Work Session

call this work session on February 5th to order. And at this time, I'll recognize our inter town manager, Russ Over.

Thank you, mayor. I'll just hit the agenda for tonight's work session. Um, we're going to review the upcoming meeting schedule. Um, and then, uh, Shelley Curran's going to give us an update on the senior con uh, the citizens convenience center. Um, I'll do a little introduction for Kim on the financial updates and she's going to walk us through the draft 2025 annual comprehension comprehensive financial report that I'm sure you'll see the uh, acronym ACER a lot. And uh I don't believe I'll have a few announcements after that and I don't believe there's a close session for this work session. So let's see. There you go, [sighs] Jenny.

All right. So, um tonight on your consent agenda, you are modifying the meeting schedule to say the location of the retreat, which is at the Parkside Marriott that we've been to before. Um and then going from there, March the 12th, then the 24th, and then the 26th. All right. Any questions about that?

Just do we have a timeline for the retreat? Like when will we be finished? Because I have another event that evening. Do we have a timeline?

I mean,

not settled yet. We can get you something fairly quickly.

Okay, that would be great for for both the 20th and

as far as the times, we're still working out the agenda.

Yes.

Things like that. And and do we have a dinner the night before?

We are proposing a a reception at least after.

Okay.

Um

and we do not have a council only dinner.

Are we doing a council only dinner?

No. Okay.

Oh, good question. Anyone else?

All right. If not, we'll turn it over to Shelley to give you an update on the where we're at with the citizen convenience center study.

Good evening, Mayor and Council. I um we have talked about the Citizens

Convenience Center before and so tonight I'm going to go over a little bit of the background from it. We have been working with a consultant to come up with some options. So I'm going to present those to you. I am not going to ask you to make a decision tonight. I just want to have a discussion about any additional information you feel like you need before we make a decision. So, um, going through some of the background, it is located, the Citizen Kerry Citizens Convenience Center is located in downtown Kerry on 313 North Dixon, and it has been there since the 1950s. Some of the services that we provide there are residential waste, recycling, and composting, and then large and special items. And I'm sure all of you have probably visited it at some point. We have about 250 visitors per day and 90,000 visitors per year. What we don't know is if that's some repeat people that maybe make a couple trips, but that's a pretty good amount. You can see on the highlighted portion here is the public portion of the citizens convenience center. So public works also has some services and they store trucks and do all sorts of things out there, but the public portion is the highlighted portion. You can see of that highlighted portion, the darker orange there is the portion of it that is in the North Carolina Railroad rideway and has been since the 1950s, but they contacted us this fall and [snorts] said that they have received a federal grant for actually a sighting extension project that um is moving forward and they need us out of the rightway. So we have to vacate the the services basically which are the vast majority of services we provide for the citizen center by December of 2026.

Can you explain what that means? Are they going to put in another

they Well, I don't know the full extent of the project, but it's basically it's a sighting project that's it's a pretty far distance that they're doing it, but they're going to put in a second track here.

They are actually going to put in

another track. another track. That's what they have. That's what they have money for. It's a Chrissy grant.

So they actually have a construction date starting in October from FRA that's already been approved the Federal Railroad Administration. So

they feel pretty confident that it's moving forward

for October of this year.

October 27th. Sorry. Yeah. Which is why so we are going to we have to be out by December so that they can do all of the pre-work that they need to do. And um we are talking to them about we know we have to move our containers. There's other we've put p we have pavement there. That's actually how the public accesses the citizens convenience center. So we'll talk to them more about what we're going to remove and or what they're going to require us to remove. So the timeline they came to us in September and told us that we were going to have to do that. I came back to you in November and you authorized $40,000 to work with a consultant. We retained Garrett and Moore who is a firm that actually specializes in engineering and management of convenience or yeah not convenience centers citizens convenience all of these types of waste management um facilities and they actually that's all they do. So they have been great to work with. So they have come up with some options that we think are your best options. One of the things that we asked them was to try to stay on the main on the current site, which we'll go through the options and you'll see that that's not really a viable option. Um, and then the other thing is to try to see if we could stay somewhere near downtown. Um, there are other Wake County actually has a number of convenience centers that people use. So, um, that's what our goals were with this. So going through the options that they have provided, the first one would be to just close the convenience center to the public as of December. Right now the current operational cost is about 800,000 to 900,000 a year for us to operate it. Um they have determined that

we can there's not enough space on there and a number of other reasons. It would be very complicated to try to keep the services on site. So the first option would be to close it completely. The second option would be to keep yard waste and food waste disposal at the current site. And what we would need to do if we did that is just figure out, we'd have to have some design dollars to figure out where we want to place it on the site. Um, our public works department thinks that we could move it right because right now our access is in the rightway. We think we could move it so that it is all within the part that we own that is not in the right of way. Shelly, sorry. Can I ask you to step back and I can see the screen?

I will stand wherever you want me to.

This is good. This [laughter] is good. Thank you.

Yeah. Oh, there is

this line. It blends with the carpet [laughter] because there's also a green line right there. I just want to point out. [laughter] All right, I'm standing on the gray line. Um, okay. The third option would be to maintain the yard waste um and the food at the current site. And then they also found another location on property that we own in downtown that car K Carrie currently owns that they think would fit. They've done sort of the feasibility of it and they think it would fit all of the other services besides the yard waste um at this other site. And so I'm going to go through that with you a little bit, but the cost for the design on a new location would be 175,000. And construction estimates, which I think this might be a little bit low, is 3 to 4 million. So um if we were to do if you all decided, okay, we want to keep it open and we want to just move it to this other site, then during the design phase, we would come up with a more accurate construction estimate. And and I would just add we'd have to budget for those amounts um to be able to move forward with each next step.

