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06-06-2016 Council Packet
WORK SESSION AGENDA CITY OF LINO LAKES Monday, June 6, 2016 CITY COUNCIL WORK SESSION Community Room (not televised) 6:00 P.M. 1. Review 2015 Annual Audit, CliftonLarsonAllen, LLP 2. VLAWMO JPA, Michael Grochala 3. 550 Lilac Assessment Appeal, Michael Grochala 4. Watermark – Mattamy Homes, Katie Larsen 5. NE Area Drainage Study, Diane Hankee 6. FEMA Floodplain Update, Diane Hankee 7. American Legion Parking Lot, Michael Grochala 8. Business Subsidy Criteria Amendment, Michael Grochala 9. United Properties 35E Distribution Center/TIF request, Michael Grochala 10. Council Updates on Boards/Commissions 11. Monthly Progress Report 12. Review Regular Agenda 13. Adjourn WS – Item 1 WORK SESSION STAFF REPORT Work Session Item No. 1 Date: June 6, 2016 To: City Council From: Sarah Cotton, Finance Director Re: 2015 Annual Audit Report Background Chris Knopik and Daniel Persaud of CliftonLarsonAllen, LLP will be in attendance at the meeting to provide an overview of the City’s 2015 Annual Financial Report, present the auditor’s management analysis and answer any questions you may have with regard to the financial condition of the City. The 2015 annual audit was undertaken earlier this year, with field work being completed in April. The auditors review all financial transactions and the financial reports of the City over the previous year for their fairness in presentation and for full disclosure of all material aspects of the City’s financial condition. This review is conducted in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in U.S. Government Auditing Standards, issued by the Comptroller General of the United States. The auditors concluded that the City’s financial statements for 2015 presented fairly, in all material respects, the financial position of the City as of December 31, 2015. The auditors also issue their reports on the City’s legal compliance with certain laws, regulations, contracts, etc., our internal control structure, and management issues. It should be noted that the City has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada for its 2014 Comprehensive Annual Financial Report. The city has received this award each year since 1995. We believe that the report issued for 2015 continues to uphold the high standards of reporting excellence that this prestigious award represents. The presentation at the work session will be comprehensive and is intended to provide the opportunity for council members to ask any questions or make comments about the audit report and the state of city finances. Mr. Knopik and Mr. Persaud will also give an abbreviated presentation at the May 13, 2016, regular City Council meeting. Requested Council Direction None Attachments 2015 Comprehensive Annual Financial Report 2015 Other Audit Reports COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF LINO LAKES, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2015 Prepared By: Finance Department Sarah Cotton, Director of Finance Paula Schloer, Accountant CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference Number I. INTRODUCTORY SECTION Principal City Officials 1 Organizational Chart 2 Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 8 II. FINANCIAL SECTION Independent Auditors’ Report 9 Management’s Discussion and Analysis 12 Basic Financial Statements Statement of Net Position Statement 1 22 Statement of Activities Statement 2 23 Balance Sheet - Governmental Funds Statement 3 25 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement 4 27 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds Statement 5 28 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance to the Statement of Activities Statement 6 30 Statement of Net Position - Proprietary Funds Statement 7 31 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds Statement 8 32 Statement of Cash Flows - Proprietary Funds Statement 9 33 Statement of Net Position - Fiduciary Funds – Agency Funds Statement 10 34 Notes to Financial Statements 35 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference Number Required Supplementary Information General Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Statement 11 66 Note to Required Supplementary Information 72 Schedule of Funding Progress for Postemployment Benefit Plan Statement 12 73 PERA Schedule of City’s Proportionate Share of the Net Pension Liability Statement 13 74 Combining Fund Financial Statements Combining Balance Sheet - Nonmajor Governmental Funds Statement 14 76 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Nonmajor Governmental Funds Statement 15 84 Special Revenue Fund - Program Recreation: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Statement 16 92 Statement of Changes in Assets and Liabilities - Fiduciary Funds - Agency Funds Statement 17 93 Supplementary Financial and Other Information Combined Schedule of Indebtedness Exhibit 1 94 Schedule of Deferred Tax Levies Exhibit 2 96 Debt Service Payments to Maturity - All Bonds Exhibit 3 98 Insurance in Force Exhibit 4 101 Taxable Valuations, Tax Levies and Tax Rates Exhibit 5 102 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference Number III. STATISTICAL SECTION Net Position by Component - Last Ten Fiscal Years Table 1 103 Changes in Net Position - Last Ten Fiscal Years Table 2 104 Fund Balances, Governmental Funds - Last Ten Fiscal Years Table 3 106 Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years Table 4 108 Assessed and Actual Value of Taxable Property - Last Ten Fiscal Years Table 5 110 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years Table 6 111 Principal Property Taxpayers Table 7 112 Property Tax Levies and Collections - Last Ten Fiscal Years Table 8 113 Ratios of Outstanding Debt by Type Table 9 115 Ratios of Net General Bonded Debt Table 10 117 Direct and Overlapping Governmental Activities Debt Table 11 119 Legal Debt Margin Information Table 12 120 Demographic and Economic Statistics Table 13 122 Principal Employers, Current Year and Nine Years Ago Table 14 123 Full-Time Equivalent Employees by Type Table 15 124 Operating Indicators by Function/Program Table 16 126 Capital Asset Statistics by Function/Program Table 17 128 I. INTRODUCTORY SECTION CITY OF LINO LAKES, MINNESOTA PRINCIPAL CITY OFFICIALS December 31, 2015 1 Elected Officials Term Expires Mayor: Jeff Reinert December 31, 2015 Council Members: Dale Stoesz December 31, 2015 Rob Rafferty December 31, 2017 William Kusterman December 31, 2017 Dave Roeser December 31, 2015 Appointed Personnel City Administrator Jeff Karlson Director of Finance Sarah Cotton Director of Public Safety John Swenson Director of Community Development Michael Grochala Director of Public Service Rick DeGardner CITY OF LINO LAKES, MINNESOTA PRINCIPAL CITY OFFICIALS December 31, 2015 2 3 May 16, 2016 Honorable Mayor Members of the City Council Citizens of the City of Lino Lakes, Minnesota Minnesota State law requires that cities over 2,500 population publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants and submit them to the state auditor. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Lino Lakes, Minnesota for the fiscal year ended December 31, 2015. This report consists of management’s representations concerning the finances of the City of Lino Lakes. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Lino Lakes has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Lino Lakes’ financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Lino Lakes’ financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2015, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended December 31, 2015, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report. GAAP require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Lino Lakes’ MD&A can be found immediately following the report of the independent auditors. 4 Profile of the Government The City of Lino Lakes, incorporated in 1955, is a growing community in the southeast corner of the County of Anoka. It covers an area of 33 square miles and has a population of approximately 21,200. The population has more than doubled from the 1990 census figure of 8,807 and has grown by 26% since 2000. Within the City’s borders lies the 2,550 acre Rice Creek Chain of Lakes Regional Park. Access to St. Paul and Minneapolis is provided by I-35W and I-35E. The City Charter, as amended, establishes a mayor-council form of government and grants the City council full policy-making and legislative authority to the mayor and four council members. The City council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring a City administrator. The City administrator has the responsibility of carrying out the policies and ordinances of the City council, for overseeing the day-to-day operation of the city. The City council is elected at-large on a non-partisan basis, with council members serving four-year terms and the mayor serving a two-year term. Elections are held every two years with two council seats and the mayor being up for election each election cycle. The City provides a full range of municipal services. These services include: general government, public safety (police and fire), public works (streets and fleet), parks and recreation, conservation of natural resources (environmental and solid waste abatement), public improvements, providing and maintaining sanitary and storm sewer, water infrastructure, and two enterprise funds, the water and sewer funds. The annual budget is the foundation for the City of Lino Lakes’ financial planning and control. All divisions are required to submit appropriations requests to the City administrator for review and consolidation into a proposed budget. The City administrator is responsible for submitting the proposed annual budget to the City Council in August of each year. The city council is required to hold a public hearing on the proposed budget and to adopt by resolution a final budget and certify it no later than December 28. The budget amounts cannot increase beyond the estimated receipts except to the extent that actual receipts exceed the estimate. Division directors may make transfers of appropriations within a department, but transfers of appropriations between departments require council approval. Budget-to-actual comparisons for the general fund and the recreation program fund, the only funds for which an annual budget has been adopted, are provided in this report beginning on pages 66 and 92, respectively. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Lino Lakes operates. Local economy. The economic development effort established by the City Council in 1993 increased the commercial/industrial tax base in the City from 3% of the total tax base to 9% in 2011. Development of three industrial parks - Apollo Business Park on 35W, Marshan Industrial Park on Lake Drive, and the Clearwater Creek Development Center on 35E, provided excellent opportunities for manufacturing and distribution businesses to move their headquarters to Lino Lakes. Before the recession began in late 2007 the Lino Lakes Town Center, comprising approximately 200 acres surrounding the 35W/Lake Drive interchange, was developing at a rapid pace. SuperTarget and Kohl’s anchor the shopping center quadrant, while Apollo Business Park brought approximately 1,000 new employees to the area. Land was purchased by Anoka County on a third quadrant for future development of a regional library. Due to economic conditions, the County has pushed back construction of the library to a future date. 5 Factors Affecting Financial Condition (Continued) In 2004, the City entered into an agreement with a master developer to develop 40 acres in the southeast quadrant of I-35W and Lake Drive. Called Legacy at Woods Edge, this mixed-use development is intended to include diverse opportunities for housing, retail and office uses. To date, the development includes the Lino Lakes Civic Complex (which houses the city hall and police station), the Chain of Lakes YMCA, a 60-unit workforce housing project, 13,000 square feet of leasable commercial space, and an assisted living facility. The Civic Complex and YMCA provide a civic and community focus as part of the vision for Town Center. A workforce family housing and assisted living facility provide diversity in housing to underserved populations within the City. In 2006, the City placed a major focus on reconstruction of the 35W/Lake Drive interchange and completion of public improvements in Legacy at Woods Edge to accommodate planned development and completed the improvements by 2008. However, it became evident at the end of 2007 that development was stalling. The recession has had negative impacts on the Legacy development. Both the master developer and lender defaulted, sending the remaining 22 acres intended for townhomes and commercial uses into tax forfeit. Development conditions have begun to improve relative to the Legacy property. During 2013, the assisted living facility purchased an adjoining parcel to expand its current operation. The 36-room addition was completed in 2014. In addition, the State Legislature approved City-initiated special legislation which has allowed the City to acquire the tax forfeited property from the State at no cost except for an administrative fee payable to Anoka County if future sale revenues exceed the value of the special assessments on the property. The acquisition of this property will allow the City greater control in marketing the property to potential developers. The solid foundation that was built and strong interest by developers prior to the recession ensures that better economic times will once again bring the interest in residential and commercial growth needed to complete the vision. Street, streetscape, water, sewer, and storm water improvements, as well as a small community park, have been installed within the development area and assessed to the development. The $11.1 million I-35W Interchange improvement was financed through the joint efforts of MNDOT, Anoka County and the City of Lino Lakes. The City has issued $4,215,000 in G.O. Tax Increment bonds and will use tax increment financing and Minnesota State Aid funds to finance its portion of the project cost. Building activity and development increased slightly in 2015, however, improvement in developer activity is evident. Building permits for new homes in 2015 numbered 47, compared to 33 in 2014. In addition, the City granted final plat approval for three new residential developments totaling 81 units in 2015. In anticipation of a strengthening economy, the City took the lead on developing the infrastructure needed to service future growth on the 35E/County Road 14 interchange area. A major reconstruction of the interchange completed a multi-year improvement of County Road 14 from Highway 61 in Hugo, through Centerville, to 35W in Lino Lakes. The City portion of the cost for this bridge reconstruction project is being financed through Anoka County, with the City issuing an initial $4.26 million General Obligation Note to the County. Due to cost savings in this project the Note was amended to $3.695 million in 2011. With both major interstate interchanges complete, the City is preparing for development of several hundred acres in all quadrants of 35E/14. Interest in the commercial interchange has spurred the extension of Otter Lake Road North east of I-35E and planning for the extension of 21st Avenue west of I-35E, which will leave the City well poised to accommodate significant future industrial, commercial and residential development. A McDonald’s restaurant was completed in 2014 at CSAH 14 and Otter Lake Road. In addition, Metropolitan Transit has constructed a 300 space Park and Ride at I35-E at CSAH 14 and 21st Avenue. 6 Factors Affecting Financial Condition (Continued) Long-term financial planning. The City’s currently adopted five-year financial plan identifies street and utility improvements totaling $23,387,990 over the five-year period. These improvements are anticipated to be funded through a number of funding sources, including special assessments, municipal state aid road funds, the area and unit trunk fund, the stormwater management fund and voter-approved tax levies. Also included in the final year of the plan is a feasibility study for a new public works facility. Scheduled capital equipment and office equipment needs and the financing for those needs are also included in the plan. The five-year plan also includes funding projections for operations and operating impacts for the five-year period. This plan is in the process of being revised to reflect the anticipated activity through the year 2020. Relevant Financial Policies The City uses a variety of financial policies to guide its fiscal actions and ensure fiscal stability. Fund balance policy. The City had adopted a Fund Balance policy which identified the required designated amounts in the Fund Balance of the General Fund at fiscal year-end and directed the transfer of any excess revenues to other funds for specific purposes, as identified annually. For the year ended December 31, 2011 and subsequent years, the City amended its Fund Balance policy to conform to the requirements of GASB 54. The new policy targets the unassigned fund balance of the general fund in a range of 40% to 50% of budgeted general fund expenditures and other financial uses. In addition, fund balances are classified in compliance with GASB 54 according to the hierarchy of usable fund balance resources. The unassigned general fund balance as of December 31, 2015 was $5,725,736 which is 58% of general fund budgeted expenditures and other financing uses for the year. Cash management policies and practices. The City’s policy is to invest all available moneys at competitive rates in accordance with Minnesota law. Investments are made by minimizing credit and market risks while maintaining a competitive yield. Funds are invested in certificates of deposit, commercial paper and U.S. government agencies. Cash is pooled in one account to provide maximum return. The City Council reviews the investment policy annually. The City’s investment policy’s primary objective is safety of principal. Therefore, all deposits were either insured by Federal depository insurance or were collateralized as required by State Statute. Due to the weakened economy, a historically low interest rate environment has persisted over the last several years and has had a dramatic impact on the city’s investment earnings. The average interest income yield on investments for 2015 was 0.71%. Total investment income also includes positive or negative changes in the fair value of investments. Changes in fair value of investments during the current year resulted in unrealized losses of $80,781, or -0.23%, for a total investement yield of 0.48%. The changes in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts, especially in the case of temporary changes in the fair value of investments the City intends to hold to maturity. It is the City’s practice to purchase and hold investments to maturity and, accordingly, changes in fair value over the term of the City’s investments are expected to net to book value. 7 Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awards the Certificate of Achievement for excellence in financial reporting to cities that meet certain criteria. The City of Lino Lakes received this award for its comprehensive annual financial report for the year ended December 31, 2014. This marks the nineteenth consecutive year the City has received this prestigious award. A governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, the contents of which conform to program requirements. This report must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City is submitting the 2015 report to GFOA for consideration of the Certificate of Achievement for Excellence in Financial Reporting. We believe our current report continues to conform to the high standards of the Certificate program. The timely preparation of this report could not have been accomplished without the dedicated services of the Finance Department, auditors and other city staff. A special thank you goes to City Accountant, Paula Schloer, for her efforts in assembling and reviewing information presented in this report. I also want to express my appreciation to the Mayor and City Council for their support for maintaining the highest standard of professionalism in the management of the financial operation of the City. Respectfully submitted, Sarah R. Cotton Director of Finance 8 II. FINANCIAL SECTION CliftonLarsonAllen LLP CLAconnect.com 9 An independent member of Nexia International INDEPENDENT AUDITORS’ REPORT Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes, Minnesota as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Honorable Mayor and Members of the City Council City of Lino Lakes 10 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes as of December 31, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matters During fiscal year ended December 31, 2015, the City of Lino Lakes, Minnesota adopted the provisions of Government Accounting Standards Board Statement (GASB) No. 68, Accounting and Financial Reporting for Pensions and the related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68. As a result of the implementation of these standards, the City of Lino Lakes, Minnesota reported a restatement for the change in the accounting principle (see Note 19). Our auditors’ opinion was not modified with respect to the restatement. