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City of Lino Lakes, Minnesota
<br />Management Report, Page 44
<br />FRANCHISE AGREEMENT - GAS UTILITY
<br />Portions of the City of Lino Lakes have gas service through a franchise agreement between the
<br />City of Circle Pines and the City of Lino Lakes. The City of Circle Pines operates the gas utility.
<br />We have reviewed the initial distribution of gas franchise profits received by the City of Lino
<br />Lakes under the terms of the franchise agreement. The revenue was calculated on the following
<br />basis:
<br />Residential and Commercial Revenue
<br />Interruptible Service
<br />Total
<br />1989 1988
<br />$141,363 @ 7% =
<br />111,977 @ 3% =
<br />$25.
<br />$9,895
<br />3,359
<br />13,254
<br />Remitted by Circle Pines 13,052
<br />Difference
<br />$136,728 @ 7% = $9,571
<br />83,363 @ 3% = 2,501
<br />$220,091 12,072
<br />11,875
<br />$202 $197
<br />The above differences relate to bad debts within the City of Lino Lakes. The franchise
<br />agreement allows for adjustment from gross revenue of net bad debts. The City of Lino Lakes had
<br />bad debts of approximately $3,400 in 1989 and $2,700 in 1988. The City of Circle Pines reports
<br />such bad debts on a combined expense line "administrative - other ". We recommend the
<br />following:
<br />1. Request that Circle Pines provide their calculation of franchise fee remittances including
<br />bad debt adjustments.
<br />2. Review with Circle Pines their methods of enforcing collection and consider adopting
<br />such procedures within the City such as including significant outstanding delinquent
<br />billings on assessment search records.
<br />3. Annually update the following schedule to analyze fluctuation in revenue data.
<br />Residential
<br />Increase/ (Decrease)
<br />Commercial Total
<br />Increase / (Decrease) Increase / (Decrease)
<br />Year Amount Amount Percent Amount Amount Percent Amount Amount Percent
<br />1981 $67,387 816,526 $83,913
<br />1982 88,195 820,808 30.88 % 18,781 $2,255 13.65 % 106,976 823,063 27.48 %
<br />1983 96,272 8,077 9.16 % 22,478 3,697 19.68 % 118,750 11,774 11.01 %
<br />1984 97,007 735 .76 % 23,829 1,351 6.01 % 120,836 2086 1.76 %
<br />1985 102,156 5,149 531 % 29,356 5,527 23.19 % 131,512 10,676 8.84 %
<br />1986 90,407 (11,749) (11.50)% 24,764 (4,592) (15.64)% 115,171 (16,341) (12.43)%
<br />1987 82,787 (7,620) (8.43)% 19,866 (4,898) (19.78)% 102,653 (12,518) (10.87)%
<br />1988 114,883 32,096 38.77 % 21,845 1,979 9.96 % 136,728 34,075 33.19 %
<br />1989 120,060 5,177 4.51 % 21,303 (542) (2.48)% 141,363 4,635 339 %
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