Yes, we do not have funds in the budget

or pending in any future budgets for this. Um this is the site on Old Apex Road. It's 801 Old Apex. Um it is property that we own. It was actually deed to the town back in I think it was 2008. It's 4.8 acres. Um, it does. You can kind of see there is a Carolina Power and Light easement that is very old that goes right through the center of it, which um I have spoken to Duke Energy. They have been great about it and said not to worry about that. So, we are okay there. And it's it neighbors the railroad too, but our property line is outside of the railroad rightway. So, we would not have to um worry about that either. there would be um the old apex road would probably have to have a turn lane or be widened or something if you were to choose to move forward with this option. So, um the the one thing that we know for sure is that we have to be out of the current space by December. Um there is no way that we will be up and running at another site without closing the current one. So, the current one will definitely close in December of 2026. Uh basically we will just right now you're hearing the options. We have some estimates and we need to figure out which option you would like to do. But I do realize that you probably have more information that you would like to get and we would love to get you whatever information. This is a big decision. So we want to make sure we get you any information that you feel like would be helpful in making the decision. So with that, any questions or discussion? And I'm going to step forward just a little because

now you can come to the green.

I Okay, [laughter] now I'm in the green question phase.

Shelly.

Yes.

Do you know if the rationale for food and yard waste was based on popularity of services or that's just the services

that would fit best in that space? Wh why why retaining those two in particular?

That is a great question. And if I say anything wrong, I'm going to ask Jimmy, thank you to to correct me. But the yard waste will not fit on the new site, but we also the town takes all of our yard waste to this site. Um we are also talking about to the railroad, and if they're listening, we would really like it. Um, we are talking about getting a spur so that maybe if we had enough yard waste, we could take it out by rail, which would be since they're doing a project there, that might be a good thing for us to look at. So yard waste, it's really because it it can still fit there in the current space. Um, and that the food I think was really popular and it doesn't take up a ton of space and we don't have to do a container that has a ramp going up to it or dig in the ground or anything which is good.

On that slide, did it show a dollar amount for what operations would cost to keep just those services?

It did not. Yeah. And um we could do we would reconfigure it a little bit so there would be some design cost and then we can figure out what the service cost would be. It would not be the 800 to 900,000 a year.

Sure.

If we close it, is there a cost?

Um [clears throat]

because we have to move everything. So So and is that operational?

So no matter what we do, any of the three options, we will have whatever it cost us to get out of the rideway. So, that is going to be a cost that we have for any of them. We do not know yet, but what we're going to actually have to move. I'm hoping that maybe we don't have to take up the pavement and everything, but until we have a talk with them and determine it, we won't know exactly, but we will get you an estimate for how much it's going to cost to get out

no matter what. So, no matter what, we'll have a base cost to improve the site

back to what it should be in order for

them to

put in their new railroad. That is exactly right. So if we close it, and that's a great question. If we close it, we will have the cost of removal from the ride ofway and then we won't have any other cost. [clears throat] If we if we do option two, we'll have the cost to close it and then whatever the design would be to figure out where the yard waste and food waste is going to go and how the public will access it um and moving it, which will be a lot less than three to$4 million for construction of a new site

minimum. Um and then the third option we'd have the same thing the cost to remove it from the right ofway and then design fees and estimate for construction. [snorts]

So there will be a time where there is no services no matter what option we pick.

There will be a yes there will be absolutely a time and it could be a year or two years. Um, we don't know exactly if we decided to go with a new location then I mean it could be two years before we

and that bears repeating two years without convenience center.

That might be a little bit long of an estimate but it

yes two years no convenience center. The convenience center will absolutely close to the public December of 2026 like without a doubt. And it's because the railroad is saying it has to. Can I add uh because I think the last time this came forward it was you know thinking this is going to be fasttracked see see what we could do. It seems pretty unreasonable at this point to think in any shape or form you could move that and design it and go to construction and build something and open it before the end of this year

and spend $4 million.

Correct.

Right.

Um so I I I don't think we should sugarcoat that and be fair especially since these meetings are televised and this is part of getting the [cough] information stream out.

So Shel, I just want [clears throat] to be very clear. This is the second time we're listening or we this this topic has come in front of the council. The last one time based on your timeline. Um last time when we heard like it was more

of like hey FYI this is going to happen you know if uh we're going to start looking at it and I think we did um like what you said [clears throat] there was there was money allocated for consultants to come in and and the council voted on that.

Yes. And now this is the time when the consultant has given you options. I'm just making sure people who are watching they have the history because we keep saying that hey guys this is you know the council goes through multiple iteration of review of different things but this is the first time and we are looking at different options and this is our time to really you know understand what was presented to you from the consulting firm.

That's exactly right and that's why we're not asking you to make a decision tonight. We just want wanted to give you the information as soon as we had it. Um there there is not a lot of land in downtown Kerry that would be available to put a new convenience center on. We actually own the land at Old Apex Road. So if you felt very strongly that we needed to open another one, that would be really the only option. Um obviously if you wanted to go to the second one that's something that we could do within our own power sort of.

So do we have like uh some figures like if we like we have to shut this down regardless but if we do not re reopen what is the impact going to be? Have we done an impact study?

So that is a great question too. We have not. But if we shut it down completely, so if we went with option one, um then I think that public works is anticipating there might be more um like yard waste for example at people's residences. So there might have some sort of impact there, but we don't know what that would be yet. And um the the one good thing is that for large things like a mattress for example, the Wake County sites are not that far. There's one in Apex and there's one in Morrisville. And so the options and we

could certainly show you where options other options are if you were going to close it, but the options are not super far.

That that's my primary question is

if I've got a mattress and a big bag of yard waste,

where can I take it?

Where do I take it? And and can we use neighboring communities convenience centers if we're a car citizen?

If you live in Wake County, you can use any of the Wake County facilities. Why do you have to show an ID when you go to the convenience center?

I actually um have never had to, but I've gone to

But there is a sign.

But there is a sign that says that

I always get mine out and they're like, "Yeah."

