regular board - sep 08 2020 - traverse city light and power

A REGULAR MEETING

Of The

TRAVERSE CITY LIGHT AND POWER BOARD

Will Be Held On

Tuesday, September 8, 2020

At

5:15 PM

In The

VIRTUAL MEETING

Meeting to be Held Remotely due to Coronavirus Outbreak and in the Interest of the Public, Health

Safety and Welfare

Anyone wishing to give public comment will need to call in and wait in a "virtual waiting room" where

their microphones will be muted until they are called upon. Directions to participate are below and

located at the following link https://www.tclp.org/Display/itemDetails/Item/424

Participating Members of the Public: Members of the public that wish to give public comments have

several options. Attendees joining the meeting will be muted by default and will not have the ability to

unmute. Muting and Unmuting Attendees will be handled by the Host and Co-Host. Public Comment is

limited to three minutes. The following options are available for Public Comment:

Option 1: Attendee can utilize the ZOOM application by downloading on their smartphone, tablet or

computer. The ZOOM Webinar ID for the meeting is: 498-915-060. The ZOOM link is:

https://zoom.us/j/498915060. Upon attendance through ZOOM they can utilize the Zoom “Raise Hand”

feature to indicate they have a public comment. The Host of the meeting will mute/unmute the Attendees

microphones as necessary during Public Comment.

Option 2: Attendees can direct dial into the meeting by utilizing the following Toll-Free Numbers: 877 853

5257 or 888 475 4499. There are two options for Attendee’s that directly dial in to give Public Comment as

follows:

Option 2a: The Attendee can send a text or email to [email protected] or during the meeting.

[email protected] the method for the public to contact Board members. Attendee should provide

their phone number and name in the text or email along with the item they would like to give Public

Comment on. This information will allow the Host to select that Attendee to unmute their microphone for

Public Comment. After the Public Comment, the Host will re-mute the microphone again.

Option 2b: The Host will announce that all microphones for remaining Attendee’s that have not yet given

Public Comment will be unmuted to allow for Public Comment. We ask that you remain respectful and

attempt to go in an ordered fashion and to only unmute your microphone to speak and re-mute your

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https://zoom.us/j/498915060

mailto:[email protected]


microphone after you are done speaking or your time has passed. When you are speaking, you will be asked

to must provide your Name and Address an if you are a TCL&P customer before proceeding with Public

Comment; however, it is not required to make public comment.

Due to the high number of users utilizing remote meeting platforms, you may experience delays or difficulties

in calling in or accessing the online meeting platform. TCL&P will make reasonable efforts to ensure the

platform is open and accessible before conducting a remote meeting. Please contact TCL&P by phone or

email if you experience any difficulty in accessing the conference call meeting.

Non-Participating Members of the Public (Audio Only): Members of the public that do not wish to give

Public Comment are advised to tune in and listen to the meeting either on local Channel 191 or streaming

online here at https://www.tacm.tv/govtvnow.asp.

Compliance with American Disabilities Act: Traverse City Light and Power will provide necessary

reasonable auxiliary aids and services, such as signers for the hearing impaired and audio tapes of printed

materials being considered at the meeting, to individuals with disabilities at the meeting/hearing upon notice

to Traverse City Light & Power. Individuals with disabilities requiring auxiliary aids or services should

contact the Light and Power Department by writing or calling the following:

Traverse City Light and Power will provide necessary reasonable auxiliary aids and services, such as signers

for the hearing impaired and audio tapes of printed materials being considered at the meeting, to individuals

with disabilities at the meeting/hearing upon notice to Traverse City Light & Power. Individuals with

disabilities requiring auxiliary aids or services should contact the Light and Power Department by writing or

calling the following.

Jennifer St. Amour

Administrative Assistant

1131 Hastings Street

Traverse City, MI 49686

(231) 932-4543

Traverse City Light and Power

1131 Hastings Street

Traverse City, MI 49686

231-922-4940

Posting Date:

09/4/2020

3:00 P.M.

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https://www.tacm.tv/govtvnow.asp

Light & Power Board September 8, 2020

Regular Meeting

AGENDA

Page 1. Roll Call ORGANIZATIONAL MEETING

Organizational Meeting Documents

5 - 8

2. Disclosure of Recusal 3. General Public Comment 4. Consent Calendar

The purpose of the consent calendar is to expedite business by grouping non-

controversial items together to be dealt with by one Board motion without discussion.

Any member of the Board, staff or the public may ask that any item on the consent

calendar be removed therefrom and placed elsewhere on the agenda for full

discussion. Such requests will be automatically respected. If an item is not removed

from the consent calendar, the action noted in parentheses on the agenda is approved

by a single Board action adopting the consent calendar

a. Approval of Agenda b. Consideration of approving minutes of the Regular meeting of August 11, 2020.

(Approval recommended) Regular Board Minutes 8.11.20 (Draft)

9 - 14

5. Unfinished Business a. Consideration of approving a sub agreement with the City of Traverse City for

the On-Bill Finance Program Capital Improvement Bond. (Arends) TCLP-20-080 - Pdf

15 - 17

b. Consideration of approving a resolution regarding the Executive Director's job

description changes. (Doren) TCLP-20-082 - Pdf

18 - 21

6. New Business

None.

7. Reports and Communications a. From Legal. b. From Staff. 1. FTTP Update. (Menhart - verbal) 2. Audit engagement and audit questionnaire. (Myers-Beman)

TCLP-20-081 - Pdf

22 - 29

c. From Board.

