Agenda packet — Berkeley City Council, November 3, 2022 (part 8 of 8)

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Audit Status Report: Unified Vision of Zero Waste Activities INFORMATION CALENDAR Will Help Align Service Levels with Billing and Ensure Customer November 3, 2022 Equity
2 BACKGROUND
Public Works’ Zero Waste Division is responsible for the collection of residential material, including refuse, recycling, and composting; collection and processing of commercial material, including refuse, recycling, and composting; off-site hauling and composting of green/food waste for all customers; off-site hauling, sorting, and marketing of construction and demolition debris for all customers; and manages contracts related to the above work.

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
With the implementation of the Audit’s recommendations, the Zero Waste Division will continue to help reduce the volume of waste landfilled and:
 Increase residential composting, recycling, and source reduction.  Increase commercial composting, recycling, and source reduction.  Increase recycling of construction and demolition (C&D) debris.  Expand efforts to eliminate waste at its source.
 Increase waste diversion in public buildings.

All of these above-noted items promote the City’s zero waste goal and are included in the approved Climate Action Plan Goals for Waste Reduction and Recycling.

POSSIBLE FUTURE ACTION
Public Works will continue to take timely and focused action(s) to address outstanding and partially implemented recommendations. The Zero Waste Division is working with the Information Technology and Finance Departments to select the software solution(s) needed to facilitate the implementation of the audit recommendations.

FISCAL IMPACTS OF POSSIBLE FUTURE ACTION
Public Works will update Council periodically on the progress, resources available, and any additional funding needed to address those recommendations that remain outstanding and partially implemented.

CONTACT PERSON
Greg Apa, Solid Waste and Recycling Manager, (510) 981-6359 Attachment:

1. Audit Findings and Recommendations Response Form

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1.1 Agree to a common and unified
vision for zero waste operations.

Discuss the long-term zero waste
goals, objectives, and key initiatives
and share that information with
those responsible for day-to-day
operations. Use meetings and
informal communications to
regularly encourage staff to
embrace a unified view of zero
waste operations.

City
Manager’s
Office and
Team
Response:

Public
Works,
Finance,
and
Information
Technology
Agree October 2016 January 23, 2018 Update
Implemented
Since late 2015, Zero Waste, 311, and IT (called collectively the Customer Solutions Group or Group) have met on a monthly basis to discuss operational issues that affect the three
divisions. Given that this Group was already in place and per the Auditor’s recommendation, the Group opted to include Finance as a participant instead of creating of a separate
team and meeting.

The meetings’ monthly agenda identifies that the Group’s primary focus is the development and continuous implementation of a common approach by all members to ensure a unified vision for zero waste operations for all community members. In addition, the meetings’ agenda details those customers’ issues as they occur, so that, the Group’s members resolve them. These resolutions are applied by the Group to continue its efforts to strive towards the City’s zero waste goals and the initiatives needed to attain these goals.

1.2 Form a zero waste team
comprised of managers and line
staff involved with zero waste
operations (i.e., waste collection,
billings, customer calls, systems
support). Include a diverse pool of
people who can share ideas,
resources, and knowledge. Have
the team members’ work
collectively to evaluate their
respective functions; the
interrelationships among their
departmental activities; and the
practices, policies, and procedures
they use to perform their zero
waste account management and
operations functions. Ensure that
the team understands that their
Team
Response:

Public
Works,
Finance,
and
Information
Technology
Agree October 2016 September 20, 2016 Update
Implemented
Zero Waste, 311, and IT meet on a monthly basis to discuss operational issues that affect the three divisions. This meeting schedule has been in existence for over one year.

Since there was already a setup in place, we decided to include Finance as a participant versus create a separate team. We expanded the group and meeting scope to accommodate the Auditor’s recommendations. At every meeting, it will be the first agenda item to make sure all participants are made aware of the team’s concept. We will consider this completely implemented by October 2016, as at that time we will have met twice within the capacity required by this audit recommendation. This will be a regular meeting for the foreseeable future. The team members do understand that the Zero Waste operation is an enterprise with different parts and that the success of the operation depends on each of these distinctive units working together.

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1.3 Require the zero waste team formed
in response to recommendation 1.2 to
develop written procedures that
clearly support cross- departmental
strategies and help staff perform their
work, as well as understand how their
work contributes to success. Include
information that helps promote the
unified view of zero waste operations,
while also explaining the individual
tasks that take place within the
departments and how those connect.

Examples include, but are not limited
to, describing the process for routing
customer cases from 311 calls, and
detailing in layman’s terms the
monthly updates that take place to
align the CX and RouteSmart systems.

Also see recommendation 1.2.

Team
Response:

Public
Works,
Finance,
and
Information
Technology
Agree Originally
Expected
December 2017

July 2019
September 20, 2016 Update
Staff from the Zero Waste Division, 311 Customer Service Center, Information Technology, and Finance Revenue Collection are reviewing and updating standard operating procedures for refuse and recycling services; reconfiguring and updating webpages; and creating technical assistance tools for zero waste customers. In July 2016, the group participated in an IT Strategic Plan Workshop to review the start of service process using the Rapid Workflow Process Model. The group will use this model to review other critical workflow processes.

January 23, 2018 Update
Partially Implemented
The Customer Solutions Group is constantly reviewing and updating standard
operating procedures for refuse and recycling services; reconfiguring and updating webpages; and creating technical assistance tools for its zero waste customers. An example of this effort is Zero Waste and 311 identified issues related to responding to the community members complaints related to collection services. Zero Waste and 311 developed 311’s scripted response and Solid Waste Supervisor response flow chart to ensure these issues were addressed within a 48 hour time frame.

