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IMMO
<br />City of Lino Lakes, Minnesota
<br />Management's Discussion and Analysis
<br />December 31, 2007
<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 legal requirements.
<br />Governmental Funds The focus of the City of Lino Lakes' governmental funds is to provide information
<br />on near -term inflows, outflows, and balances of spendable resources. Such information is useful in
<br />assessing the City of Lino Lakes' financing requirements. In particular, 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 $19,189,984, an increase of $3,034,602, or 19 %, over the previous year.
<br />Approximately 68% of this total amount, or $13,870,077, constitutes unreserved fund balance, which is
<br />available for spending at the government's discretion. The remainder of fund balance is reserved to
<br />indicate that it is not available for new spending because it has already been committed 1) to liquidate
<br />contracts and purchase orders of the prior period ($183,680), 2) to pay debt service ($3,925,402), 3) to
<br />fund interfund advances ($885,825), 4) to fund environmental improvements ($100,000), or for long -term
<br />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 $5,356,272, while the total fund balance was
<br />$5,538,031. As a measure of the general fund's liquidity, it may be useful to compare unreserved fund
<br />balance and total fund balance to total fund expenditures. Unreserved fund balance represents 62 percent
<br />of total general fund expenditures, while total fund balance represents 64 percent of that same amount.
<br />The fund balance of the City of Lino Lakes' general fund increased by $47,797 during the current fiscal
<br />year. A soft real estate market reduced building activities which significantly decreased permit revenue;
<br />however, higher investment earnings were realized due to a rising rate environment during the first 9
<br />months of the year. Reduced expenditures, primarily for personal services, offset the reduced revenues,
<br />thereby contributing toward the increase in fund balance. Overall, the general fund's revenues were within
<br />2 percent of the amended budget, while expenditures were 4% below budgeted levels.
<br />The G.O. improvement bonds 2005A fund has a total fund balance of $510,276, all of which is reserved
<br />for the retirement of related debt. This is related to the bonds issued for the Legacy Woods Edge
<br />improvement project.
<br />The area and unit charge fund has a total fund balance of $2,471,616, of which $885,825 is reserved for
<br />advances to other funds, and $1,585,791 is unreserved and available for financing capital improvements.
<br />The fund balance during the current year decreased by was $127,974.
<br />The Legacy Woods Edge improvement fund balance increased by $2,979,088, to $3,245,015. This is
<br />primarily due to the issuance of G.O. Tax Increment bonds to finance the reconstruction of the 1 -35
<br />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 financial statements, but in more detail.
<br />The water fund has total net assets at year end of $16,356,188, of which $2,953,267 are unrestricted. The
<br />increase in net assets of $1,123,612 was primarily due to contributions from private sources and the
<br />primary government, an operating transfer from a capital projects fund and from operating income.
<br />Total net assets in the sewer fund at the end of 2007 were $21,544,570, of which $5,110,716 was
<br />unrestricted. Net assets increased $410,657 during the current year resulting primarily from operating
<br />income and contributions from private sources.
<br />The water and sewer rates remained the same in 2007 as in 2006. A rate study was authorized in June,
<br />2007, and is expected to be accepted in 2008. Rates are expected to be adjusted beginning in 2009.
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