Tempers flare over DDA financial concerns, leading to spending changes | News

Tempers flare over DDA financial concerns, leading to spending changes | News


OSCODA – “I think this is absolutely ridiculous. And, quite honestly, I’m surprised more people aren’t standing here pounding their hand on this board table right now. This is absurd,” fumed Oscoda Township Trustee Timothy Cummings during the July 23 board meeting. This came after Superintendent Dave Schaeffer revealed financial concerns surrounding the Downtown Development Authority (DDA).

Officials ultimately voted to have all DDA expenses approved by trustees prior to being expended, with the exception of standard utilities.

Schaeffer said he wanted to share with trustees the same financial analysis about the DDA which he also presented during the July 10 meeting of the authority.

“Besides now and the end of the year, we’re going to be trying to come up with a five-year financial plan for the DDA. And it’s going to be a little bit different situation in 2019. From 2017 to 2018 they carried in a beginning fund balance of over $62,000 and I don’t believe that’s going to be the scenario for 2019,” he cautioned.

This and other issues led to the formation of a DDA financial planning subcommittee, which is scheduled to meet with Schaeffer today (Wednesday).

He explained that the goal of the subcommittee is to better quantify the DDA’s known – plus projected – expenditures from now through the end of 2018.

Further, a joint meeting between trustees and DDA members to delve deeper into the issue has been scheduled for Friday, Aug. 10, at 11 a.m. in the Robert J. Parks Library.

Schaeffer has noted that he wants to spend some time with the DDA to be able to understand what it is they are going to have to request from the township, as a budget adjustment will be required for 2018.

He provided trustees with an analysis of DDA fund 248, which shows that the authority’s annual budget at $138,450. 

“Through the end of June 2018, the DDA spent $165,166 – or $26,000 more than its budgeted amount for 2018,” he said.

“So, when I see fund 248 is over budget halfway through the year, the first thing I try to understand is the cash position of the fund and how much money does fund 248 have in the bank,” he continued, adding that the township board will need to approve more appropriations to cover the DDA’s expenditures. 

“But I needed to better understand if the DDA had the money in the bank to increase 2018 appropriations,” Schaeffer pointed out.

“So the more I looked at the DDA’s cash in the bank versus known expenditures throughout the remainder of 2018, the closer and closer I got to zero dollars. And I wanted to raise the alarm in July, versus waiting until the end of the year and fund 248 lands up in the red,” he explained.

Schaeffer has also pointed out that timing is a factor, as the township has scheduled two upcoming budget workshops during which officials will be reviewing the 2018 year-to-date budget for all funds, including DDA fund 248.

To further complicate things, Schaeffer said there are some unknown expenditures which will need to be factored in, relating to the opening of the Huron Shores Artisan Hall (HSAH).

HSAH, a former Odd Fellow’s lodge, was reconstructed during a DDA-driven project which has been funded through a grant, as well as the authority securing a $100,000 install purchase contract.

According to documents shared by Schaeffer, at last check the DDA had approximately $45,989 in its regular account and $53,600 in the account which was established by Oscoda Township Treasurer Jaimie McGuire so payments could be made for HSAH construction.

When considering the projected revenues and expenditures, Schaeffer said this is how he came to the notion that the DDA is about $26,000 in the hole.

These complexities are the reasons behind the formation of the subcommittee, which has also been tasked with obtaining future cost estimates to operate the newly established HSAH. 

Schaeffer said the subcommittee platform will be used to clarify expenditures and come up with a plan so that, when he goes to the board with the DDA budget adjustment, he can clearly define the amount to be increased, how the DDA can cover it with the cash in the bank and so on.

“Did I understand you to say that, basically, they’ve got nothing left?” asked Cummings.

Schaeffer said he is working to figure this out, and the biggest factor involves the construction schedule for HSAH. The construction budget was $250,620 and the latest check in the amount of $29,968 was issued a few weeks ago to Butterson Construction, which redid the building. Following that payment, there would be $17,120 left.

“And so that is still, obviously, an outstanding amount that we’re going to be paying the contractor. So what I was trying to be able to piece together is the minimum required 2018 DDA appropriations,” Schaeffer said, pointing out that nothing is written in stone and he is working with McGuire to determine what is left in the bank accounts, what the known liabilities are and other elements surrounding this issue so that a plan can be developed.

“They will get their annual revenue posted again in March of 2019, so this is the funds we have to quantify – what’s going to be left between now and when they get more money,” he advised.

Since HSAH is now open, Schaeffer said he would expect Butterson to be submitting a final invoice in the very near future.

Trustee William Palmer pointed out that the previously mentioned deficit, combined with the final construction payment, would put the DDA deficit at about  $43,000.

Schaeffer said once July wraps up and the reports are done, he will be sharing these figures to show the budget amounts versus actual. He reiterated that things will become clearer before too long, and that this is just an estimate of the final figures.

He added that there are models available to help gauge how much water, electricity and so on will cost in a building such as HSAH, and that the DDA and the township will be a lot closer to some real answers after they meet on Aug. 1.

