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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 Note 7 METROPOLITAN COUNCIL ENVIRONMENTAL SERVICES During 1971, the Metropolitan Waste Control Commission (MWCC) was organized to provide for consolidation of the sanitary sewer collection, treatment and disposal in the seven county metropolitan area surrounding Minneapolis and St. Paul. Previously, these operations were maintained by the city governments on an individual or collective basis. The MWCC merged with the Metropolitan Council during 1994 to form Metropolitan Council Wastewater Services (MCWS) and is now called the Metropolitan Council Environmental Services (MCES). The MCES bills the City annually based upon estimated volume and budgeted costs. The City follows the accounting policy of recognizing these charges as an expense of the sewer utility operation in the year for which they are billed. Note 8 STEWARDSHIP. COMPLIANCE AND ACCOUNTABILITY A. DEFICIT FUND BALANCES The City has deficit fimd balances at December 31,2015 as follows: G.O. Improvement Bonds 2005A Nonmajor Governmental Funds: 35E Interchange Dedicated Parks 21st Ave. Extension Tax Increment Financing 1-11 Blackduck/Aqua Ln Watermain Ext 20 IS Street Reconstruction Improvement Bonds 2013A Fund Balance Deficit $ (2,340,172) (259,166) (70,432) (302,954) (772,648) (51,086) (18,226) (200) The City intends to fimd these deficits through future tax levies, special assessment levies, tax increments, transfers from other fimds, and various other sources. B. EXPENDITURES IN EXCESS OF BUDGET The following is a listing of expenditure categories within the General Fund that exceed budget appropriations: Final ~et Actual Excess General government: Administration $368,868 $371,778 $ (2,910) Community development: Community Development 206,424 209,457 (3,033) Planning and Zoning Conunission 114,610 123,049 (8,439) CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,2015 Note 9 CONTINGENCffiS Tax Increment Districts -The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fimd. Management has indicated that they are not aware of any instances of noncompliance which could have a material effect on the financial statements. Federal and State Funds-The City receives financial assistance from federal and state governmental agencies in the fonn of grants. The disbursement of fimds received under these programs generally requires compliance with the tenns and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fimd. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fimd types included herein or on the overall financial position of the City at December 31,2015. Litigation -The City, in connection with the normal conduct of its affairs, is involved in various claims, judgments, and litigation. As of December 31, 2015 any potential affect this may have on the City is not estimable, however it is not expected to have a material effect on the financial statements of the City. Labor Contracts -The City has various employees that are covered under labor agreements that are subject to collective bargaining. The status oflabor contracts in the City is as follows: Number of Expiration Date of Bargaining Unit Emj!l~ees Current Contract LELS -Patrol 18 December 31,2015 LELS -Sergeant 5 December 31,2015 49ers -Public Works 15 December 31,2015 AFSCME 17 December 31,2015 Non-unionized Employees 9 Total Employees 64 IV-30