HMB’s audit questions city’s viability
The draft of Half Moon Bay’s annual audit says the city’s $18 million Beachwood settlement obligations "raises substantial doubt about the city’s ability to continue as a going concern", reports the County Times. The city is planning to issue bonds, but the debt service on those bond would be $1.5 million a year for 30 years.
The report continues: "Going concern relates to the city’s ability to continue to meet its obligations as they become due without substantial disposition of assets outside the ordinary course of business, restructuring of debt, externally forced revision of its operations, or similar actions." ...
Mayor John Muller, who has refused to look at bankruptcy as an option to defer payment, said he was "shocked and alarmed" at the wording and blamed it on the fact that the auditing firm did not have a complete picture of all the steps the city is taking to lessen its debt burden.
"They don’t realize the details of what we’re doing. We do have the potential for bonding and we do have the potential to look for other resources," Muller said. ...
City Attorney Tony Condotti said he was preparing comments in response to the audit and would ask for "clarification" on what was meant by the term "going concern." He said that, from a technical standpoint, that language was based on accounting standards that don’t apply to public agencies.
Condotti was also prepared to argue that the city "doesn’t go out of business" automatically if it runs out of money to fund basic services and salaries.
The City Council will take up the report at its next meeting, Tuesday, Feb. 10.