Nicholas Conway - DA Complaint Supporting Documentation

7/31/2019 Nicholas Conway - DA Complaint Supporting Documentation

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Supporting Documentation

Cover Pages of JPA Amendments Third Amended and Restated JPA - 2007 SGVCOG Bylaws Management Services Agreement with Attachments 1, 2, & 3 Caltrans Audit 2006 Caltrans Audit 2011 Conflict of Interest Policy Documents Regarding 2008 Settlement Payment Invoices and Documentation Related to Housing & Homeless Services Council Documents Related to the Intern Program Documents Related to Office Hours Documents Related to Chip Conway Jeffers Staff Report Regarding Grant Funds Contract with Citygate City Gate Report Documents & Link to Video Regarding Relationship Between Citygate and Conway


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COVER PAGES INDICATING DATES OF

AMENDMENTS AND RESTATEMENTS TO JPA


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THIRD AMENDED AND RESTATED JPA (2007)


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BYLAWS


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MSA & ATTACHMENTS


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CALTRANS AUDIT (2006)


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CALTRANS AUDIT (2011)


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http:///reader/full/Burb:~.ramailto:[email protected]


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SGVCOG CONFLICT OF INTEREST POLICY


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DOCUMENTS RELATED TO 2008 SETTLEMENT

PAYMENT FROM SGVCOG TO CONWAY


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DOCUMENTATION RELATED TO HOMELESS

COUNCIL


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DOCUMENTS RELATED TO INTERN PROGRAM


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EMAILS WITH SGVCOG LEGAL COUNSEL

REGARDING CLOSING OF SGVCOG OFFICES ON

FRIDAY


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INFORMATION RELATED TO CHIP CONWAY


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JEFFERS STAFF REPORT REGARDING GRANT

FUNDS


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CONTRACT WITH CITYGATE


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CITYGATE REPORT


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2250 East Bidwell Stree t, Suite 100 Folsom, C A 95630(916) 458-5100 Fax : (916) 983-2090

February 2, 2012


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Table of Contents page i

TABLE OF CONTENTS

SE C T I O N PA G ESec tion IExecutive Summary ................................................................................................. 1

1.1 A Brief Background ....................................................................................... 11.2 Our View on the Major Issues ....................................................................... 21.3 Concluding Thoughts ..................................................................................... 5

Sec tion IIIntroduction and Study Design .............................................................................. 62.1 Report Organization ....................................................................................... 62.2 Contracted Scope of Work ............................................................................. 72.3 Preliminary Document Review ...................................................................... 82.4 Study Design .................................................................................................. 8

Sec tion II IOverYLHZDQG$QDO\VLVRIWKH6*9&2*V2UJDQL]DWLRQDO6WUXFWXUH........... 103.1 Introduction .................................................................................................. 103.2 History and Background .............................................................................. 103.3 A 5HYLHZRIWKH6*9&2*V*RYHUQDQFH6WUXFWXUH................................... 11

3.3.1 Board and Executive Committee Structure ...................................... 113.3.2 Standing Policy Committees ............................................................ 123.3.3 Ad Hoc Committees ......................................................................... 123.3.4 CiW\0DQDJHUVDQG2WKHU7HFKQLFDO$GYLVRU\&RPPLWWHHV

(TACs) ............................................................................................. 13Sec tion I VEvaluation of Management of O perations........................................................ 16

4.1 Introduction .................................................................................................. 164.2 Analysis of Operational Requirements, Staffing, and Operational

Management Structure ................................................................................. 164.3 Analysis of Administrative Control over Consultants and the Management

of Grants....................................................................................................... 174.4

Options for Alternative Organizational Structures forGrant Management....................................................................................... 19

4.5 Analysis of Financial Management Including Controls .............................. 20


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Table of Contents page ii

Sec tion VComparison of the S G V C O G O perations with the Gateway Cities C O G ....... 215.1 Introduction .................................................................................................. 215.2 Administrative Budget and Labor Costs ...................................................... 235.3 Dues Structure .............................................................................................. 25

Sec tion VIReview of the Management Services Agr eement Between Arroyo Associa tes

and the S G V C O G ................................................................................................. 306.1 Introduction .................................................................................................. 306.2 Analysis of Management Services Agreement ............................................ 306.3 Additional Services for Grant Administration other than

&RUH6HUYLFHV ............................................................................................ 316.4 Timekeeping Procedures .............................................................................. 316.5 SGVCOG Staffing Options and Related Costs ............................................ 33

Sec tion VIIEvaluation of the Structu re and Relationship Between the SGVC OG and

AC E JPA ............................................................................................................... 357.1 Introduction .................................................................................................. 357.2 Analysis of Operational Requirements, Staffing, and Operational

Management Structure ................................................................................. 35Sec tion VI IIFindings and Recommendations..................................................................... 39

8.1 Summary of Findings and Recommendations ............................................. 398.1.1 Evaluation of Management Operations ........................................... 398.1.2 Comparison of Organizational Operations with the Gateway Cities

Council of Governments .................................................................. 408.1.3 Review of the Management Services Agreement Between Arroyo

Associates and the SGVCOG .......................................................... 408.1.4 Evaluation of the Structure and Relationship Between the SGVCOG

and ACE JPA ................................................................................... 41Appendices

Appendix AList of Those Interviewed as a Part of This Study

Appendix BList of Documents that were Reviewed


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Table of Contents page iii

Table of Tables:

Table 1SGVCOG Board Executive Committee ....................................................................... 12Table 2Gateway Cities Annual Administrative Costs .............................................................. 24Table 3Gateway Cities Annual Dues and Assessments Revenues ........................................... 24Table 4$UUR\R$VVRFLDWHV([SHQVHV8QGHU06$IRU&RUH6HUYLFHV ................................... 24Table 5Arroyo Associates Income from MSA Contract........................................................... 25Table 6Dues and Assessments for the Gateway Cities COG for the 2011-12 Fiscal Year ...... 26Table 7Dues and Populations for the SGVCOG for the 2011-12 Fiscal Year ......................... 28


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Section IExecutive Summary page 1

SECTION IEXECUTIVE SUMMARYManagementisdoingthethings right.

