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<br /> <br />continued development of the 112 unit Woods Edge townhome development. Lennar Homes received <br />planned unit development approval on the 871 lot Watermark development previously owned by aae <br />Mattamy Homes. Lennar is anticipating development of the site in 2018. The 402,000 square-foot <br />Distribution Alternatives building, developed by United Properties, was completed and occupied in 2017. <br /> <br />Long-term financial planning. The City’s currently adopted five-year financial plan identifies street and <br />utility improvements totaling $26,838,947 over the five-year period. These improvements are anticipated <br />to be funded through a number of funding sources, including special assessments, municipal state aid road <br />funds, the area and unit trunk fund, the stormwater management fund and voter-approved tax levies. The <br />five-year plan also includes funding projections for operations and operating impacts for the five-year <br />period. This plan is in the process of being revised to reflect the anticipated activity through the year <br />2022. <br /> <br />Relevant Financial Policies <br /> <br />The City uses a variety of financial policies to guide its fiscal actions and ensure fiscal stability. <br /> <br />Fund balance policy. The City had adopted a Fund Balance policy which identified the required <br />designated amounts in the Fund Balance of the General Fund at fiscal year-end and directed the transfer <br />of any excess revenues to other funds for specific purposes, as identified annually. For the year ended <br />December 31, 2011 and subsequent years, the City amended its Fund Balance policy to conform to the <br />requirements of GASB 54. The new policy targets the unassigned fund balance of the general fund in a <br />range of 40% to 50% of budgeted general fund expenditures and other financial uses. In addition, fund <br />balances are classified in compliance with GASB 54 according to the hierarchy of usable fund balance <br />resources. The unassigned general fund balance as of December 31, 2016 was $6,573,608 which is 64% <br />of general fund budgeted expenditures and other financing uses for the year. <br /> <br />Cash management policies and practices. The City’s policy is to invest all available moneys at <br />competitive rates in accordance with Minnesota law. Investments are made by minimizing credit and <br />market risks while maintaining a competitive yield. Funds are invested in certificates of deposit, state and <br />local securities, and U.S. government agencies. Cash is pooled in one account to provide maximum <br />return. The City Council reviews the investment policy annually. <br /> <br />The City’s investment policy’s primary objective is safety of principal. Therefore, all deposits were either <br />insured by Federal depository insurance or were collateralized as required by State Statute. Due to the <br />weakened economy, a historically low interest rate environment has persisted over the last several years <br />and has had a dramatic impact on the city’s investment earnings. The average interest income yield on <br />investments for 2017 was 0.62%. Total investment income also includes positive or negative changes in <br />the fair value of investments. Changes in fair value of investments during the current year resulted in <br />unrealized gains of $62,488, or 0.16%, for a total investment yield of 0.78%. The changes in fair value <br />during the current year, however, do not necessarily represent trends that will continue; nor is it always <br />possible to realize such amounts, especially in the case of temporary changes in the fair value of <br />investments the City intends to hold to maturity. It is the City’s practice to purchase and hold investments <br />to maturity and, accordingly, changes in fair value over the term of the City’s investments are expected to <br />net to book value. <br /> <br />6