Report 2018-110 All Recommendation Responses

Report 2018-110: City of Lincoln: Financial Mismanagement, Insufficient Accountability, and Lax Oversight Threaten the City's Stability (Release Date: March 2019)

Recommendation #1 To: Lincoln, City of

To ensure that it complies with state law, Lincoln should immediately review all of its outstanding interfund loans to determine whether the borrowing funds can repay the loans according to the terms. For any loan that is from a restricted fund and that does not have the capacity to be repaid, Lincoln should develop a plan that ensures repayment within a reasonable time frame, including seeking possible alternative financing or revenue sources, such as the general fund, bonds, one-time revenue, or a tax increase, to address the obligation.

Annual Follow-Up Agency Response From September 2023

The City had previously evaluated all interfund loans and provided a written analysis that includes evaluation of compliance with the City's interfund loan policy. A plan was developed and presented City Council to address non-compliant loans. This plan has been fully implemented. On March 28, 2023 City Council approved amortization schedules for the 2 remaining non-compliant loans bringing them into compliance with the City's interfund loan policy. There are no non-compliant interfund loans remaining.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2022

PARTIALLY IMPLEMENTED The City had previously evaluated all inter-fund loans and provided a written analysis that includes evaluation of compliance with the City's inter-fund loan policy. A plan was developed and presented City Council to address non-compliant loans. This plan has been partially implemented. On June 14, 2022 City Council approved amortization schedules for 2 of the non-compliant loans bringing them into compliance with the City's inter-fund loan policy. There are 2 non-compliant inter-fund loans remaining. The City intends to bring the remaining 2 loans into compliance prior to June 30, 2023.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Lincoln did not provide documentation of its implementation efforts, so we have assessed the implementation status of this recommendation as pending. We will reassess the city's progress upon receiving evidence of full implementation, either during the next annual follow-up or sooner.

Annual Follow-Up Agency Response From September 2021

I am an Interim City Manager and also the Acting City Finance Director. The previous responsible parties have left City employment. Nonetheless, being responsive to the JLAC recommendations has been very important to this city and we intend to complete the remaining two. I am in the process of reviewing the remaining interfund loan records and will make recommendations on how to resolve them properly in the upcoming budget and audit processes.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

We look forward to reviewing Lincoln's progress in addressing this recommendation.

Annual Follow-Up Agency Response From October 2020

The plan to address this recommendation includes the following:

1. Evaluation of all interfund loans has been completed.

2. Written analysis of all interfund loans that includes evaluation of compliance with interfund loan policy has been completed.

3. Development of written plan to address non-compliant loans has been completed.

4. Presentation of written plan to City Council was previously completed.

5. Implementation of written plan. Full implementation is assumed to be a long-term strategy and is still underway.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

We look forward to reviewing Lincoln's progress in addressing this recommendation.

1-Year Agency Response

The plan to address this recommendation includes the following:

1. Evaluation of all interfund loans has been completed.

2. Written analysis of all interfund loans that includes evaluation of compliance with interfund loan policy has been completed.

3. Development of written plan to address non-compliant loans has been completed.

4. Presentation of written plan to City Council was previously completed.

5. Implementation of written plan. Full implementation is assumed to be a long-term strategy and is still underway.

California State Auditor's Assessment of 1-Year Status: Pending

We look forward to reviewing Lincoln's evaluation, analysis, and adopted plan at its next annual update.

6-Month Agency Response

All interfund loans have been evaluated for compliance with the 2013 interfund loan policy and to determine whether or not the borrowing fund can meet all debt service obligations without impacting the stated purpose of the lending fund that is considered a restricted fund. A comprehensive interfund loan repayment plan has been developed for all loans determined to be noncompliant. The repayment plan was presented to the Fiscal and Investments Oversight Committee and the City Council on July 24, 2019 for consideration. Based on feedback received staff is completing additional legal research and evaluation prior to submitting the final repayment plan to City Council for consideration.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The plan to address this recommendation includes the following:

1. Evaluation of all interfund loans (underway).

2. Written analysis of all interfund loans that includes evaluation of compliance with interfund loan policy.

3. Development of written plan to address non-compliant loans.

4. Adoption of written plan by City Council.

5. Implementation of written plan. Full implementation is assumed to be a long-term strategy.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #2 To: Lincoln, City of

To ensure that city staff provides the city council adequate information to make its decisions regarding interfund loans and transfers, the city council should immediately collaborate with the city manager and department directors to establish formal expectations regarding the content of staff reports, and it should hold the city manager accountable for ensuring all staff reports meet those expectations.

