By Donna Beth Weilenman
Staff Reporter
Benicia City Council will hear city auditors Maze and Associates’ review Tuesday of Benicia’s financial statements for the fiscal year that ended June 30, 2012.
The audited statements are compiled into a Comprehensive Annual Financial Report, or CAFR, said Karan Reid, finance director, and the report is given annually.
“In addition to review of the financial statements, the auditors are required to report matters that could adversely affect the city’s ability to report, process, summarize and report financial data,” Reid wrote April 3.
The auditors found no deficiency in Benicia’s internal control, but made several recommendations about debt coverage requirements and operating procedures that they wanted brought to the Council’s attention, Reid said.
The audit paints a financial picture of Benicia as it existed June 30, 2012, Reid wrote in the preface to the audit.
It shows Valero Benicia Refinery, Dunlop Manufacturing, Bio-Rad Laboratories and Cytosport as among the city’s largest employers, with 200 or more workers; Valero topped the list with 480.
Coca-Cola Bottling, Pepsi Bottling Group, Benicia Fabrication and machine, Radiator Express Warehouse, Veolia ES Industrial Outsourcing, Cycle Gear, APS West Coast, Unico Mechanical Corp., Rix Industries and Bay Valve Services round out the city’s top 15 employers.
The audit said Benicia Industrial Park, where many of these companies operate, “is a model for other California cities on how to transform an abandoned military base into a viable industrial park and local economic catalyst.”
The document describes the city’s financial goals as developing stable revenue sources to provide high-level services efficiently to the city’s residents. Benicia also wants to preserve its reputation in financial markets, the auditors noted.
The city tries to make growth pay its own way, and works cooperatively with the Benicia Unified School District, Reid reported. City government attempts to engage the public on a variety of community issues, she wrote.
Financially, city management maintains internal controls to assure that city assets are protected from loss and abuse. Budgetary controls are in place and city finances comply with the Council’s approved budget.
However, at the end of the fiscal year covered by the budget, the General Fund reserves were below the target of 20 percent of revenues at year’s end, Reid wrote.
Benicia’s cash and investments are managed on a pooled basis, and the average investment portfolio exceeded $44 million, with an average yield at 1.51 percent average maturity. Most of these were money market funds, U.S. government securities, commercial paper and Local Agency Investment Fund (LAIF) deposits managed by the treasurer of the state of California, Reid wrote.
Benicia has used bonds to finance public improvement projects, the auditors wrote, and the city has a strong reputation for credit worthiness, Reid said.
Benicia Finance Committee looked at the auditors’ report Jan. 25, and heard auditor partner Vikki Rodriguez say Benicia ended the year with $219 million in assets and a General Fund balance of $6.9 million.
During the year, revenues were higher than anticipated in the 2011-12 budget, and its expenditures were lower.
The audit didn’t cover subsequent developments, such as the $840,000 drop in property taxes that made that revenue significantly lower than the estimates used when the Council planned and approved the current budget.
The Finance Committee accepted the Maze and Associates audit, and recommended sending the report to the Council.
The report mentioned the Benicia Marina enterprise fund, which historically operates in the red, though enterprise funds are supposed to be self-supporting or able to generate a positive financial balance.
The Finance Committee learned that City Attorney Heather McLaughlin is researching pertinent documents because the marina fund is a legal as well as fiscal matter.
A staff response said the matter is expected to be resolved by the end of June.
Benicia also must address its outstanding liability recorded in its transit fund, Rodriguez told the committee. Benicia and SolTrans have scheduled meetings to discuss partial or full repayment of city advances to the Transit Fund, and the matter also should be resolved by June, the memorandum on internal control states.
The audit notes the “significant deficiency in Benicia’s failure to maintain enough reserves to exceed its 2002 Water Revenue Funding Bonds, which staff said would be corrected by the recent rate increases.”
Staff agreed with Rodriguez that the city’s monthly journal entry log should be approved by someone who doesn’t prepare the entries.
The auditor’s report noted that in 2006, the city loaned the Benicia Housing Authority $1.4 million for improvements to Casa de Vilarrasa, a housing project, and let the authority borrow another $119,309 in 2009-10.
Because the authority hasn’t been able to repay those debts, the city wrote off $344,641, the auditor noted, but hasn’t addressed the rest. However, the authority and the state of California are discussing refinancing the debt to repay Benicia, the memorandum on internal control noted.
The Council will meet in a closed session at 6 p.m. Tuesday to discuss legal matters. The regular meeting starts at 7 Tuesday night in the Council Chambers of City Hall, 250 East L St.
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