Budget & Effectiveness Committee - July 21, 2020

Budget & Effectiveness Committee - July 21, 2020

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All. Right good afternoon everybody and welcome to this July 21st, meeting, of, the Charlotte City Council, budget and effectiveness, committee, we'll. Start off with introductions. My name is endre so I chair the committee, if, the other committee members would introduce themselves please. Julie. ISIL committee member. Committee. Member. Renee.thompson. Committee. Member. Mr.. Graham I. Guess. You'll join us, good. People in ch 14, please introduce themselves. Great. McDowell city auditor. Constituent. Services. City. Attorney. That. Is that all in the room. All. Right. Ryan. Burgin budget director. Kelly. Flannery chief financial officer, I would. Die over mr.. Adams. City and come on it. Brent. Cagle aviation, director. You, got everybody. Sorry. Jennifer Smith, General. Services no. Rieger with General Services they. Feel. Good. All right everybody could please mute. Your phones, I. Wanted. To say first I was, part I listened in on a meeting that just took place in, the Community. Safety Committee, talking. About a potential, referral. To budget, and effectiveness, just. Wanted to say we will consider, that when the referral, has been provided, but I, don't, feel we are in a position to talk about it today so um. We'll, take that up when the, referral. Itself has been defined and given to us so we know exactly what that is going to be about we. Do have three items on our agenda today. Prioritizing. Projects funded by hospitality. In internal, audit up for day in briefing, and City. Council resolutions. So, I'd like to hand over to Ryan Bergman. To. Take the first topic. Sure. So the as. Mr., Driggs mentioned, we have three topics today. I'll. Go over them real quickly and then turn it over to Kelly to actually start the first one, the. Three topics we. Have a referral from the retreat on vetting tourism, projects, so, the task is to discuss, developing, or improving the process, around bedding. Hospitality. Funded, projects. As, you're aware Hospitality. Funded projects, have different. State restrictions. So. Kelly Flannery, who's a co staff supports this committee with myself will, provide some background and, then see council input. Second. We'll turn it over to our, internal auditor, Greg, McDowell to talk about an internal. Audit briefing, which will. Primarily be, about, a fairly, significant. Internal, audit that they. Are due to complete, so, early last year, we. Were trying to make a lot of improvements and redesign. The. Capital process, to avoid, some of the mistakes. That were made in the past. So. Greg, has a very thorough document, you're going to talk about it a little bit today we, appreciate, that it been a really collaborative process. With city staff which, has allowed us to. Work. To improve. A lot of the things already in this document, over the last year and a half it, also provides, some further, areas that we can continue to to, improve and get better. Finally. We'll, turn it over to our city attorney Patrick. Baker to. Talk. About a February, referral. That we had that we would have taken up however. Our. March committee meeting could get cancelled it's. On council. Resolutions. So. We'll put the resolution, on the screen so you can Rifa miliar eyes yourself and. Patrick will lead the discussion there. So. With that if, it's all right mr. Driggs I'll turn it over to Kelly to start the first topic. Joey. Go ahead, thank. You. Thanks. Wendy if you just want to skip to the next slide as by, the director Berman just mentioned, this comes up with born out of the. Retreat back in January. Both, to try and kind, of codify, some of the existing policies, and procedures, that we have and identify, opportunities to. Increase. Transparency and make sure everyone's getting the most out of the, process, so.

I Think before we get too deep into next steps I just want to give everyone an, overview, reminder, of. How hospitality. Funds work and. The uses for them so Wendy I'm on slide. The. Next slide. One. More, thanks. So. As Ryan said the the state legislation, defined these couch Wars and Hospital hospitality, revenues can be used and. That's a city both, on the budget and in our annual, financial report we account for them in three different funds that's, the convention center fun tourism, fun and the hall-of-fame fun these, are not general, operations, these are special revenue funds of the city and for. The convention, center that's obviously, funding. For Convention Center as well as your Bank of America, Stadium related. Cost lives amateur. Sports. Soccer. Would live in Convention, Center funding as well and then. Tourism, is just. That if the Convention, and visitor promotion, as, well as the, Levine campus discovery. Place. I'm more of the cultural facilities, and then Hall of Fame is obviously just the NASCAR Hall of Fame facility, and. The. Next slide this. Is just a summary of the budget that was just approved back, in June. Primarily. Hospitality. Revenues currently, are used for debt service and, CRV a promotion. And marketing and, facility, maintenance as. It relates to the convention center fun typically, about 70%. Of annual revenues covered just the debt service and the maintaining, of existing, facilities, and then, all of the marketing, money that we give to crv a comes. Out of the Convention Center fun none of the other funds contribute, to those dollars. So. The revenue sources for Convention Center primarily and what we call the second three percent occupancy tax as well, as food and beverage and then. The uses as I mentioned primarily, debt service primarily, facility, maintenance. The. Tourism fund that's. The first the, first three percent occupancy tax rental, car, portion. Of you drive it, some. Money from the county it's more of a hodgepodge of dollars. There and, that goes to the maintenance of, oven. Spectrum. Labine. And some. Baseball stadium, parking costs are in there and in the NASCAR is the final, two percent occupancy tax be the total 8 percent occupancy tax and that is the only real, revenue source of that fund and that's exclusively, funding. Debt service maintenance, and from, time to time capital, projects, at the NASCAR Hall of Fame's. On. The next slide just wanted to give folks a reminder of what crba, does, the role for the city, there. Are the regions you. Know trying to bring conventions, here and promote visitor, spending and opportunities, for the community and economic development, the. Annual economic impacts, about a billion dollars and, their. Board is 13, members, that. Are actually, selected approved by the mayor and city council there's. A mix, of people there's I think three or four hospitality. Professionals, currently, at sit on that board and, their. Major function, is not, just sales and marketing but it's the operation, of the city's venues, and. It's. Important, to note that they are a component unit of the city so that means, appearing on financials, but, they have their own standalone, budget, system and their own standalone financial, policies. Usually. No, budget around 70, million about. Half of that 70, million comes, from hospitality, and. The other half comes from revenue. They generate from, hosting events and their. Budget is approved by the CEO CRV, a board of directors, typically. It's also presented. To, City Council every, year, similar. To the city they maintain a 16%, operating. Reserve or fund balance, that. Is not to be confused with the cities. Fund, balances, for these funds they're different numbers so they're fund balance isn't, exclusively, hospitality, revenues it's, whatever revenue, is Danny of generating, the year that are left over so. Kelly they also receive, money from us through our financial partners, allocations. Don't they that's, the same dollars that's correct so those dollars. Are statutorily, required for, the, state statue as well as contracts, that were entered into many.

