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City Council
February 15, 2022
GASB 87 and Lease Management
Software Solution
Finance Department
RiversideCA.gov
2 GASB 87 OVERVIEW
1. The Governmental Accounting Standards Board (GASB) establishes accounting and financial reporting standards for U.S. state and local governments.
2. GASB 87 is a major pronouncement. The last tim e there was a major pronouncement was in fiscal year 2002 with GASB 34.
3. New lease reporting requirement for all governmental agencies.
4. Previously recorded leases as rental revenue (if lessor) or a rent/lease expense (if lessee) if not considered a capital lease.
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3 GASB 87 OVERVIEW
5. Now if a lease has a greater than 12-month term and is material:
• Record a lease obligation liability and corresponding intangible asset on the balance sheet (lessee).
• Record lease receivable and corresponding deferred inflow of resources on the balance sheet (lessor).
6. New standard will be effective for the 6/30/2022 financial statements.
RiversideCA.gov
4 BACKGROUND
Analysis of New Standard and Current Process
1. The City is party to lease agreements as both a lessee and lessor and estimate approximately 450 leases citywide across multiple departments.
2. Current lease information is stored ma ny ways over multiple departments using programs, such as Microsoft Excel, and ePropertyPlus.
3. Current software solutions utilized by the City do not offer the capability to record and track leases that adhere to the new accounting standard.
4. Finance, Riverside Public Utilities, and Community and Economic Development staff determined the need of a software solution that could streamline the recording and tracking of leases as well as adhere to the new GASB 87 standard.
5. Given the COVID-19 pandemic, current staffing levels and workloads, it was determined a consultant would be needed to obtain, analyze and record the 450+ leases under the new standard.
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5 1. April 6, 2021 – RFP 2086 was posted to solicit proposals for a GASB 87 and Lease Management Software Solution and consulting services.
2. May 10, 2021 – Proposals received from 7 consultants; however, only five were found to be responsive.
3. August 20, 2021 - Finance, Community and Economic Development, Riverside Public Utilities, and Innovation and Technology completed the review, interviews and evaluations.
4. Lance, Soll & Lunghard, LLP (LSL) was the most qualified candidate and was selected.
RFP 2086
RiversideCA.gov
6 PRICING AND FISCAL IMPACT
The staff is requesting a 25% contingency to cover the cost of unknown transactions that could potentially meet the GASB 87 standard.
The cost for year one, including the 25% contingenc y, is $159,125 and sufficient funds are included in the proposed Fiscal Year 2021/2022 budget. The total initial term cost for the Professional Consultant Services Agreement through December 31, 2024 is $257,251 and optional years through December 31, 2026 is $108,851, for a total cost of $366,102 which includes a 25% contingency. Future years’ funding will be included as part of the biennial budget process.
Fund
Year 1
Cost *
Initial Term
Cost *
Optional
Years Cost *
Total Cost
(including
optional
years) *
General Fund (2205000-421000) 38,409$ 62,095 $ 26,274 $ 88,369 $ General Fund (7223700-421000) 43,898 70,966 30,029 100,995 Airport Fund (2245000-425700) 38,409 62,095 26,274 88,369 Electric Fund (6000000-425700) 38,409 62,095 26,274 88,369 Grand Total 159,125$ 257,251 $ 108,851 $ 366,102 $ 5 6
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7 Strategic Priority 5 – High Performing Government
Goal No. 5.2, utilize technology, data, and process improvement strategies to increase efficiencies, guide decision making, and ensure services are accessible and distributed equitably throughout all geographic areas of the City
Cross-Cutting Threads
STRATEGIC PLAN ALIGNMENT
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8 That the City Council:
1. Approve Professional Consultant Services Agreement with Lance, Soll, Lunghard, LLP for LeaseQuery GASB 87 and Lease Management software solution, in the amount of $205,801 plus a 25% contingency, for a total of $257,251 for the initial term through December 31, 2024, with the option to extend for two additional one-year terms for a total amount of $366,102;
2. Authorize the City Manager, or designee, to execute all term extensions in the total amount of $87,081 plus a 25% contingency in the amount of $21,770 for a total of $108,851; and
3. Authorize the City Manager, or designee, to execute the Professional Consultant Services Agreement with Lance, Soll & Lunghard, LLP and any other documents necessary to effectuate the agreement including making minor non-substantive changes and all optional contract extensions.
RECOMMENDATIONS
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