February 28, 2022 Council Finance Committee/Investment Review Committee

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[00:00:01] Member Sally Lieber: Okay, we'd like to welcome everyone to the special meeting of Monday, February 28th, 2022. Uh, video conference meeting with no physical meeting location for the council finance committee. And I'd like to note that during this declared state of emergency, this meeting will be conducted in accordance with California government code section, 54953 E, is authorized by a resolution of the city council. Please contact uh the city clerk at city. clerk at mountain view.gov to obtain a copy of the applicable resolution. All members of the council finance committee will participate in the meeting by video conference with no physical meeting location. And members of the public wishing to comment on an item on the agenda may do so in the following ways. Provide oral public comments during the meeting. Um, you can uh, register in advance to access the meeting via Zoom webinar at HTTPS colon slash slash mountain view.gov. Slash CFC underscore speakers. You will be asked to enter an email address and a name. Your email address will not be disclosed to the public. And after registering, you will receive an email with instructions on how to connect uh, to the meeting. You may also use the raised hand feature in Zoom for instructions on how to raise your Zoom hand. Uh, please visit https colon uh, colon slash slash mountain view.gov slash raise underscore hand. Speakers will be notified shortly before they are called to speak. And when you are called, speak, please limit your comments to the time allotted. Um, for you in a time where will be provided. Uh, so we'd like to uh, go ahead and have staff call the roll. Yes,

[00:02:07] Unknown Speaker: uh, chair. Lieber?

[00:02:09] Member Sally Lieber: Here.

[00:02:10] Unknown Speaker: Committee member Ramirez?

[00:02:13] Member Lucas Ramirez: Here.

[00:02:14] Unknown Speaker: Committee member, Mediche.

[00:02:16] Member Lisa Matichak: Here.

[00:02:19] Unknown Speaker: Okay,

[00:02:19] Member Sally Lieber: well, go on now to item 3, which is minutes approval, minutes for the November 22nd, 2021 meeting have been delivered to committee members with a copy posted on the city hall bulletin board, and a copy posted online on the city's website. Uh, if there are no editions or corrections, uh, motion will be in order to approve the minutes. Is there, are there any questions on the minutes? Uh, is there any public comment on minutes? And not seeing any. So we can go ahead to um, motion, council memory, mana check.

[00:02:58] Member Lisa Matichak: I'll move that we approve the minutes from November 22nd, 2021.

[00:03:07] Member Lucas Ramirez: And Mayor on Christmas. Second the motion. Okay,

[00:03:12] Member Sally Lieber: we have a motion in a second. Staff will call the roll.

[00:03:21] Unknown Speaker: Cheerleaver.

[00:03:23] Member Sally Lieber: I,

[00:03:26] Unknown Speaker: Mayor Ramirez?

[00:03:28] Member Lucas Ramirez: Yeah.

[00:03:29] Unknown Speaker: And committee member of Mattachek?

[00:03:31] Member Lisa Matichak: Yes.

[00:03:34] Unknown Speaker: Okay. Go

[00:03:35] Member Sally Lieber: on, the minutes are approved, and we'll go on to oral communications from the public. This portion of the meeting is reserved for persons wishing to address the committee on any matter that is not on the agenda. Speakers are limited to 3 minutes and state law prohibits the committee from acting on non-agenda items. And I don't see any members of the public waiting to speak. On this. Item? Yeah,

[00:04:04] Unknown Speaker: there were also no email submitted. Earlier, so that we have none submitted. Okay. Um,

[00:04:14] Member Sally Lieber: well, we'll, uh, keep on going then to item 5. Uh, unfinished business. We have none. Item 6 new business. Item 6.1. is an item to extend the city's external auditors contract and amend the contract to include GASB 87 consultation services. We have a staff report.

