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Memo z o October 15, 2010 To: Nelson Fialho, City Manager, City of Pleasanton Bert L, Michalczyk, General Manager, DSRSD Emily Wagner, Fiscal Officer, City of Pleasanton Lori Rose, Financial Services Manager, DSRSD From: Daniel Smith, Director of Operations Services, City of Pleasanton David A. Requa, District Engineer, DSRSD Subject: Clean Water Revival Income/Expenditure Audit Staff from Pleasanton and the District, assisted by The Covello Group, have completed the Income/Expenditure Audit for the Clean Water Revival project in accordance with the agreed upon procedure included as Attachment 1 which was approved by the City Manager and General Manager on October 14, 2009. This audit' is being submitted for your review and acceptance for use in ongoing discussions regarding the Regional Agreement. INCOME PORTION OF AUDIT The "Agreement for Wastewater Disposal Services" ("Regional Agreement") between the City and District is dated November 3, 1992. Staff was only able to determine connection fee receipts by entity from FYE 1983 to the present as presented in Table 1. However, in accordance with the Regional Agreement, the starting date for auditing income is January 21, 1997. Therefore, there is adequate connection fee history for the Income portion of the Audit. While the beginning date for auditing income is designated in the Regional Agreement, no ending date is defined. There are a number of possibilities for an ending date but staff recommends the date expenditures for the project were suspended by the District and final payments were made to close out the project — February 20, 1999. For simplicity, the recommended time period is FYE 1996 to FYE 1999. In this time period, sixty three and 6/10 percent (63.6%) of the connection fee revenue was derived from the District service area and thirty six and 4/10 percent (36.4%) of the connection fee revenue was derived from the Pleasanton service area. Allocation Period The key aspect of the income audit is identifying time periods that may to be used for calculating the amount of fees attributable to each service area. I This product is not a "financial" audit but a review of the time and amount of connection fees received from the best available records of the City and District. Page 1 of 5 H:\ENGDEPT\Dept ItemskENGMGR\Pleasanton\CW R Audil\Final C W R Exponditurclncomc Audil Memo.doc