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JWC Agenda 01-03-2023 AGENDA JOINT WATER COMMISSION January 3, 2024 – 1:30 pm Remote Attendance: Members of the public may attend this meeting via Microsoft Teams by calling 1-872-256-4160 and entering access code 119 801 16#. Questions/Comments: Members of the public who have questions about the commission or any items on the agenda should contact the staff commission liaison – RJ Kakach, Assistant City Engineer, rkakach@goldenvalleymn.gov, 763-593-8043. 1. Call to Order—Roll Call 2. Approval of Minutes – December 6, 2023 3. Robbinsdale Blue Line 42nd Crossing Design Discussion 4. Resolution 24-01 Designating Depositories for Joint Water Funds Resolution 24-02 Delegating Authority for Paying Certain Claims 5. Preliminary 2023 Financial Reports 6. Auditing Services for 2023 Fiscal Year 7. Adjournment Joint Water Commission, December 6, 2023 Page 1 of 2 JOINT WATER COMMISSION MINUTES Golden Valley - Crystal - New Hope Meeting of December 6, 2023 The Golden Valley - Crystal - New Hope Joint Water Commission (JWC) meeting was called to order at 1:31 pm. Roll Call Present Tim Cruikshank, City Manager, Golden Valley Adam Bell, City Manager, Crystal Reese Bertholf, City Manager, New Hope Staff Present Dave Lemke, Operations Manager, New Hope Matt Rowedder, Utilities Maintenance Supervisor, New Hope Patrick Sele, Utilities Supervisor, Crystal Tim Kieffer, Public Works Director, Golden Valley Sue Virnig, Finance Director, Golden Valley Analeigh Moser, Accountant, Golden Valley Bernie Weber, Public Works Director, New Hope Ben Perkey, Crystal RJ Kakach, Assistant City Engineer, Golden Valley Carrie Nelson, Engineering Assistant, City of Golden Valley Approval of Minutes November 1, 2023 Moved by Bertholf and seconded by Bell to approve the minutes of the November 1, 2023, Joint Water Commission (JWC) Meeting. Upon a roll call vote the following voted in favor: Cruikshank, Bell, and Bertholf. The following voted against: None. Motion carried. JWC Wholesale Agreement with the City of Minneapolis Moved by Bell and seconded by Bertholf to approve the Joint Water Commission Wholesale Agreement with the City of Minneapolis. Upon a roll call vote the following voted in favor: Cruikshank, Bell, and Bertholf. The following voted against: None. Motion carried. Resolution Delegating Authority for Paying Certain Claims to the Golden Valley Finance Department Moved by Bell and seconded by Bertholf to authorize Resolution 23-05 Delegating Authority for Paying Certain Claims to the Golden Valley Finance Department. Upon a roll call vote the following voted in favor: Cruikshank, Bell, and Bertholf. The following voted against: None. Motion carried. Joint Water Commission, December 6, 2023 Page 2 of 2 TAC Update Staff provided an update from the August 31, 2023, TAC meeting. Other Business Next meeting scheduled for January 3, 2024. Adjournment Chair Cruikshank adjourned the meeting at 1:43 pm. ATTEST: Carrie Nelson, Recording Secretary Chair Tim Cruikshank Joint Water Commission Memo January 3, 2024 Agenda Item # 3 Metro Transit Blue Line Extension at 42nd Avenue Prepared by R.J. Kakach, City of Golden Valley Assistant City Engineer Tim Kieffer, City of Golden Valley Public Works Director Summary In November of 2023, the City of Robbinsdale contacted the JWC regarding the Metro Transit Blue Line Light Rail Transit (LRT) construction project and the proposed route along Bottineau Boulevard (CSAH 81). Specifically, the Metro Transit is proposing an at-grade crossing at42nd Avenue (CSAH 9). The JWC has an existing 24-inch watermain through this intersection and there are some concerns with vibrations from the proposed rail line over the JWC main. Robbinsdale also has concerns with the at-grade crossing and is asking the JWC to support their request of an elevated structure at 42nd Avenue for the Blue Line LRT. The City of Robbinsdale is looking for feedback on this idea and potentially in the future with a letter of support for the elevated structure (grade separated crossing) to accommodate the LRT. Richard McCoy, City Engineer and Public Works Director from the City of Robbinsdale will be present to answer any questions and further outline the request from the JWC. Recommended Action Direct staff on next steps. Joint Water Commission January 3, 2024 Agenda Item #4 Resolution 24-01 Designating Depositories for Joint Water Funds Resolution 24-02 Delegating Authority for Paying Certain Claims Prepared by Analeigh Moser, Accountant Summary State Law requires cities to have depositories for city funds approved annually. The attached resolution states the depository, accounts, and signature requirements for each account. Golden Valley Finance staff is recommending the approval of the attached resolution that will allow the staff to review claims, make payment, and allow electronic signature on payment claims. All checks and electronic