Mayor and Council - Regular Meeting

All right. Toronto Council meeting May 16th 2026. Please join us to the flag of the United States of America and to the republic for it stands nation indivisible with liberty and justice for all.

Please join us for a moment of silence.

Thank you. Please have a seat. Roll call. Amanda, will you please call roll? Councilman Drew here. Mayor Got present. Councilman Miles, present. Councilman Olsen, here. Councilman Pope, present. Councilman Reeves, here. And Vice Mayor Dr. Rupture present. Thank you. Thank you. Are there any additions, deletions to the published agenda?

I'd like to make a motion that we accept the agenda in this current form. A second. There any discussion? All those in favor? Those opposed? Motion is carried. Consent agenda approval for um a motion for council organizational meeting minutes from May 6, 2026 to be approved and council meeting minutes from May 6, 2026 to be approved. So move. Second. Is there any discussion? All those in favor? I.

Those opposed? Miss Carrick, presentation and public comment. If you're interested in making presentation or public comment at this time, please take the podium. State your name. Not your address. I am Irene Steski.

And um thank you all for everything that you do. Looks like this is a good team. Um I have um a question on why the presentation or public comment is isn't at the end when someone in the meeting might have something regarding what comes after

because in order to be prepared for the meeting the me the agenda comes out a week in advance so that you can do your research so that when you come to the meeting if you're coming to speak on a topic. You're able to speak to the topic. So, we've heard what your feelings are and and the facts are prior to us having the discussion ourselves. The whole goal behind it is it's our business meeting. As it being our business meeting, your input is absolutely important. But if we've already talked about it, we're not going to change anything. So, hearing your opinion before we discuss it is is your opinion is important. I'm talking about is what comes after that, the police chief, the town, and all that other stuff.

Okay. If any of us have a question in regard to that, okay, at the next meeting, you will make a motion. Um, are we going to say okay for the last meeting and that's it? you know, if there is something that needs to be said in regard to that, the people that are here should have the right to be able to speak with it because it's happened right at that time. Okay?

And my opinion on that is to be honest is if you have something after you have the opportunity to speak now so that we can have the business discussion and make a decision, if you want to follow up with us after the meeting, we can have that discussion. But having your opinion before we vote on something is more it carries more weight than it does to hear it afterwards. So this gives you the opportunity to have the opinion beforehand. Respect. I guess it's a matter of um um personal agenda. It because it's a business meeting. We have to handle it in a business meeting. I still think that

somewhere along the way in the last three years that was moved and it didn't serve a purpose moving it to the end. So hopefully this will so so if there's any questions on anything and we come up to you after the meeting does that mean that what we are discussing is going to be at the next meetings depends on whether we voted on it and closed it out. If you get the agenda on last Monday and you have questions on it and you call me on it and we talk about it and you come up and you speak now, then when we vote on it, we've got the knowledge and your input,

your input to make that decision based on what you're sharing to tell us what you think after it's done. Isn't going to help anybody. I understand what you're saying and I still feel very strongly with how I feel. Thank you for Is there anyone else? Okay. Non-aggenda items. Um, Chief Donner, don't have anything major for you. I know our our big topic on the agenda is the audit. So, I'm not going to take up too much of your time. Uh, our guys are down at the beach this week getting their free bicycle training with the Dewey Beach Police Department. We will be debuting them at the Memorial Day parade. Nice. Put them in the parade. All right. Wow.

They're going to be in the parade. They're going to be in the parade. Not my idea, but I love it. I love that. Um, so that's where you'll see them first. And our two recruits are graduating June 5th. So, throw that out there again. Um, we are in the background phase of hiring. Five candidates moved into the background phase. One has already been washed. Four remain. One background is done. And I'm waiting on the other three. And they are graduating from Dover. Do's academy on June 5th tenatively at Dell State. Okay. And I'm sorry. What time? Probably be about 5:30 p.m. I don't have an exact time yet. Okay. Thank you. Town manager.

