1 FIRST MODIFICATION OF AGREEMENT NO. 10201 (CCS)
This First Modification of Agreement Number 10201 (CCS) (“First Modification”), entered into as of _________________(“Execution Date”), by and between the City of Santa Monica, a municipal corporation (“City”), and SP Plus Corporation (“SP Plus”) is made with reference to the following:
RECITALS
A. On or about November 30, 2015, the City and SP Plus entered into Agreement Number 10201 (CCS) for consolidated parking management and ancillary special event activation and hospitality services (“Original Agreement”).
B. On or about October 14, 2019, the City and SP Plus extended the term of the agreement for an additional two years through November 30, 2022 for a new total amount not to exceed $38.2 million. The term was administratively extended by exercising the renewal options included in Section 2.2 of the Original Agreement.
C. On or about February 1, 2020, Moss Adams LLP performed a third-party contract performance audit of the Original Agreement between the City and SP Plus focused on testing for compliance with significant requirements in the Original Agreement. Moss Adams presented the final report to the City’s Audit Subcommittee on August 18, 2020, which included the best practice recommendations.
D. The City and SP Plus desire to modify the Original Agreement to extend the contract term to October 31, 2025 for a new total amount not to exceed $68.7 million over a ten year period; to revise the annual contract Budget; to revise the criteria used to determine the Incentive Management Fee, to incorporate the Moss Adams LLP Parking Contract Review and Best Practice Recommendations into the Agreement; and to provide for administrative adjustments to contract language to address operational needs.
TERMS AND CONDITIONS
Now, therefore, the undersigned parties do hereby mutually agree to modify the Original Agreement as follows:
1. Section 1.6 of the Original Agreement shall be deleted in its entirety and replaced as follows:
1.6 “Parking Manager” means the City’s designated representative for purposes of administrating this Agreement.
2. Section 2 of the Original Agreement entitled “Term” shall be deleted in its entirety and replaced with the following paragraph:
Term. This Agreement begins on the Execution Date and terminates at midnight on October 31, 2025 (“Termination Date”), unless terminated earlier as set forth in Section 16 of the Original Agreement.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB 6/24/2021
2 3. Section 5.1 of the Original Agreement entitled “Compensation” shall be deleted in its entirety and replaced with the following:
5.1 Compensation. The City will compensate SP Plus for the Services provided under this Agreement. The total contract price for services pursuant to the Original Agreement and this First Modification shall not exceed $68.7 million over ten years. The Total Operating Expenses and Management Fees Budget in Exhibit B-3 shall be deemed as the annual not to exceed amounts, for Years 5 through 10, subject to Change Orders approved by the City in accordance with Section 3.4.
4. Section 8.1 of the Original Agreement entitled “Notices” shall be deleted in its entirety and replaced as follows:
8.1 All notices, demands, requests, or approvals to the City:
Department of Transportation
Parking Operations Division
City of Santa Monica
1444 4TH Street
Santa Monica, CA 90401
Attn: Parking Manager
Re: Contract No. 10201
With a copy to:
City Attorney’s Office
City of Santa Monica
1685 Main Street, Third Floor
Santa Monica, CA 90401
Attn: City Attorney
Re: Contract No. 10201
5. Exhibit B-1 of the Agreement entitled “Budget” shall be deleted in its entirety and replaced with Exhibit B-3, attached hereto and incorporated by reference herein.
6. Exhibit B-2 of the Agreement entitled “Management Incentive Fee Criteria” shall be deleted in its entirety and replaced with Exhibit B-4, attached hereto and incorporated by reference herein.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB 3 7. Exhibit F entitled “Moss Adams LLP Parking Contract Review and Best Practice Recommendations” shall be added to the agreement, attached hereto and incorporated by reference herein. By incorporating and accepting this Exhibit, the parties acknowledge and agree that implementation of the recommendations in Exhibit F shall be done by Change Order pursuant to Section 3.4 of the Original Agreement, and such changes shall not constitute an increase or decrease in the Scope of Services or the Budget as described in Exhibits A and B-3, respectively.
8. Except as expressly modified by this First Modification, all other terms and conditions of the Original Agreement shall be and remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Modification as of the date and year first written above.
ATTEST:
______________________________
DENISE ANDERSON-WARREN
City Clerk
APPROVED AS TO FORM:
______________________________
LANE DILG
City Attorney
CITY OF SANTA MONICA,
a municipal corporation
By: ______________________________
RICK COLE
City Manager
ABC Corporation
#VENDOR
By: _______________________________
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB 6/21/2021
George S. Cardona
Interim City Attorney
6/21/2021
Jason Johnston
SP Plus Corporation
Senior Vice President
Lane Dilg
Interim City Manager
6/24/2021
Denise Anderson-Warren
6/24/2021
City Clerk
Exhibit B-3
Budget
Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 Expenditure Category
July 1 to June
30 July 1 to June
30 July 1 to June
30 July 1 to June
30 July 1 to June
30 July 1 to Oct.
31 Salaries and Wages
Salaries and Overtime $ 2,479,800 $ 3,400,000 $ 3,468,000 $ 3,537,400 $ 3,608,100 $ 1,226,800 Retirement $ 51,300 $ 80,000 $ 81,600 $ 83,200 $ 84,900 $ 28,900 Medical Insurance $ 568,200 $ 660,000 $ 673,200 $ 686,700 $ 700,400 $ 238,100 Workers' Compensation $ 234,700 $ 340,000 $ 346,800 $ 353,700 $ 360,800 $ 122,700 Total, Salaries and Wages $ 3,334,000 $ 4,480,000 $ 4,569,600 $ 4,661,000 $ 4,754,200 $ 1,616,500 Supplies and Expenses
Accounting Fees $ 29,234 $ 30,000 $ 30,800 $ 31,600 $ 32,400 $ 11,000 Armored Car Security Services $ 50,111 $ 51,400 $ 52,700 $ 54,000 $ 55,400 $ 18,800 Automobile Costs $ 80,000 $ 82,000 $ 84,100 $ 86,200 $ 88,400 $ 30,100 Credit Card Fees $ 38,400 $ 39,400 $ 40,400 $ 41,400 $ 42,400 $ 14,400 Liability Insurance $ 150,400 $ 154,200 $ 158,100 $ 162,100 $ 166,200 $ 56,500 Maintenance - Elevators $ 227,000 $ 218,400 $ 223,900 $ 229,500 $ 235,200 $ 80,000 Maintenance - Fire Protection $ 63,200 $ 64,800 $ 66,400 $ 68,100 $ 69,800 $ 23,700 Maintenance - Parking Facilities $ 214,500 $ 219,900 $ 225,400 $ 231,000 $ 236,800 $ 80,500 Maintenance - Plumbing $ 100,000 $ 102,500 $ 105,100 $ 107,700 $ 110,400 $ 37,500 Misc. Office Supplies and Equipment $ 177,625 $ 182,100 $ 186,700 $ 191,400 $ 196,200 $ 66,700 Miscellaneous License Fees $ 10,800 $ 11,100 $ 11,400 $ 11,700 $ 12,000 $ 4,100 Parking Equipment $ 457,700 $ 394,100 $ 404,000 $ 414,100 $ 424,500 $ 144,300 Signage $ 41,200 $ 42,200 $ 43,300 $ 44,400 $ 45,500 $ 15,500 Utilities $ 61,000 $ 62,500 $ 64,100 $ 65,700 $ 67,300 $ 22,900 Total, Supplies and Expenses $ 1,701,170 $ 1,654,600 $ 1,696,400 $ 1,738,900 $ 1,782,500 $ 606,000 One-Time Capital Expenses
Fleet/Vehicle Replacements $ 150,000
Maintenance - Deferred Projects $ 470,000 $ - $ - $ - $ - $ - Parking Equipment - T2 Systems Warranty $ 280,000 $ - $ - $ - $ - $ - PARCS System - T2 Systems $ 921,400 $ - $ - $ - $ - $ - PARCS System - POS and Credit Cards $ 250,000 $ - $ - $ - $ - $ - Total, One-Time Capital Expenses $ 2,071,400 $ - $ - $ - $ - $ - Special Program Costs
Bike Valet Support - Farmer's Market $ 50,000 $ 51,300 $ 52,600 $ 53,900 $ 55,200 $ 18,800 Crossing Guard Support - SaMoHigh $ - $ - $ - $ - $ - $ - Traffic Support - Go With The Flow $ 45,000 $ 100,000 $ 102,500 $ 105,100 $ 107,700 $ 36,600 Total, Special Program Expenses $ 95,000 $ 151,300 $ 155,100 $ 159,000 $ 162,900 $ 55,400 Total Operating Expenses Budget a $ 7,201,570 $ 6,285,900 $ 6,421,100 $ 6,558,900 $ 6,699,600 $ 2,277,900 Management Fees
Traditional Management Fee $ 260,173 $ 266,700 $ 273,400 $ 280,200 $ 287,200 $ 97,600 Incentive Management Fee $ 51,150 $ 52,400 $ 53,700 $ 55,000 $ 56,400 $ 19,200 Total, Management Fees $ 311,323 $ 319,100 $ 327,100 $ 335,200 $ 343,600 $ 116,800 Grand Total - Operating Expenses and
Management Fees Budget b $ 7,512,893 $ 6,605,000 $ 6,748,200 $ 6,894,100 $ 7,043,200 $ 2,394,700 a / The Total Operating Expenses Budget is used for purposes of Section 5.2.7 Cost Overruns. b / The Grand Total - Operating Expenses and Management Fees Budget is used for purposes of Section 5.1 Compensation.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Exhibit B-3
Budget
Fiscal Year Months Category Amount
FY 2015-16
Dec. 1 to June
30 Prior Year
Actuals $ 3,573,425
FY 2016-17
July 1 to June
30 Prior Year
Actuals $ 5,803,676
FY 2017-18
July 1 to June
30 Prior Year
Actuals $ 7,350,591
FY 2018-19
July 1 to June
30 Prior Year
Actuals $ 7,913,541
FY 2019-20
July 1 to June
30 Prior Year
Actuals $ 6,860,674
FY 2020-21
July 1 to June
30 Budget $ 7,512,893
FY 2021-22
July 1 to June
30 Budget $ 6,605,000
FY 2022-23
July 1 to June
30 Budget $ 6,748,200
FY 2023-24
July 1 to June
30 Budget $ 6,894,100
FY 2024-25
July 1 to June
30 Budget $ 7,043,200
FY 2025-26 July 1 to Oct 31 Budget $ 2,394,700
TOTAL NOT TO EXCEED CONTRACT BUDGET $ 68,700,000
Agreement #10201 (CCS) was executed on November 30, 2015. Below is a summary of the prior year annual spending on this agreement, and the budget projections through the term ending October 31, 2025.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Exhibit B-4
Management Incentive Bonus Fee Criteria
The City shall provide a management incentive program. The incentive program details measurable performance standards for delivery of services and the pay incentives proposed to SP+ for delivery of the program. The incentive fee will be paid, at the City’s sole discretion, within 90 days following the end of each fiscal year ending June 30 throughout the life of the Agreement. The management incentive is based on SP+ meeting measurable performance standards. This is not a billable expense or fee. The incentive bonus fee paid by the City shall be based on SP+’s performance in the following areas:
_________________________________________________________________________ Customer Service - Mystery Parker Program (40 Points Possible) SP+ will initiate and utilize the Mystery Shop program on a monthly basis through a thirdparty agency. Each mystery parker will be given a mystery parker form prepared by SP+ and approved by the City to complete. Included on the form will be general items pertaining to the cleanliness of booths, equipment and the facilities in general, customer service, appearance and attitude of the employee, adherence to certain standard operating procedures, and professionalism.
A total of six (6) Mystery Parker visits will be done on a monthly basis, for a total of seventy-two (72) annually. Each parking facility that SP+ manages must be shopped at least once through the course of the year. A copy of each mystery parker report will be delivered to the City directly from the agency performing the service at the same time the reports are delivered to SP+. A summary of the surveys and copies of the mystery parker forms, with comments that were discussed with the employee that was surveyed, will be submitted to the Senior Manager and the City.
Scores for mystery parker reports are based on a 0% to 100% range. SP+’s incentive bonus will be based on the average rating from all 72 mystery shops over the course of the year.
Points are distributed as follows:
Cumulative Average Score Points
91% to 100% 40
81% to 89% 25
71% to 79% 15
<71% 0
____________________________________________________________________________ DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Maintenance Checklist Adherence (40 Points Possible)
SP+ shall serve as the City’s parking facilities manager. Included in these duties will be the requirement to maintain an inventory of all equipment and associated maintenance schedule.
SP+ shall be responsible for preparing and submitting to the City routine checklists of each facility to document the performance of maintenance monthly. SP+ shall maintain maintenance logs & inspection reports at the contractor’s office.
City staff shall conduct routine unscheduled inspections of the facilities using an approved checklist agreed to with SP+. A representative from SP+ shall be present during all unscheduled inspections. The checklist shall include specific maintenance items as well as a review that maintenance logs and inspection reports are up to date. Any items identified as needing correction must be corrected within 3 days. If correction cannot be completed within 3 days, SP+ must present a plan with a deadline for completion within three days. SP+ will then be held accountable for the agreed upon extended deadline for correction.
SP+’s incentive bonus will be based on cumulative percentage obtained for all scheduled inspections completed by staff and ability to correct and address maintenance items within the 3- day window. A minimum of 12 total inspections shall be conducted annually.
