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CITY OF LINO LAKES, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUEDI Fiduciary funds Fiduciary funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments. Notes to the financial statements - The notes provide additional information that is essential to a full understanding of the data provided in the govemment-wide and fund financial statements. The notes to the financial statements can be found on pages 35-59 of this report. Other Information - The combining statements and schedules referred to earlier in conjunction with nonmajor govemmental funds can be found on pages 68-81 of this report. GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government's financial position. The City of Lino Lakes' assets exceeded liabilities by $91513,956 at the close of the most recent fiscal year, an decrease of $786,644 from the previous year. This decrease is primarily due annual depreciation of capital assets and the use of municipal state aid that was advanced to the City during 2012. By far the largest portion of the City of Lino Lakes' net position (55%) reflects its net investment in capital assets (e.g. land, buildings, machinery, equipment, and infrastructure). The City of Lino Lakes uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Lino Lakes' investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Condensed versions of the statements of net position at December 31, 2013 and 2012 are as follows: Current and Other Assets Capital Assets Total Assets Noncurrent Liabilities Outstanding Other Liabilities Total Liabilities Net Position: Net Investment in Capital Assets Restricted Unrestricted Total Net Position Governmental Activities 2013 2012 $ 33.326,625 $ 34,456,692 37.854.973 39.634,563 71,181,598 74.091,255 20,006,657 21,875,614 1,083.451 815,149 21,090,108 22,690,763 22,241,821 22,166,342 11,000,033 11,595,112 16.849,636 17,639.038 Business -Type Activities 2013 2012 $ 13,092,332 $ 12.194.619 28,423,284 28,798,095 41,515,616 40992714 Total 2013 $ 46,418.957 66,278,257 112,697.214 2012 $ 46,651,311 68,432.658 115,083,969 54,182 43,410 20,060,839 21,919,024 38,968 49,196 1,122,419 864,345 93,150 92.606 21,183.258 22,783.369 28,423,284 28,798,095 50,665,105 50,964,437 11,000.033 11,595,112 12.999,182 12,102.013 29,848,818 29.741.051 $ 50,091.490 $ 51,400,49241 ,422,46640.900,108 $ 91,513,95692,300,600 Of the remaining balance of the City of Lino Lakes' net position, restricted net position (12%) are to be used for debt service requirements and a nonexpendable environmental fund. Unrestricted net position (33%) may be used to meet the government's ongoing obligations to citizens and creditors. CITY OF LINO LAKES, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 GOVERNMENT -WIDE FINANCIAL ANALYSIS (CONTINUEDI At the end of the current fiscal year, the City of Lino Lakes is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. Governmental activities Governmental activities decreased the City of Lino Lakes' net position by $1,309,002. Reductions in Capital Grants and Contributions and in the fair value of investments, interest on long-term debt service and property tax delinquencies account for this reduction for 2013. Business-tvpe activities Business -type activities increased the City of Lino Lakes' net position by $522,358. Revenue from Charges for Services and transfers in provided directly for this increase. Condensed statements of revenues, expenses, and changes in net position highlights are as follows for the years ended December 31, 2013 and 2012: REVENUES Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues: Property Taxes Franchise Taxes Other Taxes Contributions Not Restncted to Specific Programs Unrestricted Investment Eamings Change In Market Value Gain on Disposal of Capital Assets Total Revenues EXPENSES General Govemment Public Safety Public Service Parks, Recreation and Forestry Conservation of Natural Resources Community Development Interest on Long -Term Debt Water Sewer Total Expenses Governmental Activities Business -Type Activities Total 2013 20 $ 1,452,169 $ 1.476,261 $ 527,368 450,179 941,960 5,125,693 8,392,601 8,461,621 109,438 95,003 61,556 54.085 4,442 4,941 216,488 202.828 (270.692) - 4,175 11,435,330 15,874,786 2013 2012 2,725,139 $ 2,877,590 $ 4,177,308 527,368 883 20,018 942,843 113,402 (158,175) 102,073 8,392,601 109,438 61,556 4,442 329,890 (428,867) $ 4,353.851 450,179 5,145,711 8,481,621 95,003 54.085 4,941 304,901 4,175 2,681,249 2,999,681 14,116,579 18,874,467 1,566,388 1,883,961 - 3,950,197 4,046,415 - 4,540,888 5,584,283 - 835.783 1.210,867 - 141.204 184,051 404,726 430,121 951,842 837,755 927,800 949,121 1,584,395 1,527,637 1,566,388 1,883,961 3,950,197 4,046,415 4,540,888 5,584,283 835,783 1,210,867 141,204 184,051 404,726 430,121 951,842 837,755 927,800 949,121 1,584,395 1,527,637 12,391,028 14,177,453 2,512,1 5 2,476,758 14,903,223 11,654211 CHANGE IN NET POSrnON BEFORE TRANSFERS (955,698) 1,697,333 169,054 522,923 (786,644) 2,220,256 Transfers (353,304) 41,043 353,304 (41,043) - CHANGE 19 NET POSITION (1,309,002) 1,738.3/6 524,358 481,880 (786,644) 2,220,256 Net Position - Beginning of Year 51,400,492 49.662.116 40,900,108 40,418,228 92.300,600 90,080,344 NET POSITMON-END OF YEAR $ 50,091,490 $ 51,400,492 $ 41,422,466 $ 40,900,108 $ 91,513,956 $ 92,300,600