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2004-01-27PUBLIC MEETING NOTICE THE HOUSING AND REDEVELOPMENT AUTHORITY MEETING SCHEDULED FOR JANUARY 27, 2004, WILL BEGIN AT 7'10 P.M. Bonnie Ritter City Clerk Posted 1/23/04 AGENDA MOUND HOUSING AND REDEVELOPMENT AUTHORITY January 27, 2004 7:10 P.M PAGE 1. OPEN MEETING 2. ACTION APPROVING AGENDA, WITH ANY AMENDMENTS 3. ACTION APPROVING MINUTES: JAN 13, 2004 REGULAR MTG ......... 1-2 e REPORT ON INDIAN KNOLL MANOR BY REPRESENTATIVE OF WESTPORT PROPERTIES, WITH ANY NECESSARY ACTION ............. 3-14 ACTION ON 2003 ANNUAL FINANCIAL REPORT, PRESENTED BY GINO BUSINARO .......................................................... See Enclosed 6. ADJOURN MOUND HOUSING AND REDEVELOPMENT AUTHORITY JANUARY 13, 2004 The Mound Housing and Redevelopment Authority of and for the City of Mound, Minnesota, met in regular session on Tuesday, January 13, 2004, at 6:30 p.m. in the council chambers of city hall. Members Present: Chairperson Pat Meisel, Commissioners Mark Hanus, David Osmek and Peter Meyer. Members Absent: Bob Brown Others Present: City Attorney John Dean, Executive Director Kandis Hanson, City Clerk Bonnie Ritter, Community Development Director Sarah Smith, Tom Stokes, Dave Newman. 1. OPEN MEETING Chair Meisel called the meeting to order at 6:30 p.m. 2. APPROVE AGENDA MOTION by Hanus, seconded by Osmek to approve the agenda. All voted in favor. Motion carried. 3. APPROVE MINUTES MOTION by Osmek, seconded by Hanus to approve the minutes of the November 25, 2003 meeting. All voted in favor. Motion carried. 4. STATUS REPORT ON NEGOTIATIONS WITH MOUND HARBOR RENAISSANCE DEVELOPMENT John Dean reported that negotiation sessions are continuing with MHRD and there will be another session tomorrow. Recommendations will be brought back to the HRA at their January 27th meeting on all unresolved issues, including recommendations on the financial term sheet. No action is needed on this item. 5. ACTION ON STAFF RECOMMENDATION TO RETAIN APPRAISER John Dean reviewed his memo of January 9, 2004, where staff recommends that the HRA authorize the following activities: (1) select an appraiser, or appraisers to conduct a preliminary analysis of market values; (2) MHRD and staff meet with appraiser(s) to determine the engagement, the scope of work and selected properties; (3) Notice of the proposed evaluations would be sent to owners and known occupants of selected properties; (4) Selected properties would not probably be evaluated if owner/occupants are not willing to participate. In such case, substitute properties could be selected for evaluation. 1 HRA Minutes- January 13, 2004 John Dean continued in stating that when the HRA meets with MHRD on January 27th, they will learn that this is a very tight development as to whether everything can balance, so it's critical to have a high level of comfort of acquisition costs of parcels in the district. The program outlined in the memo is conditioned upon the developer agreeing to reimburse the HRA on the expenses of the appraisals. MOTION by Osmek, seconded by Hanus to approve hiring an appraiser(s) for the Mound Harbor Renaissance Development Project as outlined in John Dean's memo dated January 9, 2004. All voted in favor. Motion carried. 6. ADJOURN MOTION by Osmek, seconded by Hanus to adjourn at 6:36 p.m. All voted in favor. Motion carried. Attest: Bonnie Ritter, City Clerk Chairperson Pat Meisel 2 P2 O~ P3 '~WE£L$ ;FARGO BANK MINNESOTA, N.A. R1DGEDALE OFFICE OFFICE B OX B 514 ,,MINNEAPOL/S, MN 55479 hi, l,d,l,"{I,,ih-l"i,,'ll,ll,",l,li'"hh'l'"ihlh'l HOUSING & REDEVELOPMENT AUTHORITY SPECIAL ACCOUNT F"I NAN'CE D ]~RE:CTOR 55~1 MAYW00D RD MOUND MN 5~364-1627 Page 1 of 3 I-3 494 Account Number: Statement End Da te: Number of Enclosures: (CO300) 000-0033530 12/31/03 35 .: ...... .