4. To the best of my knowledge, there is no proceeding pending or threatened in any court or before any governmental authority or arbitration board or tribunal that, if adversely determined, would adversely affect the transactions contemplated by the Lease or the security interest of Lessor or its assigns, as the case may be, in the Equipment. All capitalized terms herein shall have the same meaning as in the foregoing Agreement.
5. The above opinion is for the sole benefit of the Lessor listed above and can only be relied upon by the Lessor or any permitted assignee or sub assignee of Lessor under the Lease.
Whenever a statement herein is qualified by “to my knowledge,” it shall be deemed to indicate that, during the course of my representation of the Lessee in connection with this transaction, no information that would give me current actual knowledge of the inaccuracy of such statement has come to my attention. I have not, however, undertaken any independent investigation to determine the accuracy of such statements, and any limited inquiry undertaken by me during the preparation of this opinion letter should not be regarded as such investigation.
No inference as to my knowledge of any matters bearing upon the accuracy of any such statements should be drawn from the fact of my representation of the Lessee.
My opinions set forth herein do not extend to, and I express no opinions herein with respect to, any laws other than the laws of the State of California, but exclusive of the tax and securities laws, rules and regulations of the State of California and the laws of the State of California relating to debt limitations and restrictions applicable to public entities.
Very truly yours,
Mark D. Hensley, City Attorney
CITY OF DELANO
CITY OF DELANO
STAFF REPORT
August 3, 2026
Agenda Item: 13
TO: Honorable Mayor and Members of the City Council
FROM: Maribel Reyna, City Manager
By: Rosa Lara Rios, Director of Finance/Treasurer
SUBJECT: Approval of First Amendment to License Agreement 2024-69 with Sky Safe, Inc. to locate and operate a drone detection system on City Property to assist in security for the Kern Valley State Prison and authorize the City Manager, or her designee, to execute the same Recommendation
Staff recommends that the City Council:
1. Approve the First Amendment to License Agreement 2024-69 with Sky Safe, Inc.
2. Authorize City Manager to execute First Amendment.
Background
On December 16, 2024, the City Council approved a two year License Agreement with Sky Safe, Inc. to locate and operate a drone detection system on city property to assist in security for the Kern Valley State Prison. The monitoring service located at 2727 W. Industry Rd., roof top has helped the state catch contraband that could be flown into the prison by drones. The existing agreement is set to expire December 31, 2026.
Sky Safe, Inc. has extended a request to amend the existing Agreement to allow for four (4) additional terms of one (1) year each, unless either party provides notice of its intention not to renew per the terms of the agreement.
Discussion/Analysis
The Licensee has been paying a monthly fee of $1,500 in a timely manner and has agreed to continue to make the payment.
Fiscal Impact
Income will continue to be posted within the Transit fund account 375-35520-000-000000.
Environmental Review
The recommended action does not constitute a “project” under CEQA pursuant to CEQA Guidelines Section 15378(b)(5), as it is an administrative action that does not result in a direct or indirect physical change in the environment.
Public Notification
Public notification was met by the posting of the agenda pursuant to the Brown Act.
SUBJECT: Approval of First Amendment to License Agreement 2024-69 with Sky Safe, Inc. to locate and operate a drone detection system on City Property to assist in security for the Kern Valley State Prison and authorize the City Manager, or her designee, to execute the same
Attachment(s)
Attachment 1 – First Amendment to License Agreement
CITY OF DELANO
STAFF REPORT
August 3, 2026
Agenda Item: 14
TO: Honorable Mayor and Members of the City Council
FROM: Maribel Reyna, City Manager
By: Rosa Lara Rios, Director of Finance/Treasurer
SUBJECT: Approve the engagement letter with Van Lant & Fankhanel, LLP Firm for auditing services not to exceed $76,525 and authorized the City Manager, or her designee to execute the appropriate documents Recommendation
Staff recommends that the City Council:
1. Approve an engagement letter for auditing services between the City of Delano and Van Lant & Fankhanel, LLP firm in an amount not to exceed $76,525.
