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01-04-2017 JWC Agenda Packet �..f^ Golden Valley•Crystal•New Nope AGENDA 101NT WATER COMMISSION January 4, 2017—1:30 pm City Council Conference Room Golden Valley City Hall 1. Call to Order 2. Approval of Minutes— December 7, 2016 3. Resolution #17-01 Designating Depositories for Joint Water Funds, Virnig 4. Resolution #17-02 Making Annual Elections for the 2017—2018 Insurance Policy, Virnig 5. TAC Update, Kakach 6. Other Business A. Contract for 2016 Audit Services (review at meeting)Virnig 7. Adjournment ` This document is available in alternate formats upan a 72-hour request. Please call 763-593-8006(TTY: 763-5933968)to make a request. Examples of alternate formats may include large print,electronic, Braille,audiocassette,etc. JOINT WATER COMMISSION MINUTES Golden Valley-Crystal - New Hope Meeting of December 7, 2016 The Golden Valley—Crystal—New Hope Joint Water Commission (JWC) meeting was called to order at 1:30 pm in the City of Golden Valley Council Chambers. Commissioners Present Anne Norris,City Manager,Crystal Kirk McDonald,City Manager, New Hope Tim Cruikshank,City Manager,Golden Valley Staff Present Marc Nevinski, Physical Development Director, Golden Valley Jeff Oliver,City Engineer, Golden Valley Sue Virnig, Finance Director,Golden Valley Bernie Weber,Operations Manager, New Hope Randy Kloepper,Water Superintendent, Crystal Dave Lemke, Utilities Supervisor, New Hope Bob Paschke, Director of Public Works, New Hope Mark Ray, Director of Public Works/City Engineer, Crystal Joe Hansen, Utilities Supervisor Approval of Minutes—October 5.2016 Moved by McDonald seconded by Cruikshank to approve the minutes of the October 5, 2016 Joint Water Commission Meeting. Motion carried. November Meeting cancelled due to lack of agenda Approve Amendment to the Short Elliott Hendrickson. Inc.A�reement for Professional Services on PCCP Analysis Proiect In February of 2016,the Joint Water Commission (JWC)approved a professional services agreement with Short Elliott Hendrickson, Inc. (SEH, Inc.)to perform a study of the JWC's PCCP pipe system.The purpose is to determine the overall conditions of the system and to develop a tool to prioritize the potential future replacement and rehabilitation projects. It has been determined that additional pressure testing and modeling would be required due to preliminary findings and pressures near the Crystal and Golden Valley pump houses.These additional tasks, increased the contract amount by $10,611.These additional changes are justified due to unforeseen tasks. Funding for this amendment is available in the Elevated Tower Inspection Project and the Arc Flash Hazard Analysis Project($10,400). These projects came in under budget creating funding that can be used toward the PCCP analysis Project.The JWC TAC recommends amending the original agreement to include the additional $10,611 for a total of$176,897. Moved by McDonald seconded by Cruikshank to amend the agreement for professional services with SEH, Inc. on the PCCP Analysis Project adding$10,611 to the agreement for a total amount not to exceed $176,897. Motion carried. Approve/Award the Golden Valley Reservoir Improvements Proiect to MN Mechanical Solutions The Joint Water Commission Technical Advisory Committee(JWC TAC) solicited quotes for two projects included in the 2016-2020 Capital Improvement Program. Due to the proximity and similarity of the projects, it was determined to combine the projects. Replace Ladders and Tank Repairs and Mud Valves and Install Orifice Plates projects were quoted together. Also staff noted this quote does not include the Joint Water Commission December 7,2016 Page2of2 dissipater plates as staff is requesting the Commission to purchase these plates directly from the manufacture to avoid paying markup costs of approximately$5,000 per plate.The Commission agreed to purchase the plates separately and inquired to the start date of the project.Staff notified the Commission that this project will begin in 2017 and will be considered a 2017 project. Moved by Norris seconded by Cruikshank to approve award the Golden Valley Reservoir Improvement Project to MN Mechanical Solutions in the amount of$82,630 and to purchase two(2)dissipater plates separately from Plant and Flanged Equipment at a cost of$30,950. Follow up on the DeCola/Winnetka Flooding. Discussion item. Staff gave a quick overview discussing status of the model and funding options.Staff is directed to provide anther update at the next scheduled meeting.Jeff Oliver and staff are advised to have a grant application submitted by the end of the year to the Minnesota Department of Natural Resources. TAC Update 36 PCCP paperwork has been submitted to finance for final payment including retainage. „ The three cities of the loint Water