One example of the varying numbers was pointed out by Clerk John Nordeen, who said the kitchen equipment purchased for HSAH will be reimbursed through the U.S. Department of Agriculture grant which the DDA received to help fund the project.

“Two things that the board really needs to be aware of, too, is just a reminder that nobody was watching the budget from February to now,” McGuire told trustees, referencing the firing of former Community Development Coordinator and DDA Director Ann Richards during the Feb. 11 board meeting

“And also, there was an audit adjustment of $30,000 that takes a big chunk of that. That was done in June for 2017’s audit, just so you’re aware,” McGuire noted.

Nordeen elaborated, saying the cut was due to the paying back of an interfund loan, which he believes dates back to the downtown street scape project.

“What would have happened since February, Jaimie?” Cummings questioned.

“They’ve been working on this project and spending money and nobody has been watching that,” McGuire answered.

“Clearly. But wouldn’t the budget need to have been established in 2017?” Cummings responded.

McGuire agreed, but said the DDA has been moving forward with the project and spending money while no one has been monitoring same or pointing out things such as the $30,000 adjustment to their cash by the auditors. “That was a big hit for them.”

“Who writes checks for the DDA? Is it the DDA treasurer?” Cummings then asked.

“I write the checks for the DDA. They approve what they’re going to pay at the meetings, and that’s their whole board that approves those bills. And then they give me the minutes and I write the checks for them,” McGuire said, after which Township Supervisor Aaron Weed commented that the DDA does have a treasurer.

Cummings pointed out that McGuire doesn’t sit on the DDA board. “So I don’t understand what the treasurer of the DDA is doing,” he said.

“There’s a report that goes out that shows revenue, expenditure and cash balance that I provide to the DDA. It’s in their packet every month, so the entire board sees the finances,” Nordeen said.

“So this is not exactly like people weren’t informed,” Cummings observed.

He also mentioned a work session in June, where he said he was scoffed at for his comments and concerns related to earlier suspicions about DDA finances.

“And now, I’ll be damned if it hasn’t exactly turned out the way I thought, without even knowing a damn bit of this. But I’m here to tell you right now, we didn’t sign up for this as a board of trustees; we didn’t sign up for this as a township. The DDA went ahead and decided what they wanted to do, spent the money and now we’re sitting here with their overrun, their negligence,” he charged.

Cummings said he mentioned during the work session that he wanted trustees to get information and figure out whether the township has any legal recourse to the situation.

He called the matter ridiculous, criminal and far beyond negligent.

“I’m sorry; people spending money that isn’t even theirs. It’s now going to have to come to the township to rescue these people. I’m pissed,” Cummings professed.

McGuire said it was her opinion that the firing of Richards – combined with the resignation announcement of longtime Superintendent Robert Stalker the same evening – is what caused a lot of the issues currently being faced by the DDA.

“And, in the absence of that, by state statute I believe it’s the supervisor’s duty to do the budgeting,” she said, noting that she would have to double check that, “But, in a way, this board created that mess.”

Weed, however, highlighted the fact that there was not a gap in superintendents.

Schaeffer became employed with the township  and worked for some time with Stalker, prior to Stalker’s resignation.

“And this, I believe, is a long time coming. This is not the result of something over the last few months. This is the result of something over the last two years,” Weed asserted.

“I disagree with that,” McGuire remarked.

To this point, Nordeen said there are two trustees who also serve on the DDA. “That’s 22 percent of the DDA. I don’t know why we’re looking in hindsight, saying, ‘why weren’t things done,’ when two people on this board hold 22 percent of the votes on the DDA, and now we’re raising our hands in the air, saying, ‘what’s going on?’

“I just hate to see the pointing of fingers to the degree it’s happening here. And I’d like to see some accountability. It’s been brought up in the past and I don’t want that to be left out of this,” he went on.

Nordeen said the placing of blame and seeking to find out whose watch something was done on is just upsetting.

“Let’s not bother confusing facts, right,” Cummings said.

“I’m all for facts. I’m not for grandstanding and making people look bad,” Nordeen replied.

Cummings said it wasn’t grandstanding, adding, “This is on the taxpayer’s dime.”

“I agree. Don’t paint me like that, alright?” Nordeen answered.

“I make a motion that the DDA stop all expenses without prior approval from the township board,” Weed moved, adding that the DDA is a board of the township. The motion was supported by Cummings.

As reported in last week’s edition of this publication, the DDA never filed Articles of Incorporation. This means the authority is not, as long assumed, a separate public body corporate.

“I think we’re a little out of order, as I’ve found this entire process,” Nordeen contended.

“I can’t believe some of the things that are being brought forward – this motion, things you seem to be asking for under your report, Mr. Weed, decisions you’re asking us to make – I’ve been asking for a month, at least formally, to have a joint meeting with the DDA and the township to talk about these things to try to come to a workable understanding, to cooperate. And now we’re being asked to do things like this,” Nordeen commented.

He said a meeting between the two entities has finally been scheduled and is just around the corner, so he didn’t see how trustees could make these sorts of decisions preempting that meeting.