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and schedule of funding progress to postemployment benefit plan, as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Lino Lakes’ basic financial statements. The combining fund financial statements and other supplementary financial and other information, the introductory section, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Honorable Mayor and Members of the City Council City of Lino Lakes 11 Other Information (Continued) The combining fund statements, special revenue fund – program recreation schedule of revenues, expenditures, and changes in fund balance – budget and actual, the combining schedule of indebtedness, schedule of deferred tax levies, and the debt service payments to maturity – all bonds schedule are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining fund statements, special revenue fund – program recreation schedule of revenues, expenditures, and changes in fund balance – budget and actual, the combining schedule of indebtedness, schedule of deferred tax levies, and the debt service payments to maturity – all bonds schedule are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section, schedule of insurance in force, schedule of taxable valuations, tax levies, and tax rates, and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 16, 2016, on our consideration of the City of Lino Lakes' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Lino Lakes’ internal control over financial reporting and compliance. CliftonLarsonAllen LLP Minneapolis, Minnesota May 16, 2016 CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 12 As management of the City of Lino Lakes, Minnesota, we offer readers of the City of Lino Lakes’ financial statements this narrative overview and analysis of the financial activities of the City of Lino Lakes for the fiscal year ended December 31, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 3-7 of this report. FINANCIAL HIGHLIGHTS The assets of the City of Lino Lakes exceeded its liabilities at the close of the most recent fiscal year by $84,554,618 (net position). Of this amount $28,560,750 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors in accordance with the City’s fund designations and fiscal policies. The City’s total net position decreased by $5,624,550 primarily due to annual depreciation of capital assets and the restatement of net position related to the adoption of the pension standards. As of the close of the current fiscal year, the City of Lino Lakes’ governmental funds reported combined ending fund balance of $20,056,015, a decrease of $2,486,348 in comparison with the prior year primarily due to a decrease in the fund balance of Capital Projects, offset by an increase in the General Fund fund balance. Approximately 10% of this amount, or $1,910,432, is available for spending at the City’s discretion (unassigned fund balance). At the end of the current fiscal year, unassigned fund balance for the general fund was $5,725,736, or 58% of total general fund expenditures and other financing uses. The City issued Equipment Certificates, EDA Lease Revenue Bonds to finance the construction of Fire House #2, and General Obligation Bonds to finance street reconstruction in the Shehahdoah Area, as well as, improvements to Birch Street and the related sanitary and water main improvements relative to the construction of the City’s new fire hall. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City of Lino Lakes’ basic financial statements. The City of Lino Lakes’ basic financial statements comprise three components: 1. Government-wide financial statements 2. Fund financial statements 3. Notes to the financial statements This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Lino Lakes’ finances, in a manner similar to private- sector business. The statement of net position presents information on all of the City of Lino Lakes’ assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Lino Lakes is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences and OPEB liabilities). CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 13 OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Government-wide financial statements (Continued) Both of the government-wide financial statements distinguish functions of the City of Lino Lakes that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Lino Lakes include general government, public safety, public services, parks, recreation and forestry, conservation of natural resources and community development. The business-type activities of the City of Lino Lakes include a water utility and sewer utility. The government-wide financial statements can be found on pages 22-24 of this report. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Lino Lakes, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Lino Lakes can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental functions and governmental activities. The City of Lino Lakes maintains forty-seven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General fund, G.O. Improvement Bonds 2005A fund, Improvement Note 2009F fund, Area and Unit Charge fund, and 2015 Street Reconstruction fund all of which are considered to be major funds. Data from the other forty-two governmental funds are combined into a single, aggregate presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Lino Lakes adopts an annual appropriated budget for its general and program recreation special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 25 through 30 of this report. Proprietary funds – The City of Lino Lakes maintains two proprietary type funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Lino Lakes uses enterprise funds to account for its sewer and water utilities. The proprietary fund statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the sewer fund and the water fund, which are considered to be major funds of the City of Lino Lakes. The basic proprietary fund financial statements can be found on pages 31 through 33 of this report. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 14 OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) 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 government-wide and fund financial statements. The notes to the financial statements can be found on pages 35-65 of this report. Other information – The combining statements and schedules referred to earlier in conjunction with nonmajor governmental funds can be found on pages 76-91 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 $84,554,618 at the close of the most recent fiscal year, a decrease of $5,624,550 from the previous year. This decrease is primarily due annual depreciation of capital assets. The largest portion of the City of Lino Lakes’ net position (56%) reflects its net investment in capital assets (e.g. land, buildings, machinery, equipment, and infrastructure). The City of Lino Lakes uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Lino Lakes’ investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Condensed versions of the statements of net position at December 31, 2015 and 2014 are as follows: 2015 2014 2015 2014 2015 2014 Current and Other Assets 32,222,786$ 32,904,991$ 14,881,531$ 14,029,608$ 47,104,317$ 46,934,599$ Capital Assets 41,228,037 36,212,984 29,127,829 27,556,022 70,355,866 63,769,006 Total Assets 73,450,823 69,117,975 44,009,360 41,585,630 117,460,183 110,703,605 Deferred outflows of resources 985,081 - 11,660 - 996,741 - Noncurrent Liabilities Outstanding 27,144,998 19,479,195 149,386 52,790 27,294,384 19,531,985 Other Liabilities 5,900,707 903,912 63,771 88,540 5,964,478 992,452 Total Liabilities 33,045,705 20,383,107 213,157 141,330 33,258,862 20,524,437 Deferred inflows of resources 636,040 - 7,404 - 643,444 - Net Position: Net Investment in Capital Assets 18,230,746 19,540,807 29,127,829 27,556,022 47,358,575 47,096,829 Restricted 8,635,293 8,666,357 - - 8,635,293 8,666,357 Unrestricted 13,888,120 20,527,704 14,672,630 13,888,278 28,560,750 34,415,982 Total Net Position 40,754,159$ 48,734,868$ 43,800,459$ 41,444,300$ 84,554,618$ 90,179,168$ Governmental Activities Business-Type Activities Total Of the remaining balance of the City of Lino Lakes’ net position, restricted net position (10%) are to be used for activities restricted by law (special revenue funds), debt service requirements and a nonexpendable environmental fund. Unrestricted net position (34%) 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, 2015 15 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) 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 $7,980,709. The cumulative effect of the application of GASB 68 as well as increases in expenses for public safety and public services activities account for this reduction for 2015. Business-type activities Business-type activities increased the City of Lino Lakes’ net position by $2,356,159. Infrastructure additions by the city and developers, offset partially by increased depreciation expense due to a change in accounting estimate provided for this increased in 2015. Condensed statements of revenues, expenses, and changes in net position highlights are as follows for the years ended December 31, 2015 and 2014: 2015 2014 2015 2014 2015 2014 REVENUES Program Revenues: Charges for Services $ 1,621,832 $ 1,529,040 $ 2,636,469 $ 2,529,524 $ 4,258,301 $ 4,058,564 Operating Grants and Contributions 526,107 840,676 263,024 - 789,131 840,676 Capital Grants and Contributions 1,176,732 335,733 3,035,031 1,035 4,211,763 336,768 General Revenues: Property Taxes 9,067,390 8,612,016 - - 9,067,390 8,612,016 Franchise Taxes 101,040 124,292 - - 101,040 124,292 Other Taxes 74,806 70,578 - - 74,806 70,578 Contributions Not Restricted to Specific Programs 5,363 4,443 - - 5,363 4,443 Unrestricted Investment Earnings 163,825 114,483 81,084 96,213 244,909 210,696 Change in Market Value (50,864) 151,212 (29,917) 58,255 (80,781) 209,467 Gain on Disposal of Capital Assets 17,836 1,727 - - 17,836 1,727 Total Revenues 12,704,067 11,784,200 5,985,691 2,685,027 18,689,758 14,469,227 EXPENSES General Government 2,016,351 2,036,550 - - 2,016,351 2,036,550 Public Safety 5,135,865 4,107,759 - - 5,135,865 4,107,759 Public Service 6,822,972 4,786,121 - - 6,822,972 4,786,121 Parks, Recreation and Forestry 1,148,740 1,093,909 - - 1,148,740 1,093,909 Conservation of Natural Resources 186,111 159,649 - - 186,111 159,649 Community Development 432,268 407,448 - - 432,268 407,448 Interest on Long-Term Debt 632,876 618,680 - - 632,876 618,680 Water - - 1,394,897 965,641 1,394,897 965,641 Sewer - - 2,089,842 1,628,258 2,089,842 1,628,258 Total Expenses 16,375,183 13,210,116 3,484,739 2,593,899 19,859,922 15,804,015 CHANGE IN NET POSITION BEFORE TRANSFERS (3,671,116) (1,425,916) 2,500,952 91,128 (1,170,164) (1,334,788) Transfers 66,834 69,294 (66,834) (69,294) - - CHANGE IN NET POSITION (3,604,282) (1,356,622) 2,434,118 21,834 (1,170,164) (1,334,788) Net Position - Beginning of Year 48,734,868 50,091,490 41,444,300 41,422,466 90,179,168 91,513,956 Prior Period Adjustment (4,376,427) - (77,959) - (4,454,386) - Net Assets - Beginning of Year, As Restated 44,358,441 50,091,490 41,366,341 41,422,466 85,724,782 91,513,956 NET POSITION - END OF YEAR 40,754,159$ 48,734,868$ 43,800,459$ 41,444,300$ 84,554,618$ 90,179,168$ Governmental Activities Business-Type Activities Total CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 16 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Below are specific graphs that provide comparisons of the government activities’ direct program revenues with their expenditures. Any shortfalls in direct revenues are primarily supported by property tax levy or general state aid. Expenses and Program Revenues – Governmental Activities $‐ $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Expenses Revenues Revenues by Source – Governmental Activities Charges for services 13% Operating grants and contributions 4% Capital grants and contributions 9% Property taxes 71% Franchise taxes 1% Unrestricted investment earnings 1% Other 1% CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 17 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Below are specific graphs that provide comparisons of the business-type activities’ direct program revenues with their expenditures. Excess revenues are retained within each fund until such time that capital replacement is needed. Expenses and Program Revenues – Business-type Activities $‐ $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 Water Sewer Expenses Revenues Revenues by Source – Business-type Activities Charges for services 98% Other 2% CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 18 FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds – The focus of the City of Lino Lakes’ governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Lino Lakes’ financing requirements. GASB Statement 54, divides fund balances into five categories: nonspendable, restricted, committed, assigned and unassigned. Definitions of these categories can be found in Note 1.Q in the Notes to the Financial Statements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for unrestricted spending at the end of the fiscal year. Approximately 10% of the total fund balance amount, or $1,910,432, constitutes unassigned fund balance, which is available for spending at the government’s discretion. The remainder of fund balance is not available for new spending because it is restricted or has already been committed or assigned for other purposes. As of the end of the current fiscal year, the City of Lino Lakes’ governmental funds reported combined ending fund balances of $20,056,015, a decrease of $2,486,348, or 11%, from the previous year. This decrease is primarily due to a decrease in the fund balance of Capital Projects, offset by an increase in the General Fund fund balance. The general fund is the primary operating fund of the City of Lino Lakes. At the end of the current fiscal year, unassigned fund balance of the general fund stood at $5,725,736, while the total fund balance was $5,946,413. As a measure of the general fund’s liquidity, it may be useful to compare unassigned fund balance and total fund balance to total fund expenditures and financing uses. Unassigned fund balance represents 58% of total general fund expenditures and other financing uses, while total fund balance represents 61% of that same amount. The fund balance of the City of Lino Lakes’ general fund increased by $639,878 during the current fiscal year, while the City budget anticipated the use of $170,000 of the general fund’s fund balance. Overall, signs of an economic recovery are being seen with increased building and development activities taking place which resulted in increased permit revenues for the year. In addition, reduced expenditures, primarily for personal services through vacant positions, fuel costs, and contractual services helped to increase the year end fund balance. Overall, the general fund’s revenues were within 1% of the amended budget, while expenditures and transfers were 4% below amended budget levels. The G.O. improvement bonds 2005A fund has a total fund deficit of ($2,340,172). This fund is related to the bonds issued for the Legacy Woods Edge improvement project. The payment of debt service and delinquency in the collection of special assessments dedicated to this issue caused a significant decrease in this fund. The use of tax increments from TIF District 1-10 and an interfund loan from the Capital Improvements fund has aided in the payment of debt service for this issue. The Improvement Note 2009F fund, to service the debt issued to Anoka County as the City’s financial commitment for the I-35E interchange project, ended the year with a fund balance of $7,384, a decrease of $27,515. This note, which was originally in the amount of $4,260,000, was reduced in 2011 to $3,695,000 to reflect cost savings during the contruction of this project. The outstanding balance as of the end of 2015 is $1,720,000. The Area and Unit Charge fund has a total fund balance of $4,422,605, all of which is assigned for financing capital improvements. The fund balance during the current year increased by $38,928, due in large part to the collection of special assessments and charges for services, which were greater than the expenditures and transfers out. The 2015 Street Reconstruction fund has a total fund deficit of ($18,226). The fund balance during the current year increased by $14,045 due to the proceeds from bond issuance exceeding the expenditures incurred related to the Shenandoah Area Street Improvement project. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 19 FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS (CONTINUED) Proprietary funds – The City of Lino Lakes’ proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The water fund has total net position at year-end of $20,401,628, of which $5,822,834 is unrestricted. The increase in net position of $1,579,872 was primarily due to capital contributions, partially offset by a net operating loss. Total net position in the sewer fund at the end of 2015 was $23,398,831, of which $8,849,796 was unrestricted. The increase in net position of $854,246 was primarily due to capital contributions, partially offset by a net operating loss for the year. The water rates, which reflect water conservation efforts through a tiered rate structure, and sewer rates were adjusted by 2% and 3%, respectively, in 2015. A review of utility rates is planned for 2016. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget was amended several times during the year reflecting increases in business license revenue, building permit revenue, MSA maintenance aid, lease revenues and SCORE grants; reductions in police revenues and fines and forfeits; and reallocating resources within the original budget. The final amended budget is $148,650 greater than the original adopted budget. Revenues were $51,277 over budget for the year. Fiscal disparities revenues came in under budget by $178,439. This variance was more than offset by greater than anticipated license and permit revenues as well as intergovernmental state aid revenues. Expenditures came in under budget by $374,464 due to many factors including lower than expected personal services costs from vacant positions. Fuel costs were much lower than anticipated and spending on contractual services was lower overall from budgeted levels primarly due to contracted storm system maintenance that was delayed in 2015. There were also transfers from the general fund of $590,245. This resulted in a net fund balance increase of $639,878 for the fiscal year, compared to the planned reduction of $170,000. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 20 CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets – The City of Lino Lakes’ investment in capital assets for its governmental and business- type activities as of December 31, 2015, is $70,355,866. This investment in capital assets includes land, buildings, office equipment and furniture, vehicles, machinery and equipment, other capital assets, and infrastructure. This represents an increase in the City of Lino Lakes’ investment in capital assets of approximately 10%. Developer lead infrastructure additions for 2015 include NorthPointe 1st Addition as well as Saddle Club 1st Addition. The City completed construction of Well No. 6, while the pump house is still pending completion. Also sitting in construction in progress and pending final completion are, the Shenandoah Area Street Improvements, the construction of Fire Station #2, and the Birch Street turn lanes and infrastructure improvements. 