P/cloudy
25°
P/cloudy
Hi 28° | Lo 2°

Claremont Manager Praises Audit

Claremont — Restoring the city’s fund balance to a healthier amount and continuing to pay down debt are two of the goals City Manager Guy Santagate has following the release of the city’s financial audit for the period ending Dec. 31, 2012.

While Santagate described the audit as “clean,” noting also there was no management letter recommending changes in accounting practices, he said there are some areas that he would like to see improvement. Chief among these is the city’s unassigned fund balance, also known as a rainy day fund.

“I think we will build the fund balance back up this year as of Dec. 31, 2013,” Santagate said.

According to the audit report, the rainy day fund is at a negative $1.8 million, based on “generally accepted accounting principles.” However, when anticipated property tax revenue is added in, which the state Department of Revenue Administration allows when calculating the fund balance, the figure is a positive $550,000.

“We are going to collect those (property taxes) or we take the property,” Santagate said at this month’s city council meeting, emphasizing that the money owed to the city is as good as cash and when it becomes more than 30 days past due, the interest is 12 percent.

Even if the anticipated property tax revenue is made part of the rainy day fund calculation, the figure is at 1.8 percent of the budget, which is well below the 5 to 15 percent the city has established as a benchmark.

“You are definitely low compared to your policy statement,” Frank Biron with the auditing firm Melanson Heath of Nashua told the city council.

The audit’s financial highlights also show a decrease of $1.4 million in long-term debt to $31 million, which includes debt under the water and sewer departments. Those are paid by user fees, not taxes. The city’s total assets, including buildings and infrastructure rose $3.1 million to nearly $62 million.

Another area of concern for Santagate is the downtown Tax Increment Finance district, which has been running a deficit and needs revenue from the River Road TIF district to meet annual bond payments. A tax increment finance district is a geographic area where public infrastructure improvements are bonded with the expectation that private investment in the district will raise sufficient additional tax revenue to cover the annual payments on the bond.

Financing Director Mary Walter said the downtown district is generating a deficit of about $222,000 annually.

Walter said as the debt payments decrease, the downtown district will be running a deficit of about $90,000 by 2015 and it is hoped that the deficit will be covered by a further increase in the assessed value of property in the district.

“This is a problem, no doubt,” said Santagate last week.

Overall though, Santagate said he was pleased with the audit and report from the auditors.

“There are no material deficiencies and no new recommendations for us, which is unique for a city this size,” he said.

Patrick O’Grady can be reached at ogrady56@yahoo.com.