City Council Hears Auditor's Report, Moves Forward With Projects

SIDNEY--On Tuesday, February 13, the City of Sidney Council met for its regular meeting, and items on the agenda included consideration of projects funded by the half-cent Infrastructure Sales Tax, an Audit Presentation of Fiscal Year 2022-23, and the selling of a vacated right-of-way behind the "Big Red" building, which was sold earlier to WTA.

The meeting started with the reading of the Open Meetings Act and approval of the minutes from the January 23, 2024 meeting. It was noted that there were connectivity issues with the live broadcast of the meeting via YouTube, and City of Sidney Finance Director Kegan Carwin attempted to get the live feedback online throughout the meeting.

Mayor Brad Sherman asked for public comments, and there were none. The first major agenda item was the Audit Presentation by Trevor Schuessler, CPA, of Rauner & Associates. Schuessler went thorough key details of the findings of the audit dated September 30, 2023, breaking down assets and liabilities, and highlighting debt service numbers and potential deficiencies. Schuessler said that the audit process went smoothly, and everyone was well prepared. He also noted that by Nebraska State Law, audits must be submitted to the State Auditor by March 31, a deadline the City of Sidney had no trouble meeting. A full copy of the audit is available at http://www.cityofsidney.org. To view the entire audit, click on the "government" tab in the left top corner, and "Audits/Budgets/Goals" is the top selection.

Some financial highlights included: The assets of the city exceeded its liabilities as of September 30, 2023, by $89,770,502 (net position). Of this amount, $26,259,004 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. The City's total net position increased by $2,787,841 in comparison to the prior year. Of the increase, $886,696, or 32% was an increase in governmental activities, and $1,901,145, or 68% related to business-type activities. The City's Governmental Fund Balance Sheet as of September 30, 2023, shows total assets of $21,799,261, which is an increase of $886,663 from the prior year. Deferred Inflows of Resources for $3,302,287 which is $319,752 less than last year. In the Statement of Cash Flows for Proprietary Funds, there was a net increase in Cash and Cash Equivalents of $ 2,191,979 in 2023 and a net decrease of $571,344 in 2022. The Governmental Activities total liabilities decreased by $1,904,562 while Business-Type Activities total liabilities showed a decrease of $355,300.

This is just a small amount of detail in the audit, and for a full accounting of all the city's finances, please refer to the audit on the City of Sidney's website. Schuessler also stated that all smaller towns use independent auditors such as Rauner & Associates, to get a set of "independent eyes" on the finances of a town. He stated that many of the small towns in the area are struggling very hard to pay their bills, and are under a lot of stress. He said that Sidney is not in this position. He noted that Sidney's government-wide net position increased by $2,787,841, or 3.21%. Schuessler said that this indicates the city is doing a very good job in managing its budget. He also said that debt servicing is trending very well and getting paid down effectively. He noted that revenues have been fluctuating, which has been a normal occurrence since 2019, but debt has almost been halved since that time. Although Schuessler noted that most other towns, especially smaller towns, are "barely scraping by", this is not a concern for Sidney, and the amount of debt Sidney has is not concerning. The one area of concern Schuessler pointed out was "internal control", an issue that had been ongoing for the past few audits, due to the relatively small size of Sidney, payments, invoices, and other financial transactions and accounting procedures were being handled by a very small group of city employees, which can increase the chances of accounting issues or fraud. Although there is no evidence of any of these types of issues concerning Sidney's finances, it is an issue that needs oversight. From the audit: "In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control." The audit went on to explain although the auditors did find a deficiency in internal control, they did not find any deficiencies in internal control that they would consider to be material weaknesses.

Finance Director Kegan Carwin went over some financials for January 2024 and noted there was a general slowdown in business activity, which is normal for January, as most people have just come off of major expenditures during the holiday season. Property tax revenues were down, which is also normal, and he expects them to pick up over the next few months. He also noted the lack of rent from the sale of "Big Red" will be a negative for some time.