2015 2014 2015 2014 2015 2014 Land 3,275,859$ 3,275,859$ -$ -$ 3,275,859$ 3,275,859$ Construction in Progress 7,268,375 808,093 1,830,071 - 9,098,446 808,093 Buildings 2,802,413 3,116,839 - - 2,802,413 3,116,839 Office Equipment and Furniture 133,963 364,999 - - 133,963 364,999 Vehicles 1,141,371 1,170,030 - - 1,141,371 1,170,030 Machinery and Shop Equipment 1,109,527 336,387 152,886 211,027 1,262,413 547,414 Other Equipment 193,122 167,804 - - 193,122 167,804 Infrastructure 25,303,407 26,972,973 27,144,872 27,344,994 52,448,279 54,317,967 Capital Assets, Net 41,228,037$ 36,212,984$ 29,127,829$ 27,556,021$ 70,355,866$ 63,769,005$ Governmental Activities Business-Type Activities Total Capital Assets at Year-End (Net of Accumulated Depreciation) Additional information on the City’s capital assets can be found in the notes to the financial statements on pages 48-49. Long-term debt – At the end of the current fiscal year, the City of Lino Lakes had total bonded debt outstanding of $24,611,250. Of this amount $16,406,250 comprises tax supported debt and $6,485,000 is special assessment debt. All outstanding debt carries the general obligation backing for which the City is liable in the event of default by the property owners subject to the specific taxes, special assessments or revenues pledged to the retirement of the debt. In addition, the City carries a note to Anoka County for its share of the cost of the I-35E/County Road 14 Interchange project in the amount of $1,720,000. 2015 2014 2015 2014 2015 2014 G.O. Bonds 16,406,250$ 9,231,000$ -$ -$ 16,406,250$ 9,231,000$ G.O. Special Assessment Bonds 6,485,000 7,445,000 - - 6,485,000 7,445,000 Note Payable - Anoka County 1,720,000 2,080,000 - - 1,720,000 2,080,000 Total Outstanding Debt 24,611,250$ 18,756,000$ -$ -$ 24,611,250$ 18,756,000$ Governmental Activities Business-Type Activities Total The City of Lino Lakes’ total bonded debt increased by $6,215,250 (37.3%) during the current fiscal year. The key factors for the change include the issuance of $198,250 in 2015A Equipment Certificates, $963,000 in 2015B Certificates, $3,095,000 of General Obligation Bonds to finance street reconstruction in the Shenandoah Area and public infrastructure improvements related ot the construction of Fire Station #2, and $4,350,000 in EDA Lease Revenue Bonds to finance the construction of Fire Station #2 in the City of Lino Lakes. Principal in the amount of $2,391,000 was retired during the year. Additional information on the City’s long-term debt can be found in the notes to the financial statements on pages 50-52. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2015 21 ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The unemployment rate for the City of Lino Lakes at year-end is 3.3%, which is a great improvement from a rate of 4.5% in 2013. This is slightly lower than the state’s average unemployment rate of 3.7% and significantly lower than the national average of 5.0% at the end of 2015. Residential growth in the City has continued to be significantly below the rates of the mid 2000’s due to the general residential real estate market weakness, with about half of the number of new home permits issued in 2015 as in 2007, and less than 76% of new home permits issued in 2005. This is an improvement over recent years. Recently increased building and development activities are signalling a recovery of the housing market. Property values of the existing tax base are expected to increase slightly and will continue to have an impact on the City’s tax base for 2016. Energy costs are expected to continue to remain steady or slightly increase over the coming months. This will have an impact on the City’s budget for the coming year and thereafter. Property tax reforms have significantly impacted state aid payments the City of Lino Lakes receives. The City is exempted from local government aid and the state legislature has discontinued the market value homestead credit in favor of a new market value exclusion, which excludes a portion of residential homestead property value from property taxes. The Federal Reserve Board has continued the federal funds rates at historical lows, currently between 0.25% – 0.50%, which is expected to result in reduced investment earnings. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of Lino Lakes’ finances for all of those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, City of Lino Lakes, 600 Town Center Parkway, Lino Lakes, Minnesota, 55014. BASIC FINANCIAL STATEMENTS 22 CITY OF LINO LAKES, MINNESOTA Statement 1 STATEMENT OF NET POSITION December 31, 2015 Governmental Activities Business-type Activities Total ASSETS Cash and investments 21,973,812$ 13,879,881$ 35,853,693$ Accrued interest receivable 61,680 - 61,680 Accounts receivable 132,531 370,984 503,515 Due from other governments 101,048 1,594 102,642 Internal balances (559,110) 559,110 - Taxes receivable 237,384 - 237,384 Special assessments receivable 9,728,587 3,310 9,731,897 Long-term notes receivable 225,000 - 225,000 Prepaid items 221,854 24,630 246,484 Inventory - 42,022 42,022 Permanently restricted cash and investments 100,000 - 100,000 Capital assets: Land 3,275,859 - 3,275,859 Construction in progress 7,268,375 1,830,071 9,098,446 Other capital assets, net of depreciation 30,683,803 27,297,758 57,981,561 Total assets 73,450,823 44,009,360 117,460,183 Deferred Outflows of Resources: Deferred Outflows - Pensions 985,081 11,660 996,741 LIABILITIES Accounts payable 673,470 41,175 714,645 Salaries payable 312,028 15,456 327,484 Contracts and retainage payable 1,354,249 - 1,354,249 Accrued interest payable 338,379 - 338,379 Due to other governments 1,687 - 1,687 Other accrued liabilities - 7,140 7,140 Net Pension Liability: Due in more than one year 4,868,844 85,202 4,954,046 Non-current liabilities: Due within one year 3,220,894 37,584 3,258,478 Due in more than one year 22,276,154 26,600 22,302,754 Total liabilities 33,045,705 213,157 33,258,862 Deferred Inflows of Resources: Deferred Inflows - Pensions 636,040 7,404 643,444 NET POSITION Net Investment in Capital Assets 18,230,746 29,127,829 47,358,575 Restricted for: Debt service - expendable 8,196,461 - 8,196,461 Economic development 225,000 - 225,000 Public safety 76,794 - 76,794 Culture and recreation 13,247 - 13,247 Environmental improvements - expendable 23,791 - 23,791 Environmental improvements - nonexpendable 100,000 - 100,000 Unrestricted 13,888,120 14,672,630 28,560,750 Total net position 40,754,159$ 43,800,459$ 84,554,618$ The accompanying notes are an integral part of these basic financial statements. 23 CITY OF LINO LAKES, MINNESOTA STATEMENT OF ACTIVITIES Year Ended December 31, 2015 Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental activities: General government 2,016,351$ 818,468$ 169,448$ 33,750$ Public safety 5,135,865 199,498 339,488 - Public services 6,822,972 454,845 2,500 1,142,982 Parks, recreation and forestry 1,148,740 149,021 - - Conservation of natural resources 186,111 - 3,617 - Community development 432,268 - 11,054 - Interest on long-term debt 632,876 - - - Total governmental activities 16,375,183 1,621,832 526,107 1,176,732 Business-type activities: Water 1,394,897 1,014,836 263,024 1,709,405 Sewer 2,089,842 1,621,633 - 1,325,626 Total business-type activities 3,484,739 2,636,469 263,024 3,035,031 Total 19,859,922$ 4,258,301$ 789,131$ 4,211,763$ General revenues: Taxes: Property taxes, levied for general purpose Franchise taxes Other taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Change in market value Gain on disposal of capital assets Transfers Total general revenues and transfers Change in net position Net position - beginning Prior period restatement for change in accounting principle, see Note 20 Net position - beginning, as restated Net position - ending The accompanying notes are an integral part of these basic financial statements. Program Revenues 24 Statement 2 Governmental Activities Business-type Activities Total (994,685)$ -$ (994,685)$ (4,596,879) - (4,596,879) (5,222,645) - (5,222,645) (999,719) - (999,719) (182,494) - (182,494) (421,214) - (421,214) (632,876) - (632,876) (13,050,512) - (13,050,512) - 1,592,368 1,592,368 - 857,417 857,417 - 2,449,785 2,449,785 (13,050,512) 2,449,785 (10,600,727) 9,067,390 - 9,067,390 101,040 - 101,040 74,806 - 74,806 5,363 - 5,363 163,825 81,084 244,909 (50,864) (29,917) (80,781) 17,836 - 17,836 66,834 (66,834) - 9,446,230 (15,667) 9,430,563 (3,604,282) 2,434,118 (1,170,164) 48,734,868 41,444,300 90,179,168 (4,376,427) (77,959) (4,454,386) 44,358,441 41,366,341 85,724,782 40,754,159$ 43,800,459$ 84,554,618$ Net (Expense) Revenue and Changes in Net Position 25 CITY OF LINO LAKES, MINNESOTA BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2015 G.O. Improvement Area and Improvement Note Unit Assets General Bonds 2005A 2009F Charge Cash and investments 5,827,130$ 536,676$ 205$ 4,106,596$ Accrued interest receivable 61,680 - - - Accounts receivable 106,208 - - 25,907 Due from other governmental units 99,933 - - - Interfund receivable - - - - Taxes receivable: Delinquent 98,771 - - - Due from county 106,481 - - - Delinquent tax increment - - - - Special assessments receivable: Delinquent 6,836 - 422 7,689 Noncurrent 145 5,561,118 2,817,877 881,484 Due from county - - 7,179 8,659 Long-term notes receivable - - - - Prepaid items 220,677 - - - Permanently restricted cash and investments - - - - Advances to other funds - - - 285,947 Total assets 6,527,861$ 6,097,794$ 2,825,683$ 5,316,282$ Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Interfund payable -$ 2,876,648$ -$ -$ Accounts payable 160,411 200 - 4,504 Salaries payable 311,276 - - - Contracts and retainage payable 2,322 - - - Due to other governmental units 1,687 - - - Advances from other funds - - - - Total liabilities 475,696 2,876,848 - 4,504 Deferred inflows of resources: Unavailable resources 105,752 5,561,118 2,818,299 889,173 Fund balances: Nonspendable 220,677 - - - Restricted - - 7,384 - Committed - - - - Assigned - - - 4,422,605 Unassigned 5,725,736 (2,340,172) - - Total fund balances 5,946,413 (2,340,172) 7,384 4,422,605 Total liabilities, deferred inflows of resources and fund balances 6,527,861$ 6,097,794$ 2,825,683$ 5,316,282$ The accompanying notes are an integral part of these basic financial statements. 26 Statement 3 2015 Other Total Street Governmental Governmental Reconstruction Funds Funds 242,579$ 11,260,626$ 21,973,812$ - - 61,680 - 416 132,531 - 1,115 101,048 - 3,660,455 3,660,455 - 15,062 113,833 - 16,896 123,377 - 174 174 - 12,018 26,965 - 423,741 9,684,365 - 1,419 17,257 - 225,000 225,000 - 1,177 221,854 - 100,000 100,000 - - 285,947 242,579$ 15,718,099$ 36,728,298$ -$ 1,342,917$ 4,219,565$ 1,885 506,470 673,470 - 752 312,028 258,920 1,093,007 1,354,249 - - 1,687 - 285,947 285,947 260,805 3,229,093 6,846,946 - 450,995 9,825,337 - 101,177 321,854 - 2,630,254 2,637,638 - 163,239 163,239 - 10,600,247 15,022,852 (18,226) (1,456,906) 1,910,432 (18,226) 12,038,011 20,056,015 242,579$ 15,718,099$ 36,728,298$ 27 CITY OF LINO LAKES, MINNESOTA Statement 4 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION December 31, 2015 Total Fund Balances for Governmental Funds 20,056,015$ Total net position reported for governmental activities in the statement of net position is different because: Land 3,275,859$ Construction in Progress 7,268,375 Buildings, net of accumulated depreciation 2,802,413 Office equipment and furniture, net of accumulated depreciation 133,963 Vehicles, net of accumulated depreciation 1,141,371 Machinery and shop equipment, net of accumulated depreciation 1,109,527 Other equipment, net of accumulated depreciation 193,122 Infrastructure, net of accumulated depreciation 25,303,407 41,228,037 9,825,337 (338,379) Net Pension Liability (4,868,844) Deferred Outflows of Resources - Pensions 985,081 Deferred Inflows of Resources - Pensions (636,040) (4,519,803) Bonds payable (22,891,250) Unamortized premiums (135,130) Unamortized discounts 29,089 Notes payable (1,720,000) Other postemployment benefits (90,852) Compensated absence payable (688,905) (25,497,048) Total Net Position of Governmental Activities 40,754,159$ The accompanying notes are an integral part of these basic financial statements. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is included in the statement of net position. Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and, therefore, are not reported as fund liabilities. All liabilities - both current and long-term - are reported in the statement of net position. Balances at year-end are: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Those assets consist of: Some of the City's property taxes and special assessments will be collected after year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as a deferred inflow of resources in the governmental funds. The City's net pension liability and net pension asset and the related deferred inflows and deferred outflows of resources are recorded only on the Statement of Net Position. Balances at year end are: 28 CITY OF LINO LAKES, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS Year Ended December 31, 2015 G.O. Improvement Area and Improvement Note Unit Revenue: General Bonds 2005A 2009F Charge General property taxes 7,489,040$ -$ -$ -$ Tax increments - - - - Licenses and permits 551,202 - - - Intergovernmental 649,611 - - - Special assessments 14,008 - 34,050 464,869 Charges for services 277,423 - - 246,360 Fines and forfeits 127,803 - - - Investment earnings 27,004 1,438 - 40,612 Net increase (decrease) in fair value of investments (9,578) (1,095) - (6,564) Refunds 54,689 - - - Miscellaneous 168,952 - - - Total revenue 9,350,154 343 34,050 745,277 Expenditures: Current: General government 1,609,249 - - - Public safety 4,372,735 - - - Public works 1,135,020 - - 35,615 Parks, recreation and forestry 828,084 - - - Conservation of natural resources 186,886 - - - Community development 422,935 - - - Capital outlay: General government 4,461 - - - Public safety 36,844 - - - Public works - - - - Conservation of natural resources 4,711 - - - Debt service: Principal - 380,000 360,000 - Interest and fiscal charges - 150,560 79,565 - Bond issuance costs - - - - Total expenditures 8,600,925 530,560 439,565 35,615 Revenue over (under) expenditures 749,229 (530,217) (405,515) 709,662 Other financing sources (uses): Transfer in 480,894 683,729 378,000 - Transfer out (590,245) - - (670,734) Sale of property - - - - Issuance of debt - - - - Premium on bonds issued - - - Total other financing sources (uses) (109,351) 683,729 378,000 (670,734) Net increase (decrease) in fund balance 639,878 153,512 (27,515) 38,928 Fund balance - beginning of year 5,306,535 (2,493,684) 34,899 4,383,677 Fund balance - December 31 5,946,413$ (2,340,172)$ 7,384$ 4,422,605$ The accompanying notes are an integral part of these basic financial statements. 29 Statement 5 2015 Other Total Street Governmental Governmental Reconstruction Funds Funds -$ 1,194,181$ 8,683,221$ - 267,286 267,286 - - 551,202 - 30,016 679,627 - 190,214 703,141 - 172,718 696,501 - - 127,803 5,979 88,464 163,497 (2,080) (31,265) (50,582) - 71,993 126,682 - 470,438 639,390 3,899 2,454,045 12,587,768 - 34,717 1,643,966 - 7,522,747 11,895,482 2,603,672 169,205 3,943,512 - 8,100 836,184 - 4,152 191,038 - - 422,935 - 67,932 72,393 - 1,161,951 1,198,795 - 290,158 290,158 - - 4,711 - 2,062,511 2,802,511 - 312,041 542,166 - 62,831 62,831 2,603,672 11,696,345 23,906,682 (2,599,773) (9,242,300) (11,318,914) - 1,850,348 3,392,971 - (2,075,158) (3,336,137) - 54,522 54,522 2,560,703 6,045,547 8,606,250 53,115 61,845 114,960 2,613,818 5,937,104 8,832,566 14,045 (3,305,196) (2,486,348) (32,271) 15,343,207 22,542,363 (18,226)$ 12,038,011$ 20,056,015$ 30 CITY OF LINO LAKES, MINNESOTA Statement 6 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES Net Change in Fund Balances-Total Governmental Funds (2,486,348)$ Amounts reported for governmental activities in the statement of activities are different because: Capital outlays 9,680,582$ Loss on disposal of capital assets (74,607) Depreciation expense (4,590,922) 5,015,053 Issuance of bonds (7,445,000) Issuance of equipment certificates (1,161,250) Bond premium (114,960) Repayment of bond principal 2,751,000 Change in accrued interest expense for general obligation bonds (88,511) Amortization of bond premium 8,691 Amortization of bond discount (3,595) (6,053,625) Unavailable resources - December 31, 2014 (9,708,584) Unavailable resources - December 31, 2015 9,825,337 116,753 (52,739) (143,376) Change in Net Position of Governmental Activities (3,604,282)$ The accompanying notes are an integral part of these basic financial statements. Year Ended December 31, 2015 In the statement of activities, compensated absences and other post employment benefits are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). During fiscal year 2015, compensated absence payable and other post employment benefits payable increased. Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Also, governmental funds report the effect of premiums and discounts when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Interest is recognized as an expenditure in the governmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues, regardless of when it is due. The net effect of these differences in the treatment of general obligation bonds and related items is as follows: Delinquent and noncurrent property taxes and special assessments receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period’s expenditures and, therefore, are not available in the governmental funds. Pension expenses in the governmental funds are measured by current year employee contributions. Pension expenses on the Statement of Activities are measured by the change in the net pension liability and the related deferred inflows and outflows or resources 31 CITY OF LINO LAKES, MINNESOTA Statement 7 STATEMENT OF NET POSITION - PROPRIETARY FUNDS December 31, 2015 Total Water Sewer 2015 Current assets: Cash and cash equivalents 5,738,284$ 8,141,597$ 13,879,881$ Accounts receivable 151,533 219,451 370,984 Due from other governmental units - 1,594 1,594 Interfund receivable - 559,110 559,110 Due from county - special assessments 1,655 1,655 3,310 Prepaid items 7,255 17,375 24,630 Total current assets 5,898,727 8,940,782 14,839,509 Non-current assets: Inventory 42,022 - 42,022 Capital assets not being depreciated: Construction in progress 1,259,174 570,897 1,830,071 Capital assets being depreciated: Buildings - - - Equipment 120,723 328,432 449,155 Water and sewer systems 20,891,552 22,164,830 43,056,382 Total capital assets 22,271,449 23,064,159 45,335,608 Less: allowance for depreciation (7,692,655) (8,515,124) (16,207,779) Net capital assets 14,578,794 14,549,035 29,127,829 Total noncurrent assets 14,620,816 14,549,035 29,169,851 Total assets 20,519,543 23,489,817 44,009,360 Deferred Outflows of Resources 5,833 5,827 11,660 Total Assets and Deferred Outflows of Resources 20,525,376 23,495,644 44,021,020 Current liabilities: Accounts payable 30,462 10,713 41,175 Salaries payable 7,728 7,728 15,456 Other accrued liabilities 7,140 - 7,140 Compensated absences payable - current portion 18,792 18,792 37,584 Total current liabilities 64,122 37,233 101,355 Non-current liabilities: Compensated absences payable - long term 13,300 13,300 26,600 Net Pension Liability 42,622 42,580 85,202 Total noncurrent liabilities 55,922 55,880 111,802 Total liabilities 120,044 93,113 213,157 Deferred Inflows of Resources 3,704 3,700 7,404 Total Liabilities and Deferred Inflows of Resources 123,748 96,813 220,561 Investment in capital assets 14,578,794 14,549,035 29,127,829 Unrestricted 5,822,834 8,849,796 14,672,630 Total net position 20,401,628 23,398,831 43,800,459 Total Liabilities, Deferred Inflows of Resources, and Net Position 20,525,376$ 23,495,644$ 44,021,020$ The accompanying notes are an integral part of these basic financial statements. Assets Liabilities Net position 32 CITY OF LINO LAKES, MINNESOTA Statement 8 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - PROPRIETARY FUNDS Year Ended December 31, 2015 Total Water Sewer 2015 Operating revenue: Charges for services 972,096$ 1,611,053$ 2,583,149$ Hook-up charges 13,260 10,580 23,840 Water meter sales 15,128 - 15,128 Other operating revenue 14,352 - 14,352 Total operating revenue 1,014,836 1,621,633 2,636,469 Operating expenses: Personal services 204,983 209,624 414,607 Materials and supplies 136,270 29,145 165,415 Contractual services 117,204 128,324 245,528 MCES sewer charges - 751,648 751,648 Depreciation 836,772 892,427 1,729,199 Utilities 84,645 41,263 125,908 Other 15,023 37,411 52,434 Total operating expenses 1,394,897 2,089,842 3,484,739 Net income (loss) from operations (380,061) (468,209) (848,270) Other income (expense): Investment earnings 33,166 47,918 81,084 Net increase (decrease) in fair value of investments (12,245) (17,672) (29,917) Special assessments 472 473 945 Total other expense 21,393 30,719 52,112 Net income before contributions and transfers (358,668) (437,490) (796,158) Capital contributions and transfers: Contributions from private sources 263,024 142,017 405,041 Capital contributions from primary government 1,708,933 1,183,136 2,892,069 Transfer out (33,417) (33,417) (66,834) Total contributions and transfers 1,938,540 1,291,736 3,230,276 Change in net position 1,579,872 854,246 2,434,118 Net position - January 1 18,860,755 22,583,545 41,444,300 Prior Period restatement for Implementation of GASB Standard (See Note 20) (38,999) (38,960) (77,959) Net position - January 1, as Restated 18,821,756 22,544,585 41,366,341 Net position - December 31 20,401,628$ 23,398,831$ 43,800,459$ The accompanying notes are an integral part of these basic financial statements. 