Leadership isdoingthe rightthings. --- Peter Drucker

The San Gabriel Valley Council of Governments (SGVCOG) commissioned Citygate

Associates, LLC, to perform a high-level and focused review of the organization. This study is

taking place at the mid-point in time concerning the construction of SGVCOG VPDMRUSURMHFW

the Alameda Corridor Extension through the San Gabriel Valley.

The construction of this project will ultimately cost in the magnitude of $1.4 billion dollars, and

will extend the Alameda Transportation Corridor from its current terminus in Los Angeles to the

eastern Los Angeles County line through Pomona. With the completion of this latter segment,

rail transportation of goods to and from the Los Angeles and Long Beach harbors will be

significantly improved through the Los Angeles metropolitan area and on to the interior of the

county.At this juncture, it is not surprising that the Governing Board is interested in looking back

concerning how far and how well the SGVCOG has progressed to this point, and also looking

forward to assess how best to proceed with the completion of the Alameda Corridor-East (ACE)

Construction Authority Project, as well as where and in what directions the organization should

proceed in the future.

The other major project going on within the boundaries of the SGVCOG is the Gold Line

extension of light rail from Pasadena to Azusa, and then beyond in subsequent phases. This

project is being constructed by a separate joint powers agency, but it reinforces the dynamism

going on within the San Gabriel Valley.

1.1 ABRIEFBACKGROUND

The SGVCOG was formed in 1994 as a Joint Powers Agency (JPA) with a membership of 31

cities, three Los Angeles County supervisorial districts and a representative of the San Gabriel

9DOOH\VWKUHHZDWHUDJHQFLHV

We were impressed by those we interviewed both inside and outside the SGVCOG about how

well regarded the SGVCOG is in terms of leadership and its effectiveness in aggregating the

political influence of its large and diverse group of cities.

Beginning with Section IV through Section VII, each of these sections begins with a summary

list of the scope of work issues covered in each respective section. This will orient the reader to

how we have addressed all of the scope of work issues listed in Section 2.2.


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1.2 OURVIEW ON THEMAJORISSUES

After performing our review consistent with the scope of work that is discussed in detail in our

report, we have concluded that there are five major issues that our client, the Governing Board,

the staff, and others reading this report should be concerned about. These summary issues, insome cases, are broader than the specific scope of work issues, but in all cases, incorporate them.

They are as follows:

Issue #1: Completion ofthe Outstanding Caltrans Audit. Analyze and Evaluate

the CurrentStructure and Operational ManagementStructure of SGVC OGV

GrantAdministration, ManagementPractices, and Financial Controls.

In its most recent letteU GDWHG'HFHPEHU &DOWUDQVVD\VWKDW LWORRNV IRUZDUG WRWKH

resolution of the conflict of interest between SGVCOG and Arroyo Associates, Inc., reviewingthe written administrative procedures and operational plan, receipt of $42,6871. . ., and working

with SGVCOG to ensure compliance with reimbursements from SGVCOG

This letter from Caltrans is the latest in a series of exchanged correspondence between Caltrans,

the SGVCOG, and Arroyo Associates, Inc.

7KH&DOWUDQVOHWWHUDOVRVWDWHVLWZDVGHWHrmined that the Master Services Agreement between

SGVCOG and its consultant, Arroyo Associates, Inc. (AAI), creates a conflict of interest

(Emphasis added.) While Citygate finds this conclusion of Caltrans to be a bit mystifying, we

nonetheless propose our recommended remedy in this report.2

As background for the reader, Caltrans issued its most recent audit dated September 7, 2011,LQFOXGHG D ILQGLQJ WKDW D FRQIOLFW RI LQWHUHVW H[LVWHG EHFDXVH WKH 0DQDJHPHQW 6HUYLFHV

Agreement (MSA) between the [SGV] COG and Arroyo Associates, Inc. provided both for

1 An amount of $36,937 was for work performed by Arroyo Associates, but never billed or ever paid by SGVCOG

to Arroyo. This amount will be reimbursed from unexpended grant funds that are specified in the grant from

Caltrans for administrative expenses. The balance of $5,750 will be reimbursed by the City of Irwindale for

FRPSXWDWLRQDOHUURUVIRULQ-NLQGVHUYLFHV

27KLVLVUHIHUUHGWRLQRWKHUFRUUHVSRQGHQFHDVDSSDUHQWFRQIOLFWRILQWHUHVW The alleged conflict of interest is

caused by the fact that under the Management Services Agreement (MSA) between the SGVCOG and Arroyo

Associates, Inc., Arroyo was performing services as both the Executive Director and as a recipient of a grant

contract.


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Arroyo to provide staff services to the COG and for the President of Arroyo to serve as the

&2*V([HFXWLYH'LUHFWRU3

:KLOH ZH EHOLHYH WKDW &DOWUDQV PDMRU SRLQW RI FRQWHQWLRQ LV WKH SGVCOGV 0DQDJHPHQW

Services Agreement, their Corrective Action Plan dated December 9, 2011 indicates that a

follow-XS DXGLW ZLOO DOVR LQFOXGH D UHYLHZ RI SGVCOGV ILQDQFLDO PDQDJHPHQW V\VWHP

including internal controls, policies and procedures, and project costing system. Further, it will

also include SGVCOGVFRPSOLDQFHZLWK6WDWHDQG)HGHUDOUHJXODWLRQV

As Citygate states in this report, we found no weaknesses or discrepancies in the project

management systems and internal finance controls that we reviewed. It is possible that Caltrans

has some criteria pertaining to State and Federal regulations that we are not familiar with. None

of the correspondence from Caltrans that we reviewed referred to specific deficiencies in the

SGVCOGVPDQDJHPHQWV\VWHPVRUZKDt remedies would be appropriate.

In any event, we have recommended that the SGVCOG engage Caltrans to make any changes

necessary to comply with their standards.

Recommendation VI-3: It is recommended that the SGVCOG proceed to comply with the

Corrective Action Plan within the timeframe specified.

Issue #2: Replacethe SGVCOGVCurrentManagementServices Agreement

(MSA) with In-house Employeesthrough EmploymentAgreements.

