Audit Committee
July 30, 2025

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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, July 30, 2025 at 4:00 PM
Roll Call: Sue Zwahlen, Chair
David Wright, Vice-Chair
Chris Ricci, Member
Camille Garcia, Public Member
Thomas Orosco, Public Member
Alternates: Eric Alvarez, Rosa Escutia-Braaton, Nick Bavaro, 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

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Joining the Committee meeting via Zoom
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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 - 2 -
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Committee 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 the Internal Audit Status Report dated July 9, 2025. (Funding Source: Not Applicable)
 Motion to receive and file the Internal Audit Status Report dated July 9, 2025.

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

2. Consider the Audit Finding Validation Report dated July 3, 2025. (Funding Source:

Not Applicable)
 Motion to receive and file the Audit Findings Validation Report dated July 3, 2025.

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

3. Consider the Accounts Receivable Internal Controls Review Report and forwarding to Council for acceptance. (Funding Source: Not Applicable)  Motion to receive the Accounts Receivable Internal Controls Review Report and forwarding to Council for acceptance.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected] - 3 -
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4. Consider the Capital Program Best Practices Report and forwarding to Council for acceptance. (Funding Source: Not Applicable)
 Motion to receive the Capital Improvement Program Best Practices Report and forwarding to Council for acceptance.

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

5. Consider the Permitting Efficiency Study Update Report and forwarding to Council for acceptance. (Funding Source: Not Applicable)
 Motion to receive the Permitting Efficiency Study Update Report and forwarding to Council for acceptance.

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

6. Consider the Auditors’ Reports and Schedule of Measure L Program Revenues and Expenditures for Fiscal Year Ended June 30, 2024, and forwarding to Council for approval. (Funding Source: Not Applicable)
 Motion recommending the review of Fiscal Year 2023-2024 Auditor’s Report on Compliance of the Measure L Local Roads First Transportation Funding Measure and forwarding to Council for approval.

FINANCE; Maria Garnica, 209-577-5249, [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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7/30/2025

CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

July 30, 2025
Date: July 9, 2025
TO: Audit Committee
Sue Zwahlen, Chair
David Wright, Vice-Chair
Chris Ricci, Member
Camille Garcia, Public Member
Thomas Orosco, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Internal Audit status report dated July 9, 2025 CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider the Internal Audit Status Report dated July 9, 2025. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2025-2026 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved six projects for FY24-25’s Internal Audit work plan and seven projects for FY25-26, plus program management. The attached report details the status of projects in progress.

DISCUSSION:

Internal Audit projects are proceeding as planned.

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to receive and file the Internal Audit Status Report dated July 9, 2025.

Approved by:

Colleen Rozillis, City Auditor
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Audit Committee, July 30, 2025
Internal Audit status report dated July 9, 2025

Attachments:

1. Internal Audit Status Report dated 7-9-25
#1..
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CITY OF MODESTO INTERNAL AUDIT STATUS REPORT 07-09-25
July 9, 2025
To: City of Modesto Audit Committee
From: Baker Tilly Advisory Group, LP
Subject: Internal Audit Status Report April 17 through July 9, 2025 _____
FY 24-25 INTERNAL AUDIT PROJECTS RECOMMENDATION VALIDATION PROCESS CAPITAL PROGRAM BEST PRACTICES ACCOUNTS RECEIVABLE INTERNAL

CONTROLS REVIEW

PERMITTING EFFICIENCY STUDY UPDATE
Schedule August 2024 - June 2025 November 2024 - July 2025 March - July 2025 February - July 2025 Budget Status: Total Budget and % Expended
through 6/30
$15,000
100%
$35,000
100%
$35,000
100%
$40,000
100%
Activities for This Period Continue to close findings based on submitted documentation
Completed analysis and interviews, developed
draft and final reports.

Completed testing and interviews, developed draft
and final reports.

Completed analysis, developed draft and final
reports.

Activities for Next Period Continue to close findings based on submitted documentation None None None
Issues None None None None

BASIC INTERNAL

AUDITOR SERVICES

ONGOING INTERNAL AUDIT

SERVICES

ETHICS HOTLINE STATISTICS
Schedule July 2024 through June 2025 Complaint Type Complaints Received During the Period
Under Review Referred to Appropriate City
Official(s)
Closed
Budget Status: Total
Budget and %
Expended
$30,000
100%
Compliance & Ethics 8 0 8 8
Fraud 0 0 0 0
Employment Matters 1 0 1 1
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CITY OF MODESTO INTERNAL AUDIT STATUS REPORT 07-09-25
FY 25-26 INTERNAL

AUDIT PROJECTS

RECOMMENDATION

VALIDATION PROCESS

ENTERPRISE RISK

ASSESSMENT

IT POLICY REVIEW HOMELESSNESS

RESPONSE PERFORMANCE
AUDIT

FEE BENCHMARKING &

COST RECOVERY AUDIT

CASH HANDLING INTERNAL

CONTROLS TESTING

PARKS, RECREATION &

NEIGHBORHOOD

PERFORMANCE AUDIT
Schedule July 2025 - June 2026 July - November 2025 August 2025 - March 2026 October 2025 – March 2026 January – June 2026 Febuary- May 2026 February – June 2026 Total Budget $10,000 $45,000 $25,000 $40,000 $40,000 $30,000 $35,000 Project Description Continue to track and validate
recommendation
implementation.

Identify, analyze, and measure
risks by the level of inherent
vulnerability, the level of
preparedness to mitigate them,
and the impact such negative
events could have on the City
should they occur. This
assessment informs the threeyear internal audit work
program.

Review IT Department policies,
identify gaps and opportunities
for improvement, and support
the Department during the
policy update process.

Assess economy, efficiency,
and effectiveness of the City’s
response to homelessness in
the community. Compare City
practices to industry best
practices.

Review the City’s fee schedule,
compare fees to peers, and
assess the extent to which fees
cover costs.

Test internal controls related to
cash handling activities across
the City.

Assess economy, efficiency,
and effectiveness of
departmental operations and
compare to industry best
practices.

Activites for Next
Period
Continue validation Initiate project, review
documentation, conduct
interviews
Initiate project, review policies
and develop gap analysis
Initiate project None None None

BASIC INTERNAL

AUDITOR SERVICES

ONGOING INTERNAL AUDIT

SERVICES
Schedule July 2025 - June 2026
Total Budget $25,000
Project Description City Auditor activities including
overseeing the internal audit
program and managing the
fraud, waste, and abuse hotline.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

July 30, 2025
Date: July 3, 2025
TO: Audit Committee
Sue Zwahlen, Chair
David Wright, Vice-Chair
Chris Ricci, Member
Camille Garcia, Public Member
Thomas Orosco, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Audit Findings Validation Report
CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider the Audit Finding Validation Report dated July 3, 2025. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2025-2026 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved an ongoing project to validate the corrective actions of audit findings and recommendations issued since 2016.

DISCUSSION:

The review incorporates all audit findings and recommendations dating back to 2016, a total of 255 findings. In the last quarter, Baker Tilly was able to verify that 9 findings have been closed.

To date, Baker Tilly has verified that 187 findings have been closed, indicating that the issue is resolved.

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to receive and file the Audit Findings Validation Report dated July 3, 2025.

Approved by:

Colleen Rozillis, City Auditor
#2..
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Audit Committee, July 30, 2025
Audit Findings Validation report

Attachments:

1. Audit Findings Validation Report dated 7-3-2025
#2..
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City of Modesto - Audit Recommendations Tracking Report 7/3/2025
( A) ( B) ( C) ( D)
Reports
Total Recommendations Open Recommendations
(Not Yet Completed by City)
Validated
Recommendations
(By Moss Adams)
Reportable Recommendations
(Newly validated since last
summary)
Single Audit Report - 2017 (17-SAR ) 4 0 4 0
Single Audit Report - 2018 (18-SAR ) 3 0 3 0
Single Audit Report - 2019 (19-SAR ) 1 0 1 0
Single Audit Report - 2020 (20-SAR ) 1 0 1 0
Single Audit Report - 2021 (21-SAR ) 1 0 1 0
2018-2019 Stanislaus County Civil Grand Jury (18_19-SCCGJ ) 8 0 8 0 2022-2023 Stanislaus County Civil Grand Jury Final Report (22_23-SCCGJ ) 5 0 5 0 2021-2022 Stanislaus County Civil Grand Jury Final Report (21_22-SCCGJ ) 7 0 7 0 2024- FORESTRY AND SOLID WASTE EFFICIENCY STUDY UPDATE (24-FASWES ) 20 14 6 0 2024- PROCUREMENT PERFORMANCE AUDIT (24-PPA ) 11 9 2 2
2016- Solid Waste Efficiency Study (16-SWES ) 12 4 8 0
2016-WATER AND WASTEWATER EFFICIENCY STUDY UPDATE (16-WWE ) 14 1 13 2 2017- BILLING AND ACCOUNTS RECEIVABLE REVIEW (17-BAR ) 4 0 4 0 2017- FLEET SERVICES EFFICIENCY STUDY (17-FSE ) 27 5 22 0 2017- INTERNAL CONTROLS TESTING: PROCUREMENTCARDS (17-ICTPC ) 19 1 18 0 2017-INTERNAL CONTROLS TESTING: TRAVEL EXPENSES (17-ICTTE ) 17 0 17 0 2017- INTERNAL SERVICE FUND REVIEW (17-ISF ) 18 11 7 0
2018- Fleet Utilization Study (18-FUS ) 13 8 5 0
2018- PERMITTING EFFICIENCY STUDY (18-PES ) 10 0 10 0
2016 INTERNAL CONTROLS TESTING: CASH HANDLING (16-ICTCH ) 42 1 41 1 2025 Employment After Retirement Review (25-EARR ) 4 4 0 0 2025 Payroll Internal Controls Review (25 -PICR ) 5 1 4 4 2025 Water and Wastewater Utilities Fiscal Review (25-WWUFR ) 9 9 0 0 Total 255 68 187 9
Legend:

Total Recommendations = number of recommendations in the report Open Recommendations = number of recommendations not yet completed by City Validated Recommendations = number of recommendations validated by Moss Adams as completed and adequately addresses the finding Reportable Recommendations = number of recommendations validated since last summary report for Audit Committee #2..
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ID
Finding
Number
from
Report
Report
Year Report Code Finding Recommendation Moss Adams Determination Notes 68 6B 2016 16-WWE
The laboratory does not perform to expectation due to equipment and personnel issues. Continue to pursue improvements in laboratory performance and customer service.

The City provided the ELAP certification for Water Quality Control Lab, the manual/standard for technical requirements of an environmental lab, and the Lab QC analyst job description for the position that staff reported was hired. These documents provided evidence that the City has improved and has resources in place to continue improvements in laboratory performance and customer service.
74 12B 2016 16-WWE
Pay grades for most Water and Wastewater positions are lower than neighboring cities. Address positions not included in the classification and compensation study, and review instances of reported salary compression.

The City provided the most recent compensation study, which shows that all positions reported appear to be aligned with peers.
190A N/A 2016 16-ICTCH
Not all transactions reconcile to the associated revenue collection system. Departments should collaborate with IT to change system settings to allow staff to perform split payments at designated locations to ensure payment types reconcile to transaction records at the end of shifts. Reviewed policies and procedures related to split payments and confirmed ability to reconcile.
45A 3A 2024 24-PPA
The City’s small purchase threshold is lower than peers, which may be inefficient. Additionally, staff reported approval processes can be cumbersome.

Consider whether adjustments to the small purchasing threshold are appropriate for the City to streamline its approval processes.

The City indicated that staff reviewed the approval thresholds and determined them to be sufficient.
45B 3B 2024 24-PPA
The City’s small purchase threshold is lower than peers, which may be inefficient. Additionally, staff reported approval processes can be cumbersome.

Review approval processes to determine if any can be streamlined such as by removing unnecessary approvals, clarifying unclear processes, or addressing system limitations.

The City indicated that staff reviewed the approval thresholds and determined them to be sufficient.
205 2 2025 25 -PICR
City Payroll retains an audit checklist, which among other tasks, includes documenting all timecard reconciliation procedures performed on timecard imports from the PD and FD timekeeping systems into Oracle. Although the City provided evidence of the individual who prepared the reconciliation on the checklist, it did not designate an employee to review the reconciliation performed and the entire audit checklist as a whole. The absence of a documented reviewer in the checklist increases the likelihood of errors going unnoticed during the audit process, potentially leading to inaccuracies in payroll processing.

The City should implement a process to add a column to the current audit checklist that documents who reviews each type of task (including the PF and FD timecard reconciliations) related to the FD and PD timecard data.

Reviewed the updated audit checklist that includes a column indicating who reviews each type of task.
206 3 2025 25 -PICR
Based on interviews, both the PD and FD have extensive review processes in place prior to sending timecard reports to City Payroll; however, the actual timecard reports are not signed off as evidence of review prior to sending out.

The FD and PD should implement a process to document review and approval of timecard reports prior to being sent to City Payroll. Each department should first designate an employee who will be responsible for performing this review, along with a backup employee. After conducting the review, the reviewer should document evidence of their review. This can be an email stating completion and review, physical signoff on reports, or something similar.

Verified two updated checklists that requires reviewing party name and signature for payroll submissions and payroll corrections. Also verified email chain of approvals for a sample of submissions.
207 4 2025 25 -PICR
The checklist used by the PD to generate the timecard report for submission to City Payroll does not have documented evidence of being reviewed or approved.

The PD should implement a process to document review and approval of the checklist used to submit timecard data to City Payroll. The PD should first designate an employee responsible for conducting this review, along with a backup employee. The reviewer should ensure that all steps of the checklist were followed by the preparer, and any discrepancies should be investigated. After completing the review, the reviewer should document evidence of their review, which can be accomplished by adding a "Reviewer" signature section within the checklist to record the overall review and approval of all outlined steps.

Verified two updated checklists that requires reviewing party name and signature for payroll submissions and payroll corrections. #2..
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ID
Finding
Number
from
Report
Report
Year Report Code Finding Recommendation Moss Adams Determination Notes 208 5 2025 25 -PICR
We obtained corrected timecards for each of our eight sample selections, noting that the Chief's signature was provided at the bottom of the page. However, it was unclear whether the signature indicated approval of the original timecard of the corrected timecard.

The FD should implement a process that clearly documents review and approval for timecards and separately documents review and approval of timecard corrections.

Verified two updated forms that requires reviewing party name and signature for payroll submissions and payroll corrections. #2..
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

July 30, 2025
Date: July 7, 2025
TO: Audit Committee
Sue Zwahlen, Chair
David Wright, Vice-Chair
Chris Ricci, Member
Camille Garcia, Public Member
Thomas Orosco, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Accounts Receivable Internal Controls Review Report CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider the Accounts Receivable Internal Controls Review Report and forwarding to Council for acceptance. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2025-2026 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved an internal control review of select aspects of the accounts receivable function as part of the FY24-25 Internal Audit work plan.

DISCUSSION:

The review assesses select aspects of the City’s accounts receivable internal controls framework, focused on assessing select key controls related to utility billing and miscellaneous accounts receivable within the Finance Department along with assessing accounts receivable interactions between the Finance Department, Police Department, Fire Department, Human Resources, Public Works, Airport and Building Safety. This engagement was completed under Generally Accepted Government Auditing Standards (GAGAS).

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to receive the Accounts Receivable Internal Controls Review Report and forwarding to Council for acceptance
#3..
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Audit Committee, July 30, 2025
Accounts Receivable Internal Controls Review Report

Approved by:

Colleen Rozillis, City Auditor
Attachments:

1. Accounts Receivable Internal Controls Review Report dated 7-7-25 #3..
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Proprietary & Confidential

FINAL REPORT

ACCOUNTS RECEIVABLE INTERNAL CONTROLS REVIEW
July 7, 2025
Baker Tilly Advisory Group, LP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206)302-6500
As of June 3, 2025, Moss Adams LLP has merged with Baker Tilly.

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.
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Accounts Receivable Internal Controls Review

FOR INTERNAL USE OF CITY OF MODESTO ONLY
Table of Contents
I. Executive Summary 1
A. Introduction 1
B. Summary of Results 1
II. Background, Scope, and Methodology 2
A. Background 2
B. Scope and Methodology 2
C. Statement of Compliance with Generally Accepted Government Auditing Standards (GAGAS) 3
III. Accounts Receivable Internal Controls Review 4
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. #3..
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Accounts Receivable Internal Controls Review | 1

FOR INTERNAL USE OF CITY OF MODESTO ONLY
I. Executive Summary
A. Introduction
As part of the fiscal year 2025 internal audit program, the Modesto City Auditor, Moss Adams LLP (Moss Adams), conducted a review of the City of Modesto’s (the City) accounts receivable (AR) internal controls framework. The review took place between March 2025 and June 2025 and focused on assessing select key controls related to utility billing and miscellaneous AR within the Finance Department along with assessing AR interactions between the Finance Department, Police Department (PD), Fire Department (FD), Human Resources (HR), Public Works, Airport, and Building Safety.

B. Summary of Results
Some examples of commendable activities, based on the review performed, include the following:
 Staff Willingness to Learn: The City has demonstrated a strong commitment to professional development, with staff actively engaging in training opportunities to enhance their skills and knowledge in AR processes.
 Implementation of a New AR System: The City is in the process of implementing a new AR system that is better aligned with its operational needs and it is expected to improve efficiency and accuracy in billing and collections.
 Daily Cash Reconciliation: The City has a process designed to reconcile daily cash receipts to the deposit amounts, ensuring accuracy in financial reporting and maintaining the integrity of its cash management processes.
 Thorough Review of End of Day Reports: Staff have a practice to review the End of Day Report, which is posted to the general ledger, prior to uploading it into Oracle. This practice enhances the accuracy of financial data and supports effective financial oversight.

There were opportunities to strengthen controls, policies, procedures, and systems within the City, particularly during the implementation of the new AR system. We recommend the City address the following over the next 12 to 18 months:
 Lack of Formal Approval Processes: Several instances were identified where documentation lacked a structured approval process, including final notices, balancing reports, and journal entries, raising concerns about accountability and the potential for fraudulent activity.  Insufficient Documentation and Recordkeeping: In multiple cases, documentation was either not saved or inadequately recorded, such as supervisor approvals captured only in email strings and discrepancies in billing systems without a clear audit trail.  Need for Enhanced Review Procedures: We recommend the City establish formal review protocols, implement electronic approval workflows, and ensure that all review actions are documented to strengthen internal controls and improve compliance. #3..
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Accounts Receivable Internal Controls Review | 2

FOR INTERNAL USE OF CITY OF MODESTO ONLY
II. Background, Scope, and Methodology
A. Background
As part of the City’s fiscal year 2025 internal audit program, Moss Adams was engaged to conduct a comprehensive review of AR function internal controls. The purpose of this review was to evaluate the adequacy of existing internal controls, identify potential areas for improvement, and evaluate for compliance with select established policies and procedures.

The City maintains a centralized AR function, which is integrated with its financial management system, NaviLine. Currently, the City utilizes an aging AR system that has been in operation for 25 to 30 years; however, they are in the process of implementing a new system expected to go live by the beginning of October 2025. In light of this transition, the City sought a comprehensive review of current controls prior to the new system’s implementation to establish a baseline and obtain recommendations for improvement. This transition is critical for enhancing the efficiency and effectiveness of the AR processes, which include billing and cashiering functions.

The Finance Department is responsible for processing all AR transactions within the City’s financial management system. This includes the oversight of billing, collections, and related reconciliations. The Finance Department works closely with other City departments, such as Utilities, to ensure accurate processing and reporting of receivables.

B. Scope and Methodology
The scope of the internal controls review included the following AR functions:
 Invoicing
 Payment Processing
 Collections
 Reconciliation
 Documentation
 Cross-Departmental Collaboration
For the AR function, we conducted a review of identified key controls within the AR function, 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  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 (e.g., 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) #3..
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Accounts Receivable Internal Controls Review | 3

FOR INTERNAL USE OF CITY OF MODESTO ONLY
 Assessing whether the controls in place would prevent or detect errors  Verifying controls by obtaining relevant documentation and comparing it to the specified control  Providing recommendations on key controls that need to be implemented or changed The work performed included interviews with Finance Department management and staff about utility billing and miscellaneous AR, HR management and staff, and PD and FD employees who oversee AR in their respective department.

In support of the internal controls review, the matrix provided in Section III provides results by including the following:
 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.

C. Statement of Compliance with Generally Accepted Government Auditing Standards (GAGAS)
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 the likelihood and impact of occurrence are included in this report.

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 City’s internal controls or over financial management systems.
#3..
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Accounts Receivable Internal Controls Review | 4

FOR INTERNAL USE OF CITY OF MODESTO ONLY
III. Accounts Receivable Internal Controls Review
NO.

CONTROL

OBJECTIVE CONTROL ISSUE RECOMMENDATION

LIKELIHOOD OF

OCCURRENCE

IMPACT OF

OCCURRENCE
Miscellaneous Accounts Receivable
1 The approval process
for monthly reconciliations between Oracle and NaviLine is welldocumented.

During our review of the approvals of the monthly financial reconciliations report, which reconciles NaviLine with Oracle, provided by the City, we identified that for 66% of the selected reports, approval consisted solely of a name and date typed into the Excel file. This method of approval lacks sufficient verification measures, prompting a need to ensure approvals are made only by authorized users to maintain integrity. Additionally, for one of the selections, the monthly reconciliation between Oracle and NaviLine did not include any evidence of review and approval by the Senior Financial Analyst, further highlighting deficiencies in the approval process.

We recommend the City implement a more robust approval process that requires documented and verifiable evidence of review, such as electronic signatures or approval workflows within the financial system. This should include clear identification of the approver’s identity and authorization level to mitigate the risk of fraudulent activity. Furthermore, it is essential to ensure that all reconciliations are formally reviewed and approved by designated personnel, with appropriate documentation retained for audit purposes. Regular training on these procedures should also be conducted to reinforce compliance and enhance the overall integrity of the financial reporting process.

High Low
2 The review and
approval process for daily report extracts from NaviLine to be imported into Oracle via Journal Entry is secure and verifiable.