payments would be reviewed at the subsequent meeting by the Commission. This resolution includes updated revisions from its approval in December’s meeting. Attachments Resolution 24-01 Designating Depositories for Joint Water Funds (1 page) Resolution 24-02 Delegating Authority for Paying Certain Claims to the Golden Valley Finance Department Recommended Action Motion to Approve Resolution 24-01 Designating Depositories for Joint Water Funds Motion to Approve Resolution 24-02 Delegating Authority for Paying Certain Claims Resolution 24-01 January 3, 2024 Commissioner __________introduced the following resolution and moved its adoption: RESOLUTION DESIGNATING DEPOSITORIES FOR JOINT WATER FUNDS BE IT RESOLVED by the Joint Water Commission of the Cities of Golden Valley, Crystal, and New Hope that the following are named as depositories for funds on deposit as provided in the Laws of the State of Minnesota: US Bank Golden Valley 4M Fund Wells Fargo Golden Valley BE IT FURTHER RESOLVED that the following signatories or alternates are authorized to sign on checks drawn on funds deposited: General Checking: Joint Water Chair _______________ Alternate: Joint Water Vice Chair __________________ BE IT FURTHER RESOLVED that the following shall be authorized to make investments of Joint Water Funds and shall be authorized to deposit the principal of said investments in the above-named depositories and beneficial to the Joint Water Commission: Joint Water Chair, Golden Valley’s Finance Department Staff. _____________________________ Chair ATTEST: _____________________________ Vice Chair The motion for the adoption of the foregoing resolution was moved by Commissioner _______ and seconded by ______ and upon a vote being taken thereon, the following voted in favor thereof: ____________and the following voted against the same: _________; whereupon said resolution was declared duly passed and adopted, signed by the Chair and his/her signature attested by the Commissioner. Resolution 24-02 January 3, 2024 Member Moser introduced the following resolution and moved its adoption: RESOLUTION DELEGATING AUTHORITY FOR PAYING CERTAIN CLAIMS TO THE GOLDEN VALLEY FINANCE DEPARTMENT WHEREAS, Minnesota Statute 412.271, subd. 1 provides that the Golden Valley – Crystal – New Hope Joint Water Commission has full authority over the JWC’s financial affairs, including the disbursements of public funds, and WHEREAS, Minnesota Statute 412.271, subd. 8 allows a Commission to delegate its authority to pay certain claims, and WHEREAS, the Joint Water Commission finds that there are numerous advantages to the Commission in delegating this authority to administrative official, and WHEREAS, the appropriate internal accounting and administrative control procedures relate to the payment of claims, and WHEREAS, the delegation to the Accountant, Accounting Supervisor, and Finance Director for paying certain claims and electronic payments, and for the JWC Chair to electronically and physically sign approval for such claims, and WHEREAS, the Golden Valley Finance Department will provide a summary of all claims paid, whether via physical check or EFT, to the Joint Water Commission at each subsequent meeting, and NOW, THEREFORE BE IT RESOLVED, by the Joint Water Commission, that authority to pay certain claims is delegated to the position(s) listed above, and BE IT FURTHER RESOLVED, that claims lists of all claims paid will be presented to the Joint Water Commission for informational purposes at the next regular meetings after payment of the claims. ATTEST: _____________________________ _____________________________ Vice Chair Chair The motion for the adoption of the foregoing resolution was moved by Commissioner _____ and seconded by Commissioner ________ and upon a roll call vote being taken thereon, the following voted in favor thereof: Chair ________, Commissioner _____, and Commissioner _________ and the following voted against the same: none. Whereupon said resolution was declared duly passed and adopted, signed by the Chair and his/her signature attested by the Vice Chair. \\Files\goldval$\Joint Water Commission\JWC Agendas\2024 JWC Agenda\01 - January\05- JWC Preliminary 2023 Financial Reports- Memo for 1-3-24.docx Joint Water Commission Memo January 3, 2024 Agenda Item #5 Preliminary 2023 Financial Reports Prepared by Analeigh Moser, Accountant Summary Attached are preliminary financial reports for 2023. The final report will be with the audit. Future quarterly financial reports will continue to be submitted for review. Financial or Budget Considerations None Recommended Action Motion to Receive Year-to-Date Reports: 2023 Joint Water Expenditures 2023 Joint Water Consumption Report 2023 JWC Capital Improvement Plan Expenditures Attachments o 2023 Joint Water Expenditures o 2023 Joint Wate Consumption Report o 2023 JWC Capital Improvement Plan Expenditures 2023 2023 2023 ADOPTED Expenditures