,QRUGHUWRHOLPLQDWH&DOWUDQVREMHFWLRQWRFRQWUDFWLQJ for staff from the private sector through

an MSA, Citygate believes the most straightforward solution is to directly employ that same staff

as SGVCOG employees. This will terminate the current contract with Arroyo Associates, Inc.,

and the SGVCOG will no longer have a private for-profit firm serve the functions of Executive

Director, support of core management services, or staffing for grant programs.

We do not foresee the SGVCOG disbanding in the future. It is more likely that COGs will play

an even greater role in constructing regional projects, especially in transportation and

environmental programs as State government shifts more responsibilities to the local level.

We point out in this report how the Gateway Cities COG has used flexible and creative ways to

employ their staff. We recommend that the SGVCOG investigate the cost and means of

converting the FRUHVWDIIRIILYHHPSOR\HHVWRLQ-KRXVHHPSOR\HHV Furthermore, transitioning

37KHIXOOEDFNJURXQGRQWKLVLVVXHLVFRQWDLQHGLQDPHPRUDQGXPHQWLWOHG&DOWUDQV$XGLWDQG&RQIOLFWRI,QWHUHVW

,VVXHIURP5LFKDUG'-RQHVSGVCOG General Counsel, to the SGVCOG Board, dated October 20, 2011.


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the SGVCOG staff to in-house employees will provide the most viable approach in the future for

hiring successive staff members.

Recommendation VI-2: 6*9&2*LQYHVWLJDWHWKHFRVWDQGWHUPVRIEULQJLQJDFRUH VWDIIRI

HPSOR\HHVLQ-KRXVHWRSURYLGHPDQDJHPHQWRIWKH6*9&2*

Issue #3: Examinethe Structure and Relationship betweenthe SGVC OG and

itsSubsidiary,the Alameda Corridor-East(ACE) Construction Authority.

ACE was created in 1998 to serve as the construction arm of SGVCOG to build a series of grade

separations along this corridor, as we mentioned, earlier. The current estimated cost to complete

the project is $1.4 billion dollars, perhaps more.

Our report discusses the ambiguities that are created when the construction activities of ACE

have been delegated to a separate board, and a separate Executive Director reporting to thisboard which is a subset of the SGVCOG Board. This defeats the organizational principle of

XQLW\RIFRPPDQG1HYHUWKHOHVV&LW\JDWHEHOLHYHVWKDWWKHVHLVVXHVFDQEHRYHUFRPHLIWKH

SGVCOG Board continues to clarify its oversight role with respect to the role of the ACE Board.

Alternatively, we discuss spinning off the ACE Project to a separate joint powers authority,

similar in role to the Gold Line Project.

Recommendation VII-1: The SGVCOG Governing Board should continue to clarify and

reiterate its oversight role and use the Public Works and City

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recommendation are provided to move Phase II of the project forward

to completion.

Issue#4: Focuson Completingthe AC E Project.

While recognizing the potential risks associated with a large public works project, the greatest

risk may be creating any unnecessary delays in moving forward and completing the project on

time and within budget.

This objective does not conflict with our recommendation that the SGVCOG Governing Board

needs to be satisfied that it has been provided the most complete and accurate information andrecommendations from ACE concerning the project mix and budget, including setting aside

adequate reserves for project closeout.

No specific recommendation is made, here.


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Issue #5: Considerthe Long-Term Direction forthe SGVCOG.

Citygate believes that the SGVCOG has a well-designed strategic planning process in place. This

provides an excellent opportunity to discuss the opportunities that should be achieved in the

future within a time-frame of five to ten years.

For example, we were asked to compare the similarities and differences of the SGVCOG with

the Gateway Cities COG. The latter COG has chosen a role of facilitating projects rather than

implementing them. Which is more appropriate for the SGVCOG going forward? What is the

proper mix? Are there potential partners outside of the SGVCOG membership that could provide

both expertise and resources to assist in fulfilling the mission? What are the needs of the

SGVCOG member agencies that could be benefit from regional assistance?

If we look for lessons elsewhere, it is very likely that the work program mix of five years ago

will not be appropriate five years from now.

Recommendation V-1: As the SGVCOG goes forward with its long-range strategic planning

process, it should consider whether the Gateway Cities model would

be appropriate for the San Gabriel Valley. The model diminishes the

EXVLQHVV ULVNV IRU WKH Gateway Cities COG which is discussed

elsewhere in this report.

1.3 CONCLUDINGTHOUGHTS

Citygate feels that it is important to conclude this summary with several comments about

SGVCOGVcontracted staff.

As we mentioned in our report, every one of the Board members we interviewed had nothing but

praise for the young professional staff analysts and the Office Manager that serve the Governing

Board and its various committees. It reflects the standard of care that the SGVCOGV([HFXWLYH

Director has exercised in employing the very best qualified people on the SGVCOGVVWDII

Finally, as part of our document review, we reviewed the last three annual performance reviews

of the Executive Director by the Governing Board. All three reviews gave him high marks. For

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VXSHULRURUDERYHDYHUDJHLQDOOFDWHJRULHV


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Section IIIntroduction and Study Design page 6

SECTION IIINTRODUCTION AND STUDY DESIGN2.1 REPORTORGANIZATION

This report provides the results of Citygate Associates, LLCs high-level review of the SanGabriel Valley Council of Governments (SGVCOG). The report identifies in broad terms the

history, governance, organizational structure, separation of authority, management of grants, and

issues associated with the continued success of the SGVCOG in achieving its mission.

Due to the short time period allotted by the SGVCOG for conducting this project, Citygate has

primarily focused mostly on the several issues the SGVCOG Sub-Committee has identified as

key issues. We recognize that many of these issues will require further study, and have designed

our report WRSURYLGHDURDGPDSWRWKH%RDUGLQGHDOLQJERWKZLWKWKHLQWHUQDODQGH[WHUQDO

issues that we have identified.

In addition to providing findings and recommendations, we have provided optional solutions in

several cases where political policy decisions are required of the Governing Board.

This report is structured into the following sections:

Section I Executive Summary: Background and facts about the SGVCOG and a

summary of report findings and recommendations.

Section II Introduction and Study Design: Description of the contracted scope of work

and study design.