Cumulative Average Score Points
91% to 100% 40
81% to 89% 25
71% to 79% 15
<71% 0
________________________________________________________________________ Reporting and Auditing (20 Points Possible)
SP+ shall:
1. Maintain complete and accurate record of revenues, expenses, receipts, inventory, and other such information required by the City.
2. Maintain accounting records of all revenue and expenses related to the management and operation of the City’s parking facilities in accordance with generally accepted accounting principles.
3. Maintain payroll reports as well as labor analysis report including positions, staff names, and the number of hours worked at each parking location.
4. Provide monthly budget to actuals variance analysis report.
5. Manage parking operations in a way that ensures adherence to annual budgetary limits outlined in the Agreement.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB
6. Maintain adequate, sufficiently detailed service and maintenance records to allow proper evaluation of services.
7. Provide free access to representatives of the City, or its designees, at any times (with reasonable notification) to all such books and records.
8. Perform random internal audits throughout the year of SP Plus staff involved in revenue collection processes, including the tracing parking tickets through the system to ensure proper cash handling procedures were implemented and that all charges have been handled correctly and accurately.
SP+’s incentive bonus will be based on the cumulative percentage obtained for receiving these reports by the date that is agreed upon by SP+ and the City.
Cumulative Average Score Points
91% to 100% 20
81% to 89% 15
71% to 79% 10
<71% 0
_________________________________________________________________________________ Management Incentive Fee Table
Total Points Achieved Percent of
Budgeted
Bonus
91 to 100 100%
81 to 90 75%
71 to 79 50%
61 to 70 25%
<61 0
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB This report is intended for the internal use of City of Santa Monica, and may not be provided to, used, or relied upon by any third parties.
Proprietary & Confidential
FINAL REPORT
City of Santa Monica
PARKING CONTRACT REVIEW
August 11, 2020
Moss Adams LLP
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report
FOR INTERNAL USE OF CITY OF SANTA MONICA ONLY
Table of Contents
Executive Summary 1
Scope and Methodology 4
Findings and Recommendations 7
A. Employee Parking Cards 7
B. SP+ Reporting to the City 9
C. Daily Cash Collections, Deposits, Reporting, and Reconciliations 10 D. SP+ Invoicing to the City 11
E. Parking Equipment and Maintenance Tracking 13
F. Accounts Receivable/Billing Collections and Monitoring 14 G. Standard Operating Procedures (SOP) 15
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 1
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EXECUTIVE SUMMARY
The City of Santa Monica (the City) entered into an agreement (the Agreement) with SP Plus Municipal Services, an operating division of SP Plus Corporation (SP+) on November 30, 2015, and renewed the Agreement on October 14, 2019. The Agreement is now extended through November 30, 2022. For the full extended contract term of seven years, the Agreement amount was not to exceed $38.2 million, with an average of $5.5 million annual budget overseen each year. The Agreement requires SP+ to manage and operate parking operations on behalf of the City, which includes, but is not limited to, the following:
• Managing, operating, and maintaining the City’s public parking facilities which includes:
○ 13 off-street parking structures/garages with approximately 7,000 spaces; and, ○ 28 off-street surface parking lots with approximately 6,000 spaces. • Collecting and depositing parking revenues from the public for daily parking, monthly parking permits, keycards (for non-meter parking), and validation sales. In fiscal year 2018-19, approximately 10 million customers were serviced totaling $42.4 million in revenue collected across multiple funds (General Fund, Beach Recreation Fund, and Pier Fund). • Providing revenue forecasts based on City-proposed or adopted parking fees. • Providing maintenance and engineering services for City parking facilities, equipment, and elevators.
• Providing the City with a robust web-based reporting platform, enabling the City to generate reports and view data.
• Designing, implementing, and maintaining a system of internal controls. • Providing ancillary services to support City programs including:
○ Parking facility maintenance, including plumbing, painting electrical, fire protection, etc.; ○ Elevator repairs and maintenance (via subcontract);
○ Go-with-the-Flow traffic management special event activations; ○ Bike Valet and Farmer’s market staffing support; and, ○ Santa Monica High School crossing-guard services.
SP+ does not oversee the on-street parking meter program, as this program is co-managed by City departments (Community Development Department and the Finance Department).
Under the Agreement, the City may subject SP+ to an annual third-party audit. Moss Adams LLP was asked by the City to perform a contract review of the current Agreement between the City and SP+ for parking management services. The goal of the review was to assess whether SP+ was in compliance with significant aspects of the Agreement, as well as to determine whether adequate controls over contract compliance had been established. Our contract audit took place between February and June 2020.
The contract review was completed under the consultancy standards of the American Institute of Certified Public Accountants (AICPA). As such, this work was not an audit of internal controls that resulted in a formal opinion or other form of assurance. The specific methods used for testing contract compliance are presented in the Scope and Methodology section below. The scope of our review was DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 2
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focused on testing for compliance with significant requirements in the Agreement. Our review included testing procedures in the following areas:
• Employee parking cards
• SP+ reporting to the City
• Daily cash collections, deposits, reporting, and reconciliations • SP+ invoicing to the City
• Parking equipment and maintenance tracking
• AR/Billing collections and monitoring
• Standard operating procedures (SOPs)
• Purchasing
There were some areas where SP+ appeared to be in compliance with Agreement requirements and solid internal controls were in place. Some examples of commendable areas include:
• SP+ submits invoices on a monthly basis to the City, and invoices tested were adequately supported and included charges allowable, including the proper calculation of the program management fee, per the Agreement.
• Reports on monthly activity and revenue were prepared by SP+ and submitted to the City for review.
• Cash collections, and the related deposits, were performed within the established timelines of the Agreement.
• The cash collection and deposit process appears to be well-controlled and automated, resulting in minimal human interaction and overall protection over the payments collected. In the daily collections assessed during this review, the automatic process was in place and multiple reconciliations were performed by SP+ and the Division, as well as Finance, to ensure that all funds collected were ultimately deposited.
Similar to most contract reviews, there were areas where practices were not in compliance with Agreement requirements, and there were opportunities to strengthen policies, procedures, systems, and controls. Suggested priorities to address over the next 6 to 12 months include, but are not limited to:
• Increase monitoring of City parking cards and restrict system access to key parking card functions.
• Clarify reporting timelines and ensure deadlines are met. Implement cross-training for reporting responsibilities to support the timely submission of reports to the City. • Improve tracking and reporting related to parking equipment, including tracking inventory, maintenance performed, replacement schedules, and related issues as they are identified and resolved. Assess the overall impact/cost (revenue, time, customers, etc.) of continuing to use outdated parking equipment.
