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02-13-1984 - Special o o CITY COUNCIL OF EDGEWATER SPECIAL MEETING FEBRUARY 13, 1984 MINUTES Mayor David Ledbetter called the Special Meeting to order at 1 :02PM in the Community Center. Mayor Ledbetter stated the purpose of the meeting was for the: Resolution for combined Planning and Zoning Board appointments, Belle Amusements request for carnival February 14-19, and Presentation of audit for FY 1983. ROLL CALL Mayor David Ledbetter Councilman Melbourne Wargo Councilwoman Gigi Bennington Councilman Neil Asting Present Present Present Present Councilman Jack Spencer City Attorney Jose' Alvarez City Clerk Connie Kinsey Police Chief Earl Baugh Present Excused Present Excused Resolution for Combined Planning and Zoning Board Appointments - Councilman Spencer stated that they need to fill in the different names for the terms so the Board will start out with a staggered succession. He suggested they take the people who had just been on the former boards who had the longest unexpired term and give them the longest term. Councilwoman Bennington agreed with that. Councilman Spencer moved that Council adopt Resolution 84-R-9 with the terms of appointments as follows: Jake Wheeler and Fred Finn, 3 years; George Quaggin and Don Bennington, 2 years; and Greg Stewart, Lyle Chenoweth, and Ann Thomas, 1 year, with terms to end February 13th each year. Councilwoman Bennington seconded the motion. Motion CARRIED 4-1. Councilman Wargo voted NO. Belle Amusements Request for Carnival February 14-19 - City Clerk Kinsey said she had a call after the last meeting and the hours they wanted would be 5PM to llPM. She said she was told that they'd get a copy of their Milwaukee license and the owner's permission plus a County license but she hadn't heard from him. Councilman Spencer asked if the man knew the meeting was today and City Clerk Kinsey said yes. Councilwoman Bennington asked if he had a Volusia County license when he operated in Oak Hill. City Clerk Kinsey said he should have but he'd told her they don't have a County license. Mayor Ledbetter noted that it's a very dangerous intersection there and 5P~1 to llPM it would need constant traffic control and asked if they're bearing the price for the Police to direct traffic at the expense of the taxpayer. Councilman Asting said held mentioned that he'd bear the expense of providing an officer at the intersection and agreed that it's a dangerous inter- section. Mayor Ledbetter asked if there would be money in advance and Councilman Asting said they should insist on that. Councilwoman Bennington noted that this would be in effect the next day and she didn't think they should consider it if he doesn't come. Councilman Asting moved to TABLE this. Councilwoman Bennington seconded the motion. Councilman Wargo stated that this is highly dangerous and the fact that he doesn't have a sponsor puts the liability on the City and the City doesn1t want to face another law- suit and he didn't feel they should allow them here. Motion CARRIED 3-2. Councilman Wargo and Mayor Ledbetter voted NO. Presentation of Audit for FY 1983 - Councilman Spencer moved to recess the Special Meeting to a Workshop. It was pointed out that it wasn't called as a Workshop so Councilman Spencer withdrew hi s moti on. Mr. Brent Millikan and Mr. Alex Kish were present from Brent Millikan & Co.,CPA, to review the audit. Mr. Millikan noted that this is the first year the City is going for a Certificate of Conformance and they'll take five copies of the audit and send them to Chicago. They are then sent to some independent judges who grade them to see if they're a perfect example of what a City's financial statement should be. He said he had Alex Kish judge them as he is one of the judges for other statements. Mr. Kish said these for the City will be done on the West coast. Mr. Millikan said there's a considerable amount of statistics involved and when they obtain a certificate of conformance they are placed on a list that goes to bonding rating agencies and it makes the City look in a better light and is attached to the financial statement next year. He said he feels comfortable that these will meet the requirements and it's unusual for a city to get a certificate the first time and usually you just get review comments on how to get it the next year. He said every city that they submitted has been accepted. o o Councilman Spencer asked the name and Mr. Millikan said it's the Municipal Finance Officers Association. Councilman Spencer asked if the award if based on format or content. Mr. Millikan said it's a blessing on the financial disclosure practices of the City and there's nothing hidden in it. Mr. Kish said Wall Street rating agencies look at it in the