Overspending by Town of Farmville, new fire station on hold

This is NOT a faith column.

The Town of Winterville gave its utility customers a 10% break for two months in a gracious move to relieve some financial strain caused by COVID-19 . The Town of Ayden gave its residential customers a 10% discount for two months on the electric portion of their April and May bills as well as a 1% electric rate reduction for all customers starting May 13. Residential and business customers in the City of Washington, NC saw a 30% reduction of their electric rates for the month of April to help them with the economic effects of the pandemic. The Greenville Utilities Commission had planned a 6.8% increase in residential retail water rates to begin on July 1, but to help its customers in the midst of COVID-19 decided to have no increase. The Town of Farmville gave us residential customers no such decreases and actually increased our water rates by 6% starting July 1.  In response to the COVID shutdown, all NC municipalities were subject to an Executive Order which prohibited them from disconnecting utilities, charging late fees or interest for those unable to pay and requiring them to give customers extra time to make good on utility debts. Ayden, Farmville, Winterville and all municipalities in Pitt County lost out on their percentage of the county sales tax revenues when stores were closed during the pandemic. Without question, this coronavirus has had a negative financial effect on towns and cities across the country. Why were some municipalities in better positions than others to deal with the economic fall-out from COVID?

By many accounts, the Town of Farmville already was in a precarious financial situation before the onset of the virus, and this was intensified by the effects of the pandemic. In my opinion, by spending on non-budgeted items or overspending on budgeted projects, especially in the past few years, our town was forced in the face of COVID-19 to make drastic cuts and to hold off on projects like the new fire station for the budget year starting July 1, 2020.

Please note that different people operate differently when it comes to spending money. I was taught from childhood that I could not have everything or even most things I wanted. Choices had to be made. I learned to work and save money, to reuse and recycle, to prioritize carefully my wants and needs, to come up with a plan and a budget, to shop around for the best price, to wait patiently for a good deal and to analyze the total cost as opposed to monthly payments. What mattered most in financial transactions was the bottom line. Without listening only to the pitch of the salesperson, what was the lowest total cost to buy that quality item or have a project done well? Statements like “we used cost-saving measures,” “we negotiated a better price,” or “we came down off our initial price” were meaningless if the final cost was not one of the best possible. It seems that it has become increasingly rare for an elected official to feel obligated to safeguard taxpayer money. It is easier to spend someone else’s funds than our own, however, according to the UNC School of Government, “Local elected officials are stewards of the public trust. They are responsible for guiding multi-million dollar county and municipal corporations that depend on numerous sources of revenues and that have multiple layers of policy and management responsibilities. Understanding their financial fiduciary responsibilities is one of their most important duties.”

Also, please remember that our elected officials are the ones accountable to us taxpayers. Any private citizen may go to the town board to recommend a project or to propose the buying or selling of property and that is their personal business. They do not have to answer to us. Elected officials and town employees are the ones who have to.

Let’s take a look at some policies and recent financial transactions by the Town of Farmville in an attempt to get a clearer picture of how we got where we are. Why did the new fire station, a necessity since the bays in the current firehouse are not tall enough to house new fire trucks, suddenly get removed from the fiscal year 2020-21 budget which just began? How did other projects which were brought up years after the plan for the new fire department jump ahead of it in the list of town priorities?  Below you will find some answers. Please feel free to verify these facts and numbers for yourself. This information is public.

The Town of Farmville does not necessarily get bids for construction projects under $500K.

In my mind this is the most important thing we residents of Farmville should band together and ask to be changed.  According to David Hodgkins, the town manager, in a June 16, 2020 email, “Only construction projects in excess of $500K have to be formally bid.” In a town of 4,700 we obviously have countless construction projects that do not cost over $500K. That threshold is way too high, in my opinion. By getting only one bid, which has happened as recently as a few months ago, the town is not looking out for our taxpayer dollars. Even if a company is known for being affordable, it is wise to get more than just that company’s proposal. There is always the chance of being able to save a good bit of money. It is very possible that the town has been spending much more than is necessary. Imagine if we could have saved even $10-$50K on each construction project under $500K that had no informal bidding process. That would have added up. For the good of the town, we must get this changed so that the Town of Farmville will make it a practice to get at least three informal bids for any construction project over maybe $100-$200K.

In the past few years the Town of Farmville has transferred millions of dollars to the General Fund, signifying higher-than-necessary utility bills.

