Management Report and Recommendations 12/31/1988

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City of Lino Lakes, Minnesota Management Report, Page 32 Other Projects Lakes #9 Carlson (Woodridge Estates) Pine Oaks Revision Sunrise Meadows Paul Montain Reshanau 3rd Addition Fund Balance December 31 1988 ($763) (10,580) * (4,856) (19,438) * 701 (3,310) * ($38,246) * These projects are anticipated to be financed by 1989 bonding. The remaining projects are in preliminary phases. Project Financing Practices The City has established the practice of excluding final overlay paving from the original bonding for improvement projects. The City does include the gravel base and bituminous base in the initial phase and such amounts are included in the original contracts and in the financing (bonding) plan. The final wearing surface, however, is not constructed until 80% of the homes have been completed. The final paving, therefore, may occur one to two years after the original project is complete. This practice extends the project period from approximately 12 months to possibly in excess of 36 months. Additionally, the final overlays are not financed. These amounts are intended to be paid from the original project. The improvement process and accounting and financial reporting procedures related thereto may be streamlined if the entire construction project is completed within a 12 to 18 month period. Additionally, project financial administration will be improved if the entire project is financed with the original bond issue. The delay for the final overlay creates requirements to split assessment roll receipts from those which were for the original project (already constructed) and those for a supplemental project to occur 12 to 18 months in the future (final overlays). The Rice Lake Estates construction project was substantially complete at December 31, 1987. Final paving was not however completed as of December 31, 1988. The City has therefore elected to retain the construction fund to account for future construction projects. The construction fund however, has over $370,000 in cash which is committed to the Permanent Improvement Bonds of 1988 which were used to refinance the Temporary Improvement Bonds of 1985. The affect of this situation is to cause a temporary cash overdraft in the Improvement Bonds of 1988 Debt Service Fund.