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1. Chairman's Report. 8. Public Comment a. General Public Comment 9. Adjournment

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To: Light & Power Board

From: Tim Arends, Executive Director

Date: August 30, 2020

Subject: L&P Board Organizational Meeting

As required by City Charter Section 177(f), the board meeting of September 8, 2020 will be the annual

organizational meeting in which a chairperson and vice-chairperson are elected, and a secretary is appointed by

the Board. The Charter language is as follows:

“An election of officers of the Board shall be held annually at the first regular meeting following the appointment

of a new Board member after the end of a regular term of office. No member shall serve as chairman for more

than two (2) consecutive terms.”

All Board Members are eligible for nomination as board chairperson. All Board Members are eligible to serve

as vice-chairperson. The following procedure would be appropriate for the organizational portion of the meeting.

o Tim Arends, as Secretary to the Board, shall initially preside over the meeting.

Call meeting to order

Roll Call

First Public Comment

Open the floor to nominations for chairperson (nominations need support), call for any further

nominations for chairperson.

Close nominations

Board discussion (nominations will be voted on in order received)

Roll Call Vote – Once four votes are received by any one nominee that nominee becomes the new

chairperson.

Secretary turns the meeting over to the new chairperson.

o The newly elected chairperson follows the same process described above in electing a vice-chairperson of

the Board.

o The Chairperson should then appoint a Secretary to the Board with approval of a Board majority. This has

historically been the Executive Director.

o Next, a Human Resources Committee should be formed consisting of two or three board members and

one alternate. City Charter Section 177(h) allows for ad hoc subcommittees, however, there can be no

standing committees. Therefore, it is appropriate to have this committees term renewed.

o Proceed to the Consent Calendar portion of the Agenda.

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Traverse City Light & Power Board

Initial Apt. Date Termination Elysha Davila (City Resident Elector) 03/19/18 04/03/23

115 Franklin St, TC, 49686 (Eff. 4/2/18) 415-728-3613 (Preferred) [email protected]

John Taylor (City Resident Elector) 05/03/10 04/07/25

307 W 12th St, TC, 49684 922-1187 (Res) 617-532-0944 (Bus) 617-899-1769 (Cell) [email protected]

Ross Hammersley (City Resident Elector) 04/03/17 04/04/22

400 Boughey St., TC 49684 633-6003 [email protected]

Paul Heiberger (City Resident Elector) 08/06/18 04/01/24

885 Centre, TC 49686 773-841-7285 (Preferred) [email protected]

Patrick McGuire (City Resident Elector) 11/10/11 04/05/21

308 N. Elmwood Ave, TC, 49684 883-2087 (Cell) 995-7896 (Bus) [email protected]

Commissioner Tim Werner 11/09/15 11/08/21

(Ex Officio/Full Voting Authority) 400 Boardman Ave, TC, 49684 313-6903 (Res) [email protected]

Commissioner Amy Shamroe 11/09/15 11/08/21

(Ex Officio/Full Voting Authority) 511 Depot View #20, TC, 49686 517-930-9999 (Res) [email protected]

Executive Director and Secretary (Tim Arends – Executive Director) ‑ staff Non‑Commissioner Board members shall be appointed to serve terms of five (5) years from the first Monday of April. The Commission Board members shall be appointed for a two‑year term bi‑annually at the City Commission organizational meeting.

Traverse City Light and Power Page 1

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This Board consists of 7 members nominated and appointed by the City Commission. Unexpired term vacancies shall be filled by the Mayor with approval of the City Commission. Not less than one and no more than two of these members shall be City Commissioners selected by the City Commission and shall be ex-officio members with full voting authority. Members must be resident elector of City, except that one member may be non‑resident if he resides within current actual service area of the Department (current actual service area is defined as an address that could receive service from TCL&P; it is not required that the address is currently receiving service from TCL&P). Non‑Commission Board Members cannot hold any other City office nor can they be an employee of the City. The City Manager or the City Manager's designee shall be an ex‑officio member without voting authority and shall not be counted for purposes of establishing a quorum.

Purpose: "shall have exclusive jurisdiction, control and management of the Light and Power Department and all its operations and facilities, except as herein provided. Unless specifically allocated to the City Commission or to a City official, the Board shall have all the powers and duties possessed by the City to construct, acquire, expand and operate the Light and Power system, etc., etc.," (See Charter provisions).

Creation of the Light & Power Board required by City Charter. Meets 2nd Tuesday of each month at 5:15

Traverse City Light and Power Page 2

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TRAVERSE CITY

LIGHT AND POWER BOARD

Minutes of the Regular Board Meeting

Held at 5:15 p.m., Virtual Meeting

Tuesday, August 11, 2020

Board Members Present: Patrick McGuire, Elysha Davila, Ross Hammersley, Amy Shamroe, Tim

Werner, Paul Heiberger, and John Taylor

Board Members Absent:

Ex Officio Member Present: Marty Colburn, City Manager

Others: Tim Arends, Daren Dixon, Karla Myers Beman, Scott Menhart, Kelli

Schroeder, Tony Chartrand, Jacob Hardy, and Tom Smith

1. Roll Call

2. Disclosure of Recusal

None.

3. General Public Comment

None.

4. Consent Calendar a. Approved the Agenda b. Approved minutes of the Regular meeting of July 14, 2020. c. Consideration of appointing Kelli Schroeder as Officer Delegate and Karla Myers-Beman

as Officer Alternate Delegate to cast official votes on behalf of TCL&P at the Annual

Meeting of the Municipal Employees Retirement System. (Approval recommended)

(Schroeder)

That Kelli Schroeder, Manager of HR & Communications and Karla Myers-Beman,

Controller be appointed Officer Delegate and Officer Alternate Delegate respectively, for

the 2020 Annual Meeting of the Municipal Employees Retirement System; and further that

the Executive Director be authorized to execute the certification of delegates. d. Removed.