Previously Farmville had town managers who kept the transfer of money from the Electric, Water or Sewer Funds to the General Fund within a certain range, except in the case of an emergency. For example, Collins and Aikman suddenly closed in 2006 and the Farmville plant had 650 workers who could no longer work in our town. In the wake of that unforeseen circumstance, the town manager and commissioners were forced to transfer more money from utility funds to the General Fund than they ordinarily would have due to the major loss of revenue. As a rule, most experts do not believe it is in a municipality’s best interest to have utilities prop up the General Fund. This makes our utility bills artificially high. Our current town manager and maybe even our elected officials do not seem to share these beliefs, as transfers from enterprise funds (electric, water and sewer) to the General Fund have steadily gone up in recent years.  For the fiscal year 2015-16 the utility transfers were $1,475,170, up almost 25% from the previous year. In the 2017-18 fiscal year almost $2M was transferred to the General Fund from enterprise funds. $1,046,241 was transferred from the Electric Fund, and residents wondered why their electric rates were so high! This means that after paying for electricity and associated operating expenses the town had enough left over from what they collected from us, the electric customers, that they could put over $1M into a different fund. Some of this $1M was warranted, as a percentage of certain town employees’ salaries rightly came from the General Fund. There should be a clear formula for how these percentages and transfers are calculated.  In 2017-18 the town also took $663,702 from the Water Fund and put it in the General Fund as well as $199,436 from the Sewer Fund. Basically, this is using the fund balance to balance the budget. Raiding enterprise  funds is also a way to avoid raising taxes. Relying on the fund balance year after year is not wise policy.  For the 2018-19 fiscal year $1,914,745 in transfers to the General Fund were proposed. That meant that 29% of the General Fund, almost $2M,  would come from utilities.  As I understand it, these numbers did not meet the level which would have required the State of NC to come in and warn us of a problem. Still, our town has been moving in the wrong direction in this area.

Bonnie’s Alley Project was increased by over $320K of taxpayer money to cost us over $520K.

The anticipated cost for the Bonnie’s Alley parking lot in May 2016 was approximately $150K. The proceeds from the sale of the Farmville Hardware building were going to cover that. Once the project was started the cost to the town rose to $200K. In 2019 after several work order changes the cost to the town to create 13 public parking spaces and an improved alley skyrocketed to $520K and the commissioners unanimously approved this expenditure, which included a $60K purchase of a private individual’s driveway. The total bill was over $600K but $522K of that was what it cost the town. Some business owners who would benefit from the improvements donated just under $40K to this project. Also, included in the total cost (not cost-to-the-town) was the paving of one business’ adjacent parking area for which the business reimbursed the Town in full.

The Town Hall Security Renovation will cost between $85K and $90K.

At the Board of Commissioners retreat in February 2020 plans were presented for the Town Hall Security Project which was estimated to cost $62,401. After COVID-19 hit the plan was changed to add glass or plexiglass where employees and the public would come into close contact plus an additional service window in the utility payment lobby. Those and a few other changes were added for an additional $22,599-$27,599. These COVID-related additions hopefully will be reimbursable from federal COVID funds. The Town of Farmville did not take bids on this construction project. The company was hired and they began the work while the Town Hall and DMV were closed due to the pandemic. This timing actually worked out well because the DMV already was going to have to be closed for the renovation. At least this way, since the DMV space was being reconfigured and could not be open for business, the potential COVID revenue losses were not as much of an issue. This security renovation was not one the public knew about for very long in advance. When was this project first proposed? Did it jump ahead of the new fire station which has been planned for years?

Farmville commissioners voted unanimously to take out a $5M loan to build a new library.