The City is planning to request a modification to the Agreement with SP+ in the near future, which would extend the Agreement term an additional three years (i.e., the full Agreement term would be ten years through November 2025). If the Agreement is modified (extended), the recommendations included in the detailed report below should be considered, and language should be incorporated into DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 3
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the amended Agreement, where appropriate. Adding clarified language to several areas within the Agreement will help to better define roles and responsibilities between the City and SP+ and better align expectations.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 4
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SCOPE AND METHODOLOGY
The scope of our contract review included an evaluation of the Agreement, SP+ standard operating procedures, and applicable City parking policies and procedures. To gain an understanding of the processes and controls in place, we conducted extensive interviews with key personnel from both SP+ and the City’s Parking Operations Division (the Division). Through these interviews, we gained insight on key functions related to parking operations, concerns, or areas that could be improved, and an overall understanding of the roles and responsibilities of each party as well as the current control structure.
The specific focus areas of the contract review, as well as a summary of the procedures performed to test for compliance, included the following:
To assess whether employee parking cards were well controlled and only issued to current employees, we performed the following:
• Obtained a list of current City employees and a list of all current active parking cards. We selected a random sample of 100 active parking cards to determine whether they were issued to current City employees. For all parking cards that were issued to an individual who was not on the list of current City employees, we inquired and requested documentation to determine whether the card was appropriately issued and supported. • Obtained a SKIDATA system access report showing all individuals who have access to activate/deactivate City employee parking cards and assessed the report to determine whether access appeared to be well-controlled and whether only employees who warranted access to this system function had been granted access.
• For the month of January 2020, we requested the report submitted to the City by SP+ showing the reconciliation of parking cards activated/deactivated to determine whether the reconciliation was performed and properly supported.
We obtained an understanding, per the Agreement, of the reporting SP+ is required to provide to the City, the methods SP+ uses to prepare and approve those reports, and the deadlines for submission.
To test for compliance with reporting requirements, we randomly selected two months during the review period (December 2019 and January 2020) to assess whether:
• The required reports were prepared, approved, and submitted by SP+. • SP+ maintained supporting documentation for the reports submitted. • The deadlines for the monthly submissions were met.
We randomly selected a period of five consecutive dates within our review period (July 16 through July 20, 2019). For each date selected, we obtained all system-generated cash receipt reports, DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 5
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deposit and reconciliation documentation, credit card sales reports, and daily reports produced and submitted to the City. We utilized this information to:
• Assess the personnel responsible for key functions in the process to determine whether proper segregation of duties and reviews/approvals were in place. • Document the dates of collection, deposit, and reporting to the City and assess for compliance with the Agreement.
• Attempt to determine whether sequentially ordered receipts/tickets were being used. • Evaluate the process for internal controls to mitigate risks associated with cash receipt handling.
We randomly selected three months during the review period (July, August, and September 2019).
For each month, we assessed the SP+ invoice and supporting documentation as follows:
• Reconciled the invoices to supporting documentation.
• Recalculated the program management fees to assess for compliance with the defined fee structure in the Agreement.
• Assessed the SP+ invoice review process prior to submission to the City, and subsequent payment by the City to SP+.
• Compared charges on the monthly invoices to the allowable charges per the Agreement. • Assessed the submission date of the invoice to the City for compliance with the due dates presented in the Agreement.
• Assessed whether there appeared to be controls for ensuring City procurement policies and procedures were adhered to.
In addition, we gained an understanding of the process for budgeting for expenses incurred by SP+ on behalf of the City, as well as internal processes for comparing expenses to the budget available and actively monitoring it on a regular basis. For the months selected for testing, we assessed whether there was documentation that a budget to actual analysis was performed and whether it appeared that it was being used effectively as an operational tool.
We obtained an understanding of the various types of parking equipment in place and the system/software that the equipment runs on. Given that a lot of the parking equipment is very old, we attempted to assess the overall impact/cost associated with utilizing the old equipment through:
• Determining if a parking equipment list was maintained to track the age of equipment. • Determining if a system or process was in place to track maintenance, issues, and costs related to specific pieces of equipment.
• Assessing the maintenance and daily inspection logs maintained by SP+ for compliance with Agreement requirements.
• Assessing whether trend analysis by specific pieces of equipment could be performed to identify potential repetitive issues/problems.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 6
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• Analyzing the customer complaint tracking and reporting processes for adequacy, including documenting resolution and assessing for trends.
We obtained A/R aging, billing, and collection reports for two months (August and September 2019) during the audit period. We assessed the reports available to determine:
• Whether monthly invoicing was occurring for the monthly parking passes that were still active. No new parking passes were being issued; however, existing ones were still honored. • If old aged accounts (over 90 days) appeared to be actively managed, and either collected or written-off.
• If a reconciliation of A/R balances between the months could be performed (i.e., whether the ending balance was equal to the beginning balance plus new billings, less collections).
We assessed the Agreement to identify what SP+ is required to have documented in a current Operations and Procedures Manual or detailed SOPs to guide parking operations and management for the City. We obtained all existing SOPs that related to City operations and management from SP+ and assessed whether the required areas of coverage were included and if they appeared to be current and up to date.
Due to the COVID-19 pandemic, which was occurring at the time of this contract review, we were unable to perform certain planned procedures as we were unable to go on-site for testing.
Specifically, we were unable to perform the following:
• Physical observations of the inventory on-hand, including parking permits, parking validations, and parking ticket stock.
• Assessment of the overall management and tracking of inventory, the accounting for sequential ticket stock, and other inventory controls. We were also unable to assess whether tickets were being issued in sequential order, and that all ticket numbers were being accounted for. • A walkthrough to include tracing ticket numbers from each system to assess for gaps or nonsequential tickets. • A walkthrough of the functionalities of the portal used by SP+ to maintain, and give the City access to, all parking operations supporting documentation, including detailed purchase support such as quotes obtained, requisitions, and documentation of bids/proposals, and reporting tools.
The walk-through was meant to physically try using the system functionalities to assess the ease of use of the overall portal.
Properly managing and controlling inventory stock, including the tracking of sequential receipts, helps to prevent misappropriation or lost revenue. The portal houses information, support, and reports that are required by the Agreement, and aids in assessing the overall management of key functions of operations, such as performing and documenting the procurement process, and providing access to real-time reporting tools. The City should consider including these additional on-site procedures during a future follow-up review.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 7
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FINDINGS AND RECOMMENDATIONS
Based on the input gathered from interviews, document review, detailed testing and other procedures, as well as comparisons to best practices, we prepared a comprehensive set of findings and recommendations, which are detailed below.
1. Finding Parking card monitoring could be improved to ensure that all active cards are issued appropriately and that cards are deactivated timely upon an employee’s termination or when an third-party (non-employee) ceases work with the City.
Recommendation Develop a process for actively monitoring employee and non-employee parking cards and ensure parking cards are deactivated timely upon an employee’s termination or a non-employee no longer requiring access.
SP+ is responsible for managing and monitoring employee and non-employee (i.e., contractors, temporary employees, etc.) parking cards. This includes handling all parking card activations and deactivations, providing regular reporting on parking cards to the City, and ensuring access to the SKIDATA system is controlled. At the time of this review, there were approximately 1,500 active parking cards.