Section III Overview and Analysis of the SGVCOGV Organizational Structure: Review

and of the relationships between the Governing Board, the SGVCOG staff,

the Technical Advisory Committees, and the ACE organization.Section IV Evaluation of Management of Operations: Analysis of operational and

staffing structure, management of consultants, and management of grants.

Also, review of the Caltrans audit and internal financial controls.

Section V Comparison of the SGVCOG Operations with the Gateway Cities COG:

Comparison in terms of CEO salaries, comparable administrative costs, and

employment arrangements.

Section VI Review of the Management Services Agreement (MSA) between Arroyo

Associates and the SGVCOG: Analysis of SGVCOG staffing options and

estimated costs.

Section VII Evaluation of the Structure and Relationship between the SGVCOG and the

ACE Joint Powers Agreement: Analysis of the responsibilities of each

organization.

Section VIII Findings and Recommendations: A concluding section listing all findings

and recommendations throughout the report.


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In each of the appropriate sections mentioned above, this report will cite specific findings and

recommendations. In order to provide a comprehensive summary, a complete listing of all

findings and recommendation is presented in Section VIII. The findings and recommendations

have been numbered to correspond with the section of the report they are found. Also, all

recommendations have been numbered to directly correspond with related findings.

2.2 CONTRACTEDSCOPE OFWORK

&LW\JDWHV VFRSH RIZRUN is defined in the contract dated November 8, 2011 between the San

Gabriel Valley Council of Governments (SGVCOG) and Citygate Associates, LLC. This

contract summarizes the services to be provided as follows:

$QDO\]HWKHFXUUHQWVWUXFWXUHLQFOXGLQJWKHGD\-to-GD\RSHUDWLRQDOUHTXLUHPHQWs

and staffing.

Evaluate operational management structure and provide recommended options for

%HVW3UDFWLFHVDQGHVWLPDWHGFRVWVDVVRFLDWHG

Evaluate the administration and control of all contracts between the SGVCOG

and consultants.

Review and evaluate the management of all SGVCOG grants.

Analyze the SGVCOGV ILQDQFLDO SUDFWLFHV FRPSDULQJ WR %HVW 3UDFWLFHV

LQFOXGLQJDSSOLFDEOHFKHFNVDQGEDODQFHVRUVHSDUDWLRQRIDXWKRULW\

Provide a comparison of organizational operations and assessment with the

*DWHZD\&LWLHV&RXQFLORI*RYHUQPHQWV

5HYLHZDQGDVVHVVWKH0DVWHU6HUYLFHV$JUHHPHQWEHWZHHQ Arroyo Associates

and the SGVCOG.

Evaluate the structure and relationship between the SGVCOG and the ACE Joint

Powers Agreement and provide recommendations for improvement if needed.

Provide recommendations on SGVCOG staffing options and related costs.

Review and analyze current policies and procedures.

&LW\JDWHVVFRSHRIZRUNGLGQRWLQFOXGHHLWKHUDILQDQFLDODXGLWRUDSURJUDPFRPSOLDQFHDXGLW

Throughout the report, we make reference to the scope of work item (or items) that are relevant

to each section.

&LW\JDWHV SURSRVHG findings and recommendations are confined to those that pertain to the

operations of the SGVCOG as a whole, or to one or more of its subcomponents, rather than the

present or past performance or conduct of individuals within the SGVCOG or ACE, its

subsidiary agency.


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2.3 PRELIMINARYDOCUMENTREVIEW

3ULRUWR&LW\JDWHVRQ-site work, we requested and were provided with a number of documents

for review as shown in Appendix B on page 44.

2.4 STUDYDESIGN

Since this is a focused and limited management review, it required a well-thought-out effort to

understand the fundamental issues, collect relevant data, evaluate and analyze the data and to

make appropriate findings and recommendations.

Because of the limited time available to conduct our field work, our report focuses on the key

issues that have been identified that contribute to achieving the mission of the SGVCOG. These

center around: the organization of the SGVCOG in terms of governance, management structure,

the efficiency and effectiveness of carrying out projects, and the ability to meet the expectations

of grant providers.

The study design for this assignment included the following steps:

$Q LQLWLDO GLVFXVVLRQ EHWZHHQ &LW\JDWHV 3URMHFW 7HDP PHPEHUV4 and the

SGVCOGV6XE-Committee prior to the on-site work to understand the specific

subject areas, leadership and management concerns about the SGVCOG.

Furthermore, we clarified our client contact point for progress reports, and

clarification, where needed.

A thorough and continuing review of the above-referenced documents so that the

Project Team has a working knowledge of the policies, organization and operation

of the SGVCOG.

Development of an interview questionnaire in several versions designed to serve

as a guideline to obtain critical information from the elected leadership of the

4,QWKLVUHSRUWUHIHUHQFHVWR&LW\JDWHLQGL cate Citygate Associates, LLC. 5HIHUHQFHVWR&LW\JDWHV3URMHFW7HDP

PHPEHUVRU3URMHFW7HDPPHPEHUVUHIHUWRWKHILUPVWZRFRQVXOWDQWVERWKRIZKRPVSHQWWZRDQG one-half

days on site in the SGVCOG offices interviewing the members of the SGVCOG Sub-Committee, as a group, and

then further interviewing them, and other members of the Governing Board, individually. Additionally, they

interviewed selected members of the SGVCOG staff, and, subsequently, one of the team members interviewed aselected group of other outside individuals. These two senior, practitioner-consultants included the President of

Citygate Associates, who has a background in providing contract management services to a Joint Powers Agency,

DQGDIRUPHUFLW\PDQDJHUZLWKIDPLOLDULW\ZLWKWKH6DQ*DEULHO9DOOH\5HIHUHQFHVWRZHUHIHUWRWKHFRQVHQVXVRI

the Project Team members and Citygate Associates, LLC.


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SGVCOG and ACE Boards,5 management and selected staff, and selected outside

individuals who could contribute to understanding the history and issues relative

to conducting this study.

Development of an interview schedule that provided sufficient time to conduct

twenty-four interviews with the above-referenced elected officials, management

staff members, and outside contributors.

A Project Kick-Off meeting with the Sub-Committee to clarify expectations and

desired project outcomes.