Yeah. So, if you go to Johnston County and they ask for your ID and you get in trouble, then [laughter]

I I don't know if I have that, but I a friend of mine that runs a construction business and we were told it was because a lot of people that ran construction businesses, maybe they didn't live where they were from, and it was to get keep uh construction debris out of the convenience convenience centers.

That makes perfect sense.

But I was I'm curious, ours is a Kerry convenience center. All the ones you mentioned are Wake County convenience centers. What's the opportunity? Even though they're in Apex and Morris, what's the opportunity to leverage [snorts] Wake County to just have a Kerry convenience center location? Have Wake County put that in that opportunity? I mean, I don't think I don't know of any other municipalities that have their own convenience centers. Um, I I tried to do some research to see and it doesn't seem like other municipalities have their own convenience centers. It seems like they're mostly county. Um, and I don't know. We have not broached that topic with them. I'm guessing land and funding, but

but we have land.

We we could ask.

Yeah, we could certainly ask to do that because I think that we're Kerry citizens, Kerry taxpayers are paying for this service, which is I know I use it. It's not very far from my house.

But I also know that when I used to live closer to the Morrisville one, which is

Wake Countyy's,

right, my Wake County taxes paid for that.

So why couldn't we just have Wake County open a, you know, a Kerry location and if we already have the land, maybe they could help us with that.

Yeah,

we can certainly explore that.

Yeah.

Looking so going back.

Sorry. So going back to my question about impact study. Sorry about what impact study. Oh yeah,

you did mention that we we that we haven't done that. We don't like there we are expecting that some um you know waste um collection probably will get impacted but how does this impact our residents like I feel 250 residents per day probably will have a bigger impact right [clears throat] like on the residents if we close this. Yeah, I think the the big difference is is right now we do not charge to go to the convenience center and if you have a mattress there is a fee to have a large bulky item picked up. So that I think I mean obviously anybody that wants to be able to go downtown to take their stuff too, it would be an impact.

Um

but yeah, there's a fee if you have it curbside, but we do provide everything curbside except for the food. That was that's my primary question. Could we not make this a paid convenience? Um and and instead of broadly funding it via, you know, our typical budget, make it something that the individuals using it would, you know, make it more cost recovery, self-funding. Is that realistic or am I just introducing a whole host of how are they going to pay? Is it, you know, is it just introducing complexity and cost and making it unrealistic?

Yeah, it's it's my understanding that there used to be a fee and then it went away. Um, [clears throat] and I don't know the history on that or why, but

our history teacher

and I I would [snorts] think even with the Wake County sites being relatively nearby, I think then you might have, you know, the competition of the Wake County sites as so it might defeat the purpose of even having the convenience of a carry site.

It would reduce I'd still use it. I I will pay money to not drive

to not drive somewhere. Absolutely.

Fair. Fair. We could you could ask the consultant who you know wellversed in these types of things if that's even an option or maybe what they've seen from it if if you wish to do that.

Shel very silly question.

I'm going to ask a very silly question.

Okay.

How many convenience center do we have um in and around Kerry? Do we know the numbers?

I'm going to come back to you with that. We have six. [laughter]

Six in Wake County. I looked [clears throat] for the closest and there's one in Apex and one in Morrisville that are both very close. Morrisville, Wake Forest, Raleigh, New Hill, and Night.

It's exactly what I was thinking.

Wake County run. And none of none of the municipalities in Wake County have

their own convenience center except for Kerry.

So Carrie, uh, do we have two? Another one.

One, we have the food. You might be thinking of the food waste that we have in his park. Oh yeah, that's

but it's not a convenience center. You can just drop off food.

If we looking more at option two with the yard and food waste,

can we look at feasibility of changing that entrance a timeline to possibly not have that service lapse? And if if it's not feasible, okay, but could we at least look at that

like for the food and

Yes. if we keep those two things on site.

I know there's a lot of logistics and we still have to take the time to get the other things out, but I just would like to know if there's any possibility to have those two services not

laps. Um, it is possible. I think our

biggest issue is going to be that the public access to it is in the right of way, right? And so figuring out how to move the service so that it can so the public is not going necessarily through where our work area is. So we would have to look at that and just see if we could do a design quickly enough and move it.

But I did

but we will put that on our list.

Thank you. Did I understand correctly that those two things can't move or only the yard waste can't move? The yard waste and the food waste we could leave on site,

but it can't both go onto a new site. Did you say something about there's not enough?

It could. The yard would not fit on the old apex. So, and because we use the yard one for our town yard waste, there's already so much yard like when we do collections, we drop it off there.

We would be creating a problem for ourselves that we would have to figure out how to solve anyway.

Right.

Right. Um, so I I guess I think we would just like or I would like to see the usage

for each

individual service

for each one. Okay.

So, [clears throat]

but I do wonder if the food because the food waste is very contained. Yeah.

I wonder if there is a short-term or interim solution at least for that one because I know the Mills Park one is very much used and very much loved by citizens. Maybe there could be an It doesn't have to be there, but maybe it could be relocated. So, they're not losing everything.

Well, and I I mean, I think that if we were just looking at, okay, the food waste, where else could we put that? That would be a much smaller um more contained

look than trying to move the entire thing. Maybe there's Yeah, maybe there's some hybrid solution that might be applicable for an interim solution while we're figuring it out and trying to convince Wake County to open one in Carrie.

Yeah.

And pay for it.

Right. Or potentially [clears throat] an option 1B where we do close the convenience center and relocate the food the the compost drop off.

Right. Yeah, that's exactly what I was trying to do, but you did a better job explaining [laughter] it.

I made it into bullets.

Thank you.

So, to sort of summarize, if I may, um, I think we will look at cost for the first two, we'll do an estimate for cost for removal as soon as we've had a meeting with them to determine exactly what we can ask them to potentially remove for us. Um, and then we'll look at a 1B type of option where if we can we move the food somewhere else or can we keep it there? And then how quickly could we make it feasible to have the trash and food or the yard waste and food stay there. Does that sound If you have any other questions that you think of because I know you're just getting this.