During our analysis of a sample of 100 active parking cards as of March 2020, we identified the following:
• In two instances (2% of the sample), an employee had been terminated, but the card had not been deactivated. The last dates of employment for the two individuals were December 28, 2019 and January 2, 2020.
• There were eight instances (8% of the sample) where a parking card was assigned to someone who was not included on the City’s Active Employee Listing. Upon inquiry, we were informed that these were likely due to temp agency personnel, volunteers or contractors that were working with various City programs. However, a current list of all active non-employee individuals working with the City could not be provided to assess whether the related active non-employee cards were appropriate.
The instances identified above imply that employee parking cards are not always deactivated timely upon termination and that a monitoring process for non-employee-issued cards needs to be implemented. In addition, while SP+ performs a reconciliation of all activations/deactivations on a monthly basis and reports the results to the City, the non-employee parking cards are not included on this reconciliation.
• Employee Cards: The process by which SP+ activates, deactivates, and reconciles parking cards should be evaluated. SP+ and the Division should coordinate with Human Resources (HR) to receive a monthly “City Employee Separation Report”. SP+ and the Division should review this report monthly to proactively deactivate parking cards timely for terminations. In general, the process should ensure that parking cards are cancelled on, or shortly after, an employee’s last DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 8
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day of employment. As a control to ensure that all terminations were communicated and that deactivation occurred, the list of active employee parking cards should be reconciled to the Active City Employee Listing on a monthly basis by SP+.
• Non-Employee Cards: It was unclear how parking cards issued to non-employees are being monitored. These parking cards should be subject to monitoring and regular oversight; however, given that there are several programs throughout the City that request non-employee cards for different situations, a full reconciliation each month may not be possible. However, a SKIDATA report of all active non-employee cards should be run each month and a reasonableness review should be performed by someone within SP+ or the Division. This reasonableness review should consider if any known changes have occurred (i.e., contracts expiring, volunteer events ending, etc.) that would affect parking cards. Where appropriate, the reviewer should reach out to the program that initially requested the card to confirm that it is still needed. In addition, consider requiring an expiration date for non-employee cards, upon which the program working with the non-employee must resubmit documentation to ensure the parking cards are still warranted. Nonemployee parking cards should be deactivated immediately when they are no longer needed for City business.
2. Finding Access to the activation/deactivation function for City parking cards within the SKIDATA system is not adequately restricted.
Recommendation Properly restrict system access to SKIDATA activation/deactivation functions to City employees and SP+ personnel who warrant access based on their current roles within the City’s parking function.
The City purchased the SKIDATA hardware and software system in 2017 for the Downtown Civic and Pier Deck off-street parking facilities. The parking equipment and system is used to provide controlled arm-gate access to these facilities and various payment options for parking fees. SP+ is responsible for operating the SKIDATA system, coordinating and scheduling SKIDATA technicians, and providing supplemental equipment maintenance and repairs in the field.
We obtained a SKIDATA system access report showing all users able to activate or deactivate a City parking card. This report showed that there were 81 accounts set up that may have activation/deactivation access granted; however, only four of these accounts were for current City and SP+ employees whose current job responsibilities warranted access. Of the remaining 77 accounts, 29 appeared to be “system accounts” that were not directly attributable to a specific person, and it was unclear who would have knowledge of the relevant login credentials. The remaining 48 accounts appeared to be related to individuals who were not City employees; thus, they may be for individuals employed with SP+. There also appeared to be duplicate accounts set up for some users.
There are varying levels of access rights that can be setup in SKIDATA, and it was unclear if all of these active accounts had inappropriate access; however, we could verify that approximately half of them were assigned “Administrator” access which gives them access to all system functions. SP+ and the City should work together to review the current list of 81 accounts and determine if any are warranted, based on job responsibilities, outside of the four individuals identified as needing access.
Access to sensitive functions (i.e., activation/deactivation) should be removed for all other individuals and system accounts to prevent unauthorized changes. System access reports should be reviewed regularly to ensure that only required access to sensitive functions is granted. Controlling system DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 9
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access helps to mitigate the risk that someone could inappropriately activate old parking cards or misappropriate parking cards in the inventory stock for personal use/benefit.
3. Finding Required monthly reports are not consistently submitted to the City by the established deadline.
Recommendation Establish a process to ensure reports are submitted by the required deadlines, even in the event of an employee’s absence. Ensure reports are submitted by the deadlines presented in the Agreement, or document an alternate due date (i.e., the 15th) that is acceptable to both the City and SP+.
The Agreement requires SP+ to prepare and submit two detailed monthly reports to the City:
• Downtown Structures Monthly Report, which includes a monthly operating report, monthly revenue report, and monthly non-revenue and revenue ticket counts. This report is due to the City by the 15th of the following month.
• Beach and Pier Parking Locations Monthly Report, which includes a monthly operating report, monthly revenue report, and monthly non-revenue and revenue ticket counts. This report is due to the City by the 5th of the following month.
During our assessment of the reports for December 2019 and January of 2020, we found that these reports are not consistently submitted to the City by the deadlines in the Agreement. Specifically, we found:
• The December 2019 reports, which were due on January 5th (Beach) and January 15th (Downtown), were not submitted until March 5, 2020.
• The January 2020 reports, which were due on February 5th (Beach) and February 15th (Downtown), were not submitted until March 5, 2020.
After discussions with SP+ and City personnel, it was determined that the delays were due to an employee being out on leave, and the reports not being prepared and submitted until they returned.
SP+ provided support for five additional months, which showed that both reports (Downtown and Beach) were typically submitted by the 15th of the following month. Standard practice was to prepare and submit the reports at the same time, rather than on the 5th and 15th, as required by the Agreement. While this did not seem to be of concern to the Division, it does result in the Beach report being submitted subsequent to the deadline each month.
Given that reports are typically submitted by the 15th of each month, SP+ should implement the following to ensure that requirements of the Agreement are adhered to:
• Cross-train additional personnel to perform the reporting function in the event of an absence.
Discuss the reporting date discrepancy (5th versus 15th) with the Division and come to a mutual understanding of whether the deadlines in the Agreement must be adhered to, or whether consistently submitting reports on the 15th is acceptable. If both parties agree that an alternative due DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 10
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date, outside of those presented in the Agreement, is appropriate, document the agreed-to requirements and obtain approval by both parties to support contract compliance.
4. Finding Parking Access and Revenue Control System (PARCS) equipmentgenerated reports were not being submitted to Division daily, as defined by the Agreement.
Recommendation SP+ should evaluate how their internal process for preparing and submitting daily reporting packages to the Division could be improved to ensure the 48-hour deadline is consistently met.
The Agreement requires daily submission of PARCS equipment-generated reports, daily cash receipts, copies of deposit slips, and an equipment-generated summary of credit card sales to the Division no later than 48 hours after collection of revenue. PARCS is the operating system for most of the Division’s parking equipment, and it interfaces with SKIDATA and other system used.
