Report 2011-118/2011-613 Recommendations and Responses in 2014-041

Report 2011-118/2011-613: Conduit Bond Issuers: Issuers Complied With Key Bond Requirements, but Two Joint Powers Authorities' Compensation Models Raise Conflict-of-Interest Concerns

Department Number of Years Reported As Not Fully Implemented Total Recommendations to Department Not Implemented After One Year Not Implemented as of 2013-041 Response Not Implemented as of Most Recent Response
California Statewide Communities Development Authority 2 4 3 3 2

Recommendation To: Statewide Communities Development Authority, California

In implementing its January 2012 contracting policy, California Communities should either periodically subject existing contracts to competitive bidding or perform some other price comparison analysis to ensure that the public funds it oversees are used effectively.

Response

The Commission issued requests for proposals (RFP) for auditor and issuer's counsel with a term of three years, allowing for a two-year extension. A new auditor contract was awarded at the June 27, 2013, meeting per the attached minutes. A new issuer counsel contract was awarded at its December 19, 2013, meeting per the attached minutes.

In addition, the Commission appointed an Executive Director at its meeting on January 16, 2014, as an independent third party to review and recommend financings to the Commission received from the current Program Manager, HB Capital, and to begin the RFP process for Program Manager Services. CSCDA issued an RFP on May 8, 2014, for Program Manager Services on behalf of the Commission. The RFP timeline calls for a selection of the Program Manager(s) by the Commission on September 11, 2014.

  • California State Auditor's Assessment of Status: Not Fully Implemented
  • Completion Date: September 2014
  • Response Date: August 2014

Recommendation To: Statewide Communities Development Authority, California

Once the Securities and Exchange Commission (SEC) finalizes its definition of
municipal advisor, California Communities should have its legal counsel review whether HB Capital should register with the Municipal Securities Rulemaking Board.

Response

After extensive review of the newly proposed definition of a Municipal Advisor by the U.S. Securities and Exchange Commission (SEC), HB Capital Resources, Ltd. has made the determination to register a Municipal Advisor subsidiary with the SEC and MSRB effective June 2014. The Commission approved the assignment of a portion of the CSCDA Program Manager Services contract to GPM Municipal Advisors, LLC, a wholly owned subsidiary of HB Capital Resources, Ltd., at its meeting on June 26, 2014, per the attached meeting minutes. GPM Municipal Advisors, LLC will serve as a Municipal Advisor to California Communities.

  • California State Auditor's Assessment of Status: Fully Implemented
  • Completion Date: July 2014
  • Response Date: August 2014

Recommendation To: Statewide Communities Development Authority, California

To be better informed about the compensation of their consultants, including any potential conflicts of interest, California Communities and Municipal Finance should require the consulting firms that staff their organizations to disclose the amount and structure of compensation provided to individual consultants, including disclosing whether any of this compensation is tied to the volume of bond sales.

Response

Please refer to our one-year response.

  • California State Auditor's Assessment of Status: Will Not Implement
  • Completion Date:
  • Response Date: October 2013

Current Status of Recommendations

All Recommendations in 2014-041