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Home My WebLink About2021.02.17 - THCA - Agenda - Regular MeetingCopies of staff reports or other written documentation relating to agenda items are on file in the Office of the City Clerk at Diamond Bar City Hall, and are available for public inspection. If requested, the agenda will be made available in an alternative format to a person with disability as required by Section 202 of the Americans with Disabilities Act of 1990. If you have questions regarding an agenda item, please contact the Authority Secretary at (909) 839-7010 during regular business hours. In an effort to comply with the requirements of Title II of the Americans with Disabilities Act of 1990, the Tres Hermanos Conservation Authority requires that any person in need of any type of special equipment, assistance or accommodation(s) in order to communicate at a public meeting, must inform the Authority Secretary a minimum of 72 hours prior to the scheduled meeting . TRES HERMANOS CONSERVATION AUTHORITY BOARD OF DIRECTORS REGULAR MEETING FEBRUARY 17, 2021 AGENDA 6:00 p.m. CITY OF DIAMOND BAR 21810 COPLEY DR. DIAMOND BAR, CALIFORNIA Chair, Ray Marquez Vice-Chair, Cathy Marcucci Director, Nancy Lyons Director, Cory Moss Director, Peter Rogers Director, Newell Ruggles Director, Steve Tye Addressing the Authority: NOTICE OF TELEPHONIC MEETING: NOTICE OF TELEPHONIC MEETING: Pursuant to Section 3. of Executive Order N-29-20, issued by Governor Newsom on March 17, 2020, the regular meeting of the Tres Hermanos Conservation Authority shall be held telephonically. How to Observe the Meeting: Members of the public who wish to listen ONLY may join the meeting by calling the following conference call number: +1 (415) 930-5321 and entering the Access Code: 440- 359-897. How to Submit Public Comment: Members of the public may provide public comment by sending written comments to the Authority Clerk by email at cityclerk@DiamondBarCA.gov by 5:00 p.m. on the day of the meeting. Please indicate in the Subject Line “FOR PUBLIC COMMENT.” Written comments will be distributed to the Authority Directors and read into the record at the meeting. Alternatively, public comment may be submitted by logging onto the meeting through this link: https://attendee.gotowebinar.com/register/95452315868526350. Members of the public will be called upon one at a time during the Public Comment portion of the agenda, and will be asked to state their name and agenda item they wish to comment on. FEBRUARY 17, 2021 PAGE 2 THCA Agenda 1. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL 2. PUBLIC COMMENTS: At this time, members of the public may address the Authority regarding any items within the subject matter jurisdiction of the Authority provided NO action or discussion may be taken on any item not appearing on the agenda, except the Authority may BRIEFLY respond to statements made or questions posed. Comments are limited to five minutes per Speaker. 3. CONSENT CALENDAR: 3.1 Consideration of the Minutes of the January 20, 2021 regular meeting. Recommended Action: Approve the January 20, 2021 Regular Tres Hermanos Conservation Authority meeting minutes. 3.2 Consideration to Approve the Check Register for the Mon th of December 2020. Recommended Action: Approve the check register for the month of December 2020. 3.3 Consideration to Approve the Treasurer's Report for the Month of December 2020. Recommended Action: Receive and file the Treasurer’s Report for the month of December 2020. 3.4 Consideration to Approve the Audited Financial Statements for Fiscal Year 2019/2020. Recommended Action: That the Authority receive and file the Audited Financial Statements for the fiscal year ended June 30, 2020. 4. OLD BUSINESS: There is none. FEBRUARY 17, 2021 PAGE 3 THCA Agenda 5. NEW BUSINESS: 5.1 Consideration of Mid-Year Budget Review for Fiscal Year 2020-21. Recommended Action: Adopt Resolution No. THCA 2021-01 entitled: A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRES HERMANOS CONSERVATION AUTHORITY ADOPTING A BUDGET AMENDMENT FOR FISCAL YEAR 2020-21 INCREASING THE BUDGET BY $26,584 BASED ON THE MID- YEAR BUDGET REVIEW. 