Commission are compiling water usage from the last 10 years for the Water Supply Plan. Killmer has relocated the generator and will be up and running in December. The PCCP Analysis Presentation/Report from SEH,will be December 20, 2016. Arc Flash is complete except for training and reports. TAC is investigating costs for water tower painting. Both interior and exterior is required within 3-4 years. Security Fence Project is complete. TAC met with County,CenterPoint and Blue Line and Park Board to review upcoming projects. Next Meetin� The next meeting is scheduled for January 4, 2017 at 1:30 pm in the Golden Valley Council Conference Room. Adiournment Moved by McDonald seconded by Norris to adjourn meeting. Motion carried. Chair Norris adjourned the meeting at 2:00 pm. � :,�" �� / r � ' G/✓"'-� Chair Anne Norris ATTEST: > � Sue Schwalbe, Recording Secretary Resolution 17-01 January 4, 2017 Commissioner Cruikshank 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: Wells Fargo Golden Valley 4M Fund 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 Director; Golden Valley Accounting Coordinator. ,� , ,� J � ';`y Ann Norris, Ch 'r ATTEST: � �� o .����� � � �� Kirk McDonald, Vice Chair The motion for the adoption of the foregoing resolution was seconded by McDonald, and upon a vote being taken thereon, the following voted in favor thereof: Norris, McDonald, and Cruikshank; and the following voted against the same: none; whereupon said resolution was declared duly passed and adopted, signed by the Chair and her signature attested by the Commissioner. Resolution 17-02 January 4, 2017 Commissioner McDonald introduced the following resolution and moved its adoption: RESOLUTION MAKING ANNUAL ELECTIONS FOR THE 2017-2018 INSURANCE POLICY WHEREAS, the Golden Valley-Crystal-New Hope Joint Water Commission must declare whether or not to waive the statutory limits on tort liability established by Minnesota Statutes 456.04, and WHEREAS, the Golden Valley-Crystal-New Hope Joint Water Commission insurance period begins August 1, 2017, through July 31, 2018. NOW, THEREFORE, BE IT RESOLVED by the Commissioners of the Golden Valley-Crystal-New Hope Joint Water Commission that it does not waive the statutory limits on tort liability established by Minnesota Statutes 466.04 for the 2017-2018 insurance policy. � '" , '7 ff� �� �"� �-- �� An Norris, air ATTEST: ` � ) .__......,�. . �. '� =',.� _ � Kirk McDonald, Vice Chair The motion for the adoption of the foregoing resolution was seconded by Commissioner Cruikshank and upon a vote being taken thereon, the following voted in favor thereof: Norris, McDonald, and Cruikshank and the following voted against the same: none whereupon said resolution was declared duly passed and adopted, signed by the Chair and their signature attested by the Vice Chair. Joint Water Commission TAC Meeting -�- Tuesday December 27, 2016 2:00 PM 1 1 . Project Updates a. 36" PCCP 1 . 36" PCCP — FINALED • Waiting for final as built drawings from BMI. 2. Water Supply Plan . All tflree cities have sent water usage information to SEH. • SEH will pick up work on the supply plan after the 1St of the year. 3. Generator Move — Moved (Killmer) « Wrapping up final ir�spections 4. PCCP Analysis Update a. Final Meeting/Presentaiton from SEH — December 20 • SEH will update report per our comments last week. • TAC will dig into results of report further to determine next steps. • Will check with Minneapolis and St. Paul on their experience with testing that is recommended in the report. 5. JWC CIP Projects a. Arc Flash . TTr�airiing ongoing. b. Elevated Tower Inspection . Wiil �;�ui �V tower painkiii� ir� �I�_ c. GV Security Fence . Fer�c�P i� compleie; wor�kir�g witk� contractar orn p�ancPil�st j��1Tl� d. GV Reservoir Work . Contract has been sent out ta MN Mechar�ical fc�r execution. G:\JWC\JWC_TAC\Minutes\JWC TAC Meeting Minutes_12.27.16.docx . Plates will be ordered P,SAP from Plante and Flange, . February/March work e. Tower Security - Quote From Total Control • Quate to add car�7era to GV t�;wer, . Will look into adding other locations to quote a) Crys and GV pump houses, NH and GV towers • Primary constraint is budget, need �$40K, have �$20K • Start with motion sensors and door switches on all doors, add cameras as time allows. 6. Golden Valley Road Culvert — Mpls Crossing 7. Other Business = Grystal ger�erator servicing quote—will work to add Crystal generator to existing JWC contract for Golden Valley generator with Ziegler Cat. G:\JWC\JWC TAC\Minutes\JWC TAC Meeting Minutes_12.27.16.docx PItINCiPA[.S �'homc�s h1. �4oniagur.C['A �I�hornas r1. Karnrnvski.C�Yf1 Paul A.R:xliuri�ich.C:PA LYr'illiam�.laurr.CPA C F R� 1 F� �'. � P�l����C Jam��H.l:icf�tcn.CI'A Aarnn �.Nickrn.C'1'A A C C t) l' N 'l� ,�1 \ "I' S �r�tC�,�f.;t..t��,��«k.�.c:tr.