 In 2016 the public library had a space needs consultation and in 2017 an architectural firm was sought for renovation and expansion. In January 2018 the original estimate for the demolition of the existing library and a new, larger one was $4.45M. The engineer cited soil and foundation issues. According to the February 5, 2018 Town Board minutes several Library Trustees spoke in favor of demolishing the library and building a larger one, as did all five of the commissioners (Moore, Elks, Shackleford, Dixon and Hobbs.) I believe that at that time the library’s Board of Trustees sincerely thought they would get at least $2.25M in grants and donations and that the Town of Farmville would have to borrow $2.25M for this project which they considered extremely beneficial for all of us. In 2018 commissioners voted unanimously to demolish the library and build afresh and in June 2019 to take out a $5M loan for this. The interest for this loan, if paid back in 15 years, will be $1.176M. This is a $5M loan in a town with a 2020-21 budget of $18M. An extra $340K will be spent for a trade for using a temporary library space, unless private citizens donate to that depot project. The Farmville Enterprise repeatedly reported the goal of raising at least $2.25M to from grants, fundraisers and donations. Why did commissioners vote to take out a $5M loan or the total projected cost of the demolition and new building when they believed something close to $2.25M would be collected from grants, fundraisers and donations?  It is wise to build in a certain cushion, but they proceeded as if no money whatsoever would be raised for the project outside of taxpayer money. On February 24, 2020 the library director reported that $530,131 had been raised up to that date ($175K in grants and $355K in private donations.) At this point Farmville taxpayers would be left with a bill of almost $4.5M not including over $1M in interest or the $340K temporary library rental trade. Most residents would have been happy for the library to correct the soil/foundation issues and to expand the building. Others might have accepted a demolition and a larger building in keeping with the lot.  It became problematic when the town was given only two options and one was the enormous building that has gone up. Of course, there could have been any number of other very good designs which were not as large and would have cost a lot less.  Why did the library proposal appear after the new fire station proposal yet jump ahead in the timeline?

The Town of Farmville will spend approximately $24K/month to rent the old train depot as part of a trade or exchange.

In October 2019 and January 2020 Farmville’s town manager, David Hodgkins, did not know a ballpark figure of what the town would spend to develop a parking lot and area at the old train depot. Presumably the commissioners did not know this either. I asked if there were a not-to-exceed price and Hodgkins said there was not but that if the project got too expensive they would go with a different design. Would you ever enter into a “trade” without knowing what you had to give up in the exchange? The town agreed to pay to develop the parking for the private owner in exchange for rent of the temporary library space, although they did not know how much the development would cost. The contract agreement began July 1, 2019. After lengthy delays, the owner had the gorgeous depot preservation/renovation ready for the library on January 28, 2020, which meant there were seven months that the library could not be moved to the temporary space. The new library is expected to be completed by March 2021. With the loss of the seven months of occupancy, the library should occupy the space for a total of 14 months. If you or I entered into an agreement and could not get into the rental space for seven months, we would not pay or “trade” for those seven months. We would alter our agreement accordingly. At the March 2020 meeting commissioners were given two choices of designs for the project. With practically no discussion they voted unanimously to spend $340K rather than $298K to develop someone else’s parking area, even knowing that the town lost out on seven months of occupancy. Apparently the $340K design was not deemed to be too expensive.  On June 5, 2020, in fact-gathering for this blog post, I emailed the Town Finance Department to find out about the “expected” $40K private contribution to this train depot parking project and if it had been made yet, to bring the cost to the Town down to $300K. Town Manager David Hodgkins responded, “You must be confusing this project with the Bonnie’s Alley project.” That was an odd response because it was a change from what Hodgkins previously had told me, but I accepted his new information. In essence, if the new library is completed by the end of March 2021, the value of this trade amounts to us taxpayers paying $24,200 per month for the use of the depot.  We taxpayers can hope that the Town will seek to spend less than the $340K by cutting some costs. We also can hope that there will be money given for the project by a private party to bring the cost below $340K. Either or both of these possibilities would change the numbers here. The train depot owner has said that the public would be free to use the parking at any time outside of event hours. The parking is quite removed from Main Street, of course, and is not very well-situated to relieve downtown parking issues. It is interesting to note that in July 2014 a commissioner made a motion to set aside $45K for potential PARTF grant/matching funds to pave the parking lot at the Farmville Community Center and the town-owned lot by Farmville Furniture. Commissioners Moore and Dixon voted against that. For some reason, they voted in 2018 to sell the town-owned parking lot next to Farmville Furniture, despite saying that we were desperate for downtown parking. Commissioner Shackleford was the only commissioner who voted against selling that central parking lot.

Some commissioners have promised a public splash pad for over eight years.

Almost eighteen years ago, the Farmville public pool was filled in after years of neglect made it cost-prohibitive to bring it up to code. The biggest concern was for modest-income families who couldn’t afford the country club, but the hope was the town would build something like a splash pad. For over eight years some elected representatives have promised one. Nothing ever has come of their words. In my opinion, it should be a top priority to keep our promises.  Commissioner Brenda Elks said in The Standard on May 28, “I know we can’t put a splash pad in our budget now. Since I sat on this board [4.5 years], this is all we have talked about. We would love to do that eventually, but COVID-19 has pushed it to the wayside… That’s something I really want us to explore what can be done about that.”

