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MIN
<br />Maw
<br />MEM
<br />City of Lino Lakes, Minnesota
<br />Management's Discussion and Analysis
<br />December 31, 2006
<br />Long -term debt. At the end of the current fiscal year, the City of Lino Lakes had total bonded debt
<br />outstanding of $25,557,000. Of this amount $7,747,000 comprises tax supported debt, $13,940,000 is
<br />special assessment debt and $3,870,000 is revenue supported debt. All outstanding debt carries the
<br />general obligation backing for which the city is liable in the event of default by the property owners subject
<br />to the specific taxes, special assessments or revenues pledged to the retirement of the debt.
<br />G.O. Bonds
<br />G.O. Special Assessment Bonds
<br />G.O. Revenue Bonds
<br />Total Outstanding Debt
<br />Outstanding Debt at Year -End
<br />Governmental Activities
<br />2006
<br />$ 7,747,000
<br />13,940,000
<br />2005
<br />$ 5,335,000
<br />19,405,000
<br />$ 21,687,000 $ 24,740,000
<br />Business -Type Activities
<br />2006 2005
<br />$ - $
<br />3,870,000
<br />$ 3,870,000
<br />Total
<br />2006
<br />$ 7,747,000
<br />13,940,000
<br />2,425,000 3,870,000
<br />$ 2,425,000 $ 25,557,000
<br />2005
<br />$ 5,335,000
<br />19,405,000
<br />2,425,000
<br />$ 27,165,000
<br />The City of Lino Lakes' total bonded debt decreased by $1,608,000 (6 percent) during the current fiscal
<br />year. The primary reasons for the decrease were refunding of the 1998A and 1998B Improvement bonds
<br />that were be called and retired in February, 2006, and the partial refunding of the 1998A Lease Revenue
<br />Bonds that were called and retired on December 1, 2006.
<br />The City of Lino Lakes received an Aa3 rating from Moody's Investors Service for general obligation debt.
<br />The represents an upgrade from the prior rating of Al. More detailed information on the City's long -term
<br />liabilities is presented in the notes to the financial statements.
<br />Additional information on the City's long -term debt can be found in the notes to the financial statements on
<br />pages 34 -54.
<br />ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES:
<br />• The unemployment rate for the City of Lino Lakes is currently 4.1 percent, which is a slight
<br />increase from a rate of 3.8 percent a year ago. This compares favorably to the state's average
<br />unemployment rate of 4.2 percent and the national average of 4.3 percent.
<br />• The City of Lino Lakes continues to see increased commercial /industrial construction growth.
<br />Residential growth has slowed due to the general residential real estate market downturn, with
<br />less than half the number of new home permits issued in 2006 from 2005. This is expected to
<br />level off in 2007 with the beginning of a recovery of the housing market later in the year.
<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 is expected to be received in 2007.
<br />• The Federal Reserve Board has increased the federal funds rates significantly, which is expected
<br />to result in increases in the City's investment earnings.
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