� January 3,2017 Ms. Sue Virnig,Treasurer Golden Valley—Crystal—New Hope Joint Water Commission 7800 Golden Valley Road Golden Valley,MN 55427 Dear Ms.Virnig: Enclosed are two copies of an engagement letter which explains and confirms the basic services we expect to perform in conjunction with your upcoming audit. Assuming the letter adequately describes those services you desire, please sign both copies, return one copy to our office,and keep the other copy for your files. Please do not hesitate to contact me if you believe the letter should be modified or if you have any questions. Sincerely, MALLOY,MONTAGUE,KARNOWSKI,RADOSEVICH&CO.,P.A. William J. Lauer,CPA Principal WJL:djr Enclosures �9aU�ay, �4crnta�;ur. I�arncr�cski. Rxduscsirfi. & (�u.. P.r1. i t5;At� ..�,i M��ui �xi�' •>��,1�� �fli�• 1liiuu-�p<�li�. AIA i:at(, • I�cic�•h. . '15,.i.�i.U4'4 � Icic(�z: 9 �. '+.ii.l�5r,7• uuH.mmlr.�nm PFiINCtPALS i'humas\9. tilonraguc.CCA (homax A.K:arn<ncski.(:PA Paul A.R.tdosc�'irh,C;Pt1 William�.taurr.C:PA � �. �.� � � � �. n P li�l.��, Jamrs f f.Fi�htin.C:I'A t,� �, � �) �) � � r�l '� .�� � A;ttnn�_Niel�en.CI'A Viccoroa L.Nulinka.C:PA January 3,2017 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 for the Golden Valley — Crystal —New Hope Joint Water Commission (the Commission) for the year ended December 31, 2016. We will audit the financial statements of the governmental activities, each major fund, and the budgetary comparison for the General Fund, including the related notes to the financial statements, which collectively comprise the basic financial statements of the Commission as of and for the year ended December 31,2016.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, if the Commission elects to prepare an MD&A,it will be subjected to certain limited procedures,but will not be audited. 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 Legal Compliance Audit Guide, promulgated by the State Auditor pursuant to Minnesota Statute § 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. We will also prepare a management report for the Board of Commissioners and administration. This report will communicate such things as our concerns regarding accounting procedures or policies brought to our attention during our audit, along with recommendations for improvements. The report will also contain certain financial comparisons and analysis,and other information of interest. �9aIlo}', 1luntagur. K.arnowsl<i, Ra�lusccirB�. �t Cn.. I'.r1. iiit 4t':��i.>i� Roulr�.rG1 • �uiic-tR�• Atinnia����ll� AI'W i:.�lf • I�rlcpnn .�ri].SJi..lt3�; � I�.vGs. �)i�.iv5 ftS67• Hua�.mnik�..��in Golden Valley—Crystal—New Hope Joint Water Commission Page 2 January 3,2017 Our services will not include an audit in accordance with the Single Audit Act Amendments of 1996 and the Title 2 U.S. Code of Federal Regulations (CFR) 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. 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. 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. We will issue a written report upon completion of our audit of the Commission's financial statements. Our report will be addressed to management and the Board of Commissioners of the Commission. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions or add emphasis-of-matter or other-matter paragraphs. If our opinions on the financial statements 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 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 include a paragraph that states (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 Commission'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 Commission's internal control and compliance. The paragraph 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 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. 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 government or to acts by management or employees acting on behalf of the government. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Golden Valley—Crystal—New Hope Joint Water Commission Page 3 January 3,2017 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, 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, and of any material abuse that comes to our attention. Our responsibility as auditors is limited to the period covered by our audit and does not extend to 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 direct confirmation 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 your responsibilities for the financial statements; compliance with laws, regulations, contracts, and grant agreements; and other responsibilities required by auditing standards generally accepted in the United States of America. Audit Procedures—Internal Controls Our audit will include obtaining an understanding of the government 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 