In July 2016,
the Group participated in an IT Strategic Plan Workshop to review the start of service process using the Rapid Workflow Process Model. And as of this date, the ERP implementation schedule hasn’t reached its scheduled timeline to integrate CX and RouteSmart systems. Nonetheless, the Group will use this Model to review other
critical workflow processes to ensure that updates are developed in layman’s terms in its monthly updates.

September 25, 2018 Update
Partially Implemented

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ATTACHMENT No. 1
Audit Title: Unified Vision of Zero Waste Activities Will Help Align Service Levels with Billing and Ensure Customer Equity Findi
ngs and Recommendations Lead D
ept. Agree,
Partia
lly
Agree, or
Do Not
Agree and
Corrective
Action Plan
Expect
ed or
Actual
Implementation
Date
Statu
s of Outstanding Audit Recommendations and Implementation Progress Summary
December 2019
January 2021
July 2024
IT administration, IT-311 and Zero Waste have commenced efforts, such as, an As-Is (existing software) review to improve customer interface with the City and a To-Be (future software) for the development of an RFP to solicit new software for new customer interface, refuse billing and routing systems. These reviews were facilitated by the City’s software consultant, Third Wave. The RFP is tentatively scheduled for a late 2018 release.

Rather than the purchase of another software system to integrate the existing inefficient (i.e., requires another software program to be bolted on to existing software), and inadequate software, a new routing and customer billing system would replace the CX and RouteSmart™ systems, integrate with ERMA and would be customer driven resolution and coordinated billing system.

March 12, 2019 Update
Partially Implemented
IT released an RFP on behalf of Public Works for Zero Waste Management software on October 18, 2018. The RFP was for a Zero Waste Management System and Professional Services consisting of a Waste Billing System, a Waste Computerized Maintenance Management System and a Route Optimization System. One proposal was received. If the proposal is accepted, software installation and implementation is anticipated to begin immediately upon contract execution in May 2019, with software operational by December 2019
March 24, 2020 Update
Partially Implemented
IT released an RFP for a Zero Waste Management System and Professional Services consisting of a Waste Billing System, a Waste Computerized Maintenance Management System will allow a follow-up RFP for Route Optimization System on October 18, 2018. One proposal was received. IT and Legal are in the process of finalizing a contract with the vendor with software installation to follow.

November 13, 2022 Update
Dropped
Contract awarded to AMCS, July 2020, to install new customer account & financial software platform to be up and running by mid-2024.

1.4 Require the zero waste team
formed in response to
Team
Response:

Agree October 2016 September 20, 2016 Update
Implemented.

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ATTACHMENT No. 1
Audit Title: Unified Vision of Zero Waste Activities Will Help Align Service Levels with Billing and Ensure Customer Equity Findi
ngs and Recommendations Lead D
ept. Agree,
Partia
lly
Agree, or
Do Not
Agree and
Corrective
Action Plan
Expect
ed or
Actual
Implementation
Date
Statu
s of Outstanding Audit Recommendations and Implementation Progress Summary
recommendation 1.2 to have
regular meetings, e.g., quarterly, to
share information about their
operations and the known or
expected changes and events that
may impact cross-functional
efforts. These meetings may need
to be more frequent at first and
less frequent over time. The team
should use their meeting time to:
 Identify continued barriers to
change.
 Decide on solutions
that will help
overcome barriers.
 Share information about the
challenges preventing staff from
meeting operational objectives.
 Make cross-departmental
decisions to improve processes
and customer service.

Also see recommendation 1.2.

Public
Works,
Finance,
and
Information
Technology
As mentioned in response to recommendation 1.2, we expanded our existing monthly meeting to include Finance. The purpose of those meetings has always been to share information about operational and staff challenges. We expanded the meeting to include specific suggestions for this recommendation.

This initiative will be a continuous process that will be put in place for years to come as it becomes part of managing the operations of Zero Waste.

1.5 In collaboration with Information
Technology and as part of
Enterprise Resource Planning,
budget for, select, and install an
account management system
designed for zero waste activities.

Use information from the zero
waste team evaluation
(recommendation 1.2) and zero
waste strategy analyses
Team
Response:

Public
Works and
Finance
Agree January 23, 2018 Update
Not Implemented
The current Customer Relationship Management (CRM) system will not integrate with RouteSmart™ due to both FUND$ and CRM system limitations. The City is currently engaged in the Enterprise Resource Planning process to replace the FUND$ and then integrate the CRM system, which according to the current schedule by June 2019. The long term solution will be to procure a new customer management, operations and billing software that will fully integrate the RouteSmart™ with the new ERP.

Zero Waste Division and the Customer Solutions Group is actively engaging with IT to ensure that the new ERP system recognizes that Zero Waste Division is an enterprise funded operation. That is, it would be desirable to utilize RouteSmart system’s

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ATTACHMENT No. 1
Audit Title: Unified Vision of Zero Waste Activities Will Help Align Service Levels with Billing and Ensure Customer Equity Findi
ngs and Recommendations Lead D
ept. Agree,
Partia
lly
Agree, or
Do Not
Agree and
Corrective
Action Plan
Expect
ed or
Actual
Implementation
Date
Statu
s of Outstanding Audit Recommendations and Implementation Progress Summary
(recommendation 1.8) to identify
the critical business needs that
should be included in the purchase
of new zero waste account
management system, or that should
be considered when determining
whether sufficient middleware
options exist to fully integrate
existing systems with the new
account management software.

Also see recommendations 1.2 and

1.8. July 2019
December 2019
January 2021
July 2024
capabilities to generate customer driven service requests (work orders), whereas the current ERP system is a City staff internally generated system input. IT has recognized that to provide seamless CRM service that a Request for Proposals (RFP) for an application that delivers the most efficient financial and operational software system that specifically handles the Zero Waste collection services will be written in FY2018 as part of Phase 2 of the ERP project.