Years Ago and how those contributions, are made but it's typically. Incorrect. Me I think I think the numbers ten million annually, and tourism. Promotion numbers. And. Point two yeah. Yeah, thank you. The. Current process, so. When we think about hospitality, projects. Or investments its. Maintained. Thank. You mr. chair Kelly I just had a question on the front the. Fund. Balance the reserve balance, for, CRV a when, you said, 16%. I know in, the case of the city that's. You, know double. What. We. Are required to have and, that. Has. A lot to do with our bond rating. But. CRV. A wouldn't. Be in that same position in, terms of right I mean they they, wouldn't be impacted. By a rating. Agency so, how, did they arrive at that 16% number, and, is. That the right number, yeah, I think so the crba doesn't hold any debt we do if they obviously don't have the wrong ratings these. Are economically, sensitive, tax revenues, in a way different from our general fund which is primarily property, tax and, sales tax property. Tax is extremely. Reliable. Sales tax is a little volatile but, the hospitality, references. We're seeing now are extremely. Volatile, so, 16%. Are about two months operating, I think, is really. The appropriate level, for them to have okay. All. Right thank you. So. We look at the type of investments, we. Have the city owned assets, and facilities, as well as reason. Intergovernmental, relationships, so that would be a great - whether it's with, you. Know a, Discovery. Place type agreement. Or something, with the county when you're looking at the Memorial Stadium agreements, or, the events, like most, recently pga. The. NBA all-star, game those types of investments are all things that get funded out of hospitality. And we. Look at the priority, our current priority, is you, obviously pay our current obligations, first so we. Have agreements, beyond just debt service requirements we have agreements, with. Hornets. With the Spectrum Center that. Will maintain facilities, and, then, the, second piece is the studio asset so we don't want to run into disrepair, on our own facilities, so the. Second kind of in our waterfall, and the. Third is whatever discretionary. Investments, how we identify, after, all existing. Commitments. Have been honored, now. We look at, investments. The things we look at obviously are legal compliance is the most important, we, look at the return on the investment, what's it bringing into the city you know in the short term in the long term. Maximize. Inclusion, for diversity, OMW SBE, job, creation, not just as part of construction but. Ongoing and, how, is it going to tour the support tourism and economic development, right, now the crba. Convention, Center is a tier, 2 destination. Category, that's, among more their biggest priorities, is maintaining, that cheer - so that's, a criteria, we look at a lot as. Well as support. From external, stakeholders, not just City Council, and CRV. But also hospitality. Industry professionals, does, this support the. Commitments, that we've made that industry, and then. Financial, policies, obviously. We want to make sure it's affordable, we, have a hundred percent of here's debt service requirement, which must be always self respect a portion. Be. Portion of next year's debt service that's. Available and we, maintain robust, fund balance and. So, with all those things that we're currently doing, I think turn. To the next slide we. Kind of look to you at this point and how. Do we want to codify those things how can we expand, on those things and, what's the appropriate next. Steps and checkpoints with, counsel. To. Make you feel comfortable that we have a valid. And transparent, process. So. Kelly you. And I spoke yesterday and. I. Think, one thing that we need to clarify for the benefit, of committee members is. Our. Experience has been that the. Crba green stas a proposal. For certain capital investments. Like. Discovery. Place or whatever. And. What. I'm trying to get straight in my own mind is, are. The things that we need to talk about, relevant. To what, they do in terms of capital budgeting or are you talking about decisions, that originate, in the City Council I. Mean. It's I defer, to council, it was your charge I believe that the request, was crv, a specific. But. I do think there's an opportunity, specifically. As it relates to the financial, policies, there. Are things we do in practice but we've never actually put, the pen to the paper and written them down I think, this is a nice time to do those things. Together. So, I guess I could go either direction but, I think there's room to modify. Some of the things they've got out there already. Right. I'm. Still struggling. With this that, that referral, came because. Things. Were coming to us and we were being asked to vote on them and I.

Think, Some of us did not have a sense of he really understood, the context, in which those decisions were, being made but. The pipeline, was of capital, projects, that. Crba, was budgeting, for and what. The implications were if we approved, additional. Funding, for one project in, terms of maybe. A delay in the timing of another one so. I'm still trying to create this sort of tie into the process that results, in a proposal being brought to us, and. The. Things that you're talking about here. And. Maybe we should have, you. Know Tom, Murray or somebody actually. Helped. Us with this but. The. Criteria that you're talking about that we, need to discuss, relate. Specifically, to those, investments. Of, hospitality, funds. In. Capital. Projects, right that's. Correct, so. I. Don't. Know other committee members chime in here, but. My impression is that a lot of that like convention center not. Sure about soccer. But. A lot of that is sort of brought to us as. A result of a process that. Appears. To be taking place within. The crba. And. By. The time it reaches us you. Know we have asked questions in the past that are okay what other things you have we got some information, Tracy provided some. But. I, think. The, thrust. Of this referral, was could. You help us to, understand. Better when. We're being asked to vote on one of these things which, was not did not originate, on council. And. How. Can we decide what should we use as reference, points so. I think the idea that we establish. The. Criteria for, investments. And that we are more thoughtful, about how, we, define our priorities, and so on could, also apply, to our, CIP, process. As well as to capital. Investments, from hospitality, funds. But. It's almost like those are two different questions I mean, do, you think that the some, of the things we're talking about here would be applicable to, our capital budgeting, decisions, on in the CIP. First. I should have prefaced by saying that before. We put. This presentation together, we did sit-down finance. Budget, strategy. And budget economic. Development, and crba and they're very willing, everyone. To participate in this and. Tom is fully. Well willing, to you know participate in future meetings I think we just thought for the first one it was kind of gauge where council was at and then kind of see next steps from there, but. As it relates to your question I don't. Know I mean I defer to Ryan a little bit I don't think there's a direct relationship there's such different, projects. And different process. I mean, there's usually a capital staff where it's not just the one funding, source whether, it be you. Know. Hops. Geo or debt service reserves or Pago you. Know it's usually a staff of a whole bunch of stakeholders. And it's, very different process, so. I guess I would, lean towards they're different but, right. More. Longevity here, than I do maybe you can color. Sure. I, think. That anytime we get feedback from, you guys on the appropriate, touch points, that you would like well. Balancing. The ability to keep things moving towards a proposed budget looking, far ahead with our planning, fund things, of that nature. Even. If we're not directly, discussing. The. Capital, piece from this referral, I helped, us understand, the touch points that would be appropriate for you guys in the types of information that you'd be looking for. Let's. Take for an example soccer. Right, so. We. Made a. We. Gave an indication that we were prepared to commit 110 million dollars, to soccer. Subject. To the completion, of satisfactory, agreements. Was. That all. Of that negotiated. By our economic development people, or by. Crba. Or by both. My. Understanding, it was primarily the city manager's office /. Right. And I. Think, as far as council, is concerned, on that one for example. We. Didn't really have any reference, points, in terms of like a quantitative, analysis. Or.

