COMMITMENT • INTEGRITY • LEADERSHIP

City of Montebello
Its Structural Deficit and Poor Operational Processes Threaten the City's Financial Stability and Delivery of Public Services

Report Number: 2018-802

HIGH RISK ISSUES

City of Montebello, Los Angeles County Risk Designation: High Risk

ISSUE

Montebello's Enterprise Funds and Long-Term Obligations Pose a Significant Financial Risk to the City
Montebello Relies Heavily on One-Time Revenues to Balance Its Budget
Montebello Has Not Addressed Its Municipal Golf Course's Increasing Debt to the City's General Fund
Unless Montebello Sells Its Water System or Secures Alternative Financing, Necessary Improvements Could Burden the City's General Fund in the Future
Montebello's Retirement Costs Could Burden the City's Finances in Future Years

Montebello's Hotels Pose an Ongoing Risk To the City's General Fund
Montebello's Hotel Bonds Could Impair the City's General Fund
The City's Mismanagement of Hotel Revenues Has Cost Montebello At Least $1.6 Million
Montebello Has Not Ensured That It Receives the Best Value From Its Agreements With the Hotel Operator

Its Poor Contracting Practices and Unresolved Staffing Needs Hinder Montebello's Ability to Provide Services to Its Residents
Montebello Should Do More to Monitor the City Manager's Contracting Activities
The City Did Not Always Follow Competitive Bidding Processes and Has Not Adequately Ensured That It Receives the Best Value for Services
Montebello Has Not Addressed Some of the Deficiencies Identified by the State Controller
Montebello's Poor Control Over Its Petty Cash and Its Lack of Credit Card Policies and Procedures Could Lead to Fraud
Lack of Consistent Leadership and Competitive Salaries Have Reduced the Effectiveness of the City's Departments

Appendices
Appendix A—Scope and Methodology
Appendix B—The California State Auditor's High-Risk Local Government Agency Audit Program

Agency Response
City of Montebello
California State Auditor’s Comments on the Response From the City of Montebello