Last week, the Local Government Commission (LGC) wrote a letter to elected officials in Spring Lake, noting several concerns about the Board of Aldermen's choices in the past few weeks.
Their first concern is the hiring of a new interim manager. The Board of Aldermen held two closed session meetings where the board discussed and then swore in a new interim manager, Joe Durham. The problem lies in that the vote to hire Durham should be public. In addition, Durham was sworn in without having a contract in place. The LGC states that no payments can be legally made for Durham's services without a contract.
The second concern noted is the discussion of lifting a furlough on town employees put into effect on March 14. The furlough reduced pay for all general fund employees, reduced staff hours and closed Town Hall on Fridays to walk-in traffic. The LGC is concerned the Board of Aldermen did not consult them on lifting the furlough; the LGC still has complete control of the town's financial affairs.
"The town's board does not currently have the authority to make this decision unilaterally," the letter states.
The third concern involves the town's attorney, Jonathan Charleston. Charleston submitted a resignation letter on March 23 and provided a 30-day notice. However, the LGC states that the board has not officially accepted his resignation, nor has it determined the last date of Charleston's employment. The LGC asks the board to clarify the final date of Charleston's employment and that the town stipulates a plan for obtaining legal representation.
A fourth concern noted in the LGC letter is that the Board of Aldermen voted to remove the LGC's presentation of interim financial information at the March 28 board meeting. The LGC states that while the presentation and information were not available when initially requested by the town in preparing the meeting's agenda, it was available that night.
A fifth concern discussed during the LGC board meeting last week was the legality of a $1 million loan from the South River Electric Membership Corporation to build a fire station. The deal was consummated in October 2020, but work had begun on the construction before funding was in place. The contract was for $1.2 million, but the town only budgeted $1 million. The LGC notes that the original loan terms included an eight-year payback at $125,000 a year; however, LGC never approved the town to get the loan.
The LGC is requesting the town respond to these concerns by April 13.
"The LGC and its staff are committed to assisting the town in implementing policies and practices that will restore its fiscal health and establish a path to long-term viability. We ask the board to demonstrate that same commitment," the letter states.
Alderman Raul Palacios sent Up & Coming Weekly a comment via email stating that he hopes Spring Lake will propel forward.
"With the help go the LGC, Spring Lake is better off than it was a year ago. Because of their oversight, Spring Lake is in a better position financially. These accomplishments haven't come without their fair share of hiccups, but as a new board, we will work to get these things right," Palacios said.
However, on his Facebook page, Palacios said that the letter from the LGC was a one-sided condemnation. His post was shared by Mayor Kia Anthony and Alderwoman Soña Cooper.
In his rebuttal to the LGC concerns, Palacios stated that the board would vote on Durham's hiring when presented with a contract. He also clarified that the board had not accepted Charleston's resignation yet.
Regarding the March 28 board meeting and the LGC report, Palacios writes that the board did remove the financial report from the agenda because they did not receive the report in advance of the meeting after requesting it three times.
"The town of Spring Lake is better than it was a year ago because of internal control handling, LGC oversight and a change in leadership. My only hope is that the next town that receives an investigative audit report receives the help they need versus those hoping to gain political points," Palacios wrote.
At the Board of Alderman work session this past Monday night, Anthony said they would respond to the LGC's concerns this week, and that response will be published. Up & Coming Weekly will publish the response on our website at upandcomingweekly.com.
The board did hear from the LGC about the town's financials up through February. According to the memo from Susan McCullen, director of the Fiscal Management Commission, as of June 30, 2020, the town's general fund balance was $0. Rebuilding the general fund balance will most likely take years. Between 2014 and 2018, $1.88 million was transferred away from the Water and Sewer Fund to the general fund. This money will need to be paid back. The LGC is currently working on the best course of action to do that.
"With the LGC and contract oversight during the year, the town may finish the current year well. However, there is significant work to do to improve the town's general fund reserves," McCullen writes in her memo. "We will not consider any new programs, additional positions, or staff raises but will focus on building the town's fiscal health."
The LGC and Durham are currently working on putting together a budget workshop to go over the 2022-2023 budget and apply for American Rescue Plan Act funds.
Durham was officially appointed as interim town manager during Monday night's work session with the approval of Charleston for legal sufficiency and approval from the LGC.
This appointment comes with the approval of the contract between the town and Durham.