Next, David Scott addressed the council about the projects slated to start from the one-half cent Infrastructure Sales Tax initiative. Scott said that the projects going forward include many of the projects voters approved in 2022, such as the connecting sidewalks from the Aquatic Center to adjacent neighborhoods. The winning bid for the sidewalk project came in at $1,050,000, nearly $200k less than the estimate. The bond issue that the City will finance will be used to finance multiple projects, including the Legion Park Project, the Pool Project, the paving of the Golf Course parking lot, as well as other projects. Scott took a few moments to answer questions that had been asked of him previously by citizens. The first question was, "Why did he (Scott) propose these projects?" Scott said that he didn't propose these projects, but the projects were the work of the city council, done through budgeting and planning sessions in direct response to needs expressed by the citizens of Sidney. Another question that was asked of Scott was, "Why can't we use money for the Pool and Trails projects, and do the rest in later years?" Scott answered by saying that it would not be legal to use the infrastructure tax money on one or two projects and that all of the projects referred to in the 2022 vote had to be included. 50% of the money was allocated for the Street Department, and the city can't take money designated for the Street Department and move it over to Parks for the trails. Mark Chrisman Excavation and Trucking out of Gering was the low bidder, and the second lowest bid was within $10k of the low bid, which indicates a very competitive bid and a good price for Sidney, according to Don Dye of M.C. Schaff and Associates, and engineering firm selected by the City of Sidney to evaluate the bidding process for the projects. The project will be done in phases, and Dye said they wanted to get started as soon as possible on the Pool project, to have it completed at about the time the Poll opens for the summer. The council approved the bid from Mark Chrisman Trucking 5-0.

The Forrest Street Project bid also came in lower than estimates, with the low bid being $1,249,172.34, approximately $215k less than estimated. This project will be financed completely by sales tax revenue from the previous year and Highway Allocation money from the State of Nebraska. The project looks to be started by April 15 by Eric Reichert Insulation and Construction out of Scottsbluff. Although the projects are not being done by local companies, the companies are willing to use subcontractors who are from the area and familiar with Sidney wherever possible. The council approved the bid from Eric Reichert Insulation and Construction 5-0.

City of Sidney Transportation Director Kasey Kantor requested approval from the Council for Resolution 20240201, providing a local match for the purchase of two new buses. Kantor stated that the buses are 6 to 8 months out, and would like to get ahead of the game to get the buses ordered. Kantor stated that public use of the transport bus system continues to increase. The Federal government and State governments would provide grants for 90% of the costs, leaving the City of Sidney with a payment of $8400 for two buses. The council approved the resolution 5-0.

Next, Sara Sinnett and Melissa Norgard, on behalf of E3, spoke on behalf of the Rural Business Development Grant Program (RBDG), which presents an opportunity for rural businesses and entrepreneurs to strengthen our local economy and promote economic strength in Cheyenne County. E3 (Energizing Entrepreneurial Ecosystems) is a pilot program that the City of Sidney and Cheyenne County has been participating in for the last 18 months. Resolution 20240202 would authorize the City to apply for and administer the USDA RBDG Funds. Sinnett stated a major hurdle new business owners and entrepreneurs have is not knowing how to write a business plan or how to get funding, and this grant would help provide those skills to local new businesses looking to start up or expand. Norgard noted that the funds would not come out of the City's budget, as it is 100% grant-funded. The motion for the resolution was approved 5-0.

David Scott then addressed the council concerning the Nebraska Cooperative Liquid Assets Securities System (CLASS). He said that several cities in Nebraska have come together for a pooled cooperative investment system governed by a board of city and public utility administrators. The City of Sidney has been asked to join this pool, and Resolution 20240203 would allow the city to join the investment pool. Joining this pool would allow the city to put some of its investments into the CLASS pool and earn interest while being able to withdraw money to pay bills without any penalty. David Scott suggested moving forward with caution, using just a small amount of the city's investment to test the effectiveness of the cooperative. He would review their portfolio and discuss the issue with the Council if they decide to pass the resolution. Councilman Bruckner stated he would like to know which businesses the investments would be broken up into, over 5 to 10 years. The motion to approve passed 5-0.

The council next passed a resolution to vacate the property behind "Big Red" from public use designation so it could be transferred to WTA, per the sale agreement. City Attorney Jay Leef said that this was the last detail that needed to be cleared up regarding the city property allowing it to be transferred to WTA. The ordinance passed 5-0.

The heads of Departments then gave updates, with Hank Radtke, Street Superintendent, stating that he is happy that the road projects are getting done. He noted some of these projects had been proposed as much as twelve years ago, and he thanked the voters for voting for the tax to get these projects done. Library Director Amanda Eastin stated that the Reading Program is ongoing, the library has virtual reality headsets that have just come in, and the Library has free COVID-19 testing kits available. Solid Waste Superintendent Dean Sterling said that he went to Lincoln to pick up the 6-yard roll-off truck the department had been waiting on. Councilman Brock Buckner said the Auditor's report shows that the city continues to move in the right direction, and in April, when the projects start, citizens will be able to see where their tax dollars are being spent.