2. Authorize the City Manager or designee to sign and execute the appropriate documents.
Background
The City is required by law and the Government Accounting Standards Board (GASB) to issue Comprehensive Annual Financial Reports that are audited by an independent CPA firm. The independent auditor plays an important and reassuring role in testing and evaluating the city’s system of internal controls and overall financial management for signs of strength and weaknesses and reporting the results. They can also serve as a valuable resource as government financial reporting continues to evolve and government financial management becomes more
complex and legally constrained.
Discussion/Analysis
Van Lant & Fankhanel, LLP is a firm of Certified Public Accountants with offices located in Loma Linda and Murrieta, California. They have over 40 years of experience in the audits of local government units, financial and compliance audits. The engagement shareholders that will be assigned to oversee the City’s audit are Greg Famkhanel, he is a Certified Public Accountant and Certified Fraud Examiner with over 33 years of experience in local government and nonprofits, including cities and special districts throughout the State of California. Brett Van Lant (Technical review Shareholder) is a Certified Public Accountant with over 16 years of experience in local government auditing.
SUBJECT: Approve the engagement letter with Van Lant & Fankhanel, LLP Firm for auditing services not to exceed $76,525 and authorized the City Manager, or her designee to execute the appropriate documents
Fiscal Impact
Sufficient funding has been budgeted within the FY2026-2027 budget to fund a cost not to exceed $76,525.
Environmental Review
The recommended action does not constitute a “project” under CEQA pursuant to CEQA Guidelines Section 15378(b)(5), as it is an administrative action that does not result in a direct or indirect physical change in the environment.
Public Notification
Public notification was met by the posting of the agenda pursuant to the Brown Act.
Attachment(s)
Attachment 1 – Engagement Letter
July 7, 2026
To: Management and the City Council
City of Delano
PO Box 3010
Delano, CA 93216
We are pleased to confirm our understanding of the services we are to provide the City of Delano (City) for the year ending June 30, 2026.
Audit Scope and Objectives
We will audit the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information, including the related notes to the financial statements, which collectively comprise the basic financial statements, and the financial statements of the City of Delano Employees’ Pension Plan (the “Plan”), of the City as of and for the year ending June 30, 2026. Accounting standards generally accepted in the United States of America provide for certain required supplementary information (RSI), such as management’s discussion and analysis (MD&A), to supplement the City’s and Plan’s basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the City’s and Plan’s RSI in accordance with auditing standards generally accepted in the United States of America. These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited:
1) Management’s Discussion and Analysis
2) Budgetary comparison schedules.
3) Pension RSI.
We have also been engaged to report on supplementary information other than RSI that accompanies the City’s and Plan’s financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America, and we will provide an opinion on it in relation to the financial statements as a whole, in a report combined with our auditor’s report on the financial statements:
1) Schedule of expenditures of federal awards.
2) Combining schedules.
In connection with our audit of the basic financial statements, we will read the following other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 1) Introductory Section
2) Statistical Section
1 The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and issue an auditor’s report that includes our opinions about whether your financial statements are fairly presented, in all material respects, in conformity with GAAP, and report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment of a reasonable user made based on the financial statements. The objectives also include reporting on:
Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards.
Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of federal awards that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Auditor’s Responsibilities for the Audit of the Financial Statements and Single Audit We will conduct our audit in accordance with GAAS; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of the Uniform Guidance, and will include tests of accounting records, a determination of major program(s) in accordance with Uniform Guidance, and other procedures we consider necessary to enable us to express such opinions. As part of an audit in accordance with GAAS and Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit.
We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government.
Because the determination of waste and abuse is subjective, Government Auditing Standards do not expect auditors to perform specific procedures to detect waste or abuse in financial audits nor do they expect auditors to provide reasonable assurance of detecting waste or abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is an unavoidable risk that some material misstatements or noncompliance may not be detected by us, even though the audit is properly planned and performed in accordance with GAAS and Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or on major programs. However, we will inform the appropriate level of management of any material errors, any fraudulent financial reporting, or misappropriation of assets that come to our attention. We will also inform the appropriate level of management of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors.
We will also conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the government’s ability to continue as a going concern for a reasonable period of time.
Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, tests of the physical existence of inventories, and direct confirmation of receivables and certain assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will also request written representations from your attorneys as part of the engagement. 2 We have identified the following significant risk of material misstatement as part or our audit planning. According to GAAS, significant risks include management override of controls. Accordingly, we have considered management override of controls as a significant risk.
