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