09-20 and 09-21-10 Special Called Regular Meeting of Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS Agreed Upon Procedures - Five Points Town Center Project (Continued) September 21, 2010 While some might argue that, in light of this case, development corporations should be subject to municipal procurement requirements since such corporations are clearly subject to oversight by the city, the prevailing opinion is that development corporations are not subject to these laws because they are functionally separate entities. Review of Five Points Proiect Transactions We requested a detail of all transactions coded to the Proj ect from the City's fmance department and were provided a project detail report (Exhibit 5) showing only transactions coded to the Project. This report includes expense, reclassification, and encumbrance transactions. Each expense transaction was reviewed to determine whether City policies and procedures and state law were followed. We also viewed supporting documentation including invoices, receipts, purchase orders, receiving reports, and copies of checks for conformity to state law and City policy. It should be noted that, for transactions related to URS, additional procedures were performed and will be addressed separately under "Review URS Contract and Supporting Documents for Accuracy and Compliance." A summary of this review is included as Exhibit 6. Generally, the EDC appeared to follow City policies and procedures and state statutes applicable to the City, although not required to do so. A few exceptions related to the accuracy of URS invoices are detailed in the section entitled "Review URS Contract and Supporting Documents for Accuracy and Compliance" below. Other items that were noticed during this review include: . The City miscalculated retainage on the first application for payment by CF Jordan, construction contractor on the Project. The City underpaid, but caught the error and made up the difference on the second application for payment. . There were several instances where items were initially coded incorrectly, however, these errors were identified and corrected by the City. . There were two instances where the receiving report was not stamped "received." . There was one instance, also for CF Jordan, where no receiving report was documented for an application of payment. However, the application for payment was signed indicating the work was done. 2A. Finding As the EDC is generally considered a nonprofit corporation, it is not subject to municipal procurement laws. In addition, the EDC does not currently have any policies and procedures in place governing procurement. 2A. Recommendation The EDC should consider amending its bylaws to officially adopt purchasing policies and procedures to help ensure organizational, fmancial, and civic accountability over the use of public funds. This could consist of adopting the same policies and procedures as the City or following municipal purchasing requirements under Chapter 252 of Texas Local Government Code. 3. Review EDC Project Plan and Associated Documents for Compliance with State Statutes: Citizens have voiced concerns that the Project, or parts of the Project, may not have been carried out in compliance with state statutes. In particular, there were specific questions raised by the public related to 8