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350
Agenda Staff Report
TO: Mayor and City Council Members
FROM: Minerva Moreno, Finance Director
DATE: March 4, 2026
TYPE OF REPORT: Agenda Item
SUBJECT: Independent Accountant’s Report on Agreed-Upon Procedures – Capital Projects (July 1, 2022 through June 30, 2024)
Recommendation:
Staff recommends that Council adopt a Resolution accepting the Independent Accountant’s Report on Agreed-Upon Procedures related to the City’s capital projects for the period of July 1, 2022 through June 30, 2024, as prepared by Harshwal and Company LLP, the City’s independent auditors.
Background:
The City engaged Harshwal and Company LLP (Harshwal) to perform an agreed-upon procedures (AUP) engagement related to the City’s capital projects for the period of July 1, 2022 through June 30, 2024.
An agreed-upon procedures engagement differs from a financial statement audit in that the independent accountants perform specific procedures requested by management and report the results of those procedures without expressing an opinion or conclusion.
The purpose of this engagement was to assist the City Council and management in evaluating compliance with applicable laws, regulations, policies, and procedures governing capital projects.
The procedures were performed in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA).
Discussion:
As part of the engagement, the following tasks were performed:
T Cityof Banos LOS . At the Crossroads of California
351
ITEM 11
• Obtained a listing of capital projects initiated or active during the review period. • Reviewed relevant City policies and procedures related to capital project administration and financial management.
• Selected a sample of capital projects and associated vendors based on management’s assessment of materiality and risk.
• Tested compliance with:
o Applicable sections of the California Public Contract Code; o Relevant City ordinances;
o The City’s procurement and contractor selection policies; o Payment processing and authorization policies;
o Applicable grant or funding requirements; and
o Applicable prevailing wage laws.
For this engagement the following projects and vendors were selected:
1. 2023 Street Rehabilitation Project - United Pavement, Inc.;
2. Animal Shelter Modular Building - BMY Construction Group, Inc.;
3. Medowlands Wet Well Replacement and Bypass - Rolfe Construction, Inc.;
4. City of Los Banos Police Station Project - Swinnerton Builders;
5. Fairground Waterline Project - Mid Cal Pipeline & Utilities, Inc.;
6. Exterior Painting Project Community Center - Perfection Painting Corp.;
7. Exterior Painting Project Four City-Owned Buldings - Pro Group Painting; and,
8. Pacheco Park Irrigation Rennovations - Marina Landscape, Inc.
For these selected capital projects, Harshwal also tested:
• Approval of project budgets and amendments;
• Existence of authorized contracts and approved change orders; • Proper documentation supporting vendor payments;
• Authorization of procurement and contractor selection; • Proper review and approval of change orders and contract amendments; • Accurate recording of payments in the City’s accounting system; and • Monitoring of approved contract amounts compared to actual costs incurred.
Results of Procedures
Harshwal reported no exceptions as a result of procedures related to compliance with applicable laws, procurement requirements, payment authorization, accounting records, or supporting documentation.
However, the report identified contract overruns for the following projects:
• 2023 Street Rehabilitation Project – Vendor: United Pavement, Inc. o Approved Contract (including approved change order and contingency):
$3,815,538
o Total Actual Costs Incurred: $3,827,854
o Contract Overrun: $12,315
352
• Animal Shelter Modular Building Project – Vendor: BMY Construction Group, Inc.
o Approved Contract (including contingency): $992,204
o Total Actual Costs Incurred: $1,127,498
o Contract Overrun: $135,294
No other exceptions or findings were reported. While the identified contract overruns were limited to the projects noted above, the City will work to correct this issue by ensuring that appropriate contingency amounts are requested at the time of contract award. Additionally, should a project require change orders in excess of the approved contingency, staff will return to the City Council to request additional authorization to prevent contract overruns.
It is important to note that an agreed-upon procedures engagement does not result in an audit opinion. Instead, it provides transparency regarding specific procedures performed and the related findings.
