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3 May 22, 2013 Honorable Mayor Members of the City Council Citizens of the City of Lino Lakes, Minnesota Minnesota State law requires that cities over 2,500 popula tion publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with genera lly accepted auditing standards by a firm of licensed certified public accountants and submit them to the state aud itor. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Lino Lakes, Minnesota for the fiscal year ended December 31, 2012. This report consists of management ’s representations concerning the finances of the City of Lino Lakes. Consequently, management assumes full responsibility fo r the completeness and reliability of all of the information presented in this report. To provide a r easonable basis for making these representations, management of the City of Lino Lakes has established a comprehensiv e internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Lino Lakes’ financial statemen ts in conformity with GAAP. Because the cost of internal controls should not outweigh their bene fits, the City’s comprehensive framewo rk of internal controls has been designed to provide reasonable rather than absolute assu rance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Lino Lakes’ financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year e nded December 31, 2012, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentati on. The independent auditor concluded, based upon the audit that there was a reasonable basis for rendering an unqua lified opinion that the City’s financial statements for the fiscal year ended December 31, 2012, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first compone nt of the financial section of this report. GAAP require that management provide a narrative intr oduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discu ssion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in c onjunction with it. The City of Lino Lakes’ MD&A can be found immediately following the re port of the independent auditors.