARE, UM, AND WHAT I WOULD CALL INDUSTRIAL OR MANUFACTURING TYPE, UH, ENTITIES.

UM, SO DOES THAT ANSWER YOUR QUESTION IN THAT? YEAH, I DIDN'T, I DIDN'T NEED SPECIFIC NAMES, BUT, UM, SO, SO I WAS CURIOUS, WE HAVE CONTRACTS WITH THEM THAT SAY THEY SHOULD BE HAVING SERVICES AND PAYING FOR SERVICES THROUGH US.

UM, IS THERE, IS THERE SOME REASON THAT WE ARE ENCOURAGING RATHER THAN MANDATING THAT? IS THERE AN ADVANTAGE TO US TO JUST TAKE A SOFTER APPROACH TO THAT WHEN IT'S A CONTRACTUAL OBLIGATION? I'M JUST CURIOUS IF THAT'S THE WISEST THING, I'M FINE WITH IT ON, I WAS JUST CURIOUS WHY WE WOULD, UM, KIND OF TAKE AN ENCOURAGEMENT RATHER THAN MANDATING SOMETHING

[00:50:01]

THAT THAT'S IN A CONTRACT.

I CAN ADDRESS THAT IF YOU'D LIKE, THAT'S OKAY.

UM, THERE'S, THERE'S SEVERAL, THERE ARE SEVERAL THINGS THAT WE HAVE RUN INTO OVER THE YEARS.

ONE IS, IS THAT THE PERSON BUILDING THE BUILDING MAY NOT BE THE PERSON USING THE BUILDING.

AND, AND SO BASICALLY YOU'RE CONTRACTING WITH THE OWNER OF, UH, OF, UH, A BUILDING WHO IS NOT ACTUALLY OPERATING A BUSINESS WITH, WITHIN THE FACILITY.

AND SO YOU, YOU'VE GOT MULTIPLE PARTIES INVOLVED THAT AREN'T A PARTY TO THE AGREEMENT.

THE SECOND THING THAT WE'VE RUN INTO IS WE HAVE NO SHORTAGE OF NATIONAL FIRMS HERE.

AND SO, UH, MANY TIMES THEY WILL HAVE NATIONAL CONTRACTS.

AND SO IN ORDER TO, UM, IN ORDER TO SWITCH SERVICES, THEY'VE GOT TO VIOLATE OR VOID A CONTRACT THAT'S ALREADY IN PLACE.

UM, THE, THE, UH, UH, THE, THE, THERE IS A HISTORY HERE IN THAT, UM, A FORMER FARMER CITY ATTORNEY'S SON WAS SELLING COMMERCIAL SERVICES.

UH, AND THAT IS WHEN THE CONTRACT STARTED APPEARING.

UH, THIS COURSE IS SOME TIME AGO, BUT IT, UH, IT JUST, IT CARRIED OVER.

AND, UH, SO AS USUAL, THERE'S A STORY.

I ASSUMED THAT THERE WAS, BUT SINCE I DIDN'T KNOW IT, I WANTED TO ASK.

SO, UM, ALL RIGHT.

SO ARE WE LOOKING AT WAYS TO KIND OF IMPROVE OUR WHOLE CONTRACT CONTRACTUAL, UH, PROCESS TO KIND OF MAKE THAT CLEANER SO THAT WE KNOW WE'RE CONTRACTING WITH A, IS THERE A WAY TO STRAIGHTEN THAT OUT? SO WE'RE NOT JUST KIND OF RUNNING INTO THIS, UM, BELATEDLY WELL IN, UH, IS BRIAN ENGLAND STILL ON HERE? YEAH, THERE HE IS.

I, UH, BRIAN, IF I MISSTATE, PLEASE, PLEASE JUMP IN.

BUT, UM, THERE, THERE WAS, THERE WAS SOME LEGAL CONCERNS ABOUT KEEPING THIS IN THERE AND, AND SO IT WILL, IT WILL COME OUT OF FUTURE CONTRACTS.