light that they know the information is somewhere in the.r~port a~d nothing is hidden. Mr. Millikan said there was a tremendous amount of addltlona1 dlS- closures and prior yearsl statements that had to be squared away. Councilman Spencer thanked them for the opportunity to come to their office to review it and said he was sorry he cou1dn't do that and only Councilman Asting was able to take advantage of it. Mr. Millikan noted that they picked the five best in the United States and Canada and the Utilities Commission was picked as one of those five and will be used fo~ t~xtbook disclosure. He also stated that Alex Kish was asked by MFOA to speak at thelr lnter- national convention and he spoke last year and will again this year on enterprise funds. Mr. Kish began the review of the audit by page. He noted that he couldn't get information from Banker's Life as it just wasn't available. He said that customer deposits are in the restricted assets and Councilman Spencer asked if that's water and sewer when a new customer goes on line. Mr. Kish said it is and there's money in customer deposits in excess of restricted amounts. He said fixed assets went from $6,687,000 to $7,400,000 this year and said it was for projects such as equipment repairs, computer upgrading, etc. He said the assets increased about 24% over last year. He noted that the equity increased about $214,000. this year. He said the expenditures increased this year but most of it was due to the Florida Shores street paving program and there's an excess of expenditures of $89,556. He said there are transfers of monies going back and forth between the funds. He said they'd elected not to go to the bond market and got a loan from the general fund and that money vli11 be paid back with the receipts collected on the assessments. He said the City's share of $114,657. will not be repaid and that is reflected. Mr. Kish said they adjusted the fund balance for licenses of $227,000. He said the operating revenue for water and sewer was $751,448. and expenses of $912,135. with an operating loss of $52,816. He noted that the total non-operating revenue was $196,662. and the net increase from enterprise operations is $82,385 with balances the end of the year of $874,855. He noted that the enterprise fund is in good financial shape. There was a discussion between Councilman Spencer and Mr. Kish regarding deficits. Mayor Ledbetter reviewed some of the provisions of Ordinance 400. Councilman Spencer noted that they were criticized because of the ad valorem tax rate but he thought it was common practice to apply the utility tax to general fund. Mr. Kish said on page 4 the 1eval of ad valorem dropped because of the t~ sales tax. Mayor Ledbetter noted that they lost a lot by taking the homestead exemption up. and Mr. Kish agreed, and referred to page 69 regarding the assessed taxable values. He noted that they had more exemptions added to the tax roll than growth. Mr. Millikan stated the people demand service and it puts the burden on fewer people. Mr. Kish pointed out that last year was one of the best in collection of levies, which was 97.45%, and that a bond analyst would know that not one individual or business could deteriorate the City's tax base. Mr. Millikan noted that Coronado Paint is the only business. Mr. Kish stated that when they got to a certain point with Banker's Life they put them on an experience fund basis that shows what you're earning and what you1re paying out. He spoke on the annuity contract when someone retires. He noted that there was an amount in 1982 for occupational licenses in September but it should have been run in 1983 as they're deferred revenues. Councilwoman Bennington questioned if making them due in December would create a problem and Mr. Kish said it would make no difference. Mr. Millikan pointed out that's where the adjust- ment came in, and if they're paid early they go on deferred revenue. Mr. Kish noted that on the special assessments, the installments will be considered current income. Councilman Spencer questioned the normal time for revenue bonds and Mr. Millikan said the theory is to make the person using the facility pay for it and it's normally about 30 years if a plant is going to last that long. -2- Council Special Meeting Minutes February 13, 1984, 1 :00 PM , ' o o Mr. Kish then reviewed pages 40 and 41 and also spoke on pages 64 and 65, which is a summary of the general governmental expenditures by function for the last ten years. Councilman Spencer questioned Economic Environment and Mr. Kish said it would be like CETA or the Industrial Board. Mr. Kish noted that Physical Environment is for something like a health grant and it was transferred to garbage from Federal Revenue Sharing for capital outlay