-I/~ou:have any questions about this statement or your accounts, call: 800-225-5935 {,~,.,,-,,..,..-------,. ~obr AcCOUnts at a Glance 'AcCount :' 'Cype . "B~sic'B'usiness Checking with Interest Beginning Deposits/ Withdrawals/ Ending ~alancb Credits Debits Balance 80,802.25 19,167.92 - 33,711.79 66,258.38 &::-: Wh~ i~'ii~2)i:,~.eceive your statements in the .mail?Get FREE;'real.time access to your accounts with Wells Fargo View account balances and review a'C~:~iJnt activity including deposits, cleared checks, card transactionS, anytime, anywhei*e~' En~roll in Wells Fargo Business Online Banking at ::Basic BuSiness Checking with Interest 000-0033530 80,802.25 66,258.38 .... ' ' D~C'02' DepOsit o · · n~- n,t ~;,d ?:teaS, ~3 Mist Pay 120303 ~1D~62~[8~ ':':"~;'::"~?"':~': ..... ~ ...... '~;';;:':~' '~MT VV*O~32~ ........hud Operating buno Dec 05 Deposit .~ -.--. .... · · Dec05 Deposit ', ......... ::,-..: -- Dec ~ f .Deposit ' ~; ' Dec':'~6 Ban~ By Mail Deposit .. ~ 'D"~ ¥8 'Deposit ..~:..~; ~:~:__:__.D:_~D~e_~_;.~!.;~nt~est Payment ..... ........... ......... - .............. Ch~k ~ Date Amount Check 1~6 D~ 01 56.31 1349 * 1~7 D~ 01 4X67 13~ Amount 4,011.00 4,149.00 3,218.00 1,659.00 f,056.00 248.75 4,823.00 3.17 Date Amount Dec 03 361.4~ Dec 10 62.00 * Gap in' Check Sequence Continued on next page Summary Statement December 2003 For more information, call MBIA Client Services at (800)395-5505 Fax: (800)765-7600 Mound Housing and Redevelopment Auth. Account Number:. MN-01-0258-2001 Account Name: GENERAL FUND Beginning Contributions Withdrawals Income Average Daily Month End Balance Earned Balance Balance This Month $232,079.84 $46,000.00 $0.00 $151.66 $236,608.42 $278,231.50 Fiscal Ending 12/31/0." $193,443.04 $83,000.00 $0.00 $1,788.46 $210,557.65 $278,231.50 Account Number:. MN-01-0258-2002 Account Name: MOUND HUD Beginning Contributions Withdrawals Income Average Daily Month End Balance Earned Balance Balance This Month $11,425.97 $0.00 $0.00 $7.40 $11,429.79 $11,433.37 Fiscal YTD Ending 12/31/0~ $11,335.65 $0.00 $0.00 $97.72 $11,388.21 $11,433.37 Total of all accounts Beginning Contributions Withdrawals Income Average Daily Month End Balance Earned Balance Balance This Month $243,505.81 $46,000.00 $0.00 $159.06 $248,038.21 $289,664.87 Fiscal Ending $204,778.69 $83,000.00 $0.00 $1,886.18 $221,945.86 $289,664.87 December 2003 Page: 1 P5 A4BIA -- ~ormoreinfoYmatl~,-c~ll MBIA-CHe~t-Services at~800)395-~505 Fax: (800)765-7600 Mound Housing and Redevelopment Auth. Account Number: MN-01-0258-2001 Account Name: GENERAL FUND Summary Beginning Balance Contributions Withdrawals Income Earned Month End Balance Average Daily Rates Average Annualized Yield December 2003 $232,079.84 $46,000.00 $o.oo $151.66 $278,231.50 0.75% 0.76% Fiscal YTD Ending (12/31/03) $193,443.04 $83,000.00 $o.oo $1,788.46 $278,231.50 0.86% 0.86% December 2003 Page: 3 A)IBIA For' more information3-cal I-MBIA- Client Services'- at~800)395:55'0 5 Fax: (800)765-7600 Mound Housing and Redevelopment Auth. Account Number: MN-01-0258-2002 Account Name: MOUND HUD Summary Beginning Balance Contributions Withdrawals Income Earned Month End Balance Average Daily Rates Average Annualized Yield December 2003 $11,425.97 $0.00 $0.00 $7.40 $11,433.37 0.75% 0.76% Fiscal YTD Ending (12/31/03) $11,335.65 $0.00 $0.00 $97.72 $11,433.37 0.86% 0.86% C. December 2003 Page: 5 P7 Mound, MN Public Housin~ 2020 Commerce Boulevard Mound, MN 55364 As Of December 31, 2003 Statement of Operating Receipts &Expenditures 311000 - Dwelling Rental 312000 - Excess Utilities Total Rentaiincome .... 