During our analysis of the cash receipt, deposit, and reporting support for five days of the reporting period (July 16 through July 20, 2019) for both the Downtown and Beach sites, we found that nine of the ten daily reports were not submitted within the 48-hour timeline as required by the Agreement.
The reports were submitted between one and eight days after the 48-hour deadline. The Division was able to provide an email in which the expected delayed submissions were communicated due to turnover that had occurred; however, the Agreement does not state in what circumstances a delayed timeline is acceptable, and in some of the instances identified, the actual reporting date did not meet the revised schedule submitted in the email. It is important to note that the delays in reporting to the City did not affect the actual depositing of the related revenue, as all deposits were processed on the same date that the cash/payments were collected.
SP+ should evaluate the internal processes that occur between when time collections are performed and the related deposit made, and when reports are ready for submission to the Division. Given that almost all (nine of the ten) reports tested were submitted late, indicates that an improvement to the overall process for preparing daily reporting packages, reviewing them internally, and submitting them to the Division needs to be made. Cross-training other individuals, outside of the primary person responsible for this reporting function, to either assist in the process or fill in if there is an absence, could help to ensure the deadline is consistently met.
If it is determined that the 48-hour deadline is not reasonable, or typically not achieved due to factors that cannot be prevented, such as pending information, system capabilities, etc., then SP+ and the Division should discuss to determine whether a later deadline is acceptable and appropriate. Any decisions that affect the language in the Agreement should be documented and that support should be maintained with the Agreement.
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5. Finding It is unclear whether SP+ is required to follow procurement requirements (due diligence, bids, proposals, etc.) for purchases made on the City’s behalf.
Recommendation Clarify with SP+ as to whether the City’s AI must be followed for all purchases made on the City’s behalf.
The City and SP+ work together to develop an annual budget for parking operations. Once this budget is approved, SP+ carries out parking operations and incurs expenses on the City’s behalf, which are subsequently reimbursed by the City through the monthly invoicing process. Budget to actual monitoring is performed monthly. This arrangement provides significant benefit to the City as it allows SP+ to process purchases, issue disbursements, and manage operations in real time, and allows for the City to benefit from the national market share discounts that SP+ obtains. SP+ and the Division communicate regularly and most purchases are preapproved by the City prior to the actual purchase being made.
It is unclear within the Agreement as to whether SP+, along with the Division, is responsible for ensuring that City purchases under this Agreement are subject to the overall City Procurement Administrative Instruction (AI) (IV-4-1). Specifically, the AI establishes thresholds in accordance with the City Code for due diligence (informal or formal quotes, bids or proposals) requirements based on dollar amount to ensure a competitive process is followed for purchases over the set threshold. The Agreement does include procurement provisions related to the approved budget and addressing reallocating budget line items, reasonable expenditure approval authority and cost overruns. SP+ also has internal corporate procurement guidelines. However, given that purchases are made by SP+ on behalf of the City, related purchases and the supporting documentation must adhere to the City’s AI.
During our testing of monthly invoices, we attempted to select a sample of larger purchases to assess whether its underlying documentation was in compliance with the AI; however, given the ways the invoices are prepared, expenses are budgeted, and individual invoiced charges related to one larger purchase spread across several months, we were unable to perform this testing.
SP+ and the Division should define the purchasing requirements for purchases made by SP+ on the City’s behalf. While preapproval of expenses is typically provided by the City, and the overall Agreement budget is agreed to, clarification should be made as to what due diligence is required for purchases. Competitive purchasing benefits the City by ensuring a fair and reasonable price is obtained for goods and services. An assessment of whether or not competitive purchasing is required, and how it must be documented, should be performed and documented. If SP+ is required to comply with the City Procurement AI, an analysis should be performed to determine whether this has been occurring on all past purchases. The Agreement is unclear in this area.
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6. Finding The annual detailed budget process for those expenses that are charged through the SP+ contract as part of the Agreement, is not formalized, and adjustments are not processed formally.
Budget to actual tracking is performed; however, it is difficult to trace individual purchases to budget line-items.
Recommendation SP+ and the Division should collaborate to prepare operating budgets on a yearly (fiscal) basis, as it relates to expenses through the Agreement.
The budgets should be agreed to and significant changes should be documented and approved.
The recording of actual expenditures against budgeted line-item categories should be evaluated for more accurate ways to monitor budget to actual by line-item.
The Agreement included a budget (Exhibit B-1) for operating expenses that could be paid by SP+ and reimbursed by the City of approximately $4.4 million to $5.0 million per year. However, this budget was approved by the City based on an assessment of operations in place in 2015 and had not been updated until the fiscal year ending June 2020. That budget was meant to cover each year of the contract; however, significant changes to parking operations have occurred since the time it was developed. The Agreement allows for “non-material adjustments,” including additions, deletions, or other revisions, to be made to the scope of services or budget. Reallocation of line item budgets can be performed with “reasonable approval by the City, as long as the expenses do not exceed the total operating expenses for each year.”
SP+ and the Division appeared to be monitoring budget to actual reports each month; however, for 2015 through June of 2019, the annual detailed budget from 2015 was not updated proactively between SP+ and the Division reflect changes in operations, responsibilities of SP+, added services, or other significant changes. Rather, the City tracked the SP+ budget based on a bottom-line approach, ensuring that the total expenses each year did not exceed the total budget allowed. This approach did not allow for meaningful monitoring to be performed on a detailed line-item basis between 2015 and 2019. Beginning in early fiscal year ending June 2020, SP+ and the Division collaborated to develop a more meaningful budget and updated individual line items to reflect anticipated spending based on actual expected expenses in each line-item category.
In addition, given the ways in which individual invoices and expenses are charged back to the City on a monthly invoice, we were unable to determine if the budget truly could be used to monitor line item balances real-time. Instead, a monthly reconciliation approach was being utilized to compare budget to actual amounts by line item. SP+ does provide a sub-system (SP+ Client View) that could provide more meaningful line-item budget to actual reporting; however, for the months tested during this review, an overall reconciliation approach was being used rather than a real-time line item monitoring approach.
SP+ and the Division should work together each year to develop a detailed line-item budget that accounts for all changes that have occurred and are expected in the upcoming year. The Agreement should be modified to reflect what is required, including approvals and monitoring reports, each year as right now the Agreement includes the same budget that was approved back in 2015. When there DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 13
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are non-material adjustments, the approval should be documented in some way, and the budget should be amended/changed to reflect the adjustment to allow for more accurate ongoing budget to actual monitoring. The current process/system for tracking and reporting actual expenditures by category should be evaluated to provide a consistency between budget and actual expenditure tracking.
7. Finding Some of the City’s parking equipment, and the related systems the equipment runs on, is nearing end of life. Additionally, there is limited tracking of maintenance issues or equipment problems related to parking equipment.