September 25, 2018 Update
Partially Implemented
IT administration, IT-311 and Zero Waste have commenced efforts, such as, an As-Is (existing software) review to improve customer interface with the City and a To-Be (future software) for the development of an RFP to solicit new software for new customer interface, refuse billing and routing systems. These reviews were facilitated by the City’s software consultant, Third Wave. The RFP is tentatively scheduled for a late 2018 release.

March 24, 2020 Update
Partially Implemented
IT released an RFP for a Zero Waste Management System and Professional Services consisting of a Waste Billing System, a Waste Computerized Maintenance Management System will allow a follow-up RFP for Route Optimization System on October 18, 2018. One proposal was received. IT and Legal are in the process of finalizing a contract with the vendor with software installation to follow.

November 13, 2022 Update.

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1.6 Incorporate systems thinking into the
hiring process for both competitive
and promotional recruitments:
 Describe the interdependent
nature of zero waste
operations in job
announcements.
 Highlight the cross-
functional responsibilities
and relationships in job
descriptions. Discuss cross-
functional experiences
during job interviews to gain
an understanding of an
applicant’s mindset about
shared accountability.

Team
Response:

Public
Works and
Finance
Agree
Difficult to
implement I and
II because some
classifications
are not specific
to Zero Waste
operations but
are general
classification
that are
Citywide Item III
– During job
interviews for
Zero Waste
functions,
questions are
tailored to
potential hires
about the
working
conditions
specifically as
the relate to
Zero Waste.

October 2016
October 2016
September 20, 2016 Update
Public Works is currently recruiting for zero waste and using the interview techniques described. Finance and IT, however, are not in the process of, or able to identify when they will be, recruiting for a position for which this recommendation applies.

Therefore, we cannot identify a future implementation date. However, both IT and Finance applied these concepts in recent hires. Additionally, all the departments intend to use the concepts described in the recommendation as much as allowable and consider this recommendation implemented.

During the interview process, candidates are provided an overview of Zero Waste Division operations including relationships with other departments, the strategic priorities used to guide our everyday thinking and application of resources, and owning the commitment to excel in the areas of courtesy, knowledge, promptness, and teamwork.

To the extent possible and allowable by the City’s recruitment practices, we will include in our recruitment materials information that conveys to applicants for general classifications that their work will include cross-functional responsibilities and shared accountability.

January 23, 2018 Update
Implemented
The Departments of Public Works and Human Resources have reviewed the process of development of job announcements, such as, the recent hiring of Zero Waste Division Operations Manager to directly address the issues noted in this Recommendation.

With this job description for the Operations Manager and future Zero Waste management, administrative and operation staff positions will include a description of the interdepartmental nature of zero waste operations, and highlight cross-functional responsibilities.

1.7 Require that someone other than
the person who manually calculated
the zero waste rates and entered the
updated rates into the CX module
Finance Agree May 2015 September 20, 2016 Update
Completed. For FY 2016 updates, which was input in 2015, Finance implemented a Quality Assurance process in which an error report was produced by IT. The Supervisor reviewed the report and made corrective changes. The report was re-

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Ensure that management is also
notified of the errors, verifies that the
corrections were made, and signs off
on the review.

July 2024
produced two other times to make sure all the error was fixed and the Manager of the unit signed off on the final report before finalizing system changes.

January 23, 2018 Update:

Implemented
The initial base rates were approved by Resolution No. 66,600-N.S. effective July 1, 2014 for FY2015. The Department of Public Works administration calculates the next Fiscal Year’s rates based on the previous Fiscal Year’s rates. The rates are calculated utilizing the current CPI, the published April annual rate, or 3%, whichever is greater.

These new FY rates and calculations are verified and signed off by Zero Waste Division Manager. The completed approved Rate Tables are then forwarded to the Finance Department Revenue Collections Manager for final verification and FUND$ system input for billing.

November 13, 2022 Update
Implemented
Contract awarded to AMCS, July 2020, to install new customer account & financial software platform to be up and running by mid-2024. New Rates were proposed at a 12/07/2022 Council Work Session that was to include the cost of AMCS. The Proposition 218 rate approval process was put on hold by City Agenda Committee in January 2022.

1.8 Request that Information Technology
use the CX module data extracts,
such as the one used for this audit, to
provide Public Works staff with the
data they need to analyze zero waste
strategies. Use the data extracts to
further identify the critical business
needs for new zero waste account
management software.

Also see recommendation 1.5.

Public Works Agree Originally
Expected:

December 2016

September 20, 2016 Update
We will ask IT to provide our fiscal services and zero waste strategy staff with CX data using existing data extracts, and use that for data analytics using software such as Excel. We will use these extracts to help identify the reporting needs of a new zero waste account management system.

If needed, IT staff can provide reports or training to Public Works staff so they are able to run the reports themselves or extract the information in the format needed, if feasible.

January 23, 2018 Update
Not Implemented
The CX module data utilized for this Audit was specifically designed to support the data request and this is what is called a bolt-on module, which means, it retrieves specific data requested from the CRM. Any module development requires IT to code, test and implement these bolt-on modules for a specific request. To analyze all appropriate data to identify a critical Zero Waste Division business need(s) would require the utilization of data residing in RouteSmart™. The Current CRM system will not integrate or auto-populate with RouteSmart™ due to CRM system limitations. Per

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The long term solution will be to procure a new customer management, operations and billing software that will integrate and fully utilize the RouteSmart™ data. An RFP for an application that delivers the most efficient financial and operational software system specific to the Zero Waste Division operational and the solid waste industry requirements is scheduled to be developed in FY2018 as part of Phase 2 of the ERP project.