6-Month Agency Response

The City Council adopted by resolution the Staff Report Template on June 11, 2019 by Resolution 2019-142. Please see attached Staff Report, and Resolution.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The staff report template was revised to require more formal expectations regarding content related to legal, financial, and policy requirements. The City Manager and the City Attorney are required to insert a statement of compliance into each staff report.

California State Auditor's Assessment of 60-Day Status: Pending

We look forward to Lincoln providing documentation in its six-month response of its revised staff report template and the formal expectations it has provided to staff to ensure that they provide city council with adequate information to make decisions.

Recommendation #3 To: Lincoln, City of

To ensure that it avoids accumulating surpluses, Lincoln should establish policies and procedures by August 2019 requiring it to review its fund balances at least annually and, if necessary, reduce its fees within a reasonable time frame.

60-Day Agency Response

The City Council adopted a new Budget Policy in April that requires the annual review of fund balances for the purpose of avoiding the accumulation of surpluses.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #4 To: Lincoln, City of

To comply with state law, Lincoln should immediately discontinue its practice of using restricted funds to subsidize other funds that have year-end deficits and that lack the ability to permanently repay the transfers within 90 days of the close of the fiscal year.

1-Year Agency Response

This recommendation was fully implemented during the 2019/2020 fiscal year with the adoption of the airport interfund loan on June 4, 2019. This was previously reported on, and supporting documentation was submitted.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Lincoln's fiscal year 2018-19 comprehensive annual financial report demonstrates that it has discontinued its practice of using restricted funds to subsidize other funds that have year-end deficits. Lincoln instead used its general fund (a non-restricted fund) to subsidize the year-end deficits in other funds.

6-Month Agency Response

On June 11, 2019, the City Council adopted an interfund loan agreement to address the long-term debt associated with the Airport that was traditionally handled at year-end as a short-term loan. The interfund loan was adopted by Resolution 2019-145.

California State Auditor's Assessment of 6-Month Status: Pending

Our audit found that the practice of using restricted funds as described in our recommendation pertained to various funds, including the Airport, Parks PFE, Drainage PFE, Regional Sewer Project, and Fire PFE funds. We look forward to reviewing the fiscal year 2018-19 audited financial statements upon completion of the annual financial audit to verify that Lincoln has discontinued this practice.

60-Day Agency Response

The implementation of this recommendation cannot be fully substantiated until the end of the fiscal year.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #5 To: Lincoln, City of

To ensure that it complies with the state constitution, Lincoln should establish and adhere to procedures that account for revenue and expenditures in each landscaping and lighting zone separately, and it should discontinue its use of surplus revenue from one zone to offset a deficit in another zone. It should take these actions by June 2019.

Annual Follow-Up Agency Response From October 2020

This has been complete and has been reported previously. This is actually the third time this has been reported on.

Expenditures for each zone within the lighting and landscaping district were tracked by zone for the entire 2018/2019 Fiscal Year. The transfer of funds in an amount equal to the General Benefit and zone deficit was made from the General Fund to the Lighting and Landscaping District Fund, consistent with state law.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Although Lincoln states that it has repeatedly reported on the completion of its efforts to implement this recommendation, its previous responses did not demonstrate full implementation. However, this most recent response addresses our earlier concern that the city had not shown how it accounts for electricity, sewer, and solid waste expenditures for each zone similar to its approach for water expenditures.

1-Year Agency Response

This was fully completed and reported on during the last report.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

Lincoln has demonstrated that it discontinued the practice of using surplus revenue from one landscaping and lighting zone to offset a deficit in another zone. The city currently uses its general fund to offset deficits in zones. Lincoln has also demonstrated that it is accounting for water expenditures in each landscaping and lighting zone, but the city has not yet shown that it accounts for electricity, sewer, and solid waste expenditures similarly for each zone.

6-Month Agency Response

Expenditures for each zone within the lighting and landscaping district were tracked by zone for the entire 2018/2019 Fiscal Year. The transfer of funds in an amount equal to the General Benefit and zone deficit was made from the General Fund to the Lighting and Landscaping District Fund, consistent with state law.