HOWEVER, UM, THERE, THERE, THERE DOES NEED TO BE COMMUNICATION THAT GOES BETWEEN THE ED OFFICE AND ENVIRONMENTAL WAY SERVICES THAT WASN'T HAPPENING.

AND, AND SO WHEN THERE'S A POTENTIAL CUSTOMER THERE, WE SHOULD BE THE FIRST ONE KNOCKING ON THE DOOR.

ABSOLUTELY.

AND THIS IS SOMETHING URIEL AND I HAVE HAVE DISCUSSED IN THE PAST, ESPECIALLY AROUND DOWNTOWN IS TWO, TWO YEARS AGO.

WE DIDN'T HAVE THE CAPACITY TO TAKE ON A WHOLE LOT MORE COMMERCIAL CONTRACTS FROM WHAT I WAS TOLD AT THAT TIME.

AND YOUR ALL HAS BEEN WANTING TO, TO BE MORE AGGRESSIVE AND ENLARGE THAT, WHICH I'M ALL FOR.

SO I WAS JUST KIND OF WONDERING HOW THAT PLAYED IN HERE AND, AND JUST IN A, IN A GENERAL, UM, IN A GENERAL CONCEPT, WE SHOULD ALWAYS, UM, DELAY PAYING INCENTIVES UNTIL THEY'VE DONE THEIR PART AND WE'VE RECEIVED PAYMENT.

I, AND I KNOW WE'RE MOVING IN THAT DIRECTION.

IT'S JUST, IT'S ALWAYS SURPRISING TO ME TO KEEP STUMBLING ACROSS THINGS WHERE WE HAVE PAID STUFF OUT TO PEOPLE WHO DIDN'T KEEP UP THEIR SIDE OF THE BARGAIN.

AND WE SHOULD CERTAINLY WAIT THAT OUT AS, AS YOU ARE NOW DOING SO ANYWAY, THANK YOU THIS AS ALWAYS, YOU GUYS DO A WONDERFUL JOB AND I APPRECIATE IT.

AND THANK YOU FOR THE ANSWERS, CORRECT.

CAUSE REMEMBER WILLIAMS, THANKS, MR. CHAIR.

YEAH.

MY QUESTION GOES BACK TO, UH, THE, UM, THE ABATEMENTS AGREEMENTS, ET CETERA.

AND I GUESS THIS QUESTION IS TO, TO OUR ATTORNEY CITY ATTORNEY SHORT ON THE LINE, UM, I'M SURE IT'LL PROBABLY BE ADDRESSED IN YOUR RECORD IN THE RECOMMENDATIONS.

UM, BUT TO WHAT LEVEL THAT'S, THAT'S MIS MISCALCULATIONS TAXES.

SO DELINQUENCIES, THOSE KINDS OF THING, DOES THAT IN ANY WAY, RAISE THE CITY'S, UH, EXPOSURE TO POTENTIAL, UM, LOSS OF, UH, PUNITIVE DAMAGES AND OTHERS MOVING FORWARD.

HOW DOES THAT, HOW DOES THAT PLAY? AND I GUESS I'M ASKING THE QUESTIONS ABOUT CITY EXPOSURE, HOW WHAT'S, WHAT'S THE, WHAT'S THE, WHAT'S THE IMPACT ON POTENTIAL EXPOSURE DOWN THE ROAD? I KNOW WE, WE DIDN'T, WE

[00:55:01]

HAD, I THINK YOU SAID WE HAD TWO CASES, MIKE, THAT IF I HEARD YOU CORRECTLY, BUT EVEN WITH TWO CASES, THE NUMBERS ARE SMALL.

UH, CAN YOU TALK JUST A BIT ABOUT, YOU KNOW, HOW WE ADDRESS THAT FROM A LEGAL STANDPOINT AND THE POTENTIAL LEGAL EXPOSURE GOING, GOING FORWARD, IF ANY, ARE YOU I'M ASKING WHAT THE CITY'S LEGAL EXPOSURE IS WHEN, WHEN, UM, A, A PARTY THAT WE'VE CONTRACTED WITH THAT WE'VE GIVEN ECONOMIC DEVELOPMENT INCENTIVES TO HAS NOT MET THEIR OBLIGATIONS UNDER THE CONTRACT.

