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HomeMy WebLinkAbout10/04/1983 MEMO TO: Mayor and City Council FROM: John K. Anderson, City Administrator RE: Non-Agenda Informational Items DATE: September 30 , 1983 1 . Reminder that we have a budget session at 7 : 00 p.m. on Monday, October 3 , 1983 . 2 . Roy Baker has informed us that he would like to work as the City ' s electrical inspector for one more year. Therefore , the City will stop looking for his replacement until next fall . 3 . On Saturday, October 15 , 1983 , there will be a dedication of the fitness trail in Lions and Tahpah Park. All Councilmembers are invited to the dedication which will be held at the begin- ning of the trail near the water tower on 10th Avenue . 4 . The Thrift Shop will have an open house at Eagle Creek Town Hall on Tuesday, October 4, 1983 from 11 : 00 a.m. to 6 : 00 p.m. 5 . The Northern Scott County League of Women Voters has updated the "Shakopee Guide to your Community" for voter information. They have asked if they could distribute one half of the 400 copies we have on hand at the municipal election rally and other locations . Since the guides aren' t moving real fast at City Hall staff has given the League about 200 copies for distribution. 6 . We have received the revision pages from the codifiers incorporating all ordinances adopted since the last revision printing in October of 1982 . Pursuant to Council direction staff has gone over each ordinance , word for word with the revision pages . No discrepancies have been found. 7 . Attached is the monthly calendar for the month of October. 8 . Attached is the conclusion of Gregg Voxland' s discussions with Bankers Life regarding Fulton Schleisman' s benefit coverage while working for Suburban Engineering. While paragraph No. 4 is confusing, what Gregg is stating is that all other potential descriptions of what Fulton is doing have been eliminated and he is formally considered to be on a 90 day leave by Bankers Life. Such a 90 day leave is permitted under their policy. 9 . Attached is a letter from Rudy Boschwitz regarding Revenue Sharing. 10 . Attached is a copy of the information that included in the utility bill stuffer and hung on doors by the Boy Scouts regarding energy conservation. 11 . Attached is a newsletter from Springsted Incorporated. Non-Agenda Informational Items Page Two September 30 , 1983 12 . At 11 : 00 A.M. Tuesday, October 4, 1983 Socttland, Inc . will make a presentation on a Parimutuel Horse Racing Track in Shakopee. It would be helpful if one or more Councilmembers could attend the meeting. 13 . The work proposed the the Block 50 alley has been completed. 14. The Mayor and I discussed the 7 Man Committee with Norbert Theis from Jackson Township and everyone agreed to wait for developments with the Watershed Management Act ( 509 law) . Mr. Theis now at least feels the City is willing to discuss the 7 Man Committee with Jackson Township. OCTOBER 1983 7 .......... SUNDAY MONDAY 1 TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 1 2 SPUC 3 HRA/City 4 5 Planning 6 7 8 4: 30 p.m. Council Commission Council 7 : 00 p.m. 7 : 30 p.m. Worksession • 7 : 00 p.m. i' 1 91 COLUMBUS 10 11 Police 12 13 14 15 DAY 4 : 00 p.m. City Hall ICC closed 5 : 00 p.m. 16 Comm. Serv. 17 City 18 19 Energy & 20 21 22 6 :00 p.m. Council Transportaion Fire Dept . 7 :00 p.m. 7 : 30 p.m. 8 : 00 p.m. 23 Cable 24 25 26 27 28 29 Advisory 7 : 30 p.m. 30 31 Memo To: John K. Anderson, City Administrator Fulton Schleisman, Engineering Technican ] From: Gregg Voxland, Finance Director Re: Health & Life Insurance Date: September 20, 1983 Pursuant to conversations with Gary Monnens of Pat Rogers & Associates, representing Bankers Life, the following information is presented. 1 . See attached exerpt from Bankers Life policy booklet, item 4B. 2. Gary Monnens defined "approved" leave of absence as being approved or with permission of the City Administrator or Finance Director or Council. 3. Mr. Monnens stated that Bankers Life did not have to be notified of a leave of absence of less than 90 days. 4. For insurance purposes, Fulton is not an eligible employee because he will be or is working less than 25 hours per week. He is not terminated and in which case under the Minnesota Continuation the life and disability coverage would drop. Therefore, since it is for a period of less than 90 days, Fulton would be considered as on a leave of absence. 5. In view of paragraph 4B in the booklet, Mr. Monnens declined to send a letter of confirmation of the above. 6. Mr. Schleisman is responsible for paying his pro rata share of insurance for the period that he works reduced hours. Pre-existing Condition Limitation. If your plan includes Basic Plan *+'""`t :»» '0pv .0 EI. ' '4,04.440101**104'_ and Major Medical benefits, the pre-existing condition limitation t - i1; shown on the Major Medical Insurance page of this booklet shall also apply to the medical benefits provided under the Basic Plan. However, the exemption applicable to Units of ten or more, as specified on the Major Medical page, shall not apply to Basic Plan medical benefits. TERMINATIONS Your Insurance Terminates As Follows: 4, (1) Upon termination of the Policy with respect to your employer by reason of non-payment of premium, inadequate participation or otherwise; or. „ ,rt . r � l�i k (2) Upon your failure to make any required contribution to your employer when due toward the cost of your insurance; or (3) On the date you notify your employer that your insurance is to be terminated; or (4) On the date of the termination of your employment. Termination of employment means cessation of active work (as defined), except: (a) if your cessation of active work is caused by sick- ness or injury, your insurance may be continued until terminated by the employer, or (b) if you are on an approved leave of absence or temporary lay-off, insurance may be continued until terminated by the employer, but in no case beyond three months following the date of cessa- tion of active work; or (c) if your cessation of active work is due to retire- ment, your Life and Medical Insurance will con- tinue, provided (i) you are at least 62 years old on the date you retire, (ii) you have completed five or more years of active full-time employ- ment with your unit, and (iii) your unit elects retired coverage. Dependent Life, Accidental Death and Dismemberment and Weekly Income coverage terminates on the earlier of (1) the date of your retirement; or (2) the date you attain 70 years of age. C (Con't) page 3 (BC 558) RUDY BDSCHWITZ COMMITTEE ASSIGNMENTS. MINNESOTA AGRICULTURE BUDGET FOREIGN RELATIONS SMALL BUSINESS '?JCrntfeb ,.fafez Zenafe VETERANS AFFAIRS WASHINGTON, D.C. 20510 September 22 , 1983 Dear Friend, Just a note to pass along the good news about the General Revenue Sharing (GRS) program. I am pleased to report that the Senate, with my support , passed S. 1426 on September 21 by a vote of 87-6 . As adopted, the bill extends the GRS program for three years at a funding level of $4. 6 billion annually, with no changes in the current formula for allocating funds . The version of the bill previously passed by the House of Representatives extends GRS for three years with a $5 . 02 billion funding level . Because of the $450 million difference in the funding between the Senate and House levels , a conference committee will meet to reconcile the differences . It is expected that the result will be compromise legislation to increase funds by about $225 million. Although I am not a conferee, I will be urging support for such a compromise . There has been no increase in revenue sharing funds since 1976 , and an increase of $225 million is about 5 per- cent , which fits in very nicely with my . erall approach to the budget. While we are close to the Septem.er 0 deadline for re- authorization of GRS , I am confident 'hat you will be able to enjoy another three years of this val abl . program. I am delighted to have been a part of this effort. incerely, Rudy BDschwitz RB/sc United States Senate 10,:n Washington, D.C. 20510 OFFICIAL BUSINESS G S� P 2 �' ?'444- �� Srlr- Address Correction Requested Do Not Forward Lr) 397367.3-1CL QSXBUNZZ THE ANDERSON FAMILY in CITY ADMINISTRATOR 129 EAST FIRST AVENUE SHAKOPEE , MN 55379 Distributed with the September 1983 SPDC bills CITY OF SHAKOPEE INCO$PORAVCO 1a70 129 E First Ave.•Shakopee,Minnesota 55379.1376 (612)4453650 September, 1983 Dear Resident, Atter reading the startling facts on the reverse, you may he interested in knowing what we can do a;; a community to lower some of our energy costs? To begin with, you can SIGN UI' FOh A HOME ENEHCY AUDIT OFFERED BY YOUR UTILITY. Nearly 25% of the energy consumed in Minnesota is used in homes. Nearly two-thirds of the homes that exist today will still be around in 2000, and most, of them arc not as energy effi- cient, as they could be. One way to stop the drain on our community's economy and our pocketbooks is to find out what we can do to improve our home's energy efficiency. The audit, known as the Minnesota Energy Conversation Service costs only $10.00 and is available from Minnegasco (372-4670). You will also learn during the audit, where you can go to get financial assistance to make your home energy improvements. For instance, you may be eligible for loans from the Minnesota Housing Finance Agency at an interest rate of 3 to 14.5% depending on household income. }'LEASE t:TAHT INVESTING IN ENERGY CONSERVATION TODAY. The savings you start earning today will only increase an energy prices rise. Sincerely, • Eldon A. Reinke, Mayor City of Shakopee STARTING FACTS REGARDING ENERGY CONSUMPTION IN MINNESOTA c, During 1982, the average homeowner in Minnesota paid $730 for natural gas. In 1983, this bill will jump to $822 as natural gas prices increase by 13% statewide. And by 1990 - only eight years away - this same homeowner could be paying $1265 if energy consumption isn't reduced. o Between 60 and 85% of the money we spend for energy is drained from our local economy. This means less money is spent and fewer jobs are created locally. o in 1990, there could be 85,000 more jobs in Minnesota if cost-effective con- servation measures and renewable energy resources are implemented by Minnesotans. By 2000, this figure could increase to 200,000. WHAT CAN WE DO AS A COMMUNITY TO LOWEIt SOME OF OUR ENERGY COSTS? SEE REVERSE $ u' ( 5c...81447 y/(y ..... 1/fie io, 1 - .; \ _, TAKE CONTROL OF YOUR HOME ENERGY COSTS TODAY! II/s: CAN YOU AFFORD NOTTO? J _ We want you. our neighbors, to learn how to take control of your home energy costs. That's why we stopped by today to encourage you to participate in a home energy audit offered by your utility. It only costs 510.00, and it can help you save money and stay warm this coming winter,the winter after that,and the winter after that. . ..En anE V aP%S T._ COMSAsa1iO flaI vlCm Minnesota Energy Conservation Service Available from Endorsed by Minnegasco Mayor Eldon Reinke 372-4670 Shakopee JayCees Boy Scout Troop #218 epdEnergy Division • Minnesota Department of Energy,Planning and Development 980 American Center Building • ISO East Kellogg Blvd. • St.Paul,MN 55101 ) Distributed by the Shakopee Boy Scouts September 12th - 30th. MN Municipality rA Volume I, Issue 3 ;� THE October, 1983 VA S-I LETTER Bond Registration We are nearing completion of our third month of operating with bond registration and, while some bugs remain to be worked out, the process has gone smoothly. The most pleasant surprise has been the lower than anticipated initial fees for registration. Nancy Langness of S-I spent significant time with local registrars in April and May in negotiating initial and annual fees, which fees for the most part are uniform in the Twin Cities area. While the costs will vary with the issue size, length of maturity and the size of bond denominations, our experience with the fee schedule indicates that on a $500,000, ten- year issue, an average initial set up charge would be $325; an annual administrative charge would be $100; $200 would be charged cumulatively over the life of the issue for principal payments; while annual costs for interest payments would range from $100 to $200. A $2 million, ten-year issue would require an average estimated payment of $700 initially; a $150 annual administrative fee; $800 of cumulative costs for principal payments; and an annual cost of from $100 to $800 for interest payments. Payments will also be required for transfers in registration. If you assumed all bonds of an issue would be transferred once, the total additional estimated cost for the $500,000 issue would be $125; the $2 million issue would require similar payments of $500. While these expenses are somewhat lower than anticipated the overall impact is sharply up from those costs associated with former paying agency charges which did not involve registration, and issuers will have to be aware of these fees in establishing their annual stream of revenues required for debt service. Several revenue sources to be reviewed might include an issuer's reinvestment income between the time of collection of debt service revenues and the payment of debt service each year, a slightly higher interest rate differential between special assessments and improvement bonds, a full levy of taxes to provide 105% of annual debt service requirements, or higher user charges. The most encouraging experience with registration is we have seen no indication that it has caused any increase in interest rates. Many dealers felt their buyers might not accept registered bonds without higher yields, but that has not been the case to date. Investment Opportunities The list of permitted investment instruments continues to grow and now includes two instruments previously not available to Minnesota units of government. They are Commercial Paper and Bankers Acceptance Notes. It is possible you have been contacted relative to investing in these instruments since a number of investment bankers aggressively are promoting their use. Commercial Paper is issued by corporations as a temporary loan for cash flow purposes. Minnesota law requires the paper to be rated at least "A-I" by Moody's or "P-I" by Standard & Poor's. The term of the paper normally does not exceed 270 days. The current short-term yields are approximately one quarter percent higher than comparable term Treasury Bills, but the interest rate differential begins to narrow after 60 days. The rates are volatile and subject to change almost hourly. Prices are quoted for various terms and you can select a specific maturity date. You should be advised that there is little if any secondary market for this security and you should therefore be confident you will not need to "cash" the security prematurely. Bankers Acceptance Notes are basically loans to major banks, which are issued at a discount to an investor, to cover advances a bank may have made for temporary loans to SPRINGSTED INCORPORATED PUBLIC FINANCE ADVISORS 800 Osborn Building • Saint Paul, Minnesota 55102 • (612) 222-4241 businesses. Minimum investmentsless. However, aswith Commercial n11y lI ol Paper thereis a severely 000 and yields may be higher than Treasury Bills for 30 days or limited secondary market for these obligations. For those who want higher yields than are available from Treasury Bills, you might investigate the discount otse sligFNMA ganand tGNMA. Security is strong, there is a and secondary market, yieldsare Equipment Certificates of Indebtedness A number of cities will adopt 1984 budgets which will require the sale of equipment certificates to fund major purchases. The sale of the certificates can be negotiated and may not exceed five years in length. One important change is that if the certificates exceed one year they are subject to registration. Depending upon the size of the issue and the purchaser, the city may want to serve as registrar. Additional information about required registrar duties can be obtained from your S-I representative. We have found that interest rates quoted on certificates vary widely, and you would be well served to seek competitive proposals, even if you do not utilize public sale techniques. S-I has placed a number of these issues through negotiation, and if you want some assistance please contact us. Bond Market Conditions While interest rates have been less volatile in 1983 than during the past two years there has still been marked movement in rates. The 20 bond Bond Buyer's Index started the year at 9.48%, and dropped to a low of 8.78% on May 5. The Index rose sharply after that time on its way to the year's high of 9.85% on August 11. The Index is currently (September 21) at 9.62%. A number of economists predict a slight lowering of rates in the fourth quarter of 1983 and the first quarter of 1984. Nearly consensus judgment can be developed that interest rates will be higher after the first quarter of 1984, due in part to the pending election. As some say, "who cuts programs or raises taxes in an election year?" It seems imperative that both actions must work in tandem if an environment for long-term lower interest rates is to be achieved. S-I had several clients which were not able to complete an advance refunding of debt issued during 1981/82 because of the increase in the interest rates in late May. We are monitoring these issues and will be in contact with you when we can forecast a market which will permit successful completion of the refundings. Staff Changes S-I has added several key staff members in a continuing effort to keep abreast of changing requirements of our issuer clients. Two recent additions are Elizabeth Aby and Steven Peyser. Betsey joined S-I after significant experience with two of the Big 8 accounting firms and holds B.A. and M.S. degrees in economics and business administration from Carnegie- Mel Ion University. A Certified Public Accountant, she brings to S-I a detailed knowledge of tax laws and the impact of tax-exempt financing on corporate taxes and accompanying rates of return. She has been particularly helpful in the analysis of the amount of and need for tax increment financing in making private development and redevelopment feasible, and in the evaluation of purchase versus lease programs for local units of government. Steve recently completed the graduate program at the University of Pennsylvania's Wharton School of Finance and has begun work as a special assistant to senior officers of the firm. Steve formerly worked at Moody's Investors Service as a credit analyst. He will be concentrating initially on S-I's rapidly growing business with higher education facilities and authorities nationwide. TENTATIVE AGENDA REGULAR SESSION SHAKOPEE , MINNESOTA OCTOBER 4, 1983 Mayor Reinke presiding 1] Roll Call at 7 :00 P.M. 2] Recess for H.R.A. Meeting 3] Reconvene 4] Liaison Reports from Councilmembers 5] RECOGNITION BY CITY COUNCIL OF INTERESTED CITIZENS 6] Approval of Consent Business - (All items listed with an asterick are considered to be routine by the City Council and will be enacted by one motion. There will be no separate discussion of these items unless a Councilmember so requests, in which event the item will be removed from the consent agenda and considered in its normal sequence on the agenda. ) *7] Approval of Minutes of September 20, 1983 8] Communications : a] Dolores Fischer re : railroad crossings without lights b] Metro Council Bulletin re: advisory bodies 9] Public Hearings: Continuation of public hearing on the improvement of the alley in block 50, by paving (Res. No. 2163 Adopting Assessments) - bring memo 7c of 9/27 agenda 10] Boards & Commissions: No reports 11] Reports from Staff: a] Game Hunting with Firearms b] Cable Construction Deadline of Sept . 16th - verbal report by J . Abbot c] Hauer' s Addition - Unassessed Costs - bring earlier memos d] Auditor Selection - bring memo dated September 19th from Finance e] Authorize payment of the bills in amount of $60, 206. 26 f] Change Order No. 4, Levee Drive, 1982-3 *g] Change Order No. 1 , 16th Ave/90th Street, 1982-6 h] Sewer and Water Improvements to Shakopee Valley Printing i] Private Sewer Lines *j ] Eagle Creek Town Hall Lease *k] Developers Agreement - Evergreen 1st Addition 1] Renewal of Refuse .Agreement with G and H Sanitation, Inc . m] Departmental Reorganization _ bring 9j from 9/20 agenda 12] Resolutions and Ordinances: *a] Res. No. 2169, Appointment of Election Judges for Nov. 8th Municipal Election *b] Res. No. 2168, Levy of Special Tax by HRA 13] Other Business : a] Appointment of Acting Admr. Oct 7-16 while Admr at ICMA Conference b] c] 14] Adjourn to Tuesday, October 18th, 1983 at 7 :00 P.M. John K. Anderson City Administrator • TENTATIVE AGENDA Housing and Redevelopment Authority in and for the City of Shakopee, Minnesota City Hall Council Chambers Regular Session October 4, 1983 1 . Roll Call at 7 :00 P.M. 2 . Approval of Minutes of August 2 , 1983 3 . Adopt budget and set levy for 1984 (Resolutions 83-1 and 83-2 ) 4. Other Business 5 . Adjourn Jeanne Andre Executive Director PROCEEDINGS OF THE HOUSING AND REDEVELOPMENT AUTHORITY REGULAR SESSION SHAKOPEE, MINNESOTA AUGUST 2, 1983 Chrm. Colligan called the meeting to order at 7 : 00 P.M. with Comm. Wampach, Lebens and Leroux present . Comm. Vierling was absent . Also present were Judith S. Cox, Acting City Admr. ; Julius A. Coller, II , City Attorney; Jeanne Andre , HRA Director and Mayor Reinke . Leroux/Lebens moved to approve the minutes of June 7 , 1983 as kept . Notion carried unanimously. Discussion took place regarding the overview of the NAHRO National Annual Convention scheduled for October 9-12, 1983 in San Diego, California . Consensus was that from the overview, it appeared there were many items that apply to Shakopee, and it would be worthwhile sending representatives to it . Comm. Leroux observed there are overlapping times of presenta- tions , so it would be worthwhile sending two people . Mayor Reinke suggested checking if there are tapes available of the presentations . The HRA Director said this wasn' t in the budget , so a budget amendment would have to be made if expenditures are made for conference atten- dance . Leroux/Lebens moved to send two Commissioners to the NAHRO National Annual Convention scheduled for October 9-12, 1983 in San Diego, Califor- nia. Comm. Leroux and Chrm. Colligan expressed a desire to attend. Comm. Vierling would also be asked if she had an interest in attending. Roll Call : Ayes , Unanimous Noes : None Motion carried. The HRA Director explained how the Accessory Apartment Loan Program would work, and suggested HRA participate in the program. Discussion followed. Comm. Leroux stated he is philosophically opposed to not having any area in the City that is limited to single family homes and suggested this change should be made prior to encouraging such conversions . This program requires the unit to be owner-occupied at the time of the con- version of part of it to an apartment , but then the unit can be sold so there could be many rental units on a block, which has an impact on surrounding property values . Discussion followed relative to controlling how many units could be located in one area, which the HRA Director indicated is done in some communities already encouraging this program. The HRA Director said an ad was placed in the paper asking if there was any interest in a program like this . At the next meeting she could bring back a report on the interest that was shown. Leroux/Wampach moved to table the Accessory Apartment Loan Program until 'the next report concerning interest of the public . Motion carried with Comm. Lebens opposed. Lebens/Leroux moved to adjourn. Motion carried unanimously. Meeting adjourned at 7 : 31 P.N . Jeanne Andre NRA Director Diane S . Beuch Recording Secretary —<7 MEMO TO: Shakopee Housing and Redevelopment Authority FROM: Jeanne Andre/Executive Director RE: 1984 Budget and Levy DATE: September 29, 1983 The attached Resolutions 83-1 and 83-2 reflect the discussion of HRA Commissioners at the Council work sessions on the bud- get . These should be adopted to meet the October 10, 1983 , deadline for certification to the County. Requested Action : Adopt Resolution No. 83-1 ; A Resolution Requesting The Shakopee City Council To Consent To The Levy Of A Special Tax By The Housing And Redevelopment Authority In And For The City Of Shakopee . Adopt Resolution No . 83-2 ; A Resolution Adopting A General Fund Budget for 1983 . JA: cau Attachment RESOLUTION NO. 83-1 A RESOLUTION REQUESTING THE SHAKOPEE CITY COUNCIL TO CONSENT TO THE LEVY OF A SPECIAL TAX BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF SHAKOPEE WHEREAS, the Housing and Redevelopment Authority in and for the City of Shakopee was created pursuant to Minnesota Statutes, Section 462.411 et. seq., as amended, and WHEREAS, Minnesota Statutes 1965, Section 462.545 designates all the territory within the area of operation of the authority as a taxing district for the purpose of levying and collecting a special benefit tax, and WHEREAS, Section 462.545 states that the special levy shall not exceed 10 cents on each $100 of taxable valuation in the area of operation, and WHEREAS, Section 462.545 states that the governing body of the municipality must give its consent to such a tax levy. NOW, THEREFORE, BE IT RESOLVED BY THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF SHAKOPEE, MINNESOTA that the Housing and Redevelopment Authority hereby requests the City Council of the City of Shakopee to consent to the special tax levy of $23,000 payable 1984 by the Housing and Redevelopment Authority in and for the City of Shakopee. Adopted in session of the Shakopee Housing and Redevelopment Authority of the City of Shakopee, Minnesota, held this day of , 1983. ��- Chairman -A�-�----- _--~ ATTEST: Executive Director Approved as to form this day of , 1983 City Attorney -�-- RESOLUTION NO . 83-2 A RESOLUTION ADOPTING A GENERAL FUND BUDGET FOR 1984 WHEREAS , the By-Laws of the Housing and Redevelopment Authority in and for the City of Shakopee provides that a budget be prepared on an annual basis . NOW, THEREFORE, BE IT RESOLVED , that the attached General Fund Budget be approved for 1984 with total appropriation in the amount of $27 , 991 . 00 . Adopted in session of the Housing and Redevelopment Authority in and for the City of Shakopee , Minnesota , held this day of 1983 . Chairman of the Housing Authority ATTEST: Executive Director _ Secretary _ .�_.�__ �—�, Approved as to form this day of 1983 . 0 City Attorney 7 OFFICIAL PROCEEDINGS OF THE CITY COUNCIL ADJ. REG. SESSION SHAKOPEE, MINNESOTA SEYIEMBER 20, 1983 Mayor Reinke called the meeting to order at 7:00 p.m. with Cncl. Lebens, Colligan, Leroux and Vierling present. Cncl. Wampach was absent. Also present were John K. Anderson, City Admr. and Judith S. Cox, City Clerk. Julius A. Coller, II, City Attorney, arrived later. Liaison reports were given by Councilmembers. Some discussion took place regarding negotiations between Shakopee and Louisville and Jackson Townships in an attempt to work out a Joint Powers Agreement for sur- face water management. The City Admr. said the townships are mostly concerned with the lack of guidelines regarding water quality. The City Engineer said there is presently no requirement for water quality, although he expects legislation to ad- dress that element. General consensus was to not have anything stricter than it is now. Mayor Reinke asked if there was anyone present in the audience who wished to address the Council on any item that is not on the agenda, and there was no response. Colligan/Vierling moved to approve the minutes of September 6, 1983 as presented. Roll Call: Ayes; Unanimous Noes; None Motion carried. Colligan/Vierling moved to place on file the letter from the Shakopee Area Chamber of Commerce dated September 13, 1983 regarding the Minnesota Main Street Program. Motion carried unanimously. Leroux/Colligan moved to accept, with regrets, the resignation of the City Planner. Motion carried unanimously. Leroux/Vierling moved to place on file the letter regarding two police officers. Motion carried unanimously. Leroux/Lebens moved to place on file the letter dated September 19, 1983 from Robert J. Schmitz, Senator, regarding the Shakopee: bypass. Motion carried unanimously. The Admin. Ass't. stated that although the deadline of September 16, 1983 has gone by, construction is not completed on the cable system. She said that according to the cable ordinance, liquidated damages can be required for failure to complete construction, unless City Council approves the delay. She pointed out some of the special problems Zylstra-United (ZU) has encountered. She indicated on a map areas of the City that are not completed. Mr. Jim Abbott, ZU President, addressed the Council to explain some of the diffi- culties ZU has had. These include a wet spring, Northwestern Bell strike, un- reasonable demands from Minnesota Valley Electric in Hauer's Addition regarding pole agreements and the inadvertant over-looking of Patricia's Addition. He said the biggest share of the work is done. He said the interconnect with Chaska depends on the State schedule for finishing construction of the bridge on Hwy. 169. He said there are 286 people who are signed up for cable service who are not hooked up yet. But he pointed out the cable ordinance refers to the construction deadline, with a separate hook-up deadline. He said of this number, 160 people live in multiple dwellings where the owner has not signed the pre-wire agreement. Mr. Abbott said he was sure that if he added up the number of days of work lost due to factors beyond his control, he would have no problem showing just cuase for an extension. He feels everything should be completed by October 15, 1983. However, he would prefer to come back and report to Council in two weeks on the progress that has been made, or any further problems encountered, before Council extends the com- pletion date. Tony Gauer, technical engineer, said the institutional network has been constructed along with everything else, with the exception of the entrance to the buildings. He said he planned to complete the outdoor work first, so when they are done with the major construction, they will complete the connections. That should make it sometime in November. Mr. Abbott explained some of the complaints they have had about restoration work after putting in underground cable, and said they started last Wednesday to lay sod. Shakopee City Coifncil September 20, 1983 Page 2 7 The City Attorney gave his opinion that a verbal request by ZU for an extension could be granted by motion of the City Council, if they so desired. An extension given implies waiver of penalties. Mayor Reinke asked Mr. Abbott about the entrance from the headend site where a lot of mud is being tracked onto CR16, causing a driving hazard. Mr. Abbott said he had made the decision not to put a road out there because it could almost serve as an attractive nuisance. It draws kids parking and fooling around near their ex- pensive equipment. Discussion followed regarding various steps that could be taken to solve that problem. Mr. Abbott said he would take it under consideration. Leroux/Lebens moved to extend the deadline for construction of the cable system within Shakopee, with the deadline of said extension to 'be established during the October 4, 1983 meeting when ZU will make a progress report. Motion carried unanimously. Mr. Abbott addressed a question of cable service to Jackson Township by stating that is a possibility they would be interested in exploring after Shakopee 's system is completely in working order. Bill Price, of Suburban Engineering, gave some background informational material regarding the unassessed costs for Hauer's Addition for an 8" water main and serivce road improvements. This was an attempt to find out why the costs were not assessed at the time work was performed in 1974. The City Admro stated that staff recommends the unassessed charges against each property be collected when the parcel is connected to the watermain, and that the two parcels already connected should be billed. The City Attorney advised that if these people inquired at City Hall about pending assessments on their property and were told there were none, there might be a prob- lem now in trying to collect that old assessment- He said if there was a flat rate charged upon hook-up to water, that might be different. But whatever is done, it should be consistent for all parcels. The City Engineer questioned if this amount of uncollected assessment could be the same money escrowed by Gene Hauer, plus interest, that was credited against the 79-1 Park Ridge Drive roadway improvements. Considerable discussion ensued regarding that possibility. Cncl. Leroux stated it is hard to go back 8-9 years later and tell people they now owe an assessment. He also asked if there were any dollars left in the bond fund for this improvement. The City Admr. discussed how a decision on this matter would affect the VIP sanitary sewer policy regarding connection charges made later after the construction is finished. Cncl. Leroux stated this is hot the same ,thing as the VIP assessment Ouv .i e before development *n the area. Betty Blaird said she bought her property in 1977 and at that time she called and asked if there were any pending assessments, and she checked again last week, and neither time was this amount mentioned. She said it would be unfair to require them to pay it now after they were informed there were no charges of this nature. The City Admr. stated that if this charge was perceived to be a hook-up charge, she would not be informed of it until she came in to hook up to water. Ms. Blaird asked to see the original resolution, and was told it was available and on file at City Hall. Rod Dragstad asked about what is going to be done with those properties that are already .hooked up to water. The City Admr. said the City Attorney suggests they be handled uniformly, so they might also have to be charged for hook-up. Colligan/Leroux moved to table discussion of this item until the next regular meet- ing of Council, pending further research by staff. Motion carried unanimously. Cncl. Leroux asked for discussion regarding the City paying and then collecting for garbage on the tax rolls twice a year. He pointed out the pros and cons of this idea. Discussion followed. The City Admr. said he would research the idea further and bring it back as a possible idea for 1985. Colligan/Ler-ux moved to direct the City Admr. to negotiate a new 2 year contract wlth G & H and bring it back to Council for approval. Motion carried unanimously. Leroux/Vierling moved that staff be directed to investigate the possibility of put- ting garbage collection on the tax rolls. Motion carried unanimously. Shakopee City Council September 20, 1983 Page 3 Colligan/Leroux moved that bills in the amount of $603,375.87 be allowed and ordered paid. Roll Call: Ayes; Unanimous Noes; None Motion carried. Discussion was held regarding the renaming of 16th Avenue and 90th Street, and the fact that a consensus for one name was not suggested by the residents. Leroux/Vierling moved that the street designated as 16th Avenue and 90th Street, in its entirety from CR89 easterly and southerly be named "Boiling Springs Lane", and notices be sent to the residents and appropriate jurisdictions. Motion carried unanimously. Colligan/Vierling moved to approve Change Order No. 4 in the amount of $432.60 for Valley Industrial Blvd. South Roadway, Contract No. 1982-2. Roll Call: Ayes; Unanimous Noes; None Motion carried. Leroux/Lebens moved to accept the Certificate of Completion for Manhole Reconstruc- tion and Adjustments in 1st Avenue (T.H.101). Motion carried unanimously. Considerable discussion ensued regarding maintenance of certain rural roads in what was formerly Eagle Creek Township. The City Engineer said that if Council wishes to continue maintenance, it should perfect the City's right to be on these private roads by way of easement acquisition. The City does not now have all the necessary easements. The City Admr. was directed to research contracting a private individual to do the snowplowing of these roads. The City Attorney stated the agreement to maintain these roads in a similar manner to the township was made to the residents of the township during the consolidation proceedings as an inducement to consolidate. He felt that was a promise made by the City that had no deadline on it. He feels the City has a moral and ethical obliga- tion to continue this service as promised. However, he stated the City should have an easement for its own protection. If the property owner does not want to give the City an easement so that it can maintain the services, it becomes dangerous for the City, and that could affect the City's obligation. Vierling/Leroux moved to continue maintenance of the roads as agreed in Eagle Creek Township consolidation proceedings, based on right-of-way as required by City Engi- neer, and this obligation be grandfathered in through the immediate property owner and heirs, but not assigns. Motion carried unanimously. Leroux/Vierling moved for a five minute recess at 9:47 p.m. Motion carried unanimously. Leroux/Vierling moved to re-convene at 9:57 p.m. Motion carried unanimously. The City Admr. initiated discussion on the proposed departmental reorganization, which could be accomplished at this time based on the resignation of the City Planner. He stated this is an opportunity to re-evaluate the current organizational structure. He said his primary goal is to create a job description and role so a person can focus more on economic development issues, not strictly HRA or planning, but bring- ing some of those interests together. He read part of an article in the League magazine which provided a further job description of the economic development pro- fessional. Cncl. Lebens asked if it was necessary to replace the City Planner at this time, because of the consultant for the downtown development and the possibility of having a director appointed if the City is funded on the Main Street Program. The City Admr. replied that the downtown consultant is just a one-time thing focusing on one specific task. The Main Street Program is also just for main street, not the over- all City. He thought it would take up to three months to fill the present position, and the process has to be started. He pointed out the Admin. Ass't would be spread pretty thin over that period of time. He added the Planning Commission and Industrial/ Commercial Commission feel pretty strongly about retaining the position of planner. Further discussion took place regarding the pros and cons of hiring a planning con- sultant and a further clarification of the Planner I position. The City Admr. thought for the proposed salary, the City should be able to get an applicant with good skills, not one just trained, because of the job market at present. He added that in terms of structure, this proposal is timely and not unusual or inappropriate for smaller communities. He said the proposed Community Development Director could also carry the title of HRA Director, but did not want her bogged down with adminis- trative functions. Shakopee City Council September 20, 1983 l Page 4 Colligan/Lebens moved to table discussion of the proposed departmental reorganiza- tion for further consideration and more specific job description and specific bench- marks for performance evaluation at various time periods. The Admin. Ass't. addressed herself to various problems she now has in coordinating so many different areas of expertise and information, and the possibilites of missed opportunities and duplication of effort that can occur when there is more than one department head working in similar areas. The City Admr. stated this particular proposal fits very neatly into the pay plan that has been looked at for two years, but never adopted. Motion carried unanimously. Leroux/Vierlung moved to concur with City Engineer's recommendation to demand repair of raveling on the 1982 Pavement Preservation and Rehabilitation Program that the work be undertaken starting no less than 15 days after load restrictions are lifted in the spring of 1984 and that Hardrives, Inc. be required to obligate themselves to perform that work within the next 30 days. Roll Call: Ayes; Unanimous Noes; None Motion carried. Colligan/Vierling offered Resolution No. 2160, A Resolution Apportioning Assessments Among New Parcels Created as a Result of the Subdivision of Land into Hauer's Second Addition, and moved its adoption. Roll Call: Ayes; Unanimous Noes; None Motion carried. Colligan/Leroux offered Ordinance No. 134, Fourth Series, An Ordinance of the City of Shakopee, Minnesota, Amending Shakopee City Code Chapter 2 Entitled "Administra- tion and General Government" by Enacting a New Section 2.82 Entitled "Public Works Reserve Fund" and by Adopting By Reference Shakopee City Code Chapter 1 and Section 2.99, Which Among Other Things Contain Penalty Provisions, and moved its adoption. The City Admr. summarized the resolution. The City Clerk further clarified this ordinance. The City Attorney said there should be two funds because one is revolving and one is not, and one has to be voted upon. Discussion followed, with the City Admr. questioning the use of each of these funds. He said he would like to get the opinion of the auditor, as they always want to decrease the number of funds, not increase them. Leroux/Vierling moved to table Ordinance No. 134 until September 27, 1983. Motion carried unanimously. Colligan/Leroux moved to repair the roof of the Public Service Building for an amount not to exceed $2,677.00. Roll Call: Ayes; Unanimous Noes; None Motion carried. The City Admr. said the Ass't City Attorney has requested that Council discontinue its condemnation proceedings against Minnesota Valley Electric, as they will be proceedings through the Public Utilities Commission. Leroux/Colligan moved to discontinue the City's condemnation proceedings against Minnesota Valley Electric without prejudice. Motion carried unanimously. The City Admr. reported the State Jaycees have approached him regarding the possi- bility of the City leasing for 99 years one of its lots for a nominal amount so they can build a building on it. He said it wouldn't contribute to the tax base, but it would bring people and publicity to the City. He was directed to puruse the idea with the City's parcel on Levee Drive between Scott and Atwood. The City Admr. said he is meeting with individuals trying to develop a race track in the City, and is discussing tax increment financing and public benefits required. The City Admr. reported the State Examiner's office has put an extremely low priority on examining the City's 1969 examiner's report. Consensus was there was no hurry. The City Attorney reported papers have been filed against Viking Steel asking that it remove its barricades and seeking a permanent injunction. Leroux/Vierling moved to adjourn to 7:00 p.m. September 27, 1983. Motion carried unanimously. Judith S. Cox, City Clerk Diane S. Beuch, Recording Secretary R77. : OM) SEP 7 LT63 enW—OF-SHAKO-PEE— Idr) 0441,1. ..go 'akar_ PaN.kiv ‘zs .5•0tUL, ./sc`i% ci-vtrcxzu .1146:30-vm,\. "t7No..Jez_tD rgvb- 1Y2 • D r \r--c5--cD -)(71s).,-1-4•S‘.•e;r1 o. dj \.P.rtS Cik-esrN.sat. ):1_,A1)\_) >Cr‘iz:Ar•t kiv-e•JZI .5NATC-Q444.,-Cir cr2- Y-Jcs- eriNSL. crc•51.