September 25, 2018 Update
Partially Implemented
IT provided extensive CX data in support of the Commercial Route expansion. During the expansion which involved adding over 400 accounts, critical limitations of the CZX software were identified. Additionally, IT facilitated the key departments to complete an As-Is analysis of existing software to identify areas of improvement. The departments have completed s To-Be analysis of future software which was the basis for a Request For Proposals (RFP) to solicit new software for new customer interface, refuse billing and routing systems. Both the CX (customer account management and billing software) and RouteSmart™ (collection routing software) systems are planned for replacement within the next year. These reviews were facilitated by the City’s software consultant, Third Wave. The RFP is tentatively scheduled for late 2018 release. IT administration, IT-311 and Zero Waste are collaborating to ensure a unified approach.

This new routing and customers billing software will the CX and RouteSmart™ Systems and integrate with Erma, the City’s new financial software system. The new software will be customer driven and provide enhanced, coordinated billing system.

March 24, 2020 Update
Partially Implemented

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ATTACHMENT No. 1
Audit Title: Unified Vision of Zero Waste Activities Will Help Align Service Levels with Billing and Ensure Customer Equity Findi
ngs and Recommendations Lead D
ept. Agree,
Partia
lly
Agree, or
Do Not
Agree and
Corrective
Action Plan
Expect
ed or
Actual
Implementation
Date
Statu
s of Outstanding Audit Recommendations and Implementation Progress Summary
July 2024
IT released an RFP for a Zero Waste Management System and Professional Services consisting of a Waste Billing System, a Waste Computerized Maintenance Management System will allow a follow-up RFP for Route Optimization System on October 18, 2018. One proposal was received. IT and Legal are in the process of finalizing a contract with the vendor with software installation to follow.

November 13, 2022 Update.

Dropped
Contract awarded to AMCS to install new customer account & financial software platform to be up and running by mid-2024.

1.9 Perform, or contract for, a fully
comprehensive route audit to align
service delivery with billing rates.

Use the route audit to:
 Make CX module and/or
RouteSmart system updates
to ensure customers are billed
correctly for their City-
provided services.
 Ensure that all residential
accounts are receiving
required services.
 Ensure that the commercial
accounts that the City is
responsible for receive and pay
for the zero waste services
required by City policy. Verify
that roll-off bin customers
serviced by the Zero Waste
Division are accurately billed.

Public Works Agree Originally
expected: July
2018

December 2019
September 20, 2016 Update
As part of the route audit, actual service levels will be compared against data in the CX module and appropriate updates made to ensure that all residential and commercial accounts are receiving required services and billed correctly for those services. Route books will also be updated to reflect the results of the route audit.

January 23, 2018 Update
Not Implemented
IT has created a table for monthly routing development that extracts customer information from the FUND$ and provides the data to be then downloaded into RouteSmart™. Due to the FUND$ system limitations, this link takes hours to download information into RouteSmart™. The company, RouteSmart™, has stated that this integration process should take minutes. The City will be replacing the ERP system in June 2019 and then the CRM system would be upgraded or replaced.

The long term solution is to integrate the new customer management, operations and billing software with RouteSmart™. With RouteSmart™ full utilization and the integration of a work order system, the invoicing system could be customer based, i.e. customers’ billing and services are directly linked with the new EFP implementation, to allow the City to more easily reconcile services provided with customers’ invoices.

September 25, 2018 Update
Partially Implemented
IT facilitated the key departments to complete an As-Is analysis of existing software to identify areas of improvement. The departments have completed s To-Be analysis of future software which was the basis for a Request For Proposals (RFP) to solicit new software for new customer interface, refuse billing and routing systems. Both the CX (customer account management and billing software) and RouteSmart™ (collection routing software) systems are planned for replacement within the next year. These reviews were facilitated by the City’s software consultant, Third Wave. The RFP is

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August 24, 2022 Update.

Dropped
Contract awarded to AMCS to install new customer account & financial software platform to be up and running by mid-2024.

1.10 Enforce the requirement for zero
waste drivers to compare actual
service levels against route books
and addenda during their collection
routes, and report any variances to
the Zero Waste Division supervisor
for correction. Ensure that the
drivers’ efforts are supported by
taking action to correct the
Public
Works
Agree. December 2016 September 20, 2016 Update
We agree that the actual service levels should be compared against route books but believe that enforcing the policy to have drivers do onsite comparisons is no longer an efficient use of our drivers’ time. We are exploring other options, such as using student interns to do the comparisons.

January 23, 2018 Update
Implemented
The Zero Waste drivers are reminded monthly to verify actual service levels with the route books for their collection routes by the Zero Waste Management Team. The Zero Waste dispatcher(s) are in constant communication with the drivers to ensure service levels are correct. If service levels are not corrected, Zero Waste Supervisor(s)

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1.11 When drafting new franchise hauler
agreements:
 Clearly define the fee calculation
requirements.
 Clearly define the type of
financial data and reports that
the haulers must submit to
support their fee calculations.

Create and enforce the use of
standardized forms for the
franchise haulers to use when
remitting their fees to facilitate
Public Works staff’s review.

Public
Works
Agree Originally
Expected:

December 2017

July 2019
September 20, 2016 Update
The City has contracted with a consultant to assess development and implementation costs related to the City’s planned in-house commercial hauling system, and evaluate the financial and operational impacts of that system on the City and on existing commercial customers. The study will look at future franchise agreements for waste collection services and will include these factors.

