Town of Black Mountain is on solid financial footing, report says
Black Mountain's finances appear to be in good shape. That's according to an analysis by an outside financial group.
Black Mountain Town Council met in special session Jan. 28 to hear an overview report of the town's finances from Davenport Public Finance.
"This has been something that's been on the minds of folks and what we've got here this morning is an analysis of our finances as far as general funds," said Josh Harrold, the town manager.
The report was provided by Ted Cole, senior vice president and manager of public finance for Davenport. According to the financial group, Cole has served as an advisor to local government clients for more than 20 years.
Cole introduced his firm, saying he was optimistic that this would be a starting point for the town as well as a possible partnership with Davenport. He said Davenport works with Buncombe County every year.
"We're an employee-owned firm, very much mid-Atlantic focus," Cole said. "We work with local governments in a financial advisory capacity."
Cole began his presentation with an overview of credit ratings. Cities and towns are rated on a scale of AAA, AA and A.
North Carolina has 13 cities and towns rated AAA, 25 rated as AA and two rated at A. Currently, Black Mountain does not possess a credit rating, but based on Cole's report, a high rating would be comparable.
Ratings are calculated based on a number of factors including economy and tax base, management, budgetary performance, finances and debt. Cole said Black Mountain may not need to be rated, depending on the town's future ventures.
Debt service coverage took up a large portion of Cole's presentation. He said Black Mountain has "ample ability" to cover debt. As it stands, debt payment makes up roughly 4% of the town budget.
"We budgeted very carefully, and the result was good revenue," said Mayor Larry Harris. "That was a good pop in the fiscal year ending 2021."
In total, the town has an outstanding debt of $1.9 million. Cole said 10 years from now, 98% of this debt will have been paid.
He said the town could take on some additional debt and still compare well to highly rated communities. The town's existing debt remains at an assessed value of 0.13%.
Cole discussed the breakdown of the town's general fund balance as a percent of expenditures. Labeling a specific amount of the budget as "unassigned" is important, according to Cole.
Harrold said the Local Government Commission, a section of the state treasury department, requires 8% of town budgets to fall under the category of unassigned to be used to for emergencies, land acquisition, debt payment or anything else that comes up unexpectedly.
Cole's report indicated the town adopted a fund balance policy to establish a minimum unassigned amount of no less than 30% of the previous year's expenditures.
Compared to other localities, Black Mountain's numbers are significantly less, but Harris said this reflects the size of the town.
"We're healthy but the numbers are small," Harris said.
Ezra Maille covers the town of Black Mountain, Montreat and the Swannanoa Valley. Reach him at email@example.com.