Amy Shamroe moved that the following actions, recommended on the Consent Calendar

portion of the Agenda, be approved as amended. Patrick McGuire seconded the motion.

Yes: Patrick McGuire, Amy Shamroe, Elysha Davila, Ross Hammersley,

Tim Werner, Paul Heiberger, and John Taylor

Absent: None

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Carried 7 to 0. Ross Hammersley joined the meeting at 5:19 p.m.

5. Items Removed from the Consent Calendar a. Consideration of approving a service order for a Cost Benefit Analysis on a Phase 2

FTTP/Smart Grid deployment with Fujitsu. (Arends/Menhart)

The following individuals addressed the Board:

Tim Arends, Executive Director

Scott Menhart, Chief Information Officer

Anthony Bednarczyk, Network Design & Integration, Fujitsu

Ross Hammersley moved that the Light and Power Board authorizes the Executive Director

to issue a service order to Fujitsu for a Phase 2 cost benefit analysis in the amount of

$24,611. Amy Shamroe seconded the motion.

Yes: Ross Hammersley, Amy Shamroe, Patrick McGuire, Elysha Davila,


Absent: None

Carried 7 to 0.

6. Unfinished Business a. Consideration of approving the renewal of the Executive Director employment contract.

(Taylor/Davila)


Chairman John Taylor


Vice-Chairperson, Elysha Davila

Jeff Jocks, General Counsel

Amy Shamroe moved that the Board approve a salary increase of 3% for the Executive

Director with a salary compensation review in one year and to authorize the Chairperson to

sign an agreement with the Executive Director to reflect these changes as approved as to

form by General Counsel. Paul Heiberger seconded the motion.

Yes: Patrick McGuire, Elysha Davila, Ross Hammersley, Amy Shamroe,

Paul Heiberger, and John Taylor

No: Tim Werner

Absent: None

Carried 6 to 1. b. Consideration of approving an amended Termination of Electric Service Policy and Electric

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Service Utility Customer Service Practices, Policies and Procedures. (Arends)



Karla Myers-Beman, Controller

Amy Shamroe moved that the Light & Power Board approves the amended termination of

Electric Service Policy and the amended Utility Customer Service Practices, Policies, and

Procedures effective September 1, 2020. Paul Heiberger seconded the motion.



Absent: None

Carried 7 to 0. c. Consideration of authorizing the Executive Director to execute the USDA Commitment

Letter dated July 31, 2020 for the On-Bill Finance Program. (Arends)




to execute the USDA commitment letter dated July 31, 2020 to acknowledge and accept the

approval of $1,800,000 loan commitment along with the City Mayor and City Clerk for the

On-Bill Financing Program authorized by the Rural Utilities Service and to execute the

supplementary forms. Amy Shamroe seconded the motion.



Absent: None

Carried 7 to 0.

7. New Business a. Consideration of creating an ad hoc customer survey committee. (Schroeder)



Kelli Schroeder, Manager of Hr & Communications

Amy Shamroe moved that the Light & Power Board approve creating a customer survey ad

hoc committee including Elysha Davila as Chairperson, Paul Heiberger and Tim Werner.

Ross Hammersley seconded the motion.

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Yes: Amy Shamroe, Patrick McGuire, Elysha Davila, Ross Hammersley,


Absent: None

Carried 7 to 0. b. Consideration of a written attorney/client privileged legal opinion from special labor

counsel dated August 11, 2020 as permitted by MCL 15.268(h). (Nordfjord/Arends)

(Possible closed session) (4 votes required)

ITEM MOVED FOLLOWING PUBLIC COMMENT.

c. Consideration of approving the Fiber to the Premise Project Phase 1.1. (Arends/Menhart)




Anthony Bednarczyk, Network Design & Integration, Fujitsu


to execute a change order with Fujitsu to deploy Phase 1.1 in the amount of $797,000,

subject to review as to substance by the Executive Director and as to form by General

Counsel; further, the Board authorizes the Executive Director to request of the City

Commission to enter into an inter-fund loan agreement from the Industrial Development

fund to finance Phase 1.1 with such terms to be approved by the Board and the City

Commission. Paul Heiberger seconded the motion.

Yes: Elysha Davila, Ross Hammersley, Amy Shamroe, Tim Werner, Paul

Heiberger, and John Taylor

No: Patrick McGuire

Absent: None

Carried 6 to 1.

8. Reports and Communications

a. From Legal.

b. From Staff. 1. FTTP Update. (Menhart - verbal)



Rob Worden, Network Design & Integration, Fujitsu 2. Capital Plan Improvement Update. (Myers-Beman)

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Karla Myers-Beman, Controller 3. Written communication to Senator Schmidt. (Arends)



c. From Board. 1. Chairman's Report.

a. Discussion of net zero emissions as a strategic goal. (Taylor/Davila)

Chairman Taylor brought forth discussions he, Elysha and Tim have had in regards

to what other utilities in the State, country and other parts of the world have done

with respect to their clean energy goals. This is pre-text to a possible future

conversation about strategic planning and could be a possible goal.

Ross Hammersley moved that the Board enter into closed session to discuss a written

attorney/client privileged legal opinion from special labor counsel as permitted by

MCL 15.268 (h). Patrick McGuire seconded the motion.