5.2 Consideration of Establishing a Fund Balance Reserve. Recommended Action: That the Authority establish a fund balance reserve policy of 10% of expenditures to be programmed into the budget annually, starting with Fiscal Year 21-22. 6. AUTHORITY DIRECTOR COMMENTS: 7. ADJOURNMENT: The next regular Tres Hermanos Conservation Authority meeting will be held on Wednesday, March 17, 2021 at 6:00 p.m. TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 3.1 3.1 Packet Pg. 4 TRES HERMANOS CONSERVATION AUTHORITY STAFF REPORT AGENDA NO. 3.1 Date: February 17, 2021 To: Chair and Board of Directors From: Daniel Fox, Executive Director Subject: Consideration of the Minutes of the January 20, 2021 regular meeting. Recommendation: Approve the January 20, 2021 Regular Tres Hermanos Conservation Authority meeting minutes. Background/Analysis: Attached for Board review and approval are the minutes of the January 20, 2021 Tres Hermanos Conservation Authority meeting. Respectfully Submitted, Reviewed By, Attachments: 1. January 20, 2021 THCA Minutes 3.1 Packet Pg. 5 TRES HERMANOS CONSERVATION AUTHORITY REGULAR BOARD OF DIRECTORS MEETING MINUTES DIAMOND BAR, CALIFORNIA JANUARY 20, 2021 PAGE 1 CALL TO ORDER The Regular Meeting of the Tres Hermanos Conservation Authority was called to order by Chair Tye at 6:02 p.m. Chair Tye stated that that consistent with COVID-19 regulations, all Directors and staff participated via teleconference and there was no physical location for public attendance. The Public was invited to join the meeting online or by phone at the numbers printed on the agenda. PLEDGE OF ALLEGIANCE The Pledge of Allegiance was led by Chair Tye. ROLL CALL PRESENT: Director Nancy Lyons Director Cathy Marcucci Director Cory Moss Director Peter Rogers Director Newell Ruggles Vice-Chair Ray Marquez Chair Steve Tye ABSENT: None Staff attending telephonically: Dan Fox, Executive Director; Ben Montgomery, Deputy Executive Director; Troy Helling, Administrative Director, Josh Nelson, City of Industry Director of Public Works/City Engineer/Assistant City Manager; Tracy Egoscue, Authority Counsel, and Kristina Santana, Authority Secretary. PUBLIC COMMENTS Melanie Schlotterbeck with Hills for Everyone, asked that during telephonic meetings, the Board give consideration and adequate time for all public comments to be heard before discussion and voting. 3.1.a Packet Pg. 6 TRES HERMANOS CONSERVATION AUTHORITY REGULAR BOARD OF DIRECTORS MEETING MINUTES DIAMOND BAR, CALIFORNIA JANUARY 20, 2021 PAGE 2 3. REORGANIZATION OF THE BOARD OF DIRECTORS 3.1 Selection of Chair DIRECTOR MOSS NOMINATED RAY MARQUEZ TO SERVE AS CHAIR, SECONDED BY DIRECTOR LYONS. NO OTHER NOMINATIONS WERE OFFERED. RAY MARQUEZ WAS ELECTED TO SERVE AS CHAIR BY THE FOLLOWING ROLL CALL VOTE: D/Lyons Yes D/Marcucci Yes D/Moss Yes D/Rogers Yes D/Ruggles Yes D/Marquez Abstain D/Tye Yes 3.2 Selection of Vice-Chair CHAIR MARQUEZ NOMINATED DIRECTOR MARCUCCI TO SERVE AS VICE-CHAIR, SECONDED BY DIRECTOR MOSS. NO OTHER NOMINATIONS WERE OFFERED. CATHY MARCUCCI WAS UNANIMOUSLY ELECTED TO SERVE AS VICE-CHAIR BY THE FOLLOWING ROLL CALL VOTE: D/Lyons Yes D/Marcucci Abstain D/Moss Yes D/Rogers Yes D/Ruggles Yes D/Tye Yes Chair/Marquez Yes 4. CONSENT CALENDAR 4.1 CONSIDERATION OF THE MINUTES OF THE JULY 15, 2020 REGULAR MEETING AND THE AUGUST 19, 2020 REGULAR MEETING RECOMMENDED ACTION: Approve as submitted. 3.1.a Packet Pg. 7 TRES HERMANOS CONSERVATION AUTHORITY REGULAR BOARD OF DIRECTORS MEETING MINUTES DIAMOND BAR, CALIFORNIA JANUARY 20, 2021 PAGE 3 4.2 CONSIDERATION TO APPROVE THE TREASURER’S REPORT FOR THE MONTHS OF JULY 2020, AUGUST 2020, SEPTEMBER 2020, AND OCTOBER 2020 RECOMMENDED ACTION: Receive and file Report. 4.3 CONSIDERATION TO APPROVE THE CHECK REGISTER FOR THE MONTHS OF JULY 2020, AUGUST 2020, SEPTEMBER 2020, AND OCTOBER 2020 RECOMMENDED ACTION: Receive and file Report. MOTION BY DIRECTOR ROGERS, AND SECOND BY DIRECTOR MOSS TO APPROVE THE CONSENT CALENDAR. MOTION CARRIED 7-0 BY THE FOLLOWING VOTE: AYES: DIRECTORS: LYONS, MOSS, ROGERS, RUGGLES, TYE, VC/MARCUCCI, C/MARQUEZ NOES: DIRECTORS: NONE ABSENT DIRECTORS: NONE ABSTAIN DIRECTORS: NONE 5. OLD BUSINESS There was none. 6. NEW BUSINESS There was none. 7. AUTHORITY DIRECTOR COMMENTS: Director Rogers wished everyone a Happy New Year and said he looked forward to more business in the coming months. Director Lyons congratulated Chair Marquez and Vice-Chair Marcucci on their appointments. 