33 CITY OF LINO LAKES, MINNESOTA Statement 9 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Year Ended December 31, 2015 Total Water Sewer 2015 Cash flows from operating activities: Cash receipts from customers 1,006,511$ 1,609,702$ 2,616,213$ Cash paid to suppliers (382,585) (999,218) (1,381,803) Cash paid to employees (187,977) (199,472) (387,449) Net cash flows from operating activities 435,949 411,012 846,961 Cash flows from noncapital financing activities: Net transfers (33,417) (33,417) (66,834) Cash flows from capital and related financing activities: Collection of special assessments (160) - (160) Acquisition of capital assets (7,134) - (7,134) Net cash flows used by capital and related financing activities (7,294) - (7,294) Cash flows from investing activities: Interest on investments 20,921 30,243 51,164 Net increase in cash and cash equivalents 416,159 407,838 823,997 Cash and cash equivalents - January 1 5,322,125 7,733,759 13,055,884 Cash and cash equivalents - December 31 5,738,284$ 8,141,597$ 13,879,881$ Reconciliation of operating income to net cash from operating activities: Operating loss (380,061)$ (468,209)$ (848,270)$ Adjustments to reconcile operating income to net cash flows from operating activities: Loss on disposal of capital assets 1,295 1,985 3,280 Depreciation 836,772 892,427 1,729,199 Change in assets and liabilities: Increase in receivables (8,325) (11,931) (20,256) Decrease (Increase) in prepaid items 4,899 4,296 9,195 (Increase) in inventory (15,760) - (15,760) (Increase) in deferred outflows (5,833) (5,827) (11,660) Increase (Decrease) in voucher payables (19,877) (17,708) (37,585) Increase (Decrease) in salaries payables 9,815 3,001 12,816 Increase (Decrease) in net pension liability 3,623 3,581 7,204 Increase (Decrease) in compensated absences 5,697 5,697 11,394 Increase (Decrease) in deferred inflows 3,704 3,700 7,404 Net cash flows from operating activities 435,949$ 411,012$ 846,961$ Noncash investing, capital, and financing activities: Capital asset contributions from governmental activities 1,971,957$ 1,325,153$ 2,892,069$ The accompanying notes are an integral part of these basic financial statements. 34 CITY OF LINO LAKES, MINNESOTA Statement 10 STATEMENT OF NET POSITION - FIDUCIARY FUNDS - AGENCY FUNDS December 31, 2015 2015 Assets Cash and investments 727,635$ Liabilities Deposits payable 727,635$ The accompanying notes are an integral part of these financial statements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 35 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lino Lakes is a public corporation formed under Minnesota Statute 410. As such, the City is under home rule charter regulations and applicable statutory guidelines. The basic financial statements of the City of Lino Lakes have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies: A. FINANCIAL REPORTING ENTITY As required by U.S. generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Lino Lakes and its component units. A component unit is a legally separate entity for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit include whether or not the primary government appoints the voting majority of the potential component unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. Component Units In conformity with U.S. generally accepted accounting principles, the financial statements of component units have been included in the financial reporting entity either as blended component units or as discretely presented component units. Blended Component Units The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the EDA is reported as if it were part of the City's operations because the governing body is substantively the same as the governing body of the City and a financial benefit or burden relationship exists between the City and the EDA. The EDA does not issue separate financial statements. The Housing and Redevelopment Authority (HRA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the HRA is reported as if it were part of the City's operations because the members of the City Council serve as commission members and a financial benefit or burden relationship exists between the City and the HRA. The HRA has not yet incurred any financial activity. B. BASIC FINANCIAL STATEMENTS 1. Government-Wide Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) display information about the primary government and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external parties for support. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s enterprise funds and various other functions of government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 36 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIC FINANCIAL STATEMENTS (CONTINUED) 1. Government-Wide Statements (Continued) In the government-wide statement of net position, both the governmental and business-type activities columns: (a) are presented on a consolidated basis by column; and (b) are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City’s net position is reported in three parts: (1) net investment in capital assets; (2) restricted net position; and (3) unrestricted net position. The City first utilizes restricted resources to finance qualifying activities. The statement of activities demonstrates the degree to which the direct expenses of each function of the City’s governmental activities and different business-type activities are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Program revenues include: (1) fees, fines, and charges paid by the recipients of goods, services, or privileges provided by a given function or activity; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 2. Fund Financial Statements The fund financial statements provide information about the City’s funds, including its fiduciary funds and blended component unit. Separate statements for each fund category (governmental, proprietary, and fiduciary) are presented. The emphasis of governmental and proprietary fund financial statements is on major individual governmental and enterprise funds, with each displayed as separate columns in the fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or incidental activities. The City reports the following major governmental funds: General Fund The general fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. General Obligation Improvement Bonds 2005A Fund The general obligation improvement bonds 2005A fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. Improvement Note 2009F Fund The improvement note 2009F fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. Area and Unit Charge Fund The area and unit charge fund accounts for the collection of water and sewer unit charges to be used for debt payments and construction of governmental infrastructure. 2015 Street Reconstruction Fund The 2015 Street Reconstruction fund accounts for the construction and improvements to Shenandoah Street. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 37 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIC FINANCIAL STATEMENTS (CONTINUED) 2. Fund Financial Statements (Continued) The City reports the following major proprietary funds: Water Fund The water fund accounts for customer water service charges that are used to finance water operating expenses. Sewer Fund The sewer fund accounts for customer sewer service charges that are used to finance sewer operating expenses. Additionally, the City reports the following fiduciary funds: Agency Funds - to account for assets held as an agent for individuals, private organizations, other governmental units, and/or other funds. The City’s agency fund accounts for pass-through contractor’s deposits relating to prospective developments. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds, which are included in the Fiduciary Funds, do not have a measurement focus. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. The City considers all revenues to be available if they are collected within 60 days after the end of the current period. Property and other taxes, licenses, and interest are all considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent that they have matured. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 38 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING (CONTINUED) Amounts reported as program revenues include: 1. Charges to customers or applicants for goods, services, or privleges provided, 2. operating grants and contributions, and 3. capital grants and contributions, including special assessments. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of the City’s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. BUDGETS Budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Annual appropriated budgets are adopted for the General Fund and the Program Recreation Special Revenue Fund. Budgeted expenditure appropriations lapse at year-end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is not presently considered necessary to assure effective budgetary control or to facilitate effective cash management. E. LEGAL COMPLIANCE – BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Administrator submits to the City Council a proposed operating budget (including the General Fund and Program Recreation Special Revenue Fund) for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution on a departmental basis and can be expended by each department based upon detailed budget estimates for individual expenditure accounts. 4. The City Administrator is authorized to transfer appropriations within any department budget. Additional interdepartmental or interfund appropriations and deletions are or may by authorized by the City Council with fund (contingency) reserves or additional revenues. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund. 6. Legal debt obligation indentures determine the appropriation level and debt service tax levies for the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to determine and calculate user charges. These debt service and budget amounts represent general obligation bond indenture provisions and net income for operation and capital maintenance and are not reflected in the financial statements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 39 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. LEGAL COMPLIANCE – BUDGETS (CONTINUED) 7. A capital improvement program is reviewed periodically by the City Council for the Capital Project Funds. However, appropriations for major projects are not adopted until the actual bid award of the improvement. The appropriations are not reflected in the financial statements. 8. Expenditures may not legally exceed budgeted appropriations at the department level unless approved by the City Council. Therefore, the legal level of budgetary control is at the department level (i.e. administration, community development, public safety, public services, and other). 9. The City Council may authorize transfers of budgeted amounts between City funds. F. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in investments authorized by Minnesota Statutes. Earnings from investments are allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund in the governmental fund financial statements, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund payables are eliminated for statement of net position presentation. Investments are stated at fair value and interest earnings are accrued at year-end. For purposes of the statement of cash flows the Proprietary Fund considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the proprietary fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types is considered cash equivalents. Permanently restricted cash and investments represents the principal and earnings portion of resources received that must be retained in a permanent fund. Only earnings from these funds may be used for purposes that support environmental maintenance and improvements. G. PROPERTY TAX CREDITS Property taxes on homestead property (as defined by State Statutes) are partially reduced by property tax credits. These credits are paid to the City by the State in lieu of taxes levied against homestead property. The State remits these credits through installments each year. These credits are recognized as revenue by the City at the time of collection. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 40 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 15 and December 15 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. Within the governmental fund financial statements, the City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and the following January are recognized as revenue for the current year. Taxes and credits not received at the year-end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by deferred inflows of resources because it is not available to finance current expenditures. Deferred inflows of resources in governmental fund are susceptible to full accrual on the government-wide statements. The City's property tax revenue includes payments from the Metropolitan Revenue Distribution (Fiscal Disparities Formula) per State Statute 473F. This statute provides a means of spreading a portion of the taxable valuation of commercial/industrial real property to various taxing authorities within the defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property valuation growth since 1971. Property taxes paid to the City through this formula for 2015 totaled $1,221,907. Receipt of property taxes from this "fiscal disparities pool" does not increase or decrease total tax revenue. I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Within the fund financial statements, the revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the County and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, noncurrent and special assessments receivable in governmental funds are completely offset by deferred inflow of resources. Deferred inflows of resources in governmental funds are susceptible to full accrual on the government-wide statements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 41 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. SPECIAL ASSESSMENT REVENUE RECOGNITION (CONTINUED) Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. J. INVENTORIES AND PREPAIDS The original cost of materials and supplies has been recorded as expenditures/expenses at the time of purchase in both the Governmental and Proprietary Funds. These funds do not maintain material amounts of materials and supplies. Certain payments to vendors reflect costs applicable to future accounting periods and are reported as prepaid items under the purchases method in both government-wide and fund financial statements. K. INTERFUND RECEIVABLES/PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. The year-end balances are classified as interfund receivables and payables on the governmental fund balance sheets. The non-current portion of interfund loans are reported as “advances to/from other funds.” Advances between funds are classified as nonspendable fund balance account in the general fund to indicate they are not available for appropriation and are not expendable from available financial resources. L. CAPITAL ASSETS Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, sidewalks, street lights, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets exceeding the City’s capitalization threshold of $2,500 are recorded at historical cost or estimated historical cost if purchased or constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. All existing City infrastructure has been capitalized regardless of date placed in service. Depreciation on exhaustible assets is recorded as an allocated expense in the statement of activities with accumulated depreciation reflected in the statement of net position. Capital assets are depreciated using the straight-line method over their estimated useful lives. Since surplus assets are sold for an immaterial amount when declared as no longer needed for City purposes, no salvage value is taken into consideration for depreciation purposes. Useful lives vary from 3 to 30 years for Buildings, Office Furniture and Equipment, Vehicles, Machine Shop and Equipment and Other assets, and 25 to 50 years for Infrastructure. Capital assets not being depreciated include land. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 42 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation, PTO (Personal Time Off), extended leave and sick pay benefits. All vacation pay and PTO and the portion of sick pay allowable as severance pay is accrued in the government-wide and proprietary fund financial statements. The current portion is calculated based on historical trends. N. LONG-TERM OBLIGATIONS In the entity-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as an expense in the period they are incurred. In the governmental fund financial statements, bond premiums and discounts, as well as bond issue costs are recognized during the current period. The face amount of the debt issue is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issue costs are reported as debt service expenditures. O. NET PENSION LIABILITY For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA’s fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. P. DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate section represents a consumption of net position that applies to a future period. The City will not recognize the related outflow until a future event occurs. More detailed information about pension related deferred outflows of resources can be found in Note 6 to the financial statements. The City’s statement of net position, governmental fund, and proprietary fund financial statements report a separate section for deferred inflows of resources. This separate financial statement element reflects an increase in net position of fund balance that applies to a future period. The City will not recognize the related revenue until a future event occurs. The City has two types of items which occurs relating to revenue recognition: The first type of deferred inflow of resources occurs because governmental fund revenues are not recognized until available (collected not late than 60 days after the end of the City’s year) under the modified accrual basis of accounting. The second type relates to pension liabilities as described in Note 6 to the financial statements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 43 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. FUND EQUITY In the fund financial statements, governmental funds report fund balances in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable – portions of fund balance related to prepaids, inventories, long-term receivables, and corpus on any permanent fund. Restricted – funds are constrained by external parties (statute, grantors, bond agreements, etc.). Committed – funds are established and modified by a resolution approved by the City Council. Assigned – consists of internally imposed constraints. These constraints are established by the City Council and/or management. The City Council passed a resolution authorizing the Finance Director to assign fund balances and their intended uses. Unassigned – is the residual classification for the General Fund and also reflects negative residual amounts in other funds. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, it is the City’s policy to use restricted first, then unrestricted fund balance. When an expenditure is incurred for purposes for which committed, assigned, and unassigned amounts are available, it is the City’s policy to use committed first, then assigned, and finally unassigned amounts. The City formally adopted a fund balance policy for the General Fund. The policy establishes an unassigned fund balance range of 40% - 50% of General Fund operating expenditures. The fund equity balances in the proprietary funds have been classified into two broad categories: Net position – net investment in capital assets Unrestricted net position Net position represents the differences between assets and deferred outflows of resources and liabilities and deferred inflows of resources in the government-wide financial statements. Net position – net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the ouststanding balance of any long-term debt used to build or acquire capital assets. Net position is reported as restricted in government-wide financial statements when there are limitations on their use thorugh external restrictions imposed by creditors, grantors, or laws or regulations of other governments. R. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures or expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. All interfund transactions are eliminated except for activity between governmental activities and business- type activities for presentation in the entity-wide statements of net position and statements of activities. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 44 S. CHANGE IN ACCOUNTING ESTIMATE For fiscal year 2015, the City had a change in accounting estimate for a change in depreciation methodology. Prior to 2015, the City did not take any depreciation for capital assets in the year of acquisition. Beginning January 1, 2015, the City started depreciating assets in the month they are placed in service. T. CHANGE IN ACCOUNTING PRINCIPLE During the fiscal year ended December 31, 2015, the City adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and the related GASB No. 71, Pensions Transition for Contributions Made Subsequent to the Measurement Date-an amendment of GASB No. 68. The primary objective of these Statements is to improve accounting and financial reporting by state and local governments for pensions. They also improve information provided by state and local governmental employers about financial support for pensions that is provided by other entities. See Note 19 for more detail of the effect of this change in accounting principle on the financial statements. Note 2 DEPOSITS AND INVESTMENTS Components of Cash and Investments Cash and investments at year-end consist of the following: Cash and Investments - Statement of Net Position 35,853,693$ Permanent restricted Cash and Investments - Statement of Net Position 100,000 Cash and Investments - Statement of Net Position - Fiduciary Funds 727,635 Total 36,681,328$ Cash and investments are presented in the financial statements as follows: Deposits 2,182,827$ Investments 34,497,681 Cash on Hand 820 Total 36,681,328$ A. DEPOSITS The City maintains a cash and investment pool that is available for use by all funds. Each fund type’s portion of this pool is displayed on the statement of net position and the balance sheet as “Cash and Investments.” In accordance with Minnesota Statutes, the City maintains deposits at financial institutions which are authorized by the City Council. Custodial Credit Risk – Custodial credit risk for deposits is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City does not have a specific deposit policy for custodial credit risk but rather follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or corporate surety bonds. Authorized collateral include: U.S. government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of a state or local government rated “A” or better; revenue obligations of a state or local government rated “AA” or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits insured by a federal agency. Minnesota Statutes require securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust department of a commercial bank or other financial institution not owned or controlled by the depository. The City’s deposits in banks at December 31, 2015 were entirely covered by federal depository insurance or by surety bonds and collateral in accordance with Minnesota Statutes. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 45 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. INVESTMENTS The City may also invest idle funds as authorized by Minnesota Statutes as follows: Direct obligations or obligations guaranteed by the United States or its agencies Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, is rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of thirteen months or less General obligations rated “A” or better; revenue obligations rated “AA” or better General obligations of the Minnesota Housing Finance Agency rated “A” or better Banker’s acceptances of United States banks eligible for purchase by the Federal Reserve System Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by a least two nationally recognized rating agencies, and maturing in 270 days or less Guaranteed investment contracts guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debt obligations of the issuer or the collateral pledged by the issuer is in the top two rating categories Repurchase or reverse purchase agreements and securities lending agreements financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers Any security which is an obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to section 126C.55. Investments Held with Broker – Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City’s policy to minimize interest rate risk includes investing primarily in short-term securities and structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations. Information about the sensitivity of the fair values of the City’s investments to market interest rate risk fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity: CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 46 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. INVESTMENTS (CONTINUED) 12 Months 13 to 24 25 to 60 Type Total or Less Months Months Minnesota Municipal Money Market Trust Fund 7,404,834$ 7,404,834$ -$ -$ Federal Home Loan Bank 297,861 - - 297,861 Federal Home Loan Mortgage Corp. 803,533 - 803,533 Federal National Mortgage Assn. 1,295,274 - - 1,295,274 Negotiable CDs 14,614,686 7,791,744 2,170,544 4,652,398 Municipal Bonds 9,822,152 4,583,200 2,026,502 3,212,450 Mutual Fund 259,341 259,341 - - Total 34,497,681$ 20,039,119$ 4,197,046$ 10,261,516$ Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. The City’s policy to minimize credit risk includes limiting investing funds to those allowable under Minnesota Statute 118A, annually appointing all financial institutions where investments are held, and diversifying the investment portfolio. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following chart summarizes year-end ratings for the City’s investments as rated by Moody’s Investors Service: Credit Type Quality Rating Amount Minnesota Municipal Money Market Trust Fund Aa2 7,404,834$ Federal Home Loan Bank Aaa/AA+ 297,861 Federal Home Loan Mortgage Corp. Aaa/AA+ 803,533 Federal National Mortgage Assn. Aaa/AA+ 1,295,274 Negotiable CDs Not Rated 14,614,686 Municipal Bonds A-Aaa 9,822,152 Mutual Fund Not Rated 259,341 Total 34,497,681$ The Minnesota Municipal Money Market Fund Trust is a common law trust organized in accordance with the Minnesota Joint Powers Act, which invests only in investment instruments allowable under Minnesota statutes as described on the previous page. Its investments are valued at amortized cost, which approximates market value in accordance with Rule 2a-7 of the Investment Company Act of 1940. The amortized cost method of valuation values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the fair value of instruments. The Minnesota Municipal Money Market Trust Fund does not have its own credit rating. MBIA, Inc., who administers the Minnesota Municipal Money Market Fund Trust holds an organization credit rating of Aa2. For an investment, custodial credit risk is the risk that, in the event of failure of the counterparty, the City will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. The City’s investment policy doesn’t specifically address custodial credit risk. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 47 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. INVESTMENTS (CONTINUED) Concentration of Credit Risk The City places no limit on the amount that it may invest in any one issuer. The following is a list of investments which individually comprise more than 5% of the city’s total investments: Type Amount Percentage Citibank SDA 2,939,195$ 8.52% Note 3 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2015 was as follows: Beginning Ending Balance Increases Decreases Transfers Balance Governmental Activities: Capital Assets, Not Being Depreciated: Land 3,275,859$ -$ -$ -$ 3,275,859$ Construction in Progress 808,093 7,268,375 (808,093) - 7,268,375 Total Capital Assets, Not Being Depreciated 4,083,952 7,268,375 (808,093) - 10,544,234 Capital Assets, Being Depreciated: Buildings 6,765,619 - - - 6,765,619 Office Equipment and Furniture 1,398,722 108,321 (167,991) (702,619) 636,433 Vehicles 2,891,461 526,556 (270,155) (24,966) 3,122,896 Machinery and Shop Equipment 960,720 684,076 (91,619) 702,619 2,255,796 Other Equipment 952,447 28,384 - 24,966 1,005,797 Infrastructure 78,607,804 1,872,963 - - 80,480,767 Total Capital Assets, Being Depreciated 91,576,773 3,220,300 (529,765) - 94,267,308 Accumulated Depreciation for: Buildings (3,648,780) (314,426) - - (3,963,206) Office Equipment and Furniture (1,033,723) (35,760) 139,878 427,135 (502,470) Vehicles (1,721,431) (534,894) 266,735 8,065 (1,981,525) Machinery and Shop Equipment (624,333) (143,346) 48,545 (427,135) (1,146,269) Other Equipment (784,643) (19,967) - (8,065) (812,675) Infrastructure (51,634,831) (3,542,529) - - (55,177,360) Total Accumulated Depreciation (59,447,741) (4,590,922) 455,158 - (63,583,505) Total Capital Assets, Being Depreciated, Net 32,129,032 (1,370,622) (74,607) - 30,683,803 Governmental Activities Capital Assets, Net 36,212,984$ 5,897,753$ (882,700)$ -$ 41,228,037$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 48 Note 3 CAPITAL ASSETS (CONTINUED) Beginning Ending Balance Increases Decreases Transfers Balance Business-Type Activities: Capital Assets, Not Being Depreciated: Construction in Progress -$ 1,830,071$ -$ -$ 1,830,071$ Total Capital Assets, Not Being Depreciated - 1,830,071 - - 1,830,071 Capital Assets, Being Depreciated: Buildings 48,690 - - (48,690) - Machinery and Shop Equipment 545,511 15,103 (66,174) (45,285) 449,155 Water and Sewer Lines 41,495,364 1,467,043 - 93,975 43,056,382 Total Capital Assets, Being Depreciated 42,089,565 1,482,146 (66,174) - 43,505,537 Accumulated Depreciation for: Buildings (48,690) - - 48,690 - Machinery and Shop Equipment (334,484) (27,300) 54,964 10,551 (296,269) Water and Sewer Lines (14,150,370) (1,701,899) - (59,241) (15,911,510) Total Accumulated Depreciation (14,533,544) (1,729,199) 54,964 - (16,207,779) Total Capital Assets, Being Depreciated, Net 27,556,021 (247,053) (11,210) - 27,297,758 Business-Type Capital Assets, Net 27,556,021$ 1,583,018$ (11,210)$ -$ 29,127,829$ Depreciation expense charged to functions/programs of the primary government as follows: Governmental Activities: General Government 334,252$ Public Safety 309,057 Public Services 3,721,888 Parks, Recreation and Forestry 224,712 Conservation of Natural Resources 512 Community Development 501 Total Depreciation Expense, Governmental Activities 4,590,922$ Business-type Activities: Water 836,772$ Sewer 892,427 Total Depreciation Expense, Governmental Activities 1,729,199$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 49 Note 4 CITY INDEBTEDNESS City indebtedness at December 31, 2015 is composed of the following: Final Issue Maturity Interest Original Payable Date Date Rate Issue 12/31/2015 Governmental Activities: General Obligation Bonds: 2013A Equipment Certificates 2/1/2013 12/31/2015 1.00% 193,000$ 65,000$ 2014A Equipment Certificates 2/15/2014 12/31/2017 1.00% 495,000 335,000 2015A Equipment Certificates 2/1/2015 12/31/2018 1.00% 198,250 198,250 2015B Equipment Certificates 8/25/2015 12/31/2020 1.50% 963,000 963,000 G.O. Tax Abatement Bonds, Series 2006C 8/15/2006 2/1/2023 4.00%-4.30% 2,460,000 1,925,000 G.O. Utility Revenue Bonds, Series 2006D 8/15/2006 2/1/2017 4.00%-4.15% 570,000 135,000 G.O. CIP Refunding Bonds, Series 2006E 11/1/2006 2/1/2018 4.00% 2,990,000 1,210,000 G.O. Tax Increment Financing Bonds, Series 2007A 7/15/2007 2/1/2024 4.00%-4.125% 4,215,000 2,405,000 G.O. Refunding Bonds, Series 2012A 11/15/2012 2/1/2024 1.00%-2.00% 2,015,000 1,725,000 G.O Bonds 2015A 8/1/2015 2/1/2031 2.00%-3.00% 3,095,000 3,095,000 EDA Leased Revenue Bonds 2015B 10/1/2015 4/1/2036 2.00%-3.00% 4,350,000 4,350,000 Total General Obligation Bonds 21,664,250 16,406,250 Special Assessment Bonds: G.O. Improvement Bonds, Series 2005A 11/1/2005 2/1/2021 4.35%-5.15% 5,550,000 2,760,000 G.O. Improvement Refunding Bonds, Series 2005B 11/1/2005 2/1/2015 3.75%-5.00% 3,755,000 - G.O. Improvement & Utility Revenue Refunding Bonds, Series 2010A 7/9/2010 2/1/2020 2.00%-3.00% 1,000,000 525,000 G.O. Improvement Bonds, Series 2013A 7/15/2013 2/1/2024 1.25%-4.00% 615,000 555,000 G.O. Improvement Bonds, Series 2014A 11/20/2014 2/1/2026 0.40%-2.30% 2,645,000 2,645,000 Total Special Assessment Bonds 13,815,000 6,485,000 Total Bonds 35,479,250 22,891,250 Note Payable - Anoka County - 2009F 8/1/2009 8/1/2024 4.00%-3.70% 4,260,000 1,720,000 Unamortized Bond Discounts (45,490) (29,089) Unamortized Bond Premiums 202,370 135,130 Compensated Absences Payable N/A 688,905 Other Post Employment Benefit Plan N/A 90,852 Total Governmental Activities 39,896,130$ 25,497,048$ Business-Type Activities: Compensated Absences Payable N/A 64,184$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 50 Note 4 CITY INDEBTEDNESS (CONTINUED) The following is a schedule of changes in City indebtedness for the year ended December 31, 2015: Payable Payable Due Within 12/31/2014 Issues Payments 12/31/2015 One Year Governmental activities: Bonded debt: General Obligation 9,231,000$ 8,606,250$ 1,431,000$ 16,406,250$ 1,699,000$ Special Assessment 7,445,000 - 960,000 6,485,000 665,000 Unamortized Bond Discounts (32,684) - (3,595) (29,089) - Unamortized Bond Premiums 28,861 114,960 8,691 135,130 - Note Payable - Anoka County 2,080,000 - 360,000 1,720,000 375,000 Compensated Absences Payable 635,995 595,793 542,883 688,905 481,894 Other Post Employment Benefit Plan 91,023 28,813 28,984 90,852 - Total Governmental Activities 19,479,195 9,345,816 3,327,963 25,497,048 3,220,894 Business-Type Activities: Compensated Absences Payable 52,790 45,913 34,519 64,184 37,584 Total 19,531,985$ 9,391,729$ 3,362,482$ 25,561,232$ 3,258,478$ All long-term bonded indebtedness outstanding at December 31, 2015 is backed by the full faith and credit of the City, including special assessment bond issues. Minimum annual principal and interest payments required to retire long-term debt, not including compensated absences payable are as follows. Principal Interest Principal Interest Principal Interest Years Ending December 31, 2016 2,364,000$ 716,762$ 375,000$ 70,165$ 2,739,000$ 786,927$ 2017 3,028,000 572,663 390,000 60,165 3,418,000 632,828 2018 2,656,250 491,586 405,000 49,565 3,061,250 541,151 2019 2,242,000 421,678 420,000 42,415 2,662,000 464,093 2020 2,251,000 356,440 130,000 13,360 2,381,000 369,800 2021-2025 6,365,000 1,002,948 - - 6,365,000 1,002,948 2026-2030 2,185,000 483,021 - - 2,185,000 483,021 2031-2035 1,510,000 191,444 - - 1,510,000 191,444 2036 290,000 5,800 - - 290,000 5,800 Total 22,891,250$ 4,242,342$ 1,720,000$ 235,670$ 24,611,250$ 4,478,012$ Bonded Debt Notes Payable Total Description and Restrictions of Long-Term Debt General Obligation Bonds – The bonds were issued for improvements or projects which benefited the City as a whole and are, therefore, repaid from ad valorem levies. Special Assessment Bonds – These bonds were issued to finance various improvements and will be repaid primarily from special assessments levied on the properties benefiting from the improvements. However, some issues are partly financed by ad valorem levies. Note Payable – Anoka County 2009F – This note was used to finance improvement projects at the I-15E and County State Highway 14 interchange and will be repaid primarily with special assessments levied on the properties benefiting from the improvements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 51 Note 4 CITY INDEBTEDNESS (CONTINUED) Description and Restrictions of Long-Term Debt (Continued) Revenue Bonds – These bonds were issued to finance various improvements in the water fund and will be repaid primarily from pledged revenues derived from the constructed assets. In August 2015, the City issued General Obligation Bonds of $3,095,000 to fund various street improvements within the City. The bond was issued at a rate of 2-3%. The bonds will mature in 2031. In October 2015, the City issued EDA Leased Revenue bonds of $4,350,000 to fund the construction of a fire station. The bond was issued at a rate of 2-3% . The bonds will mature in 2036. The liabilities for compensated absences, other post-employment benefits, and net pension in the governmental activities will be liquidated by the general fund. The liabilities for Proprietary Fund employees are included in the accrued liabilities of those funds. Note 5 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Lino Lakes’ legal debt margin for 2015 is computed as follows: 12/31/2015 Market Value 1,694,366,064$ Applicable Percentage 3.0% Debt Limit 50,830,982 Amount of Debt Applicable to Debt Limit: Total Bonded Debt 22,891,250 Less: Special Assessment Bonds (6,485,000) Tax Abatement Bonds (1,925,000) Utility Revenue Bonds (135,000) Tax Increment Financing Bonds (2,405,000) Total Debt Applicable to Debt Limit 11,941,250 Legal Debt Margin 38,889,732$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 52 Note 6 PENSION PLANS A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED BENEFIT PLANS PLAN DESCRIPTION The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA’s defined benefit pension plans are tax qualified plans under Section 401 (a) of the Internal Revenue Code. 1. General Employees Retirement Fund (GERF) All full-time and certain part-time employees of the City are covered by the General Employees Retirement Fund (GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan. 2. Public Employees Police and Fire Fund (PEPFF) The PEPFF, originally established for police officers and firefighters not covered by a local relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and administration to PERA. BENEFITS PROVIDED PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan. Members in plans that are at least 90% funded for two consecutive years are given 2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are given 1% increases. The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. 1. GERF Benefits Benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step- rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first ten years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 53 Note 6 PENSION PLANS (CONTINUED) A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED BENEFIT PLANS (CONTINUED) 1. GERF Benefits (Continued) For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66. Disability benefits are available for vested members and are based upon years of service and average high-five salary. 2. PEPFF Benefits Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits for PEPFF members first hired after June 30, 2014, vest on a prorated basis from 50% after ten years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average salary for each year of service. For PEPFF who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90. CONTRIBUTIONS Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. 1. GERF Contributions Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.50%, respectively, of their annual covered salary in calendar year 2015. The City was required to contribute 11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan members in calendar year 2015. The City contributions to the GERF for the year ended December 31, 2015, were $182,102. The City contributions were equal to the required contributions as set by state statute. 2. PEPFF Contributions Plan members were required to contribute 10.8% of their annual covered salary in calendar year 2015. The City was required to contribute 16.20% of pay for PEPFF members in calendar year 2015. The City contributions to the PEPFF for the year ended December 31, 2015, were $393,560. The City contributions were equal to the required contributions as set by state statute. PENSION COSTS 1. GERF Pension Costs At December 31, 2015, the City reported a liability of $2,124,833 for its proportionate share of the GERF’s net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2014, through June 30, 2015, relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2015, the City’s proportion share was .00410 % which was a decrease of .0022% from its proportion measured as of June 30, 2014. For the year ended December 31, 2015, the City recognized pension expense of $257,399 for its proportionate share of the GERF’s pension expense. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 54 Note 6 PENSION PLANS (CONTINUED) A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED BENEFIT PLANS (CONTINUED) PENSION COSTS (CONTINUED) 1. GERF Pension Costs (Continued) At December 31, 2015, the City reported its proportionate share of the GERF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Description Deferred Outflows of Resources Deferred Inflows of Resources Differences Between Expected and Actual Economic Experience -$ 107,128$ Changes in Actuarial Assumptions - - Net Difference Between Projected and Actual Earnings on Pension Plan Investments 201,148 - Changes in Proportion and Differences Between District Contributions and Proportionate Share of Contributions - 77,509 City Contributions Subsequent to the Measurement Date 89,631 - Total 290,779$ 184,637$ A total of $89,631 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30 Pension Expenses Amount 2016 (11,258)$ 2017 (11,258) 2018 (11,258) 2019 50,285 2020 - Thereafter - 2. PEPFF Pension Costs At December 31, 2015, the City reported a liability of $2,829,223 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2014, through June 30, 2015, relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2015, the City’s proportion was .249% which was the same as the City’s proportion measured as of June 30, 2014. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 55 Note 6 PENSION PLANS (CONTINUED) A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED BENEFIT PLANS (CONTINUED) PENSION COSTS (CONTINUED) 2. PEPFF Pension Costs (Continued) For the year ended December 31, 2015, the City recognized pension expense of $487,542 for its proportionate share of the PEPFF’s pension expense. The City also recognized $22,410 for the year ended December 31, 2015, as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s on-behalf contributions to the PEPFF. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014. At December 31, 2015, the City reported its proportionate share of the PEPFF’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Description Deferred Outflows of Resources Deferred Inflows of Resources Differences Between Expected and Actual Economic Experience -$ 458,807$ Changes in Actuarial Assumptions - - Net Difference Between Projected and Actual Investment Earnings 492,945 - Changes in Proportion and Differences Between District Contributions and Proportionate Share of Contributions - - City Contributions Subsequent to the Measurement Date 213,017 Total 705,962$ 458,807$ A total of $213,017 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30 Pension Expenses Amount 2016 31,475$ 2017 31,475 2018 31,475 2019 31,475 2020 (91,762) Thereafter - CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 56 Note 6 PENSION PLANS (CONTINUED) A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED BENEFIT PLANS (CONTINUED) ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2015, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.75% per year Active Member Payroll Growth 3.50%, Average, Including Inflation Investment Rate of Return 7.90%, Net of Pension Plan Investment Expense, Including Inflation Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disabilitants were based on RP-2000 tables for males or females, as appropriate, with slight adjustments. Benefit increases for retirees are assumed to be 1% effective every January 1st through 2026 and 2.5% thereafter. Actuarial assumptions used in the June 30, 2015, valuation were based on the results of actuarial experience studies. The experience study in the GERF was for the period July 1, 2004, through June 30, 2008, with an update of economic assumptions in 2014. Experience studies have not been prepared for PERA’s other plans, but assumptions The long-term expected rate of return on pension plan investments is 7.9%. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the long-term expected rate of return on a regular basis using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized below: Asset Class Target Allocation Long-Term Expected Real Rate of Return Domestic Equity 45% 5.50% International Equity 15% 6.00% Bonds 18% 1.45% Alternative Assets 20% 6.40% Cash 2% 0.50% Totals 100% DISCOUNT RATE The discount rate used to measure the total pension liability was 7.9%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rate specified in statute. Based on that assumption, each of the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 57 Note 6 PENSION PLANS (CONTINUED) A. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION (PERA) - DEFINED BENEFIT PLANS (CONTINUED) PENSION LIABILTY SENSITIVITY The following presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate: Description 1% Decrease in Discount Rate (6.90%) Current Discount Rate (7.90%) 1% Increase in Discount Rate (8.90%) City's Proportionate Share of the GERF Net Pension Liability 3,340,992$ 2,124,883$ 1,120,472$ City's Proportionate Share of the PEPFF Net Pension Liability 5,514,185$ 2,829,223$ 610,976$ PENSION PLAN FIDUCIARY NET POSITION Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org; by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088; or by calling (651) 296-7460 or 1-800-652-9026. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 58 Note 7 METROPOLITAN COUNCIL ENVIRONMENTAL SERVICES During 1971, the Metropolitan Waste Control Commission (MWCC) was organized to provide for consolidation of the sanitary sewer collection, treatment and disposal in the seven county metropolitan area surrounding Minneapolis and St. Paul. Previously, these operations were maintained by the city governments on an individual or collective basis. The MWCC merged with the Metropolitan Council during 1994 to form Metropolitan Council Wastewater Services (MCWS) and is now called the Metropolitan Council Environmental Services (MCES). The MCES bills the City annually based upon estimated volume and budgeted costs. The City follows the accounting policy of recognizing these charges as an expense of the sewer utility operation in the year for which they are billed. Note 8 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 2015 as follows: Fund Balance Deficit G.O. Improvement Bonds 2005A (2,340,172)$ Nonmajor Governmental Funds: 35E Interchange (259,166) Dedicated Parks (70,432) 21st Ave. Extension (302,954) Tax Increment Financing 1-11 (772,648) Blackduck/Aqua Ln Watermain Ext (51,086) 2015 Street Reconstruction (18,226) Improvement Bonds 2013A (200) The City intends to fund these deficits through future tax levies, special assessment levies, tax increments, transfers from other funds, and various other sources. B. EXPENDITURES IN EXCESS OF BUDGET The following is a listing of expenditure categories within the General Fund that exceed budget appropriations: Final Budget Actual Excess General government: Administration 368,868$ 371,778$ (2,910)$ Community development: Community Development 206,424 209,457 (3,033) Planning and Zoning Commission 114,610 123,049 (8,439) CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 59 Note 9 CONTINGENCIES Tax Increment Districts – The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance which could have a material effect on the financial statements. Federal and State Funds – The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2015. Litigation – The City, in connection with the normal conduct of its affairs, is involved in various claims, judgments, and litigation. As of December 31, 2015 any potential affect this may have on the City is not estimable, however it is not expected to have a material effect on the financial statements of the City. Labor Contracts – The City has various employees that are covered under labor agreements that are subject to collective bargaining. The status of labor contracts in the City is as follows: Number of Expiration Date of Bargaining Unit Employees Current Contract LELS - Patrol 18 December 31, 2015 LELS - Sergeant 5 December 31, 2015 49ers - Public Works 15 December 31, 2015 AFSCME 17 December 31, 2015 Non-unionized Employees 9 Total Employees 64 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 60 Note 10 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 2015. Future scheduled tax levies for all bonds outstanding at December 31, 2015 totaled $18,304,907. Note 11 FUND BALANCE At December 31, 2015, the City had various fund balances restricted, committed, or assigned through legal restriction and City Council authorization. Major fund balance appropriations at December 31, 2015 are shown on the various balance sheets as segregations of the fund balance. The fund balances are as follows: Total Nonspendable Restricted Committed Assigned Unassigned General Fund: 5,725,736$ -$ -$ -$ -$ 5,725,736$ Prepaid Items 220,677 220,677 - - - - Total General Fund 5,946,413 220,677 - - - 5,725,736 G.O. Improvement Bonds 2005A: Deficit Fund Balance (2,340,172) - - - - (2,340,172) Improvement Bonds 2009F: Debt Service 7,384 - 7,384 - - - Area and Unit Charge: Advances to Other Funds 285,947 - - - 285,947 - Construction Projects 4,136,658 - - - 4,136,658 - Total Area and Unit Charge 4,422,605 - - - 4,422,605 - 2015 Street Reconstruction: Deficit Fund Balance (18,226) - - - - (18,226) Nonmajor Governmental Funds: Prepaid Items - - - - - - Economic Development - Loan Receivable 224,580 - 225,000 - - (420) Corpus of Permanent Fund 123,791 100,000 23,791 - - - Program Recreation 84,179 1,177 - 83,002 - - Cable TV Fund 80,237 - - 80,237 - - Blue Heron Days 13,247 - 13,247 - - - Federal Narcotics 49,965 - 49,965 - - - State Narcotics 9,810 - 9,810 - - - DUI Forfeitures 17,019 - 17,019 - - - Debt Service 2,291,222 - 2,291,422 - - (200) Construction Projects 9,143,961 - - - 10,600,247 (1,456,286) Total Nonmajor Funds 12,038,011 101,177 2,630,254 163,239 10,600,247 (1,456,906) Total Fund Balances 20,056,015$ 321,854$ 2,637,638$ 163,239$ 15,022,852$ 1,910,432$ Note 12 SHARE IN GAS FRANCHISE PROFITS The City receives a share of the gross billing for natural gas sales by a neighboring City, which provides service within the City of Lino Lakes. The amount reported as revenue in the General Fund during fiscal year 2015 was $47,914. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 61 Note 13 INTERFUND RECEIVABLE AND PAYABLES The purpose of the interfund receivable and payable balances is for the elimination of negative cash between funds and at December 31, 2015 are as follows: Receivable Payable Governmental Activity: G.O. Improvement Bonds 2005A -$ 2,876,648$ Other Nonmajor Governmental Funds 3,660,455 1,342,917 Business-type Activity: Sewer Fund 559,110 - 4,219,565$ 4,219,565$ Interfund receivable and payable balances not expected to be repaid within one year are reported as advances to and from other fund and at December 31, 2015 are as follows: Receivable Payable Governmental Activity: Area and Unit Charge 285,947$ -$ Other Nonmajor Governmental Funds - 285,947 285,947$ 285,947$ The purpose of the advance from the Area and Unit Charge Fund is to temporarily finance projects in the Dedicated Parks Fund. Note 14 INTERFUND TRANSFERS Individual fund transfers for fiscal year 2015 are as follows: Transfer In Transfer Out Governmental Activity: General Fund 490,894$ (590,245)$ G.O. Improvement Bonds 2005A 683,729 - Improvement Note 2009F 378,000 - Area and Unit Charge - (670,734) Other Nonmajor Governmental Funds 1,850,348 (2,075,158) Total Governmental Activity 3,402,971 (3,336,137) Business-type Activity: Water Fund - (33,417) Sewer Fund - (33,417) Total Business-Type Activity - (66,834) Total 3,402,971$ (3,402,971)$ Interfund transfers are other financing sources and uses within the fund financial statements. The purposes of the transfers are to provide funding for capital improvement projects and capital outlay in accordance with the City's capital improvement plan. There are also transfers to and from other funds within the nonmajor governmental funds that are for closing out bond funds and moving the residual to another debt service fund. These transfers are routine and consistent with past practices. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 62 Note 15 RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Workers compensation coverage is provided through a pooled self-insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not subject to a deductible. The City’s workers compensation coverage is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. Property and casualty insurance is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portion of the insurance policies and for any exclusions from the insurance policies. These amounts are considered immaterial to the financial statements. The City continues to carry commercial insurance for all other risks of loss, including disability and employee health insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Note 16 PROPERTY UNDER LEASE AGREEMENT The City entered into an agreement to lease space within the City Hall Complex to New Creations Child Care and Learning Center, LLC. The lease is dated July 1, 2014 and continues through June 30, 2019. The lease requires escalating annual lease payments of between $5.94 and $8.65 per square foot over the lease term, for a total of $330,904. Property under operating lease and held for lease consist of the following: Building 929,970$ Less: Accumulated Depreciation (495,984) Net 433,986$ Approximate future minimum lease payments receivable under the noncancelable operating lease are as follows: Year Ending December 31, Amount 2016 72,889$ 2017 75,617 2018 77,901 2019 39,522 265,929$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 63 Note 17 CONDUIT DEBT OBLIGATIONS The City has issued Industrial Development Revenue Bonds and Commercial Revenue Notes to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities which are deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issue. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2015, one series of Industrial Revenue Bonds was outstanding with an aggregate remaining principal balance of $300,000, and one series of Commercial Revenue Notes was outstanding with an aggregate remaining principal balance of $1,648,987. Note 18 JOINT VENTURES Fire The Centennial Fire District (the District) was established under a joint powers agreement between the City of Lino Lakes and two other cities. The general purpose of the District is to provide fire protection services including, but not limited to, fire prevention, firefighting and rescue service. Each member city is entitled to appoint two commissioners to the District’s Board. Each calendar year, participating cities are to pay the District its share of the total operating and capital budget in accordance with a funding formula contained in Section VII of the joint powers agreement. The funding formula takes into account each city’s average number of calls, population, and total market value. During 2015, the City of Lino Lakes’ contributions to the District were as follows: Operating 508,394$ The audited financial statements of the District as of December 31, 2015 can be reviewed upon request of the Centennial Fire District. In January 2014 the City Council voted to start the process to withdraw from the District which will be effective January 27, 2016. The City created their own department which operations started in January 2016. Anoka County The City of Lino Lakes has a joint powers agreement with Anoka County for the reconstruction of County State Aid Highway 14 (Main Street) and I-35E Interchange County Project. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 64 Note 19 OTHER POSTEMPLOYMENT BENEFIT PLAN At December 31, 2008, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. The City engaged an actuary to determine the City’s liability for postemployment healthcare benefits other than pensions as of January 1, 2014. A. PLAN DESCRIPTION The City provides benefits for retirees as required by Minnesota Statute §471.61 subdivision 2b. Active employees, who retire from the City when over age 50 and with 20 years of service, may continue coverage with respect to both themselves and their eligible dependent(s) under the City’s health benefits program until age 65. Pursuant to the provisions of the plan, retirees are required to pay the total premium cost. As of December 31, 2015 there were approximately 48 active participants and 6 retired participants receiving benefits from the City’s health plans. B. FUNDING POLICY The City funds its OPEB obligation on a pay as you go basis. For fiscal year 2015, the City contributed $29,984 to the plan. C. ANNUAL OPEB COST AND NET OPEB OBLIGATION The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually paid from the plan, and changes in the City’s net OPEB obligation. Annual Required Contribution 31,590$ Interest on Net OPEB Obligation 972 Adjustment to Annual Required Contribution (3,749) Annual OPEB Cost (Expense) 28,813 Contributions Made (28,984) Increase in Net OPEB Obligation (171) Net OPEB Obligation - Beginning of Year 91,023 Net OPEB Obligation - End of Year 90,852$ The City’s annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the two preceding years: Percentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Contributed Obligation 12/31/2013 27,437$ 77.6% 83,969$ 12/31/2014 26,468 73.3% 91,023 12/31/2015 28,814 99.4% 90,852 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2015 65 Note 19 OTHER POSTEMPLOYMENT BENEFIT PLAN (CONTINUED) D. FUNDED STATUS AND FUNDING PROGRESS As of January 1, 2014, the most recent actuarial valuation date, the City’s unfunded actuarial accrued liability (UAAL) was $547,626. The annual payroll for active employees covered by the plan in the actuarial valuation was $5,265,020 for a ratio of UAAL to covered payroll of 10.4%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. ACTUARIAL METHODS AND ASSUMPTIONS Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 1% investment rate of return (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer’s own investments calculated based on the funded level of the plan at the valuation date. The initial healthcare trend rate was 8%, decreasing to an ultimate rate of 3% after six years. The UAAL is being amortized as a level percentage of projected payrolls on an open basis. The remaining amortization period at December 31, 2015 was not to exceed 30 years. Note 20 PRIOR PERIOD ADJUSTMENT DUE TO CHANGE IN ACCOUNT PRINCIPLE During fiscal year ended December 31, 2015, the City adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and the related Statement No. 71. As a result, the City’s net position as of December 31, 2014 has been restated to reflect the recognition of the City’s proportionate share of the Public Employees’ Retirement Association of Minnesota General Employees’ Retirement Fund’s (GERF) and Public Employees’ Police and Fire Fund’s (PEPFF) net pension liability and related deferred inflows and outflows of resources. Governmental Activities Business-type Activities Net Position, December 31, 2014, as Previously Reported 48,734,868$ 41,444,300$ Cumulative Effect of Application of GASB 68, Net Pension Liability (4,376,427) (77,959) Net Position, December 31, 2014, as Restated 44,358,441$ 41,366,341$ REQUIRED SUPPLEMENTARY INFORMATION 66 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 1 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenue: General property taxes: Current and delinquent 7,580,578$ 6,348,407$ 6,432,326$ 83,919$ Fiscal disparities - 1,232,171 1,053,732 (178,439) Excess tax increments - - 2,982 2,982 Total general property taxes 7,580,578 7,580,578 7,489,040 (91,538) Licenses and permits: Business 98,900 111,550 122,349 10,799 Non-business 341,700 402,700 428,853 26,153 Total licenses and permits 440,600 514,250 551,202 36,952 Intergovernmental: State: Market value credit - - 5,363 5,363 Police state aid 190,000 190,000 226,275 36,275 MSA maintenance 240,000 255,000 255,979 979 Other 20,000 20,000 61,610 41,610 County/Regional: Solid waste 40,000 99,000 99,319 319 Other 4,000 4,000 1,065 (2,935) Total intergovernmental 494,000 568,000 649,611 81,611 Special assessments: Penalties and Interest 15,000 15,000 14,008 (992) Charges for services: General government 4,350 4,350 4,927 577 Planning/engineering 15,000 15,000 12,722 (2,278) Fees retained from collection for other governments - SAC/surcharge 2,000 2,000 2,444 444 Administrative charge - other funds 50,000 50,000 51,619 1,619 Aerial map charge - other funds 5,000 5,000 7,832 2,832 Public