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12-05-2012 JWC Agenda PacketAGENDA JOINT WATER COMMISSION December 5, 2012 - 1:30 p.m. Council Conference Room Golden Valley City Hall 1. Call to Order 2. Approval of Minutes — November 7, 2012 3. Approve Amended 2012 Budget (Virnig) 4. New Hope Well Update (Mathisen) 5. County Road 9 Project Update (Mathisen) 6. Other Business 7. Adjournment This document is available in alternate formats upon a 72 -hour request. Please call 763-593-8006 (TTY: 763-593-3968) to make a request. Examples of alternate formats may include large print, electronic, Braille, audiocassette, etc. 2 JOINT WATER COMMISSION MINUTES Golden Valley - Crystal - New Hope Meeting of November 7, 2012 The Golden Valley — Crystal — New Hope Joint Water Commission meeting was called to order at 1:32 p.m. in the City of Golden Valley Council Conference Room. Commissioners Present Tom Burt, City Manager, Golden Valley Anne Norris, City Manager, Crystal Kirk McDonald, City Manager, New Hope Staff Present Tom Mathisen, Director of Public Works/City Engineer, Crystal Guy Johnson, Director of Public Works, New Hope Jeannine Clancy, Director of Public Works, Golden Valley Dave Lemke, Utilities Supervisor, Golden Valley Pat Schutrop, Administrative Assistant, Golden Valley Minutes of September 5, 2012 Meeting MOVED by Norris, seconded by McDonald and motion carried unanimously to approve the minutes of the September 5, 2012 meeting as presented. Resolution 12-05 Amending the Adopted 2013 General Fund Budget of the Joint Water Commission Commissioner McDonald introduced the following resolution and moved its adoption of the amended 2013 budget total of $7,931,120: RESOLUTION 12-05 RESOLUTION OF THE JOINT WATER COMMISSION AMENDING THE ADOPTED 2013 GENERAL FUND BUDGET The motion for the adoption of the foregoing resolution was seconded by Commissioner Norris and upon a vote being taken thereon, the following voted in favor thereof: Burt, McDonald, and Norris; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Vice Chair. Update on Emergency Water Supply Feasibility Study Clancy received an updated schedule from Brian LeMon, Barr Engineering Co., for the Emergency Water Supply Feasibility Study. Due to a delay in getting some of the necessary data for the report, LeMon anticipates a draft will be ready during the week of November 19. Water Meter Improvements Project Clancy reported the City of Golden Valley has approved a contract in the amount of $759,257 with Magney Construction. The estimated JWC construction costs are $399,628.50. The contracts have been signed by the contractor and staff is in the process of getting Golden Valley signatures. Some portions of the work will be done by the City of Minneapolis and staff is coordinating that work with Minneapolis and the contractor. (:\Joint Water Commission\JWC Minutes\2012 JWC Minutes\11-07-12 JWC Minutes.doc Joint Water Commission November 7, 2012 Page 2 of 2 New Hone Well Mathisen reported work is ongoing with the Minnesota Department of Natural Resources, County Road 9 Pro"ect Update Mathisen reported that the soil testing is completed and results have been received. Some pilings will be necessary. The cost for the piling should be covered by the contract amount. Construction is still scheduled for 2014-2015. Other Business 1. Burt received an email from Scott Harder on the water rate study with the City of Minneapolis. He thought the negotiation process with Minneapolis will take place in the spring or early summer 2014. 2. Mathisen discussed the changes in climate and how it appears to be affecting the recent number of storms and the amount of water that is overloading cities infrastructure. Cities may have to look at how infrastructures are designed in the future. Based on experience, FEMA is predicting more localized flooding. 3. The next Minneapolis Water Advisory Board meeting is scheduled for Thursday, December 5. McDonald reported that New Hope will not have a representative attending the meeting. Next Meetine The next scheduled meeting is December 5 at 1:30 pm. Adjournment Chair Burt adjourned the meeting at 1:46 pm. Thomas D. Burt, Chair E-111 I Pat Schutrop, Recording Secretary h\Joint Water Commission\JWC Minutes\2012 JWC Minutes\12-07-12 JWC Minutes.doc Resolution 12 -XX 12/5/2012 RESOLUTION OF THE JOINT WATER COMMISSION ADOPTING THE 2012 GENERAL FUND BUDGET BE IT RESOLVED by the Joint Water Commission that the appropriations for the General Fund Program for the calendar year 2012 as follows: GENERALFUND Expenditures of financing the sums appropriated shall be: Original Budget Water Purchased: $7,100,000 avg 2,520,000,000 gallons City of Golden Valley 3,612,497 assumes a 2.56/1000 price 2,364,373 City of New Hope .02/consumption $45,000 Insurance: assumes a 5% increase $35,000 Utilities decrease (no lease) $250,000 Labor assumes no increase $45,000 Professional Services: $115,000 Consumer Confidence Report - Total Control, Corr Pro, Audit 15,000 Professional Services 100,000 Capital Improvement Original $918,000 financed from previous projects Water Meter $759,260 $9,267,260 3.68 Joint Water cost/1000 gallons BE IT FURTHER RESOLVED by the Joint Water Commission that the sources of financing the sums appropriated shall be: GENERALFUND Revenue City of Golden Valley 3,612,497 City of Crystal 2,364,373 City of New Hope 2,531,130 $8,508,000 , Joint Water Chair ATTEST: Susan M Virnig 3 PRINCIPAIS K RThomas M. Montague, CPA Thomas A. Karnowski, CPA Paul A. Radormich, CPA William J. Iauer, CPA C E R T I F I E DIP U B L I C Janus H. Eichren, CPA A C C O U N T A ?,T T S Aaron J. Nielsen, CPA Victoria L. Holinka. CPA December 4, 2012 To the Board of Commissioners Golden Valley — Crystal —New Hope Joint Water Commission 7800 Golden Valley Road Golden Valley, MN 55427 Dear Board of Commissioners: We are pleased to confirm our understanding of the services we are to provide for the Golden Valley — Crystal — New Hope Joint Water Commission (the Commission) for the year ended December 31, 2012. We will audit the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information, which collectively comprise the Commission's basic financial statements as of and for the year ended December 31, 2012. Accounting standards generally accepted in the United States of America 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. 