California State Auditor's Assessment of 6-Month Status: Pending

Although Lincoln has made efforts to track revenue and expenditures for each landscaping and lighting zone, it has not demonstrated that it included all expenditures for each zone, such as sewer and solid waste costs. Lincoln informed us that it is now discretely tracking these expenditures for fiscal year 2019-20. We look forward to reviewing Lincoln's one-year response to verify that these expenditures are included in its updated tracking records.

60-Day Agency Response

Tracking of expenditures by zone is currently underway. Final implementation of this recommendation cannot be substantiated until the end of the fiscal year (June 30, 2019). At such time, the General Fund will be the source of funds for the cumulative zone deficit.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #6 To: Lincoln, City of

By June 2019, Lincoln should establish accounting procedures to ensure that it records all costs of city maintenance from the appropriate funds, including apportioning the general benefit costs to the general fund.

Annual Follow-Up Agency Response From October 2020

This has been completed and has been reported on several times now.

Expenditures for each zone within the lighting and landscaping district were tracked by zone for the entire 2018/2019 Fiscal Year. The transfer of funds in an amount equal to the General Benefit and zone deficit was made from the General Fund to the Lighting and Landscaping District Fund, consistent with state law.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Although Lincoln states that it has repeatedly reported on the completion of its efforts to implement this recommendation, its previous responses did not demonstrate full implementation. However, this most recent response addresses our earlier concern that the city had not shown how it is apportioning the general benefit costs of electricity, sewer, and solid waste services to the general fund similar to its approach for water costs.

1-Year Agency Response

This has been reported on twice now.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

Lincoln has demonstrated that it accounts for water expenditures in each landscaping and lighting zone and apportions the general benefit costs of water to the general fund. However, it has not demonstrated that it has taken similar action for electricity, sewer, and solid waste services.

6-Month Agency Response

Expenditures were tracked appropriately for the entire 2018/2019 Fiscal Year. The journal entry to transfer the required funds associated with the cost of the General Benefit/Zone Deficit was completed as required.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although Lincoln has made efforts to record the costs of city maintenance from the appropriate funds and has established written accounting procedures, those procedures indicate that the city has not yet been able to track electricity costs by zone. Additionally, the procedures and tracking records do not demonstrate that Lincoln accounts for sewer or solid waste expenditures. Lincoln informed us that it is discretely tracking these expenditures for fiscal year 2019-20. We look forward to reviewing Lincoln's one-year response, along with reviewing its updated tracking records and procedures, to assess its progress on implementing this recommendation.

60-Day Agency Response

The implementation of this recommendation was initiated prior to the initiation of the state audit. Full implementation of the recommendation cannot be substantiated until the end of the fiscal year (June 30, 2019). Upon completion of the fiscal year, a transfer of funds from the General Fund to the Lighting and Landscaping Fund will be made in an amount equal to the General Benefit and the cumulative zone deficit.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #7 To: Lincoln, City of

Lincoln should immediately commence a fee study that ensures its fees for water capacity are commensurate with the costs of current and planned future water capacity needs. To the extent that Lincoln has previously overcharged for water capacity fees, it should develop a plan to provide equitable consideration to those who overpaid such fees, and it should eliminate any unnecessary surplus in the water connections fund.

1-Year Agency Response

The water connection fee study and the proposed plan to provide equitable consideration to those that overpaid fees was been completed and was adopted by City Council on January 28, 2020, and went into effect 30days later. The fund balance will be used over a 10-year period to reduce the capital charge for the water rates.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

The draft water connection fee study and the proposed plan to provide equitable consideration to those that overpaid fees has been completed and the preliminary results were presented to City Council on August 7, 2019. The proposed fees and the plan to address the surplus in the water connections fund will formally be presented to City Council on October 8, 2019.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The fee study to establish fees for water capacity purchases is underway. Upon completion of the fee study, equitable consideration of overcharges will be provided by the City Council.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #8 To: Lincoln, City of

To ensure that its fees are commensurate with the cost of providing services, Lincoln should develop and follow a timeline by June 2019 for conducting periodic fee studies for each of its services, including updating its staff rates annually.

1-Year Agency Response

Timeline was previously submitted; however, revisions were made to provide clarity per comments received from Auditor.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Lincoln established a timeline for conducting periodic fee studies. In December 2019, its city council approved an updated master fee schedule that became effective in February 2020.

