The Local Government Commission has sent a letter to the Spring Lake Board of Aldermen raising concerns about several issues, including the board’s violations of the state’s Open Meetings Law.
The letter also discusses a lack of compliance with the Local Government Budget and Fiscal Control Act and questions the board’s willingness to work collaboratively with the Local Government Commission staff.
The Local Government Commission took over the town’s finances in October amid concerns over budget deficits, fiscal disarray and possible missing money. And a state audit report released last month outlined several findings, including missing money and financial impropriety.
The commission discussed the letter and issues related to Spring Lake during a meeting Tuesday.
Mayor Kia Anthony did not respond to requests for comment.
During the meeting, the Local Government Commission cited violations by the Spring Lake board of the Open Meetings Law.
The discussion included concerns related to the termination of former interim Town Manager Samantha Wullenwaber and the hiring of interim Town Manager Joe Durham, which was not voted on during a public meeting.
Anthony said after the last town board meeting on March 28 - when Durham was sworn in - that the board did not need to vote to fill the position. She also said Town Attorney Jonathan Charleston had advised the board it could take a general consensus to hire Durham in principle, which would be subject to the contract being approved by the Local Government Commission.
Alderman Marvin Lackman said the board was advised by Charleston that it did not need to vote in open session because the contract for the former interim town manager was between the Mid-Carolina Council of Governments and the Local Government Commission, not the town.
The Local Government Commission disagreed, saying the statutes clearly state that the votes must be taken in an open meeting of the board.
Amanda Martin, a lawyer with the N.C. Press Association, agreed, saying votes must take place in an open session with one or two small exceptions, which were not applicable for the hiring of the new interim town manager or for the dismissal of the former interim town manager.
“The Open Meetings Law has right within it the requirement that a vote to hire or fire must be done in open session,” Martin said. “Any discussions can be held in closed session, but the final decisions must be made in an open meeting of the board and by a vote of the board.”
Charleston did not respond to requests for comment.
Other concerns
The commission also voiced concerns about the town failing to comply with provisions of the Local Government Budget and Fiscal Control Act. It pointed to the fact the interim town manager had been sworn in by the board on March 28 and had already begun work without a contract and without the Local Government Commission approving the contract.
Durham, who had been contracted by the town to help find a permanent town manager, began last week to help the town work with the Local Government Commission and to address the audit findings.
Commission members said their concern was that the hiring took place without a properly executed or pre-audited contract and payments could not be made for the services, according to the letter. The town has not yet signed a contract for Durham’s services as interim town manager.
The commission also found that the board discussed at its March 14 open session the possibility of lifting the furloughs that were put in place for town employees as a cost-saving measure to help balance the 2022 operating budget. The commission said lifting the furloughs was not discussed with their staff.
State Treasurer Dale Folwell said the Local Government Commission had assumed full control of the town’s finances and the town board did not have the authority to make the decision unilaterally.
The commission also raised concerns about whether the board was willing to work collaboratively with commission staff. It cited the recent resignation submitted by the town attorney and the board voting to remove the commission’s financial presentation from the last board meeting.
The acceptance of Charleston’s resignation and his contract end date have not been communicated to the Local Government Commission, which the commission said was necessary because it impacts the town financially. It also has not been mentioned during an open session by the board.
The commission states in its letter that the staff “agree with the attorney’s recognition in his resignation that new legal representation for the town is appropriate,” and they also believe such a change is necessary.
The commission said one of its main concerns was that the town had not received any invoices from the town attorney for the entire fiscal year, and they were uncertain whether they would receive an invoice or what that amount might be.
Billing was a concern of former Alderman James O’Garra in early 2021 when the town paid Charleston a lump sum of $25,000 without receiving a detailed invoice. Charleston said then that the contract between his firm and the town stated that the firm would submit flat fees for project financing and not detailed invoices.
O’Garra said at the time that it was tax-payer money and continued to ask for more documentation.
Alderman Raul Palacios said Tuesday the attorney’s contract stated that bills would be sent monthly.
“I’ve asked about the monthly bills per his contract,” said Palacios, who also said the board had not officially accepted Charleston’s resignation and that he would be in favor of detailed charges.
The Department of the State Treasurer staff said after the meeting that if the board decided to rehire Charleston after April 23, when his 30-day notice to resign ended, that a new contract would be needed.
Working collaboratively
The letter to the board also questions its willingness to work collaboratively with the Local Government Commission. The commission questioned why the Spring Lake board voted to remove an update on the town’s finances by the Local Govenrment Commission staff from the agenda on March 28. Board members said at the time it was because they had not received the information five days before the meeting when the board packets were prepared.
The commission staff said they were prepared to give the financial information that night, but were told they were not allowed to present it.
“I chose not to push it knowing we would be coming back in April,” said Susan McCullen, director of the Fiscal Management Section of the Local Government Commission. She drove to Spring Lake from Raleigh with commission Finance Officer David Erwin to give the financial update.
The commission said the town does not have its own finance officer in place. It contracts for financial staff, and the commission staff are filling the finance officer duties.
The commission also discussed the town wanting to apply for a grant for water/sewer improvements.
“They had money going out the door with poor oversight and now we need to consider them using other people’s tax dollars to fund their improvements because they didn’t manage well and did not take care of their water/sewer systems,” state Auditor Beth Wood said.
State Treasurer Folwell asked the town to respond to the questions in the letter by April 13.
“The LGC is committed to assisting the town in implementing policies and practices that will restore the town’s fiscal health and establish a path to long-term viability,’’ Folwell said. “We ask the board to demonstrate that same commitment.”
Palacios said that with the help of the commission, Spring Lake is better off than it was a year ago.
“As a new board, we will work to get these things right,” he said.
Folwell said it was critical that the board work openly and transparently with the interim manager, the Local Government Commission and town residents.
Jami McLaughlin covers Spring Lake for CityView TODAY. She can be reached at jmclaughlin@cityviewnc.com. Have a news tip? Email news@CityViewTODAY.com.