Uh again, just like Chief Donner, I'm going to kind of keep this as short as I can just because I'm going to give my time to uh George and everybody in the back to get the audit for 24 out in front of us. So, a couple things I want to kind of address. Um just recently we became aware and this is something that I'm not sure where this is going to come across but uh I was approached by our um insurance company and basically we they are not going to continue to cover the skate park because of the conditions of it. Um

skate park the skate park. So, we need to figure out what that looks like. Um, but I can tell you that we will not have coverage as of June 6. So, does Barrett, this is a you question. I know you love these questions. Does this mean that at the next meeting we make a decision or we make a decision tonight so we can vote on it more than once? What does that look like? Well, so I mean I think that the decision we have to make, right, is whether or not to um just correct me if I'm wrong, right? The decision is whether or not we need to permanently close this gate park. Yeah. I mean, I can tell you we need to

until we make renovations to it. Basically, at least temporarily remove it by the six because we do not or will not have cover by the six. By the six. So, do we add that? How how long will it take after council makes a decision to remove the skatepark? I mean, we're talking like a couple ramps and stuff. Yeah, but I mean, they're big, but they are. I mean, so if we make a decision on the meeting of June 1st, will that give us enough time to Yeah, absolutely.

Yeah. Yeah. So, we'll put we can put this on the agenda for June 1st, just recognize that, you know, come prepared to basically vote to at the very least temporarily close the skate park, right? pending renovations or potentially permanently closing it. But okay,

um second thing I want to address is obviously there's been a lot of uh conversation on social media about uh a situation at the park or at George Wright Jesus George Wright Lake Ko. Yes, there we've acquired some new friends that are out there. Um please understand that animals come to places for two things. One is food,

one is general water, right? We got a large body of land. We also have some people that are feeding the animals. So um we are working to have the situation taken care of. Um, and we're kind of waiting to hear back from a specialist that's going to go out and take care of things. Um, so again, there's, you know, conversations on social media. We are working with Den to make sure that this is done, it's done safely and that there's no In the meantime, have we asked people not to go out there and feed the other animal signs have been ordered and will be posted? Somebody called me to ask me about it and I basically

hadn't seen a sign so I wasn't sure. they they have been ordered. Um, you know, once we became aware of it, we immediately jumped on that to make sure that it got taken care of. So, um, so there's that. And then lastly, I just want to say thank you to Kathleen who has worked really hard to get this audit for 24 to where it is, especially being the person that walked into this having to do something that she was not in charge of. Um, and I'm gonna be honest with you, no offense, George, but I didn't hear from you at all for this audit, which is the first time in two years that I've not had constant communication with those guys. So, and this mean that that Kathleen is doing a great great job. So, it's a great thing.

After the audit presentation is made, would you and Kathleen and Donner, however that looks like to make comment, is there anything that you want to comment on before it goes to question for us? I don't think so. Okay, we have enough comments to make on our yellow book. Okay, that we need to update. I I just have one question. What are the signs going to say at Lake Home? Um the animals, I just want because we get so Okay. Thank you.

Thank you. Old business including discussion and possible action on the following items. Need a motion for the third reading and adoption of ordinance 004-26 amending chapter 66 traffic and vehicles article one in general to establish regulations governing the enforcement of electronic red light safety monitoring program. I'd like to make a motion for the third reading and adoption of ordinance 004-26 amending chapter 66 traffic and vehicles article one. Second. Is there any discussion? All those in favor? I. All those opposed? Motion is carried.

New business including discussion and possible action on the following items. Would you please join us for the audit at the p at the podium?

Good evening. Good evening. I'm George Ferris with uh Balin Lions and Schuman your outside auditors and and I'm joined with Michael Mass. is also with Balin. Uh I think this is our fourth year working on the audit. So um you have the uh skies up there. Um I don't know you can see them on.

Um so this is the audit for December 31st, 2024. So um it is late but um but we are well along with the 2025 audit and I think we'll be caught up with uh everything uh when that audit is complete. You'll be back on your regular schedule. So um the audit um we um aren't here to give the financial results. That's the uh finance director and town manager's responsibility. But we did prepare a short um financial summary for you. Um governmental activities which includes mainly the general fund and special revenue funds. They increased the town's net position by $ 8.8 million last year. So, this is primarily due to the large property tax increase about $5 million and also includes transfers that came from the electric and water and sewer funds to uh help out the general fund. uh the business type activities, the water, sewer, electric funds uh before the transfers had a um net position increase of $5.3 million, increase of three million over the prior year, 23. So that's primarily due to $2.2 $.2 million from the town's uh charges for services, water and sewer and electrical service. And uh during that same time expected increased by $1.6 million.

uh out of that uh profit that the business type activities made 2.3 million was transferred to the governmental activities general fund primarily to uh balance that. Uh so your overall your net position went up over $11 million in 2024. Now net position is what uh bond rating agencies and council people and others look at uh in the financial statements as an indicator of your financial health. So in 2024 things got significantly better than they had been. So, uh you're starting to build up your fund balances again, your net positions, and um however, you're still uh your total net position is 58.8 million across all funds. Uh this uh is made up of 66.6 uh net investment in capital assets. the value of the streets, the buildings, the uh water infrastructure, the electric infrastructure, uh and a uh unrestricted portion of negative $10 million. So, you're still working with that accumulated deficit of over $10 million, but I think you uh you bit the bullet and you did the difficult things by raising the taxes and the rates and just needed to be done, I think. So, we have I don't these are pretty small print, but this is a little more detailed than what uh what I just uh went over. You can see your governmental

activities which is primarily the general fund and the grant funds uh comparative 2024 versus 2023. You can see your total assets are up by 5 million. Uh and that's mostly um mostly in the current assets which reflects cash and investments and receivables. Then uh your liabilities um liabilities went down which uh was a good thing that's reflects uh pay down of debt reduction of payables and down at the bottom you can see the difference in the governmental activities in the net position. So from $8.7 million in 23, it's now 17.5 uh million in total net position in the governmental funds. Uh made up a good deal of it is new asset acquisitions. Uh but you also you see that unrestricted deficit. It's going from 17.5 million down to 11.7 million. So that's significant uh improvement in one year. And then over in the business like activities which uh electric, water and sewer, you have um also your total assets are up by about $5 million. Your liabilities are also up by about $3 million, three and a half. But the net position even with the transfers is still up by $2 and a half million dollars. So all in all it's an improved position from what uh we talked about

for the FY or for the uh calendar 2023 year. Um and then on the next page in even smaller print we have the uh the income statement statement of changes in that position. And you can see there in the governmental funds uh the big number there is real estate taxes which went from about $5 million in 23 to almost $10 million in 24. And um so that accounted for most of the increase in total revenues almost $20 million last year compared to 14 million the year before. You know expenses stayed about the same just under $14 million. Um in the on the business activities side again you had about $5 million increase in total revenues. Uh that's a little bit deceptive because the biggest part of that is capital grants that uh you received. So, uh although the charges for services also went up about uh $4 million on the expense side, uh went up a bit about a million7 in total. And then you see your change in net position went from a um it the change before transfers which is the key is increased about $3 million between 13 20 and 24. So that's a real high level summary of the numbers. Do you have any questions

about the number before I get into the technicalities of the audit? So um the audit itself so what you hire us to do is to uh audit your financial statements which are made up of governmental activities, business activities, major funds and uh include the financial statements and also the notes to the financial statements. So if you looked at the uh financial statements that have been available now for a few weeks, uh most of it is made up by the of the notes which really tell the story behind the numbers. Um they're very important to getting an understanding of the finances of the town. Um so we do our audit, we perform the audit under two different sets of auditing standards. One is generally accepted auditing standards which is what you would do for any type of audit business, government, nonprofit would be conducted under those audits. In addition, since you have a significant amount of federal funds, we also follow government auditing standards which are um published put out by the office of management budget the control agendas. So those are federal rules and they're higher a little higher level of standard than plain uh government uh generally accepted auditing standards. We have to take additional classes specifically in these areas and be familiar with the rules uh of government funds. In addition uh there's also higher levels uh

required of independence of the auditors. So um that's a combination of those two sets of standards is what we have to follow. In addition we uh because of the federal funds we have to follow the uh requirements of the OM compliance supplement when we're auditing your major programs. The results um financial audit resulted this year uh 24 in an unmodified opinion which commonly called a clean opinion on the count's financial statements. Uh this is important because the clean opinion was restored this year after several years having a qualified opinion because of those uh unidentified cash receipts that had been carried forward now for uh several years and were not able to uh be identified. And uh along with uh town management, council took action to uh identify and place those additional funds in the general fund, which based on our research and management's research, that's probably where they belonged all along. But it's good that it was formally cleaned up. So you don't have that qualified opinion on your financial statements that improves your standing with the bond rating agencies or others on the outside. Okay. Uh results again um the independent auditors report under the government auditing standards. Um,

we also issued a the audit report on your financial statements and also a report on controls over your financial reporting under government auditing standards and then thirdly report on compliance with the requirements of your major federal programs. So there were um there were findings with both of the uh uh reports uh on internal controls and over the major federal programs and discuss those a little bit later. So with every audit we're required to report to you significant audit matters. Um so the main the first thing is that management is responsible for selecting the proper accounting policies. The financial statements are primarily management's responsibility not the auditors. um significant accounting policies used by the town are described in the notes to the financial statements note one and that's uh very detailed as to what your policies are that you follow. uh during the year you um adopted or had to adopt uh two new uh government accounting standards board statements number 100 and number 101. Uh number 100 deals with uh accounting changes and corrections of errors, how they get reported in your financial statements, how they get disclosed in the notes. And uh 101 deals with compensated absences, which uh it's a little bit stricter treatment, more precise

treatment of vacation and sick time uh uh for your staff. So um you'll see um in the financial statements that we have uh corrected uh in implementing 101 we corrected the prior year's presentation so that they're comparable 23 and 24 and the net effect is that you uh under the new standard you have a higher a bigger liability for um uh for the future compensated absences of your staff uh doesn't mean nothing really changed with your policy but it's all in the measurement so it's a it's a higher number other things that we're required to report to you estimates uh all financial statements uh include some estimation u the biggest and most sensitive estimates that you have are accounts receivable allowances for doubtful accounts Those are estimated based on your historical revenues, your history of losses, uh your analysis of the collectibility of individual accounts, whether they're tax or water or electric accounts. Uh another large estimate is the estimate for your pension and postretirement costs. uh they are based on actuarial valuations that you bring in the outside experts, the actuaries to perform these valuations and uh those estimates are used to get your pension liability uh for the financial statements and then depreciation just by its size. It's an estimate of based on the useful lives of your infrastructure and other assets of the town.

Okay, we're also required to report to you the uh most sensitive disclosures in the uh financial statement notes. Um these are for the current year. In note number 22, um we had a restatement of net position and fund balance which I just mentioned because of that new accounting standard number 101 compensated absences that in that note we have detail of what changed for the for the town's presentation. Another very big uh transaction to happen during the year. The town was required by the USDA uh to split its water activities and sewer activities into two different funds. Those um those funds were always water and sewer one fund in the past. Well, the uh um Rural Development Authority, I believe, required them to be split. So, Kathleen worked with uh Michael and they did a lot of work to identify uh which assets went into which fund, which employees time should be posted to which fund. Uh all the other expenses had to be segregated, the other assets, the liabilities had to be segregated. So now with the 2024 financial statements you have two funds separate and there is uh they also worked on a uh cost allocation plan which allows them going forward to more easily um separate revenues, expenses and assets between the funds.

So um that was a big project included with the audit. Um other uh disclosures the long-term liabilities and note five are very important. That's where the uh pension liability capital leases your bonds payable are all described in detail. Other important disclosures are pension liabilities. There's three notes to the financial statements that all uh discuss various various aspects of the pension liabilities 11, 12, and 13. And then the uh similar to that is the OPED other post-employment benefits note number 15 which gets into the that benefit program. Okay. other significant audit matters. Um during the audit there were um adjusting journal entries, corrections of misstatements uh that we management and uh management accepted them and posted them to your financial statements. There are also some uncorrected misstatements because they're small and not material. uh we and management decided just to leave them and not post them. There's nothing significant there. But if those uncorrected misstatements, we track them from year to year. So if uh something is off by a small amount and then in the following year becomes a larger amount, we evaluate that and we may an insignificant entry may turn into significant entry in the future. So other things we're supposed to under the standard report to you. Uh we did

have some difficulties this year in performing the audit due to the late start and um uh some information was a little bit difficult to retrieve but overall no disagreements or uh problems working with management. It was uh actually a very good experience uh working with you this year. Um, not that it wasn't in the past, but there were bigger problems in the past. So, um, we got all of the, uh, requested management representations and, uh, to our knowledge, management did not consult with any other accountants to get a second opinion on anything. So, any of those things, if they did occur, we would be required to report them to you. So under the government auditing standards uh we um performed the audit um under the standards issued by the controller general of the United States. We had nine findings in that report and um two of them are serious or more serious what we call material weaknesses. Uh the first had to do with incomplete bank reconciliations. uh during at the beginning part of the audit the bank reconciliations especially uh the general fund were not completed. They were um worked on and completed during the audit but um uh when Kathleen took over from others when she took over they were not complete. Uh she worked very hard to get them caught up and so that we could use them for the audit. Also uh the financial statement close process resulted in a lot of uh adjusting journal entries. We're working

on that for the 25 year to minimize uh the number of adjustments that uh the financial statements need. Screen. Thank you.