I'M SORRY.

I, UH, I GUESS ON THIS, THEY'VE NOT MET THEIR OBLIGATIONS UNDER THE CONTRACT.

OKAY.

AND, UM, YOU KNOW, I'M NOT GOING TO GET INTO WHO'S WHO MAY BE AT FAULT ON THAT, BUT THEY HAVE NOT MET THE OBLIGATIONS, BUT WHAT THE CITY HAS MET ITS OBLIGATIONS IN TERMS OF THE, THE AGREEMENT, THE CITY'S PART OF THE ABATEMENT AGREEMENT.

RIGHT.

UM, UM, OF COURSE, AS BRAD FREQUENTLY TELLS THE COUNCIL, ANYBODY CAN ALWAYS SUE US.

IT DOESN'T MEAN.

AND SO THERE WAS A DISPUTE OVER THE CONTRACT TERMS, MEANING A DISPUTE WHERE THE OTHER SIDES CLAIMS THAT YES, THEY HAVE MET THE OBLIGATIONS UNDER THE CONTRACT YET THE CITY SAYS, NO, WE DON'T FEEL LIKE YOU HAVE.

AND BECAUSE WE DID NOT FEEL LIKE YOU'VE MET YOUR OBLIGATIONS, WE'RE NOT GOING TO PAY YOU THE INCENTIVE THIS YEAR.

UM, IN THAT PARTICULAR CASE, WE, WHAT WE DO IN OUR CONTRACTS IS WE BUILD IN LANGUAGE THAT SETS THE VENUE AND WE SET THAT MENU FOR DALLAS COUNTY.

SO THEREFORE FOR DEALING WITH AN OUT-OF-STATE ENTITY, THEY CAN'T SUE US IN OKLAHOMA OR DELAWARE OR SOME OTHER STATE.

AND, UH, WE ALSO TYPICALLY PROVIDE, UM, WELL, I SAY THAT IN THESE, WE FREQUENTLY PROVIDE, UM, UH, LANGUAGE THAT MIGHT HAVE ARBITRATION OR MEDIATION REQUIREMENTS TO IT.

AND SO IT JUST DEPENDS ON THE SPECIFIC CONTRACT.

NONE OF THESE CONTRACTS ARE EXACTLY ALIKE AND QUITE FRANKLY, SOME OF OUR EXPOSURE IN THAT REGARD IS DIFFERENT NOW BECAUSE, UM, UM, WE CERTAINLY, IF THERE'S A CASE WHERE WE'RE PROVIDING ECONOMIC DEVELOPMENT INCENTIVES UPFRONT BEFORE PERFORMANCE, THEN IN THAT CASE, WE COULD COURSE SUE UNDER THE CONTRACT AND, UH, TO TRY TO CLAW BACK THAT MONEY.

AND IN SOME OF OUR ECONOMIC DEVELOPMENT INCENTIVES LIKE RIVER SET, FOR EXAMPLE, WE ACTUALLY HAD CLAWBACK PROVISIONS IN IT.

AND SO WE DO THOSE, UM, UM, AT TIMES, DEPENDING ON THE NATURE OF THE DEAL, BUT WHAT WE TRY TO DO AS, AS, AS A STANDARD APPROACH NOWADAYS, IS WE TRY TO MAKE SURE THAT THEY PERFORM ON THE FRONT END AND THEN WE REBATE, YOU KNOW, WHAT TAXES ARE OWED.

SO WE REALLY TRY TO DO THAT NOW.

UM, AT LEAST, UM, WE HAVE IN THE LAST TWO OR THREE YEARS.

OKAY.

AND ARE THERE, DO WE HAVE CALLBACK AGREEMENTS AND ALL OUR MAJORITY OF OUR AD? OKAY.

I DIDN'T THINK SO, BUT I WANTED TO, I WANT YOU TO CONFIRM THAT YES, WE DO.