Yes: Patrick McGuire, Ross Hammersley, Elysha Davila, Amy

Shamroe, Tim Werner, Paul Heiberger, and John Taylor

Absent: None

Carried 7 to 0.

9. Public Comment a. General Public Comment

The following individuals from the Public addressed the Board:

Corey Grueber, non-ratepayer

There being no objection, Chairman Taylor declared the meeting adjourned to a closed

session at 7:27 p.m.

7:27 p.m. the Board entered in to closed session.

The Board returned from closed session at 8:11 p.m.

Paul Heiberger moved that the Board return to open session. Ross Hammersley seconded the

motion.

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Absent: None

Carried 7 to 0.

Ross Hammersley moved that the Board accept labor counsel's recommendation and

authorize the Executive Director to sign an agreement consistent with this recommendation

if reached with the Utility Workers Union of America, AFL-CIO, Local 295. Paul Heiberger

seconded the motion.

Yes: Elysha Davila, Ross Hammersley, Amy Shamroe, Tim Werner, Paul

Heiberger, and John Taylor

No: Patrick McGuire

Absent: None

Carried 6 to 1.

10. Public Comment a. The following individuals from the Public addressed the Board:

Corey Grueber, non-ratepayer

11. Adjournment There being no objection, Chairman Taylor moved to adjourn the meeting at 8:14 p.m.

Yes: Patrick McGuire, Ross Hammersley, Elysha Davila, Amy

Shamroe, Tim Werner, Paul Heiberger, and John Taylor

Absent: None

Carried 7 to 0.

Tim Arends, Secretary

LIGHT AND POWER BOARD

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To:

Traverse City Light and Power Board

From: Tim Arends - Executive Director Meeting: Regular Board - Sep 08 2020 Subject:

On-Bill Finance Program

As mentioned at the August 11, 2020 board meeting for the On-Bill Finance Program Capital Improvement Bond, the City requested in coordination with the loan agreement an intergovernmental agreement between the City and TCL&P holding the City harmless of any financial risk with the bond issuance. General Counsel has drafted this agreement and has provided to the City for comments and it is included in your packet for your review. Staff is seeking approval for execution of the agreement in preparation of the execution of the USDA loan agreement. If you agree with Staff’s recommendation, the following motion would be appropriate: MOVED BY ___________________, SECONDED BY ________________, THAT THE LIGHT AND POWER BOARD AUTHORIZES THE CHAIRMAN AND SECRETARY TO EXECUTE THE ON-BILL FINANCING INTERGOVERNMENTAL AGREEMENT.

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On-Bill Financing

Intergovernmental Agreement

This Agreement is between the City of Traverse City (City) and the Traverse City Light and Power Department (TCL&P) pursuant to the Urban Co-operation Act, MCL 124.501 at seq.

Whereas, under Traverse City Code of Ordinances section 1046 .04the City has established the On-Bill Financing Program and has authorized TCL&P to apply for, receive and administer funds loaned by the USDA Rural Development to operate the On-Bill Financing Program;

Whereas an application for funds for the On-Bill Financing Program has been made to USDA-RD and that application has been approved with contingencies;

Whereas, pursuant to the Municipal Utility Residential Clean Energy Program Act, MCL 460.961 et seq., municipal borrowings are permitted under the Revised Municipal Finance Act, Act 34;

Whereas, the Charter provides that long term loans for TCL&P activities must be approved by the City Commission;

Whereas, the City on August 3, 2020, issued a notice of intent pursuant to Act 34 to issue bonds to begin the borrowing process for the Program; and

Whereas, the parties intend that the repayment of the loan and all costs of this Program be paid with TCL&P funds and not City general funds;

Therefore, the parties agree that all costs of the Program and repayment of the USDA-RD loan will be paid with TCL&P funds and not City general funds. There are no state funds involved in this Agreement.

The term of this Agreement is for the term of the USDA-RD loan and full repayments of that loan.

In witness whereof the parties have signed this Agreement on the dates appearing by their signatures.

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City of Traverse City

By:__________________ Dated:_________ James Carruthers, Mayor

By:___________________ Dated:_________ Benjamin Marentette, City Clerk

Traverse City Light & Power Department

By:__________________ Dated:_________ John Taylor, Chairperson

By:___________________ Dated:_________ Timothy Arends, Secretary

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To:


From: Kelli Schroeder - Manager of Human Resources and Communications Meeting: Regular Board - Sep 08 2020 Subject:

Executive Director Job Description

Included in your packet is a revised job description along with a Resolution prepared by Peter Doren, General Counsel, adopting the modified job description as required by the Executive Director Agreement, Section 6. If after Board discussion you agree with the modifications to the Executive Director job description, the following motion would be appropriate: MOVED BY______________, SECONDED BY______________, THAT THE BOARD APPROVES THE RESOLUTION ADOPTING THE MODIFIED JOB DESCRIPTION FOR EXECUTIVE DIRECTOR.

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RESOLUTION ADOPTING MODIFIED JOB DESCRIPTION

FOR EXECUTIVE DIRECTOR

WHEREAS, the Traverse City Light and Power Department has embarked on a fiber-to-

the premises and Smart Grid project providing new services to customers;

WHEREAS, the duties connected with the job description of the Executive Director need

to add responsibilities for these new services

NOW, THEREFORE, BE IT RESOLVED that the Executive Director’s Job Description is

modified as shown on Attachment A and that this new Job Description be attached to the

Executive Director’s Employment Agreement that was approved on August 11, 2020.