361000 - Investment Interest/General Funds 369000 - Other Income 802000 - Operating Subsidy Total Other Operating Receipts Total Receipts Expenses 411200 - Manager Payroll 413000- Legal Expense 414000 - Staff Training 415000 - Travel 417000 - Accounting Fees 417100- Auditing Fees 419000 - Sundry-Administrative 419500 - Outside Management Total Administrative Expense 422000 - Tenant Services Total Tenant Services Expense 431000- Water 432000- Electricity 433000- Gas 439000 - Other Utility Expense 439100 - Garbage Removal Total Utilities Expense 440000 - Maintenance & Operation 442000- Materials 443000 - Contract Costs Total Maintenance Expense YTD Over Current YTD Prorated (Under) Activity Balance Budget Budget (10,089.00) (29,294.24) (7,027.50) 22,266.74 0.00 (222.55) (174.99). 47.56 (10,089.00) (29,516.79) (7,202.49) (22,314.30) (10.57) (31.44) (107.49) (76.05) (399.75) (1,076.67) (437.49) 639.18 (4,149.00) (12,447.00) (14,562.24) (2,115.24) (4,559.32) (13,555.11) (15,107.22) 1,552.11 (14,648.32) (43,071.90). (22,309.71) (20,762.19) 3,024.00 9,304.31 9,800.01 (495.70) 0.00 0.00 350.01 (350.01) 261.95 261.95 337.50 (75.55) 0.00 144.16 56.25 87.91 545.00 687.93 886.26 (198.33) 0.00 0.00 1 ;209.99 (1,209.99) 1,838.22 3,030.69 2,577.51 453.18 850.00 1,700.00 2,550.00 (850.00) 6,519.17 15,129.04 17,767.53 (2,638.49) 0.00 0.00 300.00 (300.00~) 0.00 0.00 300.00 (300.00) 308.20 459.60 849.99 (390.39) 1,065.45 2,085.41 2,975.01 (889.60) 6,293.56 7,419.39 3,624.99 3,794.40 1,857.37 2,731.17 2,199.99 531.18 361.45 722.90 1,350.00 (627.10) 9,886.03 13,418.47 10,999.98 2,418.49 4,737.36 10,100.76 13,332.51 (3,231.75) 529.69 1,406.04 2,250.00 (843.96) 1,750.46 6,156.62 2,499.99- 3,656.63 7,017.51 17,663.42 18~082.50 . (419.08~ Mound; MN Fublic Housin_~ 2020 Commerce Boulevard Mound, MN 55364 As Of December 3'1, 2003 Statement of Operating Receipts & Expenditures 451000- Insurance 452000 ~ Pmts In Lieu Of Taxes : 454000 - Employee Benefit Contributions Total General Expense YTD Over Current YTD Prorated (Under) Activity Balance BudRet Bud.qet 1,132.90 1,572.55 3,624.99 (2~052.44) 10;15 804.92 2,120.01 (1,315.09) 561.39 2,549.52 2,407.50 142.02 1,704.44 4,926.99 8,152.50 (3,225.51) Total Routine ExpenSe 601000 - Prior Year Adjustments-Cash Total Nonroutine Expense Total Expense 25,127.15 51~137.92 55,302.51 (4,164.59) (605.45) (605.45) 0.00 (605,45) (605.45) (605.45) 0.00 (605.45) 24,521.70 50,532.47 55,302.51 (4,770.04) Printed: 01/15/04 Bank Account 1017 -- Wells Fargo - Indian Knoll Man / Westport Properties Page 1 Check# Date Payee Prop ID Bank Acct Check Memo Check Total Accff4 Distribution Memo Bill Ref # Dist Amt 1365 12/02/O3 IKM Westport Properties 5000 1017 Wells Fargo- Indian Kn... Mgmt Fees for DEC 03 Mgmt Fee for Indian Knoll Manor Mgmt Fee Total for Check # 1365 8S0.00 850.00 1366 12/08/03 IKM Frontier 1017 Wells Fargo - Indian Kn... 5040 Telephone/Fa~ ?nternet 952472507807167 425.51 12 ......... T6taI fo~ Check g 1366 ..... 425~51 1367 12/08/03 Park Supply, Inc. 1017 Wells Fargo - Indian Kn... Acct # Moun24 IKM 5202 Maintenance Supplies 45200600 8.69 Total for Check # 1367 8.69 1368 12/08/03 SBC Paging IKM 1017 Wells Fargo- Indian Kn... Acct # 483260 5040 Telephone/Fax/Internet 48326011037 14.12 Total for Check # 1368 14.12 1369 12/08/03 Telephone Answering Service 1017 Wells Fargo- Indian Kn... Cust Ref990721251 IKM 5055 Misc Administrative Expense 031101250101 14.20 Total for Check # 1369 14.20 1371 12/08/03 Westport Properties 1017 Wells Fargo - Indian Kn... Ikm Nov Postage IKM 5025 Postage Expense IKM Nov Postage 8.13 Total for Check # 1371 8.13 1372 12/08/03 Theresa Wallum 1017 Wells Fargo- IndianKn... IKM 5204 Grounds Maintenance 11/03 Petty Cash 7.00 IKM 5055 Misc Administrative Expense 11/03 Petty Cash 43.40 IKM 5202 Maintenance Supplies 11/03 Petty Cash 2.75 IKM 5025 Postage Expense 11/03 Petty Cash 28.01 IKM 5030 Education/Dues 11/03 Petty Cash 11.95 Total for Check # 1372 93.11 1373 12/08/03 Westport Properties IKM 5055 1017 Wells Fargo - Indian Kn... Food & Supplies For Crime/... Misc Administrative Expense Crime Free 150.00 Total for Check # 1373 150.00 1386 12/09/03 On Time Delivery Service 1017 Wells Fargo - Indian