An. Assessment of financial, returns it. Was kind of like Major, League Soccer is good and here are a couple of a. Couple. Of exciting, reasons, you know economic, impact and so on but. So. Are, we talking here about the possibility. Of actually being a little more rigorous when, we assess, an opportunity, like that, that. Would be my recommendation. Right. So. I guess I just asked members of the committee, how. Would, you like to move forward on this is anybody excited about this or yes. Mara. Yeah how's your handout good yes. Mr., chairman. And. I I hope that lost the charge for the committee is to figure out how. Do we. Address. Each request, that comes in for, the funding. So. There's gotta be some metrics, that we gotta come up with to. Analyze. Each. Proposal. That comes forward that addresses. Certain. Metrics but, then also addresses, some of our community, goals and oh in our rate of return on our investment. So. I think it's a committee you gotta discuss this, what. Are some of the things that we would like to see in a given proposal. That. Was kind of my thought too I think what we could talk about is. What. Type of information, council, would like to receive I don't. Really see us going down into the weeds and replicating. All the cash flow analysis, or whatever, but. What would a format, be for. A presentation. To Council that. Was just a little more rigorous and gave us a better ability to assess like the, cash. On cash return. The social return and the. Priority, that this is being given where it fits into a plan, of capital investment. I'm. Happy to let the staff do. Some of the work Kelly that you're talking about here. I guess, the committee could think about whether we, want to give instruction, to the staff as to what we think they should think about but. I don't think on the level, of council we're all gonna be sitting down the spreadsheets, and. You. Know critiquing, the, numbers analysis, that is done by the staff, so. Such. Mira does that sound right to you yes. Certainly I don't think we will be doing the actual analysis. Staff will be doing that and providing, us the results, what I would like to see. Anytime, the proposal, is brought, forward, that we are even fund balance, information, not just being, presented. But actual, spreadsheet that we can look at for our existing. Commitments that's, been approved by council here. Is our fund balance so. That we can look at the numbers and. I I don't think that information is. Currently. Given, it's sort of been we. Are given a presentation, but we don't actually have a. Spreadsheet, where you can say okay here is all our equipment. Here, is our fund balance after. We deduct all of this commitment and. Ultimately. This is the number that we currently. Have, in. Order for us to take more of that commitments. Or even, other. Commitments. Right. In the manager, and, Airport. MICU they're one sector the manager, has, come up with this notion. For. Our capital spending, our CIP spending. Of like, a permanent. Capacity. For debt which. Is meant to provide a context, in terms of, what resources we have to work with. We, know that the tourism funds. I think, have over a hundred million dollars in total revenues, although, I think you just said seventy but in any case we. Really don't know much about. How. They go about deciding. Which. Thing to do first and how much they have room for.

April. 10th well. Thank. You mister chair I think you just hit on it I think that's the question that always comes up is, we don't really know how, those decisions are made and. You. Know I don't I'm, not comfortable with the idea of having the council, look. At an ROI and determining, if that's the right number to miss there's, mirrors point I don't, think that's really productive, for, these, kinds, of situations but. At, any given time we don't know. Where. We stand with cash flow future. Obligations you, know what else even might be coming down the pipe back. I think so it always feels like we're making these decisions in a vacuum without really being. Given the benefit of all the information. Right. And the assumption, is that a lot of this information does. Exist, that it was considered, by the people who developed, the proposal, that comes to us. It's. Just a question what things we. Should be allowed to see and I know one of the issues has always been in my conversations, with Ron Kimball, in the past especially, well. We don't want to kind of communicate to the world at large what. We're thinking about or, how much money we might have earmarked, for the discovery, place. Or whatever. So. I guess we have to reconcile, that but. Kelly. I just I would say to you I think that. The. The thing that's a greatest concern, to us is, just. Getting. Enough. Information. As. A result, of the analysis, for. Us to be able to make responsible decisions, and. In, a way the question, of whether or not we like how the analysis, is being done is a separate, issue and I, think it could be a tough one for council to tackle, frankly I don't. Know whether. You. Know we've got we've got career, people who run these numbers and do all this analysis, and, people. On council have different backgrounds. So. I. Would. Be inclined to sort of trust the work they're doing and, just, say chair, more of it with us so. That when. We're asked to vote on something, we're. Not we're in a position where we can defend whatever we decided, to do. Mr.. Drinks, yes. I. Agree. With you. I'd. Like to make one. Comment. On. A. Ratio, we should consider, is like at what point. We. Say that, this is too much debt that we can take this is too much debt then, we would like to see if, it. Commits. Our future obligations. So. Maybe. As a Budget Committee we can set a policy in, place around. How, much that that'd be we. Should. We. Should have, our, council. Feels comfortable, with. At. Least it gives direction to, stop, that, a council, may not be comfortable committing, too much if, it increases, our debt to asset, or debt to valuation. Yeah. I mean it's the same sort of conversations, you would have on a board right, like an order. Earth where. You're sort, of monitoring, the finances. And the obligations. At, a high level, and. And, you have a stewardship, responsibility. I do. Think, Kelly. That, there. Are things that might be of concern to you that you could bring to us. By. Way of. Improvements. To how this analysis, is being done before, we see it and the. Committee would be quite happy I'd be quite happy to talk about that with you and. And move it forward but, I don't think the idea, for how we should change the way it's done are gonna come from this group, does. That make sense. Okay, good, let's at, the moment then if. You could focus on thinking, about what information, council.

