Table Of Content

Audit Committee Friday, January 18, 2019 at 8:00 a.m. 735 Randolph Street, Detroit, Michigan 48226 5th Floor Board RGLoWomat, eWr.oartegr Board Building AGENDA Note: Binders 1-4 are combined in agenda order and document was renumbered. 1. CALL TO ORDER 2. ROLL CALL 3. APPROVAL OF AGENDA 4. APPROVAL OF MINUTES A. December 21, 2018 (Page 1) B. January 4, 2019 (Page 6) 5. PUBLIC PARTICIPATION 6. OLD BUSINESS A. Proposed Amendment Oakland Macomb Interceptor Drainage (Page 8) District Agreement B. Review FY 2020-2021 Biennial Budget and Five-Year Plan (Page 10) C. Update: GLWA and DWSD Shared Services True-Up Status FY 2017 (Page 25) 7. NEW BUSINESS A. Proposed FY 2020 Charges (Page 28) B. General Retirement System Financial Report for Year-end (Page 58) June 30, 2018 C. Proposed Audit Fee Change Order for the FY 2018 Audit and Other (Page 240) Technical Services 8. REPORTS A. Monthly Financial Report for October 2018 (Page 242) B. CFO Update 9. LOOK AHEAD Next Audit Committee Meetings A. February 15, 2019 at 8 am 10.INFORMATION 11.OTHER MATTERS 12.ADJOURNMENT AGENDA ITEM #4A Great Lakes Water Authority 735 Randolph Street Detroit, Michigan 48226 glwater.legistar.com Meeting Minutes - Draft Audit Committee Friday, December 21, 2018 8:00 AM Water Board Building 5th Floor 1. Call To Order Chairman Baker called the meeting to order at 8:05 a.m. 2. Quorum Call Present: 3 - Chairman Brian Baker, Director Gary Brown, and Director Robert Daddow 3. Approval of Agenda Chairman Baker requested a Motion to approve the Agenda. Motion By: Robert Daddow Support By: Gary Brown Action: Approved The motion carried by a unanimous vote. 4. Approval of Minutes A. 2019-016 Approval of Minutes-November 16, 2018 Sponsors: Nicolette Bateson Indexes: Finance Attachments: Audit Committee Meeting Minutes 11.16.2018.pdf Chairman Baker requested a Motion to approve the November 16, 2018 Audit Committee Meeting Minutes. Motion By: Robert Daddow Support By: Gary Brown Action: Approved The motion carried by a unanimous vote. 5. Public Comment None 6. Old Business Great Lakes Water Authority Page 1 Printed on 1/16/2019 Page 1 Audit Committee Meeting Minutes - Draft December 21, 2018 A. 2018-1090 Presentation of FY 2018 Year-end Audited Financial Report Sponsors: Nicolette Bateson Indexes: Finance Attachments: FY 2018 Audited Financial Statement Review.pdf Cash Held fbo DWSD Memo.pdf GLWA - CAFR 6-30-18 (Final).pdf GLWA - SA 6-30-18 (Final).pdf GLWA - SAS Ltr 6-30-18 (Final).pdf Motion By: Gary Brown Support By: Robert Daddow Action: Received and Filed The motion carried by a unanimous vote. B. 2018-1091 Update: FY 2017 and FY 2018 Shared Services True-up Sponsors: Nicolette Bateson Indexes: Finance Attachments: Shared Services Agreement FY17, FY18, beyond Update 12.21.2018.pdf Memo Termination ScheAdule 1 - ITS 001 ITS 002 and ITS 003.pdf Memo Termination Schedule 2 - ITS 009 Phase One.pdf Extension of Services Request No.1 for ITS 001 and ITS 003.pdf Extension of Service Request No. 2 - for ITS-001.pdf Motion By: Gary Brown Support By: Robert Daddow Action: Received and Filed The motion carried by a unanimous vote. C. 2018-1092 Status Update: 2018 Contract Alignment Process and Wholesale Water Contract Reopeners Status Sponsors: Nicolette Bateson Indexes: Finance Attachments: Audit Committee Communication- Contract Reopeners- 12.21.18 Update v2.pdf CAP Status Table 1 12.19.18.pdf Motion By: Gary Brown Support By: Robert Daddow Action: Received and Filed The motion carried by a unanimous vote. Great Lakes Water Authority Page 2 Printed on 1/16/2019 Page 2 Audit Committee Meeting Minutes - Draft December 21, 2018 7. New Business A 2018-1098 Discussion Draft: FY 2020-2021 Biennial Budget and Five-Year Plan Sponsors: Nicolette Bateson Indexes: Finance Attachments: Budget Discussion Draft 12.21.2018.pdf Nicolette Bateson, Chief Financial Officer/Treasurer, provided an overview regarding the Draft FY 2020-2021 Biennial Budget and Five-Year Plan. Motion By: Gary Brown Support By: Robert Daddow Action: Received and Filed The motion carried by a unanimous vote. Note: Director Daddow supported the Motion to Receive and File the FY 2020-2021 Biennial Budget and Five-Year Plan, subject to further review by the Audit Committee at its January 4, 2019 meeting. 