- _t • It& - 11. - • , INN/116-- \C 31f24-9, ,c2ocrevAL_ , - �csl�►•d �.2�iJ�R�L m19- o � 300 Metro Square Bldg., St. Paul, MN 55101 ift 4' General Office Telephone (612) 291-6359 R. JOHN ANDERSON Qolitaatc� ADMINISTRATOR .6 f o4� CITY OF SHAKOPEE �i REviEw 129 1ST AV E D SHAKOPEE MN 55379 ' `0 ' m N,ro cors, w A Metropolitan Council Bulletin for Community Leaders t' r` For more information on items in this publication, call the Public Information Office at 291-6464.P'w1,,, I. September 9, 1983 Metrodome—The Council approved the Metropolitan,0i- Sports Facilities Commission 1984 budget of$7.7 million,a RECENT COUNCIL ACTIONS (Aug. 29-Sept. 9) four percent increase over the revised 1983 budget of$7.5 million. Transportation—The Council said a proposed reconstruction Comprehensive Plans—The Council said that Maple Plain's of the interchange of Hwys. 55, 13 and 110 at the south end of comprehensive plan conforms with regional plans for growth the Mendota Bridge in Dakota County is consistent with and development. regional plans for growth and development. Estimated cost of Correction—The Council appointed one of its members, the project, including reconstruction of each of the three Ray Joachim,to serve as a nonvoting member of the Metro- - highways as four-iane expressways at the interchange, is$11.3 politan Stadium Commission,not the Metropolitan Mosquito million.Construction is scheduled to begin in 1988. Control District as was incorrectly reported in the Aug.26 The Council endorsed a purchase by the Metropolitan Transit Review. Commission(MTC)of 20 buses equipped with wheelchair lifts. The Council asked the MTC to submit to the Council,before PUBLIC HEARINGS,PUBLIC MEETINGS implementation in 1984,objectives and evaluation criteria for the two-year demonstration project.The MTC will apply to Availability of Sand,Gravel and Crushed Rock—The Metro- the federal Urban Mass Transit Administration for about$3 politan Council will hold a public meeting at 7:30 p.m.Sept.20 million,with about$1 million to be provided in local funds. in the Council Chambers,to hear comments on a study that Parks—The Council: examines the future availability of aggregate resources—sand, — Approved a$1 million development grant so Ramsey gravel and crushed rock—in the Twin Cities Area. County can build a park maintenance facility near Aldrich For more information on the meeting,or a copy of the Arena in Maplewood to serve Ramsey County regional parks. study (pub. no. 10-83-019; 109 pp.;$7),call the Council's The Council intends to grant an additional $500,000 in 1985 Communications Department at 291-6464. to complete the project. Reduced Bus Fare for Job-Seekers—The Metropolitan — Transferred $500,000 of development funds from Transit Commission will hold a public hearing on whether to Bryant Lake Regional Park,Eden Prairie,to Hyland-Bush- continue the reduced bus fare for job-seekers,at 3:30 p.m., Anderson Lakes Park Reserve, Bloomington,to improve park- Sept. 21,in the commission chambers at 801 E. Kellogg Blvd., ing lots and build a new entrance road and boat launch. St.Paul.For more information,call Roger Downey at 221-0939. — Opened bids for a$350,000 bond issue for capital Area Plan for Aging—The Metropolitan Council's Advisory improvements to Como Zoo. The sale was for the last of$2.3 Committee on Aging will hold a public hearing on the 1984- million in regional bonds authorized for the zoo by the 1977 1986 Area Plan for Aging.The hearing will be held Sept.23, state legislature. at 9 a.m. in the Metropolitan Council Chambers.The plan is The winning bidder,with the lowest interest rate,was First the basis on which the Council awards federal Title ill Older National Bank of Minneapolis at a net interest rate of 6.99 Americans Act funds to local agencies and organizations to percent. Among major zoo projects under way or completed provide direct service to older people. sc far are a house for lame cats.one for primates and a house The committee will also make final recommendations on plus outdoor pool for marine animals. revisions in its :;;;t of dasiy^atcd "community focal points." — Applied for$150,000 from the U.S. Fish and Wildlife sites responsible for providing service delivery to older people. Service to assist the Metropolitan River Corridors Study Com- For more information or to register to speak at the hearing, mittee in its study of recreational uses in the Mississippi, call Council planner Judy Arends at 291-6591. Minnesota and St.Croix River corridors in the Twin Cities Area. Solid Waste Incinerator—The Metropolitan Council will • Advisory Bodies—The Council decided to open for appoint- hold a public meeting Oct. 11 to hear comments about ment all Council-appointed positions on seven of its advisory potential environmental effects caused by a proposed solid bodies,rather than just those members whose terms are up. waste incinerator in New Brighton.The incinerator is estimated The action was taken to obtain more accurate geographic rep- to cost$8 million and is to be built and operated by Midwest esentation on the committees because the state legislature Asphalt Corp.,Minneapolis.Scheduled for completion in 1985, edistricted the Council.The Council intends to reappoint a the incinerator would convert 200 tons of solid waste per day number of current committee members to provide continuity to steam. on the advisory bodies. From information gathered at the meeting,the Council will Appointments will be opened for the following advisory decide whether a more detailed review—an environmental bodies: Transportation Advisory Board;Metropolitan Waste impact statement—is needed. Management Advisory Committee; Advisory Committee on The meeting will be held at 7 p.m. in the libarary of the Aging;Metropolitan Health Planning Board;Arts Advisory Wilshire Park Elementary School, 3600 Highcrest Rd., Committee;Criminal Justice Advisory Committee;and Metro- St. Anthony. For more information or a copy of an environ- politan Housing and Redevelopment Authority Advisory mental assessment worksheet, publication no.09-83-110, call Committee. the Council's Communications Department at 291-6464. Further details will be announced later. Protecting Proposed Highway Rights of Way—The Metro- the role of metropolitan groups.The class will feature guest politan Council has set a public hearing on proposed guidelines speakers from Area organizations. for distributing funds from a Metropolitan Area highway right- To register,call Metropolitan State University at 296-4448. of-way reservation fund established by the Minnesota Legis- lature last year.The hearing is set for Oct. 12, 1:30 p.m.,in COUNCIL OFFERS AFFORDABLE HOUSING the Council offices.The hearing record will remain open for EDUCATION PROGRAM 10 days. For a copy of the document,Proposed Guidelines to Where will our children live?This is the theme of an afford- Allocate Funds for Metropolitan Highway Rights of Way, able-housing education program being offered upon request publication no.26-83-117,call the Communications Depart- by the Metropolitan Council to local Twin Cities Area civic ment at 291-6464.To speak at the hearing,call Shirlee Smith, groups.The program is about today's housing market and the Communications,at 291-6421. For information about the need to provide more affordable housing. guidelines,call Council planner Connie Kozlak at 291-6346. The program consists of a 45-minute presentation including a slide show and discussion of such topics as: trends that affect MINNESOTA JAM ARTS MARATHON IS SEPT. 18 housing,current housing costs, how regulations affect housing costs, housing in the 1980s,and common concerns and misin- Jugglers,singers,dancers,weavers,actors and others will formation often associated with more dense housing.Where perform at the second annual Minnesota Jam to Preserve the possible,current housing issues in a community will be high- Arts noon-8 p.m.Sept. 18,at the Minneapolis Convention lighted. The program provides an information kit, booklets Center. and staff available to work with local civic leaders. The jam is produced by the St. Paul-Ramsey United Arts For more information,call Council housing planners Guy Council and the Metropolitan Council Regional Arts Council. Peterson or Ana Stern at 291-6472. Admission is$4 for adults,$2 for senior citizens and those aged 14 and under. Tickets will be sold at the door. NEW PUBLICATIONS SHAPING PUBLIC POLICIES IN LONG-TERM CARE: When Older People Need Help. . . . Aug. 1983. Brochure MISSION IMPOSSIBLE? lists local organizations,with their phone numbers,that provide information about services for older people. Examples When elderly and disabled people in the Twin Cities Area of services are transportation, help with chores and home need care over an extended period of time,what's the best maintenance,housing, health care and regular hot meals. way to organize,fund and provide it?This fall the Metro- No. 14-83-114; no charge. politan Council will sponsor seven public forums on long-term care,including health care, housing and social services. COMING MEETINGS (Sept. 19-30) Moderators will be Nancy Anderson Eustis and Barbara Lukermann from the University of Minnesota's Humphrey (Information below is tentative. To verify,call 291-6464.) Institute. Forums will be held from 3 to 5:30 p.m.,followed by informal receptions.The first six forums will be held at Special Committee on Economic Development—Monday, Macalester College in St. Paul. The seventh will be in the Sept. 19,3 p.m.,Conference Room E. Metropolitan Council Chambers. Metropolitan Parks and Open Space Commission—Monday, The program is as follows: Sept. 19,3 p.m.,Council Chambers. Sept.20—A Framework for Long-Term Care.Speaker: Rosalie Task Force on Metropolitan Area Cable Communications Kane,social scientist,Rand Corp.,Santa Monica,Calif.,and coauthor Interconnection—Monday,Sept. 19,4 p.m.,Conference of Long-Term Care in Six Countries. Room A. Sept.26—Informal Support Networks: Family Responsibility. Elaine Brody,director, Dept.of Human Services,Philadelphia Geriatric Program Development and Review Committee—Monday, Center,Philadelphia,Pa. Sept. 19,5 p.m.,Council Chambers. Oct.4—The Living Environment.Jerold Nachison,chief,Congregate Management Committee—Tuesday,Sept.20, 1 p.m., Housing Services Branch,Dept.of Housing and Urban Development, Conference Room E. Washington,D.C. Oct.10—Long-Term Care Financing:Public Dollars,Public Responsi- Special Committee on Resource Management—Tuesday, bility.Jay Greenberg,associate director for research and project Sept. 200,3 p.m.,Conference Room E. director,Social/HMO Project,Brandeis University,Waltham,Mass. Metropolitan Housing and Redevelopment Authority Oct.18—Case Management: Focus on the Individual.Carol Austin, Advisory Committee—Wednesday,Sept. 21,9 a.m., HRA working for the Veterans Administration and the Northwest Long-Term Care Gerontology Center at the University of Washington,Seattle,Wash. Conference Room LL25. Oct.25—Long-Term Care Demonstrations in the Metropolitan Transportation Advisory Board—Wednesday,Sept. 21, Area.Speakers: representatives from several demonstration projects in 2 p.m.,Council Chambers. the Area. Committee on Metropolitan Commissions—Wednesday, Nov.8—Epilogue: Public Policy Issues.Session will summarize major issues and concerns,and identify issues that merit further attention. Sept. 21,3 p.m., Conference Room E. Registration is$35 (checks payable to: Metropolitan Coun- Metropolitan Council—Thursday,Sept. 22,Council cil) and is limited to about 200 persons. Mail to Council Chambers. planner Paul Riddle, 300 Metro Square Bldg.,7th and Robert Metropolitan and Community Development Committee— Sts.,St. Paul, MN 55101. Thursday,Sept. 22,2 p.m.,Conference Room E. Program Development and Review Committee—Monday, CLASS OFFERED IN METROPOLITAN DECISION MAKING Sept. 26,5 p.m.,Conference Room E. Management Committee—Tuesday,Sept. 27, 1 p.m., Former Council Chair Charles Weaver and former member Conference Room E. Todd Lefko will teach "Metropolitan Decision Making" on Committee on Metropolitan Commissions—Wednesday, Tuesday evenings beginning Oct. 4 at the Metropolitan Coun- Sept. 28,3 p.m., Conference Room E. cil.The course is offered through Metropolitan State University. Metropolitan Health Planning Board—Wednesday,Sept. 28, The class will review the structure, processes and politics of 4 p.m.,Council Chambers. metropolitan decision making and examine issues such as inter- Metropolitan and Community Development Committee— governmental relations,transportation, social development and Thursday,Sept. 29,2 p.m.,Conference Room E. 020 3 VC , g.:3 J-412Tagez 4,1„v , &537 "7/ /U3 /C- 1) (t/t/ziSILI 5537 , , .,Lia,e( /, - / //2_ • - lie,4)_e_. ir -60-2 /2Al 'pj /43 ) II-A4-,Z4-14-: 3, 1 ,co:c-t 503U -e-g-r. o- 72-carez /7. 311-et0, ) 0-71-0(1 biv-La t I 1**:\ 'rt-Li - , 01111F ,. 'il , 1fItio'14 ‘ . -iti - I NI . '141itilr \ isa4- ‘ ) 0 „ 1 , , .P ,'-, F11-' Te ‘ i‘i11111 - 114''' \ 4 . 0A.'k '' ill .i2: 4-1 .4 3ff f” cilktU14i1e114-wIlA a 7 MEMO TO: Mayor and City Council FROM: Tom Brownell , Chief of Police RE: Game Hunting with Firearms DATE: September 29 , 1983 Introduction As a result of continuing complaints from citizens residing within the current area where hunting with firearms is permitted, the question of hunting within the City limits of Shakopee should be addressed by Council . Background The current restrictions are designated by the City Code : 1 . That only B-B guns , shot guns with shot shells , or bows and arrows are used. 2 . That shooting is done on contiguous tracts of at least forty acres . 3 . That the person shooting either owns or has the written per- mission of the owner of the tract . 4. That the gun is not discharged within 500 feet of a building or public road. 5 . That the area within which the shooting is done lies south of 13th Avenue extended easterly and County State Aid Highway 16 , east of Spencer Street and County Road 79 . Nothing in Subdivision 3 of this Section shall apply to the discharge of firearms in such areas , and under such conditions of supervision, as the Council may specifically permit . The complaining citizens are concerned about the safety of persons and property. The majority of persons hunting in the permitted areas are not Shakopee residents . The City has experienced residential growth in the area since the issue was last evaluated by Council . Alternatives 1 . Maintain the status quo. 2 . Move the boundaries of the "hunting permitted" area to the south. 3 . Eliminate hunting totally from the City limits . Recommendation Conduct a public hearing to propose eliminating firearm hunting within the City limits of Shakopee . It is easier for police to explain and enforce "no hunting" than the current ordinance. Game Hunting with Firearms Page Two September 29 , 1983 Action Requested Direct the appropriate City staff to publish a public notice eliminating firearm hunting within the City limits of Shakopee at the earliest possible date . TB/jms ,w�a . .. � �i ..-'..-_-.;---,:•---,....--,:....,-;:-\-- f �` • - ` /74 33 I / [ )s i 1 I s l :, )S ii! 4 F I: .' S t j.J A 3 ` - ` • • — _ ------7--—i•4:':-Fit' _ — — ItirOr . 1 _ I -j fly 1 e F s 'Al -_, A. _ _ , _ 1, _, _ _ , _ __ , \ _ _ .„,. ..,o ,,,,.. _ „, , / _ _ , , . „, a :,,t , , _ _ !• �� I y I r _ - _ i J. 1---- i -----7.,t A .�; ' f Is ?,, , „ ,_,.,,, , , . .. i . .. \,, i .c,,.....„17 . ,, , . . . CITY OF SHAKOPEE SUBSCRIBER COUNT DAILY / WEEKLY REPORT TOTAL � ° l / J b / msJ lit,' GRAND • DATE MON TUES WED TRIMS P'RI .T L it , UNIVERSAL - Ch. 2-13 TIER I - Ch. 2-43 .Econovision Z.c 1 --a, f Econo/ 1 or more prem. , .6 • 1 I ti TIER II - Ch. 2-58 Basic Basic / 1 or more prem. PACKAGES (CHASKA ONLY) MINIVISION - 2 prem. MAXIVISION - 3 prem. TOTALVISION - 7 prem. PREMIUM HBO TMC MAX • SHO I ... 3 DISNEY Z 3 1. 0L! ` r/ BRA ! 1 HTN a t SPECTRUM ,� ai 33 c ADDS (DAILY INSTALLS) ii 7, 1 ' i 1I 1. - Eta 0 CONNECTS C`10 1 ! �fZz 91.7 L.3 DISCONNECTS (DAILY) TOTAL c�L( 'y 2nd TV SETS j Memo To: John K. Anderson, City Administrator From: Gregg Voxland, Finance Director Re: Hauer's Addition - Unassessed Costs - Informational Date: September 27, 1983 Council Meeting of 9/20/83 Follow-up: 1 . Hauer Escrow I do not have nor do I recall having ever seen any documentation con- cerning the Hauer escrow. It has been my understanding since I came to work for Shakopee that the escrow was for future road costs. This concurrs with the City Engineer's actions in reducing the assessments when Parkridge Drive was built and applying the escrow to that pro- ject. 2. Status of Assessments and Bond Fund There are two years yet to pay on the assessments. Most of the parcels on Hauer Trail have already paid off their assessments. The status of the bond fund was addressed in my memo of 6/17/83. The fund is close to a zero net fund balance now but with future interest pay- ments exceeding interest revenue, it may run short around $25, 000 by 1/ 1/86 maturity date. There is about $23, 000 in delinquent assessments, most of which is green acres. The delinquent assessments are included in the fund balance which makes it look relatively better than the cash position fund because the delinquents are not cash in hand or expected to be collected soon. The fund will probably run out of cash in 1984 unless some action is taken. In the proposed 1984 budget, the part of the remaining balances of the 1987 & 1973-B are scheduled to be transfered into this fund to alleviate the situation. The Hauer Trail assessments are not the only ones in this bond fund. Oaobe r 1983 4sy en 9 .2--/-6,27 t Memo To: John K. Anderson, City Administrator From: Gregg Voxland, Finance Director Re: Auditor Selection (9/16/83 Meeting Follow-up) (Informational) Date: September 19, 1983 Introduction & Backround The following supplemental information requested at the 9/16/83 Council Meeting. 1. Price and scope of work if the State did the audit. The proposal from the State Auditor's Office is attached (Attachment A) . They were provided with the same Request for Proposal and request for information on the management letter as the private firms. They are not responding with the same type of audit package as the other firms. If the State comes, they are going to do a financial and compliance audit. The City has only requested a financial audit. While there is some overlap between a financial and compliance audit, the latter is to specifically look at internal control and compliance with statutes, administrative rules, ordinances, etc. A financial audit covers parts of these things as the auditor notices them but they are not specifically a material part of the audit program. The estimated price quoted by the State is $13,000 but they will bill based on actual hours and mileage. 2. Sample management letters and cover letter on what the City is buying in a management letter. We are not buying a manage- ment letter in the sense that it is separate from the audit. The letter is a non-numerical or non-financial report to Council of things observed in the course of the audit. A. Attachment B is the cover letter and samples from Deloitte Haskins & Sells. The cover letter discusses their approach to management letters and from the greater variety of comments in the samples, including some analysis of financial operations, it appears that this firm may review some areas that others don't go into as much i.e. personnel, utility rates. The samples attached are voluminous but do cover a variety of items and is well done. B. Attachment C is the cover letter and samples from Afinson, Hendrickson, & Co. Their cover letter also goes to greater lengths than others to explain the purpose and their philosophy behind a management letter. C. Attachment D is the letter and samples from George M. Hanson & Co. In some of the samples, this company has reviewed and presented some analysis of operations of funds. j D. Attachment E is the letter and samples from Wilkerson, Guthman, & Johnson LTD. The samples are from a much smaller city and a larger city although the particular larger city in question is probably still developing and refining their financial management. E. Attachment F is the letter and samples from Jerome Jaspers & Co. The samples are from Shakopee and another city. F. The proposal from the State contains management letter samples. They appear to be from a much larger city. 3. The other area Council discussed was having another consultant come in to review the City's operation. A preliminary estimate of cost is $8,000 to $12,000 to look at police, public works, finance, and general government. If finance can be considered one-fourth, then the fee for finance would be $2,000 to $3,000. Taking this course of action would not change what the City gets from an auditor or reduce their fee. It appears to me at this point that most of what a consultant would review is not what an auditor would look at so we may not be talking apples and apples. Whether the Council has another consultant come in or not, I believe there is significant value to having a different qualified auditor with experience in other cities and with the "Certificiate of Conformance". 0101 Oq c-'041,44''�, STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR a'* o SUITE 400 01 • 555 PARK STREET t V SAINT PAUL 55103 ARNE. H. CARLSON SIMM AUDITOR r jju.) CiTY September 15 , 1983 Honorable Eldon A. Reinke, Mayor and Members of the City Council City of Shakopee 129 E. First Avenue Shakopee, Minnesota 55379 Dear Mayor Reinke and Members of the City Council : We are pleased to have the opportunity to submit a proposal for the audit of the City of Shakopee and the Housing and Redevelopment Authority for the year ending December 31, 1983. If you have any questions regarding this proposal or any other matters, please write or call me at (612) 296-4717. Sincerely, Warren Hanson Director of Municipal Audits WH:pt Enclosure AN EQUAL OP UNITY EMPLOYER PROPOSAL TO PROVIDE AUDIT SERVICE FOR CITY OF SHAKOPEE For Fiscal Year Ending December 31 , 1983 Proposal to Provide Audit Services for City of Shakopee Table of Contents Page Technical Proposal : Overview 1 Background and Experience 1 Organization 2-3 Understanding of Work 3-4 Staff Assignments and Resumes 4-10 Compensation and Terms of Payment 11 Sample Management Letter City of Shakopee Technical Proposal Overview Agency Purpose: The Office of the State Auditor (OSA) is a post-audit agency which makes examinations of governmental subdivisions within the state, attesting to the fairness of their financial statements as well as compliance with applicable laws and regulations. In general , the purpose of the agency is to facilitate improved financial management practice within the state through its oversight programs and contribute to the ongoing economic education of public officials and the taxpayers at large. In addition, the agency compiles fiscal data on governmental subdivisions, making these reports available to the legislature and the public. Also, the agency has instituted a program to identify and assist local governmental units that are confronted with fiscal distress. Background and Experience The primary purpose of the Office of the State Auditor is to audit governmental units. State and Local The clientele of the Office of the State Auditor consists primarily of governmental units. We are responsible for the audit of Counties, Cities of the First Class, Regional Development Commissions, Soil and Water Conservation Districts, Housing and Redevelopment Authorities and several Metropolitan type activities. In addition, audits are made of School Districts, Cities, Townships and other governmental units when requested by the governing body, freeholders (taxpayers) or voters. Our primary mission is the audit of governmental units. Specific Audits Performed by State Auditor Some of the City audits performed by the State Auditor for the year ended December 31 , 1982 were: City of St. Cloud City of Zumbrota City of Proctor City of Eveleth City of Gilbert City of Deer River City of Two Harbors City of Duluth City of Minneapolis City of Saint Paul 1 - Technical Proposal : Organization Structure The Office of the State Auditor has four divisions to accomplish its stated purposes. They are: 1 ) Audit Practice Division: The division conducts mandatory, requested and petition fiscal and compliance audits of local units of government. Reports generated include recommendations for improvement in local accounting practices. The Audit Practice Division has three subdivisions. - Counties, Cities, Schools and State and Federal Programs. 2) Governmental Information Division: The division collects, verifies, and publishes uniform fiscal data on all governmental units. Reports are disseminated to other state agencies, the legislature and the public. 3) Standards and Procedures Division : The division functions as a support service to develop, disseminate and/or implement any audit procedure which will contribute to more effective and uniform audits. 4) Management Services Division: The division provides technical assistance to non-audit clients as well as client organizations throughout the state. The assistance focuses on the identifi - cation and dissemination of innovative financial management tools and techniques which can be used by local government officials for fiscal decision making. In addition to the four divisions, the office has a support staff of attorneys and clerical . The legal staff complements the audit function because it provides assistance in researching legal and compliance matters. In addition, our library contains an up-to-date set of statutes, rules, and regulations necessary to provide timely advice. The legal staff also maintains a legal and compliance manual for each of the audit divisions. Because of the legal staff and experience of our audit staff in compliance matters, we can provide outstanding quality work relating to compliance issues. The State Auditor has performed numerous audits of Federal and State Grants and Revenue Sharing Funds. We are also conducting single audits (Attachment P audits) of all federal funds for several of our clients. The State Auditor is available at all times for consultation and stands ready to serve our clients whenever they have concerns regarding financial and legal compliance matters. Technical Proposal : Organization (Continued) Size The Office of the State Auditor has the staff who have the education , training and professional experience to perform city audits. The Office of the State Auditor is composed of the following staff: PHD' s College or Complement Graduates CPA' s MBA' s JD Administration 3 3 1 1 Audit Function - Management 4 4 3 Auditors 78 75 38 4 I Support Staff - Attorneys 2 2 2 Other 10 Understanding of Work General The financial and compliance audits of the City of Shakopee and the Housing and Redevelopment Authority will be made in accordance with generally accepted auditing standards and pursuant to Minn. Stat. Sec. 471 .697. The procedures followed will be in compliance with those prescribed by the National Council on Governmental Accounting (NCGA) and will conform to NCGA Statement 1 "Governmental Accounting and Financial Reporting Principles" and the "industry Audit Guide - Audits for State and Local Governmental Units" . Scope of Audit Financial Audit Our understanding of the financial audit is to render an opinion on the financial statements of the City of Shakopee and the Housing and Redevelopment Authority for the year ending December 31 , 1983. We concur in the items listed in your Request for Proposal (1 thru 6) . Technical Proposal : Understanding of Work Scope of Audit (Continued) Compliance Audit In addition to the financial audit the State Auditor will conduct a compliance audit. Our findings resulting from this compliance audit will be presented in a Management and Compliance Letter. The letter will contain our opinion on the City's internal control systems. Material weaknesses noted will be discussed, along with recommendations to eliminate them. We will also review compliance with certain statutes, administrative rules, ordinances and/or Attorney General ' s opinions as we deem necessary. We will also review certain management practices with the idea of achieving operating efficiencies. An exit conference will be held with City officials prior to the release of the management letter. The City will have an opportunity to respond to our letter and the responses will be included in the management letter. A sample management letter is attached. Staff Assignments Division Director The audit will be directed by the Director of Municipal Audits. Audit Manager (Director) The Audit Manager assigned will be responsible for all facets of the audit such as: - Responsible for designing the audit program. - Coordinate the audit staff and make the various audit assignments. - Verify that the audit was conducted in accordance with the audit program. - Determine the audit timing and staff needs to meet the various deadlines. - To provide supervision and review the work of subordinates. - To supervise and prepare drafts of the audit report and the final report (including the Management and Compliance Letter). 1 Technical Proposal : Staff Assignments (Continued) Senior Staff The Senior Staff will : - Assist the audit manager in researching, planning and preparing the audit program. - Supervise and review the work of the junior staff. - To implement audit in accordance with the overall audit plan. - To provide technical assistance to the junior staff. - Prepare working papers. Junior Staff The Junior Staff will : - Conduct audits in accordance with the detailed audit program. - Document audit findings. - Prepare working papers. We are including background information on the individuals who will probably be assigned to your audit. WARREN HANSON, LPA LOCAL GOVERNMENTAL AUDITOR - DIVISION DIRECTOR Minnesota Office of the State Auditor Experience - 35 Years As Division Director of Municipal Audits, Mr. Hanson is entirely respon- sible for the overall supervision of all city audit crews. With 35 years experience in the Office, he has worked on audits of: First Class Cities (Minneapolis , St. Paul, Duluth) Cities School Districts Counties Special Districts Prior Audit Experience Internal Auditor - General Mills Education Bachelor of Business Administration - Accounting major, University of Minnesota, Minneapolis, Minnesota Governmental Accounting and Auditing course - University of Minnesota Office of State Auditor courses: Municipal Finance Officers Association Certificate of Conformance Electronic Data Processing Auditing Advanced City Audits course - Minnesota Society of Certified Public Accountants Financial Auditing for Governmental Auditors - Peat , Marwick, Mitchell & Company Professional Achievements Licensed Public Accountant (State of Minnesota) - f; JAMES KAIHOI, LPA LOCAL GOVERNMENTAL AUDITOR - DIRECTOR Minnesota Office of State Auditor Experience - 20 Years Mr. Kaihoi's responsibilities as a Director include conducting assigned audits and supervising at least one audit crew on a continuing basis. In this capacity he has worked on audits of: Cities Townships School Districts Relief Associations Education Bachelor of Arts - Accounting major, St. Cloud State University, St. Cloud, Minnesota Office of State Auditor courses: Introduction to Computers Electronic Data Processing (EDP) Audit Specialist seminar EDP Auditing Professional Achievements Licensed Public Accountant (State of Minnesota) 7 CLIFFORD FREDRICKSON, LPA LOCAL GOVERNMENTAL AUDITOR - DIRECTOR Minnesota Office of State Auditor Experience - 21 Years Mr. Fredrickson, as a Director, conducts assigned audits and supervises at least one auditing crew on a continuing basis. He has audited or been responsible for entities such as: School Districts Cities Townships Fire Relief Associations Prior Audit Experience Accountant - Coronet Window Company Auditor - Accountant - Marigold Dairies Education Minneapolis Business College Accounting extension course - University of Minnesota Office of State Auditor courses: Municipal Finance Officers Association Certificate of Conformance Electronic Data Processing Auditing Professional Achievements Licensed Public Accountant (State of Minnesota) PEGGY AHOLA, CPA LOCAL GOVERNMENTAL AUDITOR - SENIOR Minnesota Office of State Auditor Experience - 3 Years Ms. Ahola supervises less experienced staff as well as plans and coordi- nates their assigned audit tasks on: Disaster Audits for Cities of Minneapolis and Rochester, Rochester Township, and Ramsey County Regional Development Commissions from Cities of St. Cloud, Mankato, Willmar, Appleton Metropolitan Council of the Twin Cities Metropolitan Waste Control Commission City of St. Paul departmental audits St. Paul Housing Redevelopment Authority West St. Paul School District City of Minneapolis departmental audits Education Bachelor of Arts - Accounting major, University of Minnesota, Duluth, Minnesota Office of State Auditor courses: Minnesota Finance Officers Association Certificate of Conformance Electronic Data Processing Auditing Local Governmental Auditing and Reporting course - Minnesota Society of Certified Public Accountants Professional Achievements Certified Public Accountant 9 - ERIC HAEHN LOCAL GOVERNMENTAL AUDITOR - INTERMEDIATE Minnesota Office of State Auditor Experience - 4 Years Mr. Haehn performs a variety of audit tasks on entities such as: Cities School Districts Fire and Police Associations Metro 11 - School consortium Metropolitan Waste Control Commission Education Bachelor of Business Administration - Accounting Major, St. Cloud State University, St. Cloud, Minnesota Office of State Auditor courses: Municipal Finance Officers Association Certificate of Conformance Electronic Data Processing Auditing City of Shakopee COMPENSATION AND TERMS OF PAYMENT We propose to conduct a financial and compliance audit of the City of Shakopee and the Housing and Redevelopment Authority for the year ending December 31 , 1983 at an estimated cost of $13,000.00. This would include approximately 480 hours of audit time and any travel expense (mileage) incurred. If the actual costs are less than the proposal , the City would be billed only for the actual costs incurred during the audit. If at any time during the course of the audit it would appear that additional work would be required and additional audit costs incurred, the City would be notified immediately. Periodic progress billings shall be submitted as work progresses, but not more often than monthly. Respectfully submitted, OFFICE OF THE STATE AUDITOR Director of Municipal Audits 1 • • \-- STATE OF MI OFFICE (". THE STATE $X 5TRIE: ARNE H. C4RLS0', 296-2551 OR P.Thyor and Members of the City Council City of - , Minnesota A copy of the Management and Compliance Letter we prepared as a result of our audit of your financial statements for 1981 is enclosed. Our opinion, dated May 14 , 1982 , on your financial statements was issued with the City 's annual financial report. The formulation of an opinion on your financial statements is the primary purpose of the audit. We have a responsibility and commitment to assist you in achieving and maintaining a good financial management system. To that end, we are including in our report, recommendations which we think may improve your financial management system. In addition, we intend to be readily available throughout the year to assist you in imple- menting any of our recommendations. Our management and compliance letter is not intended to be critical , but rather to provide you with helpful recommendations that will aid you in improving your financial management system. If you have any comments or questions regarding the report or any other matters, do not hesitate to contact me or any member of the staff. Sincerely, \ C:Q.Ata Arne H. Carlson State Auditor AN EQUAL '''ORTUNITY EMPLOYER C \A It STATE OF M. I OFFICE OF TPE V_Tri ' A '‘E H. CARLSC" 296-2551 AuDiToiz 22 , l2 :Thyor ot te city Council Minnesota We have examined the financial statements of the City of for the year ended December 31, 1981. Our opinion on those financial statements, dated May 14 , 1982 , was issued with the City 's annual financial report for 1981. As part of our examination, we made a study and evaluation of the City's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation was to determine the nature, timing and extent of the auditing procedures necessary for expressing an opinion on the City 's financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole. However, our study and evaluation disclosed the conditions presented on the following pages that we consider to be weaknesses. The City's administration is responsible for establishing and maintaining a system of internal accounting controls. This system must provide reasonable assurance that assets are safeguarded against loss, and that transactions are executed according to proper authorization and recorded properly to permit reporting in accordance with generally accepted accounting principles. We reviewed compliance with certain statutes , administrative rules, ordinances and/or Attorney General' s opinions as we deemed necessary or appropriate. This review did not include all possible regulatory provisions which ray be applicable, and was not intended to provide assurance of full compliance with all regulatory provisions. However, we noted no instances of noncompliance with legal provisions reviewed. We did not review compliance with federal grant regulations in accordance with the U.S. Office of Management and Budget Circular A-102 , Attachment P (single audit concept) . - 1 AN EQUAL O?PORT.. TY EMPLOYER In conjunction with our examination of the financial statements , we have reviewed certain management practices . This review was not designed nor intended to be a detailed study of every system, procedure and transaction. Accordingly , the findings presented in this report should not be considered as all-inclusive of areas where improvements may be needed. We are presenting the following recommendations to assist you in maintaining effective internal control and achieving operating efficiencies. These recommendations are especially important and deserve your attention. Internal Accounting Control Items Arising in Prior Years 1. Segregation of Duties - Bank Reconcilements In our 1980 report we recommended that the Department of Finance and Management Services (Department of Finance) review the assignment of duties to determine whether it would be practical to separate the responsibility for reconciling the City ' s cash account from persons receiving and recording cash transactions , Internal control is strengthened by having the cash account reconciliation performed by persons having no responsibility for the receipt or recording of cash transactions. Client' s Response Responsibility for the reconciliation of the City ' s General Account has been transferred from the Treasury Division to the Accounting Division of the Finance Department commencing in February 1982. The Treasury Division prepares the print- out of outstanding and cashed checks and this information is then forwarded to the Accounting Division where the reconcil- iation is completed. 2 . Investment Controls In our 1980 report we recommended that the Department of Finance review internal control over investments including the need for control records and periodic review of investment transactions made by the Treasury Division. The examination of the investments indicated that the Department of Finance reviewed only the November investment transactions of the Treasury Division during 1981. Client' s Response The Department of Finance/Accounting Division reviewed investment transactions on. a monthly basis from February through October of 1982. It is the Department of Finance/ Accounting Division' s intention to continue its review on an on-going basis. - 2 - 3. Parks and Recreation Supply and Maintenance inteEIT5TtiETITEfilnd The 1981 audit of the Parks and Recreation Supply and Maintenance Fund again indicated that deficiencies in the internal control of material and supply inventories exist • which may result in services and materials provided to other funds not being billed. In the 1980 audit we recommended that inventory control procedures be reviewed to determine that : . Supervision of storehouse operations is adequate. . Proper billing procedures are followed. . Periodic physical inventories are taken and compared with perpetual records. The Department of Community Services has issued administrative orders to implement these recommendations after the 1980 audit. We recommend that the Department of Community Services continue to monitor the inventory control procedures to see that the procedures are followed. Client ' s Response The Department of Community Services is monitoring the inventory control procedures to see that they are followed. Internal Accounting Control Items Arising This Year 1 . Disbursement Auditors The Audit Section (disbursement auditors) of the Department of Finance makes the final approval on all disbursement requests before a check is written. Our evaluation of the disbursement procedures disclosed that disbursement auditors, in addition to having final approval over disbursements, have access to the following : . Unissued pay instrument forms • Unissued checks . Check signing machine and signature plate. Internal control would be strengthened if access to the above listed items were restricted and the preparation of and issuing of checks was performed by someone not empowered with authorizing disbursements. - 3 .-. Client's Response Unissued pay instruments will be kept in these locations : in sealed cartons in the basement vault and the check signing room, and in opened units in a locked file cabinet. Respon- sibility will be assigned to an ccounting staff person for distribution of the pay instrument forms , and also responsibility for the key to the cabinet. Unissued vendor checks will be kept in these locations : in sealed cartons in the basement, vault, and in men cartons at two locations , one in a locked file cabinet in the Accounting Division office, and the other in a file at the back of the Data Processing machine room. The resPonsibility will be assigned to accounting staff personnel for issuance of vendor check stock and the securing of same. Unissued vendor checks and unused issued vendor checks will be inventoried monthly by accounting section staff. Check signing responsibility will be assigned as follows: Accounting Section staff will be responsible for safeguarding the two keys ; Auditing Section staff who do not authorize disbursement will be responsible for check signing. 2. Pay Instruments for Contract Payments Not Comnleted Pay instruments used for contract payments are not always completed. The instruments contain a form for providing the following information: • Amount of contract . Prior payments • Current payment . Total payments . Balance due on contract We recommend that the Audit Section require that contract payments be accompanied by pay instruments providing the above contract information. Instruments not completed should be returned, to the appropriate department for completion. The furnishing of contract information is an indication that the contract payments are being monitored by the appropriate departments in order to reduce the chance of overruns , pricing errors, etc. The Audit Section should check instruments to see that the information on them is correct. Client' s Response All incomplete pay instruments used for contract payments are now being returned for completion. - 4 - 3 . Authority for Disbursements Pay instruments used by the City for the disbursing of bills are approved by the department head but the authority for the disbursement (i .e. council action, administrative order, prior approval by the purchasing division of the Department of Finance) , indicating the department head' s authority for approving the disbursement was not indicated on a number of instruments selected in our sample of disbursements. The current method relies on the Purchasing Division and/or Audit Section of the Department of Finance to authorize the disbursements. We recommend that instruments not indicating authority for a disbursement be returned to that department and completed before being approved by the Audit Section. The Department of Finance has issued written instructions to all Department Heads , Offices and Department Accountants stating that all bills presented to the Department of Finance must be accompanied by the authority for the disbursements . The instructions also list the specific authorizations as follows : . Administrative Order Number . Council Resolution or Ordinance Number . Agreement Number . Lease Number . Court Orders . Contract Number or Bid Number . Purchasing Authorization Order Number Client ' s Response All pay instruments which do not include the authority for the disbursement are being returned for completion. 4 . Accountability of Receipts The receipting of cash is done on a department or division level. Each department or division obtains a batch of receipt forms from the Department of Finance. A record of the particular series of receipt forms and to whom issued is maintained by the Department of Finance. Our examination disclosed that once a series of receipt forms is issued there is no monitoring or follow-up as to their disposition. We recommend that a periodic review be done by the Department of Finance to see that receipt forms issued are accounted for. - 5 - Client's Response A system will be designed to audit receipt forms issued to the departments. This will consist of a test of a segment of the receipts on a regular schedule. Management Practices Items Arising in Prior Years .1 . Notices of Property to be Sold As noted in the prior audit and again this audit, a review of the notices of property to be sold indicated that a number of notices have not been closed out. Some of these notices are several years old. The Department of Finance conducted a review of these notices and closed out a number of them in 1982, but has not continued the review of the notices on a regular basis. We again recommend that the City continue its efforts to close out notices of property to be sold in a timely manner and that the City reestablish a continuing process of reviewing the notices. Client' s Response The open notices of property to be sold were worked on during 1982 to resolve closingthem; the majority were closed as a result; there will be a continuation of the system for closing open notices on a regular schedule. 2. Permanent improvement Revolving Special Assessment Fund The Permanent Improvement Revolving Special Assessment Fund is used to account for revenues, expenditures and fund balances of City construction projects . Numerous projects , often financed from various sources are included in this fund. Financial records are maintained both by the Department of Finance and other departments of the City. In the prior audit we recommended that the City continue to reconcile the financial data. of the projects between the Department of Finance and other affected departments. This reconciliation was done as of December 31, 1980 but has not been done since. We recommend that the City reconcile the financial data of the projects between the Department of Finance and other affected departments to prove their accuracy and remain informed of project financing. - 6 - Client' sEEREaut . . _ Financial records for P. I.R. by Finance Department and other City departments are in substantial agreement, and the reconciliation of Finance Department and other City department P.I.R. records will continue. afhpae_m2ht Practices Items Arisin This Year 1_ Recognition of Pa ables As part of our audit, an analysis of year-end payables was made to satisfy ourselves that they were fairly presented on the City 's financial statements. An analysis of 1982 payments disclosed that there were a number of significant payments made in 1982 for services rendered in 1981 that were not being shown as accounts payable/due other governments on the December 31, 1981 financial statements. The most significant of these items were as follows : . Utility bills for the months of October, November and December that were not processed nor paid until 1982 and were not included as Payables. • Hospitalization insurance for the month of December which was paid in January 1982 was not listed as a payable. 1 • The employer' s (City' s) share of fringe benefits ) i (e. g. Public Employees Retirement, Social Security, i and Housing and Redevelopment pensions) , an amount based on estimated accrued salaries payable as of year-end, is included in the reserve for encumbrances of the General Fund and not included as a payable. We recommend that the following measures be taken in the i 4 recognition and presentation of payables : Payments in the first part of the current year (January and February) should be analyzed to determine if they are for services rendered or goods received in the prior year. In analyzing 4 these payments it should be noted as to the time the City received the goods or services (e. g. an October bill being processed in January will a indicate there are additional payables that have not been processed) . Every reasonable effort a " should be made by the Department of Finance and the various department accountants to see that bills are processed for payment in a timely manner in order that disbursements are reflected as expenditures/expenses in the appropriate accounting period. - 7 -. • . The City's share of fringe benefits for salaries payable as of December 31 should be shown as part of the salaries payable and not as a reserve for encumbrances. Presenting a liability as an encumbrance understates expenditures/expenses and overstates the fund balance. Client ' s Etapnse The Finance Department/Accounting Division has asked Department Heads, Department Accountants and Fund Managers to cooperate in : 1) processing bills in a timely manner, and 2) to show as 12/31/82 payable on year end statements those bills for 1982 materials or services which are not paid in 1982. 2. Interfund Receivables and PaypIlles (Due To and From Funds) ___ Interfund Receivables/payables as of year end are not recognized on a consistent basis. interfund billings are done by the use of interdepartmental billings (ID' s) . In a number of instances these receivables/payables are shown as an account receivable/payable rather than as a due to/due from another fund because the corresponding receivable/payable may not be recognized in the other fund. Classifying interfund receivables/payables as accounts receivable/payable results in an inaccurate classification of assets and liabilities and could result in the omission of assets/liabilities in one fund thus overstating or understating a fund balance. We recommend that every reasonable effort be made to set up interfund receivables/payables and to classify them as such, rather than showing them as an account receivable/payable. Client ' s Response The Finance Department/Accounting Division has asked Department Heads, Department Accountants and Fund Managers to cooperate in Communicating inter-fund transactions between the affected Fund Managers and Fund Accountants with the goal in mind of properly reflecting the "Due To" and Due From" on financial statements. - 8 - CC. . . e. Previously Reported Items Resolved We would like to take this opportunity to report on the items included in our previous management and compliance letter dated December 8 , 1981 , for the audit of fiscal year 1980, which have been implemented or otherwise resolved. Item Resolution A substantial portion of the City ' s For the year ending December 31 , cash balance is invested in short- 1981 the City accrued interest term securities. Earnings from income on investments. such investments are measurable and in many cases available to meet liabilities of the current period but the appropriate accrued interest at year-end has not been reflected on the financial statements. A review of the accounts receivable For the year ending December 31 , of the Public Works Traffic, Signal 1981 the fund accountant expensed and Lighting Maintenance Internal as bad debts accounts receivable Service Fund indicated that approx- that were two years or older. imately one-third of the dollar Commencing in. 1982 an allowance amount of these accounts was one for bad debts will be established year or older. that will essentially amount to the total of two year old unpaid accounts. Our review of year-end payroll The audit of the payroll for the accrual revealed various methods year ending December 31 , 1981 and periods were used by the indicated that the City has departments of the City for implemented a uniform method determining the year-end accruals, of accounting for year-end payroll accrual . All of the foregoing items were considered in determining the nature , timing and extent of audit tests applied in our examination on the 1981 financial statements and this report does not affect our opinion on these statements dated May 14 , 1982 . After you have reviewed these suggestions , we would be pleased to discuss them with you and assist you. in implementing them. We would like to thank the Director of the Department of Finance and Management Services, his staff , and department accountants for their cooperation. Sincerely, ARE H. CARLSON State Auditor - 9 - 1 Deloitte Haskins Sells 1360 Northwestern National Bank Building 55 East Fifth Street Saint Paul, Minnesota 55101 (612) 291-8110 Cable DEHANDS Mr . Gregg Voxland September 14, 1983 Finance Director City of Shakopee 129 East First Avenue Shakopee , Minnesota 55379 Dear Mr . Voxlarid : On behalf of your City Council , you have asked for additional information about Deloitte Haskins & Sells ' approach to issuing "management letters", and we are pleased to provide the following information. OUR APPROACH Our examination of your financial statements will be conducted using our Firm' s constructive service approach to auditing. Consistent with our Firm' s dedication to our goal of providing personal service that goes "Beyond the Bottom Line", we will review the accounting and control systems which have an impact on the quality of your financial data. Furthermore , we will review other aspects of your operations with a view to making such constructive suggestions as we feel are practicable to assist you in your efforts to operate more effectively and efficiently. While this approach does not specifically constitute an operational audit in the fullest sense of the term, it will enable us to highlight those areas which we believe warrant your attention. We will initially discuss our findings with the administrative personnel who are directly responsible for each particular area ; then we will review drafts of the comments with the Finance Director and the City Manager . At the conclusion of our audit , after these reviews and any corrections , we will communicate our comments and recommendations in a management letter to the City Council. As part of our audit review of internal control , we may discover material weaknesses in internal control. We are required by generally accepted auditing standards to communicate such weaknesses to the City , and it is our practice to include such items in our management letter . We will also report upon any instances of noncompliance with applicable laws , regulations , and policies . Mr . Voxland September 14, 1983 2 We always request an opportunity to meet with the City Council and its committees to review the results of our annual audits , and the contents of our reports . Our reports in these meetings will be only as detailed as City officials deem appropriate. The more important aspect of our presence is to allow time for discussion and Council members ' questions concerning the audit . EXAMPLES Included on the following pages are selected examples of findings and recommendations we have developed for our city government clients and included in our management letters in recent years . Our letters typically include Standard introductory language covering our review of internal controls , and disclosure of any material weaknesses in internal control Improvements implemented Current year comments and recommendations Standard discussion of management ' s responsibility for internal accounting controls . OTHER SERVICES Our constructive service approach is not limited just to the annual audit . As a client of Deloitte Haskins & Sells , City officials will receive The Week in Review - a publication of our Firm which summarizes current developments and literature relating to accounting and financial management . Memoranda - periodic communications for our local governmental clients relating to a topic of current interest Special Papers - papers written by DH&S personnel dealing with specific subjects in depth . Subjects have included . . fund balance levels . . single audits under OMB Circular A-102 MFOA Certificate of Conformance. Mr . Voxland September 14, 1983 3 We at Deloitte Haskins & Sells attempt to serve our clients on a year-round basis . Wemaearain in orde�dto beic nconstantlytact with City officials throughout the y knowledgeable about your operations and alert for situations where our assistance is needed . willWe maximizeethethat benefitsnofnourg attention to your operations services . - o 0 o - In the final analysis , however , the test of high quality professional services comes down to people and their commitment to and interest in your operations . Our engagement team is ce composed of andareal desire toserve the public pewho all ve elve eunsector hin an governmnments an outstanding manner . We look foward to being able to serve the City of Shakopee as your independent accountants and auditors . Very truly yours , DELOITTE HASKINS & SELLS John B. Lilja anager Honorable Mayor and Members April 1 , 1983 of the City Council, City of , Minnesota Dear Sirs : We have examined the financial statements of the City of for the year ended December 31 , 1982 and have issued our report thereon dated April 1 , 1983. As part of our examination, we made a study and evaluation of the City ' s system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards . The purpose of our study and evaluation was to determine the nature , timing, and extent of the auditing procedures necessary for expressing an opinion on City ' s financial statements . Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole. The observations reported herein should be considered in the context of the responsibility of management for establishing and maintaining a system of internal accounting control, the objectives of and inherent limitations on such a system, and the definition of a material weakness for purposes of this report , which are described in the Appendix to this report . Our study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the City of taken as a whole. However , our study and evaluation disclosed no condition that we believe is a material weakness . IMPROVEMENTS IMPLEMENTED IN 1982 During 1982, the City administration took the following action on comments made by us as a result of our 1981 examination : . The following changes were made in liquor inventory procedures : . , inventory reports are monitored monthly . . adjustments to perpetual inventory records are review for propriety . . explanations for differences between the physical count and perpetual records are documented . . manual extension of the beer inventory are recomputed on a test basis . , extensions of liquor invoices are checked on a test basis . . The payroll register is reviewed monthly by the personnel department to insure the propriety of pay rates being used . In addition, the City has implemented changes in accounting for special assessments and compensated absences in accordance with pronouncements of the National Council on Governmental Accounting. LICENSES AND PERMITS Observation Various department personnel issue licenses and permits , maintain the ticket Cbooks , Teceivedhisdsubsequentlyreceived transfePredeto for the permits . a the cashier at" City Hall. Recommendation All licenses and permits should be paid for at the cashier ' s window, with the customer using their receipt as proof of payment . The department personnel could then issue the license/permit and note the receipt number on the permit to indicate that the payment had been made. In addition, all licenses and permits should be prenumbered to maintain additional control over permits issued . In the case of variance/conditional use permits , where payment has previously been made with an application (and held for approval) one of the following procedures could be implemented : • Accept payment after the application has been approved , or . Require a small deposit upon application. This money could then be applied tfo=htheost costfofhrePiewstforfthose°peamits , or used to help pay not approved . Observation Business license renewals for any given year are required by city ordinance to be purchased prior to year-end . In the past , the City has held payments for these licenses in the City ' s vault until the first day in January. The cash received was thus not recorded on the City ' s books until the year in which the licenses were effective. Background Payment for licenses is required prior to year-end (mid-December for liquor licenses) to allow time to check businesses for compliance with various City ordinances . This helps spread out the work load for various City staff . Recommendation Cash received for business licenses and permits should be deposited upon receipt , and deferred revenue credited , so as to record and control these receipts properly. DISBURSEMENTS Observation During 1982, purchasing duties were shifted to the City Clerk, who also has access to manually prepared checks for general disbursements prior to mailing. Recommendation To insure adequate segregation of duties and internal control, the clerk who signs checks should prepare the checks for mailing and mail them subsequent to signing, and the City Clerk should not have access to them. IMPLEMENTATION OF ACCOUNTING PRONOUNCEMENT Background The National Council on Governmental Accounting (NCGA) is an organization which issues authoritative accounting standards for governmental entities. In December 1981, the NCGA issued Statement 3, "Defining the Governmental Reporting Entity", which is effective in 1983 for the City of Statement 3 defines the proper reporting entity for governments . Specifically , it requires the financial reporting of certain related organizations within one set of financial statements where the related organizations meet certain criteria, such as a common elected governing body. For the City of this may require the inclusion of entities in the City ' s general purpose financial statements which are currently not included (for example, the Housing and Redevelopment Authority and the Police and Fire Relief Associations) . Recommendation We recommend that the City set a formal timetable and responsibility schedule for the implementation of this important new accounting pronouncement. We will be pleased to assist in this implementation at your convenience. OTHER MATTERS During the course of our audit , several minor accounting matters came to our attention and our suggestions relative to these items were discussed with the Finance Director . Furwher comment on these matters in this report is not considered necessary. I . IMPROVEMENTS IN 1982 During our examination, we noted that the City made the during improvements 198 1981 Observation It was necessary to take several physical inventories of liquor stocks . 1982 Improvement It has been possible to reduce physical inventory frequency to quarterly and City officials plan to move to semi -annual or annual physical counts . ken re We recommend that physic�hiyeattOries sampleeoracycleocoontsoshould ften than annually . During the be taken on selected items to more efficiently test the perpetual inventory records . 1981 Observation Liquor inventory levels continue to appear high in relation to present sales volume� iIn ° ge andtock sizesevls in difficult . storage make access to individual brands 1982 Improvement The Avenue store was closed in May 1982 and itsore remaining inventory transferred to the . up Because of this change , ending inventory at is over last year . However , through the use of discount pricing, obsolete and slow-moving inventory is being disposed of . This is reflected by the improved inventory turnover rate inf1902 of 76 days , as compared to the 1981 rate at days . We recommend that the CWeYfeelcontinue that thereduce shoquldrestablishinventrY levels . In addition , and an inventory turnover goal which is realistic , attainablecan comparableoa dito monitoryanderages measure4ac7 dtual) performanThis gce thennbbee use throughout the year . 1981 Observation The unreserved fund balance at December 31 , 1981 was $284 , 740 or approximately 8. 5% of the 1982 budget . This fund balance still leaves little reserve for budget variations or emergency type appropriations . 1982 Improvement The unreserved fund balance at December 31, 1982 of the General fund has been increased to $378 , 934 , or approximately 10. 7% of the 1983 budget . In addition , the newly established Land Sale Trust fund has' a fund balance of $330, 221. The combined total of the two fund balances amounts to approximately 2O7 of the 1983 budget . II. WEAKNESSES IN INTERNAL ACCOUNTING CONTROL As part of our examination , we made a study and evaluation of the City ' s system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards . The purpose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion on the City ' s financial statements . Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole . The observations reported herein should be considered in the context of the responsibility of management for establishing and maintaining a system of internal accounting control, the objectives of and inherent limitations on such a system, and the definition of a material weakness for purposes of this report , which are described in the Appendix to this report . Our study and evaluation made for the limited purpose described in the first paragraph of this section would not necessarily disclose all material weaknesses in the system of internal accounting control of the City of taken as a whole. However , our study and evaluation disclosed no condition that we believe to be a material weakness . Our examination did disclose , however , the following conditions that , although not considered by us to be material weaknesses , are weaknesses in internal accounting control for which corrective action might be taken . • PAYROLL DISTRIBUTION Observation Several instances were found whereby procedures used to control the payroll distribution process were not followed as described by City policy . Specifically , various departments were not properly authorizing employees ' payroll check distribution by signing the appropriate payroll roster . Background In 1981 the City began a policy of controling the distribution of payroll checks . Departments are required to authorize the preparation of payroll checks by signing a payroll roster and to acknowledge receipt of the same payroll checks by signing the same payroll roster . Recommendation The City should assign someone the responsibility of monitoring compliance with this policy to insure that control over the distribution of payrolls remains adequate. LIQUOR CASH RECEIPTS Observation Cumulative count totals from the daily cash register tapes are not reported on the daily cash recap sheets by the various liquor facilities . Background The daily cash recap sheets prepared by the liquor facilities are used to record liquor sales . These sheets were designed to include daily cumulative count totals to be used as a control over the unauthorized use of the cash registers . Recommendation • Daily cumulative totals from the cash registers should be recorded on the recap sheets . Also , someone should be assigned responsibility to monitor these amounts to ensure that there is no unauthorized use of the cash registers . This recommendation may not be necessary at the store because of the controls established by the automated inventory system. III. ADMINISTRATIVE AND OPERATING MATTERS MUNICIPAL LIOUOR FUND Again this year , as requested by City Officials , we have reviewed the Municipal Liquor Fund ' s operations with a view toward providing constructive suggestions . Our observations relate primarily to the off-sale liquor operations . INVENTORIES Observation The December 31, 1982 physical inventory was not reconciled in detail to the perpetual inventory records . Rather , the inventory records were simply adjusted to the physical inventory , without any investigation of differences . Recommendation When a physical inventory is taken it should be reconciled on an item-by-item basis to the perpetual inventory records . The City should establish a tolerance range , which is acceptable to the City , for individual items to be over or short from the inventory records . Differences which exceed this range should then be investigated and explained by the liquor manager and/or accounting personnel. OPERATING RESULTS Observation As we pointed out last year , operating expenses for the stores continue to be higher than average for similar off-sale municipal liquor operations , in relation to sales volume . Background Data Relevant financial information for both stores combined for the last three years is summarized as follows ( In 1982, the Avenue store was open for 5 months only) : 1982 1981 1980 Sales $673 , 985 $695, 415 $646 , 903 Gross profit 112, 266 120, 459 125 , 920 of sales 16 . 7% 17. 3% 19 . 5% Operating expenses 139, 242 135 , 717 120, 759 • of sales 20. 7% 19. 57 18. 7% Operating income (loss) (26, 976) (15, 260) 5 , 161 • of sales (4 . 00) (2. 2%) 0. 87 The above information for 1981 and 1980 was again compared to a survey of eighteen municipal liquor stores , with off-sale operations only (data for 1982 is not yet available) . The following highlights were noted : 1982 1981 1980 Gross Profit /o: City ' s % 16. 70 17 . 3; 19. 5; Mean of survey 20. 4k 20. 5% Rank of City ' s operations 14th 17th /o of Operating Expenses to Sales : City ' s % 20. 7% 19 . 5; 18. 7; Mean of survey 13. 3k 12. 70 Rank of City ' s operations 2nd 1st • • of Operating Income to Sales : City ' s /o (4. 0%) (2 . 27) 0 . 8; Mean of survey 8. 4i 7 . 8k Rank of City ' s operations 19th 18th Recommendation We are aware that several changes have been made during 1982 that should improve the results of liquor operations . Further changes should be considered as needed to attain more favorable financial results . UTILITY RATES Observation During 1982 the Water Utility fund had a net loss of $14 , 393 because city water rates were insufficient to cover rising operating costs . Background Effective September 1 , 1982, city water rates were increased by approximately 28% over rates established June 1 , 1979 . Recommendation Utility rates (water and sewer) should be reviewed regularly on an annual basis , so as to ensure that utility costs are being recovered , and working capital maintained in these funds . PURCHASING PROCEDURES Observation In 1982, current written bids were not obtained for purchases of potassium permanganate or water meters . Background City policy states that items costing over $2 , 500 but less than $10, 000 should • be purchased based on at least three written quotations and that items costing over $10, 000 should be purchased through the formal bidding procedure . Recommendation The City should monitor the bid procedures followed on their routine purchases to ensure that they are in compliance with City policy . CENTRAL GARAGE Observation The fixed assets of the central garage were not transferred out of the General Fixed Asset Account Group and into the new Central Garage - Internal Service Fund when this fund was set up in 1982. Background An internal service fund of this type would normally include fixed asset accounts for the garage building and related equipment because these assets are used in performing the services of the fund . Furthermore , depreciation of such assets is a cost of the internal service operation which serves as a method of financing the replacement of such assets . Recommendation We recommend that Central Garage charges be set at a level which will provide for the cost of using fixed assets , i .e. , depreciation. This would allow the city to record the applicable fixed assets in the Central Garage fund and include the depreciation of these fixed assets in the costs to be recovered by charges to the user departments . In the future , it will be appropriate toset ochf arges es assets ,level which will provide for the replacement cost which is often higher than the cost of the assets currently in use . SPECIAL ASSESSMENTS Project Costs Observation wing Costs in�uorrethe basedCity onfor a not-torateof :services are charged projects Maximum 7o Engineering 7%7% Administration 2% Legal Also, the City charges interest on deferred special assessments at the annual rate of 8%. Recommendation The City should analyze project costs to determine if : . The percentages used reflect the actual costs incurred to administer the projects . . There are any other costs incurred by the City which also should be included as assessable project costs. The City should also consider charging all projects a standard rate for all identified services provided , to ensure that project costs are consistently applied and recovered . The standard rates used should be supported by the above mentioL analysis . We also recommend that the interest charge on deferred special assessments be reviewed to determine if this is a realistic rate in today ' s economy . Accounting Procedures Observation The City currently does not have an established set of procedures for : . Opening, closing and transferring project costs . . Documenting the source of funding for project costs and the expected completion date of the project . . Accounting for project costs on a multi-year basis for purposes of facilitating project close-outs and applying for State Aid funds on State Aid street projects . . Converting the special assessments accounts from a cash basis to an accrual basis to facilitate the preparation of financial statements . Recommendation Written procedures would enhance the documentation of project costs and thus improve the information flow regarding project cost recovery. Written accounting procedures should be developed by the accounting and engineering departments jointly . These procedures should include a general documentation package which can be used to facilitate the accounting for , documentation of and management of special assessment projects . IMPROVEMENTS IMPLEMENTED IN 1981 During 1981 , the City administration took the following actions on comments made by us as a result of our 1980 examination: • Adjustments to utility inventory are documented and a file is maintained by the City ' s accountant to facilitate subsequent review. • Quarterly reports are prepared on a timely basis showing the operating results of the liquor stores . ▪ Liquor inventory purchases are now made by each store ; thus, cost of_ sales is accurately allocated between stores and provides for more accurate operating data. LIQUOR FUND Observation The average cost of liquor inventory items was not computed on a timely basis during the last five months of 1981. Background In August 1981 , the City installed new cash registers in each of the liquor stores. Among other things, the registers are used to maintain the perpetual inventory of stock on hand . However , as part of this change in procedures, records of average inventory cost were not maintained for the rest of the year , because related computer software was not immediately available. Appropriate software has been obtained free of charge from Univac in 1982, and records of average inventory cost are now being maintained. Recommendation Accounting records of inventory costs should be maintained at all times , because such data is vital to an adequate audit of liquor operations. Observation The physical inventory summary for the September 30 inventory was prepared manually , and investigation of differences between the perpetual records and the count was made several weeks after the count . Background For best control results , physical inventories should be summarized , compared to perpetual records , and differences investigated as quickly as possible. Recommendation The Finance Department should monitor liquor inventory procedures to ensure that : . Inventory counts are properly taken. Adjustments to perpetual records are made correctly . . Reasons for differences between the count and the perpetual records are documented . ▪ Total dollar and unit differences are summarized . . All other matters are properly addressed . Observation During testing of the beer inventory , errors were noted in the extension of costs . Background We were advised that there is no testing by the Finance Department of the work performed by the liquor store employees . Recommendation The Finance Department should test the beer inventory done by the liquor store employees to ascertain that it is properly priced and that extensions are correct. Observation Vendor invoices for liquor are not tested by anyone in the Finance Department . Background The Finance Department generally reviews and tests the accuracy of alecomeoancexception laims for payment this� However , vendrprocedureandlarerinvoices lreviewed only have bb by liquor store personnel. Recommendation All invoices should be tested for accuracy by the Finance Department before payment is made. PAYROLL Observation The payroll clerk is informed of rate changes and rates for new employees by the Personnel Department. The payroll clerk has the responsibility of seeing that the change is made on the master file. However , there is no subsequent check to see that the proper rate was entered. Recommendation Pay rates should be reviewed on a periodic basis by the Personnel Department to insure that all pay rates are correct . In addition, the City should consider having the Supervisor of Personnel review the payroll check register before checks are signed to determine the propriety of the amounts. BUDGET Observation Budget amounts for revenues of the Library Fund and Revenue Sharing Fund were not formally approved by the Council. Recommendation All budget amounts should be included in the annual budget approved by the Council. Alternatively , budget amendment action should be taken by the Council. OTHER MATTERS During the course of our audit , several minor accounting matters came to our attention and our suggestions relative to these items were discussed with the Finance Director. Further comment on these matters in this report is not considered necessary. RECEIVABLES Observation The City ' s detailed records of special assessments and ad valorum taxes receivable do not agree with those of Hennepin County. Background It is not unusual for City and County records to disagree; however , this condition became more pronounced in 1981. We provided a method of reconciling ad valorum taxes , but this methodology has not yet been used by City staff . As a resuls- , audit adjustments were necessary to ensure a fair presentation in the financial statements . Special assessments records involve a large amount of detail. While a preliminary investigation of differences with the County has been done, City records must still be reconciled in detail with the County . Recommendation City records should be reconciled with the County in detail each year , and any necessary adjustments recorded on a timely basis . Observation The City has had a small receivable from the State of Minnesota open on its books for two years. Background We have been advised that the reason this receivable has not been collected is because the City has not been able to determine who should file a request for payment with the State. Recommendation The necessary request for payment should be filed with the State of Minnesota. The Finance Department should review its accounts regularly and follow up to ensure that old balances are resolved promptly . SPECIAL ASSESSMENTS Observations During 1981 , several projects were closed in which the amount assessed was less than the project cost . The difference was charged to theac�henbalancesofents thatln Excesaccounts of Construction Costs ," reducing g Background Where amounts assessed are less thaas,n projctsts , the expenditure and difference should be accounted for reduction in fund balance. Only where assessments exceed project costs does ,the lCity Charter require that the difference be recorded as a liability of the Recommendation Excess charges should be written off in 1982. FIXED ASSETS Observation A physical inventory of all fixed assets was completed in 1981. However , the "Asset Register" control not record for wpas developed only for general fixed assets , t blic . utility fund property . Recommendation The "Asset Register" control record for public utility property should be completed . Observations In compiling data for general fixed deassets setssfoerhthe ffinancial of statements , several errors were the asset register was not used. In addition, our examination ofthe detailed dlizcords revealed several errors in the types ofassets e . Errors were also made in depreciation computations for the public utility fund . Recommendation ly Finance Department management should asseterecords ,vand train ise the development and maintenance of the account clerks involved , soiasdto osensuensure that all concerned understand how to account FUND ACCOUNTING Observation be made in orer Numerous adjusments accountwere balancesrequired forothe 1981 finanaialto develop correct statements for the various funds. Background Several corrections were required becausethe1980 eri errors were made in recording adjusting journal entries from t. Recommendation We recommend that Finance Department staff exercise much greTr care as they record audit adjustments , and when the City ' s books are closed at the end of each year. The goal should be to have ending account balances be as correct as possible prior to audit , so as to minimize the disruptive effects of audit adjustments . ICE ARENA At the request of the City ' s Parks and Recreation department , we carried out a special review of the accounting procedures relating to the Ice Arena . The following were noted : Observation Single hour ice time and ice time contract schedules are not reconciled to customer accounts . Background Ice time schedules , which show single hour ice time rentals and ice time contract rentals , are prepared at least a month in advance. However, this schedule is not compared to customer billings . Recommendations The schedule of ice time should be given to the Parks Department bookkeeper prior to the month to which the schedule relates. The bookkeeper may then use this schedule as a basis for posting billings to customer accounts. All changes to the schedule should be approved by someone other than those who are responsible for customer billings or those who supervise ice time activity. The City should also consider setting a policy whereby scheduled ice time rentals , which are not cancelled at least two days in advance , will be billed to the customer . We also recommend that random checks be made by independent personnel on a regular basis to verify that all ice time is recorded on the schedule, and is properly billed , and posted to the accounts receivable ledger. Differences between the ice time schedule and the posted charges and any balances outstanding longer than 60 days should be promptly investigated . Observation Ice time receipts , ice show and open skating tickets are not adequately controlled . Background At present , ice time receipts are not prenumbered. While ice show and open skating tickets are prenumbered , there are no controls over the use of such tickets. Recommendation Prenumbered ice time receipts , and prenumbered tickets for adult and youth open skating and ice show admissions should be obtained. The sequence numbers should be recorded by the Parks Director. The receipts and tickets presently being used should be destroyed. An inventory of tickets should be performed at the end of each day , with independent checks made on a regular basis . Tickets issued each day should be reconciled to actual cash receipts. Observation The cash registers are operated by several employees during each shift . _ Recommendation Only one employee per shift should operate the cash register. When shifts change , the total amount of sales should be recorded and a line drawn on the register tape indicating a shift change. The next employee should start the new shift with another cash drawer. The cash drawer of the employee going off shift should be counted , by two persons , and locked up. This procedure will allow for a comparison of receipts and sales for each shift. It also allows for any errors to be identified by a specific shift. Errors during each shift should be promptly investigated . Observation There are numerous "no sale" items on the cash register tapes. Background Vending machine refunds are being made out of the cash register. A "no sale" is rung up each time the drawer is opened for this purpose. Recommendation The cash register should be opened only to enter sales receipts. If necessary, a petty cash fund should be established from which to make cash refunds. Refunds should be made only after a signed slip, showing amount lost , name, address and telephone number, is submitted. A reconciliation of the fund should be performed at least weekly . Refund vouchers should be presented to the vending machine company for reimbursement . Observation During our audit , we observed that much of the hockey stick inventory held for resale appeared to be old and out of date. Background Sales of inventory appear to be inadequate to justify the volume of inventory on hand. Recommendation Consider reducing the type and number of hockey sticks on hand to the level needed to cover emergency type sales . SECTION II - WEAKNESSES IN INTERNAL ACCOUNTING CONTROL As part of our examination, we made a study and evaluation of the City' s system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The pur- pose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion on the City' s financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole. The observations reported herein should be considered in the context of the responsibility of management for establishing and maintaining a system of internal accounting control, the objectives of and inherent limitations on such a system, and • the definition of a material weakness for purposes of this report, which are described in the Appendix to this report. Our study and evaluation made for the limited purpose described in the first paragraph of this section would not necessarily disclose all material weaknesses in the system. Accordingly , we do not express an opinion on the system of internal accounting control of the City of taken as a whole. However, our study and evaluation disclosed no condition that we believe to be a material weakness. Our examination did disclose, however, the following con- dition that, although not considered by us to be a material weakness, is a weakness in internal accounting control for which corrective action might be taken. PARK AND RECREATION RECEIPTS Observation - Initial park and recreation cash receipt records are not adequately tested by a person independent of the prepartion of both the initial record and the daily bank deposit. Recommendation - None. We understand that, when brought to the attention of appropriate management personnel, procedures were established to correct this condition. SECTION III - ADMINISTRATIVE AND OPERATING MATTERS MUNICIPAL LIQUOR FUND Again this year, as requested by City Officials , we have reviewed the Municipal Liquor Fund' s operations with a view toward providing constructive suggestions. Our observations relate primarily to the off-sale liquor operations. Inventories Observation - The December 31 , 1981 physical inventory was not reconciled. in detail to the perpetual inventory records. Rather, the inventory records were adjusted to the physical inventory. Recommendation - When a physical inventory is taken it should be reconciled on an item-by-item basis to the perpetual inventory records. The City should establish a tolerance range, which is accep- table to the City, for individual items to be over or short from the inventory records. Items which exceed this range should then be investigated and explained by the liquor manager and/or accounting personnel. Observation - Several physical inventories have been taken since the establishment of the perpetual point-of-sale inven- tory system. Recommendation - We understand that these physical inven- tories were taken due to the many changes taking place in the municipal liquor operations. Once these changes are fully operational, we recommend that physical inventories be taken no more than annually . During the year, sample or cycle counts should be taken on selected items to more efficiently test-the perpetual inventory records. Observation - Inventory levels continue to appear high in relation to present sales volume. In addition, large stock levels in storage make access to individual brands and sizes difficult. Background Data - 1981 1980 Ave . Center Ave . Center Cost of sales 272,294 $302,661 $215, 102 $303,561 Inventory at year-end 75, 449 82,441 92 ,880 84,090 Inventory turnover 114 days 101 days 158 days 101 days There is a cost of maintaining inventory levels in excess o'_' the minimum needed to support current operations ; i . e. , cash invested in inventories could be used for other investments which may generate a higher return. Assuming a conservative interest rate of 10% and that the City had an inventory turnover rate comparable to the industry average of 52 days, the estimated cost of main- taining the excessive inventory levels for 1981 can be esti- mated as follows: Average City' s Inventory Average Balance with Inventory a 52 Day Balance Turnover Rate Inventory Avenue $84,165 $38,788 $45,377 Center $83,266 43, 114 40, 152 Estimated excess inventory 85,529 x 10% Estimated cost $ 8, 550 Recommendation - We understand the City has decided to discontinue the Ave. store and to consolidate the inventory at the Center location. This consolidation will initially result in a high inventory level at the Center location. Thus, we believe that strong efforts should be made to reduce the inventory level. In addition, we feel that the City should establish an inventory turnover goal which is realistic, attainable and comparable with inventory averages. This goal can then be used to monitor and measure actual performance throughout the year. Operating Results Observation - As we pointed out last year, operating expenses for the stores continue to appear higher than the average for similar off sale municipal liquor operations, in relation to sales volume. Background Data - Relevant financial information for both stores combined for the last three years is summarized as follows: 1981 1980 1979 Sales $695, 415 $646, 903 $610,222 Gross profit 120, 459 125,920 122,357 % of sales 17. 