Riverview receives clean audit but auditors flag missing investment reports and $64.3 million landfill closure liability

Riverview City Council received an unmodified audit opinion for the fiscal year ended June 30, 2024, but auditors told the council Tuesday that the city failed to provide quarterly investment disclosures required by state law and that the city’s land preserve carries a long-term landfill post‑closure liability estimated at $64,300,000.

The city’s auditors said the unmodified opinion means the financial statements were prepared in accordance with applicable rules but does not itself indicate the city’s fiscal health. “The city did receive an unmodified audit opinion,” an auditor identified as Bill said. “Our opinion does not reflect financial condition, but rather attest that the numbers included in that report are indeed accurate.”

The audit letter to the mayor and council disclosed one instance of noncompliance with a Michigan Public Act requiring quarterly investment reports to be provided to council; auditors said those reports were not provided during the audit period but have since been produced. Auditors also noted accounting adjustments they helped record for retiree health care and unfunded pension liabilities.

Why it matters: the audit shows Riverview’s general fund reported higher revenues than expenditures on a budgetary basis for 2024, in part because the land preserve transferred $1,500,000 to the general fund in 2024. That transfer and other operating transfers — $1,200,000 reported on a budgetary basis — helped the general fund post a $417,000 budgetary surplus and a $2,022,000 fund balance (about 16% of expenditures). Auditors warned council to monitor those transfers as they decline in coming years.

Key figures from the audit presentation: - General fund property tax revenue (2024): $6,600,000 (about 51% of general fund revenue). - General fund expenditures (budgetary basis): $12,500,000 for 2024. - Net operating transfers included in budgetary revenue in 2024: $1,200,000 (including a $1,500,000 transfer from the land preserve). - General fund fund balance: $2,022,000 (approximately 16% of expenditures). - Land preserve landfill post‑closure estimated cost: $64,300,000. - Investments set aside for the land preserve: $18,100,000. - Letter of credit supporting the liability (6/30/2024): $35,400,000. - Methane gas royalties included in 2024 land preserve revenue: $715,000. - Pension plan funding level: approximately 87%. - OPEB (retiree health care) liability: $22,400,000 with about $1,200,000 in assets (about 5% funded); city made a $200,000 advance funding contribution in 2024.

Auditors explained that large year‑to‑year swings in the land preserve’s operating results can reflect changes in the engineering estimate of the post‑closure liability; the city recorded a $26,000 change in that liability in 2024 versus multi‑million dollar changes in prior years. The auditors noted the city retains engineers to calculate the closure estimate and that the estimate is reassessed annually.

Council members pressed for clarity about how the financial statements should be read. “When we look at these numbers on page 4 . . . your overall net position is positive about $20,000,000 but you see the unrestricted portion is a negative of about $9,500,000,” the auditor said, explaining the effect of recording long‑term pension and OPEB liabilities on government‑wide accrual statements. Councilmember Webb asked whether a declining unrestricted net position necessarily signals fiscal stress; the auditor replied that council should focus on fund‑level measures, such as the general fund balance and budgetary trends.

Council and staff also discussed the city’s plan to “wean” the general fund from reliance on land preserve transfers: staff said the transfer planned for the next year will drop to $500,000 and then to zero in subsequent years.

The audit report included recurring internal control items auditors routinely communicate (for example, interfund loans between the golf course and other funds) and one unrecorded misstatement related to ambulance fees timing (an adjustment of approximately $265,000 discussed with management). Auditors described these matters in the report to the mayor and council and said management chose not to adjust for the disclosed unrecorded misstatement.

What's next: Council approved a corrective action plan to submit to the state department of treasury to address audit issues. The council voted to receive the audit and to publish the financial statements after council acceptance; staff said the financial statements were not posted to the city website before council approved them but would be posted the following day.

Votes at a glance (council roll calls included in the meeting): - Receive and approve minutes (January, condensed): Motion by Councilmember O'Neil, second by Councilmember Robins. Vote: 7–0 (O'Neil, Pray, Robins, Mayor Swift, Webb, Workman, Gannaga) — approved. - Consent agenda (multiple items including authorization to solicit bids for heavy equipment rental, land preserve solicitations, accept donation to police department, enable virtual credit card for accounts payable, authorize gate rate increases at Riverview Land Preserve): Motion by Councilmember Pray, second by Councilmember Robins. Vote: 7–0 — approved. - Adopt corrective action plan (to submit to state department of treasury): Motion by Councilmember O'Neil, second by Councilmember Webb. Vote: 7–0 — approved.

Councilmembers asked staff to ensure the city's required quarterly investment and financial reports are both provided to council and are posted for public access. Auditors recommended continuing to monitor interfund advances, capital reserves and the assumptions behind the landfill closure estimate.