Agenda packet — Audit Committee, October 23, 2024

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www.modestogov.com
AGENDA
City of Modesto

SPECIAL AUDIT COMMITTEE

COUNCIL WORKSHOP
2001-40 Del Puerto Room
Tenth Street Place, 1010 10th Street
Modesto, California
Wednesday, October 23, 2024 at 4:00 PM
Roll Call: Sue Zwahlen, Chair
Nick Bavaro, Vice-Chair
David Wright, Member
Camille Garcia, Public Member
Jennifer Barillas, Public Member
Alternates: Eric Alvarez, Rosa Escutia-Braaton, Chris Ricci, Jeremiah Williams Council has not delegated directive or final approval authority to the Committees.

Committee actions are recommendations to the full City Council, not final decisions on an issue. * Public Comment will only be in-person. Members of the public who wish to address the Committee, by providing public comment, during the meeting must do so in-person in the 2001-40 Del Puerto Room. As an alternative, members of the public may also provide written public comment submitted via email as indicated in the Submitting Comments by Email instructions on this agenda. Zoom will still be available for viewing and Wordly translation. *Members of the public will be allowed to provide public comment through Zoom if a Committee Member is participating remotely pursuant to the provisions of Assembly Bill 2449.

Effective March 1, 2023, if a technical issue arises with Zoom or the phone dial-in option, the Committee meeting will continue unless the meeting is being held pursuant to the provisions of Assembly Bill 2449. Alternative viewing options are listed below, and the meeting is physically open to the public.
“Wordly” can translate into 25+ different languages! To access written translation during the meeting, please scan the QR Code or click this link https://attend.wordly.ai/join/RJDY-6364.
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"Wordly" puede traducir a más de 25 idiomas diferentes! Para acceder a la traducción durante la reunión, por favor escanee el código QR o haga clic en el enlace https://attend.wordly.ai/join/RJDY-6364.

You may observe a livestream of the meeting at http://media.modestogov.com. You may also view or listen to the meeting as indicated below.

THE MEETING CAN BE VIEWED BY ZOOM VIDEO

CONFERENCING OR TELEPHONE
Joining the Committee meeting via Zoom
The City of Modesto is now offering the ability to view Committee meetings via telephonic conferencing via “Zoom” video conferencing computer technology. The meeting may be accessed through the use of Zoom using the following options:
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Joining the Committee meeting via Telephone
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PUBLIC COMMENTS IN PERSON
Three-minute time limit per speaker.

Only interested persons in the audience may present these matters. Under State law, Committee Members may respond to matters being presented under this item only as follows:
a. Briefly respond to statements made or questions raised. b. Ask a question for clarification.
c. Provide a reference to staff or other resources for factual information. d. Request staff to report back at a subsequent meeting. e. Finally, a Committee Member or the Committee itself may take action to direct staff to place a matter of business on a future agenda.

SUBMITTING COMMENTS BY E-MAIL
Written comments may be submitted via email to: [email protected] (include Agenda Item Number in the subject line). All comments will be shared with the Committee - 2 -
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Members and placed in the record but will not be read aloud during the meeting. Written comments must be received two hours before the meeting.

This Agenda is on file in the City Clerk’s Office, Sixth Floor, 10th Street Place, Posting Board at entry of 10th Street Place, and is available on the City’s Web site at www.modestogov.com.

Materials related to an item on this Agenda submitted to the Council after distribution of the agenda packet are available for public inspection in the Clerk’s office during normal business hours. Such documents are also available online, subject to staff’s ability to post the documents before the meeting, at the following website www.modestogov.com/councilmeetings In accordance with the requirements of Title II of the Americans with Disabilities Act (“ADA”) of 1990, the Fair Employment & Housing Act (“FEHA”), the Rehabilitation Act of 1973 (as amended), Government Code section 11135 and other applicable codes, the City of Modesto (“City”) will not discriminate against individuals on the basis of disability in the City’s services, programs, or activities. For more information, please visit the City of Modesto website at https://www.modestogov.com/865/Americans-with-Disabilities-Act-ADA In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk (209) 577-5396. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting
Any and all of the following agenda items are subject to action by the Modesto City Council.

NEW BUSINESS

1. Consider approving the FY Internal Audit Status Report dated 10-15-24. (Funding Source: Not Applicable)
 Motion to receive and file the Internal Audit Status Report dated 10-15-24.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected]

2. Consider approving the Property Management Review report. (Funding Source: Not Applicable)
 Motion to approve the Property Management Review report and forward to Council for acceptance.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected]

3. Consider approving the Fleet Operations Internal Controls Review report. (Funding Source: Not Applicable)
 Motion to approve the Fleet Operations Internal Controls Review report and forward to Council for acceptance.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected] - 3 -
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4. Consider approving the Solid Waste and Forestry Efficiency Study Update report. (Funding Source: Not Applicable)
 Motion to approve the Solid Waste and Forestry Efficiency Study Update report and forward to Council for acceptance.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected]

ADJOURNMENT
Posted pursuant to Government Code Section 54954.2 on the bulletin board at Tenth Street Place on at by
date time signature
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0BCITY OF MODESTO
1BCOMMITTEE AGENDA REPORT
2BDATE OF MEETING:

October 23, 2024
Date: October 15, 2024
TO: Audit Committee
FROM: Colleen Rozillis, City Auditor
SUBJECT: Approval of the FY24-25 Internal Audit status report dated 10-15-24.

CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider approving the FY Internal Audit Status Report dated 10-15-24.

STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2020-2025 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved six projects for this fiscal year’s Internal Audit work plan, plus program management. The attached report details the status of projects in progress.

DISCUSSION:

Internal Audit projects for FY24-25 are proceeding as planned.

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to receive and file the Internal Audit Status Report dated 10-15-24.

Approved by:

Colleen Rozillis, City Auditor

Attachments:

1. Internal Audit Status Report dated 10-15-24
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CITY OF MODESTO INTERNAL AUDIT STATUS REPORT 10-15-24
October 15, 2024
To: City of Modesto Audit Committee
From: Moss Adams LLP
Subject: Internal Audit Status Report July 3 through October 15, 2024 _____

INTERNAL AUDIT

PROJECTS

FLEET OPERATIONS INTERNAL

CONTROL REVIEW

SOLID WASTE AND FORESTRY

EFFICIENCY STUDY UPDATE

PROPERTY MANAGEMENT
REVIEW

WATER AND WASTEWATER

UTILITIES FISCAL REVIEW

PAYROLL PROCESS AND

CONTROLS REVIEW

RECOMMENDATION VALIDATION

PROCESS
Schedule February-August 2024 March-July 2024 April-August 2024 August-December 2024 October 2024-January 2025 August-November 2024 Budget Status: Total
Budget and %
Expended through 9/30
$40,000
85%
$25,000
92%
$35,000
77%
$55,000
10%
$40,000
3%
$15,000
7%
Activities for This
Period
Completed analysis, developed draft
and final reports
Completed analysis, developed draft
and final reports
Completed analysis, developed draft
and final reports
Kicked off project, submitted document
request, and initiated interviews
Kicked off project and submitted initial
document request
Kicked off project, compiled initial
inventory of findings and
recommendations 2016 to present
Activities for Next
Period None
None None Continue fieldwork and analysis,
develop preliminary observations
Continue fieldwork, testing, and
analysis; develop preliminary
observations; develop draft report
Complete inventory and develop
validation process
Issues None None None None None None

BASIC INTERNAL

AUDITOR SERVICES

ONGOING INTERNAL AUDIT

SERVICES

ETHICS HOTLINE STATISTICS
Schedule July through September 2024 Complaint Type
Complaints Received During
the Period Under Review
Referred to Appropriate City
Official(s) Closed
Budget Status: Total
Budget and %
Expended
$30,000
82%
Compliance & Ethics 5 0 5 5
Fraud 1 0 1 1
Employment Matters 1 0 1 1
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0BCITY OF MODESTO
1BCOMMITTEE AGENDA REPORT
2BDATE OF MEETING:

October 23, 2024
Date: October 15, 2024
TO: Audit Committee
FROM: Colleen Rozillis, City Auditor
SUBJECT: Approval of the Property Management Review report.

CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider approving the Property Management Review report.

STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2020-2025 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved a review of the City’s property management function as part of the FY23- 24 Internal Audit work plan.

DISCUSSION:

The review provides an evaluation of how efficiently and effectively the City oversees and monitors its real estate assets to identify challenges and opportunities for improvement. Nine recommendations were identified. This assessment was completed under the consultancy standards of the American Institute of Certified Public Accountants (AICPA).

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to approve the Property Management Review report and forward to Council for acceptance.

Approved by:

Colleen Rozillis, City Auditor
Attachments: 1. Property Management Review report dated 10-11-24 #2..
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This report is intended for the internal use of the City of Modesto, and may not be provided to, used, or relied upon by any third parties.

Proprietary & Confidential

FINAL REPORT

PROPERTY MANAGEMENT REVIEW
October 11, 2024
Moss Adams LLP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500
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Property Management Review

FOR INTERNAL USE OF CITY OF MODESTO ONLY
Table of Contents
Executive Summary 1
A. Background 1
B. Scope 1
C. Methodology and Objectives 1
D. Commendations 2
E. Additional Actions for Consideration 2
F. Summary of Observations and Recommendations 3
G. Implementation Plan 6
Observations and Recommendations 9
A. Planning and Strategy 9
B. Processes 15
Appendix A: Peer City Real Estate Benchmarking 22
Appendix B: Sources 26
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Property Management Review | 1

FOR INTERNAL USE OF CITY OF MODESTO ONLY
I. EXECUTIVE SUMMARY
A. BACKGROUND
Located in the heart of California’s Central Valley, the City of Modesto (the City) is well known for its rich agricultural industry, but offers a diverse economy which includes manufacturing, healthcare, and retail too. Home to around 215,000 residents, Modesto is California’s 18th largest city and home to several cultural attractions such as the Gallo Center for the Arts, the McHenry Museum, and the State Theatre. It is also home to several parks and recreational areas including the Tuolumne River Regional Park and the Modesto Reservoir.

B. SCOPE
The City does not have an established real estate management program for its buildings. Moss Adams LLP (Moss Adams) was engaged by the City to evaluate how efficiently and effectively the City oversees and monitors its real estate assets to identify challenges and opportunities for improvement. Specifically, in this engagement, we completed the following:
• In collaboration with the City, collected and inventoried all City real estate assets • Evaluated current oversight practices and use of assets to provide high-level recommendations for improvements to real estate performance
C. METHODOLOGY AND OBJECTIVES
The overall goal of this assessment was to help the City understand the current state of its real estate property management, identifying challenges and opportunities for improvement.

In our procedures, we performed the following:
• Conducted interviews with City staff and departments to understand project-specific challenges and opportunities, including topics such as interdepartmental collaboration, reporting, real estate management, policy, and procedure environment.
• Reviewed existing City policies, procedures, forms, reports, and other documentation. • Collected and inventoried all City real estate assets based on available data from the City Manager, Finance, and Risk Management.
• Conducted research into best practices for recommendations of improvements to real estate management, policies and procedures, controls, and process changes. • Provided high-level recommendations for improvements to strategy, policies and procedures, staffing, and process changes that fit into the City’s current operating environment.

The assessment was conducted between May and July 2024 and consisted of four major phases:

1. Project Initiation and Management: This phase concentrated on comprehensive planning and project management. It included selecting employees to interview, identifying documents to review, and establishing regular reports on project status. #2..
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2. Fieldwork: This phase included interviews, document review, and best practice research. We worked with City leadership to obtain the most up-to-date information and insights available. ○ Interviews: We conducted interviews with 10 staff members from the City’s management departments.
○ Document Review: We reviewed documents including organizational charts, policies and procedures, forms, and reports.
○ Best Practice Research: Based on identified opportunities for improvement, we conducted research on relevant best practices, specifically looking at the cities of Stockton, Bakersfield, Merced, and Fresno as directed.

3. Analysis: In this assessment phase, we evaluated the importance, impact, and scope of our observations within the context of the information we gathered to develop actionable recommendations.

4. Reporting: We concluded the project by reviewing draft observations and recommendations with City leadership to validate facts and confirm the practicality of our recommendations, fine-tuning our observations and recommendations based on their feedback.

This engagement was performed in accordance with the Standards for Consulting Services established by the American Institute of Certified Public Accountants.

D. COMMENDATIONS
We want to extend our heartfelt gratitude to all City employees who participated in this assessment.

Throughout our work, we noted:
• Excellent collaboration between departments and colleagues • A culture that looks for best practices and opportunities for improvement • As a best practice, the City is already working on the following:
○ Conducting a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis for all City buildings.
○ Creating a deferred maintenance program and incorporate it into the City’s Geographic Information System (GIS) and Environmental Systems Research Institute, Inc. (ESRI). ○ Establishing a formal Capital Improvement Plan (CIP).

It was clear from all City employees we worked with how much passion there is for Modesto and concern for its progress and future. The contributions from these dedicated employees undoubtedly elevated this report, and we again share our thanks.

E. ADDITIONAL ACTIONS FOR CONSIDERATION
As a result of this engagement, we identified the following opportunities to further support the City:
• Develop a multi-year strategic business policy to articulate the vision, goals, and performance measures for the City’s properties with supporting financial plan. • Utilize the recommended internal liaison (see Recommendation 4) to help carry out the recently passed Surplus Land Act. Outsource additional support as necessary to facilitate the sale or lease of the identified surplus.
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F. SUMMARY OF OBSERVATIONS AND RECOMMENDATIONS
Observations and recommendations were grouped into two areas: (1) Planning and Strategy and (2) Processes. A summary is listed below, and observations and recommendations are further detailed in in Section II of this report.

OBSERVATIONS AND RECOMMENDATIONS
Planning and Strategy

1. Observation The City currently lacks a multi-year strategic business plan to articulate the vision, goals, and performance measures for the City’s properties, including hold and exit strategies, with capital plan considerations. A comprehensive multi-year strategic or business plan is needed to define priorities, drive budgets and annual workplans, and guide ongoing real estate management activities for the City’s real estate program.

Recommendation The City should develop a multi-year strategic business plan to articulate the vision, goals, and performance measures for the City’s properties, including hold and exit strategies, with capital plan considerations. The approach, activities, and performance measures can be incorporated into the City’s greater strategic business plan and also serve as a roadmap to guide decisionmaking and space allocation.

2. Observation The City has not developed a real estate organizational chart, including business administration, facilities planning, strategic projects, project delivery, compliance, and real estate development and management departments with defined roles, responsibilities, an authority matrix, reporting lines, and oversight. An organizational chart should include consideration of key thirdparty fulfilling roles within real estate functions (e.g., key leasing agents).

Without further clarity, property leadership, accountability, and authority can be unclear.

Recommendation The City should develop role and responsibility documentation, such as a Responsible, Accountable, Consulted, and Informed (RACI) matrix, authorization matrix, or organizational chart to demonstrate how various stakeholder groups are meant to work together, and ensure that individuals in positions of leadership have appropriate authority thresholds to accomplish their work.

3. Observation The City does not perform strategic market competitive assessments or benchmarking for its properties.

Recommendation As a best practice, the City should regularly perform competitive market assessments and benchmarking on both owned and local properties. This will allow the City to monitor the strength of its portfolio and keep apprised of opportunities in the market.

4. Observation The City lacks a dedicated individual to serve as a liaison between the various City departments, the City Manager’s office, and third-party real estate vendors.
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OBSERVATIONS AND RECOMMENDATIONS
Recommendation The City should identify an internal individual to serve as a liaison between various City departments, the City Manager’s office, and the third-party real estate vendors. This person would be responsible for the ongoing reporting outlined in Observation No. 7.

