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HomeMy WebLinkAboutSEWAGE WORKS IMPROVEMENT PROJECTJeffersonville Sewer Board City of Jeffersonville 501 East Court Avenue City-County Building Jeffersonville, [N 47130 Re: Jeffersonville Municipal Sewage Works Proposed Sewage Works Improvement Project Dear Members of the Board: You have requested that H.J. Umbaugh & Associates, Certified Public Accountants, LLP (the "Firm") provide to Ciry of Jeffersonville (the "ClienP') those services more fully set forth in Exhibit A hereto (the "Services"). Fees and Costs. Fees charged for work performed are generally based on hourly rates for the time expended, a fixed amount or other arrangement as mutually agreed upon as more appropriate for a particular matter. Hourly rates for work performed by our professionals vary by individual and reflect the complexity of the engagement. In addition m fees, we also charge for various ancillary services, for which you will be invoiced. Such charges may include long distance telephone charges, photocopying facsimile transmission, computer research, mileage, travel expenses and other similar charges specifically applicable to the engagement. Billine Procedures. Normally, you will receive a monthly statement showing fees and costs incurred in [he prior month. Occasionally, we may bill on a Less frequent basis if the time involved in the prior month was minimal or if arrangements are made for the payment of fees from bond proceeds. The account balance is due and payable on receipt of the statement and we reserve the right to charge 1% interest per month for outstanding unpaid balances over thirty (30) days from the date of billing. Once our representation has been concluded or terminated, a final billing will be sent to you. If requested to provide an estimate of our fees for a given matter, we will endeavor in good faith to provide om best estimate, but unless there is a mutual agreement to a fixed fee, the actual fees incurred on any project may be less than or exceed the estimate. Auy questions or errors in any fee statement should be brought to our attention in writing within sixty (60) days of the billing date. Jeffersonville Sewer Board Re: Jeffersonville Mnnicipa] Sewage Works October 17, 2008 Page Two Termination. Both the Client and the Firm have the right to terminate the engagement at any time afrer reasonable advance written notice. On termination, all fees and charges incurred prior to termination shall be paid promptly. Accountants' Opinion. In performing our engagement, we will be relying on the accuracy and reliability of information provided by Client personnel. We will not audit, review, or examine the information. Please also note that our engagement cannot be relied on to disclose errors, fraud, or other illegal acts that may exist. However, we will inform you of any material errors and any evidence or information that comes to our attention during the performance of our procedures, that fraud may have occurred. In addition, we will report to you any evidence or information that comes to our attention during the performance of our procedures regarding illegal acts that may have occurred, unless they are clearly inconsequential. We have no responsibility to identify and wmmunicate significant deficiencies or material weaknesses in your internal control as part of this engagement. The responsibility for auditing the records of the Client rests with the Indiana State Board of Accounts and the work performed by the Firm shall not include an audit or review of the records or the expression of an opinion on financial data. Client Responsibilities. It is understood that the Accountants will serve in an advisory capacity with the Client. The Client is responsible for management decisions and functions, and for designating an individual with suitable skill, knowledge or experience to oversee the services we provide. The Client is responsible for evaluating adequacy and results of the services performed and accepting responsibility for such services. The Client is responsible for establishing and maintaining internal controls, including monitoring ongoing activities. Additional Services. Exhibit A sets forth the scope of the Services to be provided by the Firm. From time to time, additional services may be requested by the Client beyond the swpe of Exhibit A. The Firm may provide these additional services and be paid at the Firm's customary fees and costs for such services. In the alternative, the Firm and the Client may complete a revised and supplemented Exhibit A to set forth the additional services (including revised fees and costs, as needed) to be provided. In either event, the terms and conditions of this letter shall remain in effect. Jeffersonville Sewer Board Re: Jeffersonville Municipal Sewage Works October 17, 2008 Page Three If the foregoing accurately represents the basis upon which we may provide Services to the Client, we ask that you execute [his letter, in the space provided below setting forth your agreement. Execution of this letter can be performed in wunterparts each of which will be deemed an original and all of which together will constitute Che same document. If you have any questions, please let us know. The undersigned hereby acknowledges and agrees to the foregoing letter of engagement. Jeffersonville Sewer Board Dale: ~ ~- 23- OQj B ro EXHIBIT A Services Provided and Fees Scone of Services The Firm agrees to famish and perform the following Services with respect to the financial planning for the proposed sewage works improvement projects and issuance of the next series of sewage works ("Sewage Works") revenue bond (the "Bonds"), to be issued through the Indiana State Revolving Fund (the "SRF") for the proposed improvement projects (the `ProjecP'). Analysis of Costs and Revenues The Firm will: A. Prepare from available records historical balance sheets and/or historical recorded financial information for a period of one (1) calendar year and for the most recent twelve (12) months available (the "test year"). B. Prepare from available records a schedule of flow of funds for the past one (1) calendar year and the test year for the purpose of determining trends, amounts of revenue, operation and maintenance cash expenses, debt service requirements and expenditures for improvements [o the utility property and plant. C. Obtain information from Sewage Works officials, engineers and/or other sources necessary to suggest to the Client adjustments to test yeaz cash operating expenses such as additional labor, power costs, chemical costs, additional taxes and other fixed, known and measurable expense