Management Report and Recommendations 12/31/1992

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City of Lino Lakes, Minnesota Management Report, Page 43 GAS UTILITY FUND Portions of the City of Lino Lakes have gas service through a franchise agreement between the City of Circle Pines and the City of Lino Lakes. The City of Circle Pines operates the gas utility. We have reviewed the initial distribution of gas franchise profits received by the City of Lino Lakes under the terms of the franchise agreement. The revenue was calculated on the following basis: 1992 1991 Residential and Commercial Revenue $292,903 @ 7% = $20,503 S227,175 @ 7% = $15,902 Interruptible Service 126,267 @ 3% = 3,788 113,869 @ 3% = 3,416 Total $419,170 24,291 $341,044 19,318 Remitted by Circle Pines 24,267 19,286 Difference $24 $32 The previous differences relate to bad debts within the City of Lino Lakes. The franchise agreement allows for adjustment from gross revenue of net bad debts. The City of Lino Lakes had bad debts of approximately $515 in 1992, $2,500 in 1991 and $53 in 1990. The City of Circle Pines reports such bad debts on a combined expense line "administrative - other." We recommend the following: 1. Request that Circle Pines provide their calculation of franchise fee remittances including bad debt adjustments. 2. Review with Circle Pines their methods of enforcing collection and consider adopting procedures within the City such as including significant outstanding delinquent billings on assessment search records.