Downey City Council
June 13, 2023

HUD CityofDowney AGENDA MEMO
Ite#EnB(

APPROVED BY
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL CIPr MANAGERTO :

FROM:OFFICE OF THE CITY MANAGER
BY: STEPHEN W. HANNAH, DIRECTOR OF FINANCE
DATE :

SUBJECT:

JUNE 13, 2023
REIMBURSEMENT OF PROPOSITION A. PROPOSITION C. AND MEASURE R FUNDS

EXECUTIVE SUMMARY
The City Council will consider approving an increase in General Fund appropriations by $234,791 , and estimated Revenues in Proposition A (Prop A), Proposition C (Prop C) and Measure R funds in the amounts of $191 ,719, $30,006, and $12,066, respectively, for the reimbursement of costs as result of the Fiscal Year 2021-2022 Program Audit.

RECOMMENDATION
(
That the City Council:

Increase appropriations in the General Fund accounts: 10-5-9000-9055, $191 ,719;,10-5-9000-9054, $30,006; and 10-5-9000-9056, $12,066 and estimated Revenues in the Prop A fund, account 55-5-9010, $191,719, Prop C fund, account 54-5-9010, $30,006, and Measure R fund, account 56-5-9010, $12,006.

BACKGROUND
The Los Angeles Metropolitan Transportation District (LA METRO) administers a series of special sales tax funded transportation programs. For the City, these programs provide revenue for the Proposition A, Proposition C, Measure M, and Measure R funds, collectively known as Local Return Funds.

Each year, LA METRO audits recipient entities to validate both appropriate and timely use of those resources. Over the last six audited fiscal years, the City has had a series of findings resulting from these audits. These findings are a result of the City’s use of budgeted overhead costs as the basis for the charges. LA Metro requires either actual costs be submitted or only those costs associated with an approved OMB Cost Allocation Plan (CAP)
As a result of these findings, certain overhead charges submitted by the City for these programs were not approved, and the City has been required to reimburse the program for these expenditures.
(

REIMBURSEMENT OF PROPOSITION A, PROPOSITION C AND MEASURE R FOR UNSUPPORTED

COSTS CHARGED TO PROGRAMS
JUNE 13, 2023
PAGE 2

ANALYSIS
The City has been allocating the salaries and benefits charges for Local Return Fund projects based on a time study from Fiscal Year 2011-2012. Management salaries and benefits were charged based on estimated percentages for Local Return Fund activity rather than the employee’s actual hours worked on the project. This approach to cost allocation is not in compliance with Local Return Fund Program Guidelines.

To be in compliance, “a proposed expenditure of funds shall be deemed to be for public transit purposes to the extent that it can reasonably be expected to sustain or improve the quality and safety of and/or access to public transit services by the general public or those requiring special public transit assistance,” and “It is the jurisdictions’ responsibility to maintain proper accounting records and documentation...” In addition, the Metro Local Return Program Manager issued a memo dated on April 29, 2014 to jurisdictions to provide recommendations that ensure jurisdictions have adequate evidence to support its compliance with the Local Return Guidelines. The recommendations state “that an electronic system is acceptable as long as how much time is identified on the project (i.e. not just a clock-in-clock-out system) and this non- timesheet system, excel file or other, is authenticated by the employee and approved by one’s supervisor.” Also, the memo states that:

When employees work on multiple activities or projects, the salaries and benefits expenditures should be supported by time records, activity reports or equivalent documentation which meets program standards unless a CAP has been approved by the cognizant Federal agency.

Based on this shortcoming found in three of the four Local return fund programs, it was recommended that the City reimburse these programs for the charges in question.

Additionally, the City was requested to strengthen its controls over the allocation of payroll costs by using a supported allocation basis, time sheets, or other similar documentation to substantiate the actual hours worked by employees charged to the programs.

To ensure program compliance in future periods, the City has had an outside consultant (Revenue and Cost Specialists) prepare an updated CAP. As of the date of this report, the CAP has been completed , but the City awaits plan approval from our cognizant agent, which is The Department of Housing and Urban Development (HUD).

CITY COUNCIL PRIORITIES
Fiscal Responsibility

REIMBURSEMENT OF PROPOSITION A. PROPOSITION C AND MEASURE R FOR UNSUPPORTED

COSTS CHARGED TO PROGRAMS
JUNE 13, 2023
PAGE 3

FISCAL IMPACT
Approval of the recommended action will result in an appropriation increase for Fiscal Year 2022-2023 in the amount of $234,791 from the General Fund, accounts 10-5-9000- 9055, $191,719, 10-5-9000-9054, $30,006, and 10-5-9000-9056, $12,066, and increases in Estimated Revenues in the Prop A fund, account 55-5-9010, $191,719, Prop C fund, account 54-5-9010, $30,006, and Measure R fund, account 56-5-9010, $12,006.

ATTACHMENTS
Attachment A: Fiscal Year 2021-22 Independent Auditor’s Report on Compliance and on Internal Control Over Compliance Required by the Guidelines, Local Return Revenue Programs
Attachment B: Schedule of Appropriation Increases and Increases in Estimated Revenues

CITY OF DOWNEY

ANNUAL FINANCIAL REPORT OF THE

PROPOSITION A LOCAL RETURN FUND

PROPOSITION C LOCAL RETURN FUND

MEASURE R LOCAL RETURN FUND

MEASURE M LOCAL RETURN FUND

TRANSPORTATION DEVELOPMENT ACT
ARTICLE 3 FUND

FOR THE FISCAL YEARS ENDED
JUNE 30, 2022 AND 2021
Metro
J
l&
Simpson & Simpson, LLP
Certified Public Accountants
ATrACHMENT A

CITY OF DOWNEY

TABLE OF CONTENTS

FINANCIAL SECTION PAGE
Independent Auditor’s Report
Proposition A Local Return Fund
Financial Statements:

Balance Sheets
Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information:

Schedule of Expenditures – Actual and Metro Approved Project Budget Schedule of Capital Assets
4 5
6 7
Proposition C Local Return Fund:

Financial Statements:

Balance Sheets
Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information:

Schedule of Expenditures – Actual and Metro Approved Project Budget Schedule of Capital Assets
8 9
10 11
Measure R Local Return Fund:

Financial Statements:

Balance Sheets
Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information:

Schedule of Expenditures – Actual and Metro Approved Project Budget Schedule of Capital Assets
13 14
15 18
Measure M Local Return Fund:

Financial Statements :

Balance Sheets
Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information:

Schedule of Expenditures – Actual and Metro Approved Project Budget Schedule of Capital Assets
20 21
22 24
Transportation Development Act Article 3 Fund:

Financial Statements:

Balance Sheets
Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information:

Schedule of Transportation Development Act Allocation for Specific Projects Schedule of Capital Assets
25 26
27 28
29 36
Notes to Financial Statements
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1 (

CITY OF DOWNEY

TABLE OF CONTENTS
(Continued)

COMPLIANCE SECTION
Independent Auditor’s Report on Compliance and on Internal Control Over Compliance Required by the Guidelines
Compliance Matrix
Schedule of Findings and Recommendations
38 42
49 58EXIT CONFERENCE
11 FINANCIAL SECTION

U.S. BANK TOWER
633 WEST fFH STRErr, SUITE 3320
LOS ANGELES, CA 90071
(213) 73G6W TELEPHONE
(213) 7386692 FAX
wm.simpsonandsimpsoncpas.com

SIMPSON & SIMPSON
CERriFiED PUBLIC ACCOUvrANrs

FOUNDING PARTNERS
BRAINARD C. SIMPSON, CPA
MELBA W. SIMPSON, CPA
Independent Auditor’s Report
To the Honorable Members of the City Council of the
City of Downey, California and the
Los Angeles County Metropolitan Transportation Authority Opinions
We have audited the accompanying fInancial statements of the Proposition A Local Return Fund (PALRF), Proposition C Local Return Fund (PCLRF), Measure R Local Return Fund (MRLRF), Measure M Local Return Fund (MMLRF), and Transportation Development Act Article 3 Fund (TDAA3F) (collectively, the Funds), of the City of Downey, California (the City) as of and for the years ended June 30, 2022 and 2021, and the related notes to the financial statements, as listed in the table of contents. (
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the PALRF, PCLRF, MRLRF, MMLRF and TDAA3F of the City, as of June 30, 2022 and 2021, and the respective changes in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
As discussed in Note 2, the financial statements present only the PALRF, PCLRF, MRLRF, MMLRF and TDAA3F of the City, and do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2022 and 2021, the changes in its financial position, for the years then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter,
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A
Supplementary Information
Our audits were conducted for the purpose of forming opinions on each of the Funds’ financial statements.

The accompanying supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the Funds’ financial statements. The information has been subjected to the auditing procedures applied in the 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 Funds’ financial statements or to the Funds’ financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to each of the Funds’ frnancial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards , we have also issued our report dated December 15, 2022, on our consideration of the City’s internal control over the Funds’ financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over the Funds’ financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over the Funds’ financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over the Funds’ financial reporting and compliance.( Los Angeles, California
December 15, 2022

CITY OF DOWNEY

PROPOSITION A LOCAL RETURN FUND

BALANCE SHEETS
June 30
2022 202 1
ASSETS
Cash and investments
Accounts receivable
S
S
3,364,327 S
34,242
3,398,569 S
2,037,065
2,037,065Total assets

LIABILITIES AND FUND BALANCE
Liabilities
Accounts payable
Accrued payroll and employee benefits
Interest payable
$273,566
56,926
29,275
359,767
$224,391
49,766
33,524
307,68 1Total liabilities
Fund Balance
Restricted 3,038,802
3,038,802
1 ,729,384
1 ,729,384Total hInd balance
Total liabilities and fund balance S 3,398,569 S 2,037,065 The accompanying notes are an integral part of the financial statements. 4 CITY OF DOWNEY

PROPOSITION A LOCAL RETURN FUND

STATEMENTS OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE
For the Fiscal Years Ended June 30
2022 2021

REVENUES
Proposition A
Proposition A Discretionary Incentive Grant (Note 8)
Interest income
Unrealized gain (loss) on investments
Project generated revenue (Note 9)
$2,866,950
34,242
15,538
(55,669)
162
$2,297,958
11,802
4,443
379
Total revenues 2.861.223 2.3 14.582

EXPENDITURES
Various projects 2,738,045
2,738,045
2,409,430
2,409,430Total expenditures

OTHER FINANCING SOURCES
Transfer-in from PCLRF (Note 10)
Transfer-in from General Fund (Note 11)
1 ,000,000
186,240