Processes

5. Observation The City has not conducted a strengths, weaknesses, opportunities, and threats (SWOT) analysis for properties currently owned to help guide real estate expansion or consolidation strategies.

Recommendation To supplement the recently completed Facility Condition Assessment and master asset list, a SWOT analysis for all City properties should be completed.

The policies and procedures should identify who prepares and reviews this information to help guide strategy on reaching utilization goals versus plan, as well as opportunities for determining if the properties are in alignment with City goals.

6. Observation The City lacks a regularly scheduled reporting process (e.g., monthly, quarterly, and annually) for key stakeholders to evaluate the health of City real estate property inventory and make informed decisions.

Recommendation The City should consider developing an annual budget and monthly reporting process, in alignment with the strategic plan, for an overarching real estate program. At a minimum, reporting to key stakeholders should include the following:
● Property abstracts with essential property information such as name, address, primary contacts, total square footage, maintenance costs, expenditures, amenities, available seating, average utilization, groups assigned to the property, and current pending work for the property. ● Annual operating budgets and capital expenditure budgets per property. ● Monthly, quarterly, and/or annual financial proformas with KPIs and variance analysis against prior year budgets.

7. Observation The City lacks a formalized communication plan aligned with the RACI framework (see Observation No. 2) for key internal stakeholders and/or committees with regular status updates and established agendas with key information.

Recommendation The City should consider establishing a reoccurring meeting for key property stakeholders to review and discuss key real estate information.

8. Observation The City does not have formalized real estate financial and operation policies and procedures. Based on feedback provided during interviews, this has created challenges with communication, reporting, consistency, and customer service.

Recommendation The City should evaluate all current policies, procedures, and processes for existence, appropriateness, and alignment with current practices. At a minimum, the policies and procedures should include the following items:
● Defined roles and responsibilities for City employees and third-party support
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OBSERVATIONS AND RECOMMENDATIONS
● Defined monetary and approval thresholds for all real estate transactions ● Required real estate reporting to key stakeholders
● Defined KPIs and metrics with methodologies
● Facility service request system and key roles
● Financial and operation policies and procedures
● Transaction evaluation guidelines
Once policies and procedures are updated and in alignment with current practices, they should be made available in a centralized location, such as an intranet, for employees to easily reference.

9. Observation The City lacks an asset list that is complete and accurate.

Recommendation As part of this assessment, we collected all known asset lists and combined them to create a comprehensive list (delivered separately July 18, 2024). We recommend that the City cross-reference its internal data to ensure that the list is accurate and up-to-date. This will enable the City to make informed decisions, track its assets, link it to GIS and ESRI programs, and plan for the future. Additionally, we recommend that the City develop a policy and procedure for maintaining the list moving forward to ensure that it remains accurate and up-to-date.
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G. IMPLEMENTATION PLAN
We have prepared an implementation plan to guide the enactment of the recommendations provided in this assessment. The recommendations are listed in order of priority (critical, high, medium, or low), but much of this work may overlap.

Risk rating definitions for critical, high, medium, and low are as follows: high-risk rating indicates a high likelihood of a significant negative impact; medium-risk rating indicates a moderate likelihood of a moderate negative impact; and low-risk rating indicates a low likelihood of a negative impact based on our experience. This plan should be viewed as a living document that City leadership will discuss, reorganize, and adjust with time.

The Primary Responsible Party is the leader in coordinating activities to accomplish the line item. This individual may or may not directly execute the work detailed, but will be responsible for moving the work forward.

OBSERVATION

AREA RECOMMENDATION

POTENTIAL

IMPACT MANAGEMENT RESPONSE RESPONSIBILITY PRIORITY

TIMELINE
Q4
2024
Q1
2025
Q2
2025
Q3
2025
Q4
2025
Strategic Planning The City should develop a multi-year strategic business plan to articulate the vision, goals, and performance measures for the City’s properties, including hold and exit strategies, with capital plan considerations. The approach, activities, and performance measures can be incorporated into the City’s greater strategic business plan and also serve as a roadmap to guide decision-making and space allocation.

Inefficient space
allocation, missed
opportunities for
capital
improvements, and
an inability to
effectively respond
to changing
community needs.

Staff to develop a strategic
business plan that supports the
City's overall strategic plan. Key
Departments involved are
identified as: Public Works,
Community & Economic
Development, Parks, Rec. &
Neighborhood, Utilities, & Legal
Counsel.

Deputy City
Manager: Scotty
Douglass
HIGH
Roles and
Responsibilities
The City should develop role and responsibility documentation, such as a Responsible, Accountable, Consulted, and Informed (RACI) matrix, authorization matrix, or organizational chart to demonstrate how various stakeholder groups are meant to work together, and ensure that individuals in positions of leadership have appropriate authority thresholds to accomplish their work.

Overlapping
responsibilities,
inefficiencies, and
delays in decisionmaking that could
hinder effective
project execution
and overall
governance.

Staff to develop a RACI matrix
that will be incorporated into the
strategic business plan.

Although the DCM is listed as
primary responsible, key
department officials will be
assigned and designated as the
secondary primary responsible
to ensure that all work tasks
related to the strategic business
plan are in motion.

Deputy City
Manager: Scotty
Douglass
HIGH
Policies and
Procedures
The City should evaluate all current policies, procedures, and processes for existence, appropriateness, and alignment with current practices. At a minimum, the policies and procedures should include the following items:
● Defined roles and responsibilities for City employees and third-party support ● Defined monetary and approval thresholds for all real estate transactions ● Required real estate reporting to key stakeholders
● Defined KPIs and metrics with methodologies
● Facility service request system and key roles
● Financial and operation policies and procedures
● Transaction evaluation guidelines
Once policies and procedures are updated and in alignment with current practices, they should be made available in a centralized location, such as an intranet, for employees to easily reference.

Perpetuation of
outdated or
ineffective guidelines
that could lead to
operational
inefficiencies,
compliance issues,
and a lack of
accountability in
governance.

Staff to develop and update
policies, procedures and
process as needed. Staff will
include a work plan and road
map in the strategic business
plan to address policies &
procedures.

Deputy City
Manager: Scotty
Douglass
HIGH
City Asset Listing As part of this assessment, we collected all known asset lists and combined them to create a comprehensive list (delivered separately 18, 2024). We recommend that the City cross-reference its internal data to ensure that the list is accurate and up-to-date. This will enable the City to make informed decisions, track its assets, link it to GIS and ESRI programs, and plan for the future.

Challenges in
making informed
decisions, tracking
assets effectively,
Staff has completed an
assessment of the City's overall
property list and determined a
list of Surplus Properties that
Deputy City
Manager: Scotty
Douglass
HIGH
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OBSERVATION

AREA RECOMMENDATION

POTENTIAL

IMPACT MANAGEMENT RESPONSE RESPONSIBILITY PRIORITY

TIMELINE
Q4
2024
Q1
2025
Q2
2025
Q3
2025
Q4
2025
Additionally, we recommend that the City develop a policy and procedure for maintaining the list moving forward to ensure that it remains accurate and up-to-date. and planning for
future needs.

Council and Re-development
Successor Agency have
declared as surplus. Staff is
now taking the next steps to
process 29 properties through
the SLA & to determine the best
course of action(s) for each
property. A process matrix will
be established and incorporated
into relevant policies and
procedures as appropriate.

Communication Plan The City should consider establishing a reoccurring meeting for key property stakeholders to review and discuss key real estate information such as:
● Market changes, including current supply and demand as well as upcoming availability ● Standard operations, including any current facility concerns, building services, amenity services, and current facility uses and needs
● Upcoming facility needs, transactions, moves, and facility service requests ● Capital project updates
● Utilization updates
● Financial updates, including full review of the month-end results, year-end forecast and any changes, potential issues that may change the year-end forecast that aren’t already built into the forecast, and significant financial variances
Inability to effectively
respond to market
changes and facility
needs.

The City has established newly
formed work group to support
the review and discussion of
key real estate information. A
communication plan will be
included in the strategic
business plan.

Deputy City
Manager: Scotty
Douglass
HIGH
Strategic Market
Competitive
Assessments and
Benchmarking
As a best practice, the City should regularly perform competitive market assessments and benchmarking on both owned and local properties. This will allow the City to monitor the strength of its portfolio and keep apprised of opportunities in the market.

Failure to identify
potential
opportunities and
threats in the
market.

Staff will determine best
approach in utilizing internal
resources available to
determine potential support
needed by potential
consultants.

Deputy City
Manager: Scotty
Douglass
HIGH
Annual Budget and
Monthly Reporting
Process
The City should consider developing an annual budget and monthly reporting process, in alignment with the strategic plan, for an overarching real estate program. At a minimum, reporting to key stakeholders should include the following:
● Property abstracts with essential property information such as name, address, primary contacts, total square footage, maintenance costs, expenditures, amenities, available seating, average utilization, groups assigned to the property, and current pending work for the property. ● Annual operating budgets and capital expenditure budgets per property. ● Monthly, quarterly, and/or annual financial proformas with KPIs and variance analysis against prior year budgets.

Lack of financial
oversight and
accountability.

The strategic business plan will
include work tasks associated
with developing an operating
budget and making
recommendations to the City
Manager for future years.

Deputy City
Manager: Scotty
Douglass

MODERATE
SWOT Analysis To supplement the recently completed Facility Condition Assessment and master asset list, a SWOT analysis for all City properties should be completed. The policies and procedures should identify who prepares and reviews this information to help guide strategy on reaching utilization goals versus plan, as well as opportunities for determining if the properties are in alignment with City goals.

Lack of critical
insights resulting in
misaligned
strategies with City
objectives.

This work step will be included
in the strategic business plan
and captured in policy and
procedure. Staff will work with
public works to expand
condition assessment and
analysis of City Properties.

Deputy City
Manager: Scotty
Douglass
LOW
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OBSERVATION

AREA RECOMMENDATION

POTENTIAL

IMPACT MANAGEMENT RESPONSE RESPONSIBILITY PRIORITY

TIMELINE
Q4
2024
Q1
2025
Q2
2025
Q3
2025
Q4
2025
Staffing The City should identify an internal individual to serve as a liaison between various City departments, the City Manager’s office, and the third-party real estate vendors. This person would be responsible for the ongoing reporting outlined in Observation No. 7.

Siloing that can lead
to missed
opportunities for
collaboration and
effective project
execution.

As part of the SWOT analysis,
staff will provide a
recommendation to the City
Manager in coordination with
human resources and the
budget division.

Deputy City
Manager: Scotty
Douglass
LOW
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II. OBSERVATIONS AND RECOMMENDATIONS
Based on the input gathered from interviews and document review, as well as comparisons to best practices, we prepared a comprehensive set of observations and recommendations below.

A. PLANNING AND STRATEGY
Strategic Planning

Current Conditions
The City currently lacks a multi-year strategic business plan to articulate the vision, goals, and performance measures for the City’s properties, including hold and exit strategies, with capital plan considerations. A comprehensive multi-year strategic or business plan is needed to define priorities, drive budgets and annual workplans, and guide ongoing real estate management activities for the City’s real estate program. In this type of environment, City leadership is operating at more of a tactical, operational level, rather than at a strategic level.

The City has not established strategic KPIs, and performance information is not collected or reported in conjunction with budget monitoring and portfolio management.

Without clear goals, it is difficult for the City to track, monitor, and report on progress against strategic goals. Interviewees reported that long-term portfolio planning and KPI tracking is unavailable, and there is a lack of understanding on whether its current portfolio fits into the City’s objectives and goals, as there isn’t a clear path forward with defined targets.

Additionally, the City is not proactively assessing space usage. The City should define utilization calculation and targets for its portfolio. This calculation framework should be honest reflections of desired outputs or outcomes. As a component of defining the calculation, the City should include a specific utilization target to be achieved within a defined timeframe and performance measures, such as how this information will be used.
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Recommendations
The City should develop a multi-year strategic business plan to articulate the vision, goals, and performance measures for the City’s properties, including hold and exit strategies, with capital plan considerations. The approach, activities, and performance measures can be incorporated into the City’s greater strategic business plan and also serve as a roadmap to guide decision-making and space allocation. This plan should, at minimum, include information related to:
• Vision for the City
• Market analysis and competitive assessments
• Financial planning and upcoming/ongoing projects
• Operational goals, objectives, and action items
• Facility condition assessments, including technology assessments • Operational KPIs to increase transparency, improve communications, and assist leadership in identifying areas for improvement. Recommended indicators to begin tracking and sharing with both internal and external stakeholders may include:
○ Space occupancy rates (e.g., building, floor, meeting rooms, and desks) ○ Capital project cash flow
○ Change orders
○ City operating budget and cost control (e.g., HVAC, energy, preventative maintenance, and reactive maintenance)
○ Planned vs. reactive maintenance (e.g., preventative maintenance as a percentage of total work)
○ Operating expense ratio
○ Service request fulfillment times
○ Department satisfaction scores (e.g., workspace comfort, safety and security, etc.) ○ Department level growth
○ Planned work backlog
KPIs provide a detailed and transparent view of metrics directly aligned with the City’s focus areas on the strategic plan and will help inform future capital improvements. Staff will be able to track progress towards clearly-defined and benchmarked goals and help identify areas of improvement across the entire organization.

Based on research, different cities approach strategic planning for real estate portfolio management in various ways. The City of Fresno adopted the Asset Management Act, which aims to manage city assets using a select real estate brokerage firm while still managing assets for specific use cases.

The Asset Management Act’s purpose is to utilize taxpayer funds, reduce operating costs, generate revenue, and improve city services and public-private partnerships. The City of Stockton has a LongRange Property Management Plan that focuses on assets to be developed, redeveloped, or sold, as well as a surplus property listing table. The city also manages brownfields redevelopment plans and has several mapping and database tools that promote both city-owned and private properties. The City of Merced has a detailed analysis of land owned by the city, further grouped by residential, commercial, industrial, community, and other with goals for land usage based on land groupings. The city also has a surplus land list managed by the Office of Economic Development. Overall, cities centralize management of real estate assets and delegate control of assets to one city department, #2..
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include real estate plans within detailed city plans, and encourage public-private partnerships to manage city-owned real estate whether internally or outsourced.

Roles and Responsibilities

2. Observation The City has not developed a real estate organizational chart, including business administration, facilities planning, strategic projects, project delivery, compliance, and real estate development and management departments with defined roles, responsibilities, an authority matrix, reporting lines, and oversight. An organizational chart should include consideration of key third-party fulfilling roles within real estate functions (e.g., key leasing agents). Without further clarity, property leadership, accountability, and authority can be unclear.

Current Conditions
The City has not developed a real estate organizational chart including business administration, facilities planning, strategic projects, project delivery, compliance, and real estate development and management departments with defined roles, responsibilities, an authority matrix, reporting lines, and oversight. In certain circumstances, interviewees reported a lack of clarity around responsibilities and decision-making authority. Organizational charts should include consideration of key third-party fulfilling roles within real estate functions (e.g., brokerage firms). As a result, the team relies on peer mentorship and word-of-mouth to communicate roles, responsibilities, and expectations, which can lead to inconsistent practices and expectations. Without further clarity or documentation, property leadership, accountability, and authority can be unclear.