and it would be for enterprise activity. There was a comparison of the assessed value on table 4. Mr. Kish noted that the property tax rates went from 6.690 in 1974 to 5.049 in 1983 and there was a dropped amount of valuation because of the homestead exemptions. He pointed out that table 6 is the legal debt margin and that table 7 shows that Edgewater doesn't have overlapping debts except vacations and sick leave. He noted that the citizens can be held responsible for debts of the Volusia County School Board or the Southeast Volusia Hospital District. He said table 8 shows a summary of revenue bond coverage for water and sewer bonds for the last ten years, and noted that this doesn't include utility service tax. Mayor Ledbetter reviewed the amount needed to be kept in the fund per Ordinance 400. Mr. Kish reviewed table 9 which was demographic statistics for the last ten fiscal years. He noted that table 10 had 9 years of property value,construction and bank deposits and said that there is about $35,000,000. on deposit in the banks and savings and loans which is invested in local institutions. Mr. Millikan pointed out that the income is low because there are so many retired people in town. Mr. Kish said table 11 is a summary of the ten largest single unit water users, table 12 is a list of the principal taxpayers, table 13 is a schedule of insurance in force, and table 14 covers miscellaneous statistics. Councilman Asting said he'd like to see the number crmiles within the corporate limits of the City be enlarged. There was a recess at 2:50 PM. Meeting returned to session at 2:56PM. Mr. Kish then reviewed the Report on Internal Control, starting on page 82. He noted an instance of a signed check that was misplaced by City personnel and there was not a stop payment issued on the check. City Clerk Kinsey said that a stop payment has been issued since then. Mr. Kish pointed out that the water-sewer inventory system needs perpetually maintained by the person in charge and there should be a split up of the duties. He said last year they purchased a lot of pipe and had to reconcile the amount that was left. He suggested that in addition to the physical inventory of the water & sewer, there should be a monthly stores issuance sent to the Finance Department for booking into the general ledger system. Mr. Kish said a work order system should be implemented and he'd send a copy of some of the forms used by other entities to show how they're being used. He noted that the City can capitalize some of the costs. Councilwoman Bennington asked if culverts could be used also and Mr. Kish said it would help to determine the cost to the people. Councilman Spencer said it could be used for Utilities and Public Works and they could check to see if they could do it for Parks and Recreation also since they have two construction grants and some of the work will be done by City employees and could be charged to the grants. Mr. Kish said the property control system has improved but he'd suggest surprise physical counts be made. Mr. Kish said they couldn't locate certain purchase order copies of voided orders, and there were about 9 that couldn't be located and 20 without the first copy. He noted that this has been tightened up now. Councilman Spencer asked if the audit would uncover fraud, and if any of their work indicated a suspicion of fraud. Mr. Kish said no, and they'd communicate immediately with the Council if so and then would follow it up in writing. Mr. Millikan confirmed that they had nothing in this to indicate fraud. Councilman Spencer asked if they should change the cash handling for the City and Mr. Kish said they have made changes and improvements. Mr. Kish noted that the management letter is for lesser items that need to be brought to their attention and appropriate action has been taken in most of them. He said on investment earnings they noted a number of low yield passback accoun~ and they could take some out and put it in interest yielding. He said the State Board of Administration has pooled investment programs. -3- Council Special Meeting Minutes February 13, 1984, 1 :00 PM o o Councilman Asting asked if it's a requirement that money from the sinking fund be placed in a passbook account. City Clerk Kinsey said it's a separate account but in a passbook account. Mr. Kish and Mr. Millikan suggested they might get bond counsel written confirmation as to how to interpret the ordinance or resolutions and maybe the could co-mingle the funds. Mr. Kish pointed out that the State Board of Administration has a tremendous package and it would bear looking into but it's not long term and fluctuates each day. Mr. Kish noted that the pension information and other items are required for the Auditor General's office. He