1.186.240
1 ,000,000
1 ,000,000Total other financing sources
Excess of revenues over expenditures and other
financing sources 1 ,309,418 905,152
Fund balance at beginning of year 1 ,729,384
3,038,802 S
824,232
1 ,729,384Fund balance at end of year $
The accompanying notes are an integral part of the financial statements. 5 CITY OF DOWNEY

PROPOSITION A LOCAL RETURN FUND

SUPPLEMENTARY D(FORMATION

SCHEDULE OF EXPENDITURES

ACTUAL AND METRO APPROVED PROJECT BUDGET
For the Fiscal Year Ended June 30, 2022
(With Comparative Actual Amount for the Fiscal Year Ended June 30, 2021) (
(
2022
Actual
Variance
Favorable
(Unfavorable)
Project
Code
Metro
Budget
202 1
ActualProject Name
105
107
150
155
170
170
Fixed Route Program
Senior/Handicapped Transit Program
Transit Depot Security Cameras
Recreational/Special Event Transit
Bus Stop Maintenance
Downey Depot Maintenance
$1 ,840,064
1 ,334,449
58,881
72,000
285,355

53.950
S 1 ,309,845
1,146,019
14,700
39,439
188,780
39,262
$530,219
188,430
44, 181
32,561
96,575

14.688
$1 ,363,653
787,564
205,636
52,577
Total expenditures $3.644,699 S 2.738.045 S 906.654 $ 2.409.430 (
See accompanying independent auditor’s report.
6 (
(

CITY OF DOWNEY

PROPOSITION A LOCAL RETURN FUND
SUPPLEMENTARY n(FORMATiON

SCHEDULE OF CAPITAL ASSETS
June 30, 2022
Date
Acquired
Balance
7/ 1/2021
Balance
Deletions 6/30/2022Description
S
Additions
Jun-2005
Jan-2007
Feb-2008
Feb-2008
Jun-2008
Jun-2008
Jun-2008
Jun-2008
Oct-2008
Dec-2008
Apr-2009
Apr-2009
Apr-2009
Jun-2010
Ford Bus (6233)63 ,475
8,000
69,795
72,263
13,341
69,795
69,795
69,796
45,828
46,620
74,257
74,257
74,258
S S -S 63,475
8,000
69,795
72,263
13,341
69,795
69,795
69,796
45,828
46,620
74,257
74,257
74,258
Projector - Dell 1220
2007 Ford Bus
2007 Ford Bus
Storage Server
2008 Starcraft Allstar Type III
2008 Starcraft Allstar Type III
2008 Starcraft Allstar Type III
Survelliance
2008 Chevrolet Uplander -White
2009 Starcraft Allstar Bus
2009 Starcraft Allstar Bus
2009 Starcraft Allstar Bus
(
9 Navigational Router - Novus DCC-
PRO II 105,562 - - 105,562
Aug-2010 Property at 9300 Stewart and Gray
Road for the Consolidated City
Corporate Yard Project (Partly
Funded by Proposition A Local
El Dorado Bus
877,999
446,713
446,713
446,713
446,713
446,713
446,713
446,713
877,999
446,713
446,713
446,713
446,713
446,713
446,713
446.7 13
Jul-2019
Jul-2019
Jul-2019
Jul-2019
Jul-2019
Jul-2019
Jul-2019
El Dorado Bus
El Dorado Bus
El Dorado Bus
El Dorado Bus
El Dorado Bus
El Dorado Bus
Total $ 4,862,032 S - $ - $ 4.862.032
See accompanying independent auditor’s report.
7 CITY OF DOWNEY

PROPOSITION C LOCAL RETURN FUND

BALANCE SHEETS
June 30
2022 2021
ASSETS
Cash and investments
Accounts receivable
Retention receivable (Note 12)
S 1 ,856,993
59,058
21 ,000
S 2, 187,578
2, 187,578Total assets S 1 ,937,05 1 S

LIABILITIES, DEFERRED INFLOW OF RESOURCES,

AND FUND BALANCE
Liabilities
Accounts payable
Retention payable
Accrued payroll and employee benefits
S 30,532
84, 197
6,85 1
121,580
S 74,324
8,676
8,224
91 ,224Total liabilities
(
Deferred inflow of resources (Note 12)21 ,000
21 ,000Total deferred inflow of resources
Fund Balance
Restricted 1 ,794,471
1 ,794,471
2,096,354
2,096,354Total fund balance
Total liabilities, deferred inflow of resources,
and fund balance S 1,937.051 S 2, 187,578
The accompanying notes are an integral part of the financial statements. 8 CITY OF DOWNEY

PROPOSITION C LOCAL RETURN FUND
STATEMENTS OF REVENUES, EXPENDITURES.

AND CHANGES N FUND BALANCE
For the Fiscal Years Ended June 30
2022 2021

REVENUES
Proposition C
Proposition A Discretionary Incentive Grant (Note 8)
Interest income
Unrealized gain (loss) on investments
$2,378,075
59,058
11,040
(36,655)
$1 ,906,074
13,386
3,880
1 ,923,340Total revenues 2,41 1.518

EXPENDITURES
Various projects 1,734, 188
1 ,734, 188
219,301
219,301Total expenditures

OTHER FINANCING SOURCE (USE)
Transfer-out to PALRF (Note 10)
Transfer-in from General Fund (Note 11)
(
( 1 ,000,000)

20.787
( 1 ,000,000)
( 1 ,000,000)Total other financing source (use)(979,213) Excess (deficiency) of revenues over expenditures and
other financing source (use)(301,883)
2,096,354
704,039
1,392,315Fund balance at beginning of year
Fund balance at end of year $1,794,471 S 2.096.354
The accompanying notes are an integral part of the financial statements. 9 CITY OF DOWNEY

PROPOSITION C LOCAL RETURN FUND
SUPPLEMENTARY PgFORMATION

SCHEDULE OF EXPENDITURES

ACTUAL AND METRO APPROVED PROJECT BUDGET
For the Fiscal Year Ended June 30, 2022
(With Comparative Actual Amount for the Fiscal Year Ended June 30, 202 1 ) 2022
Variance
Favorable
(Unfavorable)
Project
Code
302
Metro
Budget
202 1
ActualProject Name Actual
Stewart and Gray Road Signalization and
Safety Enhancements S 86,706 S
300,000
755 S 85,951 S
300,000302
302
302
620
620
715
715
720
Florence Avenue Traffic Signal Upgrades
Lakewood Boulevard Traffic Sjgnal
Upgrades
Imperial Highway Traffic Signal
156
12,125
18,902
32,356
Upgrades and Safety Enhancements
Ride Sharing Program 33,500
31 ,928
30,699 2,801
Local Return Fund Administration
(Public Works)
Bellflower Boulevard Pavement
37,793 (5,865)
23,712
754,455
Rehabilitation 40,000
1 ,405,000
1 , 1 60,000
16,288
650,545Florence Avenue Pavement Rehabilitation 8,360
147,402
219,301
Telegraph Road Traffic Throu drout and
Safety Enhancements - Phase 2 998, 108
1 ,734,188
161,892
1 ,322,946Total expenditures 3,057, 134
Transfer-out to PALRF (Note 10)
105 Fixed Route Service
106 Senior/Handicapped Transit Program
500,000
500.000
500,000
500.000
500,000
500.000
Total transfer-out to PALRF 1.000.000 1.000.000
1,322,946 S
1 ,000,000
1,219,301Total expenditures and transfer-out to PALRF S 4,057,134 $ 2,734,188 $ See accompanying independent auditor’s report.
10 CITY OF DOWNEY

PROPOSITION C LOCAL RETURN FUND
SUPPLEMENTARY nqFORMATiON

SCHEDULE OF CAPITAL ASSETS
June 30, 2022
Date
Acquired
Jun-2004
Balance
7/1/202 1
Balance
6/30/2022DescriptionAdditions Deletions
Old River School Road - Stewart
and Gray to Dinwiddie $194 §
3,671
8,398
-$-$194
3,671
8,398
Jun-2010
Jun-2010
Jun-2010
Imperial Highway
Lakewood Boulevard
Old River School Road - Stewart
and Gray to Dinwiddie 3,410
Jun-2011 Citywide Traffic Signal
3 ,410
1 ,074
160
36,392
Communication System 1 ,074
160
36,392
Jun-2011 Imperial Highway Traffic Signal
Communication System
Jun-2011
Jun-2012
Jun-2013
Signal System Integration
Paramount Rehabilitation -
Brookmill to Alameda
(
Florence Avenue Traffic Sjgnal
Communication Systems
791 ,896 791 ,896
125,559 125,559
Jun-2013 Imperial Median, Safety
Rehabilitation Improvements 3,604,367
Jun-2014
Jun-2014
Florence Avenue Traffic Signal
Communication Systems
3,604,367
1 ,610,879
Paramount Rehabilitation -
1 ,610,879
742,742Florence to Lubec 742,742
1 ,304,009
Jun-2015 Brookshire Avenue - Imperial
Highway to Davis
Bell£lower Pavement
1 ,304,009
Jun-2016
Rehabilitation (Imperial Highway
- Stewart & Gray)86,693
1 ,884,856
86,693
Jun-2016 Firestone Street Improvements -
Old River School Road to 1,884,856
Jun-2016 Lakewood Boulevard
Improvements Phase 3 Florence 893,454 893,454
Jun-2017
Jun-201 7
Citywide Striping Major
Roadways 41,062 41 ,062
Firestone Rehabilitation -
Lakewood to East City Limits 498.156
11,636,972
498.156
11 ,636,972Sub-total
(
See accompanying independent auditor’s report.
11 CITY OF DOWNEY

PROPOSITION C LOCAL RETURN FUND
SUPPLEMENTARY ngFORMATION

SCHEDULE OF CAPITAL ASSETS
(Continued)
June 30, 2022
Date
Acquired
Jun-2017
Balance
7/1/202 1
Balance
6/30/2022DescriptionAdditions Deletions
Telegraph Road Traffic
Improvements
Bellflower/Imperial Intersection
Improvements
Firestone Median-Patton - Marbel
Avenue (6703)
Imperial Highway Traffic Signal
Fiberoptics Communication
Systems (6700)
$827,158 S
862
-$-$827,158
862
315,971
Jun-201 8
Jun-201 8
Jun-2018
315,971
166,489
12,947,452 S -$
- 166.489
- $ 12,947,452Total S
(
See accompanying independent auditor’s report.
12 CITY OF DOWNEY