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. An audit is not designed to provide assurance on internal control or to identify significant deficiencies or material weaknesses. However, during the audit, we will communicate to management and those charged with governance of the Commission,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. Golden Valley—Crystal—New Hope Joint Water Commission Page 4 January 3,2017 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. Management Responsibilities Management is responsible for establishing and maintaining effective internal controls, including 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. Management is also responsible for making all financial records and related information available to us and for the accuracy and completeness of that information.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 government 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 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 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, contracts or grant agreements, or abuse that we report. Golden Valley—Crystal—New Hope Joint Water Commission Page 5 January 3,2017 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 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 relating to 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. Engagement Administration,Fees,and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any documents selected by us for testing. 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, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to a regulatory agency or its designee, a federal agency providing direct or indirect funding,or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carryout 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. We expect to begin our audit shortly after the end of your fiscal year and to issue our reports prior to June 30, 2016. William J. Lauer, CPA is the engagement partner and is responsible for supervising the engagement and signing the reports. Golden Valley—Crystal—New Hope Joint Water Commission Page 6 January 3,2017 Our fee 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.) except that we agree that our gross fee,including expenses,will not exceed$9,400. 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. 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. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. 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. 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 issues,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. 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 that 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. Golden Valley—Crystal—New Hope Joint Water Commission Page 7 January 3,2017 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. 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. 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. GZ/.,r.r�c.+� • ��-Zi' William J. Lauer, PA Principal WJL:djr Golden Valley—Crystal—New Hope Joint Water Commission Page 8 January 3,2017 Response: This letter correctly sets forth the understanding of the Golden Valley—Crystal—New Hope Joint Water Commission. 11 By: �"�y ���'" � � Title: � �� � Date: �-~ l���� :� �erber�a s+� Certified Public Accountants Svstem Review Reaort 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 Mailoy, Montague, Karnowski, Radosevich and Co., P.A. (the firm} in effect for the year ended May 31, 2016. Our peer�eview was conducted in accordance with the Standards for Performing and Reporting on Peer Reviews estabiished by the Peer Review Board of the American Institute of Certified Public Accountants.As part of our peer review, we considered reviews by regulatory entities, if applicable, in determining the nature and extent of our pracedures. The firm is responsibie 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. Qur 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 standa�ds at www.aicpa.orgiprsumma�. As required by the standards, engagements selected for review included engagements performed under GovernmentAuditing 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, Mon#ague, Karnowski, Radosevich and Co., P.A. in effect for the year ended May 31, 2016 has been suitably designed and complied with to provide the firm with �easonable assurance of pertorming and reporting in conformity with applicable professional standards in all material respects. Firms can receive a rating of pass,pass with deficiency(ies)or fai/. Malloy, Montague, Karnowski, Radosevich and Go., P.A. has received a peer review rating of pass. /�.���. s'�- KerberRose SC September 15,2Q16 4211 N. Lightning Drive,Suite A Appleton,WI 54913 ,� (lC�meG�Oba� .,., P:920-943-0105 F:920-993-0116 ��� ,,;,,�;,; W W W.�4QY�JCt'POSE:.COITI lnd.lu�eiie��r 4cm<mrirra Fir-naa