Management Report and Recommendations 12/31/1994

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City of Lino Lakes, Minnesota Management Report, Page 6 Delinquent assessments receivable consist of amounts collectible in 1994 and prior years which the City has not yet received. Special deferred assessments consist of residents who had not yet hooked up to the water and sewer system. The City's charter does not allow residents to be assessed for water and sewer projects until they hookup to the system. During 1994, the City eliminated these assessments from the financial statements. As residents hookup to the utility system they will be assessed at that time. A summary of assessment collections for the past four years is as follows: Nor 1991 1992 1993 1994 Delinquent balance - January 1 $132,985 $126,088 $118,690 $43,036 Adck Current installment 351,941 379,521 632,067 387,200 Amount collectible 484.926 505.609 750.757 430.236 Less: Current collections 293,452 306,443 580,678 355,543 Delinquent collections 65,396 82,664 39,313 32,743 Total collections 358.848 389.107 619,991 388.286 Adjustments 10 2,188 (87,730) (5,453) Delinquent balance - December 31 $126,088 $118,690 $43,036 $36,497 Current collection rate 83% 81% 92% 92% Total collections as a percent of current levy 102% 103% 98% 100% As shown above, the City continues to experience a stable collection rate. The primary funding of debt payments is special assessments. Timely collection of special assessments is required to assure timely availability of cash to meet the scheduled debt payments. We recommend the City continue to monitor the collection rate and provide supplemental financing if assessment collections are not adequate to meet bonded debt payments. Prepayments temporarily provide cash and in the short term, favorably affect the City's ability to meet temporary bond issues debt payments. If, however, prepayments are invested at significantly lower interest rates, and/or consumed to meet current debt requirements for permanent debt issues, the City incurs a "loss" because the interest which would have been earned on the assessment amount is not adequately replaced by investment income. During 1993 and 1994 the City collected $3,192,613 and $1,560,816.