to Date Budget Remaining GENERAL FUND Expenditures Water Purchased: 7,952,715 8,001,643 (48,928) .02/consumption (1) 45,000 36,407 8,593 Insurance: 65,000 96,579 (31,579) Utilities Electricity 250,000 221,980 28,020 Phone 7,350 3,808 3,542 Labor/Maintenance 120,000 149,360 (29,360) Professional Services: Professional Services 15,000 1,750 13,250 Rent remitted to members TOTALS $8,455,065 $8,511,526 ($56,461) (1) Consumption billed through Nov 2023: 2,153,103,000 gals. See Consumption sheet for full details Capital Improvement 2023 2023 2023 ADOPTED Expenditures to Date Budget Remaining Projects listed in CIP 1,508,250 255,389 1,252,861 TOTALS 1,508,250.00$ 255,389.14$ 1,252,860.86$ TOTAL REMAINING BUDGET INCLUDING CIP & GENERAL FUND:$1,196,399.40 JWC FINANCIALS- BUDGET & EXPENDITURES TO DATE (11/30/2023) Gallons Billed By %Mpls Billed vs Golden Valley Crystal New Hope TOTAL Minneapolis Difference Billed GV Crystal Total Pumped Jan-2023 57,663,000 31,081,000 48,738,600 137,482,600 144,787,000 (7,304,400)0.95 80,507,000 77,690,000 158,197,000 (13,410,000) Feb-2023 49,558,000 31,081,000 46,258,600 126,897,600 129,600,000 (2,702,400)0.98 72,716,000 77,690,000 150,406,000 (20,806,000) Mar-2023 38,296,000 32,292,000 42,538,100 113,126,100 151,579,000 (38,452,900)0.75 80,507,000 85,243,000 165,750,000 (14,171,000) Apr-2023 55,065,000 27,764,000 48,375,900 131,204,900 130,562,000 642,900 1.00 77,910,000 83,374,000 161,284,000 (30,722,000) May-2023 52,222,000 41,620,000 40,983,800 134,825,800 206,640,000 (71,814,200)0.65 80,507,000 103,184,000 183,691,000 22,949,000 Jun-2023 54,081,000 49,070,000 58,785,800 161,936,800 304,545,000 (142,608,200)0.53 77,910,000 157,563,000 235,473,000 69,072,000 Jul-2023 105,955,000 53,525,000 86,526,200 246,006,200 297,350,000 (51,343,800)0.83 80,507,000 146,922,000 227,429,000 69,921,000 Aug-2023 83,072,000 62,316,000 67,983,200 213,371,200 255,980,000 (42,608,800)0.83 80,507,000 132,102,000 212,609,000 43,371,000 Sep-2023 79,226,000 59,454,000 70,164,900 208,844,900 230,474,000 (21,629,100)0.91 77,910,000 113,860,000 191,770,000 38,704,000 Oct-2023 83,188,000 43,077,000 62,384,900 188,649,900 166,193,000 22,456,900 1.14 80,507,000 90,330,000 170,837,000 (4,644,000) Nov-2023 62,836,000 48,466,000 45,979,600 157,281,600 135,393,000 21,888,600 1.16 75,313,000 78,140,000 153,453,000 (18,060,000) Dec-2023 0 0 0 #DIV/0!0 0 721,162,000 479,746,000 618,719,600 1,819,627,600 2,153,103,000 (333,475,400)0.85 864,801,000 1,146,098,000 2,010,899,000 142,204,000 0.39630 0.26370 0.34000 1.00000 3,605.81 2,398.73 3,093.60 9,098.14 Gallons Billed By Minneapolis Crystal Actual/ Est/Prorate 45687053 - East Actual/ Est/Prorate GV Meter 24" 44745335 - West Actual/ Est/Prorate Read Date Total Jan-2023 82,396,000 Actual 0 Actual 62,391,000 Actual 1/30/2023 144,787,000 Feb-2023 73,516,000 Actual 0 Actual 56,084,000 Actual 2/28/2023 129,600,000 Mar-2023 85,415,000 Actual 0 Actual 66,164,000 Actual 3/31/2023 151,579,000 Apr-2023 75,622,000 Actual 0 Actual 54,940,000 Actual 4/30/2023 130,562,000 May-2023 115,479,000 Actual 0 Actual 91,161,000 Actual 5/30/2023 206,640,000 Jun-2023 176,901,000 Actual 2,557,000 Actual 125,087,000 Actual 6/30/2023 304,545,000 Jul-2023 171,530,000 Actual 0 Actual 125,820,000 Actual 7/30/2023 297,350,000 Aug-2023 150,589,000 Actual 0 Actual 105,391,000 Actual 8/30/2023 255,980,000 Sep-2023 133,558,000 Actual 0 Actual 96,916,000 Actual 9/30/2023 230,474,000 Oct-2023 109,027,000 Actual 0 Actual 57,166,000 Actual 10/30/2023 166,193,000 Nov-2023 90,148,000 Actual 0 Estimated 45,245,000 Actual 11/30/2023 135,393,000 Dec-2023 0 0 1,264,181,000 2,557,000 886,365,000 2,153,103,000 Joint Water Commission Average Consumption 2023 Gallons Billed to Customers Gallons Pumped Column1 Column2 Column3 Column4 Column5 Column6 Column10 Column12 Column13 Budgeted Amount Paid in 2023 Budget 2023 Budget 2023 Remaining Active Projects 50-16 Replace Trunk Valves 14-027 200,000 107,926 92,074 52-16 Tank Coating Repair (GV) 15-002 - 3,400 (3,400) Paid KLM under previously approved contract amount in 2019 70-18 SCADA Updates 14-029 40,000 6,584 33,416 - Inspect & Clean Resevoirs (CRY 2023) 16-006 50,000 10,200 39,800 Remaining Budget from 19-01 Resevoir Repairs to be moved to 16-006. Total $72,182 - Trunk Main Testing 17-004 10,000 - 10,000 - Security - All Towers & Pump Stations 14-037 200,000 47,280 152,720 South Tower-Blast/Paint (NH)- 2023 or 2024 18-002 (16-004)78,250 - 78,250 73-18 Effluent Meters at Reservoir 19-002 55,000 - 55,000 - TH55 & Douglas Dr Underpass & Roundabout 23-006 300,000 6,782 293,218 - Water Tower Replacements 19-003 525,000 - 525,000 - Water Tower Inspections 19-004 50,000 - 50,000 23-007 MCC Control Updates 23-007 - 73,217 (73,217) Expenditures approved under Bolton & Menk contract approved in May 2023 for $237,000 Remaining budget from 65-17 & 67-17, totaling $1,073,545 will be included in 2024 adopted budget TOTALS 1,508,250$ 