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City of Lino Lakes, Minnesota
<br />Management's Discussion and Analysis
<br />December 31, 2008
<br />FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
<br />As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with
<br />finance related Jegal requirements.
<br />Govemmenta! Funds The focus of the City of Lino Lakes' governmental funds is to provide information
<br />on near-term inOows, outOovvs, and balances of spendable resources. Such information is useful in
<br />assessing the City of Lino Lakes' financing requirements. In padicu|ar, unreserved fund balance may
<br />serve as a useful measure of a government's net resources available for spending at the end of the fiscal
<br />year.
<br />As of the end of the current fiscal year, the City of Lino Lakes' governmental funds reported combined
<br />ending fund balances of $10.184.984, a decrease of $3.004.890. or 16Y6. under the previous yeor,
<br />primarily due to the construction of the |35W/Lake Drive interchange. Approximately 71% of this total
<br />mmount, or $11,449,524, constitutes unreseived fund balance, which is available for spending at the
<br />government's discretion. The remainder of fund balance is reserved to indicate that it is not available for
<br />new spending because it has already been committed 1) to liquidate contracts and purchase orders of the
<br />prior period ($192.798). 2) to pay debt service ($3,405,272), 3) to fund interfund advances ($812.400).
<br />4) to fund environmental improvements ($100,000), or for long-term notes receivable ($225,000).
<br />The general fund is the primary operating fund of the City of Lino Lakes. At the end of the current fiscal
<br />year, unreserved fund balance of the general fund was $5.393.310. while the total fund balance was
<br />$5,584,141. As a measure of the general fund's |iquid)h/, it may be useful to compare unreserved fund
<br />balance and total fund balance to totat fund expenditures. Unreserved fund balance represents 60% of
<br />total general fund expenditures, while total fund balance represents 62% of that same amount.
<br />The fund balance of the City of Lino Lakes' general fund increased by $46,110 during the current fiscal
<br />year. A soft real estate market and the onset of an economic recession in December, 2007. reduced
<br />building activities which decreased permit revenue. The recession also had an impact on property tax
<br />de/inquencies, interest nsba, which made a significant impact on budgeted investment eornings, and
<br />intergovernmental revenues expected from the state. Reduced expenditunes, primarily for personal
<br />services and contractual sen/ices, offset the reduced navonuas, thereby contributing toward the increase
<br />in fund balance. C)venaU, the general fund's revenues were within 4% of the amended budget, while
<br />expenditures were 5% below budgeted tevets.
<br />The G.O. improvement bonds 2005A fund has a total fund balance of $1,069, all of which is reserved for
<br />the retirement of related debt. This is related to the bonds issued for the Legacy Woods Edge
<br />improvement project. The payment of debt service and delinquency in the collection of special
<br />assessments dedicated to this issue caused a significant decrease in this fund in 2008.
<br />The area and unit charge fund has a total fund balance of $2,648,963 of which $812.400 is reserved for
<br />advances to other funds, and $1.836.583 is unreserved and available for financing capital improvements.
<br />The fund balance during the current year increased by $177.347, due in large part to the reduction in the
<br />advances to other funds and to tower expenditures in 2008.
<br />The Legacy Woods Edge improvement fund balance decreased by $2,649,695, to $595,320. This is
<br />primarily due expenditures for the reconstruction of thel-35 W/Lake Drive interchange.
<br />Proprietary funds The City of Lino Lakes proprietary funds provide the same type of information found in
<br />the government-wide finar,ciat statements, but in more detail.
<br />The water fund has total net assets et year end nf$17'O46.456.of which $3.183.Q53 are unrestricted. The
<br />increase in net assets of $690,267 was primarily due to contributions from the primary govarnment, and
<br />from operating income.
<br />Total net assets in the sewer fund at the end of 2008 were $22.354.993. of which $5,844,825 was
<br />unrestricted. Net assets increased $810.423 during the current year resulting primarily from operating
<br />income, investment income and contributions from private sources
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