The City of SAN Diego Council President Myrtle Cole Fourth District November 8, 2018 Judge Peter C. Deddeh Presiding

Policy 000-40 does not list all types of sponsorship agreements. Response: The Mayor and City Council agree with the Grand Jury’s finding.

The audit was unable to determine whether all agreements under the Program had been identified. Response: The Mayor and City Council partially disagree with the Grand Jury’s finding. The San Diego County auditors requested information on agreements that have been developed by CPD; and CPD provided the auditors a comprehensive list of marketing City Response to San Diego County Grand Jury Report Titled “City of San Diego Corporate Partnership Development Program” partnership agreements (including those not directly labeled as such). In addition, the auditors were provided a revenue and in-kind tracking report for the last five years, from which they selected agreements to examine.

CPD does not comply with the MMP requirement to track and report on all marketing partnerships developed by City departments on a quarterly basis. Response: The Mayor and City Council agree with the Grand Jury’s finding. This requirement has been addressed in the revised Marketing Partnership Policy. CPD will be obtaining marketing partnership information from departments for agreements valued at $25,000 or greater and will be including such information in annual reports.

The lack of a requirement for disclosure increases the risk that an agreement could create a conflict of interest, or the appearance of one. Response: The Mayor and City Council agree with the Grand Jury’s finding. This requirement has been addressed in the revised Marketing Partnership Policy and updated Request for Sponsorship (RFS) form. RFSs will require disclosure of any conflicts of interest. If an RFS is not issued, marketing partnership agreements will address compliance with required disclosures.

The disposition schedule does not require CPD to maintain project records for at least the life of the agreement. Response: The Mayor and City Council disagree with the Grand Jury’s finding. The CPD disposition schedule requires project records for contracts/agreements not approved by Council to be maintained for five years after the contract/agreement ends. Project records for contracts/agreements approved by Council must be kept permanently.

CPD files on some agreements are incomplete. Response: The Mayor and City Council partially disagree with the Grand Jury’s finding. CPD maintains complete documentation for its agreements and does not believe its agreement files are inadequate. There is one exception for the Waxie agreement, for which the San Diego County auditors noted that there was not an executed agreement. This agreement was for a promotional event that occurred in both 2012 and 2013 (for a total City/public benefit of $4,000). The event that Waxie sponsored in 2012 and 2013 was the culmination of an Environmental Services Department/San Diego County Office of City Response to San Diego County Grand Jury Report Titled “City of San Diego Corporate Partnership Development Program” Education collaboration on a children’s contest in which recycled materials were used in artwork. The revenue was tracked in the City’s financial system, and related documentation is on file with CPD.

CPD lacks a process for determining the net benefits of agreements. Response: The Mayor and City Council disagree with the Grand Jury’s finding. CPD does not enter into agreements that do not have an inherent net benefit to the City. Each agreement is unique, and the foundation of each partnership is the value to the City, which is carefully reviewed and negotiated by CPD. Additionally, marketing partnerships agreements are often reviewed and approved by the City Council, which also considers the value to the City. Partnership agreements include one or more of the following benefits: financial – e.g., Toyota partnership provides Lifeguard vehicles the City would otherwise have to purchase or lease; public benefits – e.g., Discover Bike delivers a public bikesharing program, which provides an option for alternative transportation; efficiencies – e.g., Toro Co. has an exclusive agreement to provide golf course maintenance equipment and provides the City with in-kind values for ongoing equipment needs, tournament support, and irrigation support services; and employee benefits – e.g., Sharp HealthCare provides wellness classes and flu vaccinations for City employees (as well as community wellness workshops for San Diego residents).

The Grand Jury report does not include a Finding 08.

Failure to adequately describe the sponsorship opportunity could reduce the number of potential respondents. Response: The Mayor and City Council agree with the Grand Jury’s finding.

Failure to identify the responsible administrative department can result in lack of accountability in managing an agreement, including lost revenue. Response: The Mayor and City Council agree with the Grand Jury’s finding.