Dunmore Homes Response to Audit Footnotes: Dec. 02, 2008

Public Comment on Audit Footnotes #7 & #8, CC Meeting Tuesday December 02, 2008

By Michael Lutz

Dunmore Homes

 

Honorable Mayor Varela and Council Members.

 

I am appearing tonight for the purpose of identifying, and correcting for the record, several inaccuracy in Notes 7 and 8 to the Audited Financial Statements as of June 30, 2008.

 

These notes purport to reflect items including obligations and agreements between the City of Livingston and Dunmore Homes contained in the Development Agreement for Country Villas Unit 4, dated July 19, 2008.

 

Section 10 of the Development Agreement discusses the Developers obligation to acquire 2.5 acres of land toward the projects obligation for park land for which the Developer would be entitled to receive credit against the park-in-lieu fees and to acquire 2 acres of land to expand the existing drainage basin on Dwight Way for which the Developer would be entitled to receive credit against the storm drainage impact fees.

 

Based upon the City’s interest in acquiring the balance of the property owned by the Livingston Industrial Park partnership, Dunmore was asked by the City to make an offer for the entire 12.6 acre parcel based upon an appraisal of the property. In the event that the land owner declined the offer, Dunmore was asked to provide funding toward the city’s acquisition of the remaining 8.1 acres of land.

 

When Dunmore was unsuccessful in completing the acquisition, it met it’s obligations under the Development Agreement by delivering to the City 3 Letter of Credit: $347,500 for the 2.5 acres of park, $278,000 for the 2 acres of drainage basin and $1,125,900 for the loan to the city to acquire the remaining 8.1 acres of the property.

 

Note 7 of the Audited Financial Statement indicated that the City borrowed $829,926 in January 2008, when in fact the City borrowed $1,125,900 in January 2007. The note goes on to indicate that this borrowing was to facilitate the purchase of 12.6 acres for a future sports complex and further drainage. In reality, the borrowing was only for the purchase of the excess 8.1 acres of property. Finally, the note relates that the borrowing is only re-payable from the storm drain impact fee fund. The fact is that the borrowing is not repayable from the storm drain impact fee fund at all, but in accordance with the Development Agreement, the borrowing was to be repaid by the City within 3 years from the date of acquisition in semi-annual payments. The fund sources for repayment were identified in the Development Agreement as Park-in-Lieu Fees collected from other projects and by using 25% of the funds collected city-wide for the Community Amenities Fund.

 

Note 8 of the Audited Financial Statement indicates a note payable balance of $829,976 as of July 1, 2007. With the retirement of $138,329 of the note by payment during the current year, it’s indicated that there is a remaining balance due of $691,647 as of June 30, 2008. These balances are understated by $295,924. The note payable balance at July 1, 2007 should be reflected as $1,125,900 and with the payment of $138,329 having been made during the year, the remaining balance as of June 30, 2008 should be reflected as $987,571.

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