MEETING OF THE BOARD OF SELECTMEN
Tuesday, October 25, 2016
7:00 P.m.
Town Hall – First Floor Conference Room
MINUTES
Present: First Selectman Carl P. Fortuna Jr., Selectman Scott Giegerich, Selectman
Carol Conklin and members of the public.
I. CALL TO ORDER – First Selectman Fortuna called the meeting to order at 7:00 P.M.
II. PLEDGE OF ALLEGIANCE - Recited
III. COMMENTS FROM THE PUBLIC-Betty O’Brien submitted 194 signatures of citizens who would like to see the library hours restored on winter Sundays. The closing has caused inconvenience for several groups. She was told that the Board of Finance would have to consider this or the library could seek to re-allocate resources. Tom Stevenson noted the piece of granite in the Main Street median should be picked up. The First Selectman is getting a quote to fix the granite. He also addressed Ms. O’Brien and thought it was helpful to the Board of Finance to see that many signatures.
IV. COMMENTS FROM THE SELECTMAN: Connecticut Sports Foundation (CSF). Two letters were received from the CSF, one requesting economic development funds, which would go through the normal budget process and a thank you letter for the donation from the sale of the former Old Saybrook Police Boat and Honda engine that came with the purchase of the Coast Guard safeboat. The First Selectman also noted that Peg Viggiano had called him to ask why she was not re-appointed to the Youth & Family Services Board. He explained that the information he relied for said appointment was not optimal and that the process could have been better. For that, he apologized to Ms. Viggiano.
V. APPROVAL OF MINUTES Board of Selectmen Meeting October 11, 2016.
FORTUNA/CONKLIN
Motion to approve Board of Selectmen Meeting minutes October 11, 2016.
MOTION CARRIED UNANIMOUSLY
VI. BUSINESS BEFORE THE BOARD
- Report on the bi-annual findings of the capital asset inventory as required by the Town’s Capital Asset Policy.
The Finance Director, Lee Ann Palladino, discussed this item in detail, going through the findings, net book value of assets and capital asset inventory changes (see attached document for more detail). Carol Conklin asked about improvements to buildings and was told that would go on the
next valuation, and also asked about disposal policies, which was discussed. Mr. Giegerich noted the explanation was helpful and he appreciates the hard work that went into this.
- Discussion and possible consideration of the revised Town’s Capital Asset policy.
This was next discussed by the Finance Director. This policy allows for more comprehensive requirements for identifying capital assets, recommended changes in useful lives for assets, clarification on impairment and disposal of assets and the addition of a clause on insurance. Ms. Conklin asked about the how assets would be reported and the finance director assured her of uniformity in reporting.
- Discussion - 185 Bokum Road auction sale.
The First Selectman outlined the procedure for this sale on November 12 at noon.
- Discuss and act on Public Works Director’s recommendation to release encroachment permit bond – North Main Street & Stage Road.
FORTUNA/GIEGERICH
Motion to approve release of encroachment permit bond – North Main Street & Stage Road.
MOTION CARRIED UNANIMOUSLY
- Conservation Commission. Re-appointment Robert Fish.
Mr. Fish chooses not to be re appointed.
- Conservation Commission. Re-appointment Donna Leake. This
is a two year term due to expire 11/2018.
FORTUNA/CONKLIN
Motion to re-appoint Donna Leake as a member on the Conservation Commission.
MOTION CARRIED UNANIMOUSLY
- Conservation Commission. Re-appointment Jerry Brophy. This
is a two year term due to expire 11/2018.
FORTUNA/GIEGERICH
Motion to re-appoint Jerry Brophy as a member on the Conservation
Commission.
MOTION CARRIED UNANIMOUSLY
- Estuary Transit District. Re-appointment Roland Laine. This is a four year term due to expire 11/2020.
FORTUNA/GIEGERICH
Motion to re-appoint Roland Laine to the Estuary Transit District.
MOTION CARRIED UNANIMOUSLY
- Public Health Nursing. Re-appointment Priscilla Funck. This is a three year term due to expire 11/2019.
FORTUNA/CONKLIN
Motion to re-appoint Priscilla Funck as a member on the Public Health Nursing Board.
