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BLYTHEWOOD – A financial report on the Town and the Doko Manor by the Town’s CPA, Kem Smith, at the Jan. 27 Town Council meeting turned out to reveal not only a Town government with some cash flow problems, but perhaps more importantly, a nervous Town government unwilling to answer questions from the media about the particulars of the report.

After emailing a list of follow-up questions to Smith after the meeting, the list is reported to have ended up in the possession of the Town Attorney/Interim Town Administrator Jim Meggs who did not answer the questions nor make any reply to The Voice. The Voice then contacted two Council members for answers to the questions. One of those, Councilman Bob Mangone, explained to The Voice that he didn’t feel the Town’s CPA was the proper person to be answering questions about the Town’s budget, that questions of that sort should probably be addressed directly to Mayor J. Michael Ross. Ross said that, because Smith is a contract consultant, the Town would be obligated to pay her for the time she spent answering questions about the financial report. The mayor said the list of questions was forwarded to a Councilman who is a CPA, but at press time, no one had returned emails or answered The Voice’s questions about the financial report.

Some of the worrisome numbers presented by Smith at the Jan. 27 meeting were upstaged only by the theatrics of one already edgy Councilman. Bob Mangone lit into Smith for not having at the ready a spread sheet with details of a particular entry on the balance sheet that had to do with deferred revenue for the beleaguered Doko restaurant. In an increasingly boisterous tirade that lasted nearly five minutes, Mangone berated Smith, telling her she needed to be better prepared with a spread sheet detailing the moneys that made up the amount in question.

“I mean, if you are going to give us an audit, you ought to be prepared to come up with a spread sheet to show us what makes up all these numbers,” Mangone bellowed at Smith. Smith, taken aback at the outburst, explained that she could have brought along such details had she known Council wanted them.

“That’s why I sent the packet to you early,” Smith said.

After Mangone had raised his voice at Smith, to the surprise of the board and audience, he then accused Smith of yelling at him. The Mayor interrupted, explaining to Mangone that Smith was not presenting an audit, that she had only been asked to present the balance sheet for the Town and the Manor and not the details. The Mayor also told Mangone that the Town Hall was still holding some of the checks that were the subject of Mangone’s consternation and that Smith probably did not yet even know about them. Still, Mangone was not satisfied, instructing Smith, “in the future you should be ready to provide those details, then I won’t have to call you up the day after I get this.”

Review of Town’s Finances

Smith reported that while total revenue was budgeted at $1,210,000 and actual revenue at midyear was only $306,007.86, some of the Town’s revenue, such as business licenses, comes in later in the year. On the ‘good’ side, Smith said Council’s total salary and expenses were down. When asked why, Councilman Mangone speculated that it was money saved due to the vacancy of one council seat earlier in the year. The Mayor’s salary and expenses were also lower than budgeted, but there was no explanation. Smith said staff salaries and benefits were over budget at mid-year and she put them on her watch list. Also of concern are the Town’s legal fees, which are at $36,093.32 at mid-year, with only $50,000 budgeted for the entire fiscal year. This does not include the $54,000 paid annually to Meggs as the part-time legal consultant for the Town (Meggs also earns $6,450 per month for 15 hours of work per week as the Town’s part-time interim administrator). Smith also put the Town Maintenance expenses on her watch list and explained that $14,000 of the Events and Conference Director’s salary would now be paid out of the Hospitality Fund.

Total actual expenses at mid-year exceed $700,000 while the Town has budgeted for only $210,000 in expenses for the entire fiscal year 2014.

Review of Manor’s Finances

In her Jan. 27 report on the Manor’s finances, Smith reported that, with only $4,600 in available cash in the Manor’s bank account, “in the pretty near future the Town is going to have to transfer some money into the Manor account.” Smith reported in October that the Manor was operating at a deficit of $106,000 ($52,000 in furnishings and $54,000 in operating costs) during its first six months of operation (March to October 2013). During the first half of fiscal year 2014, revenue was still off considerably and expenditures continued to exceed budgeted expectations. Smith reported operating losses of almost $23,000 during the first half of the 2014 fiscal year (July – December 2013). Revenues from facility and equipment rentals and facility maintenance fees were budgeted at $59,000 but were actually only $27,988.50.

Smith said the somewhat improved reflection of operating losses resulted from spreading some pre-paid expenses over the 12-month fiscal year. But, Smith said, “the Town needs to be realistic about the Manor’s losses and revise the budget to better mirror what’s happening.” Smith said the Town also needs to set up a payment schedule for repaying the $52,000 it took out of the general fund to purchase furnishings for the Manor.

