Certified Public Accountant Josh Durst of Durst and Jordan presented his findings of the September 30, 2017 final audit report with comparatives to 2016 at the Jay Council meeting last Monday, reminding them to be cash aware in future project choices.
Durst told the council that although the audit was considered clean, there was a big change in the towns overall cash position and there were a few concerns in relation to cash. He noted that the town's statement of net position and cash and cash equivalents in investments declined, mainly due to the absence of royalties paid by Breitburn Energy.
According to Project Manager Eric Seib, Breitburn Energy was the most recent company to lease from Exxon and the royalties that have been paid will end this year.
“We were getting royalties, but in November of 2016, they sent a letter saying Jay was supposed to be maintaining wells, but because of a glitch in their system they had to collect back maintenance charges for the wells,” said Seib. “They are doing it month-by-month. We are going to discuss with the lawyer whether or not we can challenge that or not. It was part of the agreement back when it was signed. They just didn't follow through on their side.”
“We are going to have to be aware, or wary even, of projects where there's going to be a capital outlay or cash outlay but that that project may not generate revenue to go back to the town,” said Durst. “The beautification project for example, resulted in a pretty hefty cash outlay to the town of Jay, and in reality, when it was finished it looked a lot nicer, but you could not take that expenditure then and tie it back to it producing a revenue source. It didn't improve our millage rate, it didn't improve what we were putting on property taxes, we didn't get a rate increase in utilities from it, not that that is the reason we did it, but that was a big cash outlay that did not in turn produce a revenue source for us. But overall, we are going to have to look for some potential revenue source in the future. We are going to be losing those royalties from Breitburn, and that was a substantial source. We need to reach out to governmental agencies, grant opportunities, even your local legislators to find any funding that will help us with our revenue position. Then its up to you all to manage capital expenditures and cash outlay.”
Durst mentioned other aspects of the audit results, such as collection of delinquent gas and water accounts at 60-days instead of 120 days, the need to have timely financial reporting available to the council and refining definition of employee policies concerning overtime, vacation, and on-call pay, and other inconsistencies in employee policies.
Durst also talked about the age of the buildings in Jay, which can deter potential business. He noted that the choices they have are to sell lots in the industrial area, construct new buildings or expand the city limits to offer more space. He did say there may be grants to renovate or overhaul buildings, but that it's still difficult to get the value up due to age.
Jay Mayor Shon Owens made the point that the town does have amenities and could be marketed in a way to attract potential business.
“We have the ability to market our town, we just don't have the people in place(to offer technological services),” said Owens. “We have a good school, healthcare and we are 45 minutes from the beach. We need to market those things today.”
