2016-145 Council Resolution - Laserfiche WebLink

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Summary: Lino Lakes City, Minnesota; Appropriations; General Obligation governmental debt service; • Weak debt and contingent liability position, with debt service carrying charges at 24.9% of expenditures and net direct debt that is 205.5% of total governmental fund revenue, but rapid amortization, with 83.4% of debt scheduled to be retired in 10 years; and • Strong institutional framework score. Strong economy We consider Lino Lakes City's economy strong. The city, with an estimated population of 21,629, is located in Anoka County in the Minneapolis -St. Paul -Bloomington, MN -WI MSA, which we consider to be broad and diverse. The city has a projected per capita effective buying income of 121% of the national level and per capita market value of $90,702. Overall, the city's market value grew by 4.6% over the past year to $2.0 billion in 2016. The county unemployment rate was 3.6% in 2015. The city is located 20 miles north of St. Paul and encompasses an area of roughly 33 square miles. The city is mostly residential, making up roughly 75% of its tax base with the next biggest contributor being commercial/industrial making up 14%. Residents of the city have access to the greater Minneapolis/St. Paul Metropolitan Statistical Area (MSA), which provided ample employment opportunities for the residents of the city. We understand that the city has recently approved plans for additional residential developments. Currently the city expects market values to increase at a 3% to 6% annual rate over the next couple years. Based on the recent approval of new residential properties we view these results as likely. Strong management ▪ We view the city's management as strong, with "good" financial policies and practices under our FMA methodology, indicating financial practices exist in most areas, but that governance officials might not formalize or monitor all of them on a regular basis. Some of management highlights include: • Use of at least three years of historical information in the formulation of the upcoming years revenue and expenditure assumptions with the help of outside sources and a line -by-line approach to budgeting; • Quarterly reporting of budget -to -actual performance to the council with the ability to make amendments to the budget as needed; • Formalized long-term financial plan that looks out five years and is updated on an annual basis; • Long-term capital plan that looks out five years and has sources and uses of funds identified; • Formalized investment management policy with monthly reporting of interest earnings and holdings; • No formalized debt management policy, though it adheres to state guidelines; and • Formalized fund balance policy, though it has a target to maintain 40% to 50% of expenditures for cash-flow needs. Strong budgetary performance Lino Lakes City's budgetary performance is strong in our opinion. The city had surplus operating results in the general fund of 7.4% of expenditures, but a deficit result across all governmental funds of positive 1.4% in fiscal 2015. Our assessment accounts for the fact that we expect budgetary results could improve from 2015 results in the near term. Our calculations are made by making adjustments for expenditures that we view as one time in nature. For fiscal 2015 \. . (Dec. 31), the city had a positive variance and a positive net result of $640,000. Management attributes this to the WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 21, 2016 3 1741666 1 302253518