3% 19. 5% 20. 1% Operating expenses 135,717 120,759 117,770 % of sales 19. 5% 18. 7% 19. 3% Operating income (loss) ( 15, 260) 5, 161 4 ,587 % of sales (2. 2%) 00. 8% 00.8% The above information for 1980 and 1979 was compared to a survey of eighteen municipal liquor stores, with off-sale operations only (data for 1981 is not yet available) . The following highlights were noted: 1980 1979 Gross Profit %: City' s % 19. 5% 20. 1% Mean of survey 20. 5% 20. 1% Rank of City' s operations 17th 11th % of Operating Expenses to Sales : 18.7% 19. 3% City' s $ 12 . 8% Mean of survey 12 .7%2st 2nd Rank of City' s operation % of Operating Income to Sales : 00.$% 00.8% City' s % Mean of survey 7. 8% 7. 3% Rank of City' s operations 18th 15th Recommendation - None. We recognize the efforts and changes the City is currently making in the Municipal Liquor operations, in an attempt to improve the results of its operations. The above observation and background data is presented for information only. SPECIAL ASSESSMENTS Project Costs Observation - Costs incurred by the City for the following services are charged to projects based on a not-to-exceed rate of: Maximum % Engineering 7% Administration 2% Legal 1% Also, the City charges interest on deferred special assessments at the annual rate of 8%. Recommendation - The City should perform an analysis of pro- ject costs to determine if: . The percentages used reflect the actual costs incurred to administer the projects. . There are other costs incurred by the City which also should be included as assessable project costs. The City should also consider charging all projects a stan- dard rate for all identified services provided, to ensure that project costs are consistently applied and recovered. The standard rates used should be supported by the above men- tioned analysis. Additionally, the City should review its interest charge on deferred special assessments to determine if this is a realistic rate in today' s economy. Interim Financial Statements Observation - The City currently does not prepare interim financial statements for the special assessments fund. Background - Unassessed construction costs are those costs incurred by the City but not yet assessed or reimbursed by the State for State-Aid streets. In the past two years, our audit of this account has resulted in many adjustments to convert this account from a cash basis to an accrual basis. Recommendation - The City should prepare financial statements for the special assessments fund at least quarterly . Along with this, unassessed construction costs should be accrued on a quarterly basis and reported as an aged listing for manage- ment follow-up on the source and timing of the funding of these costs. Accounting Procedures - Observation - The City currently does not have an established set of procedures for: . Opening, closing and transferring project costs. . Documenting the source of funding for project costs and the expected completion date of the project. . Accounting for project costs on a multi-year basis for purposes of facilitating project close-outs and applying for State-Aid funds on State-Aid street projects. . Converting the special assessments accounts from a cash basis to an accrual basis to facilitate the prep- aration of financial statements. Recommendation - A set of written accounting procedures should be developed by the accounting and engineering depart- ments jointly . These procedures should include a general documentation package which can be used to facilitate the accounting for, documentation and management of, special assessment projects. Written procedures would enhance the documentation of project costs and thus improve the information flow regarding project cost recovery . FINANCE COMMITTEE Observation - The City Council currently does not have a finance committee. Background - It has been our experience that the use of a finance committee can be a means of improving communication with the Council relating to financial matters. Such matters can be discussed in greater technical detail during committee meetings, and usually in a summary manner during Council meetings. This approach usually saves time during the meetings of the full Council. A finance committee often has the following responsibilities : . Review City financial statements on a routine timely basis. Also, review results of specific department operations. . Meet with accounting personnel and review the accounting for specific, nonrecurring transactions. . Review the scope of the annual audit, and advise the independent auditors of any special audit concerns of the Council. . Review the results of the annual audit. Recommendation - Consider establishing a finance committee including members of the Council and appropriate City staff. GENERAL FUND Observation - The unreserved fund balance at December 31, 1981 was $284,740 or approximately 8. 5% of the 1982 budget. This fund balance still leaves little reserve for budget variations or emergency type appropriations. Background - The City' s unreserved fund balance increased by approximately $93, 808 over 1980. Recommendation - The City should continue to provide for increases in the fund balance. CASH AND TEMPORARY CASH INVESTMENTS Obsevation - Cash and temporary cash investments on deposit at one designated depository did not have sufficient deposit insurance and pledged collateral at December 31, 1981 , as required by State statutes. Approximately $82,000 of funds on deposit were not secured at December 31, 1981 . Recommendation - We understand that this was an isolated incident, and that the designated depository in question corrected the problem subsequent to year-end. 1980 IMPROVEMENTS IMPLEMENTEL) Improvements have been instituted on the following observations contained in our previous commentary report: 1. Detailed accounting records for general fixed assets were completed. This improved internal accounting controls over general fixed assets and allowed us to audit them for the first time. 2. Initial cash receipts records are now being adequately tested. 3. Monthly financial reports are now being issued on a mol3 timely basis. 4 . The City now accrues vacation and sick pay in accordance with generally accepted accounting principles in its enterprise funds . MATERIAL WEAKNESSFS IN INTERNAL CONTROL Observation Internal control weaknesses were noted in the following areas: Cash Disbursements - Prior to issuance, checks are not adequately tested to supporting documentation by a person independent of the processing of cash disbursements. Payroll - All payroll checks are issued by the payroll clerk, with no person independent of the payroll function adequately testing them. Background Internal control is an important aspect of the City' s administrative and accounting procedures as a means of both safeguarding City assets and providing for reliable financial information. We do recognize that the City does have a partially mitigating control in that detailed reports of payroll and general disburse- ments are distributed to the various responsible department heads every month for their review. This procedure does provide additional control over disbursements; however, since it is performed after the disbursements are made, it would not effectively detect erroneous disbui ements prior to payment. Recommendation Prior to issuance, checks should be tested to supporting documentation by a person independent of the processing of both cash disbursements and payroll. • Operating Results Observation As we pointed out last year, operating expenses for the stores continue to appear higher than the average for similar off sale municipal liquor operations, in relation to sales volume. Background Data Relevant financial information for both stores combined for the last three years is summarized as follows: 1980 1979 1978 Sales $646, 903 $610, 222 $582,911 Gross profit 125, 920 122,357 109, 221 % of sales 19. 5% 20.1% 18.7% Operating expenses 120, 759 117, 770 109, 710 % of sales 18. 7% 19.3% 18. 8% Operating income (loss) 00.8% 00: 887 ( 00('48 ) % of sales ) The above information for 1979 and 1978 was compared to a survey of fifteen municipal liquor stores, with off-sale operations only (data for 1980 is not yet available) . The following highlights were noted: 1979 1978 Gross Profit %: City' s % 20.1% 18.7% Mean of survey 20.1% 20. 2% Rank of City' s operations 11th 14th % of Operating Expenses to Sales: City' s % 19.3% 18.8% Mean of survey 12.8% 12. 5% Rank of City' s operation 2nd 1st % of Operating Income to Sales: City's % 00 . 8% (00 .1%) Mean of survey 7 .3% 7. 7% Rank of City' s operations 15th 15th Although the City' s gross profit ranking was 11th in 1979, its percentage compares favorably with the gross profit average of the survey. The City' s percent of operating expenses to sales does not, however, compare favorably with survey averages. The City also has a very low percent of operating income to sales. Both of these unfavorable results appear to be caused by high operating expenses as related to sales volume. Background Comments Using the 1980 results, sales volumes necessary to produce an acceptable operating expense to sales ratio would be as follows: Operating Sales Sales Ratio Expenses Reauired Increase 11% $120, 759 $1,097,780 $450, 906 12% 120, 759 1, 006,325 359,422 13% 120,759 928,915 282, 012 It should be noted that to obtain the ratios, it would be necessary to obtain the sales increase without any increase in operating expenses. This may not be possible. Therefore, sales volume increases would need to be even greater. Recommendation We understand that the City has decided to expand the Center store and to continue in the Avenue store for at least one year. We recommend that efforts be continued to increase sales volume and/or reduce operating expenses at both stores, so as to achieve adequate levels of net income. Internal Financial Reports Observation The Liquor Manager allocates his time to the stores and bar at a fixed percentage rate. In July 1980, these rates were changed, but the effect of the change was not noted in subsequent financial reports. The changes were as follows: July 1980 Prior to and Forward July 1980 Bar 75% 40% Avenue - 12. 5% 30% Center 12. 5% 30% Background The monthly liquor financial reports include the allocated time as an operating expense. These reports are used by the Liquor Commission as part of their review of the operations. We understand that the allocation is arbitrary, but is supposed to be indicative of the time spent on the affairs of each location. The following summary shows what the allocated expenses would have been at each location had the same percentage been used in 1980 as was used in 1979: Bar Avenue Center Total Expenses as allocated. . $14,409 $ 5,325 $ 5,325 $25, 059 Expenses if the 1979 percentage had been used 10, 023 7. 517 7, 517 25,059 Effect of Change $ 4,385 $(2.192) $(2,192) $ -0- As a result of the change, $4,385 less operating expenses were allocated to the stores in 1980, than would have been allocated using the 1979 rates. Recommendation We recommend that the monthly financial reports be restructured. We suggest that only direct expenses be deducted from revenues to determine the direct contribution of each location, in the following manner: Bar Avenue Center Total Sales $200 $200 $200 $600 Cost of Sales 100 100 100 300 Gross Profit 100 100 100 300 Less: Direct Expenses 25 50 50 125 Contribution Margin $ 75 $ 50 50 175 Less: Indirect Expenses100 Net Income $ 75 For this purpose, indirect expenses would include payroll expenditures for the Liquor Manager and the accountant, as well as other expenses not directly associated with any one location. Alternatively, if current reporting is continued, allocation changes should be made only at the beginning of the year. In any event, when a significant change is made, it should be footnoted in all affected interim reports, so that readers understand the effect of changes on operating results of the locations. INTERNAL SERVICE FUND Observation During 1980, the City accounted for motor fuel by setting up an inventory pool in the General Fund and charging expenditures to departments based on usage of fuel. However, this method of accounting was not carried out in accordance with generally accepted accounting principles (GAAP) for governmental type funds. An adjustment was made to the financial statements to correct the accounting for motor fuels in accordance with GAAP. Background The City has common goods and services utilized by two or more departments. Some examples of such goods and services are motor fuels, central copy machine, the use of LOGIS and central garage activities. Recommendation In order to recognize departmental expenses based on usage, the motor fuel inventory should be accounted for in an internal service fund. Generally accepted accounting principles for internal service funds are similar to those used by commercial enterprises. Thus the City can record inventories in the internal service fund and charge governmental funds based on usage. The City should also investigate using an internal service fund to account for other common services and goods provided to various departments, thereby providing more accurate departmental cost information for the use of such goods and services. GENERAL FUND Observation The unreserved fund balance at December 31, 1980 was $190,932 or approximately 6.3% of the 1981 budget. This fund balance level still leaves little reserve for budget variations or emergency type appropriations. Background The City' s unreserved fund balance increased by approximately $121, 225 over 1979. Recommendation The City should continue to provide for increases in the fund balance. PREPAID EXPENSES Observation The City does not record prepaid insurance in its enterprise funds. Background Generally accepted accounting principles require that prepaid expenses be recognized in the financial statements of enterprise funds. Recomnendation We have not qualified our opinion on the enterprise funds ' financial statements because the amounts involved are immaterial. However, these expenses should be recorded so as to recognize the related expense in the appropriate accounting period. PERSONN KI , RECORDS Observation Personnel records were not always maintained, particularly for part-time employees. Recommendation The City should maintain personnel records for all employees as a means of documenting personnel actions. AUDIT COMMITT M Observation The City Council currently does not have an audit committee. Background It has been our experience that the use of an audit committee can be a means of improving communication with the Council relating to financial matters. Such matters can be discussed in greater technical detail during committee meetings, and usually then in a summary manner during Council meetings . This approach usually saves time during the meetings of the full Council. An audit committee often has the following responsibilities: • Review City financial statements on a routine timely basis. • Meet with accounting personnel and review the accounting for specific, nonrecurring transactions. Review the scope of the annual audit, and advise the • independent auditors of any special audit concerns of the Council. ▪ Review the results of the annual audit . Recommendation Consider establishing an audit committee, including two or three members of the Council and appropriate City staff. TAXES RECEIVABLE Observation Taxes receivable records are not maintained by the City. The City relies on County records and on year-end audit procedures to assure accuracy of recorded taxes receivable. Background Maintenance of ledger sheets recording transactions affecting the levy for each year would provide an inexpensive means of verifying the year-end balances of delinquent taxes reported by the County and would speed up year-end closing and financial reporting for the City. Recommendation Ledgers of taxes receivable by year of levy should be maintained, including separate columns for each fund. The ledgers should be updated using information transmitted with each tax settlement. DEFERRED SPECIAL ASSESSMENTS Observation As we have reported previously, detail records of deferred special assessments are not maintained on a current basis . Background The absence of currently prepared detail records and control accounts weakens internal control, exposes the City to possible undetected temporary concealment of diverted cash receipts, and causes delays in completing annual financial statements for the City. Difficulty in obtaining computer assistance from County has delayed implementation of corrective action on this matter. Recommendation Establish and maintain, on a current basis, control accounts and detail records for all special assessments . Code receipts, levies and activations throughout the year to the affected balance sheet and operating statement accounts, and reconcile the detail records to the related control accounts . Consider developing the required records on the computer installed by the police department, rather than waiting for cooperation from the County. ENTERPRISE FUNDS Observation Control over cash transactions at the golf course and ice arena was interrupted by cash register malfunctions during 1980. On one occasion we observed golf course personnel trans- acting business without using the register. The explanation given was that the machine was broken. The ice arena machine produced tapes that could not be read due to ineffective ribbons . Background Cash registers provide control over transactions in several ways; i.e. , providing a relatively secure place for temporary storage of cash, producing a permanent record of transactions entered, and providing an expectation among customers that transactions will be entered on the register. Recommendation Repair malfunctioning cash registers ase iately. provide prenumbered receipts for documenting during the period the registers are inoperative or ineffective. Observation Cash receipts for both the golf course and the privately operated pro shop are controlled by the same cash register. Pro shop receipts are coded separately, and are deducted when cash is summarized and remitted to the city hall cashier. Recommendation Control over golf course receipts could be strengthened by use of prenumbered tickets for golf rounds. If such tickets were used, the cash register receipt should be stapled to the ticket, so that both would be available for inspection on the course. Observation The procedures employed for obtaining physical counts of the liquor inventory could be modified to increase efficiency and accuracy. Recommendation Adopt an inventory tag and tag control method of recording physical counts and obtain the necessary computerized assistance for entering unsorted recorded counts . Under the tag approach, count teams record the quantity of a single product on a single tag, and prepare different tags for each location where that product is observed. The teams are generally assigned an area to count, and are responsible for counting every inventory item they observe. The team records the count product number, description and location of each product counted and then places a tag on it. A second copy of the tag is detached and retained for summariza- tion, usually performed with the aid of computer equipment . Accuracy is increased by this system because visual inspection is possible to determine that tags are affixed to all products in inventory, thus helping to ensure a complete count. Mechanical summarization of physical counts together with numerical control of the tag sequence protects against loss of data. Efficiency is increased because increased accuracy allows elimination of double count procedures in favor of spot checks of significant items by supervisors who work simultaneously with count teams. Further efficiency is gained because the tag system makes the count team respon- sible for a physical area rather than for a product category which may be stored in several areas, thus allowing counting to proceed faster. PAYROLLS Observation Payroll checks are distributed to employees in most departments by department supervisors, who also approve time cards for the same employees . Recommendation Payroll checks should be distributed to employees by an employee who has no other payroll-related duties . CASH Observation Collateral pledged to protect the City' s deposits at two depositories did not meet the statutory requirement at December 31, 1980. The collateral provided was less than required by $29,000 and $440,000, respectively. Recommendation City staff should require documentation from the banks that collateral has been provided as required and obtain verbal confirmation of such collateral prior to trans- ferring funds . ACCOUNTS RECENABT,P Observation Routine billing auijustments are prepared and submitted for entry on utility receivable records by utility clerks without review or approval by supervisors . Recommendation The City should provide for supervisory approval of all proposed adjustments and review of computerized listings of adjustments entered on the system. OTHER COMMENTS AND SUGGESTIONS ADMINISTRATIVE MATTERS Observation The City does not have a policy regarding the billing/collection of interest charges for property owners who pay the annual portion of their special assessment principal direct to the City. Background Payments of special assessments may be made at City Hall up to the annual date on which annual instalments are certified to the County for billing on the annual property tax state- ments. It has been the City' s practice to record an annual interest amount only on the date of certification for those instalments being certified to the County. As a result of this prectice, special assessments are never subject to an interest charge if the property owner pays the annual instalment direct to the City. Recommendation Annual interest charges should be computed on the outstanding principal balances of all special assessments, and collected as appropriate. Observation Two special assessment receipts were noted as not having been entered in the subsidiary records . This was apparently caused when the City inadvertently filed away receipts that had not been recorded. Recommendation Since the problem was apparently isolated to the final two months of the year, we recommend that the receipts for this period be reviewed to verify that all entries have been recorded in the subsidiary records . Observation Three checks were noted as not being included in the check register run. Recommendation All checks should be included in the check register run, with voided checks noted as such. Observation It was noted that two checks had information whited-out (amount or payee) and new information typed in. Recommendation Rather than whiting-out check information, the original check should be voided and a new check typed with the correct information. Observation Several vouchers lacked the City Administrator' s signature, which is required for most transactions according to City policies . Recommendation All vouchers should be reviewed and signed by the City Administrator before Council approval. Observation The City borrowed g283,404 on January 21, 1980 without formal Council action as required by the City Charter. In addition, a loan agreement was not obtained from the bank. Recommendation Funds should be borrowed only in accordance with procedures specified in the City Charter. Observation Seven expenditure items tested by us had no purchase order information available. In each case, a purchase order should have been issued to comply with the City' s purchasing procedures . Recommendation Purchase orders should be issued in accordance with established procedures . Observation No personnel files were maintained for four temporary/part-time employees . Recommendation All City employees should have personnel files and these files should be updated at least annually. Observation Sixteen checks, totaling 8167 .79, were carried on the outstanding chepk listing for more than one year. Recommendation Old outstanding checks should be written off regularly. Observation According to the Council minutes of October 1, 1980, resolution #1980-53 should have been prepared to award a contract for airport work to Marvin Tretter. Apparently this resolution was not prepared, and the resolution number was used for the next resolution passed by the Council. Recommendation Develop a review procedure for Council minutes to ensure that all business referred to therein is processed correctly and on a timely basis . Observation Budgets are not prepared for all special revenue funds . Recommendation All special revenue funds should be budgeted for in the budget adopted by the Council, or covered by supplemental budget resolutions . • PAYROLL ti Observation The City ' s fire chief was paid overtime during 1980 in the amount of $1,448.01. Background According to Council resolutions #1979-21 and #1980-29, these payments appear to be improper. According to the resolutions, the following should not get overtime: city administrator, attorney, building inspector, fire chief, assistant engineer, water plant supervisor, waste treatment plant supervisor and librarian. Recommendation The City should follow the resolutions and discontinue paying the fire chief for overtime. Observation One employee who worked part-time at the golf course had no written authorization regarding his rate of pay. . Recommendation The golf course superintendent should prepare a memo certifying the pay rate for part-time employees before payment is made. These rates should be reviewed for propriety and reasonableness by the City Administrator. { PRIOR COMMENTS Certain matters commented upon in our previous letters have not yet been resolved, and are therefore repeated here. Administrative Matters Observation Section 2 . 57 of the City code requires the City to advertise for bids on any contract exceeding $5,000. Background Minnesota Statutes 471.345, as amended, requires cities esto advertise for bids only if the contract exceeds g10,000. Recommendation The City should consider amending the City code by adopting the guidelines established by Minnesota Statutes 471.345. Observation The City is maintaining an Advertising fund. This fund has had very little_activity in the past few years and at December 31, 1980 had a deficit of $10 .00. Recommendation The Cityshould consider closing the Advertising fund due to the limited activity. The expenditures could be accounted for in the General fund. Observation At December 31, 1980 the Police Reserve Severance Pay fund had a deficit fund balance of $4,000.00. Background Fund balance levels of City funds is one of the criteria used by bond rating analysts in determining adverseCity' s affectbon rating. A negative fund balance the bond rating. Recommendation The City should make budgetary provision for regular operating transfers to the Police Reserve Severance Pay fund, so as to eventually eliminate the deficit. Water Utility Fund Observation As of December 31, 1980, project 124 had a loan payable to the Water Utility fund for $100,000, plus accrued interest, -and an amount due from the General fund of $63,437 .ts Then e project has been completed but the above am on the books since 1977 . Recommendation The City should financially close project 124, by transferring the appropriate funding from the applicable funds . Inventory Observation Several items were noted in the street department inventory which should be classified in Water Utility or Sewer Utility fund inventories, as these are the funds which use these materials . Recommendation The City should establish separate inventories for the street, sewer, and water departments, so that all inventories are reported in the proper fund. Observation The City ' s street department inventory is valued at cost for any item acquired in the last five years and at approximate replacement cost for any item over five years old. The result is that the City does not have a consistent method for pricing inventory. Recommendation All inventory items should be valued at cost. If the cost is not determinable, the estimated cost should be used. 3 COTS AND SUGGESTIONS DEVELOPERS ESCROW DEPOSITS Observation Two instances were noted where the accounting for developers escrow bonds and deposits were incorrect: 1. One cash deposit was credited to an incorrect subdivision account. The developer that received the incorrect credit withdrew the balance and received an amount greater than the actual amount due. 2. A bond held in the City' s deposit box Citywas Council returned to a developer withoutspecific approval. City personnel returned the bond because they could not identify the circumstances for the deposit . The Finance Department did not record the release of the bond in the Trust and Agency Fund. Recommendation 1. The City should request return of the refunded deposit from the developer. 2 . The detail records of escrow deposits should be reviewed and reconciled regularly so as to ensure that all deposits are correctly accounted for. RENTAL OF CITY LAND Observation Park land which was not in use by the City was rented to an individual for use as farm land. The agreement was not in writing and rental rates were not approved by the City Council. Recommendation The City Council should approve a rate structure for rental of excess land, and authorize procedures to be used in such cases . APPENDIX 9- MANAGEMENT' S RESPONSIBILITY FOR, AND THE OBJECTIVES AND LIMITATIONS OF, INTERNAL ACCOUNTING CONTROL AND THE DEFINITION OF A MATERIAL WEAKNESS The following comments concerning management ' s responsibility for internal accounting control, the objectives of and the inherent limitations in a system of internal accounting control, and the definition of a material weakness are excerpts from Statements on Auditing Standards of the American Institute of Certified Public Accountants . Management ' s Responsibility Management . . . is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility , estimates and judgments by management are required to assess the expected benefits and related costs of control procedures . Objectives The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safe- guarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management ' s authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles . Limitations Because of inherent limitations in any system of internal • accounting control, errors or irregularities nevertheless may occur and not be detected . Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate . Material Weakness A material weakness [ for the auditor ' s purpose] is a condition in which the specific control procedures , or the degree of compliance with them, do not [ in the auditor ' s judgment ] reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions . These criteria may be broader than those that may be appropriate for evaluating weaknesses in accounting control for management or other purposes . &Ot ANFINSON, HENDRICKSON & CO. CERTIFIED PUBLIC ACCOUNTANTS Park National Bank Building • 5353 Wayzata Boulevard, Suite 410 • Minneapolis, Minnesota 55416 • 612-545-0421 V 1r September 16, 1983 Mr. Greg Voxland, Finance Director City of Shakopee 129 East First Avenue Shakopee, Minnesota. 55379-1376 Dear 4r. Voxland: Enclosed are some examples of management letters issued to our city clients over the last several years. I will also include in this letter our interpretation of what a management letter is and what it should include. We are pleased to provide this additional information for you and the Council to review. It means the City is giving the careful consideration that is due to the selection of an auditor and you are making an in-depth evaluation of each firm's qualifications. Too many times it is merely a glance at the "bottom line (fee) "! Management Letter - The partners of Anfinson, Hendrickson & Co. consider the preparation of a management letter one of the most important phases of any audit. This is the area where we can provide the greatest benefit to you, our client. Accordingly, a considerable portion of time and thought is put into the letter to provide meaningful and useful recommendations to enhance and strengthen your operation. One thing it should not contain is petty or inconsequential items. Obviously, we are going to include comments relative to weaknesses in internal control and improvements needed in your accounting system and procedures. But the letter should go beyond that! It should include comments and recommendations about all phases of your operation. You should get the benefit of all the years of experience we have to offer in the form of varied kinds of methods and proce- dures we have observed--good and bad! All of this experience, and observation of your operation, should culminate in a meaningful letter to you. The letter is intended to provide constructive, rather than critical, comments and recom- mendations for your consideration. The development of a good management letter begins with the first day of fieldwork. We are constantly evaluating all of your forms, procedures, policies, methods, strengths, and weaknesses throughout the audit. Our observations are noted and discussed with administrative personnel. Our list is broken down into two categories. One contains the items for inclusion in AFFILIATED WITH NATIONAL Cr ""EMBER FIRMS IN PRINCIPAL CITIES City of Shakopee - 2 - September 16, 1983 the management letter, and the other contains items of a more routine, or mechanical nature, which needs only to be passed along in discussion at the exit conference. We also discuss the items to be included in the letter to ascertain that each item is complete, factual, and properly stated. Then everyone is in agreement on the contents of the letter and there are no "surprises." We hope our thoughts and the sample letters will be useful to you. Please feel free to call for any clarification or additional input. Thank you for the opportunity to possibly serve you. Sincerely, ANFINSON, HENDRICKSON & CO. i/„".,4CfxJ, L( f:111, '. G2i Donald D. Anfinson, Partner DDA/t g Enclosure ANFINSON, HENDRICKSON & CO. CERTIFIED PUBLIC ACCOUNTANTS l '‘ To the City Council We have examined the financial statements of the City for the year ended December 31, 1980, and have issued our report thereon, dated April 10, 1981 . As part of our examination, we made a study and evaluation of the City's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary to express an opinion on the City's financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole. The City is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting pziocipIes. Because of inherent limitations in any system of internal accounting control, errors or irregularities may nevertheless occur and not be detected. Also, pro- jection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the City, taken as a whole. However, our study and evaluation disclosed the following condition which we believe could result in material errors or irregularities in the financial statements that would not necessarily be detected within a timely period. The City has a limited number of office personnel and, accordingly, does not have adequate internal accounting controls in certain areas because of a lack of segregation of duties. Park National Bank BuildinQ ~ 5353VVa zata Boulevard, Suite 410 ~ Minneapolis, Minnesota 55416 ~ 612'54570421_ A good system of internal accounting control contemplates an adequate segrega- tion of duties so that no one individual handles a transaction from its incep- tion to its completion. While we recognize that your office staff may not be large enough to permit an adequate segregation of duties in all respects for an effective system of internal accounting control, it is important that you be aware of this condition. This condition above was considered in determining the nature, timing, and extent of the audit tests to be applied in our examination of the financial statements for the year ended December 31, 1980, and this report does not affect our report on those financial statements dated April 10, 1981 . This report is intended solely for the use of management and should not be used for any other purpose. The following lists other financial and accounting matters warranting Board and/or administrative consideration. I . SPECIAL INVESTIGATIONS During the early part of 1981, City personnel became aware of potential irregularities in certain areas of the City's operations. At your request, we performed an extensive investigation of alleged irregularities in Golf Course activities. A detailed report dated June 23, 1981 was submitted with our findings. We were also asked to investigate certain transactions in the Park Maintenance Department. Our report was submitted during June, 1981 with the details of that special examination. Our special investigation of Golf Course operations disclosed the following matters and conditions which reduced the effectiveness of internal control. With a lack of follow-up to correct, these conditions continued, thus creating a situation conducive to the kind of breaches in internal control and alleged irregularities that occurred. A. Prior Year Comments Our previous year's management letter dated April 22, 1980, noted obser- vations made during our review of Golf Course operations that deposits were not made on a timely basis, third party checks were accepted, checks were cashed, and copies of credit card sales slips were not retained. We recommended a review of those conditions to establish appropriate policies to minimize the potential for loss due to fire, theft, etc. Our current year's review disclosed no changes or improvements of any consequences! In fact, a review of management letters presented over a period of years indicated a very limited degree of due consideration and adoption in any area of recommendations. We believe the firms performing the annual audits submitted their recommendations for improvements in the best interests of the City! We strongly urge the City Council and administration to review them carefully in the future for implementation as applicable. B. Timely Deposit of Receipts We noted that cash registers were not always totaled and balanced each day. In some instances they were not totaled for nearly a month, thus accumulating large sums of cash before deposit. As a result, daily receipts were not deposited on a timely basis. Using the week of September 22, 1980 as an example, the cash registers accumulated $7, 182.25, which was not deposited until October 6, 1980. From October 13 to November 23, 1980, the cash registers accumulated $26,075.51, which was deposited on November 24, 1980. Other instances were also noted. We recommend that deposits be made on a daily basis without exception! Cash registers should be cleared once a week and reconciled to the total of the week's deposits by someone other than the individual preparing and taking the deposit to the bank. The finance office should determine the cause and correct all exceptions between the deposits and cash register tape totals. The City is losing significant interest earnings at the present high rates on funds that could otherwise be invested, because of the lack of timely deposit. C. Bank Deposit Slips The daily receipts of the golf course operations are deposited directly into a separate bank account, which is reconciled by the finance office on a monthly basis. Original (white) copies of bank deposit slips were returned to the finance office each month with the bank statement. Many of these bank deposit slips contained substantial alterations of the com- ponent parts of the deposit without affecting the total deposit. In other words, it appears that subsequent day's checks were being substi- tuted for cash taken on the original with no change in the duplicate (yellow) slip retained. We recommend that finance office personnel compare the original (white) copy of the deposit to the duplicate (yellow) copy retained in the depo- sit book on a test basis to ascertain comparability of components comprising the deposit and to detect alterations. D. Review and Reconciliation of Daily Reports and Cash Register Tapes On numerous instances we noted that the daily totals on the golf course's cash register tapes did not agree with the total receipts depo- sited in the bank and reported to the City. On almost every occassion, the cash register tape total was higher than that deposited and reported. This situation is usually caused by an over-ring somewhere on the cash register tape. However, in most of the cases, there was little or no documentation to indicate this fact. All mistakes made on the cash register should be fully documented by the following procedures: 1 . The customer's receipt copy should be retained and initialed by the cash register operator and a new, correct sale rung up. 2. A supervisor or another employee should initial the transac- tion for approval. 3. When the daily cash sheets are matched against the weekly reports for accuracy at the finance office, greater care should be exercised to ensure that totals on the tapes attached to the cash summary sheets agree to the information being reported on ..-iem. • E. Gift Certificates When gift certificates were sold, they were rung up on the cash register in the sales category, the cashier thought appropriate. This was based on the cashier's guess of the type of merchandise the gift certificate would be redeemed for (i.e. golf balls, gloves, clubs, clothing, etc. ) . When these gift certificates were redeemed, they were destroyed and no record retained of the merchandise purchased with the gift certificates. Gift certificates issued should be accounted for in a separate sales category. When the certificates are redeemed for merchandise, the cer- tificate should be cancelled, the type and price of the merchandise purchased recorded, and this information periodically summarized by sales category. The finance office would, by journal entry, reclassify the sales from gift certificates to the appropriate sales category. The finance office should also maintain control over the unused prenumbered certificates. Redeemed gift certificates should be retained for audit purposes. F. Merchandise Purchases and Issuance of Checks During 1980, the golf manager was presumably preparing purchase orders, usually after the merchandise was received, approving the purchase orders, approving invoices for payment, and in some cases also preparing the invoices for payment. All of this was done without any indication that any of the documents were reviewed or approved by anyone else prior to the invoices being processed for payment. After the checks were written, in some cases they were picked up by the golf manager who was to deliver them. Some of these checks were cashed at the Golf Course and included in the deposits. At a minimum someone other than the golf manager should approve all purchase orders of goods and services. The purchase orders should obviously be prepared prior to the order and delivery of the goods or services. For further control, all checks should be mailed directly to the vendor. This is basic to a good system of internal control. G. Perpetual Inventory of Golf Merchandise The golf course does not maintain any type of perpetual inventory of golf merchandise. This has been noted by previous auditors and, at that time, determined to not be cost justified. In light of current audit findings, we recommend the City once again reevaluate the necessity for some form of perpetual inventory records to increase controls of specific types of inventory (clubs, etc.) . There are many variations and alternatives that could be evaluated as cost effective or improve controls to some degree. II. OTHER AREAS The remaining comments cover other areas for your consideration to improve internal control and enhance accounting procedures in general. A. Payroll Only approximately one-half of the 1980 time sheets needed for our exami- nation could be located in the Park and Recreation Department. The timesheets located were usually not dated and appeared to be mixed with the 1981 timesheets. Of those timesheets located, several appear to have been completed by the employee's supervisor, approved by that supervisor and recapped by the Park and Recreation Office. After processing, payroll checks were then delivered back to the golf course and placed in a box for the employees. A number of the payroll checks were cashed at the golf course. To ensure good internal control, it is essential that no one employee be given too much responsibility for a transaction from start to finish. Employees should complete their own timesheets. Supervisors should approve all timesheets and forward them to the finance office to be pro- cessed for payment. Payroll checks should not be left in a box to be picked up; rather, they should be mailed or distributed from a central location by someone not having any other payroll responsibilities. R. Federal Revenue Sharing Fund The City had not received its quarterly revenue sharing payments since duly, 1980, because reports were filed late. We recommend the City make every effort to complete these reports on a timely basis to ensure payments due the City are not delayed or forfeited. C. City Maintenance Garage The operation of the City's maintenance shop is currently accounted for within the General Fund. The services provided by the maintenance shop to other departments are on a cost - reimbursement basis. Under present accounting procedures, these expenditures are recorded twice - once when goods are purchased and once when charged to the departments. The net effect is to "balloon" General Fund revenues and expenditures. In order to more clearly determine that the charges to other departments are sufficient to recover total costs of these maintenance services, we recommend the use of an Internal Service Fund to account for the main- tenance shop activities. D. Fund Equity Transfers • We noted during the audit that not all fund equity transfers receive Council approval. We recommend that all future fund equity transfers receive Council approval. j E. Fixed Assets The City does not maintain detailed general fixed assets records. We believe the development and maintenance of such records would serve a useful purpose. The records would provide more adequate control over these assets and would assist in establishing any claims due to fire, theft or other loss. As stated in 1979, and in prior year's management letters, a lot of work has been done already on the development of these records since 1976. The work will have to be updated, however. We recommend the City proceed with the completion of these records on a specific timetable. Procedures should be established to maintain the records once completed. F. Park Maintenance Expenditures Some questionable transactions and handling procedures in the park main- tenance area were noted and commented on in our report on the special investigation of that department submitted in June, 1981 . The City should carefully evaluate invoicing and approval procedures of all departments to determine consistent application throughout the City. G. Bank Reconciliations Our review of the bank reconciliations of the City's regular account and the Motor Vehicle account indicated numerous small unreconciled differences. Every effort should be made to indentify and resolve timely all recon- ciling items included in bank reconciliations. H. Outstandin Checks As noted in our prior year's management letter, the City has carried for- ward a number of old outstanding checks, some of which were issued many years ago. Administrative staff should review outstanding checks annually and write off all checks not expected to be cashed. I. Investments As noted in our prior year's management letter, the City was commended for the amount of interest earned on temporary investments. We still would like to suggest an improvement, however, to enhance your investment records. For ease of reference and control, all pertinent information, including the identification number for each investment, should be included in the control record. J. Cash Disbursements During the 1979 audit, we noted that paid invoices are not cancelled. A coding sheet is attached to the invoice. We commented on this in our management letter. This was also commented on by previous auditors. Paid invoices for 1980 were not cancelled and a coding sheet is attached to each invoice. Once again, we recommend each invoice be cancelled by use of a rubber stamp which could service other useful purposes. The stamp, which should be placed on the invoice at the time of receipt, should include blocks for initials for approval for payment, receipt of goods, account codings, date paid, check number, etc. This would significantly enhance control, ease of reference, and effectively cancel the invoice to avoid duplicate payments and misuse. K. Collateral and Minutes In our prior year's management letter, we noted that collateral was insufficient in some instances and that the majority of council minutes lacked proper signatures. We observed in 1980 that these situations have been corrected. . L. Authorized Signers_ Our confirmation received from the Trust for Short-Term U. S. Government Securities indicated that is still one of the authorized account sigoers, • We recommend the City have the account updated to reflect the current authorized signers. M. Due From Other Governmental Units The City has a $10,0OO receivable in the Park Capital Reserve Fund which has been a receivable since 1976. This was a Lawcon Grant awarded to the City for a park project. To date, the City has not filed a request for reimbursement with the State of Minnesota for the expenditures incurred under this grant. We recommend the City review this grant to determine its status and collectibility. The necessary reports to request the amount of the grant funds due the City should be prepared and filed. We would be pleased to discuss these recommendations with you and assist with any changes you may wish to make. We also wish to express our thanks for the courtesy and assistance extended to us during the course of our examination. Sincerely, ' �^� ^%��«�.7 ,�^�a - . Certified Public Accountants Minneapolis, Minnesota April 10, 1981 I it ANFINSON, HENDRICKSON & CO. CERTIFIED PUBLIC ACCOUNTANTS Park National Bank Building • 5353 Wayzata Boulevard, Suite 410 • Minneapolis, Minnesota 55416 • 612-545-0421 To the City Council and Administration The following comments and recommendations are the result of observations made and noted during the course of the audit. They are offered for your con- sideration as improvements considered necessary, or as improvements we believe could enhance the quality and effectiveness of your financial accounting system. Payroll Time Sheets and Cards Time sheet summaries submitted to the Payroll Department by department heads are not signed by employees. The individual time cards, which are later submitted to support the time sheets of hourly paid workers, are not always signed by the employee. In addition, the Payroll Department does not compare the time cards to the time sheet summaries submitted earlier. We believe payroll system procedures should be altered to: a) include a requirement for all employees to sign for their time worked and b) the adoption of a formal procedure for reconciling time cards to the time summaries. Test Distribution of Payroll In our experience, we have occasionally encountered instances of payroll checks being issued to terminated or nonexistent employees. Therefore, the City may wish to consider application of an occasional surprise payroll distribution test to enhance internal control. The test would be performed by a designated individual who would distribute pay checks directly to each employee to determine that all listed payees exist and are currently employed. Payroll Periods The City currently pays some employees weekly and others semimonthly. Weekly paid employees are paid for a prior week to allow time for payroll preparation and adjustments. Semimonthly paid employees receive payment through the date of the check. The latter procedure requires an estimate of the hours worked in the last few days of the pay period, with adjust- ments then made in the next payroll period. Having different payroll periods and using estimated hours causes various accounting problems and inefficiencies! We recommend that the City give serious consideration to the use of semi- monthly pay periods (first half and second half of month) for all employees, with an appropriate delay in preparation and distribution to allow the use of actual, not estimated, data. AFFILIATED WITH NATIONAL CPA GROUP • MEMBER FIRMS IN PRINCIPAL CITIES T2IroIl Terminations No formal procedures exist for notification to the Payroll Department that a part-time, seasonal employee has been terminated. Formal documentation should be transmitted immediately to the Payroll Department for all per- sonnel changes. Segregation of Duties As mentioned in our letter on internal accounting controls, certain weaknesses exist due to a lack of proper segregation of duties. An area of major concern relates to the duties of the City Accountant. She is responsible for the receipt of cash, the preparation of receipts, the delivery of deposits to the bank, recording transactions to the City's accounts, preparation of payroll and general checks, processing checks through the signing machine, distributing checks, and the reconciliation of bank accounts. We believe controls can be enhanced significantly by allocating certain functions to other individuals. We urge that admini- stration review this area to make appropriate adjustments. puzc�asio Purchase requisitions and purchase orders are routinely prepared after the purchase has been completed. This is an inappropriate procedure. A City of your size should have a formal purchase order system in operation with all forms and procedures followed. Under this eystem, prior approval would be required for all purchases over a nominal amount (figure decided by administration) . A formal purchase order system, properly used, enforces compliance with established policy, and strenghthens internal control over the purchasing and payment function immeasurably. Check i City checks are presently processed through a check signing machine with only the signature of the Treasurer. Chartered cities are to comply with provisions of the charter. The City's charter (Sec. 7. 10) states "All disbursements shall be made only upon the order of the City Manager and City Clerk, duly authorized by a resolution or motion of the Council. . . . and each such order shall be directed to the City Treasurer." In order to maximize internal control and more appropriately comply with the charter, we recommend that two signatures on checks be required, those of the City Manager and City Treasurer. We believe involvement of the City Clerk pro- vides no additional purpose or control. That reference in the provision could be eliminated from Sec. 7 . 10. Ice Arena and Pool Receipts Control over receipt of admission fees for the Municipal Ice Arena and Pool consists of comparing a manual count of users admitted to the amount collected for the day. Since the count of admissions is made by the sane employee who collects the admission fee, and the service being sold to the public is not susceptible to control by number of items sold, the risk is present that all admission fees may not be received by the City. The point of cash receipt can be a difficult area to control. We feel the installation of a cash register to be shared by the arena and pool, or the establishment of a prenumbered admission ticket system, would reduce the risk of misappropriation of receipts. Vacation Several employees have accumulated more vacation then City code allows. We suggest that the City re-establish compliance by having employees take accumulated vacation or other means. The City should consider a policy which assures compliance with the City code. Gross Revenue Civic Center Arena Bonds of 1972 The bond indenture calls for a debt retirement reserve of $53,000 to have been established out of original bond proceeds. The purpose of the reserve is to assure timely payment of principal and interest on the bonds if operating revenue fall short at any given time. Any portion of the reserve used must be replaced out of subsequent year's earnings. The reserve should be accomplished by restructuring o53,000 of cash or investments and a reservation of retained earnings of an equal amoour. In order to assure the availability of the $53,000 in cash, we feel the Arena Fund should try to establish, and maintain, an equity position of at least $53,800 of total retained earnings. Condition of Financial Records Although we have suggested needed improvements in several areas of your accounting system, we would like to point out that the financial records of the City were in excellent condition and well maintained. We would be pleased to discuss these recommendations with you and assist with any changes you wish to make. We also wish to express our thanks for the courtesy and assistance extended to us during the course of our examination. Yours very truly, A0FZNSO0, HENDRICKSON & CO. /6')127-411-ea7 141444 Donald D. Anfinson, Partner Minneapolis, Minnesota April 26, 1983 ANFINSON, HENDRICKSON & CO. CERTIFIED PUBLIC ACCOUNTANTS : To the City Council , Minnesota We have examined the financial statements of the City for the year ended December 31 , 1981 , and have issued our report thereon, dated February 5, 1982. As part of our examination, we made a study and evaluation of the City's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation was to determine the nature, timing and extent of the auditing procedures necessary to express an opinion on the City's financial statements. Our study and. evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole. The City is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to oermit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any system of internal accounting control, errors or irregularities may nevertheless occur and not be detected. Also, pro- jection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the City, taken as a whole. However, our study and evaluation disclosed the following condition which we believe could result in material errors or irregularities in the financial statements that would not necessarily -be detected within a timely period: The City has a limited number of office personnel and, accordingly, does not have adequate internal accounting controls in certain areas because of a lack of segregation of duties. Park National Bank Building ELouify:Lrp, Suite 410 • Minneapolis, Minnesota 55416 • 612-545-0421 AFFILIATED WITH NATIONAL CPA GROUP • MEMBER FIRM - 2RINCIPAL CITIES A good system of internal accounting control contemplates an adequate segregation of duties so that no one individual handles a transaction from its inception to its completion. While we recognize that your office staff may not be large enough to permit an adequate segregation of duties in all respects for an effective system of internal accounting control, it is important that you be aware of this condition. The foregoing condition above was considered in determining the nature, timing, and extent of the audit tests to be applied in our examination of the financial statements for the year ended December 31, 1981 , and this report of such con- dition does not affect our report on those financial statements dated February 5, 1982. This report is intended solely for the use of management and should not be used for any other purpose. The following lists other areas warranting Board and/or administrative consideration. Closing of Special Revenue Funds Separate special revenue funds are used to account for the operations of the parks (Park Fund) , the collection of fire contracts (Township Fire Fund) , and the operations of the airport (Airport Fund) . Each additional separate fund maintained by the City complicates accounting, requires subsidizing transfers, is unnecessary, and is costly! Since there appears to be no statutorial or other legal requirement for these funds, they should be closed out! The fund balances or deficits should be transferred to the General Fund. All the necessary revenue and expenditure detail for each of these activities could readily be accounted for in the General Fund. Further, special revenue funds not required are subject to the general levy limitation and requires a "combining" with the General Fund to determine legal compliances. We recommended in our previous year's management letter they be closed out. We strongly urge you to give consideration to this matter once again this year! Since activity is complete, we also recommend closing the Community Development Grant Fund to the General Fund. Governmental Funds - Results of Operations and Deficits General Fund - The General Fund had a cash deficit of $29,653 at December 31 , 1981 . In addition, the fund balance in the General Fund has decreased from $177,050 at December 31 , 1979, to $61, 152 at December 31, 1981 . This is a significant decline in the available resources in the General Fund, the main operating fund of the City! The 1981 Improvement Fund project costs were $92,636, of which $30,444 will be financed from special assessments levied against benefiting properties. The balance of the project costs of $62, 192 were financed from the General Fund during 1981 . This transfer accounted for the substantial decrease in the General Fund's fund balance during the year. Park Fund - The Park Fund's operations reported an excess of expenditures over revenue of $46,986 during 1981 resulting in a fund balance deficit of $50, 184 at year end. We recommended in a previous comment that this fund be closed to the General Fund. If the City feels it is absolutely necessary to maintain a separate Park Fund, we recommend a transfer be made from the General Fund to eliminate the deficit and provide working capital. It appears an annual subsidizing transfer from the General Fund would be necessary in future years. Airport Fund - The Airport Fund had a fund balance deficit of $11,730 at year end. We have also recommended this fund be closed to the General Fund. Once again, if the City must maintain a separate fund for the Airport Fund, we recommend a transfer be, made from the General Fund to elimi- nate this deficit and provide working capital. In 1980 and 1981, transfers of $25,000 each year from the Municipal Liquor Store were budgeted as a source of revenue in the General Fund. However, these transfers were not made, although the Liquor Store has been profitable and has accumulated cash beyond operating requirements. To improve all of the above situations, we recommend transfers from the Liquor Fund to eliminate General, Park, and Airport Fund cash deficits, with additional transfers to the General Fund to provide operating funds and improve its financial condition. The Sewer Fund also appears to have excess funds beyond operating requirements and could also be a source of revenue for the General Fund. As an additional step, the City should determine a fund balance minimum for the General Fund and make every effort to maintain that amount. Municipal Liquor Inventory The Municipal Liquor Store inventory at December 31, 1981, was $122,268. This appears to be extremely high! It represents approxi- mately four months inventory requirements! The Council and store manager should review turnover and appropriate inventory balances to be maintained, taking into consideration several items including: 1 ) the loss of interest earnings (at today's high rates) because of the cash required to maintain present inventory levels, even con- sidering volume discounts which may be obtained. 2) the cost of handling and storing excess inventory. 3) the time that elapses between the reorder date and the delivery date. 4) the minimum inventory level which can be maintained without affecting sales. 5) other sometimes significant factors such as: location, insurance requirements, seasonal requirements, etc. While the above list may not be all-inclusive, we believe they are important factors in your evaluation of inventory requirements. Garbage Fund Operations The Garbage Fund has reported net losses of $18,725 and $11 ,550 in 1981 and 1980, respectively. The consumer rates charged for this service should be sufficient to cover the costs of providing the service. We strongly urge a rate study with appropriate adjustment to rates charged to maintain the desired level of operating results and finan- cial condition of the fund. Our firm has performed this service for other cities. We would be happy to discuss this service with you. Recommended Changes in Accounting Procedures Vouchers: The City prepares a voucher for every invoice paid by the City during the year and attaches it tothe invoice. The voucher con- tains the following information: a. Vendor name b. Date paid c. Amount At the present time, the City uses a single check for paying its vendors. We recommended the City use a three part check, with the first carbon copy replacing the voucher described above and the second carbon copy being filed numerically. The City is incorporating this change in 1982. The changes should result in time savings. Recommended Interfund Transfers The following transfers should be made to repay interfund receivables and payables at December 31 , 1981 : To From Liquor Fund $ 408 Garbage Fund 368 Sewer Fund 604 General Fund 4,380 1978 Improvement Fund 1,775 General Fund $ 408 Liquor Fund 7, 127 This transfer is necessary to properly allocate prior years interest earnings to the proper funds. These transfers were recommended in last year's management letter. It is absolutely essential that these transfers be made! Collateral We noted that collateral required to secure deposits was inadequate at one of the City's depositories at year end. As a result, an additional $100,000 was to be assigned by the bank. • The City should maintain a continuous record of collateral assigned with periodic review to insure that adequate collateral is maintained in accordance with Minnesota Statutes Section 118.01. The statute is very specific. Annual Budget The revenue budget of the City presently combines the revenue from all sources and funds in one total budget. In order to more clearly identify the results of each fund's operations, we recommend a separate budget be prepared for each fund budgeted (General and Special Revenue Funds as a minimum) . It is also important to do this to reflect and insure compliance with levy requirements. We would like to discuss these recommendations with you and assist in their implementation. Thank you for the courtesy and assistance extended to us during the audit. ,/ Certified Public Accountants Minneapolis, Minnesota February 5, 1982 ANFINSON, HENDRICKSON R. CO. CERTIFIED PUBLIC ACCOUNTANTS To the City Council We have examined the financial statements of the City - for the year ended December 31 , 1981 , and have issued our report thereon, dated June 9, 1982. As part of our examination, we made a study and evaluation of the City's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary to express an opinion on the City's financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whol . The City is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any system of internal accounting control, errors or irregularities may nevertheless occur and not be detected. Also, pro- jection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the City, taken as a whole. However, our study and evaluation disclosed the following condition which we believe could result in material errors or irregularities in the financial statements that would not necessarily be detected within a timely period. The City has a limited number of office personnel and, accordingly, does not have adequate internal accounting controls in certain areas because of a lack of segregation of duties. Park National Bank Building • 5353 Wayzata Boulevard, Suite 410 • Minneapolis, Minnesota 55416 • 612-545.-0421 AFFILIATED WITH NATIONAL CPA GROUP - MEMBER FIRMS IN PRINCIPAL CITIES - . A good system of internal accounting control contemplates an adequate segrega- tion of duties so that no one individual handles a transaction from its incep- tion to its oomp%etioo. While we recognize that your office staff may not be large enough to permit an adequate segregation of duties in all respects for an effective system of internal accounting control, it is important that you be aware of this condition. This condition above was considered in determining the nature, timing, and extent of the audit tests to be applied in our examination of the financial statements for the year ended December 31, 1981, and this report does not affect our report on those financial statements dated June 9, 1982. This report is intended solely for the use of management and should not be used for any other purpose. The following lists other financial and accounting matters warranting Council and/or administrative consideration. Payroll Verification Payroll rate changes and personnel additions and deletions are approved by the City Manager's office. These changes are forwarded to the Finance Department to be entered into the payroll system. When this information is entered, it is noted on the authorization form and returned to the City Manager's office. While the actual payroll checks are reviewed, there is no subsequent review of the payroll data entered into the system by the City Manager's office. We recommend that the City Manager's office review subsequent payrolls to determine that the rate changes, additions, and deletions were entered and are correct. The City Manager's office should also review the entire payroll on a test basis annually to insure all payments were to bona fide city personnel. Utility Billing Adjustments The Utility Department uses a form to document any utility billing adjustments which must be made. The forms are retained and available for review by the Finance Department as necessary. This form does not provide space, however, for documentation of the reason the adjustment was necessary. These adjustments are, therefore, rarely sufficiently documented. We believe this form should be revised to provide space to document the reason for the adjustment. We also recommend that all utility billing adjustments be reviewed by the appropriate departmental supervisor. These procedures would improve the quelity of the docu- mentation and internal control. Departmental Receipts Inspections Division - Inspections Division cash receipts (which is primarily checks) and the yellow copy of the receipt form are currently being held in the division in an unlocked drawer until they are turned over to the cashier each Friday. The cash received by the Inspections Division is occassionally substantial. The Inspections Division should turn these receipts over to the cashier on a daily basis to improve internal control and maximize interest earnings. Motor Vehicle Department - Check number 4513 from the Motor Vehicle account of the City to the regular operating account of the City for September was dated October 7, 1981. The check was not credited to the City's account until October 20, which is seven working days later. This particular check had only one of the two required signatures. We recommend that receipts be deposited on a timely basis and that check signing requirements be fulfilled in accordance with policy. Golf Course - The golf receipts are deposited in the Recreation Area Account. This is a noninterest bearing account. Periodically, these receipts are transferred to the City's operating account. We recommend the City consider depositing these receipts directly into an interest-bearing account or make other arrangements to maximize use of all City funds. and Recreation Fees - The Park and Recreation Department currently uses two types of receipt forms; a two-part general receipt and a three-part activity receipt. These receipts are prenumbered. No control is maintained over used, unused, or voided receipt forms. The Park and Recreation Department prepares a recap of the receipts by object before they are turned over to the cashier. The recap does not indicate the prenumbered receipts included. It is, therefore, impossible to trace the prenumbered receipts to a recap to verify that they were actually turned over to the cashier. This substantially weakens internal control! The numerical sequence of all prenumbered receipts should be pro- perly accounted for and the recap should indicate the receipts included in that recap. This procedure should be applied to all departments of the City without exception. Bank Reconciliation The December 31 , 1981, bank reconciliation did not agree with the cash balance per the general ledger. The reconciling items not included on the bank reconciliation were as follows: a. Check number 13744 dated in December for $105,641 . 14 was for the last payroll period of the year. This check did not clear the bank before year. end. It was not included, however, as an outstanding check at year end. � . b. Bank credited the City's account for interest on an investment that did not belong to the City. The City recorded the $1 ,375 as interest income. This error occurred on August 3, 1981 , and the bank corrected it on September 1 , 1981 . However, on December 31 , the City had not adjusted its accounting' records to delete the ¢1,375 recorded previously. The • City will make this adjustment in 1982. c. The bank charged the City $45.65 on July 27, 1981, for an overdraft. The City apparently has an agreement with the bank that it does not charge the City for overdrafts. The bank corrected this situation in January 1982. This item was not included on the bank reconciliation at year end. d. Northwestern National Bank charged the City $2 for a wire transfer on January 9, 1981 . This item was not recorded on the City records nor included as a reconciling item at year end. One of the basic internal controls is the periodic reconciliation of recorded amounts per the general ledger with the actual bank balance and the recording of any necessary adjustments. There appears to be no good reason why the adjustments have not been made on a timely baois. We strongly recommend review and correction of this situation immediateIy. This failure to perform a basic accounting function should not occur! Follow-up on Previous Year's Comments A detailed follow-up and commentary of prior year's management letter and all changes initiated by the City is included in a separate letter. The letter addresses the issues item by item. We would be pleased to discuss these recommendations with you and assist you with any changes you may wish to make. We express our thanks for the courtesy and assistance extended to us during the course of our examination. • Certified Public Accountants Minneapolis, Minnesota June 9, 1982 Q G ' Vn /'l H c ® GEORGE M. HANSEN COMPANY, P.A. A Professional Corporation of Certified Public Act oiau finis September 14, 1983 piar a -9' F i f:? i `3 Mr. Greg Voxland, Finance Director City of Shakopee :.., 129 East First Avenue Shakopee, Minnesota 55379 Dear Mr. Voxland: Enclosed are copies of management letters we have sent to three cities. We consider the management letter part of the audit, and similar type letters are sent to our audited clients. If the City desired additional services for an indepth analysis of a specific activity or operations reviews, these services could be provided. Additional services are normally provided based on present maximum fees. The fees are based on the time involved, the capabilities of the necessary individuals, and to some extent the time of year. Our hourly rates range from $25 to $75 per hour. If you have any further questions please contact me. Very truly yours, JGM:ap J. Gregory Murphy Enclosures 1 75 SOUTH PLAZA BUILDING WAYZATA BOULEVARD AT HIGHWAY 100 MINNEAPOLIS,MINNESOTA 55416 61 2/546-2566 l M FIC o GEORGE M. HANSEN COMPANY. P.A. A Professional Corporation of Certified Public Accountants ountant.c City Council City of Dear Mayor and Council: During the course of our examination, we make certain observations relating to the system of internal control and accounting procedures which we are bringing to your attention in this letter. We are presenting the letter in four sections: A. Accounting Procedures and Internal Control Matters B. Discussion of Operations C. Changes in Accounting Principles which will affect the 1983 Financial Statements D. Conclusion A. ACCOUNTING PROCEDURES AND INTERNAL CONTROL MATTERS Data Processing - We understand that initial steps to study and evaluate various systems are being undertaken during the current year. The selection of the proper system and equipment to meet the City's current and future operating needs and provide the required controls is extremely important. We would be pleased to assist in the evaluation and selection process. Segregation of Duties - Currently one person prepares deposits, records receipts and reconciles bank accounts. Control would be improved if these functions were handled by different individuals. No one person should have control over an entire transaction cycle such as this. If the limited number of employees precludes having different people perform each task, steps should be taken to insure that everything is recorded properly. For instance, the finance director could reconcile the cashier's daily tapes with the deposits per the bank statement. This way, the receipts and deposits could be reviewed. Payroll Procedures - The exemptions indicated on the employees' form W-4, do not agree with the exemptions being used to compute the payroll for several employees. The number of exemptions have been changed based on verbal instructions from the employee. When there is a change in exemptions a new form W-4 should be submitted by the employee in order to properly authorize the change in withholding. Canceled Bond Coupons - Some bond coupons returned to the City from American National Bank and Trust Company were not canceled by the bank. These coupons are negotiable instruments until canceled. The City should review all returned bonds and coupons to ascertain that they are canceled, and notify the paying agent if any uncanceled items are received. The City should cancel any uncanceled items received. 1 75 SOUTH PLAZA BUILDING WAYZATA BOULEVARD AT HIGHWAY 100 MINNEAPOLIS.MINNESOTA 55416 612/546-2566 City Council Page 2 A. ACCOUNTING PROCEDURES AND INTERNAL CONTROL MATTERS (CONTINUED) Ice Arena - Receipts for hockey program registration are held until the applicant is either accepted or rejected. When the selection process is completed the registration fee of rejected applicants is refunded from the fees collected and the remainder of the fees are receipted and deposited to the City's account. Often the fees collected are held for a month before being refunded or deposited. Control over these fees would be improved if they were receipted and deposited as received and refund checks subsequently issued to rejected applicants. Ice Arena petty cash vouchers should be submitted for reimbursement at regular intervals. At the time of our cash count there were expense vouchers that were six months old. Purchases made from the Ice Arena petty cash often include sales tax. Although the amounts involved are small, employees should inform vendors, when purchases are made, that purchases for the City are tax exempt. SAC Charges - The City has recorded a liability of $170 for SAC charges that have been collected in prior years. A determination should be made as to whether the charges are payable to the MWCC or refundable to the contractor. Old Outstanding Checks - The City has ten outstanding checks in the total amount of $707 which were issued prior to 1982. These payments should be reviewed to determine their status. Some of these checks may he unclaimed money which would have to be handled in accordance with appropriate State Statutes. Escrow Deposits - The City is holding six deposits, ranging from $50 to $240 which were received from 1969 to 1974. No transactions have been recorded for the deposits in recent years. A review of these deposits should be made to determine if they are to be refunded or are to be used to reimburse the City for prior costs. Golf Course - During slow use periods receipts are often deposited twice a week. Control would be improved if these receipts were deposited daily. Purchases made from the Golf Course petty cash often include sales tax, from which the City is exempt. Special Revenue Funds - Several activities currently recorded in special revenue funds could be treated as activities within the General Fund. A review should be made to determine if it is necessary to maintain separate funds for these activities. Unnecessary funds result in additional work and further complexity. Funds to be considered are: Firemen's Relief Fund Community Center Fund Special Police Fund Forestry Fund Heritage Fund City Council Page 3 B. OPERATIONS In the paragraphs which follow, we comment on significant changes in operations during 1982 from the previous year. General Fund A comparison of General Fund revenues and expenditures for 1982 to these for 1981 is as follows: Increase Percent 19821981 (decrease) of change Revenues $3,094,027 $2,913,050 $ 180,977 6% Expenditures 2,925272 2,634,330 290,942 11 Net change $ 168755 $ 278,720 $(109,965) 39 The major elements of revenue for the two years were: Increase Percent 19821981 (decrease) of change General property taxes $1,148,480 $ 976,617 $ 171,863 18% Licenses and permits 116,123 102,927 13,196 13 Intergovernmental 1,194,518 1,297,915 (103,397) 8 Fines 148,019 113,382 34,637 31 Charges for services 123,893 125,287 ( 1,394) 1 Other revenue 99,229 82,414 16,815 20 Transfers 263,765 214,508 49,257 23 $3,094,027 $2,913,050 $ 180,977 6 Comments: 1. General property taxes increased $171,863 or 18% in 1982 and now account for 37% of total revenues (34% in 1981) . 2. Major elements of the change in intergovernmental revenue were: Increase Percent (decrease) of change Homestead credit $( 28,799) 9% Local government aid ( 52,498) 6 Highway maintenance aid 8,609 18 Other ( 30,709) 77 City Council Page 4 B. OPERATIONS (CONTINUED) General Fund (Continued) Comments (Continued) : • 3. The major change in other revenue was interest earned, which increased $13,825 or 21%. 4. Two transfers had the major effect on the 1982 transfers: Transfer from Revenue Sharing Fund was $25,471 (187) less than 1981 Transfer from State-Aid Fund was $67,221 . No transfer was made during 1981 . Major elements of expenditures for the two years were: Increase Percent 1982 1981 (decrease) of change General government $ 440,752 $ 365,628 $ 75,124 217 Public safety 1,335,821 1,198,811 137,010 11 Streets 451,549 345,096 106,453 31 Recreation 211,935 207,649 4,286 2 Parks 219,121 250,204 ( 31,083) 12 Other functions 250,070 259,841 ( 9,771) 4 Transfers 16,024 7,101 8,923 126 $2,925,_272 $2,634,330 $ 290,942 Comments: Major changes occured in: Increase Percent (decrease) of change General government City Manager $ 17,294 31% • Courts 38,255 71 Elections 18,064 563 Municipal - Clerk 10,576 12 Accounting ( 10,658) 15 Public safety Police 138,377 15 Streets Street maintenance 68,251 29 Snow and ice removal 32,705 64 Transfers Transfer to Ice Arena Fund 9,690 136 City Council Page 5 B. OPERATIONS (CONTINUED) General Fund (Continued) Expenditures for 1982 were less than budget for all functions except the following: Over expended Percent General government Mayor and Council $ 334 I% Courts 43,109 88 Personnel Board 256 5 Advisory Commission 2 2 Municipal Building 3,560 6 Public Safety Protective inspection 2,145 2 Civil Defense 956 47 Streets Storm sewer 835 2 Transfers 16,024 Conclusions: Total revenue increased $180,977 in 1982, the increase occuring mainly in general property taxes. Intergovernmental revenue decreased $103,397 due primarily from the State's reduction of Local Government Aid and Homestead Credit. It appears that State aids will have minimal increases in the future; therefore more reliance will be placed on property taxes. The undesignated fund balance at December 31, 1982 was $1 ,322,050 or approximately 41 percent of the 1983 budgeted expenditures. Such a fund balance is necessary to provide for working capital, contingencies, etc. The City should review its fund balance requirements to determine the adequacy of the fund balance. See attached page headed "Need for Adequate Fund Balance". City Council Page 6 B. OPERATIONS (CONTINUED) Water and Sewer Fund A condensed summary of operations for the last four years follows: 1982 1981 1980 1979 Operating revenue User charges - Water $ 638,879 $ 534,917 $ 495,137 $453,294 User charges -- Sewer 777,344 643,696 558,224 462,016 Other 64,618 72,601 58,633 73,225 $1,480,841 $1,251,214 $1,111,994 $988,535 Operating expenses Water $ 669,945 $ 508,417 $ 444,319 $388,082 Sewer 712,119 629,797 493,147 440,179 Unallocated 126,359 121,226 115,869 114,165 $1,508,423 $1,259,440 $1,053,335 $942L426 Operating income (loss) $( 27,582) $( 8,226) $ 58,659 $ 46,109 Other revenue (expense) - Net 32,042 27,671 27,251 13,535 Net income $ 4.460 $ 19,445 $ 85,910 $ 59,644 The income of the fund has deteriated during the last 3 years due to expenses increasing more than revenue. Operating revenue increased 50 percent since 1979 whereas operating expenses have increased 60 percent. The operations of the fund should be closely monitored to ascertain that rates are adequate to cover expenses and provide adequate income. For several years the Administrative charge from the General Fund has been $22,000. This charge should be reviewed to determine if it is still adequate. Swimming Pool Fund The operations for the last four years are as follows: 1982 1981 1980 1979 Revenue $ 48,723 $ 37,773 $ 37,166 $ 36,259 Expenses 72,600 74,458 69,906 69,340 $(23,877) $(36,685) $(32,740) $(33.081) Subsidies from other funds $ 30,993 $ 18,429 $ 18,063 $ 16,353 City Council Page 7 B. OPERATIONS (CONTINUED) Swimming Pool Fund (Continued) Even with a substantial increase in revenue in 1982 (29 percent) the fund continued to show a loss. The fund continuously operates with a deficit cash balance, in effect, borrowing money from other funds to pay bills. The debt for construction of the pool is not paid for from pool operations. It is paid for by a property tax levy. If the related debt expenses of the fund were included in the fund, the loss would be considerably larger. The City should consider whether this is actually a separate operation or a service and convenience as part of the City's Park and Recreation programs. If it is actually a Park and Recreation program it should be accounted for as a function within the General Fund. Golf Course Fund A summary of operations for the last four years follows: 1982 1981 1980 1979 Operating revenue $145,175 $143,965 $116,284 $ 94,871 Operating expenses 103,619 93,413 83,355 80,096 Operating income $ 41,556 $ 50,552 $ 32,929 $ 14,775 Other revenue (expense) - Net ( 4,411) ( 7,863) (10,990) ( 8,857) Net income $ 37.145 $ 42,689 $ 21,939 $ 5.918 The financial condition of the fund is good. The Fund continues to make adequate income to pay the bonds and provide for equipment replacement. The cash balance decreased substantially during 1982 because $62,077 was paid out for property and equipment. Ice Arena Fund A summary of operations for the last four years follows: 1982 1981 1980 1979 Operating revenue $178,283 $165,632 $144,579 $112,586 Operating expense 232,422 210,560 178,460 179,986 Operating loss $(54,139) $(44,928) $(33,881) $(67,400) Other revenue, excluding transfers and equipment contribution 5,222 4,001 117 20,492 Net loss $(48,917) $(40,927) $(33,764) $(46,908) City Council Page 8 B. OPERATIONS (CONTINUED) Ice Arena Fund (Continued) 1982 1981 1980 1979 Subsidies from other funds .$ 21 ,806 $ 11 ,888 Depreciation expense included in operating expense $ 54,765 $ 54,298 $ 51,285 $ 52,531 The Ice Arena Fund continues to show a net loss each year; however, working capital has improved each year because the annual depreciation expense has been greater than the loss. Constant revie.s should be made of the Fund's operations to insure that fees are maximized and competative and that expenses are kept to a minimum. C. CHANGES IN ACCOUNTING PRINCIPLES WHICH WILL AFFECT TIIE 1983 FINANCIAL STATEMENTS Escrow Funds - Accounting principles require separate accounting treatment for expendable and nonexpendable trust funds; expendable being those funds whereby the City has authority to use the monies within the fund and nonexpendable being those funds whereby the City is only acting as an agent and has no authority to use fund revenues. Presently, the City's financial records combine both types into one fund. We suggest that separate funds be set up for both escrow types in order to better facilitate financial statement preparation. Special Assessment Funds - A recent interpretation from the National Council on Governmental Accounting (Copy of letter to Office of the State Auditor attached) makes a significant change in the recognition of revenue for special assessment debt service funds. In order for the City's 1983 financial statements to be presented in accordance with "Generally Accepted Accounting Principles" this accounting change should be reflected in the financial statements. A comparison of the 1982 financial statements as presented and as restated to reflect the change is attached to this letter. City Council Page 9 D. CONCLUSION We are pleased to report that the internal control of operations continued to be good, the financial records are maintained on a current basis, and the employees are discharging their responsibilities in a capable and efficient manner. Administrative policies are being consistently followed and supervised by what we consider to be an outstanding administrative staff. The above comments were developed during our examination and deal primarily with accounting and certain operational matters. We would be pleased to discuss the above comments with you at your convenience and to render any assistance you may require. We would like to acknowledge the courtesy and cooperation extended to us during the course of our audit. Very truly yours, GEORGE M. HANSEN COMPANY, P.A. JGM:ap J. Gregory Murphy Enclosures Field work completed June 13, 1983. li 9 1 C ® GEORGE M. HANSEN COMPANY. P.A. A Professional Corporation of-Certified Public Accountants City Council City of • Dear Council Members: During the course of our examination, we make certain observations relating to the system of internal control and accounting procedures which we are bringing to your attention in this letter. We are presenting the letter in four sections: A. Accounting Procedures and Internal Control Matters B. Discussion of Operations C. Changes in Accounting Principles which may affect the 1983 Financial Statements D. Conclusion A. ACCOUNTING PROCEDURES AND INTERNAL CONTROL NATTERS Prior Year Recommendations We are pleased to be able to report that the major deficiencies in the accounting records noted in our previous year's letter to Council have been corrected. Although incorrect account codings were noted in certain instances, the pervasiveness of this problem was not evident during 1982. From June 1982 onwards (after completion of the 1981 audit) the bank accounts were reconciled monthly by an accounting clerk and reviewed by the Finance Director. We also noted an improvement in cash management in that available funds were kept invested to the extent possible. The status of other recommendations in our last year's letter is noted below: Payroll - Payroll withholding accounts were still not reviewed and adjusted at year end. Although unidentified amounts are not significant, we recommend that this problem be resolved in the current year. Fixed Assets - Fixed asset records were not updated during the year. We repeat our recommendation that these records be reviewed and updated. Escrow Funds - Implemented Liquor Operations Cash receipts - Prompt transfer of juke box receipts at the on-sale store is still a problem. Daily sales and cash reports - Implemented Checks of retail prices on invoices - Implemented NSF checks - Reconciled to the books Accounts Receivable - Reconciled to books Review of Purchase Ledger - Implemented 175 SOUTH PLAZA BUILDING WAYZATA BOULEVARD AT HIGHWAY 100 MINNEAPOLIS.MINNESOTA 55416 612/546-2566 City Council Page 2 Current Year Observations Cash Disbursements - Checks are signed using a check signing machine. The machine has no meter to record the number of checks signed. Keys to the machine are kept in the safe which is open during the day. Although a check log is maintained by the Finance Director in which checks written are recorded, we feel that control over disbursements would be strengthened if a check signing machine with a meter were used. The check log could be maintained by persons operating the machine and the numbers of checks signed could be compared with the meter. Control over the keys to the check signing machine should be assigned to a particular person. Purchasing - As noted in our prior year's letter, purchase orders are now required on all purchases exceeding $10. Consideration should be given to increasing this limit to perhaps, $50. The purchase order can provide additional control over purchasing and payment of invoices if utilized as follows: 1. A copy of the P.O. should go to the department requesting the merchandise. 2. Receipt of the merchandise should be documented on the P.O. and signed and dated by the receiving person. 3. The P.O. should be returned to accounts payable clerk who should compare it to the invoice prior to preparing check. 4. The P.O. should be filed with paid invoice. Payroll - Generally, the complete payroll process, from preparing the payroll journal to writing and distributing the payroll checks, is in the hands of the payroll clerk. An element of good internal control is segregation of duties. While this may not be possible, we feel control over payroll would be strengthened if the Finance Director reviewed the payroll journal, compared the checks to the journal and initialled the journal to document these procedures. Perhaps the Finance Director could also distribute the checks to department heads. Security of City Deposits - State law requires that the market value of collateral pledged by banks to secure cities' deposits must be at least 10% more than the amount of the deposits. Our review indicated that the collateral pledged by the was deficient at December 31, 1982. We recommend that collateral requirements be reviewed periodically with the banks, especially at times when large deposits or investments are made. City Council Page 3 B. DISCUSSION OF OPERATIONS In the following paragraphs, we comment on the significant changes in operations during 1982 from the previous year and on possible considerations for the future. General Fund A comparison of General Fund revenues and expenditures for 1982 to those for 1981 and to the budget is shown below: 1982 1981 Budget Actual Actual Revenues $1,085,043 $1,103,216 $1,118,510 Expenditures 1,118,308 1,113,297 1,080,233 Revenues in excess of expenditures $( 33,265) 1( 10,081) $ 38.277 As shown, actual 1982 revenues exceeded budget by $18,173 but decreased. by $15,294 from 1981. The main areas of revenue changes were: Over (under) Budget 1981 Taxes $(10,373) $ 35,778 Intergovernmental revenue (16,347) (41,126) Fines and forfeits 26,090 10,717 Other 1,316 (18,222) Transfers 7,358 (15,011) Miscellaneous 10,129 12,570 $ 18,173 $(15,294) The major variations in expenditures occurred in the following areas: Over (under) Budget 1981 General government $ 8,214 $ 29,706 Public safety 10,374 24,763 Public works 12,325 (13,227) Parks and recreation (15,935) (26,774) Unallocated ( 186) 854 Transfer 12,963 Other (19,803) 4,779 $( 5,011) $ 33,064 City Council Page 4 General Fund (Continued) Comments: 1 . The City's actual revenues exceeded budget by $18,173 in 1982, while budgeted expenditures exceeded actual by $5,011 . As a result, the actual deficit for the year was $10,081, compared to a budgeted deficit of $33,265. Decreases in property taxes and intergovernmental revenue from budget were offset by an increase in fines and forfeitures. Legal (General government) , police (public safety) and streets (public works) were the areas where the major increases over budget occurred, although the overage in streets was offset by under expenditures in parks. 2. Compared to the prior year, however, City revenues decreased by $15,294 while expenditures increased $33,064, a $48,358 decline in net revenues from $38,277 in 1981 to a deficit of $10,081 in 1982. As shown on the preceding page, intergovernmental revenues decreased by $41,126 from 1981 mainly in Road and Bridge grants but also in local government aid and the homestead credit. Increases in general government and public safety expenditures were partially offset by decreases in public works and parks. 3. The 1982 results indicate that the City was generally able to control expenditures. On the revenue side, however, there are causes for concern: a. Property tax revenues, while greater than 1981, were less than budgeted, caused by the drop in collections to an overall rate of 87% of levy compared to 99% in 1981 . We suggest that settlements from the County be compared to the current levy and to past collection amounts in order to determine at an early date the rate of current collections. A lower collection ratio may have to be considered in the budget process. b. Expected cuts in local government aid and homestead credit have occurred and must be anticipated in the future. c. Delays in payments of State aids, coupled with generally lower interest rates, will continue to reduce the amount of interest income the City can expect in the future. • City Council Page 5 Special Revenue Funds No amounts were disbursed from the Revenue Sharing Fund in 1982 and the fund balance approximated two years ' revenues at December 31, 1982 . Federal law requires that Revenue Sharing funds be disbursed or appropriated within two years of receipt. We understand that amounts have been, or will be, spent in 1983, but we wish to remind you of the general requirements. Enterprise Funds Liquor Fund - Liquor Fund net sales decreased $77,978 or five percent, during 1982 to $1,450,147 while gross profit decreased $10,462, or two percent. Off- sale sales decreased $61,000 while gross profits increased $2,000. On-sale sales decreased $17,000, but gross profit decreased $13,000. The decrease in on-sale sales occurred almost entirely in liquor and this had a proportionately greater effect on the gross profit than the declines in off- sale sales. Operating expenses increased $24,755, or seven percent, in 1982 with the largest increase occurring in selling expenses which increased $23,827, or eleven percent. Selling salaries made up the majority of the increase, or $15,989. Overhead expenses decreased while administrative costs were up $2,190. Income before transfers in 1982 totalled $119,959 (1981, $153,317) , resulting in a deficit of $31,041 after transfers to the General Fund of $151 ,000 (1981, net income of $2,373) . Inventories at December 31, 1982 totaled $178,524, or $12,771 less than at December 31, 1981 . As a result, inventory turnover (cost of sales divided by average inventory) increased to 5.20 times in 1982 from 5.18 times in 1981. The Statement of Changes in Financial Position indicates a decrease in working capital in 1982 of approximately $24,000. A comparison of the operations to those of other Minnesota municipalities operating both on and off-sale stores in 1981, as compiled by the State Auditor, shows the following: Other on and Wayzata off-sale stores Gross profit 32.7% 37.5% Operating expenses 23.6 30.3 Income from operations 9.1% 7.2% City Council Page 6 Enterprise Funds (Continued) Liquor Fund (Continued) In summary, a $78,000 decrease in net sales resulted in a $33,000 decrease in income before transfers and a net loss after transfers of $31,031. The current year's operations should be closely monitored to determine if a reduction in the Transfer to the General Fund is required. Also, to generate additional cash, a serious effort to sell the slow-moving inventory items should be undertaken. Water and Sewer Funds - A summary of operations of the funds for 1982 follows : Water Sewer Operating revenues $161,596 $286,055 Operating expenses 119,311 280,090 Income (loss) from operations $ 42,285 $ 5,965 Nonoperating revenues, net 9,794 16,603 Net income before transfers $ 52,079 $ 22,568 Transfers (13,422) 765 Net income $ 38,657 $ 23,333 Revenues in both funds increased in 1982, primarily caused by increased usage. Expenditure increases were relatively lower with the result that both funds showed operating income in 1982. License Fund - Fees on license plate sales increased $20,139 in 1982. As a result , after operating expenses and an $18,000 transfer to the General Fund, net income amounted to $27,219 compared to $18,328 in 1981. C. CHANGES IN ACCOUNTING PRINCIPLES WHICH MAY AFFECT THE 1983 FINANCIAL STATEMENTS NCGA Statement 4 - Accounting and Financial Reporting Principles for Claims and Judgments and Compensated Absences Statement No. 4 requires that, effective in 1983, governmental units must accrue liabilities for future vacation, sick and other leave benefits that meet the following conditions: a. The obligation relating to employees'' rights to receive compensation for future absences isattributable to employees ' services already rendered. b. The obligation relates to rights that vest or accumulate. c. Payment of the compensation is probable. d. The amount can be reasonably estimated. City Council Page 7 For the City this means that, for those employees whose vacation, sick and other benefit plans vest and accumulate (those that are not contingent on future services and that may be carried forward to one on more future periods) , the liability for these benefits earned, but not taken will have to be computed and recorded beginning December 31, 1983. The presentation in the annual financial statements will depend on the funds involved and estimated payment dates of the liabilities. NCGA Statement 3 - Defining the Governmental Reporting Entity This statement discusses criteria for defining the governmental reporting entity, ie., for determining which organizations, functions and activities of government should be included in the general purpose financial statements of that governmental unit. Although it does not define all the criteria for inclusion, the statement does say that . . . "the basic - but not the only - criterion for including a governmental department, agency, institution, commission, public authority or other governmental organization in a governmental unit's reporting entity for general purpose financial reports is the exercise of oversight responsibility over such agencies by the governmental unit's elected officials." Such responsibility would include financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations and accounting and fiscal matters. We are attaching the complete text of NCGA Statement 3 to this letter so that both the City Council and Management are aware of the requirements and can make a determination as to its applicability for the 1983 financial statements of the City. If it is determined that there are agencies now existing which would meet the criteria in the Statement but are not now included in the City's annual financial statements, this should be discussed with the auditors so that the auditing implications can be considered. We would be please to assist in this determination. D. CONCLUSION The above comments were developed during our examination and deal primarily with accounting and certain operational matters. We would be pleased to discuss the above comments with you at your convenience and to render any assistance you may require. We would like to acknowledge the courtesy and cooperation extended to us during the course of our audit. Very truly yours, GEORGE M. HANSEN COMPANY, P.A. ROE:ap Field work completed April 7, 1983. M HCo GEORGE M. HANSEN COMPANY, P.A. A Professional Corpnrmion of Certified PuMir Accountants The City Council City of Dear Councilmembers: During the course of our examination, we make certain observations which we feel will be of interest to you. These observations, of course, refer only to those areas to which our audit work extended. The comments which follow are suggestions for improvement based upon both our experience and our observations of similar situations in other governmenal entities. GENERAL Again, the finance department put forth a fine effort in preparing for this year's audit. Some of the suggestions we made last year have been implemented and internal control in these areas has improved. There are still a few areas that concern us and require your consideration. INTERNAL CONTROL AND RELATED MATTERS The following internal weaknesses were pointed out in previous letters and still apply: Special Assessment Records The City's special assessment clerk maintains detailed special assessment records for all assessed improvement projects. There is, however, no control summary of all these detailed records. These summaries are important for accounting purposes when balancing annually with Hennepin County and when checking the assessment clerk's detailed records. We recommend that the finance department establish these summary records and annually agree them with the assessment clerk's detailed records and County figures. A portion of this work is currently done at year end in preparation for the audit. Failure to do so could result in a material misstatement of the special assessment receivables or loss of revenue to the City. Property Ledger The City is still in the process of compiling information for a property ledger. Hopefully the project will be completed by the end of 1983 so the City will have this valuable data for insurance and accountability purposes. 1 75 SOUTH PLAZA BUILDING WAYZATA BOULEVARD AT HIGHWAY 100 MINNEAPOLIS.MINNESOTA 55416 612/5462566 City Council Page 2 INTERNAL CONTROL AND RELATED MATTERS (CONTINUED) Fund Accounting The City maintains several funds that have little or no activity each year. Funds of this nature should be reviewed to determine their necessity. Only a minimum number of funds should be maintained. Examples of funds which might be closed and activities handled in the General Fund are: Post Audit Fund Planning Fund Street Maintenance Fund The activity and fund balances in each of these funds is so insignificant that it seems cumbersome to maintain records for such funds. Relief Associations Currently the City's Finance Department spends considerable time doing book- keeping and other related services for the Police and Fire Relief Associations. The City is not reimbursed by the Associations for these services even though all record keeping and investing is handled by the Finance Department. It is very possible that more time will be required in the future as some of the long-term investments mature and member retirements increase. This situation should be reviewed and alternative methods of record keeping investigated. Accounting for the large volume of investment and other related transactions is currently all done manually. The possibility of using LOGIS or some other system for recording these transactions should be investigated. Administrative and Accounting Policy Manuals We were unable to find any formal written policies that addressed certain administrative and accounting matters that came up during the course of our examination. Policies for purchasing, personnel and accounting matters are not formally documented and could lead to misinterpretation. We suggest that administrative and accounting policy manuals be prepared and specifically identify procedures in the purchasing, accounting and personnel areas. Cash Receipts The current practice of using a manually prepared daily recap for posting cash receipts requires additional staff time and also increases the likeli- hood of errors. The recap could he avoided if receipts were posted directly to the financial system from a cash register or a cash register summary tape. The current register does not have the capability of summarizing transactions by account and would have to be replaced. Several of the cities we work with have chosen this method and also eliminated the need for writing up individual receipts for each cash transaction. City Council Page 3 OTHER MATTERS Deposit Fund The City' s deposit fund which accounts for the collection and subsequent remittance of performance bonds is currently handled through a separate non-interest bearing checking account and is omitted from the LOGIS accounting system. For financial statement purposes however, we have included the activities of this fund. We recommend that deposit fund activities be reported in the LOGIS accounting system like all other City funds. The necessity of a separate checking account should also be reviewed. Certificate of Conformance in Financial Reporting Many of the cities we presently audit are either participating in the Certificate of Conformance Program or have made plans to join the program in the near future. We encourage this participation and feel it should be a goal of the City of It requires a concentrated effort from city management who must present financial and statistical data and narrative explanations far beyond those found in the current audit report. The Certificate of Conformance is the highest form of recognition in governmental accounting and financial reporting, and its attainment representa a significant accomplishment by a city and its management. Reports qualifying for a certifi- cate provide a better understanding of the city's finances to bond rating agencies, potential investors and other users of the financial statements. We would be pleased to discuss thse suggestions with you and assist with any changes you may wish to make. We also wish to express our appreciation for the courtesy and assistance extended to us during the course of our examination. Very truly yours, GEORGE M. HANSEN COMPANY, P.A. JGM:ap Field work completed April 20, 1983. t:Dir1C Vi 0 GEORGE M. HANSEN COMPANY, P.A. A Prufex.+iorrul Corporatio,,of Certified Puhlir Arruu.urrmc Professional services in many areas are available through George M. Hansen Company, P.A. The services we provide include : Implementation of accounting systems and procedures to provide more meaningful interim financial reports. Changes in current accounting systems to comply with requirements of the Office of the State Auditor. Advice on utility billing and collection systems . Advice on liquor and other enterprise fund financial systems. Data processing needs assessments. Data processing feasibility studies. Analysis of financial condition and programs to improve: Fund balances Special assessment fund projections Operating fund losses Assistance and development of: Chart of accounts Annual budgets and related Form 280 Investments and cash flow analysis Capital improvement programs Property and equipment records Special assessment records Analysis of current fee structure to determine adequacy and recommend other areas where fees could be imposed to reimburse costs. In-depth and analysis of specific problem areas or operations. Assistance in recruitment. Assistance and training of the accounting staff. 1 75 SOUTH PLAZA BUILDING WAYZATA PW%t . ;i iWAY 'rn1NEAPOLIS,MINNESOTA 5541 6 612/546.2566 WILKERSON , GUTHMANN & JOHNSON , LTD. CERTIFIED PUBLIC ACCOUNTANTS 1300 NORTHWESTERN NATIONAL BANK BUILDING HOWARD M. GUTHMANN 55 EAST FIFTH STREET JAMES V. LEWIS JOHN L. PHILLIPPI SAINT PAUL. MINNESOTA 55101 JAMES G. PLATZ ROGER A. KATZENMAIER 16121 222-1801 JOHN T. KISCH AUSTIN J. STIBBE RONALD H. ZUERCHER 815 MIDWEST FEDERAL PLAZA WEST 801 NICOLLET MALL HARTWELL WILKERSON MINNEAPOLIS. MINNESOTA 55402 WALLACE T.JOHNSON (RETIRED) 16121 338-7907 (RETIRED) (.sem k FN KC✓l s rt M: dL, .Y - •- . E. September 13, 1983 Mr. Gregg Voxland , Finance City of Shakopee 129 East First Avenue Shakopee, Minnesota 55379 Dear Mr. Voxland : Enclosed are two management letters we provided cities during the past year. We request that they be used for no other purpose than as examples of our work. We also wish to point out that one of the letters was prepared for a very small city with part-time officials. As such, the recommendations are very basic. Generally accepted auditing standards require auditors to communicate to audit clients any noted material weaknesses in internal accounting controls. We meet those requirements and attempt to go further. For instance , one segment of an audit is intended to determine whether cash investments and related interest income are properly stated . We not only review internal controls intended to insure that all transactions are recorded properly; we also review the investment practices to determine that all available cash is invested and at favorable interest rates. If conditions exist which indicate improvement is possible, we include a recommenda- tion in our management letter. As stated in our proposal , we believe management letters are potentially the most positive result of the audit process. The auditor has a unique opportunity to objectively look at an organization 's financial affairs. We believe in taking advantage of this opportunity to provide our clients with as much help as possible in recognizing areas where inprovements in internal controls and operating efficiencies may be achieved . Our process for developing a comprehensive management letter is as follows : - During the course of the field work, each auditor com- pletes a preprinted form for each potential management letter item. • M Mr. Gregg Voxland , Finance Director City of Shakopee Page Two September 13, 1983 - During the review of the workpapers , the manager discusses each item with the auditor and , if appropriate, city officials to insure that our understanding of each situa- tion is correct. - After the audit is essentially complete, the manager reviews the financial report and gives overall considera- tion to the audit to determine if comprehensive comments are appropriate. - A draft of the letter is prepared and discussed with the finance director and other interested city officials. - A final letter is issued and discussed with the city council and other city officials. If you have any further questions , please call . rely AA* \JkL Jo n T. Kisc JTK:pac Enclosures WILKERSON , GUTHMANN & JOHNSON , LTD . CERTIFIED PUBLIC ACCOUNTANTS 300 NORTHWESTERN NATIONAL SANK BUILDING HOWARD M. GUTHMANN 55 EAST FIFTH STREET JAMES V. LEWIS JOHN L. PHILLIPPI SAINT PAUL. MINNESOTA 55101 JAMES G. PLATZ ROGER A. KATZENMAIER M121222-1501 JOHN T. KISCH AUSTIN J STIBBE RONALD H. ZUERCHER 515 MIDWEST FEDERAL PLAZA WEST 501 NIC OLLET MALL HARTWELL WILKERSON MINNEAPOLIS. MINNESOTA 55402 WALLACE T,JOHNSON (RETIRED) (5,2) 335-7507 (RETIRED) July 11 , 1983 Mayor and Members of the City Council ` , Minnesota We have completed our examination of your cash basis financial statements as of and for the year ended December 31 , 1982. As part of our examination, we reviewed your record keeping systems and certain aspects of your operations. In addition to the detailed record keeping recommenda- tions we have already provided the City Clerk and City Treasurer directly, we offer the following comments and recommendations for your consideration . Since our work did not cover all aspects of your operations , there are likely to be additional areas where improvements are needed. 1 . Financial Condition Cities receive most of their revenues during the last half of the year (property taxes on July and December 15, state aids in monthly installments from July to December ) . As a result , on any December 31 , you should have cash and investment balances sufficient to finance at least six months ' expenditures. Mayor and Members of the City Council * , Minnesota Page Two July 11 , 1983 At December 31 , 1982, you had approximately $25, 000. This wasn ' t sufficient, as evidenced by the May, 1983, bond issue. We believe a balance of $50, 000 to $60, 000 would have provided you with adequate reserves . In order to return the City to a sound financial condition and eliminate the need to issue bonds each year, we recommend that : A. Expenditures and revenues from the current date to year-end be estimated and year-end cash balances be projected . After deducting from the projected cash balance any expected bond payments to be made in early 1984, you will have an estimate of cash available at year-end to finance 1984 operating expenditures. B. An operating expenditure budget for 1984 be prepared. C. Revenue required in 1984 to return the City to good financial condition by December 31 , 1984 , be determined as follows : 1984 expenditure budget (B above) $XXX Desired balance of cash at December 31 , 1984 ( approximately 1/2 of amount above) XXX Less : Projected balance at December 31 , 1983 (A above ) (XXX) Required revenues XXX Mayor and Members of the City Council , Minnesota Page Three July 11 , 1983 D. State aids and miscellaneous revenues ( license fees , etc. ) for 1984 be estimated . E. The property tax levy needed to raise the revenues cal- culated in C above be determined . F. The amount that can actually be levied for 1984 be determined . State limitations and taxpayers ' ability to pay must be coosidered . In all likelihood , bonds will again need to be issued in 1984 , even if the revenues determined in C, D and E above can be raised . 2. Disbursement Documentation Our review of the documentation supporting disbursements revealed the following deficiencies : - numerous disbursements were not supported by any docu- mentation. This related primarily to a particular month during the year and the documentation may have been lost . - in numerous cases , vouchers were prepared and signed by City officials , but no other supporting documentation was available ( invoices or signature and sworn statement of claimant, etc. ) - the portion of the attorneys bills which described the services rendered were removed . Mayor and Members of the City Council Minnesota Page Four July 11 , 1983 - in at least one case , a payment due an employee was made to a third individual , at the employee 's request. - amounts due to and from employees were in many cases netted against one another , without adequate documenta- tion. - photocopies of invoices supported disbursements. - vouchers were unnumbered and undated . All disbursements be supported by adequate documentation including : - voucher jacket showing check number and date paid. - a description on the voucher of services or products purchased and the classification of the disbursement ( city hall , police equipment, miscellaneous , etc. ) - an attached original invoice, except where the payment is for services performed by city officials or employ- ees. Photocopies of invoices should be avoided to pre- vent duplicate payments . Further, monthly statements from vendors are not adequate, unless supported by invoices as well . - vouchers signed by City officials and employees as claimants to support wage payments. Individual vouchers should be prepared to support each payment. City officials should sign vouchers only after they are satisfied that all needed documentation is attached . Mayor and Members of the City Council Minnesota Page Five July 11 , 1983 Disbursements to employees and others should not be netted against amounts due from them. Further , the City should not pay a third party an amount due a claimant . 3. Clerk ' s and Treasurer ' s Records , Monthly Statements Prior to January 1 , 1983, the City Clerk performed , for all practical purposes , the duties of both the clerk and treasur- er . As a result , no internal controls over cash receipts and dis- bursements existed . Significant errors or irregularities could have occured and may not have been detected. Since January 1 , 1983, the Clerk and Treasurer have been performing their respective duties. As long as each maintains and verifies their own records , the opportunity for error or irregu- larity is greatly reduced . We have provided the Treasurer and Clerk with new ledger formats , which should simplify the record keeping process and provide additional information. The new formats enable the Clerk to prepare a monthly financial statement for the Council which summarizes City receipts and disbursements for the month and year-to-date. Beginning in 1984 , this statement will provide comparative information with the previous year. Beginning in 1984 , it may be helpful to add budgetary information to the monthly statement. Mayor and Members of the City Council 411111.111111.1111111111111.41111111111., Minnesota Page Six July 11 , 1983 4. Federal Revenue Sharing Federal revenue sharing regulations require that cities maintain certain records, submit certain reports and hold public hearings regarding the use of the funds. The new City ledgers meet the requirement for segregating the funds and , if properly maintained , will provide the information necessary to complete the required financial reports . We obtained a Federal Revenue Sharing handbook for the Clerk. It should be read carefully to determine that the City is complying with all regulations. 5. Council Meeting Minutes Minutes of council meetings should document approval of all significant actions , including : - annual budget. A copy should be attached to the minutes and the total budget amount should be included in the minutes. - annual tax levy. Again, the amount should be included . - Federal Revenue Sharing hearings and budgetary actions. All disbursements of revenue sharing funds should be clearly identified as such when approved . - amounts and vendors for significant individual purchases. For large equipment purchases , such as a police car , bid amounts of the various vendors should be listed in the minutes , along with reasons for selecting any vendor other than the lowest bidder. Mayor and Members of the City Council Minnesota Page Seven July 11 , 1983 - acceptance of the Clerk's annual statement to be submitted to the Office of the State Auditor. 6. Receivables from Employees The voucher supporting the last 1982 paycheck to two City employees indicated they owed the City a total of $437. These amounts relate to purchases made by the City on their behalf . We were unable to verify the accuracy of the amounts due to inadequate records. We recommend that these amounts be collected , if they haven ' t been. Further, we recommend that the practice of allowing employees to charge personal items to the City be discontinued. Beyond the obvious record keeping problems it creates, it allows individuals to use the sales tax-exempt status of the City. 7. Equipment Records The City maintains no records of its equipment. We recommend that an inventory of all significant items of equipment be taken and that records be developed which include: - A description of the item - Make , model and serial number - Cost or estimated cost - Date purchased - Vendor - Any other pertinent information. Mayor and Members of the City Council Minnesota Page Eight July 11 , 1983 After an original inventory is established , later pur- chases and retirements should be recorded . Each year the equip- ment records should be compared to equipment on hand . A simple 3" by 5" card for each asset would suffice or we can devise a form for your use . 8. City Officials ' Bonds If not already done, we recommend that the bonds pro- vided by the City Clerk and Treasurer be increased beyond the $1 , 000 required by law. 9. Sewer Service Charges The City currently pays the sewer service charges for the entire City out of its general revenues . We recommend that billing users be considered. 10. Property Taxes - Fiscal Disparities During 1982, City residents paid no property taxes to the City. (Residents did receive property tax bills, but the pro- ceeds were distributed to the County , the School. District, etc. ) This resulted from a provision of the property tax sys- tem in the metropolitan area referred to as "Fiscal Disparities" . In simple terms , this provision results in an areawide distribu- tion of property taxes on certain commercial property in the metropolitan area. Each governmental unit in the metropolitan area receives its distribution of these taxes based on the pre- vious year ' s tax rate. This distribution is deducted from the tax Mayor and Members of the City Council , Minnesota Page Nine July 11 , 1983 levy certified by the governmental unit and the balance is levied against the units ' taxpayers. The City ' s Fiscal Disparities distribution in 1982, based on 1981 tax rates , exceeded the certified levy for 1982. As a result , no taxes were levied against City property owners in 1982. In 1983, the City received no Fiscal Disparities distribu- tion, because the tax rate on City property for City purposes in 1982 was zero. As a result, taxes on City property increased fro.d 0 in 1982 to 40 mills in 1983, and the process is likely to be repeated in 1984 and 1985. 11 . Payroll. Taxes and PERA Contributions During 1980 and 1981 and part of 1982, the City failed to deposit state and federal income taxes withheld from police- men. During 1982 these payments were made as follows : State Federal Total Income Taxes Withheld from Wages Paid in 1980 and 1981 $1 614. 00 $ 3 775. 20 $ 5 389. 20 1982 1 013. 60 3 523. 20 4 536. 80 Penalties and Interest 1 578. 40 3 297. 66 4 876. 06 4 206. 00 10 596. 06 14802. 06 During 1983, approximately $550 of additional interest and penalties were paid. However, these billings were the result of an Internal Revenue Service error , and a refund has been requested. We have also requested that the IRS abate at least a portion of the portion of the penalties paid in 1982. We expect that they will make a decision on this matter in the near future. Mayor and Members of the City Council Minnesota Page Ten July 11 , 1983 During the same period , the City failed to withhold PERA contributions from City employees . Following the complaint of one employee to PERA, the City made the following payments : Contributions : Employee $3 689. 30 Employer 5 533. 95 Interest on past-due contributions 532. 24 9 755. 49 During the last several months of 1982, appropriate deductions were made from employees ' paychecks. However , due to the condition of City records , we were unable to determine how much , if any, of the 1980, 1981 and early 1982 employee contribu- tions were deducted from their paychecks . In other words , the City absorbed , in all likelihood , a major portion of the employee as well as employer contributions. In addition, contributions for one employee who resigned in 1982 were never made. We understand that police officers ' income taxes and PERA contributions are being properly withheld and deposited dur- ing 1983. However , we recommend that PERA, social security and income tax withholding requirements be reviewed to determine whether the exclusion of other City employees and officials is proper . Mayor and Members of the City Council Minnesota Page Eleven July 11 , 1983 These conditions were considered in determining the nature, timing , and extent of the audit tests applied in our exam- ination of the 1982 financial statements , and this report does not affect our opinion on those cash basis statements dated May 27, 1983 . After you have had an opportunity to review this letter and the financial statements , we would appreciate an opportunity to discuss them with you. If you need assistance in implementing any of them, we will be available. We appreciated the excellent cooperation we received from City officials , especialll, Kevin Krueger and Loretta Hale, in performing our work. Respectfully submitted , 1111111111111.11 TDL:HMG:pac WILKERSON, GUTHMANN & JOHNSON, LTD. CERTIFIED PUBLIC ACCOUNTANTS 1300 NORTHWESTERN NATIONAL SANK BUILDING HOWARD M. GUTHMANN SAINT PAUL,MINNESOTA 55101 .JAMES V. LEWIS JOHN L. PHILLIPPI 222-1801 JAMES G, PLATZ ROGER A.KATZENMAIER JOHN T. KISCH AUSTIN J. STIB BE 172♦MIDWEST FEDERAL PLAZA WEST MINNEAPOLIS, MINNESOTA 55402 338-7907 HARTWELL WILKERSON WALLACE T. JOHNSON IRETIRED} RETIRED June 29, 1983 Mayor and Members of the City Council 1.11111milmw Minnesota We have completed our examination of the financial statements of the 11111111MMO for the year ended December 31 , 1982. As part of our examination, we made a review of your significant accounting records , procedures and controls. The City 's accounting records were, again, much improved over the previous year . As a result , our fees were further reduced . Our services continue to be somewhat more substantial than those normally associated with an audit and the preparation of the financial section of the financial reports for a city similar to . This was due, in 1982, to our review of and assistance with the trunk fund project and the continuing efforts to upgrade the City ' s financial reporting in hopes of obtaining the MFOA Certificate of Conformance. We expect that without the need for these additional services , fees can again be reduced for the 1983 audit. The City could further reduce audit fees by preparing the financial section of the annual reports or portions thereof . Mayor and Members of the City Council , Minnesota Page Two The following comments cover items we wish to highlight and areas we believe could be further improved . 1 . Special Assessment Delinquencies As expected , delinquent special assessments increased substantially during 1982. A summary of the total delinquent assessments receivable at year-end for the last three years follows : December 31 , 1982 $ 1 992 863 1981 1 056 718 1980 295 814 If existing partially developed areas are developed , collections on these delinquencies and future installments should improve substantially. However, if future sales are concentrated in new developments , current delinquency problems will persist. County collections during 1983, both on the current installment and delinquent balances , should be monitored carefully. The effects of this situation should be thoroughly considered in any decisions regarding future improvement projects. Mayor and Members of the City Council , Minnesota Page Three 2. General Fund Balance The City has increased its General Fund fund balance during each of the last two years . However, that Fund 's aver- age cash balances have been declining over the same period , as evidenced by interest earnings of approximately $23 000 in 1980 , $7 000 in 1981 and $-0- in 1982. The General Fund receives most of ita revenues during the last half of the year (property taxes on July 15 and December 15, state aids in equal monthly installments from July to December ) . As a result , the General Fund needs a fund balance at year-end roughly equal to 50% or six months of the following year ' s expenditures to remain financially sound throughout the year . The $439 000 balance at December 31 , 1982, is 13. 