Management Report and Recommendations 12/31/1998

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Honorable Mayor and Members of the City Council City of Link Lakes Page 2 Auditor Comments Town Center Construction Fund Over the past three years the City has purchased two different parcels in the "Village Area" of Lino Lakes for the purpose of reselling for development and a third that was traded for the land the Civic Complex is located on. Future land sales are intended to cover the purchase of these three parcels. In addition, the proceeds from the sale of the former police station land will also go toward covering these costs. The total amount of the costs incurred on the acquisition of these parcels and the costs associated with them through the end of 1998 is $2,061,483. Two of these parcels were financed with contracts for deed; as of 12/31/98, the remaining principal balance of the two contracts is approximately $946,020. Summary of Activity Description of Expenditure 1996 Capital Outlay (inc.Iand) $ Interest expense Engineering Professional services — Legal Other Revenues net land sale proceeds 36,535 1997 1998 Total $ 1,437,382 $ 296,178 $ 1,733,560 30,128 30,128 4,053 27,905 31,958 70,644 68,294 175,473 4,623 9,189 13,812 308 40 348 $ 36,535 $ 1,517,010 $ 431,734 $ 1,985,279 58,788 99,469 158,257 Remaining deficit $ (36,535) $ (1,458,222) $ (332,265) $ (1,827,022) Note: the expenditures above do not include any interest that has accrued on the Rehbien contract. The interest (and principal portion) will be paid as land is sold. Through the end of 1998 this amount would represents approximatley $78,000. When the next payment is made, it will be applied first to interest that has accrued in 1998 and — for 1999, with the remainder being applied to the principal balance. There are approximately 11.5 developable acres that remain for sale, including the 4 acres from the former police station land. The above deficit of $1,903,226 (in addition to any other costs that are charged to this project in 1999 and future years) will need to be funded from either land sales or other — revenue sources. (if the revenues generated from the land sales are not sufficient to cover the deficit).