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CITY OF LINO LAKES, MINNESOTA
<br />MANAGEMENT'S DISCUSSION AND ANALYSIS
<br />DECEMBER 31, 2014
<br />FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
<br />As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with
<br />finance related legal requirements.
<br />Governmental funds — The focus of the City of Lino Lakes' governmental funds is to provide information
<br />on near-term inflows, outflows, and balances of spendable resources. Such information is useful in
<br />assessing the City of Lino Lakes' financing requirements. GASB Statement 54, divides fund balances into
<br />five categories: nonspendable, restricted, committed, assigned and unassigned. Definitions of these
<br />categories can be found in Note 1.0 in the Notes to the Financial Statements. In particular, unassigned
<br />fund balance may serve as a useful measure of a government's net resources available for unrestricted
<br />spending at the end of the fiscal year. Approximately 5% of the total fund balance amount, or $1,177,213,
<br />constitutes unassigned fund balance, which is available for spending at the government's discretion. The
<br />remainder of fund balance is not available for new spending because it is restricted or has already been
<br />committed or assigned for other purposes. As of the end of the current fiscal year, the City of Lino Lakes'
<br />governmental funds reported combined ending fund balances of $22,542,633, an increase of $964,790,
<br />or 4.5%, from the previous year. This increase is primarily due to the proceeds from the issuance of the
<br />2014A Equipment Certificates and G.O. Bonds 2014A, the majority of which will be expended in 2015.
<br />The general fund is the primary operating fund of the City of Lino Lakes. At the end of the current fiscal
<br />year, unassigned fund balance of the general fund stood at $5,053,064, while the total fund balance was
<br />$5,306,535. As a measure of the general fund's liquidity, it may be useful to compare unassigned fund
<br />balance and total fund balance to total fund expenditures and financing uses. Unassigned fund balance
<br />represents 57% of total general fund expenditures and other financing uses, while total fund balance
<br />represents 60% of that same amount.
<br />The fund balance of the City of Lino Lakes' general fund decreased by $79,548 during the current fiscal
<br />year, while the City budget anticipated the use of $159,425 of the general fund's fund balance. Overall,
<br />the continued soft real estate market again resulted in reduced building activities this year which
<br />decreased permit revenue. Even as signs of economic recovery were being seen, the remaining effects
<br />of the recession also had an impact on property tax fiscal disparities delinquencies. Public Safety charges
<br />for services increased from traffic control activities through the year. Improvements in financial markets
<br />resulted in a positive impact on the value of current investments. In addition, reduced expenditures,
<br />primarily for personal services through vacant positions, and contractual services helped to offset the
<br />reduced revenues. Overall, the general fund's revenues were within less than 0.1% of the amended
<br />budget, while expenditures and transfers were 2% below budgeted levels.
<br />The G.O. improvement bonds 2005A fund has a total fund deficit of ($2,493,684). This fund is related to
<br />the bonds issued for the Legacy Woods Edge improvement project. The payment of debt service and
<br />delinquency in the collection of special assessments dedicated to this issue caused a significant
<br />decrease in this fund. The use of tax increments from TIF District 1-10 and an interfund loan from the
<br />Capital Improvements fund has aided in the payment of debt service for this issue.
<br />The Improvement Note 2009F fund, to service the debt issued to Anoka County as the City's financial
<br />commitment for the 1-35E interchange project, ended the year with a fund balance of $34,899, a decrease
<br />of $961,392. The decrease was directly due to the prepayment of outstanding bonds, per terms of the
<br />agreement with the County, from prepayments of special assessments in 2013 and 2014. This note,
<br />which was originally in the amount of $4,260,000, was reduced in 2011 to $3,695,000 to reflect cost
<br />savings during the contruction of this project. The outstanding balance as of the end of 2014 is
<br />$2,080,000.
<br />The Municipal State Aid fund, a capital projects fund used to finance reconstruction of state aid eligible
<br />streets, ended the year with a fund balance of $3,922,220. This fund received a large advance from the
<br />Minnesota Municipal State Aid in 2012 equal to the next five annual construction installments. These
<br />funds will be used over the next several years to pay debt service on the Tax Increment Bonds 2007A
<br />and the Improvement Notes 2009F, and for future MSA projects.
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