The City of Beaumont refuses to Audit their Financial Statements because most of their Assets are forged.
Acquiring Bond Debt is similar to acquiring a loan. When a bond is first acquired the money received, less Cost of Issuance, is recorded on the City’s books as an Asset and the Debt is recorded as a Liability.
If a $10 Million bond is acquired, $5 Million is spent on Lawyers and Consultants, and a $5 Million facility is built the City would record $5 Million as an Asset that would depreciate in 5-20 years.
The Liability would decrease yearly as the Debt is paid. Interest is recorded as an Expense.
From 1993 to 2014 the City of Beaumont acquired $325 Million in Bonds. The FYE 2014 Financial Statements Page 19, recorded $248 Million in CFD Bond Debt as a Liability, which is correct.
However; the City also recorded $216 Million ‘Investment in CFD bonds’ as an Agency Fund Asset. This is incorrect.
The ‘Assets’ the City should be recording would be the value of the Facility built from the proceeds of the bonds, less depreciation.
From State Controllers’ Report November, 2015:
“In our review of the City’s Comprehensive Annual Financial Reports for Year 2007-2008 THROUGH Year 2013-2014, we found that the City has not capitalized capital assets nor recorded depreciation expenses within its governmental activities financial statements. This resulted in inaccurate financial statements as well as a qualified audit opinion.”
If the City used the Bond Funds to build facilities they could claim the facilities as an Asset, but the City embezzled the money and never built facilities, so there are no Assets to claim.
All Infrastructure built in the City of Beaumont before1996 has already depreciated out. Bond money spent on Lawyers and Consultants is an Expense that creates no Asset. Bond money embezzled by City Staff creates no Asset.
Bond money traded for Mitigation Fees creates an Asset for the City if the infrastructure built is city property. Over $35 Million in Mello Roos Bond Debt was used to pay Developer Mitigation Fees to the Beaumont/Cherry Valley Water District for the Water District’s Infrastructure.
Page 19 on the City of Beaumont 2014 Financial Statements listed ‘Investment in CFD Bonds’ as an Asset worth $216,273,358 and also recorded $248,406,441 as a Liability ‘Due to Bond Holders’.
The District doesn’t own the Bonds. The ‘District’ is nothing more than the City giving itself another title to circumvent State Laws that requires Voter Approval to acquire debt. The City/District never had any money to purchase the Bonds.
Aside from claiming Bond Debt as an Asset; the City of Beaumont also claims the $21 Million IOU from the RDA and $74 Million in Sewer Machinery and Equipment. The $21 Million is a plugged number and $74 Million was never used to purchase Sewer machinery and equipment. Review of the General Ledger shows that all of the money was actually paid to Urban Logic.
The City of Beaumont refuses to audit their financial statements because most of their Assets are forged. There is no $21 Million IOU to the City from the RDA, there is no $200 Million investment in CFD Bonds, and there is no Infrastructure to claim.