Report extracts from NaviLine should be reviewed for accuracy by comparing the extract balance to the system balance prior to the import to Oracle to ensure accurate data transfer. During our review of the daily report extracts from NaviLine provided by the City, we The City should establish a more secure and verifiable approval process for financial documentation. This process should require the use of electronic signatures or an approval workflow within the financial system to ensure that approvals are traceable and verifiable.

High Low
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NO.

CONTROL

OBJECTIVE CONTROL ISSUE RECOMMENDATION

LIKELIHOOD OF

OCCURRENCE

IMPACT OF

OCCURRENCE
noted that the reports sampled lacked evidence of formal approval for the data. The approval included was merely a name and date typed into the Excel file, which does not provide adequate assurance of authenticity and underscores the importance of safeguarding approval processes to prevent unauthorized access and ensure integrity.

Additionally, it is crucial to maintain a clear record of the approver’s identity and their authorization level. Implementing these measures will enhance the integrity of the approval process and reduce the risk of unauthorized or fraudulent activity in the future. Regular training should also be provided to staff to ensure compliance with these enhanced procedures. 3 All customer account
adjustments in the financial system follow the appropriate approval thresholds and are reviewed and approved by the Senior Financial Analyst via the monthly “Adjustment Report.” Prior to this project, formal procedures were in place to manage the review and approval process for customer account adjustments. However, documentation evidencing these reviews and approvals—such as emails confirming the process—was not consistently saved or retained. In an email from the Director of Finance dated April 18, 2025, it was acknowledged that while the procedures existed, the lack of retained documentation made it difficult to verify compliance.

We recommend the City enhance the documentation and retention practices related to the existing review and approval procedures for the Adjustment Report to ensure compliance and accountability. The Director of Finance indicated that corrective measures would be implemented immediately to strengthen documentation practices. Specifically, the Financial Analyst will be responsible for pulling and reviewing the adjustment report monthly, and the Senior Financial Analyst will provide final approval, with all approvals to be included alongside other monthly documentation associated with this position. Additionally, this should include reinforcing the importance of saving and organizing evidence—such as emails or approval records—that demonstrate the Financial Analyst’s monthly review and the Senior Financial Analyst’s final approval. Additionally, implementing a centralized tracking system to document and store High High
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NO.

CONTROL

OBJECTIVE CONTROL ISSUE RECOMMENDATION

LIKELIHOOD OF

OCCURRENCE

IMPACT OF

OCCURRENCE
monthly review and approval activities will help ensure all approvals are consistently recorded and readily accessible for audit purposes. Regular training should be conducted to reinforce staff awareness of these documentation requirements and adherence to established procedures, thereby strengthening the overall effectiveness of the internal control framework. 4 Open Charge Reports
for outstanding grants are reviewed and approved prior to distribution.

Per discussion with the Director of Finance, it was noted that there is currently no formal approval process in place for the Open Charge Reports. These reports are distributed to Analysts to ensure that any outstanding grants are being followed up on and the emails related to this process are saved as part of the updated documentation. However, the absence of a structured approval mechanism emphasizes the need to improve accountability and enhance the effectiveness of the follow-up process.

We recommend the City implement a formal approval process for Open Charge Reports to enhance accountability and ensure that outstanding grants are appropriately monitored. This process should include identifying designated personnel responsible for reviewing and approving the reports before they are disseminated to Analysts. Additionally, a standardized documentation procedure should be established to retain records of approvals, including timestamps and signatures, to provide a clear audit trail. Regular training should be conducted to ensure that all staff understand the importance of this process and adhere to the established procedures, thereby improving the overall effectiveness of the internal control framework.

High Moderate
5 Direct supervisor
approvals of account adjustments are welldocumented, and documentation is Direct supervisor approval is required for account adjustments at the time the adjustment occurs. During discussions with the Director of Finance, it was noted We recommend the City establish a more robust documentation process for supervisor approvals to ensure that all approvals are properly recorded and retained. This process should include the Moderate Low
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NO.

CONTROL

OBJECTIVE CONTROL ISSUE RECOMMENDATION

LIKELIHOOD OF

OCCURRENCE

IMPACT OF

OCCURRENCE
retained and searchable.
that the AR Division permitted supervisor approvals to be documented solely through email correspondence during the audit period, with the supervisor included as a courtesy copy on the email. The specific email that contained the approval for the sampled adjustment could not be located, as it was not saved in their files. The department had hoped that the email would still be searchable in Outlook, but this was not the case. requirement to save all relevant approval emails in a designated folder or system to create a reliable audit trail. Additionally, the City should consider implementing an electronic approval workflow that captures approvals within a secure system, reducing the reliance on email and enhancing accountability. Regular training should also be provided to staff to emphasize the importance of maintaining proper documentation and adherence to established procedures, thereby strengthening the overall internal control framework.

Utility Billing Receivable
6 Past due balances are
reviewed monthly, and a documented review and approval of final notices is performed.

During our review of the final notice reports provided by the City for utility final notices issued in June 2024, August 2024, and January 2025, we noted that while the documentation was submitted, there was no evidence to indicate that these reports underwent a documented review and approval process. Per discussion with the utility billing team, regular reviews are conducted; however, due to system limitations, they are unable to document which specific reports are reviewed. This lack of documented review and approval highlights an opportunity to strengthen internal The City should consider expanding current procedures to require documentation of the review and approval process through the billing system and via monthly spot-checks for final notices to enhance the internal control framework and ensure the integrity of the documentation process. This protocol should include the documentation of the designated personnel responsible for reviewing the content and accuracy of the notices prior to issuance. Additionally, the City should implement a tracking system to document the review of specific reports, including date stamps and signatures of the approving parties. Regular training sessions should also be conducted to reinforce the importance of compliance with this protocol, thereby High Moderate
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NO.

CONTROL

OBJECTIVE CONTROL ISSUE RECOMMENDATION

LIKELIHOOD OF

OCCURRENCE

IMPACT OF

OCCURRENCE
controls and enhance the reliability of the process.
improving accountability and reducing the risk of oversight in future documentation. 7 Billing exceptions are
reviewed and approved.

It was noted that discrepancies and exceptions flagged by the billing system from customer accounts are reviewed by the Senior Account Clerk or Account Technician. However, according to discussions with the Director of Finance, the current billing system does not capture or display the actions taken by the employee during the review and approval of these exceptions. This lack of documentation highlights the importance of enhancing accountability and strengthening the effectiveness of the review process.

As the City implements the new accounts receivable system, which includes an audit log capturing all employee actions such as the review of billing exceptions, we recommend leveraging this functionality to maintain detailed records of the review process, such as timestamps, reviewer identities, and decisions made. This system capability supports strong accountability and control over billing exceptions. Furthermore, we suggest maintaining regular training and communication with staff to ensure consistent use of the system’s audit features and reinforce the importance of thorough documentation. Although it was noted that the current process has been reviewed and approved by external financial auditors, ongoing attention to these controls will help sustain the integrity and effectiveness of the billing system.

High Moderate
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

July 30, 2025
Date: July 9, 2025
TO: Audit Committee
Sue Zwahlen, Chair
David Wright, Vice-Chair
Chris Ricci, Member
Camille Garcia, Public Member
Thomas Orosco, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Capital Improvement Program Best Practices Report CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider the Capital Improvement Program Best Practices Report and forwarding to Council for acceptance. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2025-2026 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved a review of the City’s capital improvement program as compared to industry best practices as part of the FY24-25 Internal Audit work plan.

DISCUSSION:

The review provides an evaluation of the current state of the City’s capital improvement program and identify best practices and opportunities to improve the effectiveness of the City’s capital planning and management activities. Six (6) 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 receive the Capital Improvement Program Best Practices Report and forwarding to Council for acceptance.
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Audit Committee, July 30, 2025
Capital Improvement Program Best Practices Report

Approved by:

Colleen Rozillis, City Auditor
Attachments:

1. Capital Program Best Practices Report dated 7-3-25
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As of June 3, 2025, Moss Adams LLP has merged with Baker Tilly.

Proprietary & Confidential

FINAL REPORT

CAPITAL IMPROVEMENT PROGRAM ASSESSMENT
July 3, 2025
Baker Tilly Advisory Group, LP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500
As of June 3, 2025, Moss Adams LLP has merged with Baker Tilly.

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.
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Capital Improvement Program Assessment Report

FOR INTERNAL USE OF THE CITY OF MODESTO ONLY
Table of Contents
I. Executive Summary 1
A. Background and Scope 1
B. Methodology and Objectives 1
C. Commendations 2
D. Summary of Observations and Recommendations 2
II. Observations and Recommendations 4
A. High Priority 4
B. Medium-High Priority 6
C. Medium Priority 7
D. Low Priority 12
Appendix A: Capital Planning Policy Best Practices 14
Appendix B: CIP Book Best Practice Comparison 18
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. #4..
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Capital Improvement Program Assessment Report | 1

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I. Executive Summary
A. Background and Scope
The City of Modesto (the City) engaged its internal auditor, Baker Tilly Advisory Group, LP (Baker Tilly), to conduct an assessment of the City’s Capital Improvement Program (CIP) as part of the FY24–25 Internal Audit Program. The goal of this project is to assess the current state of the City’s CIP and identify best practices and opportunities to improve the effectiveness of the City’s capital planning and management activities. Our assessment included project identification, budgeting, planning, execution, and closeout.

This assessment was conducted from December 2024 through March 2025. Our analysis was informed by interviews with City leadership and staff, review of data and documents provided by the City, and comparison of current processes to industry best practices.

Specifically, in this engagement, we completed the following:
• Conducted interviews and walkthroughs with staff across the City engaged in capital planning and execution
• Reviewed capital program, planning, and budgeting documentation, including policies and procedures, the CIP book, and public communications
• Evaluates the efficiency and effectiveness of the City’s policies and procedures managing capital assets, including new infrastructure and deferred maintenance, long-term planning, and responsiveness to resident and community requests
• Reviewed staffing levels and structure, skills, capacity, and efficiency as well as intra- and interdepartmental collaboration and coordination • Leveraged best practices and benchmarked relevant information from peer cities • Identified opportunities for improvement in planning and delivery, organization, operations, process efficiency, and customer service
B. Methodology and Objectives
The overall goal of this assessment was to help the City understand the current state of its capital planning and management activities, identifying challenges and opportunities for improvement. The assessment 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 providing project status reports.

2. Fieldwork: This phase included interviews, document review, and best practice research. We worked with leadership from the Public Works, Utilities, Engineering Services, and Finance departments to obtain the most up-to-date information and insights. ○ Interviews: We conducted interviews with 10 members of City leadership and staff involved in capital projects and capital planning throughout Public Works, Finance, and Utilities to understand strengths, weaknesses, and opportunities for improvement. #4..
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○ Document review: We reviewed the current CIP plans and policies, project tracking collateral, and other documentation related to capital program processes. ○ Best practice research and peer comparison: We compared the City’s capital plan and processes to industry best practices and to cities with comparable capital budgets.

3. Analysis: In the assessment phase, we evaluated the results of our fieldwork to develop actionable recommendations.

4. Reporting: We concluded the project by reviewing draft observations and recommendations with Public Works and Finance leadership to validate facts and confirm the practicality of our recommendations.

C. 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 • High employee morale and a positive workplace culture It was evident from all employees with whom we spoke that there is a passion for the City, along with a genuine dedication to its progress and future. The insights and contributions from these dedicated employees undoubtedly elevated this report, and we again share our thanks.

D. Summary of Observations and Recommendations
Observations and recommendations were grouped into four areas: (1) high priority, (2) medium-high priority, (3) medium priority, and (4) low priority. A summary is listed below, and observations and recommendations are further detailed in in Section II of this report.

PRELIMINARY OBSERVATIONS AND RECOMMENDATIONS
High Priority

1. The City does not currently have a uniform methodology across its departments for estimating and reporting project budgets which could lead to a reliance on initial costs rather than comprehensive project cost estimates. This creates an increased risk of inadequate funding for projects, as full estimated costs may not be consistently reported during the project design phase, leading to potential risks of financial shortfalls later in the construction phase, as well as reduced transparency within the CIP book’s reporting.

To ensure accurate budgeting and long-term planning, the City should develop comprehensive cost estimates for upcoming projects, such as implementing Government Finance Officers Association (GFOA) and other industry best practices, that encompass the full scope of expenses, rather than just initial costs, and ensure that the costs for the full project lifecycle are included in the CIP book reporting.
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PRELIMINARY OBSERVATIONS AND RECOMMENDATIONS
Medium-High Priority

2. The City’s capital planning and project prioritization efforts are oftentimes conducted on a decentralized and somewhat subjective basis, which creates risks that capital project prioritization and funding are not transparent or consistently aligned with specific City priorities.

A. The City should adopt prioritization criteria that appropriately weigh critical maintenance needs and support clear communication.

B. The City should maintain an Unfunded Project list in priority order to identify critical project needs if alternative funding sources become available.

C. The City should consider reestablishing the CIP Task Force.

Medium Priority

3. The City has some documented policies and procedures guiding capital planning and project management, but they are outdated and there are key gaps. This makes it difficult to ensure continuity of operations in an environment with personnel turnover.

The City should establish a comprehensive and up-to-date set of capital planning policies and procedures informed by best practices, including project management resources that provide standardized templates, checklists, and forms.

4. The City’s CIP processes lack modern technology solutions deliberately designed for capital projects and is largely decentralized between different systems and departments, which makes it difficult to track and report on project status on a standardized basis.

A. The City should establish a formalized project-tracking methodology.

B. The City should develop regular reporting on key financial and project data to keep all stakeholders up-to-date.

When possible, the City should invest in a modern project management system and the resources necessary to support its design, implementation, and maintenance regarding capital projects.

5. Despite significant recruiting efforts, the City has struggled to hire an adequate number of qualified civil engineers due to an overall shortage in the labor market, which has resulted in the engineers that are currently on staff being responsible for larger than usual project loads, and has limited the number of new projects that the City is able to take on at a time.

The City should review their current recruiting practices and update them where necessary in order to broaden their reach and attract a greater number of applicants. Additionally, the City should pursue innovations to streamline engineering processes and reduce overall workload.

Low Priority

6. The CIP book aligns with a number of industry best practices, but there are opportunities to improve public transparency, process descriptions, and financial and project data.

The City should update the CIP book with best practice elements, including expanding on the planning and prioritization process descriptions, adding more detail to financial and project data, and providing a holistic narrative about the City’s capital activities. #4..
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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.

A. High Priority

PROJECT PLANNING AND BUDGET REPORTING

1. Observation The City does not currently have a uniform methodology across its departments for estimating and reporting project budgets which could lead to a reliance on initial costs rather than comprehensive project cost estimates. This creates an increased risk of inadequate funding for projects, as full estimated costs may not be consistently reported during the project design phase, leading to potential risks of financial shortfalls later in the construction phase, as well as reduced transparency within the CIP book’s reporting.

Recommendation To ensure accurate budgeting and long-term planning, the City should develop comprehensive cost estimates for upcoming projects, such as implementing Government Finance Officers Association (GFOA) and other industry best practices, that encompass the full scope of expenses, rather than just initial costs, and ensure that the costs for the full project lifecycle are included in the CIP book reporting.

Current Conditions
The City does not currently have a uniform methodology across the departments for estimating and reporting project budgets, which could lead to a reliance on initial costs rather than comprehensive project cost estimates. While it was noted that individual departments followed defined internal processes for budgeting, and to ensure that adequate funding was available for their projects, often times the full lifecycle costs were reported for projects, as defined by GFOA and other industry best practices for CIP book reporting. As a best practice, the GFOA recommends that the full extent of the capital project/asset and the associated life cycle costs be determined when developing the multiyear capital plan with a focus on including a clear estimate of all major components that will be necessary to complete the project, and accounting for all ongoing life cycle costs of the project, as they will impact future operating budgets (please see Appendix B for additional detail).

Inquiry into the City’s capital planning and project budgeting processes showed that there was not a uniform methodology across City departments for developing project budgets. In some cases, initial project budgets were submitted for approval and planning purposes, rather than a comprehensive estimate for the full project. In these cases, once a project enters the construction phase, budgets are updated based on the actual costs of the construction contracts for the main project scope.

Additionally, to create efficiency, multiple projects from a single location are often packaged together after acceptance of an initial project in the location. While this practice can help to mitigate construction disturbances in neighborhoods and communities, on the project budget and planning side, it can also create an unclear delineation between the original and expanded scopes of work. #4..
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When the full estimated cost is not accounted for in the project budgets or long-term plans at project initiation, it does not provide an adequate level of transparency into project lifecycle budgets.

Recommendations
When developing budgets and conducting long-term planning, it is essential that the City creates and utilizes estimates for the total costs of its upcoming projects that take into account the full scope and project lifecycle rather than just the initial expected cost. To ensure that all project budgeting is conducted uniformly across the City and accounts for the full expected cost of the upcoming projects, the City should incorporate the following best practices into their project planning, budgeting, and CIP book reporting processes:
• Establish clear project scope: Clearly outline the project’s objectives and create a comprehensive list of requirements, including specifications, deliverables, and constraints, to ensure all stakeholders have a shared understanding of the project. • Ensure clear estimates in CIP book reporting: Ensure that CIP book reporting on project budgets contains a clear estimate of all lifecycle costs for upcoming projects in the next three to five years, as recommended by the GFOA and industry best practices (please see Appendix B for additional detail).
• Utilize historical data: Analyze cost data from similar past projects to inform current estimates and maintain a database of historical costs for various project types, which will facilitate more accurate future estimating efforts.
• Incorporate comprehensive cost components: Include all direct costs such as labor, materials, equipment, and subcontractor expenses while also accounting for indirect costs like overhead and administrative expenses.
• Engage stakeholders early: Involve project managers, engineers, and financial analysts in the estimating process to leverage their expertise, and gather input from community stakeholders and departments impacted by the project to ensure all perspectives are considered. • Conduct risk assessment: Assess potential risks that could impact project costs, such as regulatory changes or market fluctuations, and include contingency allowances in the budget to account for unforeseen events or changes in scope.
• Regularly review and update estimates: Continuously monitor and update cost estimates throughout the project lifecycle to reflect changes in scope or market conditions, implement a formal change management process to evaluate conditions, and ensure reviews of cost estimates and revisions are completed and documented when project changes occur. • Document assumptions and methodologies: Clearly document the assumptions, methodologies, and sources used in the estimating process to provide transparency and ensure that estimates are reviewed and approved by relevant stakeholders before finalizing budgets. • Implement technology solutions: Utilize specialized cost estimating software to enhance accuracy and efficiency and leverage data analytics to analyze costs and identify trends that can improve the estimating process.
• Train staff on best practices: Provide training and resources for staff involved in cost estimating to keep them updated on best practices and ensure uniformity across City departments.

By following these best practices, the City’s capital planning program can enhance the accuracy and reliability of project cost estimates, leading to better budgeting, resource allocation, and project execution.
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B. Medium-High Priority

PROJECT PRIORITIZATION

2. Observation The City’s capital planning and project prioritization efforts are oftentimes conducted on a decentralized and somewhat subjective basis, which creates risks that capital project prioritization and funding are not transparent or consistently aligned with specific City priorities.

Recommendation A. The City should adopt prioritization criteria that appropriately weigh critical maintenance needs and support clear communication.

B. The City should maintain an Unfunded Project list in priority order to identify critical project needs if alternative funding sources become available.

C. The City should consider reestablishing the CIP Task Force.

Current Conditions
Currently, the City’s capital planning and project prioritization efforts are oftentimes conducted on a decentralized and somewhat subjective basis, which creates risks that capital project prioritization and funding are not transparent or consistently aligned with specific City priorities. Our interviews revealed that the methodology for determining how capital projects were prioritized varied between departments, with many processes relying on subjective judgment and lacking documented criteria or decision-making procedures.

Interviewees for the various City departments involved in capital planning noted that projects are typically discussed in annual meetings between departments and prioritized on an ad hoc basis, often in response to the availability of funding sources, such as specific grants. Furthermore, there is no centralized City committee overseeing prioritization; instead, it is assessed individually by each department. There is also no specific guide, decision tree, or Responsible, Accountable, Consulted, and Informed (RACI) matrix equivalent to assist in the prioritization process, which further contributes to inconsistencies and a lack of transparency. To mitigate these risks, it is essential that the project prioritization methodology is well-documented and consistent across departments, ensuring that all capital improvement projects are prioritized in an objective, transparent manner that aligns with the City’s long-term strategic goals.

Recommendations
The City should fully document their prioritization criteria and decision-making workflow for evaluating potential capital projects. Ideally, the City’s prioritization criteria would ensure that the City is making the most of its funding and personnel resources, as well as incorporate sufficient specificity to aid in understandable and transparent project prioritization. The GFOA recommends that governments first prioritize capital requests based on health and safety considerations, service, and asset preservation.

While the City does approach prioritization this way, there are opportunities for the City to more clearly communicate how a project scores according to these criteria and weigh critical maintenance needs more heavily.
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Examples of prioritization processes and criteria from other cities that prioritize essential work include the following:
• Departments throughout the City of San Diego first identify their capital needs over the next five fiscal years that would allow them to meet their established service levels, operational goals, and overall core missions. Departments categorize their projects and needs as either priority (e.g., projects that address life, safety, and/or legal mandated needs that could potentially impact the core operation of an impacted facility or asset, or that are mayoral or council priorities) or discretionary (e.g., projects that would allow the City of San Diego to meet and exceed its services to the community and enhance the overall quality of life). Projects are then prioritized by a Review Advisory Committee that includes membership from nine different departments across the City of San Diego.
• To qualify for the City of Pasadena’s CIP, a project is required to either address a particular safety issue, an existing maintenance effort that is no longer satisfactory to keep a facility in good repair, or an existing facility that is no longer adequate to meet demand. Projects submitted that meet one of these requirements are reviewed by the Finance and Management Services Division for completeness, then put into one of 14 broad categories (e.g., street lighting, parking, etc.).

Projects are then returned to proposing departments for classification as high, medium, or low priority; preliminary cost estimates; and recommendation of a funding plan.

The City should also consider maintaining an Unfunded Project list in a priority order, as the City of Oakland does, to track projects that they would like to complete but do not currently have the funding for. This will enable the City to quickly identify the most critical unfunded projects should alternative funding sources become available.

We understand that the City previously maintained a CIP Task Force which is currently inactive.