January 23, 2018 Update
Not Implemented
The City Council approved a recommendation to replace the current non-exclusive franchise collection system for commercial refuse and recyclables with in-house commercial refuse and recycling collection services except for roll-off service. In FY19, Public Works’ will be issuing an RFP to solicit a consultant to review all Transfer Station and residential and commercial community members’ rates. Once contracted, the consultant will assess development and implementation costs related to redesigning the franchise
commercial hauling system to provide for roll-off and
compactor services. Then, the consultant will evaluate the financial and operational impacts of that system on the City and on existing commercial customers.

January 23, 2018 Update
Not Implemented
No changes since last report, but progress continues on this item.

September 25, 2018 Update
Not Implemented
No changes since last report, but progress continues on this item.

March 12, 2019 Update
Dropped
With Zero Waste Division successful completion in March 2018 of the integration of commercial accounts (440 +) formerly collected under the existing Non-Exclusive Commercial Hauler Franchise Agreement system, revision of the existing system is not required. Zero Waste does not anticipate issuing new Franchise Agreements but will work with the three existing Franchisees during the next Franchise Agreement renewal process in 2020 to enhance reporting requirements. Public Works will also evaluate the published fees as set by resolution as listed in 9.60.260 of the Municipal Code.

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1.12 Continue to investigate whether the
franchise hauler erroneously
removed recyclables from its fee
calculations and, if so, back bill as
allowable, per state law and city
code.

Public
Works
Partially Agree Originally
Expected;
December 2016
October 2018

September 20, 2016 Update
City Council Approved a Public Works Action Calendar Item to replace the current non-exclusive franchise collection system. Public Works’ long-term plan is for the department to take over all commercial zero waste services except for roll-off containers and compactors. Given the planned changes, it is not practical or cost- effective to undertake the task of investigating the past fee calculations. However, moving forward, for any franchise hauler agreements we may have, we will require that staff have written procedures in place that describe the correct calculations for determining what that haulers owe the City, and that staff review invoices for accuracy in comparison to those calculation requirements.

January 23, 2018 Update
Alternative Implemented
At its May 26, 20151, the City Council approved a Department of Public Works Action Calendar Item to replace the
current non-exclusive franchise collection system. The Council’s approved Public Works’ long-term plan for in-house collection of these non- exclusive commercial waste collection
services except for roll-off and compactor
services. This in-house commercial waste collection by Zero Waste Division is scheduled to start March 1, 2018 as detailed at the October 10, 2017 Council Work session2. Given the approved action with the non-exclusive franchisees termination, it would be neither practical nor cost-effective to undertake the task of investigating the past fee calculations. ZWD staff agrees for any future franchise hauler agreements for roll-off and compactor services that staff will have written procedures in place that describe the correct calculations to determine what that owe the City, and that staff will review invoices for accuracy in comparison to those calculation requirements.

September 25, 2018 Update
Dropped
Beginning in March 2018, the Zero Waste Division began collecting commercial waste, recyclables and compost in-house, except for roll-off and compactor services. Written procedures that describe the correct calculations are in progress concurrence with the implementation of Erma, the City new financial software system, to start October 1, 2018.
1 https://www.cityofberkeley.info/Clerk/City_Council/2015/05_May/Documents/2015-05-26_Item_34_Zero_Waste.aspx 2 https://www.cityofberkeley.info/Clerk/City_Council/2016/09_Sep/Documents/2016-09-13_WS_Item_01_Zero_Waste_Worksession.aspx

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Office of the City Manager
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.CityofBerkeley.info/Manager

INFORMATION CALENDAR
November 3, 2022
To: Honorable Mayor and Members of the City Council
From: Dee Williams-Ridley, City Manager
Submitted by: Liam Garland, Director, Public Works Department Subject: Audit Status Report – Lease Audit: Conflicting Directives Hinder Contract Oversight

INTRODUCTION
The Office of the City Auditor presented a June 2009 Leases Audit: Conflicting Directives Hinder Contract Oversight. The City Auditor conducted the audit to determine whether facility leases were properly initiated, tracked, recorded, and renewed or terminated; whether monitoring of collection activities was effective and efficient; and whether payments and receipts were properly recorded. This report is the seventh and final update to the 2009 Lease Audit, which is slated for no further follow-up action as recommended by the City Auditor for all audits more than five years old.

CURRENT SITUATION AND ITS EFFECTS
This report is the seventh and final update to the 2009 Lease Audit. In recognition of its goal to implement Lease Audit recommendations, Public Works has committed to providing status updates of real property matters to City Council, thereby providing information on properties owned and leased by the City and progress updates on revisions to Administrative Regulation 6.6: Negotiating and Preparing City Lease or License Agreements, Acquiring/or Disposing of Real Property as recommended in the 2009 Lease Audit.

BACKGROUND
In June 2009, the City Auditor’s Office issued its report Leases Audit: Conflicting Directives Hinder Contract Oversight. The objective of the audit was to determine the effectiveness of the City’s facility lease oversight and resulted in recommendations aimed at improving lease oversight and management. The City Auditor requested the City Manager continue to report to Council on the status of those recommendations until all were fully implemented or otherwise addressed. The sixth and most recent status report was presented to City Council on May 29, 2018.

The original Audit Report included twenty-four recommendations, seventeen of which have been closed; fifteen were implemented as recommended; one was implemented with an alternative solution; and one was closed after management reconsidered it and reported it would not be implemented because it would neither be appropriate nor

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Audit Status Report: Lease Audit: Conflicting Directives Hinder Contract Oversight INFORMATION CALENDAR November 3, 2022

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realistic to do so. The May 2018 report stated that the seven remaining recommendations are partially implemented and that further implementation should be suspended.

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
There are no identifiable environmental effects or opportunities associated with the subject of this report.