3.1.a Packet Pg. 8 TRES HERMANOS CONSERVATION AUTHORITY REGULAR BOARD OF DIRECTORS MEETING MINUTES DIAMOND BAR, CALIFORNIA JANUARY 20, 2021 PAGE 4 Director Moss congratulated the new Chair and Vice -Chair and said she was excited about the appointments and looked forward to conducting business in the coming months. She asked staff to bring back suggestions about what the board might want to do moving forward. She wished everyone a Happy New Year. Director Tye congratulated Chair Marquez and Vice-Chair Marcucci, said he looked forward to the board accomplishing a lot this year and wished everybody a happy New Year. Vice-Chair Marcucci thanked everyone for her appointment, wished everyone a happy New Year and said she was looking forward to getting things done this year. Chair Marquez thanked Director Tye for a tremendous job and leadership during 2020, thanked the board for the opportunity to serve as Chair and asked Executive Director Fox to recommend staff’s vision for the board moving forward and to provide a status of the cattle lease. Executive Director Fox stated that staff is working on the Cattle Ranch leases to finalize negotiations with the cattle ranchers and environmental review and analysis which may not be ready for the next scheduled board meeting but will be presented as staff moves to prioritize tasks and visioning mov ing into the next year’s budget. Chair Marquez asked the status of the THCA liability insurance, and Administrative Director Helling responded that the authority is covered for liability regarding the cattle. 7. ADJOURNMENT: There being no further business, Chair Ray Marquez adjourned the Tres Hermanos Conservation Authority at 6:28 p.m. to February 17, 2021 at 6:00 p.m. __________________________ RAY MARQUEZ CHAIR __________________________ KRISTINA SANTANA AUTHORITY SECRETARY 3.1.a Packet Pg. 9 TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 3.2 3.2 Packet Pg. 10 TRES HERMANOS CONSERVATION AUTHORITY STAFF REPORT AGENDA NO. 3.2 Date: February 17, 2021 To: Chair and Board of Directors From: Daniel Fox, Executive Director Subject: Consideration to Approve the Check Register for the Month of December 2020. Recommendation: Approve the check register for the month of December 2020. Background/Analysis: Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint Powers Agreement Section 5.2 Disbursements, the check register of the Authority should be periodically reviewed by the Board. Attached for your review and approval is the check register for the month of December 2020. Respectfully Submitted, Reviewed By, Attachments: 1. Check Register for December 2020 3.2 Packet Pg. 11 Date Check #Vendor Memo/Description Amount 12/4/20 1189 Ca Dept of Tax & Fee Admin Water Rights - FY 20-21 $ (310.35) 12/4/20 1190 Industry Security Services, Inc. voided check - clerical error - 12/4/20 1191 City of Industry (Home Depot)Dishwasher (905.68) 12/4/20 1192 City of Industry (LA County)Weed Abatement/Pest Control (3,682.56) 12/4/20 1193 City of Chino Hills voided check - clerical error - 12/7/20 1194 City of Chino Hills Water - 10/13/20 - 11/10/20 (318.42) 12/7/20 1195 Industry Security Services, Inc. Security - Aug 2020 (2,905.86) Total (8,122.87)$ Tres Hermanos Conservation Authority JPA Transaction List by Vendor December 2020 3.2.a Packet Pg. 12 TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 3.3 3.3 Packet Pg. 13 TRES HERMANOS CONSERVATION AUTHORITY STAFF REPORT AGENDA NO. 3.3 Date: February 17, 2021 To: Chair and Board of Directors From: Daniel Fox, Executive Director Subject: Consideration to Approve the Treasurer's Report for the Month of December 2020. Recommendation: Receive and file the Treasurer’s Report for the month of December 2020. Background/Analysis: Pursuant to the Amended and Restated Tres Hermanos Conservation Autho rity Joint Powers