Follow-up interviews were needed in some cases to cross-check facts, and to

further develop an understanding of the issues under study.

5In this case, the President of the ACE Council and the President of the SGV Governing Board, who both serve on

the Sub-Committee.


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Section III2YHUYLHZDQG$QDO\VLVRIWKH6*9&2*V2UJDQL]DWLRQDO6WUXFWXUH page 10

SECTION IIIOVERVIEW AND ANALYSIS OF THE SGVCOGS

ORGANIZATIONAL STRUCTURE

3.1 INTRODUCTION

In this section of the report, Citygate briefly discusses the background and history of the

SGVCOG to provide context for the remaining sections of the report. We then discuss the

relationships between the SGVCOG Governing Board, the Board of Directors of ACE (a

subsidiary), the management of both entities, and the role of the Technical Advisory

&RPPLWWHHVHVSHFLDOO\WKH&LW\0DQDJHUV7AC.

3.2 HISTORY ANDBACKGROUND

Founded in 1994, the San Gabriel Valley Council of Governments (SGVCOG) is a Joint Powers

Authority (JPA) of 31 incorporated cities in the San Gabriel Valley, the three Supervisorial

Districts representing the unincorporated areas in the San Gabriel Valley, and a representative of

WKH9DOOH\VWKUHHZDWHUDJHQcies. Collectively, these agencies represent the Valleys two million

residents living in 31 incorporated cities and numerous unincorporated communities.

The SGVCOG is the largest and most diverse sub-regional council of governments in Los

Angeles County, with the exception of the even-larger six-county area formed by the Southern

California Associations of Governments (SCAG).

Councils of governments like the SGVCOG have been formed throughout the nation to provide

planning, projects, and aggregated political power that cannot be achieved by individual cities,

counties, or other units of local government.

Historically, the San Gabriel Valley cities and unincorporated areas were politically divided and

under-represented as a region during the period of rapid post-war growth. That changed,

however, with the formation of the SGVCOG.

With its 31 incorporated cities, the San Gabriel Valley is called the Valley of Local Control and

Local Independence.7KH6DQ*DEULHO9DOOH\VFLWLHV DFFRXQW IRU SHUFHQWRI /RV$QJHOHV

&RXQW\VFLWLHV, but only 20 percent of the population. The San Gabriel Valley, as a sub-region,

also has the largest number of Los Angeles County residents living in unincorporated

communities, including such significant communities as Altadena, Hacienda Heights, and

Rowland Heights. The cities formed the San Gabriel Valley Council of Governments in 1994 as

an umbrella agency to work on regional issues, to secure government funding, and to help forgea consensus in addressing issues that impact all the cities and communities. The SGVCOG was

the first of its kind in Southern California and remains the largest council of governments in Los

Angeles County. The San Gabriel Valley is represented by two U.S. Senators, five Members of


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Congress, six State Senators, seven Assembly members, and three of the five Los Angeles

County Supervisors.

The SGVCOG has a diverse membership of the 31 cities in the San Gabriel Valley, as well as the

portions of Los Angeles County that represent unincorporated communities in the San Gabriel

Valley. The 31 cities range in population from 800 (City of Industry) to 160,000 (City of

Pomona). While each of these communities has a unique history and character, they also have

many shared issues and projects that intersect multiple jurisdictions, such as traffic congestion,

transit projects, park and open space, air quality regulations, watersheds planning, and solid

waste regulations.

3.3 AREVIEW OF THESGVCOGSGOVERNANCESTRUCTURE

Councils of governments (COGs) fill a niche in local government that neither cities and counties,

nor special districts can perform effectively. They exist to deal with regional and sub-regional

policy and planning issues that transcend the political boundaries of their constituent members.COGs have been especially effective in serving as clearinghouses for government grants,

aggregating and coordinating political advocacy for their regions with state and federal agencies,

and in conducting regional planning.

By their nature, COGs usually serve a diverse membership in terms of constituents, regional

characteristics, demographics, and even political priorities. Consequently, there is ever-present

ZKDWPLJKWEHFDOOHGDSROLWLFDOFHQWULIXJDOIRUFHWKDWWHQGVWRSXOOWKHPHPEHUDJHQFLHVDSDUW

diluting political solidarity and even creating conflicts between members.

2QH FRXOG DUJXH WKDW WKLV FHQWULIXJDO IRUFH EHFRPHV VWURQJHU DV SURJUDPV PRYH IURP

generalized, region-wide topics such as air quality, to more specific, local issues such as freeway

locations. Said another way, planning is easier than implementation.

In spite of these natural political dynamics, the SGVCOG has been remarkably successful in

achieving its mission. Part of the reason is, undoubtedly, because of the rich, unified history of

the San Gabriel Valley. There is a shared view that the San Gabriel Valley has traditionally

competed for resources with other regions such as central Los Angeles, the West Side, South

Bay, etc.

Additionally, the SGVCOG leaders must be given credit for providing consistency and focus on

the mission and the various projects and programs over an extended period of time.

3.3.1 Board and Executive Committee Structure

The Governing Board consists of one delegate (with an alternate) from each of the current 31

cities, three supervisorial districts, and the San Gabriel Valley Water Districts JPA. The

Governing Board meets monthly, and is responsible as the governing body, including appointing

the Executive Director of the COG.


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The Governing Board also has the power to appoint standing and ad hoc policy committees (see

below).

The officers of the Board consist of the President, First, Second, and Third Vice Presidents.

The Executive Committee consists of the elected officers of the Council, all past Presidents ofthe Council currently serving as [a] Governing Board Delegate, the Chairpersons of all Council

Standing Policy Committees, and the Chairperson of the Alameda Corridor East Construction

Authority.

Table 1SGV CO G Board Executive Committee

President 1

stVice President

2nd

Vice President 3

rdVice President

Past P resident(s) (remaining on Board) Sec retary and T reasurer (non-voting Executive Director) C O G Policy Committee Chairs (Transportation; Energy,

Environment and Natural Resources; Housing,

Community, and Economic Development) C O G Techn ical Advisory Committee Chairs (non-

voting City Managers, Public Works, Planners)

3.3.2 Standing Policy Committees

The Governing Board has established three standing committees to develop policy

recommendations in specific functional areas consistent with the overall mission of the Council.