Kn... Inv. 11300305356 IKM 5055 Misc Administrative Expense 92.93 Total for Check # 1386 92.93 1388 12/09/03 AT&T 1017 Wells Fargo- IndianKn... Acct. 023-13225982 IKM 5040 Telephone/Fax/Internet Service 10/21-11/ 45.49 20 Total for Check # 1388 45.49 1389 12/09/03 Browning-Ferris Industries 1017 Wells Fargo - Indian Kn... Acct. 1-0200-1113356 IKM 5315 Rubbish Removal 1-0200-1113356- 361.45 PlO 0311 Printed: 01/15/04 CHECK DETAIL Bank Account 1017 -- Wells Fargo - Indian Knoll Man Westport Properties Page 2 Check# Date Payee C~ Prop ID Bank Acct Check Memo Check Total Acct# Distribution Memo Bill Ref # Dist Amt 1390 12/09/03 Classifieds IKM 5010 1391 12/09/03 IKM 5305 IKM Total for Check # 1389 1017 Wells Fargo - Indian Kn... Customer No. 5657 Advertising Expense 29265 / 29449 Total for Check # 1390 Centerpoint Energy Minnegasco 1017 Wells Fargo - Indian Kn... 2020 Commerce Blvd Gas Expense 543-002-050- 900NOV 5305 Gas Expense 543-002-931- 401NOV 1392 12/09/03 City Of Mound IKM 5310 1393 12/09/03 Ikon Office Solutions IKM 5055 1395 1396 12/09/03 LMCIT IKM 6015 12/09/03 RetailServices IKM 5202 IKM 5202 IKM 5202 IKM 5202 12/09/03 C.Naber & Associates IKM 5020 IKM 5020 12/09/03 Minnesota NAHRO IKM 5O30 12/09/03 Xcel Energy IKM 5300 12/15/03 IKM IKM 1397 1398 1399 Total for Check # 1391 1017 Wells Fargo - Indian Kn... Acct. 94-42343015-01-8 Water And Sewer Expense Service 10/1-10/29 Total for Check # 1392 1017 Wells Fargo - Indian Kn... Cust # 14xllr Misc Administrative Expense 23006912 Total for Check # 1393 1017 Wells Fargo - Indian Kn... Covenant No. Cmc 24208 Property Insurance Expense Inv. 14547 Total for Check # 1394 1017 Wells Fargo - Indian Kn... Acct. 6004'**'6813 Maintenance Supplies Maintenance Supplies 302431703093817 Maintenance Supplies 351730103079203 Maintenance Supplies 302429503097942 Total for Check # 1395 204.00 361.45 204.00 983~39 2,074.75 1,015.75 43.20 8,879.00 6.08 5.86. 50.90 21.17 1017 Wells Fargo - Indian Kn... Ups Charges To Send Audit ... Accounting Expense 25925 11.04 Accounting Expense 25995 95.00 Total for Check # 1396 3,058.14 1017 Wells Fargo - Indian Kn... Kim Britz 2004 Yearly Dues Education/Dues 2004 Yearly Dues 1,015.75 Total for Check # 1397 1017 Wells Fargo - Indian Kn... 2020 Commerce Blvd Electric Expense 1920-008-243-328 43.20 Total for Check # 1398 8,879.00 Westport Properties Payroll 1017 Wells Fargo - Indian Kn... Payroll 12/15/03 5200 Maintenance Contracts 5134 Manager Payroll 84.01 106.04 100.00 100.00 1,065.45 1,065.45 3,143.46 1,920.06 Printed: 01/15/04 Page 3 CHECK DETA. IL Bank Account 1017 -- Wells Fargo - Indian Knoll Man Westport Properties Check# Date Payee Prop ID Bank Acct Check Memo Check Total Acct~ Distribution Memo Bill Ref # Dist Amt 1400 12/12/03 IKM 1401 12/12/03 IKM 1402 1403 12/16/03 IKM IKM 12/29/03 IKM IKM 1404 12/29/O3 IKM 1411 12/31/O3 IKM IKM Total for Check # 1399 Home Depot Credit Services 1017 Wells Fargo - Indian Kn... Acct. 6035 **** 9994 5202 Maintenance Supplies 5,063.52 8.59 Total for Check # 1400 8.59 Home Depot Credit Services 1017 Wells Fargo - Indian Kn... Acct. 6035 **** 1102 5202 Maintenance Supplies 105.74 Burley, Margaret 5060 2100 Total for Check # 1401 1017 Wells Fargo ~ Indian Kn... Security Deposit Refund Security Deposit Interest Exp 6.00 Security Deposit Liability 150.00 Total for Check # 1402 Westport Properties Payroll 1017 Wells Fargo - Indian Kn... PR12.24.03 5134 Manager Payroll 5200 Maintenance Contracts A-Aaron's 105.74 5403 Al's Plumbing 1,814.84 2,778.64 156.00 Total for Check # 1403 1017 Wells Fargo - Indian Kn... Cust. No. 003735 Appliance Replacemenet 5,824.00 4,593.48 Total for Check # 1404 5,824.00 1017 Wells Fargo - Indian Kn... 5206 Plumbing 10482 526.36 5206 Plumbing 10594 149.00 1412 12/31/03 B Sylvester IKM 5005 1413 12/31/03 IKM 1414 12/31/03 IKM 1415 12/31/03 IKM IKM Total for Check # 1411 675.36 1017 Wells Fargo - Indian Kn... Managing General Partners Fee 11/03 MTCS 62.00 Total for Check # 1412 62.00 C. Naber & Associates 1017 Wells Fargo - Indian Kn... Reac Prep 5020 Accounting Expense 26263 450.00 Total for Check # 1413 450.00 Concept Landscaping/Remod... 