MOTION CARRIED UNANIMOUSLY
- Public Health Nursing. Re-appointment Sharon Craft. This is a three year term due to expire 11/2019.
FORTUNA/GIEGERICH
Motion to re-appoint Sharon Craft as a member on the Public Health Nursing Board.
MOTION CARRIED UNANIMOUSLY
VII. COMMENTS FROM THE SELECTMEN-Mr. Giegerich also commented that he called Ms. Viggiano and discussed her concerns with her. Ms. Conklin recommended we tell John Ellis to meet with the EDC. Patricia Flanagan also spoke in favor of Sunday library hours in the winter.
Mr. Fortuna commented:
-that he will receive the Terry Concannon award presented by the Middlesex County Substance Abuse and Addiction Council this Friday
-that Research Parkway and Mill Rock Road were paved
-that there is the Annual Town Meeting on November 28
-that he received a Certificate of Appreciation for the town’s continued funding of the Connecticut River Coastal Conservation District
-on the CCM State-Local partnership panel that is developing statewide policies that govern delivery and financing of municipal services with a lens on expanding the work of the State Tax panel as it relates to municipal fiscal operation and maximizing inter municipal cooperation opportunities
VIII. ADJOURNMENT
FORTUNA/CONKLIN
Motion to adjourn at 8:00 p.m
MOTION CARRIED UNANIMOUSLY
Respectfully Submitted,
Carl P. Fortuna Jr.
First Selectman
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To: Board of Selectman
Board of Finance
From: Lee Ann Palladino, Director of Finance
Re: Capital Asset Audit Resolution
Date: October 18, 2016
Summary
The purpose of this memorandum is to report on the bi-annual findings of the capital asset inventory as required by the Town’s Capital Asset Policy. The firm of Industrial Appraisers (“IA”) was hired in February 2016 for the purpose of utilizing its consulting appraisal services to perform a general government, town-wide inventory. In addition to meeting this policy requirement, this appraisal was also done to address three audit findings.
- Disposal of Fully Depreciated Capital Assets – One audit finding was to implement procedures that facilitate timely disposals of assets, accurate record-keeping, and performance of a town-wide inventory. This audit finding has been largely addressed with the actions described herein.
- Procedure for Board of Education (“BoE”)capital asset records. Another audit finding required a procedure to include the BoE’s capital assets on the Town-wide financial reporting systems. The procedure is outlined below and completes this finding.
“On an annual basis the BoE will supply the Town with a copy of any capital asset purchase orders over $5,000.~ The Town will then put the asset into its capital asset system, which is used to prepare the financial statements.~ The purchase orders will be collected throughout the fiscal year by the BoE and given to the Town by the end of August”
- Fraud Risk Assessment. The third finding is a subset of the fraud risk assessment finding, where the town is responsible for the design, implementation and maintenance of internal controls to prevent and detect fraud. Proper oversight of capital assets is one important cog in the wheel of a fraud protection program. Accurate reporting and tracking of capital asset will help to prevent loss of Town assets. The Fraud Risk Assessment will be addressed over multiple years.
Disposal of Fully Depreciated Capital Assets
The executive summary changes in the Town’s capital assets as a result of the Town-wide asset inventory are outlined in Exhibit I. The first step of the town-wide inventory was performed by IA, which took place in March with a report delivered in April. The second phase of the town-wide inventory took place internally after the conclusion of the inventory performed by IA whereby extensive comparisons of the inventory list compiled by IA to the Town’s capital asset system were researched. Finally, in support of this research, a secondary comprehensive inventory of town land, public work assets, and all town vehicles was performed. Additionally, the BoE provided two-years of capital assets to be entered into the capital asset system. Please note that the Auditors have not finalized fiscal year 2016
entries and further changes to these balances may take place as a result of the finalization of their audit.
The primary drivers of the changes in inventories and capital asset balances are outlined below.
Findings:
After the completion of the inventory and subsequent update of the Town’s capital asset system, the book cost of the capital assets stood at $139.7 million, a decrease of $182 thousand over last fiscal year-end balance, with a corresponding net book value (after depreciation) of $94.7 million, increase of $2.9 million, over the same period.
