Audit committee forwards Building Authority financial review after auditors flag missing reports, governance gaps

The Wayne County Commission—s Committee on Audit voted to receive and file the Office of the Legislative Auditor General—s (OAG) limited review of the Wayne County Building Authority—s audited financial statements for the fiscal year ended Sept. 30, 2024.

The OAG—s review, presented to the committee, found that the Building Authority—s external auditors issued an unmodified opinion on the stand-alone financial statements but that required supplemental information was omitted. Auditors also identified a lack of a formally adopted budget for the special revenue/general fund and no written policies to address custodial credit risk for deposits and investments.

The OAG noted an increase in revenues of roughly $180,000 for fiscal 2024, primarily from building rents and interest income, and a decrease in the Building Authority—s governmental fund balance of about $304,000. The report said the authority—s net position increased by roughly $12,000 in fiscal 2024, which auditors attributed to a reduction in noncurrent liabilities and accrued interest payable. Auditors reported noncurrent liabilities due in more than one year at roughly $11.8 million for fiscal 2023 and about $11.3 million for fiscal 2024.

Erica Jones, principal senior auditor, summarized the financial results during the committee presentation and said the auditors— outside firm found the statements fairly presented in all material respects. "Plante Moran stated that the financial statements presented fairly in all material respects the financial position of the Wayne County Building Authority as of Sept. 30, 2024," Jones told the committee.

Committee members pressed staff for more detail about the decline in the fund balance and how the Building Authority functions in practice. Daryl Jones, identified at the meeting as Director of Facilities for the Building Authority, told commissioners that major repairs over the last three to four years—including carpet and structural work—accounted for a significant portion of the expenditures that reduced the fund balance. "A lot of repairs have been done over the last 3, 4 years. Carpet, building structure has been repaired and has been based off what they submitted to us as far as reports," Daryl Jones said.

Legal counsel Jim Jernigan described the Building Authority—s historical role: the state needed the county to issue bonds to finance two health-center facilities, the county did so through the Building Authority, and the state leases the buildings with a third-party developer/operator involved. "The state leases from us, and BoGi Group acted as...the developer. They literally built the buildings and they manage the buildings at this point," Jernigan said, noting the authority now largely operates as a pass-through for payment flows handled by the state and bank.

Committee members asked for clearer documentation of the structure and cash flows. Commissioner Cooley asked for a written narrative showing the history of the transactions, the parties involved and how payments flow to and from the Building Authority; legal counsel said staff would prepare a one-page historical summary and an amortization schedule on the bonds.

The report identified two outstanding bond issues, originally issued in 2011 for properties in Inkster and Hamtramck; the presentation said the initial combined amount was about $12 million and that the outstanding balance is approximately $11 million. Auditors also said a significant portion of the authority—s governmental fund balance—reported as $8.8 million in the review—is restricted for debt service (approximately $5.6 million), with assigned amounts for capital projects (about $776,000) and other committed activities.

Auditors recommended the OAG report be forwarded to the Wayne County Commission for receiving and filing and that the Building Authority adopt budgetary and custodial policies and provide the missing management discussion and analysis (MD&A) and budgetary comparison schedules in future filings. Marcy Carl, identified as the auditor general, confirmed that staff and Building Authority management had agreed to work on preparing the MD&A for inclusion in next year—s financial statements.

The committee moved to receive and file the OAG limited review of the Building Authority financial statements. The motion was moved by Commissioner Wilson, supported by Commissioner Killeen, and the committee recorded the motion as carried.

The committee did not adopt additional formal actions on implementation timing during the meeting but asked staff to provide the requested historical narrative, an amortization schedule for the bonds and to work with the Building Authority to adopt any needed policies and prepare the missing supplemental reports.