I think we have more. You're leaning.

Oh, I'm sorry. Am I cutting you off? I didn't mean to. I I want my colleagues to uh ask any questions as well. Before we left the conversation, just for the benefit of everyone else in the room or listening at home, I would love for you to answer the question that you answered for me, which is how this happened because I would hate for it to be lingering in a resident's mind. Why did we find ourselves in this situation? And you explained this happened over decades. It's not uncommon for this encroachment in the rightway to happen, but if you'd like to uh put that on the record, I think that would be helpful.

Well, and I think you just did a great job. But yes, the um the the railroads and I mean I have a lot of history of working with the railroads and when they have a lot of land and they have a lot of rightway and unless they need to use the right of way, they don't really enforce it. They do charge a fee to lease, like if you have something in their rightway, they had every right to charge us, which thank you for not charging us. Um, but they had every right to charge us for being in their

rightway. And so all along the line, um, anywhere they're doing projects, they're having to tell people, you have to get out of my rightway. Most places probably don't have like a big operation like we do in their rightway. It might be a building or something, but people are being required to move buildings and all sorts of stuff. So, um, because they got a federal grant, they're on a timeline and they told us as soon as they knew they were awarded it and now they have a construction date starting. So, it's

does that

Yes.

Well, and it probably stands to reason in the 1950s they were a little looser with their, you know, observations of what were happening.

Yeah. I mean, we we've been operating for free in their rideway for since 1950. Like, we are we

Thank you for the use of your land. [laughter] Yeah.

Years.

So, can we look at the map [clears throat] again?

Yeah.

Um, if we close the uh citizens convenience center. So, those land we owned the light yellow. Can we use them or it's just a be vacant over there? Just

So, we own um I'll get back to my gray line so can see. Um, so we this is the ride ofway portion. So that's where we have to vacate. And this is where citizens come in and they go down here. So all of that will have to go. We still own this. There's power lines there that have restrictions, but we actually use

almost all of that land for public works. We store trucks there. We we do we have trucks coming in with our yard waste that we collect. So there's just not enough land there. Um, there's also it was an old dump and so you can't do a lot of digging without doing a lot of different things and so you can only put things on top of the land.

So it there's not enough room to we so

we do think that the yard waste and food could fit but we will have to reconfigure this and it's possible that there's something maybe in that area something that we could do. But Shelley, just to clarify, the part that public works is using today that citizens aren't going into, we plan to keep that regardless.

Yes, we do. Okay. Yeah, we will still use it for public works. So, this whole portion will still be utilized by our public works department.

Shel, this is um I don't know if we have ever discussed this, but with right of the the right of way that we're giving, are we getting money for that?

No, we are not giving it. [laughter] No, no, no. The um railroad owns 100 ft of rightway from the center of their line on both sides. Okay.

So um they have ultimate condemnation and rights to anything they want. Basically they are um the ultimate authority by by federal law. So um we have been using their rightway not them using ours. Is the Lexi Lane park impacted at all?

No, it's uh just below the screen. I know it's the bottom of the screen. There's a different uh access into that,

right? It's before that, but is there any impact at all? Will it be clo like No. Where will you close it off now?

You enter further up uh North Dixon Avenue.

Yeah. And we're only I mean we'll close right there.

Okay.

And so everything will stay open before that.

Gotcha. So, as far as communication, I mean, I would prefer personally that we put a sign up immediately. This closes at the end of the year.

Yeah.

Because we got to tell people and they got to see it over and over and over.

I think October 22nd.

Yeah. I think also we can collect

Oh, oc whatever the

I think that's when they their project begins. We close December. Okay.

Yes. Okay. Got it.

We are closing December of 2026. So even

while we work on options, I think we should get a sign up or something. That's fair. [clears throat]

Rather than later.

The other piece of information I think would be helpful particularly for me in making this decision is understanding how the I'll call them high impact events. Um what the costs would be of losing the convenience center, let's say in a hurricane cleanup or when we do our loose leaf collection, that type of stuff. Same thing I'm sure for citizens. I think the the rare times I've gone there with yard waste was post hurricane everything's done in my yard, you know, put it in the car or or somebody moves and they've got a whole bunch of boxes. I understand we're talking about a trip to another convenience center in Apex or Morrisville and and such, but for our staff, there's I'm assuming there are regular large volume events that go to the convenience center. I just want to know if there's anything I'm not thinking of where there might be costs involved. Just understanding looking at it as an $800 to $900,000, we'll call it a savings, but it it not it is it really is there real costs associated with losing the convenience center because of its proximity to all the stuff that's being done. Is that really a lesser savings when all the things are are added up? Like it's and what I'm demonstrating here is a high lack a very big lack of familiarity with how public works does all the magic stuff they do because they do it

you never see them do it like it's just magically done

and I know it's not magic but

that's what I was trying to get from Shelley. What public works does today, they are going to keep doing. All the yard waste they pick up from in front of your house is going to continue to go to this site.

That they do storm clean up after a storm is going to continue to go to this site even after we have to vacate the rightway.

But if if the citizens can no longer dispose, there's going to be more calls. There's going to be a larger volume for public works and all that or and so that's good to know that if there's a hurricane cleanup, they still have that

can and perhaps a spur, which I love

that idea by the way very much. Um, I just want to know if there's any.

Yeah. And and that's where I say like if we completely close it, like if we went with option one, we we need to try to do an estimate of what like to SA's point too, like what would the service impacts be to or what would our staff impacts be if we're getting more calls and we're having to do more um pickups at people's residences and stuff. So, we can certainly look at that. And um if you did option two, you would still have the yard waste. So hopefully for a hurricane it wouldn't be too much of an impact unless people are bringing mattresses and

Right.