MEASURE R LOCAL RETURN FUND

BALANCE SHEETS
June 30
2022 2021
ASSETS
Cash and investments S
Cash with fiscal agent - 202 1 Sales Tax Revenue Bonds (Note 13) 1,628,001 S
8,893,081
10,521,082 S
1,380,360
1 ,380,360Total assets $

LIABILITIES AND FUND BALANCE
Liabilities
Accounts payable
Retention payable
Accrued payroll and employee benefits
Accrued interest payable
Accounts payable - 2021 Sales Tax Revenue Bonds (Note 13) Retention payable - 2021 Sales Tax Revenue Bonds (Note 13) Accrued payroll and employee benefits - 2021 Sales Tax
Revenue Bonds (Note 13)
S 87,3 1 8
628
6,624
31,269
1 ,209,128
74,271
$242,557
17,973
10,245
(
9,392
1 ,418,630 270,775Total liabilities
Fund Balance
Restricted
Restricted - 2021 Sales Tax Revenue Bonds (-Note 13)
1,502,162
7,600,290
9, 102,452
1 , 109,585
Total fund balance 1 ,109,585
1 ,380,360Total liabilities and amd balance S 10,521,082 S The accompanying notes are an integral part of the financial statements. 13 CITY OF DOWNEY

MEASURE R LOCAL RETURN FUND

STATEMENTS OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE
For the Fiscal Years Ended June 30
2022 202 1

REVENUES
Measure R
Interest income
Unrealized loss on investments
2021 Sales Tax Revenue Bonds (Note 13)
Interest income - 2021 Sales Tax Revenue Bonds (Note 13) S 1 ,783,269
9,430
(30, 183)
12,773,737
378
$1,431,537
12,113
( 18,345)
Total revenues 14.536.63 1 1.425.305

EXPENDITURES
Various projects 6,569,649
6,569,649
2,258,605
2,258,605Total expenditures

OTHER FINANCING SOURCE
Transfer-in from General Fund (Note 1 1 )25,885
25,885
(
Total other financing source
Excess (deficiency) of revenues over expenditures and
other financing source 7,992,867 (833,300)
Fund balance at beginning of year 1 , 109,585
9,102,452 S
1 ,942,885
1 ,109,585Fund balance at end of year S
The accompanying notes are an integral part of the financial statements 14 CITY OF DOWNEY

MEASURE R LOCAL RETURN FUND

SUPPLEMENTARY INFORMATION

SCHEDULE OF EXPENDITURES

ACTUAL AND METRO APPROVED PROJECT BUDGET
For the Fiscal Year Ended June 30, 2022
(With Comparative Actual Amount for the Fiscal Year Ended June 30, 202 1) 2022
Variance
Favorable
(Unfavorable)
Project
Code
277
302
Metro
Budget
512,200 S
202 1
Actual
1,110
Project Name Actual
Citywide Transit Priority System
Lakewood Boulevard Traffic Signal
$43,714 $ 468,486 S
Upgrades 40,000
40,000
125,000
12,782 27,218
40,000
13,824
302
302
Firestone Boulevard Traffic Signal
447, 1 02
Upgrades
Paramount Boulevard Traffic Signal
Upgrades 111,176
303
303
Stewart and Gray Road Signalization
and Safety Enhancements 46,261 1 ,886 44,375
150,000
170,055
473,313
Florence Avenue Traffic Signal
Upgrades 150,000
200,000
30,000
25,000
20,000
390
470
470
470
630
705
Traffic Safety Improvement Program 29,945
30,000
25,000
20,000
289,985
30,000
25,000
20,000
1-5 Consortium
1-710 Consortium
91/605 Major Corridor Study
Public Works Executive Management
Salary (not to exceed 10%)
FY 21/22 Residential Streets Pavement
25,543
125,000
300,000
25,000
879,281 (853,738)25,885
Rehabilitation 125,000
255,098
15,405
705
705
705
705
705
705
715
715
715
FY 2 1/22 Alley Beautification Program
3rd Street Pavement Rehabilitation
44,902
9,595
Suva Street at Rio Hondo River Bridge
Repair 26,000
50,000
26,000
38,988
FY 20/21 Annual Citywide Traffic
11,012Striping of Major Roadways
Asphalt Patch Truck 222,512
First Alley South of Little Lake Road
Rehabilitation 75,000
100,000
75,000
50,000Concrete Improvements 50,000
Old River School Road Pavement
Rehabilitation 10,000
31,912
1 ,956,916
17,041
1 ,248
1 ,287,582
(7,041 )
30,664
669,334
107,887
2, 195
1 ,644,989
Florence Avenue Bridge Rehabilitation
and Widening at San Gabriel River
(
Sub-total
See accompanying independent auditor's report.
15 CITY OF DOWNEY (
(

MEASURE R LOCAL RETURN FUND

SUPPLEMENTARY D(FORMATION

SCHEDULE OF EXPENDITURES

ACTUAL AND METRO APPROVED PROJECT BUDGET
(Continued)
For the Fiscal Year Ended June 30, 2022
(With Comparative Actual Amount for the Fiscal Year Ended June 30, 2021) 2022
Variance
Favorable
(Unfavorable)
Project
Code
715
Metro
Budget
202 1
ActualProject Name Actual
Woodruff Avenue Pavement
Rehabilitation S 50,000 S 53,858 S (3,858) S
715 FY 19/20 Residential Streets Pavement
Rehabilitation
7,087
715
715
720
3rd Street Pavement Rehabilitation
500,000
145,992
121,046
20,740Fifth Street Pavement Rehabilitation 492,913
Pedestrian Crossing Safety
Enhancements 20,000
6,600
20,000
(3 17)
720 Systemic Safety Analysis Report
Program
CIP 17-09: Paramount Boulevard
6,917
720
730
730
Signalization and Safety Enhancements
Imperial Highway Complete Streets
12,838
27,542
34,3 1 2
188
Study
Florence Avenue Regional Complete
25,000
25,000
440,000
12, 162
25,000
412,458
Streets Study
740
755
755
760
815
820
Intersection Roundabouts
Citywide Median Island Landscape
Enhancements 50,000 50,000
Paramount Boulevard Median
Landscape Improvements (Phase 2)
Entry Monument Signs (Various
291,338
Locations)
Bike Share and Safety Education
60,000
24,000
400,000
60,000
24,000
400,000
Program
South Downey Safe Routes to School
Project
Expenditures Funded by the Measure R
2,258,605Local Return Fund 3.557.516 1.395.824 2, 161.692 (
See accompanying independent auditor’s report.
16 CITY OF DOWNEY

MEASURE R LOCAL RETURN FUND
SUPPLEMENTARY nqFORMATION

SCHEDULE OF EXPENDITURES

ACTUAL AND METRO APPROVED PROJECT BUDGET
(Continued)
For the Fiscal Year Ended June 30, 2022
(With Comparative Actual Amount for the Fiscal Year Ended June 30, 2021) 2022
Variance
Favorable
(Unfavorable)
Project
Code
705
705
Metro
Budget
2021
ActualProject Name Actual
Bond Fund - CIP 21-06: Fifth Street
Pavement Rehabilitation 560,000 S 7,127 $ 552,873 S
Bond Fund - CIP 22-02: FY 21/22
Residential Streets Pavement
Rehabilitation (Area 10)4,500,000 2,783,307
20,361
1 ,716,693
705
705
705
705
715
Bond Fund - CIP 22-16: Residential
Streets Pavement Rehabilitation (Area 4,800,000
1 ,335,000
4,779,639
Bond Fund - CIP 22-18: Residential
Streets Pavement Rehabilitation (Area
Bond Fund - CIP 22-22: Residential
11 ,027
84,845
1 ,335,000
238,973
155,155
Streets Pavement Rehabilitation (Area
Bond Fund - CIP 22-23: Residential
250,000
240,000Streets Pavement Rehabilitation ( Area
Bond Fund - CIP 22-19: Stoakes
Avenue, Meldar Avenue, Mazanar
Avenue and Vista Del Rosa Street
Improvements 1 ,700,000 1 ,734,749 (34,749)
715 Bond Fund - CIP 20-30:Foster Bridge
Boulevard, Rivergrove Drive and
Glencliff Drive Pavement Rehabilitation
Expenditures Funded by the Sales Tax
350.000 532.409 ( 1 82,409)
Revenue Bonds (Note 13)13,735,000 5, 173,825 :
17,292,516 S

5.173.825 8.561.175 -
6,569,649 S 10,722,867 S 2,258,605Total expenditures $
See accompanying independent auditor's report.
17 CITY OF DOWNEY

MEASURE R LOCAL RETURN FUND
SUPPLEMENTARY nqFORMATION

SCHEDULE OF CAPITAL ASSETS
June 30, 2022
Date
Acquired
Jun-2015
Balance
7/1/2021
Balance
Deletions 6/30/2022DescriptionAdditions
Columbia Way - 1105 to Imperial
Highway $543,549 S
19,036
S - S 543,549
- 19,036Jun-2015
Jun-2015
FY 13-14 Residential Street Resurfacing
Brookshire Avenue - Imperial Highway
to Davis 222,941 222,941
Jun-2016 Firestone Street Improvements Old
River School Road to Brookshire 200,000 200,000
Jun-2016 Imperial East City Limits Fromtage
Road to Brookshire Avenue 18,300
1 ,276,747
160,013
18,300
1,276,747
160,013
Jun-2016
Jun-2016
Jun-2016
Public Works Contract (Residential
Street Resurfacing)
Residential Streets Resurfacing
Stewart and Gray Pavement
Rehabilitation (Old River School Road -
Bellflower and Woodruff - Firestone)
Variable Message Feedback Signs
2,500
11,555
11,555
12,697
153,828
2,500
11,555
11,555
12,697
153,828
Aug-2016
Aug-2016
Jun-2017
Jun-201 7
Jun-2017
(
Variable Message Feedback Signs
Citywide Striping Major Roadways
Downtown Street Lighting Conversion
Firestone Rehabilitation - Lakewood to
East City Limits 45,823 45,823
Jun-2017 Gardendale Pavement Rehabilitation
Lakewood 235,676
86,662
468,000
235,676
Jun-2017 Pedestrian Improvements/New
Sidewalk/Ramp 86,662
468,000Jun-2017
Jun-201 8
Telegraph Road Traffic Improvements
Bellflower/Imperial Intersection
Improvements 33,976
518,265
33,976
518,265Jun-2018
Jun-201 8
Firestone Median-Patton-Mart>el Avenue
Florence Boulevard Old River School
Road Traffic Signal Upgrade
Bellflower Boulevard/Foster Road
81 ,534
85,689
98,414
81,534
85,689
98,414
Jun-2018
Jun-201 8
Traffic Signal Upgrade
Woodruff Avenue/Foster Road Traffic
Signal Upgrade
Sub-total 4.286.760 4,286.760
(
See accompanying independent auditor's report.
18 CITY OF DOWNEY

