The city of Bothell is reviewing some of its financial policies in the wake of findings from the Washington State Auditor’s Office from 2017.

The city received a management letter from the auditor’s office on Nov. 15, which noted discrepancies in the collection of impact fees. Bothell also had an audit finding on Nov. 21 that “the city did not verify that purchases made through its purchasing cooperative complied with the city’s adopted purchasing policy” when it procured two fire engines for $1,371,375.

Like every city in Washington, Bothell receives an accountability audit report each year from the state. City Manager Jennifer Phillips told the Reporter that it presents a chance to look at the city’s processes and policies, and “continue to make improvements.” Phillips acknowledged the second finding at the council’s Nov. 27 meeting.

“We did have an audit finding in our most recent audit, and it related to a piggybacking procurement that we did with another entity,” Phillips told the council. “It actually was, in my opinion, a more robust procurement process and resulted in better equipment that was purchased, but it did vary from our purchasing policy.”

“Piggybacking” refers to one local government making purchases from contracts awarded by another government or group of governments via an interlocal agreement or contract.

“One of the efficiencies in government is to piggyback off of other agencies’ procurement processes,” Phillips told the Reporter. “This is used nationwide, especially for jurisdictions our size.”

The discrepancy came from a “minor oversight” during the procurement process. Bothell’s purchasing policy specifically references “an invitation for bids” versus “a request for proposals,” Phillips said.

Phillips said it resulted in a better outcome for the community, because an RFP process allows a governmental agency an opportunity to negotiate, while an invitation for bids does not (according to Bothell’s policy, the city must award contract to the lowest responsible bidder).

“The city cannot demonstrate it adequately safeguarded public resources by ensuring that the purchase of two fire engines complied with its own purchasing policy,” according to the audit finding, though the city noted in its response that “the main purpose was to engage with the cooperative to purchase the fire trucks at the best possible price.”

In order to ensure that future purchases made through purchasing cooperatives or other government agencies comply with all statutory requirements, the city will work with departments and staff responsible for purchasing, to fully understand the procurement requirements, according to Bothell’s response. This will include staff trainings and review of the city’s purchasing policy.

The city may also bring on a staff member to help with purchasing. During the council’s review of the 2019-2020 budget, Phillips said the city used to have a procurement manager, but that position was cut several years ago and never restored.

She may look to bring back funding for the position, as the procurement process in the city is currently “decentralized,” meaning that each city department is responsible for managing its own process.

The city will also have to make adjustments to its impact fees, and is issuing bills or refunds for amounts under- and over-collected.

The city’s Community Development department receipts various impact fees, including traffic and fire impact fees. In 2017, the city collected $34,108 in fire impact fees and $2,539,993 in traffic impact fees, and in 2018 (through June 2018), the city receipted $93,403 in fire impact fees and $1,832,989 in traffic impact fees, according to the letter from the state auditor.

“During the audit, the city brought to our attention that there were discrepancies in the collection of these fees. Staff identified $14,364 of traffic impact fees that were under-collected and a net total of $53,992 in traffic and fire impact fees that were over-collected,” the letter noted.

The auditor noted that the department “did not have a formal policy or procedure that establishes aspects such as the types of impact fees to collect, the applicable rates to charge for each fee, when to apply the fee to the project, and responsibility for review and oversight of the calculation and collection of impact fees,” and recommended that the city establish one that that includes its process for calculating, administering, collecting and monitoring impact fees.

The auditor also identified an additional $21,292 in fire impact fees that were over-collected.

Bothell’s fire impact fees are fairly new. In April 2017, the fees were enacted to ensure development bears a share of the cost of capital facilities to accommodate growth.

All recent audit findings are available at www.sao.wa.gov.