I hereby certify that the above Resolution was

adopted by the Traverse City Light & Power

Board at a meeting held on

_________________, 2020.

________________________________

Timothy J. Arends, Secretary

Traverse City Light & Power Department

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ATTACHMENT A

TRAVERSE CITY LIGHT AND POWER JOB DESCRIPTION

TITLE: EXECUTIVE DIRECTOR The City Charter mandates basic duties of the Executive Director. Many of these are contained in Charter Sections 178 and 179. General Summary: Provide leadership for Light and Power DepartmentTraverse City Light & Power (TCL&P) that assures: the highest level of satisfaction and competitive rates for customers, a safe productive and motivated workforcestaff, implementation of the short-term and long-term strategic direction, as approved by the board, a positive and cooperative relationship with all Light and Power stakeholders, and sound management of both human and fiscal resources. Typical Duties:

1. Create an organizational climate that enables the UtilityTCL&P employeesstaff to be productive, motivated, and to work safely and cooperatively.

2. Assist the bBoard in carrying out its duties to establish policies that lead to excellence in:

customer service, operational efficiency, and employee relations. After those policies are established to, make sure they are implemented fairly and consistently in the Utilityat TCL&P.

3. Develop, implement and maintain Department TCL&P goals, objectives, policies and priorities; ensure that established goals and priorities are acted uponachieved.

4. Prepare and present issues for bBoard consideration and action, including assistance with

agenda preparation and keeping accurate records of bBoard proceedings.

5. Assure that the Utility’sTCL&P’s generation, transmission and distribution systems are operationally efficient, reliable and safe. Further, the Utility’sTCL&P’s purchased power must be reliable, competitively priced, and adequate to meet the future needs of all customers.

6. Assure that TCLP's fiber-to-the-premise enterprise is operationally efficient, reliable,

marketed effectively, priced competitively and has a take rate that ensures generation of revenue sufficient to cover the investment.

7. Demonstrate sound fiscal management including: budgeting, accounting, and real estate

and personal property assets.

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Executive Director Job Description Page 2 of 2

8. Represent the Utility TCL&P with all external agencies and regulatory bodies (i.e. Michigan Public Power Agency, Michigan Municipal Electric Association, American Public Power Association, Michigan Public Service Commission, OSHA, Environmental Protection Agency, Department of Natural ResourcesEGLE, USDA, and telecommunication/smart grid associations, etc.)

9. Complete, with assistance from Light and PowerTCL&P Human Resources, the hiring,

training, promotion and termination of Utility TCL&P staffemployees. Be directly responsible for the performance management and professional development of all directly reporting staffemployees. The Executive Director may appoint or remove a Controller only with a concurring vote of five members of the bBoard.

10. Contract with, supervise, and coordinate the activities of all external service providers to

the UtilityTCL&P (i.e. legal, construction, professional services, etc.).

11. Work cooperatively within the city government framework, especially where other City Departments provide service to the Utility TCL&P and where the UtilityTCL&P provides services to the City.

12. Regularly and frequently collaborate with and exchange information with the City Manager. This collaboration shall include, but not be limited to, the following:

a. The City Manager should be given an opportunity to participate in labor and administrative negotiations.

b. The City Manager (or designee) should be encouraged to attend all TCL&P staff meetings and the Director (or designee) is encouraged to attend all City staff meetings.

c. The City Manager should may be considered the acting TCL&P Director in the event the Director is absent for extended periods as determined by the TCL&P Board.

13. Assure that the activities provided on a contractual basis to other agencies are carried out

effectively and efficiently.

14. Act as the chief spokesperson for TCL&P the Utility with media, customers, city government and other critical stakeholders.

15. Plan for and implement a personal plan for professional development, in conjunction with

Board feedback, to assure preparedness for leading the UtilityTCL&P into the future with innovation and creativity.

16. Create and change, as needed, the organizational structure, reporting relationships, and

job roles to achieve both staff employee job satisfaction and organizational effectiveness and efficiency.

17. Perform other duties as may be assigned by the Light and PowerTCL&P Board. Revised September 2020

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To:


From: Karla Myers Beman - Controller Meeting: Regular Board - Sep 08 2020 Subject:

Audit engagement and audit questionnaire

The City Commission at the April 15, 2019 meeting approved a second three-year agreement with Vredeveld Haefner LLC for auditing services. Based on input from the Treasurer’s office, Light and Power and

Downtown Development Authority staff. Included within your board packet is a copy of the current year’s audit

engagement letter. The engagement letter provides information regarding the auditor’s responsibilities under

generally accepted auditing standards and the planned scope and timing of the scheduled audit engagement. Along with the audit engagement letter is an Audit Questionnaire for the Governing Board. This is required by Statement of Auditing Standards 99: Consideration of Fraud in a Financial Statement Audit. Please fill out the audit questionnaire and return it directly to the auditors via email [email protected] or mail to the address included on the letterhead. An additional option is to call the auditors directly and answer the questions verbally. Doug Vredeveld, Principal can be reached at 1-616-446-7474. Thank you in advance for your cooperation in this matter.