While our cursory search of the City’s website revealed this information, we are not familiar with the intricacies of the task force’s previous role or its effectiveness. However, the City may want to consider reactivating the task force as a means to establish prioritization criteria and maintain an Unfunded Project list.

C. Medium Priority

POLICIES AND PROCEDURES

3. Observation The City has some documented policies and procedures guiding capital planning and project management, but they are outdated and there are key gaps. This makes it difficult to ensure continuity of operations in an environment with personnel turnover.

Recommendation The City should establish a comprehensive and up-to-date set of capital planning policies and procedures informed by best practices, including project management resources that provide standardized templates, checklists, and forms. #4..
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Current Conditions
The City’s policies and procedures related to the CIP are currently decentralized and fragmented between departments and lack comprehensive guidelines necessary for effective capital planning and asset management. Key deficiencies include the absence of dedicated sections addressing stakeholder departmental needs, insufficient prioritization frameworks for capital requests, and a lack of detailed policies regarding capital asset management practices.

Additionally, the existing CIP does not adequately incorporate long-term financing considerations, nor does it provide a structured approach to evaluating and monitoring capital projects. There is limited transparency in how decisions are made, and the policies do not effectively engage public and external stakeholders in the planning process.

In our review, it was noted that due to differences in how capital improvement projects are funded, there may be some differences in how each department approaches their capital planning policies and procedures. For instance, it was noted that the Utilities department utilizes the adopted utility master plans in order to assist department staff with the development of its capital improvement projects. However, for the City as a whole, the current state and lack of standardization and documentation of policies and procedures regarding capital planning reflects a need for significant improvement to ensure that the City’s capital planning efforts are aligned with its strategic objectives, operational priorities, and community needs. Without these enhancements, the City risks inefficiencies in resource allocation, potential misalignment of projects with organizational goals, and challenges in maintaining and managing its capital assets effectively.

This situation underscores the importance of developing a cohesive and comprehensive set of policies and procedures that can guide the City in making informed decisions, fostering collaboration among departments, and ensuring accountability in capital planning and management.

Recommendations
The City should establish a streamlined and up-to-date set of capital planning policies and procedures informed by best practices. Ideally, the City would maintain the following policies and procedures related to the capital program:
• Capital Planning Policy
• Capital Request and Project Prioritization Policy (high priority) • Financial Planning Policy
• Financial Impact and Cost Estimation Policy
• Capital Asset Management and Deferred Maintenance Policy (high priority) • Project Monitoring and Reporting Policy
• Project Management Procedures
As the City develops these resources, it can consider storing and maintaining standardized templates, checklists, and forms in the same location. A list of capital planning policy best practices can be found in Appendix A.
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PROJECT REPORTING AND TRACKING

4. Observation The City’s CIP processes lack modern technology solutions deliberately designed for capital projects and is largely decentralized between different systems and departments, which makes it difficult to track and report on project status on a standardized basis.

Recommendation A. The City should establish a formalized project-tracking methodology.

B. The City should develop regular reporting on key financial and project data to keep all stakeholders up-to-date.

C. When possible, the City should invest in a modern project management system and the resources necessary to support its design, implementation, and maintenance regarding capital projects.

Current Conditions
The City is not currently using a modern technology solution specifically designed for capital projects.

As a result, project data outlining status and execution is largely decentralized across various systems and departments. For instance, instead of leveraging the existing Microsoft Access database, many project managers are tracking projects using Excel spreadsheets, which operate independently of a centralized system. This preference arises from perceptions among some City staff that the database is outdated and difficult to navigate. The lack of transparency complicates department management’s ability to track project status independently, hold teams accountable for timely and effective execution, and report to City Council on project progress.

While it was noted that the Utilities department had a system in place for monitoring the financial status of projects—utilizing bi-weekly reporting through the COM Project Status Inquiry—there did not appear to be a centralized or standard process for the City as a whole. Without accurate, transparent, and regular reporting, City leaders lack proper insight into capital project advancement. However, staff have indicated that scaling up reporting could overwhelm their current workload, potentially leading to more frequent project status check-ins than desired.

Recommendations
The GFOA recommends that jurisdictions 1) plan and design systems to collect, store, and analyze project data and to report results, and 2) regularly monitor capital projects’ financial and project activity information.0F
1 To achieve this, the City should implement the following recommendations.

The City should establish a formalized project-tracking methodology.

The appropriate technological solutions for project accounting, scheduling, and reporting may take the form of spreadsheets, customized databases, ERP systems, or project management software.

Often, more than one solution is used. Regardless of the specific tracking and reporting format, the City can begin by establishing standard practices for tracking capital projects. Whether staff are 1 https://www.gfoa.org/materials/capital-project-monitoring-and-reporting #4..
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tracking projects in Excel or in an ERP system, all projects should be tracked in a systematic and uniform way.

In the short term, this could be accomplished by assigning a staff member to work with project managers to maintain and regularly update a centralized spreadsheet that captures project status, progress toward key milestones, the budget expended, and any changes to the budget or project.

The City should develop regular reporting on key financial and project data to keep all stakeholders up-to-date.

Though reviving the end-of-year status update on in-progress projects will be an improvement to the City’s reporting environment, it is best practice to provide ongoing holistic project-level performance reporting on a regular basis. The GFOA recommends that regular performance reporting include the following project information presented in a straightforward and clear manner:
• A comparison of actual results to the project plan, including:
○ Percent of project completed, including budget, forecast, commitment, and expenditure information
○ Percent of project budget expended
○ Progress on key project milestones
○ Contract status information, including time remaining and percentage used ○ Revenue and expenditure activity
○ Cash flow and investment maturities
○ Funding commitments
○ Available appropriation
○ Comparison of results in relation to established performance measures • Reporting of changes to project scope, budget appropriations, costs, schedule, or funding • A regularly reported snapshot of key schedule, cost estimate, and available funding information to establish baseline data for performance measures and report components When possible, the City should invest in a modern project management system and the resources necessary to support its design, implementation, and maintenance to support capital projects.

Comprehensive project-tracking and reporting capabilities are essential to effective capital project operations. The City’s capital program is large and complex as well as requires a modern solution to manage projects, track progress, allocate resources, and facilitate communication. While a project management solution requires resource investment and time to implement and learn, the risk of continuing to operate without a modern solution likely outweighs the risk of investing in such a system. The implementation of a project management solution will require collaboration with the City’s Information Services Department (ISD) equivalent, in addition to sufficient staffing within both the City’s operational departments and ISD equivalent to manage the technology investment effectively, provide expertise to users, and oversee training. #4..
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STAFFING

5. Observation Despite significant recruiting efforts, the City has struggled to hire an adequate number of qualified civil engineers due to an overall shortage in the labor market, which has resulted in the engineers that are currently on staff being responsible for larger than usual project loads, and has limited the number of new projects that the City is able to take on at a time.

Recommendation The City should review their current recruiting practices and update them where necessary in order to broaden their reach and attract a greater number of applicants. Additionally, the City should pursue innovations to streamline engineering processes and reduce overall workload.

Current Conditions
The City has struggled to hire an adequate number of qualified civil engineers due to an overall shortage of prospects in the current labor market. Interviews conducted reveal this is consistent across various departments that require engineering roles to carry out capital projects, including both Utilities (wastewater design, water design, and water resources) and Engineering Services (land development, construction administration, surveying, transportation, and parks planning and development). This inability to locate and hire qualified candidates has created an increased burden and a large workload for the civil engineers currently employed by the City. Team members from every group we met with reported that while other roles had adequate staffing levels, they had been unable to adequately staff their engineering roles for several years. This has resulted in the engineers on staff being responsible for larger than usual project loads, limiting the number of new projects the City can undertake at any given time. Engineers in these departments are crucial for tasks such as designing infrastructure, conducting feasibility studies, ensuring regulatory compliance, and overseeing construction activities.

In an effort to fully staff these positions, the departments have worked in conjunction with human resources on a number of initiatives in order to attract new talent to the City. These initiatives have included conducting a detailed and benchmarked compensation study, increasing the pay range for all licensed engineers, conducting a mailing campaign that reached out to 2,000 licensed engineers throughout California, and advertising job openings through a wide range of services and professional organizations. While these vacancies have been difficult to fill, team members noted that the City has utilized outside consultants when available and has been actively working to attract new talent to address these gaps in the engineering teams.

Recommendations
The City should review their current recruiting practices and update them where necessary in order to broaden their reach and attract a greater number of applicants. When reviewing and updating their current recruiting practices for civil engineering positions, the City should consider the following:
• Consider offering signing bonuses: The City should consider offering signing bonuses or other incentives such as relocation bonuses in order to attract qualified candidates. • Continue to recruit through established channels: The City should continue working to recruit qualified engineers through established channels to ensure they are reaching the greatest number of qualified candidates.
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If the City continues to struggle to hire and maintain an adequate number of licensed and experienced civil engineers, they should consider the following options to reduce the workload for their current engineering staff:
• Reduce administrative workload: The City should reduce the engineering team’s administrative workload by delegating administrative tasks to support teams to allow the current City engineers to focus on critical project tasks.
• Outsource non-core tasks: The City should consider outsourcing certain tasks or projects to outside firms and consultants to reduce the workload of current City engineers. • Utilize software tools: The City should invest in project management and engineering software that can streamline or automate workflows, allowing engineers to focus on higher-value tasks.

D. Low Priority

CIP BOOK BEST PRACTICES

6. Observation The CIP book aligns with a number of industry best practices, but there are opportunities to improve public transparency, process descriptions, and financial and project data.

Recommendation The City should update the CIP book with best practice elements, including expanding on the planning and prioritization process descriptions, adding more detail to financial and project data, and providing a holistic narrative about the City’s capital activities.

Observation
The City develops a five-year CIP budget that is communicated in a CIP book. The CIP book is a public document that contains information crucial to City operations. It is intended to link the City’s comprehensive fiscal plans and the physical development of capital projects, and inform the public of the capital improvement projects that the City plans to begin in the next two years. Due to the plan’s importance, it is crucial that the City ensures that the plan and the CIP planning process are aligned with industry best practices. The current CIP book adheres to several best practices, including the following:
• Accessibility: Programs should be written in plain language, avoid jargon, and include a welcome message.
• Timeline: Programs should document at least three to five years of upcoming projects. • Definition of terms: Readers are aware of what constitutes a capital project and what constitutes a significant capital maintenance project.
• Planning and prioritization process: Programs should include a description of the budget process.
• Capital maintenance: Programs should include significant capital maintenance projects.

A full comparison of the City’s CIP book to best practices can be found in Appendix B. #4..
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Recommendations
There is an opportunity to align the CIP book with best practices in the following areas:

Planning and prioritization
The City should enhance the CIP by developing a comprehensive framework that outlines the planning and prioritization process for capital projects. This framework should include:
• A specific section detailing how each stakeholder department will fulfill its operational and financial requirements, providing a consistent approach across all project types to ensure alignment with the City’s strategic objectives and operational priorities • A comprehensive description of the CIP review committee, including its membership composition and the responsibilities of both the committee and its members, to enhance transparency and clarify the governance structure overseeing the CIP
• A detailed explanation of the role of the public and other external stakeholders in the capital improvement process, outlining the expected level and type of public participation to ensure consistency with community expectations and previous engagement efforts • A clear articulation of the decision-making process within the capital planning framework, including a structured approach for prioritizing project needs and allocating limited resources, thereby ensuring transparency and alignment with the City’s strategic objectives By implementing this framework, the City will create a more effective and transparent capital planning process that fosters collaboration among stakeholders and enhances the overall management of capital projects.

Financial planning and project data
The City should enhance the CIP by incorporating comprehensive financial and project data that includes:
• A detailed inventory of unfunded capital improvement projects, along with their overall estimated costs, presented in an appendix to provide a clear understanding of the City’s capital needs and facilitate future planning and resource allocation
• Adjusted cost projections for inflation for all projects scheduled beyond the first year, ensuring more accurate budgeting and financial planning that reflects the true costs of future capital improvements
• All required project information for each funded project, with a specific focus on providing clear estimates of lifecycle costs, including land acquisition, design, construction, contingency, and post-construction costs, as well as anticipated ongoing impacts on the City’s operating budget By implementing this financial and project data, the City will improve transparency, enhance decisionmaking regarding resource allocation, and ensure the sustainability of capital projects throughout their lifecycles.
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Appendix A: Capital Planning Policy Best Practices
The following table details the elements that should be covered in key capital planning policies.

POLICY

CATEGORY POLICY BEST PRACTICE ELEMENTS
Capital project
monitoring and
reporting
Project Monitoring and
Reporting Policy
Policies related to project status and activity monitoring should include a minimum requirement that regular reports will:
● Provide a comparison of actual results to the project plan, including:
○ Percent of project completed
○ Percent of project budget expended
○ Progress on key project milestones
○ Contract status information, including time remaining and percentage used ○ Revenue and expenditure activity
○ Cash flow and investment maturities
○ Funding commitments
○ Available appropriation
● Compare results in relation to established performance measures ● Highlight significant changes to project scope, costs, schedule, or funding An annual snapshot of a project’s key schedule, cost estimate, and available funding information should be taken to establish baseline data for performance measures and report components.

CIP planning Capital Request and
Project Prioritization
Policy
Capital request prioritization policies should help evaluate capital requests so they can be prioritized based on the following:
● Health and safety: Priority should be given to high-risk safety issues that require a capital project to correct
● Asset preservation: Capital assets that require renewal or replacement based on the capital asset lifecycle
● Service/asset expansion: Infrastructure improvements needed to support the government’s policies, plans, and studies
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POLICY

CATEGORY POLICY BEST PRACTICE ELEMENTS
These policies should include:
● Guidance for when the initial prioritization process may be impacted by legal requirements and/or mandates
● Procedures for coordination with related entities
● Procedures for allowing submitting agencies to provide an initial prioritization ● Guidance for collecting and incorporating input and participation from major stakeholders and the general public
● Policies for considering the impact on operating budgets resulting from capital projects ● A practice of applying analytical techniques for evaluating potential projects (e.g., net present value, payback period, cost-benefit analysis, lifecycle costing, and cash flow modeling) ● Details for a rating system that will facilitate decision-making ● Procedures for ensuring CIP projects align with and support the City’s Master Plan Financial Impact and
Cost Estimation Policy
Policies to ensure that the full extent of capital projects/assets and the associated lifecycle costs are considered when developing a multi-year capital plan should include:
● Procedures for defining the scope and timing of a planned project in the early stages of the planning process
● Guidance for identifying and using the most appropriate approaches when estimating project costs and potential revenues
● Procedures for procuring outside assistance if internal resources are not sufficient to estimate a capital project’s costs, revenues, and/or lifecycle costs
● A practice of adjusting cost projections based on anticipated inflation for projects programmed beyond the first year of the plan
● Guidance for providing a clear estimate of all major components required to implement a project, including acquisition needs, design, construction, contingency, and post-contingency costs ● Guidance for quantifying the ongoing lifecycle costs associated with each project and identifying funding sources for those costs
Capital asset
management
and deferred
maintenance
Capital Asset
Management Policy
Policies related to capital asset management practices should include:
● A requirement for a complete inventory and periodic measurement of the physical condition and existence of all capital assets
● A requirement to establish condition and functional performance standards to be maintained for each type of capital asset
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POLICY

CATEGORY POLICY BEST PRACTICE ELEMENTS
● A requirement to evaluate existing capital assets to determine if they still provide the most appropriate method to deliver services
● Consideration of developing financial policies that identify and dedicate fees or other revenue sources to help maintain the expected service levels of capital assets ● A requirement to allocate sufficient funds in the multi-year capital plan and annual operations budget for condition assessment determination and reporting, preventative maintenance, repair, renewal, and replacement of capital assets to continue providing services that contribute to public health, safety, and quality of life
● A requirement to monitor and communicate progress toward stated goals and the overall condition of capital assets, with appropriate controls to ensure the validity and accuracy of this information ● A requirement to provide, at least once every three years, a “plain language” report on capital assets to elected officials that is also made available to the general public Capital project
monitoring and
reporting
Project Monitoring and
Reporting Policy
Policies related to project status and activity monitoring should include a minimum requirement that regular reports will:
● Provide a comparison of actual results to the project plan, including:
○ Percent of project completed
○ Percent of project budget expended
○ Progress on key project milestones
○ Contract status information, including time remaining and percentage used ○ Revenue and expenditure activity
○ Cash flow and investment maturities
○ Funding commitments
○ Available appropriation
● Compare results in relation to established performance measures ● Highlight significant changes to project scope, costs, schedule, or funding An annual snapshot of a project’s key schedule, cost estimate, and available funding information should be taken to establish baseline data for performance measures and report components. #4..
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POLICY

CATEGORY POLICY BEST PRACTICE ELEMENTS
Project
management
Project Management
Procedures
Project Management Procedures include tactical guidance on the following topics:
● Contract administration and management
● Bid and procurement management
● Change order and scope management and controls application ● Expenditure management controls
● Design and construction budget management controls
● Project close-out controls
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Appendix B: CIP Book Best Practice Comparison
The following table compares the City’s CIP book with best practices.

POLICY

CATEGORY SOURCE BEST PRACTICE
THE CITY’S CURRENT

CONDITION RECOMMENDATION
Accessibility Industry best
practice, GFOA
Program books should be written
in plain language (avoiding jargon
when possible) and include a
welcome message and/or guide to
describe how to read and use the
report. This is done to make the
document more accessible to
members of the public.

The CIP book is aligned with best
practices.

Timeline GFOA Program books should document
at least three to five years of
upcoming projects. While only the
current year will be approved and
funded, this long-term planning
provides transparency for City
leadership and enables more
strategic decision-making.

The CIP book does contain
information on upcoming projects;
however, the available budget
reporting does not adequately
reflect the full project lifecycle
costs.

Definitions of
terms
GFOA Program books should include a
clear definition of what constitutes
a capital project and significant
capital maintenance project.

The CIP book is aligned with best
practices.

Planning and
prioritization
process
description
GFOA Program books should include a
description of how an organization
will approach capital planning,
including how stakeholder
departments will collaborate to
prepare a plan that best meets the
operational and financial needs of
the organization.

The City’s CIP book does not
include a section that outlines how
stakeholder departments will meet
operational and financial needs of
the organization. Instead, in the
sections for specific issues such
as Public Safety, it provides a
couple of pages describing the
issues, how they’ve been solved,
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POLICY

CATEGORY SOURCE BEST PRACTICE
THE CITY’S CURRENT

CONDITION RECOMMENDATION
and future projects. This isn’t
consistent across every project
type.

AD 7.14 CIP Policy does a good
job of explaining how different
groups plan, manage, and
coordinate capital planning.

GFOA The process should include a
description of the program’s review
committee, identification of
committee members, and a
description of the committee’s and
its members’ responsibilities.

There is mention made on Page 7
(page 10/389) of the CIP Task
Force and the City of Modesto
Planning Commission, but no
further explanation of who this
team is made up of.

GFOA The process should include a
description of the role of the public
and other external stakeholders in
the process. The level and type of
public participation should be
consistent with community
expectations and past
experiences.

The CIP includes information
about the external agencies who
are involved in the process, but
does not mention the role of the
public.

GFOA The program should note how
decisions will be made in the
capital planning process, including
a structured process for prioritizing
needs and allocating limited
resources.

The CIP book mentions that
proposed projects are reviewed by
the City of Modesto Planning
Commission for General Plan
Conformity before being forwarded
to the City Council for review.

Additional documents provided
state the same (i.e., lack of detail
and depth).

Industry Best
Practice
Program books should include a
description of the budget process.

The CIP book is aligned with best
practices.
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POLICY

CATEGORY SOURCE BEST PRACTICE
THE CITY’S CURRENT

CONDITION RECOMMENDATION
Capital
maintenance
GFOA CIP books should include
significant capital maintenance
projects.

The CIP book is aligned with best
practices.

Financial and
project data
Industry best
practice
CIP books should include a
description of the funding sources
used to support CIP projects.

Each project has a small mention
of where the fund is coming from,
but uses general blanket terms
such as “Capital Fund” and
“Capital Grants.” It is unclear if the
funding is through grants, private
borrowing, or City revenues.

The Policy section in the AD 7.14
CIP Policy document outlines
where funding will be received and
some of the criteria needed to
pursue each funding opportunity.

Industry best
practice
Program books should include a
summary report of total dollar
amount (for both sources and
uses) of the capital program for the
current budget year. Funded
projects can be presented in a
variety of ways, including by
funding source, project by
department, and project by project
category.

The CIP book meets some of the
requirements, choosing to break
out projects by project category,
but does not provide a summary
report of the total dollar amount of
the capital program for the current
budget year.

Industry best
practice
Program books should include a
description of unfunded capital
improvement projects, including
overall estimated costs. Many
cities include a full inventory of all
unfunded projects in an appendix.

There is no list of unfunded
projects in the CIP book. All
projects in the CIP book seem to
have some kind of funding; even
projects that are in the design
phase have some kind of funding
behind them.
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POLICY

CATEGORY SOURCE BEST PRACTICE
THE CITY’S CURRENT

CONDITION RECOMMENDATION
Industry best
practice
For projects programmed beyond
the first year of the plan, cost
projections should be adjusted for
inflation.

CIP book does not meet this
requirement.

Industry best
practice
For each funded project, program
books should include project
information, including at a
minimum:
● Project title
● Category
● Short project description
● Project status
● Funding source
● Clear estimate of lifecycle
costs (including land
acquisition needs, design,
construction, contingency, and
post-construction costs)
● Estimated anticipated ongoing
impacts (operations and
maintenance costs) to the
City’s operating budget
(including costs to operate,
maintain, administer, and
renew or replace the capital
asset)
Although some of this information
(e.g., description, title, and
category) is included, the CIP book
does not contain estimates of
anticipated ongoing operations
and maintenance costs or lifecycle
costs. It was noted in our review
that for some projects, the
reported budgets were not
reflective of the full project
lifecycle.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

July 30, 2025
Date: July 9, 2025
TO: Audit Committee
Sue Zwahlen, Chair
David Wright, Vice-Chair
Chris Ricci, Member
Camille Garcia, Public Member
Thomas Orosco, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Permitting Efficiency Study Update Report
CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider the Permitting Efficiency Study Update Report and forwarding to Council for acceptance. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

The recommended action supports the following 2025-2026 City of Modesto Strategic Plan Initiatives: Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved an efficiency study of the City’s permitting function as part of the FY2024- 25 Internal Audit work plan.

