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1a 12/31/98 Debt Services Projections CITY OF CHANHASSEN 7 City Center Drive, PO Box 141 -:hanhassen, Minnesota 55317 Phone 612.937.1900 General Fax 612.937.5139 'ngineering Fax 612.937.9152 !Ib/ic Safety Fax 612.934.2524 ;(feb IUwll',ci.chanbassen.lIlil.1IS TO: Don Ashworth, City Manager (.M~ Pam Snell, Finance Director \ lJl I - IJe City ofCIJaJzbasse1l. A growing community witb clean lakes, qualit)' schools, a channing downtown, thrilling businesses, and beautiful parks. A great plllce to tille, work, and play. FROM: DATE: November 2, 1998 SUBJ: Engagement letter for special audit services to review debt s,~r'Jice projections On September 21, 1998 HLB Tautges Redpath, Ltd. presented the annml review of the 1997 Comprehensive Annual Financial Report and Management Considerations. As a part of that discussion, Council expressed an interest in engaging their fiml to undergo am independent review of the City's annual debt service analysis and projections. Attached is an engagement letter of agreed-upon procedures to provide special audit ser'lic:e~. with regard to the elements of the debt service analysis and projections. Staff is requesting Council approval of the attached engagement letter for special aJdit services to review debt service projections. III Tautges Redpath. Ltd. Certified Public Accountants and Consultants October 21, 1998 Honorable Mayor and Members of the City Council City of Chanhassen PO Box 147 Chanhassen,:MN 55317 This letter is in response to your request to provide special audit services with regard to the elements in the debt service projection. The purpose of the engagement is to assist the City ofChanhassen in evaluating the adequacy of funding for scheduled debt payments. Procedures will be applied to all bonded debt outstanding at December 31, 1998. Our engagement to apply the agreed-upon procedures, as described below, will be performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures either for the purpose for which this report has been requested or for any other purpose. As such, we agree to complete the following procedures and report our findings to the City of Chanhassen: 1) Test the mathematical accuracy of all debt service fund projections prepared by the City's Finance Department. 2) Trace all debt service payments on schedule to bond resolutions. 3) Trace all bond schedules to the Comprehensive Annual Financial Report. 4) Trace all elements in the projection to the underlying authorization/source: Receipts/ Revenue: Special assessments including interest General property taxes Interest on investments Tax increment collections Other items as appropriate Disbursements/Expenditures: Bond principal and interest Other items as appropriate 5) Trace future events to plans and resolutions. 4810 White Bear Parkway, White Bear lake, Minnesota 55110, USA Telephone: 651 4267000 Fax: 651 4265004 HlB Taulges Redpalh, lId. is a member of 11m Inlernal.onal. A world.wide organizalion of accounling firms and business advisers. City of Chanhassen October 21, 1998 Page 2 We plan to begin our procedures during the fieldwork for the 1998 audit. Unless unforseeable problems are encountered, we anticipate a report will be issued shortly thereafter the issuance of the 1998 Comprehensive Annual Financial Report in substantially the following format: At your request we have performed the procedures enumerated below with respect to the debt payments of the City of Chanhassen for all bonded debt outstanding as of December 31, 1998 set forth in the accompanying schedules. Our review was made solely to assist the City of Chanhassen in evaluating the adequacy offundingfor scheduled debt payments. Our engagement to apply agreed-upon procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed are summarized asfollows: 1) Test the mathematical accuracy of all debt service fund projections prepared by the City's Finance Department. 2) Trace all debt service payments on schedule to bond resolutions. 3) Trace all bond schedules to the Comprehensive Annual Financial Report. 4) Trace all elements in the projection to the underlying authorization/source: Receipts/ Revenue: Special assessments including interest General property taxes Interest on investments Tax increment collections Other items as appropriate Dis bursements/Expenditures: Bond principal and interest Other items as appropriate 5) Trace future events to plans and resolutions. Our findings are presented in the accompanying schedules. Because the above procedures do not constitute an audit conducted in accordance with generally accepted auditing standards, we do not express an opinion on the projected debt payments for the future periods. In conjunction with the procedures referred to above, except as set forth in accompany schedule, no matters came to our attention that cause us to believe that the funding for scheduled debt payments is inadequate. Had we performed additional procedures or had we conducted an audit of the financial statements in accordance with generally accepted auditing standards, other matters might have come to our attention that would have been reported to you. City of Chanhassen October 21, 1998 Page 3 This report relates solely to the to the projected debt schedules and does not extend to any financial statements of the City ofChanhassen, Minnesota taken as a whole. In addition to the above report we will prepare a financial analysis of each debt service fund. The analysis will identify: 1) The projected cash positionlbalance of this fund. 2) Address anticipated deficits (if any). 3) Discuss the stability of pledged revenue sources and identify alternatives if such sources are subject to uncertainties. We estimate our fees for this engagement to be approximately $7,500. This fee estimate is based on anticipated cooperation from City personnel to provide the data as described in the enclosed list. If circumstances arise that require us to extend procedures, we will inform the City of Chanhassen. If you agree to the terms as stated herein, please sign where indicated below and return to us. Sincerely, RGT /clg City of Chanhassen, Minnesota Signed: Title: Date: Signed: Title: Date: City of Chanhassen October 21, 1998 Page 4 CITY OF CHANHASSEN, MINNESOTA Debt Service Payments Analysis - City to Provide December 31, 1998 1. Financial projections for all bond issues. · including interest rates used in projections 2. Anticipated property tax levies. 3. T ,\st of assessment rolls, terms, rates. 4. Anticipated TIP revenue to be spread to bond issues in 1999 and future years. 5. Anticipated MSA to be spread to the debt service funds in 1999 and future years. 6. Schedule of other projected financing sources for debt service funds (i.e., anticipated transfers from enterprise funds, etc.). 7. Bond resolutions. 8. Debt payment schedules.