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1967 WaterSewer Audit BROEKER HENDRICKSON &3 CO. e ertified 'Pa6lic Rccountants NORTHWESTERN BANK BUILDING MINNEAPOLIS, MINNESOTA 55402 To the Village Council Village of New Hope Hennepin County, Minnesota We have examined the balance sheet of the VILLAGE OF NEW HOPE WATER AND SEWER FUND as of December 31, 1967, and the related statements of income and retained earnings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying financial statements present fairly the financial position of the Village of New Hope Water and Sewer Fund at December 31, 1967, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Minneapolis, Minnesota ;I~ ~t' .- June 13, 1968 VILLAGE OF NEW HOPE WATER AND SEWER FUND BALANCE SHEET - DECEMBER 31, 1967 A S S E T S CURRENT ASSETS: :::ash $ 1,079.78 Accounts receivable 61,191.61 Due from other funds 192,660.00 Investments--unrestricted 196, 30LL .91 Total current assets $ 451,236.30 RESTRICTED INVESTMENTS (Note 1) 51,100.00 PLANT AND EQUIPMENT, at cost: Accumulated Cost Depreciation Net Water and sewer plant and dis- tribution system $ 80,145.55 $702,722.92 (Note 2) $782,868.47 Building and land 83,952.01 10,091.94 73,860.07 Equipment 37,185.47 22,631.68 14,553.79 j904,005.95 $112,869.17 $791,136.78 791,136.78 OTHER ASSETS: Deferred sewer use charges, in process of amortization over life of long- $ 60,500.00 term contract Advance to Joint Water Commission 10,563.91 Due from other municipalities 17,185.65 88,249.56 jl,381,722.64 L I A B I LIT I E S CURRENT LIABILITIES: Current maturity of long-term liabilities $ 33,000.00 Accrued interest on Water and Sewer Revenue Bonds and Long-Term Sewer Usage Contract 4,150.83 Accounts payable 40,338.70 Total current liabilities $ 77,489.53 LONG-TERM LIABILITIES, exclusive of current maturity included above: Water and sewer s)stem revenue bonds payable (Note 3 $405,000.00 Long-term sewer usage contract (Note 4) 32,500.00 437,500.00 RESERVE FOR RESTRICTED ASSETS 51,100.00 RETAINED EARNINGS--per accompanying statement 815,633.11 jl,381,722.64 The accompanying notes are an integral part of this balance sheet. VILLAGE OF NEW HOPE WA'1'ER AND SEWER FUND STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1967 INCOME REVENUES: $268,580.52 Water and sewer use charges Water connection charges 101,893.84 Sewer connection charges 55,845.07 Other 4,368.16 Total revenues $430,687.59 OPERATING EXPENSES: Cleaning and waste removal- $ 10,303.65 Salaries Operating expenses 75,961.29 $112,264.94 Contract expense 26,000.00 Water- Salaries $ 10,526.23 Water purchased 72,764.80 Other 4,060.27 87,351.30 Administrative- Salaries $ 13,586.50 Other 8,272.99 21,859.49 Depreciation 22,380.60 243,856.33 Net operating income $186,831.26 INTEREST EARNED ON INVESTMENTS 4,831.54 $191,662.80 INTEREST EXPENSE ON BONDS AND CONTRACT PAYABLE 17,939.16 Income before extraordinary item $173,723.64 EXTRAORDINARY ITEM--Reduction in accounts payable reserve (Note 5) 25,341.88 Net income for the year _$199,065.52 RETAINED EARNINGS BALANCE, DECEMBER 31, 1966 $616,367.59 ADD: Net income for the year ended December 31, 1967, as above $199,065.52 Decrease in reserve for restricted assets 200.00 199,265.52 BALANCE, DECEMBER 31, 1967 .$815,633.11 The accompanying notes are an integral part of these statements of income and retained earnings. VILLAGE OF NEW HOPE WATER AND SEWER FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1967 1. Restricted assets consist of investments appropriated for the payment of bonds and interest as provided in the bond indenture. 2. On November 12, 1963, the Village entered into an agreement under the authority of Minnesota Statutes, Section 471.59, with the City of Crystal and the Village of Golden Valley for the joint construction and operation of a water storage and distribution system using the City of Minneapolis as the source of the water supply. The agreement created a Joint Water Commission to administer the venture under the terms of the agreement. Actual operation of the system began July 1, 1964. Through December 31, 1967, the Water and Sewer Fund of the Village has expended a total of $191,428.77 as its share of the cost of these joint facilities, with the balance of costs assessed to benefited property owners. Approximately $375,000 of Village funds are required to complete the Village's commitment under the agree- ment; such amounts to be expended during 1968 and 1969. 3. The indenture underlying the Water and Sewer System Revenue Bonds payable provides, in part, the following: a. Annual bond maturities vary from $5,000 to $25,000 for each year through 1992. Bonds maturing in the years 1968 through 1972 are payable on their respective maturity dates without option of prior payment. Bonds maturing in the years 1989 through 1992 are subject to redemption on any interest date on or after April 1, 1966, at par plus accrued interest. Bonds maturing in the years 1973 through 1988 are subject to redemption on any interest date on or after April 1, 1972, at par plus accrued interest and a premium of $40 per $1,000 bond. All prepayments are at the option of the Village. b. The annual interest on the bonds is 4.0% on $320,000 of bonds maturing in the years 1968 through 1988 and 3.8% on bonds maturing in the years 1989 through 1992. Interest is payable semi-annually on April 1st and October 1st. -2- VILLAGE OF NEW HOPE WATER AND SEWER FUND NOTES TO FINANCIAL STATEMENTS ( CONTINUED ) DECEMBER 31, 1967 4. The long-term sewer usa~e contract bears 2% interest and is due on December 1st of 19 8 ($28,000) and 1969 ($32,500)0 5. The Village of New Hope had provided, through December 31, 1966, $41,386.43 as a reserve against billings from the Village of Golden Valley for sewer usage to December 31, 1965. Certain of these billings were formally protested by the Village of New Hope. The Village of Golden Valley filed suit asking for payment of $65,299.00 plus interest as settlement for the pro- tested portion. During 1967, the Village of New Hope settled this claim for a total of $16,044.55 includi81 related costs. The balance of the unused reserve ($25,341.88 has been in- cluded as a special credit in current results of operations.