Yeah. Shel, maybe another data point there is how many curbside pickups we have and how much we collect in those fees um

to see what kind of effect that would have.

Those fees are unlikely to be cost recovery. Am I correct in making that assumption?

I will get back to you on that. Yeah. Because I Well, and I wonder, you know, this is now getting more outside the box. If if we decide that that's a big impact, right? People taking their mattresses and then they'd have a a curbside collection fee. If we closed it in its entirety, is there any way to take some of that cost savings and offset those fees?

True. True. But if now if I call and have a mattress picked up, they're driving it to now we've got staff driving it to Apex or Morrisville or M

somewhere else, right? That's Yeah,

I like Lor's idea.

Abby County to partner with us. [laughter]

Wake County is going to like it.

Is it Is it really an $800 to $900,000 a year closing the convenience center if it's still being used by public works?

I'm sorry. It's a current operational cost. So that's how much we pay right now. Like we have a we have GFL is out there running it. We have it manned. It cost us 800,000 to 900,000 a year to run the convenience center. Right now,

if we close it, we will not have a cost

at the convenience center to us. The only impact would be to staff if we're doing more pickups and

Okay. So, it really is a that cost savings even though we would still be using it internally

for Yes.

public works and public works access for yard waste and that sort of thing. That's what I was trying to see if it was really a cost savings or not.

And I do just want to make sure that I'm really clear that um even if Wake County was like, "What an excellent idea. We'd love to do that." The convenience center will still be closed for a good chunk of time. [laughter]

Certainly.

Okay. Good. All right. Anything else?

Yeah. Okay. If you guys have any other questions, I'm happy to listen and get whatever information you need. We have very good consultants.

Excellent. Thank you.

So, Shelley will be back uh sometime this spring to answer more of those questions. All right, we are going to bring uh Kimberly Branch up to walk us through the uh annual comprehensive financial report. The ACER, this is something that um Bella and Britney have done as part of their orientation session. And much like Liam did in the budget uh last work session, just thought it would be a good idea to share with the rest of council. um especially looking at the the draft version of the 2025 that we are receiving tonight. Uh before I bring her up, I just wanted to talk about and I will do this again at the council meeting just to make sure we're c crystal clear with everything going on. Uh there are four uh different investigations and inquiries going on uh during this transitional time and I just want to highlight them. is that the North Carolina Office of the State Auditor's office is investigating alleged cases of fraud, waste, and abuse of taxpayer dollars. That is a multi-year um look at things. I believe four. um WBLE Dickinson who you've hired to do um an investigation uh for y'all examining the PECARD usage and reimbursement uh by

the former manager examination of reporting finances to council and also a review of the environment created uh by the former manager and that is ongoing and unfortunately that there we go [laughter] sorry I think I did that to Carrie the district attorney has called for north the North Carolina SBI um to perform a criminal investigation. And lastly tonight at your council meeting and this is why it's pertinent to the aer um Cherry Beckert is here and uh Leanne Waters who I believe is in the audience. I had the pleasure of meeting her today. She will walk you through the auditor's report during your council meeting. Um so that is ongoing. So the aur is obviously tied to that effort. Um I said that already. [clears throat] This is I think the best slide and thank you Kim and others. uh for doing this today and jump in if I get this wrong in any way because I this I thought this helped and if you think of it what what does citizens understand about all of these efforts is um as it starts out with every year as being required to do an um external audit uh of our services all of prior years I think there's six prior years that are on our website currently uh staff starts by creating a draft financial statement at the end of the prior fiscal year um the auditors then take those draft financial statements and ultimately produce an opinion that's shared with you um tonight. All of that information then goes into uh I think it's the back end of the ACER that is shared publicly with the auditor's opinion. So there's a lot of different efforts. There's a lot of different work. Kim, you and your team have probably been working since July basically when the fiscal year closed. Um so I hope that's a good walkthrough. I'll do this again at the council meeting as uh information is shared. And so with that, we'll bring up Kim and let her walk through um the draft actor.

Thank you, Russ. Um good evening, mayor and council. Thank you, Russ. You did a

large part of my introduction, so I appreciate all of that. Um today, we are coming to you though for just that education of how to read the um annual comprehensive um financial statement. As Russ mentioned, uh, Leanne will be here for the 6:30 meeting to talk about the audit, which are very, we're looking at those as two separate things for this evening. Okay. All right. So, what are we going to try to get to? I'm trying I got to make sure I stay in my bubble. [laughter] Um, but I'm going to shift a little bit because um, this is well, this will be a hands-on um, exercise because as we go through pages throughout, I would love for you to turn to those pages with me so we can just talk through the through things in detail. Okay. So some key takeaways we have for you today. What we're going to talk about, we are going to talk about what the annual comprehensive financial report is and why it and why it matters. After this day, you all are going to be very um current on language and you'll say ACTER just like we do the ACT for the annual comprehensive financial report. How are we going how to read the ACTER? Um, as we go throughout um, this presentation, we're going to go to some specific pages so we can highlight some important schedules with you, but we're going to do that all along so that you guys can follow along and we can just talk about the different schedules that we think um, we want to highlight because it is a 300page document. You all have a draft of that in front of you um, with a glossery in front of it. Um, when I say draft, the audit is still ongoing. We have a deadline to the local government commission of February the 12th. So that after that point you all will receive the nice copy with all sections um included. Okay. What is the annual comprehensive financial report? It is our town's official annual financial report. Finance actually generates um this report. To Russ's point, he did part of my presentation. Um the auditors come in and they um they audit it. It is an endorsement of the GFOA. There are sections within this 300page document