Recommendation The overall age of the City’s parking equipment, the systems the equipment runs on, and the impact/cost of using older equipment should be assessed.
The Agreement requires that SP+ serve as the City’s parking facilities manager, which includes the requirement to maintain an inventory of all equipment and associated maintenance schedules. SP+ is also responsible for managing the contracts for performing parking equipment maintenance with a Service Maintenance Provider and ensuring all customer complaints are handled and resolved quickly and effectively. There are several system and equipment providers, including SKIDATA, T2 and Hi-Tech, that SP+ works in conjunction with to fulfill these Agreement responsibilities.
During interviews, it was communicated that a lot of the parking equipment currently in use is very old, prone to mechanical and other issues, and runs on systems that do not provide adequate reporting. During our assessment of the impact of the older equipment, we identified the following issues contributing to the problem:
• A current list of all parking equipment, tracking the date of purchase and other key information, is not maintained; therefore, we were unable to assess the overall age of the equipment being utilized for City parking operations. SP+ or the Division could not provide this listing. • While daily inspection logs and issues logs are maintained, the information provided on those logs does not denote the specific machine/piece of equipment. Issues identified are not tracked by machine/piece of equipment, and the resolution of specific issues is not always documented.
The daily logs primarily relate to minor issues (cosmetic-type problems, trash/cleanliness, or sign issues), and typically only denote “pass” or “needs follow-up” rather than the specific issue and the related resolution.
• A formal reporting system for customer complaints related to parking equipment or facilities is not in place; however, SP+ deploys a secret shopper program to assess the customer experience.
Given the items above, it is not possible to track the impact of issues and malfunctions of older equipment and the related systems/software, or to assess the overall impact/cost of potential lost revenues to the City. As such, we were unable to determine the overall impact that aged equipment has on parking operations and the related revenue to the City. As identified in the Standard Operating Procedures finding below, SP+ does not have SOPs covering Equipment Inventory or Maintenance and Replacement Schedules for equipment, which could be a cause of the issues presented above.
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SP+ and the City should collaborate to determine ways to begin tracking equipment-related information, including maintenance performed, issues reported, resolution of issues identified, and customer complaints. Going forward, a means of reporting and monitoring the impacts/costs associated with old equipment should be tracked and reported to allow the City to perform a costbenefit assessment for replacing old equipment. A full equipment inventory, which tracks the date of original purchase or an estimated date, as well as maintenance and replacement schedules for all equipment, should be developed and maintained on an ongoing basis.
Given the systems/software that the parking equipment uses are old, the reporting and controls over these systems should be assessed to determine what risks they pose to the City. Older systems are more prone to errors in reporting and allow for controls to be more easily bypassed, which could result in misappropriation going undetected.
SOPs covering Equipment Inventory, Maintenance Schedule, and Replacement Schedule should be developed and implemented, in compliance with the Agreement. Refer to the Standard Operating Procedures below.
8. Finding There are large A/R credit and debit balances in the 120 days or older category that have not been fully addressed to remove them from the A/R listing.
Systems access to the billing system is not restricted to only individuals with billing responsibilities.
Recommendation SP+ should work with the City to ensure the old A/R is cleaned up in the system, and that only balances in which collection efforts are currently being made on, are included. Old accounts should be written-off allowing for more accurate reporting and monitoring of the rolling A/R balances.
Systems access should be restricted to only those individuals that are responsible for billing activities related to the City of Santa Monica A/R.
SP+ is responsible for billing and collection efforts related to parking keycard permit access monthly cards (parking cards) that are still being honored by the City. New monthly parking cards are not being issued. SP+ bills customers in advance (i.e., the month before) in all cases except for specialized license agreements, using the SP+ Central Accounts Receivable System (CARS).
Customers remit payment directly to SP+, and all A/R and payment activity is recorded in CARS, not in the City’s system, which results in the related A/R not being included on the City’s balance sheet.
SP+ then remits payment to the City via wire transfers to the City’s bank account, at which time, the payments are recorded as revenue by the City.
In fiscal year 2017–2018, Moss Adams performed a review in this area and provided recommendations to improve the management of billing and collections related to parking card A/R.
Following that review, SP+ and the Division implemented several improvements to the overall A/R monitoring and management function. Based on our analysis of the current A/R function, it does appear that significant improvements have been made and there is a process in place to keep A/R DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Parking Contract Review Report | 15
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balances current by deactivating cards if payment is not received within 60 days of the due date.
However, there are a few large account credit balances (approximately $1.5 million) on old accounts that are now being billed manually versus utilizing the system. In addition, there were some old accounts with debit balances that had not been adjusted or written off.
Based on our discussions with management, they have been trying to correct these accounts for several years; however, had not been successful in getting them resolved (i.e., adjusted or written-off) as of the time of this review. There had initially been plans to resolve the issues in early 2020; however, due to COVID-19’s effect on City operations and priorities, this had not been resolved.
These old aged accounts make A/R reporting and monitoring more difficult as it is difficult to distinguish if new A/R balances are hitting the 90-day or older categories.
Finally, based on a memo provided by SP+ and a systems access report related to the City of Santa Monica account in the CARS billing system, it appears that there 590 SP+ users with access to the account. Systems access should be restricted to only individuals who are responsible for billing and collections on the City of Santa Monica A/R, and SP+ should ensure that none of those individuals are also responsible for handling the related payments (cash receipts) on those accounts.
SP+ and the City should work together to resolve the system issues and clean-up the old A/R. Going forward, a roll-forward should be performed each month to ensure the ending balance, plus new billings, less collections, ties to the ending A/R balance. In addition, any A/R that hits the 90-day+ categories should be addressed immediately. It is difficult to determine if this is occurring regularly given the large A/R balances residing in the 120+ days category. If the Agreement is modified, the City should consider modifying the language around billing and collections to be more consistent with the City’s current AI in this area.
9. Finding Many of the SOPs that SP+ is required to develop and keep current, in accordance with the Agreement, were either incomplete, did not appear sufficient to meet the requirements or did not exist.
Recommendation SP+ should review all SOPs, compare them to Agreement requirements, make updates or draft new SOPs to meet the requirements of the Agreement, and obtain City approval.
The Agreement requires SP+ to prepare and maintain an up-to-date Operations and Procedures Manual (SOPs) that reflect the method of parking lot operations proposed by SP+. These SOPs must be proposed to, and approved by, the City. The manual must cover 16 key areas of operations specified by the Agreement.
In our analysis of the SOPs provided by SP+, we identified the following:
• Many of the 16 required SOPs were available. However, several were incomplete, did not appear sufficient to meet the requirements of the Agreement, or were not included, including:
○ Graffiti Abatement – An SOP covering this area was not provided. ○ Quality Control (QC) Plan – A QA Assessment was provided; however, a detailed QC Plan was not.