Currently, these are: the Transportation Committee; the Energy, Environment and Natural

Resources Committee; and the Housing, Community, and Economic Development Committee.

The terms of Board Members appointed to these committees expire at the end of each fiscal year,

and regional representation is considered in making new appointments.

3.3.3 Ad Hoc Committees

In addition to the High Speed Rail Working Group, on July 11 th, 2011, the Board Executive

Committee appointed another ad hoc committee to review the SGVCOGV VWUXFWXUH VWDIILQJ

and management practices. That committee is composed of the President, the 1st

and 2nd

Vice

Presidents, and the Ace Board Chair (who is also a SGVCOG Board Member). The City


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0DQDJHUV7$& Chair, who is currently the City Manager from Covina, and the (now retired)

City Manager of Azusa, are also members.

This Sub-Committee, as it is called, engaged Citygate Associates to perform this study. As

mentioned earlier, the Project Team initially met with this committee to clarify that it would

serve as our client contact point. Citygate used the Sub-Committee as the contact point for

reporting purposes.

3.3.4 &LW\0DQDJHUVDQG2WKHU7HFKQLFDO$GYLVRU\&RPPLWWHHVTACs)

The SCVCOG Board has established three Technical Advisory Committees (TACs)City

Managers, Planning/Community Development Directors, and Public Works/Transportation

Directorsfor the purpose of providing input, as may be requested by the Governing Board.

7KHVHFRPPLWWHHV KDYH EURDGSRZHUVLQFOXGLQJEXW QRW OLPLWHG WR&RXQFLOZRUN SURJUDPV

EXGJHWVSULRULWLHVSROLFLHVSURJUDPVDQGSUDFWLFHV6

One of the activities of WKH&LW\0DQDJHUV7$&KDVEHHQWRVHWXSWKH$&(3KDVH,,5HYLHZSub-Committee to develop a cost/benefit assessment of the projects in the ACE Phase II Study

and create a priority ranking for these projects. The Sub-Committee is composed of

representatives from West Covina, Pomona, Montebello, Industry and LA County, as well as

ACE and SGVCOG staff.7

:H XQGHUVWDQG WKDW WKH &LW\ 0DQDJHUV 7$& LV FXUUHQWO\ UHYLHZLQJ $&( 3KDVH ,, VWXG\

recommendations from the Public Works TAC, with the intention of making project and funding

recommendations to the SGVCOG Board.

Two charts are presented on the following pages. The first chart describes the responsibilities of

each staff member. The second chart describes the various committees, sub-committees, andtechnical advisory committees supporting the Governing Board.

6San Gabriel Valley Council of Governments: A Joint Powers Authority, 6

thAmended and Restated Bylaws,

effective January, 2009.

7Chair, Public Works TAC, ACE Phase II Study Recommendations, July 6, 2011.


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Section III2YHUYLHZDQG$QDO\VLVRI6*9&2*VOrganizational Structure page 14

Governing Board

ExecutiveDirector

GeneralCounsel

Accountant/Treasurer

Office

Manager

Staff #1 (MC) Staff #2 (JL) Staff #3 (CS) Staff #4 (GB)

Core Services (.4 FTE)

xGoverning Board

xTransportation

Committee

x

EENR Committee

xCityManagersTAC

xPublicWorks TAC

xPlanning TAC

xEnergyWorking Group

Grants (.6 FTE)

xEnergy Wise

xCalRecycle

xWatershed

xSCECEESP

xEnergyUpgrade

Grants (.75 FTE)

xSCE CEESP


xGoverning Board

xExecutive Committee

xEENR Committee

xHousing Committee

xPlanning TAC

xEnergyWorking Group

xWater Working Group

Grants (.5 FTE)

xEnergy Wise

xWatershed

xSCE CEESP (EE CAP)

xEnergyUpgrade


xPublic Works TAC

xSolid Waste W orking

Group

Grants (.9 FTE)

xEnergy Upgrade

xEnergyWise

xSCE CEESP (EEMIS)

xAll record keeping

SGV CO G Staff Responsibilities


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Section III2YHUYLHZDQG$QDO\VLVRI6*9&2*VOrganizational Structure page 15

COG Standing

Committees

Transportation

Committee

J. Fasana, Chair

Steve Ly

City Council

Representatives,

City Transportation

Engineers

Lower LA & SGV Rivers andMtnsConservancy

D. Bertone, San Dimas

M. Clark, Rosemead

Planners Technical Advisory

Committee

D. Chantarangsu

L. Stevens

City Community Development

Staff and Planners

Public Works Technical

Advisory Committee

S. Yauchzee

K. Hassel

City Public Works Engineers

City Transportation Engineers

City Managers TechnicalAdvisory Committee

D. Parrish

R. Bobadilla

Gold Line FoothillExtension

S. Pedroza, Claremont

League of California Cities

Liaison


MTA TAC

L. Stephens

B. Janka

C. Bradshaw

Transportation and

Communications

T. Spohn, Industry

S. Ly, Rosemead

Community, Economic andHuman Development

G. Sund, Supv. District 5

G. Murabito, Glendora

J. Gonzales, So. El Monte

Energy and Environment


D. Bertone, San Dimas

Treasurer/Auditor

C. Conway

Executive

Committee

Angel Carrillo

Barbara Messina

Mary Ann Lutz

Joe Gonzales

John Fasana

Gino Sund

Sam Pedroza

David Spence

Carol Herrera

Tom King

Tim Spohn

Energy, Environment andNatural Resources

Committee

S. Pedroza, Chair

D. Bertone, Vice Chair

City CouncilRepresentatives

COG Appointments SCAG

Regional Council

M. Clark, #32

K. Hanks, #33

B. Messina, #34

M. Finlay, #35

D. Voss, #36

C. Herrera, #37

P. Lantz, #38

K':W

ACE ConstructionAuthority

T. Spohn, Chair,

City of Industry

Dave Gutierrez

San Gabriel

ACE Board

COG Technical A dvisory

Committees

COG Ad Hoc Committees

SGVCOG Governing Board

35 Member Agencies

Executive Director

N. Conway

High Speed Rail

Working Group

City Council Representatives

County Supervisor

Representatives

City Staff

Other COG Ad Hoc

Committees may be formed

to address issues as directed

by the Board

Legal Counsel

R. Jones, Jones & Mayer

Housing, Community, andEconomic DevelopmentCommittee

G. Sund, Chair

G. Murabito

City Council Representatives

City Housing &

Redevelopment Staff

Committees, Sub-Committees, and Techn ical Advisory Committees Supporting the Governing Board


322/352


323/352

Section IVEvaluation of Management of Operations page 17

to these Staff Analyst positions generally fall into two categories: (1) staff support to the

Governing Board, the Standing Committees, and the Technical Advisory Committees (TACs);

and (2) grant administration and program operations. :KDWZHPHDQE\SURJUDPRSHUDWLRQVLV

that these Staff Analysts actually perform some of the work associated with specific grants.

