An internal city audit of leftover deposits
– mostly from developers – has resulted in an additional
injection of more than $500,000 into the general fund.
HOLLISTER
An internal city audit of leftover deposits – mostly from developers – has resulted in an additional injection of more than $500,000 into the general fund.
Accounting Manager Brett Miller’s audit revealed that the city had neglected to transfer $507,000 in deposits from agreements – some that matured a few years ago, he told the Free Lance.
It resulted in an increase on the latest budget revenue projections in the “fines and forfeitures” category from $136,000 to $643,000 for the fiscal year.
Miller explained that these accounts are used to park long-term deposits by developers, sometimes for 10 years. This arrangement allows developers to determine if subsequent projects’ developers will share the cost of general improvements. If there is cost sharing, a portion of the deposit is returned. When the agreement expires, the deposit balance reverts to the city.
Funds on deposit cannot be used for unrestricted general fund expenses until the agreement matures and the balance is transferred, Miller said. Timely execution of transfers requires close tracking of the agreement’s terms and conditions, but the audit determined that some accounts went for a years after maturity before the transfers were executed.
The injection of more than $500,000 resulted in a significant improvement in the revised budget numbers. After this adjustment, the revenue shortage for the general fund this year was reduced to $331,000. As a whole, the injection will help to increase the estimated general fund reserve balance – along with a diversion of $1.2 million from the redevelopment agency and employee salary cuts – to around $3 million at the end of the fiscal year.
According to Mr. Miller, who has been with the city for less than a year, the accounting department is developing an improved method of tracking these long-term agreements to ensure timely execution of transfers in the future.
