Item_4-d.i_EPHD_Memo_re_Outsourced_Accounting.pdf
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- Solicitation number
- 270105
- Issued by
- Pima County, Tucson City, Arizona
About this file
This memorandum from the El Pueblo Housing Development Board (EPHD), a municipally affiliated 501(c)(3) nonprofit subsidiary of the City of Tucson, Arizona, requests Board authorization to procure outsourced full-service accounting and financial management services. EPHD is seeking proposals from qualified accounting firms to provide comprehensive accounting and financial management services, with proposers permitted to submit for accounting services, audit services, or both. The organization develops, finances, owns, and preserves affordable housing utilizing various funding sources including LIHTC equity, federal grants (HOME, CDBG, ARPA), tax-exempt bonds, and philanthropic sources. The procurement is driven by expanding development activity and increasingly complex financial management requirements, including fund accounting for multiple restricted sources, development cost tracking, federal compliance documentation, tax preparation and filing, Section 3 and Davis-Bacon financial tracking, and audit requirements. No specific response deadlines, bid meetings, or award dates are provided in this memorandum.
The anticipated annual cost of outsourced accounting services is estimated at $500,000 in the first year and $350,000 in subsequent years, which EPHD projects will be lower than the fully burdened cost of an internal staffing model consisting of a dedicated controller, two senior accountants, and fractional CFO oversight. EPHD selected outsourcing to gain specialized affordable housing expertise that reduces audit risk, ensures federal compliance, supports stronger internal controls, and provides scalability during varying construction cycles. If a single firm provides both accounting and audit services, strict independence safeguards must be demonstrated in accordance with AICPA and Government Auditing Standards, including separate engagement teams, separate engagement partners, and annual written independence representations. The Board has authorized EPHD staff, in collaboration with the City of Tucson, to evaluate proposals and make the final selection.
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Text version
EL PUEBLO HOUSING DEVELOPMENT
BOARD MEMORANDUM
To: Board Directors From: Ann Chanecka, President Date: April 8, 2026
Subject: Authorization to Procure Outsourced Accounting Services
1. PURPOSE
The purpose of this memorandum is to request Board authorization to procure outsourced full-service accounting and financial management services for the Corporation.
2. BACKGROUND
EPHD is a municipally affiliated 501(c)(3) nonprofit responsible for developing, financing, and preserving affordable housing in coordination with the City of Tucson. The Corporation utilizes complex capital stacks including LIHTC equity, federal grants, bond financing, and philanthropic sources.
As development activity expands, financial management requirements have increased significantly in complexity, including:
• Fund accounting for multiple restricted sources
• Development cost tracking and cost certification support
• Federal compliance (HOME, CDBG, ARPA)
• Tax Preparation and Filing
• Section 3 and Davis-Bacon financial tracking
• Audit and potential Single Audit requirements
A u t h o r i z a t i o n t o P r o c u r e O u t s o u r c e d A c c o u n t i n g S e r v i c e s | 2
3. RATIONALE FOR OUTSOURCING
3.1 Specialized Affordable Housing Expertise
Affordable housing development accounting requires specialized knowledge of LIHTC basis calculations, developer fee accruals, partnership structures, and regulatory compliance. Outsourced firms with dedicated housing portfolios provide deeper technical expertise than general municipal accounting staff.
3.2 Resource Management
Hiring a full internal finance team (Controller + Staff Accountant + Compliance Support) would remove the burden of this work from the assigned City staff, allowing them to focus on City of Tucson business needs.
3.3 Scalability
Outsourced services provide flexibility to scale up during active construction periods and scale down during slower periods without long-term staffing commitments.
3.4 Risk Mitigation
An experienced firm reduces risk of:
• Audit findings
• Ineligible cost reimbursement
• Misstated LIHTC eligible basis
• Grant compliance violations
3.5 Stronger Internal Controls
A formalized outsourced structure supports documented policies, segregation of duties, and consistent reporting to the Board.
4. FINANCIAL IMPACT
The anticipated annual cost of outsourced accounting services is estimated at $500,000 in year one and $350,000 annually which is expected to be lower than a fully burdened internal staffing model (one dedicated controller, two dedicated senior accountants, oversight of one fractional CFO) and single audit requirements while providing specialized expertise.
A u t h o r i z a t i o n t o P r o c u r e O u t s o u r c e d A c c o u n t i n g S e r v i c e s | 3
5. REQUESTED BOARD ACTION
Staff requests the Board authorize issuance of the attached Request for Proposals (RFP) for Full-Service Accounting & Financial Management Services and delegate authority to EPHD staff, in collaboration with BSD staff, to evaluate proposals and make a selection.
| 1. PURPOSE |
| 2. BACKGROUND |
| 3. RATIONALE FOR OUTSOURCING |
| 3.1 Specialized Affordable Housing Expertise |
| 3.2 Resource Management |
| 3.3 Scalability |
| 3.4 Risk Mitigation |
| 3.5 Stronger Internal Controls |
| 4. FINANCIAL IMPACT |
| 5. REQUESTED BOARD ACTION |
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