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City of Lino Lakes, Minnesota
<br />Management's Discussion and Analysis
<br />December 31, 2007
<br />CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED)
<br />Long -term debt At the end of the current fiscal year, the City of Lino Lakes had total bonded debt
<br />outstanding of $25,944,000. Of this amount $11,569,000 comprises tax supported debt, $12,520,000 is
<br />special assessment debt and $1,855,000 is revenue supported debt. All outstanding debt carries the
<br />general obligation backing for which the city is liable in the event of default by the property owners subject
<br />to the specific taxes, special assessments or revenues pledged to the retirement of the debt.
<br />Outstanding Debt at Year -End
<br />Govemmental Activities Business -Type Activities Total
<br />2007 2006 2007 2006 2007 2006
<br />G.O. Bonds $ 11,569,000 $ 7,747,000 $ $ $ 11,569,000 $ 7,747,000
<br />G.O. Special Assessment Bonds 12,520,000 13,940,000 - 12,520,000 13,940,000
<br />G.O. Revenue Bonds - - 1,855,000 3,870,000 1,855,000 3,870,000
<br />Total Outstanding Debt $ 24,089,000 $ 21,687,000 $ 1,855,000 $ 3,870,000 $ 25,944,000 $ 25,557,000
<br />The City of Lino Lakes' total bonded debt increased by $387,000 (1.5 percent) during the current fiscal
<br />year. The key factors for the change include the 1996B Water Revenue bonds that were called and retired
<br />in February, 2007, and the issuance of the 2007A Tax Increment Financing bonds.
<br />The City of Lino Lakes received an Aa3 rating from Moody's Investors Service for general obligation debt.
<br />More detailed information on the City's long -term liabilities is presented in the notes to the financial
<br />statements.
<br />Additional information on the City's Tong -term debt can be found in the notes to the financial statements on
<br />pages 33 -53.
<br />ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
<br />• The unemployment rate for the City of Lino Lakes is currently 4.8 percent, which is a significant
<br />increase from a rate of 4.1 percent a year ago. This compares favorably to the state's average
<br />unemployment rate of 4.9 percent and the national average of 4.8 percent.
<br />• Residential growth in the City has slowed significantly due to the general residential real estate
<br />market downturn, with less than half the number of new home permits issued in 2007 and 2006
<br />than in 2005. This is expected to decrease further and then level off in 2008, with the beginning of
<br />a recovery of the housing market in 2009. This will have a significant impact on the growth of the
<br />City's tax base for 2009 and beyond.
<br />• Energy costs are expected to continue their steep increase over the coming months. This will
<br />have an impact on the City's budget for the coming year and thereafter.
<br />• Property tax reforms and State budget deficits have significantly impacted local government aid
<br />payments the City of Lino Lakes receives. Local government aid and market value homestead
<br />credit was reduced to zero for 2003, 2004, 2005 and 2006. While the City is exempted from local
<br />government aid, market value homestead credit was received in 2007 and is expected to be
<br />received in 2008.
<br />• The Federal Reserve Board has decreased the federal funds rates significantly, which is expected
<br />to result in decreases in the City's investment earnings.
<br />REQUESTS FOR INFORMATION
<br />This financial report is designed to provide a general overview of the City of Lino Lakes' finances for all of
<br />those with an interest in the governments finances. Questions concerning any of the information provided
<br />in this report or requests for additional financial information should be addressed to the Director of
<br />Finance, City of Lino Lakes, 600 Town Center Parkway, Lino Lakes, Minnesota, 55014.
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