Saturday, October 28, 2017

Development Corp Gets $6 million Bill from City

Finance Director Tina Diershke presented a bill of $2,380,000 to the Development Corporation board on Wednesday.  She explained, "When we did the bond refunding in 2012 for some reason it was not properly allocated to the Development Corporation." Nor was it budgeted for the Development Corporation's debt service.  Dierschke said the bill would be $1.4 million per year for the next three years.

The timing is ironic for two reasons.  First, the news comes as the city nears the end of the first month in its new fiscal year.  The second irony is the board approved a $578,000 annual agreement for city services.  The agreement states the city will:

Provide financial analysis and projections on available funds, sales tax trends, bonding capacity, and voter-approved project, as requested by COSADC Board.

Determine allocation of cost of services for COSADC budget as part of the indirect costs contract with consultant or other comparable means, . 

Assist COSADC staff in the preparation of the annual COSADC budget

Audit COSADC agreements, administrative files and financial records for compliance with relevant requirements and regulations. 
The Development Corporation board pays an annual fee for city management services.  Management owes this board a reason for the $6 million miss which lingered over five years of fiscal audits and city budgets.

Consider the language from the City's 2013-2014 budget:

General Debt Service Fund
This fund is used to repay the principal and interest on debt. For fiscal year 2014, $.08 of the property tax rate is designated for this fund. This year, approximately 54% of total revenue collected comes from both current and delinquent property tax collections and 46% reflects transfers from the Development Corporation to service the debt for type B sales tax community development capital projects. The remaining revenue is interest. Debt requirements change from year to year and activity in this fund will vary accordingly.
The city went through four more budget cycles without catching the error.  It had five external audits that also missed the error.

The City of San Angelo’s Finance Department has for the fourth straight year earned the Certificate of Achievement for Excellence in Financial Reporting for its 2016 comprehensive annual financial report.
The Development Corporation Board will take up a budget amendment to fix for the five year budget/audit error.  A number of board members were less than happy with the surprise development.

This is a quality of service issue as the error could have been caught during budget preparation or the annual audit. At least ten error catching opportunities were missed over the last five years.  The Development Corporation paid the city over $1.3 million for administrative support services for the last three of the five years.

In their last meeting the Development Corporation approved buying the city's illegal dump site for future economic development and endorsed a city services agreement that is 23% higher than two years ago.  For one meeting it looked as if the Development Corporation got dumped on by the city.

City leaders owe this board a clear and thorough investigation/analysis, not a strong suit for City Manager Daniel Valenzuela 

Monday, October 23, 2017

City Bill for Development Corp Balloons

The City of San Angelo Development Corporation will consider approving an agreement with the City of San Angelo for administrative services.  The proposed amount for FY 2018 is nearly $580,000.  That's up over $100,000 in two short years.

$578,088 - 2018
$513,677 - 2017
$471,273 - 2016
That's a 23% increase over the 2016 rate.  The Development Corporation board will undertake this item nearly one month into FY 2018.

The City of San Angelo operates under the speed of billing.   

Sunday, October 22, 2017

City Water Fund: Gushing at Year End

Citizens rained money into the City of San Angelo's water fund this summer.  Cash poured in such that the city hit its $3.1 million water fund target with three months to spare.  With one month to go the fund was over target by $1.5 million

The city's Water Enterprise fund had a $4.6 million fund balance as of 8-31-17.  This represented 75.3 days of cash on hand.  How much did fund balance grow with the city booking nearly $2.6 million in water revenue for the month of September?  September water revenues beat August's by over $575,000 so it could be a very green month for city coffers.

Water prices are slated for another annual increase in January.  The rebate discussion looms.  How much will the city transfer from water fund balance at the end of the 2016-17 fiscal year?  It's West Texas, where we're used to gushers and droughts.

Sunday, October 15, 2017

MedHab's StepRite: Ready to Heal?

StepRite, MedHab's long awaited signature rehabilitation product, finally has its own website.  Two critical hurdles for StepRite have been FDA approval and Medicare's agreeing to pay for the device.  MedHab founder Johnny Ross said the company achieved FDA approval in a March 2016 interview.

Less than a year remains on MedHab's $3.5 million economic development agreement with the City of San Angelo.  MedHab raised capital three times after inking the deal with the City.  Might the company be ready to ramp up StepRite?  That would be news. 

Monday, October 02, 2017

City Council: Selling Unauthorized Dump to Development Corporation

San Angelo's City Council will tackle the sale of 17.58 acres to the Development Corporation on 10-3-17.  This is the third time this topic has been on public agenda, twice for City Council and once for COSADC.  Not once has any city staffer or representative informed the public that the property formerly housed the city's incinerator and served as an unauthorized dump for household garbage for a decade after the incinerator was shut down.

The Development Corporation will conduct Phase 1 and 2 Environmental Site Assessments on the property.  For $1,500 more the engineering firm will provide a Remediation Cost Estimate.  That cost likely will dwarf the up to $100,000 in sales tax money Council and the Development Corporation approved to date.

This item may not be discussed as it is on the Consent Agenda.  The Consent Agenda has twelve items and the Regular Agenda only four.  That's one way to conduct business.

Update 10-3-17:  The item was pulled from consent by City Councilwoman Billie DeWitt.  Development Chief Roland Pena.  Mayor Brenda Gunther asked if there was reason to believe there might be environmental problems?  Pena said no but the studies are needed to confirm.  The history of the site was once again kept below ground.  The city posted the last environmental assessment of the property on its website.  Symbolically the document opens upside down.

Update 1-28-18:  The Development Corporation will take up this property in Executive Session at its 1-31-18 meeting.

Update 4-2-18:  The Development Corporation returned the land to the city after completing environmental studies and a remediation cost estimate..