that the auditors do not audit and we'll talk a little bit about that as we go through the presentation. It is prepared in accordance with the generally accepted accounting principles which is GAP. It is audited as I mentioned by our independent auditors. It demonstrates transparency. So let's talk about why it matters. It matters because it confirms car's financial condition. It identifies trends and risk. It supports policy and budget decisions. It's used by third parties like our bond rating agencies, lenders, and other regulators. It demonstrates stewardship of public funds. And it measures accountability and outcomes. So you all last work session you talked um with Liam through the budget. You all adopt July 1. finance works with the execution of that and we get to the end of the year June 30th which tell which tells you the outcomes of that execution. All right. So let's look at a timeline for um what we I would say going this year is a isolated year because of so many things um but a regular schedule for us in generating this um act for is June 30th we end our fiscal year we start our audit work internally effect starting July 1 we start trying to close out our books between July and September 30th part of that closing out of the books is looking for things that may have happened between July and September that should have been accounted for in our fiscal year. Does that make sense? I want to make sure I'm clear because I'm talking technical stuff here today. Um [clears throat] so July between July and um September, that gives us the time to make sure our June 30th year in books are accurate, as accurate as they can be. Um, and once we get to September 30th, that's what I say we when we officially want to close our fiscal year out, which is includes all those journal entries I

just spoke about. October the 31st is when we are completing our first draft of the financial report so that we can hand those over to the auditor. Um, so between September and October 31st, that gives us time to actually work on some of what you see here tonight. just pulling um pulling our financial statements together so that October 31st the auditors I don't want to say they start their official um fieldwork with us because they've talked to us all along since July one to be honest um but they really start deep diving into the financial statements around October the 31st so that they can do all of their transaction work whatever work they they're doing through audit that so that we can submit to the local government commission our final full annual comprehensive financial report and that is um December the 31st. I mentioned earlier um this is what we plan to do. This is a typical deadline this year. It was a there you know it was an outlier just because of the largely because of the federal shutdown that happened back in the fall. Okay. Some important terms. Some important terms I'm going to highlight here. However, you do have a glossery with some additional terms that you may hear throughout the evening. General fund. This is our primary operating fund of the government. This is public safety. This is parks and recreation. This is where um the largest fund um where most of the operations go through. Proprietary funds are funds used for business type activities where the costs are covered primarily by user fees. Our [clears throat] example of a proprietary fund here are is our utility fund water sort finding. A finding is an issue the auditors identify that needs to be reported to the governing board. You all may have read the report. We do have some that will be reported. Um Leanne will report on those during her 6:30 session. Unmodified opinion, also called a clean

opinion, is the best opinion. We always work hard to get that opinion. Um and it concludes fair presentation of the financial statements in all material respects in compliance with GAP. Okay. All right. So how to read the annual comprehensive financial um report? There are four sections that I'm going to outline for you. We have the introduction section. We have the financial section. You don't have to turn yet. I'm going to get y'all there. financial section, statistical section as well as the compliance section. This draft that you have here has the introduction section draft financial section and the statistical section. The compliance section is really the section we're still working on and we still have between tonight and the 12th to get it done and we're very close. All right, so let's just dig down a little bit into the introduction section. Introduction section will include things like council members, mission statements, appointed and administrative staff response. I'm skipping some too, responsibilities of town government. It's really to inform third parties what really makes our machine makes up our machine and the operations of the town. One thing I will point out though, it also includes our certificate of achievement for excellence and financial reporting that we get from GFOA. Because of our reporting, we are as of June June 30th, 2024, that was our 40th year of receiving that award. All right. Financial section. [clears throat] The financial section includes things like the management discussion and analysis. And I will have some slides where we're going we're going to go to the MDNA basic financial statements and notes required supplementary information associated associated independent auditor's report which Leanne will speak to the auditor's report later on as well. All right, let's talk about the

management discussion and analysis. Now we can turn pages. If you turn to page 37, the MDNA in short, this ranges from pages 37 to 44. It is the narrative. It's all narrative bridge between complex statements that we have and policy decisions. It explains what's changed, why it changed, and what it means going forward. I like to look at um the MDNA. If you're on page 37 or in that group of pages, we start with just general highlights. It um the discussion ranges from governmentwide, which is all funds of um Kerry, and then it goes into deeper dives like what's going on with the general fund, what's going on with the utility fund, what's going on with other government funds like capital funds, what's going on with transit. We have commentary in this um discussion. This is what I am highlighting as a very important um discussion and analysis for you all to read every year. What I will point out just taking me up a little bit this acter it doesn't change much from year to year. The statements the um the the discussions and everything they're similar from year to year. So what I'm telling you tonight you can carry it forward with you unless we have a guidance change of some kind from the Gazsby. Things will look the same. All right. So that was the MDNA. Um and when we say management discussion and analysis, I draft the management um discussion and analysis with others who review like um Dana um she would take a re review of it, but it's really management of finance um that generates this. Okay. All right. Let's talk about governmentwide statements. You heard me reference the word governmentwide and again that means all funds um for the town. If you can turn with me to page

45, this will start us with exhibit A. [clears throat] [snorts] If you want to know the statement of position and answer questions like what do we own, who do what do we owe and how strong our financial position is for the whole entire government as a whole. Exhibit A is your balance sheet that you can find that information. So if you flip the page from page 45 just over to 46. If you look at that very bottom, you see total net position. That's really the value of carry as of fiscal year 2025.

So for in this particular case, our net position is 1.9 billion. Um and you can see a breakout of that um those amounts starting at the net investment and capital assets going down. That shows you the breakout of that those um totals. Okay. If you follow me to the next page on page 47, [snorts] that is where you are going to see your statement of activities, which is really the income statement for the entire um entity. This um report tells us what did the government services cost, how much was funded by taxpayers versus fees and grants. So you can find that in this location. This is an interesting report that with time you all will get used to it and I always love to talk about it after you know if you want some extra time with me I'll talk to you about it all day. Um but this is a report that you really read from left to right from the perspective of it will show you um some expenses here and you know what we're paying for things. And then at the bottom you can see where it starts avalorum the gen the general government revenues that have to come in to kind of help um run our services.

