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low <br />Long -term financial planning. The city has entered into an agreement with Hartford Development LL, LLC, to <br />develop 40 acres in the southeast quadrant of I -35W and Lake Drive. This mixed -use development will occur <br />over a period of two to five years and would include up to 450 dwelling units, retail commercial business, a <br />community green and park and trail amenities, and is expected to begin construction in late Summer, 2005. The <br />YMCA, in partnership with the city, is also planning a facility within the development. The city's participation <br />in the YMCA will be $1.5 million of the $7.0 million project, plus land and infrastructure. The city, which plans <br />to build the facility and lease it back to the YMCA, plans to issue G.O. Tax Abatement bonds to finance its <br />contribution to this project, as well as $2.5 million in lease- revenue debt. The city has also secured a CDBG <br />grant of $125,000 to be used toward a teen center within the YMCA. Construction on the facility is scheduled to <br />begin in Fall, 2005. <br />To facilitate this development, street, streetscape, water, sewer, and storm water improvements must be installed <br />within the development area, as well as improvements to the existing Lake Drive. Engineering estimates for <br />these improvements is estimated at approximately $9 million and will be financed with G.O. Improvement and <br />G.O. Tax Increment bonds. The city also believes that this development will result in additional ongoing costs <br />involved in servicing and maintaining the streets and public areas, which will be addressed in future operating <br />budgets. <br />The city's five -year financial plan, which is currently under review, identifies street and utility improvements <br />totaling $25,985,000 over the period of 2005 through 2009. These improvements are anticipated to be funded <br />through a number of funding sources, including special assessments, municipal state aid road funds, the area and <br />unit trunk fund, the stormwater management fund, tax increment financing and voter - approved tax levies. <br />Improvements to several of the city's neighborhood parks and the city's trail system are also planned over this <br />period in the amount of $437,000. These improvements will be funded through park dedication fees and the <br />dedicated parks fund. <br />Cash management policies and practices. The City's policy is to invest all available moneys at competitive <br />rates in accordance with Minnesota law. Investments are made by minimizing credit and market risks while <br />maintaining a competitive yield. Funds are invested in certificates of deposit, commercial paper and U.S. <br />government agencies. Cash is pooled in one account to provide maximum return. The City Council reviews the <br />investment policy annually and last amended it in 1998. <br />Cash temporarily idle during the year was invested in certificates of deposit, commercial paper, and obligations <br />of the U.S. Treasury. The City's investment policy's primary objective is safety of principal. Therefore, all <br />deposits were either insured by Federal depository insurance or were collateralized as required by State Statute. <br />Due to the weakened economy, a low interest rate environment has persisted over the few years and has had a <br />significant impact on the city's investment earnings. The average yield on investments for 2004 was 2.04 %. <br />Investment income includes positive or negative changes in the fair value of investments. Changes in fair value <br />during the current year, however, do not necessarily represent trends that will continue; nor is it always possible <br />to realize such amounts, especially in the case of temporary changes in the fair value of investments the city <br />intends to hold to maturity. <br />Risk management. The City's general property, liability and worker's compensation coverage is provided <br />through the League of Minnesota Cities Trust (LMCIT). <br />At the beginning of the insurance year, the city deposits with LMCIT a premium determined by calculating <br />estimated payroll and applying experience modification ratios. An audit is performed at the end of the insurance <br />year, which may produce a refund or an adjustment due. LMCIT's reserves and rates are reviewed annually by <br />an actuary to assure that the program remains financially strong. <br />5 <br />