We may, from time to time and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you with these service providers but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider. Furthermore, we will remain responsible for the work provided by any such third-party service providers.
Our audit of financial statements does not relieve you of your responsibilities.
We will also provide a report on agreed upon procedures performed on the City’s calculation of its annual appropriations limit as required by Article XIII B of the California State Constitution. We will perform the procedures in the Article XIII B Appropriations Limit Uniform Guidelines as published by the League of California Cities. This report will include a statement that the report is intended solely for the information and use of management, City Council and specific legislative or regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties.
Audit Procedures—Internal Control
We will obtain an understanding of the government and its environment, including internal control relevant to the audit, sufficient to identify and assess the risks of material misstatement of the financial statements, whether due to error or fraud, and to design and perform audit procedures responsive to those risks and obtain evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal control. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards.
As required by the Uniform Guidance, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to the Uniform Guidance.
An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. Accordingly, we will express no such opinion. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under AICPA professional standards, Government Auditing Standards, and the Uniform Guidance.
Audit Procedures—Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the City’s and Plan’s compliance with provisions of applicable laws, regulations, contracts, and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards.
The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the City’s major programs. The purpose of these procedures will be to express an opinion on the City’s compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to the Uniform Guidance.
3 Other Services
We will also assist in preparing the financial statements, schedule of expenditures of federal awards, and related notes of the City and Plan in conformity with U.S. generally accepted accounting principles and the Uniform Guidance based on information provided by you. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. We will perform the services in accordance with applicable professional standards. The other services are limited to the financial statements, schedule of expenditures of federal awards, and related notes services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities.
You agree to assume all management responsibilities for the financial statements, schedule of expenditures of federal awards, and related notes, and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements, the schedule of expenditures of federal awards, and related notes and that you have reviewed and approved the financial statements, the schedule of expenditures of federal awards, and related notes prior to their issuance and have accepted responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept responsibility for them.
Responsibilities of Management for the Financial Statements and Single Audit Our audit will be conducted on the basis that you acknowledge and understand your responsibility for (1) designing, implementing, establishing, and maintaining effective internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, including internal controls over federal awards, and for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives are met; (2) following laws and regulations; (3) ensuring that there is reasonable assurance that government programs are administered in compliance with compliance requirements; and (4) ensuring that management and financial information is reliable and properly reported. Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles; for the preparation and fair presentation of the financial statements, schedule of expenditures of federal awards, and all accompanying information in conformity with accounting principles generally accepted in the United States of America, and for compliance with applicable laws and regulations (including federal statutes), rules, and the provisions of contracts and grant agreements (including award agreements). Your responsibilities also include identifying significant contractor relationships in which the contractor has responsibility for program compliance and for the accuracy and completeness of that information.
You are also responsible for making drafts of financial statements, schedule of expenditures of federal awards, all financial records, and related information available to us and for the accuracy and completeness of that information (including information from outside of the general and subsidiary ledgers). You are also responsible for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, identification of all related parties and all related-party relationships and transactions, and other matters; (2) access to personnel, accounts, books, records, supporting documentation, and other information as needed to perform an audit under the Uniform Guidance; (3) additional information that we may request for the purpose of the audit; and (4) unrestricted access to persons within the government from whom we determine it necessary to obtain audit evidence. At the conclusion of our audit, we will require certain written representations from you about the financial statements; schedule of expenditures of federal awards; federal award programs; compliance with laws, regulations, contracts, and grant agreements; and related matters.
Your responsibilities include adjusting the financial statements to correct material misstatements and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements of each opinion unit taken as a whole.
You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the government 4 complies with applicable laws, regulations, contracts, agreements, and grants. You are also responsible for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements that we report. Additionally, as required by the Uniform Guidance, it is management’s responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; promptly follow up and take corrective action on reported audit findings; and prepare a summary schedule of prior audit findings and a separate corrective action plan.