Receives In, the, context, of a capital, spending proposal. And. It, would give us a good basis, for making a decision and, you heard from the such Mara and. Mayor Pro Tem and, then. We can talk to more about. Ideas that you have for a. Changer. In analytical, procedures, and, I. Think. We would bring them up as a suggestion, to the committee and and, we can react to that but we're not going to be the office of that so. If. Everybody, is okay. On that topic. As. Such Mira your hand is still up I assume that you didn't mean to speak again. All. Right thank you good. So, um, Ryan. Why, don't you move on to chapter 2. Good. Afternoon council, members, happy. Great, happy, to be here even under these unusual. Circumstances. Your. Agenda calls for me to talk about an, audit report. That. We've completed and, we'll be issuing soon go back to that keep, it on the front first, slide please. If we have a chance we'll talk to you about our audit summary and our audit plan those. Items can always be found online. We. We post all things internal, audit related our audit plan our, accomplishments. To date our, peer review which is required for us to follow government, auditing standards and. First. I'd like to reintroduce virtually. Tina, Adams introduced herself my, deputy auditor she's been with. Me for 22 years and then. Probably lurking, on online is also audit. Supervisor Craig Terrell and those. Two were key to completing this audit report that I'm going to talk to you about. And. For those of you who are new to internal audit or just a refresher memories I want to talk about how we get to this point to bring an audit report to you first we develop our a plan and my. Audit group does risk assessment, we. Obtain input from departments, and of. Course we also receive, city manager requests, over the years I would, say that the audit plan has been 90%, our. Very own ideas, of you know after doing risk assessment, and paying attention to what's happening in the city and. Just being aware of audit issues and. Then departments, requesting, specific audits, and, then, on occasion the city manager will ask for an audit and and that's in, this case so next slide, in. This case right just to be clear you. Are an internal, audit function right so you're not speaking for an orbiting firm this, is not to be confused with our external, audit the conduct, of our annual financials, correct, I'm your city auditor which is internal audit and I've been, with you for over 22, years and. I. Mentioned. My. Two top people who worked on this report so that if there's anything, you want to compliment or say positively, about it, it. Accrues to Tina Adams and Craig Terrell if you, have questions, concerns, or you think we didn't answer, everything we should have then. That's my responsibility. So. As I said this was a city manager's request and as Ryan even mentioned back, because. The final report that will issue later this week and that you'll receive soon.

Will. Be around a hundred pages long, and. So. Again. With the nature of audit we, focus on how we can improve and there, are areas that we can improve upon but as Ryan, said at the beginning a, number, of staff have already taken, our recommendations. Taken our discussion, and. Come up with things on their own the, things that the city is doing better today than they were when we started looking at this in 2019. Or not necessarily, just because of internal audit internal. Audit didn't recommend the, advance planning and design program, but, we recognize it as a key, thing. That the city is doing now that that, helps you, better understand, and and. Helps us focus better. So. Next. Slide it. Has been a significant, effort our scope, to look at five-year plans review, current and and past practices, we've. Looked at a number of case. Studies projects. That. Were completed many years ago and that we're going on recently and. So this case, study analysis, would. We. Have we have. Addressed. Things like the cross charlotte trail. The. Joint communications center, the. Charlotte convention center but, our report was not to. Perform. A. Rigorous. Autopsy. Or look back on the specific, projects, we looked at it enough projects, to form opinions as to how we can improve things going forward. And. So to do that we focused on or. We used guidance, from the government. Finance officers association and. The project management institute to, help us formulate our ideas we also hired two, outside companies, telson solutions, and RSM. To look at specific, projects, for us and their. Reports, will. Stand a stand, alone but our appendices, to our overall report next. Slide. So. Again at a 30,000, foot level and, again telling. You that there's 22, recommendations, and each recommendation, had. Responses. Of from. Usually. Three to five different departments we have a total of eight departments who have responded, to our recommendations, and so we, have 68 responses. That actually addressed this and so that has contributed. To the amount of time that has taken us to put, it all together and give people a chance to respond decide if they were going to take actions immediately, obviously. Some things would take quite a while to to. Dive into so. At the 30,000, foot level, project. Selection and advance planning and. We. Said that project, budgets have been established without, sufficient design, and, so, we recommended. Some. Planning decisions, be. Documented, better. Established. The. Selection, process for the advanced planning and design program, so, that was after the I'm. Calling with a D and D P was established. We. Want them to improve upon that and so strategy, and budget is going to document that and. We're, satisfied that the. Advance. Planning program, does address some previous risks. Next. Slide, airman. Yes. Go ahead thank, you. Mr.. McDowall is all it's great to hear from you I love your presentation, each time. You. Bring something new that we don't know we. Don't know about. Have. You seen challenges. In your previous slide you mentioned, vary use and, questions. Or service. To departments. Have. You had challenges. Getting responses. Oh is. That not the case well. I didn't mean to imply that at all I just meant it was a large undertaking and, to, obtain the responses, from sometimes as many as five. Or six departments to. One. One, recommendation we had we, wanted to have a, robust. Conversation and. So sometimes there was some back-and-forth conversations. Phone calls emails. And. And. So I wouldn't. Say other than the fact that you, know we've all been dealing with. Some. Some. Extra special circumstances. For the last few months and so. I maybe, took a little bit longer to kind of wrap things up. Because. People were being drawn in different directions, everyone. Has been very cooperative, everyone. Understands. When especially when the city manager asks us to do a specific audit. That. They're gonna be cooperative they're going to be helpful and actually. From the I'll go ahead and tell you now out of the 68 responses, that we received there's. Only four that I would classify as, being. On. A not. Accepted, or disagreement. And, and that's okay for our auditors to disagree, with with people that we're recommending that they change things and, sometimes the disagreement, were your.