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Vredeveld Haefner LLCCPAs and Consultants Douglas J. Vredeveld, CPA

10302 20”‘Avenue (616) 446-7474Grand Rapids, MI 49534 Peter S. Haefner, CPA

FaxK(616)828-0307 (616)460-9388

July 31. 2020

Board of DirectorsTraverse City Light and Power1131 Hastings StreetTraverse City, MI 49684

We are pleased to con?rm our understanding of the services we are to provide Traverse City Lightand Power(the “UtiIity")for the year ended June 30, 2020. We will audit the ?nancial statements of the business—typeactivities and each major fund, including the related notes to the ?nancial statements, which collectivelycomprise the basic ?nancial statements of Traverse City Light and Power (a component unit of the City ofTraverse City, Michigan) as of and for the year ended June 30, 2020. Accounting standards generallyaccepted in the United States provide for certain required supplementary information (RSI), such asmanagement's discussion and analysis (MD&A), to supplement Traverse City Light and Power’s basic?nancial statements. Such information, although not a part of the basic financial statements, is required bythe Governmental Accounting Standards Board who considers it to be an essential part of financial reportingfor placing the basic financial statements in an appropriate operational, economic, or historical context. Aspart of our engagement, we will apply certain limited procedures to Traverse City Light and Power’s RSI inaccordance with auditing standards generally accepted in the United States of America. These limitedprocedures will consist of inquiries of management regarding the methods of preparing the information andcomparing the information for consistency with management's responses to our inquiries, the basic financialstatements, and other knowledge we obtained during our audit of the basic ?nancial statements. We will notexpress an opinion or provide any assurance on the information because the limited procedures do notprovide us with suf?cient evidence to express an opinion or provide any assurance. The following RSI isrequired by generally accepted accounting principles and willbe subjected to certain limited procedures, butwillnot be audited:

1. Management's Discussion and Analysis.2. Pension schedules.

The following additional information accompanying the ?nancial statements will not be subjected to theauditing procedures applied in our audit of the ?nancial statements, and for which our auditor's report willnotprovide an opinion or any assurance.

1. Schedule of Capital Assets and Depreciation2. Schedules of Revenues and Expenditures — Budget and Actual

Audit Objectives

The objective of our audit is the expression of opinions as to whether your basic ?nancial statements arefairly presented, in all material respects, inyconformity with U.S. generally accepted accounting principles.Our audit willbe conducted in accordance with auditing standards generally accepted in the United States ofAmerica and the standards for financial audits contained in Govemmenf Auditing Standards, issued by theComptroller General of the United States, and willinclude tests of the accounting records of Traverse CityLight and Power and other procedures we consider necessary to enable us to express such opinions. Wewill issue a written report upon completion of our audit of Traverse City Light and Powers ?nancialstatements. Our report will be addressed to the governing board of the Utility.We cannot provide assurancethat unmodi?ed opinions will be expressed. Circumstances may arise in which it is necessary for us tomodify our opinions or add emphasis—of-matter or other-matter paragraphs. If our opinions on the ?nancialstatements are other than unmodi?ed, we willdiscuss the reasons with you in advance. If, for any reason,

Specializing in services to governmental and nonprofit entities of 29

we are unable to complete the audit or are unable to form or have not formed opinions, we may decline toexpress opinions or issue reports. or may withdraw from this engagement.

We will also provide a report (that does not include an opinion) on internal control related to the financialstatements and compliance with the provisions of laws, regulations, contracts and grant agreements,noncompliance with which could have a material effect on the ?nancial statements as required byGovernment Auditing Standards. The report on internal control and on compliance will include a paragraphthat states (1) that the purpose of the report is solely to describe the scope of testing of internal control over?nancial reporting and compliance, and the result of that testing, and not to provide an opinion on theeffectiveness of the entity's internal control on compliance, and (2) the report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering internal control over ?nancialreporting and compliance. The paragraph willalso state that the report is not suitable for any other purpose.If during our audit we become aware that Traverse City Light and Power is subject to an audit requirementthat is not encompassed in the terms of this engagement, we will communicate to management and thosecharged with governance that an audit in accordance with U.S. generally accepted auditing standards andthe standards for ?nancial audits contained in Government Auditing Standards may not satisfy the relevantlegal, regulatory, or contractual requirements.

Audit Procedures—Genera|

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements; therefore, our audit will involve judgment about the number of transactions to beexamined and the areas to be tested. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of signi?cant accounting estimates made by management, as well asevaluating the overall presentation of the ?nancial statements. We will plan and perform the audit to obtainreasonable assurance about whether the ?nancial statements are free of material misstatement, whetherfrom (1) errors, (2) fraudulent ?nancial reporting, (3) misappropriation of assets, or (4) violations of laws orgovernmental regulations that are attributable to the entity or to acts by management or employees actingon behalf of the entity. Because the determination of waste and abuse is subjective, Government AuditingStandards do not expect auditors to provide reasonable assurance of detecting waste or abuse.

Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, andbecause we willnot perform a detailed examination of all transactions, an unavoidable risk exists that somematerial misstatements may exist and not be detected by us, even though the audit is properly planned andperformed in accordance with U.S. generally accepted auditing standards and Govemment AuditingStandards. In addition, an audit is not designed to detect immaterial misstatements or violations of laws orgovernmental regulations that do not have a direct and material effect on the financial statements. However,we will inform the appropriate level of management of any material errors and any fraudulent financialreporting or misappropriation of assets that come to our attention. We will also inform the appropriate levelof management of any violations of laws or governmental regulations that come to our attention, unlessclearly inconsequential, and of any material abuse that comes to our attention. Our responsibility as auditorsis limited to the period covered by our audit and does not extend to later periods for which we are notengaged as auditors.

