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Mayor, Watts want more details on audit report

Profile image for By Peggy Heinkel-Wolfe / Staff Writer
By Peggy Heinkel-Wolfe / Staff Writer

Info on growth, property values and indebtedness sought after audit report

Denton City Council members asked the finance staff for additional information after hearing the annual audit report Tuesday afternoon.

Overall, Jerry Gaither, a certified public accountant with Dallas-based Weaver and Tidwell, told the City Council during a work session that auditors found the city has good internal controls and has followed through with the recommendations made by auditors in past years.

After hearing the overview of the audit, Mayor Mark Burroughs asked for more information about the city’s indebtedness and council member Chris Watts about its growth and change in property values.

Denton has moved toward issuing certificates of obligation instead of revenue bonds to cover capital expenditures made in the city’s utility departments.

The city staff has recommended the move to save on interest costs, telling the council that, even in the unlikely event of insolvency on the part of a city utility department, the City Council wasn’t likely to let a utility department go under anyway.

Like general revenue bonds, which must be approved by the voters, certificates are backed by the good faith and credit of the city’s taxpayers. But, unlike general obligation bonds, the Texas Legislature has given towns and cities the authority to issue the certificates without voter approval.

As of Sept. 30, 2012, the audit date, the city had about $560 million in outstanding debt, including bonds, certificates and other financing. The majority of that long-term financing, nearly 80 percent of it, is paying for activities in the city’s utility departments. About $66 million of the city’s outstanding debt has come due or will come due by this September.

Only about 11 percent of the city’s overall indebtedness is in general obligation bonds authorized by voters.

Burroughs asked for comparative information between Denton’s indebtedness and that of other area cities, such as McKinney and Lewisville, since the city’s level of indebtedness was cited several times by Texas Comptroller Susan Combs during a recent visit with members of the local Republican Party.

Overall, Denton’s indebtedness has dropped over the past several years, Gaither told the mayor and council.

But Burroughs persisted, citing the need for more information in light of some unaudited statistics that were provided in the report. For example, the city’s indebtedness in relation to per capita income has increased steadily since 2006, from about 0.017 percent, to 0.02 percent last year.

Some of that might be explained by changes in reporting of per capita income, Burroughs said.

“We need a lot more information to get that transparency,” Burroughs said.

Council member Chris Watts also requested more information about assessed values, since the city saw big changes with several apartment communities — including Forum at Denton Station, The Timbers at Denton, University Courtyard and Gateway at Denton — now among the city’s top 10 taxpayers.

The audit report included changes due to new projects, annexed properties and increased values for the past year, but Watts asked for information both pre- and post-economic downturn.

During its regular meeting Tuesday night, the council authorized another $68.3 million in certificates of obligation to be issued for 2012-13.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is .


An audit of the city’s 2011-12 finances as of Sept. 30, 2012, showed:

Total expenses: $311.6 million

Balance remaining in general fund: $25.2 million

Long-term liabilities (bonds, certificates, other financing) for government activities: $139 million ($17.4 million due within one year)

Long-term liabilities for business-type (utilities, landfill) activities: $560.1 million ($48.2 million due within one year)


During its regular meeting Tuesday, the Denton City Council also:

•  Ordered the issue of $46.7 million in certificates of obligation to pay for upcoming water, wastewater and sewer projects.

•  Ordered the issue of another $21.5 million in certifications of obligation to pay for other capital improvements in city facilities, including $3 million for vehicle replacements, $2.7 million for the new animal shelter, $2 million for airport land and $1 million for fire stations.

•  Awarded a $202,509 construction contract to Wilson Contractor Services to replace two 10-inch sewer crossings as part of the widening of U.S. Highway 380.

•  Held the first of two readings to annex 1,154 acres of land along Mayhill Road, another 298 acres along Pockrus Page Road and 143 acres along Teasley Lane.

•  Agreed to sell 0.09 acres of excess right of way at West Hickory Street and North Texas Boulevard to SB Holdings LLC for $11,000.

•  Tabled consideration of granting the city manager, or his designee, the authority to purchase real property for the widening of Bonnie Brae Street, Mayhill Road and the expansion of the Denton Municipal Electric grid under certain parameters, generally when the property costs less than $350,000 to purchase.