Recommendations
The City should develop an organizational chart with RACI matrix identifying the individuals or departments that need to be involved or notified of project milestones, activities, or timelines that are part of feasibility, schematic and conceptual design, design development, construction documentation, bidding and permitting, or closeout. Typical groups to consider include:
• Finance
• Facilities
• Strategy
• Project Delivery
• Compliance
• Real Estate Development
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• Real Estate Services
• Departmental Asset Custodians
To create a RACI chart, the City should list all of a project’s tasks down the left column and stakeholders across the top row. For each task, enter R, A, C, or I to assign a level of involvement for each stakeholder in each task, as further defined below:
• Responsible: This team member does the work to complete the task. Every task needs at least one responsible party, but it’s possible to assign more. • Accountable: This person delegates work and is the last one to review the task or deliverable before it’s deemed complete. On some tasks, the responsible party may also serve as the accountable one. Only one accountable person is typically assigned to each task or deliverable. • Consulted: Every deliverable is strengthened by review and consultation from more than one team member. Consulted parties typically provide input based on either how a deliverable will impact their future project work or their domain of expertise on the deliverable itself. • Informed: These team members simply need to be kept in the loop on a project’s progress, rather than roped into the details of every deliverable.

Other recommendations for creating an effective RACI chart include the following:
• Color coding tasks can be useful to quickly see whether any team member is responsible for too many tasks within a project, and to make sure each task has assigned at least one responsible and one accountable party.
• Breaking the chart down by project phases also lets you see how many tasks anyone is responsible for within a certain timeframe, which can help distribute work evenly.

The American Institute of Architects provides a sample responsibility matrix that can provide content for a future RACI chart for the City.

Strategic Market Competitive Assessments and Benchmarking

3. Observation The City does not perform strategic market competitive assessments or benchmarking for its properties.

Recommendation As a best practice, the City should regularly perform competitive market assessments and benchmarking on both owned and local properties.

This will allow the City to monitor the strength of its portfolio and keep apprised of opportunities in the market.

Current Conditions
The City does not perform strategic market competitive assessments or benchmarking for its properties. Performing such assessments on a regular basis will allow the City to proactively plan and adapt space needs to changing market conditions, as well as ensure competitiveness in alignment with profitability goals and objectives.

Performing market assessments and competitive benchmarking is important because it will allow the City to stay informed about current market conditions and trends. By conducting market assessments, #2..
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the City can determine the demand for their properties and adjust their pricing and marketing strategies accordingly. They can also identify any potential risks or challenges that may impact the value of their property.

Competitive benchmarking, on the other hand, will allow the City to compare their property to similar properties in the market. This can help them identify areas where they can improve their property to make it more competitive and attractive to potential buyers should they seek to sell. It can also help them determine the appropriate bidding amount should they seek to buy new property.

Overall, performing market assessments and competitive benchmarking are critical components of a strong real estate strategy and will allow the City to make informed decisions about their portfolio.

Recommendations
The City should implement regular reviews of competitive assessments (e.g., semi or annual) and benchmarking for all existing and potential real estate purchases. The City should also regularly receive market trend reports from its third-party real estate vendors since they help support the City with real estate transactions and likely have direct access to market data in real time. These assessments and market updates should be documented in a policy and address roles and responsibilities in the preparation of the assessments and benchmarking, frequency of reviews, and key stakeholders that should be presented the results. This will allow the City to stay ahead of changing market conditions, patterns, and trends that might affect the competitiveness of various properties. Regularly updating assessments would help the City remain agile in response to market changes. Additionally, by routinely identifying areas for improvement, the City can improve on allocating resources more effectively, ensuring that properties are utilized to their best potential.

For reference, a standard competitive market assessment would be conducted as follows:
• Step 1: Gather your list of comparable or target assets. Collect the same basic descriptive information for each, such as:
○ Size
○ Address
○ Age
• Step 2: List out the criteria important for your analysis. Your criteria may include:
○ Location
○ Amenities
○ Current Use
Be sure to include any important notes, such as proximity to public transport or potential tenants in common, if leasing.
• Step 3: Compare where your property is in relation to your targets per criteria. Is your target’s location better than, equal to, or worse than your own? • Step 4: Score your assessment of each criterion. Better than = 1 point, equal to = 0, and worse than = -1. Based on the number of total points per target, rank the buildings in order of highest score to lowest score.
• Step 5: Based on your ranking, work to identify those areas of improvement compared to your long-term real estate strategic plan.
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Staffing

4. Observation The City lacks a dedicated individual to serve as a liaison between the various City departments, the City Manager’s office, and third-party real estate vendors.

Recommendation The City should identify an internal individual to serve as a liaison between various City departments, the City Manager’s office, and the third-party real estate vendors. This person would be responsible for the ongoing reporting outlined in Observation No. 7.

Current Conditions
The City lacks a dedicated individual to serve as a liaison between the various City departments, the City Manager’s office, and third-party real estate vendors. While the City used to have a dedicated real estate manager, the position was never filled after the previous manager left. A lack of management designated to oversee the real estate process can lead to the following:
• Inefficient Utilization of Assets: Without a dedicated manager, these is no comprehensive oversight of the City’s real estate portfolio, leading to underutilization or mismanagement of properties.
• Inconsistent Maintenance and Upkeep: Properties may not receive timely maintenance and upkeep, resulting in increased repair costs and potential safety hazards. • Inadequate Recordkeeping: Real estate records may not be consistently updated or accurately maintained, leading to challenges in asset tracking and decision-making.

Recommendations
The City should identify an existing internal individual or hire someone to serve as a liaison between various City departments, the City Manager’s Office, and third-party real estate vendors. A dedicated manager will provide the necessary oversight to optimize asset utilization, reduce cost through proactive maintenance, and ensure real estate transactions are in alignment with City goals. Ideally, this person would also serve as the Subject Matter Expert when it comes to the recently passed Surplus Land Act and how to navigate the sale or lease of the identified “surplus land.” Roles and responsibilities for this position should be included within the organization chart and RACI matrix (see Recommendation No. 2 for further information).

This is in line with other cities that have a designated internal person who oversees real estate. The City of Bakersfield has a Real Property Supervisor appointed within the Finance Department who handles real property. The City of Stockton has real estate managed by the Economic Development Department, with help from the Finance Department. Having a designated internal person who oversees real estate can help cities manage their assets more efficiently and effectively, provide objective analysis and recommendations, improve communications between teams with regards to real estate, and ensure that the City’s real estate portfolio is aligned with its overall goals and objectives.
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B. PROCESSES
SWOT Analysis

Recommendation To supplement the recently completed Facility Condition Assessment and master asset list, a SWOT analysis for all City properties should be completed. The policies and procedures should identify who prepares and reviews this information to help guide strategy on reaching utilization goals versus plan, as well as opportunities for determining if the properties are in alignment with City goals.

Current Conditions
The City recently completed a Facility Condition Assessment and master asset list; however, the City does not appear to conduct a SWOT analysis for properties currently owned and leased. As a result, the City lacks a framework to evaluate the current status of these properties in terms of their strategy value and operational efficiency. This results in the following risks:
• The City may miss opportunities to optimize the utilization of properties, resulting in underutilized space and potentially unnecessary expenses.
• In the absence of a comprehensive assessment, the City may allocate resources inefficiently, failing to address weaknesses and threats that could be mitigated. • Without a SWOT analysis, the City may lack essential information for decision-making related to lease consolidation, termination, subleasing, or assignment, which could impact the achievement of its strategic goals.

Recommendations
The City should implement formal policies and procedures for conducting regular SWOT analyses for all its owned and leased properties to enhance strategic decision-making and operational efficiency.

The policies and procedures should, at minimum, contain the following information:
• Objectives and scope
• Data collection and sources (e.g., market trends, competitive analysis, and emerging risks) • Methodology and KPIs (e.g., location, condition, occupancy rates, and cost efficiency) • Decision-making framework outlining how the results will be used to inform strategic decisions, lease negotiations, resource allocation, and property management strategies • Responsible parties (e.g. the internal liaison per Recommendation 4 and Public Works for example)
Implementing these policies and procedures will provide the City with a structured and systematic approach to conducting SWOT analyses for its properties, ultimately enhancing its ability to make informed decisions and optimize operational efficiency. #2..
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For reference, the basic structure of a SWOT analysis should include:
• Step 1: List as many findings for each of the four SWOT categories as possible. Questions you may consider while making this list include:
○ Strengths: What do you do well? What do your peers see as your strengths? What makes your strongest asset the strongest, and can other assets be brought to the same level? ○ Weaknesses: What could you improve? Where do you have fewer resources than others? Are you lacking in knowledge?
○ Opportunities: What trends can you take advantage of? Can your strengths be converted to opportunities?
○ Threats: What obstacles do you face? What are the negative aspects in the current market? • Step 2: Review and prioritize the top 10 findings from your lists, with one being the highest priority and 10 the lowest.
• Step 3: Analyze the top 3–5 findings from your list to identify next steps and assign a responsible party.

Annual Budget and Monthly Reporting Process

Current Conditions
Departments are responsible for developing their own real estate budgets and reporting processes.

As a result, the City lacks a regular reporting process (e.g., monthly, quarterly, and annually) for key stakeholders to evaluate the health of City real estate and make informed decisions. Interviewees reported that they have limited visibility in the budget process and feel they could benefit from greater access to tracking, monitoring, and reporting on budget performance.

Ideally, performance reporting would address progress toward strategic goals and objectives, link to real estate activities, and be reported on a quarterly basis to leadership, at minimum. Overall, performance measures should evaluate outcomes, where possible, and outputs where other information is not available. This provides a transparent mechanism for stakeholders to understand the City’s goals, strategies, resourcing decisions, and progress. #2..
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Recommendations
The City should conduct regular reviews of budget-to-actual information to ensure financial and operational plans that were approved in the budget are being implemented and progressing accordingly. These outcomes should be aligned with the City’s strategic plan, and include financial proformas with KPIs and variance analysis against prior year budgets. Regular reviews of budget-toactual information ensure financial and operational plans that were approved by the City are being implemented and progressing accordingly. Regular monitoring of budgetary performance provides an early warning of potential problems, and gives decision-makers time to consider actions in response to major deviations.

This reporting process should be documented in a policy or equivalent formalized procedural document. The budget monitoring policy should define roles and responsibilities and assign ownership to budget monitoring. The City should strive to automate monthly budget reporting to reduce manual processes and increase efficiency. The budget-to-actual report should include sufficient detail to provide leadership with the overall budget-to-actual information for the property, including the following:
• Capital expenditures
• Repair costs
• Maintenance costs
• Percentage of spending
Communication Plan

Recommendation The City should consider establishing a reoccurring meeting for key property stakeholders to review and discuss key real estate information.

Current Conditions
The City lacks a formalized communication plan aligned with the RACI framework (see Observation No. 2) for key internal stakeholders and committees with regular status updates and established agendas with key information. This deficiency in structured communication can lead to several associated risks and impacts, including:
• Misalignment and Decision-Making Delays: Without a clear communication plan, key stakeholders may lack timely access to critical information. • Inefficient Resource Allocation: The absence of regular updates and established agendas may lead to inefficient allocation of resources, as stakeholders may not have a comprehensive understanding of the City’s real estate needs and challenges. #2..
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• Missed Market Challenges: Failure to communicate market changes and upcoming availability of properties can lead to missed opportunities to capitalize on favorable market conditions or adapt to shifting demand.
• Operational Challenges: Lease issues, building services, and amenity services may not be promptly addressed, potentially resulting in operational inefficiencies and tenant dissatisfaction. • Limited Financial Oversight: A lack of financial updates and clear communication channels may hinder financial oversight, making it difficult to identify and address significant financial variances or anticipate changes to year-end forecasts.

Currently, no one has been tasked with pulling this information together on an ongoing basis.

Recommendations
The City should consider establishing a reoccurring meeting framework for key property stakeholders to review and discuss key real estate information, such as:
• Market changes, including current supply and demand as well as upcoming availability • Standard operations, including any current facility concerns, uses, and needs • Upcoming transactions, moves, and overdue facility service requests • Capital project updates
• Utilization updates
• KPI updates
• Financial updates, including full review of the month-end results, year-end forecast and any changes, potential issues that may change the year-end forecast that aren’t already built into the forecast, and significant financial variances
• Property abstracts with essential information, such as name, address, primary contacts, total square footage, amenities and repairs costs
By implementing a formal communication plan, including designating someone to update this reporting on an ongoing basis (such as the real estate manager suggested in Observation No.4), the City can establish a structured plan that enhances decision-making, optimizes resource allocation, and ensures that key property stakeholders are well-informed and aligned with the City’s real estate goals.

Policies and Procedures

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Recommendation The City should evaluate all current policies, procedures, and processes for existence, appropriateness, and alignment with current practices. At a minimum, the policies and procedures should include the following items:
● Defined roles and responsibilities for City employees and third-party support
● Defined monetary and approval thresholds for all real estate transactions ● Required real estate reporting to key stakeholders
● Defined KPIs and metrics with methodologies
● Facility service request system and key roles
● Financial and operation policies and procedures
● Transaction evaluation guidelines
Once policies and procedures are updated and in alignment with current practices, they should be made available in a centralized location, such as an intranet, for employees to easily reference.

Current Conditions
The City has limited policies and procedures to promote consistency and transparency of real estate procedures. Policies and procedures help employees understand expectations and perform processes consistently across locations and time. Additionally, policies and procedures support operational continuity when employees leave the organization. Without well-documented, current, and accessible policies and procedures, employees may inadvertently complete tasks incorrectly and in a way that violates the City’s expectations for service or prudent financial and project management.

Well-developed policies and procedures reduce the City’s operating risk and increase employee accountability.

In general, knowledge about processes is held by specific individuals and verbally communicated to incoming staff members rather than being documented. Specifically, interviewees noted that roles and responsibilities across departments and with vendors are unclear. For example, interviewees are unsure who decided to contract with the outside real estate firms or if the services are needed.

Interviewees also didn’t understand when to contact these firms.

While the City has operational policies and procedures around accounting for lease agreements (GASB 87), insurance, and real property acquisitions, these are not consolidated into a central resource for key stakeholders to easily refer to. As a result, while current policies and procedures can serve as a starting point in consolidating and updating policies and procedures, they currently contain gaps.

Limited clarity and documentation of policies and procedures present significant challenges related to:
• Accountability: Policies and procedures facilitate accountability for staff. • Customer Service: Limited policy and procedure documentation can result in communication and customer service issues due to a lack of clearly-defined service standards or standard operating procedures that adversely impact the customer. #2..
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• Efficiency: When processes are unclear or inconsistent it can, among other things, reduce staff efficiency and cause extra work for staff. It is also difficult to optimize processes that are not documented, as there is no standard baseline procedure to improve upon. • Knowledge Transfer: When knowledge is primarily oral, it can be difficult for new staff to efficiently learn operational processes and procedures. Likewise, when long-tenured staff leave the organization, there are increased risks of losing institutional knowledge. • Roles and Responsibilities: A lack of clarity around responsibilities and decision-making authority can impact employee morale and team relations. It is especially important that all teams understand the specific tasks this role will be fulfilling to avoid duplicate work and confusion. • Risks: A lack of standardized processes can create issues related to compliance and risk management, such as required equipment reviews and repairs, if sensitive processes are not handled consistently.

Recommendations
The City should evaluate all current policies, procedures, and processes for existence, appropriateness, and alignment with current practices. At minimum, the policies and procedures should include the following items:
• Defined roles and responsibilities for City employees and third-party support • Defined monetary and approval thresholds for all real estate transactions • Required real estate reporting to key stakeholders
• Defined KPIs and metrics with methodologies
• Facility service request system and key roles
• Financial and operation policies and procedures
• Transaction evaluation guidelines
Once policies and procedures are updated and in alignment with current practices, they should be made available in a centralized location, such as an intranet, for employees to easily reference. As policies and procedures often live in many dispersed places, the City will need to develop an organized, easy-to-navigate repository.