The Farmville Community Center has been in a state of disrepair for years.

The Town of Farmville Community Center has an entrance/exit at the back of the building where senior citizens and Meals on Wheels volunteers enter. The curb is not cut out to allow for walkers. There is no sidewalk leading up to those doors. The flooring in that hallway and kitchen has many broken tiles and is uneven. The outside doors are heavy and in major need of replacement. They slam shut on you if you do not hold them carefully. The ceiling and walls in the kitchen have water stains or peeling paint. The roof was replaced a few years ago and there is already a problem with leaks in a few parts of the building. These concerns have been brought to the attention of the town board and manager for years. Emails, letters to the editor or citizens’ presentations usually result in a repair or two. Wouldn’t it be wise to maintain the town’s current properties well before embarking on building new ones?

Town employees will not receive a Cost of Living Adjustment, Town Manager gets 2% raise

The Town of Farmville will not give its employees the proposed Cost of Living Adjustment this fiscal year. They say this is due to the economic impact of COVID-19. According to The Standard on July 16, 2020, following the June 29 closed session Farmville Board of Commissioners meeting the commissioners voted unanimously to give David Hodgkins, town manager, a 2% merit raise. Hodgkins earns a salary of $110,313.

The Town of Farmville has had years to prepare for the loss of the water rights contract with the Town of LaGrange.

In August 2008 the Town of LaGrange entered into a 10-year contract to buy water rights from the Town of Farmville. After this, the rules in eastern NC for “banking” water credits was going to change. In May 2016 Hodgkins wrote in the cover letter for the FY16/17 budget “Retail water rates are proposed to increase by 8% to maintain a sustainable rate structure in anticipation of the future loss of water rights payments from the Town of LaGrange and to offset a planned bulk water rate increase from Greenville Utilities Commission effective July 1. These revised rates will fully fund all critical operational and capital needs in the Water Fund without appropriating any funds from Water Fund reserves.” The Town of Farmville had years to prepare for the $425K loss in water revenue but continues to bring this loss up as relevant today. Remember, in the fiscal year 2017-18 the town took $663,702 from the Water Fund and placed it in the General Fund, to put $425K in perspective.

In a May 4, 2020 letter for the fiscal year 2020-21 budget Farmville’s retail water rates should be increased by 6% and according to the May 28 Standard newspaper “The increase in rates will offset a $425K loss of payments from the Town of LaGrange.” Why would LaGrange even come into the conversation this long after the fact? Farmville water rates continue to rise.

The Town of Farmville will see an increase in tax revenues due to the 2020 Pitt County revaluation.

In May, Pitt County leaders decided to lower the tax rate to offset the increase property owners would have to pay due to the 2020 revaluation.  This was a gracious move by the county to help property owners with their tax bills for at least the one year following COVID-19. The Town of Farmville did not lower its tax rate, so the town will benefit financially from the higher reappraisals. This will result in higher taxes for us Farmville property owners and increased revenue for the Town of Farmville.

On July 1, 2020 Town of Farmville began requiring Zoning Compliance Permits & fees for gazebos, storage sheds, decks, above-ground pools, carports, fences & signs.

The details for the fees and structures are now on the Town of Farmville website.

IN SUMMARY

COVID-19 certainly has had a negative impact on the finances of the Town of Farmville and all municipalities in the country. Some were better prepared to face such economic woes than others.  In 2020 we see that the Town of Farmville has overspent not just hundreds of thousands of dollars but that we possibly will have to repay almost $4.5M plus over $1M in interest. Several projects were fast-tracked and placed ahead of the needed new fire station. COVID-19 offered a convenient excuse for delaying the fire station at least a year, but the truth is that the Town of Farmville has been overspending on projects and has not been disciplined in allowing the General Fund to stand for itself. Many bills will be coming due and money from the Electric, Water and Sewer Funds will not suffice. Perhaps someday a group of commissioners will rein in the spending and commit to maintaining a priority list of town projects to be done over the course of years. Hopefully taking care of the town Community Center and providing a public splash pad will be at the top of the list after the new fire station.

ADDENDUM

WHY IS MY FARMVILLE WATER BILL SO HIGH?

