An annual audit of the City of Newcastle for the year ending in June 2022 came back with not only a finding of no instances of noncompliance, but also gave a positive snapshot of the City’s many activities and projects that are underway.
The audit, performed by HBC CPAs and Advisors, states that auditors did not find any deficiencies in internal control that they consider to be material weaknesses.
Mayor Karl Nail said, “The audit came out exceptionally clean. The audit was complementary of our management and our finances.”
Nail said the City is “in the best shape as a City that we have probably ever been in.”
Budgetary highlights noted by auditors included an actual budgetary basis revenues over final estimates by $1,267,503, or a 4.64% positive variance. They also said actual expenditures were under final appropriations by $1,719,283, or an 8.33% positive variance.
The audit also noted a decrease in the amount of the City’s debt for the year 2022. At year-end, the City had $3,838,225 in long-term debt outstanding, reported on a modified cash basis, which represents a $97,639 decrease from the prior year. Auditors noted that this is the result of normal debt retirements.
The City had a net increase of $979,733 in capital assets from the previous year, with a total investment of $25.6 million in capital assets — land, buildings, machinery and equipment, and infrastructure.
They noted that the more significant capital asset additions in 2022 included a Pierce Custom Pumper (fire truck) worth $713,906, five 2022 Ford Police Interceptors worth $324,187, the WTP Clarifier Replacement Project worth $308,516, the WTP Media Replacement Project worth $148,600, Phase 1 of the Walking Trail worth $291,468, two 2021 Ford Police Interceptors at $135,110, and an Avtec Dispatch Console worth $122,985.
Nail said, “We are at a point where we are able to maintain adequate reserves, and we are able to save money for the extremely large capital items we are now facing which include the fire station, the wastewater plant, and the animal shelter.”
Nail said, “The audit is a reflection of our goal of saving and then having the ability to build for the future when we do things.”
The mayor, in what has become a common theme, said this allows the City to provide the basics, but do so “generationally — the right way.”
As part of the audit, the HBC firm also looked at factors that will affect finances in years to come. They note the following:
• Even though sales and use tax increased in fiscal year 2022 due to continued City growth and business development, the City has maintained a conservative approach for budgeting purposes in 2022.
• Construction on Fire Station #1 at 555 S. Main began in March 2023. The City obtained an 18-month construction loan with First National Bank & Trust for $9.8 million with a maturity date of September 2024. The fire station is being built on the north section 2.08 acres of the 12.76 acres purchased in May 2020. The City paid $146,000 to get a partial release of the FNB mortgage on the 2.08 acres to begin construction.
• The City is considering repurpose of the original Fire Station #1 as a parks department building.
• The City closed a construction loan with FNBT for the $3.5 million animal shelter on April 28, 2023.
• The City has hired Guernsey to prepare a Comprehensive Plan for Planning and Development.
• The City purchased 22.3571 acres for expansion of the Newcastle Sports Complex on October 12, 2022 for $950,000, financed by FNBT. This will expand the existing sports complex. The City is applying for grants to help fund this project and a grant has been received for improvements to the original sports complex.
• The City plans to begin construction on a new wastewater treatment plant at a projected cost of $40 million.
• The Southeast 40th Street bridge construction at a cost of $247,500 was completed in October 2022.
• A joint project between the City and Home Creations will upsize waterlines from 12” to 18” on South Portland Avenue and will include serving Brush Creek Section 1 Subdivision. This project will cost approximately $358,000 for the City’s share.
• The City finished a water plant project in April 2023. This project included clarifier rehab, filter media replacement, ground storage rehab at the water plant, and a water storage facility rehabilitation. This project cost approximately $420,000.
• ODOT Widening of State Highway 76 is continuing with easement acquisition and utility line relocation.
The audit also noted that the City, at times, participates in various federal and state grant programs or loan programs.
They state that in 2022 the City’s involvement in federal and state programs was not significant, and the City has not been notified of any noncompliance with federal or state award requirements.
Nail noted that the audit was one year old, based on data from the 2022 budget year. Even so, he said the City is in a position where if there is a downturn in the economy, even with the debt from the fire station and the wastewater facility, the City can weather it out with the reserves and conservative budgeting.
He said this is a direct reflection of the work done by the city management and the council.
