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Home My WebLink AboutSANITARY SEWER BOARD • .W. Kro & Associates,LLP CPA's and Consultants Otto W.Krohn,CPA,CGMA 231 E.Main Street,Westfield,Indiana 46074 James W.Treat,CPA,CGMA American Institute of CPA's Indiana CPA Society January 23, 2017 Mr. Len Ashack, Director &Members of the Sanitary Sewer Board Jeffersonville Wastewater Department River Ridge Commerce Center 423 Lewman Way Jeffersonville, Indiana 47130 Engagement Letter—City of Jeffersonville's Sanitary Sewer Board Dear Mr. Ashack: We are pleased to confirm our understanding of potential ongoing consulting services we have been requested to provide for the City of Jeffersonville, the Sanitary Sewer Board and Management of Jeffersonville Municipal Sewage Works (Wastewater Utility - the `Utility'). Pursuant to our role with the City's Long-Term Control Plan (`LTCP') project team, we have developed a comprehensive understanding of the Utility, including its existing financial condition, current monthly user rates and charges, debt service and other revenue requirements, cost of service matters and the anticipated impact of the remaining LTCP capital projects. The following details our initial assessment of those services, which may be augmented or amended as circumstances require. Therefore, upon request: Scope of Services 1. We propose to serve as an ongoing resource for you and the City of Jeffersonville on financial matters involving the Utility, its outstanding and proposed bonds, utility rates and general accounting and financial reporting needs. 2. If necessary, we will assist with the preparation and analysis of updated financial & operating reports, responses to inquiries from interested parties (including City Officials, Management, Ratepayers, Media, USEPA, IDEM and Bondholders — existing and future stakeholders). 3. Continue to assist Utility team members with long range planning, budgets, projections and financial forecasts. 4. We will also assist with ongoing compliance matters, including maintaining required fund balances with respect to working capital, sinking fund and debt reserve requirements. 5. We will also assist with the evaluation of the adequacy of annual debt coverage ratios and with ongoing continuing disclosure issues that come to our attention. Phone:317-867-5888 Facsimile: 317-867-5898 www.owkcpa.com 1 6. Upon request, we can prepare projections of cash revenue requirements, based on management's knowledge and belief of current and projected operation and maintenance expenses, debt service and various assumptions relative to debt service coverage (i.e. minimum coverage requirements, pay-go capital projects, adequacy of cash reserves, etc.). 7. Upon request, we can prepare Compilation Reports for financial reporting purposes, evaluate the impact of capital projects and assist with the pursuit of grant funding opportunities that might arise, including those available under Indiana's Office of Community and Rural Affairs (`OCRA'), Federal and/or State Programs offered through IDEM, USEPA and/or SRF. Consultants'Responsibilities We will comply with the AICPA's Code of Professional Conduct, including the ethical principles of integrity, objectivity, professional competence and due care. Our engagement will not include an audit in conformity with Generally Accepted Audit Standards (GAAS). Therefore, our services cannot be relied upon to identify or disclose any financial misstatements, including those caused by fraud or error, or to identify or disclose any wrongdoing within the entity or noncompliance with laws and regulations. However, we will inform the appropriate level of management of any material errors and any evidence of information that comes to our attention during the performance of our procedures if we find that fraud may have occurred. In addition, we will inform you of any evidence or information that comes to our attention during the performance of our services regarding any wrongdoing within the entity or noncompliance with laws and regulations that may have occurred, unless they are clearly inconsequential. We have no responsibility to identify and communicate deficiencies or material weaknesses in your internal control as part of this engagement. Other Relevant Information Otto W. Krohn is the engagement partner and is responsible for supervision of the engagement and signing any potential reports or authorizing another individual to sign any reports. We certify that there is no direct or indirect compensation made to any individuals at O.W. Krohn and Associates, LLP as a result of participation in this engagement. Further, we certify that there are no known conflicts of interest with respect to our participation on this engagement. To ensure that O.W. Krohn and Associates' independence is not impaired under the AICPA Code of Professional Conduct, you agree to inform the engagement partner before entering into any substantive employment discussions with any of our personnel. And finally, we certify that there has been no termination with respect to our status as Municipal Advisors, pursuant to recent rules and regulations of the Securities and Exchange Commission(SEC) or the Municipal Securities Rulemaking Board (MSRB). Fees Monthly invoices will be rendered for professional services based upon hourly time charges and out of pocket expenses. Hourly time charges will fall within a range of$85 to $200 per hour, depending upon the level of experience necessary for the various tasks to be performed. In the Scope of Services above, paragraphs 1 thru 3 have to do with the reconfiguring the LTCP for a reduction in capital projects and/or the extension of time in which to complete the 2 remaining LTCP projects. We will work with Sycamore and the other members of our team to rework the FCA rate model for the assumptions noted above at an estimated cost of$7,500 to $15,000 (including up to 2 meetings with the City). Services related to Paragraphs 4 and 5 above are anticipated fall within a range of$3,500 to $6,500. Additional services noted in Paragraphs 6 and 7 above will only be provided at the request of the City. These services are not anticipated to be necessary, as we intend to rework the very same test year with potentially two additional capital project funding options: I. Smaller LTCP or 2. Longer Implementation Period to complete LTCP. Should such services become necessary, we will provide a more defined scope of service and estimated fees upon request. Termination This agreement may be terminated by either party at any time. In the event of termination, the City agrees to compensate O. W. Krohn & Associates for services rendered up to the date of termination. We have provided additional information in the attached Appendix A to amplify our commitment to professional standards relevant to this proposed Agreement. We appreciate the opportunity to continue our service to the Jefferson Municipal Sewage Utility and believe that this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you acknowledge and agree with the terms of our engagement as described in this engagement letter, please return a signed copy to us. Sincerely, O.W. Krohn&Associates, LLP 00 oi. Otto W. `Buzz"Krohn, CPA, CGMA Executive partner Acknowledged: Sanitary Sewer Board City of JefferAonville, Indiana Client Authorized Representative Date 3 APPENDIX `A' Jeffersonville Sanitary Sewer Board Engagement Letter INSURANCE: O.W. Krohn&Associates, LLP maintains the following insurance: a. Worker's Compensation and Disability; b. Comprehensive and General Liability; C. Comprehensive Auto Liability; d. Comprehensive Umbrella Liability; and e. Professional Liability. COMPLIANCE WITH WORKER'S COMPENSATION LAW: O.W. Krohn & Associates complies with all provisions of the Indiana Worker's Compensation Act, and if requested, shall provide the City a Certificate of Insurance or other verification of same. COMPLIANCE WITH E-VERIFY: O.W. Krohn & Associates, LLP is registered with the Federal E-Verify program (ID 465935) and is compliant with the processes to document its employees. PROHIBITION AGAINS DISCRIMINATION: O.W. Krohn&Associates, LLP certifies that, with respect to its employees, subcontractors, and clients, that it does not discriminate by reason of race, religion, color, sex, national origin or ancestry. INDEPENDENT REGISTERED MUNICIPAL ADVISORS: O.W. Krohn & Associates, LLP is registered with the Securities and Exchange Commission as Independent Registered Municipal Advisors, and complies with all related regulatory requirements. 4