The draft Independent Accountant’s Report on Agreed-Upon Procedures related to the City’s capital projects for the period July 1, 2022 through June 30, 2024, is available for review in the Finance Department located at City Hall and on the City’s website at www.losbanos.org.
Fiscal Impact:
There is no immediate fiscal impact associated with receiving and filing this report. The identified contract overruns have already been incurred and recorded in the City’s accounting records. Staff will continue to monitor capital project budgets and strengthen oversight processes to mitigate the risk of future overruns.
Reviewed by:
_________________________________
Nirorn Than, City Manager
Attachments:
1. Resolution
2. Draft Independent Accountant’s Report on Agreed-Upon Procedures related to the City’s capital projects for the period July 1, 2022 through June 30, 2024 353
THIS PAGE IS INTENTIONALLY LEFT BLANK
354
RESOLUTION NO. ____
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF LOS BANOS ACCEPTING THE
INDEPENDENT ACCOUNTANT’S REPORT ON
AGREED-UPON PROCEDURES RELATED TO
THE CITY’S CAPITAL PROJECTS FOR THE
PERIOD OF JULY 1, 2022 THROUGH JUNE 30,
2024
WHEREAS, the City of Los Banos engaged Harshwal and Company LLP (Harshwal); and
WHEREAS, the auditing firm of Harshwal and Company LLP has completed their engagment for agreed-upon procedures and all related reports and presented their findings to the Los Banos City Council; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Los Banos hereby accept the the Independent Accountant’s Report on Agreed-Upon Procedures related to the City’s capital projects for the period July 1, 2022 through June 30, 2024.
The foregoing resolution was introduced at a regular meeting of the City Council of the City of Los Banos held on the 4th day of March 2026, by Council Member ____________ who moved for its adoption, which motion was duly seconded by Council Member ______________, and the Resolution was adopted by the following vote:
AYES:
NOES:
ABSENT:
APPROVED:
__________________________
Michael S. Amabile, Mayor
ATTEST:
___________________________
Lucille L. Mallonee, City Clerk
355
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356
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CERTIFIED PUBLIC ACCOUNTANTS
357
CITY OF LOS BANOS
TABLE OF CONTENTS
JULY 01, 2022 TO JUNE 30, 2024
Independent Accountant's Report on Applying Agreed-Upon Procedures ...................... ..
Page(s)
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San Diego, California
February XX, 2026
361
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362
Agenda Staff Report
TO: Mayor & City Council Members
FROM: Nirorn Than, City Manager
Mary F. Lerner, City Attorney
DATE: March 4, 2026
TYPE OF REPORT: Agenda Item
SUBJECT: City Council Vacancy – District 2
______________________________________________________________________ Recommendation:
Consider and approve the City Council’s preferred process for filling the vacant District 2 City Council seat.
Adopt by motion one of the following:
1. Appoint an individual from District 2 to fill the vacant council seat.
2. Place the District 2 City Council vacancy on the November 3, 2026 General Election ballot.
Background:
Former District 2 Council Member Evan Sanders resigned from his council seat effective January 9, 2026. As a result, a mid-term vacancy has occurred for the District 2 City Council seat.
Pursuant to Government Code §36512(b), if a City Council Member vacancy occurs, the City Council must, within sixty (60) days from the date of the vacancy, either fill the vacancy by appointment or by calling a special election (which can run concurrent with a general election/be subsumed by the general election) to fill the vacancy. As such, the LOsBanos
At the Crossroads of California
363
ITEM 12
last day to fill the vacancy by appointment or call an election would be Tuesday, March 10, 2026.
A person appointed to fill the vacancy would hold office until the general election on November 3, 2026. The time period between appointment and November 3, 2026 is the unexpired term of the former incumbent.
By Appointment. There are no state laws or Los Banos Municipal Code provisions establishing specific procedures to make an appointment to fill a City Council vacancy.