Kind Of minor like well that mean, yes maybe we need to do something better report. Better but we don't like the the recommendation, of the solution that you might have have, raised, and so as, often as we can we hear other people's alternate, solutions, and inject, those into our reports, and so sometimes I'd like to tell people we're, not taking credit for everything you've already decided, to. Do but our independent. View gives. Us an opportunity to raise questions and say can we do this better, and. So, I. Went. On link but the answer your question was there, was not a problem getting responses, from departments. Yeah. Could. You send, us at. The end of this presentation, it might be part of this presentation, the, list of artists, your department, has conducted. So. Far in 2020. And in. 2019 all the artists. That you all have done at the request or city manager's, office and has, in. The past had there been a scenario, where the Artic internal, audit request came, from, City. Council, or. Just goes through the map. Requests. Come through the city manager's office I've, heard council. Members talk about audits sometimes and so we certainly pay attention to that as to what would be important for this for the city but, overall a 90% of the audits are that we initiate, or a result of my, staff and I doing. Our own risk assessment, looking. To see what's important, to. The city what's important to Council and. Again, there have been a few requests. This one being the most most. Significant, a, couple. Years ago I I wanted, to do an audit and I there's, certain types of types of audits you shouldn't do unless management, you know really wants you to take a look at it and so sometimes. I sit down and say here's, something I think would be useful and if, you embrace that then I'll move forward but it's. Important, for us to be independent we, are review. We're audited you say well who audits the auditors and that's yeah. We're, required to have external review, of our work, it's called a peer review and if, we don't have that done at least every three years we can't say that we're following government auditing, standards and that's that's key I think to our being, able to claim to be independent, so. Let. Me just mention there we do have at. Least on an annual basis, this committee receives, a report, from the internal, auditor that covers a lot, of the things that you're talking about massage Mira, talks. About the audits they conducted, and reports on their activity, and the, projects, they're looking at. If. Possible, I'd like to stay focused, on the report that we're getting today because, I think this is actually important, for me. You. Know how many conversations, we've had in the past about our capital, process. And some, of the things that happened like the cross Charlotte trail, and. What we're seeing here, is an assessment, of what. Some, of the issues, may have been that gave rise to those so. Want. To just make sure we can justice to this topic and. By. All means I you. Should get that report, you requested, but. Tell. Us more about your conclusions, Greg okay we're on we're on slide six of ten and so we're actually moving along and I just point out that will. Send you the documents you asked for but they're also online not. Just internally, on CNET but they're also available to the public we, probably post monthly updates as to how we're progressing on, our audit plan of, the audit plan for the next two years is actually online, and. So that information is there but happy to send it to you directly so looking here at estimating. We. Said, we. Need some cost estimating, standards, that are citywide each department, has their, own approach and, our recommendation, is that we become more consistent and.

Establish. Those everyone's. Playing by the same rule and. So we had findings, and recommendations about, the need for independent. Cost estimates, prior. To submitting to Council especially. For the high dollar high risk projects, and. We pointed out that we had a couple projects. One, was the JCC, and the other was the convention center where, the sub contractor, bids exceeded. The. Budget the budget of. The original estimates significant, dollars and we recommend that in that type of case that an independent Cost Estimator be, brought in and. So that's great. What. Construction. Manager, at risk means, and what the alternatives. Are, to. Us for contracting. But this is one way in which we can do business with contractors. What. Is it and what are the alternatives. Sure and section II focuses, on that specifically, but the, difference if, you. Well, I'll go ahead mention that the key ones are designed, bill design-bid-build. And then, seem, are as we call it construction, manager at risk and. It's. Interesting, it's. An interesting approach interesting. Delivery. Method and we've. Had lengthy, discussions, with people as to how they decide which method to choose under what circumstances, and so, we'll talk more about that when I get to II okay. But. Again on estimating. General. Services agreed with us about, seeking ice and independent. Cost estimates, as recommended, next, time see. I'm still again. Staying at the 30,000, foot level because, once. You all read you know pages 1 through 102. I'm, sure you might want to call me up and have some further discussions. So. Cost management and delivery and. In. This. Regards, we actually devoted. A page or two discussing, some projects, that had been delivered very. Successfully, to the city but. Again auditors, do tend to focus it on what can we do to improve and, so. We, have some project management controls, but they're not consistently. Documented. And. We, recommended, establishing, the criteria. For. Selecting the appropriate method, and. We also pointed out that the cost of staff time on capital projects, hasn't been, accurate. Or, complete, or. Consistent. Actually among the departments each department, has taken a little bit different approach over the years, and. As you can see on actions taken and plan General Services is going to evaluate that strategy. Budgets, and, budget department is working with departments, to establish, the. Consistent. And accurate methodology. Slide. D next. To live performance. Reporting. The. City has been, decentralized. In its approach or at least it has historically, been that way what, I've seen over the last year, or so is a, improved.

Process, And, initially, when, we started looking at this project to say you, know what went wrong wiring, it wires council. Having questions or, why are we not, the. Reporting. The. Results that we'd like and, the. First thing that came to our attention was just really a reporting, we didn't have a consistent. Way to approach. When. And how and what, information council received, and I, think. Most. People would agree and I've watched that council. Has been more receptive to the types of reports that staff, has brought forward and it's, it's, been easier to to. Stay on top of I guess any, any concerns, or, threatened. I guess is one of the words that use threatened projects, budgets, and the like and so, we focused on that, performance reporting, and we said we. Need to establish. We. Need to have a system, to the Nessa for, facilitating. That timely project reporting, unfortunately. We're doing some things manually, or, we're having systems not talking to each other, and. So it's it takes a little extra time to put that that information together, also. A percentage, of completion reporting. Requirement, would really improve the project, tracking and that's that's something we really are encouraging departments. To. Focus on. General. Service has is working on a new template and, developing. A monthly report and so, we're really optimistic that, that's going to address. That question that concern, next. Slide. The. Use of the construction, manager at risk it's one method, of delivery and, it's. Probably. Not even the best person to explain what. What the C Mar is other than the fact that you have a choice between. How. Many contracts, do you, use, general. Contractors, who's in charge how, much of the risk you can you can push off to a. Contractor. Who's in charge of all these things and we had some interesting conversations, on this because. Some. Departments, use, one, contract, and some use two and our. External. Contractor. Our external expert, that we brought in had an opinion as to how we should do things and. We. Ended up saying well as long as you know legal will support either approach one, or two contracts, and so. There's there's different. Approaches and we will follow them closely but our findings, there is. That. We need some more independent, evaluations, of subcontractors. Bids and. Some. People think well once you've put it out to bid. That, is your independent. Review. Whatever, comes in that's that's a competition. But. We. Think we need to allocate some more resources to reviewing, those those bids that come in for subcontractors and, and. When they're out of out. Of expectation. We need to challenge that or make sure we understand, what the differences are and, not just as not just say well it all came out you.