MEASURE R LOCAL RETURN FUND
SUPPLEMENTARY nfFORMATION

SCHEDULE OF CAPITAL ASSETS
(Continued)
June 30, 2022
Date
Acquired
Jun-201 8
Balance
7/1/2021
Balance
Deletions 6/30/2022DescriptionAdditions
Firestone/Woodruff Traffic Signal
Upgrade
Lakewood/Florence Traffic Signal
Upgrade
Imperial Highway/Downey Avenue
Traffic Signal Upgrade
Paramount Boulevard at 3rd, 5th, 7th
Street Signal
Lakewood Boulevard LED Light and
Pole Painting
Graffiti Truck
Asphalt Patch Truck
$94,021 S -$-$94,02 1
76,777
57,02 1
Jun-201 8
76,777
57,021
Jun-201 8
Jun-201 8
Jun-2018
343 ,448

5.185.347 S - S - $ 5.185.347
343,448
59,603
45,205
222.5 12
59,603
45,205
222,512
Aug-2019
Aug-2020
Total $
(
5,185.347 S $ 5.185.347
See accompanying independent auditor's report.
19 CITY OF DOWNEY

MEASURE M LOCAL RETURN FUND

BALANCE SHEETS
June 30
2022 2021
ASSETS
Cash and investments S
Cash with fiscal agent - 2021 Sales Tax Revenue Bonds (Note 13 ) 2,397,410 S
14,476,094
16,873,504 S
2,618,847
2,618,847Total assets S

LIABILITIES AND FUND BALANCE
Liabilities
Accounts payable
Retention payable
Accrued payroll and employee benefits
Accrued interest payable
Accounts payable - 2021 Sales Tax Revenue Bonds (Note 13) Retention payable - 2021 Sales Tax Revenue Bonds (Note 13) Accrued payroll and employee benefits - 2021 Sales Tax
Revenue Bonds (Note 13)
Due to General Fund
S 7,281
18,521
2,812
46,296
187,677
159,470
S 364,822
14,588
1 ,463
5,808
278,094
705,959 380,873Total liabilities
Fund Balance
Restricted
Restricted - 2021 Lease Revenue Bonds (Note 13)
2,322,500
13,845,045
16,167,545
2,237,974
2,237,974Total fund balance
Total liabilities and fund balance $16,873,504 S 2.618.847 The accompanying notes are an integral part of the financial statements 20 CITY OF DOWNEY

MEASURE M LOCAL RETURN FUND
STATEMENTS OF REVENUES, EXPENDrruRES,
AND CHANGES nq FUND BALANCE
For the Fiscal Years Ended June 30
2022 2021

REVENUES
Measure M
Interest income
Unrealized loss on investments
2021 Sales Tax Revenue Bonds (Note 13)
Interest income - 2021 Sales Tax Revenue Bonds (Note 13) S 2,017,974
14,966
(46,910)
17,691 ,638
534
$1 ,621 ,984
16,796
(24,454)
Total revenues 19.678.202 1.614.326

EXPENDITURES
Various projects 5,748,63 1 1 .232,935
5,748,63 1

1.232,935
1 ,232,935Total expenditures
Excess of revenues over expenditures 13,929,571 381,391 (
Fund balance at beginning of year 2,237,974
16,167,545 S
1 ,856,583
2,237,974Fund balance at end of year $
The accompanying notes are an integral part of the fInancial statements 21 CITY OF DOWNEY

MEASURE M LOCAL RETURN FUND

SUPPLEMENTARY INFORMATION

SCHEDULE OF EXPENDITURES

ACTUAL AND METRO APPROVED PROJECT BUDGET
For the Fiscal Year Ended June 30, 2022
(With Comparative Actual Amount for the Fiscal Year Ended June 30, 202 1 ) 2022
Variance
Favorable
(Unfavorable)
Project
Code
302
302
Metro
Budget
202 1
ActualProject Name Actual
Stewart and Gray Road Signalization
and Safety Enhancements
Imperial Highway Signalization and
Safety Enhancements
Lakewood Boulevard Street
Improvements
Fy 2 1/22 Residential Streets Pavement
Rehabilitation
Imperial Highway Pavement
Rehabilitation
Annual Miscellaneous Bridge Repairs
Lakewood Boulevard Parkway
Improvements
FY 22/23 Telegraph Road Bridge
Replacement at San Gabriel River
Old River School Road Pavement
Rehabilitation
Florence Avenue Bridge Rehabilitation
at Rio Hondo River
Florence Avenue Pavement
3rd Street Pavement Rehabilitation
Telegraph Traffic Throughout and
Safety Enhancements - Phase 2
CIP 17-10: Stewart and Gray
Signalization and Safety Improvements
Paramount Boulevard Median
Landscape Improvements (Phase 1 )
Firestone Boulevard Median
Landscape Improvements
Downey Bicycle Master Plan
Implementation Phase I
Expenditures Funded by the Measure
M Local Return Fund
S 190,676 S - S
58,880
190,676 S
701 ,200
300,000
642,320
705
705
705
300,000
600,000 600,000
150,000
200,000705
705
1 ,077,800
305, 174
150,000
(877,800)
(
220,000
100,000
(85, 174)
100,000
19,084
705
715
715
715
715
720
60,000
54,000
495,000
300,000
6,708
269
23,048
28,690
53,292
53,73 1
47 1 ,952
271,310
283,224
2,783
5,131
447,800 374,938 72,862 882
720
454,680
755
755
880
428,956
2,258
470.483
4,289,159
25,998
1 ,901 ,504
444,485
2,387,655
35,937
1 ,232,935
(
See accompanying independent auditor's report.
22 CITY OF DOWNEY

MEASURE M LOCAL RETURN FUND
SUPPLEMENrARY INFORMATION

SCHEDULE OF EXPENDITURES

ACTUAL AND METRO APPROVED PROJECT BUDGET
(Continued)
For the Fiscal Year Ended June 30, 2022
(With Comparative Actual Amount for the Fiscal Year Ended June 30, 2021 ) 2022
Variance
Favorable
(Unfavorable)
Project
Code
705
Metro
Budget
202 1
ActualProject Name Actual
Bond Fund- CIP 21-05: 3rd Street
Pavement Rehabilitation
Bond Fund- CIP 22-15: Residential
Streets Pavement Rehabilitation (Area
Bond Fund- CIP 22-17: Residential
Streets Pavement Rehabilitation (Area
Bond Fund- CIP 22-18: Residential
Streets Pavement Rehabilitation (Area
Bond Fund- CIP 22-20: Residential
Streets Pavement Rehabilitation (Area
Bond Fund- CIP 22-21: Residential
Streets Pavement Rehabilitation (Area
Bond Fund- CIP 22-22: Residential
Streets Pavement Rehabilitation (Area
Bond Fund- CIP 22-23: Residential
Streets Pavement Rehabilitation (Area
Expenditures Funded by the Sales Tax
Revenue Bonds (Note 13)
$250,000 S 476,633 S (226,633) S
1 ,706,537
705
705
5,000,000 3,293,463
4,800,000 26,002
11 ,465
4,773,998
3,453,535
705
705
705
705
705
3 ,465,000
200,000 19,564 180,436
200,000
200,000
200,000
20,000 180,000
200,000
200,000

14.315.000 3.847.127 10.467.873 -
18,604,159 $ 5,748,631 S 12,855,528 S 1,232,935Total expenditures $ See accompanying independent auditor's report.
23 CITY OF DOWNEY

MEASURE M LOCAL RETURN FUND
SUPPLEMENTARY DqFORMATION

SCHEDULE OF CAPITAL ASSETS
June 30, 2022
Date
Acquired
Jun-2018
Balance
7/ 1/2021
Balance
6/30/2022DescriptionAdditions Deletions
Brookshire Pavement Rehabilitation -
Firestone/Florence
Graffiti Truck
$ 285,710 S
45,205
-$- $ 285,710
- 45.205Jul-20 19
Total $ 330,915 S -$- $ 330,915
See accompanying independent auditor’s report
24 CITY OF DOWNEY
TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND
(PURSUANT TO PUBLIC UTILITIES CODE SECTION 99234)

BALANCE SHEETS
June 30
2022 2021
ASSETS
Cash and investments
$
$
S
$
Total assets

LIABILITIES AND FUND BALANCE
Liabilities
Accounts payable
Due to General Fund
S 8,036 S
39,590
47,626
4,410
42,844
47,254Total liabilities
Fund Balance
Unassigned
(
(47,626)
(47,626)
(47,254)
(47,254)Total fund balance
Total liabilities and fund balance S S
The accompanying notes are an integral part of the financial statements. 25 CITY OF DOWNEY
TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND

STATEMENTS OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE
For the Fiscal Years Ended June 30
2022 202 1

REVENUES
TDA 3 S 161,500 S
161.500
93,383
93,383Total revenues

EXPENDITURES
Various projects 161 ,872
161 ,872
95,792
95,792Total expenditures
Deficiency of revenues over expenditures (372)(2,409)
(44,845 )
(47,254)
Fund balance at beginning of year (47,254)
(47,626) $Fund balance at end of year S
(
The accompanying notes are an integral part of the financial statements. 26 Lt
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CITY OF DOWNEY
TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND

SUPPLEMENTARY INFORMATION

SCHEDULE OF CAPITAL ASSETS
June 30, 2022
Date
Acquired
Balance
7/ 1/202 1
Balance
6/30/2022Description
$
Additions Deletions
6/30/2008
6/30/2008
6/30/2008
6/30/2008
6/30/2009
6/30/2009
6/30/2010
6/30/2012
6/30/2013
6/30/2014
6/30/2017
6/30/2017
Pedestrian Improvements
Pedestrian Improvements
Pedestrian Improvements
Pedestrian Improvements
Safe Route to School - ORSR
Safe Route to School
Pedestrian Improvements
Pedestrian Improvements
Pedestrian Improvements
Pedestrian Improvements
Pedestrian Improvements
Bike Master Plan
28,064
106
11,606
13,106
50,892
33,597
208,747
51,510
165,350
103,569
13,050
20,737
S - S -$28,064
106
11,606
13,106
50,892
33,597
208,747
51,510
165,350
103,569
13,050
20,737
Total $700.334 S -$S 700,334
(
See accompanying independent auditor’s report.
28 CITY OF DOWNEY

NOTES TO FINANCIAL STATEMENTS
For the Fiscal Years Ended June 30, 2022 and 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fund Accounting
The operations of the Proposition A Local Return Fund (PALRF), Proposition C Local Return Fund (PCLRF), Measure R Local Return Fund (MRLRF), Measure M Local Return Fund (MMLRF), and Transportation Development Act Article 3 Fund (TDAA3F) (collectively, the Funds) are accounted for in separate sets of self-balancing accounts that comprise their assets, liabilities, fund balance, revenues and expenditures.

