Pasadena’s Construction and Demolition Waste Diversion Program, which requires construction and demolition contractors to divert at least 75 percent of construction or demolition waste either through recycling, salvage, or deconstruction, is not being implemented properly – with internal controls absent to prevent fraud, waste and abuse, and no established formal policies and procedures towards a consistent and uniform implementation of the process – a consultant will tell City Council’s Finance/Audit Committee.
At the same time, the benefits of the “C and D” program cannot be measured effectively because of the absence of data to base the measurement from.
The program has generated $10.8 million in deposits from construction and demolition projects. Most of the money should be kept in the fund as a reserve for future refunds, the consultant said, but up to $3.3 million could be used by the City.
These are among the observations relayed by a consultant tapped by the City to assess the program.
The consultant, Tap International, says the Construction and Demolition Waste Diversion Program Program needs improvement to ensure that the City’s requirements and the intentions of the program are met.
Ruthe Holden, the City’s Internal Audit Manager, will present a detailed report about the assessment when the City Council’s Finance/Audit Committee meets in a special meeting on Thursday, March 4, starting at 4 p.m.
In a preliminary report, Holden said the Internal Audit Division conducted an analysis of the C and D program in October l upon the City Manager’s request. The Division also evaluated Fund 406, which holds all C and D deposit amounts.
At the time of Internal Audit’s review, the fund held $10.8 million in deposits, Holden said. This audit came to the conclusion that internal controls were weak or non-existent, and that a performance audit – such as this latest one by Tap International – had to conducted “to obtain a more thorough understanding of the issues.”
One of the other findings of Tap International’s assessment showed that of the $10.8 million balance in the 406 Fund Account as of September 30, 2020, the City could retain approximately $7.50 million to pay refunds on future deposits by construction and demolition contractors.
Holden said on Tap International’s suggestion, the City “can escheat or transfer up to $3.33 million” from this account, although a significant portion of the amount has to be further studied.
“Of the $3.33M, City staff have determined that $628,000 in transactions need further research reducing the amount available for transfer,” Holden said.
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