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CITY OF LINO LAKES, MINNESOTA
<br />MANAGEMENT'S DISCUSSION AND ANALYSIS
<br />DECEMBER 31, 2013
<br />CAPITAL ASSET AND DEBT ADMINISTRATION
<br />Capital assets — The City of Lino Lakes' investment in capital assets for its governmental and business -
<br />type activities as of December 31, 2013, is $66,278,257. This investment in capital assets includes land,
<br />buildings, office equipment and fumiture, vehicles, machinery and equipment, other capital assets, and
<br />infrastructure. This represents a decrease in the City of Lino Lakes' investment in capital assets of
<br />approximately 3.1%. The extension of Otter Lake Road north of CSAH 14 was completed during the year
<br />by the City, adding to road and utility infrastructure. The only additions were from projects in progress.
<br />The decrease within the governmental activities is attributable to the depreciation of buildings,
<br />constructed streets, underground infrastructure and vehicles. Within the business -type activities
<br />decreases were also attributable to depreciation of existing assets of the water and sewer funds.
<br />Capital Assets at Year -End
<br />(Net of Accumulated Depreciation)
<br />Governmental Activities Business -Type Activities Total
<br />Land
<br />Buildings
<br />Office Equipment and Furniture
<br />Vehicles
<br />Machinery and Shop Equipment
<br />Other Equipment
<br />Infrastructure
<br />Capital Assets, Net
<br />2013
<br />$ 3,2/5,859
<br />3,301,916
<br />407.616
<br />1,064.565
<br />340.245
<br />182,700
<br />29.282,072
<br />$ 3!.854,9/4
<br />2012 2013 2012
<br />5
<br />$ 3,275,859
<br />3,324,186
<br />450,739
<br />1,148,061
<br />392.625
<br />205.040
<br />30.838,053 28,190,357 28,602.192
<br />5 39,634,563 $ 28,423,284 5 28,798,095
<br />232,927 195,903
<br />2013 2012
<br />$ 3.275,859 0 3,275.859
<br />3.301,916 3,324,186
<br />407,616 450,739
<br />1,064,565 1.148,061
<br />573,172 588,528
<br />182,700 205,040
<br />57,472,429 59,440,245
<br />$ 68,278,257 $ 68,432,658
<br />Additional information on the City's capital assets can be found in the notes to the financial statements on
<br />pages 46-47.
<br />Long-term debt — At the end of the current fiscal year, the City of Lino Lakes had total bonded debt
<br />outstanding of $15,585,000. Of this amount $9,865,000 comprises tax supported debt and $5,720,000 is
<br />special assessment debt. All outstanding debt carries the general obligation backing for which the City is
<br />liable in the event of default by the property owners subject to the specific taxes, special assessments or
<br />revenues pledged to the retirement of the debt. In addition, the City carries a note to Anoka County for its
<br />share of the cost of the I-35EJCounty Road 14 Interchange project in the amount of $3,695,000.
<br />G.O. Bonds
<br />G.O. Special Assessment Bonds
<br />Note Payable - Anoka County
<br />Total Outstanding Debt
<br />Outstanding Debt at Year -End
<br />Governmental Activities Business -Type Activities
<br />2013 2012 2013 2012
<br />$ 9,865,000 5 10,646,000 $
<br />5,720,000 6,780,000
<br />3,695,000 3,695,000
<br />$ 19,280,000 $ 21,121,000 $
<br />Total
<br />2013 2012
<br />$ 9,865,000 $ 10,646,000
<br />5,720,000 6,780,000
<br />3,695,000 3,695,000
<br />$ 19,280,000 $ 21,121,000
<br />The City of Lino Lakes' total bonded debt decreased by $1,841,000 (10.6%) during the current fiscal year.
<br />The key factors for the change include the issuance of $193,000 in 2013A Equipment Certificates and the
<br />issuance of a general obligation bond in the amount $615,000 to finance the extension of Otter Lake
<br />Road. Principal in the amount of $2,649,000 was retired during the year. Additional information on the
<br />City's long-term debt can be found in the notes to the financial statements on pages 48-50.
<br />CITY OF LINO LAKES, MINNESOTA
<br />MANAGEMENT'S DISCUSSION AND ANALYSIS
<br />DECEMBER 31, 2013
<br />ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
<br />• The unemployment rate for the City of Lino Lakes at year-end is 4.5%, which is a great improvement
<br />from a rate of 5.6% a year ago. This is slightly lower than the state's average unemployment rate of
<br />4.6% and significantly lower than the national average of 6.5% at the end of 2013.
<br />• Residential growth in the City has continued to be significantly below the rates of the mid 2000's due
<br />to the general residential real estate market weakness, with about one-third the number of new home
<br />permits issued in 2013 as in 2007, and less than 84% of new home permits issued in 2005. This is an
<br />improvement over recent years. Recently increased building and development activities are signalling
<br />the beginning of a recovery of the housing market. Property values of the existing tax base are
<br />expected to firm will continue to have an impact on the City's tax base for 2014.
<br />• Energy costs are expected to continue to increase over the coming months. This will have an impact
<br />on the City's budget for the coming year and thereafter.
<br />• Property tax reforms and State budget deficits have significantly impacted state aid payments the City
<br />of Lino Lakes receives. Local govemment aid and market value homestead credit was reduced to
<br />zero for 2003 and 2004-2011. The City is exempted from local government aid and the state
<br />legislature has discontinued the market value homestead credit in favor of a new market value
<br />exclusion, which excludes a portion of residential homestead property value from property taxes.
<br />• The Federal Reserve Board has continued the federal funds rates at historical lows, currently to
<br />between 0.00% — 0.25%, which is expected to result in sizable decreases in the City's investment
<br />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 government's 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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