changes. D. Calculate, in conjunction with others, estimated project costs and prepare proposed bond amortization and retirement schedules for approval of the Client. E. Calculate cash available, if any to apply to the proposed projects. F. Schedule monthly revenues of the test year in order to locate and adjust unusual and significant fluctuations in such revenue. G. Prepare amortization schedules of presently outstanding funded deb[ of the Sewage Works extending over the life of the remaining years of payment and obtain information from bond ordinances or other documents relating [o such funded debt. H. Obtain information from the rate ordinances now in effect. I. Assist in the development of a capital improvements program and a financial program leading to the obtaining of funds necessary to meet the capital improvement requirements through funds now available and/or future revenues of the system. Analyze sufficiency of current revenues to meet estimated annual fuWre revenue requirements. If revenues are not sufficient, suggest across-the-board increase in rates and charges to produce revenues equal to the requirements (if rate change is necessary). K. Meet with the Client to discuss findings and recommendations. L. Provide financial information to the Client's attorney foc the preparation of a rate ordinance (if a rate change is necessary). Financial Plannine The Firm will: A. Obtain information from the bond ordinance now in effect. B. Prepare amortization schedules of presently outstanding funded debt of the Sewage Works extending over the life of the remaining years of payment and obtain information from bond ordinance or other documents relating to such funded debt. C. Establish, in conjunction with the Utility's officials and consulting engineers, a budget of costs of the proposed projects and assist in determination of the amount of Bonds to be issued and the timing of the issuance of the Bonds. D. Provide financial planning information such as the method of financing, whether SRF or open market, the expected time of completion of the proposed projects, anticipated beginning of principal payments, maximum annual interest rate, amount of debt service reserve required and the method of funding the reserve, wverage required, and other similar terms and conditions relative to the issuance of the Bonds. E. Prepare schedules of preliminazy amortization of the Bonds. F. Meet, as needed, with the Board to discuss findings and recommendations. G. Provide financial information to the Client's attorney for preparation of resolmions and ordinances. SRF BOND ISSUE -Final Series Authorized in the 2005 Bond Ordinance Financial Advisory Services The Firm will: A. Suggest for consideration of the Clien[, sources of financing the Pcoject including such sources as available funds on hand, revenue bonds or other sources. B. Suggest teems and conditions of borrowing such as redemption privileges, maximum interest rates, allocation of net revenue to foods and debt service reserve requirements. C. Meet as needed, with the officials of the Client to discuss findings and recommendations. D. Provide financial information to the Client's attorney for preparation of a bond ordinance. E. Provide the Client with an amortization schedule resulting from the sale of the Bonds. F. After the sale of the Bonds, advise the Client on the establishment of accounts and account balances in order to comply with the requirements of the Bond documents and provide a schedule o£ monthly transfers to the new Bond and Interest Account. Accounting Report The Firm will prepare the following reports: A. Accounting Reporl for the State Revolving Fund Loan Program The Firm will compile a projection of debt service coverage resulting from the first full year of operation of the newly constructed sewage works improvements. State Revolvine Fund Application The Firm will assist the Client on the preparation of the following document. A. Indiana State Revolving Fund Application a. Prepare, on behalf of the Client, the Application to the SRF disclosing technical data, information and schedules concerning the Bonds, the Client and the Sewage Works needed by the SRF. b. Provide additional information to the SRF or others as may be needed throughout the period between filing the Application and closing the Bonds. c. Analyze the terms proposed by the SRF and, when appropriate, suggest modifications of such terms for the Bonds. d. Make rewmmendations to the Client for options to 5nance non- eligible project casts. e. Attend a meeting of the SRF to explain [be financing and answer questions relating to the financial aspects of the Project. Sale of Bonds The offer and sale of the Bonds shall be made by the Client, in the sole discretion of the Client, and under its control and supervision. The Client agrees that the Firm does not undertake to sell or attempt to sell [he Bonds, and will take no part in the sale thereof. The Client agrees that the Firm's compensation hereunder shall be due and payable upon delivery of the State Revolving Fund Application and Accounting Report by the Firm to the Client or the distribution thereon on its behalf regardless of whether the Bonds are sold by the Client. Parity Bonds (Assistance Provided [o Subcontractor) The Firm will: A. Determine the provisions of the bond ordinance(s) of the now outstanding bonds which govern the issuance of the subsequent debt debentures on a parity with the existing bonds. B. To advise the Client and subcontractor of the requirements necessary for meeting the pazity provisions of the above documents. C. Provide information to the subcontractor to facilitate the preparation of such tests (through procedures agreed upon with Client, SRF and Client's Bond Counsel), if eligible, of the Utility's records as are necessary for the issuance of the proposed Bonds on parity with the now outstanding bonds. Fees For the services set forth above, the Firm's fees will be based on its actual recorded time and expense based on its standard hourly rates and charges, estimated as follows: Financing and Malvsis of Costs and Revenues Not to Exceed Analysis of Costs & Revenues & Financial Planning $12,000 to $15,000 Bond Issue* $25,000 to $30,000 Parity Report * $4,000 to $5,000 * Final Series of bonds authorized in the 2005 Bond Ordinance. The above fees shall include all expenses incmmd by the Firm with the exception of expenses incurred for travel, if any, outside the SCate of Indiana. No such expenses will be incurred without the prior authorization of the Client. The fees do not include the charges of other entities such as couriers, newspapers, bond counsel and local counsel.