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City of Lino Lakes, Minnesota
<br />Management Report, Page 34
<br />Franchise Agreement - Gas Utility
<br />Subsequent to our initial meeting with the City Council in May, 1983, we reviewed
<br />the franchise agreement between the City of Circle Pines and the City of Lino Lakes. In
<br />a letter dated June 29, 1983, we summarized the conclusion of our limited review of the
<br />franchise agreement and operating results of the utility as reported by the City of
<br />Circle Pines. Included in that report were schedules of net income from 1978 through
<br />1983. Those amounts are as follows:
<br />Net Income
<br />Circle Pines Lino Lakes Total
<br />Percent Percent Percent
<br />Year Amount of Total Amount of Total Amount of Total
<br />1978 $ 23,736 53.5% $ 20,602 46.5% $ 44,338 100.0%
<br />1979 39,104 75.6 12,630 24.4 51,734 100.0
<br />1980 22,563 86.2 3,605 13.8 26,168 100.0
<br />1981 6,215 41.7 8,676 58.3 14,891 100.0
<br />1982 70,955 78.4 19,587 21.6 90,542 100.0
<br />1983 61,151 73.9 21,642 26.1 82,793 100.0
<br />Six Year
<br />Totals $223,724 72.1% $ 86,742 27.9% $310,466 100.0%
<br />The City of Lino Lakes may receive payment of net income after the accumulated
<br />retained earnings deficit is eliminated. The retained earnings for the gas utilities
<br />have been as follows:
<br />Retained Earnings (Deficit)
<br />City of City of
<br />Circle Pines Lino Lakes
<br />December 31, Amount Amount Total
<br />1978 $ 85,581 $(108,627) $(23,046)
<br />1979 124,685 (95,997) 28,688
<br />1980 147,248 (92,392) 54,856
<br />1981 153,463 (83,716) 69,747
<br />1982 224,418 (64,129) 160,289
<br />1983 285,569 (42,487) 243,082
<br />The above two schedules indicate that the Circle Pines gas utility operation has
<br />been more profitable than the Lino Lakes operation. Additionally, the Circle Pines gas
<br />utility has a positive retained earnings balance in excess of $285,000 while the Lino
<br />Lakes retained earnings account is in a deficit position.
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