No formal application process is required, and the City Council may appoint any qualified person who is at least 18 years of age, a registered voter of Merced County and a resident of the vacant district. If the City Council opts to fill the vacancy by appointment, the Brown Act requires any actions concerning the appointment conducted by the City Council to be held in open session.
There are some limits to the appointment power. The City Council cannot fill a vacant seat by appointment if that appointment would result in a majority of the City Council having been appointed, not elected. In that case, the vacancy must be filled by election (Government Code § 36512(d)). Furthermore, the City Council cannot appoint one of its own officers to a vacant position, except to the office of elected Mayor (Government Code § 1752). None of those situations apply here.
Calling an Election. Pursuant to Government Code §36512(b), the City Council may also choose to call an election to fill the vacancy. Calling an election requires the vote of a majority of the City Council. If an election is called, it would be held at the next regularly established election date (November 3, 2026), not less than one hundred and fourteen (114) days from the date the City Council calls the special election. (Government Code §36512(b)(1)).
Discussion:
Some jurisdictions have adopted ordinances, resolutions or policies, setting out the procedure for filling a City Council vacancy. The City of Los Banos does not have an established procedure for filling a City Council vacancy.
Option 1 – Appoint a successor for the remainder of the term.
If the City Council votes to fill the vacancy by appointment, the appointment must be made within 60 days of the City Council seat becoming vacant which would be by March 10, 2026.
There is no legal requirement that the City Council use any particular method of appointment. The appointment must be made in public. This is not a permitted closed session discussion or decision.
Should the City Council wish to appoint an applicant to fill the vacancy, such can occur immediately or at a special meeting to occur on or before March 10, 2026. 364
Option 2 – Call an Election.
If the City Council votes to call an election, that election will be held “on the next regularly established election date not less than 114 days from the call of the special election.” In 2026, based upon the 114-day requirement, the next eligible regular election date is November 3, 2026.
Fiscal Impact:
For Option 1, a City Council appointment can be accomplished with existing staff and within the existing budget. For Option 2, the City would be responsible for the cost of an election, which the Merced County Registrar of Voters would calculate based on the number of items the City places on the November 3, 2026 ballot. The expenditure for this election will be included in the Fiscal Year 2026 – 2027 budget for this vacancy and for other elected offices.
Reviewed by:
_______________________________ _______________________________ Nirorn Than, City Manager Finance Department
-
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365
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366
RESOLUTION NO. ____
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF LOS BANOS ESTABLISHING THE
PROCESS TO FILL THE DISTRICT 2 VACANCY
WHEREAS, former District 2 Council Member Evan Sanders resigned from his council seat effective January 9, 2026. As a result, a mid-term vacancy has occurred for the District 2 City Council seat; and
WHEREAS, pursuant to Government Code §36512(b), if a City Council Member vacancy occurs, the City Council must, within sixty (60) days from the date of the vacancy, either fill the vacancy by appointment or call a special election (which can run concurrent with a general election/be subsumed by the general election) to fill the vacancy; and
WHEREAS, the last day to fill the vacancy by appointment or by calling an election would be Tuesday, March 10, 2026.
WHEREAS, a person appointed to fill the vacancy would hold office until the general election on November 3, 2026. The time period between appointment and November 3, 2026 is the unexpired term of the former incumbent.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Los Banos does hereby direct that the vacancy be filled by:
[choose option]
____ Option 1: appointment of a qualified resident in District 2 to fill the remainder of Council Member Sander’s term.
____ Option 2: placing the vacant position on the November 3, 2026 general election ballot (“Calling the Election”).
The foregoing Resolution was introduced at a regular meeting of the City Council of the City of Los Banos held on the 4th day of March 2026, by Council Member ______ who moved its adoption, which motion was duly seconded by Council Member ______ and the Resolution adopted by the following vote:
AYES:
NOES:
ABSENT:
APPROVED:
367
__________________________
Michael S. Amabile, Mayor
ATTEST:
___________________________
Lucille L. Mallonee, City Clerk
368
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