6-Month Agency Response

Timeline was previously submitted; however, revisions were made to provide clarity per comments received from Auditor.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Lincoln has established a timeline for conducting periodic fee studies and has indicated that some fee studies are underway. We look forward to reviewing Lincoln's one-year response to assess whether it has followed its proposed timeline.

60-Day Agency Response

The timeline for the completion of fee studies was provided in the initial response to the audit.

California State Auditor's Assessment of 60-Day Status: Pending

Although Lincoln identified anticipated completion dates of fee studies in its initial response, it also stated that it would create a schedule to ensure regular updates to its fees and rates. We look forward to reviewing Lincoln's six-month response to assess its progress in developing such a schedule, including its determination of how often it plans to review each fee and when it last reviewed the fee.

Recommendation #9 To: Lincoln, City of

To the extent allowable by law, the city council should develop a plan by August 2019 to provide equitable consideration to ratepayers for the utility costs they incurred that were higher than necessary because of the city's practice of not paying for its own water, sewer, and solid waste services.

1-Year Agency Response

Credits related to the City's use of municipal water were provided to the rate payers as a one-time bill credit in March 2020.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Lincoln has demonstrated that it provided credits to ratepayers for the utility costs they incurred because of the city's practice of not paying for its own water, sewer, and solid waste services.

6-Month Agency Response

On April 23, 2019, City Council directed staff to provide credits to rate payers in order to provide equitable consideration of for the City not historically paying for utility costs incurred by the City directly. Staff is in the process of calculating the credits, and then will submit a formal item to City Council for approval of the issuance of the actual credits.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

A presentation regarding this item was presented to City Council on April 23, 2019. Staff is now refining the refund methodology and will present a final item for consideration to City Council by the August 2019 deadline.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #10 To: Lincoln, City of

To ensure transparency to the public, beginning with its fiscal year 2019-20 budget, Lincoln should specify in its annual budget the amount that it intends to spend for the use of municipal utilities--water, sewer, and solid waste--and the funds that it intends to use to pay for these costs.

6-Month Agency Response

The adopted 2019-2020 Annual Budget, includes a separate line item for each fund that pays for municipal utility use.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

The draft 2019/2020 Annual Budget complies with this recommendation. The budget will not be adopted until either the first of second City Council meeting in June 2019 and as such, this recommendation will not be fully implemented until such time.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #11 To: Lincoln, City of

By August 2019, Lincoln should establish and follow policies and procedures for budgeting, preparing its financial statements at the end of each fiscal year, and approving expenditures based on the Government Finance Officers Association guidelines and other best practices.

1-Year Agency Response

The City Council adopted the Budget Policy (April 23, 2019) and Closing Policy (February 12, 2019) and they were followed for the preparation of the 2019/2020 Annual Budget (approved on June 11, 2019), and the year-end closing process for the 2018/2019 Fiscal Year. The audited financials were completed in December 2019.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

We reviewed Lincoln's fiscal year 2018-19 comprehensive annual financial report and single audit report to conclude that the city has established sufficient policies and procedures for budgeting and for preparing its financial statements at the end of each fiscal year.

6-Month Agency Response

The City Council adopted the Budget Policy (April 23, 2019) and Closing Policy (February 12, 2019) and they were followed for the preparation of the 2019/2020 Annual Budget (approved on June 11, 2019), and the year-end closing process for the 2018/2019 Fiscal Year (annual audit activities are underway).

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Lincoln established policies and procedures for budgeting, preparing its financial statements at the end of each fiscal year, and approving expenditures. We look forward to reviewing Lincoln's fiscal year 2018-19 audited financial statements upon completion to assess whether Lincoln followed its closing policy.

60-Day Agency Response

To date, the City Council has adopted the following financial policies: 1. Closing Policy, 2. Budget Policy, 3. Grant Policy. A draft Accounting and Reporting Policy has been developed and will be presented to City Council for consideration prior to August 2019.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #12 To: Lincoln, City of

To help ensure that the city manager fully informs the city council of all relevant information before the council approves the annual budget, the city should specify by July 2019 the supporting information that it expects staff to provide with the proposed budget. Lincoln should then update its duty statements to require the city manager and department directors to provide the city council with this information as part of the city's budget process.