1017 Wells Fargo - Indian Kn... 5205 Snow Removal 4150 80.00 Total for Check # 1414 80.00 Centerpoint Energy Minnegasco 1017 5305 Gas Expense 5305 Gas Expense Wells Fargo - Indian Kn... 543-002-931-401 DEC 543-002-050-900 DEC 2,746.42 489.00 Total for Check # 1415 3,235.42 1416 12/31/03 Westport Properties 1017 Well:[:)'[ 2;0 - Indian Kn... Employee Holiday Party Printed: 01/15/04 Bank Account CHECK DETAIL 1017 -- Wells Fargo - Indian Knoll Man Westport Properties Page 4 Check# Date Payee Bank Acct Check Memo Check Total Prop ID Acct# Distribution Memo Bill Ref # Dist Amt IKM 5025 Postage Expense December Postage 8.51 IKM 5055 Misc Administrative Expense 120603 332.00 HOLIDAY Total for Check # 1416 340.51 1417 12/31/03 Southwest Lock & Key 1017 Wells Fargo - Indian Kn... Units # 311 & 308 IKM 5208 Security 7285 159.94 ........ ~FotalT6rX2h~cl¢- # '1,117 159~94 1418 12/31/03 SBC Paging 1017 Wells Fargo - Indian Kn... IKM 5040 Telephone/Fax/Intemet 48326012035 7.31 1419 12/31/03 IKM Total for Check # 1418 Rental Research Services 1017 Wells Fargo - Indian Kn... 5035 Credit Check Expense Y87232 NOV 29.50 7.31 1420 12/31/03 IKM IKM IKM IKM IKM IKM IKM IKM IKM Total for Check # 1419 Mound Tree Value Hardware 1017 Wells Fargo - Indian Kn... Customer # 1900 5202 Maintenance Supplies X05567 5202 Maintenance Supplies X05366 5202 Maintenance Supplies X05341 5202 Maintenance Supplies X05164 5202 Maintenance Supplies X04956 5202 Maintenance Supplies X04589 5202 Maintenance Supplies XO4483 5202 Maintenance Supplies X04392 5202 Maintenance Supplies X03631 CR 13.46 2.98 17.98 23.98 5.99 7.08 4.08 7.17 -6.99 29.50 1421 12/31/03 IKM Minnesota Elevator Inc 5200 Total for Check # 1420 1017 Wells Fargo - Indian Kn... Cust No. 2498 Maintenance Contracts CD22417 169.27 75.73 1422 12/31/03 IKM Ikon Office Solutions 5040 Total for Check # 1421 1017 Wells Fargo - Indian Kn... Cust # 14xllr Telephone/Fax/Intemet 23046449 43.20 169.27 1423 12/31/03 IKM Total for Check # 1422 Home Depot Credit Services 1017 Wells Fargo - Indian Kn... Per Roz & 12/19/03 Statement 5202 Maintenance Supplies 603532200934110 2 130.16 43.20 1424 C 1425 12/31/03 IKM 12/31/03 IKM Total for Check # 1423 Grainger 1017 Wells Fargo - Indian Kn... 5209 HVAC 1093642496 5040 1017 Wells Fargo - Indian Kn... P13 Frontier Total for Check # 1424 Telephone/Fax/Intemet 952472507807167 12 130.16 114.02 114.02 425.67 Printed: 01/15/04 CHECK DETAIL Bank Account 1017 -~ Wells Fargo - Indian Knoll Man Westport Properties Page 5 Check# Date Payee Prop ID Bank Acct Check Memo Check Total Accff4 Distribution Memo Bill Ref # Dist Amt 1426 12/31/03 Culligan IKM 5215 1427 12/31/03 IKM City OfMound 5310 Total for Check # 1425 425.67 1017 Wells Fargo - Indian Kn... Water Softener Salt 101X13472504 121.92 Total for Check # 1426 121.92 1017 Wells Fargo - Indian Kn... Acct. 94-42343015-01-8 Water And Sewer Expense 94-42343015-01-8 1,027.90 Total for Check # 1427 1,027.90 Total of Checks Fo~ Bank Account# 1017 39,518.46 39,518.46 Total of 57 Checks For All Bank Accounts P14 ABDO EICK & MEYERS LLP Gertgp~l Public Accountants & Consultants November 5, 2003 Grandview Square 5201 Eden Avenue Suite 370 Edina. MN 55436 C To the Board of Commissioners Housing and Redevelopment Authority of and for the City of Mound Mound, Minnesota We have audited the general purpose financial statements of the Housing and Redevelopment Authority of and for the City of Mound (the HRA), Mound, Minnesota for the year ended September 30, 2003 and have issued our report thereon dated November 5, 2003. Professional standards require that we provide