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L'; A I = I l E V E I L Y I I I - - - F lag P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES RIVERSIDE PUBLIC UTILITIES Board Memorandum DATE: FEBRUARY 5, 2016 ITEM NO: 6 File ID — 16 -0342 — D SUBJECT: REPORT ON THE EXAMINATION OF NORTHSIDE PROPERTY TRANSACTIONS TO BE PRESENTED BY AUDITORS, BAKER TILLY VIRCHOW KRAUSE, LLP ISSUE: Having completed their examination in regards to the propriety of Northside property transactions, the auditors, Baker Tilly Virchow Krause, LLP (Baker Tilly) will present their final report and findings to the Board of Public Utilities. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: 1. Receive and file the Report on Northside Property Transactions; and 2. Direct the City Manager to implement any recommendations proposed by the auditors in their report. BACKGROUND: Ongoing discussion about propriety and appropriateness of the Northside property transactions from certain members of the public resulted in requesting an examination of these transactions to be performed by an independent audit firm. On August 7, 2015, the Board of Public Utilities (Board) approved the Professional Services Agreement with Baker Tilly Virchow Krause, LLP (Baker Tilly) for the purpose of conducting an examination and performance audit for Riverside Public Utilities. One of the three projects outlined in the scope of work related to an examination of Northside property transactions which included Pellesier Ranch, AB Brown, Reid Park and the Riverside Golf Course properties. The examination was performed over the past several months and focused on determining the appropriateness and proper recording of all financial and loan transactions associated with the properties noted above; examination of property appraisals for reasonableness; and confirmation that proper title transfers occurred appropriately and were in compliance with state laws and the City Charter. The final report was to include an opinion on management's assertion that transactions were correctly recorded and supported by proper documentation. In addition, Baker Tilly was to provide their findings and also recommendations for best practices as it relates to property transactions. Management agreed with the auditor's recommendations and outlined steps to implement their recommendations. Russ Hissom, Partner at Baker Tilly, will be making the presentation of their report. FISCAL IMPACT: There is no fiscal impact associated with this report. Prepared by: Approved by: Approved by: Approved as to form: Laura M. Nomura, Assistant General Manager- Finance Girish Balachandran, Public Utilities General Manager John A. Russo, City Manager Gary G. Guess, City Attorney Attachment: 1- Report of Northside Property Transactions 2- Baker Tilly Power Point Presentation