POSSIBLE FUTURE ACTION
When resources become available, the City Manager and Public Works aim to develop an implementation plan to improve property management citywide. Alternatively, the City Auditor may choose to launch a new performance audit with updated recommendations.

FISCAL IMPACTS OF POSSIBLE FUTURE ACTION
Currently, Public Works’ Property Management Unit has one (1) full-time employee. Any increase in these services would very likely require additional staffing and budget.

CONTACT PERSON
Dionne Early, Community Development Project Coordinator, Public Works, (510) 981-6453
Andrew Brozyna, Deputy Director of Operations, Public Works, (510) 981-6396 Attachment:

1. Audit Findings and Recommendations Response Form

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Audit Title: Leases Audit: Conflicting Directives Hinder Contract Oversight

Finding Recommendation Lead
Department
Status of Outstanding Audit Recommendations and
Implementation Progress Summary
The City’s 2002 plan to
centralize property and
facility lease
management has not
been implemented.

1.1 The City Manager should
formalize and approve the
division of responsibilities
between the Public Works
department and other
departments regarding lease
management.

City
Manager
Original Audit Response: City Manager and Public Works agreed with recommendation.
10/28/13 Status: Partially Implemented
1/31/17 Status Update: Partially Implemented/Further
Implementation Needed.
5/29/18 Status Update: Partially Implemented. Despite nearly nine years of attempting to decentralize property management within the City of Berkeley, particularly in regards to lease management, the effort has not been successful. The City’s contract with Contra Costa County Real Estate Division does provide some real property services, but the Community Development Project Coordinator responsible for Public Works property management continues to have to play an active role in all Departments’ real property decision-making and lease management. The City Manager’s Office will work with the various departments that currently support property management to develop an alternative citywide approach by functional responsibility. For example, some portions of property management, such as facility maintenance and lease negotiations may be centralized, but doing so will require additional resources.

Further status reports for this recommendation will be submitted until it is “alternatively implemented.”
11/3/22 Status Update: Dropped. Audit recommendations are considered dropped if the City has not implemented them within five years.

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The City’s 2002 plan to
centralize property and
facility lease
management has not
been implemented.

1.2 The Public Works
department should
determine and formally
define the role of the real
property administration staff
given available resources.

City
Manager
Original Audit Response: City Manager and Public Works agreed with recommendation.
10/28/13 Status: Partially Implemented/Further Implementation Suspended.
1/31/17 Status Update: Partially Implemented/Further
Implementation Needed.
5/29/18 Status Update: Partially Implemented. The City continues to not have dedicated real property administration staff identified in every department. The Interdepartmental Real Property Working Group meetings have made it clear that each department has specific and varied real property needs. This resulted in the group disbanding, and each department is instead working with Public Works’ Community Development Project Coordinator on an as- needed basis. Full implementation of this recommendation will be completed once an alternative citywide approach to property management has been identified and implemented.
11/3/22 Status Update: Dropped. Audit recommendations are considered dropped if the City has not implemented them within five years.

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The City’s 2002 plan to
centralize property and
facility lease
management has not
been implemented.

1.3 Develop and finalize a
property management plan
that documents the specific
responsibilities of Public
Works and of other
departments for lease
management.

Public
Works
Original Audit Response: City Manager and Public Works agreed with recommendation.
10/28/13 Status: Partially Implemented/Further Implementation Suspended.
1/31/17 Status Update: Partially Implemented/Further
Implementation Needed.
5/29/18 Status Update: Partially Implemented. Full implementation of this recommendation will be completed once an alternative citywide approach to property management has been identified and implemented.
11/3/22 Status Update: Dropped. Audit recommendations are considered dropped if the City has not implemented them within five years.

The City’s 2002 plan to
centralize property and
facility lease
management has not
been implemented.

1.4 The property management
plan should be coordinated
with affected City
departments, including the
Contract Administrator in
Finance/Purchasing, before
finalizing.

Public
Works
Original Audit Response: Public Works agreed with
recommendation.
10/28/13 Status: Partially Implemented
1/31/17 Status Update: Partially Implemented/Further
Implementation Needed.
5/29/18 Status Update: Partially Implemented. A new Contract Administrator/General Services Manager (GSM) was hired summer 2016. The GSM is an important partner in improving lease boilerplates, contract templates, and RFP guidance associated with property management. While significant improvements in
coordination have occurred, as stated above, a property management plan structured around decentralization has notbeen completed. Full implementation of this recommendation will be completed once an alternative citywide approach to property management has been identified and implemented.
11/3/22 Status Update: Dropped. Audit recommendations are considered dropped if the City has not implemented them within five years.

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The City’s 2002 plan to
centralize property and
facility lease
management has not
been implemented.

1.5 Formally communicate the
plan with all affected City
departments.

City
Manager
Original Audit Response: Public Works agreed with
recommendation.
10/28/13 Status: Partially Implemented
1/31/17 Status Update: Partially Implemented/Further
Implementation Needed.
5/29/18 Status Update: Partially Implemented. The
Interdepartmental Real Property Working Group meetings were terminated. A team folder on the City’s shared drive continues to be used to share property management documents. No plan to continue decentralized management of property in the City of Berkeley is being developed. Full implementation of this recommendation will be completed once an alternative citywide approach to property management has been identified and implemented.
11/3/22 Status Update: Dropped. Audit recommendations are considered dropped if the City has not implemented them within five years.

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City staff did not
comply with City rules
and regulations
because the City lacks
clear guidelines and
simple tools for
effective lease
negotiations, review,
approval, and
oversight.

2.1 Administrative Regulation 6.6
and Contracts Online should
be updated to give clear
direction to City staff
regarding administration and
execution of lease
agreements.

