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City Council Regular Meeting Minutes • May 26, 1998 Page 7 1 Cavanaugh stated that Mr. Alvite has not brought a proposal to the City. He should start the 2 process, the City should not have to take the initiative. 3 Mornson reported Mr. Alvite has applied for a conditional use permit for the Town& Country 4 site. The request will be on the June 16, 1998 Planning Commission agenda. 5 D. Presentation of City's 1997 Audit by Stuart Bonniwell. 6 Stuart Bonniwell, Certified Public Accountant, explained each section of the 1997 Financial 7 Report for the City of St. Anthony. 8 Mayor Ranallo noted a Management Letter which was prepared by Mr. Bonniwell and submitted 9 to the City on April 17, 1998. Ranallo reported that the Council had met in work session with 10 Mr. Bonniwell to discuss the recommendations included in that letter. 11 Marks asked if the rationale for reserving funds was to guard the City in case of a shortage of 12 revenue and also to provide a better bond rating, therefore making it less expensive to borrow 13 money and actually saving money in the long-term. 14 Mr. Bonniwell stated this is correct. The interest rates provided to the City are considerably 0 lower as a result of the reserves that the City has built up over the years. 16 Cavanaugh asked if the amount of$250,000 in the Internal Service Fund had been tested to 17 determine the adequacy of the figure. He asked what was actually paid each year. 18 Mr. Bonniwell noted that if all the City employees quit their jobs, this would be the amount 19 owed to them. He stated that last year approximately $30,000 to $35,000 was paid. The liability 20 last year grew by $25,000. This is a combination of more people retiring and a higher deferred 21 amount. 22 Cavanaugh asked if Mr. Bonniwell audits the Liquor Budget. He noted that one of the 23 recommendations was that it is critical to the liquor operation that an accurate, complete and 24 reasonable budget be prepared to reflect all operating costs, including debt service requirements 25 on bonds and other debts issued. 26 Mr. Bonniwell stated it is critical to have outstanding amounts shown in the budget and to show 27 that there will be a sufficient profit, taking into account the cost of the bonds and future costs. 28 The liquor budget which has been prepared has not been prepared with general fund accuracy 29 and details to support the entries. 30 Cavanaugh asked if Mr. Bonniwell had audited the new liquor inventory system. is Mr. Bonniwell stated he had worked with the system but had not audited it. He stated the audit is 32 performed by the vendor to demonstrate that the system does what it is supposed to do.