So Kim uh does this also include the cash on hand

that we in all of the balance sheets you will have um cash. So, if you turn back to page 45, you see that equity and pulled cash and investments.

Yes, it's at the very top.

At the very top, I'm sorry, in the in the asset section.

Oh, yeah.

Yep. That shows us cash. Now, you know, there's always stories with every single balance that you will see because the the cash that you see on your books can be different than the cash in the bank. There's reconciling that we have to do every month. But this is what we have to report our book balances.

Yeah.

And this is um as of particular time that we have to report like um as of let's say March 31st or something whatever is in the account.

So anything that is in your annual financial report at the end of the year is going to be as of June 30th.

Yeah. As of June 30th.

Okay. Let's go to our next schedule. And this is a fun one for you all. Exhibit C which is going to be on pages 50. Start on pages 50 and 51. What I want to highlight with um [clears throat] exhibit C this is where this is the balance sheet for the general fund and this is where you're going to find if anybody says what is your fund balance at the end of the year. If you look at the general fund column because that's the one we talk about when we're talking about fund balance, you will see and it is actually in this year on page 51. It's always the last piece of the balance sheet. You will see that total fund balance is about $106 million as of June 30th. Is everybody following that? Okay. Um so [cough and clears throat] when we look at policy for fund balance at the end of the year we are seeing how this 106% compares to our policy statement that

says fund balance needs to be retained at 33.33% of budgeted expenditures and the budgeted expenditures that we look at is the original budget that you all adopted as of July 1 of this fiscal year. So those are the numbers we'll be comparing every year

and Kim will have a slide on that at the um council meeting as well.

Yes.

So in 2025 what what was the percentage

this percentage the 106 it turns up to be about 41%.

And our floor or our requirement was the 33.33%. Yeah.

Where's the general expenditure number of which 106 is 33 or 40%. So you won't see it in this schedule cuz this is a balance sheet. Um what the number that we use is the number that is in the budget book from the general fund summary that says total expenditures before other resources. So it's really your operational expenditure number

is it will it show up in the final act? So it should but sometime and you know full disclosure as we continue to comb through these um financial statements it should so you should be able to do it in the same place but sometimes we have rolled things like incumbrances and things like that from the previous year over and so I can't guarantee if you look back over 10 years that this number is the one you should use as the original um budget because of some of those roll forwards. What I would say is we use as a rule of thumb you need to look at the budget books for that fiscal year and go to the general fund summary.

So is there a place where [snorts] some you know a lay person can say here's what our fund balance was where it's called out where you don't have to do the math. Is there a place on a certain document so we can say yes we were aligned to to policy number 175. So

what I have included in the MDNA is that we have met the policy for fund balance but the calculation I don't have that spelled out in any of the statements in the ACTR.

Okay.

Yeah,

I think that would be helpful.

Yeah, very good.

Right. It's a highlighted number. It's one that has a policy associated with it. Especially since the beginning of your presentation says supports policy. Yeah. Yeah.

And if that is a policy, it would be nice to call out not only are we aligned with the policy, but here's what the number is.

Yeah. Just so it's trans. Yeah.

Just to be transparent.

I hear you.

Okay.

At what point did we and I know I've heard this in few discussions and I probably pro I will definitely mix this uh information up as a full disclosure. So when did we not um get to the like 33.3% like was there any time and um last year or the year before?

So in the past couple of years we've been significantly over that 33.33 33%. 2023 we were very close but we were short. Um the percentage in um 23 was around 31%.

Okay. And the policy is at 33.

Yeah.

Thank you. So that 33 uh policy percentage um when did we decide this number?

So so the I believe we changed policy last in 2020. Um was when we changed it um the last time. However, and you'll hear it in my presentation at 6:30, we are looking at these policies because we've grown so much

to see what policy we really should be using for where we are today.

Yeah. So, y'all will see that in the next

Well, probably after the budget is adopted this year.

Yeah.

Kim, can you really quick define for me

when you say encumbered? Do you mean allocated to a project or otherwise tied to something?

It's committed. Encumbers committed. Most of the time there's contracts, there's things that we just hadn't completed,

right? And it's

for the actual finaloice going somewhere. Yeah. Thank you.

Yeah.

Okay. All right. Page 53. This is just the income statement of what you see on um schedule C on page 53. What I will point out here though is that if you find that same general fund column, There's a line at the very bottom that says net change in fund balance.

This is revenues minus expenses for the year. This number here is how your fund balance will change every year. [snorts] So in this year I told you that we're at 106 million that you saw on your balance sheet. And you here you see a positive 23.6. That means that we added 23.6 to our um fund balance. So you can always look at that net change and see how your fund balance has changed for the year. All right. So we were talking about favorite favorite reports with Lim last time. This is my favorite report here. Schedule G. [laughter] Schedule G shows whether management operated within budget

policy direction. Some key takeaways here. This schedule which starts on page 55 and runs to page 61 will show you significant variances and explanations use of if there was use of reserves and it directly supports governance and accountability. This is a report. I'll go off on a limb, Liam, and say that the auditors look at this report because we are statutoily bounded by our audit, right? And this schedule here, if we're over when um our budget authorization, you would be able to see it from this report. Um but it is nice to see all of the departments. This is a

very um detailed schedule. The spending compare, it's a comparison um to the current year. In our case, it's 25 compared to 24 as well. All right. So, let's talk about the financial notes. So, um there are a lot of pages in the financial notes, but I just want to highlight a few that um we think are significant ones that you should pay close attention to. If we turn to page 83 to 86, this is our fund balance and restrictions. If you want an understanding of everything that goes into those fund balance categories and when we continue to educate you on fund balance as we bring forth a recommendation of a new policy, we'll deep dive into some of these definitions, but we always have to also enclose it within our annual comprehensive financial report. So, this is where you can find um that information. Oo, debt pages 95 to 105. That is another schedule that I would bring your attention to. This will tell you all of the debt that we have outstanding. It'll tell you our amortization schedules like how much we, you know, how we're going to pay for them um over the over the rest of their um maturity cycle. Um so that this is a very important schedule. The last piece of the notes that I would bring your attention to is on page 129. Now on page 129, we always have to talk about our subsequent events. Subsequent event is from the time period at the end of the fiscal year. So it runs July 1 to the time of issuance. So in this case, we're not quite at issuance yet because we still have a few days, but that's so we have to report anything significant during that time. This is a drafted note, so it has some up-to-date information. We're going to have to include some additional notes there that

you'll see in your final um distribution.