Our procedures will include tests of documentary evidence supporting the transactions recorded in theaccounts, and may include tests of the physical existence of inventories, and direct con?rmation ofreceivables and certain other assets and liabilities by correspondence with selected individuals, fundingsources, creditors, and ?nancial institutions. We may request written representations from your attorneys aspart of the engagement, and they may billyou for responding to this inquiry. At the conclusion of our audit,we will require certain written representations from you about your responsibilities for the ?nancialstatements; compliance with laws, regulations, contracts, and grant agreements; and other responsibilitiesrequired by generally accepted auditing standards.

Audit Procedures—|nternal Controls

Our audit willinclude obtaining an understanding of the entity and its environment, including internal control,suf?cient to assess the risks of material misstatement of the ?nancial statements and to design the nature,timing, and extent of further audit procedures. Tests of controls may be performed to test the effectivenessof certain controls that we consider relevant to preventing and detecting errors and fraud that are material tothe ?nancial statements and to preventing and detecting misstatements resulting from illegal acts and other

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noncompliance matters that have a direct and material effect on the ?nancial statements. Our tests. ifperformed, will be less in scope than would be necessary to render an opinion on internal control and,accordingly, no opinion will be expressed in our report on internal control issued pursuant to GovernmentAuditing Standards.

An audit is not designed to provide assurance on internal control or to identify signi?cant deficiencies ormaterial weaknesses. Accordingly, we will express no such opinion. However, during the audit, we willcommunicate to management and those charged with governance internal control related matters that arerequired to be communicated under AICPA professional standards and GovemmentAuditing Standards.

Audit Procedures—Compliance

As part of obtaining reasonable assurance about whether the ?nancial statements are free of materialmisstatement, we will perform tests of Traverse City Light and Power's compliance with the provisions ofapplicable laws, regulations, contracts, agreements, and grants. However, the objective of our audit will notbe to provide an opinion on overall compliance and we will not express such an opinion in our report oncompliance issued pursuant to Government Auditing Standards.

Other Services

We willalso assist in preparing the ?nancial statements and related notes of the Utilityin conformity with U.S.generally accepted accounting principles based on information provided by you. These nonaudit services donot constitute an audit under Government Auditing Standards and such services will not be conducted inaccordance with Government Auditing Standards. We will perform the services in accordance withapplicable professional standards. The other services are limited to the ?nancial statement servicespreviously de?ned. We, in our sole professional judgment, reserve the right to refuse to perform anyprocedure or take any action that could be construed as assuming management responsibilities.

Management Responsibilities

Management is responsible for designing, implementing, establishing and maintaining effective internalcontrols, relevant to the preparation and fair presentation of ?nancial statements that are free from materialmisstatement, whether due to fraud or error, and for evaluating and monitoring ongoing activities to helpensure that appropriate goals and objectives are met; following laws and regulations; and ensuring thatmanagement and ?nancial information is reliable and properly reported. Management is also responsible forimplementing systems designed to achieve compliance with applicable laws, regulations, contracts, andgrant agreements. You are also responsible for the selection and application of accounting principles; andfor the preparation and fair presentation of the ?nancial statements in conformity with U.S. generallyaccepted accounting principles, and for compliance with applicable laws and regulations and the provisionsof contracts and grant agreements.

Management is also responsible for making all ?nancial records and related information available to us andfor the accuracy and completeness of that information. You are also responsible for providing us with (1)access to all information of which you are aware that is relevant to the preparation and fair presentation ofthe financial statements, (2) additional information that we may request for the purpose of the audit, and (3)unrestricted access to persons within the government from whom we determine it necessary to obtain auditevidence.

Your responsibilities include adjusting the ?nancial statements to correct material misstatements and forcon?rming to us in the written representation letter that the effects of any uncorrected misstatementsaggregated by us during the current engagement and pertaining to the latest period presented areimmaterial, both individually and in the aggregate, to the ?nancial statements taken as a whole.

You are responsible for the design and implementation of programs and controls to prevent and detect fraud,and for informing us about all known or suspected fraud affecting the government involving (1) management,(2) employees who have signi?cant roles in internal control, and (3) others where the fraud could have amaterial effect on the ?nancial statements. Your responsibilities include informing us of your knowledge ofany allegations of fraud or suspected fraud affecting the government received in communications fromemployees, former employees, grantors, regulators, or others. In addition.you are responsible for identifyingand ensuring that the entity complies with applicable laws, regulations, contracts, agreements, and grants

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and for taking timely and appropriate steps to remedy fraud and noncompliance with provisions of laws,regulations, contracts or grant agreements, or abuse that we report.

Management is responsible for establishing and maintaining a process for tracking the status of auditfindings and recommendations. Management is also responsible for identifying and providing report copiesof previous ?nancial audits, attestation engagements performance audits or other studies related to theobjectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to uscorrective actions taken to address signi?cant ?ndings and recommendations resulting from those audits,attestation engagements, performance audits, or other studies. You are also responsible for providingmanagement's views on our current ?ndings, conclusions, and recommendations, as well as your plannedcorrective actions, for the report, and for the timing and format for providing that information.

You agree to assume all management responsibilities relating to the ?nancial statements and related notesand any other nonaudit services we provide. You will be required to acknowledge in the managementrepresentation letter our assistance with preparation of the financial statements and related notes and thatyou have reviewed and approved the financial statements and related notes prior to their issuance and haveaccepted responsibility for them. Further, you agree to oversee the nonaudit services by designating anindividual, preferably from senior management, with suitable skill, knowledge, or experience; evaluate theadequacy and results of those services; and accept responsibility for them.

With regard to the electronic dissemination of audited ?nancial statements, including ?nancial statementspublished electronically on your website, you understand that electronic sites are a means to distributeinformationand, therefore, we are not required to read the information contained in these sites or to considerthe consistency of other information in the electronic site with the original document.