Agreement Section 5.3 Accounts, the Treasurer must verify and report in writing, at least quarterly, the amount of money held for the Authority, the amount of interest earnings, revenues, and expenditures since the last report. Attached for your information is the Treasurer’s Report for the month of December 2020. Respectfully Submitted, Reviewed By, Attachments: 1. Treasurers Report - December 2020 3.3 Packet Pg. 14 3.3.a Packet Pg. 15 Fiscal Year % Budget Dec To Date of Budget 2020/21 2020 2020/21 Used Revenues: Investment interest -$ 6$ 105$ - Rental income 8,100 675 4,050 50% Contributions from member agencies 248,488 - 248,488 100% Reimbursements - 32 157 - Total Revenues 256,588 713 252,800 99% Expenditures: Professional Services 35,220 - 1,575 4% Legal services 20,004 - 1,313 7% Legal services - Extraordinary 66,000 - 1,205 2% Contractual Services 113,559 4,589 31,060 27% Security services 34,800 2,906 11,878 34% Office Supplies & Software 2,005 310 1,087 54% Utilities - 318 1,877 - Total Expenditures 271,588 8,123 49,995 18% Excess of revenues over (under) expenditures (15,000)$ (7,410)$ 202,805$ Fund Balances: Beginning of fiscal year, Revised* 41,584$ Excess of revenues over (under) expenditures 202,805 As of December 31, 2020 244,389$ Fund Balances by City: Chino Hills 83,398$ Diamond Bar 64,643 Industry 96,348 Total Fund Balances by City 244,389$ *Audit should be finalized by the end of January 2021 which will finalize the beginning fund balance for Fiscal Year 2020-21. Note: The December 2020 report now shows the accrual basis of accounting as opposed to the cash basis as shown in previous months. The accrual basis shows a more complete picture when comparing to the budget. Tres Hermanos Conservation Authority Statement of Revenues, Expenditures and Changes in Fund Balances For the Month Ended December 31, 2020 3.3.a Packet Pg. 16 TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 3.4 3.4 Packet Pg. 17 TRES HERMANOS CONSERVATION AUTHORITY STAFF REPORT AGENDA NO. 3.4 Date: February 17, 2021 To: Chair and Board of Directors From: Daniel Fox, Executive Director Subject: Consideration to Approve the Audited Financial Statements for Fiscal Year 2019/2020. Recommendation: That the Authority receive and file the Audited Financial Statements for the fiscal year ended June 30, 2020. Background/Analysis: Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint Powers Agreement Section 3.8, Treasurer, the Treasurer shall cause an independent audit to be made by a certified public accountant in compliance with Section 6505 of the Government Code. Respectfully Submitted, Reviewed By, Attachments: 1. Audit Communication Letter 2. Report on Internal Controls 3. Financial Statements June 30, 2020 3.4 Packet Pg. 18 203 N. Brea Blvd., Suite 203 Brea, CA 92821 Lance, Soll & Lunghard, LLP Phone: 714.672.0022 January 21, 2021 To the Board of Directors Tres Hermanos Conservation Authority Diamond Bar, California We have audited the financial statements of the governmental activities and the general fund of the Tres Hermanos Conservation Authority (the Authority) for the year ended June 30, 2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated January 28, 2021. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Authority are described in the notes to the financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during fiscal year 2019-2020. We noted no transactions entered into by the Authority during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. No misstatements were found. 3.4.a Packet Pg. 19 To the Board of Directors Tres Hermanos Conservation Authority Diamond Bar, California Management Representations We have requested, certain representations from management that are included in the management representation letter dated January 21, 2021. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Authority’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Authority’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to budgetary comparison schedule for the General Fund which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. New Accounting Standards The following new Governmental Accounting Standards Board (GASB) pronouncements were effective for fiscal year 2019-2020 audit: GASB Statement No. 95, Postponement of Effective Dates of Certain Authoritative Guidance The following pronouncements have been postponed as a temporary relief to governments and other stakeholders in light of the COVID-19 pandemic and the new effective date is reflected in the following fiscal years and should be reviewed for proper implementation by management: Fiscal year 2021 GASB Statement No. 84, Fiduciary Activities. GASB Statement No. 90, Majority Equity Interests - an Amendment of GASB Statement Nos. 14 and 61. 3.4.a Packet Pg. 20 To the Board of Directors Tres Hermanos Conservation Authority Diamond Bar, California Fiscal year 2022 GASB Statement No. 87, Leases. GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. Fiscal year 2023 GASB Statement No. 91, Conduit Debt Obligations. Restriction on Use This information is intended solely for the use of the Board of Directors and management of the Authority and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Brea, California 3.4.a Packet Pg. 21 203 N. Brea Blvd., Suite 203 Brea, CA 92821 Lance, Soll & Lunghard, LLP Phone: 714.672.0022 INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Tres Hermanos Conservation Authority Diamond Bar, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and the general fund information of the Tres Hermanos Conservation Authority (the Authority) as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, and have issued our report thereon dated January 21, 2021. In planning and performing our audit of the financial statements, we considered the Authority’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 3.4.b Packet Pg. 22 To the Board of Directors Tres Hermanos Conservation Authority Diamond Bar, California Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Brea, California January 21, 2021 3.4.b Packet Pg. 23 TRES HERMANOS CONSERVATION AUTHORITY JUNE 30, 2020 FINANCIAL STATEMENTS 3.4.c Packet Pg. 24 75(6+(50$126 &216(59$7,21$87+25,7< ),1$1&,$/67$7(0(176 -81( 3.4.c Packet Pg. 25 75(6+(50$126&216(59$7,21$87+25,7< -81( 7$%/(2)&217(176 3DJH 1XPEHU $87+25,7<2)),&,$/6L ,1'(3(1'(17$8',7256¶5(3257 %$6,&),1$1&,$/67$7(0(176 6WDWHPHQWRI1HW3RVLWLRQDQG*RYHUQPHQWDO)XQG%DODQFH6KHHW 6WDWHPHQWRI$FWLYLWLHVDQG*RYHUQPHQWDO)XQG5HYHQXHV ([SHQGLWXUHVDQG&KDQJHVLQ)XQG%DODQFH 1RWHVWR)LQDQFLDO6WDWHPHQWV 5(48,5('6833/(0(17$5<,1)250$7,21 %XGJHWDU\&RPSDULVRQ6FKHGXOH 1RWHVWR5HTXLUHG6XSSOHPHQWDU\,QIRUPDWLRQ 3.4.c Packet Pg. 26 75(6+(50$126&216(59$7,21$87+25,7< -81( $87+25,7<2)),&,$/6 6WHYH7\H&KDLUPDQ 5D\0DUTXH]9LFH&KDLUPDQ 1DQF\/\RQV%RDUG0HPEHU &DWKHULQH0DUFXFFL%RDUG0HPEHU &RU\0RVV%RDUG0HPEHU 3HWHU5RJHUV%RDUG0HPEHU 1HZHOO5XJJOHV%RDUG0HPEHU 3.4.c Packet Pg. 27 203 N. Brea Blvd., Suite 203 Brea, CA 92821 Lance, Soll & Lunghard, LLP Phone: 714.672.0022 INDEPENDENT AUDITORS’ REPORT To the Board of Directors Tres Hermanos Conservation Authority Diamond Bar, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and the general fund information of the Tres Hermanos Conservation Authority (the Authority) as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the general fund information of the Tres Hermanos Conservation Authority as of June 30, 2020, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. 3.4.c Packet Pg. 28 To the Board of Directors Tres Hermanos Conservation Authority Diamond Bar, California Other Matters Required Supplementary Information Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Accounting principles generally accepted in the United States of America require that the budgetary comparison schedule of the Tres Hermanos Conservation Authority be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 21, 2021 on our consideration of the Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance. Brea, California January 21, 2021 2 3.4.c Packet Pg. 29 TRES HERMANOS CONSERVATION AUTHORITY STATEMENT OF NET POSITION AND GOVERNMENTAL FUND BALANCE SHEET JUNE 30, 2020 General Statement of Fund Adjustments Net Position Assets: Cash and cash equivalents 167,386$ -$ 167,386$ Accounts receivable 154,845 - 154,845 Prepaid expenses 1,575 - 1,575 Capital assets - 41,650,000 41,650,000 Total Assets 323,806$ 41,650,000 41,973,806 Liabilities and Fund Balance: Liabilities: Accounts payable 33,734$ - 33,734 Unearned revenue 248,488 - 248,488 Total Liabilities 282,222 - 282,222 Fund Balance: Unassigned 41,584 (41,584) - Total Fund Balance 41,584 (41,584) - Total Liabilities and Fund Balance 323,806$ Net Position: Investment in capital assets 41,650,000 41,650,000 Unrestricted 41,584 41,584 Total Net Position 41,691,584$ 41,691,584$ The notes to financial statements are an integral part of this statement. 