Training should be provided, and personnel should be held accountable for implementing updated policies. The City should also consider how procedures are communicated during new employee onboarding. As procedures evolve over time, training should be revised and redelivered to ensure consistency across functions and locations.
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City Asset Listing

9. Observation The City lacks an asset list that is complete and accurate.

Current Conditions
The City provided our team with three asset lists, one from the City Manager’s Office: one from the Finance Department and one from the City’s property insurance policy. However, each list had different fields, conflicting information, or was missing information throughout. We reviewed each list thoroughly and compiled the most complete and concise dataset possible. We grouped together like addresses to ensure that the data was easy to understand and analyze. This detailed list was delivered via Excel to the City on July 18, 2024.

Recommendations
The City should work to determine what gaps exist in the detailed list and then source the necessary information. This may require an in-field visit for final verification. Fields to consider including in their final asset list based on best practice research are:
• Property Address
• Property Type (e.g., residential, commercial, industrial, etc.) • Property Size (square footage or acreage)
• Property Value
• Date Acquired
• Zoning
• Condition of Property
• Maintenance History
• Current Use (i.e., assigned Department)
• Planned Use (if any)
• Revenue Generated (if any)
• Expenses Incurred (e.g., maintenance, repairs, etc.)
• Lease/Rental Information (if applicable)
• Notes/Comments
These fields can be customized based on the City’s specific needs and requirements. #2..
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Once validated (as discussed with the City), the asset listing can be imported into a GIS/ESRI system, which can promote effective asset management. GIS/ESRI systems use spatial data to create maps and analyze geographic information, which can be used to visualize the location and distribution of assets. By importing the asset listing into a GIS/ESRI system, the City can create a visual representation of its assets and analyze the data in a spatial context. This can help the City identify patterns, trends, and relationships between assets that may not be immediately apparent from a simple list. For example, the City can use the GIS/ESRI system to identify clusters of assets in certain areas, which may indicate opportunities for redevelopment or consolidation. Additionally, the GIS/ESRI system can be used to track the condition and maintenance history of assets, which can help the City prioritize repairs and maintenance. Overall, importing an asset listing into a GIS/ESRI system can provide the City with a powerful tool for effective asset management and decisionmaking.

Lastly, it is critical for the City to have a policy and procedure for updating the list moving forward.

This will ensure that the asset list remains accurate and up-to-date, which is essential for effective asset management. The policy and procedure should outline the frequency of updates, who is responsible for updating the list (such as the dedicated individual recommended in Observation 4), and the process for verifying the accuracy of the information. The City should also establish a system for tracking changes to the asset list and ensuring that all relevant departments are notified of any updates. By implementing a policy and procedure for updating the asset list, the City can ensure that it has a reliable and accurate source of information for decision-making, tracking, and planning purposes.
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APPENDIX A: PEER CITY REAL ESTATE BENCHMARKING
Per the City’s request, we specifically researched how the cities of Stockton, Merced, Bakersfield, and Fresno manage their real estate portfolios. A comparison of various elements has been included below as reference.

CITY ELEMENTS

PEER CITIES
Fresno Stockton Bakersfield Merced Modesto
Population (2022) 545,567 321,819 410,647 91,563 218,069 City Size (Sq Miles) 112.3 62.1 143.6 23.32 37.09
Total City Budget (2024) $1,870,000,000 $935,400,000 $814,000,000 $407,500,000 $715,000,000 Targeted Strategies for Real Estate
included in Strategic City Plan
Yes Yes Yes Yes No
Department Supervising Real Estate Capital Projects
Department
Economic
Development
Department
Economic Development
Department/Finance
Economic
Development
Department
N/A
Department Managing Real Estate Data Information
Services
Department
Information
Technology
Department
Technology Service
Department
Information
Technology
Department
N/A
Surplus Land Listing Yes Yes Yes Yes No
Private-Public Partnerships Yes Yes Yes Yes Yes
Occupancy Rates Tracked as part of
its real estate
management
practices and used
to monitor the
performance of its
real estate assets
Occupancy Rates
used to assess the
performance of city
owned properties
and manage real
estate assets
effectively
Monitored for its real
estate assets and used
to evaluate the
performance and
utilization of city
properties and facilities
Not frequently
published but
may be used
internally to
manage
properties and
facilities
Not frequently
published but
may be used
internally to
manage
properties and
facilities
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CITY ELEMENTS

PEER CITIES
Fresno Stockton Bakersfield Merced Modesto
Real Estate Market Analysis Opportunities:

Affordability,
demand fueled by
population growth,
economic
diversification,
huge emphasis on
new developments
Opportunities:
highly affordable
relative to
neighboring high
cost cities such as
SF and San Jose,
rental demand
fueled by fast
population growth,
new development
in infrastructure
Opportunities:

Affordability, demand
fueled by population
growth, economic
diversification, huge
emphasis on new
developments
Opportunities:

Steady growth in
both residential
and commercial
sectors,
affordable, rental
demand,
institutional
growth
Opportunities:

Steady growth in
both residential
and commercial
sectors, driven by
strong demand,
population
growth, and
economic stability
Challenges:
market volatility,
inventory
constraints,
regulatory hurdles,
economic
dependence on
sectors vulnerable
to economic shifts
Challenges:
market volatility,
inventory
constraints,
regulatory hurdles,
economic
dependence on
sectors vulnerable
to economic shifts
Challenges: market
volatility, inventory
constraints, regulatory
hurdles, economic
dependence on sectors
vulnerable to economic
shifts
Challenges:
market volatility,
inventory levels,
strict regulatory
and development
constraints
Challenges:
market volatility,
Affordability and
Inventory
Shortages
Public Real Estate Database Yes Yes Yes Yes No
Dedicated Personnel for Real Estate
Portfolio Management
Real Estate
Services Division
within the Public
Works Department
that oversees real
estate functions
Real Estate
Division that
manages cityowned properties
and transactions
Real Estate Services
Division responsible for
managing city
properties and real
estate transactions
No dedicated real
estate position,
management is
often handled by
broader city
departments
No department or
position focused
solely on real
estate
management
Internal vs. External Management Managed internally
by the Real Estate
Services Division,
providing direct
Real estate
functions are
handled by the
city’s Real Estate
Division, managing
Real estate
management is
conducted internally by
the Real Estate
Services Division,
Merced relies on
external firms
and consultants
for real estate
management and
Real estate
management is
primarily handled
through contracts
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CITY ELEMENTS

PEER CITIES
Fresno Stockton Bakersfield Merced Modesto
oversight and
management.
properties and
transactions inhouse.
overseeing property
management and
transactions.
advisory
services.
with private firms
and consultants.

Real Estate Policies Fresno has
detailed policies
covering
acquisition,
disposition, and
management of
real estate assets.

Stockton has welldefined policies
and procedures for
managing cityowned properties,
including
acquisition and
disposal
guidelines.

Bakersfield has
extensive policies
governing real estate
management, including
detailed procedures for
transactions and
property oversight.

Merced has
minimal policies
related to real
estate
management,
focusing more on
general property
guidelines.

Modesto has
basic policies for
real estate, with
limited detailed
guidelines or
procedures for
property
management.

Data Management System Fresno uses a
robust data
management
system for tracking
and analyzing real
estate assets,
including GIS
technology.

Stockton employs
an advanced data
management
system to track
property details,
transactions, and
performance
metrics.

Bakersfield utilizes an
advanced data
management system
with integrated tools for
monitoring and
managing real estate
assets.

Manual or basic
digital systems
Manual or basic
digital systems
Budget Management Fresno has a
specific budget
allocated for real
estate activities,
allowing for
targeted financial
planning and
oversight.

Stockton allocates
a specific budget
for real estate
functions, enabling
better control over
financial resources
related to property
management.

Bakersfield maintains a
dedicated budget for
real estate activities,
providing clear financial
management and
investment capabilities.

Merced manages
real estate
expenses
through the
general city
budget, which
can limit targeted
investment in
property
management.

Real estate
activities are
funded through
the city’s general
budget without a
separate
dedicated budget
for real estate.

KPIs/Metrics to Evaluate Real Estate KPIs employed are
used to measure
real estate
KPIs used to track
and assess real
estate
KPIs utilized to monitor
real estate
management, including
Limited KPIs for
real estate with
fewer structured
None
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CITY ELEMENTS

PEER CITIES
Fresno Stockton Bakersfield Merced Modesto
performance
including metrics
on property
utilization and
financial
performance
performance, such
as occupancy
rates, lease
revenues, and
asset management
efficiency
performance metrics
related to property use,
maintenance, and
financial outcomes
metrics for
performance
evaluations
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APPENDIX B: SOURCES
The following websites and articles were utilized for the best practice research requested by the City as referenced throughout the report and Appendix A:
• https://www.fresno.gov/wp-content/uploads/2023/01/AssetManagmentAct1.pdf • https://fresnoland.org/2024/05/22/fresno-county-real-estate-portfolio-mismanaged/ • https://www.fresno.gov/wp-content/uploads/2023/03/upload_temp_Consolidated-GP-10-13- 2022_compressed.pdf
• https://www.fresnocountyca.gov/files/sharedassets/county/v/1/county-administrativeoffice/economic-development/ceds.pdf • https://cms3.revize.com/revize/stockton/Documents/Business/Economic%20Development/Redev elopment%20Successor%20Agency/Long_Range_Property_Management_Plan.pdf • https://www.stocktonca.gov/business/economic_development/surplus__property.php • https://stocktonca.mapgeo.io/datasets/properties?abuttersDistance=100&latlng=37.965931%2C121.279005&zoom=12 • https://cms3.revize.com/revize/stockton/Documents/Business/Economic%20Development/Econo mic%20Development%20Division/COS_EDSAP_January_2022%20(1).pdf • https://content.civicplus.com/api/assets/319bac29-84be-4383-8d85-dc79f5122da9 • https://www.cityofmerced.org/departments/housing-success-agency-surplus-land-properties • https://www.cityofmerced.org/home/showpublisheddocument/4650/637028296379170000 • https://www.us.jll.com/en/views/eight-ways-to-boost-state-and-local-government-real-estateperformance • https://www.brookings.edu/articles/how-local-governments-can-put-their-assets-to-work/ • https://www.fresno.gov/capitalprojects/who-we-are/
• https://www.fresno.gov/wp-content/uploads/2024/05/FY-2025-Mayors-Proposed-Budget_1.pdf • https://experience.arcgis.com/experience/2b2f1f8322fb426db97ed50fc1693786/ • https://www.cityofmerced.org/Home/Components/News/News/1436/ #2..
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0BCITY OF MODESTO
1BCOMMITTEE AGENDA REPORT
2BDATE OF MEETING:

October 23, 2024
Date: October 15, 2024
TO: Audit Committee
FROM: Colleen Rozillis, City Auditor
SUBJECT: Approval of the Fleet Operations Internal Controls Review report.

CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider approving the Fleet Operations Internal Controls Review report.

STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2020-2025 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved an internal controls review of the City’s Fleet Services Division as part of the FY23-24 Internal Audit work plan.

DISCUSSION:

The internal controls review assessed Division functions including requesting and ordering fleet parts, inventorying and tracking fleet parts; reviewing and approving vendor invoices; preparing, reviewing, and approving customer invoices; tracking and maintaining fleet vehicles and equipment; securing fleet vehicles, equipment, and parts; and documenting controls and processes within policies and procedures. The review was conducted under Generally Accepted Government Auditing Standards (GAGAS). 8 control issues were identified.

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to approve the Fleet Operations Internal Controls Review report and forward to Council for acceptance.

Approved by:

Colleen Rozillis, City Auditor

Attachments: 1. Fleet Operations Internal Controls Review Report dated 9-16-24 #3..
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This report is intended for the internal use of City of Modesto, and may not be provided to, used, or relied upon by any third parties.

CITY AUDITOR’S OFFICE

FINAL REPORT

FLEET OPERATIONS INTERNAL CONTROLS REVIEW
September 16, 2024
Moss Adams LLP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500
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Table of Contents
Executive Summary 1
A. Introduction 1
B. Summary of Results 1
Introduction 2
A. Background 2
B. Scope and Methodology 2
C. Statement of Compliance with GAGAS 3
Fleet Operations Internal Controls Review 4
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EXECUTIVE SUMMARY
As part of the fiscal year 2024 internal audit program, the Modesto City Auditor, Moss Adams LLP (Moss Adams), conducted a review of the City of Modesto’s (the City) internal controls framework for the Fleet Services Division (the Division). The internal controls review took place between April 2024 and August 2024 and focused on assessing select key controls within the Division deemed important to protecting the City’s fleet assets and resources as well as processing and reporting timely financial information.

The Division appeared to have internal controls developed for some functions and was in the process of implementing internal controls for other functions. Some examples of commendable activities that, based on the review performed, appeared to have well-designed internal controls, include:
 Bid waiver reviews and approvals
 Record retention for auctioned assets
 Maintenance tracking within AssetWorks
There were opportunities to strengthen controls, policies, procedures, and systems within the Division. There were gaps in internal controls within the Division of varying degrees that were discovered across the functions reviewed.

Suggested priorities to address over the next six to 12 months include, but are not limited to:
 Refining and simplifying the vendor invoice review process  Training employees on policies and procedures
 Developing policies and procedures for the billing process  Segregating duties amongst ordering parts and receiving parts  Securing parts to help prevent loss or theft
 Motivating departments to bring in vehicles for preventative maintenance #3..
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INTRODUCTION
As part of the City’s fiscal year 2024 internal audit program, Moss Adams conducted an internal controls review over the Division to determine the general adequacy of internal controls and identify areas of improvement.

The Division falls under the Public Works Department and oversees the parts and vehicle ordering for the City, parts and vehicle management, and vehicle and equipment maintenance for approximately 1,270 pieces of equipment. The Division’s “customers” are primarily City departments that use Division-maintained vehicles or equipment. The Division also maintains the fleet for the Stanislaus Regional Transit Authority (StanRTA), which is the primary provider of mass transportation in the suburban, rural, and metropolitan areas of Stanislaus County. Additionally, the Division maintains the fleet for five fire districts aside from the City’s own fire department. The Division employs 48 people and is organized into five areas:
 Administration
 Parts
 Bus Maintenance
 Heavy Bay
 Light Duty
The Division utilizes AssetWorks to request, manage, and track equipment parts, and utilizes Oracle, the City’s Enterprise Resource Planning (ERP) system, for invoice reviews and approvals.

The scope of the internal controls review included the following Division functions:
 Requesting and ordering fleet parts
 Inventorying and tracking fleet parts
 Reviewing and approving vendor invoices
 Preparing, reviewing, and approving customer invoices  Tracking and maintaining fleet vehicles and equipment  Securing fleet vehicles, equipment, and parts
 Documenting controls and processes within policies and procedures For each Division function assessed, we conducted a review of eight key controls, which included:
 Identifying control objectives in specific areas and controls that would satisfy each control objective
 Reviewing policies and procedures
 Examining relevant documentation in support of select key controls #3..
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 Performing control walkthroughs to observe the design of key controls and understand workflow processes
 Obtaining an understanding of the characteristics of each relevant control activity (who performs it; how often it is designed to operate; whether it is designed to mitigate fraud; whether it is a manual or automated control; and whether it is a preventive, detective, or corrective control)  Assessing whether the controls in place would prevent or detect errors  Providing recommendations on key controls that need to be implemented or changed The work performed included interviews with Management, Technician, Parts, and Administrative employees within the Division.

In support of the internal controls review, the matrix provided in Section III provides results by including the:
 Control objective
 Control issue
 Recommendation
 Likelihood of occurrence
 Impact of occurrence
Likelihood of occurrence is defined as the probability of a negative event occurring. Impact of occurrence is defined as the level of significance if a negative event occurs. Risk levels of low, moderate, or high were used to rate the likelihood of occurrence and impact of occurrence for each finding.

