TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Trang Nguyen, Finance Director
1. Subject
title
Software Services Agreement with Fifth Asset, Inc. d/b/a DebtBook for Accounting for Debt Service, Leases, and Subscription Based Information Technology Arrangements.
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2. Summary
A three-year Agreement with Fifth Asset, Inc. d/b/a DebtBook to provide a software-based module for efficiently tracking the City’s debt service obligations as well as Accounting for Leases and Subscription Based Information Technology Arrangements.
3. Recommended Action
recommendation
Approve the agreement with Fifth Asset, Inc. d/b/a DebtBook in the amount of $43,500 for a software subscription to track the City’s debt service obligations, leases, and Subscription Based Information Technology Arrangements; and authorize the Mayor and City Clerk to execute on behalf of the City.
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4. Fiscal Impact
The total expenditure for this three-year agreement is $43,500 and will be funded as follows:
General Fund (100) $37,500 in acct #100.1231.51670.00000
Orange Merged Capital Projects (940) $ 3,000 in acct #940.9810.51630.00000
CFD 91-2 Serrano Heights (876) $ 1,500 in acct #876.20354
CFD 06-1 Del Rio (878) $ 1,500 in acct #878.20354
5. Strategic Plan Goals
Goal 2: Be a fiscally healthy community
a: Expend fiscal resources responsibly.
d: Effectively manage and develop City assets.
6. Discussion and Background
The Governmental Accounting Standards Board (GASB) has recently adopted two new standards which address enhanced accounting for Leases (GASB 87) and Subscription Based Information Technology Arrangements (GASB 96). In each case, it establishes a model for accounting based on the foundational principle that leases and subscriptions are financings of the right to use an underlying asset.
In Fiscal Year 2022-23 the Finance Department’s Accounting Division evaluated options for calculating and tracking these underlying assets and entered into a one-year agreement with Fifth Asset, Inc. d/b/a DebtBook for $8,775. The software greatly enhances the division’s ability to properly track and report the 25 leases and 39 subscriptions.
In addition, with the need for greater transparency, staff identified the benefit of using the DebtBook debt management software to accurately report cash flow needs, debt service payments, and debt balances for both the City’s debt issuances (Pension Obligation and Lease Revenue bonds), Successor Agency bonds, and pass-through debt (Del Rio and Serrano Heights CFD bonds).
This agreement is for a three-year term and includes the accounting modules for Leases, Subscription Based Information Technology Arrangements, and Debt Management as follows:
Year 1 $13,000
Year 2 $14,500
Year 3 $16,000
7. ATTACHMENTS
• Software Services Agreement