Zephr Hills council accepts clean audit, votes to pursue FEMA appeals for denied debris claims

City auditors presented a draft report June 8 concluding the city received an unmodified (clean) audit opinion and showing fund balance increases across most governmental funds. Julie Fowler of CliftonLarsonAllen told the council the general fund’s unassigned balance was about $17 million at fiscal year‑end and that the city’s financial position is strong.

"All of those governmental funds, with the exception of the impact fee fund, did have an increase in fund balance for the year," Julie Fowler said, noting an approximately $4.8 million increase to the general fund during the year and an overall positive trend.

Fowler said the auditors noted two findings: material adjustments required to align some prior year numbers with generally accepted accounting principles, and a CRA reporting item where evidence was lacking to show timely submission of a budget to the county as required by statute. Despite those findings, she reported a clean opinion on both the financial statements and the major grant compliance testing.

Council voted to accept the audit as presented.

Separately, staff briefed council on FEMA reimbursements following Milton. The city has received about $500,000 in FEMA reimbursements and $2.2 million in insurance proceeds for certain infrastructure losses, but two reimbursement requests were denied: roughly $62,000 for debris removal in gated communities and about $748,000 for debris removal at city parks and properties. "We believe that our claim was well documented and FEMA staff shouldn't have just said dismiss both those claims right out," staff said.

Staff recommended engaging Baker Donaldelson to prepare a written appeal for $20,000 and, if denied, to proceed to binding arbitration for an estimated additional $50,000. Council approved the recommendation to engage the firm and pursue the appeal.

City leaders said their outside consultant (Carl Thompson) has already compiled documentation and that the appeal is considered a reasonable next step to recover substantial denied amounts. Staff noted that arbitration would likely proceed virtually unless a specific arbitrator requires in‑person presence, in which case council would review travel costs.

The council’s actions create two near‑term workstreams: implementing audit adjustments and follow‑up recommendations, and contracting for legal representation to pursue FEMA appeal and potential arbitration.