[00:04:40] Unknown Speaker: Yes, thank you, chair. Um, so basically, we're here to uh, address or request an extension, uh, up to a two-year extension with our audit firm of MCS Gene O'Connell, uh, or MGO for short. Uh, we've been with them for now, uh, 6 years, we had an initial 4 year um, contract, uh, with an option for um, 2 additional years. So we, we took that. And normally we would be going out to do a bid, um, um, just to test the market. Um, however, given sort of where we find ourselves with, um, the recent, you know, the pandemic and then the the staffing turnover, um, as well as the implementation of Gasby 87. That is something that is required in this year. Uh, on staff. We would like to request instead of going out and doing a full-blown RFP. We like to extend that contract for up to 2 years to do that. One of the concessions we got from our auditor was to maintain the same pricing in the 2nd year. So, uh, there would be a uh, 3% increase in the 1st year and then it would be this uh, no additional increase in the year following that. Um, and then at which time we would go back and do another full-blown RFP. Uh, and really it's just to kind of help with with the workloaders as, as, you know, there's a number of things going on. Um, uh, in this department where, um, well, we thought we were going to be doing a a TOT. We were going to be doing a shoreline bond refunding, um, fee study. So there's there's quite a bit of stuff going on already, and this would just be one way to, uh, essentially kind of help, um, sort of, uh, not increase the workload additionally. Um, MGO has done a done a fine job um, over the time that they've been here. They are one of the major audit firms in California. Um, as well as, you know, there's there's a handful. Um, they are um, Uh, you know, pretty well known. They've done well, and uh, we also just kind of attached for for information. Um, you know, the GFOAs recommended practices on audit contract, um, uh, awards and extensions, typically. And the point there was that typically they uh, um, suggest, recommend that, you know, you have at least a 5 year period, uh, as a minimum, because of the, the time involved to sort of startup and the learning curve that auditors have usually in the 1st couple of years. They have to really get to know the city. Uh, in all the workings. Um, and, uh, also, um, that, uh, you know, sometimes there's some, uh, financial savings that can be had for longer term contracts. Um, so we've been at 6 years, which is, you know, just over sort of the minimum requirement. So, um, we've not been with them a long time, a lot of city, some cities have been with audit firms for 10, 15 or more years. And that's typically where they, you know, certainly want to make sure that you go out and um, kind of test the market and not necessarily stay with the same firm for, you know, a super long time. But we're not really in that situation. At this point. Um, we really are just uh, looking for kind of a short-term extension to get through this period. And then we'll resume back to a normal, um, you know, RFV process where we would be looking to, you know, maybe get a 55 year kind of a contract. Um, the other thing, as I referenced too, was the Gasby 87. So really that is a significant accounting standard having to do with implementing and accounting for um, leases. The city has a number of leases, as you know, uh, from ground leases to, um, operating leases, um, and so there's, Quite a bit of, um, required, um, disclosure and data gathering that's, um, that goes along with this uh, process. And in fact, we will be looking to hire, um, or to ask MGO to provide some consulting services for staff to help implement this during this year as well. And so that's the other request that we have in this memo. And in fact, council just approved the funding, um, for hiring a consultant uh, at the midyear. Um, This would, uh, be with or we're suggesting here that it'd be with MGO, who's familiar with the city, the city's leases, and it would be in the best position to, uh, help us implement that. So, uh, that's it in terms of presentation, and if you have any questions, be happy to answer any questions you have. Okay. Does

[00:09:56] Member Sally Lieber: anyone have questions? Counselor Banachek. Thanks.

[00:10:00] Member Lisa Matichak: I have a couple of questions. Um, Mr. Takahashi, I was wondering if, um, over the course of the past 6 years, have the people, um, especially the partner and the director, I think they call it. Have it, have those been the same people from MG on the entire time or have they um, changed at all? Or do you know?

[00:10:24] Unknown Speaker: Um, I may ask grace for assistance on that because they go back, you know, 6 years. I wasn't here. I believe there was some turnover from the initial year. Um, in terms of uh, partner and staff, but Grace, I'm gonna. Correct.

[00:10:41] Grace (staff): Yeah, I think um, our engaged partner um, was um, David. I forgot his last name apologized for that. And in the beginning of the 1st year, and then Mr. Ben now, um, was a, um, assigned director on the same year for implementation. Since then, I think we work closely with Mr. Ben Lao for the rest of the 5 years. Um, You know, um, you know, but then, you know, M Joe has multiple partners. Um, you know, it does not necessarily means that we cannot request a different engaging partner um, if we choose to extend the contract. So

[00:11:17] Member Lisa Matichak: how much, um, You know, I appreciate your comments about how, um, it's difficult to bring a new firm on, bring them up to speed. Um, but what about bringing on a different partner? Is it the same amount of work for staff or does that create too much churn? Well,

[00:11:41] Unknown Speaker: bringing on a, uh, a new partner, um, probably wouldn't, um, bring on that much of a additional work for staff. It's really at the staff, you know, auditor level and and probably manager level. Uh, the partner is responsible, you know, certainly for the higher level, um, review and making sure that, you know, any identifying sort of the higher level issues and making sure that they've done the sufficient work. So they do, they do, uh, review at a higher level. Um, there, there certainly could be because there certainly could be a different perspective and maybe some, some additional questions and things that maybe weren't, uh, you know, um, looked into maybe the last time, but, uh, I would, you know, not expect it to be a significant amount of that. It's really more at the staff level where, you know, where that's going to create more, you know, work and especially when you when you change audit firms because they're they're kind of starting from scratch. So

[00:12:48] Member Lisa Matichak: at the staff level, do you know if it's changed much over the past 6 years? Um,

[00:12:55] Unknown Speaker: I know it's changed. Yeah, there's been a number of, there's been, we usually like to have some continuity because that's what gets you the efficiency, but they usually change out one, um, you know, person. It's been a little different the last couple of years because of COVID because they really haven't been able to, you know, on site. Um, they've done most of that remotely. Um, but I know we definitely have had, um, uh, one person that's been continuous. And then, um, Maybe one or 2 that have worked part partly on it. So there's there's sort of a hybrid mix. Okay,