Beyond those controls that have been noted within this report as an issue, additional controls were reviewed without exception. Key controls with exception conditions are reported in this document.

We conducted this internal controls review in accordance with Generally Accepted Government Auditing Standards (GAGAS). Those standards require that we plan and perform the internal controls review to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our objectives. The internal controls review, control objectives, control issues, recommendations, and conclusions on likelihood of occurrence and impact of occurrence are included in the report body.

This internal controls review did not constitute an audit of financial statements in accordance with GAGAS. Moss Adams was not engaged to, and did not, render an opinion on the Division’s internal controls or over financial management systems.
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FLEET OPERATIONS INTERNAL CONTROLS REVIEW
NO.

CONTROL

OBJECTIVE CONTROL ISSUE RECOMMENDATION

LIKELIHOOD OF

OCCURRENCE

IMPACT OF

OCCURRENCE
1 The vendor invoice
review process is
efficient and effective
and reduces the
administrative burden
on the Parts team, as
well as to pay vendors
timely.

During our interviews, multiple
employees explained that the
current vendor invoice review
process is complicated and
burdensome due to excessive
steps throughout the process,
which creates delays with
processing invoices and paying
vendors timely. Additionally,
during our testing of a sample of
ten invoices, we observed that
the average number of days
from invoice receipt to final
approval was approximately 25
days.

The Division should refine the vendor invoice
process by taking the following steps:
● Review the process of having the
Administrative Services Technician print
out invoices and deliver the invoices to the
Parts team to stamp and return back to the
Administrative Services Technician.
● Replace the process above with a step
where the Administrative Services
Technician searches within AssetWorks for
the parts that were ordered to verify
whether the Parts team received the parts
ordered from the invoice.
○ If the Administrative Services
Technician is unable to locate the part
within AssetWorks, then they can
communicate that with the Parts team
to determine whether the status of the
part listed within the invoice.
● Once parts have been confirmed within
AssetWorks, the Administrative Services
Technician would then enter the invoice
into Oracle for Fleet Supervisor or Fleet
Manager approval (based on dollar
amount).

By having the Administrative Services
Technician verify whether parts were received,
the Parts teams will have more time to
inventory, manage, and secure the parts on
hand. The Division will also be able to process
invoices more quickly, which will allow vendors
to be paid on time which can result in vendors
High High
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IMPACT OF

OCCURRENCE
being more likely to work with the Division in
the future.

Management Response: The
recommendation is under evaluation for
potential implementation adjustments.

This will require additional support for
administrative support as well as modifying
access rights to the parts inventory portion of
AssetWorks. Parts staff have been restored to
full allocations and currently have 4 staff
assigned.

This is a concern for checks and balances to
review partial receipts, verification of
receiving/packing list. As well as have the
invoice and shipping receiving/packing list
placed together for audit purposes.
2 Division employees
are aware and
understand the
Division’s policies and
procedures.

The Division has policies and
procedures in place for various
processes, including but not
limited to, processes for crew
leaders, supervisor duties,
administrative responsibilities
and overall bus maintenance.

During our interviews with
various employees, it was
mentioned that they generally
were not aware of these policies
and procedures. This could
result in the current practices
deviating from the designed
practices detailed out in policies
and procedures.

The Division should conduct a training for
Administrative, Parts, and Technician
employees to review current policies and
procedures. The trainings should cover the
following topics:
● Why the policies and procedures are
important
● Roles and responsibilities
● Use of AssetWorks for each team’s
functions
● Highlights from each policy and procedure
including specific items that are essential
to the Division’s success
The Division should also allow ample time for
employees to ask questions about current
processes to help clarify current roles and
responsibilities as much as possible.

High High
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IMPACT OF

OCCURRENCE
Management Response: The
recommendation is under evaluation for
possible implementation adjustments. Fleet
Manager is working with staff to review and
revise Division policies and procedures.

Staff are assigned Citywide reviews of
policies, administrative directives, and security
protections through Target Solutions,
KnowBe4, and PolicyTech.

Weekly and/or bi-weekly meetings have been
established to provide staff opportunities to
ask clarification questions, provide input and
recommendations for processes and
procedures to improve efficiency and
accountability.
3 The Division’s monthly
billing process is
consistent and
effective. Additionally,
policies and
procedures
surrounding the billing
process for the
Division are current
and comprehensive.

The Division does not have
consistent and effective billing
processes in place, which does
not allow for consistent, welldesigned, and timely completed processes. Due to the fact that
the Fleet Manager position had
been vacant, billing had not
been occurring consistently
since September 2023.

Inconsistent billing processes
might lead to departments
thinking that they have more
funds available than they
actually do if the Division has
not billed the departments
timely.

The Division should develop standard
processes for conducting monthly billing, along
with a policy and procedure around the
preparation and review of the monthly billing
process. These should include the following
items:
● Roles and responsibilities: This outlines
the responsibilities of individuals to
implement and enforce the policy.
● Billing schedule: This outlines the timeline
for the billing process, including the
deadline for submitting billing information
and the date the billing journal entries will
be posted. Ideally, this information is
reviewed by the Division by the second
week of the month following the date the
goods/services were provided by the
Division and is ready to be sent to the
City’s Finance Department approximately
two weeks later.

High High
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IMPACT OF

OCCURRENCE
● Billing accuracy: This outlines the
procedures and checks in place to ensure
that bills are accurate and free from errors,
including verifying department information,
pricing, and billing rates.
● Billing approvals: This outlines the process
for obtaining approvals for billing, including
who is responsible for reviewing and
approving bills before posting the billing
journal entries.
● Billing adjustments: This outlines the
procedures for making adjustments to bills,
including how to handle billing disputes
and how to issue credits or refunds.
● Billing records: This outlines the
procedures for maintaining billing records,
including how long records should be kept
and how they should be stored. The
Division should also limit access to billing
records to prevent any unwarranted or
unauthorized changes.
● Billing reports: This outlines the
procedures for generating billing reports,
including what information should be
included in the reports and who should
receive and review them.
● Training and education: This outlines the
training and education requirements for
employees involved in the billing process,
including how to use the billing software
and how to handle inquiries or complaints
related to billing.

Management Response: The
recommendation is under evaluation for
possible adjustments or additions to existing
written SOPs.
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OCCURRENCE
Fleet Manager is working with staff to review
and revise these Division policies and
procedures.

Part of the Agreement with StanRTA has the
timeline detailed for expectations.

Checks and balances are joint effort between
Finance, Budget, and PW Fleet Services for
accuracy.

The City has a records retention policy that
additional training should be scheduled as
refresher or introduction to staff.
4 Roles and
responsibilities for
performing purchasing
due diligence for the
Division are clearly
defined.

During interviews, it was
communicated that when
performing procurement due
diligence for police vehicle parts
(Cop Shop), research is very
time-consuming because of the
unique nature of the parts and
limited vendors with those
unique parts and there is
confusion and misalignment on
whether the Parts team or the
City’s Purchasing Department
should be performing this due
diligence. In some instances,
the Parts team might spend a
couple of months performing
the due diligence of obtaining
three bids for an item, which
might delay the patrol car builds
and start to impact public
safety.

Additionally, during our testing
of compliance with the City’s
procurement due diligence
requirements, we identified that
Based on our understanding of City-wide
procurement procedures, the Buyers within the
Purchasing Department are to perform the due
diligence for purchases. Regardless, the
Division (specifically the Parts team) and the
Purchasing Department should discuss due
diligence for parts purchases (specifically for
the Cop Shop) to clarify who should perform
this due diligence. If needed, the two teams
should work together given the Parts team’s
familiarity with the Cop Shop parts and
vendors. The two teams should also discuss
whether these Cop Shop procurements might
qualify for sole source procurement given the
unique nature of the parts and limited vendors,
which could result in a more efficient process.

Management Response: The
recommendation is under evaluation for
potential implementation adjustments.

The staff have been updated on the policies
for purchasing limits and the potential when
bid waivers are warranted.

In progress and recently approved through
Council, Finance-Purchasing and PW-Fleet
Moderate Moderate
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IMPACT OF

OCCURRENCE
three of the ten transactions
tested did not comply with the
City’s Purchasing Policy as the
Division did not obtain three
bids for purchases greater than
$3,500.
have collaborated on obtaining agreements
with parts vendors, service vendors
(transmissions), upfitters as the Phase I effort
to streamline and maintain compliance with
City Policies and fiduciary responsibilities for
public funds.

Purchasing is not responsible for the individual
parts/material purchasing as this is specialized
for the model/year/type of equipment being
repaired or maintained and thus part of PW
Fleet Parts Technician duties.
5 The duties for ordering
and receiving parts for
the Division are clearly
defined and
segregated to promote
a strong internal
controls environment.

The ability to purchase parts on
behalf of the Division is not
limited to the Crew Leader, who
should be the only designated
employee, based off interviews.

Additionally, the Parts team
employee who orders a certain
part may be the same employee
who receives the part, which
creates a segregation of duties
risk, increases the chance for
mistakes, and increases the risk
of loss or theft.

The Division should update role descriptions to
clarify which position(s) is responsible and
allowed to purchase parts. Limiting who has
the ability to purchase parts will help decrease
the risk of loss or theft and will help increase
the Division’s ability to better track its parts.

The Division should also research whether it
can limit parts ordering access to specific roles
in AssetWorks to better create a segregation
of duties.

If possible, based on staffing levels, the Parts
team should also segregate the ordering and
receiving duties to ensure that whichever
employee ordered parts is not the same
employee to document receipt of those parts.

This will help to ensure segregation of duties
and lead to a stronger internal control
environment, which helps to reduce the
possibly of loss or theft.

Management Response: The
recommendation is under evaluation for
potential implementation adjustments.

High High
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IMPACT OF

OCCURRENCE
There are existing duty assignment but are
dated and require refreshing to address
current needs, controls, staffing.

The new Fleet Manager has implemented
some revisions within the Asset Management
software (FA) to address some deficiencies
observed.

Additional training for staff is being
implemented with the software vendor to
improve understanding and efficiencies.

Pending is revising the SOP for documenting
the controls for cross checking and validating
ordering, receiving, stocking, distribution to
WO.
6 Roles within the
Division are sufficiently
staffed to help ensure
that fleet operations
progress is efficient,
timely and effective.

During our review, the Division
was short-staffed in each team
(Administration, Parts, Bus
Maintenance, Heavy Bay, and
Light Duty), although there were
plans to hire additional
employees in the near future.

Light Duty and Parts were each
short one employee,
Administration was short two
employees, and Bus
Maintenance was short three
employees.

Based on benchmarking data from other
similar California cities such as Fresno,
Stockton, Merced, and Sacramento, the City
has about 34 pieces of equipment per Division
employee, while the average from the other
four cities is about 33 pieces of equipment per
fleet employee, which means the Modesto
Fleet Services could be slightly understaffed.

Because this data is estimated based on
publicly available information and does not
include data by the types of equipment
maintained (such as heavy-duty equipment),
the City should consider conducting a staffing
assessment to help determine an appropriate
staffing level.

Management Response: The
recommendation is under evaluation for
potential implementation adjustments.

There is an industry standard for calculating
the vehicle-to-technician (mechanic) ratio
needs based upon Maintenance Repair Units
Moderate Moderate
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OCCURRENCE
(MRU). This was started for the Fire apparatus
needs and will continue to document
reasonable staffing levels.

Additional evaluation on PM schedules,
recently completed for transit is a pending
effort.
7 Parts are secured and
inventoried to help
prevent loss or
potential theft.

Access to the parts room is not
restricted to only the Parts team
and there is no easy way to
discern whether parts are lost or
stolen as the Parts team does
not perform regular inventory
counts. Any employee with
access to the Division yard
could access the parts room at
any time of day (the parts room
is always accessible) and could
remove parts without an easy
way for Parts team employees
to know that there are parts
taken out of the inventory.

The Division should install a security measure
such as walling off the parts room or requiring
a badge, code, or key to enter the parts room
to help better secure parts. Appropriate
lighting in the parts room and surveillance
systems might also help to increase the
security of the parts room.

The Division should also conduct an inventory
count, at least annually, to help track parts and
increase reliability of financial reporting. If
needed, the Division should implement
inventory management technology to assist
with the inventory count such as barcodes or
radio-frequency identification (RFID) tagging.

Lastly, the Division should define roles and
responsibilities for the inventory count to
include who will perform the count, who will
review and approve the count, and who will
investigate variances, if any should occur.

Management Response: The
recommendation is under evaluation for
potential implementation adjustments.

The staff have implemented these measures
for securing the rooms.

Upgrading to cloud solution for software is an
effort that is being discussed to implement
more technology to lessen staff impacts and
increase accuracy.

High High
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OCCURRENCE
8 Timely preventative
maintenance occurs
for all vehicles that the
Division is responsible
to maintain.

City departments do not bring
equipment to the Division for
preventative maintenance in a
timely manner, which might lead
to more expensive and complex
repairs in the long run.

During our testing, we found
that two of the seven vehicles
selected for testing did not
receive preventative
maintenance, which means that
the Division was unable to
adhere to its preventative
maintenance schedule and
might lead to more serious
mechanical issues later on for
those vehicles.

Although the Technicians send out weekly
emails reminding departments about
upcoming routine maintenance, the Division
should consider other methods to encourage
departments to bring their vehicles in for
routine maintenance:
● Incentives: The Division could offer
incentives to departments that bring in their
vehicles on time for routine maintenance.

This could include discounts on future
services, priority scheduling for repairs, or
other perks that would encourage
departments to prioritize maintenance.
● Penalties: The Division could also consider
implementing penalties for departments
that consistently fail to bring in their
vehicles on time for routine maintenance.

This could include fines, restrictions on
vehicle usage, or other consequences that
would encourage compliance.
● Education and Training: The Division could
provide education and training to
departments on the importance of routine
maintenance and how to properly care for
fleet vehicles. This might help departments
understand the impact of not bringing in
vehicles on time and how to avoid common
maintenance issues.

Management Response: The
recommendation is under evaluation for
potential implementation adjustments.

The staff have started discussions with client
departments for educating the critical need for
timely PMs.

Moderate Moderate
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NO.

CONTROL

OBJECTIVE CONTROL ISSUE RECOMMENDATION

LIKELIHOOD OF

OCCURRENCE

IMPACT OF

OCCURRENCE
Incentive or penalty (just as cut-off fuel card)
are future discussions after educating endusers.
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0BCITY OF MODESTO
1BCOMMITTEE AGENDA REPORT
2BDATE OF MEETING:

October 23, 2024
Date: October 15, 2024
TO: Audit Committee
FROM: Colleen Rozillis, City Auditor
SUBJECT: Approval of the Solid Waste and Forestry Efficiency Study Update report.

CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider approving the Solid Waste and Forestry Efficiency Study Update report.

STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2020-2025 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved an efficiency study of the City’s Forestry and Solid Waste Divisions as part of the FY23-24 Internal Audit work plan.

DISCUSSION:

The efficiency study provides an update on progress toward the issues identified in the 2016 study and determines any additional opportunities for improvement in management, organization, and operations within Solid Waste and Forestry. Areas of focus for the study include organizational structure, staffing levels, and span of control; employee development and succession planning; policies and procedures; internal processes; equipment and systems; and levels of service.

Eleven recommendations were identified. This assessment was completed under the consultancy standards of the American Institute of Certified Public Accountants (AICPA).

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to approve the Solid Waste and Forestry Efficiency Study Update report and forward to Council for acceptance.

Approved by:

Colleen Rozillis, City Auditor
Attachments: 1. Solid Waste and Forestry Efficiency Study Update report dated 10-2-24 #4..
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This report is intended for the internal use of the City of Modesto, and may not be provided to, used, or relied upon by any third parties.

