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Other Auditor Reports 12/31/2007
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Other Auditor Reports 12/31/2007
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Other Auditor Reports
Date
12/31/2007
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While in total the City has a surplus of total resources available over remaining scheduled debt service <br />based on the calculation above, certain individual funds are operating at a deficit. These deficits will <br />need to be funded by future adopted assessment rolls, special assessment levies, investment earnings, <br />transfers from other funds, property taxes or other available means. <br />Factors to consider when analyzing debt service funds: <br />• Are all the anticipated assessment rolls being adopted as soon as appropriate? <br />• Have all the planned financing sources been identified, such as pledged amounts from the area and <br />unit fund or future MSA funds? <br />• Are there significant "prepayments" received from property owners? In the current investment <br />environment, will the earnings the City will receive on these prepayments be lower than the interest <br />rate that was being charged on the adopted assessment roll? <br />The Area & Unit Fund is committed to the debt service of some special assessment bonds as well as <br />toward the water revenue bonds. The City's five -year operating plan addresses the above issues and <br />therefore, this comment is simply a reminder of the extent that repayment of certain debt is based on <br />pledged sources from the Area and Unit fund. <br />Developer Escrow Accounts <br />The City maintains an Agency Fund to account for the activity related to developer escrows. It is our <br />understanding that developers deposit an escrow prior to a project beginning and that certain costs may <br />be applied against this escrow. A total net deposit held in the agency fund at December 31, 2007 was <br />$1,028,002. Within this balance we noted that there are several escrow accounts that carry a "negative" <br />balance (which represents an additional receivable balance from the developer) or have remained idle <br />from the prior year. Efforts were made during 2007 by the City to reconcile negative and idle accounts <br />with the related developers. For instance, total "negative" accounts were reduced from $268,660 at <br />December 31, 2006 to $198,024 at December 31, 2007. We recommend that the City continue this <br />process. <br />Conclusion <br />We welcome the opportunity to discuss the points mentioned in this letter or any other accounting and <br />procedural issues in order to coordinate our efforts with you, the mutual objective being the <br />development of more effective accounting procedures for the City. We understand that some of the <br />aforementioned points are in the process of implementation or may already have been implemented; <br />however, these points are noted so that effective follow -up can be accomplished. <br />We sincerely appreciate all the courtesies and cooperation extended to us by you and the staff of the <br />City, and thank you for the opportunity to be of service to you. We look forward to working with you in <br />the future. <br />This report is intended solely for the information and use of the City Council, finance committee, <br />management, the Office of the State Auditor, and federal awarding agencies and pass- through entities <br />and is not intended to be and should not be used by anyone other than these specified parties. <br />Minneapolis, Minnesota <br />May 16, 2008 <br />(4) <br />Z:t d z L P <br />LarsonAllen LLP <br />
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