DISCUSSION:

The study provides updates on the 2018 Permitting Efficiency Study and identifies additional opportunities for improvement in the permitting and development review processes. The report contains six recommendations to improve operations, processes, and systems. This engagement was completed under the consultancy standards of the American Institute of Certified Public Accountants (AICPA).

FISCAL IMPACT:

None.

RECOMMENDED COMMITTEE ACTION:

Motion to receive the Permitting Efficiency Study Update Report and forwarding to Council for acceptance.
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Audit Committee, July 30, 2025
Permitting Efficiency Study Update report

Approved by:

Colleen Rozillis, City Auditor
Attachments:

1. Permitting Efficiency Study Update Report dated 7-8-25 #5..
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.

CITY AUDITOR’S OFFICE

FINAL REPORT

PERMITTING EFFICIENCY STUDY UPDATE
July 8, 2025
Baker Tilly Advisory Group, LP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500
As of June 3, 2025, Moss Adams LLP has merged with Baker Tilly.

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.
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Permitting Efficiency Study Update Report

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Table of Contents
Executive Summary 1
A. Introduction 1
B. Summary of Observations and Recommendations 2
Introduction 5
A. Background 5
B. Scope 6
C. Approach 6
2018 Permitting Study Updates 8
Observations and Recommendations 12
A. Operations 12
B. Processes and Systems 19
C. Tactical Solutions 24
Appendix A: Survey Results 30
Appendix B: Policy and Procedure Gap Analysis 43
Appendix C: Workload Trend Analysis 46
Appendix D: Peer Staffing Comparison 62
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EXECUTIVE SUMMARY
The City of Modesto’s (the City’s) Community & Economic Development (CED) Department ensures that new development in the city achieves a balance between the economic, social, environmental, and quality of life goals for the City. Permitting and development review processes involve many key divisions within the City and rely on coordination for timely turnaround of permit applications. The City engaged its internal auditor, Moss Adams LLP (Moss Adams), to conduct a follow-up review of the Permitting Efficiency Study conducted in 2018. The prior study evaluated opportunities for improvement in the permitting and development review processes, including entitlement and construction permits.

The 2018 Permitting Efficiency Study identified 10 observations and recommendations. Overall, the City has made progress in many areas identified in the 2018 report. We observed that eight prior observations have been resolved and two are ongoing, but their risk has been diminished through the City’s continued efforts. Below is a summary of the status of the observations from the previous review and detailed observations are discussed in Section IV. 2018 STUDY PROGRESS REPORT
Observation Recommendation Status
1 Decentralized Plan Check and
Permitting Processes
Define and create an organized and
centralized location of resources
relevant to the varied permitting
activities.

Resolved
2 Reliance on Sole Source
Employees Close to Retirement
Proactively strategize ways to
incorporate succession planning for
key positions involved in permitting
activities to ensure operational
continuity and prevent the loss of
institutional knowledge.

Resolved
3 Early Stages of Outcome
Performance Measuring and
Reporting
Review and identify more meaningful
performance metrics related to
permitting activity and identify
opportunities for sharing with City
leadership and customers alike.

Ongoing
4 Significant CED Department
Leadership Turnover
Support departmental stability by
ensuring positions are filled timely,
staff are provided sufficient training
and support, and dedicate resources
to developing managers through
coaching and training.

Resolved
5 Building Permit Plan Check
Slowdowns from Incomplete
Applications
CED should develop a comprehensive
checklist of all the items that must be
included in pre-submittal and plan
check.

Resolved
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2018 STUDY PROGRESS REPORT
Observation Recommendation Status
6 Inconsistent and Outdated
Policy and Procedure
Documentation
Strengthen policies and procedures,
cross-training, and workforce planning;
prioritize the documentation of policies
and procedures related to the various
permitting processes, updating
outdated policies and documenting
previously uncaptured processes, and
identifying key personnel.

Ongoing
7 Heavy Reliance on Manual
Processes and Paper
The selection and implementation of a
new Permitting System provides an
opportunity to strengthen internal data
and processes.

Resolved
8 Negative Impacts to Customer
Service at Development
Services Center
Reevaluate how the Development
Services Center reception counter is
staffed, and provide training on
customer service expectations and
permitting activity processes.

Resolved
9 Lack Capacity for
Environmental and Stormwater
Related Permitting Activities
Prioritize appropriately resourcing and
staffing the positions required to safely
and efficiently conduct the
environmental and stormwater
requirements for permitting activities.

Resolved
10 No Formal Customer Feedback
Mechanism in Place
Develop a simple yet meaningful
process to solicit, collect, and analyze
customer feedback on the different
permitting process activities in order to
facilitate ongoing continuous
improvement efforts.

Resolved
This follow-up study was conducted between February and May 2025 using a four-phased approach consisting of project planning and management, fact-finding, analysis, and reporting.

Observations and recommendations were grouped into three categories as defined below: 1) Operations, 2) Processes and Systems, and 3) Tactical Solutions, and are summarized below.

Observations and recommendations for all three categories are provided in Section IV of this report.

OBSERVATIONS AND RECOMMENDATIONS
Operations

1. Observation
Due to growth in permitting activities, workloads for staff involved in the permitting and building inspection processes have increased, although capacity to manage the workload is low, likely due to low staffing levels. #5..
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OBSERVATIONS AND RECOMMENDATIONS
Recommendation
As resources allow, prioritize hiring for critical positions that will alleviate the most significant workload pressures, including Building Inspectors (particularly staff dedicated to code enforcement) and Development Services Technicians (in both Building and Planning).

Review workloads throughout outside departments involved in the plan review process after implementing process improvements recommended in Plan Review Timelines.

Review workloads at the Reception Counter after implementing system upgrades recommended in Automated Phone and Messaging Systems.

2. Observation
The City’s current fee structure may not adequately cover the cost of all phases of development review and permitting activities, which could result in the subsidization of these activities.

Recommendation The City should prioritize conducting a fee study and establish clear cost recovery goals for development and permitting activities.

Processes and Systems

3. Observation The CED Department has established performance measures related to permitting activities, although these metrics are largely volume-based.

Recommendation
To enhance customer service delivery, the CED Department should develop additional performance measures related to customer experience and timeliness.

4. Observation
Plan review timelines may be difficult for some departments to meet due to limited staff capacity, variation in project complexity, and a lack of consistent procedures across departments for timely review of plans.

Recommendation
To help manage the plan review timelines across departments and address the limited staff capacity, the City should:

Consider implementing differentiated timelines based on project complexity and type
Implement a standardized procedure for staff to perform an initial completeness check upon receiving an application and before initial review is started

5. Observation
Comments made by reviewing departments during plan review may not be easily identified, which can cause delays in the review process for both applicants and City staff.

Recommendation
To enhance the clarity of comments, CED should incorporate utilization of the markup summary feature in eTRAKiT as a standard procedure during the plan review process and ensure that all plan reviewing departments consistently use the feature.

Tactical Solutions

6. Observation
Although eTRAKiT has significantly streamlined and modernized the permitting and plan review process, there are some challenges related to the system’s governance and capabilities that are causing issues for staff. In addition, the lack of automated phone and messaging systems is impeding efficiency in some areas.
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OBSERVATIONS AND RECOMMENDATIONS
Recommendation
To improve the customer experience, limit staff confusion, and reduce plan review time, the CED Department should implement a nested question feature to guide applicants to the correct application forms for their project.

To streamline the document review process for staff and applicants, CED should develop and enforce standardized naming conventions for all documents uploaded to the eTRAKiT system.

Consider offering expanded eTRAKiT trainings to staff and customers. #5..
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INTRODUCTION
The objective of the City’s CED Department is to ensure that new development in the city achieves a balance between the economic, social, environmental, and quality of life goals for the City. For the purposes of this study, permitting and development refers to the various types of permitting and developing activity occurring within the City, which encompasses entitlement and construction permitting processes. The Planning Division is the owner of the entitlement process, while the Building Division generally coordinates construction permits. The key divisions that connect to the various types of permitting and development activities include:
• Planning: The Planning Division provides services related to land use within City limits, including processing all zoning and land use applications and working with the development community to facilitate the review of new projects.
• Building Safety: The Building Division provides a variety of services at the request of property owners and developers seeking to build or modify a structure, including reviewing building plans, issuing building permits, and inspecting construction to ensure compliance with all plumbing, mechanical, electrical, and structural codes.
• Land Development Engineering: The Land Development Engineering Division is responsible for maintaining and upholding the City of Modesto Standard Design Specifications; reviewing improvement plans and maps, including all new subdivisions; reviewing stormwater requirements during building plan reviews; processing various easement dedications; issuing encroachment permits for any work performed in the City’s right-of-way such as street curbs, gutters, sidewalks, and driveways; water and sewer connection permits; and transportation permits. ○ Parks Planning: The Parks Planning Division within the Engineering Department checks construction drawings for compliance with landscape and irrigation plans • Fire: The Fire Department provides services aimed at reducing the loss of life, health, property, and environmental quality through reviews and inspections of site plans, fire-system tests and inspections, and water flow tests.

The Development Services Center, in the City-County Administrative Building, includes staff representing the City’s various departments such as Building Safety, Land Development & Engineering, and Planning. Fire relocated to a separate building approximately two years ago. Types of requests, permits, licenses, and services provided by the Development Services Center include:
• Planning-related actions including land use and entitlement applications (e.g., subdivisions, use permits, zoning changes)
• Construction-related applications (building permits, building plan reviews) for development and construction projects
• Standard Design Specification reviews and permits, such as easement dedications, encroachment permits, water and sewer connection permits, and transportation permits • Processing over-the-counter applications for miscellaneous permits and licenses #5..
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The FY24-25 Internal Audit work plan included a follow-up review of the Permitting Efficiency Study conducted by Moss Adams in 2018. The prior study evaluated opportunities for improvement in the permitting and development review processes, including entitlement and construction permits. The purpose of this assessment is to both provide an update on progress toward the issues identified in 2018 and determine any additional opportunities for improvement related to the development review process, permitting processes, and customer service and communications.

This study was completed under the consultancy standards of the American Institute of Certified Public Accountants (AICPA).

This study was conducted between February and May 2025 and consisted of four major phases as detailed in the table below.

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

February 2025
2 Fact-Finding and
Data Collection 
In the second phase we conducted our fieldwork,
including documentation review, interviews, and
customer surveys.
● Document Review: We reviewed documents
including performance data, policies and
procedures, planning documents, and customer
feedback.
● Interviews: We conducted interviews with 21
members of staff and management in key
divisions connected to one or more of the
permitting processes, including Engineering, Fire,
Public Works, Parks, and Utilities. We also met
with four developers who frequently work with the
City.
● Customer Survey: We distributed a survey to
permit applicants who submitted encroachment,
building, or planning-related permit applications to
the City within the past three years asking for
feedback on their experiences with the City
including customer service, processing times, and
communication. Of the 6,597 permit applicants
that the survey was distributed to, 294 submitted
complete responses—a 4.5% response rate. Our
analysis excluded blank and non-applicable
responses. Full survey results are included in
Appendix A.

February to March
2025
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PROJECT PHASES
Phase Description Period
3 Analysis 
Based on the information gained during our fieldwork
phase, we performed a gap analysis of current
conditions and identified opportunities for
improvement. Leveraging best practice information
and our own experience from working with similar
municipalities, we developed practical
recommendations. As part of this phase, we also
performed a gap analysis of CED policies and
procedures compared to best practices, analyzed
workload and staffing trends, and gathered public
information from peer jurisdictions related to staffing and permitting practices.

April to May 2025
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.

June 2025
(anticipated
presentation to
Audit Committee
July 2025)
It is important to note the areas of strength and existing good practices that can be leveraged for further improvement within the City. The Moss Adams team would like to note the following commendations.

Interdepartmental Coordination: Staff reported that collaboration between departments involved in permitting has improved, which has contributed to a more streamlined plan review process. The implementation of a project manager role to oversee and guide departments through the process has helped mitigate previous delays during plan review.

Commitment to Continuous Improvement: As evidenced by the progress made on the issues that were noted in the 2018 report, the CED Department is committed to constantly improving the permitting and plan review process, both for developers and staff.

Application Time for Decisions Made: Since 2021, the Planning Division has continuously decreased the amount of time necessary from when an application is received to issue a decision. On average, decisions were made 47 days after an application was received in 2021 and the division has reduced that to an average of 12 days as of 2024.

We would like to commend the CED Department staff and management for their willingness to assist us in this assessment process. These commendations, coupled with our observations and recommendations, provide an overview of areas of strengths and opportunities to improve operations and reduce risk at the City.
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2018 PERMITTING STUDY UPDATES
Based on our review of documentation and data provided by the City, as well as information obtained through interviews, we evaluated the City’s progress in implementing the recommendations identified in the 2018 Permitting Study.

1. 2018 Observation Decentralized Plan Check and Permitting Processes 2018
Recommendation
Define and create an organized and centralized location of resources relevant to the varied permitting activities.

Status Resolved
The City implemented the eTRAKiT system, which allows users to manage information related to permits, inspections, and plan review and provides a centralized location where all documentation related to a project is uploaded. Staff report that eTRAKiT has significantly streamlined the permitting process and made plan review processes smoother across departments. The CED Department also developed eTRAKiT guidance documents and videos that are made available to customers online through the Building Safety and Planning Division webpages, making resources more accessible to permit applicants.

Planning recently began accepting applications online via eTRAKiT as well. Additionally, staff members in the Building Safety Division are responsible for overseeing the plan review process and coordinating inter-departmental work, which has significantly improved process flow.

2. 2018 Observation Reliance on Sole Source Employees Close to Retirement 2018
Recommendation
Proactively strategize ways to incorporate succession planning for key positions involved in permitting activities to ensure operational continuity and prevent the loss of institutional knowledge.

Status Resolved
All potential employee retirements identified in the 2018 study have occurred; therefore, the City is not currently reliant on their institutional knowledge. Prior to their departure, the City developed several guidance documents to capture this knowledge. For example, a process flow for the development review process is in place to provide a roadmap for project managers to ensure all steps occur during plan review. There are five CED employees eligible for retirement in the next five years, four of which are eligible in 2025 and one in 2030. However, the Department has developed several checklists for permitting and inspections, as well as documentation of key permitting processes related to eTRAKiT, rental housing, and vacant properties and administrative, Board of Building Appeals, and accounting procedures to mitigate reliance on sole contributors. #5..
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3. 2018 Observation Early Stages of Outcome Performance Measuring and Reporting 2018
Recommendation
Review and identify more meaningful performance metrics related to permitting activity and identify opportunities for sharing with City leadership and customers alike.

Status Ongoing
Performance standards for plan review were established by all reviewing divisions, including Building Safety, Planning, Fire, Landscaping, Land Development & Engineering, Storm Water, Solid Waste, and Environmental Compliance, and are reported on quarterly. Plan review timeframes are established for first reviews and resubmittals for project types including New Commercial Buildings and Sites, New Apartments and Multifamily, Commercial Remodels, New Single-Family Dwellings, and Residential Remodels. Departments also track and report other volume-based and customer service metrics, and staff noted that eTRAKiT has helped improve the ease of tracking. However, as will be noted in Performance Measures, there are opportunities to continue developing meaningful performances measures that help the City understand the level of customer service provided to applicants.

4. 2018 Observation Significant CED Department Leadership Turnover 2018
Recommendation
Support departmental stability by ensuring positions are filled timely, staff are provided sufficient training and support, and dedicate resources to developing managers through coaching and training.

Status Resolved
The 2018 study noted that there was considerable turnover within the CED Department, particularly with the Department Director and the Building Official, which was a filled with a part-time consultant.

Since that time, leadership has stabilized, with positions filled since the last Permitting Study was conducted. The Planning Manager position recently turned over; however, there is ample leadership support to fill the role quickly. Additionally, CED leadership track trainings that staff attend. Staff reported that managers provide mentoring and training to more junior staff, which contributes to longterm career development and succession planning.

5. 2018 Observation Building Permit Plan Check Slowdowns from Incomplete Applications 2018
Recommendation
CED should develop a comprehensive checklist of all the items that must be included in pre-submittal and plan check.

Status Resolved
Building Safety developed checklists for project submittals into eTRAKiT to educate permit applicants on documents needed prior to submitting. These checklists cover various projects such as New Multifamily, New Commercial, New Single Family Dwellings, Residential Remodels, and Accessory Dwelling Units (ADUs).
#5..
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6. 2018 Observation Inconsistent and Outdated Policy and Procedure Documentation 2018
Recommendation
Strengthen policies and procedures, cross-training, and workforce planning; prioritize the documentation of policies and procedures related to the various permitting processes, updating outdated policies, and documenting previously uncaptured processes, and identifying key personnel.

Status Ongoing
Policies and procedures related to administrative functions, accounting, some building safety permitting and inspections activities, the board of building appeals, the rental housing safety program, and vacant property registrations are documented and dated to support operational continuity.

Staff reported issues with completing updates to policies and procedures due to high workloads, and as a result there are outstanding additional policies and procedures related to online applications, a zoning code update, and signage that need to be updated and/or documented. This is further discussed in Policies and Procedures. We consider this finding ongoing due to the nature of policies and procedures and the continuous process of updates and revisions to remain current.

7. 2018 Observation Heavy Reliance on Manual Processes and Paper 2018
Recommendation
The selection and implementation of a new Permitting System provides an opportunity to strengthen internal data and processes.

Status Resolved
Plan reviews are now conducted electronically through the eTRAKiT system, which automates the process flow and allows users to identify each step of the process as reviews are completed, making the permitting process more seamless.

8. 2018 Observation Negative Impacts to Customer Service at Development Services Center 2018
Recommendation
Reevaluate how the Development Services Center reception counter is staffed and provide training on customer service expectations and permitting activity processes.

Status Resolved
The Development Services Center reception counter is staffed with full-time employees. Regular temporary staff who are aware of the City’s processes are also used as needed to supplement when staff resources are low. The City also provides regular trainings to Development Services Center staff. However, as will be discussed in Staffing and Workload, staff shared that the workload at the Development Services Center is high.
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9. 2018 Observation Lack Capacity for Environmental and Stormwater Related Permitting Activities
2018
Recommendation
Prioritize appropriately resourcing and staffing the positions required to safely and efficiently conduct the environmental and stormwater requirements for permitting activities.

Status Resolved
Leadership and staff reported that environmental and stormwater activities are adequately supported.

Key Performance Indicators (KPIs) for 2024 also show that these plan checks are occurring timely and are continually tracked and monitored.

10. 2018 Observation No Formal Customer Feedback Mechanism in Place 2018
Recommendation
Develop a simple yet meaningful process to solicit, collect, and analyze customer feedback on the different permitting process activities to facilitate ongoing continuous improvement efforts.

Status Resolved
Customer feedback surveys are automatically sent to customers through eTRAKiT after most building permits are issued and building inspections passed, which helps CED gather regular customer feedback. Additionally, developer round tables are conducted quarterly to mitigate potential issues during the plan review process and gather feedback to inform ongoing process improvements. #5..
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OBSERVATIONS AND RECOMMENDATIONS
Based on the input gathered from interviews, document review, staff survey, and comparisons to best practices, we prepared the following set of observations and recommendations.

1. Observation
Due to growth in permitting activities, workloads for staff involved in the permitting and building inspection processes have increased, although capacity to manage the workload is low, likely due to low staffing levels.

Recommendation
As resources allow, prioritize hiring for critical positions that will alleviate the most significant workload pressures, including Building Inspectors (particularly staff dedicated to code enforcement) and Development Services Technicians (in both Building and Planning).

Review workloads throughout outside departments involved in the plan review process after implementing process improvements recommended in Plan Review Timelines.

Review workloads at the Reception Counter after implementing system upgrades recommended in Automated Phone and Messaging Systems.

Observation
Challenges with workloads was the most common topic raised during interviews with staff from both Planning and Building Safety. Although workload (a measure of work volume per number of staff assigned to the work) has decreased in some areas since 2022, particularly areas related to commercial applicants and permits, workload has increased in the following areas (further detailed in the narrative below for each team and also included in Appendix C):
• Overall number of customers per staff in Building
• Number of ADU applications per staff
• Number of ADU permits issued per staff
• Number of building inspections completed per staff
• Number of final building inspections completed per staff • Total application volume per staff
• Number of external customer service hours spent per staff • Number of internal customer service hours spent per staff We used publicly available staffing data to compare the City’s staffing in these areas to the cities of Stockton, Manteca, Riverbank, Turlock, and Merced. Because workload data, including the number of permits issued, inspections completed, and applications received was not available, comparisons are based on the population and square mileage of each city. The table below shows that by every metric based on population and square mileage, the City’s Building, Planning, and Inspections staff cover more constituents and square miles per person than staff at peer cities do on average. Though this is #5..
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not a formal peer benchmarking analysis, this suggests that the City may be understaffed compared to peers. Full peer comparison data is included in Appendix D.

RATIO MODESTO PEER AVERAGE DIFFERENCE
Building Staff
Population per Building Staff 15,757 8,889 + 6,867
Sq Mi per Building Staff 3.08 1.82 + 1.25
Planning Staff
Population per Planning Staff 20,054 14,136 + 5,917
Sq Mi per Planning Staff 3.91 2.95 + 0.97
Inspectors
Population per Inspector 44,118 25,011 + 19,107
Sq Mi per Inspector 8.61 5.42 + 3.19
Building and Planning Staff
Population per Total Staff 8,824 5,232 + 3,592
Sq Mi per Total Staff 1.72 1.10 + 0.62
In the sections below, we focus on specific staffing needs within each Division.

Building Safety Division
Building Inspectors
The City may be understaffed to complete the number of building inspections requested, especially when staff are on vacation or taking sick leave. This is in part because inspectors are now responsible for completing code enforcement cases that in the past were handled by a Neighborhood Preservation Unit that was relocated to the Police Department. Staff reported that this increased workload could be due to new processes for follow up for building cases. Historically, there was no process for addressing these cases, which caused priorities to shift, and since establishing the process, inspectors’ workloads have increased.