2WKHUSURJUDPRSHUDWLRQVDUHSHUIRUPHGE\RXWVLGHFRQVXOWDQWV

As a cross-check, our interview sample of Board members corroborated the fact that the Staff

$QDO\VWVquality of work is highly regarded and appreciated.

Finding IV -1: The SGVCOG has a very small administrative operation. Having

all five staff members report directly to the Executive Director

does not create a span-of-control issue and creates an efficient

reporting relationship. Because of the small number of staff, the

Staff Analysts DUH IDPLOLDUZLWK HDFK RWKHUV DVVLJQPHQWV DQG

can substitute for each other, if need be.

Recommendation IV-1: Before the Governing Board decides and acts on

adding a new project or program, require the

Executive Director to provide a cost estimate and

staffing strategy for implementation.

Finding IV -2: Based upon our analysis of the current workload, we believe that

the staff is working at capacity. Care should be taken, however,

in adding programs without discontinuing other lower priorityactivities or supplementing resources.

Recommendation IV-2: Maintain the current staffing arrangement and

structure.

4.3 ANALYSIS OFADMINISTRATIVECONTROL OVERCONSULTANTS AND THEMANAGEMENT

OFGRANTS

A total of two outside consulting contracts are currently administered by the SGVCOG staff. The

Staff Analysts are responsible for monitoring and reviewing the work products from these

consultants. Additionally, the Lead Staff Analyst reviews their invoices to cross-check between

work performed and work billed. All source records are kept in the respective project logs

associated with each respective project for a historical record and audit purposes.


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Citygate reviewed the process for managing all grants from inception to completion and post-

audit close out. One member of the staff is assigned the responsibility of creating and managing

the project log for each grant under contract.

Grant logs or records are divided into five sets of records:

Grant contract deliverables: such as research reports, program design records, and

diaries or correspondence related to program implementation.

Grant contract documents: grant contract amendments, documents relating to the

procurement of outside services such as contracting with consultants including:

RFPs, contractor/vendor selection, and any other legal documents or process

relating to describing the purpose and process for delivering the work under the

grant.

Grant invoices and payment requests: complete records of all payment records

documenting the reason for payment, amount, and source of payment funds.

Post-grant records: including audit by grantor agency, all correspondence relating

to audit findings, and closeout.

We also note that the Lead Staff Analyst routinely checks with each respective grant-providing

DJHQF\V JUDQW PDQDJHU PRQWKO\ WR EH DVVXUHG WKDW invoices have been reviewed, and that

expenditures conform to grant rules and requirements.

We were asked to consider dividing the functions of seeking out and managing grants from the

function of performing grant implementation. We understand the concern about creating a

conflict of interest where a private sector grant manager is also receiving income for performing

services under the grant; i.e., awarding a grant to oneself.Recommended solutions are discussed in Section 6.5 of this report.

The only two outside agencies currently performing periodic audits on SGVCOG grants are the

California Department of Finance for the Watershed Coordinator Grant and Cal Recycle Grants,

and the AQMD for AB 2766. Grant work associated with the Southern California Edison

Company is iQFOXGHGZLWKLQ(GLVRQVRZQLQWHUQDODXGLWLQJV\VWHPV7KH&38&DXGLWV(GLVRQV

rate payer programs, of which SGVCOGVSURJUDPLVRQHRIPDQ\

Finding IV -3: The administration of grants requires maintaining detailed

records indexed chronologically and by subject matter. We find

that the SGVCOGV records and grant management systems are

IROORZLQJEHVWSUDFWLFHV


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Recommendation IV -3: Maintain and continue using the current grant

management system.

4.4 OPTIONS FOR ALTERNATIVE ORGANIZATIONAL STRUCTURES FOR GRANT

MANAGEMENT

Citygate was asked to consider an organizational arrangement whereby FRUH DGPLQLVWUDWLYH

services would be handled by Arroyo Associates, and grant management activities would be

handled by a separate management services company under a separate contract, thus eliminating

any appearance of conflict of interest.

Actually, the grant management process breaks down into three components:

Grant research and procurement

Grant contract management

Performance of the work.

Conceivably, Arroyo could continue to research and procure grants. Another firm would be

engaged to perform all contract management functions, including contract compliance and

expenditure control.

In order to separate those from managing the work and those doing the work, a third firm or

consultant(s) would have to be retained to perform the grant work in order to assure that nobody

was inordinately profiting from the grant program.

It seems to Citygate that this would be not only overly complicated and less effective, but also

most likely be far more expensive. Grantmaking organizations often want to be familiar with the

capabilities of personnel responsible for the implementation of the grant project. There is a high

level of relational cultivation between the grantmaker and grantee throughout the grant

management process. This will be difficult to achieve if grant management responsibilities are

bifurcated, and would not likely be preferred by grantmakers, as most would want to have a

single point of contact. Furthermore, the SGVCOG staff would then be required to monitor the

work of the third-party contractor implementing the grant program.

,I &LW\JDWHV UHFRPPHQGDWLRQ WR EULQJ WKH FRUH VWDII LQ KRXVH LV LPSOHPHQWHG WKHQ JUDnt

programming work could either be done by LQKRXVHVWDIIRULIGHVLUDEOHthe Governing Board

could outsource to outside contractors just as it is done within municipal organizations of the

member agencies of the SGVCOG. This would be transparent in terms of the SGVCOGV

budget, and would avoid any issues of conflicts of interest.