CITY AUDITOR’S OFFICE

FINAL REPORT

FORESTRY AND SOLID WASTE EFFICIENCY STUDY UPDATE
October 2024
Moss Adams LLP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500
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Table of Contents
Executive Summary 1
A. Introduction 1
B. Summary of Observations and Recommendations 2
Introduction 5
A. Project Overview 5
Observations and Recommendations 9
A. Organization and Staffing 9
B. Management 16
C. Operations and Maintenance 17
Appendix A: Survey Results i
Appendix B: Tree Ordinance Comparison vi
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EXECUTIVE SUMMARY
The City of Modesto (the City) engaged its internal auditor, Moss Adams LLP (Moss Adams), to conduct a follow-up review of the Solid Waste Division Efficiency Study conducted by Moss Adams in 2016. The prior study evaluated opportunities for improvement in management, organization, and operations in the Solid Waste Division (Solid Waste), which at that time included oversight of the compost, green waste, street sweeping, solid waste, and forestry functions. Since that study, the City has created a separate Forestry Division (Forestry). This study covers both divisions to provide continuity.

Overall, the City has made progress in many areas identified in the 2016 report. We observed that two prior findings have been resolved, eight are ongoing but their risk has been diminished through the divisions’ continued efforts, and one is an increasing risk. Below is a summary of the status of the findings from the previous review.
2016 STUDY PROGRESS REPORT
Organization and Staffing
Topic 2016 Finding Status Notes
Organization
Structure
The Solid Waste Division’s
organization structure is inefficient. Resolved
Solid Waste and Forestry were
separated. No challenges regarding
organization structure arose during
this assessment.

Span of
Control
The span of control of the Forestry
Operations Supervisor is unusually
high.

Ongoing
Decreasing
The Forestry Operations Supervisor’s
span of control has decreased but
remains unusually high.

Staff
Capacity
The Solid Waste unit has
significant unmet code enforcement
and compliance needs.

Ongoing
Increasing
Staff capacity continues to be the
foremost challenge in Solid Waste
and Forestry.

Employee
Retention
and
Succession
Employee turnover has averaged
8% per year over the past three
fiscal years, primarily due to
retirements, and 27% of the current
workforce has more than 20 years
of service with the City.

Ongoing
Decreasing
Employee turnover was high between
2021 and 2023 but has decreased
significantly in 2024.

Staff Morale
Morale is impacted by limited
resources and the perception of
favoritism.

Ongoing
Decreasing
Morale has significantly improved due
to a focus on building trust. However,
limited resources continue to impact
morale, particularly in Solid Waste.

Management
Tree
Ordinance
The City’s Tree Ordinance can be
strengthened in several areas. Ongoing The City’s Tree Ordinance has not been updated, but Forestry has
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2016 STUDY PROGRESS REPORT
Decreasing begun to undertake community
engagement activities.

Performance
Metrics
The Division is underutilizing
performance metrics for workloads
and operations across its units.

Resolved
All teams across Solid Waste and
Forestry are regularly tracking and
reporting on performance metrics.

Operations and Maintenance
Tree
Maintenance
Backlog
Current staffing levels are not
sufficient to address the City’s tree
maintenance backlog.

Ongoing
Decreasing
The City has taken steps to address
the tree maintenance backlog, but it
remains high.

Tree-Related
Risk
The City has significant and
increasing tree-related risks and
potential liability.

Ongoing
Decreasing
The City continues to have significant
tree-related risks and liability, though
tree claims for FY24 have
significantly decreased compared to
the prior three years.

Equipment The Division has significant
equipment replacement needs.

Ongoing
Flat
Equipment replacement needs are a
high priority, but there is no formal
asset management strategy and
faulty equipment continues to impact
operations.

Procurement
Limited central procurement
capacity has impacted the
Division’s ability to obtain
necessary equipment.

Ongoing
Flat
Though Procurement’s capacity has
increased, supply chain delays and
continued cross-functional challenges
are still impacting Forestry and Solid
Waste’s ability to obtain equipment.

This follow-up study was conducted between April and July 2024.

Observation and recommendations are grouped into three sections that mirror the 2016 report structure: Organization and Staffing, Management, and Operations and Maintenance. Observations and recommendations are summarized below.

OBSERVATIONS AND RECOMMENDATIONS
Organization and Staffing

1. Observation The span of control for the Forestry Manager is unusually high, which may be limiting their ability to support employee career growth and development.

Recommendation Continue to pursue transitioning two Crew Leader positions to supervisory positions to reduce span of control.
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OBSERVATIONS AND RECOMMENDATIONS

2. Observation
Solid Waste continues to have significant code enforcement, blight abatement, and compliance needs due to increasing state regulations and stagnant staffing levels.

Recommendation
A. Prioritize adding capacity to the Code Enforcement team.

B. Explore options to convert the PT Blight Abatement positions into FT positions to recruit for those roles more effectively.

C. If the Recycling Program and Public Education’s workload increases, consider adding additional capacity and explore options to ensure that interns join the team on a regular basis.

D. Consider adding dedicated regulatory compliance function to the Compost team, either through a PT position or contracted out.

3. Observation Forestry employees reported understaffing in several areas.

Recommendation Consider adding equipment operators, inspectors, and an Administrative Office Analyst (AOA) to increase team efficiency.

4. Observation
Employee turnover averaged 13% in Forestry and 18% in Solid Waste between 2021 and 2023, and 19% of the current workforce in Forestry and 8% in Public Works are eligible for retirement in the next five years.

Recommendation
Continue to improve employee retention by prioritizing formal succession planning for all key positions, providing expanded training opportunities, considering implementing step levels for certain positions, and reviewing compensation for maintenance workers.

5. Observation
While staff morale across both divisions has significantly improved since 2016, morale in Solid Waste continues to be impacted by understaffing and limited resources.

Recommendation Take steps to increase Code Enforcement staffing as compliance requirements continue to rise, as recommended in the Solid Waste Staff Capacity section.

Management

6. Observation The City’s Tree Ordinance can be strengthened in several areas.

Recommendation Update the Tree Ordinance based on International Society of Arborists (ISA) best practice guidance.

Operations and Maintenance

7. Observation
Current staffing and equipment levels are not sufficient to address the City’s tree maintenance backlog and maintain a tree pruning cycle aligned with best practices.
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OBSERVATIONS AND RECOMMENDATIONS
Recommendation
A. Continue to contract out for additional capacity aimed at stump grinding, tree removal, and pruning. Consider increasing these contracts.

B. Consider adding additional Forestry staff and equipment to reach a five- to six-year pruning cycle.

8. Observation The City has significant tree-related risks and potential liability.

Recommendation Continue to take measures to address the tree maintenance backlog to reduce tree-related risks.

9. Observation
The divisions have begun to address equipment replacement needs, but equipment needs persist and there is no formal equipment asset management strategy.

Recommendation
A. Conduct an asset inventory and condition assessment.

B. Collaborate with Fleet to formally define equipment maintenance roles and responsibilities.

C. Develop policies and procedures that call for adequate preventative maintenance and repair to ensure that assets are maintained to maximize useful life.

10. Observation Technology limitations impact Forestry’s operations.

Recommendation
A. Continue to adapt Lucity to act as an effective and efficient tree management system.

B. Continue to modernize processes, including migrating away from paper-based processes and moving requests online.

11. Observation
Procurement delays are still impacting Forestry and Solid Waste’s ability to obtain necessary equipment, likely due to limited central procurement capacity and supply chain issues.

Recommendation
A. Work with Purchasing to establish service level standards and performance targets that will support efficient operations in Forestry and Solid Waste.

B. Designate a procurement liaison in each division who can work with Procurement and Fleet to ensure that all purchased specialty parts are the correct item.

C. As noted in Equipment, develop backup inventory over time for all major equipment to prevent procurement challenges from majorly impacting operations in the future.
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INTRODUCTION
Solid Waste
Solid Waste employs 26 full-time employees (FTEs) and is responsible for waste removal in Modesto.

Solid Waste is made up of three teams: Recycling Program and Public Education, Enforcement, and Compost.
• The Recycling Program and Public Education team is responsible for community outreach and public education as it relates to sorting recyclables and compost, special events, grant management, and compliance. This team is also involved with state reporting. • The Enforcement team is responsible for all waste-related code enforcement in the City.

Enforcement now includes a Blight Abatement team who is responsible for removing all illegal dumping in the City.
• The Compost team manages the City’s compost facility, which plays an essential role in the City meeting state-mandated diversion and organic recycling requirements. The compost facility receives approximately 52,000 tons of diverted organic waste annually for processing into compost from residents, commercial accounts, and Forestry. The compost produced is sold to the public, donated for special projects, and utilized internally by the City.

Solid Waste also manages two service agreements to provide residential, commercial, and industrial solid waste services, and monitors the City’s former landfills.

Forestry
Forestry employs 58 FTEs and is responsible for urban forest management of the 81,000+ publicly owned trees in Modesto. While many other California cities outsource forestry operations and maintenance, the City’s program has always been operated in-house.

Forestry is comprised of four teams: Street Sweeping and Green Waste, Pruning, Preservations, and Requests.
• The Street Sweeping and Green Waste team is responsible for street sweeping and green waste removal (e.g., leaves, grass clippings, and other yard waste) throughout the City. Street sweeping equipment operators follow behind green waste collection and leaf collection to sweep the streets and remove litter, which prevents pollutants from entering the City’s storm drain system. • The Pruning, Preservation, and Requests teams work together to maintain, prune, plant, and remove public trees, stumps, and roots.

In addition to these services, Forestry crews provide emergency response to hazard trees or storm damage 24 hours a day.

Much of the work of Forestry involves invasive species management, as the City’s trees are infested with mistletoe. The Modesto Ash is particularly vulnerable to mistletoe, which can stunt growth and kill #4..
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trees. Forestry crews are responsible for removing mistletoe, trimming trees for safety and health, and removing trees that are unsafe or dying.

SOLID WASTE AND FORESTRY ORGANIZATIONAL STRUCTURE
The FY23-24 Internal Audit work plan included a follow-up review of the Solid Waste Division Efficiency Study conducted by Moss Adams in 2016. The prior study evaluated Solid Waste, which at that time included oversight of the compost, green waste, street sweeping, solid waste, and forestry functions. Since that study, the City has created a separate division called Forestry. This study covers both Solid Waste and Forestry to provide continuity.

The purpose of this assessment is to both provide an update on progress toward the issues identified in 2016 and determine any additional opportunities for improvement in management, organization, and operations within Solid Waste and Forestry. Areas of focus for the study include:
• Organizational structure, staffing levels, and span of control • Employee development and succession planning
• Policies and procedures
• Internal processes
• Equipment and systems
• Levels of service
Public Works
Solid Waste
Recycling
Program & Public
Education
Enforcement
Blight Abatement
Compost
Forestry
Street
Sweeping/Green
Waste Leaves
Pruning
Preservation
Requests
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This assessment was completed under the consultancy standards of the American Institute of Certified Public Accountants (AICPA).

The study was conducted between April and July 2024. The project consisted of four major phases as detailed in the table below.

PROJECT PHASES
Phase Description Period
1 Start-Up and
Management 
Project initiation consists of collaborative project planning with the City and project management tasks, including
developing our scope of work and final work plan.

April 2024
2 Fact-Finding
and Data
Collection

In the second phase we conduct our fieldwork, including documentation review, interviews, and employee surveys.

We interviewed 13 members of staff and management
and distributed an all-staff survey.

April to May 2024
3 Analysis 
Based on the information gained during our fieldwork
phase, we perform a gap analysis of current conditions
and identify opportunities for improvement. Leveraging
best practice information, and our own experience from
working with similar entities, we develop practical
recommendations.

May to June 2024
4 Reporting
Results 
We communicate the results of our analysis with
observations and recommendations presented first in a
draft report that is reviewed with management to confirm the practicality and relevance of recommendations before finalizing the report.

July 2024
(anticipated
presentation to Audit
Committee Fall 2024)
It is important to note the areas of strength and existing good practices that can be leveraged for further improvement within the City. The following is a list of commendations that the Moss Adams team would like to note:
• Staffing and Morale: Staffing levels have improved since the last study, and division management has prioritized improving the workplace culture. As a result, staff morale is no longer as significant of a concern as it was in the prior study. • Increased Efficiency: The team has prioritized finding process efficiencies where possible. For example, the in-house Blight Abatement team now handles illegal dumping that was previously contracted out in a slower and less cost-effective manner, and the City has made progress toward addressing the tree maintenance backlog.
• Performance Measures: Both teams are regularly tracking high-quality performance measures.

We would like commend Forestry and Solid Waste staff and management for their willingness to assist us in this assessment process. These commendations, coupled with our findings and #4..
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recommendations, provide an overview of areas of strengths and weaknesses that can help improve operations and reduce risk at the City.
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OBSERVATIONS AND RECOMMENDATIONS
Based on the input gathered from interviews, document review, a survey, and comparisons to best practices, we prepared the following set of observations and recommendations. We have grouped our observations and recommendations into sections that mirror the 2016 report and pertain to Organization and Staffing, Management, and Operations and Maintenance.

Observations and recommendations are also coded according to the key below to differentiate between 1) topics that pertain solely to Forestry or Solid Waste, and 2) topics that are continuations of observations contained in the 2016 study or that are newly identified.

KEY
Division Observation Type
Forestry Ongoing Observation
from 2016 Study
Solid Waste Newly Identified
Observation

1. Observation
The span of control for the Forestry Manager is unusually high, which may be limiting their ability to support employee career growth and development.

Recommendation Continue to pursue transitioning two Crew Leader positions to supervisory positions to reduce span of control.

OBSERVATION
The 2016 study found that the span of control of the Forestry Operations Supervisor was unusually high. At the time, the Forestry Operations Supervisor oversaw four crew leaders with three different functions, for a span of control of 1:36. Today, there is one Forestry Manager and one Forestry Operations Supervisor in Forestry overseeing Pruning, Preservation, and Requests. The Forestry Operations Supervisor is currently on leave, resulting in the Forestry Manager having a span of control of 1:40. When the Forestry Operations Supervisor is not on leave, they have a span of control NEW
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of 1:31. For teams with standardized practices, the best practice span of control is typically 1:11 to 1:15.1
Civil service rules require supervisor-level staff and above to perform all personnel management.

Although interviewed and surveyed staff noted that the span of control on these teams was operationally feasible due to crew leaders providing on-the-job oversight, a span of control above 1:15 makes it difficult for a supervisor to properly assess employee effectiveness, provide meaningful performance feedback, and prioritize employee development.

To address this, Forestry leadership is currently working to change two Operations Crew Leader positions to supervisor positions. This will result in a span of control of 1:6 for the Forestry Manager, and 1:13 for each of the three future supervisors overseeing Pruning, Preservation, and Requests (if the 39 field employees are divided equally between teams).

In addition, the Street Sweeping/Green Waste Operations Supervisor has a span of control of 1:15. If the number of crew members increases on this team, there will be a need for an additional supervisor to maintain the best practice ratio maximum of 1:15.

RECOMMENDATION
The City should prioritize converting two Operations Crew Leaders to supervisors to ensure effective management of Forestry personnel. A narrower span of control will result in better supervision of employees, in turn increasing efficiency, productivity, and safety. Creating additional supervisory positions also creates more advancement opportunities for employees, which could help the City retain the knowledge and skills of talented staff.

Supervisors with fewer reports will also have more time to coach and develop staff. Surveyed employees noted the desire for additional training opportunities from experts in the field, safetyrelated meetings, and increased team-building opportunities. An additional supervisory position could take on that work.
1 https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/how-to-identify-the-right-spans-ofcontrol-for-your-organization #4..
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2. Observation
Solid Waste continues to have significant code enforcement, blight abatement, and compliance needs due to increasing state regulations and stagnant staffing levels.