And before you go to the next slide, I just wanted to do a call out that it's 6 PM.

I'm almost wrapping up. [laughter]

Um I don't I'm not sure what happened to this next page, but the statistical section is also a huge um recommendation for you all to look at because it gives you comparative information. If you turn in your report to 179, you will see that and it's it depends on what you're interested in. I actually didn't flag that for myself, but um 179 it shows you up to 10 years of information on information like taxes, revenues, expenditures, debt, um socioeconomic information, all a lot of things. Um, so if you're interested to see how the trends go, the statistical section is really the place um that can give you that information. It's very useful. All right. All right. And then the compliance section, which I mentioned you all do not have um in your book, but this is where we report on our federal and state grant requirements, bond covenants, um single audit results, which has to do with our federal funding activity. Um auditor's conclusion about material weaknesses, internal controls in any instance. This is where you will find those findings that I briefed you on a little bit earlier. They want me to. There you go. All right. So, that concludes this presentation. Um, I love answering questions about anything finance. So, if there's any point you want to dive a little bit deeper into what we have here, please don't hesitate to reach out.

Are there any questions as of now? When will this be um available online for citizens to

So we we're waiting until we get our final opinion. So we know we we are working towards and should be successful

in having it done the submission to the local government commission by the 12th of February. So but then we have to send things to print. Um so a couple it it will be soon. Um hopefully before the close out of March, but we'll see.

And then it'll be posted online at the same time.

Absolutely. will be posted on posted online. Yep.

And and I think my questions might be for Russ. Uh the public's going to go, "Wait a minute. All these things happen. I don't see anything. What's going on here?"

So I think

So how do you distinguish this from the state auditor?

So I think that'll be a good question. and any questions you have as as we hear from Cherry Beckert at the full council tonight. If you have questions in general, you may wish to hold them until you have to have the complete picture and the findings from the auditor.

Okay.

Do we have a timeline on that yet by chance?

Well, you're going to hear all of their findings tonight in the presentation.

I mean this I'm sorry, the state auditor.

Oh, we I'm sorry. We don't know. See, even I'm confused. [laughter]

All right, that's it.

Thank you. Thank you. All right, just a few announcements for me. I'm gonna Jenny's going to hand out um a couple documents if you will. The first is going to be and there's just a summary up here is the list of uh funded as well as a list of unfunded projects, the projects that you reassessed um as part of the budget this past year. There's 141 general fund projects and 169 utility fund projects. This is just a list. I wanted to get to uh this to you about a month out as we will start uh discussing capital projects as part of next year's budget in both of our work sessions in March. So if there's anything else you want to see, staff is probably working on some additional information. Some of you have already given suggestions like um you know [clears throat] what projects are in what specific district. So we'll be working um over the next several weeks uh to get you probably a little more detailed report, but for right now you have a list. And so if anybody has questions about that, please please let

us know. Bless you.

And and can we use um I think I asked you this before, but chair um to look at the amount that um that each one of these cost, can we go back to the capital documentation that we had before?

That's a good start. The only thing that would have changed if we as we spent money on a a project that you know continued throughout the year, the balance is probably different. And so we look to update those numbers. the descriptors that were in those notebooks. Yes. And um I'm hopeful we'll probably give you a a similar notebook to those that saw that um la last year as part of the budget.

Yes. A lot of projects. I just want to highlight the budget schedule again. Um this is the same as um what Liam really showed you at the last meeting. Uh lots of meetings, lots of work sessions. Um and obviously then highlighting staff is working on planning the uh the budget town hall as well. So several meetings even this past week to continue to plan for that. Uh got the work sessions in March where we'll be doing um some of the capital project discussions the 12th and the 24th and the schedule continues. If anybody was taking a picture here's the end of that.

It doesn't fit on one slide. I'm sorry.

Good. you mentioned. [laughter]

Uh and then just real quick, this is this is the uh information we've kind of settled on when we be going to boards and commissions to talk about the budget this year. So, take a look at that. Uh and then I had um shared uh I think we may have changed the colors actually. So, we're going to keep you on your toes with color changes on the slides, but just any council initiated items. Uh we currently have a team that's working on policy and procedure changes. Uh specifically I believe a lot of these will be rolled up into um policy statement or u standard procedure but

with spending authorities and um delegation of authority is what it's actually called as we work to try to bring some of that back to you as soon as possible. So, in progress, um, these are all the one, again, the ones that y'all initiated an RFP for the independent external auditor. The only thing I'll point out, um, as it may be a bit of sad news, but we're in the last year of Cherry Beckard's contract was a, uh, originally a three-year contract with two one-year extensions or up to two, you know, combined of up to two years additional expense expenses or contract years. We are in the last year of that. So, we'll be going back out um uh to determine who will be doing those services uh for the next year. And last, the other only other handout um I thought there was a slide on it, but we were given a pulse report to date, something we'll continue to try to hand out. This is uh requests that have come in through 311 on budget and just kind of continue to keep you updated with kind of a budget focus um is where we're at right now so that you can see what citizens are submitting um through 311. So that's the last handout for the night and the last thing I had for the night.

Any other questions? All right, this work session is a journ. Thank you. Thank you.