said on compensated expenses, they made an adjustment on that. He pointed out that there were two individuals who took their vacations before they were earned. He said management is implementing a system that requires approval of all vacation requests. Mr. Kish said one of the Building Officials was issuing electrical and mechanical permits on the application forms. He said the numerical control of the building permits was not maintained but it's transferred to building and they keep it now. Mr. Kish said on the roof repairs at the City Barn, there was no check made to see if the contractor had a competency card or an occupational license issued. He pointed out that the Certificate of Competency card has been revised to the Certificate of Registration without revision of the wording to Code section 11-7. Mr. Kish pointed out that the Utility rates indicate that operating revenue will not recover the Utility expenditures. Mr. Kish stated that on payroll withholding deductions, there were some instances where there was no back up for these deductions. Mr. Kish noted that there was no fund established for Special Assessments but they had expenditures and the construction activity was taken care of in the General fund and they made a retroactive cumulative adjustment as if that had been in a special fund. Mr. Kish pointed out that they need an Accounting Policies and Routine Procedures Manual that has job descriptions, accounting procedures, etc. Councilman Spencer asked how they can get this done since it's the second year it's been brought up. Mr. Kish said they.re about half there and there was a considerable amount of work already done on the project. Mr. Millikan said they feel that the City has made a lot of improvement and is functioning more efficiently than they were two years ago. City Clerk Kinsey thanked Mr. Millikan and Mr. Kish and all the members in their office for all the assistance and said they had been very helpful. Mayor Ledbetter asked if they're still paying a man out of petty cash to climb the water tower. City Clerk Kinsey said they paid them for years out of petty cash but now they get it with the payroll check. Councilman Spencer asked about low cost banking services by advertising. Mr. Millikan said they have assisted a number of clients with this and they have the blank papers they can use. City Clerk Kinsey noted that she has a set to review. Mr. Kish said sometimes they can get the service of free checks or other free services but they can get compensated balances up to a certain amount. Councilman Spencer said it appears to him that the City.s financial condition is very healthy. Mr. Kish said he feels they are very strong financially. Councilman Spencer thanked them for coming and said the report was excellent and gave them a lot of information and he finds it very convenient to be able to get in touch with Mr. Kish when necessary. -4- Special Council Meeting Minutes February 13, 1984, 1:00 PM ~ . o o Councilman Asting moved to accept the audit. for the fiscal year ending September 30, 1983. Councilman Spencer seconded the motion. Motion CARRIED 5-0. Mr. Millikan presented a proposal for auditing services for the 1983-1984 fiscal year. Councilman Asting moved to employ the firm of Brent Millikan and Company to perform the audit for the fiscal year ending 1984. Councilman Spencer seconded for discussion. Councilman Spencer said held like to know the fees paid to the firm versus what was paid a year ago. Mr. Millikan said it was $24,000.00 last year and this year it was $26,500.00 due to the certificate of conformance requirements, problems in prior years that had to be corrected, assessment funds, compensated absences, pension plans, and occupational licenses. Mr. Millikan said they could probably do it for $24,000.00 next year and that should be a realistic fee plus theyld charge less if it cost less to do. Councilman Asting said he felt it was well worth it and the quality of work received and information contained in the report is invaluable to this Council and future Councils. Mayor Ledbetter said he thought it was one of the best audits in the City in the nearly nine years he's been on Council. Mr. Millikan said he felt next year's audit will be much easier to compile. Motion to employ the firm of Brent Millikan and Company for the 1983-1984 fiscal year CARRIED 5-0. Councilman Asting moved to adjourn the meeting. Councilman Spencer seconded the motion. Meeting was adjourned at 3:50 PM. Lura Sue Koser ~fi-7_ j ~ Minutes submitted by: OUNCI OMAN - ZONE TWO . ~ }d~~7 COUNCI~~ COUNCI ( AN -ZONE E'UR q"-<J ./ c7 7;f'/) I +~ ATTEST: ~ 1(~ '- Approved this:~~ day of ~~ ,1984. q;0QJreQ~~~ MAYDR ' ''-.j- '. -5- Special Council Meeting Minutes February 13, 1984, 1 :00 PM