Book cost
Book cost is the amount paid for an asset at the time of purchase. The total book cost decreased by $182,412 primarily as a result of removing assets that had fully depreciated and are no longer in service; offsetting those losses were the addition of a few major capital projects. The main drivers of the changes in book value are as follows:
- Buildings – decrease of $821,500. A duplicate entry was removed for the Public Works building.
- Building improvements – increase of $1,289.077 due to FY2016 additions most notable was the BoE roof at the middle school for $846 thousand.
- Land – increase of $359,900. The land audit was performed by the Assessor: some properties were removed and the acquisition cost of others was updated.
- Land Improvements – decrease of $1,444,171. Land improvements that were removed, originally purchased in excess of $3 million, included items that were brought into service as early as 1964 such as trees, grass plantings, flag poles, fences, paving, light poles and similar types of land improvements. Large improvements added this fiscal year included the BoE track, tennis and turf facilities that totaled $1,671,623.
- Infrastructure – decrease of $1,687,254. The removal of chip seal as an infrastructure asset was also a major driver of the asset values. Chip seal is recognized as a process that maintains the life of road. According to our own capital asset policy, an item qualifies as a capital asset only if it increases capacity or if it significantly increases the asset’s useful life. At present, roads in our capital assets system are recorded as having a 75 year useful life, therefore, chip seal is considered to maintain them and is not considered an asset that should be capitalized.
- Machine and Equipment – increase of $308,461 due to FY 2016 entries, which included a BoE generator in the amount of $174,288.
- Vehicles – increase of $1,813,075 due to the addition of fire truck equipment which was not included in the capital asset system but still in service (most of the equipment was fully depreciated so it only affected the book cost), and a new payloader and truck purchased in 2016.
Net Book Value
Net Book Value is defined as total acquisition cost less depreciation and represents the current value of the asset based upon its useful life. Total Net Book value increased by $2,959,266 for the following reasons:
- Buildings – increase of $1,981,667 was due to the correction of the library acquisition date from 1967 to 2002. An asset that was depreciated since 1967 would have almost all of its value depreciated, by putting in the correct date, a longer useful life remains and a corresponding increase to its net book value.
- Building improvements – increase of $769,222 due to FY2016 additions, which included the Board of Education middle school roof ($846 thousand), among others, offset by $520 thousand in depreciation.
- Land – increase of $359,900. Land values are not depreciated; therefore book cost and net book cost remain the same. The reasons as stated above for the increase in land remain the same for net book cost: some properties were removed and the acquisition cost of others was updated.
- Land Improvements – increase of $1,292,933. The main driver of the increase in the land improvements was the addition of the track, tennis and turf fields in the amount of $1,671,623. Fully depreciated land improvements that were removed (as noted above) do not affect net book value as it is recorded at zero. However, the mini golf facility had three recorded values due to the fact that it was rebuilt after the hurricanes. The removal of the two older entries and the current year depreciation offset the increases in this category.
- Infrastructure – decrease of $1,505,740. The removal of chip seal as an infrastructure asset was the reason for the decrease. Older entries had partially depreciated and therefore book and net were not the same value.
- Machine and Equipment – increase of $180 – virtually flat. Current year additions were offset by current year depreciation.
- Vehicles – increase of $61,106 due to new due to the addition of new vehicles purchased in 2016.
Capital asset procedures have been clarified to keep the capital asset system up to date. Capital assets that are created through use of funds secured by debt and/or grants continue to be carefully tracked and monitored. The review of the inventory found some weaknesses in capital assets that are purchased through the budget process. To remedy this situation, purchases in excess of $5,000 are being segregated and tracked so that they can be properly added to the system. Capital expenditures that are not as clear (for example, materials are purchased to build a sidewalk or road) are being assessed at the end of the fiscal year to determine if they should be added to the system.
With regard to the ongoing disposal of assets, a three prong approach will be instituted:
1. When new items are purchased, department heads must disclose if an older item was traded in, scrapped, or kept in inventory.
2. On an annual basis, department heads will be asked to report on any items that have been removed from the system.
3. Research will take place to formalize the sale of unwanted capital assets. The procedure will be fine-tuned over the upcoming months.
Exhibit I
Capital Asset Inventory Changes
Fiscal Year 2015/2016
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