Public
Works
Original Audit Response: Public Works and Finance agreed with recommendation.
11/9/10 Status: Contracts Online Updated
10/28/13 Status: Partially Implemented
1/31/17 Status Update: Partially Implemented/Further
Implementation Needed.
5/29/18 Status Update: Partially Implemented. While updates to Contracts Online were completed, leases must be updated, usually with the assistance of outside counsel, to ensure all current requirements from local, states and federal levels are addressed. A generic template does not work for the majority of revenue or expenditure leases involving the City. Updating AR 6.6 will not sufficiently clarify administration and execution of City lease agreements. A suite of Administrative Regulations will be developed that cover thefull spectrum of the City’s real property needs to ensure staff and City Council follow a process that is fully transparent and adheres to accepted public outreach processes. 11/3/22 Status Update: Dropped. Audit recommendations are considered dropped if the City has not implemented them within five years.

There are no
performance measures
to document
expectations of and
performance by the
Real Property
Administrator or
departmental lease
managers.

3.3 Public Works should update
the City’s real property
administration policies and
procedures to align with
management’s expectations.

Public
Works
Original Audit Response: Public Works agreed with
recommendation.
10/28/13 Status: Partially Implemented
1/31/17 Status Update: Partially Implemented/Further
Implementation Needed.
5/29/18 Status Update: Partially Implemented/Further
Implementation. Public Works will update the City’s real property administration policies and procedures once an alternative citywide approach to property management has been identified and implemented.
11/3/22 Status Update: Dropped. Audit recommendations are considered dropped if the City has not implemented them within five years.

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INFORMATION CALENDAR
November 3, 2022
To: Honorable Mayor and Members of the City Council
From: Dee Williams-Ridley, City Manager
Submitted by: Liam Garland, Director, Department of Public Works Subject: Audit Status Reports: Fleet Replacement Fund Short Millions & Rocky Road: Berkeley Streets At Risk and Significantly Underfunded

INTRODUCTION
On November 19, 2020, the City Auditor published the Rocky Road: Berkeley Streets at Risk and Significantly Underfunded Audit Report1, reviewing the funding resources to sufficiently maintain City streets, and asking if Public Works has clear policies and processes to guide paving decisions. This is the first status report regarding this audit.

On June 2, 2021, the City Auditor published the Fleet Replacement Fund Short Millions Audit Report2, reviewing the solvency of the fund to sufficiently replace vehicles and asking if Public Works has the key information necessary to manage the Fleet program.

This is the first status report to City Council on the efforts made to implement the Audit Report’s recommendations for Fleet.

CURRENT SITUATION AND ITS EFFECTS
The Street Paving Audit Report noted two findings and five recommendations for the Public Works Department to review, implement and report to Council. As of this report, three recommendations have been implemented and two recommendations have been partially implemented.

The Fleet Audit Report noted two findings and twelve recommendations for the Public Works Department to review, implement and report to Council. As of this report, there are updates to the status of all twelve recommendations. The first set of seven recommendations was related to the underfunding of the replacement fund. One recommendation has been partly implemented, the remaining six recommendations have been started. The second set of five recommendations focused on Public Works having critical information available to inform management and decision making. All five recommendations under this finding have been started.
1 Rocky Road: Berkeley Streets at Risk and Significantly Underfunded https://berkeleyca.gov/sites/default/files/2022- 01/Rocky-Road-Berkeley-Streets-at-Risk-and-Significantly-Underfunded.pdf 2 Audit: Fleet Replacement Fund Short Millions: https://berkeleyca.gov/sites/default/files/2022-01/Fleet-Replacement- Fund-Short-Millions.pdf

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Audit Status Reports - Fleet Replacement Fund Short Millions INFORMATION CALENDAR & Rocky Road: Berkeley Streets At Risk and Significantly Underfunded November 3, 2022

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The attachment provides a detailed table of audit report recommendations, steps towards corrective action, and implementation updates. The next status report will be in May.

BACKGROUND
Public Works’ Engineering Division is responsible for capital projects to maintain over 216 centerline miles of streets in Berkeley, while the Streets & Utilities Division handles day-to-day maintenance of those streets. Public Works’ Equipment Maintenance Division manages the maintenance, purchase, and replacement of the City’s 730 fleet vehicles, heavy duty trucks and large equipment, including public safety, fire, and alternative fuel vehicles and equipment. Public Works’ Administrative and Fiscal Services Division is responsible for the Department’s budget and fiscal oversight, regulatory compliance and reporting, and analytical support for routine and special projects in all Public Works operating divisions.

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
Public Works replaces vehicles with alternative fuel, hybrid and electric vehicles whenever possible given availability of fleet technology, available budget and charging infrastructure. Streets that are improved to benefit all users help encourage more bicycling and walking, which lowers greenhouse gas emissions. Streets that are improved to include green infrastructure help reduce pollution and clean stormwater before it reaches the Bay.

POSSIBLE FUTURE ACTION
Public Works will continue to address the remaining three partially implemented recommendations in the Streets Audit and the twelve started and partially implemented recommendations in Fleet Audit.

FISCAL IMPACTS OF POSSIBLE FUTURE ACTION
In the biennial budget adoption for FY 2023 and FY 2024, the City Council allocated an increase of $5,000,000 (FY2023) and $9,100,000 (FY2024) to street paving in the Capital Improvement Fund. The Council also passed a funding guideline to approve an $8,000,000 increase in future fiscal years. This funding is intended to raise paving funding to levels sufficient to maintain current pavement conditions. The Measure L Bond Measure, if approved by Berkeley voters on November 8, 2022, would raise $300,000,000 towards street and traffic safety improvements, including improvements that advance bicycle and pedestrian use and safety. Project funding would be allocated over several years to raise the pavement condition index (PCI) to 70 or above, which is a “Good” status.