ALL INSPECTIONS COMPLETED PER STAFF
Totals 2022 2023 2024
Total Building Safety Inspectors 5 5 5
Total Inspections Completed 17,672 17,418 18,831
Inspections Completed Per Building Inspector 3,534 3,484 3,766 In general, the number of building inspections completed slightly decreased from 2022 to 2023, but in 2024 inspections increased by 8% from 17,418 to 18,831. Because of this, the number of inspections #5..
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completed per inspector also increased to 3,766 in 2024. Despite the increased workload, the number of building inspector positions, including Building Inspector I, Building Inspector II, and Senior Building Inspectors allocated to the CED Department has remained the same since 2022 (See Appendix D).

Building code enforcement cases are one aspect of an inspector’s workload, but staff shared that building inspectors must often postpone other scheduled inspections to prioritize these complaint cases, typically related to building without a permit. Workloads for inspectors are already high with staff reporting between 13 to 17 inspections conducted daily, but this number increases when other staff request time off, and the number of inspections can increase to as many as 20 inspections in a day.

Staff suggested an additional position solely dedicated to addressing code enforcement cases to help mitigate day-to-day challenges with managing the workload. Building Safety relies on contract inspectors at times to supplement staff when the workload is high. With development within the City increasing, according to staff, the number of inspections needed will only continue to increase, but the lack of staffing resources has contributed to challenges in quality control on reports. According to staff, the Division historically had additional employees to review entries for typos, misspellings, and data completeness, but these corrections can be missed at current staffing levels. More staff can help complete projects faster, reduce bottlenecks, and improve service quality, leading to higher output and better use of resources, which can increase revenue or reduce costs.

Development Services Center Reception Counter
The Development Services Center, in City Hall, includes staff representing the City’s various departments, including Building, Land Development & Engineering, and Planning. The role of the Receptionist at the Development Services Center includes (but is not limited to):
• Serving as the front-line customer service
• Determining if customers need to see County or City staff • Identifying which department or division staff are the most appropriate for the customer request • Accurately handling (or appropriately escalating) customer questions According to staff, the workload at the reception counter of the Development Services Center is extremely high, and staff estimate that at least two additional personnel are needed to manage the volume of phone, email, and in-person interactions sufficiently. Between balancing phone calls, reviewing voicemails, and fielding department-specific issues, it is difficult to manage the workload.

Specifically, reception staff note that most calls are related to the Building Safety Division and require extended amounts of time to address. For example, scheduling inspections and fielding questions related to eTRAKiT user support can take several minutes to fully complete. Additionally, reception staff are required to review voicemails and manually record the messages, sometimes 30 to 40 messages on a given day, which is difficult to balance with incoming phone calls and in-person requests. In the past there was a system in place that automatically transcribed emails and allowed staff to attach the messages to cases in the permitting system. However, that system was discontinued, and staff must now listen and annotate each voicemail to receive the message.

Development Services Center
Workload for Development Services Technicians is very high, in part because these positions provide backup to the front counter as needed. Staff reported low administrative staffing levels and high #5..
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turnover, causing staff to assume both administrative and technician-related tasks. Some accountingrelated tasks, such as opening and closing the cash drawer, are completed at the Development Services counter and only staff who work the counter know how to complete these procedures.

Therefore, it is difficult for staff to take time off because other staff are not trained to complete these duties.

An Administrative Service Technician role to supplement the two existing Development Services Technicians could be a helpful addition by offering flexible assistance, especially related to accounting procedures, according to staff. A minimum of three technicians would allow better worklife balance and assist the City with providing quicker, more personalized support, improving customer retention and attracting new customers.

The City appears to allocate a similar number of positions for technicians as other peer cities. In general, the number of customers served by the City’s Building Safety Division has increased significantly within the last three years, with one FTE added. Based on the total number of staff positions allocated to the department for the last three years, the number of customers per staff has more than doubled since 2022, while staffing has remained approximately the same.

CUSTOMER COUNT PER STAFF
Totals 2022 2023 2024
Total Building Safety Staff 13 13.5 14
Total Customer Count 1,587 2,932 4,100
Customer Count Per Staff 122 217 293
Recently staff have started splitting time at the Development Services counter, with one person on the counter in the morning and switching off in the afternoon, but only when there are no additional demands on time including internal meetings or staff leaving early. Additionally, staff noted that there are constant pulls to and from the counter to assist with clerical, administrative, and permitting tasks.

These constant pulls make upholding CED’s commitment to customer service challenging because technicians lack the time to complete more thorough research into inquiries and also lack the time to invest in ongoing career development through trainings, which could assist with completing plan checks and answering code-related questions that technicians must typically interrupt other staff to get resolved. In some cases, technicians are unable to complete requests on the spot and must follow up via email with customers at a later time.

Planning Division
Staffing in the Planning Division may have some gaps, most notably at the front counter. According to staff, there is not enough coverage to sufficiently support the front counter and other Planning staff are often pulled to assist counter staff, which impacts their ability to manage workloads.

Many customers visit the Development Services Center for plan check questions and counter staff often call other Planning staff to the counter to answer technical questions that technicians are not able to address. Because of this, plan check deadlines are sometimes missed. In general, staff noted that the workload is manageable but is stretched past capacity when requests for assistance from the counter are made. As indicated in Appendix D, Planning was allocated one technician for fiscal year #5..
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2025, which aligns with staffing levels the City of Turlock but appears to be on the lower side of staffing levels compared to the other peer cities, especially when some workload indicators appear to be increasing for Planners noted below.

BUILDING PLAN CHECK REFERRED TO PLANNING PER STAFF
Totals 2022 2023 2024
Total Planners* 5 6 6
Total Building Plan Checks Referred to Planning 56 490 716 Building Plan Checks Referred to Planning Per
Planner 11 82 119
*Position numbers include all Planner-related titles including Assistant/Associate/Senior/Principal Planner.

In the past three years, building plan checks referred to Planning have continuously increased.

Between 2022 to 2024, the number of plan checks referred to Planning per Planner increased by 981%, highlighting the substantial increase in demand in the last few years. Although an additional Planner was allocated to Planning in 2023, plan checks have continued to increase but staffing levels remain the same.

Workload Challenges
Additionally, Planning is receiving an influx of different activities and there are bandwidth challenges to ensure the division continues to meet community expectations, according to staff. The number of complex applications has increased in the past few years, including large projects that have several entitlements that the division was not experiencing a few years ago. Adequate staffing enables scaling operations to meet demand without sacrificing quality, supporting sustainable growth.

Planning staff also reported there is little bandwidth for operational activities including completing updates to the zoning code and continuing to document policies and procedures. Staff noted that the zoning code needs a comprehensive overhaul because it is outdated. Sections of the code are edited at times, such as those related to liquor licensing, but this leads to less cohesion in the code over time. Since implementing eTRAKiT, many processes are outdated or obsolete, but staff do not have capacity to update procedures accordingly. Beginning this year, Planning began accepting applications online and the procedures for conducting these processes are not fully documented because staff lack the capacity to develop videos and other online procedures.

Other Departments
Staff capacity for plan review in Public Works – Traffic Engineering, Solid Waste, and Fire is currently limited due to understaffing and vacancies. According to staff, the lack of staff capacity contributes to potential delays on projects during plan review, staff having to work overtime to meet deadlines, or bringing in outside consultants or retired annuitants to complete plan reviews.

Public Works – Traffic Engineering: Engineers in Public Works assist with development review throughout construction in several areas including (but not limited to):
• Traffic signals
• Pedestrian beacons
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• Traffic signal control
• Warning signs along roadways
• Street lighting
Traffic Engineers reported significant challenges with turnaround time for completing development reviews due to high demand, which often causes reviews to be completed late, typically several days past due. Current vacancies in the division contribute to a lack of support during plan review and require staff to fill multiple roles. This can cause delays on projects, especially those that require traffic control plans because work cannot be completed without engineer approval.

Solid Waste: Solid Waste staff review permit applications for requirements related to trash enclosures. According to staff, an additional person to assist with plan checks would help manage the workload. Staff reported meeting deadlines but often working extra hours to accomplish this due to a current vacancy within the division.

Fire: Fire plan review is conducted for engineered systems, such as fire alarms and fire sprinkler systems. Staff reported continued use of retired annuitants, which was also identified during the previous 2018 Permitting Study, although the department was approved for a plan reviewer position this year and the department utilizes contractors for deferred submittals. Relying on retired annuitants is not ideal because the workload can vary at times from little to nothing, followed by bursts of activity with unexpected due dates. Since these positions are part-time, have a limited number of hours and the workload is high, managing the time commitment and prioritizing plans can be challenging and some work can fall back on Fire staff.

Recommendation
Based on the workload trend analysis (see Appendix C), the City should prioritize hiring for critical positions that will alleviate the most significant workload pressures as resources allow. These positions could include additional Building Inspectors, Planners, administrative support staff, or dedicated code enforcement personnel in the Building Safety and Planning Divisions. Adequate staffing will enhance the City’s ability to meet development review and permitting timelines, improving overall service delivery to customers. Specifically, the City should consider hiring additional personnel in the following areas, as resources allow:

Building Inspectors
• Consider adding two additional Building Inspectors until the City is able to complete the number of building inspections requested in the timeframe promised on a regular basis. • Consider adding an additional position dedicated to addressing code enforcement cases.

Development Services Center Reception Counter
• The City should also consider employing an automated voicemail system that automatically transcribes voicemails to reduce staff time spent listening to voicemail messages. • Much of the workload at the reception counter is due to general customer service inquiries, often related to inspections. The City should review workloads at the reception counter after implementing the system upgrades recommended in Automated Phone and Messaging Systems.

If workloads are still high, consider adding an additional front-line customer service role. #5..
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Planners
• Consider adding an additional Planner due to the significant workload increase and the complexity of applications and to assist Development Services Technicians with responding to technical questions.

Development Services Center
• Building: Consider adding an additional Development Services Technician to balance workloads and provide backup for key functions.
• Planning: Consider adding an additional Development Services Technician to balance workloads and provide backup for key functions.

Other Departments
• Take the steps recommended in Plan Review Timelines to manage expectations and realize expedited plan review processes.
• If challenges persist, work with departmental staff to determine additional staffing needs to ensure the plan review process stays within the defined timelines.

2. Observation
The City’s current fee structure may not adequately cover the cost of all phases of development review and permitting activities, which could result in the subsidization of these activities.

Recommendation The City should prioritize conducting a fee study and establish clear cost recovery goals for development and permitting activities.

Observation
Development review and permitting fees are intended to help cover the costs associated with providing plan checks, inspections, and permitting administration, including both direct and indirect costs. Article 7 section 9-1.701 of Modesto’s city code requires that the building official determines the value of permit and plan check fees based on the value of all construction work, including furnished work, other permanent work, and equipment. Fees are then approved and adopted by the City Council in the form of a resolution.

However, the current fees may not cover the cost of all permitting and plan review activities across the City. The City currently charges a flat fee at the start of the process for permit applications. Staff throughout the City, and particularly in Planning and Fire, shared the concern that this flat fee does not sufficiently cover the cost of staff time spent in multiple rounds of plan review. For example, Fire fees are assigned a value at the beginning of the plan review process, which may be based on square footage and there are also fees for inspections. However, in some cases, there are multiple cycles of review. Fees may be charged for incomplete or altered plans but only if the building permit has already been issued and the applicant wants to change it. New fees are not assigned for these additional reviews or charged for resubmittals. As a result, the City may not be receiving adequate funds to cover the full costs of labor, including what is charged to third-party reviewers. In addition, none of the currently charged fees are used to cover the cost of Solid Waste’s involvement in plan review, which is the only department without a fee associated with that service. Therefore, the City may be subsidizing permitting and plan review activities for permit applicants. #5..
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It is important that the City is deliberate when choosing how to balance the need for cost recovery (and ensuring that permitting activities are sufficiently funded and staffed) against the need to keep costs reasonable for customers. However, charging low rates can lead to insufficient funding and staffing of permitting activities, which ultimately has a negative impact on customer service.

The City last conducted a fee study in 2018 and since then, according to staff, costs associated with the development review and permitting process have increased. The City is preparing to conduct another fee study in the next year and a half. Cities typically conduct fees studies every three to five years to reflect changing costs and circumstances.

Recommendation
The City should prioritize conducting a fee study to assess the direct and indirect costs associated with permitting. Ideally, the City would establish clear cost recovery goals for both development and permitting activities. If the cost recovery goal is not 100%, the City should ensure that adequate funding is provided to the impacted departments or divisions to back-fill the difference. In this way, the City can ensure that the fee structure fully supports the needs of both the departments and the customers. Appropriate fees with adequate cost recovery will also enable the City to cover the cost of additional staffing as discussed in the Staffing and Workload section.

Additionally, to provide ongoing funding for development and permitting services, many community development organizations attempt to balance fee revenues with the costs associated with these activities. A separate fund accounting method could be used to keep revenues and expenditures segregated from the City’s General Fund.

3. Observation The CED Department has established performance measures related to permitting activities, although these metrics are largely volume-based.

Recommendation
To enhance customer service delivery, the CED Department should develop additional performance measures related to customer experience and timeliness.

Observation
Like many cities, Modesto’s permitting process is a combined effort of several major departments and divisions. Key performance metrics for plan reviews for all reviewing divisions have been established since the 2018 Permitting Study that apply to:
• Building Safety
• Fire
• Planning
• Landscaping
• Land Development & Engineering
• Storm Water
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• Solid Waste
• Environmental Compliance
Established metrics include targets for the duration of time to complete first checks during plan review and the duration of time to complete resubmittals for five project types, as shown below.

PROJECT TYPE FIRST REVIEW RESUBMITTALS
New Commercial Buildings and Sites 30 Calendar Days 15 Calendar Days New Apartments and Multifamily 30 Calendar Days 15 Calendar Days Commercial Remodels 21 Calendar Days 14 Calendar Days
New Single Family Dwellings 21 Calendar Days 7 Calendar Days Residential Remodels 14 Calendar Days 7 Calendar Days
Additionally, some divisions established additional performance measures that help measure workload. Other volume-based metrics tracked by Building Safety include:
• Number of Applications (Residential Units, New Commercial, Commercial Additions and Improvements, and Accessory Dwelling Units [ADUs])
• Number of Permits Issued (Residential Units, New Commercial, Commercial Additions and Improvements, and ADUs)
• Number of Permits Express
• Valuation of Permits Issued
• Permit Plan Review Time
• Number of Inspections Completed
• Number of Final Inspections Completed
The Planning Division also tracks other volume-based metrics related to the number of applications, the time from receiving an application to decision, the time spent on development applications, and how many building plan checks are referred to Planning.

Additionally, customer surveys are automatically sent through the eTRAKiT system when most building inspections are completed and building permits are issued. Surveys are structured around overall customer experience and allow customers to provide additional feedback to Buildings on suggestions for improvement. It is unclear, however, how these surveys are used to measure overall customer satisfaction and whether CED has an established target for overall satisfaction.

While these metrics are important for assessing workload indicators, CED could strengthen performance measurement by implementing other customer experience and timeliness metrics.

Understanding which activities lead to successful outcomes allows for more strategic allocation of resources, ensuring that efforts are directed toward the most effective initiatives. Outcome-based performance measures are essential for permitting and development activities as they promote accountability, improve service delivery, inform decision-making, and foster a culture of continuous improvement and innovation.
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Recommendation
By measuring customer experiences and timeliness, the CED Department can make targeted improvements that enhance service delivery. These metrics could include:

PERFORMANCE MEASURE DEFINITION
Customer Service
Customer Satisfaction Score ● Gauge customer satisfaction through surveys focused on ease of use, transparency, and overall experience by establishing a percentage goal for overall satisfaction
Permit Application
Submission Time
● Track customers' average time to submit a complete permit application using eTRAKiT
● Track the percentage of incomplete applications and the percentage of applications requiring second and third rounds of reviews
Approval Time for Permits ● Measure the average time from permit application submission to approval
● Track the percentage of approved permits within timelines consistent with established goals
Timeliness
Customer Support Response
Time
● Establish a goal for the average response time to customer inquiries
● Measure the average response time of customer support for inquiries related to the permitting process
Issue Resolution Time ● Establish a goal for the average issue resolution time to customer inquiries
● Measure the average time to resolve issues

4. Observation
Plan review timelines may be difficult for some departments to meet due to limited staff capacity, variation in project complexity, and a lack of consistent procedures across departments for timely review of plans.

Recommendation
To help manage the plan review timelines across departments and address the limited staff capacity, the City should:

Consider implementing differentiated timelines based on project complexity and type
Implement a standardized procedure for staff to perform an initial completeness check upon receiving an application and before initial review is started
Staff reported that the two-week turnaround for plan reviews is difficult to meet for some departments, particularly teams where there are a limited number of staff available to complete this work. If a plan review is submitted to a department when key staff are out of the office, it can create tight turnarounds and lead to late submissions. Additionally, some plan reviews are much more time intensive than others. Some staff shared the hope that a collaborative effort be made to establish #5..
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more achievable expectations for different types of reviews. Currently, all reviewing departments adhere to plan review timelines for five common project types (see Performance Measures).

Established plan review timelines do not account for the increase in complex projects Planning has experienced in the last few years. Staff stated that many customers are submitting applications for larger, more complex projects including subdivisions and projects with numerous entitlements.

Pinpointing exact timelines is difficult since Planning projects vary and can be anything from a staff level approval to a project that requires annexation. Staff stressed the need for different timelines for different entitlement paths. However, applicants appear to be satisfied with the plan review process, with 45% of survey respondents rating the ease of submitting plans for review as very easy and the turnaround time for initial plan review as very timely.

Plan Review: How would you rate the ease of submitting plans for review? Plan Review: How would you rate the turnaround time for initial plan review? Departments and individual staff members currently take somewhat different approaches to plan review, where some staff are in the practice of checking to ensure an application is complete immediately upon receiving it and others may not have time to open the application until late in the review period. If it is discovered that an application is incomplete in the final days of the review period, that extends the review timeline. However, if that issue is identified early, the application can be immediately returned to the applicant for proper completion. Planning provides estimated timelines to customers that are based on best case scenarios. When these timelines are not feasible, it can create confusion and frustration for applicants.

Additionally, some staff shared that they do not receive reminders from eTRAKiT beyond the initial notification that a plan is ready for review, and that additional reminders directly from the system throughout the two-week review period would be helpful to proactively keep the review process on track. However, eTRAKiT functionality lacks the ability to send additional reminders automatically.

Staff reported working with the eTRAKiT consultant to implement this change; however, it requires 45% 29% 14% 5% 7%
Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult 45% 19% 20% 9% 8%
Very timely Somewhat timely As expected (neither expeditious nor delayed) Somewhat delayed Very delayed #5..
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more work on the user’s end to implement automatic reminders, defeating the purpose of streamlining the process.

Recommendation
The City should consider implementing differentiated plan review timelines based on project complexity and type. For example, longer review periods for more complex projects and shorter timelines for simpler applications. Additionally, establishing realistic and achievable review timelines for different types of projects should consider staffing levels, workload, and historical data on review times.

The CED Department should consider implementing a standardized procedure to perform an initial completeness check upon receiving an application, potentially through the use of AI. This should include a checklist of required documents and information to ensure that applications are complete before the formal review period begins. Standardizing the initial review process and establishing clear expectations will lead to more consistent practices across departments, minimizing confusion and delays, and improve communication with applicants by setting realistic expectations. This could enhance customer satisfaction and trust in the permitting process overall.

5. Observation
Comments made by reviewing departments during plan review may not be easily identified, which can cause delays in the review process for both applicants and City staff.

Recommendation
To enhance the clarity of comments, CED should incorporate utilization of the markup summary feature in eTRAKiT as a standard procedure during the plan review process and ensure that all plan reviewing departments consistently use the feature.

Observation
The City returns plan reviews to customers with comments added in Bluebeam, a construction software that supports PDF markup. Both City staff and interviewed developers suggested that it would be helpful if the City began to provide a separate document that listed all the City’s feedback in one place, noted the location of the necessary update in the related documentation, and referenced the related City code. This would significantly speed up customers’ ability to make changes. It would also streamline additional rounds of review when updated applications are returned to the City because departments would be able to quickly see which updates they need to review and where they are located.

Some staff reported eTRAKiT’s capability to provide a markup summary that shows the customer where all the comments are and reported using this feature on projects, although this may not be consistently used across the Department. The summary allows the user to see where the comments are and what section of code they apply to.

Recommendation
Encouraging the utilization of eTRAKiT’s markup summary feature among all plan reviewing departments could improve staff and customer experience and prevent further delays during the plan #5..
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review process. To enhance the clarity of comments, CED should incorporate use of this feature as a standard procedure during the plan review process and ensure that all plan reviewing departments consistently use the markup summary feature to document:
• Comment Description: A clear description of each comment or required change. • Document Location: A reference to the specific page or section of the submitted documents where the comment is located and the change needed.
• Related City Code: A citation of the relevant City code or regulation that the comment pertains to.

The markup summary feature in eTRAKiT should be highlighted during training sessions, emphasizing its benefits in providing a comprehensive overview of comments.

6. Observation
Although eTRAKiT has significantly streamlined and modernized the permitting and plan review process, there are some challenges related to the system’s governance and capabilities that are causing issues for staff.

Recommendation
To improve the customer experience, limit staff confusion, and reduce plan review time, the CED Department should implement a nested question feature to guide applicants to the correct application forms for their project.

To streamline the document review process for staff and applicants, CED should develop and enforce standardized naming conventions for all documents uploaded to the eTRAKiT system.

Consider offering expanded eTRAKiT trainings to staff and customers.

Observation
The eTRAKiT system has allowed the CED Department to streamline the permitting process and transition away from manual processes. Many staff emphasized that eTRAKiT is a significant improvement over the previous permitting system, Tidemark, and shared that the automated features of the system and the ability to measure performance more easily have helped the City improve the overall experience for permit applicants. Interviewed developers and surveyed permit applicants largely agreed with this sentiment.

How would you rate the following elements of the City’s permitting process, based on your overall experience with these services?
Navigating eTRAKiT
33% 30% 22% 10% 6%
Excellent Good Average Poor Terrible
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In general, 53% of survey respondents rated the overall experience navigating eTRAKiT as either excellent or good, indicating that the system is working well for some external stakeholders. However, others noted that there are some difficulties in navigating the eTRAKiT system, stating that it may not be user-friendly and could benefit from improvements. As the City adjusts to using eTRAKiT, some issues related to the system’s functionality and customizability to support the City’s permitting process have surfaced.