You are responsible for identifying all federal awards received and understanding and complying with the compliance requirements and for the preparation of the schedule of expenditures of federal awards (including notes and noncash assistance received, and COVID-19-related concepts, such as lost revenues, if applicable) in conformity with the Uniform Guidance. You agree to include our report on the schedule of expenditures of federal awards in any document that contains, and indicates that we have reported on, the schedule of expenditures of federal awards. You also agree to [include the audited financial statements with any presentation of the schedule of expenditures of federal awards that includes our report thereon OR make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon]. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance; (2) you believe the schedule of expenditures of federal awards, including its form and content, is stated fairly in accordance with the Uniform Guidance; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards.
You are also responsible for the preparation of the other supplementary information, which we have been engaged to report on, in conformity with U.S. generally accepted accounting principles (GAAP). You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to [include the audited financial statements with any presentation of the supplementary information that includes our report thereon OR make the audited financial statements readily available to users of the supplementary information no later than the date the supplementary information is issued with our report thereon]. Your responsibilities include acknowledging to us in the written representation letter that (1) you are responsible for presentation of the supplementary information in accordance with GAAP; (2) you believe the supplementary information, including its form and content, is fairly presented in accordance with GAAP; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the supplementary information.
Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the Audit Scope and Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or studies. You are also responsible for providing management’s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions for the report, and for the timing and format for providing that information.
Engagement Administration, Fees, and Other
We understand that your employees will prepare all cash, accounts receivable, or other confirmations and schedules we request and will locate any documents selected by us for testing.
At the conclusion of the engagement, we will complete the appropriate sections of the Data Collection Form that summarizes our audit findings. It is management’s responsibility to electronically submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors’ reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse. We will coordinate with you the electronic submission and certification. The Data Collection Form and the reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors’ reports or nine months after the end of the audit period.
We will provide copies of our reports to the City; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. 5 The audit documentation for this engagement is the property of VLF, LLP and constitutes confidential information.
However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to the Oversight Agency or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of VLF, LLP personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies.
The audit documentation for this engagement will be retained for a minimum of seven years after the report release date or for any additional period requested by the Oversight Agency for Audit, or Pass-through Entity. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation.
We will begin our audit in July of 2026 and plan to issue our reports in December of 2026. Greg Fankhanel, CPA is the engagement partner and is responsible for supervising the engagement and signing the reports or authorizing another individual to sign them.
Our fees for the 2025-2026 fiscal year will be $76,525. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. In addition, the above fees are based on the assumption that the Single Audit will include no more than two major programs, in accordance with the Uniform Guidance.
Reporting
We will issue written reports upon completion of our Single Audit. Our reports will be addressed to the City Council of the City of Delano and Board of Directors of the City of Delano Employee Pension Plan. Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit. Depending on the nature of these circumstances, it may be necessary for us to modify our opinions, add a separate section, or add an emphasis-of-matter or other-matter paragraph to our auditor’s report, or if necessary, withdraw from this engagement. If our opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue reports, or we may withdraw from this engagement.
The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will state that (1) the purpose of the report is solely to describe the scope of testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance, and (2) the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. The Uniform Guidance report on internal control over compliance will state that the purpose of the report on internal control over compliance is solely to describe the scope of testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Both reports will state that the report is not suitable for any other purpose.
We appreciate the opportunity to be of service to the City of Delano and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the attached copy and return it to us. 6 Very truly yours,
VAN LANT & FANKHANEL, LLP
Greg Fankhanel
Certified Public Accountant
RESPONSE:
This letter correctly sets forth the understanding of the City of Delano and the City of Delano Employee Pension Plan.
Signature:
Title:
Date:
7 CITY OF DELANO
STAFF REPORT
August 3, 2026
Agenda Item: 15
TO: Honorable Mayor and Members of the City Council
FROM: Maribel Reyna, City Manager
By: Rosa Lara Rios, Director of Finance/Treasurer
SUBJECT: Approval of professional legal services engagement with Morgan, Lewis & Bockius LLP for pension administration legal services and authorize the City Manager to sign any documents needed Recommendation
Staff recommends that the City Council:
1. Approve a professional services engagement with Morgan, Lewis & Bockius LLP for pension administration, on an as needed basis.
2. Authorize the City Manager or designee to sign and execute the appropriate document.
Background
For approximately the past fifteen (15) years, the City of Delano has relied on the specialized legal counsel of Marcus Wu for matters related to pension administration, including compliance with CalPERS requirements, regular rate and pension reporting obligations, and related regulatory and actuarial legal questions. Mr. Wu has developed extensive institutional knowledge of the City's pension practices, plan structure, and history over this period.