PALRF and PCLRF represent 25% and 20%, respectively, of the % cent Proposition A and % cent Proposition C sales taxes which are distributed to the jurisdictions within Los Angeles County based on population and must be used exclusively for transportation related programs and projects.

MRLRF is derived from 15% of a county-wide % cent sales tax which is distributed to the jurisdictions within Los Angeles County based on a per capita basis and must be used exclusively for transportation purposes.

MMLRF is derived from 17% of a county-wide % cent sales tax which is distributed to the jurisdictions within Los Angeles County based on a per capita basis and must be used exclusively for transportation purposes.
(
TDAA3F is a Special Revenue Fund that accounts for the City’s share of the Transportation Development Act Article 3 allocations which are legally restricted for specific purposes.

Basis of Accounting and Measurement Focus
PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F are accounted for using the modified accrual basis of accounting whereby revenues are recognized when they become both measurable and available to finance expenditures of the current period and expenditures are generally recognized when the related fund liabilities are incurred.

Special Revenue Funds are reported on the spending or “financial flow” measurement focus. This means that generally only current assets, current liabilities and deferred inflows and outflows of resources are included on their balance sheets. The statement of revenues, expenditures and changes in fund balance for Special Revenue Funds generally present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

Budgets and Budgetary Accounting
The budgeted amounts presented in this report for comparison to the actual amounts are presented in accordance with accounting principles generally accepted in the United States of America. (
29 CITY OF DOWNEY

NOTES TO FINANCIAL STATEMENTS
For the Fiscal Years Ended June 30, 2022 and 2021
(Continued)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value Measurement
In accordance with Government Accounting Standard Board (GASB) Statement No. 72, Fair Yalue Measurement and Application, which became effective for the fiscal year ended June 30, 2016, the City categorizes its fair value measurement within the fair value hierarchy that is based on the valuation inputs used to measure the fair value of the investment. Level 1 inputs are quoted prices in active markets for identical investments; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Accordingly, the City reports its investment at fair value and recognizes unrealized gain (loss) on investments.

Refer to City’s 2022 Annual Comprehensive Financial Report for detailed disclosures regarding the City’s investment policy and fair value measurement.

Fund Balance Reporting
GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type DefInitions , establishes the fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of resources reported in governmental fbnds
The PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F report the following RInd balance classification as of June 30, 2022:
(
• Restricted – Amounts that are constrained for specific purpose, which are externally imposed by providers, such as creditors, or amounts constrained due to constitutional provisions or enabling legislation. The uses of the funds’ remaining fund balances are restricted for projects approved by Los Angeles County Metropolitan Transportation Authority (Metro). • UIIassigned – The unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted to those purposes Information regarding the fund balance reporting policy adopted by the City is described in Note 1 to the City’s Annual Comprehensive Financial Report.

NOTE 2 – ANNUAL FINANCIAL STATEMENTS
The financial statements reflect only the financial position and results of operations of the PALRF, PCLRF, NIRLRF, MMLRF, and TDAA3F and their compliance with the Proposition A and Proposition C Local Return Program Guidelines, Measure R Local Return Program Guidelines, Measure M Local Return Program Guidelines, Transportation Development Act Article 3 and the Los Angeles County Metropolitan Transportation Authority Funding and Allocation Guidelines for Transportation Development Act Article 3 Bicycle and Pedestrian Funds.
(
30 CITY OF DOWNEY
NOTES TO FINANCIAL STATEMEVrs
For the Fiscal Years Ended June 30, 2022 and 2021
(Continued)
NOTE 3 - PROPOSITION A AND PROPOSITION C LOCAL RETURN COMPLIANCE

REQUIREMENTS
In accordance with Proposition A and Proposition C Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Proposition A and Proposition C Local Return approved programs. See accompanying Compliance Matrix.

NOTE 4 – MEASURE R LOCAL RETURN COMPLIANCE REQUIREMENTS In accordance with Measure R Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Measure R Local Return approved programs. See accompanying Compliance Matrix.

NOTE 5 – MEASURE M LOCAL RETURN COMPLIANCE REQUIREMENTS On June 23, 2016, the Metro Board of Directors approved the Los Angeles County Traffic Improvement Plan Ordinance, known as Measure M. In accordance with Measure M Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Measure M Local Return approved programs. See accompanying Compliance Matrix.
(
NOTE 6 – TRANSPORTATION DEVELOPMENT ACT COMPLIANCE REQUIREMENTS In accordance with Public Utilities Code Section 99234, funds received pursuant to this Code’s section may only be used for activities relating to pedestrians and bicycle facilities. See accompanying Compliance Matrix
NOTE 7 - CASH AND INVESTMENTS
The PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F’s cash and investment balances were pooled with various other City funds for deposit and investment purposes. The share of each fund in the pooled cash and investments account was separately maintained and interest income was apportioned to the participating funds based on the relationship of their average balances to the total of the pooled cash and investments. 31 CITY OF DOWNEY

NOTES TO FINANCIAL STATEMENTS
For the Fiscal Years Ended June 30, 2022 and 2021
(Continued)
NOTE 8 - PROPOSITION A DISCRETIONARY INCENTIVE GRANT – PALRF AND PCLRF The City entered into a Memorandum of Understanding (MOU) agreement with Metro to receive Proposition A Discretionary Incentive Grant for participating in the Consolidated National Transit Database (NTD) Voluntary Reporting. The amounts received for the years ended June 30, 2022 and 2021 consisted of the following:

Agreement
Date
NTD
Voluntary
ReportingPeriod
MOU
Amount
Amount
Received
2022 2021

93.300 S
93,300 S
July 31, 2017 7/1/17 – 6/30/19 FY2014-15 S 93.300 S
Total $
The Proposition A Discretionary Incentive Grant of $93,300 was recorded under PALRF and PCLRF in the amounts of $34,242 and $59,058, respectively.

NOTE 9 – PROJECT GENERATED REVENUE - PALRF
Project generated revenue for the years ended June 30, 2022 and 2021 consisted of the following:
2022
162
162
202 1
341
38 379
Senior citizen passenger passes $
Metro bus pass sales
Total $
$
$
NOTE 10 – TRANSFER IN (OUT) - PALRF AND PCLRF
In fiscal years ended June 30, 2022 and 2021, transfers were made from PCLRF to PALRF in the same amount of $1,000,000 in both fiscal years, to provide and subsidize funding for PALRF’s Fixed Route Program Project Code 105 and Senior/Handicapped Transit Program Project Code 107.

NOTE 11 – TRANSFER-IN FROM GENERAT, FUND - PALRF, PCLRF, AND MRLRF The amount of $186,240 transferred from General Fund to PALRF represents reimbursement for the portion of the expenditures incurred on the Senior/Handicapped Transit Program Project Code 107. Likewise, the amount of $20,787 transferred from General Fund to PCLRF represents a reimbursement for the portion of the expenditures incurred on the Local Return Fund Administration (Public Works) Project Code 620.

The amount of $25,885 represents the reimbursement from the General Fund to MRLRF in response to the prior year audit finding, Finding No. 202 1-005.
(
32 CITY OF DOWNEY
NOTES TO FINANCIAL STATEMEVrs
For the Fiscal Years Ended June 30. 2022 and 2021
(Continued)
NOTE 12 – DEFERRED INFLOW OF RESOURCES - PCLRF
The City recognizes revenue when the payments for services rendered become measurable and available.

In fiscal year ended June 30, 2022 the City recorded deferred inflow of resources when the availability of the funds was not determined at fiscal year end.

The issuance of Governmental Accounting Standards Board Statement No. 65, 1tems Previously Reported as Assets and Liabilities, established accounting and financial reporting standards that reclassify certain liabilities as deferred inflows of resources. A deferred inflow of resources is defined as those resources that are not available for spending in the current period. Since the reimbursements from Metro were not available for spending PCLRF in fiscal year ended June 30, 2022, the amounts were reported as deferred inflow of resources.

As of June 30, 2022, the retention receivable and deferred inflow of resources under PCLRF, in the same amount of $2 1,000, consisted of reimbursement to be received from Metro for the portion of expenditures incurred on the Firestone Boulevard Improvement Project from Lakewood Boulevard to East City Limits project
NOTE 13 – 2021 SALES TAX REVENUE BONDS - MRLRF AND MMLRF (
On October 19, 2021, the City issued the Downey Public Finance Authority Sales Tax Revenue Bonds Series 2021B (Measure R) and Series 2021 A (Measure M), otherwise known as “2021 Bonds", in the amounts of $11,385,000 and $15,275,000, respectively. The proceeds from the bonds in the amounts of $ 12,773,737 and $17,691,638 for MRLRF and MMLRF, respectively, are anticipated to be used to finance the costs of acquisition, construction, rehabilitation, reconstruction, and resurfacing of the City’s public street facilities, fund a reserve account and pay costs of issuance. Furthermore, the MRLRF and MMLRF funds may be used to pay for the cost and other financing costs of the project that was approved by Metro by the letter dated June 11, 2021.