NOT ONLY BECAUSE THOSE CLAWBACK PROVISIONS ARE TYPICALLY USED IN THE, IN THE, UM, UM, AGREEMENTS WHERE WE'RE NOT DOING REBATES, WE'RE DOING UPFRONT CASH TO THEM.

WE'RE WAIVING FEES UP FRONT OR SOMETHING LIKE THAT.

OKAY.

ALL RIGHT.

ALL RIGHT.

THANKS, SIR.

THANK YOU, MR. CHAIR.

THANK YOU, MS. WILLIAMS. UH, ANY OTHER QUESTIONS I'VE GOT A FEW, UM, ON THE, UM, ON THIS PART OF REQUIRING THEM TO USE OUR, OUR SERVICES OR WHAT'S THE CITY MANAGER MENTIONED THAT THERE WAS A LEGAL CONCERN ABOUT WHETHER WE COULD DO THAT AT ALL.

I MEAN, I WOULD THINK THAT WE COULD REQUIRE THAT HE IS THERE.

IT MIGHT BE DIFFICULT TO ENFORCE, OR MAYBE COULD REQUIRE, UH, YOU KNOW, CAN WE REQUIRE THEM TO RECOMMEND A TENANTS OR TO IDENTIFY TENANTS NEW TENANTS TO US, IF WE'RE DEALING WITH A SITUATION WHERE THE FACILITIES BEING LEASED, UH, OR CAN WE REQUIRE THEM TO HAVE THE CONTRACT, UNLESS THERE'S A CONFLICTING NATIONAL CONTRACT? WHAT ARE THE OPTIONS? I MEAN, I WOULD ASSUME WE HAVE SOME OPTIONS THERE OTHER THAN, AND I KNOW THAT EACH OF THESE CONTRACTS IS DIFFERENT.

EVERY ONE OF THESE, THIS IS NOT, WE DON'T DO THESE.

WE ONLY HAVE, I THINK IT WAS 24 CONTRACTS THAT 24 TOTAL ONE CITY, OR IS THAT SAMPLE THE CHRONIC ACTIVE ONCE THE ED DEPARTMENT HANDLES.

OKAY.

SO, I MEAN, WE'RE NOT TALKING ABOUT TH THESE ARE NOT BOILER PLATE THINGS.

THESE ARE ALL INDIVIDUALLY NEGOTIATED CONTRACTS THAT I WOULD, YOU KNOW, THAT HOPEFULLY LEGAL IS PRETTY INVOLVED IN.

YES, YES.

I THINK MR. CHAIRMAN YOU'VE, YOU'VE YOU'VE THE DIFFICULTY IS THE ENFORCEMENT.

AND, UM, ALSO OFTENTIMES THE PEOPLE WE ARE NEGOTIATING WITH, EVEN THOUGH THEY MAY BE SOPHISTICATED, THEY OFTEN ARE CONNECTED WITH THE REST OF THEIR ENTITY RATION

[01:00:01]

IN, SO THEY DON'T KNOW IF A CONTRACT'S ALREADY IN PLACE.

AND SO WE IMMEDIATELY, WHEN WE REQUIRED THEM TO SIGN THESE, WE COULD IMMEDIATELY PLACE SAME IN SOME SORT OF LEGAL JEOPARDY WITH ANOTHER CONTRACTOR, OR WE MAY BE REQUIRING THEM TO DO SOMETHING THAT THEY JUST AREN'T ABLE TO DO.

AND THEN AFTER THEY SIGN IT AND THEY GET READY TO, UM, WE ISSUE A CEO, THEY START GETTING READY TO OPERATE THEIR BUSINESS, AND THEY DON'T SIGN UP FOR OUR SOLID WASTE SERVICES.

UM, UM, THE QUESTION COMES WELL, UM, NUMBER ONE WOULD BE, FIND OUT WHAT DO WE DO? AND THEY TELL US, WELL, WE WOULD REALLY LIKE TO, BUT THIS IS WHAT HAPPENED.

UM, UM, AND SO IT'S JUST DIFFICULT.

IT'S DIFFICULT TO ENFORCE.