Recommendation
A. Prioritize adding capacity to the Code Enforcement team.

B. Explore options to convert the part-time (PT) Blight Abatement positions into full-time (FT) positions to recruit for those roles more effectively.

C. If the Recycling Program and Public Education’s workload increases, consider adding additional capacity and explore options to ensure that interns join the team on a regular basis.

D. Consider adding a dedicated regulatory compliance function to the Compost team, either through a PT position or contracted out.

OBSERVATION
Interviewed employees reported that teams throughout Solid Waste are struggling to keep up with their workloads given current staffing levels. When asked to rate the adequacy of current staffing levels across Solid Waste as a whole, 43% of survey respondents within Solid Waste said that the division was somewhat understaffed, and 38% said that it was adequately staffed.

Code Enforcement
The 2016 report found that Solid Waste had significant unmet code enforcement and compliance needs, largely stemming from Assembly Bill (AB) 341 and AB 1826. Since that report, California passed State Bill (SB) 1383, which has significantly increased the code enforcement and compliance workload. In 2023, SB 1383 compliance activities represented 30% of all code enforcement activities.

The City is currently under a state corrective action plan to get all businesses in compliance with SB 1383. Though the City has requested an extension, there are currently about 2,000 businesses that are not in compliance, and a typical business requires reaching out through the mail, site visits, reinspections, and hearings. Code Enforcement staff estimate that their caseload has more than doubled and they are currently completing about 50% of their workload. Staffing levels within this group have not changed since SB 1383 passed.

In addition, the Code Enforcement team was expected to conduct an annual audit of all inactive accounts in the City in 2023 but was unable to due to the SB 1383-related workload.

Blight Abatement
Staff report that the Blight Abatement team is also experiencing a high workload. The team recently requested to convert two PT positions to two FT roles because 1) there is too much illegal dumping to keep up with and 2) it is difficult to keep a PT position filled. The PT roles have been vacant for six months as of June 2024. However, the request was denied due to the limitations of Measure H funding. The Blight Abatement team’s goal is to pick up illegal dumping within three business days, and City Council has said it would ideally be one business day. However, the team is currently able to respond to illegal dumping within about two weeks. The current situation creates frustration among community members, who may submit multiple reports of illegal dumping before it is resolved. #4..
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Recycling Program and Public Education
Employees report that the Recycling Program and Public Education’s staffing is currently sufficient, but that is largely due to the eight state interns that are currently assigned to the team. The interns are not guaranteed every year, but staff report that they are instrumental in meeting state compliance requirements, including working directly with the Code Enforcement team at times, though that is not the intent of the internship. Interviewed staff shared the concern that staffing would not be sufficient if 1) the interns were to diminish in number or 2) compliance requirements were to increase, as they may with the upcoming SB 54 regulation. If passed, SB 54 will impact what material the City can and cannot accept and require significant new education efforts.

The Recycling Program and Public Education team previously had an additional PT role that worked on recycling education and special events, but now has only one FT role and reportedly a much higher workload.

Compost
The Compost team’s operations are most impacted by equipment challenges, as detailed in the Equipment section. However, it is common to have a dedicated person responsible for ensuring compliance with regulations related to composting. Currently, the Compost Facility Supervisor is responsible for supervising all operations and ensuring compliance.

RECOMMENDATION
The 2016 report recommended reallocating staff to meet evolving compliance and enforcement workloads. Solid Waste’s staffing needs are now too great to be addressed through reallocation. The City should:
• Hire at least one more code enforcement officer. Staff estimate that one additional FTE would allow them to complete 75% of their work, and two more would bring them to 100%. • Explore options to convert the PT Blight Abatement positions into FT positions to recruit for those roles more effectively.
• If Recycling Program and Public Education’s workload increases, consider adding additional capacity and explore options to ensure that interns support the team on a regular basis. • Consider adding a dedicated regulatory compliance function to the Compost team, either through a PT position or by contracting this function out.

3. Observation Forestry employees reported understaffing in several areas.

Recommendation Consider adding equipment operators, inspectors, and an AOA to increase team efficiency.

OBSERVATION
Forestry employees reported understaffing in several areas.

NEW
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Street Sweeping and Green Waste: Employees shared that staffing is sufficient during slower seasons, but additional capacity is needed during leaf season. Between October and February, Street Sweeping and Green Waste borrow staff from other crews to keep pace with the workload, but overtime is still used if there is not enough coverage to maintain the street sweeping schedule. Street Sweeping has had the same size crew since 2009, but the City has grown and will continue to grow.

Requests: The Requests team conducts work order inspections, which are currently handled almost entirely by the Operations Crew Leader. The City will likely need additional inspectors if it continues to adopt the trees planted by developers in new subdivisions.

Administrative Office Analysts (AOA): There are currently two AOAs within Forestry. The AOAs support Forestry and Green Waste, which includes answering all incoming requests. The AOAs reportedly respond to 500- to 800 calls per month, which will increase when Green Waste calls are added in July. Though the second AOA is a recently added position, it is funded by Measure H and is required to spend 50% of their time supporting Crew Leaders—not responding to calls. Staff report that one additional AOA would allow that team to reasonably handle incoming calls. In addition, Pruning, Preservation, and Street Sweeping and Green Waste reported that they would benefit from increased access to administrative assistance from an AOA.

When asked to rate the adequacy of current staffing levels across Forestry as a whole, 59% of survey respondents within Forestry said that the division was somewhat understaffed, and 22% said that it was very understaffed.

RECOMMENDATION
Consider adding the following Forestry staff to increase capacity and efficiency:
• Two additional equipment operators (one sweeper operator and one green waste operator) yearround, and two new pieces of equipment for them to operate • Additional inspectors (The number of inspectors needed will depend on the monitoring cadence that the team would like to maintain. Monitoring and early detection can help manage risks associated with mistletoe infestation, and shift toward a more proactive approach versus reacting to incidents or resident complaints.)
• One additional AOA
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OBSERVATION
Twenty-three employees left Forestry and 13 left Solid Waste between 2021 and 2023. The table below shows the percent turnover for each division over the past four fiscal years, including FY24 year-to-date.

EMPLOYEE TURNOVER RATES
DIVISION 2021 2022 2023 2024 YTD
Forestry 12% 17% 9% 2%
Solid Waste 8% 15% 30% 0%
Although employee turnover rates are high on both teams (Gallup recommends organizations aim for a 10% annual turnover rate), interviewed employees say that retention is improving, as evidenced by the low turnover rate for 2024 year-to-date.
2 Staff shared that high turnover rates were largely due to past management styles (accordingly, the leading cause of past turnover on both teams was resignation), but the low pay classification of maintenance workers also contributes to turnover on these teams. Both teams rely heavily on maintenance workers.

Additionally, 19% of the current workforce in Forestry and 8% of the current workforce in Solid Waste are eligible for retirement in the next five years. There are not currently any formal succession plans in place, nor is there a formal approach to training. When asked to rate the level of cross-training and backup within their immediate teams, the majority of respondents in Forestry said average (34%) or poor (28%), and the majority of respondents in Solid Waste staff said average (48%).

RECOMMENDATION
To proactively plan for upcoming retirements and to continue to limit employee turnover, leadership should:
• Provide formal training opportunities. Surveyed employees noted the desire for hands-on training opportunities in the field by a manager or supervisor.
2 https://news.gallup.com/businessjournal/316/truth-about-turnover.aspx #4..
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• Encourage City leadership to review compensation for maintenance workers to ensure that compensation is fair and competitive.
• Prioritize the development of succession strategies for all positions, focusing on knowledge transfer, leadership development, and technical training. Public Works and Human Resources should prepare a template for succession plans, provide guidance and technical support, and review plans. An effective succession planning process should contain the following elements:
○ Active executive involvement
○ Integration with the Citywide strategic plan
○ Processes to identify essential positions and their critical competencies ○ Procedures to identify, promote, and select high potential staff, along with plans for individual career development
○ Procedures to monitor individual development through coaching, mentoring, and performance management
○ Methods to identify and fill gaps in succession (e.g., strengthen internal capabilities and/or recruit from the outside)
○ Regular reviews of plans to ensure effectiveness
• Consider implementing step levels in certain positions to promote employee growth and development.

5. Observation
While staff morale across both divisions has significantly improved since 2016, morale in Solid Waste continues to be impacted by understaffing and limited resources.

Recommendation
Take steps to increase Code Enforcement staffing as compliance requirements continue to rise, as recommended in the Solid Waste Staff Capacity section.

OBSERVATION
The 2016 study found that staff morale was impacted by limited resources and the perception of favoritism. Since then, interviewed and surveyed staff report that morale in Solid Waste and Forestry has significantly improved due to a focus on building trust and stronger support from management.

However, heavy workloads continue to impact morale in Solid Waste, particularly within Code Enforcement. Based on interviews and the staff survey, Code Enforcement staff are overwhelmed, and retention is a concern due to risk of employee burnout.

RECOMMENDATION
As described in the Solid Waste Staff Capacity section, code enforcement requirements have continued to increase but Code Enforcement staffing and resources have not increased accordingly.

Leadership should ensure that workloads in Code Enforcement remain reasonable. #4..
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6. Observation The City’s Tree Ordinance can be strengthened in several areas.

Recommendation Update the Tree Ordinance based on ISA best practice guidance.

OBSERVATION
The 2016 study noted that the City’s Tree Ordinance could be strengthened in several areas. The Tree Ordinance has not been updated since that time. The International Society of Arborists (ISA) recommends that municipal tree ordinances contain seven key elements. The table below, originally provided in the 2016 study, shows how the City’s Tree Ordinance fulfills the ISA best practice guidance.

ISA KEY ELEMENT CITY TREE ORDINANCE
Basic performance standards Yes
Clear and specific goals No
Developed with community support No
Flexibility Yes
Part of comprehensive tree management strategy Partial
Responsibility and authority Yes
Specified enforcement actions No
Although the ordinance itself has not been updated, Forestry has taken steps to increase public communication about the division’s goals. As part of this effort, Forestry staff have conducted public outreach like attending jobs fairs and Earth Day events, met with local colleges and counties to explore opportunities for collaboration, and increased communication with City personnel in other departments to improve the public’s perception of the division’s work.

RECOMMENDATION
The City should update the Tree Ordinance based on ISA best practice guidance. The following elements should be strengthened:
• Clear and specific goals: Articulate the goals of urban forest management in the ordinance. • Community support: Solicit input from the community through surveys or public outreach. • Comprehensive tree management strategy: Develop a stronger link between the ordinance, the Street Tree Plan, and maintenance activities.
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• Specified enforcement actions: Determine consequences for the actions prohibited or required by the ordinance, such as notices of violation or fines.

Included in Appendix A is a detailed comparison of the City’s Tree Ordinance to the cities of Oakland and Pasadena, as reported in the 2016 study.

7. Observation
Current staffing and equipment levels are not sufficient to address the City’s tree maintenance backlog and maintain a tree pruning cycle aligned with best practices.

Recommendation
A. Continue to contract out for additional capacity aimed at stump grinding, tree removal, and pruning. Consider increasing these contracts.

B. Consider adding additional Forestry staff and equipment to reach a five- to six-year pruning cycle.

OBSERVATION
The 2016 report noted the City’s significant tree maintenance backlog. With the 2016 levels of staffing in Forestry (40 FTEs), the City was supporting a 12-year tree pruning cycle. While recommended pruning cycles vary by species, they typically range from three to five years. Trees that are not pruned regularly represent a safety hazard to people and property. In addition, longer pruning cycles typically mean pruning is more drastic, which can cause decay and shorten the life of the tree.

Invasive species management is also a complicating factor in the City’s efforts to manage the urban forest. Because mistletoe goes to seed every three to four years, it is important to prune affected trees in a timely manner to prevent its spread. If mistletoe is not removed, it will stunt tree growth and can kill trees over time.

Since 2016, Forestry has added staff capacity, increased internal efficiency, and worked with contractors to begin to address the tree maintenance backlog. Efforts to address the backlog include the following:
• Pruning, Preservation, and Requests have pooled teams and vehicles to increase efficiency and hold daily morning meetings to distribute workloads.
• Forestry is contracting out stump grinding, tree removal, and some pruning tasks. These efforts have resulted in addressing 800 requests for stump removal in the first five months of 2024, double the amount of requests addressed in all of 2023. • Forestry is adopting lighter pruning practices to increase pruning speed. #4..
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FORESTRY PERFORMANCE METRICS
2021 CALENDAR
YEAR
2022 CALENDAR
YEAR
2023 CALENDAR
YEAR
Trees Pruned 3,463 10,180 12,816
Stumps Removed 487 665 414
Trees Planted 46 1,156 584
Damaged/Diseased
Trees Removed
95 668 1,577
Trees Pruned for
Mistletoe
685 1,027 1,191
The division has made significant positive improvements in the past several years and anticipates even stronger numbers in 2024. However, staff estimate there is still a three-year tree maintenance backlog and that the current pruning cycle is around 10-12 years. Work to address the backlog will often be deprioritized to address customer requests or urgent needs, such as sidewalks that are being uplifted by a root system, and there are not enough staff members to stay on top of both areas.

As a result, the backlog can grow and create additional risk. Forestry’s Tree Pruning Guide assumes a tree pruning cycle of four to five years and division leadership noted that they would like to see at least a five- to six-year pruning cycle by 2027.

Staff estimate that adding three trucks, two trailers, and hiring crew to operate them would enable a five- to six-year pruning cycle. Equipment needs are discussed in the Equipment section.

RECOMMENDATION
The City has made positive progress toward addressing the tree maintenance backlog. The City should continue to contract with private companies for tree trimming and add staffing and equipment when possible to address the tree maintenance backlog and reach a five- to six-year pruning cycle.

The improvements noted in the Equipment and Procurement sections that concern the availability and reliability of equipment will also contribute to addressing the tree maintenance backlog. #4..
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8. Observation The City has significant tree-related risks and potential liability.

Recommendation Continue to take measures to address the tree maintenance backlog to reduce tree-related risks.

OBSERVATION
Over the past three fiscal years, the City has spent a total of $477,183 on tree-related insurance claims. The number of insurance claims and dollars paid for tree-related damages and injuries have increased since FY19, as shown in the table below. Tree-related claims include root issues, damage to property from trees, falling limbs, and trip and fall claims from sidewalk uplift.

TREE-RELATED

INSURANCE
CLAIMS
FY18–19 FY19–20 FY20–21 FY21–22 FY22–23 FY23–24
YTD*
Forestry
Number of
Claims
177 137 144 154 177 10
Amount Paid $68,306 $483,758 $89,838 $203,840 $262,237 $11,106 Street Trip/Fall
Number of
Claims
1 2 0 0 0 0
Amount Paid $0 $50 $0 $0 $0 $0
* As of June 24, 2024.

A large maintenance backlog increases risk, liability, and the cost to the City in insurance claims. The City has been working to address the tree maintenance backlog, and the number of tree-related claims may be reduced in FY24, as shown in the table above.

RECOMMENDATION
To reduce tree-related risk, the City should continue to address the tree maintenance backlog as noted in the Tree Maintenance Backlog section.
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9. Observation
The divisions have begun to address equipment replacement needs, but equipment needs persist and there is no formal equipment asset management strategy.

Recommendation
A. Conduct an asset inventory and condition assessment.

B. Collaborate with Fleet to formally define equipment
maintenance roles and responsibilities.

C. Develop policies and procedures that call for adequate preventative maintenance and repair to ensure that assets are maintained to maximize useful life.