The serial bonds mature annually each June 1 from 2022 to 2039 for Measure R, in amounts ranging from $460,000 to $815,000 and bear interest at a rate of 4.000%. For Measure M, the bonds mature annually each June 1 from 20221 to 2041 in amounts ranging from $470,000 to $1,790,000 and bear interest at a rate of 4.000%. Interest is payable annually on June 1 in each year, commencing on June 1, 2022. 33 CITY OF DOWNEY

NOTES TO FINANCIAL STATEMENTS
For the Fiscal Years Ended June 30, 2022 and 2021
(Continued)
NOTE 13 – 2021 SALES TAX REVENUE BONDS - MRLRF AND MMLRF (Continued) The 202 1 Bonds’ cash and investments and fund balances recorded under MRLRF and MMLRF for the year ended June 30, 2022 are as follows:
(
(
MRLRF MMLRF Total
Sales Tax Revenue Bond Proceeds Received $12,773,737 S 17,691,638 S 30,465,375 534 912Add: Interest Income 378
Less: Capital Project Bond Fund Expenditures
Sales Tax Revenue Bond Fund Balance at
June 30, 2022 7,600,290 1 3 ,845,045 2 1,445,335
Add: Accounts Payable at June 30, 2022 1,209,128 187,677 1,396,805 Retention Payable at June 30, 2022 74,271 159,470 233 ,74 1 Accrued Payroll and Employee Benefits
at June 30, 2022 9,392 5,808 15,200
Due to General Fund - 278.094 278.094
Cash and investments – Restricted at June 30, 2022 S 8,893,081 S 14,476,094 S 23,369,175 NOTE 14 – TRANSPORTATION DEVELOPMENT ACT FUND REVENUE ALLOCATION The revenue allocation for the years ended June 30, 2022 and 2021 consisted of the following:
2022 202 1
- $ 22,260
3,231 71,123
77, 160 -
81,109 -
161.500 S 93,383
(5,173,825)(3,847,127)(9,020,952)
(
Fy 2016- 17 allocation
FY 2017- 18 allocation
FY 201 8-19 allocation
FY 2019-20 allocation
Total payment requested S
S
34 CITY OF DOWNEY

NOTES TO FINANCIAL STATEMENTS
For the Fiscal Years Ended June 30, 2022 and 2021
(Continued)
NOTE 15 – TRANSPORTATION DEVELOPMENT ACT FUNDS RESERVED In accordance with TDA Article 3 (SB821) Guidelines, funds not spent during the fiscal year have been placed on reserve in the Local Transportation Fund (LTF) account with the County Auditor-Controller to be drawn down whenever the funds become eligible for a specific project and an approved drawdown request is received by Metro. As of June 30, 2022 and 2021, the City has funds on reserve as follows:
2022
S
2021
3 ,23 1
77, 160
82, 153
63 ,649
FY 2017- 18 allocation
Fy 2018-19 allocation
FY 2019-20 allocation
FY 2020-21 allocation
FY 202 1-22 allocation
Available reserve balance
$
1 ,044
63,649
83,151
147,844 SS 226, 193
NOTE 16 – IMPACT OF CORONAVIRUS
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the United States.

It is unknown how long these conditions will last and what the complete financial effect will be to businesses and other affected organizations, including local governmental entities. However, the City’s management believes that the financial impact, if any, will not materially affect the June 30, 2022 Funds’ financial statements.

NOTE 17 – SUBSEQUENT EVENTS
The City has evaluated subsequent events through December 15, 2022, the date the financial statements were available to be issued and concluded no other events have occurred that require disclosure or adjustments to the fInancial statements.
35 U.S. BANK TOWER
633 WEST 5TH STREET, SUITE 3320
2£6:£Ti£HON! (
(213) 7386692 FAX
wm.simpsonandsimpsoncpas.com

SIMPSON & SIMPSON

CERTIFIED PUBLIC ACCOUNTANTS

FOUNDING PARTNERS
BRAINARD C. SIMPSON, CPA
MELBA W. SIMPSON, CPA
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
To the Honorable Members of the City Council of the
City of Downey, California and the
Los Angeles County Metropolitan Transit Authority
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, Measure M Local Return Fund, and Transportation Development Act Article 3 Fund (collectively, the Funds) of the City of Downey, California (the City), as of and for the year ended June 30, 2022, and the related notes to the financial statements, and have issued our report thereon dated December 15, 2022.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the Funds’ financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the Funds’ financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deBciency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A signifIcant deFciency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. (
36 M
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City Funds’ financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the fInancial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances ofnoncompliance or other matters that are required to be reported under Government Auditing Standards .

Purpose of this Report
The purpose of this report is solely to describe the scope of our 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. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. (
Los Angeles, California
December 15, 2022
37 COMPLIANCE SECTION

(
U.S. BANK TOWER
633 WEST 5TH STRErr, surE 3320 LOS
ANGELES. CA 90071
(213) 73&6664 TELEPHONE
(213) 73&6692 FAX
www.simpsonandsimpnnqns.urn

SIMPSON & SIMPSON

CERTIFIED PUBLIC ACCOUNTANTS

FOUNDING PARTNERS
BRAINARD C. SIMPSON. CPA
MELBA W. SIMPSON, CPA
Independent Auditor’s Report on Compliance and on
Internal Control Over Compliance Required by the Guidelines To the Honorable Members of the City Council of the
City of Downey, California and the
Los Angeles County IVletropolitan Transit Authority
Report on Compliance
Opinion on Each Local Return Program and Transportation Development Act Article 3 Program We have audited the compliance of the City of Downey, California (the City) with the Proposition A and Proposition C Local Return Guidelines, Measure R Local Return Guidelines, Measure M Local Return Guidelines, Transportation Development Act Article 3, and the Los Angeles County Metropolitan Transportation Authority’s Funding and Allocation Guidelines for the Transportation Development Act Article 3 Bicycle and Pedestrian Funds (collectively, the Guidelines) for the year ended June 30, 2022. (
In our opinion, except as noted in the Compliance Matrix and the Schedule of Findings and Recommendations, the City complied, in all material respects, with the compliance requirements of the Guidelines for the year ended June 30, 2022.

Basis for Opinion on Each Local Return Program and Transportation Development Act Article 3 Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States, and the Guidelines. Our responsibilities under those standards and the Guidelines are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for Proposition A Local Return Program, Proposition C Local Return Program, Measure R Local Return Program, Measure M Local Return Program, and Transportation Development Act Article 3 Program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above. (
38 Responsibilities of Management for Compliance
W (
Management is responsible for the City’s compliance with the Guidelines referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statues, regulations, rules, and provisions of contracts or program agreements applicable to the City’s Proposition A Local Return Program, Proposition C Local Return Program, Measure R Local Return Program, Measure M Local Return Program, and Transportation Development Act Article 3 Program.

Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. 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 generally accepted auditing standards, Government Auditing Standards , and the Guidelines will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City’s compliance with the requirements of Proposition A Local Return Program, Proposition C Local Return Program, Measure R Local Return Program, Measure M Local Return Program, and Transportation Development Act Article 3 Program as a whole.
(
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards , and the Guidelines, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. •Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Guidelines, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. (
39 (M
Other Matters
The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with the Guidelines and which are described in the accompanying Schedule of Findings and Recommendations as Finding Nos. 2022-001, 2022-002, 2022-003, and 2022-004. Our opinion on each local return program and Transportation Development Act Article 3 is not modified with respect to these matters.

Government Auditing Standards requires the auditor to perform limited procedures on the City’s responses to the noncompliance findings identified in our audit described in the accompanying Schedule of Findings and Recommendations. The City’s responses were not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses.

Report on Internal Control Over Compliance
Our consideration of internal control over compliance was for the limited purpose described in Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weakness or significant deficiencies may exist that were not identified. However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be a material weaknesses. (A defIciency fn internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with the Guidelines on a timely basis. A material weakness im internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with the Guidelines will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Recommendations as Finding Nos. 2022-002, 2022-003, and 2022-004, to be material weaknesses.

A signifrcant defIciency fn internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with the Guidelines that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

Government Auditing Standards requires the auditor to perform limited procedures on the City’s responses to the internal control over compliance findings identified in our audit described in the accompanying Schedule of Findings and Recommendations. The City’s responses were not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses. (
40 W (
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Guidelines. Accordingly, this report is not suitable for any other purpose.

Los Angeles, California
December 15, 2022
41 CITY OF DOWNEY

COMPLLANCE MATRIX
Year Ended June 30, 2022
Compliance Requirement In Compliance Questioned
Costs
If no, provide details
and management
response.
me
A. Proposition A and Proposition C Local Return Funds
M/

1.Uses the State Controller’s Uniform System of
Accounts and Records or has established a
separate Proposition A and Proposition C Local
Transit Assistance Account for Local Return
purposes.

X None

2.Revenues received including allocations, project
generated revenues and interest income was
properly credited to the Proposition A and/or
Proposition C Local Return Account.

X None

3. 4.

5. 6.

Funds were expended with Metro’s approval and
were not substituted for property tax.

X
X
X
X
None
None
None
None
Timely use of funds.

Administrative expenses are within the 20% cap.

Expenditures that exceeded 25% of approved
project budget have approved amended Project
Description Form (Form A) or electronic
equivalent.

7.Annual Project Update Report (Form B) or
electronic equivalent was submitted on time.

X None
None
None

8. 9.

10. 11.

Annual Expenditure Report (Form C) or electronic
equivalent was submitted on time.

X
X
X
Pavement Management System (PMS) is in place
and being used for Street Maintenance or
Improvement Projects Expenditures.

Local Return Account is credited for reimbursable
expenditures.

None
Where Proposition A funds were given, loaned or
exchanged by one jurisdiction to another, the
receiving jurisdiction has credited its Local Return
Account with the funds received.

X None l
jgiven, loaned, or
jexchanged in FY 2021-
22 e
for Intelligent Transportation Systems projects or
elements.

X None I
I Transportation Systems
}projects or elements in
FY 2021-22.
(
42 CITY OF DOWNEY

COMPLIANCE MATRIX
Year Ended June 30, 2022
(Continued)
Questioned
Costs
If no, provide details
and management
response.

Compliance Requirement In Compliance
Yes
A. Proposition A and Proposition C Local Return Funds
s
reserve funds, Capital reserve was approved by
Metro and current status is reported in the Annual
Project Update (Form B) or electronic equivalent.

No N/A
X None No capital reserve fund
I established in FY 202 1-
22 14.Recreational transit form was submitted on time.X None e 001 on the Schedule of
Findings and
Recommendations.
mt e
approved by Metro.

X None
None
!T
I exchanges in FY 2021-
22 16.

17. 18.

19. Proposition C Local Return Funds were used to
augment, not supplant existing local revenues
being used for road improvement purposes.

X
X
X
All on-going and carryover projects were reported
on Form B or electronic equivalent.

None
Cash or cash equivalents are maintained.None
Accounting procedures, record keeping, and
documentation are adequate.

X PALRF:
8377,959
PCLRF:
$3 1 ,006
See Finding Nos. 2022-
[002 and 2022-003 on
Ithe Schedule of
I Findings and
Recommendations.
43 CITY OF DOWNEY

COMPLIANCE MATRIX
Year Ended June 30, 2022
(Continued)
I n C 0 1[1C1 P 1 i a n C e (111)11 U:: ::: e d I fann: :I: :=:ee :I==: S responsenme no
Compliance Requirement
B. Measure R Local Return Fund

1. } Funds were expended for transportation purposes.
e
established.