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 evidence to express an opinion or provide any assurance. The MD&A is required by accounting principles generally accepted in the United States of America and will be subjected to certain limited procedures, but will not be audited. We will perforin 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 Legal Compliance Audit Guide, promulgated by the State Auditor pursuant to Minnesota Statute § 6.65, and it 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. Our services will not include an audit in accordance with the Single Audit Act Amendments of 1996 and the U.S. Office of Management and Budget Circular A-133, which would only be required if the Commission expended $500,000 or more in federal assistance finds 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. Malloy, Montague, Karnowski, Radoscvich & Co., P.A. 5353 Wayzata Bouk: and • Suite 410 • Minneapolis, MN 55.116 0 'ielephon.: 952-545-042: • Tdefa;:: 952-545-0569 1 %mr.mmkr.com Golden Valley — Crystal — New Hope Joint Water Commission Page 2 December 4, 2012 Audit Objectives The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America and to report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements taken as a whole. Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America 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 the accounting records of the Commission and other procedures we consider necessary to enable us to express such opinions. If our opinions on the financial statements are other than unqualified, we will fully 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 to issue a report as a result of 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 laws, regulations, and the provisions of contracts or 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 compliance will include a statement that the report is intended solely for the information and use of management, the body or individuals charged with governance, others within the Commission, and specific legislative or regulatory bodies and is not intended to be, and should not be, used by anyone other than these specified parties. 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 auditing standards generally accepted in the United States of America and the standards for financial audits contained in Government Auditing Standards may not satisfy the relevant legal, regulatory, or contractual requirements. Management Responsibilities Management is responsible for the basic financial statements and all accompanying information as well as all representations contained therein. As part of the audit, we will assist with preparation of your financial statements and related notes. You are responsible for making all management decisions and performing all management functions relating to the financial statements and related notes and for accepting full responsibility for such decisions. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements 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 are required to designate an individual with suitable skill, knowledge, or experience to oversee any nonaudit services we provide and for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for establishing and maintaining effective internal controls, including monitoring ongoing activities, to help ensure that appropriate goals and objectives are met. You are also responsible for the selection and application of accounting principles; and for the fair presentation in the financial statements of the respective financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Commission and the respective changes in financial position and cash flows, where applicable, in conformity with accounting principles generally accepted in the United States of America. Golden Valley — Crystal — New Hope Joint Water Commission Page 3 December 4, 2012 Management is also responsible for making all financial records and related information available to us and for ensuring that management and financial information is reliable and property recorded. 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, (2) additional information that we may request for the purpose of the audit, and (3) unrestricted access to persons within the Commission from whom we determine it necessary to obtain audit evidence. Your responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the 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 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 Commission involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud or illegal acts 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 Commission received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the Commission complies with applicable laws, regulations, contracts, agreements, and grants for taking timely and appropriate steps to remedy any fraud, illegal acts, violations of contracts or grant agreements, or abuse that we may report. You are responsible for the preparation of the supplementary information in conformity with accounting principles generally accepted in the United States of America. You agree to include our report on the supplementary information in any document that contains and indicates that we have reported on the supplementary information. You also agree to present the supplementary information with the audited financial statements OR make the audited financial statements readily available to users of the supplementary information no later than the date the supplementary information is issued with our report thereon. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous financial audits, attestation engagements, performance audits or other studies related to the objectives discussed in the Audit 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. Audit Procedures— General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We will plan and perform the audit to obtain reasonable rather than absolute 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 Commission or to acts by management or employees acting on behalf of the Commission. Because the determination of abuse is subjective, Governmeni Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Golden Valley — Crystal — New Hope Joint Water Commission Page 4 December 4, 2012 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 a risk that material misstatements may exist and not be detected by us, even though the audit is properly planned and performed in accordance with auditing standards generally accepted in the United States of America 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 and any fraudulent financial reporting or misappropriation of assets that come 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. 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 confinnation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. Audit Procedures—Internal Controls Our audit will include obtaining an understanding of the Commission and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting en -ors 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. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. 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 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. Audit Administration, Fees, and Other We understand that your employees will prepare all cash or other confinnations we request and will locate any documents selected by us for testing. Golden Valley — Crystal — New Hope Joint Water Commission Page 5 December 4, 2012 The assistance to be supplied by your personnel, including the preparation of schedules and analysis of accounts, typing all cash or other confirmations we request, and locating any invoices selected by us for testing, will be discussed and coordinated with you. 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, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to a regulatory agency pursuant to authority given to it by law or regulation. 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 photocopies of selected audit documentation to the regulatory agency. 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, pass-through entity, 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 engagement and signing the report or authorizing another individual to sign it. Our fees for these services will be based on the actual time spent at our standard hourly rates. We will also bill you for travel and other out-of-pocket costs such as report production, typing, and postage. 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 upon presentation. Unless additional work is requested, or circumstances require additional work, we estimate the basic audit fees to be $8,625. The fee is 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, new funds, 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. 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, 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. Golden Valley — Crystal — New Hope Joint Water Commission December 4, 2012 Page 6 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. 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 the enclosed copy and return it to us. Sincerely, MALLOY, MONTAGUE, KARNOWSKI, RADOSEVICH & CO., P.A. William J. Lauer, CPA Principal WJL:kch Response: This letter correctly sets forth the understanding of the Golden Valley — Crystal — New Hope Joint Water Commission. By: Title: Date: KERBER, ROSE & ASSOCIATES, S.C. Certified Public Accountants 4211 K- N. Lightning Drive, Suite A • Appleton, WI 54913 (920) 993-0105 ^ Fax (920) 993-0116 (888) 725-5277 System Review Report To the Principals of Malloy, Montague, Karnowski, Radosevich and Co., P.A. and the Peer Review Committee of the Minnesota Society of CPAs We have reviewed the system of quality control for the accounting and auditing practice of Malloy, Montague, Karnowski, Radosevich and Co., P.A. (the firm) in effect for the year ended May 31, 2010. Our peer review was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews established by the Peer Review Board of the American Institute of Certified Public Accountants. The firm is responsible for designing a system of quality control and complying with it to provide the firm with reasonable assurance of performing and reporting In conformity with applicable professional standards in all material respects. Our responsibility Is to express an opinion on the design of the system of quality control and the firm's compliance therewith based on our review. The nature, objectives, scope, limitations of, and the procedures performed in a System Review are described in the standards at www.alcpa.org/prsummary. As required by the standards, engagements selected for review included engagements performed under Government Auditing Standards and an audit of an employee benefit plan. In our opinion, the system of quality control for the accounting and auditing practice of Malloy, Montague, Karnowski, Radosevich and Co., P.A. in effect for the year ended May 31, 2010, has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass, pass with deficiency(ies) or fall. Malloy, Montague, Karnowski, Radosevich and Co., P.A. has received a peer review rating of pass. sC, KERBER, ROSE & ASSOCIATES, S.C. September 23, 2010 Members of the American and Wisconsin Institutes of Certified Public Accountants www.kerbarrose.com