3 3.4.c Packet Pg. 30 TRES HERMANOS CONSERVATION AUTHORITY General Fund Adjustments Statement of Activities Revenues: Member contributions 117,846$ -$ 117,846$ Rental income 7,777 - 7,777 Investment income 54 - 54 Reimbursements 737 - 737 Total Revenues 126,414 - 126,414 Expenditures/Expenses: General government: Professional services 19,224 - 19,224 Legal services 17,941 - 17,941 Legal services - extraordinary 22,826 - 22,826 Contractual services 123,959 - 123,959 Security services 35,201 - 35,201 Office supplies and software 1,071 - 1,071 Utilities 8,327 - 8,327 Total Expenditures/Expenses 228,549 - 228,549 Change in Net Position (102,135) - (102,135) Fund Balance/Net Position - Beginning 143,719 41,650,000 41,793,719 Fund Balance/Net Position - Ending 41,584$ 41,650,000$ 41,691,584$ FOR THE YEAR ENDED JUNE 30, 2020 STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUND REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE The notes to financial statements are an integral part of this statement. 4 3.4.c Packet Pg. 31 75(6+(50$126&216(59$7,21$87+25,7< 127(672),1$1&,$/67$7(0(176 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RIUHVRXUFHVUHYHQXHXQWLOWKDWWLPH7KH$XWKRULW\KDVQRLWHPVWKDWTXDOLI\IRUUHSRUWLQJLQ WKLVFDWHJRU\ 6 3.4.c Packet Pg. 33 TRES HERMANOS CONSERVATION AUTHORITY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2020 Note 2: Cash and Cash Equivalents Demand Deposits At June 30, 2020, the carrying amount of the Authority’s deposits was $167,386 and the bank balance was $173,032. The $5,646 difference represents the net effect of reconciling items such as outstanding checks and deposits in transit. Note 3: Capital Assets The City of Industry purchased the Ranch from the Successor Agency to Industry’s Urban-Development Agency in the amount of $41,650,000 in fiscal year 2018-2019. As part of the Settlement Agreement, Chino Hills and Diamond Bar contributed to the purchase 10% of the purchase price. Note 4: Maintenance Cost Member Share For Fiscal Year 2019-2020 per Chapter 4. Funding and Administration, 4.1 Funding: Contributions include an equal one-third payment from each member for the reasonable annual and recurring maintenance of the Ranch, for insurance, legal costs, and administration costs of the Authority and a reasonable reserve as established by the Board. Such costs shall be specified in the annual budget approved by the Authority, which is in accordance with the Joint Powers Agreement. In fiscal year 2019-2020, the Maintenance Cost Member Share of each Member was as follows: the City of Industry contributed $37,869, the City of Chino Hills contributed $20,109, and the City of Diamond Bar was not required to contribute anything at the time of the adopted budget due to having a sufficient balance for the fiscal year. Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint Powers Agreement Section 5.4, expenditures shall be within the limitations of the approved annual budget, and as required for emergency repairs, or as such the Board amends budget. Upon review of expenditures through the second quarter of Fiscal Year 2019-2020, additional contributions were made; the City of Industry contributed $21,354, the City of Chino Hills contributed $21,639, and the City of Diamond Bar contributed $16,875. Note 5: Related Party Transactions At June 30, 2020, the City of Industry was reimbursed $7,453 for trash services, and the City of Chino Hills was reimbursed $3,292 for water services. 