6% of the $3 235 000 1983 budget. We recommend that the City develop a long-range plan to increase the balance in the General Fund both in absolute terms and as percentage of annual expenditures. Mayor and Members of the City Council 00111.00111.110, Minnesota Page Four 3. Trunk Fund Project During early 1983, the City completed the "trunk fund project" and recorded the resulting transfers between Special Assessment Funds . The results of this project provide the City with a basis for operating a fairly complicated , but very useful , cost allocation system for improvement projects. The current and potential benefits of the project and future operation of the system include the following , among others : - Verification of assessment accuracy is greatly simplified . - Trunk rate determination can be refined . - Reasons for significant special assessment fund deficits and balances have been generally deter- mined , and additional deficits can be predicted and more easily prevented. - More accurate projections can be made of the finan- cial impact on the City of future development. Mayor and Members of the City Council immillimp, Minnesota Page Five However , maintenance of this cost allocation system along with the special assessments receivable system will place a substantial burden on the finance director and his staff . Further , to be operated properly, the cost allocation system will require attention throughout the year . We recommend that complete documentation of the cost allocation system be prepared to ease its future operation. This will be extremely important if new personnel are assigned responsibility for its maintenance . Further , documentation for the project itself should be thoroughly reviewed to determine that it is accurate and com- plete. The impact of this project on the financial condition of individual Special Assessment Funds was dramatic, and ques- tions regarding the project may arise several years from now. 4. Fixed Asset Records During 1982 , the City developed detailed records for property and equipment used in governmental fund operations and established a general fixed asset account group. As a result, we were able to eliminate our opinion qualification. More importantly, the City improved controls over its property. Mayor and Members of the City Council , Minnesota Page Six We recommend that similar records be developed for Public Utilities Fund property and equipment. 5. Municipal State Aid - Construction Billings In our 1981 management letter , dated May 24 , 1982, we noted that an available state advance on a project approved by the State in 1981 had not been received . The $340 000 advance on this project was received in January, 1983, after construc- tion was nearly complete. We recommend that advances be requested as soon as possible after state project approval is received . Further, receivable balances should be reviewed frequently to insure that final billings are processed as soon as the project is completed . 6. Volunteer Fire Department Salaries Volunteer firemen ' s salaries are paid directly from a fire department bank account. Twice each year the City reim- burses the fire department for the salary payments. The City Treasurer is responsible for all City funds. As such , he should have direct control over all disbursements. Mayor and Members of the City Council , Minnesota Page Seven We recommend that volunteer firemen be paid directly by the finance department. 7. Budgetary Controls General fund expenditures exceeded budgets by $72 000 and $ 110 000 in 1982 and 1981 , respectively. We recommend that all expenditures be approved by the Council through the budget process . Department heads should periodically project needs and request revisions prior to exceeding approved departmental budgets. Periodically, actual and estimated revenues should be reviewed , to assist the Council and staff in evaluating departmental requests for expenditure budget increases. 8. Reimburseable Engineering and Legal Expenditures Frequently the city attorney and the consulting engineer bill the City for services provided developers. The City in turn bills the developer and obtains reimbursement. Payments to the engineer and attorney are recorded as expenditures and reimbursements received are recorded as revenues . . i Mayor and Members of the City Council , Minnesota Page Eight We recommend that deposits from developers be required prior to performance of the services . Further , we recommend that a balance sheet "clearing" account be established to account for both the payments and deposits . This should simplify the determination of deposit balances and eliminate one source of expenditures in excess of budget ( see discussion above ) . Finally, we recommend that the City consider whether the services provided developers by City staff should be reimbursed . 9. Manual Check Controls The City Council receives copies of the manual check register after the checks have been issued . We recognize that certain disbursements need to be processed quickly. However , we recommend that disbursements not having prior Council approval be limited to specified purposes and/or maximum amounts. Mayor and Membrnnesota S of the City eCouncil , Mi Page Nine The foregoing conditions were considered in determining the nature, timing and extent of audit tests applied in our exam® ination of the financial statements , and this report does not modify our opinion dated April 19 , 1983 , on the financial statements . After you have had an opportunity to review these suggestions , we would be happy to discuss them or assist you in implementing any or all of them. We wish to thank the City' s staff for the assistance and cooperation we received during the audit. Sincerely, s E„ k a ;-�," 4 ' � 4 ' �l . ' i 1.-"', F '_ Xv .!. 4. { srr RAK/JTK :pac F • JEROME JASPERS & COMPANY Ger/Oed 7�16/'c 2ccoun/an/s 206 SCOTT STREET ?NIMBI RS OF T111:AMERI('AN INSTITUTE:OF SIIAKOPF:E,MINNESOTA 55379 111111E1)PUBLIC ACCOUNTANTS TF,LF:PHONE:(6121 445-2817 JEROME JASPERS.C.P.A. JAMES STREEFLAND.Jr.C.P.A. September 14, 1983 Members of the City Council City of Shakopee Shakopee, Minnesota 55379 Re: Management Letter (Letter of Comments and Recommendations) Dear Council Members: Although the purpose of an audit engagement is to formulate an opinion on the financial statements, auditors are often requested to prepare a management letter at the conclusion of the examination. The management letter includes comments and recommendations for improving accounting practices, accounting procedures and weaknesses in internal accounting control. If the recommendations are implemented, both the auditor and the City in many cases, benefit from time spent preparing such a letter. The management letter also creates a valuable contact with the City Council that otherwise may not be available to an auditor and may aid in building a better understanding of our function as auditors. The cost to the City for preparing a managament letter is not material since the comments and recommendations are developed from our observations during the examination and are verbally communicated to the administration of the City during the audit. We have included copies of management letters prepared by us and communicated to City Councils. Sincerely yours, 1 JEROME JASPER & CO PANY JJ/gg August 15, 1980 Members of the City Council Minnesota 55379 MANAGEMENT LETTER !Dear Council Members : As we stated in our engagement letter dated October 16, 1979, an examination would be made of the accounting and other records of the H City of for the purpose of expressing an opinion on your financial statements for the year ended December 31, 1979. We also 'stated In our letter that at the conplusion of our examination, we -would make separate recommendations for strengthening internal controls and improving operating procedures. We have now completed the examin- ,ation of your financial statements and at this time make the following irecommendations to you. 1 . Fixed Assets of the City of We recommend that a detailed physicial inventory of the fixed assets be taken, which should include - 1' /f a) description of property b) location c) date of acquisition d) original cost If the date of acquisition and original cost cannot be determined, then they should be estimated. This inventory should be updated at least annually to account for additions and dispositions during the year. Advantages t9 the City of this project would be - # ' Ki a) source of information for insurance purposes b) source of information for budgetory purposes c) source of information for use in maintenance and safe-keeping 2. Diversification of Duties A diversification of duties regarding the area of cash receipts, bank reconcilations, recording of transactions to the accounting system, and the depositing of receipts in the bank account, is not presently incorporated. While this is always a problem in offices with relatively few employees, we believe the following recommendations may improve the internal controls in these areas. a) the recording of transactions to the accounting system should be performed by a person unrelated to collection of cash receipts and bank deposits. b) monthly bank reconcilations should be entrusted j to aerson unrelated to the P preparation of checks, cash receipts and bank deposits, and the recording of transactions to the accounting ( system ! p . Purchasing System We recommend that the City review its purchasing system for goods and improve upon the system by either centralizing the system or reorganizing the current system such that the depart- ment heads report to the administration and the accounting department when an order is placed or received. a well organized purchasing procedure is important to the City to insure that - 1' /, ? a) the goods were actually received with a written evidence of delivery b) that the goods were what was ordered and paid for c) that the prices paid for the goods were no more than those shown in the related purchase orders, bids and contracts . d) that all discounts were taken e) that such purchases were not paid for more than once f) that the purchases were charged to proper appropriation accounts • • i � 3 . Purchasing System - continued g) that no expenditure was made in excess of the balance to the credit of the appropriation account to which it was chargeable. h) that the accounting department and adminstration have data available regarding outstanding orders and will be able to report to the City Council commitments made, along with the cortunitements already paid for at given reporting intervals. 4, Special-Assessment-Monthly Recording of Revenue and Expenditures it We recommend that a monthly or quarterly review be made of the recording and classification of revenue and expenditures for the respective special assessment funds be made by appropriate city personnel. During the course of our examination, we have found this review is done at year end when the auditors are i conducting their examination and generally the auditors are required to extend their auditing procedures to satisfy them- selves that the revenue and expenditures are correctly classified. We also recommend that an accounting hand book be designed giving h H direction to the person or persons recording transactions . Such a hand book can also be utilized for the other funds of the City. We will be pleased to discuss these recommendations with you 1, further, if you so desire. We wish to thank you for the opportunity of serving you and we look forward to an enjoyable and continuing association in service to you. Yours truly, JEROME JASPERS JJ/gw Telephone 612.445.2817 JEROME JASPERS Cen,JFed Puhhr A“ounganr 206 Scott Street SHAKOPEE.MINNESOTA 55379 MEMBER OF THE AMERICAN INSTITUTE OF �., CERTIFIED PUBLIC ACCOUNTANTS July 11, 1979 Members of the City Council , Minnesota 56011 MANAGEMENT LETTER Dear Council Members: As we stated in our engagement letter of September 28, 1978, an examination would be made of the accounting and other records of the City of , for the purpose of expressing an opinion your financial statements for the year ended December 31, 1978. We also stated in our letter that at the conclusion of our examination we would make separate recommendations for strengthening internal controls and improving operating procedures. We have now completed the examination of your financial statements and at this time make the following recommendations to you. 1. FIXED ASSETS OF THE CITY OF In the past, the City has not maintained a detailed physical inventory of fixed assets. We recommend that a detailed physical inventory be taken which would include a) a description of the property b) location c) date of acquisition d) original cost If the original cost and date of acquisition cannot be determined, then this should be estimated. This inventory should be updated annually to account for additions and dispositions during the year. The advantages to the City would be as follows : a) source of information for insurance purposes b) source of information for budgetory purposes c) source of information to be used in maintenance, use and safe keeping. iL, AS!ii M 2. SPECIAL ASSESSMENT - RETIREMENT OF BONDS We recommend that each assessment fund be analyzed to project whether or not funds will be or are available either currently or in the future to retire the scheduled bond and interest payments for each assessment can be accomplished by preparing schedules containingL:.; This t information regarding- "z a) debt service requirements il b) cash available in the fund itself as of a certain date c) deferred tax levy presently servicing these funds d) deferred special assessments yet tobe collected and `' e) delinquent taxes of each fund r 3 . WATER AND SEWER FUND - PARTICIPATION BY THE SEWER FUND IN RETIRING THE G. 0. REVENUE BONDS We recommend that the Council determine to what extent, if any, the Sewer Fund will participate in re- payment of the $480, 000 G. O. . Sewer and Water Revenue Bonds. This determination should be done on an annual basis. To date, the Water Fund has serviced the debt service requirements of the $480,000 G. 0. Revenue Bonds. These bonds were issued to finance water and sewer utility improvements and the principal and interest payments on this issue were to be met by revenues from both the water and sewer systems. 4. VARIOUS TRANSFERS We recommend the following transfers be made for the amounts and reasons given: a) Transfer $529.79 from the Sewer Fund to the Water Fund. This is to reimburse the Water Fund for expenditures paid regarding First Addition Sewer and Watermain Extension. r Y • i7 14 r, • 1 1. b) Transfer $5, 965.40 from the Sewer Fund to the Revolving Improvement Fund. This is to reimburse the Revolving Improvement Fund for expenditures paid regarding First Addition Sewer and Watermain Extension. c) Transfer $1,441.01 from the Revolving Improvement IP; Fund to the Sewer Fund. This is to reimburse the L Sewer Fund for expenditures paid for the Street Project. d) Transfer1 $ 22.34 from the Revolving Improvement Fund to the Improvement Bonds of 1978 Fund. This is to reimburse the Improvement Bonds of 1978 Fund *:: for engineering grade fees for Street. .yi4, "-' e) Transfer $750.00 from the Capital Projects Fund of 1978 to the Improvement Bonds of 1978 Fund. This is to reimburse the Improvement Bonds of 1978 Fund for consultants ' fees paid regarding the $31, 000 certificate of indebtedness. i Llil rr f) Transfer $850.00 from the Improvement Bonds of 1978 VI Fund to the General Fund. This is to reimburse the 1 General Fund for payment of preliminary engineering fees regarding the 1978 Improvement Project. Transfer r $348.58 from the Payroll Trust Fund to the General Fund. This is to reimburse the General Fund Lx for payments of social security that was refunded to 10 the City. r h) Transfer $242.62 from the Capital Projects Funds to r the Debt Service Fund - Certificate of Indebtedness 1 1978. This is to reclassify accrued interest on the certificate sold. We do feel that the accounting system that was initiated last, year has been working sufficiently to supply the City Council with the information necessary to control the City' s financial operations. i We will be pleased to discuss the above recommendations with ` ' the council if youwant us to. ,.b =4 Yours truly, A-t • .EROME JAS S JJ/gw 1. A . JEROM E JAtiF LUS & COMPANY ^ ' CiI'r/iJn•,/ '%'1G/i,• 44.04Jun/uilb %II%MIIt'tIn 111E 1M1'ItIt'.A\IVO11t 11 ni Zi),,l(f11snot.l t'1 It 11111.11 Pt 111 It'.St'tl)U\1 Ah1s 111A KttP f.t•,.�11\\FAIf1A S J►'ut1111►:JAsri:us,(•.1'.A. 1kLkP114\k:1611,44548 JtM►:.Sl'u►:►:►'1•ANII,Jr.(•.P.A. J' Ipl April 13, 1982 AMembers of the City Council . Minnesota 55379 40 MANAGEMENT LETTER 1,41' 'l= Dear Council Members : e- 1 As we stated in our engagement letter, we would make separate recommendations for strengthening internal controls and improving operating procedures . We have now completed the examination of your financial statements and at this time make the following recommen- dations to you. no 1 . Accounting. Manual (sOP's) We recommend that the accounting manual started in 1981 be completed in its entirety. If accounting procedures and policies are clearly stated in writing, the policies set by management can be enforced efficiently and consistently. Uniform handling of like transactions is essential to the production of reliable accounting records and reports, and uniformity in the handling of transactions is possible only when definite patterns for pro cessing routine transactions are made known to all the accounting . staff. 2. Accounts Receivable and Billing We recommend that controls are adopted to insure that all services performed are billed and recorded. The following con- ditions are indicative of satisfactory control over billing and receivables: 1 A. Billings are _to be seriallynumbered invoices . nvoices . B. All documents supporting billings' are also to be serially Y f 0 • - 2 C. Detailed receivable records are periodically (monthly) . balanced with general ledger control accounts . D. An aged trial balance of receivables is periodically (monthl prepared and followup action is taken on overdue balances . E. Duties are adequately separated so that the individual responsible for maintaining the receivable records does not have access to cash and to authorize performance of services Part A and E are currently in operation as well as part of D re- garding follow up action on overdue balances . We are pleased with the results of implemention of the fixed asset accounting system and the purchasing system which were installed by your administration in 1981 . We wish to thank you for the opportunity of serving you and we look forward to an enjoyable and continuing association in service to you. Yours truly, Co, erome Jaspe & Company gg September 1983 Page-2 DEBIT ACCT. CR. ACCT. AMOUNT BATCH REMARKS VENDOR CK. AMT. CM. NC cgw5 ' 01.4391. 121. 12 01. 1010 13.00 Dues & Subscript. Mpls./Star/Tribune 13.00 14121 81.4920.000.00 81. 1010 5,282.91 Remit FIT 1st Nat.-Shakopee 5,282.91 14122 81.4931.000.00 81 . 1010 635.00 Payroll Savings 1st Nat.-Shakopee 635.00 14123 81.4927.000.00 81. 1010 1, 126.40 Remit Def. Comp. PEBSCO 1, 126.40 14124 81.4927.000.00 81. 1010 280.00 Remit Def. Comp. IDS Life Ins. 280.00 14125 01.4390. 131. 13 01. 1010 15.00 Schools & Conf. M.A.U.M.A. 15.00 14126 01 .4390. 111 . 11 01. 1010 12.00 Schools & Conf. League of MN Cities 12.00 14127 81.4921.000.00 81 . 1010 3,327.33 Remit SIT Comm. of Revenue 3,327.33 14128 81.4923.000.00 81 . 1010 6,055. 79 Remit PERA PERA 6,055.79 14129 01 .4100.311.31 01 . 1010 855. 14 Salaries-Full Time Kenneth Hanel 855. 14 14130 81.4922.000.00 81. 1010 7,335.26 Remit FICA State Treasurer 7,335.26 14131 01.4321.351 .35 01. 1010 11. 10 Telephone NW Bell 81.70 14132 01.4321.331.33 01. 1010 19.50 " 01.4321.421 .42 01. 1010 19.50 " II II 01 .4321.311.31 01 . 1010 31.60 " II II 01 .4330. 151. 15 01 . 1010 55.44 Travel & Subsist. Gregg Voxland 55.44 14133 01.4390. 131. 13 01 . 1010 12.50 Schools & Conf. City of Champlin 50.00 14134 01.4390.311.31 01. 1010 37.50 " II 01.4370. 182. 18 01. 1010 9.63 Utilities/Nat. Gas Minnegasco 16.68 14135 01.4370.622.62 01. 1010 7.05 " " 01.4310.361.36 01. 1010 525.00 Prof. Services Robert Mcallister 525.00 14136 01.4210.411.41 01. 1010 53.25 Supplies Deputy Registrar 129.50 14137 01.4210.311 .31 01. 1010 76.25 II It II 81.4927.000.00 81. 1010 780.40 Remit Def. Comp. PEBSCO 780.40 14138 54.2300.000.00 54. 1010 12, 138.74 JEJ Special Assess. Raymond/Jane Lemmons 12, 138.74 14139 September 1983 Page-3 ,.\ - DEBIT ACCT. CR. ACCT. AMOUNT BATC:i REMARKS VENDOR CK. AMT. CK. N. ` 55.2300.000.00 55. 1010 7,215.96 JEJ Special Assessments City of Shakopee 21, 104.00 14140 55.4611.000.00 55. 1010 1,687.58 " " II " " 54.2300.000.00 54. 1010 7,637.73 " " " " I. 54.4611.000.00 54. 1010 4,562.73 " II II " II 26.4320. 197. 19 26.1010 5. 18 Postage City of Shakopee 96.97 14141 01.4320.411.41 01. 1010 13.71 Postage II 01.4320. 151. 15 01. 1010 2.06 Postage II 01.4320.231.23 01. 1010 . 14 Postage n " 01.4350. 151. 15 01. 1010 . 15 Printing & Pub. " " 01.4330.411.41 01. 1010 7.50 Travel & Subsist. II II 01.4210.421.42 01. 1010 . 17 Supplies II 01.4210. 182. 18 01. 1010 .31 Supplies 01.4210.621.62 01. 1010 21.50 Supplies n " 01.4210.421.42 01. 1010 21.50 Supplies " 01 .4210.311.31 01. 1010 3.25 Supplies Il 71.4210.711.71 71. 1010 21.50 Supplies " II 01.4390. 121. 12 01. 1010 290.00 Schools & Conf. ICMA 290.00 14142 $60,206.26 $60,206.26 Totals by Fund 01-General Fund $ 2, 113. 75 26-D.T. Redevelopment 5. 18 54-77-C St. Impovements 24,339.20 55-79-A Improvements 8,903.54 71-Sewer Fund 21.50 81-Payroll Trust 24,823.09 $60,206.26 /1j MEMORANDUM TO John K. Anderson City Administrator FROM : H. R. Spurrier "we City Engineer 11t/ SUBJECT: Levee Drive Extension Contract No. 1982-3 DATE September 30, 1983 Introduction: Attached is Change Order No. 4, for the above-referenced project. Background: The proposed work is intended to modify the riprap specified for the work so that the overflow does not undercut the riprap. The modification will consist of a poured cut-off wall that will prevent erosion under the existing riprap. The amount of the Change Order is $600. Change orders approved to date have increased the contract $6,804.68. The original work completed amounts to $57,687.90 for a total $64,492.58. To date, $69,282.80 has been encumbered for this project, therefore, the Change Order amount does not exceed the encumbered funds. Action Requested: Motion to authorize appropriate City Officials to execute Change Order No. 4, in the amount of $600 for Levee Drive Extension, Contract No. 1982-3 to F. F. Jedlicki , Inc. HRS/jvm Attachment ` - CHANGE ORDER Change Order No. : 4 Project Name: Levee Drive Extension Date: September 21, 1983 Contract No. : 1982-3 Original Contract Amount $ 59,923.00 Change Order(s) No. 1 thru No. 3 $ 9,359.80 Total Funds Encumbered Prior to Change Order $ 69,282.80 Description of Work to be (Added/Deleted): Alteration of storm sewer outlet erosion control The above described work shall be incorporated in the Contract, referenced above, under the same conditions specified in the original Contract as amended unless otherwise specified herein. Any work not so specified shall be performed in accordance with the Standard Specifications adopted by the City of Shakopee, Minnesota. The amount of the Contract shall be (increased/dXXXB4XXXX) by $ 600.00 The number of calendar days for completion shall be (increased/X&WWW) by 30 Original Contract Amount $ 59,923.00 Change Order(s) No. 1 thru 4 $ 9,959.80 Total Funds Encumbered $ 69,882.80 • Completion Date: September 30, 1983 The undersigned Contractor hereby agrees to perform the work specified in this Change Order in accordance with the specifications, conditions and prices specified herein. h..;Contractor: �- , _ // _ L By Title: Date: y - Z2— ' 3 /14^ Y VED AND RECOMMENDED: —%J'Oki City n.ineer ate APPROVL1 City of Shakopee By: Mayor Date Approved as to form this day of City Administrator Date 19 City Clerk Date City Attorney MEMO TO: H. R. Spurrier City Engineer FROM: Ray Ruuska Engineering Coordinator RE: Change Order No. 1 16th/90th Street Project DATE: September 29, 1983 Introduction: Attached is Change Order No. 1 for the above-referenced project. Background: Due to the hot, dry weather in August, seeding was delayed on this project. This work was done on September 14th and very good growth has occurred. Only minor clean-up work remains to be done. No change in total cost of project. I , therefore, recommend extending the completion date 30 days to September 15th. Action Requested: Approve Change Order No. 1, changing the completion date of 16th Avenue and 90th Street Roadway Improvements, Contract No. 1982-6, to September 15, 1983. Appr,. -d for submittal . � .h , rrier City E •neer RR/jvm Attachment • CHANGE ORDER 9 16th Ave . & 90th Street Change Order No. : 1 Project Name: Roadway Improvements Date: September 8 , 1983 Contract No. : 82-6 Original Contract Amount $ 80 , 510 . 85 Change Order(s) No. -- thru No. -- $ -0- Total Funds Encumbered Prior to Change Order $ 80 , 510 . 85 Description of Work to be (Added/Deleted): Extend the completion date 30 days from August 15 , 1983 to September 15 , 1983 The above described work shall be incorporated in the Contract, referenced above, under the same Condi t icon:; :;pec i lied in the original Contract, a:, amended unless otherwise specified herein. Any work not so specified shall be performed in accordance with the Standard Specifications adopted by the City of Shakopee, Minnesota. The amount of the Contract shall be (increased/decreased) by $ -0- The number of calendar days for completion shall be (increased/decreased) by 30 Original Contract Amount $ 80, 510 . 85 Change Order(s) No. -- thru 1 $ -0- Total Funds Encumbered $ 80, 510 . 85 Completion Date: September 15 , 1983 The undersigned Contractor hereby agrees to perform the work specified in this Change Order in accordance with the specifications, conditions and prices specified herein. Contractor: Lundgren Excavating, Inc . By: /.317;72,7z_< -2_ Title: /2„ ,.../ Drat ( /_ -() AI' aV ! . RECOMMENDED: - � t ��� '? it s ngi _er am&Imam pat- APPROVED: ity of Shakopee By: Mayor Date Approved as to form this day of City Administrator Date - 19 City Clerk Date City Attorney ///2 MEMO TO: John K. Anderson, City Administrator FROM: Judith S . Cox, City Clerk RE: Sewer and Water to Shakopee Valley Printing DATE: September 30 , 1983 Introduction The City has received a petition from Ken Theis for sewer and water improvements to be extended to Shakopee Valley Printing. Background Mr. Theis is adding onto his existing building. He is required to have a fire wall or install a sprinkling system for the addition. He chose to install the sprinkling system and has signed a petition for the extension of sewer and water to his property. The building inspector approved the building permit with a sprinkling system, only after Mr. Theis petitioned for the sewer and water improvements and agreed in writing to pay all non-assessable costs for the watermain extension. The City Engineer recommends ordering a feasibility report for the improvement of Marschall Road from 11th Avenue to 13th Avenue by sanitary sewer. The Utilities Commission are in favor of the water project as long as the construction is done in accordance with general policies and specs . Since the petition is not signed by 35% of property owners , it would be a Council initiated project . Alternatives a . Order a feasibility report . b. Do nothing at this time and direct staff to advise the petitioner why. Action Requested Offer Resolution No. 2170, A Resolution Ordering the Preparation of A Report on An Improvement , and move its adoption. JSC/jms RESOLUTION NO. 2170 A RESOLUTION ORDERING THE PREPARATION OF A REPORT ON AN IMPROVEMENT WHEREAS , it is proposed to improve Marschall Road between 11th Avenue and 13th Avenue by sanitary sewer and watermain and to assess the benefited property for all or a portion of the cost of the improvement , pursuant to Minnesota Statutes , Chapter 429 . NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA that the proposed improvement be referred to H. R. Spurrier for study and that he is instructed to report to the Council with all convenient speed advising the Council in a preliminary way as to whether the proposed improve- ment is feasible and as to whether it should best be made as proposed or in connection with some other improvements , and the estimated cost of the improvement as recommended. Adopted in session of the City Council of the City of Shakopee , Minnesota , held this day of , 1983 . - Mayor of the City of Shakopee ATTEST: City Clerk Approved as to form this day of , 1983 . City Attorney oar 7' 1983 _ L SUPPLEMENT TO APPLICATION FOR BUILDING PERK T 'BQF SKr'i*KOPEE KENNETH L. THEIS UNDER DATE OF AUGUST 10, 1983 In consideration of the City of Shakopee granting the undersigned application for building permit dated August 10, 1983 , and as a supplement thereto, the undersigned Kenneth L. Theis owner of the premises described as the North 120 feet of of the Northeast Quarter of Section 7 ' the West 400 feet of the South half of the Southeast Quarter A excepting road, 7-115-22 , Scott County, MN, covenants and agrees that he will upon granting of the permit , install a sprinkler system in the Valley Publishing Company building located on the aforementioned legally described property. He further covenants and agrees to petition for the public improvement of watermain extension, from its present terminus at County Road 17 and 11th Avenue , to the Southwest corner of the above described property and make said sprinkler system operational . He further agrees to pay all (non-assessable ) cost for said watermain extension and hereby waives his right to all public hearings and appeals to said special assessments pur • - suant to NSA 429 . He further covenants and agrees that the watermain will be installed in accordance with City specifications . It is further understood that oversizing cost for the watermain is a non-assessable item. This agreement is binding upon heirs , assigns and suc- cessors . Dated this 30 day of 47/7„4„,j- , 1983. 44/ a opee alley Pu fishing, Inc. ' Kenneth L. Theis , President Suhscri hrH and Quinrn to hnfnrn mn / IC) MEMO TO: John K. Anderson/City Administrator FROM: LeRoy Houser/Building Official RE : Private Sewer Lines DATE : September 12 , 1983 Introduction: We are having problems with two or more single family residences on private sewer lines . Background :. Each year we are confronted with some irate property owner who has purchased a home and just finds out that his sewer is blocked through no fault of his own, but caused by his being on a private sewer line with one or more property owners other than himself. If the property owner closest to the ;rain causes a block- age in the line, then we have one or more lines blocked, then we usually end up with a neighborhood dispute which we invariably get involved in. I have attached the areas with this problem existing which engineering has provided. Recommendation: I suggest we adopt a policy that when one of these blockages occur, we make them hook up to the City line individually. Alternative : Leave as is . Action Requested : Direct staff to draft a policy requiring individual hook-up to the municipal sewer lines when problems occur in old jointly used private sewer lines . LH: cau Attachment NO SANITARY SEWER On 1st Between Clay & Pierce 3 Pierce & Shumway 2 Shumway & Scott 5 Total 10 On 2nd Between Lewis & Sommerville 1 " Fillmore & Main 3 Market & Minn. 4 Dakota & Prairie 6 " Naumkeag & Marschall 2 Total 1 On 3rd Between Adams & Pierce 4 Shumway & Apgar 1. Apgar & Scott 1 " Scott & Atwood 1 Sommerville & Spencer 2 Total On 4th Between Adams & Pierce 2 Shumway & Apgar 1 Apgar & Scott 1 Fuller & Holmes 1 Sommerville & Spencer 1 Market & Minn. 2 Total 8 On 5th Between Apgar & Scott 1 Total On Market between 4th & 7th 6 Total 6 On 6th Between Shumway & Apgar 1 Apgar & Scott 1 Holmes & Lewis 3 Lewis & Sommerville 1 Total 6 On 7th Between St . Mark & Pierce 1 7th cont Between Shumway & Apgar 1 Atwood & Fuller 2 Holmes & Lewis 2 Lewis & Sommerville 2 Sommerville & Spencer 1 Total On 8th Between Lewis & Sommerville 1 Total 1 On Fuller Between 10th & 8th 2 Total 2 On Shakopee Ave . Between Holmes & Lewis 1 Total 1 i1b— MEMO TO: John K. Anderson, City Administrator(, FROM: LeRoy Houser, Building Official RE: Eagle Creek Townhall Lease Agreement DATE: September 30 , 1983 Introduction The attached lease agreement for Eagle Creek Town Hall has been redrafted deleting the 72 interest on the cost of expansion, per Council approval on September 27th. Action Requested Approve a new lease agreement with Scott-Carver Economic Council for rent of the Eagle Creek Town Hall and expansion, and authorize proper City officials to execute said lease agreement . LH/jms LEASE / ( L This lease entered into this day of 1983 , by and between the City of Shakopee , a body politic and corporate , with its principal offices at 129 East First Avenue , Shakopee , Minnesota (hereinafter referred to as "City" ) ; and Scott-Carver Economic Council , Inc . , a corporation organized under the laws of the State of Minnesota , with its principal office at -- (hereinafter referred to as "Council.." ) . WHEREAS , the City is the owner of a certain facility known as the Eagle Creek Town Hall , located at the intersection of County Road 83 and County Road 16 ; and WHEREAS , the Council has been, for some time , utilizing said building and desires to continue to utilize and lease said building; and WHEREAS , the Council has requested that the City construct an addition to said building for the Council ' s use ; and WHEREAS , the City is agreeable to constructing said addition providing that the Council pays the cost thereof in the form of lease payments over a period of five years , in equal monthly pay- ments . NOW THEREFORE, it is agreed by and between the parties hereto as follows : 1 . The City shall lease to the Council , and the Council shall rent from the City, the Eagle Creek Town Hall for a period of five years commencing the first day of the month after which the above- described addition is completed, at a monthly rent equal to a monthly payment which would be paid on the total cost to the City of the above-described addition amortized over five years . There shall be no interest charge involved in this lease arrangement . Said monthly payments shall be made on the first day of each and every month. 2 . Should the Council , at any time during said five-year lease , vacate the leased premises , then all remaining amounts of rent due hereunder shall be accelerated and due and payment immedi- ately. 3 . The Council acknowledges that the City utilizes the leased premises for primary and general elections held pursuant to law each September and November of every even-numbered year, as well f( as for municipal elections held in November of each odd-numbered year. The Council agrees that the City shall have the use of the leased premises on each such election day. 4. Although the City has no present public need for use of the leased premises except as hereinbefore set forth, should the City Council of the City of Shakopee determine that the leased premises are necessary for public use , the City may give the Council 60 days ' written notice of the City' s intent to utilize said facility for public purposes ; and at the conclusion of said 60-day period, this lease shall be terminated. Under such circum- stances , the Council shall have no further obligation, at the con- clusion of said 60-day period, to make any further lease payments . 5 . The City does hereby grant to the Council an option to lease the leased premises for one additional five-year period commencing at the conclusion of the initial five-year lease period. The rent to be charged by the City to the Council for said option period shall be $1 .00. Should the Council desire to exercise its option rights under this paragraph, the Council shall give the City 60 days ' written notice prior to the expiration of the original lease . 6 . The Council shall have the obligation to repair and main- tain the leased premises , including the parking areas and land areas surrounding the building located on the leased premises . The City will , however, assume all maintenance and repair costs to the facility which exceed $200.00 per individual case , provided said maintenance and repairs are not caused by the negligence of the Council , its agents , employees , or invitees . The Council shall maintain the entirety of the leased premises in an orderly and neat manner. The Council shall further pay all utilities , including telephone , gas , electric , refuse removal , sewer and water charges , and shall pay for all security service . 7 . The Council shall carry liability insurance coverage on the leased premises , naming the City, its officers , agents , and employees as additional insureds , in amounts approved by the City Attorney. The Council shall further reimburse the City for the cost of general building and fire insurance that the City maintains on the leased premises . 8 . The City will provide snow removal and grading of road and lot at its exclusive cost . (r 9 . This lease shall be construed under the laws of the State of Minnesota . IN WITNESS WHEREOF, the parties hereto have caused this lease to be executed on the day and year first written above by their authorized representatives . CITY OF SHAKOPEE SCOTT-CARVER ECONOMIC COUNCIL, INC. By: By: Its Mayor Its Executive Director By : By: Its City Clerk Its Board Chairman By: Its City Administrator Ilk MEMO TO: John K. Anderson, City Administrator FROM: Judith S . Cox, City Clerk RE: Developers Agreement - Evergreen 1st Addition DATE: September 30, 1983 Introduction Sara Laurent of Renden Development has asked that the City consider releasing the Evergreen First Addition from the developers agreement , even though all work required is not complete . Background The developers agreement requires the installation of sidewalks along the north side of 13th Avenue , plus street construction, sanitary sewer, storm sewer, street lighting, watermain and electric system in Evergreen First Addition. The utilities have been installed and we need a one year guarantee from the developer. The developer has signed an underground con- tract with SPUC for the electrical system for lots south of 13th Avenue and will be signing a contract for the electrical system for lots north of 13th Avenue with SPUC next week. The sidewalk are not in yet and the developers would like to delay construction until after construction on the lots north of 13th Avenue . Recommendation Staff recommends releasing the developers agreement after the developer : 1 . provides a one year guarantee of utilities and roadway con- struction from completion date 2 . submits a letter depositing a letter of credit for sidewalk construction 3. submits a letter of credit in the amount of 125% of the engineer ' s estimate of the cost of sidewalks 4. execution of a new park dedication agreement Alternatives a . Wait until all improvements are installed prior to releasing developers agreement . b. Authorize release of developers agreement upon submission of above. Action Requested Authorize the release of the developers agreement for Evergreen First Addition upon 1 ) execution of a letter of understanding for Developers Agreement - Evergreen 1st Addition Page Two September 30, 1983 completion of sidewalks , 2 ) submission of letter of credit in the amount fo 125% of the City Engineer' s estimate of the cost of the sidewalks , 3 ) submission of a one year guarantee from completion date of utility installation and roadway construction, and 4) execution of a new park dedication agreement . JSC/jms Note : Council did approve a like request for Minnesota Valley 3rd Addition in April of 1981 . MEMO TO: Mayor and City Council FROM: John K. Anderson, City Administrator RE: Renewal of Refuge Agreement with G and H Sanitation, Inc. DATE: September 29 , 1983 Introduction The City Council , at its September 20 , 1983 meeting, directed City staff to negotiate a new garbage and refuge collection contract with G and H Sanitation, Inc . The proposed contract with the new rates is attached for Council review. Only the underlined items in the contract have been changed from the 1982-1983 contract . Rate Survey At staff ' s request , Bob Elliott of G and H provided the City with a municipal refuse collection rate survey. The rate survey is avail- able for Council review and I will bring it to the meeting. The survey listed 48 cities and only two of those cities had rates lower than Shakopee . Because the survey only included two Scott County cities I checked some additional cities in the area . The primary reason for this additional survey was due to the substan- tially lower tipping fees haulers pay at Louisville Landfill which has the effect of holding costs down for haulers using that landfill . The additional cities surveyed were Chaska, Prior Lake and Jordan. I have included them in the table below along with Savage , the other Scott County city listed in the larger survey. City Pick-Up Type of Service Cost Chaska Weekly Private haulers $6 .00/mo. Prior Lake Weekly 4 different private $7 . 50/mo. haulers typical Shakopee Weekly City contract $4. 82/mo. Jordan Weekly City contract $4. 32 or 4.40/mo. for 1984* Savage Weekly 5 different private $7 . 50/mo. haulers *The City of Jordan recently bid its garbage collection contract for 717 residential units . The city received bids of $4. 32 , $4.40 and $5 . 65 . The City of Jordan is in court over the award of the contract to one of the two low bidders . The low bid is locked in for a two year period for 1984 and 1985 . The contractor will be providing service similar to Shakopee and will be using the Louis- ville Landfill . Although the City was satisfied with the service that had been provided under its past contract (the $4.40 per month bidder) , the service was not exceptional like the service we have received from G and H. Renewal of Refuge Agreement with G and H Sanitation, Inc . P-X Page Two September 29 , 1983 G and H Proposal Bob Elliott and Ed Gregory of G and H met with me on September 23, 1983 to discuss their proposal . At that meeting they proposed a 5% increase for 1984 and an additional 5% increase for 1985 . They also indicated that for 1985 they would like to pass along any landfilled tipping cost increases and any increases resulting from State legislation creating a solid waste tax or user fee to finance hazardous waste landfills . They also indicated that they were not planning to pursue the large standardized containers that they thought they might get involved in when we discussed the contract in 1981 . At that meeting I indicated that the City was interested in receiving a map of their routes and discussing any rerouting that might be beneficial to City long term street rehabilitation and maintenance. I also asked them if there were any problem pick-up areas and they said they did have a problem with the "H" alleys in the area of the Wermerskirchen Addition on East 7th and 8th Avenues . Negotiations Upon obtaining the results of the recent competitive bidding in Jordan, I called G and H to negotiate fees for 1984 and 1985 . After some discussion we reached tentative agreement on a 3. 7% increase for 1984 which would result in a $5 .00 per month fee for regular pick-up and a $3 . 24 per month fee for senior citizens pick-up. For 1985 , a year in which G and H expects to experience a landfill tipping increase , we agreed upon a 5% increase resulting in 1985 fees of $5 . 25 for regular pick-up and $3 .40 for senior citizens pickup. In addition, the City would agree to reopen the contract in 1985 if tipping fees increase more than 25%. The current tipping rate is $1 . 25/cu. yd. and G and H expects no increase in 1984. In addition, if the legislature passes a solid waste tax or user fee charge to finance hazardous waste disposal the City would also agree to reopen the contract in 1985 to deal with the impact of the new tax or fees . The above figures and contract reopeners have been included in the attached contract and are highlighted by underlining. Alternatives 1 . Accept the negotiated 1984-85 garbage and refuge collection fees . 2 . Reject the negotiated garbage and refuge collection fees . 3 . Direct staff to continue negotiations and indicate the type of modifications Council desires . Recommendations The City has received excellent service from G and H and complaints have been almost non-existent . Staff recommends renewal of the contract at the negotiated prices listed above and the continuation of the 12¢ City charge included for our monthly utility billing expenses . Renewal of Refuge Agreement with G and H Sanitation , Inc . L Page Three September 29 , 1983 Action Requested Authorize the proper City officials to execute an agreement for refuge collection for 1984-85 with G and H Sanitation, Inc . at the following rates : Type of Service 1984 1985 Regular Service $5 . 00/mo . $5 . 25/mo.* Senior Citizens Service 3 . 24/mo. 3 .40/mo.* *G and H Sanitation, Inc. , will have the right to reopen the 1985 contract to discuss landfill tipping fees if they increase more than 257 above their current $1 . 25 per ton rate and also if the legisla- ture passes a solid waste tax or user fee to support hazardous waste . JKA/ jms GARBAGE AND REFUSE COLLECTION CONTRACT January 16. 1984 - January 15. 1986 THIS AGREEMENT. made and entered into this 4th day of October. 