AND THERE ARE SOME, UM, ISSUES RELATED TO, UM, UM, ANTITRUST LAWS ABOUT WHETHER OR NOT CITIES CAN EVEN REQUIRE THAT NOW IN THIS PARTICULAR CASE, BECAUSE IT'S A CONTRACTUAL OBLIGATION AND NOT JUST AN ORDINANCE THAT WE'RE PASSING THAT WE'RE REQUIRING, IT'S PROBABLY THOSE ISSUES ARE PROBABLY, UM, UM, NOT, NOT THAT PREVALENT, BUT, UM, THERE ARE SOME ISSUES THAT HAVE TO BE CONSIDERED IF WE DECIDE TO GO THAT ROUTE, BUT FRANKLY IT'S PROBABLY, UM, UH, WE'VE ALWAYS LOOKED AT THOSE CLAUSES AS, UH, CLAUSES THAT ARE, UM, AT BEST, UM, ILLUSIONARY AND, UM, UM, THAT JUST ENCOURAGE THEM TO USE CITY SERVICES MORE SO THAN REQUIRING THEM TO USE CITY SERVICES.

AND, UM, OFTENTIMES IT INCENTIVIZES THAT.

SO, OKAY.

IT WOULD SEEM TO ME THAT IF WE'RE, I MEAN, IT IS A CONTRACT, WE'RE NOT SAYING EVERYBODY IN THE CITY HAS TO USE OUR ENVIRONMENTAL WASTE SERVICE.

WE'RE JUST SAYING, IF YOU WANT THIS BENEFIT FROM US, YOU WANT US TO, I MEAN, IT'S, YOU'RE GETTING MONEY FROM US, YOU'RE GETTING AN ECONOMIC DEVELOPMENT INCENTIVE.

AND SO, YOU KNOW, FOR A CERTAIN DEGREE, I DON'T REALLY LIKE, I REALLY LIKE LEAVING MONEY ON THE TABLE.

UM, BUT ON THE OTHER HAND, I, I DON'T WANT TO CAUSE MORE PROBLEMS THAN WE SOLVE.

UM, SO I, BUT THAT'S SOMETHING THAT, UH, I DON'T KNOW WHETHER THAT FALLS UNDER A COUNCIL POLICY, THE COUNCIL SHOULD TALK ABOUT OR SOMETHING THAT'S SO FAR IN THE WEEDS THAT, UM, I THINK THAT'S SOMETHING THAT THERE ARE A FEW ENOUGH OF THESE TYPES OF, UH, AGREEMENTS THAT WE CAN, WE CAN ADDRESS THAT, I GUESS, ON A CASE BY CASE BASIS, UM, WHAT STAFF TO GO.

UM, AND THAT'S ALL, I, THAT'S ALL THE QUESTIONS I REALLY HAVE.

I REALLY APPRECIATE THE AUDIT.

THE RESULTS ARE A LITTLE BIT, UH, TROUBLING IS THE WORD, BUT, YOU KNOW, OBVIOUSLY WE WANT TO SEEK CONSISTENT APPLICATION OF THIS STUFF AND MAKE SURE THAT EVERYBODY KNOWS WHAT THEY'RE GETTING, YOU KNOW, FROM BOTH SIDES OF IT, SO THAT WE, AND IT'S VERY EASY.

I'LL SAY THIS IT'S VERY EASY IN HINDSIGHT TO GO BACK AND LOOK AT A CONTRACT THAT SOMEBODY ELSE DRAFTED AND SAY, OH, WELL, YOU, YOU KNOW, OH, YOU GUYS MISSED THIS AND YOU MISS THAT OR WHATEVER.

AND I'M SURE THAT AT THE TIME THAT THESE THINGS WERE DRAFTED, IT DIDN'T OCCUR TO A LOT OF PEOPLE THAT THERE MIGHT BE THREE OR FOUR OR FIVE OR 10 DIFFERENT WAYS TO CALCULATE THE ABATEMENT.