Smith told the Council that to break even, the Manor needs to bring in at least $6,600 each month. The Town has underwritten an average of about $4,000 each month. Under expenditures, the Town budgeted for $33,000 for program and oversight salaries, which had increased to almost $26,000 at mid-year. Also at mid-year, maintenance services and supplies were $7,246.51 over the $12,000 budgeted for the entire year.

The Mayor ended the Manor report on an optimistic note, saying, “I think when Ms. (Martha) Jones (Events and Conference Director) gives her report next, we’ll at last get some first quarter projections.”

But that didn’t happen. Jones, who was director of the events at the Manor as the deficit ballooned during first nine months of operation, was not prepared with first quarter projections. Jones reported that during the month of December, with many holiday festivities, the Manor only lost a little over $500. She also explained that the rental prices had been raised and that there are now more paid rentals than free rentals, which were the rule during the first six months of operation. Many of the free rentals were given to the Richland 2 School District. The Town frequently covered the District’s costs for tablecloths, napkins and other equipment. Civic clubs in Blythewood as well as some churches were also allowed to use the facility for free, but other churches were charged. Jones left her job with the Town last Friday to go to work for Richland District 2.

WINNSBORO – While Fairfield County, in their fiscal year 2012-2013 audit, received an “unmodified opinion” from the Elliott Davis accounting firm, Elliot Davis CPA Tom McNeish told Council Monday night that his firm found several “material weaknesses” in three areas. Two of those findings, McNeish said, were repeat findings that also showed up in the audit of the previous fiscal year and were, he said, “of particular concern.”

McNeish said the County’s financial statements were sound and that the County was in compliance with their federal grant requirements. The weaknesses, he said, were in internal controls and processes and procedures, and fell under compliance with policy, proper segregation of duties and reconciliation practices. The weaknesses were:

Procurement (repeat finding) – Required documents missing. “What we need to see, in those instances, is documentation,” McNeish said. “We’re going to want to see requisition/purchase orders – even if we’re looking at Council minutes for approval by you as a governing body, particularly if we’re looking at an estimated project that’s in excess of $25,000, as expressed by your procurement policy.”

Proper segregation of duties – Cash disbursements and journal entries should have at least two people involved. “In the Treasurer’s Office, for both journal entries and cash disbursements, we’d like to see a more consistent application of segregation of duties. If I prepare a journal entry that affects the general ledger, I should not be the one putting it into the system. I shouldn’t have full control over it. Somebody should be signing off and documenting that that occurred. Same thing with cash disbursements.” (In the Assessor’s Office), “if the appraised values are changed due to an appeal, one person inputs it after someone else has approved it.”

Reconciliation (repeat finding) – In Planning and Zoning, cash receipts ledger needs to be reconciled every month. In Delinquent Tax Collector’s Office, unclaimed funds in excess of tax amounts owed need to be reconciled in detail so tax collector knows to whom those amounts are owed. Difference of $22,000 between what is in subsidiary ledger and what was in general ledger. “For any given balance that’s in the general ledger we want to see the details, we want to see the specific transactions that are making that up. Not only that, the total of those transactions has to reconcile what’s in the general ledger.”

McNeish said that issues with how the County handled their Local Option Sales Tax (LOST) funds had been addressed after meetings with Elliott Davis last fall, but since the issue occurred in FY 2013, the LOST issue was included among the findings. Milton Pope, interim County Administrator, said many of the findings had either already been addressed or were being addressed. Findings in the Treasurer’s Office as well as the Assessor’s Office, Pope said, were being addressed, while in Planning and Zoning, issues have already been addressed.

“However, we did have some deficiencies that need immediate attention,” Pope said. “Primarily, those focus around procurement. There are clearly some weaknesses we have with our policy.”

Since his arrival last summer, Pope said, the County has been following the procurement policy that exists. Next month, he said, he will ask Council to review that policy and consider additional changes. Pope also asked Council to consider a more extensive review of the audit at a future work session.

Administrator Seeks Drawings, Answers

WINNSBORO – In the wake of the Jan. 12 collapse of a 50-foot section of retaining wall around the recently completed football field at Drawdy Park, County Council voted unanimously Monday night to hire a construction manager to inspect other building projects completed for the County by S2 Engineering and Consulting. The vote came after Milton Pope, interim County Administrator, informed Council that his staff was in the process of retaining a structural engineering firm to inspect any repairs to the wall.

Pope also told Council that his office had sent a “legal document” to S2 “requesting various pieces of information and documentation.” After the meeting, Pope clarified that he had sent a certified letter to S2 requesting any additional drawings, soil analysis and “any other documentation that they have.” Pope said that he was also looking for an explanation from S2 for why the section of wall collapsed.

Last week, The Voice viewed drawings the County has on file for the retaining wall. Those drawings, produced for S2 by Sherman Sumter, are dated Jan. 3, 2014 – months after the wall had been completed. The drawings are not to scale and include little detailed information. Sources with the County told The Voice that the drawings were not plans, but were “as built” drawings and were protocol for changes that occur during a construction project.

Sources also told The Voice that no building permit was applied for or issued for the wall prior to the wall’s construction. Monday night, Pope confirmed that fact, adding that it might have been included in S2’s scope of work.

“Was that the best way to handle it?” Pope asked rhetorically. “I guess the jury’s still out on that.”

Pope acknowledged that “deficiencies” existed in the process surrounding the construction of the retaining wall and said that his staff was working to ensure similar failures do not arise in the future.

“Clearly, in looking back over the situation, we could have and should have had some additional controls in place to prevent some of the things that occurred with the park,” he said. “What our staff is doing now is to manage the point of where we’re at right now as effective as we can to make sure the County is protected as much as possible and to seek an appropriate remedy to the situation that we have.”

Pope reminded Council that the County does have a warranty on the work, but said that the County needed to “make sure that is vetted properly, that we have the proper information regarding the cause of the failure and we agree to those things as well as to what the remedy for the fix will be.”

Councilman David Brown (District 7), who placed the motion to hire a construction manager on the floor, said state law extends how long a contractor is responsible for work.

“I know with Drawdy Park we’ve got a year warranty,” Brown said, “but I think it goes further than that.”

BLYTHEWOOD – Town Council unanimously passed final reading Monday night on an ordinance to amend provisions of another ordinance Council has repeatedly not obeyed during Mayor J. Michael Ross’ administration. The law in question pertains to how applicants are recruited for the Town’s boards and commissions. The issue arose in November when Ross brought forward the nomination of three applicants for appointment to the Board of Architectural Review and the Board of Zoning Appeals without following the Town’s statute that requires the posting of notices of vacancies on the boards and commissions at least 30 days prior to appointment so that members of the public are adequately notified of vacancies in case they want to apply. This was the fourth time the Ross administration, with no public objections from Town Attorney Jim Meggs who now also serves as the Town’s interim administrator, proposed these appointments without posting a notice and without providing the required 30-day time period for residents to apply. Meggs complained Monday night that he felt the notice requirement was a fairly complicated provision. He favors the amendment that allows the Town to forego the 30-day notification requirement in favor of advertising twice a year, during June and January, for board and commission vacancies instead of when vacancies occur. Residents can make applications at any time but the new ordinance does not provide for residents to be alerted when vacancies occur.

The new ordinance pertains to the Board of Architectural Review and the Board of Zoning Appeals. Council also passed first reading on an identical ordinance that pertains to the Planning Commission.

Three appointed to boards

After passing the ordinance, Council then voted to appoint Jim McLean to the Board of Architectural Review (BAR) and Joseph Richardson and Ray Fantone to the Board of Zoning Appeals (BZA). The three appeared before Council and stated their qualifications and their desire to serve the Town.

McLean, who lives on Sandfield Road, said he has a good understanding of the BAR and that he was one of the authors of the original BAR ordinance passed in the late 1990s.

Joseph Richardson, a graduate of the University of South Carolina School of Law, worked for two years as an attorney but has since been primarily associated with his family’s business, Richardson Construction Company on Monticello Road. Richardson lives with his wife and son in Cobblestone Park.

Ray Fantone, who lives in Lake Ashley, served as a volunteer firefighter in Blythewood from 1996 to 2003. He has a Master’s Degree in Public Administration from the University of Connecticut and a Masters in Business Administration from the University of South Carolina. He works in Enterprise Resource Planning for the Richland School District Two. Fantone is married with three daughters ages 13, 16 and 25.

