Minutes EDC 4B 03/07/2005 - Joint WorkshopMINI -ITIS O>: ,JOINT WORKSHOP
BETWE1 N TOWN COUNCIL,
LDC A AND EDC B/
RI GULA12 TOWN COUNCIL MEETING FOR THE
TOWN OF TROPHY CLUB
LOCATION: 100 MUNICIPAL DRIVE, TROPHY CLUB, TEXAS
Monday, March 7, 200
6:00 P.M.
STATE Or TEXAS
COUNTY OF DENTON
The Town Council of the. Town of Trophy Club, Texas, met in Workshop/Regular Session on 10onday, March 7,
2005. The meeting was held within the boundaries of the Town and was open to the public.
TOWN COUNCIL MENI.BERS PIZESE'NT:
Scott Smith
Scott Spence
Susan Edstrom
Roger Williams
Beverly Foley
Pain Cates
STAFF AND GUEST(S) PRESEtN'T:
Donna Welsh
Town' Manager
Diane Cockrell
Town Secretary
Lisa Ramsey
IHR Manager
Roger Unger
Finance Director
Adam Adams
P & R Director
Beth Anil Gregory
Kevin Fleck
Patricia Adams
Neil Twomey
D\vight .Morrow
Gary Cantrell
Rebecca Shuman
Bill Devlin
Jim 1 -licks
Andrew Hayes
Pete Reinke
Les Carter
CD Director
Mayor
Mayor Pro Tem (arrived at 6:14 p.m.)
Council Member
Council Member (arrived at 6:53 p.m.)
Council Member
Council Member
Manny Martinez
Bobby Harrell
Jilni Haire
Wendy Hill
Jmi Haire
Mendy Whitehead
P & Z Coordinator Richard Kuhlman
Town Attorney
EDC A
EDC A
EDC A
EDC B
EDC B
EDC B
EDC B
Resident
Resident
Amanda Foust
David Cunningham
Reith Sock -well
Dennis Sheridan
Keith Allen
Dennis Sheridan
Margi Cantrell
Pearl Ford
Pauline Twomey
Ameristar.,
Terra Land Developme.nt-
NWPWF
TC/Roanoke Soccer. Assoc.
NWPWF
Trophy Realators and
Metroport Chamber of Commerce
Metroport Chamber of Commerce
Resident/Developer
Midwest Commercial Realty
Resident/NISD Superintendent
P & Zoning Commission
Starwood Homes
P & Z Conanvssion
Resident
Resident.
Resident
A.1 joint Workshop: Economic Development Corporation A and Economic Development Corporation
B.
A.2 Town Council, EDC A and EDC B to call to order and announce a quorum.
Mayor Smith called the Workshop/Regular Session to order at 6:08 p.m. noting a quorum was present.
A.3 Town Council, EDC A and EDC B to meet with Chamber representatives and local developers and
to discuss ffiture development and development issues.
Parc ? Workshop/Re4ular Session March 7, 2005
Mayor Sniith head each att;:ndee inti-oduce tltCmsclves and .0harc their imtrest autd 1 -u1111 -e plans. The Council was
addressed by: Kcith Allen of SLJI- 00d Homes rerardinc Future plans for development to the north of the Eagles
Ridge developitient. Bobby Harrell of Terra Companies. discusser! the !moll, currently being, developed by Terra.
Richard Kuhhiian. Chair of NW Metroport Chamber, briefed the Council On trends in ilie real estate market.
David Cunnan'nhatn of :Midwest Commercial Realty shared tentative interests for development including chain
restaurants and hotels. Kerin Fleck briefed the Council on the Village. Shops @ Trophy Club development, Ms.
Flock stated Haat there are t«o h asiiig space vacancies in ilio retail shops fronting State Highway 114. The dance
studio. Me .and My Shadow and Wizeguys have gone out of business. Ms. Fleck tins met w-ith a prospective
restaurant tenant to occupy the. 1'Vizeguys space. The Plaza shopping center has a few vacancies as .veli A
representative from Regency Centers could not be present at the workshop session.
The Mayor asked if there is an interest in developing a Task Force of members from Chamber, EDC A & B;
Devc.topers and Council to analyze the demographics and start looking far developers.
AA %DC A an(] EDC B to adjourn.
EDC A and EDC B were called to order at 6.32 p.m.
EDC A and EDC 13 adjounied at 7.:05 p.m.
The council took a short break and. started the regular session at 7:18 p.m..
A.s Invocation.
Director Briggs gave the invocation.
A.fi Fledge of allegiance .to the. American Mag.
Pledge of allegiance to the Texas Flag.
"llonor the Texas flag, I pledge allegiance to thee, Texas one and iattlivisible.
Council Member Williams lett the pledges.
!Mayor Smith took time to recogDize the 16 years of service and departure of Diane Cockrell, Town Secretary to
become City Secretary for the City of Decatur.
B.? Discuss and take appropriate action regarding a request for a Temporary Use Community Garage
Sale granted by Special Privilege. (Applicant: Anna Langley, Trophy Club Women's Club)
Sharon Harris represented the. Trophy Club Women's Club regarding the request for approvai of the April '30'''
and October I" garage sale dates.