Know Some were higher somewhere lower. And. So we want to ensure that ago she ation of contract, terms does not delay trade package bidding, and we have a couple examples in, our report as, to how how, this, negatively. Impacted, us so. General services. General. Service just to wrap this up general service is going to ensure the. Seam are an independent cost estimators, evaluate, the bids, and. Update our manuals, to be consistent. Besides. Me all right did you have a question yes. Have. You looked at our MW, sve as it, relates to this and. Any. What. Sorry. I'm. Talking to. I'm. Being assisted, here in. The. Meeting. So. Mr.. McDowall have you looked at and they will USB feeds, as it comes to subcontracting. Very. Comes to independent, evaluation. Not, as a part of this audit no. We're. Certainly aware of concerns. That, we might have and we have looked at. Our. Overall management but I have to go back a couple of years to see to. Give you a better, explanation of, what audits we've had that a focus. On. It. Right it had been some concerns that have. Been raised there. There. Is not really. Quoting. That quantitative. Process. When it comes to subcontractors. Be to remember these, are interested. In hearing your recommendations. I. Think. That would actually be a different, charge to the auditor and. It. Is another entirely, different, topic of conversation. Possibly. One that really ought to be in. Councilmember. Mitchell's committee because, he, is heavily, engaged in that I mean, clearly we can look at it but. Once again what. I'm seeing here is. A. Response. To a lot of the questions, we had when. Issues like the cross Charlotte, rail the. JCC, and other. Projects. I just, came in kind. Of wildly off target, and. Personally. I'm very, happy, to see this because. It. Suggests, to me that the reasons that those things happen have, been identified or, are being pointed, out to us here and in the extended, report and, we.

Need To think about how we follow up or what conversation, we have with the manager. So. I, don't. Mean to deflect your question, massage mirror but that's. A whole different, can. Of worms the, issues. Around MW, SPE in. This, case what we're talking about is. These procedures, and, I would mention concept. Construction, manager at risk is. One. Basis. On which you can basically, contract. With somebody there's. Design build operate, manage. There was what. Used to be called, that. Was called d-bomb I think and then there was the. F-bomb, which is you throw finance there as well and the. Choice among those different. Models. Negotiating. Comes. Down to basically how you allocate risks, I would, say the principle thing so, if you have something, like a turnkey, project, and, you tell the contractor we're gonna pay you so much money and they're gonna do these for us and, anything. After that is your problem. What, does concern me is, that I I thought a couple of our contracts, were like that where. We were protected, because the construction, manager, was at risk and then. We got told no there. Are overruns, and the, subcontractors. Didn't come in where we thought they would and. So. Then. You wonder if. Using, that basis, was the right idea in the first place. Ie should. We have negotiated, differently, and not, left, to the manager, of the contract, a lot of the responsibility. So. I. Guess. My question for, the committee and for all of us is. If. You look at the second. Slide I think it was, which. Pulls all this together. The. Conclusion, slide that, says the city is not consistently use best practices, to manage our capital, projects. Question. Is what are we doing about that and. Greg. You and I spoke and forgive, me for being familiar call, you by your first name but oh you, and I spoke about this and. I. Think the impression, I got from you was that. We are sort of making progress that, the change we made to the twenty million dollar fund. And, and. The. Changing, the sequence of how. We approach capital, projects, was. Was. Helping, the situation so, that we didn't have situations. Where bonds, for example have been authorized, and then the project, itself didn't even get started until we. You know the end of the authority. That we had for the bonds so what, was your sense of where we are right now well, I'm, going to be if, if, you let me talk a lot or become more come to more meetings and over the you hear me say that similar, thing which is that the city is a good organization that wants to get better. Its, I'm at the 30,000, foot level and, so you, really will have to look at some of the responses, to see for example that out of 68 responses, most of the time departments, are saying yeah. We accept that recommendation we, can we can do a little bit more.

Multiple. Times I've said though that auditors. Particularly, in construction. Expect. To find or question, or even recover, one or two percent of what the what the owners are doing if, we find five or ten percent then you need to really, do a better job if, we find less than that you're spending a lot of time on contract management or I'm just not a very good auditor so trying, to use that as the, perspective, that good. Organization, can get better yes there's 22, recommendations, in this but we spent a lot, of time it was kind of a broad scope to audit it was it was only after a few months that the city manager asked, us to add CMR. As a specific, thing because. We had issues with the joint communications, center the, Charlotte Convention, Center renovation and, and he said he was going to tell. You council members it had the order to look and say well there's the problem the seamer method of delivery, and we said no we didn't we didn't find that so, it's a broad scope to audit many, findings, and recommendations and. I would not be shy about coming back to you and saying you know the city has a real problem and needs to needs to fix it you need to you, know hire more auditors or do things completely different that's not my message today my message today is is again, kind of a continuing. City's. Improving. Things when, the city manager wants somebody to take a closer look he brings me in and and. Asked, me to give it you know my opinion and so, with my staff and a couple contractors, that we hired to help us out you. Know I went back and looked through all these responses. And I tried, again a conclusion. You wanted to be fairly brief and, it's hard to do that with 22 recommendations, but. The level of detail we gave was to really help the city in those five different areas that we focused on. Would. You be able to. To. Give us a score in, comparison. With other large cities as to the quality of these processes, I mean it. Is the stuff you're talking about fairly, typical and large cities or. Do. You think we have a real issue but. We looked at a number of other cities we ought we looked at other audit. Departments, that have done this type of audit and, they find similar, issues I think, the the question is you, know what's, the receptivity, of people. To audit recommendations and. We, have a robust, recommendation. Follow-up, plan and process and so, once people tell us they're going to look at things they're gonna change things we're gonna do things differently, we, follow up with them if. You scan. Through the report you'll see some areas where we say here's actions that have already been taken it's, it's really hard to compare us to others I would say that you. Know time and time again after, having been with with us this, fine, city for 20 years it's, a good organization. But. As you know so, many areas is very broad and is. An, organization, does it want to continue to improve and the, fact that the city manager asks, internal, audit to look into things like this says yes we do want to improve and. I've had that conversation with, many bosses over the years and it's like well if I find something negative you. Know what where we go from there you, know am I going to be your best friend and, a, good manager as, I've been fortunate to have always, says, well. It. May be tough to swallow but we want to improve so put it out there on the table so I'm not doing anything doing, anybody any any good. If I don't tell them my honest. Independent, opinion, all. Right thank you did mrs. Mira did you want to say something yes. So a couple of points I'd like to make here. Mr.. McDowall have you looked at as. It relates to solve this projects. That me had. Issues. With such. As Charlotte. Rain and other huge. Capital, projects. Where he had seen change. In scope. Compared. To what was there. Yes. That. Were made and what. Are your recommendations in. Terms of the scope, that had been changed. From.

