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Audit review: $4.1M in utility capital activity and $9M effect linked to TID 8 reallocations
Summary
Baker Tilly and village staff told the committee that 2024 saw significant capital activity: $4.1 million in utility-related asset activity and a $9 million aggregate effect tied to TID 8 allocations as projects completed and costs were reallocated to utilities.
Audit representatives from Baker Tilly joined the Germantown General Government & Finance Committee to answer questions about the village’s 2024 Comprehensive Annual Financial Report. The auditors and staff described large capital activity in 2024 and explained why Tax Increment District (TID) 8 showed a large fund-balance swing.
Baker Tilly said the $4.1 million of capital activity reported in the water and sewer utilities largely reflected projects that were recorded in one location during construction and then allocated to the appropriate entity upon completion. Amanda of Baker Tilly described the exercise of allocating shared project costs across the water utility, sewer utility and TIDs as “an allocation work in progress” that the audit helped finalize.
Village staff explained TID 8’s reported $9 million movement was an aggregate effect of completed projects (including a water tower, booster station and roadway work) that were initially recorded to TID 8 during construction and, as projects finished in 2024, were allocated to the water and sewer utilities per the project plan. Staff said the practical effect was that roughly $3 million was moved out of TID 8 with additional impacts recorded in utility accounts.
Audit and staff also discussed developer-contributed capital and the timing of getting required documentation from developers. Baker Tilly said some prior material misstatements in capital and depreciation arose when items were misclassified as capital or noncapital; staff said they are improving procedures and preparing a developer handbook to collect required project documentation earlier.
Committee members asked about a municipal revenue obligation tied to developer JW Speaker. Staff said there are two developer-agreement components: guaranteed increment (some deadlines were initially missed but appear to have been met) and a municipal revenue obligation tied to public infrastructure the company constructed and expects reimbursement for; staff and the village attorney are reviewing whether payments or offsets should occur and will bring any proposed agreement amendments to the Village Board.
No formal committee action was required on the audit presentation; Baker Tilly agreed to answer follow-up questions. Staff will continue to improve asset records and developer documentation to reduce future audit adjustments.
