The question of what to do with the city’s 107-year-old City Hall building remains as one of the hot topics heading into the primary. (Garrett Estrada photo)

The question of what to do with the city’s 107-year-old City Hall building remains as one of the hot topics heading into the primary.
(Garrett Estrada photo)

A lot has happened with the City of Ely in recent months. A historic recall attempt failed to get enough signatures to try and force a vote to remove all five City Council members and the Mayor. State Senator Pete Goicoechea brought forth a senate bill that could bring a vote to disincorporate the City of Ely in 2017. A controversial forensic audit ordered by the City Council brought forth the Nevada Northern Railway’s financial information to the public and immediately spurred changes including the termination of the railroad’s certified public accountant.

Now, with less than two weeks to go until the city holds a primary election to whittle down the candidates for who will be running the city by the end of the year, it is important to try and sift through all the information and get to the core of how the City of Ely is doing.

We here at The Ely Times wanted to go back and offer a better look at the state of the city this week, and next week provide biographies of each candidate prior to the primary election to give the voters in the City of Ely the most possible information to make an informed choice as to who they feel will best represent their interests, and the interests of the city.

Back in January, two seperate and less talked about audits were presented in front of the Ely City Council by Chad Atkinson of Hinton Burdick CPAs & Advisors that broke down the city’s financial shape.

FINANCIAL SHAPE

In the auditor’s presentation of the city’s finances, Atkinson said that the City of Ely was in better financial shape than the previous year. The report, which analyzes the financial condition of the city during the fiscal year from July 1, 2013 through June 30, 2014, comes to this conclusion under the heading “Government-Wide Financial Analysis:

“In the case of the City of Ely, assets exceed liabilities by $25,800,283 at June 30, 2014 versus $23,971,342 at June 30, 2013, an increase of $1,828,941.”

That figure, referred to as the net position of the city, takes into account the city’s many assets, which include buildings, roads, etc. According to the audit, 68 percent of the  net position is dedicated to investment in capital assets and cannot be spent. The amount of money the city can actually spend is listed as government funds, which came out to a total fund balance of $1,716,025. Again that number needs to be split into funds that are restricted for certain uses and unrestricted funds, which is “available for spending at the government’s discretion.”

The unrestricted fund balance is the number that most voter’s should pay attention to, as it is those monies that can be spent by their elected officials as they see fit. Most of that money falls into the “general fund,” which increased by $20, 523 over the city’s 2014 fiscal year. The year over year increase to the general fund did not seem to be anticipated, as the city had budgeted to lose $310,578, resulting in a positive difference of a little over $330,000 from  what was originally budgeted.

For those wondering if the City of Ely has any debt, the Hinton Burdick audit lists that as of the end of the 2014 fiscal year, the City of Ely currently had a “total debt of $3,108,152.” While that amount seem troublesome, the total debt for the city had actually dropped $841,911 from the previous year. Around 80 percent of that total debt is tied into “business-type activities” and are not considered “general obligation debt.” What this means is that that actual amount of money the City of Ely currently has as outstanding is $591,338, which is down around $40,000 from the previous year.

Those that would like to see the entire balance sheets of where these numbers came from, or would like to just read the 97-page audit can file a public information request at city hall and receive the audit at the price of 50 cents per page.

DEFICIENCIES

Another aspect to the Hinton Burdick audit of the city was to identify material weaknesses in the internal controls for “audit procedures that are appropriate in the circum stances for the purpose of expressing our opinions on the financial statements, but not for expressing an opinion on the effectiveness of City of Ely, Nevada’s internal controls.”

The Hinton Burdick audit lists six different findings as deficiencies or material weaknesses., which were: Segregation of Duties; Controls over bank reconciliations; Controls over cash receipting; Controls over payroll processing; Controls over utility billings, receivables and write-offs; and reconciliations and year-end accounting.  In addition, another five items were listed as “significant deficiencies,” which were: Authorization controls — department heads; Controls over utility payments; Controls over personnel files; accounts receivable and allowance for doubtful account balances; and Capital Asset Inventory.

While the number of deficiencies listed in the Hinton Burdick audit of the city far outweigh that of the audit of the railroad just one year prior, Atkinson pointed out that the removal of the previous City Clerk and the hiring of her replacement, Bob Switzer has made large strides in correcting many of these areas. In repsonse to City Councilman Bruce Setterstrom’s question of whether the city had already worked towards resolving the deficiencies outlined in the audit, Atkinson said that believed they were being properly dealt with.

RELATIONSHIP WITH NNRY

One of the most talked about aspects with the current City Council has been the year long struggle between the city council (which also acts as the Nevada Northern Railroad’s Board of Trustees) and the NNRY’s Management Board.  Concerns were originally raised back in a city council meeting in December, 2013 in response to the railroad’s Executive Director Mark Bassett having taken out loans to help the railroad stay financially solvent. The council also took issue with the then recent Hinton Burdick audit of the railroad, which found several deficiencies, including Segregation of duties and resolved to get the deficiencies taken care of.

In a well-attended council meeting inside the Senior Center on Jan. 23, 2014, relations between the Board of Trustees and  seemed to deteriorate further when Councilman Sam Hanson suggested that the city take over the accounting end of the Historical Railroad Foundation’s non-profit organization, a position filled by Bassett’s wife Joan.

After a perceived lack of communication and cooperation between the Board of Trustees and the Railroad Management Board, the city council approved a “forensic audit” in a council meeting  held on June 26 inside the National Guard Armory. In that meeting, the council approved to spend up to $10,000 to hire an independent CPA to thoroughly go through the railroad’s financial statements with the purpose of “answering questions” that had otherwise gone unanswered according to Councilman Marty Westland at the meeting. The final price of the forensic audit done by Larry L. Bertsch, CPA & Associates LLP has yet to be disclosed publicly. As of March 25, Setterstrom said he believed the city had received a bill from the auditing firm, though the price was not available of of press time.

The commissioning of the forensic audit came after a failed attempt between the Board of Trustees and the Management Board to work together through an “ad-hoc committee,”consisting of two members from each board and a fifth, independent member. Though the committee held several public meetings, it was eventually dissolved by Mayor Melody Van Camp after a meeting where no City representatives showed up.

A new, smaller committee was recently approved at a March 12 council meeting that would consist of one member of each board and an appointed independent third member to help manage and restructure the railroad’s debt.

CITY HALL

Another current point of discussion between city residents and the city council members is what to do with the 107-year-old building the City Hall building. In a council meeting on Jan. 29, city council members approved the purchase of a building located at 480 Campton Street for up to $500,000 pending necessary inspections to relocate City Hall into.

When the building inspections discovered that additional money would be required to bring the council again voted to approve the purchase, a move that was vetoed by the mayor several days later.

In the council’s most recent meeting, an agenda item to overturn the Mayor’s veto was removed after it was determined to have been improperly agendized.

Next week – part 2.

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