255,389$ 1,252,861$ Total Balance Less Encumbrances 50-16 Replace Trunk Valves 14-027 694,424.68$ 52-16 Tank Coating Repair (GV) 15-002 749,619.14$ 63-17 North Tower Blast & Repaint (NH) 15-003 364,021.93$ 70-18 SCADA Updates 14-029 202,105.09$ Inspect & Clean Reservoirs- CRY 2023 (GV Portion Done- See Below)16-006 122,182.00$ Security - All Towers & Pump Stations 14-037 402,720.30$ Replace Flow Meters 21-002 90,000.00$ 71-18 Rehab PCCP Pipe 18-001 39,537.77$ South Tower-Blast/Paint (NH)- 2023 or 2024 18-002 (16-004)1,065,096.57$ TH 55 and Douglas Dr CSAH 102 23-006 293,218.00$ Meter Pit Improvements 22-005 3,199.20$ MCC Control Updates - Incl prev budget from 65-17 & 67-1723-007 (60,716.00)$ 64-17 48" Gate Valve-Reservoir (GV) 15-006 160,000.00$ 14-A Emergency Water Supply (GV) -1,700,000.00$ JWC Trunk Main Testing 17-004 50,000.00$ 73-18 Effluent Meters at Reservoir 19-002 280,000.00$ New Tower (NH) 19-003 100,000.00$ New Tower (GV) 19-003 1,378,250.00$ Tower Inspections (NH & GV) 19-004 50,000.00$ TOTAL 7,683,658.68$ GOLDEN VALLEY - CRYSTAL - NEW HOPE JOINT WATER COMMISSION CAPITAL IMPROVEMENT PROJECT SUMMARY Nov-23 Total Project Financing through CIP Joint Water Commission Memo January 3, 2024 Agenda Item #6 Engagement Letter - Auditing Services for 2023 Fiscal Year Prepared by Sue Virnig, Golden Valley Finance Director Summary Each year the Joint Water Commission is required to have a State Legal Compliance Audit performed in accordance with auditing standards established by the Auditing Standards Board and Minnesota Statutes. Finance or Budget Consideration The 2024 General Fund Budget has $15,000 for professional services. The contract amount is $12,925 for 2023 services. Recommended Action Motion to approve the 2023 Audit Services Contract for $12,925 with Chair and Finance Director to sign contract with MMKR. Attachments MMKR 2023 Audit Contract (10 pages) \\Files\goldval$\Joint Water Commission\JWC Agendas\2024 JWC Agenda\01 - January\06 - Joint Water Commission Memo-Audit Services.docx December 29, 2023 To the Board of Commissioners and Management of the Golden Valley – Crystal – New Hope Joint Water Commission 7800 Golden Valley Road Golden Valley, MN 55427 Dear Board of Commissioners and Management: We are pleased to confirm our understanding of the services we are to provide the Golden Valley – Crystal – New Hope Joint Water Commission (the Commission) for the year ended December 31, 2023. Audit Scope and Objectives We will audit the financial statements of the governmental activities, each major fund, the budgetary comparison for the General Fund, and the disclosures, which collectively comprise the basic financial statements of the Commission as of and for the year ended December 31, 2023. Accounting standards generally accepted in the United States of America (GAAP) provide for certain required supplementary information (RSI), such as management’s discussion and analysis (MD&A), to supplement the Commission’s basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board (GASB), who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the Commission’s RSI in accordance with auditing standards generally accepted in the United States of America (GAAS). These limited procedures will consist of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient appropriate evidence to express an opinion or provide any assurance. In connection with our audit of the basic financial statements, we will read the following other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 1)Introductory information We will perform the required State Legal Compliance Audit conducted in accordance with auditing standards generally accepted in the United States of America and the provisions of the Minnesota Legal Compliance Audit Guide, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, and will include such tests of the accounting records and other procedures we consider necessary to enable us to conclude that, for the items tested, the Commission has complied with the material terms and conditions of applicable legal provisions. C E R T I F I E D A C C O U N T A N T S P UBLIC PRINCIPALS Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichten, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA/CMA Jaclyn M. Huegel, CPA Kalen T. Karnowski, CPA Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1 Golden Valley – Crystal – New Hope Joint Water Commission Page 2 December 29, 2023 We will also prepare a management letter for the Board of Commissioners and administration. This letter will include certain required communications to governance, and may include such things as our concerns regarding accounting procedures or policies brought to our attention during our audit, along with recommendations for improvements. Our services will not include an audit in accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), which would only be required if the Commission