OBSERVATION
The 2016 study found that the division had significant unmet equipment replacement needs. Since then, staff report that equipment replacement has been made a priority. However, equipment needs are still an area of concern and surveyed and interviewed employees stressed that having sufficient equipment that is well-maintained is one of the major changes that leadership could make to improve workplace resources.

Equipment Needs
Employees reported that equipment often breaks down, which has a significant impact on the teams’ ability to complete their work. The following equipment maintenance and replacement needs were highlighted by staff:

Forestry
About half of Forestry’s equipment has been replaced with higher-quality equipment in recent years, including three sweepers and two top tier loaders. Though the remaining equipment continues to impact work efficiency, the team estimates that those pieces will be upgraded over the next four to seven years – including phasing out the use of packer dump trucks and claw load trucks, which Forestry staff say are not ideal for tree pruning operations. Still, staff shared that the team would benefit from additional equipment if staffing levels were to increase to allow for the capacity to operate them. When asked to rate their level of agreement with the statement “I have sufficient equipment to do my job effectively,” 22% of Forestry respondents somewhat disagreed and 13% strongly disagreed.

Forestry is also experiencing delayed timelines as described in the Procurement section. For example, the team has ordered a new chipper, but there is reportedly a five-year backlog. The team has also ordered two aerial towers that have not yet arrived.

Solid Waste
The Compost team reported that the equipment currently in use at the compost facility is not sufficient to maintain the facility’s operability. The composting process requires a loader, water truck, grinder, #4..
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and screener. All existing equipment is old and frequently shuts down. As a result, there have been compost materials waiting to be processed for over a year because the screener has been down. The screener is now functional, but there is a year’s backlog of material to process. When materials build up in this way, the City runs out of space and has to stop accepting green waste. The green waste backlog is stored in piles that measure 100’ x 100’ x 12’. The piles can catch on fire if the temperature is too hot. There are currently 11 piles in the compost facility.

There are currently two loaders, but there is no backup for the grinder and screener. Both machines are over 10 years old. The grinder was purchased in 2007 and the screener was purchased in 2011.

When asked to rate their level of agreement with the statement “I have sufficient equipment to do my job effectively,” 10% of Solid respondents somewhat disagreed and 10% strongly disagreed.

Asset Management
The 2016 study recommended that the division conduct an asset inventory and condition assessment and collaborate with Fleet and Purchasing to develop a plan for funding and replacing equipment.

This work has not yet occurred. There is not currently an asset inventory or condition assessment, and the team does not have a method by which to accurately and proactively track equipment condition and replacement needs. Without this type of inventory and assessment, the City cannot identify and plan for the significant financial investment required to maintain or replace equipment.

The lack of a formal asset inventory also contributes to the difficulty of maintaining equipment.

Though Fleet is meant to maintain all City vehicles, staff report that Forestry and Solid Waste’s working arrangement with Fleet is unclear. Vehicles that break down are often out of commission for extended periods of time due to understaffing in Fleet, and there are very limited communications regarding the time it will take to repair major equipment. Staff noted that Forestry teams maintain daily logs and inspection reports for all equipment, which include conducting a visual inspection.

Moss Adams is currently conducting a Fleet Operations Internal Controls review.

Finally, California is shifting toward the use of battery saws instead of gas saws, which include many pieces that will need to be inventoried. The City will need to develop a strategy to track and maintain high-value equipment prior to transitioning to the use of battery saws.

RECOMMENDATION
Public Works leadership should conduct an asset inventory and condition assessment in partnership with the Fleet Department. This assessment should be used to determine the remaining equipment replacement needs for Forestry and Solid Waste. This may include replacing vehicles that frequently break down and providing backup trucks so that the composting process is not halted when one machine is down.

Sufficient funds should be allocated in a multi-year capital plan to replace vehicles and equipment.

The capital plan should be prioritized based on safety, utilization, and other factors critical to sustaining operations. The assessment should be conducted at least every three years and used to proactively identify equipment replacement needs.

Forestry and Solid Waste management should also collaborate with Fleet to formally define equipment maintenance roles and responsibilities. Policies and procedures reflecting that decision should be formalized and adhered to. The equipment maintenance procedure should include #4..
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directions for preventative maintenance and repair to ensure that assets are maintained to maximize useful life.

10. Observation Technology limitations impact Forestry’s operations.

Recommendation
A. Continue to adapt Lucity to act as an effective and efficient tree management system.

B. Continue to modernize processes, including migrating away from paper-based processes and moving requests online.

OBSERVATION
Technology limitations are currently impacting Forestry’s operations in two areas: tree management and community request processes.

Tree Management
Forestry currently uses Lucity as its tree management system. Lucity is a relatively new City platform.

Recently, a full inventory of City street trees was added to Lucity; this work was completed by a contractor through a Cal Fire grant. However, staff report that the system has shortcomings that significantly slow down work in the field. While Lucity is an efficient asset management system for tools, it does not have sufficient capabilities to manage living things. For example, Lucity requires manual selection of each individual tree and includes 40 different work codes. Staff report that this significantly slows down work in the field and does not provide meaningful information relevant to tree management.

Community Request Processes
Some key processes in Forestry are paper-based or inefficient, including:
• The forms homeowners fill out for tree removal and work on roots and stumps are paper-based.

Paperwork is turned in daily by crew.
• Residents contact Forestry’s main phone line, monitored by an AOA, with requests. The AOA then calls or emails a Crew Leader to pass on the request. ○ Green Waste’s calls have been routed to City Hall but will be routed to the Forestry AOA beginning in July.
○ Residents can also submit work requests in the GoModesto app, but not all choose to do so. • Records are stored in physical file cabinets, and staff are not currently able to prioritize document management.

RECOMMENDATION
The City should continue to invest IT resources to adapt Lucity as an effective tree management system. Ideally, a tree management system should be able to quickly update the following information about each tree:
• Tree species and age
NEW
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• Current and historical growth rates
• Lead and needle color and condition
• Presence of pests or diseases
• Soil moisture and nutrient levels
• Trunk stability and structural integrity
• Signs of decay or damage
• Maintenance and treatment history
In addition, Forestry should continue to work to modernize processes. The division should consider opportunities to migrate more resident requests online, including by offering a website-based form.

11. Observation
Procurement delays are still impacting Forestry and Solid Waste’s ability to obtain necessary equipment, likely due to limited central procurement capacity and supply chain issues.

Recommendation
A. Work with Purchasing to establish service level standards and performance targets that will support efficient operations in Forestry and Solid Waste.

B. Designate a procurement liaison in each division who can work with Procurement and Fleet to ensure that all purchased specialty parts are the correct item.

C. As noted in Equipment, develop backup inventory over time for all major equipment to prevent procurement challenges from majorly impacting operations in the future.

OBSERVATION
The 2016 study found that limited central procurement capacity was impacting the division’s ability to obtain necessary equipment. This was largely due to significant turnover in Purchasing at that time.

Purchasing has continued to experience high turnover since then, with an average turnover rate of

24.6% in the past three fiscal years. Although the City has added staff to its Purchasing team to accommodate increased purchasing demand, as noted in the Procurement Performance Audit conducted by Moss Adams concurrently with this study, some Purchasing staff are still experiencing high workloads and limited capacity.

Accordingly, interviewed and surveyed employees for this study noted that procurement delays for equipment purchases are still a challenge, though there has been improvement since 2016. Staff noted that some delays may be due to supply chain issues for specialized equipment like chippers.

Forestry staff also shared the perception that there are times when Fleet inadvertently orders the incorrect replacement parts for specialized equipment, which slows down equipment maintenance timelines.
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RECOMMENDATION
The 2016 study suggested that Public Works could assign procurement responsibilities to division or department staff, and ensure they are adequately trained to coordinate procurements. However, Procurement should ultimately handle all major purchasing Citywide. In addition, Forestry and Solid Waste staff do not have capacity to undertake significant procurement-related duties at this time. With this in mind, Forestry and Solid Waste should:
• Work with Purchasing to establish service level standards and performance targets that will support efficient operations in Forestry and Solid Waste, as recommended in the Procurement Performance Audit. In addition to the clarity brought by shared expectations, setting service level standards will help the divisions understand if procurement delays are due to limited internal capacity or external supply chain issues.
• As noted in Equipment, develop backup inventory over time for all major equipment to prevent procurement challenges from majorly impacting operations in the future. #4..
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Appendices | i
APPENDIX A: SURVEY RESULTS
An all-staff survey was distributed to 86 Forestry and Solid Waste staff on May 31, 2024. Despite remaining open for two weeks, the survey garnered a 10% response rate, which is considered relatively low. The responses were evenly divided between Forestry and Solid Waste. To garner additional responses, the survey was reopened between August 30 and September 13, 2024. At the end of this period, the survey received a 62% overall response rate – 32 from Forestry staff and 21 from Solid Waste staff.

Survey results are used throughout the report and included below.

How would you rate the adequacy of current staffing levels (aka are there enough people to perform the work) across your department as a whole?
Forestry
Solid Waste
How would you rate the adequacy of current staffing levels (aka are there enough people to perform the work) within your immediate team?
Forestry
3% 16% 59% 22%
Very overstaffed Somewhat overstaffed Adequately staffed Somewhat understaffed Very understaffed 5% 5% 38% 43% 10%
Very overstaffed Somewhat overstaffed Adequately staffed Somewhat understaffed Very understaffed 3% 22% 66% 9%
Very overstaffed Somewhat overstaffed Adequately staffed Somewhat understaffed Very understaffed #4..
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Solid Waste
How would you rate the level of cross-training and backup within your immediate team? Forestry
Solid Waste
Employee Engagement: How much do you agree with the following statements?

STRONGLY
AGREE

SOMEWHAT

AGREE NEUTRAL SOMEWHAT DISAGREE

STRONGLY

DISAGREE
Overall, I am satisfied with my job.

Forestry 31% 41% 25% 0% 3%
Solid Waste 33% 19% 24% 24% 0%
I feel valued by my supervisor.

Forestry 53% 28% 13% 6% 0%
Solid Waste 38% 19% 14% 10% 19%
I feel valued by my peers and other members of the organization.

Forestry 38% 50% 13% 0% 0%
5% 48% 33% 14%
Very overstaffed Somewhat overstaffed Adequately staffed Somewhat understaffed Very understaffed 13% 25% 34% 28%
Excellent Good Average Poor Terrible
10% 33% 48% 10%
Excellent Good Average Poor Terrible
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STRONGLY
AGREE

SOMEWHAT

AGREE NEUTRAL SOMEWHAT DISAGREE

STRONGLY

DISAGREE
Solid Waste 38% 33% 19% 5% 5%
I feel engaged by my day-to-day work.

Forestry 41% 41% 19% 0% 0%
Solid Waste 33% 33% 19% 14% 0%
My team has positive relationships with customers/citizens.

Forestry 53% 34% 9% 3.13% 0%
Solid Waste 29% 43% 19% 5% 5%
I do not experience bullying or harassment from other employees.

Forestry 69% 13% 13% 3% 3%
Solid Waste 57% 14% 19% 10% 0%
Discipline is used consistently with all employees across the organization (i.e. everyone is treated fairly).

Forestry 34% 25% 22% 6% 13%
Solid Waste 33% 19% 33% 5% 10%
I receive useful and consistent feedback about my performance.

Forestry 41% 31% 16% 13% 0%
Solid Waste 33% 19% 33% 10% 5%
I am given opportunities to learn and advance my skills or knowledge.

Forestry 44% 25% 16% 6% 9%
Solid Waste 38% 14% 33% 10% 5%
Collaboration and Communication: How much do you agree with the following statements?

STRONGLY
AGREE

SOMEWHAT

AGREE NEUTRAL SOMEWHAT DISAGREE

STRONGLY

DISAGREE
In general, teams within the department work well together and collaborate effectively.

Forestry 38% 53% 9% 0% 0%
Solid Waste 38% 29% 14% 19% 0%
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STRONGLY
AGREE

SOMEWHAT

AGREE NEUTRAL SOMEWHAT DISAGREE

STRONGLY

DISAGREE
Department management works well together.

Forestry 50% 9% 22% 16% 3%
Solid Waste 33% 14% 29% 14% 10%
Communication within my division is effective.

Forestry 44% 19% 25% 9% 3%
Solid Waste 24% 38% 24% 10% 5%
Communication from my supervisor is effective.

Forestry 56% 22% 19% 3% 0%
Solid Waste 34% 19% 34% 9% 3%
Communication from my department director is effective.

Forestry 34% 19% 34% 9% 3%
Solid Waste 19% 14% 38% 14% 14%
How would you rate the City’s current efforts to develop and train employees? All Respondents
How satisfied are you with the competitiveness of the City’s compensation and benefits? All Respondents
Resources and Support: How much do you agree with the following statements? 8% 32% 40% 17% 4%
Excellent Good Average Poor Terrible
17% 32% 23% 21%
Very satisfied Somewhat satisfied Neither satisfied nor dissatisfied Somewhat dissatisfied Very dissatisfied #4..
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STRONGLY
AGREE

SOMEWHAT

AGREE NEUTRAL SOMEWHAT DISAGREE

STRONGLY

DISAGREE
I have sufficient technology to do my job effectively.

Forestry 25% 44% 22% 6% 3%
Solid Waste 29% 33% 19% 5% 14%
I have sufficient equipment to do my job effectively.

Forestry 9% 31% 25% 22% 13%
Solid Waste 29% 33% 19% 10% 10%
My workspace (building, office, etc.) is adequately maintained.

Forestry 36% 23% 19% 23% 0%
Solid Waste 29% 38% 19% 10% 5%
My work environment is physically safe.

Forestry 38% 22% 25% 13% 3%
Solid Waste 29% 43% 14% 5% 10%
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APPENDIX B: TREE ORDINANCE COMPARISON
The table below compares the City’s Tree Ordinance to two other city ordinances, based on the structural elements recommended by the ISA.

ISA Structural
Element
Modesto Oakland Pasadena
Clear and specific
goals
None [List of benefits to the community
provided by trees.] For all these
reasons, it is in the interest of the
public health, safety, and welfare of
the [City] community to protect and
preserve trees by regulating their
removal; prevent unnecessary tree
loss and minimize environmental
damage from improper tree removal;
encourage appropriate tree
replacement plantings; effectively
enforce tree preservation regulations;
promoted the appreciation and
understanding of trees.

In recognition of the benefits to the
community provided by trees and to
increase the tree canopy in [City], the
City Council adopted measures to
protect public trees in certain areas of
the city.

Comprehensive tree
management strategy
Criteria for tree removal include, in
part, if the tree is required to maintain
the intent and spirit of the Street Tree
Plan.

None Criteria for action(s) taken are based
in part on consistency with the Master
Street Tree Plan and other long-term
planning documents.

Community support None Opportunity for public comment. None Flexibility Appeals process for any
administrative actions.

Appeal process for tree removal
requests.

Appeal process for tree removal
requests.
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Specified enforcement
actions
None If damage to a street tree occurs as a
result of on-site work, the tree
reviewed may require a replacement.

If someone removes, damages, or
endangers any protected tree in the
city except in compliance with the
ordinance, they are guilty of an
infraction. They are liable for all costs
associated with the investigation and
enforcement of the ordinance,
required to provide replacement trees
and/or fees. The Office of Parks and
Recreation may put a lien on the
violator’s real property for this
amount.

Violators of the ordinance may be
charged with a misdemeanor or
infraction. An infraction can result in a
$250 fine; a misdemeanor may result
in up to 6 months imprisonment and a
maximum $1000 fine. Other penalties
may apply (late payments,
administration fees, etc.).
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Audit CommitteeOctober 23, 2024

Audit Committee
October 23, 2024