8. Reports A. 2018-1094 Monthly Financial Report for September 2018 Sponsors: Nicolette Bateson Indexes: Finance Attachments: Monthly Financial Report for September 2018 for 12.21.2018.pdf Motion By: Gary Brown Support By: Robert Daddow Action: Received and Filed The motion carried by a unanimous vote. B. 2018-1095 Quarterly Construction Work-in-Progress Report Sponsors: Nicolette Bateson Indexes: Finance Attachments: Quarterly CWIP Report.pdf Motion By: Gary Brown Support By: Robert Daddow Action: Received and Filed The motion carried by a unanimous vote. Great Lakes Water Authority Page 3 Printed on 1/16/2019 Page 3 Audit Committee Meeting Minutes - Draft December 21, 2018 C. 2018-1096 Status Report: FY2019 Continuous Improvement Report Sponsors: Nicolette Bateson Indexes: Finance Attachments: Memo Projects Dashboard.pdf FRA FY19 Continuous Improvement Report Q1.pdf Motion By: Robert Daddow Support By: Gary Brown Action: Received and Filed The motion carried by a unanimous vote. D. 2018-1097 Detroit Water & Sewerage Department Financial Statements Sponsors: Nicolette Bateson Indexes: Finance Attachments: DWSD Financial Statements FYE 6.30.2018.pdf DWSD Audited Financial Report 06.2018-Audit-Final.pdf DWSD Summary of Audit Findings 06.2018-AU 260 Ltr-Final.pdf Motion By: Robert Daddow Support By: Gary Brown Action: Received and Filed The motion carried by a unanimous vote. E. CFO Update Topics (verbal) Nicolette Bateson, Chief Financial Officer/Treasurer, gave an update regarding Legacy Pension; Charges Rollout Meeting #3 (Revenue Requirement), scheduled to be held January 10, 2019 at 10:30 a.m.; and Charges Rollout Meeting #4 (Service Charges), scheduled to be held January 24, 2019 at 10:30 a.m. 9. Look Ahead The next Audit Committee Meetings are scheduled as follows: - Special Audit Committee Meeting (Budget Review) - January 4, 2019 at 8:00 a.m. - Regular Audit Committee Meeting (Charges Review) - January 18, 2019 at 8:00 a.m. 10. Information None 11. Other Matters Director Brown stated he will attend the January 4, 2019, 8:00 a.m. Special Audit Committee Meeting via teleconference. Great Lakes Water Authority Page 4 Printed on 1/16/2019 Page 4 Audit Committee Meeting Minutes - Draft December 21, 2018 12. Adjournment Chairman Baker requested a Motion to Adjourn. Motion By: Gary Brown Support By: Brian Baker Action: Approved The motion carried by a unanimous vote. There being no further business, the meeting was adjourned at 10:17 a.m. Great Lakes Water Authority Page 5 Printed on 1/16/2019 Page 5 AGENDA ITEM #4B Great Lakes Water Authority 735 Randolph Street Detroit, Michigan 48226 glwater.legistar.com Meeting Minutes - Draft Audit Committee Friday, January 4, 2019 8:00 AM Water Board Building 5th Floor Special Meeting 1. Call To Order Chairman Daddow called the meeting to order at 8:00 a.m. 2. Quorum Call Present: 3 - Brian Baker, Gary Brown, and Robert Daddow 3. Approval of Agenda Chairman Daddow reqested a Motion to approve the Agenda. Motion By: Brian Baker Support By: Gary Brown Action: Approved The motion carried by a unanimous vote. 4. Approval of Minutes None 5. Public Comment None 6. Old Business None Great Lakes Water Authority Page 1 Printed on 1/16/2019 Page 6 Audit Committee Meeting Minutes - Draft January 4, 2019 A. 2018-1089 Discussion: FY 2020 & 2021 Biennial Budget and Five-Year Plan Sponsors: Nicolette Bateson Indexes: Finance Attachments: FY 2020 & 2021 Biennial Budget and Five-Year Plan Nicolette Bateson, Chief Financial Officer/Treasurer, provided an overview regarding the FY 2020 & 2021 Biennial Budget and Five-Year Plan. Motion By: Brian Baker Support By: Gary