Mayor Pro Tem Spence gloved to approve. Council Member Edstrom seconded; motion canied.unanimously,
A.7 Discuss and take appropriate action regarding the approval of fiscal year end September 2004
Audit.
Council Member Cates moved to table the Audit until the March 21, 2005 meeting and asked .to include her
questions to the Auditor in the minutes. Mayor Pro Tem Spence seconded. motion carried unanimously.
Statement for Audit and Financial Statements
From: Pain Cates, Council Member
March 7. 2005
I set up an appointment to discuss my audit questions with [lie auditor before the last meeting that was held on
February 7. 2004 at 5:00 pm. He called at 4:00 pili to tell me he would not inak.e it at 5:00 pita and would meet
me at 6:30. Unfortunately my questions Would have taken longer than 15 minutes, allowing 15 minutes before
the council meeting to set tip the computer, etc, Now, he is telling the Council that I refused to meet with him so
he will not answer my questions.
I'aUe Workshop/Regular- Session March 7, 2005
He .said he would respond to illy questions in N+riting. I sent him my questions directly to which lie replied to
Donna Welsh and Roczer Unger. He did riot address my questions in his response. T do not understand why he
would not respond directly to me or address my questions.
1t:1y prior experiencee with auditing. is from Ernst & Young. KPi1AG heat IMarwlck, and a local CPA firm. I needed
to get answers to my reservations to approve the audit and the financial statements.
In his response in the email forwarded to me from Donna Welsh, lie said that the Town of Trophy Club is not
subject to the Single .Audit Act of 1954. 1 do not understand this as the Town of Trophy Club received $'475,000
in park: grants and $130,000 in police grants during 2003-2004. The Single :'Audit .Act of 1984 requires that these
A133 or "Yellow Book" standards be followed in audits of state and local governments which receive Federal
Financial Assistance. There is no mention of .grant arniount exceptions. When a local government receives
Federal Financial Assistance, the audit concept of materiality is lower than other corporate audits.
The. Single Audit Act was primarily created to give guidelines to getting a quality audit. The guidelines include
principles from A-133 "Audits of Suites. Local . Govennments, .and Non-profit Organizations, Codification of
Statements on Auditing Standards:, promulgated by .tire American Institute of Q�rtilied Public .,Accountants, The
financial audit standards contained in the Governmental Auditing Standards by the General Accounting Office,
SOP 98-3 American Institute of Certified Public Accountants Statement of Position 98-3, Audits of States, Local
Government, and Not-for-Profit Organizations Receiving Federal_ Awards.
1. want to point out to you that he has a disclaimer in the financial :statelpents that says:
The Town has received Federal and State Grant funds. which ame governed.:by various .rules and regulations of the
grantor agency. Costs charged to these programs .are subject to audit. and adjustment by the grantor agency.
Therefore to the extent the Town has not compticd with the rt ir✓s and'regulati.ons governing the grants; refunds of
any money received may Ise required.
Does this mean that due to the factthat we do not have an audit under the regttu'ements of the Single Audit Act of
.1984, we are subject to refunding these federal and state: financial assistance?
The other comment made in his email stlpula.ted dint lits internal control questionnaires were used to. determine
his audit procedures. His financial. statement footnotes refer to the fact that .the audit was perfornned in
accordance to governmental auditing sta-ndards',
The second reporting standard for financial statement audits under::govermmental auditing standards is:
The report on the financial statements should either (1) describe the scope of the auditors' testing of compliance
with laws and regulations and internal control over financial reporting and present the results of those tests or (2)
refer to the separate report(s) containing that information. Iii presenting results of those tests, auditors should
report fraud, illegal acts, other material noncompliance, and reportable.eonditions containing that infortrtation.
Internal Control objectives adequately met provide some assurance of tb.e following:
Validity and Reliability of data
Compliance with Laws and regulations
Safeguarding the resources against waste, LOSS, and misuse.
I want to speak about .reportable conditions under AICPA standards. Reportable conditions are major deficiencies
in internal control. In the event that an auditor finds reportable conditions in internal control during the audit, he
must respond (after the audit) with the identification of these reportable conditions. The evidence of reportable
conditions allows higher risk of misstatement of financial statements or misappropriation of assets. Under
ATCPA standards there are 10 reportable conditions. In my opinion, die reportable conditions that concern the
Town of Trophy Club are (1) absence of appropriate segregation of duties consistent with control objectives, (2)
absence of appropriate reviews and approvals of transactions. accounting entities, or systemsoutput. 1n nay
opinion. these two reportable conditions have existed in this town for many years. The Town finance staff is too
Page d \Workshop/>Ze(ttl.tr Session March 7, 2005
s.tnall to have appropriate segregation of duties and Nvoi ld have had to change processes to compensate for the
size of the staff. Evidence of the a.ppropricite reviee%\s N ere not tmderstood by the staff to be needed according; to
my couvVersations with the Finance Director. The atidiior hits nover mentioned these twn conditions in the five
vzars that he has audited the finatrcial statements. The opinions over the last,5 years have been "clean'% giving the
Town staff and the Town Council the some assurance chat there; 'Were 110 issues within the town accounting. The
tr+anagement letter- at the end of the audit has never been ci`ated. lir niv opinion. The Town Council did not get
the option to accept the _:risk of reportable corrdi(ions 'Nhich include possible misappropriation of assets or
misstatement. of financial. state.luents. hr my opining- The. -TuNvrr Stiff cid not get the choice to implement
procedures to prevent any possible rnisappropriatioris of ;insets or nrinstate.nrc;nts of financial statements..