1983. by and between the City of Shakopee. a Municipal Corporation, hereinafter called party of the first part. and G 6 H Sanitation. Inc. . a Minnesota Corporation. at 12448 Pennsylvania Avenue South. Savage. Minnesota. hereinafter called party of the second part. as follows: For and in consideration of the covenants herein set forth, the said party of the first part does hereby hire the party of the second part as garbage and refuse collector; and the said party of the second part does hereby covenant and agree that for and in consideration of the payments to be made by said party of the first part to the party of the second part as herein provided, that the said party of the second part will serve the party of the first part as a garbage and refuse collector in accordance with the following specifications and terms: a) One collection per week shall be made. b) Collection shall be made of all garbage, household refuse and yard debris generated by the residents. Household refuse shall mean and include such items as garbage (drained and wrapped), tin cans, bottles, sweepings, cleanings, trash. litter, domestic solid wastes placed in containers with cover and handles not to exceed thirty-two (32) gallon capacity. Plastic bags may also be used. Such refuse may also include yard debris such as grass clippings and leaves placed in such containers or in bags of such size and material that can easily be handled by one man. In addition, there may be brush or trimmings in a reasonable amount tied in bundles not over three (3) feet in length. c) Collection service shall be for all dwellings, single, duplex and triplex, and presently collected multiple residential and commercial establishments, that desire collection services and are located in the "urban" area of the City of Shakopee with approximate boundaries of the Minnesota River, Shawnee Trail. Austin Street, Thirteenth Avenue and Tyler Street. d) Refuse shall be place by the alley unless other arrangements are agreed upon by the resident and the collector. If there is no alley, refuse shall be placed at the curb, but not prior to the day of collection. e) Household appliances, excessive amounts of brush, remodeling and containable refuse must be picked up by the collector if the resident calls the office of the collector and makes necessary arrangements. Such service furnished by the collector to the residents of the City of Shakopee will be charged to said residents by volume, time or both. Such special service shall be billed and collected by the office of the collector. f) The collector must furnish proper compactor units and other necessary proper equipment. The collector also must furnish all necessary held and labor in the performance of his contract and to dispose of all such refuse so collected in a lawful manner. The Collector will provide the City with a /l collection route map and will alter routes to comply with City road weight restrictions where the City has a clearly established policy. g) The collector must obtain and file with the City of Shakopee a Performance Bond for the life of this contract in the amount of $50.000. h) The collector must keep a good and sufficient liability and accident policy in force in the amount of $200,000 — $500,000 for bodily injury and $50,000 for property damage saving and protecting the City harmless from any accident that might result due to the use of the collector's truck or trucks and employees or from any act or omission of the collector 's employees. The collector shall keep at all times in full force, at his own expense, proper and sufficient Workmen's Compensation Insurance. i) The collector must file a valid Certificate of Insurance with the City of Shakopee showing that the insurance coverage mentioned herein is in full force and effect and each policy or certificate must name the City of Shakopee as an additional insured with the requirement that the City shall be given at least ten (10) days notice in writing in the event of any cancellation of said policies. j) The City will act as billing and collection agent for the collector. The collector will be paid on a monthly basis with payment being made by the fourth Monday of each month beginning with the fourth Monday in March, 1984. The amount of each monthly payment shall be the monthly charge times the number of units billed at the beginning of the month by the City. The rates that will prevail during the life of this contract are as follows: 1. For the year beginning January 16, 1984, and ending January 15, 1985. the charge for regular pickup shall be $5.00 per month; Senior Citizen pickup shall be $3.24 per month. 2. For the year beginning January 16, 1985, and ending January 15, 1986, the charge for regular pickup shall be $5.25 per month; Senior Citizen pickup shall be $3.40 per month. Should landfill tipping rates increase by more than 25% from their current $1.25/cu. yd. or the State pass legislation creating a refuse tax or user fee the parties agree to reopen the contract for 1985. k) The breach of any of the terms and conditions of this contract on the part of the collector shall be grounds for cancellation of this contract by the City. Upon such termination by the City, the City shall have the right to contract with other parties to perform the work or to perform the work without a contract. In either case, the City shall hold the collector and his surety liable for any excess cost for performing such work over and above the cost to the City of the initial contractor had continued to perform the work in the manner anticipated at the time the contract was awarded. Termination of the contract as herein provided shall not terminate. suspend or affect the liability of the surety upon its bond. Failure to comply with the terms of these specifications relative to the collection and disposal of garbage and rubbish on the part of the collector by reason of major disaster or extreme emergency within the City of Shakopee shall not constitute a breach of the contract. 14/, All the provisions of the specifications for the collection and disposal of garbage and rubbish in the City of Shakopee. Minnesot that formed a part of the call for quotations dated October 19. 1979. shall be. and hereby are. incorporated herein with the same effect as if fully set forth herein. save and except insofar as such provisions of such specifications are inconsistent with any of the specific performances of this contract. The party of the second part covenants and agrees with the party of the first part to do and perform all those things set forth in the above contract. which are to be performed by said party of the second part as garbage and refuse collector of and for the party of the first part. and it is mutually agreed by and between the Parties hereto that this contract shall be for a two year period beginning January 16. 1984. and terminating January 15. 1986. IN TESTIMONY WHEREOF. the party of the first part has caused this contract to be executed in its corporate name by authority of its City Council and the party of the second part has caused this instrument to be entered into by authority of its Board of Directors , all as of the date first above written. THE CITY OF SHAKOPEE. A MUNICIPAL CORPORATION By Mayor of the City of Shakopee By City Administrator By City Clerk G & H SANITATION. INC. By Its i/M MEMO TO: Mayor and City Council FROM: John K. Anderson, City Administrator RE: Departmental Reorganization DATE: September 30 , 1983. Introduction City Council , at its regular September 20 , 1983 meeting, tabled the discussion on the departmental reorganization and directed staff to prepare job descriptions for the next regular Council meeting. Council indicated a desire to review the specific job descriptions , performance criteria established for the Community Development Director and to have the additional time to think about the pro- posed reorganization. Job Descriptions The job descriptions for the position of Community Development Director and Planner II are attached for Council review. These job descriptions include a section that has not been included in previous City job descriptions entitled, "Examples of Performance Criteria" . Later in this memo I have listed the specific 6th, 12th and 18th month criteria we would use in measuring the Community Development Director' s performance . Please review the job descriptions carefully to determine whether or not they accurately reflect the responsibilities I have indicated would be performed by the Director of Planning and Community Development and the Planner U . A close examination of the experience and training required for the Director of Planning and Community Development listed under "Qualifications" provide the rationale for our starting Jeanne Andre at the entry level for this position. Specifically Proposed Performance Criteria As stated in my memo of September 16 , 1983 , the Director of Planning and Community Development position, if filled by Jeanne Andre , would carry with it a specific list of performance criteria over an 18 month period beginning January 1 , 1984. Those criteria are listed below for Council review and may be changed as deamed appropriate . Six Month Review 1 . Follow through on application for Main Street Program. 2 . Follow through on application for Mortgage Revenue Program. 3 . Complete CDBG grant application by February 1 , 1984. 4. Staff the Downtown Committee and bring the consultants report on the downtown plan to completion. Departmental Reorganization . Page Two September 30 , 1983 12 Month Review 1) 1 . Coordinate to successful completion the Public Works improvements , parking lot and green space , for the downtown redevelopment project . 2 . Establish a vacate property list based on bare land and vacate structures to be used in response to economic development inquiries to come to City Hall . 3 . Successfully complete at least one commercial rehab loan program loan as established under the downtown tax increment financing district. 4. Negotiate with at least five major businesses identified as having potential in the downtown marketing analysis , and That will bring a major redevelopment project( s ) to Shakopee ' s downtown. 18 Month Review 1 . Completion of second successful commercial rehab loan program in the central business district under our tax increment program. 2 . Secure funding for Community Development Block Grant . There will have been two funding cycles during this 18 month period. Other criteria performance having been met , this criteria will be extended to a 3rd funding round (February ' 86 ) because of the lack of staff time available for preparation of the ' 84 application. 3 . Successfully attract one new small retail businesses to Shakopee ' s downtown with their arrival being primarily the result of efforts by the Community Development Department . Summary and Recommendation City Council has now embarked on an effort to develop the funding for the full time personnel required as part of our Main Street Program application. I would like to restate the program' s criteria that this person work full time on the Main Street Project . Any efforts by Shakopee to preplan combining a part of this indi- vidual ' s functions with City Community Development or Planning functions will likely result in the failure of our application being funded. The Main Street people are very clear about the necessity for the Main Street staff to give their undivided atten- tion to the Main Street Program efforts . The City has entered into a letter of agreement with Rob Chelseth for planning services to backup Jeanne Andre while we are without a Planner. This stop gap arrangement is satisfactory for the short term but will hurt the City' s efforts to put together a good Main Street application, Mortgage Revenue Bond application and Community Development Block Grant application during the next few months . I would like to underscore the fact that the ICC and Planning Commission both feel that we need a person on staff to work on planning related duties . To the extent that Jeanne Andre is moved over to fulfull some of these duties other Community Development related activities will suffer such as those mentioned above. Departmental Reorganization I� �w Page Three September 30, 1983 In looking for some examples for the position descriptions attached to this memo we found two communities that have organizational structures almost identical to the one I proposed in my September 16th memo. The job descriptions for the Director of Community Development from both Plymouth and Brooklyn Park had even included the building functions under the Community Development Department . This indicates to me that our two step approach which would create the department in 1983 and allow for the potential inclusion of building functions sometime in the future as the City continues to grow is on target . I recommend the action requested as outlined in my September 16 , 1983 memo. JKA/jms 1( trA- POSITION DESCRIPTION Position Title Director Planning & Community Development Department Community Development Accountable To City Administrator Primary Objective of Position To plan, direct and provide leadership for planning, economic develop- ment and HRA activities in a manner that will assure the effective administration and delivery of services ; and to propose , monitor and maintain sound community development plans and regulations which are current and consistent with Council policies , directives , codes and ordinances . Major Areas of Accountability Directs and administers planning programs to encourage orderly commu- nity development in accordance with applicable comprehensive plans and ordinances by providing professionally sound advice and recom- mendations for Planning Commission, City Council and HRA considera- tion. -- Establishes administrative procedures which encourage the thorough, consistent and timely review of development proposals . -- Determines compatability and consistency of development proposals with City development goals/plans . -- Recommends specific City positions on development proposals upon applicable ordinance provisions and professional judgement . Formulates and recommends plans for community development programs , and oversees economic development activities and implementation of comprehensive City plans in a manner that will assure their achieve- ment . -- Initiates and promotes public/private sector cooperation in securing economic development in the community. -- Reviews and evaluates new concepts , developments and approaches , and determines applicability to community development functions . -- Recommends revisions to city land use regulations , plans , policies and procedures to adequately respond to the current development environment , and to effectively meet needs and goals of the City. Provides positive leadership for all community development department programs and determines program priorities . -- Promotes and maintains cooperative work efforts among divisions of department to assure the effective department operation. Administers and coordinates approved HRA programs to assure compli- ance with contractural agreements , adopted budgets , regulations and policies . /f -v� Director Planning & Community Development Page Two -- Prepares HRA agendas , staffs HRA meetings and follows up on all HRA directives . -- Coordinates programs as necessary with appropriate Federal , State and County agencies . -- Monitors financial and contractural status of programs and accurately maintains required records . Monitors and evaluates all community development department functions and evaluates final results . -- Assures that work of all divisions is complete and sound, and that programs and staff output are consistent with City policies , goals and codes . Represents the Department with other City Officials , other govern- mental agencies , and the general public , in a manner that will assure continuing effectiveness in the achievement of City objectives . Prepares and administers departmental budget , including portions of the Capital Improvement Program with appropriate documentation for submission to the City Administrator. -- Assures that expenditures are consistent with the approved budget . Keeps City Administrator promptly informed of significant matters to permit effective performance of community development programs . Performs other duties as apparent or assigned. Examples of Performance Criteria Ability to creatively package and bring together the necessary public/ private sector elements for successful economic development programs and projects will be assessed by the number of such programs and projects successfully undertaken. Ability to formulate and implement long range community development plans will be assessed by timeliness of plans and consistency of recommendations for development with overall plan. Ability to provide adequate information and recommendations to City Council , City Administrator, and Planning Commission will be deter- mined by consistency, thoroughness and timeliness with which staff reports are provided. Coordination of activities within department will be gauged by the level of personel cooperation and effectiveness , efficiency and economy of operating the department . Capacity to work with builders and developers in City will be deter- mined by ability to represent and communicate City positions on specific economic development proposals and general planning issues such that they are understood by the parties involved. It ° • Director Planning & Community Development Page Three Supervision of Others Direct supervision over Planner II and Secretary. Qualifications Training or experience equivalent to Master ' s degree in public administration, planning or related fields . Should have at least five years experience in government administra- tion, with increasing responsibility. Must have a thorough knowledge of state , federal and municipal policies and codes affecting department operations . Must have demonstrated ability to motivate , train, direct and super- vise others . Must be able to develop and maintain positive and effective working relationships with employees , elected and appointed officials , architects , contractors , developers and the general public . Must be a creative and innovative thinker. Must be able to communicate effectively orally, graphically and in writing. aPOSITION DESCRIPTION Position Title Planner II Department Community Development Accountable To Director of Planning and Community Development Primary Objective of Position To assist the Director in the development and implementation of Planning and Community Development programs and services by staffing the Planning Commission; by conducting research and Comprehensive Plan studies ; and by performing related assigned tasks , to assure positive and effective enforcement of City plans , policies and ordinances . Major Areas of Accountability Coordinates all Planning Commission activities . -- Prepares Planning Commission agendas , staffs meetings and follows up on all Commission directives . -- Prepares case reports on all plats , conditional use permits , zoning changes , etc . coming before the Planning Commission to insure conformance with City plans , policies and ordinances . Conducts research and analysis relative to current development pro- posals and to special projects based upon appropriate files , plans , policies and ordinances . -- Develop timely and complete reports and recommendations for assigned projects . Respond to public inquiries concerning City land use plans , policies , and ordinances and development review procedures in a positive and courteous manner. Maintains Comprehensive Plan, providing information about the plan, and advising the Director of necessary changes and recommended modifications . -- Assure plan elements and graphics are consistent with City and State requirements . -- Provide technical advice to City departments , to other agencies , and to the public . -- Coordinates the work of consultants employed to conduct studies and to provide special services , ensuring objectives of con- tractual agreements are made. Coordinates assigned programs involving other agencies and jurisdic- tions and administers related funding source requirements . -- Keeps Director advised of current status of program implementation. Planner Il 11 10 Page Two -- Assures program and funding requirements are met in a timely and accurate manner. Keeps Director promptly informed of significant matters in areas of accountability. Performs other duties and responsibilities as apparent or assigned Examples of Performance Criteria Quality of case reports , advice and information will be gauged by the timeliness and thoroughness of research employed, the advis- ability or recommendations , and consistency relative to established programs and policies . Ability to communicate both orally and in writing will be gauged by feedback from citizens , developers , Planning Commission members , and employees of the City and other agencies . Coordination of planning activities will be gauged by feedback from citizens , developers , Planning Commission members , and employees of the City and other agencies . Ability to keep Director informed of significant matters in areas of accountability will be determined by the degree to which Director finds information to be timely and pertinent to the area of respon- sibility. Qualifications Training and experience equivalent to a four year college degress in planning, planning administration or closely related field and increasingly responsible planning experience at municipal government level . Should have at least two years of experience in the planning field. Ability to develop and maintain positive and effective working replationships with elected officials , commissions , architects , engineers , developers , employees and the general public . Ability to provide work direction where appropriate. Must have a thorough knowledge of overall City development plans , municipal and state laws and metropolitan development guidelines . Must be able to communicate effectively graphically, orally and in writing. MEMO TO: John K. Anderson, City Administrator FROM: Judith S . Cox , City Clerk RE : Appointment of Election Judges for Municipal Election DATE: September 29 , 1983 Introduction It is necessary for Council to appoint election judges for the November 8th municipal election, at this time . Background The election judges recommended for appointment have served erved as judges in the past and are willing to serve in the upcoming municipal election. Compensation is the same as in the past two years and is budgeted. Recommendation It is recommended that the individuals named in Resolution No. 2169 be appointed election judges for 1983 municipal election. Action Requested Offer Resolution No. 2169 , A Resolution Appointing Judges of Election, and Establishing Compensation, and move its adoption. JSC/jms RESOLUTION NO. 2169 A RESOLUTION APPOINTING JUDGES OF ELECTION, AND ESTABLISHING COMPENSATION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, that : 1 . The following persons are hereby appointed Judges of Election for the five polling precincts within the City of Shakopee designated in Resolution No. 2021 , adopted July 6 , 1982 : FIRST PRECINCT: Winnie Anderson, Chrm. Donald Clemens Susan Niewind Ann Noterman Lillian Kopisca Marcie Schmitt Marie Kocks Gladys M. Theis SECOND PRECINCT: Candace Kragthorpe, Marcia Spagnolo, Co-Chrm. Co-Chrm. Carolyn Nevin June Regan JoAnne Evans Connie Berens THIRD PRECINCT: Maetta Jurewicz , Chrm. Joyce Schwartz Kathryn Marschall Rose McCourtney Dean Trutnau June Sebald Phyllis Schesso LeVaun Schmitt Sally Herzog FOURTH PRECINCT: Lillian Weinandt , Co-Chrm. Glenda Spiotta, Co-Chrm. Helen O' Brien Doris Ann Solseth Pat Clemens Sylvester Gerald Joan Lynch Marge Bischoff Dolores Morke FIFTH PRECINCT : Virgilla Geske, Chrm. Rudy Maurine Brenda Fonder Paulette Rislund Rose Jasper Rita Steinhoff Thea May Pat Pass Carol Link Resolution No. 2169 Page Two • 2 . The Election Judges shall be compensated for their work at the rate of $3. 35 per hour and the Chairman of the Election Judges shall be compensated at the rate of $3. 85 per hour. 3 . The proper officials be and hereby are authorized and directed to do and perform all acts necessary to carry out the terms , intents , and purposes of this Resolution. Adopted in session of the City Council of the City of Shakopee , Minnesota, held this day of 1983 .. Mayor of the City of Shakopee ATTEST: City Clerk Approved as to form this day of , 1983 . City Attorney art 9 RESOLUTION NO. .2B A RESOLUTION APPOINTING JUDGES OF ELECTION, AND ESTABLISHING COMPENSATION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, that : 1 . The following persons are hereby appointed Judges of Election for the five polling precincts within the City of Shakopee designated in Resolution No . 2021 , adopted July 6 , 1982 : FIRST PRECINCT: _ Eladys M. ! .• C Donald Clem C�u� n Niewind Th CTT-Ann Noterman Lillian Kopisca Claude Sinnen Donald Trutnau Ruth O'Reilley Dora Harbeck Mary Lou Kale cie Schmitt Linda Mankowski �Nla ; KoCkS Berdie Hartman Winnie Anderson Allt Joan Hart Dorothy Breimhorstd'` SECOND PRECINCT: Marvel. Siebenaler Barbara Runge Carol_yn Nevin) Marilyn Johnson Hazel Bisek Lois Kubes Lucille Odenwald Audrey Stage�t Beryl Barrett June Re•an Candace Kragthorpe . , '� Janne Davis Ethel Schneider C_Connie Berens J C � Joanne Kruger Ma - a agn. THIRD PRECINCT: etta Jurewic� _ Chan. Nancy Huss (- Kathryn 'a Pat Clemens Dean Trutnau -7)71--- Jo ce Schwartz 7 Phyllis Schesso Rose McCourtney�`�' Orma Kraai June Sebald Bernadette Gerlach Ce-Vaun Schmitt Bernice Mottinger Lillian Weinandt Loretta Jaspers S 11 Herzo C _ y � Sharon Bisek Tyanne Breimhorst 0 • 4 _ • _ . - Co. �I ll'"^-J C ' � 1- Zs FOURTH PRECINCT Glenda Spiotta Chrm. N Sharon Fernholz Doris Ann Solseth ----1--) /Felen O' Brien _,/ ( Sylvester Gerald • Judy Cannon Marge Bischoff Dorothy Breimhorst Delores Morke • C---' 1 Frank Schneider eV) Muriel Fenlason Pat Clemens _ '/I C-, , Elaina Hoen ` . Joan Lyncv Joanne Colley Diane Karst Ray Schmitt FIRST PRECINCT: ------ rgilla Geske Chrm. Marie Nigg Brenda Fonder Rudy Maurine_ __, Sally Juba Mary Ann Mertz Dean Obernolte Paulette Rislund Judy Ess Rita Steinhoff - Rose Jasper 1 Pat Passe 2) C Thea May Janet O'Connor Louise Vyskocil IC)i' Bonnie Notermann Carol Link 2 . The Election Judges shall be compensated for their work at the rate of $3 . 35 per hour and the Chairman of the Election Judges shall be compensated at the rate of $3 . 85 per hour. 3 . The proper officials be and hereby are authorized and directed to do and perform all acts necessary to carry out the terms , intents , and purposes of this Resolution. Adopted in i%- y s,4 /1 session o the City C4,�,. c:1, of the City of Shakopee , Mi nesota , e . this ��` day of it 198 , g- / /1,2 12 ,/, , .-7 g 4,-? , __,e/ (,4 Mayor of e City or Shakopee ATTEST: c ril ‘, ,f7 — 1,ty er I T,; Approved as to form this 5- day of , 1982 . • _ ity Atto -ney ø_ e 1 i 1 ed.,-ei • / e RESOLUTION NO. 2169 A RESOLUTION APPOINTING JUDGES OF ELECTION, AND ESTABLISHING COMPENSATION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, that : 1 . The following persons are hereby appointed Judges of Election for the five polling precincts within the City of Shakopee designated in Resolution No. 2021 , adopted July 6 , 1982 : FIRST PRECINCT: Winnie Anderson, Chrm. Ann Noterman Susan Niewind *Dorothy Breimhorst Lillian Kopisca Marcie Schmitt Marie Kocks Gladys M. Theis ** Dora Harbeck SECOND PRECINCT: Candace Kragthorpe , Marcia Spagnolo, Co-Chrm. Co-Chrm. - Carolyn Nevin June Regan JoAnne Evans _ Connie Berens 4 Hazel Bisek _ Carol Bishop 4- Beryl Barrett 4` Barbara Runge THIRD PRECINCT: _ Maetta Jurewicz , Chrm. Joyce Schwartz Kathryn Marschall Rose McCourtney Dean Trutnau June Sebald Phyllis Schesso LeVaun Schmitt Sally Herzog FOURTH PRECINCT: Lillian Weinandt , Co-Chrm. Glenda Spiotta , Co-Chrm. Helen O' Brien Doris Ann Solseth Pat Clemens Sylvester Gerald Joan Lynch Marge Bischoff '` Mary Ann Mertz Dolores Morke FIFTH PRECINCT: Virgilla Ceske , Chrm. Rudy Maurine Brenda Fonder Paulette Rislund Rose Jasper Rita Steinhoff Thea May Pat Pass Carol Link Resolution No. 2169 Page Two / , 2 . The Election Judges shall be compensated for their work at the rate of $3 . 35 per hour and the Chairman of the Election Judges shall be compensated at the rate of $3 . 85 per hour. 3 . The proper officials be and hereby are authorized and directed to do and perform all acts necessary to carry out the terms , intents , and purposes of this Resolution. Adopted in session of the City Council of the City of Shakopee , Minnesota , held this day of 1983. Mayor oT the City of Shakopee ATTEST: City Clerk Approved as to form this day of , �$ City Attorney 0 RESOLUTION NO. 2168 A RESOLUTION CONSENTING TO THE LEVY OF A SPECIAL TAX BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF SHAKOPEE WHEREAS, the Housing and Redevelopment Authority in and for the City of Shakopee was created pursuant to Minnesota Statutes, Section 462.411 et. seq., as amended, and WHEREAS, Minnesota Statutes 1965, Section 462.545 designates all the territory within the area of operation of the authority as taxing districts for the purpose of levying and collecting a special benefit tax, and WHEREAS, Section 462.545 states that the special levy shall not exceed 10 cents on each $100 of taxable valuation in the area of operation, and WHEREAS, Section 462.545 states that the governing body of the municipality must give its consent to such a tax levy. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, that the City Council consents to and joins in a special tax levy of $23,000 by the Housing and Redevelopment Authority in and for the City of Shakopee for taxes payable in 1984. Adopted in session of the City Council of the City of Shakopee, Minnesota, held this day of , 1983. Mayor of the City of Shakopee ATTEST: City Clerk Approved as to form this day of , 1983. City Attorney /36 MEMO TO: City Council FROM: LeRoy Houser/Building Official RE: Eagle Creek Town Hall Addition Bid DATE : October 3 , 1983 Introduction : The low and only bid received on the Eagle Creek Town Hall project was from E.L. Prahm Construction. The bid was $21 ,863 .00. It is $617 .00 lower than the original quote from Jefferson Carpentry. Action Requested : Direct staff to execute contract with E.L. Prahm Construction in the amount of $21 ,863 . 00 . LH: c a u ( 30/ PROPOSAL FOR EAGLE CREEK TOWNHALL/'THRIFT SHOP CITY OF SHAKOPEE, MINNESOTA 1983 OPENING TIME: 10: 30 a.m. , C.D.S.T. OPENING LATE:-Monc i Oct . 3, 1983 Honorable City Council City of Shakopee 129 E. 1st Avenue Shakopee , Minnesota 55379 Gentlemen : The undersigned, being familiar with your local conditions , having made the field inspections and investigations deemed necessary, having studied the plans and specifications for the work including Addenda Nos . and being familiar with all factors and other conditions afrecti_ng the work and cost thereof, hereby proposes to furnish all labor, tools , materials ,. skills , equipment and all else necessary to completely construct the project in accor- dance with the plans and specifications on file with your. Clerk. BASE BID I/we propose to completely construct the addition to the Eagle Creek Townhall/'Thrift Shop, providing all General , Mechanical , and Electrical construction , including all materials , labor and related appurtenances , as described in the specifications , for the LUMP SUM of : Twenty one thousand eight hundred sixty three DOLLARS .00 CENTS LUMP SUM $ 21' 63.00 ALTERNATE BIDS Bidders may list alternate bids below, if desired : Item Add or Deduct from Base Bid 1 . 2 . 3 . 4 . 5 . I3 SUBCONTRACTOR LIST: Each bidder shall complete the following list indicating the sub- contractors he will use if awarded the contract . No changes in subcontractors can be made after bidding without written request and confirmation by the Building Official and the City Clerk. Failure to complete this list or failure to comply with these requirements shall disqualify the bid. Item Subcontractor Phone No. Masonry Ralph Thomas ---------- 445-2$12 Painting Albie_Breimhorst 445-4715 Plumbing Steins, Inc. 445-4444 Ventilating Steins, Inc. 445-4444 Electrical Lucas Electric 445-330$ Accompanying this bid is a bidder' s bond , certified check, cash deposit or cashier' s check in the amount of one thousand ninty three DOLLARS fifteen CENTS ( $ 1,093.15 ) whfEHi- is at least five percent ( 570) of tl amount of my/our BTT made payable to the City of Shakopee , Minnesota , and the same is subject to forfeiture in the event of default on the part of the undersigned or failure on the part of the undersigned to execute the prescribed contract and bond within fifteen ( 15 ) days after its submittal to me/us for execution. In submitting this bid it is understood that the Owner retains the right to reject any and all bids and to waive irregularities and informalities therein and to award the contract to the best interests of the Owner. In submitting this hid it is understood that payment will be by cash or check. It is understood that bids may not be withdrawn for a period of 30 days after the date and time set for the opening of bids . It is understood that the Owner reserves the right to retain the certified check, bid bond , cashier' s check, or cash deposit , of the three lowest bidders as determined by the Owner for a period not to exceed 30 days after the date set for the opening of bids . Respectfully submitted, !, (A Corporation) E. L. Prahm Bldrs. (An Individual ) Name of er (H Partnership) By 07 -14*,/y7/2 Title Owner Shakopee, Mn. 55379 E. L. Prahm City, State, Zip Code Printed-Name of Signer 445-6522 1192 Harrison St. Telephone No. Address MEMO TO: John K. Anderson/City Administrator FROM: LeRoy Houser/Building Official RE: Public Service Building Roof Repair DATE: October 3 , 1983 Introduction: We have received two quotes for the repair of the roof at the public service building; Allweather Roof Company for $2 ,677 . 00 and Northland Roofing for $2 , 985 . 00. Recommendation: I recommend we have Allweather Roof Co . repair the roof at the public service building for the price of $2 ,677 . 00 . Action Requested : Direct staff to execute contract with Allweather Roof Co. for roof repairs at the public service building for the amount of $2 ,677 . 00 LH: cau Proposal' • ; R �! Proposal No.IJ�.11�� 9 FROM Northland Roofing Sheet No. Route 2, Box 274 ixa• • Stanchfield, MN 55080 Date 612-689-2509CnrY OF Sf;A� OPEE • .. 9/19/83 Proposal Submitted To Work To Be Performed At Name City of Shakopee Street 476 Gorman Street Street 129 East First Street . City Shakopee State MN City Shakopee Date of Plans State Minnesota Salesman Telephone Number We hereby propose to furnish all the materials and perform all the labor necessary for the completion of 1 . Clean 12" area around roof edge_ ------- ----n2. sa 12" mesh reinforcing on all metal counter flashing seams 3. Install 2 ply flashing on roof edge, 816 In ft4. --- Patch and coat HVAC and Hatch Flashings, 84 In ft _ 5. Install new gravel on roof edge All material is guaranteed to be as specified, and the above work to be performed in accordance with the drawings and specifications submitted for above work and completed in a substantial workmanlike manner for the sum of Two thousand nine hundred eighty five Dollars ($ 2,985 .00 ). with payments to be made as follows. ___ paid, ;n f X11 anon comnlPt r,„ �._y ,ea arrangements-a.remade before the _ job has begun. — Any alteration or deviation from above specifications involving extra costs, will be executed only upon wiitten orders, and will become an extra charge over and above the estimate. All agreements contingent upon strikes, accidents or delays beyond our control. Owner to carry fire, tornado and other necessary insurance upon above work. Workmen's Compensation and Public Liability Insurance on above work to be taken out by Northland_ ii44fi —_,—______ Respectfully submitte • Per Michel Roses, President ACCEPTANCE OF PROPOSAL The above prices, specifications and conditions are satisfactory and are hereby accepted. You are authorized to do the work as specified. Payment will be made as outlined above. Accepted Signature Date Signature To: MINNESOTA PROPERTY OWNERS PLEASE TAKE NOTICE: 7 1 3 c- OleNib_ Aliweather Roof Co. It it 470 N. Cleveland Ave.0 St.Paul,Minnesota 55104 Phone(612)646-7878 Since 1925 September 19, 1983 111111 City of Shakopee 129 East First Street Shakopee, Minnesota Attn: Mr. LeRoy Hauser Re : Shakopee Public Utilities & Police Bldg. 476 Gorman Street Shakopee , Minnesota Dear Sir: , This letter will confirm our visual inspection of p the above building on 9/16/83. We thoroughly inspected the surface, flashings , projections and roof edge . Our observations and recommendations areas follows : ROOF ASSEMBLY Surface - Gravel Membrane - Four ply felt-asphalt Insulation - Unknown Deck - Metal ROOF CONDITION PHOTO NO. Roof Age - Built in 1977 Surface - Light gravel coverale Flood Coat - Bare in spots Membrane - Exposed in a few spots Insulation - Appears to be dry Flashings - Flashing is loose and allowing 1 ,2,3,4,5 moisture to enter roof system around roof hatch. There are cracks in flashing around HVAC curb, allowing moisture to enter the Police Dept . area. At each splice of metal counter flashing at roof edge there is a crack on the deck . This is allowing moisture to enter roof roof system. Roof leaks above stairway in Public Utilities shop. ��oI NL Roy ie a r n m E MBE I '. 7 • kr ,rte September 19, 1983 13 City of Shakopee Page Two RECOMMENDATIONS Because of the above flashing conditions, we would recommend that the following maintenance be done: BILL OF PARTICULARS 1. Spud clean, 12" area around roof edge. 2. Install 12" fiberglass mesh patch on all metal counter flashing seams. 3. Install hot 2 ply flashing on roof edge, 816 lineal feet. 4. Patch and coat HVAC and Hatch flashings, 84 In ft. 5. Install new gravel on roof edge. Total price for this work, labor and material complete is $2, 677. 00. This work is done per enclosed T & M Specifi- cation and is guaranteed for one year. Thank you for this opportunity to be of service . If you should have any questions, please contact us . Sincerely, Allweather Roof Co. Jim Ai. leran Commercial Roof Consultant JC:ms Enclosure : Time & Material Specification W/Guarantee /3 q' RESOLUTION NO. 2166 A RESOLUTION APPROVING 1983 TAX LEVY, COLLECTIBLE IN 1984 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, COUNTY OF SCOTT, MINNESOTA, that the following sums of money be levied for the current year, collectible in 1984, upon the taxable property in City of Shakopee, for the following purposes: GENERAL FUND LEVY $1,022,807 SPECIAL LEVIES: Judgements $ 13,382 Matching Funds 30,709 Shade Tree 22,858 Pension Funds 9,639 Ind. & Comm. Dev. 17,868 Tax Abatements 17,105 TOTAL SPECIAL LEVY $ 111,561 TOTAL GENERAL FUND $1 ,134,368 DEBT SERVICE: '74 Imp. 17,336 '77-B Imp. 70,980 '77-C Imp. 25,172 Public Service Building 106,470 G.O. Judgement 52,717 TOTAL DEBT SERVICE $ 272,675 • TOTAL CITY LEVY $1,407,043 BE IT FURTHER RESOLVED, that the City Clerk is hereby instructed to transmit a certifies copy of this resolution to the County Auditor to Scott County, Minnesota. Adopted in session of the City Council of the City of Shakopee, Minnesota, held this day of 1983. Mayor of the City of Shakopee ATTEST: City Clerk Approved as to form this day of , 1983 City Attorney /3f MEMO TO: John K. Anderson, City Administrator FROM: Jeanne Andre , Administrative Assistant RE: Huber Park Trail Restroom Facilities DATE: October 4, 1983 Bids were received and opened for the above project on Tuesday, October 4, 1983 , at 2 : 00 p.m. Nine bids were received as out- lined on the attached bid list , ranging from $47 ,990 to $56 ,200. Low bidder is Consolidated Mechanical Contractors . Brad Lemberg of Bonestroo attended the opening and found the low bid to be in order. Therefore it is recommended that the contract be awarded to Consolidated Mechanical Contractors . Recommended Action Award contract for the construction of the Huber Park Trail Rest- room Facilities to the low-bidder, Consolidated Mechanical Con- tractors , for the amount of $47 ,990 , and authorize appropriate officials to execute the contract and return the deposits and bid bonds of a11 bidders except the bid bonds of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. JA/jms Our File No. 7718 IIUBER TRAIL RESTROOM FACILITIES FOR CITY OF SHAKOPEE, MINNESOTA BID TIME: 2:00 P.M. , C.D.S.T. BID DATE: Tuesday, Oct. 4, 1983 CONTRACTORS TOTAL BASE BID ALT BID 0 . Kratochvil Construction e-5/ago - ,,7 -/u -2-- .....en-Gena rue t i on 0) 1,/,3. W. H. Cates Construction 01 Slo 2 p p S°J,® 4jr- Anderaer-If uc_ on ( -*-1. E. L. Frahm Builders (.,574&7 eid41Z6 ea k<- 6. Superior 77 SZ 86 9 S7, 6 &°1- 7. John Klingelhutz 455/ 9--re' 4S-20 QV.I. Gem Construction 3-4/ 94/7 S?b ...9. Alta-Mechant-cal-Contr. _ 4/10. Zastro-Masset Const. I& CS'S e4C1c.$1Z1.S® i.4.1. Michael Construction Ll e p 0 ,SVo V13. Consolidated Mech. Contr. In 44 D .s-?o 7296b MEMO TO: John K. Anderson/City Administrator FROM: LeRoy Houser/Building Official RE: Met Councils proposed Mitigation and Compensation Act DATE : October 4, 1983 Introduction: At your request , I have reviewed the proposed Mitigation and Compensation Act for Siting Solid Waste Facilities . Background : As you know, I serve on the MWCC Hazardous Waste Committee for reviewing the proposed regulation governing operation, mitiga- tion and compensation of hazardous waste operations . It has been the consensus of the committee the emphasis must be placed on reduction and recycling of waste, both solid and hazardous rather than on site storage and disposal . This would result in less of a need for numerous and large on site disposal and storage facilities . We have all agreed on the need for the Mitigation and Compensation Act . I have reviewed the draft submitted by Met Council and am of the opinion it is thorough, in depth and covers any problems that would be confronted by siting a landfill . I have only one concern, that is there appears to be no provision for appeal in the Mitigation and Compensation Act . If a claim- ant is not satisfied with the recommendation of the panel and the ruling of the Commissioner of the Dept . of Revenue , it appears there is nowhere else to go and the Commissioners ruling is binding. Recommendation: Respond to Metropolitan Waste Management Advisory Committee request for comments on the proposed Act and request clarifica- tion as to whether or not an appeals process is to be part of the Act . If not, request them to include it . LH: cau October 4, 1983 TO: Mayor and City Council of Shakopee The intersection of County Roads 83 & 16 in Shakopee is one we pass daily . Each time we do , a sense of "I hope I make it" comes over us. "Have I adequately surveyed all directions knowing that many accidents occur here and blindspots abound to my right and left?" This intersection has taken its toll and the numbers keep increasing. To our knowledge , no deaths have occurred here yet , but some really close calls have . At least five of our neighbors have been involved in some personal injury or property damage related accident . Will a death soon follow?? The intersection is not a normal 90 degree, flat plane inter- section. The angle of intersection is different than 90 degrees. An angle of inclination occurs for both roads. Surfacing of the roads change . Vegetation obstructions as well as terrain obstruction occur at the approaches from all directions. Gravel on hard surface changes stopping ability. Varying weather, road and maintenance create unpredictable conditions. Yet , this intersection is signed as though these conditions don' t exist . A traffic increase has also been noted here. The K-Mart Distri- bution House, increased residential development , and the Bingo Palace have all put additional traffic pressures on the inter- section. We believe additional traffic control is warranted. We would like to have a safety beacon installed or some other suitable device. The overhead beacon would flash yellow (caution) to the thru Co. Rd. 16 traffic and red (stop) to the Co. Rd. 83 traffic. We believe this would make the intersection more apparent and consequently safer. We are requesting that the City Council generate a letter to the County Road Engineer, the responsible agency, requesting that a safety beacon or similiar device be installed. Thank you for your kind attention . Bev Koehnen Dave Czaja