CONTACT PERSON
Sean O’Shea, Administrative & Fiscal Services Manager (510) 981-6306 Joe Enke, Manager of Engineering (510) 981-6411
Greg Ellington, Equipment Management Superintendent (510) 981-9469

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Audit Status Reports - Fleet Replacement Fund Short Millions INFORMATION CALENDAR & Rocky Road: Berkeley Streets At Risk and Significantly Underfunded November 3, 2022

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Attachment:

1. Audit Findings and Recommendations Response Report – Streets

2. Audit Findings and Recommendations Response Report - Fleet

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Audit Title: Rocky Road: Berkeley Streets at Risk and Significantly Underfunded Finding Recommendation Lead
Department
Expected or
Actual
Implementation
Date
Status of Audit Recommendations,
Corrective Action Plan, and Progress
Summary
Without significant
additional funding,
Berkeley streets will
continue to deteriorate
and deferred maintenance
costs will increase.

1.1 Annually, conduct a budget
analysis, based on the
deferred maintenance needs
at that point in time, to
determine what level of
funding is necessary to
achieve the desired goals of
the Street Rehabilitation
Program. Report findings to
City Council. This information
will be helpful during updates
to the Five-Year Street
Rehabilitation Plan and during
the budgeting process.

Public
Works
Ongoing Partly Implemented:

The City received a PTAP grant to fund a
consultant (PEI) to survey the entire City's
paving condition. The consultant's report is
pending. The newly adopted Street Rehab
policy says that the City will conduct funding
sufficiency analysis based on existing
deferred maintenance. This analysis will be
included as part of the biannual Paving Plan
adoption. Public Works will propose a budget
as part of the biannual CIP adoption to
address the paving needs, based on available
resources, and will present any funding
shortfalls to the Council.

Without significant
additional funding,
Berkeley streets will
continue to deteriorate
and deferred maintenance
costs will increase.

1.2 Identify funding sources to
achieve and maintain the
goals of the Street
Rehabilitation Program.

Public
Works
Ongoing Partly Implemented:

Funding sources for street improvement are
identified in the Capital Improvement
Program budget. The City Council also
approved a ballot measure for the November
2022 ballot which if passed, will provide up to
$300,000,000 to improve Berkeley’s streets,
sidewalks and bike and ped infrastructure.

Approximately $230 million would be
allocated to Street Rehabilitation and Repair.

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The Streets Rehabilitation
and Repair Policy is out-of-
date and Public Works is
not following it.

2.1 Update the Street
Rehabilitation and Repair
Policy annually and define
who is responsible for
ensuring the Policy is updated,
as stated in the Policy.

Public
Works
January 2022 Implemented:

Public Works Commission approved a Street
Rehabilitation and Repair Policy March, 2021,
which was received and revised after
consideration at the FITES Commission in
May 2021, and ultimately adopted by City
Council on January 25, 2022. The Policy and
Five Year Paving Plan were considered and
adopted on the same Council agenda. The
Street and Maintenance Policy shall be
adopted by City Council at a minimum
interval of 5 years, after review by the
Transportation and Infrastructure
Commission.

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The Streets Rehabilitation
and Repair Policy is out-of-
date and Public Works is
not following it.

2.2 When updating the Street
Rehabilitation and Repair
Policy, incorporate equity to
align with Vision 2050 and
clearly define how it will be
applied to the street
maintenance and
rehabilitation planning
process.

Public
Works
January 2022 Implemented:

The updated Street Rehabilitation and Repair
Policy was adopted with clear language
placing Equity as an objective: "The benefits
of good infrastructure shall be distributed
equally throughout the entire community
regardless of income, political influence, or
demographic characteristics of the residents
in the area. Equity means that disadvantaged
residents with more pressing needs
experience benefits sooner than others, as
defined by the City within the adopted Five
Year Plan." The policy also calls for the
designation of an Equity Zone, serving
neighborhoods with historic
underinvestment, which is to be prioritized to
achieve the PCI goals of 70 sooner than the
remainder of the City.

The Streets Rehabilitation
and Repair Policy is out-of-
date and Public Works is
not following it.

2.3 Define goals and performance
measures to guide the Street
Rehabilitation and Repair
Policy and Street
Rehabilitation Program that
align with other plans and
policies relevant to street
paving (e.g., Complete Streets
Policy, Vision 2050, etc.).

Regularly report to Council on
performance measures.

Public
Works
January 2022 Implemented:

Performance Metrics are included as a major
part of the adopted Specific Policy. Key areas:
1) The goal is to get to standard PCI of 70 for
roadways: Arterials, Collectors, Bus Routes,
Bikeway Network, and Equity Zone. 2)
Funding should be prioritized with Equity in
mind 3) Performance metrics reporting will
be included with the biannual Paving Plan
review.

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Audit Title: Fleet Replacement Fund Short Millions
Finding Recommendation Lead
Department
Expected or
Actual
Implementation
Date
Status of Audit Recommendations,
Corrective Action Plan, and Progress
Summary
The Replacement
Fund is underfunded
by millions of dollars.

1.1 Calculate the dollar value of the
City’s replacement needs. Use
results from the recent rate study
to adjust departments’
replacement fees to cover their
share of the costs associated with
vehicle replacement, including
customization and personnel.

Public
Works
Ongoing Partly Implemented:

The current fleet replacements costs
have been updated in FUND$ Fleet
Management System to include all costs,
and have been reflected in the FY 23 &
FY 24 Operating budget and the five year
replacement schedule communicated in
the FY 23-27 CIP.