Ogden Resident 12/22/07 comments

By Ogden Resident

Just made available for public viewing the 2007 Ogden City Annual Financial Report, no wonder the mayor didn’t want the report to come out before the election.

Seems the city administration is writing off about $6 million of RDA debt out of the city’s general fund claiming that it's uncollectable debt (that’s about 10% of the city’s total annual revenues). I thought he (Godfrey) said that the city wasn’t responsible for RDA debt!

Also the infamous page 50 that identifies Ogden as being responsible for RDA debt is now found on page 48.

Lots of other good tid-bits in there as well.

To come to the results that I mentioned go to the following pages (not adobe PDF page numbers but the actual report page numbers). I’ll try to make this so that even Scott Schwebke can make sense of this.

After you’ve opened the document first go to page 48, near the bottom of the page, three paragraphs above

B. Government-wide And Fund Financial Statements” and read “The accompanying
financial statements include all activities of the City and Ogden Redevelopment
Agency (RDA). The RDA was included because the separate governing bodies of both entities are comprised of the same individuals and the City is financially
accountable for the RDA.”

This wording put in by the outside auditor so that he doesn’t go to jail for non-disclosure.

Now go to page 56, “B. Loans To/From Other Funds”, under this heading notice that a loan transfer is noted transferring $2,720,000 dollars to the RDA from the General Fund (but also notice that amount $2,720,000 dollars was derived by deducting $6,322,847 dollars from the original transfer the of $9,052,847 dollars with a note to refer to note 21).

Now go to page 71 where Note 21 Special Item is located and read:

As of June 30, 2007, it was determined by management that certain interfund advances receivable would not be fully collectible. Analysis of the funding sources for the various payments indicated that funding for certain payments will expire in advance of complete repayment. A valuation allowance was recorded against the advances receivable with simultaneous reduction in the associated advances payable (See Note 3). This valuation transaction is recorded as a special item given that it has not been the practice of the City to forgive interfund advances nor has it been the experience of the City that interfund advances be determined noncollectable. This policy and history qualify the event as unusual in nature. The magnitude of the valuation was determined to be significant and under the control of management.

The effect of the valuation transaction is reported as a reduction in current year fund balance in the general fund and an increase in current year fund balance in the redevelopment agency. Given that the effect of the transaction is eliminated in the governmental funds it is not present in the statement of governmental activities.

To put this into plain English, this is saying that we are not going to get all our money back, bottom line and as such the city is writing off $ 6 million dollars that was part of a few RDA projects. Now you ask what projects and to get that answer you have to now go to Note 3 on page 57.

NOTE 3. RECEIVABLES AND PAYABLES, CONTINUED

B. Loans To/From Other Funds, Continued

General fund to the Redevelopment Agency: These loans have been reserved for in the general fund to the extent that they are considered collectible. Terms of the note specify that tax increment revenue from the individually identified project areas is to be used to repay these loans. [7th paragraph]

Additional detail follows this paragraph that says:

Allowance for noncollectable advances

As of June 30, 2007, it was determined that a valuation allowance was necessary regarding the above mentioned General fund to Redevelopment Agency interfund advances. This determination was made based on the anticipated revenues from the payment funding sources. The advances and associated valuation allowance are detailed as follows:

General RDA - Central Business District $ 1,751,601
General RDA - 25th Street District 3,821,794
General RDA - Washington Blvd. District 3,479,452

Total: $9 ,052,847

Allowance for noncollectable advances (6,332,847)

$ 2 ,720,000

If this detail above comes out a little funky it’s because I was importing the graph above and had display problems; but the information is quite clear on page 57 of the report.

Long and short of it though is the administration is writing off $6.3 million dollars of RDA debt that was from a loan from the city’s General Fund. As such the General fund is now taking the hit. RDA debt is a liability of the city and these write offs are against some of our new projects. This doesn’t bode well for the future.

Ed. Note: the above text was consolidated and edited from comments posted to WCF on 12/22/07.