Application Selection
eTRAKiT may not support or is not currently set up to display nested questions, where a customer selects the type of project they are working on and is directed to the appropriate list of permit application questions. Instead, customers are shown a full list of the types of permits that are available through the City. As many customers do not know what type of permit they are looking for, staff shared that customers often choose the wrong permit type. This requires staff time to confirm the correct type of application with the customer and update the application in the system. In addition, projects cannot be easily changed or deleted, which results in an accumulation of expired projects in the system.

Naming Conventions
Interviewed staff shared that there are no naming conventions in place to guide applicants on how to label uploaded files. As a result, it is sometimes unclear which documents to review, and staff must open every document to ensure they have not missed anything related to their department.

Interviewed developers noted that it is common in other jurisdictions to have required naming conventions for documents uploaded to permitting systems.

Naming convention procedures appear to already exist for certain commonly received documents, including Cycle 1 & 2 Plans, Summary Markup, and ADA Declaration Worksheets. CED staff noted that developing additional naming conventions for documents during plan review are tweaks to the system that could be easily applied to help improve the customer experience. Other department staff noted that documents that are labeled for the cycle (i.e., CY1) and the name of the plan could be helpful during review, especially because some plans can be significantly long, and this naming convention could help them locate the appropriate documents quicker.

Technical Support
Staff spend a significant amount of time assisting customers with eTRAKiT navigation. Although there is a consultant who can manage significant issues, customer phone calls about eTRAKiT questions usually fall to staff primarily in Planning and the Development Services Center. During implementation of the system, staff stated that each department or division identified a subject matter expert (SME), who became the designated eTRAKiT implementer for their department, referred to as eTRAKiT administrators. However, some departments still struggle with navigating eTRAKiT.

Staff from outside of the CED Department stated that there is a lack of internal eTRAKiT support when issues arise. For example, one department does not receive eTRAKiT’s automated emails that notify staff when plans are ready for review and has not been able to receive technical support to address this issue. Many staff noted that additional internal capacity, such as a dedicated eTRAKiT expert, could help to alleviate the customer service workload, manage applications in the system, and provide additional project support as needed.
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Recommendation
To improve the customer experience, limit staff confusion, and reduce plan review time, the CED Department should work with the eTRAKiT vendor or the IT Department to implement a nested question feature that tailors the application process based on the type of project selected by the customer. This will help guide customers to the appropriate permit application questions, reducing the likelihood of selecting the wrong permit type. It will also minimize the time staff spend confirming the correct application type with customers, leading to a more efficient process.

CED should also develop and enforce standardized naming conventions for all documents uploaded to the eTRAKiT system. This should include clear guidelines for staff and applicants on how to label their files based on document type and purpose. Establishing naming conventions will streamline the document review process for staff, making it easier to identify and locate necessary documents without having to open each file, which will enhance efficiency and improve the overall customer experience.

Although most survey respondents reported an excellent or good experience navigating eTRAKiT, there may be some difficulty for staff and customers when troubleshooting the application, since there can be little capacity for dedicated support to address issues with the system. Implementing regular training sessions for staff on eTRAKiT features and best practices for assisting customers could diminish user error and help to identify where functionality issues could be improved. The CED Department should consider offering training resources or workshops for customers and staff to help them navigate the system effectively. Training will empower staff to provide better support to customers and reduce the volume of inquiries. Educating customers on how to use the system will also decrease confusion and improve the overall user experience.

7. Observation Although eTRAKiT has helped streamline the plan review process, there is some customer confusion around scheduling inspections.

Recommendation
To limit confusion during inspections scheduling, CED should implement time-of-day indicators in eTRAKiT and define these timeframes for customers.

To promote more efficient customer assistance, the CED Department should develop a quick reference guide for staff on common scheduling issues and how to resolve them.

Consider reinstating an IVR system for inspection scheduling.

Consider implementing a text message service to send automated inspection reminders to customers.

Observation
Similar to other cities such as Stockton and Manteca, Modesto building inspections are currently completed the next day for customers that schedule before 3:00 PM the prior day. Staff reported that the timeframe for the inspection is displayed as TBD in eTRAKiT, whereas other cities indicate AM or PM to provide an estimate of the time of day a customer can expect an inspection to be completed.

The cities of Manteca and Merced display AM and PM windows on the online platforms used for inspections scheduling, and Manteca also defines AM and PM timeframes on its website. Inspections #5..
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scheduled in the AM are typically conducted between 8AM and 12PM and those in the PM are conducted between 1PM and 4PM.

After customers submit an inspection request in the eTRAKiT system, the City directs customers by email to call Development Services Center reception to obtain information on the inspection time.

Staff who work at the Development Services Center reception counter shared that most phone calls they receive are related to inspections, including customers calling to schedule inspections who do not want to schedule them online, checking what time inspections will occur, or asking who the assigned inspector will be. Counter staff will then spend a significant amount of time addressing these questions or working to schedule inspections. The City’s Senior Building Inspector also triages a significant number of inspection-related calls.

Prior to eTRAKiT, staff shared there was an automated phone system in place with interactive voice response (IVR) functionality that customers could use to schedule inspections, which was significantly easier than the current approach. The City of Merced still utilizes an IVR system as well; however, all peer cities offer direct phone calls as options for scheduling inspections. Additionally, some survey respondents noted difficulties in coordinating inspections and communications between different departments, leading to delays and confusion. CED staff shared that prior to implementing eTRAKiT and discontinuing the inspections scheduling automated call system, they rarely received inspectionrelated calls from customers.

Staff suggested implementing a text message service that allowed the Department to notify customers of the date and time of an inspection and the contact information for their inspector. This would assist Building Safety with delivering better customer service and ease the workload at the Development Services Center reception.

Recommendation
To ease some customer confusion while scheduling building inspections, CED should indicate in eTRAKiT the time of day (AM or PM) an inspection is anticipated to be performed. The timeframes for each time-of-day indicator should also be defined for customers to increase transparency.

Additionally, developing a quick reference guide for staff that outlines common issues customers face when scheduling inspections and how to resolve them can promote more efficient assistance.

To reduce workloads related to customer calls, the City should also consider reinstating an IVR system for inspection scheduling and implementing a text message service to send automated inspection reminders to customers.
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8. Observation
The Building and Planning Divisions have documented many procedures related to the permitting and development review processes, but additional improvements to policies and procedures could further enhance transparency and improve service delivery.

Recommendation
The CED Department has made significant strides in policy and procedure documentation since the previous 2018 Permitting Study. To further enhance policy and procedure documentation, the Department should update policies and procedures based on priority level as identified in the gap analysis.

Observation
Well-developed and properly maintained policies and procedures can increase collaboration, reduce staff tension, and ultimately improve the consistency of customer service. 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 City. 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 cost-effectiveness. Well-developed policies and procedures reduce the City’s operating risk and increase employee accountability.

Through both interviews and our review of the available documents, it appears that some policies and procedures may need updates, and documenting other processes that do not have associated policies and procedures could further assist with guiding permitting activities. Staff reported the need to update and/or document policies related to online applications, a zoning code update, and signage.

Since the 2018 study, CED has made significant progress in developing and maintaining policies and procedures pertaining to areas such as permit application submission, plan review procedures, inspection scheduling and protocols, conditions of approval, and internal accounting. In alignment with best practices, many of the documents we reviewed included a purpose, updated revision dates, and noted responsible parties in the procedure.

However, in addition to the policies mentioned above, best practices for policies and procedures related to permitting note the importance of also documenting other additional aspects of the permitting process, including but not limited to:
• Pre-application meetings
• Interdepartmental coordination
• Inspection reporting
• Permit approval process
• Permit expiration and renewal
• Staff training programs
• Communication protocols
• Review and update of policies
Some gaps exist in these areas for the CED Department. Although some of these are activities are conducted in practice, the policies and procedures to help guide implementation are not fully #5..
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documented. We identified areas that CED should consider updating in the Department’s policies and procedures (See Appendix B for a comprehensive table of recommended updates).

Recommendation
CED should update policies and procedures related to online applications and signage and conduct a zoning code update. Additional policies and procedures identified in best practices should also be updated and should be based on indicated priority levels in the gap analysis (see Appendix B). By prioritizing high-impact areas, the City can improve efficiency, reduce delays, and enhance overall service delivery in the permitting process. Once these foundational elements are solidified, attention can shift to medium and low-priority areas to ensure a comprehensive and effective permitting system. Areas of high priority include policies and procedures for:
• Permit Application Process: Clear guidelines for application submission, eligibility criteria, and pre-application meetings are essential for ensuring that applicants understand the requirements and can submit complete applications. Improving this area can significantly reduce delays and confusion in the permitting process.
• Review Process: The efficiency and effectiveness of the review process directly impact the speed in which permits are issued. Establishing clear procedures for plan reviews, interdepartmental coordination, and public notification is crucial for maintaining timelines and ensuring that all necessary evaluations are conducted.
• Inspections Procedures: Inspections are a critical component of the permitting process that ensures compliance with safety and building codes. Well-defined scheduling, protocols, and reporting procedures are essential to avoid delays and ensure that inspections are thorough and consistent.

Once policies and procedures are updated, they should be available in a centralized location, such as an intranet, for employees to easily access and reference.

It is important to note that although policies and procedures are critical for consistency and effectiveness, they must be formalized, training must be provided, and personnel must be held accountable for adhering to them. As policies and procedures evolve over time, training should be revised and redelivered to ensure consistency across the Department. Departments should also receive communication on any policy or procedure change that impacts their workflow. #5..
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APPENDIX A: SURVEY RESULTS
A customer service survey was distributed to 6,597 permit applicants within the past three years on April 9, 2025. The survey was open for one week and garnered 457 total responses with 294 overall complete responses, an overall 15% response rate, and 4.5% fully completed response rate.

We analyzed complete responses and excluded responses left blank, or non-applicable. Survey results are also used throughout the report.

Please select which of the following best represents your role:

In your most recent permitting experience with the City of Modesto, what kind of permit did you apply for?
51% 1%
1%
30% 2% 14%
Property Owner Property Owner & Contractor Property Owner & Other Contractor Contractor & Other Other 13% 45% 27% 3% 9%
Commercial Building Tenant Other Residential Remodel
New Commercial/Multifamily Building Residential Remodel, Other #5..
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On average, how often have you interacted with the City of Modesto related to permitting (applying for permits, plan reviews, inspections, etc.) in the past year? 9% 17% 8% 23% 43%
Weekly Monthly Quarterly Once or twice a year Once or twice in the past three years #5..
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Permitting Ratings – Overall Experience: How would you rate the following elements of the City’s permitting process, based on your overall experience with these services?
48%
42%
38%
32%
43%
43%
59%
52%
41%
33%
29%
32%
29%
29%
30%
31%
25%
27%
31%
30%
13%
16%
21%
24%
14%
14%
11%
13%
14%
22%
5%
6%
8%
9%
7%
6%
3%
6%
6%
10%
5%
4%
4%
6%
5%
6%
2%
3%
7%
6%
Overall permitting activity processing/turnaround time.

Clarity of roles and responsibilities during the process Frequency of communication from the City
Availability of relevant information on the website.

Staff response time
Consistency in inspection feedback.

Professionalism and courtesy of administrative and counter staff.

Staff knowledge and helpfulness in handling your permit application and questions.

Consistency in plan check comments.

Navigating eTRAKiT.

Excellent Good Average Poor Terrible
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Permitting Ratings – Review Groups: During the permitting process, many City departments are often involved in plan review and inspections. How would you rate your experience with each of the following review groups? 39%
45%
42%
40%
38%
42%
38%
38%
34%
31%
32%
34%
30%
30%
14%
15%
18%
19%
16%
17%
23%
5%
2%
4%
3%
8%
6%
4%
4%
4%
4%
6%
5%
5%
5%
Planning
Building
Engineering
Fire
Public Works
Utilities
Parks
Excellent Good Average Poor Terrible
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Permitting Ratings – Customer Service: How would you rate the City’s customer service pertaining to each permitting activity below? 44%
42%
40%
39%
38%
39%
36%
32%
37%
35%
34%
35%
35%
32%
35%
33%
28%
31%
36%
36%
14%
14%
16%
20%
16%
16%
21%
17%
16%
15%
4%
4%
4%
5%
5%
7%
4%
10%
4%
5%
4%
5%
5%
4%
6%
6%
11%
9%
7%
9%
Building Code
Building Plan Review
Conditional Use Permit
Fire Sprinkler Plan Review
Grease Interceptor
Master Plan Review
Rezone
Stormwater Review
Variance
Zoning/Planning
Excellent Good Average Poor Terrible
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Permitting Ratings – Processing Time: How would you rate the City’s overall processing time for each permitting activity below? 41%
41%
41%
36%
37%
38%
40%
35%
40%
33%
31%
31%
28%
32%
26%
28%
21%
29%
22%
30%
20%
17%
19%
20%
21%
18%
22%
16%
24%
20%
3%
5%
4%
5%
5%
8%
6%
13%
4%
7%
5%
5%
8%
7%
11%
9%
10%
6%
10%
10%
Building Code
Building Plan Review
Conditional Use Permit
Fire Sprinkler Plan Review
Grease Inceptor
Master Plan Review
Rezone
Stormwater Review
Variance
Zoning/Planning
Excellent Good Average Poor Terrible
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Comparison to Other Cities: In your experience, how does Modesto’s permitting process compare to other cities?
Plan Review: How would you rate the ease of submitting plans for review? Plan Review: How would you rate the turnaround time for initial plan review? 58% 32% 10%
Better About the same Worse
45% 29% 14% 5% 7%
Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult 45% 19% 20% 9% 8%
Very timely Somewhat timely As expected (neither expeditious nor delayed) Somewhat delayed Very delayed #5..
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Plan Review: How would you rate the turnaround time for subsequent plan correction submissions? Plan Review: How would you rate the responsiveness of plan reviewers? Plan Review: If an inspection correction notice was issued for your project, were the correction comments clear and concise?
39% 26% 19% 10% 7%
Very timely Somewhat timely As expected (neither expeditious nor delayed) Somewhat delayed Very delayed 47% 29% 14% 4% 6%
Very responsive Usually responsive Sometimes responsive Hardly responsive Not responsive 39% 19% 2% 8% 33%
Always Sometimes Never I'm not sure I have never been issued a correction notice for plan review #5..
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Inspections: Are inspections generally performed in the time that you would expect? Inspections: Are Building inspections performed promptly as scheduled? Inspections: Are Fire inspections performed promptly as scheduled? 62% 15% 2% 20%
Always Sometimes Never I'm not sure
78% 19% 3%
Always Sometimes Never
71% 26% 3%
Always Sometimes Never
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Inspections: Are Landscaping inspections performed promptly as scheduled? Inspections: Are Utilities inspections performed promptly as scheduled? Inspections: Are Engineering inspections performed promptly as scheduled? 71% 25% 4%
Always Sometimes Never
76% 21% 3%
Always Sometimes Never
68% 28% 4%
Always Sometimes Never
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Inspections: How would you rate the availability of building inspectors when you need to get information from them?
Inspections – Ease of Scheduling: How would you rate the ease of scheduling a Building inspection?
Inspections – Ease of Scheduling: How would you rate the ease of scheduling a Fire inspection? Inspections – Ease of Scheduling: How would you rate the ease of scheduling a Landscaping inspection?
44% 33% 11% 9% 3%
Very available Usually available Sometimes available Hardly available Never available 61% 25% 9% 2%
3%
Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult 45% 22% 24% 5%
4%
Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult #5..
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Inspections – Ease of Scheduling: How would you rate the ease of scheduling a Utilities inspection?
Inspections – Ease of Scheduling: How would you rate the ease of scheduling an Engineering inspection?
Inspections: If an inspection correction notice was issued for your project, were the correction comments clear and concise?
55% 14% 18% 6%
6%
Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult 52% 24% 12% 4%
7%
Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult 48% 23% 19% 4%
5%
Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult #5..
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86% 14%
Yes No
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APPENDIX B: POLICY AND PROCEDURE GAP ANALYSIS
The table below compares the CED Department’s policies and procedures to general best practices for policies and procedures related to permitting processes.

CATEGORY BEST PRACTICE

POLICY AREA BEST PRACTICE DETAIL MODESTO CURRENT CONDITION RECOMMENDATION PRIORITY LEVEL PRIORITY DETAIL Permit Application
Process
Application Submission Detailed instructions on how to submit a permit application, including required
forms, documentation, and fees.

CED has external plan submittal
documentation and procedures for
various project types in eTRAKiT. Some
include required forms, documentation,
and estimated fees (ADU).

Consider reviewing and updating P&Ps with
revision dates past one year to ensure
procedures are current. If no revisions are
needed, add a "last updated" date instead.

Consider updating submittal documentation to
include eTRAKiT instructions for each permit
type. Not all submittal documentation includes
these instructions (Res Electrical, New
Multifamily, New Commercial, etc.)
High This is the starting point for all permitting
activities. Clear guidelines for
application submission, eligibility criteria,
and pre-application meetings are
essential for ensuring that applicants
understand the requirements and can
submit complete applications. Improving
this area can reduce delays and
confusion in the permitting process.

Pre-Application Meetings Guidelines for optional pre-application meetings to discuss project scope and
requirements with applicants.

CED conducts roundtables with
developers, but these procedures aren’t
documented.

Develop a policy for optional pre-application
meetings including methods for documenting
discussion points and retention of meeting
notes.

Eligibility Criteria Clear criteria outlining what types of projects require permits and what may
be exempt.

CED does not have a written policy that
outlines criteria for what types of
projects require permits and what may
be exempt.

Develop a policy that outlines criteria for
common types of projects that require permits
and what may be exempt.

Review Process Plan Review Procedures Step-by-step procedures for how submitted plans are reviewed,
including timelines for each stage of
the review.

Plan Review Process is included in plan
submittal documentation for certain
types of projects such as New
Commercial.

Consider adding the plan review process to
each applicable project type in the submittal
documentation
High The efficiency and effectiveness of the
review process directly impacts the
speed at which permits are issued.

Establishing clear procedures for plan
reviews, interdepartmental coordination,
and public notification is crucial for
maintaining timelines and ensuring that
all necessary evaluations are
conducted.

Interdepartmental
Coordination
Procedures for coordinating reviews
among different departments (e.g.,
Planning, Fire, Public Works) to
ensure comprehensive evaluations.

Interdepartmental review is triggered
through eTRAKiT as reviews are
completed. CED doesn’t have a written
procedure for review coordination but
has performance measures for plan
review timelines.

Consider a written procedure for
interdepartmental coordination during plan
review that outlines the process including presubmittal/intake, assessment/review, submission, and final notification.

Inspection Procedures Scheduling Inspections Guidelines for how and when inspections should be scheduled,
including required notifications to
applicants.

Inspections are scheduled by customers
in eTRAKiT. Modesto has procedures
for scheduling an inspection in eTRAKiT
for customers.

Review the procedure and add either an
updated or last revision date.

Consider updating the procedure to include
when an inspection can/should be scheduled
and next steps after an inspection request is
submitted in eTRAKiT including expected
response times.

High Inspections are a critical component of
the permitting process that ensure
compliance with safety and building
codes. Well-defined scheduling,
protocols, and reporting procedures are
essential to avoid delays and ensure
that inspections are thorough and
consistent.

Inspection Protocols Detailed procedures for conducting inspections, including checklists for
inspectors to ensure consistency.

Modesto has inspection checklists for
various activities.

Review the inspection checklists and make
any necessary updates and update the last
revision date or add a “last updated" date
instead.
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CATEGORY BEST PRACTICE

POLICY AREA BEST PRACTICE DETAIL MODESTO CURRENT CONDITION RECOMMENDATION PRIORITY LEVEL PRIORITY DETAIL Inspection Reporting Policies for documenting inspection results and communicating them to the
applicant, including timelines for
follow-up actions.

Modesto does not have a written policy
for documenting inspection reports.

Develop a policy and procedures for
documenting inspection results and
communicating them to the applicant,
including timelines for follow-up actions.

Permit Issuance Approval Process Clear criteria and procedures for issuing permits once all requirements
have been met.

CED doesn't have a policy for the
approval process for issuing permits.

CED has a brochure that provides a
brief overview of the plan review
process and there is a process flowchart
for the plan review process in eTRAKiT.

Develop a policy with clear criteria and
procedures for issuing permits once all
requirements have been met.

Medium While important, the issuance of permits
is contingent upon the successful
completion of the application, review,
and inspection processes. Streamlining
this area is necessary but can be
effectively addressed once the
preceding processes are solidified.

Conditions of Approval Guidelines for any conditions that may be attached to permits, including
compliance with specific codes or
regulations.

CED includes conditions of approval
with project submittal checklists.

Review Planning and Building Safety plan
submittal documents for updates and update
the last revision date or add a “last updated"
date instead.

Permit Expiration and
Renewal
Policies regarding the duration of
permits, renewal processes, and what
happens if a permit expires.

There is an Expiring Issued Permits
Report Policy, but it doesn't detail the
duration of permits, how applicants can
renew them, or the process when a
permit expires. It provides procedures
for staff to identify permits that should
be expired and has some details about
what happens if a permit expires.

Develop a policy that details the duration of
permits and procedures for the renewal
process.

Fees and Payments Fee Schedule A transparent fee schedule for various types of permits, including any
additional fees for expedited
processing.

A fee schedule is not included in the
internal policies and procedures but is
included on some external plan
submittal documentation for customers.

Add a link to the current fee schedule to each
plan submittal document for better
transparency.

Add a link to the current fee schedule to
internal policies and procedures for staff
accessibility.

Medium A transparent fee schedule and clear
payment procedures are important for
financial planning and customer
satisfaction. However, they can be
adjusted and communicated alongside
other process improvements, making
this a medium priority.

Payment Procedures Clear instructions on how payments
can be made, including accepted
methods and deadlines.

Payment procedures for customers are
included in some project plan submittal
documentation and note that fees can
be paid via e-check, credit, or debit
card.

Consider adding payment instructions in the
narrative of the procedures and detailing
payment methods accepted for each plan
submittal document to improve clarity for
customers.

Appeals Appeal Process Procedures for applicants to appeal decisions made by the Building and
Planning Divisions, including timelines
and required documentation.

CED doesn’t have a written policy for
how applicants can appeal decisions.

