Comprehensive Annual Financial Report 12/31/2014

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CITY OF LINO LAKES, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2014 As management of the City of Lino Lakes, Minnesota, we offer readers of the City of Lino Lakes' financial statements this narrative overview and analysis of the financial activities of the City of Lino Lakes for the fiscal year ended December 31, 2014. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 3-7 of this report. FINANCIAL HIGHLIGHTS • The assets of the City of Lino Lakes exceeded its liabilities at the close of the most recent fiscal year by $90,179,168 (net position). Of this amount $34,415,982 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. • The City's total net position decreased by $1,334,788 primarily due to annual depreciation of capital assets. • As of the close of the current fiscal year, the City of Lino Lakes' governmental funds reported combined ending fund balance of $22,542,363, an increase of $964,790 in comparison with the prior year primarily due to the proceeds from the issuance of the 2014A Equipment Certificates and G.O. Bonds 2014A, the majority of which will be expended in 2015. Approximately 5% of this amount, or $1,177,213, is available for spending at the City's discretion (unassigned fund balance). • At the end of the current fiscal year, unassigned fund balance for the general fund was $5,053,064, or 57% of total general fund expenditures and other financing uses. • The City's total bonded debt increased by $1,091,000 (11.4%) during the current fiscal period. The City issued Equipment Certificates of $495,000 and a general obligation bond in the amount $2,645,000 to finance the improvement of 21st Avenue, Northpointe addition improvements and the construction of Well # 6 and Wellhouse. Principal in the amount of $2,049,000 was retired during the year. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City of Lino Lakes' basic financial statements. The City of Lino Lakes' basic financial statements comprise three components: 1. Government -wide financial statements 2. Fund financial statements 3. Notes to the financial statements This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements The government -wide financial statements are designed to provide readers with a broad overview of the City of Lino Lakes' finances, in a manner similar to private - sector business. The statement of net position presents information on all of the City of Lino Lakes' assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Lino Lakes is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences and OPEB liabilities). 12