Okay. Uh okay. Those are the two material weaknesses there. And then uh seven what we call significant deficiencies. They are less serious than material weaknesses but still important enough to bring to your attention and report on. So um there was a misstatement in the schedule of expenditures of federal awards. That's the schedule of your federal funds. Uh which um uh we found during the audit that there were two major programs that weren't listed on there originally and we had to make adjustments to uh list those. Uh there's uh there was a significant deficiency dealing with the valuation of inventory and keeping inventory records. Um, this quarterly billing of property taxes, it's more of a suggestion than a finding. I know we've talked about this the past couple of years. Uh, the town has the ability to levy quarterly property taxes when you have increases in valuations. Uh, the town has chosen not to do that and you might be missing out some revenues because of that. Um uh you're probably aware of the pension plan tax withholding problem which uh has been is still being worked on but uh partially solved at this point. Um one-time vendor files has to do with um in the um payment of bills. onetime vendors are um entered into the system and then those numbers are then reused.

And that's kind of risky because uh it gives people working in the the payment system the ability to issue a check and then delete the audit trail. Now, it's a lot of work to create new vendors every time you have a one-time payment, but um we still recommend that uh management consider doing that. And um two last things, the electronic municipal market access filing requirements, that's Emma. Uh you're required because of your bond covenants to post uh on their website uh any significant financial uh uh events like the financial statements. um or in your case the last couple of years the fact that the financial statements were late in getting out that should have been also reported on that website. Now, it's all been brought up to date since then through uh through the end of this uh June 30th 24 report, but it's something to u uh follow up on and make sure it's occurring because the bond holders, the rating agencies are looking at that. And then lastly, the uh pension funding. We made the comment that uh last year also that your actuary had um included a warning in their report that um the uh release pension fund was severely under funded and um we thought also it's important enough to uh repeat what they had said because it is true. I know that also uh in the last

year you've taken action to uh enhance the pension funding but that's another thing that it's very important to the employees the retirees but also to your uh bond ratings and the single audit which is the federal funds audit you had three what we call major programs uh the uh corona virus recovery funds, the COVID 19 funds. Um it's I think the last year that it'll be a major program. And then you had u capitalization grants for the clean water and the drinking water state revolving uh loans. Uh those are funds that come from the uh EPA and they're passed through the state of Delaware uh uh DNR and uh Department of Health and Social Services. One is for uh drinking water, the other is for sewer improvements. So you you had about $5.8 8 million in federal funds expended in 24. Uh by taking these three major programs and sampling them and testing them, we covered most of that $5. In our audit testing, we had two findings in the single audit. Um there's uh one of the reports that we sampled the project and expenditure report did not have documentation of the procedures for the preparation of that report which is required. And then uh one of the key line items in that report called obligations and expenditures contained some mathematical errors which were later corrected.

And then uh in procurement uh there was a um a purchase of wire that cost $214,000, but there was no documentation of a competitive quotation process which you're required to follow if you're using federal funds over $100,000. Those were all reported to uh management both the uh uh government auditing standards findings and the single audit findings. Management provided us with their responses. their responses uh um are part of the single audit report which uh should uh is currently in draft form but it will be um it'll be wrapped up uh very quickly. Okay. So as part of our audit, we also follow up on prior year audit findings and uh from last year we had uh in the government auditing standards findings we had three material weaknesses. Two of them I just went over we repeated for 2024 but one of them was cleared and under significant deficiencies we had seven in 23 six of them repeated in 24 uh one of them was clear and then uh we had two similar findings in 24 under the single audit the uniform guidance findings. Now, uh because we ended the 23 audit and then quickly started the 24 audit to get caught up, management really didn't have enough time to implement corrective action

plans for uh those 2023 findings, but uh we see that efforts are underway and we believe that uh you're on the right track to get everything uh if not eliminated the finding things greatly reduced toward 2025. Any questions for myself and Michael

about when do you expect to have the 25 one done? Um, we're in the process now of getting started and we fully anticipate being done by the end of September to correlate with your required filing number guidance.

That's good. September. Thank you very much. Thank you. Thank you very much for your full energy. Appreciate it. This is a happy day. And Tori, Kathleen, Donner. Thank you. Yep. This this was a lot of effort. And Jim, thank you because I know this was a process being finance chair for us as we we did went through the the realms last year. U but Kathleen again you really stepped in, stepped up, and your leadership is absolutely outstanding. Thank you. Thank you.

Thank you. That's my agenda. Make a motion confirm. Go right ahead there, sir. I'd like to make a motion that we adjourn the meeting. Second. Is there any discussion? All those in favor? I those opposed. Have a