There is an internal policy related to the
Board of Building Appeals and meeting
guidelines.

Develop a procedure for how applicants can
appeal decisions made by the Building and
Planning Divisions, including timelines and
required documentation.

Medium While the ability to appeal decisions and
request variances is important for
fairness and flexibility, it typically comes
into play after initial permitting
processes. Addressing this area is
necessary but can follow the
establishment of more foundational
processes.
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CATEGORY BEST PRACTICE

POLICY AREA BEST PRACTICE DETAIL MODESTO CURRENT CONDITION RECOMMENDATION PRIORITY LEVEL PRIORITY DETAIL Record Keeping and
Documentation
Documentation
Standards
Policies for maintaining records of all
permit applications, approvals,
inspections, and communications with
applicants.

There is a Records Retention Policy for
the Building Safety Division for retaining
and storing various records.

Consider updating the policy to include
guidelines for how staff should communicate
with applicants, including response times for
inquiries and updates on application status.

Low While maintaining accurate records is
essential for compliance and
accountability, the immediate impact on
the permitting process is less direct than
the other areas. Improvements in this
area can be implemented gradually as
other processes are enhanced.

Data Management Procedures for managing and storing
electronic and physical documents
related to the permitting process.

There is a Records Retention Policy for
the Building Safety Division for retaining
and storing various records.

Consider updating the policy to include record
retention for communications with applicants
including via email,
Training and Staff
Development
Staff Training Programs Policies for ongoing training of staff involved in the permitting process to
ensure they are knowledgeable about
current codes, regulations, and best
practices.

CED doesn't have a written policy for
ongoing training of staff.

Consider developing a policy for ongoing
training of staff, including training
requirements, frequency, topics, and
procedures for completing training.

Low Ongoing training is important for longterm effectiveness and staff performance, but immediate changes to
policies and procedures can often be
implemented without extensive training.

Prioritizing foundational processes first
will allow for more targeted training
efforts later.

Performance Evaluation Procedures for evaluating staff
performance related to the permitting
process, including customer service
metrics.

CED doesn't have a written policy for
tracking and reporting performance
metrics, although metrics exist.

Develop a policy and procedures for tracking
performance measures, including maintaining
data, and frequency of reporting.

Customer Service and
Communication
Communication
Protocols
Guidelines for how staff should
communicate with applicants,
including response times for inquiries
and updates on application status.

CED doesn't have a policy for
communicating with applicants.

Develop a policy for communicating with
applicants that includes response times for
inquiries and updates on application status.

Low While effective communication and
customer service are vital for
stakeholder satisfaction, many
improvements can be made through the
implementation of clearer processes
and guidelines. Once the core
processes are established, enhancing
communication can be more effectively
addressed.

Customer Feedback Procedures for collecting and
addressing feedback from applicants
regarding the permitting process.

Customer surveys are sent
automatically to customers after a
permit is issued and a building
inspection is completed. There is no
written policy about how customer
feedback through the permitting process
is collected and addressed.

Consider developing a policy for managing
customer survey feedback including where it
will be housed, who will review it, how it will
be used, whether follow-up is needed, and
expected timelines for responses.

Continuous Improvement Review and Update
Policies
Procedures for regularly reviewing and
updating policies and procedures to
reflect changes in regulations,
technology, and community needs.

CED does not have a policy regarding
the frequency of updating policies and
procedures.

Develop a policy that establishes regularity for
updating policies and policies including
changes to regulations, technology, or other
events.

Low Establishing a framework for continuous
improvement is important for long-term
success, but it is a lower priority
compared to immediate operational
needs. Once foundational policies and
procedures are in place, a focus on
continuous improvement can be
integrated into regular operations.
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APPENDIX C: WORKLOAD TREND ANALYSIS
We analyzed provided workload data to determine staffing ratios to workload performed by Building Safety and Planning staff.

NUMBER OF CUSTOMERS PER STAFF
Totals 2022 2023 2024
Total Building Safety Staff 13 13.5 14
Total Customer Count 1,587 2,932 4,100
Customers Per Staff 122 217 293
2558
1587
2932
4100
0 500
1000
1500
2000
2500
3000
3500
4000
4500
2021 2022 2023 2024
Customer Count
Year
Building Safety Division Customer Count
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NUMBER OF RESIDENTIAL UNIT APPLICATIONS PER STAFF
Totals 2022 2023 2024
Total Building Safety Plans Examiners 2 2 2
Total Residential Applications 266 70 110
Number of Residential Applications Per Staff 133 35 55
337
266
70 110
0 50
100
150
200
250
300
350
2021 2022 2023 2024
Number of Applications
Year
Number of Residential Unit Applications
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NUMBER OF NEW COMMERCIAL APPLICATIONS PER STAFF
Totals 2022 2023 2024
Total Building Safety Plans Examiners 2 2 2
Total New Commercial Applications 23 21 21
Number of New Commercial Applications Per Staff 11.5 10.5 10.5 18 23
21 21
0 5
10 15
20 25
2021 2022 2023 2024
Number of Applications
Year
New Commercial Applications
238
178
152
133
0 50
100
150
200
250
2021 2022 2023 2024
Number of Applications
Year
Commercial Additions and Improvements Applications
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NUMBER OF COMMERCIAL ADDITIONS & IMPROVEMENTS APPLICATIONS PER STAFF Totals 2022 2023 2024
Total Building Safety Plans Examiners 2 2 2
Total Commercial Additions & Improvements Applications 178 152 133 Number of Commercial Additions & Improvements Applications Per Staff 89 76 66.5

NUMBER OF ADU APPLICATIONS PER STAFF
Totals 2022 2023 2024
Total Building Safety Plans Examiners 2 2 2
Total ADU Applications 98 114 128
Number of ADU Applications Per Staff 49 57 64
98 114
128
0 20
40 60
80 100
120
140
2022 2023 2024
Number of Applications
Year
ADU Applications
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NUMBER OF RESIDENTIAL UNIT PERMITS ISSUED PER STAFF
Totals 2022 2023 2024
Total Building Safety Staff 13 13.5 14
Total Permits Issued- Residential 241 120 69
Residential Permits Issued Per Staff 18.5 8.9 4.9
223
241
120
69 0
50 100
150
200
250
300
2021 2022 2023 2024
Number of Permits Issued
Year
Permits Issued-Residential Units
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NUMBER OF NEW COMMERCIAL PERMITS ISSUED PER STAFF
Totals 2022 2023 2024
Total Building Safety Staff 13 13.5 14
Total Permits Issued-New Commercial 13 13 15
New Commercial Permits Issued Per Staff 1 1 1.1
18 13 13
15 0
2 4
6 8
10 12
14 16
18 20
2021 2022 2023 2024
Number of Permits Issued
Year
Permits Issued-New Commercial
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NUMBER OF COMMERCIAL ADDS & IMPROVEMENTS PERMITS ISSUED PER STAFF Totals 2022 2023 2024
Total Building Safety Staff 13 13.5 14
Total Permits Issued – Commercial Adds & Improvements 167 148 112 Commercial Adds & Improvements Permits Issued Per Staff 12.8 11 8 124
167
148
112
0 20
40 60
80 100
120
140
160
180
2021 2022 2023 2024
Number of Permits Issued
Year
Permits Issued-Commerical Additions and Improvements
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NUMBER OF ADU APPLICATION PERMITS ISSUED PER STAFF
Totals 2022 2023 2024
Total Building Safety Staff 13 13.5 14
Total Permits Issued – ADU Application 67 97 102
ADU Application Permits Issued Per Staff 5.2 7.2 7.3
67 97
102
0 20
40 60
80 100
120
2022 2023 2024
Number of Permits Issued
Year
Permits Issed-ADU Applications
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ALL INSPECTIONS COMPLETED PER STAFF
Totals 2022 2023 2024
Total Building Safety Inspectors 5 5 5
Total Inspections Completed 17,672 17,418 18,831
Inspections Completed Per Building Inspector 3,534 3,484 3,766 20987
17672 17418
18831
0 5000
10000
15000
20000
25000
2021 2022 2023 2024
All Inspections Completed
Year
All Inspections Completed (BLD Only)
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ALL INSPECTIONS COMPLETED PER STAFF
Totals 2022 2023 2024
Total Building Safety Inspectors 5 5 5
Total Inspections Completed 5,789 5,884 6,161
Inspections Completed Per Building Inspector 1,158 1,177 1,232 5553
5789
5884
6161
5200
5300
5400
5500
5600
5700
5800
5900
6000
6100
6200
6300
2021 2022 2023 2024
Final Inspections Completed
Year
Final Inspections Completed
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APPLICATION VOLUME PER STAFF
Totals 2022 2023 2024
Total Planners 5 6 6
Total Application Volume 158 235 233
Application Volume Per Staff 32 39 39
104
158
235 233
0 50
100
150
200
250
2021 2022 2023 2024
Application Volume
Year
Total Application Volume
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EXTERNAL CUSTOMER SERVICE PER STAFF
Totals 2022 2023 2024
Total Planning Staff 8 9 11
Total Hours 3,386 2,710 3,406
External Customer Service Per Staff 423 301 310
2941
3386
2710
3406
0 500
1000
1500
2000
2500
3000
3500
2021 2022 2023 2024
Number of Hours
Year
External Customer Service
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INTERNAL CUSTOMER SERVICE HOURS PER STAFF
Totals 2022 2023 2024
Total Planning Staff 8 9 11
Total Hours 1,007 1,325 1,443
Internal Customer Service Hours Per Staff 126 147 131
1179
1007
1325
1443
0 200
400
600
800
1000
1200
1400
1600
2021 2022 2023 2024
Number of Hours
Year
Internal Customer Service
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TIME FROM APP RECEIVED TO DECISION (AVERAGE DAYS) PER STAFF Totals 2022 2023 2024
Total Planners 5 6 6
Total Time (Average Days) 21 20 12
Average Days from App Received to Decision Per Staff 4 3 2 47 21 20
12 0
5 10
15 20
25 30
35 40
45 50
2021 2022 2023 2024
Average Number of Days
Year
Time from Application Rec'd to Decision
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TIME SPENT ON DEVELOPMENT APPS (HOURS) PER STAFF
Totals 2022 2023 2024
Total Planning Staff 5 6 6
Total Time (Hours) 3,997 3,463 3,735
Time Spent on Development Apps Per Staff 799 577 623
4080
3997
3463
3735
3100
3200
3300
3400
3500
3600
3700
3800
3900
4000
4100
4200
2021 2022 2023 2024
Number of Hours Spent
Year
Time Spent on Development Applications
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BUILDING PLAN CHECK REFERRED TO PLANNING PER STAFF
Totals 2022 2023 2024
Total Planning Staff 5 6 6
Total Building Plan Checks Referred to Planning 56 490 716 Building Plan Check Referred to Planning Per Staff 11 82 119 728
56 490
716
0 100
200
300
400
500
600
700
800
2021 2022 2023 2024
Number of Checks Referred
Year
Building Plan Checks Referred to Planning
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APPENDIX D: PEER STAFFING COMPARISON

PEER STAFFING COMPARISON
Position Modesto Stockton Manteca Riverbank Turlock Merced Total Building
Staff (FY2024) 14 25
20 3 11 13
Total Planning
Staff (FY2024) 11 13 3 5.5 9.85
Inspectors
(FY2025) 5 10 3 2 3 4
2024 Population
(census.gov) 220,592 324,975 94,292 25,625 72,888 96,073 Square Miles 43.05 64.8 21.41 4.1 16.88 23.25
Staffing Ratios
Pop per Building
Staff 15,757 12,999 N/A 8,542 6,626 7,390
Sq Mi per
Building Staff 3.08 2.59 N/A 1.37 1.53 1.79
Pop per Planning
Staff 20,054 24,998 N/A 8,542 13,252 9,754
Sq Mi per
Planning Staff 3.91 4.98 N/A 1.37 3.07 2.36
Pop per
Inspector 44,118 32,498 31,431 12,813 24,296 24,018
Sq Mi per
Inspector 8.61 6.48 7.14 2.05 5.63 5.81
Pop per Total
Staff 8,824 8,552 4,715 4,271 4,417 4,205
Sq Mi per Total
Staff 1.72 1.71 1.07 0.68 1.02 1.02
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

July 30, 2025
Date: July 14, 2025
.

TO: Audit Committee
Sue Zwahlen, Chair
David, Wright, Vice-Chair
Chris Ricci, Member
Camille Garcia, Public Member
Thomas Orosco, Public Member
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Fiscal Year 2023-2024 Auditor’s Report on Compliance of the Measure L: Local Roads First Transportation Funding Measure
CONTACT: Maria Garnica, Accounting Manager (209) 577-5249; [email protected]
DESCRIPTION:

Consider the Auditors’ Reports and Schedule of Measure L Program Revenues and Expenditures for Fiscal Year Ended June 30, 2024, and forwarding to Council for approval. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2025-2026 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Long-Term Financial Sustainability.

BACKGROUND:

In November of 2016, the voters of Stanislaus County approved the county wide, 25-year, halfcent sales tax increase known as Measure L. As part of the safeguards built into the expenditure plan, an annual independent audit and annual reporting must be completed. On page 8 of the expenditure plan, the ordinance states “Annual fiscal and compliance audits will be conducted by a CPA, to assure that the revenues expended are necessary and reasonable.” The ordinance also requires an audit annually to ensure that administrative expenses were no more than 1% of revenues expended and that the jurisdiction meets its maintenance of effort.

On December 12, 2017, per Resolution 2017-505, Council approved the Measure L Master Funding Agreement with the Stanislaus Council of Governments (StanCOG) which expired on June 30, 2020. On May 26, 2020, per Resolution 2020-228, a new Measure L Master Funding Agreement with StanCOG was approved for the period of July 1, 2020 through June 30, 2025 #6..
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Audit Committee, July 30, 2025
Fiscal Year 2023-2024 Auditor’s Report on Compliance of the Measure L: Local Roads First Transportation Funding Measure

which aligns with this audit period. The agreement states in Article III: Payments and Expenditures that the recipient shall annually submit to StanCOG, “An annual independent audit of all of recipients Measure L accounts which audit shall be conducted at recipient’s sole cost and expense.”
For the audit related to FY 2023-2024, the City received information from StanCOG that they would be continuing to conduct the annual audit and that it would be at the expense of StanCOG as part of the 1% allowable administrative expenses within the Measure L ordinance.

The accounting firm of LSL CPAs selected by StanCOG conducted the Fiscal Year 2023-2024 financial audit report.

DISCUSSION:

As part of the City’s Fiscal Year 2023-2024 Measure L Program Audit, the accounting firm verified the revenues and expenditures, fund balances, and that the Maintenance of Effort requirement was met.

In order to accomplish the audit, the City provided the following information to the firm:
 Receipt of payment for all cash received from StanCOG  Detail of all payroll charges and expenditures supporting documentation  Copies of completed monthly reports submitted to StanCOG  Revenue and Expenditure General Ledger detail and the trial balance for all Measure L funds
 Copy of the certification for the maintenance of effort  List of all Measure L projects and a copy of the Strategic Plan Once this information was provided, staff worked closely with the firm to ensure that any requested documents and questions asked were addressed in a timely manner.

On July 11, 2025, LSL CPAs issued the draft independent auditor’s report of the Measure L program for the fiscal year ending on June 30, 2024. The City is awaiting the firm's final report and letter to the Policy Board of Stanislaus Council of Governments which will be issued after the final report is presented to the StanCOG board. The draft report indicated an absence of findings for the fiscal year ending June 30, 2024.

FISCAL IMPACT:

While the information contained in this report discloses the financial performance for the City, there is no direct fiscal impact.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the review of Fiscal Year 2023-2024 Auditor’s Report on Compliance of the Measure L Local Roads First Transportation Funding Measure and forwarding to Council for approval.
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Audit Committee, July 30, 2025
Fiscal Year 2023-2024 Auditor’s Report on Compliance of the Measure L: Local Roads First Transportation Funding Measure

Approved by:

DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:

1. Stanislaus Council of Governments- Measure L City of Modesto Draft #6..
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STANISLAUS COUNCIL OF GOVERNMENTS

MEASURE L- CITY OF MODESTO
FOR THE YEAR ENDED JUNE 30, 2024 ANNUAL FINANCIAL REPORT AFTNME #6..
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STANISLAUS COUNCIL OF GOVERNMENTS
MEASURE L – CITY OF MODESTO
Annual Financial Report
For the Year Ended June 30, 2024
Table of Contents
Page
Number

FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT .......................................................................................................................

BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:

Statement of Net Position ...............................................................................................................................

Statement of Activities ....................................................................................................................................

Fund Financial Statements:

Balance Sheet – Governmental Fund .............................................................................................................

Reconciliation of the Balance Sheet of Governmental Fund to the Statement of Net Position .....................................................................................................................

Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Fund ......................................................................................................................

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Fund to the
Statement of Activities ....................................................................................................................................

Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual (GAAP) – Special Revenue Fund .......................................................................................

Notes to the Financial Statements .........................................................................................................................

SUPPLEMENTARY INFORMATION
Schedule of Expenditures by Project .....................................................................................................................

DRAFT......... ......
..................................... .................................... ..................................... .................... ..................................... .................................. f Governmental Fund nmental Fund
..................................... .......................... ditures and Changes in ditures and Changes i
nd .................................
tement of Revenues, Ex ment of Reve
nces of Governmental F nces of Government
es ................................. es ................................ nues, Expenditures a nues, Expenditures
AP) – Special R
s .....
#6..
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LSLCPAS.COM
INDEPENDENT AUDITORS’ REPORT
To the Policy Board
Stanislaus Council of Governments
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities and Measure L Fund of the City of Modesto, California (the City), California, and the related notes to the financial statements, which collectively comprise the basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Measure L Fund of the City, as of June 30, 2024, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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

Emphasis of Matter
As discussed in Note 1 to the financial statements, the financial statements present only the Measure L Fund and do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2024, the changes in its financial position, or, where applicable, its cash flows for the year ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. nmental activ nmen
es to the financial s es to the fin
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Our responsibilities und ie
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e believe that the audit ev believe that the audit ev
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tates of A
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To the Policy Board
Stanislaus Council of Governments
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. x Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. x Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information
Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Fund’s basic financial statements. The accompanying combining and individual fund financial statements and schedules (“supplementary information”) are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.

The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

DRAFTng sta
l skepticism throughou skepticism th
nt of the financial statem
responsive to those ri ve
heamounts and disclosu amounts an
elevant to the audit in ord he audi
for the purpose of expre or the purpose of expr
no such opinion is expre uch opinion is expre
counting policies used an counting policies u
, as well as evaluate t , as well as evaluat he
h those charged with those charged with gov
ficantaudit findings, and
nformation
management’s discus management’s disc
equire to be pr equire to be p
of the bas
o be
2 #6..
- 126 -
To the Policy Board
Stanislaus Council of Governments
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June XX, 2025, on our consideration of the City’s internal control over the Measure L Fund’s financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over the Measure L Fund’s financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over the Measure L Fund’s financial reporting and compliance.

Irvine, California
June XX, 2025 DRAFT
3 #6..
- 127 -
Stanislaus Council of Governments
Measure L - City of Modesto
Statement of Net Position
Governmental
Activities
ASSETS
Cash and investments $ 42,869,025
Accounts receivable 150,158
Due from other governments 2,295,000
Total assets 45,314,183

LIABILITIES
Accounts payable 29,804
Total liabilities 29,804

NET POSITION
Restricted: 45,284,379
Total net position $ 45,284,379
June 30, 2024
See Notes to Financial Statement 4
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Stanislaus Council of Governments
Measure L - City of Modesto
Statement of Activities
For the Year Ended June 30, 2024
Program
Capital
Contributions Governmental
Expenses and Grants Activities
Functions/Programs:

Primary government:

Governmental activities:

General government $ 9,266,248 $ 13,927,680 $ 4,661,432 Total governmental activities 9,266,248 13,927,680 4,661,432 Total primary government 9,266,248 13,927,680 4,661,432 General Revenues:

Investment earnings 1,750,581
Total General Revenues 1,750,581
Change in Net Position 6,412,013
Net Position, Beginning of Year 38,872,366
Net Position, End of Year 45,284,379
Revenues
Net (Expenses)
Revenues and
Changes in Net
Position
DRAFT66,
9,266,248 9,266,
General Revenues:

Investment earn Inve
Total General Tot
Change in Chang
Net P
T
5 #6..
- 129 -
Stanislaus Council of Governments
Measure L - City of Modesto
Balance Sheet
Governmental Funds
June 30, 2024
ASSETS
Cash and cash equivalents $ 42,869,025
Accounts receivable 2,445,158
Total assets $ 45,314,183

LIABILITIES
Accounts payable $ 29,804
Total liabilities 29,804

FUND BALANCES
Restricted 45,284,379
Total fund balances 45,284,379
Total liabilities and fund balances $ 45,314,183
See accompanying notes to financial statements. 6
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Measure L - City of Modesto
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
June 30, 2024
Amounts reported for governmental activities in the Statement of Net Position are different because:

Total fund balances - governmental funds $ 45,284,379
Net position of governmental activities $ 45,284,379
Stanislaus Council of Governments
DRAFT
7 #6..
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Stanislaus Council of Governments
Measure L - City of Modesto
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Fund
For the Year Ended June 30, 2024

REVENUES
Measure L funds $ 15,221,944
Interest income 1,750,581
Total revenues 16,972,525

EXPENDITURES
Local Streets and Road 8,167,303
Traffic Management 765,556
Bike and Pedestrian 333,389
Total expenditures 9,266,248
Excess of revenues
over expenditures 7,706,277
Net change in fund balances 7,706,277
Fund balances-beginning 37,578,102
Fund balances-ending $ 45,284,379
See accompanying notes to financial statements.

DRAFT
8 #6..
- 132 -
Measure L - City of Modesto
Reconciliation of the Statement of Revenues, Expenses and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2024
Amounts reported for governmental activities in the Statement of Activities are different because:

Net change in fund balances - total governmental funds: $ 7,706,277 Change in unavailable revenues (1,294,264)
Change in net position of governmental activities $ 6,412,013 Stanislaus Council of Governments
Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.