In accordance Nv:ith. Codification of Statertrents on Auditing S(andards. promulgated by the American lustitute of
Certified Public Accountwits or AU :316.35. 317.10-.16). i f evidence of'possible fraud or illegal acts was foun i,
the auditor must obtain sufficient, cornpetent evidence to determine whether, in fact, material fraud or illegal acts
occurred and if so dewinine. the effect on the financial suu�mc:irts.
The criminal investigation is still i.p.. process so deicrmination of materiality to the financial stateinents. is not
known. 'inmy. apit Torr, dtie to the penditrg criminal itrves1i1Uitior1. Chert: should have been .some kind of footnote
disclasure regardingthis investigation and that imt.eriality to financial statement has not been deCermined at this.
time. Furthetmore,,.it should e:rnentioned that the ro,vn Staff reported the incident.to the appropriate federal
party. ,
I3.1 Citizen presentations: this is an opportunity for citizens to address the Council on any matter
i�hethir'or>nt6t it Wooled on the agenda. The Council is not permitted to take -action on or disetiss�, .
any:`parese<tafaorisinade to the -Council at ibis time concerning an item not listed ora the agenda.
fire Coinieil i*ilf h6ti presentations on specific agenda items prior to the Council ad.:dressurg those; :
items,
Pearl Ford of Spring Creek Court and Neil Twomey of 1.04 Oakmont addressed tine Council:
B.2 Countrllstaff rept►rts t1?is is an. opportunity for Council and staff to provide brief upd tes on
projects and to'provide. public service announcements. It is Trot a time foie the axpressson of
opux ons, guestipns amid answers, or discussion anion- staff and Council Discussion is Iiu�ited to
whether Council rlesrres. to leave a topic placed on a future agenda for :future consideration.
Council and. Staff reports were Q%ven.
13.3 Discuss atad dire t staff .regarding dual roles of EDC A CorporationJIVN'ays and Means A.dvrsory
Group witb. respect #o ,establishing a separate corporation and advisory group. .
Council Member Williams. -moved to direct staff to investigate with EDC: A and flays and Means to see what tlrezz
continued future interest ts: Council Member Foley seconded; motion passed unanimously.
B.a Town Council to interview and take appropriate action by Resolution to appoint two candidates to -
rDC B.
A. Tillman C. Burks, Ill
B. Michael E. Claussen
C. John W. Cochran
D. Arnanda Foust
E. Vivek Ratna
F. Ralph NVm. Scoggins .
Jim Hicks, Chair of EDC Ii requested that the applicants attend the next EDC B for discussion. Council Member
Williar:ns moved to request the candidates rneet with EDC 13 to be interviewed. Council Member 'Edstrom
seconded. Motion passed unani.rnously.
13.5 Discuss and i:ake appropriate action] regarding approval of EDC B funding of booth for Northwest
Communities Partnership Realtor Conference in April in the attioaltt of x+1,350.00.
Mayor Pro Tern Spence proved to approve. Council Member «'illiams seconded; motion carried unanimously.
f';,2e 5 1' �'orkshoplRe�ttlar Session ��arch ;. _00�
11.6 Discuss and take appropriate action regarding approval of E'DC B funding of 20th Year
A nniversary and Arbor Day Celebration in amount of $3,5 0.00.
Council ;vlenrber Edsu-om moved to take funds from continency in the amount of S I.S>U. ,o support this event.
Council Member Cates seconded; motion carried unanimously.
D.1 Consent agenda: Discuss and take appropriate action to approve financials dated January 2005.
D.2 Consent agenda: Discuss and take appropriate action to approve minutes dated February 7, 2005.
D.3 Consent Agenda: Discuss and Take appropriate action regarding Racial Profiling Report for 2004.
DA Consent Agenda: Discuss and take appropriate action regarding a Resolution supporting House
Bill 1.227 regarding Utility Relocation.
1).5 Consent Agenda: Discuss and take Appropriate action to appoint Lisa Ramsey as Interim Town
Secretary.
Council N-lernber Edstrotrr_moved to approve. Council Member Williams secondcd: motion carried unanimously.
All matters listed as Consent Aeenda are considered to be. routine by the Town Council and will be enacted by
one motion. There will not be a separate discussion.of these. items. ]f discussion is desired, that item will be
removed from the consent agenda and will be considered sepaaittely.
FA Adjourn.
14�ivor Pro Tem Spence moved toadjourn at..9:01 p:m: Council Member 11Jiiliams seconded; motion carried
unanimously.
The Town Council may convene into executive session discuss posted tori -s as allowed by the Texas Open
Meeting Act, LGC.551.071 �, f
Yot Jo w . of T ophy Club