After seeking USDA funds, Landis attracted state’s attention for overspending issue
Published 12:00 am Sunday, January 13, 2019
LANDIS — As the town of Landis looked forward to economic growth, it planned to use money awarded by the USDA to pay for a water line.
But after sparking concerns from the state’s Local Government Commission about the town’s day-to-day finances and abandoning plans for a water line, the town looks to forfeit the $1.05 million in Department of Agriculture funding.
In order to receive the money, Landis needed approval from the Local Government Commission that included submitting financial records. Those plans last year attracted scrutiny from the commission, which approves local government borrowing, sells debt on behalf of local government entities and performs regular financial oversight.
In a letter sent to Landis in September, the commission said it had concerns about finances from the 2017-18 fiscal year and had tried multiple times to communicate with the southern Rowan County town via email and phone calls. It was the latest letter the LGC has sent Landis scrutinizing the town’s finances.
The letter said the town had a net loss for its general fund, stormwater fund and sewer fund. It also said several accounts were significantly over budget. One such account was for van and police equipment, which was overspent by 655 percent or $249,695.39.
The LGC also commented on the overspending on salaries for administration, stormwater, sewer and light fund.
“We have requested financial reports from Landis staff — the finance officer and town manager — on several occasions via email and phone calls and have not received any reports as of September 13, 2018,” the letter stated. “This is a grave concern to us.”
Town Manager Reed Linn responded to the letter by saying it doesn’t provide “the whole, big picture” of the situation.
“If you just look at this one letter, you’re thinking, ‘Oh my God, the town of Landis is broke and poor,’” Linn said.
Linn said the financial records were from May and the fiscal year wouldn’t close until the end of June. Linn said the town usually completes budget amendments in June. And financial officer Ginger Gibson, who has worked for the town for 14 years, said Landis always waits until the end of the year to make budget amendments.
So in June, the town made about $2.1 million in budget amendments for the 2017-18 fiscal year in what was a $13.8 million budget.
Gibson said the town received “a lot of revenue” in June that helped pay for the budget amendments. And then, the letter was no longer relevant, as budgeted expenditures matched actual expenses. Gibson said revenue comes from financing, grant money and moving money around in the general fund.
Part of the overspending not included in the original budget was a result of police vehicles, Linn said. Landis bought eight police vehicles but didn’t account for the purchase in its budget until the end of the fiscal year.
“We received the money, but it wasn’t noted until we did the amendment at the end of the year,” Linn said.
Linn said some towns update budgets to reflect expenses throughout the fiscal year. On Monday, he told the Salisbury Post that Landis would make amendments throughout the 2018-19 fiscal year, but as of last week’s Board of Aldermen meeting, the town had made none.
Adding to concerns about Landis’ financial situation, the town has attracted the ire of local residents for a property tax hike of 5 cents per $100 valuation for the 2018-19 fiscal year.
Landis also created a vehicle fee of $30. By comparison, Salisbury has a fee of $10.
The tax increase, alongside a high electricity and water-sewer rate, concerned some residents. But town leaders at several Board of Aldermen meetings said the town has a history of poor finances.
Mike Nelson spoke at the August Board of Aldermen meeting about his fears of affordability for residents of Landis. Nelson has property on Kimble Loop. He compared the water and electricity bills he pays in Landis to those costs in Matthews, paying $50 a month for water in Matthews and more than $100 in Landis.
Meanwhile, Nelson said his Matthews electricity bill was $208 and his Landis bill was $315.
Ralph and Tracy Lacks asked several times during the public-comment period about the repaving of Landis streets and where tax dollars are going.
Dean Beck, who spoke at last week’s meeting, told aldermen that his grandson bought land in Landis and that his grandson is concerned about the high electric and water-sewer rates.
In June, the town backed down from the original plan for a water line that prompted attention from the Local Government Commission to begin with. The town considered running a sewer line to the planned 250-home Oaks of Landis neighborhood, but after last week’s Board of Aldermen meeting, it plans to forgo a sewer line, too.
True Homes, which is building the Oaks of Landis neighborhood, says it will need to cross a tributary of Cold Water Creek three times with bridges and, as a result, decided to decrease the number of homes to be constructed. Linn said the town, therefore, will postpone its sewer project, which was expected to cost $1.2 million.
The town was not able to transfer the USDA funds from a water project to a sewer project, meaning that it will have to reapply. The board on Monday decided to release the $1.05 million USDA water bond, meaning that the funds will not be used since Landis will not use it for a water project in the next year.
Linn said the town could apply for USDA funding for a sewer project, but since the Oaks of Landis neighborhood will be fewer houses than expected, the town likely won’t.
The Local Government Commission said it received a completed audit from the 2017-18 fiscal year from Landis last week and is reviewing it.