DRAFT
9 #6..
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Stanislaus Council of Governments
Measure L - City of Modesto
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual (GAAP) Special Revenue Fund
For the Year Ended June 30, 2024
Variance with
Final Budget
Actual Positive
Original Final Amounts (Negative)

REVENUES
Measure L funds $ 12,614,437 $ 15,221,944 $ 15,221,944 $ - Investment earnings 592,492 - 1,750,581 1,158,089
Total revenues 12,614,437 15,814,436 16,972,525 1,158,089

EXPENDITURES
Local Streets and Roads 7,442,561 9,292,561 8,167,303 1,125,258 Traffic Management 1,251,478 2,782,027 765,556 2,016,471 Bike and Pedestrian _p ( ) 805,382 1,030,382 333,389 696,993 Total expenditures 9,499,421 13,104,970 9,266,248 3,838,722 Net change in fund balances $ 3,115,016 $ 2,709,466 7,706,277 $ 4,996,811 Fund balances-beginning 37,578,102
Fund balances-ending $ 45,284,379 DRAFT292,
2,782,027 2,78
1,030,382 1,03
13,104,970
5,016 $ 2,709,466TF
10 #6..
- 134 -

STANISLAUS COUNCIL OF GOVERNMENTS
MEASURE L – CITY OF MODESTO
Notes to the Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements present only the City of Modesto’s, California (the City) Measure L Fund (the Measure L Fund) and are not intended to present fairly the financial position, changes in financial position, or cash flows of the City. The financial statements of the Measure L Fund have been prepared in conformity with accounting principles generally accepted in the United States of America, as applied to government units (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The Measure L Fund’s significant accounting policies are described below.

A. Reporting Entity
The Measure L Fund is a special revenue fund of the City. Stanislaus Council of Governments (StanCOG) is the regional transportation planning agency and the metropolitan planning organization of Stanislaus County, which oversees the Measure L Initiative. Measure L provides for the implementation of the Expenditure Plan as approved and adopted by StanCOG, which provides funding for countywide local street and road improvements, arterial street widening, signalization, pedestrian, bicyclist and driver safety improvements. These needed improvements are funded by Measure L, the one-half of one percent retail transactions and use tax established for a twenty-five-year period, April 1, 2017 – March 31, 2042. The revenues will be deposited in a special fund, used solely for the transportation projects, improvements and programs described in the Expenditure Plan which is considered a part of Ordinance, and incorporated into Measure L Policies and Procedures. The City’s Department of Public Works and Planning staff provides the necessary services such as maintenance and accounting to the Measure L Fund on a reimbursement basis with no allocation of payroll expenses.

B. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the Measure L fund activities. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported as general revenues.

Separate financial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements.

Government-Wide Financial Statements
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements are met.

Governmental Fund Financial Statements
Governmental fund financial statements (i.e., balance sheet and statement of revenues, expenditures and changes in fund balance) are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues susceptible to accrual are property taxes, interest on investments, and intergovernmental revenues. Property taxes are recorded as revenues in the fiscal year in which they are levied, provided they are collected in the current period or within sixty days thereafter. A one-year availability period is used for all other revenues. Interest on invested funds is recognized when earned. Intergovernmental revenues that are reimbursements for specific expenditures are recognized when all eligibility requirements are met. Expenditures generally are recorded when a liability is incurred, as under accrual accounting; however, debt service expenditures are recorded only when payment is due.

DRAFTun
organiz orga
entation of th entati
cal street and road cal street a
mprovements. These n provements.
tions and use tax establ tions and use tax es
be deposited in a spec be deposited in a spe
ibed in the Expenditure ibed in the Ex
and Procedures. The C nd Procedur
uch as maintenance and mainten
oll expenses.
g and Financial Statem nd Financial Statem
ed to meeting the operat d to meeting th
efit from goods, services
r segment. Program rev r segment. Program rev
rom goods, services
e offset by program rev e offset by program re
ctivities. The statement ctivities. The statem
(i.e., the statement of ne i.e., the statemenA
cluded among program cluded among progr
ents are provided for ents are provided
ns in the fund financ ns in the fund fina
ments
11 #6..
- 135 -

STANISLAUS COUNCIL OF GOVERNMENTS
MEASURE L – CITY OF MODESTO
Notes to the Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The Measure L Fund reports one major governmental fund:

The Special Revenue Fund is the primary operating fund and accounts for all financial resources of the Measure L Fund of the City.

The Measure L Fund adopts annual appropriated budgets for its special revenue fund, which is a major fund.

Budgetary comparison schedules have been provided for this fund to demonstrate compliance with the budgets.

C. Assets, Liabilities, and Net Position/Fund Balance

1. Cash and Cash Equivalents
In order to maximize the flexibility of its investment program and to aid in cash budgeting, the City pools the cash of all funds, except for monies deposited with fiscal agents in accordance with related bond indentures. The cash and investments balance in each fund represents that fund’s equity share of the City’s cash and investment pool, as the City places no restrictions on the deposit account for the participating funds.

Interest income earned on pooled cash and investments is allocated quarterly. Interest income on restricted cash and investments with fiscal agents is credited directly to the related fund.

2. Accounts Receivable
The Measure L Fund utilizes the allowance method of accounting for and reporting uncollectible or doubtful accounts. At June 30, 2024, management considered all accounts to be fully collectible and, therefore, no allowance was recorded in the accompanying financial statements.

3. Accounts Payable
Certain costs are incurred by the Measure L Fund during the current reporting period but are not paid until after the beginning of the next fiscal period. These costs are reported as accounts payable in the financial statements. The Measure L Fund current accounts payable balance is $29,804 as of June 30, 2024.

4. Net Position
For government-wide reporting, the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources is called net position. Net position is comprised of three components: net investment in capital assets, restricted, and unrestricted. x Net investment in capital assets consists of capital assets, net of accumulated depreciation/amortization and reduced by outstanding balances of bonds, notes, and other debt that are attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are included in this component of net position. The Measure L Fund did not have any net investment in capital assets as of June 30, 2024.

DRAFTpecial revenu pecia
o demonstrate co o demons
ogram and to aid in cash and to a
agents in accordance w agents in accorda
that fund’s equity share hat fund’s equity shar
account for the participa ount for the participa
d investments is allocate investments is a
ited directly to the relate ited directly to the
he allowance method o e allowance m
anagement considered a anagement considere
anying financial stateme
Measure L
hese
12 #6..
- 136 -

STANISLAUS COUNCIL OF GOVERNMENTS
MEASURE L – CITY OF MODESTO
Notes to the Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) x Restricted net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Assets are reported as restricted when constraints are placed on asset use either by external parties or by law through constitutional provision or enabling legislation. The Measure L fund considers all of its resources to be restricted.
x Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that does not meet the definition of the two preceding categories. The Measure L Fund did not have any unrestricted resources as of June 30, 2024.

The Measure L Fund’s policy is to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available.

5. Fund Balance
In governmental fund types, the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources is called “fund balance.” The Measure L Fund’s governmental funds report the following categories of fund balance, based on the nature of any limitations requiring the use of resources for specific purposes.
x Nonspendable fund balance represents amounts that are either not in a spendable form or are legally or contractually required to remain intact. The Measure L Fund did not have any nonspendable resources as of June 30, 2024.
x Restricted fund balance includes amounts that can be spent only for the specific purposes stipulated by external resource providers such as grantors or enabling federal, state, or local legislation. Restrictions may be changed or lifted only with the consent of the resource providers. The Measure L Fund considers all of its resources to be restricted.
x Committed fund balance represents amounts that can be used only for the specific purposes determined by the adoption of an ordinance committing fund balance for a specified purpose by the City’s Council prior to the end of the fiscal year. Once adopted, the limitation imposed by the ordinance remains in place until the resources have been spent for the specified purpose or the Council adopts another ordinance to remove or revise the limitation. The Measure L Fund did not have any committed resources as of June 30, 2024. x Assigned fund balance represents amounts that are intended to be used by the City for specific purposes but do not meet the criteria to be classified as committed. The Council has by resolution authorized the finance director to assign fund balance. The Council may also assign fund balance, as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. The Measure L Fund did not have any assigned resources as of June 30, 2024.
x Unassigned fund balance represents the residual amount for the general fund that is not contained in the other classifications. The general fund is the only fund that reports a positive unassigned fund balance. Additionally, any deficit fund balance within the other governmental fund types is reported as unassigned. The Measure L Fund did not have any unassigned resources as of June 30, 2024.

The Measure L Fund establishes and modifies or rescinds fund balance commitments by passage of an ordinance or policy. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget as a designation or commitment of the fund, such as approved contracts. Assigned fund balance is established by the Measure L Fund through adoption or amendment of the budget or future year budget plan as intended for a specific purpose. The Measure L Fund’s policy is to first apply restricted, committed or assigned resources when an expense is incurred for purposes for which both restricted, committed or assigned and unassigned fund balance is available.

DRAFTdeferred outflows of re deferred outflow
Measure L Fund’s gove Measure L Fund’s g
ny limitations requiring th
s that are either not in re eith
asure L Fund did not ha asure L Fund did n
s that can be spent only f n be spent only f
enabling federal, state, o enabling federal,
resource providers. The
sents amounts that can s amounts
mmitting fund balance fo mmitting fund ba
dopted, the limitation im dopted, the limitation i
e specified purpose or t
e L Fund did not have a e L Fund did not ha
esents amou
classifie
he
13 #6..
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STANISLAUS COUNCIL OF GOVERNMENTS
MEASURE L – CITY OF MODESTO
Notes to the Financial Statements
For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Management’s Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates
E. Governmental Accounting Standards
During the year ending June 30, 2024, the Measure L Fund implemented the following standards with no financial impact:

GASB Statement No. 100 – Accounting Changes and Error Corrections. The requirements of this statement are effective for reporting periods beginning after June 15, 2023.

NOTE 2: CASH AND CASH EQUIVALENTS
Cash and Cash equivalents balances for the Measure L Fund are held in the City’s investment pool. The City maintains a cash and investment pool to facilitate the management of cash. The cash and cash equivalents held in the City’s investment pool are available on demand to the Measure L Fund and are stated at fair value. Interest is allocated to the City’s various funds based upon average cash balances. The Cash and cash equivalents, and deposits held with the City, as of June 30, 2024, were $42,869,025 and $42,869,025, respectively.

See the City’s Annual Comprehensive Financial Report (ACFR) for disclosures related to risks and fair value measurements.

NOTE 3: RISK MANAGEMENT
The Measure L Fund is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City provides coverage for these losses through commercial insurance policies and/or through participation in the City Program. Refer to the City’s ACFR for additional information.

NOTE 4: COMMITMENTS AND CONTINGENCIES
Commitments and contingencies, undeterminable in amount, include normal recurring pending claims and litigation.

In the opinion of management, based upon discussion with legal counsel, there is no pending litigation which is likely to have a material adverse effect on the financial position of the Measure L Fund.

NOTE 5: SUBSEQUENT EVENTS
The Measure L Fund evaluated subsequent events for recognition and disclosure through July __, 2025, the date on which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2024, that required recognition or disclosure in these financial statements.

DRAFTth
ctions. The require ctions. Th
L Fund are held in the Fund are h
management of cash. Th ement o
to the Measure L Fund to the Measure L
average cash balances average cash balance
were $42,869,025 and re $42,869,025 and
nancial Report (ACFR) ancial Report (A
d to various risks of los to various ris
injuries to employees; a injuries to employee
nsurance policies and/o
ation. ation

AND CONTING
deter
14 #6..
- 138 -

STANISLAUS COUNCIL OF GOVERNMENTS

MEASURE L - CITY OF MODESTO

SCHEDULE OF EXPENDITURES BY PROJECT
FOR THE YEAR ENDED JUNE 30, 2024
Category
Project
Number Project Name
Expense Budget -
Local Control
Measure L
FY 23-24 Local
Control Measure L
Expenses
Project to Date
Measure L Local
Control Expenses
through 6/30/2024
Budget Remaining for
Future Fiscal Years
Local Streets & Roads 100806 2016 Pavement Rehab Project $ 176,106 $ - $ 176,106 $ - Local Streets & Roads 100942 Paradise Road Improvements 45,156 - 45,156 - Local Streets & Roads 100966 Pelandale from Sisk to Dale 487,249 - 487,249 - Local Streets & Roads 101036 Carpenter Street Improvements 2,628,392 - 2,628,392 - Local Streets & Roads 101037 Lakewood Street Improvements 2,365,558 - 2,365,558 - Local Streets & Roads 101038 Wylie,Floyd,Carver Improvements 2,250,469 - 2,250,469 - Local Streets & Roads 101042 Paradise Road ATP - Construction Portion 7,212,561 3,068,077 3,705,924 3,506,637 Local Streets & Roads 101088 Standiford Avenue Pavement Rehab 2,788,144 - 2,788,144 - Local Streets & Roads 101118 Claus Road Pavement Rehab 1,183,203 - 1,183,203 - Local Streets & Roads 101120 Village One Slurry Seal 2,554,544 - 2,554,544 - Local Streets & Roads 101141 Downtown Master Plan 108,450 - 108,450 - Local Streets & Roads 101157 Tuolumne Blvd. Pavement Rehab 2,502,283 - - 2,502,283 Local Streets & Roads 101168 Scenic Dr Pavement Rehab Phase 1 (Lakewood to Claus) 1,243,944 - 1,243,944 - Local Streets & Roads 101169 Scenic Dr Pavement Rehab Phase 2 (Downey to Lakewood) 6,035,580 247,160 681,866 5,353,715 Local Streets & Roads 101170 Tully Road Pavement Rehab 2,011,496 - 2,011,496 - Local Streets & Roads 101171 Coffee Road Pavement Rehab Phase 1 3,186,604 - 3,186,604 - Local Streets & Roads 101214 Granger Neighborhood Pavement Rehabilitation 360,000 8 299,839 60,161 Local Streets & Roads 101245 2020 Pvmnt Condition Survey 189,180 - 189,180 - Local Streets & Roads 101246 Briggsmore-McHenry to Oakdale 5,374,090 3,547,829 5,348,667 25,423 Local Streets & Roads 101248 Orangeburg Ave. Pvmt Rehab Ph1 3,121,267 1,022,693 3,019,865 101,402 Local Streets & Roads 101249 Pelandale Nghbrhd Pvmt Maintenance 1,552,471 13,752 1,495,001 57,470 Local Streets & Roads 101269 Pelandale Ave. Rehabilitation 800,000 116,289 116,289 683,711 Local Streets & Roads 101295 9th St Corridor Improvements 3,956,776 - - 3,956,776 Local Streets & Roads 101314 Coffee Road Pavement Rehab Phase 2 2,748,500 58,058 72,462 2,676,038 Local Streets & Roads 101315 Dale Road Pavement Rehabilitation 2,185,000 - 26,816 2,158,184 Local Streets & Roads 101392 Orangeburg Ave. Pvmt Rehab Ph2 2,736,500 49,585 100,807 2,635,693 Local Streets & Roads 101496 Lakewood and Scenic Improvements 2,990,000 - - 2,990,000 Local Streets & Roads 101578 Claus Road Complete Street Grant 50,000 43,852 43,852 6,148 Total Local Streets and Roads 62,843,523 $ 8,167,304 $ 36,129,881 $ 26,713,642 $ Traffic Management 100634 Upgrade Traffic Signals - 2013 169,432 $ $- 169,432 $ $-Traffic Management 100719 Traffic Signals 2013 (Ros/Bel) - - - - Traffic Management 100720 Traffic Signals 2013 (Pres/Mt. Vrn) 122,080 - 122,080 - Traffic Management 100884 Emergency Vehicle Pre-Emption 61,500 - 61,500 - Traffic Management 100940 Synchronize Traffic Signals Downtown 2015 45,548 45,548 45,548 - Traffic Management 100990 System Safety Analysis Program 32,500 1,484 31,895 605 Traffic Management 101039 Task Force for School Safety 46,187 - 46,187 - Traffic Management 101040 Orville Wright Elementary Improve. 586,702 - 540,195 46,507 DRAFT2,36 2,250,4 2,2 7,212,561 7, 2,788,144 2,788, 1,183,203 2,554,544 108,450 2,502,28 1,243 6,0 e 2 on 15 #6..
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STANISLAUS COUNCIL OF GOVERNMENTS

MEASURE L - CITY OF MODESTO

SCHEDULE OF EXPENDITURES BY PROJECT
FOR THE YEAR ENDED JUNE 30, 2024
Category
Project
Number Project Name
Expense Budget -
Local Control
Measure L
FY 23-24 Local
Control Measure L
Expenses
Project to Date
Measure L Local
Control Expenses
through 6/30/2024
Budget Remaining for
Future Fiscal Years
Traffic Management 101043 Replace Traffic Controllers 584,437 - 584,437 - Traffic Management 101066 New Signal Oakdale/Claratina 110,000 50,094 61,354 48,646 Traffic Management 101089 Tully Road Safety Improvement 881,183 3,012 41,241 839,942 Traffic Management 101122 Install 2 Flashing Beacons 9,970 - 9,970 - Traffic Management 101123 Fiber Drop Traffic Signal Cabinet 240,321 165 240,321 - Traffic Management 101124 Replace 35 Traffic Controllers 177,705 27,556 177,705 - Traffic Management 101125 Traffic Signal Analysis Study 243,270 - 243,270 - Traffic Management 101157 Tuolumne Blvd. Pavement Rehab 1,023,610 - - 1,023,610 Traffic Management 101172 School Safety Program Study 250,000 76,519 250,666 (666)Traffic Management 101173 School Area All Stop Beacon 48,000 - 48,000 - Traffic Management 101174 Advance School Zone Beacons at 13 Schools 129,983 - 129,983 - Traffic Management 101175 School Crosswalk Beacon 1,061,316 17,960 980,010 81,306 Traffic Management 101176 Upgrade Crosswalk to RRFB 37,456 - 37,456 - Traffic Management 101177 Upgrade RRFB - Elliot School 19,670 - 19,670 - Traffic Management 101178 Neighborhood Traffic Calming 1,550,000 85,901 279,423 1,270,577 Traffic Management 101179 HAWK System at Hetch-Hetchy on Tully and Prescott 25,846 - 25,846 - Traffic Management 101192 Upgrade ATMS - 2019 439,628 (71,043) 215,754 223,874 Traffic Management 101221 School Safety Program Study - Projects 1,125,000 3,296 11,675 1,113,325 Traffic Management 101242 Install Video Detection 399,971 - 399,971 - Traffic Management 101247 Virginia Corridor Trail Maintenance 58,900 - 53,380 5,520 Traffic Management 101316 Adaptive Traffic Control Software 700,000 78,150 78,150 621,850 Traffic Management 101317 Fiber Drop Carpenter/Prescott/Maze 70,000 26,708 45,305 24,695 Traffic Management 101318 Fiber Drop Downtown Corridors - G St. and H St. 30,000 12,551 28,811 1,189 Traffic Management 101322 Claus Road Signal Coordination 301,873 54,560 76,182 225,691 Traffic Management 101323 Scenic Drive Signal Coordination 331,877 212,388 233,185 98,692 Traffic Management 101333 Install RRFB at 10 Locations 150,000 - - 150,000 Traffic Management 101383 Oakdale Road Improvement 116,390 792 6,689 109,701 Traffic Management 101384 Sylvan/Standiford PHB's 111,150 76,758 86,891 24,259 Traffic Management 101394 All-Way Stop Beacons - Closed 45,379 - 45,379 - Traffic Management 101395 Traffic Safety Analysis 195,000 32,375 72,942 122,058 Traffic Management 101397 Fiber Drop Sisk Road 30,000 11,995 14,060 15,940 Traffic Management 101482 SS4A Action Plan 250,000 - 122 249,878 Traffic Management 101496 Upgrade Traffic Signals 2023 675,000 - - 675,000 Traffic Management 101572 HAWK 16th at H and I 500,000 3,458 3,458 496,542 Traffic Management 101573 Advance School Beacon Installation 200,000 - - 200,000 Traffic Management 101581 Ethernet Switches 550,460 - - 550,460 Traffic Management 101587 ATP - Cycle 7 25,000 15,330 15,330 9,670 Total Traffic Management 13,762,344 $ 765,557 $ 5,533,474 $ 8,228,870 $ DRAFT24177,7 243,270 1,023,610 1,023 250,000 48,000 129,983 1,061,31 37 t. and H St. 16 #6..
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STANISLAUS COUNCIL OF GOVERNMENTS

MEASURE L - CITY OF MODESTO

SCHEDULE OF EXPENDITURES BY PROJECT
FOR THE YEAR ENDED JUNE 30, 2024
Category
Project
Number Project Name
Expense Budget -
Local Control
Measure L
FY 23-24 Local
Control Measure L
Expenses
Project to Date
Measure L Local
Control Expenses
through 6/30/2024
Budget Remaining for
Future Fiscal Years
Bike and Pedestrian 100882 MJC Bike Path Phase 2 202,047 $ - $ 202,047 $ $-Bike and Pedestrian 101041 Active Transportation Plan 300,000 7,038 276,426 23,574 Bike and Pedestrian 101042 Paradise Road ATP 465,718 - 25,000 440,718 Bike and Pedestrian 101073 Carver/Bangs-Pelandale/Snyder Bike Trail System 405,591 - - 405,591 Bike and Pedestrian 101126 Dry Creek Trail Maintenance 651,261 234 651,261 - Bike and Pedestrian 101180 Dry Creek Trail Pavement Rehab & ADA Upgrade Phase II 1,627,967 22,892 77,308 1,550,659 Bike and Pedestrian 101247 Virginia Corridor Trail Maintenance 825,163 28,142 742,037 83,126 Bike and Pedestrian 101250 Neighborhood ADA Program 695,534 258,505 617,059 78,475 Bike and Pedestrian 101295 9th St Corridor Improvements 850,057 - - 850,057 Bike and Pedestrian 101391 Nghbrhd ADA Imp Program II 575,000 1,246 1,246 573,754 Bike and Pedestrian 101587 ATP - Cycle 7 25,000 15,330 15,330 9,670 Total Bike and Pedestrian 6,623,338 $ 333,389 $ 2,607,715 $ 4,015,623 $ Grand Total 83,229,205 $ 9,266,249 $ 44,271,070 $ 38,958,135 $ DRAFT40651,2 1,627,967 1,825,163 825, 695,534 850,057 575,000 25,00 $ $ 6,623 8 $ AF 17 #6..
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