7 3.4.c Packet Pg. 34 TRES HERMANOS CONSERVATION AUTHORITY BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED JUNE 30, 2020 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 119,815$ 143,719$ 143,719$ -$ Resources (Inflows): Member contributions 57,978 117,846 117,846 - Rental income 7,500 7,700 7,777 77 Interest income - - 54 54 Reimbursements - - 737 737 Amounts Available for Appropriations 185,293 269,265 270,133 868 Charges to Appropriations (Outflow): General government: Professional services 19,593 19,593 19,224 369 Legal services 20,001 21,340 17,941 3,399 Legal services - extraordinary 40,000 47,337 22,826 24,511 Contractual services 64,203 134,075 123,959 10,116 Security services 30,786 34,587 35,201 (614) Office supplies and software 870 2,091 1,071 1,020 Utilities 9,840 10,242 8,327 1,915 Total Charges to Appropriations 185,293 269,265 228,549 40,716 Budgetary Fund Balance, June 30 -$ -$ 41,584$ 41,584$ Budget Amounts 8 3.4.c Packet Pg. 35 TRES HERMANOS CONSERVATION AUTHORITY NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2020 Stewardship, Compliance and Accountability The Executive Director directs the preparation of the Authority operating budget that is approved by the Board annually. 9 3.4.c Packet Pg. 36 TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 5.1 5.1 Packet Pg. 37 TRES HERMANOS CONSERVATION AUTHORITY STAFF REPORT AGENDA NO. 5.1 Date: February 17, 2021 To: Chair and Board of Directors From: Daniel Fox, Executive Director Subject: Consideration of Mid-Year Budget Review for Fiscal Year 2020-21. Recommendation: Adopt Resolution No. THCA 2021-01 entitled: A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRES HERMANOS CONSERVATION AUTHORITY ADOPTING A BUDGET AMENDMENT FOR FISCAL YEAR 2020-21 INCREASING THE BUDGET BY $26,584 BASED ON THE MID-YEAR BUDGET REVIEW. Background/Analysis: Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint Powers Agreement Section 5.4 Expenditures within Approved Annual Budget, all expenditures shall be within the limitations of the approved annual budget, and as required for emergency repairs, or as such budget is amended by the Board. Upon review of expenditures through the second quarter of Fiscal Year (FY) 2020 -21, staff is proposing to appropriate available fund balance of $26,584 for utilities, security services, and contractual services. Fiscal Impact: The proposed budget amendment will increase the expenditure budget by $26,584 and decrease the projected ending fund balance by $26 ,584. No additional funding will be needed from the member cities. The projected ending fund balance will be zero. Respectfully Submitted, Reviewed By, Attachments: 1. Resolution No. THCA 2021-01 5.1 Packet Pg. 38 2. Exhibit 1 5.1 Packet Pg. 39 RESOLUTION NO. THCA 2021-01 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRES HERMANOS CONSERVATION AUTHORITY ADOPTING A BUDGET AMENDMENT FOR FISCAL YEAR 2020-21 INCREASING THE BUDGET BY $26,584 BASED ON THE MID- YEAR BUDGET REVIEW WHEREAS, Section 5.4 of the Tres Hermanos Conservation Authority Joint Powers Agreement (JPA) requires that expenditures shall be within the limitations of the approved annual budget, and as required for emergency repairs, or as such budget is amended by the Board; and WHEREAS, at a public meeting on April 15, 2020, the Executive Director presented, and the Board of Directors adopted a budget for the Fiscal Year 2020-21 commencing July 1, 2020, and ending June 30, 2021; and WHEREAS, amendments must periodically be made to the budget to conform to changed circumstances following adoption of the budget. NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors of the Conservation Authority as follows: Section 1. Budget Amendment No. 21B003 is hereby approved as reflected on Exhibit No. 1, attached hereto. SECTION 2. This resolution shall take effect immediately upon its passage and adoption. PASSED, APPROVED, AND ADOPTED this 17th day of February 2021. Ray Marquez Chair Tres Hermanos Conservation Authority Kristina Santana Authority Secretary Tres Hermanos Conservation Authority 5.1.a Packet Pg. 40 Resolution No. THCA 2021-01 ATTEST: I, Kristina Santana, Secretary of the Tres Hermanos Conservation Authority, do hereby certify that the foregoing