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4.5 ANALYSIS OFFINANCIAL MANAGEMENTINCLUDINGCONTROLS

We have noted that internal controls are in place to assure that all labor hours are reviewed by a

supervisor and signed off as accurate. These verified reports are then referred to the SGVCOGV

Treasurer/Auditor for consolidation into billing statements which are either assigned to paymentIURPFRUHVHUYLFHUHYHQXHVRUVHQWWRWKHUHVSHFWLYHJUDQWPDQDJHURIWKHUHVSHFWLYHDJHQFLHV

for monthly review and reimbursement by that agency.

On an annual basis, the SGVCOG is audited by outside auditors. Additionally, the SGVCOG is

also audited by each respective grant-providing agency to verify that all expenses meet grant

contract requirements. Other than the Caltrans audit (referred to in another section of this report),

we are aware of no other audit exceptions resulting from previous or existing grants. We also

note that any ineligible grant costs associated for Arroyo employees become a liability for

Arroyo Associates, rather than the SGVCOG.

In summary, we believe that the SGVCOG is using good accounting and timekeeping practices

that provide clear and detailed audit trails.

In terms of services provided by the staff, we have reviewed detailed job and activity

descriptions, and work logs documenting what each employee has performed each month. These

logs provide a check that the work actually performed PDWFKHVHDFKHPSOR\HHVMREDVVLJQPHQWV

We find that the workload is well distributed, and the organizational structure is more than

adequate for a small staffing organization.

Our interview sample of Board members corroborated the fact that the staff and quality of work

are highly regarded and appreciated.

Finding IV -4: We believe that adequate internal controls are in place to

maintain best practices concerning the core activities and grant

programs maintained by the SGVCOG.

Recommendation IV-4: As a good practice, the SGVCOGV DQQXDO DXGLWRUV

should be routinely asked to review all time-keeping

and program management activities for compliance

with generally accepted accounting practices and State

and Federal grant requirements.


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Section VComparison of the SGVCOG Operations with the Gateway Cities COG page 21

SECTION VCOMPARISON OF THE SGVCOGOPERATIONS WITH THE

GATEWAY CITIES COG

5.1 INTRODUCTION

The scope of work item covered in this section is:

Provide a comparison of organizational operations and assessment with the

*DWHZD\&LWLHV&RXQFLORI*RYHUQPHQWV

In this section of the report, Citygate examines the organizational similarities and differences

between the SGVCOG and the Gateway Cities Council of Governments (Gateway Cities COG).

The Gateway Cities COG is made up of the twenty-seven cities of Southeast Los Angeles

County, as well as the County of Los Angeles and the Port of Long Beach. Its organizational

mission is to improve this region of the county in four primary areas:

Transportation

Air quality

Housing

Economic development.

In organizational structure and in membership size, the Gateway Cities COG is similar to the

SGVCOG. Its operational approach is slightly different in that it does not construct projects or

operate programs. More specifically, the Gateway Cities COG does not manage direct

implementation grant projects like the SGVCOG, which runs several energy-efficiency grant

projects that require staff to be directly involved in and performing educational outreach and

program planning activities. The Gateway Cities COG is more of an organization that might be

characterized as a sub-set of the Southern California Associations of Governments (SCAG). Its

function in terms of the Gateway Cities COGV programs and initiatives is:

First: A Forum

Second: A Planner

Third: A Consensus Builder

Fourth: An Advocate

The Gateway Cities COGV approach is to assist in the formation of consortia of member cities

and other agencies that have a common goal and are willing to take responsibility for:

Aggregating the political will and organization to create and build a project or

operate a program.


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Maintaining the necessary public relations to render public support and

understanding.

Obtaining the financial resources to build a project or operate a program.

Assuming the financial liability for project construction of program operation.

One added ingredient is to actively involve Federal or State agencies in addition to other regional

agencies that are not members of the Gateway Cities COG who have a stake in the project or

program.

The following chart provides the organizational structure of the Gateway Cities COG.

Finding V-1: The Gateway Cities COG is primarily focused on serving the role

of a facilitator in creating projects within its region.

Recommendation V-1: As the SGVCOG goes forward with its long-range

strategic planning process, it should consider whetherthe Gateway Cities model would be appropriate for

the San Gabriel Valley. The model diminishes the

EXVLQHVVULVNVIRUWKHGateway Cities COG which is

discussed elsewhere in this report.


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5.2 ADMINISTRATIVEBUDGET ANDLABORCOSTS

The Gateway Cities Council of Governments is similar in membership size to the SGVCOG (31

agencies vs. 35 agencies). Part of our scope of work was to examine and compare the

administrative services budget and employment arrangements of the two COGs.

Administrative services at the SGVCOG are provided through a Management Services

Agreement (MSA) with a private firm, Arroyo Associates.

The Gateway Cities COG originally employed administrative staff through a similar

administrative services contract. But after several years, the Gateway Cities COG has used a

hybrid employee arrangement. Three individuals, the Executive Director and two clerical staff,

are directly employed as employees of the COG. The Executive Director has been employed for

approximately fifteen years, and has had a salary of $159,000 per year for the last several years.

The COG pays these employees no fringe benefits, only their direct salaries. We were told that

the Executive Director is a retired PERS participant, and did not wish to re-enter the PERSsystem at the time of his employment. Consequently, this arrangement was negotiated between

the COG Board and the Executive Director.

Two additional staff members, including the Assistant Executive Director (for finance) chose to

remain in the PERS system, so two member cities, Norwalk and Bellflower, each agreed to

respectively employ one of these latter employees. The Gateway Cities COG has agreements

with these cities, and reimburses them for all employment costs, including fringe benefits and

PERS retirement costs. As a consequence, the Gateway Cities COG has worked out a way to not

contract with PERS while providing flexible employment alternatives for its staff members.

In total, the Gateway Cities COG utilizes a staff workforce of 5.0 FTEs, compared to a total of

5.75 FTEs employed by the SGVCOG. We note that it is difficult to compare the staffing levels

of the Gateway Cities COG and SGVCOG, given the various differences in program priorities,

activities, and grant projects.


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Section VComparison of the SGVCOG Operations with the Gateway Ci

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