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October 21, 2017

Jamie Taylor/river news

Amanda Mboga of the accounting firm of Baker Tilly Virchow Krause briefs the City Council Monday on the firmís recent audit of the cityís finances.
Jamie Taylor/river news

Amanda Mboga of the accounting firm of Baker Tilly Virchow Krause briefs the City Council Monday on the firmís recent audit of the cityís finances.
10/12/2017 7:27:00 AM
City Council sets date for special meeting on administrator
Panel also hears results of annual financial audit

Jamie Taylor
River News Reporter


The Rhinelander City Council will hold a special meeting at 5 p.m. Oct. 23 to discuss whether the city administrator position should be a part or full-time position. The panel set the date during its regular meeting Monday, at which time it also received the results of a recent audit of the city's finances.

Ahead of the special meeting, alderpersons will receive the contract for interim administrator Keith Kost, who is serving in a part-time capacity, as well as the contracts of the previous four administrators and the job descriptions for the position as it has been applied over those terms.

Kost's contract is set to expire at the end of December and the city's finance committee suggested last week that the full council should meet to discuss the matter. The contract the council approved Feb. 13 set Kost's annual salary at $51,000 for three-day work weeks, typically Monday through Wednesday, although it was understood that he might need to occasionally put in additional time as required to effectively conduct city business.

The proposed 2018 budget for the administrator's office currently lists the position as being paid as full-time. With Kost only receiving a part-time salary, the department is projected to save $88,7222 from the $599,388 budgeted for 2017. The proposed 2018 budget is set at $573,307, down $26,081 from this year.

Kost has said he is willing to stay on as a part-time administrator for as long as the city is happy with his performance. He also said he would be willing to stay on until a full-time replacement could be named plus a couple of weeks beyond their starting date to get them up to speed.

If the council decides to keep the city administrator position at part-time and keep Kost, the city attorney and mayor Dick Johns would begin negotiations with him following the special council meeting. Any final contract would have to be approved by the finance committee and the full council.

Audit report

The meeting started with a presentation from Amanda Mboga of the accounting firm of Baker Tilly Virchow Krause, LLP on the recent audit.

Mboga first discussed the health of the city's general fund as of Dec. 31, 2016. The report said the total general fund balance for the city was $2,969,887, of which $1,800,685 were either in a nonspendable form or legal or contractual obligations require them to be maintained intact. The remaining $1,169,202 was classified as unassigned.

"If we compare the available fund balance to the expenditures of the general fund for the year, we come up with a percentage of about 16.3 percent," Mboga said. "Which has been trending downward and has for the last two years."

The graph in the summary shows that the percentage in 2015 was 18.37 and 21.96 in 2014. She said the current percentage is at the minimum level the Government Finance Office Association recommends for cites to maintain, which represents a reserve of about two months of unassigned spending.

"The city does have its own internal fund balance policy, also, with a goal of about 25 percent," she said. "It also says that if it should fall below 15 percent, that would be cause for concern and that action would have to be taken."

Because of this, the city currently isn't at the internal goal it has set for itself, she added.

Mboga then walked the council through the city's general obligation debt. She said the city has a debt capacity of almost $30 million, of which it has used $16,830,309 or about 57 percent.

"That has been fairly consistent over the last three years," Mboga said.

The next page of the summary showed the analysis of debt service of governmental funds for non-capital expenditures, which was 26.59-percent for 2016.

"That is above what the bond rating agencies recommend as a maximum, but the reason for that is because the principal includes the refunding that you did," she said. "So you borrowed in order to pay off a different obligation. That is running through the principal line here and is a non-recurring item. So even though it is above the line, it is not a cause for concern."

When examining the water utility's income statement for the year, the operating revenue was above the operating expenses, the second year this has occurred since 2014.

"The last rate increase for water was done in mid-2015, and you can see the difference between 2014 from 2015 and 2016 when it has been in effect for a full year," Mboga said.

The report showed that the water utility has a contingency fund that would cover over 6.5 months of operations, well above the minimum recommended target of three months.

The wastewater utility also had revenues that exceeded operating expenses, with the last rate increase coming in mid-2014. The utility has enough unrestricted cash on hand to cover 4.3 months of expenses, with the minimum recommended target being three months, Mboga said.

In addition, the report notes that additional funds have been set aside as restricted for capital improvements and debt payments.

The city has two non-major enterprise funds - storm water utility and Northwood Golf Course - that are showing losses, according to the report, and have been running deficits for at least the last three years.

The storm water utility saw its deficit grow from $374,167 in 2015 to $1,956,242 for 2016, due primarily to the downtown streetscape project.

"The golf course has been steadily growing in both the cash and investments and unrestricted net position (deficit), and that has continued for 2016, as well," Mboga said.

That report shows that the golf course owes $1,176,522 to the general fund with its overall deficit being $1,182,559.

In summary, Mboga said the city met its benchmarks in 2016 and exceeded them in some areas.

"The biggest things to watch would probably be the fund balance in the general fund and the golf course," she said. "And also the storm water utility."

In other action, the council:

• Approved a limited term assistant for the city clerk's office for tax season at a cost not to exceed $2,500.

• Approved a lease for a new copier

• Approved accepting the insurance renewal quote from CVMIC.

• Approved the site plan for the Pizza Ranch restaurant to be built on land in a subdivided parcel on Eisenhower Parkway.

• Approved a chicken permit for 1021 Echo Lane.

• Approved a project certificate of substantial completion for the downtown project, along with the final change order and request for payment.

Jamie Taylor may be reached via email at jamie@rivernewsonline.com.





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