STAFF REPORT

Operations Committee, January 3, 2008

Special Audit Reports (FN08-05)
Presentation of Special Auditor Reports for the fiscal year ended June 30, 2007
Speaker:  Mrs. Karen Mills
 

From:  Karen A. Mills, Finance Director
Prepared by:  Michelle W. Price, Controller
Approved by:  William B. Coleman, Jr., Town Manager
Approved by:  Benjamin T. Shivar, Assistant Town Manager

 

Due to special agreements and contracts, the Town of Cary is required to have additional “agreed upon procedures” performed in conjunction with the audit for the following issues:

●     Western Wake Regional Wastewater Management Facility project(s) – partner participation verification

●     Morrisville utility merger update – evaluation of the annual status of the Morrisville utility revenues and merger costs

These additional procedures were performed by our auditors, Cherry Bekaert & Holland, LLP, for the year ended June 30, 2007 in both of these areas.  The reports (WWRWMF and Morrisville Merger) have been distributed to each council member, management and utility partners.  No adverse findings were reported as a result of these procedures. The following is a summary of each report.

 

Western Wake Regional Wastewater Management Facility (WWRWMF)

The auditors’ procedures included review of all projects related to WWRWMF that are covered by the interlocal agreements with Apex, Morrisville, Holly Springs and Wake County.  Partner billings were reviewed for accuracy and the percentages billed were verified against the interlocal agreements and any related amendments.  Partner participation was found by the auditors to be accurate and compliant with the agreement.  See Exhibit A for a summarized schedule of the WWRWMF activity through June 30, 2007.

 

Morrisville Utility Merger Update

The auditors’ procedure included a review and verification of merger cost and related revenues, including review of detailed supporting documentation.  Where applicable, expenditures and revenues were agreed to the Town of Cary’s audited FY2007 Comprehensive Annual Financial Report (CAFR).  The auditors noted that calculations appeared to be mathematically accurate and information presented in the schedules was consistent with approved and audited information in the CAFR and budget documents, as well as consistent with the supporting documentation provided by staff.  See Exhibit B for an updated projection of the payoff schedule for Morrisville customers and a graph comparing the updated schedule with the initial merger consultant projections.

 

Fiscal Impact:  None

 

Staff Recommendation:  Staff recommends that Council minutes reflect the presentation of these two special reports.


 

EXHIBIT A

 

 

Western Wake Regional Wastewater Management Facility Projects

 

 

 

 

Schedule of Partner Participation

 

 

 

 

 

 

Expenditures billed through June 30, 2007

 

 

 

 

 

 

 

 Apex

 Holly Springs

 Morrisville

 Cary

Wake

County

 Covered by State Revolving Loan

 Total Expense

West Cary pump station & force main (land & other)

                     -  

                     -  

 

1,415,599.96

 

9,910,856.94

                     -  

                     91,133.89  

  11,417,590.79

Permitting & design

                     119,148.09  

 

107,159.18

27,904.57

196,217.86

                     -  

 

1,430,214.00

1,880,643.71

Land for plant site

 

2,143,279.36

                     -  

 

500,304.40

 

3,533,013.82

                     -  

                     -   

6,176,597.59

Land for effluent pump station

 

270,477.52

 

226,235.84

 

63,346.04

 

445,433.24

                     -  

                     -  

1,005,492.63

Development

 

18,109.19

 

15,147.09

 

4,241.19

 

29,822.95

                     -  

                     -  

67,320.42

General Plant

330,277.08

                     -  

 

79,421.47

 

558,855.95

28,450.00

 

1,965,916.10

2,962,920.60

Plant Pump Station & Force Main

 

70,752.45

68,541.44

17,135.36

119,947.52

                     -  

251,164.80

527,541.57

Project Management

34,370.27

6,822.56

10,813.12

76,721.64

                     -  

                     -  

128,727.59

W Reedy Creek Branch Gravity Sewer Interceptor

14,531.47

                     -  

15,354.01

107,203.86

                     -  

102,761.40

239,850.74

Beaver Creek Pump Station & Force Main

69,338.33

                     -  

25,549.91

186,369.27

                     -  

117,580.05

398,837.56

SCADA

12,492.80

12,102.40

3,025.60

21,179.2

                     -  

                     -  

48,800.00

Value Engineering

29,054.67

9,970.58

7,008.93

49,195.82

                     -  

                     -  

95,230.00

 

 

3,111,831.24

 

445,979.1

 

2,169,704.55

 

15,234,818.07

28,450.00

3,958,770.24

24,949,553.20

 


 

EXHIBIT B

Town of Cary and Town of Morrisville April 2006 Utility Merger

 

 

Contributed Revenues and Merger Cost Capital Outlays

 

 

 

 

Actual Results Through June 30, 2007 and Projections Through June 30, 2021

 

 

 

 

 

 

 

 

 

ACTUAL

ACTUAL

Projection

Projection

Projection

 

 

 

Year 2-6

Year 7-11

Year 12-15

 

FY 2006

FY 2007

FY 2008-12

FY 2013-17

FY 2018-21

Merger Cost Capital Outlays, including Equipment

7,084,267

4,156,866

29,196,125

7,947,149

9,656,133

 

 

 

 

 

 

Excess Revenues and Original Capital Contribution *

4,579,244

4,808,989

9,447,626

19,748,352

21,784,856

 *(Revenues less non-capital expenditures)

 

 

 

 

 

 

 

 

 

 

 

Contributed Revenues Over (Under) Merger Cost Capital Outlays

(2,505,023)

652,123

(19,748,499)

20,930,773

29,387,888

 

 

 

 

 

 

Cumulative Contributed Revenues Over (Under) Merger Cost Capital Outlays

(2,505,023)

(1,852,900)

(21,601,399)

(18,414,904)

(16,095,079)

 

 

 

 

 

 

Present Value of Cumulative Contributed Revenues Over (Under) Merger Cost Capital Outlays

(2,505,023)

(1,852,900)

(20,684,564)

(7,920,386)

6,309,520

April 2006 Projected Present Value of Cumulative Contributed Revenues Over (Under) Merger Cost Capital Outlays

(6,234,778)

(14,228,442)

(24,940,811)

(9,670,408)

1,302

 

 

 

 

 

 

Note: Morrisville Annual Rate Increases are projected to be 1% Over and Above Cary Rate Increases for the entire payoff period.