Management Report and Recommendations 12/31/1988

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City of Lino Lakes, Minnesota Management Report, Page 42 to assure compliance with various City ordinances relating to pertinent applications. The City receives deposits and/or bills the various developers for costs incurred. We recommend that the City continue to maintain detail records of amounts due from developers and assure that adequate deposits are received prior to incurring expenses on a developer's behalf (see later comments). The Investment Fund is designed to pool all available cash balances of the City to maximize the investment efficiency of the City. Interest is allocated to funds monthly based on the average cash balance of the participating funds. The Deferred Compensation Fund was established in 1987 in response to the issuance of the Governmental Accounting Standards Board (GASB) Statement No. 2. GASB Statement No. 2 requires deferred compensation plans adopted under the provisions of Internal Revenue Code Section 457 to be included in the City's annual financial report. FRANCHISE AGREEMENT - GAS UTILITY 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: 1987 1988 Residential and Commercial Revenue $102,653 @ 7% = $7,186 $136,728 @ 7% = $9,571 Interruptible Service 88,509 @ 3% = 2,655 83,363 @ 3% = 2,501 Total $191,162 9,841 $220,091 12,072 Remitted by Circle Pines 9,615 11,875 Difference $226 $197 The above 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 $3,300 in 1987 and $2,700 in 1988. The City of Circle Pines reports