Marcus Wu has recently joined the law firm Morgan, Lewis & Bockius LLP. To maintain continuity of counsel and preserve the significant institutional knowledge accumulated over the past fifteen years, staff recommends the City continue its engagement with Marcus Wu through his new firm
Discussion/Analysis
Pension administration is a highly specialized area of law requiring familiarity with CalPERS regulations, the Public Employees' Retirement Law, IRS qualification requirements, and evolving compliance obligations. Retaining Marcus Wu through Morgan, Lewis & Bockius LLP avoids the substantial cost, delay, and risk associated with onboarding new counsel unfamiliar with the City's pension matters.
The scope of services under the proposed agreement includes ongoing pension compliance advice; CalPERS reporting and audit support; regular rate and compensation review; and related legal counsel as directed by the City.
SUBJECT: Approval of Professional Legal Services Engagement with Morgan, Lewis & Bockius LLP for Pension Administration Legal Services and authorize the City Manager to sign any documents needed
Fiscal Impact
The proposed engagement letter provides for legal services at an hourly rate of $895 for Partners and of Counsel, and $595 for associates and benefit advisors. Sufficient funding has been budgeted within the FY2026-2027 pension budget and will only be used as needed.
Environmental Review
The recommended action does not constitute a “project” under CEQA pursuant to CEQA Guidelines Section 15378(b)(5), as it is an administrative action that does not result in a direct or indirect physical change in the environment.
Public Notification
Public notification was met by the posting of the agenda pursuant to the Brown Act.
Attachment(s)
Attachment 1 – Professional Services Engagement Letter
Marcus Wu
Partner
+1.415.442.1678
[email protected]
Morgan, Lewis & Bockius LLP
600 Montgomery Street
Suite 2300
San Francisco, CA 94111-2725 +1.415.442.1000
United States +1.415.442.1001
DB2/ 652478118.1
Rosa Lara-Rios
Finance Director
City of Delano
1015 11th Avenue
Delano, CA 93215
Re: Employee Benefits and Tax Advice
Dear Rosa:
Morgan, Lewis & Bockius LLP appreciates the opportunity to provide legal services to City of Delano in connection with employee benefits and tax matters. In accordance with Firm policy, the purpose of this letter is to set forth our understanding as to the terms upon which we have been retained.
MUTUAL RESPONSIBILITIES
We will provide the legal services that, in our professional judgment, are appropriate for this matter and in accordance with applicable legal and ethical standards. You agree that appropriate representatives of City of Delano will be reasonably available to confer with us upon request, will provide us with such documents and information as you may possess relating to the matter, will disclose all facts and circumstances of which you are aware that may bear upon our handling of the matter, will promptly pay our fees in accordance with the terms of this letter, and will otherwise assist our efforts as we reasonably request.
SCOPE OF REPRESENTATION
We are confident that our services in this matter will prove beneficial, and we hope that you will seek our assistance with other matters in the future. However, our present agreement to provide legal services to City of Delano is limited to the matter described above for which you have engaged us. As you are aware, we are a large law firm, and we represent many other companies and individuals. It is possible that some of our present or future clients will have disputes or other dealings with City of Delano during the time that we are representing City of Delano. Accordingly, as a condition of our undertaking this matter for you, you agree that this Firm may continue to represent, and/or may undertake in the future to represent, existing and/or new clients in any matter, including litigation, that is not substantially related to our work for City of Delano, even if the interests of such clients in those other matters are directly adverse to City of Delano. Where ethically permissible to do so, we agree to notify you of each such representation as it arises. We agree, however, that your prospective consent to conflicting DB2/ 652478118.1
Rosa Lara-Rios
City of Delano
representations shall not apply in any instance where, as the result of our representation of City of Delano, we have obtained sensitive, proprietary or other confidential information of a non-public nature that, if known to another client of ours, could be used to the material disadvantage of City of Delano in a matter in which we represent, or in the future are asked to undertake representation of, that client.
CORPORATE TRANSPARENCY ACT/BENEFICIAL OWNERSHIP REPORTING Unless separately agreed in writing, in a form prescribed by the firm, the firm’s representation of you does not include legal advice regarding your company’s reporting obligations or compliance with the Corporate Transparency Act or any similar laws of any jurisdiction (such as the New York LLC Transparency Act).