The Commitments, I'd been made, to constituents. The, number one thing is that we need to communicate and. We need to report for, example the percentage of completion we. Need to communicate upfront, how. Sure we are of our estimates, and so. You. Know sometimes as when when cats does design. Estimates. They'll say we're at 30% we're at 60% and sometimes, we've found that the city the staff has not been clear when, they put a project on the table as to, how much design has gone into it and so you might have a different opinion you. Might have a different reception, if you see if we told you, as. Water, does sometimes well we at, 15%, that's, enough for us to put it on the table and say here's something that we're initially working on that's. That's a different story than if we say we've done you. Know 30 or 60 percent design work and feel, and, feel better going forward so I know the manager has laid out for example, how. He's going to handle the cross Charlotte rail and the different segments, and so, there, are a number of segments that we haven't put a dollar amount around because we haven't done the design work so again the the, the, new program, goes. A long ways towards that. I. Understand. Then you have some, of his recommendations. When, you presented, to the committee. As. It. Relates to existing, findings, we might see. We. Might see a bigger scope, of absurd. An audit request, I think committees should be open to making those recommendations not, to the auditor directly, but, to our manager, that you know I see, here are the recommendations as it, relates to the existing, scope, but, I think we need to take a step further in. This case. Subcontractor. Speights where I'm WSB. II so, we are not shying away from. Making. Recommendations. When. It comes to audit addressed a one, last question for, mr. McDowell when. You look at the processes. Do. You also make. Recommendations, when it comes to streamlining, rx, processes. Are the. Budget request I. Certainly. Could I can't think of any offhand as, to. Streamlining. Or or budget related internal. Audit, tries. To kind of find where we can plug in you. Know not to duplicate everything. That the city is doing I mean you could argue that everything internal, audit does is duplicating, somebody's we're looking over someone's shoulder and we're giving an opinion as to whether or not they could do it better and. But. There are still some organizations, need, get. The benefit of that internal audit yeah, it's again it's it's the selection process as to where can internal audit be best employed. I, think, we need to move. On to our last topic that. Greg. Do you think if we plan to. Have. You come and see us again in about three months would you be able to report on any, significant. Progress, over, that time frame or. What. Are your expectations as, a result of this report I think. Three months might, be pretty good to give you an update as to, the. Responses, that people have given us and how they're, progressing on that like, I said yeah there's a number of recommendations, that, are already have. Been addressed or are in the process of, being addressed and, I'm. Sure mr. Driggs when you get into it you'll you'll, want to address you'll want to talk about many of those 102, pages yeah. I can't wait. So. Colleagues, if it's okay I would like to suggest I, feel. This is important, it's not exactly sexy but when. You think of some of the conversations, we've had over the last couple years. We, need to get these things right, so. First. Of all if we could follow up maybe in three months and have. You just let. Us know how. We're doing there, the, other thing is. I'm. Wondering, whether we should tell the. Full council, something, about this report and my, thought was maybe that when we have the report. Out from committee, chairs, that. We, incorporate, in there a kind, of a synopsis or an abbreviated, version of it you. Everybody is in, with that it. Seems to be something that we they ought to be aware of how, much detail he have but if, we have a sentence, there like the city has not consistently, used, best practices, to manage large capital, projects, I think. We should stay on top of it so. Without. Objection. If. There is. Something. Yeah. Okay. The. Website. You. Can find, on. CNET if your internal, or on the city's normal. Website just look for the internal audit Department you. Look under the drop-down for departments, find internal, audit and, we, have our about. Three years worth a lot of plans and, status, and we post a monthly status and. We have about oh I. Forget. The last time I counted six or seven years worth of lots at least a good 100 audit reports that we've issued for. Available, for your pleasure, and reading. Okay. And. If you can't find it I've called me I'll help you I'll walk you through it and we. Will read them all for next time great there you go there, you, thank.

You Very much our last, topic today, has. To do with City Council, resolutions. And this. Got referred to us as a result of a number of proposals for, resolutions. That. Raised questions about. When. Exactly a resolution. Is appropriate. So. I'm, going to hand off to Patrick. Baker to. I. Guess. Lay, some groundwork for that right Patrick, yes thank, you mr. Driggs um members, of the committee this. Was a referral. That was dated a February, the third as you can see on, your screen. Specifically. In response to a. A, bit, of a wave I guess from Charlotte perspective, you, know I come from Durham, it seemed like there was a resolution. Every every. Council meeting Dara Dara Mike's to do resolutions, and I think that that's a new process, here, in Charlotte. But what I've been asked to do was to assist the committee in. In, developing. A process. Or a policy. Should. The committee decide to go forward with. A policy. As it relates to considering. Resolutions. Right now you do not have any specific policy, that. Relates, to resolutions, it is simply, you, just, go through the, normal, addenda, process, and with, all of your agenda, items, it requires six, votes to. To pass, but. The question ultimately and, you see some of the the considerations. And I, if. You can go to the second, page on, the committee charge. You. See the policy question there can the committee, develop, a more formal, process by, which Council, considers future. Resolution, requests. And. Review. Of any applicable policies from our peer cities and cities in North Carolina, I can tell you anecdotally. The. Cities. In North Carolina, I'm, not aware of any that have, a particular. Policy. Or procedure as it relates to resolutions. Beyond. The standard, process of considering, an item, in their agenda process. And. Passing. That that item but I will have. A more formal report. At. Your next meeting, reached. Out to some but not all of the peer cities as. Well and I'm not finding, any specific. Processes. Or procedures as, a relates. To the consideration, of a resolution. But. But specifically. Final. Sentence there the charge should also address, but is not limited to the following considerations and, you see three category. That have been proposed, of, potential. Ways to, more formalize, the process. By. My subject matter of the resolution, whether falls under the direct purview, of, another agency or institution, whether. The resolution. Receipt does it have to receive. Unanimous.