Resolution was duly and regularly passed, approved and adopted by the Board of Directors of the Tres Hermanos Conservation Authority, at its regular meeting held on the 17th day of February 2021, by the following Roll Call vote: AYES: BOARD MEMBERS: NOES: BOARD MEMBERS: ABSENT: BOARD MEMBERS: ABSTAIN: BOARD MEMBERS: Kristina Santana Secretary Tres Hermanos Conservation Authority 5.1.a Packet Pg. 41 Exhibit No. 1 BA # 21B003 Date:2/17/2021 Fiscal Year:2020-21 Requested by:Brenda Ramirez Amount:26,584.00$ City:Chino Hills - Treasurer Description:Appropriate fund balance for mid-year budget review EXPENDITURES Current Budget Proposed Amendment Amended Budget 113,559.00$ 19,919.00$ 133,478.00$ Security Services - Industry Security Services, Inc 34,800.00 835.00 35,635.00 Security Services - Cameras - 4G/LTE Cellular/solar powered 35,635.00 2,180.00 37,815.00 Utilities - Trash Services - 341.00 341.00 341.00 3,309.00 3,650.00 - - - - - - - - - REVENUES Current Budget Proposed Amendment Amended Budget -$ - - - - - REASON/JUSTIFICATION Tres Hermanos Conservation Authority JPA BUDGET AMENDMENT Account Description To appropriate available fund balance based on the mid-year budget review. Contractual Services - Pest Control - LA County Account Description Utilities - Water 5.1.b Packet Pg. 42 Revised Actuals % Budget Budget To Date of Budget 2020/21 2020/21 2020/21 Variance Used Revenues: Membership Contribution 248,488$ 248,488$ 248,488$ -$ 100% Rental Income 8,100 8,100 4,050 (4,050) 50% Interest Income - - 105 105 0% Reimbursements - - 157 157 0% Total Revenues 256,588$ 256,588$ 252,800$ (3,788)$ 99% Expenditures: Professional Services 35,220 35,220 1,575 33,645 4% Legal Services 20,004 20,004 1,313 18,692 7% Legal Services - Extraordinary 66,000 66,000 1,205 64,795 2% Contractual Services 113,559 133,478 31,371 82,188 24% Security Services 34,800 37,815 11,878 22,922 31% Office Supplies & Software 2,005 2,005 777 1,228 39% Utilities - 3,650 1,877 (1,877) 51% Total Expenditures 271,588$ 298,172$ 49,995$ 221,593$ 17% Excess of revenues over (under) expenditures (15,000)$ (41,584)$ 202,805$ (217,805)$ As of Fund Balances:12/31/2020 Beginning of fiscal year 41,584$ 41,584$ Excess of revenues over (under) expenditures (41,584) 202,805 Estimated Fund Balance as of 6/30/21 -$ 244,389$ Fund Balances by City: Chino Hills 83,398$ Diamond Bar 64,643 Industry 96,348 Total Fund Balances by City 244,389$ Note: Fund balance available for appropriation -$ Tres Hermanos Conservation Authority Statement of Revenues, Expenditures and Changes in Fund Balances Mid-Year Budget Review With BA #20B003 Revised 5.1.b Packet Pg. 43 TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 5.2 5.2 Packet Pg. 44 TRES HERMANOS CONSERVATION AUTHORITY STAFF REPORT AGENDA NO. 5.2 Date: February 17, 2021 To: Chair and Board of Directors From: Daniel Fox, Executive Director Subject: Consideration of Establishing a Fund Balance Reserve. Recommendation: That the Authority establish a fund balance reserve policy of 10% of expenditures to be programmed into the budget annually, starting with Fiscal Year 21-22. Background/Analysis: Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint Powers Agreement Section 5.1, Annual Budget, the Board shall establish a reasonable reserve and the policy and timing for funding such reserve. Staff is recommending a fund balance reserve policy of 10% of expenditures which will be programmed into the budget annually. Alternatively, the Board has the following options to consider for budgeting purposes: Option (1) Continue to end each fiscal year with a zero-fund balance reserve. Option (2) Other percentage of expenditures. The goal of this fund balance reserve would be to maintain adequate financial reserves so that in times of unplanned expenditures the Authority can continue to meet expenditure obligations without needing to request additional funds from the member agencies. Fiscal Impact: Based on the FY 20-21 budget, a 10% reserve would have required an additional $27,158.79 in funding, or $9,052.93 from each member agency. 5.2 Packet Pg. 45 Respectfully Submitted, Reviewed By, 5.2 Packet Pg. 46