60-Day Agency Response

The City Council adopted a new Budget Policy on April 23, 2019. The Budget Policy identifies the data and information required by City Council for the budget. The City Manager's job description requires the development and implementation of all City Council Policy and therefore, does not require further modification.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #13 To: Lincoln, City of

To ensure that the city complies with its purchasing policy, the city manager should immediately develop and implement procedures for staff to obtain and document the required approval from the city manager or the city council before committing city resources. Beginning immediately, the city manager should also report to the city council on a regular basis all purchases that the city manager approves.

6-Month Agency Response

Staff began reporting to the City Council all purchases made by the City Manager at the March 26, 2019 City Council Meeting. A new documentation process was developed to provide staff consistent guidance on purchasing procedures. The process includes the requirement that a purchasing form is filled out and signed for documentation purposes.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

Staff developed a new process for purchasing that includes a transmittal sheet that requires confirmation from staff that each required step in the purchasing process is followed. Training of staff has been initiated and will be completed in May 2019. Staff began reporting out on purchases made to City Council via a report filed with the City Council that is accepted by resolution at a regular City Council Meeting. The first full month of implementation will be May 2019.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #14 To: Lincoln, City of

To ensure that city management holds city staff accountable for resolving deficiencies identified in its annual audits, Lincoln's city council should immediately require the city manager to track and report progress in addressing outstanding audit recommendations at least quarterly.

1-Year Agency Response

Per Auditor's request, the City's Financial Reporting Policy was revised on January 14, 2020, to require the quarterly reporting of progress made to address any outstanding audit findings. It should be noted, that the reporting was being completed prior to request for revision of the policy.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

On April 15, 2019, City Council received the annual financial audit for the Fiscal Year ending, June 30, 2018. On July 2, 2019, staff presented to City Council an update regarding the progress of addressing outstanding audit recommendations for the 2017/2018 Fiscal Year. Each audit finding has an action plan, and progress on addressing the action plan will be tracked and reported until such time the findings have been addressed.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Although Lincoln's city manager has started tracking and reporting the city's progress in addressing outstanding audit recommendations, Lincoln has not yet demonstrated that the city council established a specific requirement for the city manager to track such progress and provide these reports at least quarterly.

60-Day Agency Response

The first full quarter that this recommendation will be implemented is the fourth quarter that ends on June 30, 2019. Staff has developed a plan to address each audit finding and as initiated implementation of the plan. However, full implementation of this recommendation cannot be substantiated until the end of the fourth quarter of the fiscal year due to the fact that the audit was release towards the end of the third quarter and therefore the first quarterly report will be made upon the completion of the fourth quarter.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #15 To: Lincoln, City of

By June 2019, Lincoln should develop and follow a process to ensure that it accurately and promptly records all year-end closing entries in its general ledger and issues its comprehensive annual financial report within the period that state law requires.

1-Year Agency Response

The City Council adopted a Closing Policy on February 12, 2019, and a Financial Reporting Policy on July 23, 2019. Full implementation cannot be substantiated until the Annual Financial Audit is completed. Financial audit was complete on time and substantiates compliance with the finding.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

Lincoln issued its fiscal year 2018-19 comprehensive annual financial report in December 2019, which is within the period that state law requires.

6-Month Agency Response

The City Council adopted a Closing Policy on February 12, 2019, and a Financial Reporting Policy on July 23, 2019. Full implementation cannot be substantiated until the Annual Financial Audit is completed.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

City Council adopted a Closing Policy on February 12, 2019. The policy includes procedures for recording all year-end closing entries in its General Ledger.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #16 To: Lincoln, City of

To ensure transparency in providing accurate fee information to the public, Lincoln should immediately update and publicly disclose its master fee schedule to reflect the fees that it actually charges. In addition, Lincoln should periodically review its fee schedule to identify outdated fees that do not accurately reflect the cost of providing services. It should revise those fees to incorporate the costs commensurate with those services and update its master fee schedule accordingly.

1-Year Agency Response

The Master Fee schedule was adopted in January 2020, and the new fees went into effect in February 2020.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

In addition to updating and disclosing its master fee schedule, Lincoln previously provided a timeline in its six-month response stating that it would update this fee schedule annually to reflect current costs and every five years to reestablish fees.

6-Month Agency Response

The comprehensive update of the Master Fee Schedule is in progress. Draft results will be presented to the City Council at the October 8, 2019 City Council Meeting. The website has been updated to reflect any fees being charged that were inconsistent with the Master Fee Schedule.