In 2015 the Town of Farmville entered into an agreement to become a wholesale customer and to buy water from the Greenville Utilities Commission. The cost per 1,000 gallons would go up by 10 cents for four consecutive years. The starting rate was $1.61 per 1,000 gallons, then it went to $1.71, $1.81, $1.91 and $2.01 in the succeeding years. The agreement was that in 2020 there would be a rate analysis, which was done recently. On July 1, 2020 the wholesale cost paid to GUC from the Town of Farmville rose to $2.15 per 1,000 gallons. (The town’s fiscal year runs from July 1 to June 31.)  The cost of the actual water we get is only part of our residential water bill. The Town has to maintain infrastructure, run operations and pay personnel in the water department and in billing.

The wholesale cost per 1,000 gallons of water went up by 14 cents on July 1 but certain other costs associated with our water bill did not increase. For example, town employees in the water department or in billing did not get a Cost of Living Adjustment. Why did the Town increase our total water rates by 6% when that was far more than the increase they had to pay to the GUC? The town had to pay an additional 5% of only the cost of actual water, or 5% of 22% of our water bill. It was a percentage of a percentage. If we used 4,000 gallons of water in our household the cost to the Town of Farmville for that actual water only went up 56 cents in July 2020. An increase of less than 1% of our total water bill would have covered the 14 cents per 1,000 gallons increase.

The Greenville Utilities Commission had scheduled a 6.8% increase in water rates to their retail residential water customers starting on July 1, but due to COVID decided to have no increase. On May 4, 2020 in his budget cover letter David Hodgkins wrote, “Retail water rates are proposed to increase by 6% to maintain a sustainable rate structure with the loss of the water rights payments from the Town of LaGrange in FY 2019-20 and to offset a planned bulk water rate increase from the Greenville Utilities Commission effective July 1.” The bulk water rate increase from GUC is relevant but the other part of this explanation is not accurate. The Town of LaGrange completed its ten-year contract of buying water credits from the Town of Farmville in August 2018, near the beginning of fiscal year 2018-19. That was two years ago.  Actually, the Town supposedly made up for the losses from LaGrange in fiscal year 2016-17 with an 8% increase in our retail water rates.  In May 2016 Hodgkins wrote about this increase, “These revised rates will fully fund all critical and operational and capital needs in the Water Fund without appropriating any funds from the Water Fund reserves.” The Farmville water rates also were increased in 2017-18 and 2018-19. (In the fiscal year 2017-18 the Town of Farmville transferred $663,702 from the Water Fund to the General Fund.) We residential water customers enjoyed a one-year reprieve from increases in our retail water rates in 2019-20.  On May 6, 2019 Hodgkins wrote, “No changes in the retail water rate structure are recommended at this time. Rate increases in recent years as well as continued success in securing grant funds from major capital projects have enabled the Town to build an adequate reserve sufficient to maintain a sustainable rate structure in the near term.” If the loss of revenue from the Town of LaGrange was not recouped by June 2017 it certainly was by June 2019.  LaGrange should not be mentioned as a partial cause of the 6% increase we began to see in our retail water bill in July 2020.

For some perspective you might look at the UNC NC Water and Wastewater Rates Dashboard. The website shows what residential water rates were as of 1/1/20 for 4,000 gallons. These rates were before the 6% increase by the Town of Farmville. The NC median was $30.50. Farmville was above the median at $36.25 with Kinston ($36.49) and Ayden ($34.) in that ballpark. The Dashboard shows Tarboro much lower at $17.13, Greenville Utilities Commission at $27.08, Snow Hill at $28 and LaGrange at $28.80.

According to this UNC Dashboard, before Farmville’s recent 6% increase, if your household used 4,000 gallons of water in May 2020 your water bill from the Town of Farmville was $36.25. Of that 100% of your bill ($36.25), $8.04 was paid to the GUC for actual water. The remaining $28.21 was for other costs, many associated with what it took to get the water and your bill to you. Thus, only 22% of your water bill was for actual water. It is interesting that the GUC charged their customers $9/month less for 4,000 gallons than the Town of Farmville did last fiscal year and Snow Hill charged $8.25 less. Since the GUC did not increase their water rates to residential customers for fiscal year 2020-21 but the Town of Farmville went up by 6%, the water bills to GUC residential customers will be $27.08 per month for 4,000 gallons as opposed to $38.45 per month for those gallons in Farmville households. Farmville residents who use an average of 4,000 gallons per month will pay over $132 more for water in 2020-21 than GUC residential customers.