City of Aberdeen finished fiscal 2018 with general fund surplus, enterprise fund losses, annual audit shows

Aberdeen Mayor Patrick McGrady praised the audit report, since it means there are no “material defects” in the city’s finances.
Aberdeen Mayor Patrick McGrady praised the audit report, since it means there are no “material defects” in the city’s finances. (David Anderson/The Aegis/Baltimore Sun Media Group)

The City of Aberdeen finished fiscal 2018 with a $255,000 surplus in its general fund budget, although its water, sewer and stadium enterprise funds posted losses, according to an audit report.

“Most of the [general fund] surplus came from savings in expenditures,” Finance Director Opiribo Jack told the mayor and City Council Monday.


The stadium fund did finish the year with a profit, however, thanks to a transfer from the general fund, according to figures presented by Jack.

The water and sewer funds ended with respective losses of about $628,000 and $296,000, Jack said. There were no transfers from the general fund to support either fund, which operate in a similar fashion to independent businesses, depending heavily on charges to water and sewer customers for revenue.


Jack noted, in an interview Wednesday, that the funds have shown profits in prior years, and the city does not transfer money if they have a loss.

“Once in a while it happens, if there is an emergency water main break and there is no funds, we have transferred money to the water and sewer fund but that happens rarely,” he said.

The Aberdeen mayor and City Council voted 4-1 in favor of a budget amendment to spend up to $150,000 on legal expenses to defend a lawsuit filed against the city by the Aberdeen IronBirds baseball ownership group.

The stadium fund, which is the enterprise fund set up to manage the revenues and operating expenses of Ripken Stadium, finished fiscal 2018 with total revenues of $1.035 million, including a $721,722 transfer. Total revenues prior to the transfer were $314,180, according to Jack’s figures.

Stadium fund expenses were $612,137, according to Jack. Transfers are made from the general fund to support the stadium because it “doesn’t make enough money to cover expenses,” Jack said Wednesday.


Those transfers are made each year to support operating expenses and repairs and maintenance, the finance director said.

City leaders have clashed in recent years with Tufton Professional Baseball LLC, the business entity that owns the minor league Aberdeen IronBirds, sole tenant of Ripken Stadium. Cal Ripken Jr. and Bill Ripken, former Orioles, are Tufton’s majority owners.

At issue have been funding for debt service on construction of the city-owned stadium, which opened in 2002; maintenance expenses; costs of capital repairs; and management of non-baseball events meant to bring in additional revenue.

University of Maryland Upper Chesapeake Health is “very excited” about building a new medical campus in Aberdeen and wants to share its plans with the community Thursday evening.

The city has tried to sell the stadium but has not had any buyers. Tufton filed a lawsuit against the city in October, alleging breach of contract, and the mayor and council approved a budget amendment Monday to earmark $150,000 for legal expenses in the city’s defense.

The city’s finances are in good shape, overall, according to the audit conducted by the RSM US LLP accounting firm. The firm issued a top “unmodified opinion,” according to Jack.

The comprehensive annual financial report, which is on the city’s website, includes highlights such as finishing the fiscal year on June 30 with a $15.4 general fund balance and a $2 million increase in net position — total assets versus total liabilities.

“Most of this increase is attributable to better than expected tax revenues, management fees, interest income, and savings in expenses,” according to the report.

Mayor Patrick McGrady praised the report, since it means there are no “material defects” in the city’s finances.

“That is the best result that you can get from an audit,” he said.

‘Stagnant’ water and sewer funds

City leaders expressed concern Monday about a lack of residential development, meaning fewer payments of fees to connect new buildings to the water and sewer system, plus the greater expense of repairing or replacing the aging infrastructure.

“We reached a low-water mark, if you will, for the last decade in terms of tap fees,” City Manager Randy Robertson told the mayor and council.

He and Phyllis Grover, director of planning and community development, said six new residences have been built in the past two years.

The city manager said one new factory or large business could make “a substantial difference” for water and sewer funds.

City officials project better upcoming years, as a Starbucks coffee shop is proposed for the intersection of Route 22 and Middleton Road. University of Maryland Upper Chesapeake Health is also seeking city and state approval to build a medical center, with a psychiatric care facility, in the Aberdeen Corporate Park off of Route 22 east of Middleton Road.

“We have some major things in the window,” Robertson said.

Concern over water and sewer funds comes as the city faces repairs to aging infrastructure and as officials embark on annexing 75 acres off of Gilbert Road on the west side of Aberdeen.

The mayor and council voted unanimously Monday to introduce an annexation plan, kicking off a lengthy process of public meetings, as well as reviews by Harford County and the state, before the annexation is ruled on.

Should the annexation be approved, developers seek an up-zoning from agricultural to Integrated Business District and to build a 455-unit community with apartments, townhouses and single-family houses.

The mayor issued a warning about relying on new revenue “to fix our existing stuff,” noting recent water main repairs happening in the Windemere neighborhood, which he said his grandfather developed in the early 1960s. Several water main breaks have occurred in recent years along Paradise Road, affecting water service to Aberdeen High School off of Paradise, he said.

McGrady said $5 million is needed to repair water and sewer lines on the east side of Aberdeen. He expressed concern about how the city will cover maintenance costs for new water and sewer lines, roads and sidewalks in the annexation areas.

“We have to consider how we’re going pay for those ... how a council in 25 years is going to pay for that,” he said.

McGrady stressed that it is “important and incumbent upon the planning commission and the City Council to look at the second and third generational costs of” the annexation.

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