City of Pasadena Underground Utility Program Steve Toler, Senior Manager October 19, 2015

Project Summary Management Partners retained in January 2015 Purpose: Review administrative practices, responsibilities and procedures and recommend improvements for program performance and accountability 2

Project Approach Conducted 11 interviews Administered questionnaires to individuals involved in the UUP Reviewed several documents, policies and municipal code Created five process maps Conducted review of research on utility undergrounding 3

Observations ObservationStatus Overall ownership for the program has been unclearIn progress Some new procedures have not been writtenIn progress Master contractor approach is a best practiceContractor selected Right-of-entry letters could be more informativeLetters modified Signature authorization levels were not consistent throughout the organization In progress W-9 compliance should be reviewedIn progress Additional financial analytical capacity and segregation of duties needed In progress Undergrounding all utilities under the current schedule will take decades to complete – is the goal reasonable? Pending 4

Recommendations: Program Administration and Ownership 1. Assign ownership of UUP to Pasadena Water and Power 2. Prepare written policies and procedures on new processes 3. Conduct training on new policies and provide regular information updates for UUP-related staff 5

Recommendations: Project Management 4. Complete implementation of the master contractor for work on private property 5. Evaluate the $3,000 maximum reimbursement allowance 6. Provide more proactive information in right-of- entry letter to property owners 6

Recommendations: Financial Transaction Process 7. Establish written guidelines for determining authorized signers 8. Conduct regular W-9 compliance audits 9. Ensure appropriate internal controls are implemented for new financial information software conversion 10. Review procedures for charging engineering staff time to the UUP fund 7

Recommendations: Financial Management Practices 11. Add analytical staff to increase capability for financial analysis for all capital projects 12. Review the goal of the UUP to determine the extent of undergrounding desired 13. Determine if and when the surtax should be discontinued 8

Conclusion City has implemented positive improvements Clear ownership of the program will institutionalize responsibility and accountability Strengthened internal controls and financial reporting will mitigate potential future errors and misappropriations Interdepartmental collaboration is vital to success Timely implementation still relies on telecommunications providers and property owners Policy decisions are necessary regarding overall program goals, scope and continuation of surtax 9

Questions and Discussion 10