SO NOT HERE TO THROW ANY ROCKS ON IT, BUT, UM, I THINK WE DEFINITELY NEED TO KIND OF COME UP WITH A WAY AND, UM, AND BE CONSISTENT IN HOW WE APPLY IT.

SO THAT'S ALL I GOT.

ANY OTHER QUESTIONS, COMMENTS, THOUGHTS, OPINIONS, IDEAS, CHAIRMAN, UH, AS BRIAN BRADFORD INDICATED EARLIER, I THINK OPENING UP THAT COMMUNICATION BETWEEN DEPARTMENTS, UH, WOULD GREATLY IMPROVE THE OPERATIONS, IMPROVE, COMPLIANCE, AND IMPROVE AS GETTING MORE BUSINESSES THROUGH THE CITY.

AND THAT'S ONE AREA THAT WAS REALLY LACKING.

AND, UH, WE CAN ALL, I MEAN, AS, AS DEPUTY MAYOR, PRO-TEM INDICATED, UH, AS SOON AS YOU REAL CAME TO FIND OUT ABOUT THIS, HE WAS READY TO COMMUNICATE WITH THIS ENTITY AND, AND, YOU KNOW, TRY TO TRACK THEM TO USE THE CITY SERVICES.

SO, UH, WE FEEL VERY CONFIDENT, UH, WITH BRIAN SUPPORT.

UH, THIS WILL BE IF HE COME BACK IN A YEAR OR TWO, UM, THIS WILL BE A GREAT, UM, WHERE YOU WILL SEE A LOT OF IMPROVEMENTS.

THAT'S THE DOG ALSO AGREES WITH YOU ON THAT.

UM, YOU KNOW, JEN, I THINK YOU'RE RIGHT.

I THINK THAT'S VERY TRUE.

IT'S, YOU KNOW, IF WE HAVE TO FORCE THEM, YOU KNOW, WE HAVE GREAT AND WE HAVE GREAT SERVICES.

AND IF WE HAVE TO FORCE SOMEONE TO USE SOME, THEN MAYBE WE'RE NOT DOING IT THE RIGHT WAY.

UH, BUT CERTAINLY IF WE CAN GET THE INSIDE TRACK TO SELL OUR EWS AND OTHER SERVICES, I THINK WE WIN, UH, MOST OF THE TIME.

SO, UH, I AGREE WITH THAT.

AND I ALSO AGREE WITH THE QUEUE, BUT THAT'S, THAT'S THE CHALLENGE OF, OF THE CITY OR ANY MUNICIPALITY IT'S WHEN WE WORK TOGETHER AND WE COMMUNICATE AMONGST THE VARIOUS SILOS,

[01:05:01]

WE BREAK DOWN THAT STUFF THAT WE, THAT WE CAN GET THE MOST THINGS DONE AND THE MOST SYNERGY.

SO I VERY MUCH APPRECIATE THAT COMMENT.

AND THAT'S A LOT OF WHAT YOU GUYS DO, AND I APPRECIATE THAT FROM THE AUDIT PERSPECTIVE AS WELL.

THANK YOU.

ALL RIGHT.

ANY OTHER QUESTIONS, THOUGHTS, IDEAS SEEING NONE.

I THINK THAT'S OUR LAST ITEM ON THE AGENDA, MIKE, CORRECT ABOUT THAT TED AND I WILL CORRECT US AS DEPUTY MAYOR PRO TEM NOTED.

UM, APPARENTLY I WAS LIVING IN THE PAST WHEN I MENTIONED THE START DATE.

I CALLED IT MARCH 15TH OF 2020, PERHAPS ONLY BECAUSE 20, 2018, WE'VE BEEN BETTER THAN 2021 SO FAR, WHICH I DID NOT EXPECT, BUT, UH, BUT IT IS 2021, MARCH 15, 2021.

AND WITH THAT, UH, THE AUDIT, THIS AUDIT COMMITTEE MEETING IS ADJOURNED.

THANK YOU ALL FOR JOINING US.

WE'LL SEE YOU.

WELL, THANK YOU.

* This transcript was compiled from uncorrected Speech-to-Text.