expended $750,000 or more in federal assistance funds during the year. If the Commission is required to have a Single Audit of federal assistance funds, this engagement letter would need to be modified. The objectives of our audit are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error; issue an auditor’s report that includes our opinion about whether your financial statements are fairly presented, in all material respects, in conformity with GAAP; and report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. Reasonable assurance is a high level of assurance but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment of a reasonable user made based on the financial statements. The objectives also include reporting on internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. Auditor’s Responsibilities for the Audit of the Financial Statements We will conduct our audit in accordance with GAAS and the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and will include tests of your accounting records of the Commission and other procedures we consider necessary to enable us to express such opinions. As part of an audit in accordance with GAAS and Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4)violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government. Because the determination of waste and abuse is subjective, Government Auditing Standards do not expect auditors to perform specific procedures to detect waste or abuse in financial audits nor do they expect auditors to provide reasonable assurance of detecting waste or abuse. Golden Valley – Crystal – New Hope Joint Water Commission Page 3 December 29, 2023 Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is an unavoidable risk that some material misstatements may not be detected by us, even though the audit is properly planned and performed in accordance with GAAS and Government Auditing Standards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements. However, we will inform the appropriate level of management of any material errors, fraudulent financial reporting, or misappropriation of assets that comes to our attention. We will also inform the appropriate level of management of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. We will also conclude, based on the audit evidence obtained, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the government’s ability to continue as a going concern for a reasonable period of time. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts; and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain assets and liabilities by correspondence with selected customers, creditors, and financial institutions. We will also request written representations from your attorneys as part of the engagement. We have identified the following significant risk(s) of material misstatement as part of our audit planning , which are presumed to be applicable for all audits: 1) Management override of controls 2) Revenue recognition 3) Constructed capital asset additions, if material At this time, audit planning has not concluded and modifications may be made to significant risks of material misstatement. If modifications are made, we will communicate them to you. We may, from time to time and depending on the circumstances, use third party service providers in serving your account. We may share confidential information about you with these service providers but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third party service provider. Furthermore, we will remain responsible for the work provided by any such third party service providers. Our audit of financial statements does not relieve you of your responsibilities. Golden Valley – Crystal – New Hope Joint Water Commission Page 4 December 29, 2023 Audit Procedures – Internal Control We will obtain an understanding of the government and its environment, including internal control relevant to the audit, sufficient to identify and assess the risks of material misstatement of the financial statements, whether due to error or fraud, and to design and perform audit procedures responsive to those risks and obtain evidence that is sufficient and appropriate to provide a basis for our opinions. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal control. An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. Accordingly, we will express no such opinion. However, during the audit, we will communicate to management and those charged with governance internal control related matters that are required to be communicated under American Institute of Certified Public Accountants (AICPA) professional standards and Government Auditing Standards. Audit Procedures – Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the Commission’s compliance with the provisions of applicable laws, regulations, contracts, agreements, and grants. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. Other Services We will also assist in preparing the financial statements and related notes of the Commission in conformity with accounting principles generally accepted in the United States of America based on information provided by you. These nonaudit services do not constitute an audit under Government Auditing Standards and such services will not be conducted in accordance with Government Auditing Standards. We will perform the services in accordance with applicable professional standards. The other services are limited to the financial statement services previously defined. We, in our sole professional judgment, reserve the right to refuse to perform any procedure or take any action that could be construed as assuming management responsibilities. Responsibilities of Management for the Financial Statements Our audit will be conducted on the basis that you acknowledge and understand your responsibility for designing, implementing, establishing, and maintaining effective internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, and for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives are met; following laws and regulations; and ensuring that management and financial information is reliable and properly reported. Management is also responsible for implementing systems designed to achieve compliance with applicable laws, regulations, contracts, and grant agreements. You are also responsible for the selection and application of accounting principles, for the preparation and fair presentation of the financial statements and all accompanying information in conformity with accounting principles generally accepted in the United States of America, and for compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Golden Valley – Crystal – New Hope Joint Water Commission Page 5 December 29, 2023 Management is responsible for making drafts of financial statements, all financial records, and related information available to us and for the accuracy and completeness of that information (including information from outside of the general and subsidiary ledgers). You are also responsible for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, identification of all related parties and all related party relationships and transactions, and other matters; (2) additional information that we may request for the purpose of the audit; and (3) unrestricted access to persons within the government from whom we determine it necessary to obtain audit evidence. At the conclusion of our audit, we will require certain written representations from you about your responsibil ities for the financial statements; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by GAAS and Government Auditing Standards. Your responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the written representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements of each opinion unit taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud affecting the government involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the government complies with applicable laws, regulations, contracts, agreements, and grants and for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws, regulations, or contracts or grant agreements that we report. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies of previous financial audits, attestation engagements, performance audits or other studies related to the objectives discussed in the Audit Scope and Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or other studies. You are also responsible for providing management’s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions, for the report, and for the timing and format for providing that information. You agree to assume all management responsibilities for the financial statements and related notes and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements and related notes and that you have reviewed and approved the financial statements and related notes prior to their issuance and have accepted responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept responsibility for them. Golden Valley – Crystal – New Hope Joint Water Commission Page 6 December 29, 2023 Engagement Administration, Fees, and Other We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. We will provide copies of our reports to the Commission; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. The audit documentation for this engagement is the property of Malloy, Montague, Karnowski, Radosevich & Co., P.A. (MMKR) and constitutes confidential information. However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to a regulator agency or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for the purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of MMKR personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend or decide to distribute the copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of five years after the report release