[00:13:38] Member Lisa Matichak: thank you. That's it for me. Hey,

[00:13:42] Member Sally Lieber: any other questions from Mr. Takahashi? Okay, seeing none. Uh, we'll go to public comments and If we have any public present to make those comments. So motion would be in order. Counsel my rheumatic. So,

[00:14:06] Member Lisa Matichak: um, I'll move the staff recommendation, which is to extend the contract with MGO for 2 years and to include the, um, extension to cover Gasby. Let me get the, it was it. No, I forgot the number. I can't find it real quickly here. I understand it before. 87. 87? Thank you. Um, and, um, Well, I have absolutely no problem with the current partner. Um, you know, he, when I was mayor, I had the one on one meeting with him and he's come to the, uh, CFC and the council meetings when we discuss this. And I really have no problems with him. But I do think every once in a while it is good to change things up to see if somebody spots something else. So, I, I would add to the motion that we, um, hate to say request a different partner, but, uh, I guess that's what we're doing.

[00:15:14] Unknown Speaker: Well, and the other thing, they do have a secondary partner that, um, does, does review, um, and that's certainly something that we could could request if, you know, we didn't want to, totally change out. And and, you know, normally the change out is after a longer period of time, I would say, um, where, you know, maybe an audit firm has been with, um, a city for like 10 years or more. And that's typically where they would, you know, request a different team or at least certain, like an audit partner. Um, normally within the 5 year frame, it's probably not as, as common, certainly as, you know, every city is different, but, um, It's probably more crucial the longer that you've been, been with them. So,

[00:16:02] Member Lisa Matichak: I'm sorry, you said there's a 2nd partner on. Yeah,

[00:16:06] Unknown Speaker: typically there's a, uh, like a technical review partner and they, you know, will meet and they will review, um, the work of, uh, you know, at a higher level of the team and to make sure that issues have not been missed or that, you know, they've addressed particular issues, you know, correctly in their opinion. They'll look at the things that, you know, are, are the most, uh, challenging issues, I guess. You know, where something could go wrong, what something that, you know, like the Gadsby 87. They'll probably spend a little bit more time on something like that. Uh, as opposed to, you know, something that's, you know, sort of a lower level, you know, more routine kind of uh, of issues accounting. So

[00:16:54] Member Lisa Matichak: sorry, I didn't mean for this to turn into another conversation, but I guess, you know, um, I, I'd feel comfortable if, um, one of those was a different person, either the primary partner or the secondary partner. And I'll leave it up to them to figure out. Right.

[00:17:10] Unknown Speaker: And that's what I wanted to make sure that you knew that there is, they do usually have a 2nd person, so that we can also request that there's a different 2nd partner. Okay.

[00:17:20] Member Lisa Matichak: Yeah, either a different primary or a different secondary, whichever works out best is fine with me. So I'll add that to the motion, that we change out either the primary or the secondary. Their choice though. Great. Great.

[00:17:34] Member Sally Lieber: Mayor. Thank

[00:17:36] Unknown Speaker: you, chair. I'm happy to 2nd the motion, but did want to do a quick check in. Is staff comfortable with that recommendation? Yes, I, you know, I, I think at this point, I think the 2nd partner would certainly make sense because they, um, will give a little bit of a fresh look, um, but it will also retain, you know, the, I think, the, The knowledge of the last, you know, five, six, five, 6 years that he's been or 5 years that he's been on it.

[00:18:11] Member Sally Lieber: Great. So, uh, we've got a motion in a second. so we can go ahead and have staff call the roll. Committee

[00:18:20] Unknown Speaker: member Medicheck.

[00:18:22] Member Lisa Matichak: Yes.

[00:18:23] Unknown Speaker: Um, Mayor Ramirez. Hey, Ramira. We can't hear you, Lucas.

[00:18:41] Member Lucas Ramirez: Yes, yes. Um,

[00:18:44] Member Sally Lieber: Cher, Lieber?

[00:18:45] Member Sally Lieber: Yes. Okay. Well, we'll go on now to item 7 committee staff, comments, questions, and committee reports. Are there any for us? Okay. Um, seeing none, I'll I'll just make one um, at our annual, uh, finance and investment review, Councilman Romantic raised the issue of, um, social responsible criteria, and in particular, the, uh, fossil fuel avoidance on, uh, life funding. And, and pursuant to her request, we were able to get the, the information back from staff that Leif did not have any policy on that. And so I'd like to request that we, um, pull together another meeting of this committee, uh, to, um, consider a letter to Leif, um, asking them to engage in that. Okay. And should we just indicate with a thumbs up for all, uh, good with that? Is that sufficient? Okay, well, I'll give the universal symbol if we're good with it. That looks like uh, 3 informal eyes there. Um, any other uh, comments or uh, reports? And seeing none, uh, we will go on to our adjournment, and if there's no objection. will adjourn this committee to the next meeting. Thank you so much, everyone. Stay safe. Thanks. Bye.

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