Agenda Item
City Council
Item #: 7.1. 4/12/2022 File #: 22-0209
TO: Honorable Mayor and Members of the City Council
THRU: Rob Houston, City Manager
FROM: Will Kolbow, Assistant City Manager/Administrative Services Director
1. SUBJECT
Merging of the Investment Advisory Committee and Audit Committee. Resolution No. 11387 and Ordinance No. 02-22.
2. SUMMARY
The City’sAudit Committee and Investment Advisory and Oversight Committees provide a critical oversight role over the City’sfinancial reporting and investment activities, respectively. However, due to the unique qualifications of the Audit and Investment Advisory committees, it has proven difficult to fill the vacancies that exist in the committees. Additionally, the City’scurrent Investment Oversight Committee provides a duplicate function to the Investment Advisory Committee. Therefore, in order to ensure the functions of both committees continue and for efficiency purposes, staff is recommending the City Council merge the two committees into one new committee entitled the Investment and Audit Committee, and eliminate the Investment Oversight Committee.
3. RECOMMENDED ACTION
1. Adopt Resolution No. 11387. A Resolution of the City Council of the City of Orange Eliminating the Audit Committee and the Investment Advisory Committee, Establishing a New Investment and Audit Committee, Repealing Resolution Nos. 10166 and 11356, and Stating Qualifications for Appointment to All City Council Created Committees.
2. Introduce and Conduct First Reading of Ordinance No. 02-22. An Ordinance of the City Council of the City of Orange Repealing Chapter 2.50 of the Orange Municipal Code to Eliminate the Investment Oversight Committee Due to the Creation of the Investment and Audit Committee.
4. FISCAL IMPACT
None.
5. STRATEGIC PLAN GOALS
Goal 2: Be a fiscally healthy community
a: Expend fiscal resources responsibly.
6. DISCUSSION AND BACKGROUND
The City’sAudit Committee and Investment Advisory and Oversight Committees provide a critical oversight role over the City’sfinancial reporting and investment activities, respectively. However, due to the unique qualifications of the Audit and Investment Advisory committees, it has proven difficult to City of Orange Printed on 4/7/2022Page 1 of 3
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Item #: 7.1. 4/12/2022 File #: 22-0209
fill the vacancies that exist on both committees.
Background
The Audit Committee was established in July 1997 and consists of the City Treasurer and four citizen representatives. Its purpose is to select the City’sindependent financial statement auditor, monitor and evaluate the audit, and act as a direct communications link between the City Council and the independent auditors. The committee last met in July 2011 and has not met since due to a lack of quorum. The committee currently has two members: City Treasurer Richard Rohm and Jordan Prell, who was appointed this past August.
The Investment Advisory Committee (IAC) was created in April 1995 and consists of three citizen representatives. The purpose of the IAC is to review the City’sStatement of Investment Policy and Treasurer reports, provide advice regarding potential investment strategies, and provide written recommendations to the Investment Oversight Committee. The IAC currently has two members:
Larry Sallinger and Mark Mittmann. Mr. Sallinger has served beyond the 12-year limit as contemplated by the OMC but continues to serve until a replacement is named. The third seat on the IAC has been vacant for several years.
The Investment Oversight Committee (IOC) was created by Ordinance in August 1992 and is codified in the Orange Municipal Code (OMC), Chapter 2.50. It consists of the City Treasurer, who acts as Chair, the City Manager or their designee, who is the Vice Chair, and the Finance Director. Its purpose is to review the City’sStatement of Investment Policy, monitor the compliance of the City’s investments with the Policy, and report to the City Council the recommendations of the IAC.
Recommendations
Staff has diligently attempted to find qualified candidates for consideration to fill both committees.
However, most of the individuals that have applied for both committees do not meet the qualifications of either. Due to the ongoing difficulty of filling the respective committees, and to ensure that the important work of both committees continues, staff recommends that the City Council create a new Committee to combine the functions of the IAC and Audit Committee. The qualifications of the Committee could be any combination of the prior committees, with at least one member meeting the qualifications of the IAC and one meeting the qualifications of the Audit Committee, to ensure there is expertise in each area that the Committee covers. Further, staff recommends membership consist of the City Treasurer and a total of four citizen representatives. Staff presented this approach to the Council at the March 8, 2022 City Council meeting.
Procedurally, should the City Council approves this change, this would be a new committee and the appointments to the seats would be subject to the procedures of the Maddy Act. Existing members of both current committees would be eligible to apply for the newly created seats.
Finally, since the IOC functions are largely duplicated by the IAC, and the City Manager and Finance Director already act as staff for both the IAC and Audit Committee, staff also recommends that the City Council repeal OMC Chapter 2.50, eliminating the IOC, and designate the new Investment and Audit Committee as a direct advisory committee to the City Council.
7. ATTACHMENTS
· Resolution No. 11387
· Ordinance No. 02-22
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Item #: 7.1. 4/12/2022 File #: 22-0209
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