Debt-service issue nets $386K
JOHNSTOWN –Bills and payments were topics of discussions for the Gloversville-Johnstown Joint Sewer Board this week.
At Wednesday’s board meeting, Gloversville Finance Commissioner Tammie Weiterschan presented the board with a $385,847 check following the discovery of an issue with debt service credits discovered during the city’s 2016 annual audit.
According to Weiterschan, the issue stems from a 30-year loan the city took out in 2003. The sewer board does not have the authority to obtain bonds, so the two cities do.
Weiterschan said both Gloversville and Johnstown get monthly spread sheets of all the sewer rents. On the bottom of these spread sheets are a credit for the debt service
“We pay the invoices that we get. The city get two invoices a year… to pay the debt service; the principal and interest in April and interest only in October,” she said.
Those invoices included an interest subsidy on the sheets and the city paid the bill less the interest subsidy. Weiterschan said when the bonds were taken out in 2003, the debt service schedule at the time was only gross debt service and did not include the interest subsidy on it.
“So for the last 14 to 15 years, we’ve enjoyed a subsidy, but we enjoyed a higher debt service credit as a result,” she said during Tuesday’s Common Council meeting.
Weiterschan said during the audit, auditors were looking at a separate 2015 bond that was taken out for sewer screening updates when they found the issue in the 2003 bond. She said they discovered the problem by looking at the credits off the sewer rent balance and invoices sent, and found them to be different.
Weiterschan then began to review 15 years of documents attempting to locate the discrepancy and solve the discrepancy.
Weiterschan said ultimately it was determined the city owes the joint sewer board $385,847. She presented the board with a check for that amount during the meeting after getting the Common Council’s approval on Tuesday.
Also during the meeting, the board discussed a recent letter that was sent to the water board discussing money Johnstown allegedly owes to the sewer plant.
Gloversville-Johnstown Wastewater Treatment Facility Fiscal Manager Donna Renda said during the meeting that Johnstown is behind on the capital portion of its debts to the sewer plant. The capital portion is comprised of all the debts including bonds for projects, according to Renda.
She said the city of Johnstown is current in its sewer rent payments. Sewer rents are payments the cities make to the sewer department once residents and businesses pay the cities.
Renda said excess money on the bonds should be used to pay back the bonds.
“It is for all of the rate payers,” Renda said. “That money that is left on that should be used to chase the debt. But if I don’t know what that is, and I do the debt service, I can’t chase debt because I don’t know what it is.”
Water Board President and Johnstown Third Ward Councilwoman Helen Martin said the city has been working on resolving the issue.
Renda said during the meeting, the amount owed was not known to her since the cities hold the bonds. She said that information has not been shared.
Renda said Johnstown city officials have been made aware of the capital portion of the debt being owed.
Water board member and Gloversville Sixth Ward Councilman Wrandy Siarkowski said this has been an ongoing issue.
Siarkowski said the water board sent a letter about the payments as far back as 2014. He said the first letter was sent on Nov. 26, 2014. A letter response was received in 2015. Another correspondence was sent to the city in 2015.
“That is as far as it went,” Siarkowski said.
Siarkowski stated Gloversville discovered the discrepancies in its bonding on Aug. 22 and had the issues resolved and a check for the total ready by Wednesday.
“And we have been discussing this since I’ve been on the board since June 2012, and we’ve had no resolution what so ever from the city of Johnstown,” he said.
Siarkowski said a June meeting between the two cities ended with an agreement that Johnstown would come up with an answer as to how much debt service is supposed to be within 30 days.
Martin said she discussed the matter with both treasurer Michael Gifford and Johnstown Mayor Vern Jackson and was assured that the matter is being worked on. She said she was not at the June meeting and cannot speak to what the actual agreement was.
“It is as simple of a process as people may think,” Martin said. “They did not promise they would have it done within 30 days.”
Jackson said Friday that there was never an agreement that Johnstown would have the issue settled in 30 days.
“We never said that. They mentioned it and we said ‘No, that’s not possible,'” Jackson said.
Jackson said now that the budget proposal is complete, the city can being working to address the issue.
“We are working on it starting next week. So hopefully it won’t be long,” Jackson said.
Jackson said he can’t say much more on the issue since Gifford is the one working on it.
“I told him we need to get this solved. And we finished the budget and starting Monday I am going to be on him again to get this over with,” Jackson said.
Jackson said he couldn’t say how long it would take to resolve.
“It will be addressed now,” Jackson said.
During Tuesday’s Common Council meeting, Gloversville City Attorney Anthony Casale said during the June meeting, which he was at, he told the Johnstown officials there was several $100,000 bond repayments haven’t been repaid.
“Since then, we haven’t gotten an answer from them. All we’ve gotten from the city of Johnstown, event to this moment is ‘Oh, we’ll look into it,’ nothing more,” Casale said.
Johnstown City Engineer Chris Vose said he wished the letter in question had been sent to Johnstown officials, including attorney Mike Poulin or the treasurer Michael Gifford.
“I also don’t find that it is proper that things are being discussed in a public session in Gloversville and spewed all over the radio,” Vose said.
Jackson said he also felt the letter should have been cc’d to city officials. He said however, that Johnstown officials were told by Gloversville officials that they took issue with the funds, and said during the meeting Johnstown told them where they were in working on the issue.
“Since I’m the chief executive officer and mr. gifford is the CFO , we should have been told,” Jackson said.
Siarkowski said that is something that should be discussed with Mayor Dayton King. He said he made no comment at Tuesday’s meeting referring to the money owed.
“I said we resolved our problems,” Siarkowski said.
Vose said there should be communication between the joint sewer board and the two cities if there are issues. Vose said he can’t answer for what other city officials do and the last he knew the city was current.
Gifford was not available for comment this week.
Kerry Minor can be reached at firstname.lastname@example.org.