The City of Fate audit report for Fiscal Year 2012 included recommendations and compliments.

A recommendation made by Neal Conway of Conway Company CPAs during the Fate City Council meeting Monday night involved water rates. Compliments included the city’s tax rate — which he said is one of the lowest in the state — and the city’s cash reserve fund.

Conway said it may be time to start talking about water rates.

“What I did want to recommend is it’s probably a good conversation to have, to talk about your water rates because, at least in 2012, you were not covering your water expenditures with the revenue you had,” Conway told city council members.

With every city he represents, Conway said, he conducts a tax rate comparison.

“I can tell you honestly that 24 cents (per $100 valuation) is on the very low side,” he said. “I say that with a compliment that your tax rate is among the lowest in Texas.”

He also commented on the city’s $4.6 million in unrestricted cash. That total, he said, represents about 245 days of funds for city operations.

Normally, Conway said, he recommends that cities have 90 days of cash reserve funds.

“Let me offer this as a positive comment to you,” he said, “A lot of cities are struggling to get up to 90 days worth of unrestricted cash and Fate has 245.”

Conway also made positive comments concerning water distribution efficiency — water that is “pumped in” from the North Texas Municipal Water District and then distributed to water customers.

Fate has a 95 percent rate in accounting for water via sales.

“You’re over 95 percent,” Conway said. “A lot of cities are struggling with infrastructure and doing 60 to 70 percent. So, your water system is running very well in comparison to other cities.”

Conway reported the following economic conditions and outlook.

“The city is experiencing continued growth as part of the close proximity to both Rockwall and the Dallas Metroplex. The average value of new construction residential permits was just under $300,000.

“There were 175 single-family permits issued during fiscal year 2012 for a total construction value of $52,746,740.

“In addition, there were 2,900 water connections, with 2,822 being total residential.

Since the city’s residential tax base is a significant portion of its annual budget, these increases have the most significant impact on the city’s ability to raise revenues to provide the services and conditions for future growth.

“While the City of Fate continues to see new opportunities due to growth, the city faces challenges due to this same growth. With increases in population, the city must keep up with the fast growing demand for services such as public safety and utilities. City council and staff must continue to work towards a sustainable level of finances to meet demands for services.”

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