Full compliance cannot be substantiated until the Adoption of the updated Master Fee Schedule.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The City is currently undergoing a complete update of the Master Fee Schedule and Cost Allocation Plan. It is anticipated that the study will be completed and a new fee schedule will be proposed to City Council for consideration in August 2019.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #17 To: Lincoln, City of

To ensure that it applies the correct fee credits to developers, Lincoln should develop policies and procedures by September 2019 for establishing fee credits and maintaining adequate documentation to justify modifications to fee credits, including credits it awards based on changes in fee schedules and updated development agreements.

Annual Follow-Up Agency Response From September 2024

September 10, 2024 City Council adopted Resolution 2024-185 - Approving the Procedures to Establish and Administer Fee Credit for the City of Lincoln's Public Facilities Fee Program. Adoption of this procedural document is the final step to fully implementing this finding ensuring a process to establish and administer fee credits. Previous actions included the adoption of Resolution 2022-162 Public Facilities Element Update including the Public Facility Element Fee Study which has previously been provided.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From September 2023

On June 28, 2022 the City Council adopted Resolution 2022-162, adopting the Public Facilities Element Update, dated June 10, 2022. At that time the adoption of the new fee schedule as identified within the PFE was deferred while staff continued to work with the development community to craft an implementation schedule for the new fee schedule and to answer questions by the development community with regards to the list of facilities and cost estimates. In interact process and discussion between city staff and the development community resulted in minor changes with and updated Public Facility Element Fee Study adopted by City Council on October 25,2022. This study provides the justification and Nexus study required for these fees. The City agreed to a phased in approach for the change in fees with fees implemented January 1, 2023. On January 10, 2023 the City Council adopted a resolution accepting the Mitigation Fee Act annual and 5-year reporting of the Public Facilities Element fees.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Although we commend Lincoln for conducting a fee study and updating its fees, the city has yet to update its policies and procedures for establishing fee credits and maintaining adequate documentation to justify modifications to fee credits. As a result, it has not demonstrated that it has fully implemented our recommendation.

Annual Follow-Up Agency Response From October 2022

PARTIALLY IMPLEMENTED The Public Facility Element Fee Study has been completed and adopted by City Council on October 25,2022. This study provides the justification and Nexus study required for these fees. Additionally, the City has engaged a consultant to evaluate existing developer fee credits. The City anticipates the to fully implement this recommendation by 06/30/2023

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Lincoln did not provide documentation of its implementation efforts, so we have assessed the status of this response as pending. We will reassess the city's progress upon receiving evidence of full implementation, either during the next annual follow-up or sooner.

Annual Follow-Up Agency Response From September 2021

The draft PFE (Developer Impact Fee Study) has been completed and is under final review. As a relatively new Interim City Manager (and Acting Finance Director), I have not yet had time to fully review the progress on this effort. I will be doing so during my time of employment.

The previous response is still current:

The draft Public Facility Element Fee Study is in progress. Once adopted, this Fee Study will provide the required justification for all fees and a more straightforward process for tracking fees. As an interim measure, all fee credits have been included as liabilities on the City's financials based on information contained in the associated development agreements.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

We look forward to reviewing Lincoln's progress in addressing this recommendation.

Annual Follow-Up Agency Response From October 2020

The draft Public Facility Element Fee Study is in progress. Once adopted, this Fee Study will provide the required justification for all fees and a more straightforward process for tracking fees. As an interim measure, all fee credits have been included as liabilities on the City's financials based on information contained in the associated development agreements.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

The draft Public Facility Element Fee Study is in progress. Once adopted, this Fee Study will provide the required justification for all fees and a more straightforward process for tracking fees. As an interim measure, all fee credits have been included as liabilities on the City's financials based on information contained in the associated development agreements.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

The draft Public Facility Element Fee Study is in progress. This Fee Study will provide the required justification for all fees and a more straightforward process for tracking fees. As an interim measure, all fee credits have been included as liabilities on the City's financials based on information contained in the associated development agreements.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

This implementation of this recommendation has been initiated; however, completion of full implementation is not anticipated until September 2019. Full implementation will include adoption of a new Public Facility Element (PFE) Study and the development and implementation of processes to track and record impacts credits. The PFE study update is underway and staff expects to present the item to City Council by July 2019.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2018-110

Agency responses received are posted verbatim.