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What did auditor really say about County water finances?

(Week of April 21, 2011)

Before the Vero Beach City Council, the Indian River Board of County Commissioners, and top staff meet April 29 to see if it’s possible to join forces on water-sewer utilities, they might want to get on the same page about each other’s financial statements.

Vero Beach Mayor Jay Kramer has for months attacked Indian River County’s financial position.

In the lead-up to the April 29 meeting, County Commission Chairman Bob Solari said he asked Vero Beach officials to send any and all questions to the county so staff can clear the air.

He said Monday the county had not received any questions from Vero Beach City Hall.

At issue is the health of the county’s cash flow and bank reserves.

When utility activists Dr. Stephen Faherty and CPA Glenn Heran presented their newest water-sewer financial model to the county, Vero Beach and Indian River Shores,  showing the county with healthy cash flows and bank reserves, Kramer maintained the county lost $3 million in 2009 and that Vero Beach was in a stronger cash position than the county.

Kramer complained Faherty and Heran’s analysis is widely regarded as fact and often quoted in media reports about utility issues. “They’re presenting all these numbers and saying that they’re in the CAFR (certified annual financial statements) when they’re not,” he said.

When reminded neither he nor Vero staffers had provided anything to refute Faherty and Heran’s work, Kramer said: “We’re working on it.”

Kramer had said he gleaned the information he was quoting about the county “losing money” and “bleeding cash” from CPA Ross Cotherman of Harris Cotherman Jones Price, the auditing firm for both the city and county.

Solari and County Administrator Joe Baird said that when Cotherman was called in to answer questions about what he told Kramer, the auditor said the mayor misinterpreted the data.

Solari said Cotherman confirmed at a March 28 meeting that there were no concerns about the county’s financial state and that the county utility in no way needs the City of Vero Beach to “bail the county out,” as Kramer has stated.

Two days later, Kramer publicly said that Cotherman was not familiar with the county books and that he was being diplomatic as an effort to keep both the Vero and County accounts.

Kramer said he sat down earlier this year with Cotherman, and that Cotherman, in his role as the county auditor, went over the county’s financials and answered questions.

At that time, Kramer said Cotherman confirmed the things he had concerns about in the county budget.

Regarding the 2009 audited financial statements, Kramer has said that the county “lost $11 million” despite the fact it added $3 million to the utility’s reserves.

What Kramer sees as a loss is $14 million depreciation on more than $100 million in capital improvements over the past five years.

County officials provided their financials, which showed a stable operation with cash in the bank.        

In hopes of clearing up the issue and preventing further confusion, Solari called a meeting, inviting Cotherman, County Administrator Joe Baird and Kramer to attend.

“When I didn’t hear back after six days, I called Jay to say that since I hadn’t heard back, I was inviting Vice Mayor Pilar Turner to attend,” Solari said.

“And he said fine, so it was evident that he had received my message about the meeting and chosen not to respond.”

The idea, according to Solari, was to get everyone in the same room to hopefully find out whether there were genuine concerns about the county’s financial reports.

Turner attended as a witness to Solari’s 12 prepared questions, several of which directly addressed Kramer’s public statements. Solari said Turner and Baird asked a few additional questions as well.

Solari said Cotherman admitted he met with Kramer about the county’s financials.

According to Solari, Cotherman said he didn’t know what Kramer was talking about.

Kramer said he didn’t go to the meeting because he saw it as an ambush. “I’m going to sit there and let Joe Baird and Bob Solari beat on me?

“I don’t think so. I wasn’t going to convince their minds. Why would I need to be in the same room to tell them what they tell me?”

On March 30, Kramer questioned Cotherman’s ability to make statements about the county finances and then questioned the auditor’s motivations for not backing him up.

“You gotta remember the auditor wants the business of Vero Beach and wants the business of the county so they’re probably not too incentivized to take one side or the other,” Kramer said on WTTB radio.

“You know, they kind of want to keep their work on both entities here.”

Kramer continued by saying that Cotherman, as a principal of the firm, didn’t have close, hands-on knowledge of the county finances, and therefore wasn’t really qualified to comment on the details that Kramer is calling into question.

“I did talk to Ross, I’ve actually talked to him quite a bit,” he said on WTTB. “He’s got other individuals that kind of know the books more and those are the people I’ve got to talk to. Ross doesn’t really get too far into the details of the books.

Cotherman did not respond to multiple calls and e-mails.