Santa Monica received another clean financial bill of health and is preparing to launch a major overhaul of its troubled permitting system by spring 2026, officials said during an audit subcommittee meeting Monday.
The city has consistently earned an unmodified opinion, the highest form of financial assurance, on its annual financial statements for at least four years, according to Ryan Domino, a partner with auditing firm LSL, who presented the interim audit results.
"The staff here do work very hard to maintain good controls over the accounting," Domino told the committee. "Overall, I do believe that staff do a very good job in having good policies and procedures."
However, the audit identified several areas requiring attention, including delayed bank reconciliations and the need for better capital asset tracking across city departments.
Major Permitting System Replacement Planned
The city is moving forward with replacing its current permitting system with a new platform called ‘Clarity’ in what Community Development Director Armine Chaparyan called "a massive system" implementation.
"Our goal is to continue using our existing system, and we are not ready to transition into Clarity at all. We're not just there yet," Chaparyan said, acknowledging concerns about potential system failures during rollout.
The new system aims to address long-standing complaints about permit processing delays by allowing multiple departments to work simultaneously on applications rather than sequentially. Currently, permits must pass through various city departments, including building and safety, public works, and code enforcement, often creating bottlenecks.
"When we say permitting, people always assume it's just in one division. It actually is not," Chaparyan explained. "There are so many that touch it."
The director said she is conducting field observations and analyzing internal operations to identify specific bottlenecks that may not be resolved by the new system alone.
Customer Service Initiatives Launch
The city has launched several customer service improvements while preparing for the larger system overhaul. A new ‘business concierge’ program connects businesses struggling with city processes to dedicated staff ambassadors who guide them through requirements.
"Our biggest goal is to retain businesses. It's to help our existing business to stay in business but expand," Chaparyan said. The program has already received about three dozen inquiries since launching.
The city is also exploring artificial intelligence tools that could pre-screen permit applications against city codes before submission, potentially reducing review times. California has entered into a contract for similar AI software that Santa Monica may be able to access through state procurement agreements.
Asset Tracking Issues Persist
The audit highlighted ongoing challenges with tracking city assets, particularly the disconnect between financial records and departmental inventory systems. The city's fleet management system tracks all vehicles, while the financial system only records assets worth more than $50,000.
"The financial system was never set up to be the physical asset inventory," explained Oscar Santiago from the city manager's office. Staff are working to synchronize these systems by June 2026.
Internal Audit Focuses on 311 System
Baker Tilly, the city's internal auditing firm, is conducting a performance audit of the 311 customer service system, which handled 55,000 requests last year with a team of five full-time staff members.
The audit will examine how the 311 system coordinates across departments and whether the city is using data effectively to allocate resources and identify service trends.
Committee member Dan Hall expressed particular interest in understanding whether all residents use the system equally, noting that "our wealthier and more in tuned residents probably utilize 311 quite heavily," while low-income, non-English speakers may not.
The meeting began with the swearing-in of new subcommittee member Juan Matute, bringing the committee to full capacity as it oversees the city's financial oversight and operational improvements.
The audit subcommittee will receive updates on the Clarity system implementation and other initiatives at future meetings as the city works to address long-standing operational challenges while maintaining its strong financial standing.