Sunday, July 14, 2024

Amid Navassa’s financial mess, mayor can ‘no longer conduct business for the town’

Navassa’s town hall and police department. (Port City Daily/Mark Darrough)

NAVASSA — Directly north of one of the state’s fastest-growing towns, Leland, is the much smaller Navassa, population 1,798. Currently, the town faces a directive from the state’s Local Government Commission to clean up its books. 

In its most recent Unit Assistance List, issued last December and based on audited financial data for the fiscal year July 2019 to June 2020, Navassa received two high-risk evaluations: one for internal control issues and another for financial issues with its water and sewer fund.

According to Councilman James Hardy, recent letters from the LGC have mentioned concerns for the town’s pre-audit certification process, internal controls, and the solvency of the general fund.

Last May, Hardy took over the role of overseeing the town’s budget.

RELATED: Pender County, six Cape Fear towns face financial troubles with state

The move to make a councilman the town’s budget officer was part of a reshuffling of financial responsibilities that were first enacted by the council in February 2019. At the same time, it assigned Michelyn Alston duties of deputy finance officer. 

In August 2019 council voted to shift Mayor Eulis Willis’ role as budget officer to Claudia Bray, the town’s administrator.

In August 2020, a Council meeting became tense when Hardy – who two months prior took over Bray’s duties as budget officer – attempted to add an agenda item, in order to view the town’s financial records. 

“From my years of experience working in the banking sector, I did see some things that caught my eye,” he told council, according to WHQR. “And I am simply asking for the council to give me the tools to ensure that Navassa remains sound and also continues to have a balanced budget.”   

“Well, I don’t see fit for you to need it,” Minnie Brown responded to her fellow council member, who was then the new budget officer. “Why do you need that?” 

WHQR reported the motion passed before Councilman William Ballard questioned the mayor, who has held his office for more than 14 years. Ballard wanted to know about past payments and non-payments for sewer tipping fees on the properties.

On Saturday, Hardy explained in blunt terms what he saw among the records: “At first glance, there were a lot of issues.”

Around eight months after the August 2019 meeting, council voted to “remove the duties conveyed onto the Mayor and take his duties back to G.S. 160A-67 and 160A-69,” according to an email from Bray to Port City Daily last week. The first statute vests the governance of a North Carolina city to the council, while the second states that the mayor “shall have the right to vote as a council member on all matters before the council, but shall have no right to break a tie vote in which he participated.”

“Therefore, the Mayor can no longer conduct business for the town,” Bray wrote of the council’s decision.

[Author’s Note: Bray and other town officials were asked to further explain the council’s 2019 vote to “remove the duties conveyed onto the Mayor” and its 2020 vote to prevent the mayor from conducting any business for the town. This article will be updated with and if PCD receives a response.]

When Councilman Hardy took over Bray’s budget responsibilities last May, Bray assumed the duties of the town’s finance officer from Charlena Alston. Alston, who is related to Michelyn Alston by marriage, is currently the town clerk and deputy finance officer.

With Councilman Hardy taking over as budget officer for Bray, council also voted to shift the duties of the finance officer from Charlena Alston to Bray.

“It was Charlena and Kemmy Goodson [the town’s CPA at the time] responsible to complete all activities associated with the FY 2019-2020,” Bray wrote in the email, adding that council terminated Goodson’s contract on January 28, 2021.

According to reporting by StarNews, Charlena Alston and Bray were involved in an alleged physical altercation outside Town Hall in November 2011. Charlena Alston, then Bray’s administrative assistant, was fired due to poor job performance, Bray said at the time, but not because of the altercation.

It is unclear when Charlena Alston was re-hired by the town after her 2011 termination.

On Friday, Bray explained the swapping of financial roles was done “to improve the processes and strengthen the financial stability” of the town. She said the town adopted its most recent budget “on time for the first time ever,” and it was balanced without using any appropriations from its general fund.

According to the North Carolina Department of State Treasurer website, Navassa’s July 2019 – June 2020 audit was not submitted until February 13, 2021. Audit reports for counties and municipalities are typically due by October 31 each year. Navassa’s submission was the last of all municipalities in Brunswick County, aside from the town of Belville, which did not show a submission of an audit on the state’s website.

“Because [Navassa’s] audit is still under review, we are reserving any comment at this time,” said Dan Way, spokesperson for the Office of the State Treasurer.

Hardy said, shortly after he took over as budget officer in May 2020, he and other officials “decided to start our audit process two to three months earlier,” but the auditing company submitted the report late. When the town received a letter from the LGC saying the audit had not yet been completed, Hardy claims he was not aware of the issue.

On Friday, Bray herself initially said she had never seen the letter from the LGC, adding that her role as finance officer didn’t begin until July 1, 2020.

Councilman Hardy said the biggest driver of the town’s financial problems was the mismanagement of its water and sewer fund.

“For the last couple years, there have been fund balance appropriations from the general fund to offset negative balances in the water and sewer fund,” he said.

He noted such appropriations have ranged from $250,000 to $500,000 in taxpayers’ funds for the past several years.

A Brunswick County water tower in Navassa overlooks the Cape Fear River.

Consistent issues with the water and sewer’s fund debt caused the town to absolve and turn it over to the county last July, he said. Brunswick’s ownership and operations of Navassa’s water and sewer system initiated “an important step toward improving the Town’s utility,” according to a statement issued by the county at the time.

Discussions between Navassa and Brunswick County began in October 2019, when the town requested a proposal outlining a potential merger and acquisition of its water and utility system into the county’s system, according to the county.

Ultimately, Hardy believes the town’s finances are getting straightened out.

“We have reorganized the entire finance department to start fresh, more and less,” Hardy said. “It is our intent to stay in the good light with the LGC, and to show to our citizens that we can responsibly handle our finances. It also shows a glimmer of light, and how we’ve addressed those issues.”

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