Davis, Calif., uses consultant to reconcile city bills.
An avalanche of paper covered the Davis (Calif.) Department of Public Works following the issuance of $20 million in Mello-Roos Community Facilities District bonds. Issued in October 1991, the bonds were to finance the acquisition of public infrastructure improvements in the 528-acre East Davis-Mace Ranch Park development.
According to Davis Senior Civil Engineer Will Marshall, two months after the district was formed, two enormous boxes crowded his desk, filled to the top with receipts and invoices to be paid.
The invoices, totaling more than $4 million, represented the work of almost 20 consultants and nine contractors over the previous two-year period. Marshall and the Public Works Department were overwhelmed, especially since they had many other urgent projects requiring their attention.
Hiring extra personnel to handle the additional work load would have taken months. The solution was to retain an outside consultant to tackle a variety of tasks.
A “Special District Acquisition Project Reimbursement System Policies and Procedures” program was established. This set a standard framework for the orderly administration, construction, acceptance and acquisition as well as reimbursement for Special District Acquisition projects in the city funded by a Mello-Roos district. Other tasks include:
* project engineering and administrative review;
* determining eligible costs;
* verifying that prevailing wages are paid and affirmative action guidelines are met;
* preparing acquisition reports; and
* reviewing submittals and preparing regular status reports.
Both the developer and the city are satisfied with the relationship. The project has also grown during this time – $29.5 million in bonds have been issued, and the development project, by West Sacramento, Calif.-based Ramco Enterprises, is well underway.
It will include 1,155 single-family units; 423 multi-family units; 66,300 square feet of retail space; 145,900 square feet of service commercial space; 232,100 square feet of office space; 450,900 square feet of industrial space; and 1,008,400 square feet of business park space.
Both the city and the developer will benefit. “We processed two series of payments per month: one for six construction contracts and one for 22 consultants,” Marshall says. “It consumed at least 40 hours each month just processing payments. There were numerous delays, and obviously the developer became very frustrated.”
Marshall now only attends one monthly meeting with the developer and consultant and spends about five hours a month on the project.
With 23 consultants, 13 contractors and numerous change orders, “Having a consultant has resulted in better economies of scale, and we know that the financial controls and work quality will remain consistent with the city’s standards,” he says.
“Having the city use a consultant in getting bills reconciled and turned around quickly helps everyone,” Raber says. “The initial cost savings are to the homebuyer – the less money spent by consultants and contractors results in lower taxes to homebuyers. Invoices also get processed more efficiently now.”
This article was written by Barbara Gregory, an analyst in the Management & Finance Division of Berryman & Henigar, San Diego.