City audit receives clean opinion; council briefed on $40M bond tranche and strong credit ratings

Fayetteville’s external auditors told the City Council on Feb. 23 that the city’s Comprehensive Annual Financial Report for the fiscal year ending June 30, 2025, received a clean (unmodified) audit opinion, while the compliance review identified two material weaknesses in internal controls.

Robert Bittner, the lead audit partner, told council, "the city did receive a clean opinion on the financial statements this year," while noting two areas management has already committed to correct: a year‑end journal entry classification and an Oracle system setup issue that raised additional audit testing related to cash reconciliation. He said management provided corrective action plans and that no malfeasance or material noncompliance with major federal or state programs was found.

Council then heard from the city’s financial adviser, David Cheatwood of First Tryon, on a planned sale of the first tranche of voter‑approved general obligation bonds. Cheatwood said the city will issue approximately $40 million of the $97 million voters authorized in 2022, with about $15 million dedicated to initial public safety work and the remainder to reimburse the city for infrastructure work. He estimated total proceeds near $43 million (reflecting a premium) and projected a marketing interest environment that could yield roughly a 3.6% rate on a 20‑year structure.

Cheatwood also reported that rating agencies assigned strong marks: Moody’s assigned Aa1 and Standard & Poor’s assigned AA+ on this issuance—both the second‑highest ratings available—citing the city’s reserves, low long‑term liabilities and strong management practices. He said the proposed repayment plan relies on internal allocations (about 1.6¢ of the city’s tax rate for the public safety portion and motor‑vehicle‑license‑fee allocations for infrastructure), with no planned tax‑rate increase tied to the borrowings.

Council accepted the auditors’ report and moved forward with bond planning steps; staff will post the preliminary official statement, sell competitively (target date March 24) and close the sale roughly three weeks later.