Management Report and Recommendations 12/31/1999

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Honorable Mayor and Members of the City Council City of Lino Lakes Page 16 DEBT SERVICE FUNDS (Continued) Schedule of Special Assessment Debt: Special Assessment Debt: (at 12/31/99) Total resources available + Scheduled property tax levies $4,276,192 5,368,978 9,645,170 - Debt Service 17,821,010 Deficit in scheduled funding (at 12/31/99) $(8,175,840) This deficit will need to funded by future adopted assessment rolls, special assessment levies, - investment earnings, transfers from other funds, property taxes or other available means. Factors to consider when analyzing debt service funds: - • Are all the anticipated assessment rolls being adopted as soon as appropriate? • Have all the planned financing sources been identified, such as pledged amounts from the area and unit fund or future MSA funds? — • Are there significant "prepayments" received from property owners? In the current investment environment, will the earnings the City will receive on these prepayments be lower than the interest rate that was being charged on the adopted assessment roll? • Have the scheduled debt service payments been scheduled around the anticipated assessment rolls in addition to any anticipated prepayments to avoid accumulating excess balances and generating excess eamings that potentially could be subject to arbitrage? We recommend that all Debt Service Funds of the City be reviewed at least annually by applying the above criteria. The Area & Unit Fund is committed to the debt service of some special assessment bonds as well as toward the water revenue bonds. We recommend that the City determine the full commitment of the Area and Unit Fund whenever this fund is used to pledge toward future bond issues and construction projects. The most beneficial time to do this calculation is during the Utility Rate Study and the Capital Improvements Program.