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○ Facility Maintenance Procedures and Schedule – Some elements of these were covered throughout other SOPs; however, a comprehensive set of procedures and detailed schedule were not provided.
○ Equipment Inventory, Maintenance Schedule, and Replacement Schedule – The SOPs provided covered facility inspections and a 2020 space count inventory; however, SOPs covering equipment inventory or maintenance and replacement schedules were not provided. ○ Company personnel policies, including Affirmative Action Plan – SP+ personnel policies were provided; however, not an Affirmative Action Plan.
○ Alarm Procedures – SP+ has an Emergency Plan that requires location supervisors to familiarize themselves with the local alarm system and ensure employees understand its function; however, there are no other alarm procedures included. • Most of the SOPs are not dated; therefore, we were unable to determine whether they are up to date and reflect current practices. The three SOPs that were dated indicate the last updates occurred in 2016, 2017, and 2020.
• There was no documentation available as to whether the SOPs were originally submitted to the City for approval, or if significant updates to the SOPs over the years had been submitted to the City for approval.
A full review of the SP+ SOPs should be performed. All SOPs required by the Agreement should be either updated to ensure they reflect current practices, or developed if they do not exist. SP+ and the Division should work together to ensure that the SP+ SOPs meet the requirements of the Agreement, including detailed language throughout the Agreement on what the responsibilities of SP+ are in these areas, and ensure, where appropriate, that they are consistent with City policies.
Once drafted/updated, the full set of SOPs should be submitted to the City and documentation of approval should be maintained. These SOPs should be evaluated at least annually to ensure they are up to date, and any significant changes should be submitted to the City for review and approval.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Management Responses to the City of Santa Monica Parking Contract Review By Parking Operations Division, Community Development Department, City of Santa Monica Moss-Adams Auditors, LLP, audit preparer August 11, 2020 A. Employee Parking Cards
1. Finding: Parking card monitoring could be improved to ensure that all active cards are issued appropriately and that cards are deactivated timely upon an employee’s termination or when a third-party (non-employee) ceases work with the City.
Recommendation: Develop a process for actively monitoring employee and non-employee parking cards and ensure parking cards are deactivated timely upon an employee’s termination or a non-employee no longer requiring access.
Manager’s Response: We agree. The Division will develop a process between Parking Operations and Human Resources to monitor and provide information of terminated employee and non-employee to SP+ in a timely manner for the purposes of deactivation of parking access media.
2. Finding: Access to the activation/deactivation function for City parking cards within the SKIDATA system is not adequately restricted.
Recommendation: Properly restrict system access to SKIDATA activation/deactivation functions to City employees and SP+ personnel who warrant access based on their current roles within the City’s parking function.
Manager’s response: We agree. The Division will review SP+ access policy and confirm access restrictions for activation/deactivation be limited to managers explicitly directed to make changes on behalf of the City. All others will be limited to read-only modes to verify active key card use.
B. SP+ Reporting to the City
3. Finding: Required monthly reports are not consistently submitted to the City by the established deadline.
Recommendation: Establish a process to ensure reports are submitted by the required deadlines, even in the event of an employee’s absence. Ensure reports are submitted by the deadlines presented in the Agreement, or document an alternate due date (i.e., the 15th) that is acceptable to both the City and SP+.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Manager’s response: We concur with this finding. Division staff will work with SP+ staff to ensure that all required operating reports are produced and presented by their contractually established due dates.
C. Daily cash Collections, Deposits, Reporting, and Reconciliations
4. Parking Access and Revenue Control System (PARCS) equipment generated reports were not being submitted to Division daily, as defined by the Agreement.
Recommendation: SP+ should evaluate how their internal process for preparing and submitting daily reporting packages to the Division could be improved to ensure the 48-hour deadline is consistently met.
Manager’s response: We concur with this finding. SP+ staff will evaluate internal processes to improve upon submittal deadlines. The Division will review these processes to ensure 48-hour deadlines are met consistently.
D. SP+ Invoicing the City
5. Finding: It is unclear whether SP+ is required to follow procurement requirements (due diligence, bids, proposals, etc.) for purchases made on the City’s behalf.
Recommendation: Clarify with SP+ as to whether the City’s AI must be followed for all purchases made on the City’s behalf.
Manager’s response: The Division will clarify this requirement with SP+. Generally, SP+ follows fair and competitive bid practices for provision of third-party services and equipment supplies but City will confirm to what extent the contract requires closer adherence to procurement requirements.
6. Finding: The annual detailed budget process for those expenses that are charged through the SP+ contract as part of the Agreement, is not formalized, and adjustments are not processed formally. Budget to actual tracking is performed; however, it is difficult to trace individual purchases to budget line-items.
Recommendation: SP+ and the Division should collaborate to prepare operating budgets on a yearly (fiscal) basis, as it relates to expenses through the Agreement. The budgets should be agreed to and significant changes should be documented and approved.
The recording of actual expenditures against budgeted line-item categories should be evaluated for more accurate ways to monitor budget to actual by line-item.
DocuSign Envelope ID: 11D9426A-3C13-43D1-A9A2-FA54BF3E82BB Manager’s response: The Division concurs on this request and will continue to refine monitoring and approval processes.
E. Parking Equipment and Maintenance Tracking
7. Finding: Some of the City’s parking equipment, and the related systems the equipment runs on, is nearing end of life. Additionally, there is limited tracking of maintenance issues or equipment problems related to parking equipment.
Recommendation: The overall age of the City’s parking equipment, the systems the equipment runs on, and the impact/cost of using older equipment should be assessed.
Manager’s response: The Division agrees with this. Industry best practices indicate that new equipment be listed with its expected useful life, include a regular maintenance schedule and parts consumed, and that prior to end of useful life, an assessment be done to consider replacement options based on return on investment.
F. Accounts Receivable/ Billing Collections and Monitoring
8. Finding: There are large A/R credit and debit balances in the 120 days or older category that have not been fully addressed to remove them from the A/R listing. Systems access to the billing system is not restricted to only individuals with billing responsibilities.
Recommendation: SP+ should work with the City to ensure the old A/R is cleaned up in the system, and that only balances in which collection efforts are currently being made on, are included. Old accounts should be written-off allowing for more accurate reporting and monitoring of the rolling A/R balances. Systems access should be restricted to only those individuals that are responsible for billing activities related to the City of Santa Monica A/R.
Manager’s response: The Division concurs. City staff will arrange with SP+ to address outstanding A/R clean-up issues as a first order priority, and address access authority.
G. Standard Operating Procedures (SOP)
9. Finding: Many of the SOPs that SP+ is required to develop and keep current, in accordance with the Agreement, were either incomplete, did not appear sufficient to meet the requirements or did not exist.
Recommendation: SP+ should review all SOPs, compare them to Agreement requirements, make updates or draft new SOPs to meet the requirements of the Agreement, and obtain City approval.
Manager’s response: The Division agrees with this finding and will implement such measures.
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