X
X
X
None
None
None3.Revenues received including allocations, project
generated revenues and interest income was
properly credited to the Measure R Local Return
Account.

4. 5.

6. 7.

8. 9.

10. Funds were expended with Metro’s approval.

Funds were not substituted for property tax and
are in compliance with the Maintenance of Effort.

X
X
X
X
X
X
None
None
Timely use of funds.None
None
None
Administrative expenses are within the 20% cap.

Expenditure Plan (Form One or electronic
equivalent) was submitted on time.

Annual Expenditure Report (Form Two or
electronic equivalent) was submitted on time.

None
Where funds expended were reimbursable by
other grants or fund sources, the reimbursement
was credited to the Local Return Account upon
receipt of the reimbursement.

X None Tiere was no
{reimbursement by other
!grants or fund sources to
ithe expenditures
I incurred in FY 202 1-22.

I
exchanged by one jurisdiction to another, the
receiving jurisdiction has credited its Local Return
Account with the funds received.

X None I
given, loaned, or
jexchanged in FY 202 1-
22 12.

13. A separate account was established for Capital
reserve funds and Capital reserve was approved
by Metro.

X None
None
o
iestablished in FY 2021-
22 Funds were used to augment, not supplant existing
local revenues being used for transportation
purposes unless there is a fund shortfall.

X
(
44 CITY OF DOWNEY

COMPLLANCE MATRIX
Year Ended June 30, 2022
(Continued)
„..„„„„„ .„:::::“",T;F::=:t::,':=:*
response.
o
Compliance Requirement
B. Meastr
F Recreational transit form was submitted on
trrne.

X
X
None [D
jrecreational expenses
incurred in FY 2021-22 .

15.Fund exchanges were approved by Metro.None
$ 12,066
jThere were no fund
exchanges in FY 202 1-
22 nm) a
documentation are adequate.

X i See Finding No. 2022-
i 004 on the Schedule of
}Findings and
Recommendations
(
45 CITY OF DOWNEY

COMPLIANCE MATRIX
Year Ended June 30, 2022
(Continued)
Compliance Requirement „'.„„:,„. '":=::“ "=a=: ITiS:=F
response.

We lo
C. Measure M Local Return Fund

1. 2.

Funds were expended for transportation
purposes.

X
X
X
None
None
None
Separate Measure M Local Return Account was
established.

3.Revenues received including allocations, project
generated revenues and interest income was
properly credited to the Measure M Local
Return Account.

4. 5.

6. 7.

Funds were expended with Metro’s approval.X
X
X
None
NoneFunds were not substituted for property tax and
are in compliance with the Maintenance of
Effort.
(Timely use of funds.None
no
None
Administrative expenses are within the 20% cap.X 1
administrative expenses
in FY 2021-22.

8. 9.

10. Expenditure Plan (Form M-One or electronic
equivalent) was submitted on time.

X
XExpenditure Report (Form M-Two or electronic
equivalent) was submitted on time.

None
Where funds expended were reimbursable by
other grants or fund sources, the reimbursement
was credited to the Local Return Account upon
receipt of the reimbursement.

X None There was no
}reimbursement by other
!grants or fund sources to
ithe expenditures incurred
Ein FY 2021-22.

11.Where Measure M funds were given, loaned or
exchanged by one jurisdiction to another, the
receiving jurisdiction has credited its Local
Return Account with the funds received.

X None iThere were no fbnds
!given, loaned, or
! exchanged in FY 202 1-
22 12.A separate account was established for Capital
reserve hInds and Capital reserve was approved
by Metro.

X None o
I established in FY 2021-
22 (
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CITY OF DOWNEY

COMPLLANCE MATRIX
Year Ended June 30, 2022
(Continued)
Compliance Requirement
D. Transportation Development Act Article 3 Fund
Timely use of funds.None
None
None
Expenditures were incurred for activities relating to
pedestrian and bicycle facilities and amenities
Claim Form (or electronic equivalent) was
submitted on time
(

CITY OF DOWNEY

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
Year Ended June 30, 2022
PALRF: Finding No. 2022-001
CompHane ding to Proposition A and Proposition C Local Return Guidelines, Section II.A.1.3, Recreational Transit Service, “Jurisdictions shall submit a Listing of Recreational Transit Services no later than October 15 after the fiscal year.” Condition The City did not meet the October 15, 2022 deadline for submission of the Listing of Recreational Transit Services. However, the City submitted the listing on November 29, 2022.

Cause The new Transit Management Analyst reported the recreational expenses incurred in the Local Return Management System (LRMS), as instructed by Metro. However, the new staff was not aware that the Listing of Recreational Transit Services (listing) in a paper format was to be submitted to Metro.

Effect The City’s Listing of Recreational Transit Services was not submitted timely as required by the Guidelines.

Recommendation We recommend that the City establish procedures to ensure that the Recreational Transit Services Listing is properly prepared and submitted before the due date of October 15th so that the City’s expenditures of the Proposition A Local Return Fund will be in accordance with Metro’s approval and the Guidelines.

Furthermore, we recommend that the City retain a confirmation of receipt by Metro to indicate the form was submitted in a timely manner. (
Management’s
Response
The Transit Management Analyst is now aware of the requirements and plans to submit the listing form in a timely manner in the fbture. In addition, the Management Analyst will prepare a training manual or instructions on Metro’s filing requirements.

Corrected During the
Audit
The City subsequently submitted the Listing of Recreational Transit Services on November 29, 2022. No follow-up is required.
49 CITY OF DOWNEY

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
PALRF and PCLRF: Finding No. 2022-002
Compliance Reference I According to Proposition A and Proposition C Local Return Guidelines, Section II: Project Eligibility, “A proposed expenditure of funds shall be deemed to be for public transit purposes to the extent that it can reasonably be expected to sustain or improve the quality and safety of and/or access to public transit services by the general public or those requiring special public transit assistance,” and Section V: Audit Section, “It is the jurisdictions’ responsibility to maintain proper accounting records and documentation...

In addition, the Metro Local Return Program Manager issued a memo dated on April 29, 2014 to jurisdictions to provide recommendations that ensure jurisdictions have adequate evidence to support its compliance with the Local Return Guidelines. The recommendations state “that an electronic system is acceptable as long as how much time is identified on the project (i.e. not just a clock-in-clock-out system) and this non-timesheet system, excel file or other, is authenticated by the employee and approved by one’s supervisor.” Also, the memo states that:
“(4) Where employees work on multiple activities or cost objectives, a distribution or their salaries or wages will be supported by personnel activity reports or equivalent documentation which meets the standards in subsection (5) unless a statistical sampling system (see subsection (6)) or other substitute system has been approved by the cognizant Federal agency. Such documentary support will be required where employees work on:
(b) A Federal award and non-Federal award.
(5) Personnel activity reports or equivalent documentation must meet the following standards:
(a) They must reflect an after the fact distribution of the actual activity of each employee,
(e) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards but may be used for interim accounting purposes, provided that: (i) the governmental unit’s system for establishing the estimates produces reasonable approximations of the activity actually performed; (ii) at least quarterly, comparisons of actual costs to budgeted distributions based on monthly activity reports are made. Costs charged to Federal awards to reflect adjustments made as a result of the activity actually performed may be recorded annually if the quarterly comparisons show the differences between budgeted and actual costs are less than ten percent; and (iii) the budget estimates or other distribution percentages are revised as least quarterly, if necessary, to reflect changed circumstances.’
(
50 CITY OF DOWNEY
SCHEDULE OF FINDfN GS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
PALRF and PCLRF:

Condition
Finding No. 2022-002 (Continued)
To support the propriety of expenditures charged to the Proposition A and Proposition C Local Return Funds, the salaries and benefits expenditures should be supported by time records, special funding certifications, activity reports, or other official documentation evidencing in proper detail the nature of the charges. However, the salaries and benefits charged were based on estimated percentages on PALRF and PCLRF activities rather than the employee’s actual hours worked on the projects. Although the City provided a time study listing of the employees charged to PALRF and PCLRF, the salaries and benefits on the time study were based on estimated percentages. Moreover, the hours were not adjusted to reflect the “true” hours worked on the projects at the end of the fiscal year 2021-22. The following is a list of the unsupported salaries and benefits allocations per project:
(a) PALRF’s Fixed Route Program Project Code 105 in the amount of §55,663.
(b) PALRF’s Senior/Handicapped Transit Program Project Code 107 in the amount of S 1 95,606.
(c) PCLRF’s Ride Sharing Program Project Code 620 in the amount of $ 14,000.(
(d) PCLRF’s Local Return Fund Administration (Public Works) Project Code 620 in the amount of $17,006.

This is a repeat finding from the prior six fiscal years.

Cause The City allocates the salaries and benefits charges based on a time study from fiscal year 2011-12. The same percentage allocations have been used in prior fiscal years.

Effect The payroll costs claimed under the PALRF and PCLRF projects may include expenditures which may be disallowed Proposition A and Proposition C project expenditures. This resulted in questioned costs of $251,269 and 531,006 for PALRF and PCLRF, respectively.

Recommendation We recommend that the City reimburse its PALRF and PCLRF accounts for $251,269 and $31,006, respectively. In addition, we recommend that the City strengthen its controls over the allocation of payroll costs by using a supported allocation basis, time sheets or similar documentation to substantiate the actual hours worked by employees charged to the programs.
(
51 CITY OF DOWNEY

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
PALRF and PCLRF:Finding No. 2022-002 (Continued)
As a resolution to prior years’ findings, the City indicated in April 2022 that its corrective action plan was to have an outside consultant (Revenue and Cost Specialists) who was hired during fiscal year 202 1-22 to prepare an updated Cost Allocation Plan (CAP) and User Fee Study. On January 25, 2022, an executed contract/agreement with Revenue and Cost Specialists was taken to the City Council for approval, with an understanding that the CAP and the User Fee Study will be implemented in fiscal year 2022-23. Although the CAP was for fiscal year 2022-23, the City, in a good faith effort, made transfers from the General Fund to PALRF and PCLRF to ensure that the payroll and benefits charges allocated to the local return funds in fiscal year 202 1-22 were within the amounts allowed by the new CAP.

Management’s
Response
All the department’s directors communicated regularly with the CAP consultants until the CAP was finalized and completed in August 2022.