“It’s out of order, it’s inconsiderate – at least to myself, I feel to the rest of the board, the DDA board – I’m just struggling with the process of this whole thing,” Nordeen expressed.

“I understand that. I’m struggling, too, considering I have not found a financial analysis done on this facility project. And, without that financial analysis, without having a projection of funds, I think we’re in a crisis situation when it comes to the DDA,” Weed said. “And, therefore, I think we need to have action now until we know what the data is, to know whether it’s stable or not. Without that information, I don’t think we can risk the chance.”

“I can come around to this motion you’ve made. I want to be cautious, I don’t want to waste taxpayer money, I don’t want to be foolish by any means. I can do that. I want a discussion. And I can freeze expenditures until we have that discussion, but I’m tired of getting kicked down the road and having to make these decisions without having those discussions,” Nordeen said.

“What is the amount that we are in the red on the community center?” asked Trustee Jim Baier, to which Schaeffer said it is roughly $40,000.

“We’re OK with that,” Baier commented.

“We do it every year,” McGuire added.

“It sounds like people are saying the DDA has been totally unresponsive to the budgeting process all along. But this is a special year for them,” Baier noted, saying the HSAH project was bigger than anything else he can remember having being taken on by the DDA.

He added that the HSAH open house on July 18 drew in 400-500 people, indicating there is interest in the building from the public.

“This is not something that the DDA does annually,” Baier went on, saying that if the DDA is in some trouble right now, he believes it is a one-time deal.

He said HSAH is quite a project and he is blown away by the outcome.

“I don’t know why we can be so up in arms about a deficit in one place, but OK with a deficit in another,” he said, referencing the community center.

Weed argued that he and other board members have not said they were OK with this deficit.

“And we’re also talking about a different taxing jurisdiction. The building does look wonderful but, based on a rough cost analysis I did, I found that that building has to be rented for 44 to 56 weekends a year in order to make up its annual costs. That’s concerning to me,” Weed said.

“The downtown development authority is about developing the downtown. And, if most of their funds are going to be expended into the facility, what development downtown is going to happen? That one building is not going to make the downtown,” he stressed.

Baier said the building looks nice, yes, but the reconstruction also eliminated what he called one of the biggest eyesores in the whole town.

“But at what expense to the taxpayers?” Weed questioned.

Palmer said there needs to be some conservation of funds being spent, since the DDA is over budget halfway through the year. However, if Weed’s motion were to pass, he worried about what could happen if the DDA weren’t able to pay the final bill for the HSAH construction.

McGuire said not all the expenses can be froze anyway, since there is an electric bill which has to be paid each month.

“I’m not asking for a complete freeze. I’m asking for expenses to be pre-approved by the township board,” Weed explained.

“The point here, is, we’re looking for board oversight. That was what I supported. That was it,” Cummings said, adding that it wasn’t implied that the DDA would not be allowed to pay its bills.

“If this is just to close out 2018, then in January we’ve got to give them another advance until they get their revenues in March to keep it going for January, February and possibly March?” asked Trustee Martin Gayeski, which was confirmed by Weed.

“But we don’t know all that yet,” McGuire said.

“And the first goal is to quantify what the total budget adjustment is going to be for 2018,” Schaeffer reiterated.

Weed then moved to have all DDA expenses approved by the board of trustees prior to being expended, with the exception of standard utilities. This passed in a 6-1 vote, with Baier in opposition.

When it came time for public comments, attendees heard from Richards, who shared, “My character has been attacked quite a bit in the last few months and there’s a lot of things I could rebut tonight.”

She said, just as with social media, people can say a lot of things but there is another side to the story.

Richards noted that there were a lot of people in the audience shaking their heads, as if indicating that they didn’t understand how the DDA could do this or not be aware of certain things. But she insisted there is a much larger picture that many people aren’t aware of and, hopefully in time, that will come out.

With the adoption of the 2018 budget, Richards said every department head had to come up with roughly what they thought they would spend the following year. “At that time, the DDA didn’t even know where we were with awarding the contract or anything, so we were trying to guesstimate as to how much we were going to be spending in 2017; how much we were going to be spending in 2018.”

As they got closer to the end of 2017, she said budgets were adjusted to accommodate what was actually being spent.

“But we never did get to the 2018 budget to make those changes, and we would have been doing that probably later in the February/March/April time frame, once we knew where everything was going,” said Richards, who also referenced the $30,000 hit to the DDA.

When discussing how much money would be needed for the HSAH project, she said the DDA knew things were going to be tight and that they may get down to $50,000.

“Take $30,000 off of that and it puts us at $20,000 – that is pretty scary. So I’m not disputing that,” Richards noted.

“I guess I don’t understand why all the rocks. I mean, I said this before – everybody’s peeing to mark your territory and you’re starting to pee on people’s feet. And I don’t understand why.”

 She also went back to the Articles of Incorporation qualms surrounding the DDA, saying that, regardless of how the authority was created, “It always operated in the best interest of the downtown. Nobody’s intent was to ever screw anybody over or hurt the township – it was to make improvements. And we spent hundreds of thousands of dollars doing that.”



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