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Auditors flagged community-center sublease payments; Tabiona to seek legal review
Summary
Auditors identified language in the town's sublease with the school district that may allow the district to deduct interest earnings from scheduled sublease payments; staff estimated the discrepancy could be roughly $25,000 and will send documentation to the drafting attorney for clarification.
Town finance staff told the council that auditors flagged the town's sublease agreement with the school district for the community center, noting language that appears to allow deductions for interest earned on invested bond proceeds. "The amount of the sublease based rentals otherwise payable ... shall be reduced by an amount equal to the earnings on the investment of the final bond," staff read from the document during the budget discussion.
Auditors believe the deduction may have been applied to multiple payments rather than only the final payment, producing a shortfall in the account that should have accumulated for the community-center final payment. Staff estimated the discrepancy could be on the order of $25,000 to date and said the auditors recommended pulling the funds into the correct PTIF account and seeking legal clarification. "We figured it was about 25,000 right now," the staff member said.
Council directed staff to gather the sublease documentation and ask the attorney who prepared the documents (staff referenced Eric Johnson and earlier counsel) to review the wording and provide a fee estimate. The town also discussed opening or moving funds into a dedicated account while the review proceeds.