Engagement Administration, Fees, and Other

We understand that your employees willprepare all cash or other con?rmations we request and willlocateany documents selected by us for testing.

We will provide copies of our reports to the management of the Utilityhowever, management is responsiblefor distribution of the reports and the ?nancial statements. Unless restricted by law or regulation, orcontaining privileged and con?dential information, copies of our reports are to be made available for publicinspection.

The audit documentation for this engagement is the property of Vredeveld Haefner LLC and constitutescon?dential information. However, pursuant to authority given by law or regulation, we may be requested tomake certain audit documentation available to the State of Michigan or its designee, a federal agencyproviding direct or indirect funding, or the U.S. Government Accountability Of?ce for purposes of a qualityreview of the audit, to resolve audit ?ndings, or to carry out oversight responsibilities. We will notify you ofany such request. If requested, access to such audit documentation will be provided under the supervisionof Vredeveld Haefner LLC personnel. Furthermore, upon request, we may provide copies of selected auditdocumentation to the aforementioned parties. These parties may intend, or decide, to distribute the copiesor information contained therein to others, including other governmental agencies.

The audit documentation for this engagement will be retained for a minimum of ?ve years after the reportrelease date or for any additional period requested by the State of Michigan. if we are aware that a federalawarding agency or auditee is contesting an audit finding, we willcontact the party(ies) contesting the audit?nding for guidance prior to destroying the audit documentation.

We expect to begin our audit on approximately October 26, 2020 and to issue our reports no later thanDecember 31, 2020. Peter Haefner is the engagement partner and is responsible for supervising theengagement and signing the report or authorizing another individual to sign them.

Our fee for these services will be at our standard hourly rates plus out-of-pocket costs (such as reportreproduction, word processing, postage, travel, copies, telephone, etc.) except that we agree that our grossfee, including expenses, willnot exceed $8,150 for.the audit. Our standard hourly rates vary according to thedegree of responsibility involved and the experience level of the personnel assigned to your audit. Ourinvoices for these fees will be rendered each month as work progresses and are payable on presentation. inaccordance withour firm policies, work may be suspended if your account becomes 30 days or moreoverdue and may not be resumed until your account is paid in full. Ifwe elect to terminate our services for

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nonpayment, our engagement will be deemed to have been completed upon written noti?cation oftermination, even if we have not completed our report. You will be obligated to compensate us for all timeexpended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee isbased on anticipated cooperation from your personnel and the assumption that unexpected circumstanceswillnot be encountered during the audit. Ifsigni?cant additional time is necessary, we willdiscuss it with youand arrive at a new fee estimate before we incur the additional costs.

We appreciate the opportunity to be of service to Traverse City Light and Power and believe this letteraccurately summarizes the signi?cant terms of our engagement. If you have any questions, please let usknow. If you agree with the terms of our engagement as described in this letter, please sign the enclosedcopy and return it to us.

Sincerely,Vredeveld

RESPONSE:

This letter correctly sets forth the understanding of Traverse City Light and Power.

By:

Title:

Date:

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Vredeveld Haefner LLCCPASand Consultants Douglas J. Vredeveld, CPA

10302 20"‘Avenue (515) 445.7474Grand Rapids, MI49534 Peter s. Haefner, CPA

Fax (616) 828-0307 (615) 450.9333

July 31, 2020

Board of DirectorsTraverse City Light and Power1131 Hastings StreetTraverse City, MI 49684

Effective two-way communication between Vredeveld Haefner LLC and the Light andPower Board is important to understanding matters related to the audit and in developinga constructive working relationship. The attached engagement letter providesinformation regarding our responsibilities under generally accepted auditing standardsand the planned scope and timing of the scheduled audit engagement. We will alsoprovide you with timely communications regarding the results of our audit uponcompletion of the engagement.

We are requesting input from the Board for the purpose of planning the scheduled auditengagement. This input may be provided through the completion of the attachedquestionnaire or by a direct meeting of an engagement partner and the Board or anBoard member.

Ifyou have questions about this letter or any aspects of the scheduled audit engagementwe would be happy to discuss it further with the Board, we can be reached at thetelephone numbers listed above or via website links at vh-cpascom. We appreciate yourassistance and the opportunity to be of service to the Board.

Sincerely,Vredevel / ‘a fner LLC

Specializing in services to governmental and nonprofit entities of 29

Traverse City Light & PowerAudit Questionnaire for the Governing Board

To help us with the process of planning the audit engagement, please provide your input on thefollowing topics.

Identify any of the following which occurred during the year being audited: (significant financialactivity/highlights, signi?cant changes in the organization or its operating environment, signi?cant change instaf?ng, service levels, or operations)

Provide any information, and or suspicions you have regarding fraud, or suspected fraud within yourorganization in the year being audited. Please identify the nature and magnitude of the fraud or suspectedfraud, who perpetrated it, how it occurred, how it was detected, etc...Please identify any concerns you have regarding the integrityor competence of senior management.

.a_

How does the Board exercise oversight in the organization's assessment of the risks of fraud and the programsand controls the organization has established to mitigate those risks?

eWhere in your organization do you believe fraud could occur?

Please provide any additional informationwhich you believe may be relevant to the audit process.

Are there additional analysis or specific procedures you would like to have performed in addition to our auditprocedures?

Please return your completed questionnaire to:

Vredeveld Haefner LLC Completed by:10302 20‘"Ave. NW

CPA‘Grand Rapids, MI49534 Title:

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