Brown Action: Received and Filed The motion carried by a unanimous vote. 7. New Business None 8. Reports None 9. Look Ahead The next regular Audit Committee Meeting is scheduled for January 18, 2019 at 8:00 a.m. 10. Information None 11. Other Matters None 12. Adjournment Chairman Daddow requested a Motion to adjourn. Motion By: Robert Daddow Support By: Gary Brown Action: Approved The motion carried by a unanimous vote. There being no further business, the meeting was adjourned at 10:04 a.m. Great Lakes Water Authority Page 2 Printed on 1/16/2019 Page 7 AGENDA ITEM #6A Date: To: January 18, 2019 Fro m:Great Lakes Water Authority Audit Committee Re: Nicolette N. Bateson, CPA, Chief Financial Officer/Treasurer Proposed Amendment Oakland Macomb Interceptor Drainage District Agreement Background: The Great Lakes Water Authority (GLWA) provides wastewater disposal services to the Oakland Macomb Interceptor Drainage District (OMIDD). The Authority’s Northeast Sewer Pump Station (NESPS) serves only OMIDD yet it is also a key component in the continuing development of GLWA’s comprehensive regional wastewater master planning efforts. The 2009 OMIDD services agreement provided for sewage disposal services and contemplated further collaboration in the future, including the NESPS. Since 2017, representatives of OMIDD and GLWA have been meeting to explore those collaboration oApnpaolyrtsuisn:ities. On January 14, 2019, OMIDD and GLWA staff representatives reached an agreement on terms that both agreed to present to their respective boards before proceeding with a proposed amendment to the 2009 agreement. The next steps are for the outline of the terms to be brought forward to both the GLWA and OMIDD Boards for review. Key aspects of the proposal address: 1) operations (control maintained by GLWA), 2)maintenance (OMIDD provides maintenance), 3) capital funding (OMIDD has authority to construct and finance), 4) annual fees, and 5) payout of debt associated with NESPS. Attached is a simplified table that outlines the financial terms agreed to by the staff representatives of each entity. This information was pertinent to GLWA in calculating the FY 2020 charges for all member partners for next week’s charges rollout meeting #4. This information will be referenced in other Audit Committee agenda items. TPhroe pnoesxet da cAticotnio ins :a review by the Board at a date to be determined by General Counsel. Receive and file. Page 8 Summary of OMID Cost Elements - Initial 5-year Contract Amendment Period FY 2020 to FY 2024 Initial 5-year Agreement Period Cost Responsibility Baseline Annual Index Amount after FY 2020 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Total Basis 1 Utility Charges For NEPS Estimated direct pass through - Budget 750,000 NA - pass thru 750,000 750,000 750,000 750,000 750,000 3,750,000 includes utilities only 2 GLWA Operating Expense Limited to proportional operational support activities - 25% of operating 756,700 4.0% 756,700 787,000 818,500 851,200 885,200 4,098,600 expenses allocated to lift stations 3 GLWA Legacy Pension Obligation Estimated Personnel cost allocation from legacy period - 1.75% of assigned sewer operating and non-operating pension 392,800 0.0% 392,800 392,800 392,800 392,800 392,800 1,964,000 obligations. 4 Transfer to WRAP Fund 1 0,400 10,400 10,600 10,700 10,900 11,000 5 3,600 0.5% applied to annual elements 5 Lease Payment 6/30/18 asset review - NESPS = 0.66% of 181,500 0.0% 181,500 181,500 181,500 181,500 181,500 907,500 Sewer capital assets. 6 Subtotal "Annual" Elements 2,091,400 2,091,400 2,121,900 2,153,500 2,186,400 2,220,500 10,773,700 7 Capital Contribution 6/30/2019 Net Book Value of NESPS 1 1,920,000 NA - pass thru 1 1,920,000 1 1,920,000 Assets 8 TOTAL 1 4,011,400 1 4,011,400 2,121,900 2,153,500 2,186,400 2,220,500 2 2,693,700 9 Total less Pass thru Utility Charges 13,261,400 13,261,400 1,371,900 1,403,500 1,436,400 1,470,500 18,943,700 Dated: January 14, 2019 Page 9