you with the following information related to our audit. Our Responsibility Under Auditing Standards Generally Accepted in the United States of America and Government Auditing Standards As stated in our engagement letter, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement. Because an audit is designed to provide reasonable, but not absolute assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In planning and performing our audit of the general purpose financial statements of the HRA, for the year ended September 30, 2003, we considered its internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control. However, we noted certain matters involving the internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of internal control that, in our judgment, could adversely affect the HRA's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. We noted the following reportable condition: Segregation of Duties Our study and evaluation disclosed that because of the limited size of your office staff, the HRA bas limited segregation of duties. Good internal control contemplates an adequate segregation of duties so that no one individual handles a transaction from inception to completion. While we recognize that the HRA is not large enough to permit an adequate segregation of duties in all respects, it is important, however, that you be aware of this condition. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or fraud 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. Our consideration of internal control would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However the reportable condition described above is not believed to be a material weakness. 952,835.9090 Fax 952.835.3261 www.aemcpas.com Housing and Redevelopment Authority of and for the City of Mound November 5, 2003 Page Two As part of obtaining reasonable assurance about whether the HRA's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement mounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. We noted the following findings related to the HRA's legal compliance: Declaration/or Payment According to Minnesota statute 471.38, each claim of the HRA is required to contain a declaration that such account, claim or demand, is just and correct and that no part of it has been paid. We noted that this declaration does not exist on the back of any checks. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the HRA are described in Note 1 to the general purpose financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2003. We noted no transactions entered into by the HRA during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the general purpose financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the general purpose financial statements and because of the possibility that future events affecting flaem may differ significantly from those expected. Audit Adjustments For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the HRA's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the HRA, either individually or in the aggregate, indicate matters that could have a significant effect on the HRA's financial reporting process. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting or auditing matter that could be significant to the general purpose financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the HRA's general purpose financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Housing and Redevelopment Authority of and for the City of Mound November 5, 2003 Page Three C Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the HRA's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Diffi~u-lttes E nco untere~n~l~ olbTriiifi-g-tli6A-udit We encountered no difficulties in dealing with management in performing our audit. Other Matters The following is a summary of key financial information and any applicable comments: General Fund The general fund balance increased $68,800, with a September 30, 2003 ending fund balance of $320,879. There were no expenditures during the year. The I-IRA should establish a formal fund balance policy that considers future uses of the fund balance. This policy would include a methodology to complete annual designations. We recommend the HRA make designations for intended use of fund balance. The general fund is currently not tracked or reconciled by the HRA staff. We recommend the City of Mound take control of accounting for the general fund of the HRA. This w/Il become important when more activity occurs in the fund. Debt Service Fund The assets of the debt service fund are dedicated to the retirement of the bonds outstanding. A summary of the assets and bonds outstanding at year end are &s follows: Total Total Bonds Fund Cash Assets Outstanding Maturi _ty Public Safety Building Lease Revenue Bond, Series 2002 $ 554:225 $ 7:415:192 $ 6:860;000 2024 The bonds will be paid from a capital lease with the City of Mound. Capital Projects Fund The capital projects fund is used to account for resources dedicated for major capital improvements. The following balance remains at September 30, 2003: Fund Balance Fund 09/30/03 09/30/02 Public Safety Building $ 2,067,157 $ 5.474.816 The construction of the public safety building is still in progress. As a result, the fund balance remains relatively large. Housing and Redevelopment Authority of and for the City of Mound November 5, 2003 Page Four Enterprise Funds The Public Housing project is reported in this section of the report. A summary oft_he 2003 operations and cash balances as of September 30 are as follows: Public Housing Percent of Operating 2003 Revenue Operating revenue $ 125,433 100.0% Operating expenses (288,247) (229.8) Operating loss (162,814) (129.8) Nonoperating revenue 101,718 81.1 Net loss $ (61,096) (48.70)% Cash balance $ 99,805 The cash balance appears adequate. The nonoperating revenue includes HUD grants, interest earnings and other miscellaneous nonoperating revenue. Other Items Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments This statement is a major overhaul in the way government financial statements look and the information contained within. It is intended to make the HRA's annual financial report more user friendly for citizens, staff, Council and those that provide resources to the I-IRA. We are prepared to offer assistance and direction on implementation but staffand board can fred many resources relating to Statement No. 34 on GASB's web site (gasb.org). We have discussed some of the items needing preparation in advance of implementation with your Executive Director and listed below are some key dates and activities: Statement implementation date: Items needing completion by HR_A: Inf~structure asset inventory: Capital asset inventory: Management Discussion and Analysis Letter (MD&A): Year ending, September 30, 2004 Not Applicable Complete Year ending, September 30, 2004 The dates above are recommended timelines for completion but the I-IRA can complete any of them before the date identified. Housing and Redevelopment Authority of and for the City of Mound November 5, 2003 Page Five This report is intended solely for the information and use of management and the HRA Board and should not be used by anyone other than these specified parties. The comments and recommendations in the report are purely constructive in nature, and should be read in this context. Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records and related data. If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience. We wish to thank you for the oppommity to be of service and for the courtesy and cooperation extended to Us by your staff. November 5, 2003 Minneapolis, Minnesota ABDO, EICK & MEYERS, LLP Certified Public Accountants G