RETAINER
It is customary for Morgan, Lewis & Bockius LLP to require the payment of a retainer in undertaking a new representation. We have not requested a retainer in connection with this representation. However, if our bills are not paid when due, or if the representation proves to be substantially more complex or time-consuming than our initial discussions would indicate, we may ask, as a condition of our continuing this engagement, that you deposit a retainer to be applied against ongoing fees and expenses on terms that will be agreed upon at that time.
DETERMINATION OF FEE
Our fees are determined, in accordance with applicable ethical rules, by considering a number of factors, including the amount of time that our lawyers, legal assistants and staff devote to the matter, the experience and expertise of the professionals who perform the services, the complexity, novelty and difficulty of the questions involved, the magnitude of the matter, any time limitations or other special demands presented, and the results obtained.
You agree that our fee will be based upon the time which we devote to the matter, in accordance with hourly rates assigned to the particular lawyers and legal assistants performing the work. Currently, our rates are $895 for Partners and Of Counsel, and $595 for associates and benefits advisors. These rates are subject to periodic adjustment, and the rates billed will be those in effect at the time the services in question were rendered.
In addition to our fees, we will bill you for any expenditures which we make for you and any costs which we incur on your behalf. These may include filing fees, transcript costs, deposition costs, word processing costs where the use of word processing is mandated by the circumstances, computerized legal research costs, the costs of reproducing documents, parking and travel costs, expenses which we incur while we are away from our office on your business, fees which accountants, consultants or expert witnesses retained on your behalf charge us, and other similar expenditures. Where such expenditures are significant in amount, we may ask you to make payment directly to the provider of goods or services.
DB2/ 652478118.1
Rosa Lara-Rios
City of Delano
STATEMENTS
We will send you statements for services rendered and for expenditures which we have made for you at the conclusion of this transaction. The amounts set forth in the statements are due within 30 days after the statement is mailed. If you have any questions about any statement, please call me promptly to discuss it.
If your account becomes delinquent, we have established collection procedures which may include stopping all legal services of a non-emergency nature and, where consistent with our ethical obligations, withdrawing from this representation. We also reserve the right to ask you for reasonable security for past due balances and work required in the near future. As a condition of our undertaking this representation, you agree to provide such security to us upon request.
In fairness to the majority of our clients who pay our statements promptly, we have established late payment charges designed to charge to the late payors the costs of carrying their overdue accounts. We reserve the right, to the extent permitted by law, to add a late payment charge of 1% per month to your past due account. These late charges will accrue from the due date of the bill until the date the bill is paid.
COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS
If during the course of our representation it becomes necessary for us to involve lawyers who are admitted to practice in jurisdictions outside the United States, we may have to require that you provide us with documentary evidence to comply with their local client verification requirements.
MARKETING COMMUNICATIONS
Morgan Lewis is proud of its relationship with City of Delano. We would appreciate the opportunity to include your name and logo in our marketing materials and on the firm’s website, and to be permitted to make comments about matters of interest that involve you and that are publicly known, for example, a decision by a court or a transaction.
TERMINATION
We anticipate a long and mutually satisfactory relationship. However, you have the right to terminate our engagement at any time by giving us written notice of termination. We also have the right, subject to our responsibilities under applicable ethical rules, to terminate our engagement by giving you written notice if you fail to cooperate with us or to pay our bills when due, or if we determine that continuing to represent you would be unethical, impractical or improper. If our relationship is terminated by either of us, you will remain obligated to pay us in full for our past services and for costs and expenses in accordance with the terms of this letter.
AGREEMENT APPLICABLE UNTIL CHANGED IN WRITING
This agreement, including the attached Addendum Regarding Data Protection, will apply to any additional matters we agree to undertake upon your behalf unless we enter into an express written agreement reflecting an alternate arrangement.
DB2/ 652478118.1
Rosa Lara-Rios
City of Delano
Please review this letter and the Addendum carefully. If it accurately reflects your understanding of the terms of our representation, please sign below and return a copy to me. Your signature indicates your authority to act on behalf of City of Delano.