Support From the City Council to be a City Council. Resolution. And resolutions. That may be considered, controversial. Within. The, community. So. My. Plan is to get some feedback from you, all in terms of what you'd like to see what you'd like for me to come back to, you with. Particularly. Interested. In hearing if there are other, categories, that, you'd like to consider. And. And. Then I'll take that direction from you all to to come back with you to. Respond, to whatever questions, that you have of me whatever. Directive, that. You provide me today so uh I'll, stop there and take any questions. Did. Anybody have a hand up I can't see the hands here. I. Have, a question mr. chair, go ahead um I. Guess. It's more of a statement for mr. Baker I, personally. Struggled. To support, council. Resolutions, that don't have any action, behind them so just. Making a statement I think is something that. You. Know I just questioned if that you know I don't know if that fits into a category, but, I do think that that's one area that we have gotten a, little. Bit tripped up with in the past by making a resolution and example, being the strategic. Energy action plan when. We looked at I. Think. It was in 2000. 17. 2019. I'm losing my days. We, we, were going to just pass the resolution to, say that we support it but we hadn't done any work. Behind. That to come up with any kind of a plan so, then, once staff, you know put together a pretty thorough plan we passed it so I think that's one thing that I would. Like to include in, the, committee charge or the policy, question, is what. Actions, are actually a, part, of. The. City's for. You know within the city's purview to do that would be behind resolution. Okay. I. Would. Like to respond to that mr. drapes there. Go ahead oh I. Hear. What beautiful, champ is saying when, we're. Not able to take in action. And. When we cast it as a Lucian what does it really mean. I'll. Give you an example, where. When. There was ice, rates. Community. Was asking, for us to pass, a resolution and. They. Wanted us to take, a strong, stance. Not. So much because we can do something but because they, wanted support, from the city. And. I understand, in. Those situation. They remind how to make a statement. Where. It creates for their trust with, our cm PD their immigrant, community, would speak up, so. There, might be an exceptions. To certain scenarios, where community, is asking us to step. Up and speak up, in. Certain situations. So I. Would. Like us to consider those, resolutions, where, our voice is so important, in the process. So, that that's really I just wanted to make sure that I, share, my thoughts on that sure. And and to respond, to that in that case the. Community, did want us to respond, to. The. Adverse circumstances. That the immigrant. Community, was. Experiencing. Mostly, from the federal government, and we did we have. Task. Force that met and and, tried to respond, to questions so we did take. Action. Related. To that so we're, we're I think we have a problem is, when, we want to pass a resolution that. Comes, from an emotional, issue and we're, either not willing, to take action or we don't have any action, that we can take and then, you get other groups that come in and said well you didn't do anything for us we asked you to do something you didn't respond to us and so, then it becomes very difficult as, to where you draw the line, and. And, that's, what I just think we should be mindful of I. Think. There are different kinds of resolutions which, is partly reflected, in this conversation. If. We have a resolution, that's, kind of an affirmation. Of our values. You. Know possibly. Some people would think that at certain points in time that. Was important, because of, public.

Dismay. About, something that has happened some. Of the resolutions, get political, in nature and. They. They amount to more of a criticism a. Different. Level of government or whatever, so. I think the reason we're having this conversation is. To try and decide. Taking. On board what mayor pro-tem said, what. Sort of things is it appropriate, for, the city to. Want to talk, about in a resolution, there. Are other things like, the immigrant situation, where. We didn't pass a resolution we, took action and at. The end of the day on the energy thing and. Mayor. Pro-tem you may remember I was pretty adamant in, resisting. That resolution which, was in the last meeting, of the term of the, prior mayor and. It. Would have been great, made some people feel good and it would not have committed. Us to anything, so. Mr.. Baker getting, back to your framework. I. Think. Our idea here is, is to try and define, what a resolution, is what the process is for bringing it forward I mean as it stands right now can a member of council just draft a resolution and. Then, circulate, it and bring, it up for a vote or, how. Would it happen today. Yeah, typically what would happen, is there. A couple of ways of, getting. On the, the, agenda. I believe, the mayor has some flexibility, because I know she does proclamations. That's a separate separate. Issue from resolutions, but generally, speaking you. Would, someone. Would draft the, resolution, and circulate, it to the, group and. It would be added to an agenda at some point in time to be voted on by. And. Again you need six votes to. Be able to pass the. Resolution. So. One. Of the issues about that which I can attest to myself is, that the. Resolution, is then a statement by, the City of Charlotte, and, it. Becomes. Binding on everybody, and, you could have three or four members that are really not an agreement at all with the resolution and. A. Question. As to whether we should require, unanimity.

If, This is going to be a position taken, by City, Council. So. One issue that to consider is what kind of a vote does it take supermajority. Unanimous. And. Can. The mayor offer a resolution the. Same way the rest of us do does, it have to be put on the agenda for a future meeting like, is. It an item that needs to appear on the agenda. Yeah. Typically that's how it would happen is that is that a widow because you certainly, want to have the. Public be able to know what it is that you are doing so, that's typically, the best way to do that is to, go ahead and put it on the print agenda, for consideration. So. I guess question, for the committee. Is. This something we want to try and legislate. Can. We legislate this, can, we kind. Of exclude, things that, the majority of us would probably oppose, and. Not. Create. Incidental. Consequences. That we didn't have, in mind I mean, what's. The feeling about this. But. My position is, this, is mouthful is. That we ought to keep it simple. Resolutions. Are not a, monthly. Thing are. Every. Other thing, it comes up with something, happens. Or I. Believe. The. Council or a majority. Of the council which, is sakes, believe. Strongly, about, that they want to lend. The. Weight. Of the, city behind, it in. A resolution, similar, to any hope, that we make take that take six, vote I don't, think a resolution, should have a majority. For. I think, the, parameters. Around it really. Ought, to be kept, simple. In. Addressed. Because. The infrequency, of them. When. They taste by case scenario, based on the topic matter of. Topic, matters make fire. An. Immediate, response, ID. The. President, sending, in federal, troops to a city. Maidens, are of a resolution, that the, city should speak trunk, I. Don't. Think that these, eleven, those to pass I think it's something. That as, a community, as an example. And. Becomes a metaphor to watch it was

2020-08-02 03:59

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