date or for any additional period requested by the regulatory agency. If we are aware that a federal awarding agency or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. William J. Lauer, CPA, is the engagement partner and is responsible for supervising the engagemen t and signing the reports or authorizing another individual to sign them. We expect to begin our audit shortly after the end of the fiscal year and to issue our report no later than June 30, 2024. Our fees for these services will be at our standard hourly rates plus out-of-pocket costs (such as report reproduction, word processing, postage, travel, copies, telephone, etc.). Unless additional work is requested, or circumstances require additional work, our estimated fees for the services described herein are $12,925. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. These fees are based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If we find that additional audit procedures are required, or if additional services are requested by the Commission, those services will be billed at our standard hourly rates. Additional audit procedures might be required for certain accounting issues or events, such as new contractual agreements, transactions and legal requirements of new bond issue s, new funds, major capital projects, new tax increment districts, if there is an indication of misappropriation or misuse of public funds, or if significant difficulties are encountered due to the lack of accounting records, incomplete records, or turnover in the Commission’s staff. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Golden Valley – Crystal – New Hope Joint Water Commission Page 7 December 29, 2023 Our audit engagement ends on delivery of our audit report. Any follow-up services that might be required will be a separate, new engagement. The terms and conditions of that new engagement will be governed by a new, specific engagement letter for that service. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in these sites or to consider the consistency of other information in the electronic site with the original document. If you intend to publish or otherwise reproduce the financial statements, such as in a bond statement, and make reference to our firm name, you agree to provide us with printers’ proofs or masters for our review and approval before printing. You also agree to provide us with a copy of the final reproduced material for our approval before it is distributed. During the year, you might request additional services such as routine advice, assistance in implementing audit recommendations, review of your projections or budgets, and other similar projects. Independence standards allow us to perform these routine services; however, it is important that you understand t hat we are not allowed to make management decisions, perform management functions, nor can we audit our own work or provide nonaudit services that are significant to the subject matter of the audit. Please be aware that e-mail is not a secure method of transmitting data. It can be intercepted, read, and possibly changed. Due to the large volume of e-mails sent daily, the likelihood of someone intercepting your e-mail is relatively small, but it does exist. We will communicate with you via e-mail, if you are willing to accept this risk. To ensure that MMKR’s independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering into any substantive employment discussions with any of our personnel. If a dispute occurs related in any way to our services, our firm and the Commission agree to discuss the dispute and, if necessary, to promptly mediate in a good faith effort to resolve it. We will agree on a mediator, but if we cannot, either of us may apply to a court having personal jurisdiction over the parties for appointment of a mediator. We will share the mediator’s fees and expenses equally, but otherwise will bear our own attorney fees and costs of the mediation. Participation in such mediation shall be a condition to either of us initiating litigation. To allow time for the mediation, any applicable statute of limitations shall be tolled for a period not to exceed 120 days from the date either of us first requests in writing to mediate the dispute. The mediation shall be confidential in all respects, as allowed or required by law, except that our final settlement positions at mediation shall be admissible in litigation solely to determine the identity of the prevailing party for purposes of the awarding of attorney fees. We both recognize the importance of performing our obligations under this agreement in a timely way and fully cooperating with the other. In the event that either of us fails to timely perform or fully cooperate, the other party may, in its sole discretion, elect to suspend performance or terminate the agreement regardless of the prejudice to the other person. We agree we will give 10 days’ written