Effective in fiscal year 2022-23, the City will allocate the payroll expenditures based on the new cost study.

Auditor’s Additional
Comment
With the effort to record expenses in PALRF that is allowable under the new FY 2022-23 CAP, the City transferred General Fund monies in the amount of $ 113,032 to reimburse a portion of the questioned cost of 8195,606 for PALRF’s Senior/Handicapped Transit Program Project Code 107, leaving a net questioned cost of $82,574.

As a result, the remaining total questioned costs are $138,237 and $31,006 for PALRF and PCLRF, respectively. Therefore, we recommend that the City reimburse its PALRF and PCLRF accounts for the said remaining questioned costs
52 CITY OF DOWNEY

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
PALRF: Finding No. 2022-003
Compliance Reference According to Proposition A and Proposition C Local Return Guidelines, Section II: Project Eligibility, “A proposed expenditure of funds shall be deemed to be for public transit purposes to the extent that it can reasonably be expected to sustain or improve the quality and safety of and/or access to public transit services by the general public or those requiring special public transit assistance“ and Section V: Audit Section, “It is the jurisdictions’ responsibility to maintain proper accounting records and documentation.. .

Condition To support the propriety of expenditures charged to the Proposition A and Proposition C Local Return Funds, non-payroll expenditures should be supported by properly executed contracts, invoices, and vouchers or other official documentation evidencing in proper detail the nature of the charges.

However, payments for equipment rental in the amount of $126,690 were charged to PALRF's Senior/Handicapped Transit Program, Project Code 107, without appropriate supporting documentation, i.e., invoices, purchase orders, contracts, etc., to validate the disbursements.

This is a repeat finding from the prior five fiscal years.

Cause
Effect
The City allocates equipment rental charges based on a time study from fiscal year 2011-12. The same percentage allocation has been used in prior fiscal years.( The unsupported expenditures for the equipment rental resulted in questioned costs of $ 126,690.

Recommendation We recommend that the City reimburse its PALRF account for $126,690. We recommend that the City strengthen its controls over the allocation of equipment rental costs by using an equitable and supported allocation basis to substantiate the costs charged to the program.

Management’s
Response
As a resolution to prior years’ findings, the City indicated in April 2022 that its corrective action plan was to have an outside consultant (Revenue and Cost Specialists) who was hired during fiscal year 2021-22 to prepare an updated CAP and User Fee Study. On January 25, 2022, an executed contract/agreement with Revenue and Cost Specialists was taken to the City Council for approval, with an understanding that the CAP and the User Fee Study will be implemented in fiscal year 2022-23. Although the CAP was for fiscal year 2022-23, the City, in a good faith effort, reimbursed PALRF through a transfer from the General Fund to ensure that the equipment rental charges allocated to PALRF in fiscal year 2021-22 were within the amounts allowed by the new CAP.

All the department’s directors communicated regularly with the CAP consultants until the CAP was finalized and completed in August 2022.

Effective in fiscal year 2022-23, the City will allocate the equipment rental charges based on the new cost study.
(
53 CITY OF DOWNEY

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
PALRF: Finding No. 2022-003 (Continued)
Auditor’s Additional
Comment
With the effort to record expenses in PALRF that is allowable under the new FY General Fund monies in the amount of2022-23 CAP, the City $73,208 to reimburse a portion of the questioned cost of $126,690 for PALRF’s Senior/Handicapped Transit Program Project Code 107, leaving a net questioned cost of $53,482
Therefore, we recommend that the City reimburse its
said remaining questioned cost.

PALRF account for the
54 CITY OF DOWNEY

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
MRLRF: Finding No. 2022-004
Compliance Reference According to Measure R Local Return Guidelines, Section A.I: Program Summary, “The Measure R Ordinance specifies that LR (Local Return) funds are to be used for transportation purposes. No net revenue distributed to Jurisdictions may be used for purposes other than transportation purposes.” and Section B.VII: Audit Section states, “It is the Jurisdictions’ responsibility to maintain proper accounting records and documentation to facilitate the performance of audit prescribed in these guidelines.” in addition, the Metro Local Return Program Manager issued a memo dated on April 29, 2014 to jurisdictions to provide recommendations that ensure jurisdictions have adequate evidence to support its compliance with the Local Return Guidelines.

The recommendations state, “that an electronic system is acceptable as long as how much time is identified on the project (i.e. not just a clock-in-clock-out system) and this non-timesheet system, excel file or other, is authenticated by the employee and approved by one’s supervisor.” Also, the memo states that “(4) Where employees work on multiple activities or cost objectives, a distribution or their salaries or wages will be supported by personnel activity reports or equivalent documentation which meets the standards in subsection (5) unless a statistical sampling system (see subsection (6)) or other substitute system has been approved by the cognizant Federal agency. Such documentary support will be required where employees work on:
(
(b) A Federal award and non-Federal award.
(5) Personnel activity reports or equivalent documentation must meet the following standards:
(a) They must reflect an after the fact distribution of the actual activity of each employee,
(e) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards but may be used for interim accounting purposes, provided that: (i) the governmental unit’s system for establishing the estimates produces reasonable approximations of the activity actually performed; (ii) at least quarterly, comparisons of actual costs to budgeted distributions based on monthly activity reports are made. Costs charged to Federal awards to reflect adjustments made as a result of the activity actually performed may be recorded annually if the quarterly comparisons show the differences between budgeted and actual costs are less than ten percent; and (iii) the budget estimates or other distribution percentages are revised as least quarterly, if necessary, to reflect changed circumstances.
(
55 CITY OF DOWNEY
SCHEDULE OF FINDn{GS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
MRLRF: Finding No. 2022-004 (Continued)
Condition 1 To support the propriety of expenditures charged to the Measure R Local Return Fund, the salaries and benefits expenditures should be supported by time records, activity reports, special funding certifications, or other official documentation evidencing in proper detail the nature of the charges. However, the salaries and benefits charged to Public Works Executive Management Salary Project Code 630 in the amount of $12,066 were based on estimated percentages on MRLRF activity rather than the employee’s actual hours worked on the project. Although the City provided a time study listing of the employees charged to MRLRF, the salaries and benefits were based on estimated percentages. Moreover, the hours were not adjusted to reflect the “true” hours worked on the projects at the end of the fiscal year 2021-22.

This is a repeat finding from the prior six fiscal years.

Cause The City allocates the salaries and benefits charges based on a time study from fiscal year 2011-12. The same percentage allocations have been used in prior fiscal years.

Effect The payroll costs claimed under the MRLRF projects may include expenditures which may be disallowed Measure R project expenditures. This resulted in questioned cost of $ 12,066.
e We recommend that the City reimburse its MRLRF account for $12,066. 1n addition, we recommend that the City strengthen its controls over the allocation of payroll costs by using a supported allocation basis, time sheets or similar documentation to substantiate the actual hours worked by employees charged to the program.

Management’s
Response
As a resolution to prior years’ findings, the City indicated in April 2022 that its corrective action plan was to have an outside consultant (Revenue and Cost Specialists) who was hired during fiscal year 2021-22 to prepare an updated CAP and User Fee Study. On January 25, 2022, an executed contract/agreement with Revenue and Cost Specialists was taken to the City Council for approval, with an understanding that the CAP and the User Fee Study will be implemented in fiscal year 2022-23. Although the CAP was for fiscal year 2022-23, the City, in a good faith effort, ensure that the payroll and benefits charges allocated to MRLRF in fiscal year 2021-22 were within the amounts allowed by the new CAP
All the department’s directors communicated regularly with the CAP consultants until the CAP was finalized and completed in August 2022.

Effective in fiscal year 2022-23, the City will allocate the payroll expenditures based on the new cost study.
(
56 CITY OF DOWNEY

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
Year Ended June 30, 2022
(Continued)
MRLRF: Finding No. 2022-004 (Continued)
Auditor’s Additional The City represented to the Auditor that the City will reimburse MRLRF for the Comment questioned cost of $12,066 from General Fund during fiscal year 2022-23 57 EmT CONFERENCE

(

CITY OF DOWNEY

PROPOSITION A LOCAL RETURN FUND, PROPOSITION C LOCAL RETURN FUND MEASURE R LOCAL RETURN FUND, MEASURE M LOCAL RETURN FUND. AND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND

EXIT CONFERENCE
June 30, 2022
An exit conference was held on December 29, 2022 with the City of Downey. Those in attendance were:

Simpson & Simpson Representative:

John Longoria, Senior Auditor
City’s Representatives:

Anil H. Gandhy, Finance Director
Francesca Navarro, Principal Accountant
Sulema Martinez, Accountant
Matters Discussed:

Results of the audit disclosed three (3) material weaknesses and four (4) non-compliance issues with Metro Guidelines.(
A copy of this report was forwarded to the following City representative(s) for their comments prior to the issuance of the final report:

Sulema Martinez. Accountant
58 (
Simpson & Simpson, LLP
633 West 5th Street, Suite 3320
Los Angeles, CA 90071
RE:CITY OF DOWNEY ANNUAL FINANCIAL REPORT OF THE PROPOSITION A LOCAL RETURN FUND, PROPOSITION C LOCAL RETURN FUND. MEASURE R LOCAL RETURN

FUND, MEASURE M LOCAL RETURN FUND, AND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND FOR THE FISCAL YEARS ENDED JUNE 30, 2022 AND 2021.

I have received the annual financial report of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, Measure M Local Return Fund, and Transportation Development Act Article 3 Fund for the years ended June 30, 2022 and 2021, for the City of Downey and agree with the contents of the report except as indicated below:
(Attach additional pages if necessary)
(
Very truly yours,
Name
Title
Date

Attachment B
Increase Appropriations within the General Fund
Fund Fund Title Account Object Object Title
9055 Transfer To Prop A Fund - 55
9054 Transfer To Prop C Fund - 54
9056 Transfer To Measure R Fund - 56
Amount
$ 191,719
30,006

12.066
$ 233.791
10 General Fund 10-5-9000-9055
10 General Fund 10-5-9000-9054
10 General Fund 10-5-9000-9056
Total Increase in General Fund Appropriations
Increase Estimated Revenues in the following Funds
Fund Fund Title Account Object Object Title
9010 Transfer from General Fund - 10
9010 Transfer from General Fund - 10
9010 Transfer from General Fund - 10
Amount
$ 191,719
30,006

12.066
$ 233,791
55 Transit Prop A 55-5-9010
54 Transit Prop C 54-5-9010
56 Transit Measure R 56-5-9010
Total Increase in General Fund Appropriations