Sincerely,
Marcus Wu
APPROVED AND ACCEPTED
CITY OF DELANO
By:
Title:
Date:
DB2/ 652478118.1
Rosa Lara-Rios
City of Delano
Morgan, Lewis & Bockius LLP
Addendum Regarding Data Protection
Morgan Lewis is committed to maintaining the privacy of personal data. In connection with the terms of our engagement, we both agree that we will comply with our respective obligations under the applicable data protection, data privacy, and data security laws (the “Data Protection Laws”). For purposes of performing legal services, we are an independent data controller (or comparable term/role).
To fulfill the terms of this engagement and for related purposes (such as updating our client records, processing our billing, and complying with our legal and regulatory obligations), you understand that we may collect, store, use, and otherwise process personal data from and about you, your employees, your agents and other third parties related to the engagement.
Further, you agree that it may be appropriate or necessary for us to disclose and/or transfer your personal data to our affiliates and third-party providers who may be located in other jurisdictions (which may offer a different level of protection for personal data) in order to fulfill the terms of this engagement and for related purposes as described above. In all cases, we will take appropriate technical and organizational measures to protect against the unauthorized or unlawful processing of personal data.
You shall not share, disclose or transfer (directly or through a third party at your direction) any personal data to us, our affiliates, and/or third-party providers engaged by you/us to assist with this engagement, including those in other jurisdictions, unless such disclosure or transfer complies with the Data Protection Laws. You will obtain valid consents from and/or furnish privacy notices to data subjects, or otherwise ensure the existence and validity of legal grounds, as needed to facilitate our collection and other processing of personal data, including its cross-border transfers to such jurisdictions as the United States.
You also agree to comply with data localization requirements under the Data Protection Laws, as applicable to the data that you share, disclose or transfer to us. We are not responsible, in any jurisdiction, for compliance with localization requirements (unless local law specifically provides otherwise). Our information technology systems, including email, are hosted and personal data is stored on servers located in the United States.
We do not intend to access or process any “important data” as defined under Chinese Data Protection Laws. You shall not disclose, transfer, share, or provide us with access to any important data, unless you first notify us and obtain approval(s) from the Chinese government authorities as required under Chinese Data Protection Laws for the cross-border data transfer.
More information about our Privacy Policy (and Privacy Notices, as applicable) is available on our website.
By signing the engagement letter, you confirm that you have read and understood our Privacy Policy and any applicable Privacy Notice. Please contact the Privacy office at [email protected] with any questions, concerns or requests to access, correct or invoke other rights related to personal data.
CITY OF DELANO
STAFF REPORT
August 3, 2026
Agenda Item: 16
TO: Honorable Mayor and Members of the City Council
FROM: Maribel Reyna, City Manager
By: Rosa Lara Rios, Director of Finance/Treasurer
SUBJECT: Approval of Mayor’s appointment to replace a Pension Committee Member
Recommendation
Staff recommends that the City Council:
1. Approve the replacement of Carlton Lennon to the Pension Committee with Donna Gonzalez to a four year term (July 2026 – July 2030).
Background
The Pension Committee consists of three members who serve at the pleasure of the City Council. The Committee is responsible for oversight of pension plan administration and related fiduciary matters.
Discussion/Analysis
Because Pension Committee members serve at the pleasure of the City Council, the Council may appoint and replace members at its discretion. Staff recommends appointing Donna Gonzalez as the replacement of Carlton Lennon (Appointed: April 2015). The recommended appointee, Mrs. Donna Gonzalez, brings over 25 years of experience in financial services relevant to fund management, investment products, and financial risk, along with governance experience.
Fiscal Impact
Pension Committee members receive a stipend of $500 per meeting, and the Committee meets four times per year ($2,000 annually per member). The action replaces one member with another and does not change the size of the Committee; there is no net fiscal impact.
Environmental Review
The recommended action does not constitute a “project” under CEQA pursuant to CEQA Guidelines Section 15378(b)(5), as it is an administrative action that does not result in a direct or indirect physical change in the environment.
Public Notification
Public notification was met by the posting of the agenda pursuant to the Brown Act.
SUBJECT: Approval of Mayor’s appointment to replace a Pension Committee Member
Attachment(s)
Attachment 1 – Mrs. Gonzalez Resume