notice of an intent to suspend or terminate, specifying the grounds for our decision, and will give the other an opportunity to cure the circumstances cited as grounds for that decision. In the event of suspension or termination, all fees and costs are immediately due on billing. Golden Valley – Crystal – New Hope Joint Water Commission Page 8 December 29, 2023 We agree that it is important that disputes be discussed and resolved promptly. For that reason, we agree that, notwithstanding any other statutes of limitations or court decisions concerning them, all claims either of us may have will be barred unless brought within one year of the date the complaining party first incurs any damage of any kind, whether discovered or not, related in any way to acts or omissions of the other party, whether or not the complaining party seeks recovery for that first damage and whether or not we have continued to maintain a business relationship after the first damage occurred. Notwithstanding anything in this letter to the contrary, we agree that regardless of where the Commission is located, or where this agreement is physically signed, this agreement shall have been deemed to have been entered into at our office in Hennepin County, Minnesota, and Hennepin County shall be the exclusive venue and jurisdiction for resolving disputes related to this agreement. This agreement shall be interpreted and governed under the laws of Minnesota. When requested, Government Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract. Our most recent peer review report accompanies this letter. Reporting We will issue a written report upon completion of our audit of the Commission’s financial statements. Our report will be addressed to the Board of Commissioners and management of the Commission. Circumstances may arise in which our report may differ from its expected form and content based on the results of our audit. Depending on the nature of these circumstances, it may be necessary for us to modify our opinions, add a separate section, or add an emphasis-of-matter or other-matter paragraph to our auditor’s report, or if necessary, withdraw from this engagement. If our opinions are other than unmodified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or issue reports, or we may withdraw from this engagement. We will also provide a report (that does not include an opinion) on internal control related to the financial statements and compliance with the provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. The report on internal control and on compliance and other matters will state (1) that the purpose of the report is solely to describe the scope of testing of internal control and compliance, and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control on compliance, and (2) that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. The report will also state that the report is not suitable for any other purpose. If during our audit we become aware that the Commission is subject to an audit requirement that is not encompassed in the terms of this engagement, we will communicate to management and those charged with governance that an audit in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual requirements. We will also provide a report (that does not include an opinion) on the Commission’s compliance with applicable provisions of the Minnesota Legal Compliance Audit Guide, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65. The report will state (1) whether, in connection with our audit, anything came to our attention that caused us to believe that the Commission failed to comply with the applicable provisions of the Minnesota Legal Compliance Audit Guide, insofar as they relate to accounting matters, and (2) that the purpose of the report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. The report will also state that the report is not suitable for any other purpose. Golden Valley – Crystal – New Hope Joint Water Commission Page 9 December 29, 2023 If during our audit we become aware that the Commission subject to an audit requirement that is not encompassed in the terms of this engagement, we will communicate to management and those charged with governance that an audit in accordance with U.S. generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual requirements. We appreciate the opportunity to be of service to the Commission and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign where indicated and email it to mmkr@mmkr.com. Sincerely, MALLOY, MONTAGUE, KARNOWSKI, RADOSEVICH & CO., P.A. William J. Lauer, CPA Principal WJL:lmb RESPONSE: This letter correctly sets forth the understanding of the Golden Valley – Crystal – New Hope Joint Water Commission. Board of Commissioners Representative Management Representative By: _________________________________ By: Title: _________________________________ Title: Date: _________________________________ Date: