Item V.5.a - Corrected Attachment 1 — Richmond City Council, December 17, 2024

Recommendation
Number Recommendation Description Recommendation
Number Auditor Direction
Responsible
Department for
Implementation (per
auditor - GPP
recommendation)
Lead Staff Estimated
Time Frame November 2024 Update

1.1 Provide direction to the Port on its
long-term strategic goals for the
Port. This will better inform Port
staff as they develop a proposed
strategic plan.

City Council Charles Gerard/
Lizeht Zepeda 12/31/2025
The Port, as part of its planning process, will seek input from the City Council on the strategic plan. The Port will issue a Request for Proposals (RFP) for a strategic
planning consultant to guide the process in 2025.

1.2 Formally adopt a proposed Port
strategic plan developed by Port
staff. This will help give Port staff
clear direction.

City Council Charles Gerard 12/31/2026
The Port will engage City Council throughout the planning process and well present a finalized strategic plan to City Council upon completion.

1.3 Develop and present a proposed
strategic plan to the City Council.

This will provide the City Council
with a proposed plan to review that
is developed using the knowledge
of its Port staff.

Economic
Development (Port) Charles Gerard 12/31/2026
The Port will issue a Request for Proposals (RFP) for a strategic planning consultant to guide the process in 2025.

The consultant will guide and assist in development of the Port's strategic planning process and make
recommendations for a final plan.

1.4 Adopt a procedure to review the
strategic plan with the City Council
at least every five years. During the
review staff should include any
proposed revisions to the strategic
plan to be considered and possibly
adopted by the City Council at that
time.

Economic
Development (Port) Charles Gerard 12/31/2026 and
Ongoing
The Port will review and update the strategic plan every five years to reflect changes in the direction and policy as it evolves. A clear timeline for these reviews will be
incorporated into the plan itself.

2.1 Develop and maintain written
procedures for its critical operating
functions.

Economic
Development (Port)
Charles Gerard/
Lizeht Zepeda 6/30/2026
The Port operates as an Enterprise Fund department
under City Management, with its procedures aligned to
and documented within City processes. It relies on City resources and City departments for a range of support
functions. Additionally, a dedicated procedures manual
can be developed to address processes unique to the Port and its operations.

2.2 Develop and document a backup
plan, or succession strategy, for
critical roles and responsibilities at
the Port.

Economic
Development (Port)
Charles
Gerard/Sharrone
Taylor
12/31/2025
Upon hiring additional headcount, and as part of the
strategic planning process, the organization of the Port will be reviewed. Target positions such as the Capital
Projects Manager have well documented job descriptions.

As part of the hiring process, Port management will always consider candidates' potential for increased responsibility for the purposes of succession planning.

Management and Performance Audit of the Port of Richmond Audited by: GPP Analytics 1 Port Strategic Plan:

The Port of Richmond’s absence of a
strategic plan significantly
undermines its operational efficiency
and long-term planning, leading to
unclear investment priorities and
deteriorating infrastructure. To
address these issues, the City should
develop and formally adopt a
strategic plan, ensuring its regular
review and adaptation. This will
enable the Port to effectively allocate
resources, attract stable tenants, and
secure funding, ultimately enhancing
its viability and economic
contributions.
2 Port Procedures:

The Port of Richmond’s lack of
written procedures for managing its
$10.5 million in operating revenue
and $29.5 million in assets poses
significant operational and
compliance risks, especially during
staff turnover. Without documented
processes for key functions, like
lease revenue collection and maritime
operations, the Port is vulnerable to
disruptions and knowledge loss. To
mitigate these risks and ensure
consistent operation, it’s crucial for
the Port to develop and maintain
written procedures for its essential
functions and establish a succession
strategy for critical roles.

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3.1 Appropriate funds to hire a
Maintenance Manager within the
Port.

City Council
Sharrone Taylor/
Charles Gerard/
Nannette Beacham/
Daniel Chavarria
6/30/2025
The City Council approved a Capital Projects Manager
position for the Fiscal Year 2024-25 budget in April 2024.

The solicitation for this position was posted by Human
Resources and Port Director is in the final process of
selecting a candidate. The approved budget for the 2024- 2025 fiscal year includes funding for a Management
Analyst. Additionally, the Port allocated funding for a dedicated Senior Business Assistance Officer position.

The Port anticipates these positions will be filled with full time resources within the first quarter of 2025 calendar year.

3.2 Direct the Port to consider all
increased costs associated with
the Maintenance Manager position
and incorporate them when setting
future fees, tariffs, and lease rates.
*Contingent on recommendation

3.1 City Council
Lizeht
Zepeda/Charles
Gerard/Rita Martinez
Individual lease
renewal
Port management will always seek the highest valued
lease and rent terms for facilities and properties through the City's open and transparent bidding processes and
incorporate all costs that can be associated with each
individual lease.

3.3 Develop an agreement with the
Port, or an outside vendor
managed by the Port, with a known
billing rate and set service-level
expectations for work performed,
to account for the remaining work,
such as road repairs, that cannot
be performed by the Port’s
Maintenance Manager (see
Recommendation 3.1).

Public Works
Department/Economic
Development (Port)
Charles
Gerard/Lizeht
Zepeda/Daniel
Chavarria/Rita
Martinez/ Avinesh
Nadan
12/31/2025
The Port will utilize outside vendors selected through the City's procurement process for work to be performed that requires specialized skills and/or that is outside the scope of staff's capabilities to perform. The Capital Projects Manager will provide oversight in the vender selection
process and throughout the completion of work.

3.4 Develop an interim tracking and
billing method, such as tracking
work performed using a
spreadsheet, to recoup time and
materials spent on behalf of the
Port.

Public Works
Department/Economic
Development (Port)
Charles Gerard/
Lizeht Zepeda/Rita
Martinez/ Avinesh
Nadan/ Sandi
Wong/Randall
Narron
6/30/2025
The Port develops a detailed budget and capital projects plan as part of the City's annual budget process. The
budget allocations and changes are tracked in detail. The Port may occasionally utilize other City department
services, such as Public Works. The Port will develop a spread sheet to improve tracking of cross department
work and transfers of payment for such work.

3.5 Perform a comprehensive facility
condition assessment of all major
Port assets after a strategic plan
has been adopted (see
Recommendation 1).

Economic
Development (Port)
Charles Gerard/
CSW 6/30/2025
The facilities assessment will precede the strategic plan effort. Therefore, the assessment results can be
accounted for within the strategic plan. Funding for a facilities assessment has been included in the 2024-2025 FY budget. A Request for Proposals (RFP) was issued in
August 2024 and City Council approved the selection of
Moffatt and Nichol in combination with Liftech for this assessment work.
3 Maintenance Staff and Deferred
Maintenance:

The audit has uncovered significant
inefficiencies in the maintenance of
the Port’s assets, leading to
unplanned financial support from the
City’s General Fund. These issues
pose a risk to the Port’s asset value
and emergency preparedness, and
ultimately its long-term operational
viability. To address these issues, we
recommend hiring a Maintenance
Manager, establishing a clear billing
system for maintenance work
performed by the Public Works
Department, and conducting a
comprehensive facility conditions
assessment to ensure asset
preservation and operational
readiness.

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4.1 Appropriate funds to hire a Finance
Manager, a position that was
previously held at the Port until
Fiscal Year 2014-15.

City Council Charles Gerard/
Andrea Miller Completed
City Council approved a Finance Manager position for the Fiscal Year 2024-25 budget in April 2024. The Finance
Department has promoted Rita Martinez to the position of Finance Manager II. Rita is dedicated to Economic
Development/Port and works closely with the Port staff.

4.2 Direct the Port to consider all
increased costs associated with
the Finance Manager position and
incorporate them when setting
future fees, tariffs, and lease rates.
*Contingent on recommendation

4.1 City Council
Charles,
Gerard/Andrea
Miller/ Rita Martinez
Individual lease
renewal
Port management will always seek highest valued lease
and rent terms for facilities and properties through the City's open and transparent bidding processes and
incorporate all costs that can be associated with each
individual lease.

4.3 Investigate and review the
consistency of its document
retention practices for both onsite
and offsite storage.

Finance Department/
Economic
Development (Port)
Charles,
Gerard/Andrea
Miller/ Rita Martinez
9/30/2025
The Port and Finance team will review document
management and reporting practices for hard and soft
copies of documents and will improve record keeping.

4.4 Use the additional staff capacity
gained by the Port adding a
Finance Manager to perform
comprehensive and routine budget
and financial monitoring of the Port
that is in line with the Government
Finance Officer’s Association’s
best practices.
*Contingent on recommendation

4.1 Finance Department/
Economic
Development (Port)
Charles,
Gerard/Andrea
Miller/ Rita Martinez
Ongoing
City Council approved a Finance Manager position for the Fiscal Year 2024-25 budget in April 2024. The Finance
Department has promoted Rita Martinez to the position of Finance Manager II. Rita is dedicated to Economic
Development/Port and works closely with the Port staff.

Rita will assist in providing comprehensive and routine budget and financial monitoring of the Port.

5.1 Write and implement Port-specific
procedures regarding how it
solicits, selects, and
vets tenants for Port properties.

The procedures should include
appropriate retention of supporting
documents such as all proposals
received, the selection criteria and
scoring, and all documents used to
vet the accuracy of the tenant’s
information.

Economic
Development (Port)
Nannette Beacham/
Charles Gerard/
Lizeht Zepeda/ Rita
Martinez
9/30/2025
The lease solicitation, selection and vetting process
follows City Richmond procurement processes
and procedures. These current procedures capture all
supporting documents such as proposals and selection
criteria.
4 Finance Staff and Financial
Monitoring:

The Port’s financial management is
hindered by a lack of dedicated
finance staff at the Port and
insufficient financial oversight,
leading to revenue growth that lags
behind regional inflation and potential
underinvestment in operations. The
absence of a Finance Manager since
FY 2014-15 has limited the Port’s
capability for in depth financial
planning and monitoring which is
essential for strategic fee setting and
successful grant applications.

Document management issues
further complicate financial
accountability. To enhance financial
management and alignment with its
mission, the City should reinstate a
Finance Manager for the Port.
5 Lease Solicitation, Selection, and
Vetting Process:

The Port lacks documented Port-
specific procedures for leasing,
impacting the transparency and due
diligence in tenant solicitation,
selection, and vetting. With no
records in these areas for most of the
ten lease agreements between 2013
and 2023, there’s a risk of non-
compliance with City policies and
state laws. The absence of clear
processes increases the potential for
fraud and undermines the

Page 3 of 7 ends

5.2 Determine the nature of the
Surplus Property Authority and, as
recommended in the 2011 audit of
the Port, either disclose more
information about it or dissolve it if
no information exists.

City Council Nannette Beacham,
Susan Bloch 6/30/2026
The Surplus Property Authority (SPA) role has been
discussed with City Council by City Management and the
City Attorney's office. The SPA covers a portion of the Port's facilities but not all port facilities. The Port management's recommendation is that the SPA be
dissolved. When the City and the Port consider having a dedicated port board or commission, that entity will need to cover all properties and facilities within the Port's portfolio.

6.1 Write and implement a procedure
to verify all reported cargo volume
that affects revenue from lease
agreements, wharfage fees, tariffs,
or other fees that may be
calculated by the volume of cargo.

Economic
Development (Port)
Charles Gerard/
Nannette
Beacham/Lizeht
Zepeda/Andrea
Miller/Rita Martinez
12/31/2026
The Port has two tenants that handle cargo and pay on a tariff basis - AAK USA Inc. and Auto Warehousing
Company. The lease agreements incorporate standards of
reporting and payment facilitating compliance. Within the port industry, landlord ports may undertake an audit of cargo volumes every several years. The Port will engage with a consultancy to undertake a cargo volume audit
process every two years.

6.2 Appropriate funds and approve the
positions recommended in
Recommendation 3 and
Recommendation 4 to help ensure
that Port staff have the capacity to
carry out verification activities.

City Council
Charles Gerard/
Nannette
Beacham/Lizeht
Zepeda/Andrea
Miller/Rita Martinez
12/31/2025
Appropriations for positions in Recommendation 3 and 4 is completed. Port staff will develop a process for cargo verification at least every two years.

7.1 Include specific direction within
their policies and procedures
manual regarding inspections/
monitoring of Port properties for
tenant compliance with
environmental clauses included in
their leases as well as the San
Francisco Bay Conservation and
Development Commission policies
(see Recommendation 2).

Economic
Development (Port)
Lizeht Zepeda/ Avery
Stark/ Charles
Gerard/ Lina Velasco
12/31/2025
The Port tenants operate under lease agreements with the standards of law, including environmental law, facilitating compliance. An operations and environmental audit
process can be built into the port procedures manual. The Port has a larger concern with the unleased properties that are subject to vandalism, waste disposal, and blight.
optimization of tenant agreements for
the Port’s benefit. Addressing these
deficiencies by establishing Port-
specific leasing procedures and
clarifying the role of the Surplus
Property Authority in the City will
enhance accountability and align
leasing practices with the Port and
community interests.
6 Lease Volume Guarantee Verification
and Documentation:

The Port’s lease agreement with Auto
Warehousing Co. (AWC) includes
vehicle processing guarantees critical
for offsetting bond payments. Despite
AWC’s financial compliance, the
Port’s lack of verification of reported
vehicle processing volume, and its
reliance on AWC-provided figures
without supporting evidence like
vessel manifests, undermines
revenue assurance. Industry best
practices advocate for such
verification to prevent inaccuracies
and potential fraud. Addressing
staffing shortages and implementing
robust verification procedures for
cargo volumes will enhance revenue
reliability and align the Port’s
practices with industry standards.
7 Environmental Compliance and
Lease Monitoring:

Despite tenant lease agreements
containing environmental provisions,
there’s no evidence of proactive and
systematic oversight by the Port,
attributed to insufficient procedures
and staffing. This deficiency poses
risks to the City’s legal and financial
standing. Implementing explicit
monitoring policies and documenting
compliance efforts are crucial to
mitigate potential environmental,
le
gal, and financial repercussions,

Page 4 of 7 ends

7.2 Document staff
inspections/monitoring of Port
properties for environmental
compliance and other tenant
activities which may require a
permit from the San Francisco Bay
Conservation and Development
Commission.

Economic
Development (Port)
Lizeht Zepeda/ Avery
Stark/ Charles
Gerard/ Lina Velasco
12/31/2025
The Port Director met with all tenants, terminals and
toured/inspected their sites within this year. Tenants are responsible for their Bay Conservation and Development
Commission (BCDC) approval and permitting, use
compliance within their leased premises. Facilities
inspections can be recorded going forward for reporting purposes.

8.1 Prioritize the process of soliciting
for, and vetting, potential tenants
for vacant Port properties, in line
with the Port’s strategic plan (see
Recommendation 1).

Economic
Development (Port) Charles Gerard 6/30/2025
Staff agrees that leasing the properties is most effective at keeping them safe and secure. The Port is installing a
Flock Camera system to improve security and safety. The Port is installing traffic calming measures and other safety infrastructure. The Port has also commenced a Crime
Prevention Through Environmental Design
(CPTED)engagement with Richmond Police Department.

8.2 Establish a written procedure to
consider security services,
surveillance systems, alarm
systems, and secure fencing when
properties become vacant. This is
in line with the recommendations
made in Recommendation 2 of the
audit report.

Economic
Development (Port)
Charles Gerard/ Bisa
French 12/31/2025
The Port will document and establish written procedures for ongoing security and surveillance improvements. The Port is working with Richmond Police Department on
Crime Prevention Through Environmental Design
(CPTED) engagement for the Port area. The Port is
installing traffic calming measures and other safety
infrastructure.
g, p ,
ensuring adherence to regulations
and safeguarding the Bay’s
environment.
8 Security at Port Facilities:

Without security, vacant Port
properties are susceptible to
trespassing and vandalism,
increasing risks and costs for the
City. With three unleased buildings as
of January 2024, a lack of security
measures has led to damage and
could complicate lease negotiations
and/or delay tenant occupancy.

Previous security efforts at Terminal
1 lack assessment for effectiveness,
highlighting the need for established
security procedures for vacant
properties. Recommendations
include prioritizing tenant solicitation
for vacant properties and establishing
security protocols to mitigate
trespassing and vandalism risks and
their associated costs.

Page 5 of 7 ends

9.1 Provide documentation to the Port
of Richmond and Richmond City
Council related to the original loans
to the Port and their purpose by
June 30, 2024.

Finance Department Rita Martinez Completed
Staff have identified additional promissory notes
documentation to support the loan from the General Fund to the Port. There is a Payment Schedule in place.

Additionally, the Port and the City recently refined the payment plan and shortened the loan term through a
$4.5M payment from the Port Fund to the City.

9.2 Review all loans between the
General Fund and other City
departments and ensure
all supporting documentation is
maintained and sufficient to
demonstrate that the liability is
appropriate in compliance with
state law.

Finance Department Rita Martinez Completed
Documentation was located and presented to GPP
Analytics. The City loan liability has been audited per the City's Annual Comprehensive Financial Report (ACFR)

9.3 If they have not received
documentation of the original loans
to the Port and their purpose by
June 30, 2024, restate and
eliminate the liability for these
loans to help maintain compliance
with state law.

City Council Rita Martinez N/A
Documentation was located and presented to GPP
Analytics. The City loan liability has been audited per the City's Annual Comprehensive Financial Report (ACFR).

10.1 Amend its Administrative Manual
to clarify its policy regarding
personal internet and email usage
by City employees.

City Managers
Office/Information
Technology
Nannette Beacham/
Charles Gerard/
Andrea Miller/ Rita
Martinez
6/30/2025
City staff will work with Information Technology to ensure adherence to City policy. City staff will coordinate a
corresponding update of the Administrative Manual.
9 Debt to the General Fund:

The Port’s unresolved debt to the City
General Fund, initially reported as
$16,942,096 in 2013 and paid down
to $12,485,369.72 by FY 2023–24,
lacks substantiating documentation
for its origin and purpose. This
absence of records complicates the
Port’s ability to justify the
reasonableness of its fees under
state law. The issue, consistent with
findings from a 2011 audit, suggests
a broader problem of record-keeping
within City departments.

Recommendations include a final
effort by the Finance Department to
locate documentation for the Port
loans and a review of all City
department loans to ensure
compliance with state law, potentially
restating and eliminating
unsubstantiated liabilities to maintain
legal compliance.
10 Personal Emails:

During our audit, we noted Port and
City employees in Richmond using
personal email accounts for City
business. This practice could hinder
the City’s ability to respond to
California Public Records Act
requests, risking non-compliance, as
personal emails fall outside the City’s
purview. The City’s policies on
technology use in its Administrative
Manual are inconsistent, allowing
both ‘minimal personal use’ while also
stating that technologies are for ‘City-
related activities only’.

Recommendations include amending
the Administrative Manual for clarity

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10.2 Disseminate the amended sections
of the Administrative Manual to all
City employees and provide
specific information and
technological guidance on how to
comply with these policies and the
California Public Records Act.

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Richmond City CouncilDecember 17, 2024

Richmond City Council
December 17, 2024