Administrator Meggs’ report

“I’ve hit the ground pretty fast as the mayor will attest,” Meggs told Council. “I’m learning the Town’s budget and payment systems which I’ll figure out in due course. I’ve tried to identify some quality work life issues at Town Hall.” He said Town Hall is a noisy place and that’s he’s going to do some “retooling on the telephones so they aren’t ringing on every desk in Town Hall, and try to do some soundproofing on the plank floors. With the phones and foot traffic, it can become quite distracting.”

“I have discussed (as a code enforcement issue) putting decals on trucks of contractors who have business license (with the Town). We’ll probably be coming back to you in a few months with an ordinance change that will go to a Blythewood contractors’ decal system so that folks out on code enforcement patrol can identify contractors that are licensed to do work in the Town,” Meggs said. “To the extent any of us are running around town, we can get (code enforcement) information to Town Hall for action.”

Meggs said another project is to develop a business calendar to catalogue and diary all the obligations the Town has under various contracts and agreements with third parties.

Future of Doko Restaurant

Following an executive session in which Council discussed contractual arrangements for the Doko Depot restaurant, Councilman Bob Mangone summed up the session by saying that it was productive and that, “We are going to meet with Mr. (Jonathan) Bazinet to iron out some new arrangements around the central idea of developing a restaurant here in Blythewood.” Mangone said Mr. Bazinet talked in terms of the significance of jobs the restaurant would bring, particularly to teenagers whose first jobs are frequently in food service. “We are still moving in the direction of having a restaurant, but he (Mr. Bazinet) understands our position that the Town doesn’t want to be responsible for the entire $900,000 Doko loan. And we understand that he doesn’t either. But somewhere in the middle we hope we can come to an agreement and look forward to (the restaurant) in the future.

During open citizens comments, two Ashley Oaks residents, Rick Konopka and Steve Abrahamson, expressed their objections to the restaurant. Konopka said, “I know we don’t pay any property taxes right now and I’d like it to stay that way. The November election clearly showed that 2/3 of the voters don’t want any more large capital expenditures.”

Abrahamson said he agreed with Knopoka and said, “We need to take care of the maintenance of the Town before we take on additional debt.”

A special called Town Council workshop is scheduled for Feb. 7, from 8 a.m. to 2 p.m.

WINNSBORO – Town Council received a preliminary report on its year-end audit Tuesday night from Bill Hancock, a CPA with the Brittingham, Brown, Prince and Hancock accounting firm.

“We found no instances of non-compliance with the Town’s internal control, nor any significant deficiencies that we consider to be material weaknesses,” Hancock reported. “The Town took in $15 million in revenue, and the net assets were $381,000 after paying all the bills and accounting for all the depreciation on the capital assets.”

Hancock complimented the Town, saying it appears the Town took care and diligence with its budget – both in planning and in exercising discipline when it came to spending.

Hancock said he expects to deliver a final, complete report on the audit in a couple of weeks.

In other business, Council approved the following requests for capital expenditures:

Water Plant – Council voted to replace an air scour blower ($4,000), plant emergency lights ($2,500), to purchase a chlorine gas cylinder scales ($20,000) and to overhaul of a large pump motor (estimated at $20,000). Town Manager Don Wood asked that a portion of $53,000 previously approved for a filter valve replacement be released for the repair of the large pump motor.

“The cost may exceed or be less than the estimated $20,000,” Wood said, “but we’re going to realize considerable savings by overhauling instead of replacing the pump. The total should not exceed the $53,000.”

Gas Water and Sewer Department – Council accepted the high bid of $39,250 for a backhoe that Wood said was badly needed. He said he felt the service availability and service contract as well as fewer hours of use justified the higher price.

Public Safety – Council granted permission to proceed with accepting bids for the immediate replacement of the roof on the Public Safety building. Wood said the Town had received an estimate of $65,000, but that it would still be put out for bid.

Council also approved unanimously a request by Danny Miller for the Eastern Star group to be allowed to use the Old Armory in April for a scholarship fundraiser event.

After an executive session to discuss legal and contractual matters regarding water and sewer (Mid County Water Co., Fairfield County and Blythewood, et. Al.), Council took two votes. It voted, first, to pass a resolution to extend the 1994 water service agreement with Mid-County Water Company for a period of 60 days after its expiration on Feb. 15. According to the resolution, this will allow the Town and Mid-County time to negotiate a new wholesale water agreement or allow continued service for 12 months under a separation of service plan approved by DHEC.

Council also awarded the Wateree Construction Company the contract to build the Blythewood pump station at a cost of $374,500, half of which will be paid by the Town of Winnsboro and half by Fairfield County.