Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.
Issue link: http://www.epageflip.net/i/1468000
16 UCW MAY 18 - 24, 2022 WWW.UPANDCOMINGWEEKLY.COM e Town of Spring Lake is no stranger to ineptness or corruption when it comes to town governance. From losing control of its police de- partment to the Cumberland County Sheriff 's Office because of corruption to the most recent state takeover of the town's finances, the Town of Spring Lake has, over the years, tainted its reputation. In its most recent debacle, the North Carolina Office of the State Auditor (OSA) deemed the town incapable of handling its finances and put its financial affairs under the Local Government Commission. Addition- ally, a state audit published in March determined that Spring Lake officials misused taxpayer dollars, including more than $430,000 for personal use by the town's former accounting tech- nician. e audit further alleges that the town did not adequately inventory vehicles, misused procurement cards and that minutes of public meetings were missing. e audit found that the town's finance director failed to supervise and review the accounting techni- cian's actions, especially deposits into her account at the Fort Bragg Mutual Credit Union. e March audit was not the first time Spring Lake came under state fiscal scrutiny. A 2016 OSA audit found similar infractions. e OSA launched that investigation after receiving com- plaints of misappropriation of money via its hotline. e audit identified 63 Town employee positions and three aldermen who violated town policy using procurement cards. e audit did not name the individuals. It also determined that from July 2010 through March 2015, the town board and employees spent at least $122,434 on 1,448 purchases unre- lated to town business. And the town under-billed a commercial real estate company by $90,930 because town employees misread water meters. Af- ter discovering the mistake, the then- unnamed town manager believed it unfair to bill the real estate company for the remaining water usage, accord- ing to the report. e reasons for Spring Lake's continuing financial mishaps can be attributed to several reasons, accord- ing to a former long-time Alderwoman Fredricka Southerland. For years, Southerland was on the losing end of a 3-2 vote regarding town business she considered questionable. "I believed in honesty and transpar- ency. e town needed to quit sweep- ing things under the rug," she said. Retired from the banking and financial industry, Southerland often ques- tioned the town's fiscal decisions. She blames much of the town's financial woes on unqualified leadership. Lead- ership unwilling or unable to learn about their fiscal responsibilities. In one set of town meeting minutes, Southerland is on record pleading with her fellow board members to educate themselves about issues. She also suggests the town's citizens own part of the blame. Despite having one of the highest municipal tax rates and a $13 million budget, the town of some 12,000 often voted for personali- ties rather than qualified candidates. "I tried my best to educate them. Some didn't realize how much (taxes) they were paying. I wanted them to come out to meetings and hold the board accountable," she said. In this latest financial mishap, the town's organizational makeup may have played a damaging role. For example, although the town operates under a council-manager form of government where the town manager is the chief administrative officer, well versed in the responsibilities of all aspects of the town's daily activities, Spring Lake had its finance director and thus financial operations report- ing to the board and not the town manager. e often-abrupt dismissal of key town personnel also played a role. In this instance, it led to the appointment of a non-qualified accounting techni- cian to the finance director role. is individual is alleged to have embez- zled town funds; an issue brought to light in the latest audit. e LGC has a legal obligation to en- sure local governments' finances are well managed. Spring Lake joins the towns of Kingstown, Robersonville, Pikeville, Eureka and East Laurinburg under the LGC's financial control. Un- der state law, the LCG has far-reaching powers, and last year voted to revoke East Laurinburg's municipal charter because it couldn't get its finances in order. e town will no longer exist after June. Spring Lake's ongoing financial woes are not new. e LGC commu- nicated with Spring Lake numerous times during the past four years, rais- ing concerns about the town's failure to follow state law when administering public money. In its latest actions, the LGC on May 2 intervened to resolve issues sur- rounding a $1 million loan the town accepted from South River Electric Membership Corporation. e prob- lem: Spring Lake did not have the authority to accept the loan since its finances and ability to repay any loan were under state jurisdiction. e town never sought LGC approval of the loan. So, the LGC directed its staff on May 3 to begin re-negotiating with South River EMC terms for the town to pay off the loan. South River EMC loaned the $1 million to Spring Lake to build a fire station, which the town started building before the money was in place. e original 10-year term was deferred for two years, followed by eight annual payments of $125,000. Since Spring Lake never asked the LGC to approve the loan, under state law, the loan and its agreements are not valid and thus not enforceable by the lender. However, the LGC wants to hold South River EMC harmless and opted for Spring Lake to repay the loan. e LGC's counteroffer is a 20- year payback period with a two-year payment deferral. A 20-year payback period would be less stressful to the cash-strapped town. According to the LGC, once the terms are final, its staff will file an application for financing approval – required by law – and hold public hearings before staff brings the pro- posal back to the LGC for a vote. Spring Lake, for years, knew its financial operations were suspect. e latest warnings included: • January 3, 2020, Sharon G. Ed- mundson, LGC's Fiscal Management director, sent a letter to Mayor Larry Dobbins warning him that for fiscal years 2018 and 2019, the town failed to submit its annual audits. • April 23, 2020, LGC staff sent a let- ter to Spring Lake's Board of Aldermen and town administration stating that the town failed to comply with state law by not having fiscal year audits conducted soon after adopting a budget. Audits are due October 31 fol- lowing June 30 budget adoptions. • June 2, 2020, the LGC issued a res- olution warning Spring Lake regarding its failure to comply with state laws to submit fiscal year audits. According to the resolution, the town's audits had been at least two months late for the past five years. e 2018 audit was 16 months late. • June 23, 2021, citing a budget deficit and lack of fiscal controls, the LGC again warns Spring Lake of a pos- sible takeover of the town's finances. e LGC held an emergency meeting on June 22 and voted unanimously to send a warning to Spring Lake due to concerns over long-standing fiscal irregularities and an investigation into missing money. • July 26, 2021, e LGC voted to take complete control of Spring Lake's finances if the Board of Aldermen impedes the Office of State Auditor in- vestigation into "questionable" finan- cial activities if the board withholds COVER STORY Spring Lake: A town in trouble by JASON BRADY Joe Durham, interim town manager for Spring Lake. (Photo by Jason Brady)