safety 201,200 191,200 197,879 6,679 Total charges for services 277,550 267,550 277,423 9,873 Fines and forfeits 130,500 120,500 127,803 7,303 Investment earnings 30,000 30,000 27,004 (2,996) Change in market value - - (9,578) (9,578) Refunds 30,000 30,000 54,689 24,689 Miscellaneous: Gas franchise fees 60,000 60,000 47,914 (12,086) Cable TV 12,500 12,500 12,500 - Donations 2,000 2,000 1,925 (75) Other 77,500 98,499 106,613 8,114 Total miscellaneous 152,000 172,999 168,952 (4,047) Total revenue 9,150,228 9,298,877 9,350,154 51,277 Year Ended December 31, 2015 67 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 2 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2015 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures: General government: Mayor and council: Current: Personal services 40,638$ 40,638$ 39,728$ 910$ Supplies - - 19 (19) Other services and charges 21,500 21,000 20,766 234 Contractual services 16,000 16,000 16,901 (901) Total mayor and council 78,138 77,638 77,414 224 Elections: Current: Personal services 8,604 8,604 10,123 (1,519) Supplies 800 800 457 343 Other services and charges 2,000 2,000 927 1,073 Contractual services 100 100 - 100 Capital outlay 4,600 4,600 4,461 139 Total elections 16,104 16,104 15,968 136 Administration: Current: Personal services 422,305 342,008 351,927 (9,919) Other services and charges 26,360 18,860 10,035 8,825 Contractual services 8,000 8,000 9,816 (1,816) Total administration 456,665 368,868 371,778 (2,910) Finance: Current: Personal services 301,432 301,432 320,323 (18,891) Supplies 900 900 1,025 (125) Other services and charges 129,500 129,500 102,809 26,691 Contractual services 100,900 100,900 99,489 1,411 Total finance 532,732 532,732 523,646 9,086 Cable TV: Current: Personal services 1,735 1,735 1,905 (170) Supplies 50 50 - 50 Capital outlay 500 500 - 500 Total cable TV 2,285 2,285 1,905 380 Consultants: Current: Legal 140,000 132,500 130,277 2,223 68 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 3 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2015 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures (continued): General government (continued): Engineering/planning: Current: Contractual services 103,576$ 103,576$ 100,952$ 2,624$ Charter commission: Current: Other services and charges 2,500 2,500 649 1,851 General government buildings: Current: Personal services 2,175 2,175 2,141 34 Supplies 29,400 29,400 38,909 (9,509) Other services and charges 308,000 308,000 295,850 12,150 Contractual services 68,000 58,000 54,221 3,779 Total general government buildings 407,575 397,575 391,121 6,454 Total general government 1,739,575 1,633,778 1,613,710 20,068 Public safety: Police: Current: Personal services 3,051,475 3,051,475 3,016,413 35,062 Supplies 29,050 29,050 25,641 3,409 Other services and charges 96,230 104,230 89,686 14,544 Contractual services 44,415 44,415 38,792 5,623 Capital outlay 22,600 22,600 36,844 (14,244) Total police 3,243,770 3,251,770 3,207,376 44,394 Fire protection: Current: Personal services 435,164 384,426 391,843 (7,417) Supplies 12,700 12,700 12,216 484 Other services and charges 157,000 147,000 96,204 50,796 Contractual services 513,894 513,894 518,817 (4,923) Capital outlay - - 807 (807) Total fire protection 1,118,758 1,058,020 1,019,887 38,133 Building inspection: Current: Personal services 181,036 178,035 172,098 5,937 Supplies 750 750 1,322 (572) Other services and charges 7,130 7,130 5,158 1,972 Contractual services 5,500 5,500 3,738 1,762 Total building inspection 194,416 191,415 182,316 9,099 Total public safety 4,556,944 4,501,205 4,409,579 91,626 69 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 4 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2015 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures (continued): Public works: Streets: Current: Personal services 574,205$ 560,205$ 552,111$ 8,094$ Supplies 142,000 142,000 130,887 11,113 Other services and charges 109,660 109,660 116,140 (6,480) Contractual services 177,275 177,275 70,360 106,915 Total streets 1,003,140 989,140 869,498 119,642 Fleet: Current: Personal services 114,099 89,099 74,379 14,720 Supplies 224,000 224,000 136,865 87,135 Other services and charges 56,880 56,880 52,053 4,827 Contractual services 7,500 7,500 2,225 5,275 Total fleet 402,479 377,479 265,522 111,957 Total public works 1,405,619 1,366,619 1,135,020 231,599 Parks and recreation: Parks: Current: Personal services 465,109 465,109 439,617 25,492 Supplies 26,500 26,500 31,781 (5,281) Other services and charges 47,150 25,650 37,061 (11,411) Contractual services 35,700 35,700 28,537 7,163 Total parks 574,459 552,959 536,996 15,963 Recreation: Current: Personal services 287,963 287,963 272,791 15,172 Supplies 2,500 2,500 2,309 191 Other services and charges 14,750 14,750 14,839 (89) Contractual services 400 400 1,149 (749) Total recreation 305,613 305,613 291,088 14,525 Total parks and recreation 880,072 858,572 828,084 30,488 70 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 5 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2015 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures (continued): Conservation of natural resources: Forestry: Current: Personal services 35,468$ 35,468$ 35,519$ (51)$ Supplies 1,250 1,250 82 1,168 Other services and charges 380 380 338 42 Contractual services 5,000 5,000 5,561 (561) Capital outlay 5,000 5,000 4,936 64 Total forestry 47,098 47,098 46,436 662 Environmental: Current: Personal services 52,826 44,660 41,460 3,200 Supplies 1,200 1,200 250 950 Other services and charges 7,050 7,050 4,051 2,999 Contractual services 1,200 1,200 1,015 185 Total environmental 62,276 54,110 46,776 7,334 Solid waste abatement: Current: Personal services 30,877 48,377 49,702 (1,325) Supplies - - - - Other services and charges 550 12,200 8,113 4,087 Contractual services 6,000 40,000 40,795 (795) Capital outlay - - (225) 225 Total solid waste abatement 37,427 100,577 98,385 2,192 Total conservation of natural resources 146,801 201,785 191,597 10,188 71 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 6 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2015 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures (continued): Community development: Community development: Current: Personal services 202,755$ 196,524$ 190,187$ 6,337$ Supplies 100 100 144 (44) Other services and charges 8,400 8,400 18,191 (9,791) Contractual services 1,400 1,400 935 465 Total community development 212,655 206,424 209,457 (3,033) Economic development: Current: Personal services 21,646 16,646 13,702 2,944 Supplies 150 150 - 150 Other services and charges 79,300 75,300 76,327 (1,027) Contractual services 300 300 400 (100) Total economic development 101,396 92,396 90,429 1,967 Planning and zoning commission: Current: Personal services 84,960 84,960 89,400 (4,440) Supplies 200 200 65 135 Other services and charges 14,400 10,450 14,162 (3,712) Contractual services 19,000 19,000 19,422 (422) Total planning and zoning commission 118,560 114,610 123,049 (8,439) Total community development 432,611 413,430 422,935 (9,505) Other : Contingency 100,000 - - - Total expenditures 9,261,622 8,975,389 8,600,925 374,464 Revenue over expenditures (111,394) 323,488 749,229 425,741 Other financing sources (uses): Transfer in 480,894 480,894 480,894 - Transfer out (539,500) (589,500) (590,245) (745) Total other financing sources (uses) (58,606) (108,606) (109,351) (745) Net increase (decrease) in fund balance (170,000)$ 214,882$ 639,878 424,996$ Fund Balance - January 1 5,306,535 Fund balance - December 31 5,946,413$ 72 CITY OF LINO LAKES, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2015 Note 1 BUDGETS Actual in Final Excess of Budget Actual Budget General Fund: General government: Administration 368,868$ 371,778$ (2,910)$ Community development: Community Development 206,424 209,457 (3,033) Planning and Zoning Commission 114,610 123,049 (8,439) The General Fund budget is legally adopted on a basis consistent with U.S. Generally Accepted Accounting Principles. The legal level of budgetary control is at the department level. The following is a listing of expenditures that exceeded budget appropriations. The excess expenditures were paid for with available fund balance during 2015. 73 CITY OF LINO LAKES, MINNESOTA Statement 12 SCHEDULE OF FUNDING PROGRESS FOR POSTEMPLOYMENT BENEFIT PLAN Current and Two Preceeding Valuations Actuarial UAAL as a Actuarial Accrued Percentage Actuarial Value of Liability Unfunded Funded Covered of Covered Valuation Assets (AAL) AAL Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 1/1/2008 -$ 329,191$ 329,191$ - 4,859,980$ 6.8% 1/1/2011 - 474,770 474,770 - 4,888,702 9.7% 1/1/2014 - 547,626 547,626 - 5,265,020 10.4% 74 CITY OF LINO LAKES, MINNESOTA Statement 13 REQUIRED SUPPLEMENTARY INFORMATION Page 1 of 2 PERA SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Last Ten Fiscal Years PEPFF Schedule of the City's Proportionate Share of the Net Pension Liability Last Ten Fiscal Years* Measurement Measurement Date 6/30/2015 Date 6/30/2014 City's Proportion of the Net Pension Liability 0.2490% 0.2490% City's Proportionate Share of the Net Pension Liability 2,829,223$ 2,029,320$ City's Covered-Employee Payroll 2,284,973$ 2,236,463$ City's Proportionate Share of the Net Pension Liability as a Percentage of Its Covered-Employee Payroll 123.82% 90.74% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 86.61% 87.10% *The Amounts Presented for Each Fiscal Year were Determined as of 6/30. PEPFF Schedule of City Contributions Last Ten Fiscal Years 2015 2014 Statutorily Required Contribution 393,551$ 314,426$ Contributions in Relation to the Statutorily Required Contribution (393,551) (314,426) Contribution Deficiency (Excess) -$ -$ City's Covered-Employee Payroll 2,429,327$ 2,055,072$ Contributions as a Percentage of Covered Employee Payroll 16.20% 15.30% NOTE: Information prior to 2014 is not available 75 CITY OF LINO LAKES, MINNESOTA Statement 13 REQUIRED SUPPLEMENTARY INFORMATION Page 2 of 2 PERA SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Last Ten Fiscal Years GERF Schedule of the City's Proportionate Share of the Net Pension Liability Last Ten Fiscal Years* Measurement Measurement Date 6/30/2015 Date 6/30/2014 City's Proportion of the Net Pension Liability 0.0410% 0.0432% City's Proportionate Share of the Net Pension Liability 2,124,883$ 2,039,320$ City's Covered-Employee Payroll 2,407,426$ 2,240,493$ City's Proportionate Share of the Net Pension Liability as a Percentage of Its Covered-Employee Payroll 88.26% 91.02% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 78.20% 78.70% *The Amounts Presented for Each Fiscal Year were Determined as of 6/30. GERF Schedule of City Contributions Last Ten Fiscal Years 2015 2014 Statutorily Required Contribution 182,102$ 162,934$ Contributions in Relation to the Statutorily Required Contribution (182,102) (162,934) Contribution Deficiency (Excess) -$ -$ City's Covered-Employee Payroll 2,428,027$ 2,247,366$ Contributions as a Percentage of Covered Employee Payroll 7.5% 7.25% NOTE: Information prior to 2014 is not available Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for particular purposes. The City maintained the following nonmajor Special Revenue Funds during the year. Economic Development Authority - established to account for the receipt and uses of funds for economic purposes. Cable TV Fund - established to account for activities relating to their Cable TV. Program Recreation - established to account for various self-supporting recreational programs. Blue Heron Days - established to account for the activities associated with the Blue Heron Days festival. Federal Narcotics - established to account for activities associated with the the receipt and use of federal narcotics forfeitures. State Narcotics - established to account for activities associated with the receipt and use of state narcotics forfeitures. DUI Forfeitures - established to account activities associated with the receipt and use of DUI forfeitures. Debt Service Funds The Debt Service Funds account for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. The City’s Debt Service Funds account for four types of bonded indebtedness: General Debt Bonds - are repaid primarily from property taxes. Improvement Bonds - are repaid primarily from special assessments. Public Facility Lease Revenue Bonds - are repaid primarily from lease revenues received from the EDA leasing the buildings to the City of Lino Lakes and other tenants. Revenue Bonds - These bonds were issued to finance various improvements and will be repaid primarily from pledged revenues derived from the constructed assets. Capital Project Funds Capital Project Funds account for the acquisition or construction of major capital facilities other than those financed by Proprietary Funds and Trust Funds. The City maintained the following nonmajor Capital Project Funds during the year: Building and Facilities Fund - to account for the activities associated with the maintenance and replacement of municipal buildings and facilities. Capital Equipment Revolving Fund - to account for proceeds from Equipment Certificates and funds held to purchase capital equipment. Closed Bond Fund - to account for excess funds from matured bond issues. Street Reconstruction - to account for the financing of future reconstruction of City streets. Sealcoating - to account for money received from levies, assessments, and developer deposits for future street sealcoating and overlay projects. Nonmajor Governmental Funds (Continued) Capital Project Funds (Continued) Surface Water Management - to account for the financing of surface water management and storm water improvements. Tax Increment Funds - to account for development projects financed with tax increments. Dedicated Parks - to account for the receipts and use of monies collected from dedicated parks fees. Muncipal State Aid Fund - to account for the financing of future reconstruction of state aid eligble streets. I35E Interschange Fund - to account for activity related to the I35E/CSAH 14 Interchange Reconstruction Project. Office Equipment Revolving Fund - to account for the receipt and use of funds for office equipment purchases. Legacy Woods Edge Improvement Fund - the Legacy Woods Edge Improvement fund accounts for construction costs related to infrastructure improvements in the Legacy Woods Edge development. Traffic Signal Fund - the Legacy traffic signal charge fund accounts for costs associated with construction of traffic signals in the City. Otter Lake Road Exension Fund - this fund accounts for activities relating to the construction performed in the extension of the Otter Lake Road. 21st Ave Extension Fund - this fund accounts for activities relating to the construction performed in the extension of 21st Avenue within the City. Fire House #2 Construction Fund - this fund accounts for activities relating to the construction of Fire House #2. Well #6 Construction Fund - this fund accounts for activities relating to the construction of Well # 6 and well house. Northpointe Improvements Fund - this fund accounts for activities relating to the construction of streets and utilities within the Northpointe development. Birch St/Centerville Rd Improvements Fund - this fund accounts for activities relating to the construction of street improvements and sanitary sewer extension in conjunction with Fire Station #2. Blackduck/Aqua Lane Watermain Extension Fund - this fund accounts for activities relating to the trunk watermain improvements along Aqua Lane to north of Blackduck Drive. Permanent Funds Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City’s programs. The City maintained the following nonmajor Permanent Fund during the year. Foxborough Environment Fund - established to account for the use of funds received for environmental maintenance and improvements in the Foxborough area. 76 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 Economic Development Cable TV Program Blue Heron Federal Authority Fund Recreation Days Narcotics Assets Cash and investments -$ 80,237$ 86,306$ 14,662$ 51,389$ Cash and investments with escrow agent - - Accrued interest receivable - - Accounts receivable - - 217 - - Due from other governmental units - - - - - Interfund receivable - - - - - Taxes receivable: Delinquent - - - - - Due from county - - - - - Delinquent tax increment - - - - - Special assessments receivable: Delinquent - - - - - Noncurrent - - - - - Due from county - - - - - Delinquent tax increment - - - - - Long-term notes receivable 225,000 - - - - Prepaid items - - 1,177 - - Total assets 225,000$ 80,237$ 87,700$ 14,662$ 51,389$ Liabilities, Deferred Inflows of Resources and Fund Balance (Deficit) Liabilities: Interfund payable -$ -$ -$ -$ -$ Accounts payable - - 3,189 1,415 1,424 Salaries payable 420 - 332 - - Contracts and retainage payable - - - - - Advances from other funds - - - - - Total liabilities 420 - 3,521 1,415 1,424 Deferred inflows of resources: Unavailable resources - - - - - Fund balance (deficit): Nonspendable - - 1,177 - - Restricted 225,000 - - 13,247 49,965 Committed - 80,237 83,002 - - Assigned - - - - - Unassigned (420) - - - - Total fund balance (deficit) 224,580 80,237 84,179 13,247 49,965 Total liabilities, deferred inflows of resources and fund balance (deficit) 225,000$ 80,237$ 87,700$ 14,662$ 51,389$ Special Revenue 77 Statement 14 Page 1 of 4 Debt Service Debt Service Special Certificates State DUI Revenue of Narcotics Forfeitures Subtotal Indebtedness 10,645$ 17,430$ 260,669$ 125,654$ - - - - - - 217 - - - - - - - - - - - - 3,155 - - - 4,152 - - - - - - - - - - - - - - - - - - - - - - 225,000 - - - 1,177 - 10,645$ 17,430$ 487,063$ 132,961$ -$ -$ -$ -$ 835 411 7,274 - - - 752 - - - - - - - - - 835 411 8,026 - - - - 3,155 - - 1,177 - 9,810 17,019 315,041 129,806 - - 163,239 - - - - - - - (420) - 9,810 17,019 479,037 129,806 10,645$ 17,430$ 487,063$ 132,961$ Special Revenue (Continued) 78 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 Tax Utility CIP Improvement Abatement Revenue Refunding TIF Bonds of Bonds Bonds Bonds Bonds 2005B 2006C 2006D 2006E 2007A Assets Cash and investments 18,447$ 255,753$ 179,936$ 884,320$ 149,896$ Cash and investments with escrow agent - - - - - Accrued interest receivable - - - - - Accounts receivable - - - - - Due from other governmental units - - - - - Interfund receivable - - - - - Taxes receivable: Delinquent 1,169 3,316 - 5,893 - Due from county 188 3,729 - 6,383 - Delinquent tax increment - - - - - Special assessments receivable: Delinquent - - 9,582 - - Noncurrent 22,281 - 37,277 - - Due from county - - - - - Delinquent tax increment - - - - - Long-term notes receivable - - - - - Prepaid items - - - - - Total assets 42,085$ 262,798$ 226,795$ 896,596$ 149,896$ Liabilities, Deferred Inflows of Resources and Fund Balance (Deficit) Liabilities: Interfund payable -$ -$ -$ -$ -$ Accounts payable - 200 200 200 200 Salaries payable - - - - - Contracts and retainage payable - - - - - Advances from other funds - - - - - Total liabilities - 200 200 200 200 Deferred inflows of resources: Unavailable resources 23,450 3,316 46,859 5,893 - Fund balance (deficit): Nonspendable - - - - - Restricted 18,635 259,282 179,736 890,503 149,696 Committed - - - - - Assigned - - - - - Unassigned: - - - - - Total fund balance (deficit) 18,635 259,282 179,736 890,503 149,696 Total liabilities, deferred inflows of resources and fund balance (deficit) 42,085$ 262,798$ 226,795$ 896,596$ 149,896$ Debt Service (Continued) 79 Statement 14 Page 2 of 4 Improvement and Utility Revenue Improvement Improvement GO GO EDA Leased Debt Refunding Bonds Bonds of Bonds of Bonds Bonds Revenue Bonds Service 2010 2012A 2013A 2014A 2015A 2015B Subtotal 120,638$ 255,991$ -$ 127,747$ 50,605$ 107,367$ 2,276,354$ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,529 - - - - 15,062 - 2,416 - - - - 16,868 - - - - - - - - - - - - - - 9,582 57,088 55,699 - - - - 172,345 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 177,726$ 315,635$ -$ 127,747$ 50,605$ 107,367$ 2,490,211$ -$ -$ -$ -$ -$ -$ -$ 200 200 200 200 200 200 2,000 - - - - - - - - - - - - - - - - - - - - - 200 200 200 200 200 200 2,000 57,088 57,228 - - - - 196,989 - - - - - - - 120,438 258,207 - 127,547 50,405 107,167 2,291,422 - - - - - - - - - - - - - - - - (200) - - - (200) 120,438 258,207 (200) 127,547 50,405 107,167 2,291,222 177,726$ 315,635$ -$ 127,747$ 50,605$ 107,367$ 2,490,211$ Debt Service (Continued) 80 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 Capital Closed Building and Equipment Bond Street Facilities Revolving Fund Fund Reconstruction Sealcoating Assets Cash and investments 239,655$ 463,297$ -$ 667,153$ 614,124$ Cash and investments with escrow agent - - - - - Accrued interest receivable - - - - - Accounts receivable - - - - - Due from other governmental units - 1,115 - - - Interfund receivable 2,317,533 - 1,246,697 - - Taxes receivable: Delinquent - - - - - Due from county - - 28 - - Delinquent tax increment - - 174 - - Special assessments receivable: Delinquent - - - - - Noncurrent - - 40,449 99,675 - Due from county - - - - - Delinquent tax increment - - - - - Long-term notes receivable - - - - - Prepaid items - - - - - Total assets 2,557,188$ 464,412$ 1,287,348$ 766,828$ 614,124$ Liabilities, Deferred Inflows of Resources and Fund Balance (Deficit) Liabilities: Interfund payable -$ -$ -$ -$ -$ Accounts payable 3,473 421,149 5,463 - 1,626 Salaries payable - - - - - Contracts and retainage payable - - - - 302,314 Advances from other funds - - - - - Total liabilities 3,473 421,149 5,463 - 303,940 Deferred inflows of resources: Unavailable resources - - 40,623 99,675 - Fund balance (deficit): Nonspendable - - - - - Restricted - - - - - Committed - - - - - Assigned 2,553,715 43,263 1,241,262 667,153 310,184 Unassigned: - - - - - Total fund balance (deficit) 2,553,715 43,263 1,241,262 667,153 310,184 Total liabilities, deferred inflows of resources and fund balance (deficit) 2,557,188$ 464,412$ 1,287,348$ 766,828$ 614,124$ Capital Projects 81 Statement 14 Page 3 of 4 Tax Tax Tax Surface Increment Increment Increment Water Financing Financing Financing Dedicated MSA I35E Management 1-5 1-10 1-11 Parks Construction Interchange 476,341$ 209,982$ 188,941$ -$ 215,515$ 3,023,600$ -$ - - - - - - - - - - - - - - 199 - - - - - - - - - - - - - - - - - - 96,225 - - - - - - - - - - - - - - - - - - - - - - 2,436 - - - - - - 111,272 - - - - - - 1,419 - - - - - - - - - - - - - - - - - - - - - - - - - - - 591,667$ 209,982$ 188,941$ -$ 215,515$ 3,119,825$ -$ -$ -$ -$ 772,023$ -$ -$ 259,135$ 29,648 470 521 625 - - 31 - - - - - - - - - - - - - - - - - - 285,947 - - 29,648 470 521 772,648 285,947 - 259,166 113,708 - - - - - - - - - - - - - - - - - - - - - - - - - - - 448,311 209,512 188,420 - - 3,119,825 - - - - (772,648) (70,432) - (259,166) 448,311 209,512 188,420 (772,648) (70,432) 3,119,825 (259,166) 591,667$ 209,982$ 188,941$ -$ 215,515$ 3,119,825$ -$ Capital Projects (Continued) 82 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2015 Office Equipment Legacy Woods Revolving Edge Traffic Otter Lake 21st Ave Fund Improvement Signal Road Ext Ext Assets Cash and investments 194,791$ -$ 113,736$ 207,609$ -$ Cash and investments with escrow agent - - - - - Accrued interest receivable - - - - - Accounts receivable - - - - - Due from other governmental units - - - - - Interfund receivable - - - - - Taxes receivable: Delinquent - - - - - Due from county - - - - - Delinquent tax increment - - - - - Special assessments receivable: Delinquent - - - - - Noncurrent - - - - - Due from county - - - - - Delinquent tax increment - - - - - Long-term notes receivable - - - - - Prepaid items - - - - - Total assets 194,791$ -$ 113,736$ 207,609$ -$ Liabilities, Deferred Inflows of Resources and Fund Balance (Deficit) Liabilities: Interfund payable -$ -$ -$ -$ 262,864$ Accounts payable 12,218 - - - 1,326 Salaries payable - - - - - Contracts and retainage payable - - - - 38,764 Advances from other funds - - - - - Total liabilities 12,218 - - - 302,954 Deferred inflows of resources: Unavailable resources - - - - - Fund balance (deficit): Nonspendable - - - - - Restricted - - - - - Committed - - - - - Assigned 182,573 - 113,736 207,609 - Unassigned: - - - - (302,954) Total fund balance (deficit) 182,573 - 113,736 207,609 (302,954) Total liabilities, deferred inflows of resources and fund balance (deficit) 194,791$ -$ 113,736$ 207,609$ -$ Capital Projects (Continued) 83 Statement 14 Page 4 of 4 Permanent Fund Fire House Birch St/ Blackduck/ Capital Foxborough House #2 Well #6 Northpointe Centerville Rd Aqua Ln Projects Environment Total Construction Construction Improvements Improvements Watermain Ext Subtotal Fund 2015 624,252$ 854,422$ 413,271$ 193,123$ -$ 8,699,812$ 123,791$ 11,360,626$ - - - - - - - - - - - - - - - - - - - - - 199 - 416 - - - - - 1,115 - 1,115 - - - - - 3,660,455 - 3,660,455 - - - - - - - 15,062 - - - - - 28 - 16,896 - - - - - 174 - 174 - - - - - 2,436 - 12,018 - - - - - 251,396 - 423,741 - - - - - 1,419 - 1,419 - - - - - - - - - - - - - - - 225,000 - - - - - - - 1,177 624,252$ 854,422$ 413,271$ 193,123$ -$ 12,617,034$ 123,791$ 15,718,099$ -$ -$ -$ -$ 48,895$ 1,342,917$ -$ 1,342,917$ 8,949 3,432 - 6,074 2,191 497,196 - 506,470 - - - - - - - 752 582,033 103,051 35,342 31,503 - 1,093,007 - 1,093,007 - - - - - 285,947 - 285,947 590,982 106,483 35,342 37,577 51,086 3,219,067 - 3,229,093 - - - - - 254,006 - 450,995 - - - - - - 100,000 101,177 - - - - - - 23,791 2,630,254 - - - - - - - 163,239 33,270 747,939 377,929 155,546 - 10,600,247 - 10,600,247 - - - - (51,086) (1,456,286) - (1,456,906) 33,270 747,939 377,929 155,546 (51,086) 9,143,961 123,791 12,038,011 624,252$ 854,422$ 413,271$ 193,123$ -$ 12,617,034$ 123,791$ 15,718,099$ Capital Projects (Continued) 84 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2015 Economic Development Cable TV Program Blue Heron Federal Authority Fund Recreation Days Narcotics Revenue: General property taxes -$ -$ -$ -$ -$ Tax increments - - - - - Intergovernmental - - - - - Special assessments - - - - - Charges for services - 40,626 129,592 - - Investment earnings - 452 827 90 463 Net increase (decrease) in fair value of investments - (172) (299) (33) (176) Refunds - - - - - Miscellaneous - - 30 21,054 86,588 Total revenue - 40,906 130,150 21,111 86,875 Expenditures: Current: General government 1,165 - - - - Public safety - - - - 76,557 Parks, recreation and forestry - - 150,020 19,185 - Conservation of natural resources - - - - - Community development - - - - - Capital outlay: General government - - - - - Public safety - - - - - Public works - - - - - Debt service: Principal - - - - - Interest and fiscal charges - - - - - Bond issuance costs - - - - - Total expenditures 1,165 - 150,020 19,185 76,557 Revenue over (under) expenditures (1,165) 40,906 (19,870) 1,926 10,318 Other financing sources (uses): Transfer in 745 - - - - Transfer out - - (10,000) - - Issuance of debt - - - - - Premium on bonds issued - - - - - Total other financing sources (uses) 745 - (10,000) - - Net increase (decrease) in fund balance (420) 40,906 (29,870) 1,926 10,318 Fund balance (deficit) - Beginning of year 225,000 39,331 114,049 11,321 39,647 Fund balance (deficit) - End of Year 224,580$ 80,237$ 84,179$ 13,247$ 49,965$ Special Revenue 85 Statement 15 Page 1 of 4 Debt Service Special Certificates State DUI Revenue of Narcotics Forfeitures Subtotal Indebtedness -$ -$ -$ 300,838$ - - - - - - - - - - - 318 - - 170,218 - 51 53 1,936 1,069 (19) (20) (719) (423) - - - - 9,004 17,845 134,521 - 9,036 17,878 305,956 301,802 - - 1,165 - 5,037 2,387 83,981 - - - 169,205 - - - - - - - - - - - - - - - - - - - - - - - - 276,000 - - - 11,298 - - - - 5,037 2,387 254,351 287,298 3,999 15,491 51,605 14,504 - - 745 - - - (10,000) - - - - - - - - - - - (9,255) - 3,999 15,491 42,350 14,504 5,811 1,528 436,687 115,302 9,810$ 17,019$ 479,037$ 129,806$ Special Revenue (Continued) 86 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2015 Tax Utility CIP Improvement Abatement Revenue Refunding TIF Bonds of Bonds Bonds Bonds Bonds 2005B 2006C 2006D 2006E 2007A Revenue: General property taxes 876$ 264,155$ -$ 449,496$ -$ Tax increments - - - - - Intergovernmental - - - - - Special assessments 18,052 441 26,608 808 - Charges for services - - - - - Investment earnings 210 610 651 3,627 - Net increase (decrease) in fair value of investments (13) (209) (234) (1,308) - Refunds - - - - - Miscellaneous - - - - - Total revenue 19,125 264,997 27,025 452,623 - Expenditures: Current: General government - - - - - Public safety - - - - - Parks, recreation and forestry - - - - - Conservation of natural resources - - - - - Community development - - - - - Capital outlay: General government - - - - - Public safety - - - - - Public works - - - - - Debt service: Principal 420,000 155,000 60,000 360,000 360,000 Interest and fiscal charges 13,450 85,893 7,683 56,450 105,176 Bond issuance costs - - - - - Total expenditures 433,450 240,893 67,683 416,450 465,176 Revenue over (under) expenditures (414,325) 24,104 (40,658) 36,173 (465,176) Other financing sources (uses): Transfer in - - 66,834 - 464,976 Transfer out - - - - - Issuance of debt - - - - - Premium on bonds issued - - - - - Total other financing sources (uses) - - 66,834 - 464,976 Net increase (decrease) in fund balance (414,325) 24,104 26,176 36,173 (200) Fund balance (deficit) - Beginning of year 432,960 235,178 153,560 854,330 149,896 Fund balance (deficit) - End of Year 18,635$ 259,282$ 179,736$ 890,503$ 149,696$ Debt Service (Continued) 87 Statement 15 Page 2 of 4 Improvement and Utility Revenue Improvement Improvement GO GO EDA Leased Debt Refunding Bonds Bonds of Bonds of Bonds Bonds Revenue Bonds Service 2010 2012A 2013A 2014A 2015A 2015B Subtotal -$ 178,816$ -$ -$ -$ -$ 1,194,181$ - - - - - - - - - - - - - - 16,854 21,246 - - - - 84,327 - - - - - - - 742 800 - 125 201 382 8,417 (256) (274) - (46) (75) (140) (2,978) - - - - - - - - - - - - - - 17,340 200,588 - 79 126 242 1,283,947 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100,000 220,000 60,425 - - - 2,011,425 20,850 - - - - - 300,800 - 19,483 17,965 24,183 200 1,000 62,831 120,850 239,483 78,390 24,183 200 1,000 2,375,056 (103,510) (38,895) (78,390) (24,104) (74) (758) (1,091,109) - - 94,936 130,341 - - 757,087 - - - - - - - - - - - 49,474 106,668 156,142 - - - - 1,005 1,257 2,262 - - 94,936 130,341 50,479 107,925 915,491 (103,510) (38,895) 16,546 106,237 50,405 107,167 (175,618) 223,948 297,102 (16,746) 21,310 - - 2,466,840 120,438$ 258,207$ (200)$ 127,547$ 50,405$ 107,167$ 2,291,222$ Debt Service (Continued) 88 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2015 Capital Closed Building and Equipment Bond Street Facilities Revolving Fund Fund Reconstruction Sealcoating Revenue: General property taxes -$ -$ -$ -$ -$ Tax increments - - - - - Intergovernmental - - - - - Special assessments - - 24,818 14,192 - Charges for services - 2,500 - - - Investment earnings 3,264 1,608 8,445 3,977 4,674 Net increase (decrease) in fair value of investments (1,203) (652) (3,100) (1,466) (1,690) Refunds - - - - 71,993 Miscellaneous 135,524 55,609 - - - Total revenue 137,585 59,065 30,163 16,703 74,977 Expenditures: Current: General government 11,048 - 12,575 - - Public safety - - - - 804,382 Parks, recreation and forestry - - - - - Conservation of natural resources - - - - - Community development - - - - - Capital outlay: General government 6,727 - - - - Public safety - 1,161,951 - - - Public works 4,237 229,259 - - - Debt service: Principal - - - - - Interest and fiscal charges - - - - - Bond issuance costs - - - - - Total expenditures 22,012 1,391,210 12,575 - 804,382 Revenue over (under) expenditures 115,573 (1,332,145) 17,588 16,703 (729,405) Other financing sources (uses): Transfer in - - - - 514,500 Transfer out - - (480,894) - - Issuance of debt - 1,161,250 - - - Premium on bonds issued - - - - - Total other financing sources (uses) - 1,215,772 (480,894) - 514,500 Net increase (decrease) in fund balance 115,573 (116,373) (463,306) 16,703 (214,905) Fund balance (deficit) - Beginning of year 2,438,142 159,636 1,704,568 650,450 525,089 Fund balance (deficit) - End of Year 2,553,715$ 43,263$ 1,241,262$ 667,153$ 310,184$ Capital Projects 89 Statement 15 Page 3 of 4 Surface Tax Increment Tax Increment Tax Increment Water Financing Financing Financing Dedicated MSA I35E Management 1-5 1-10 1-11 Parks Construction Interchange -$ -$ -$ -$ -$ -$ -$ - 36,118 148,315 82,853 - - - - - - - - - - 66,877 - - - - - - - - - - - - - 2,928 1,111 1,491 - 1,013 24,109 - (1,077) (412) (544) - (380) (8,822) - - - - - - - - - - - - 142,109 - - 68,728 36,817 149,262 82,853 142,742 15,287 - - - - - - - - 95,270 - - - - - 328,373 - - - - - - - - - - - - - - - 1,059 1,564 1,529 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11,241 - - - - - - - - - 95,270 1,059 1,564 1,529 11,241 - 328,373 (26,542) 35,758 147,698 81,324 131,501 15,287 (328,373) - - - - 50,000 - - - - (148,315) (82,853) - (817,682) - - - - - - - - - - - - - - - - - (148,315) (82,853) 50,000 (817,682) - (26,542) 35,758 (617) (1,529) 181,501 (802,395) (328,373) 474,853 173,754 189,037 (771,119) (251,933) 3,922,220 69,207 448,311$ 209,512$ 188,420$ (772,648)$ (70,432)$ 3,119,825$ (259,166)$ Capital Projects (Continued) 90 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2015 Office Equipment Legacy Woods Revolving Edge Traffic Otter Lake 21st Ave Fund Improvement Signal Road Ext Extension Revenue: General property taxes -$ -$ -$ -$ -$ Tax increments - - - - - Intergovernmental - - 30,016 - - Special assessments - - - - - Charges for services - - - - - Investment earnings 1,335 1,566 554 1,534 - Net increase (decrease) in fair value of investments (485) - (203) (556) - Refunds - - - - - Miscellaneous - - - - - Total revenue 850 1,566 30,367 978 - Expenditures: Current: General government 9,929 - - - - Public safety - - 542 24,421 109,872 Parks, recreation and forestry - - - - - Conservation of natural resources - - - - - Community development - - - - - Capital outlay: General government 61,205 - - - - Public safety - - - - - Public works - - - 54,125 - Debt service: Principal - - - - - Interest and fiscal charges - - - - - Bond issuance costs - - - - - Total expenditures 71,134 - 542 78,546 109,872 Revenue over (under) expenditures (70,284) 1,566 29,825 (77,568) (109,872) Other financing sources (uses): Transfer in 25,000 - - - - Transfer out - (535,414) - - - Issuance of debt - - - - - Premium on bonds issued - - - - - Total other financing sources (uses) 25,000 (535,414) - - - Net increase (decrease) in fund balance (45,284) (533,848) 29,825 (77,568) (109,872) Fund balance (deficit) - Beginning of year 227,857 533,848 83,911 285,177 (193,082) Fund balance (deficit) - End of Year 182,573$ -$ 113,736$ 207,609$ (302,954)$ Capital Projects (Continued) 91 Statement 15 Page 4 of 4 Permanent Fund Fire House Birch St/ Blackduck/ Capital Foxborough House #2 Well #6 Northpointe Centerville Rd Aqua Ln Projects Environment Total Construction Construction Improvements Improvements Watermain Ext Subtotal Fund 2015 -$ -$ -$ -$ -$ -$ -$ 1,194,181$ - - - - - 267,286 - 267,286 - - - - - 30,016 - 30,016 - - - - - 105,887 - 190,214 - - - - - 2,500 - 172,718 8,349 5,868 5,036 767 - 77,629 482 88,464 (2,774) (2,147) (1,803) (254) - (27,568) - (31,265) - - - - - 71,993 - 71,993 - - - - - 333,242 2,675 470,438 5,575 3,721 3,233 513 - 860,985 3,157 2,454,045 - - - - - 33,552 - 34,717 4,190,303 333,240 754,193 798,170 - 7,438,766 - 7,522,747 - - - - - - - 169,205 - - - - - - 8,100 8,100 - - - - - 4,152 - 4,152 - - - - - 67,932 - 67,932 - - - - - 1,161,951 - 1,161,951 - - - 2,537 - 290,158 - 290,158 - - - - 51,086 51,086 - 2,062,511 - - - - - 11,241 - 312,041 - - - - - - - 62,831 4,190,303 333,240 754,193 800,707 51,086 9,058,838 8,100 11,696,345 (4,184,728) (329,519) (750,960) (800,194) (51,086) (8,197,853) (4,943) (9,242,300) - - - 503,016 - 1,092,516 - 1,850,348 - - - - - (2,065,158) - (2,075,158) 4,273,332 - - 454,823 - 5,889,405 - 6,045,547 50,351 - - 9,232 - 59,583 - 61,845 4,323,683 - - 967,071 - 5,030,868 - 5,937,104 138,955 (329,519) (750,960) 166,877 (51,086) (3,166,985) (4,943) (3,305,196) (105,685) 1,077,458 1,128,889 (11,331) - 12,310,946 128,734 15,343,207 33,270$ 747,939$ 377,929$ 155,546$ (51,086)$ 9,143,961$ 123,791$ 12,038,011$ Capital Projects (Continued) 92 CITY OF LINO LAKES, MINNESOTA Statement 16 SPECIAL REVENUE FUND - PROGRAM RECREATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2015 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenue: Charges for services: Recreation fees 144,935$ 144,935$ 129,592$ (15,343)$ Investment earnings - - 827 827 Change in market value - - (299) (299) Miscellaneous - - 30 30 Total revenue 144,935 144,935 130,150 (14,785) Expenditures: Current: Personal services 58,205 58,205 65,083 (6,878) Supplies 35,650 35,650 52,623 (16,973) Other services and charges - - 1,520 (1,520) Contractual services 28,350 28,350 30,794 (2,444) Capital outlay 3,000 3,000 - 3,000 Total expenditures 125,205 125,205 150,020 (24,815) Other financing sources (uses): Transfers out - - (10,000) (10,000) Net increase (decrease) in fund balance 19,730$ 19,730$ (29,870) (49,600)$ Fund balance - January 1 114,049 Fund balance - December 31 84,179$ 2015 Fiduciary Funds Agency Fund Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments. The City maintained the following Agency fund during the year: Contractor’s Deposits – to account for pass-through costs relating to prospective developers. 93 CITY OF LINO LAKES, MINNESOTA Statement 17 STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - FIDUCIARY FUNDS - AGENCY FUNDS Year Ended December 31, 2015 Balance Balance January 1, December 31, 2015 Additions Deductions 2015 Assets Cash and investments 783,438$ 100,627$ 156,430$ 727,635$ Liabilities Deposits payable 783,433$ 100,627$ 156,425$ 727,635$ SUPPLEMENTARY FINANCIAL AND OTHER INFORMATION 94 CITY OF LINO LAKES, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2015 Final Interest Maturity Rates Dated Date General Obligation Bonds: 2012A Equipment Certificates 1.00% 2/1/2012 12/31/2015 2013A Equipment Certificates 1.00% 2/1/2013 12/31/2016 2014A Equipment Certificates 1.00% 2/1/2014 12/31/2017 2015A Equipment Certificates 1.00% 2/1/2015 12/31/2018 2015B Equipment Certificates 1.50% 8/25/2015 12/31/2020 G.O. Tax Abatement Bonds, Series 2006C 4.00%-4.30% 8/15/2006 2/1/2023 G.O. Utility Revenue Bonds, Series 2006D 4.00%-4.15% 8/15/2006 2/1/2017 G.O. CIP Refunding Bonds, Series 2006E 4.00% 11/1/2006 2/1/2018 G.O. Tax Increment Bonds, Series 2007A 4.00%-4.125% 7/15/2007 2/1/2024 G.O. Refunding Bonds, Series 2012A 1.00%-2.00% 11/15/2012 2/1/2024 G.O Bonds 2015A 2.00%-3.00% 8/1/2015 2/1/2031 EDA Leased Revenue Bonds 2015B 2.00%-3.00% 10/1/2015 4/1/2036 Total General Obligation Bonds Special Assessment Bonds: G. O. Improvement Bonds of 2005A 4.35%-5.15% 11/1/2005 2/1/2021 G. O. Improvement Refunding Bonds of 2005B 3.75%-5.00% 11/1/2005 2/1/2015 G.O. Improvement & Utility Revenue Refunding Bonds, Series 2010A 2.00%-3.00% 7/9/2010 2/1/2020 G.O. Improvement Bonds, Series 2013A 1.25%-4.00% 7/15/2013 2/1/2024 G.O. Improvement Bonds, Series 2014A 0.40%-2.30% 11/20/2014 2/1/2026 Total General Improvement Bonds with special assessments pledged Other Long-Term Debt: Note Payable - Anoka County - 2009A 4.00%-3.70% 8/01/2009 8/1/2024 Total City indebtedness 95 Exhibit 1 Prior Years Principal Interest Original Payable Payable Due Due Issue Payments 1/1/15 Issued Payments 12/31/15 In 2016 In 2016 150,000$ 99,000$ 51,000$ -$ 51,000$ -$ -$ -$ 193,000 63,000 130,000 - 65,000 65,000 65,000 650 495,000 - 495,000 - 160,000 335,000 167,000 3,350 198,250 - - 198,250 - 198,250 65,000 3,800 963,000 - - 963,000 - 963,000 177,000 27,686 2,460,000 380,000 2,080,000 - 155,000 1,925,000 170,000 78,380 570,000 375,000 195,000 - 60,000 135,000 65,000 4,254 2,990,000 1,420,000 1,570,000 - 360,000 1,210,000 380,000 40,800 4,215,000 1,450,000 2,765,000 - 360,000 2,405,000 380,000 89,526 2,015,000 70,000 1,945,000 - 220,000 1,725,000 230,000 17,618 3,095,000 - - 3,095,000 - 3,095,000 - 81,090 4,350,000 - - 4,350,000 - 4,350,000 - 174,766 21,694,250 3,857,000 9,231,000 8,606,250 1,431,000 16,406,250 1,699,000 521,920 5,550,000 2,410,000 3,140,000 - 380,000 2,760,000 400,000 130,235 3,755,000 3,335,000 420,000 - 420,000 - - - 1,000,000 375,000 625,000 - 100,000 525,000 100,000 14,250 615,000 - 615,000 - 60,000 555,000 60,000 16,815 - - - 2,645,000 - 2,645,000 105,000 33,543 10,920,000 6,120,000 4,800,000 2,645,000 960,000 6,485,000 665,000 194,842 4,260,000 - 2,080,000 - 360,000 1,720,000 375,000 70,165 38,614,250$ 11,717,000$ 16,111,000$ 11,251,250$ 2,751,000$ 24,611,250$ 2,739,000$ 786,927$ 2015 96 CITY OF LINO LAKES, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES December 31, 2015 G. O. G. O. G. O. Tax CIP Year of Equipment Equipment Equipment Equipment Improvement Abatement Refunding Levy/ Certificates Certificates Certificates Certificates Bonds Bonds Bonds Collection of 2013A of 2014A of 2015A of 2015B of 2005A 2006C 2006E 2015/2016 68,933$ 178,868$ 72,240$ 214,921$ 572,497$ 278,140$ 460,110$ 2016/2017 - 178,164 71,749 215,030 571,184 285,411 464,100 2017/2018 - - 70,258 214,090 574,072 297,263 - 2018/2019 - - - 213,119 574,907 313,472 - 2019/2020 - - - 214,216 579,639 323,316 - 2020/2021 - - - - - 337,517 - 2021/2022 - - - - - 350,447 - 2022/2023 - - - - - - - 2023/2024 - - - - - - - 2024/2025 - - - - - - - 2025/2026 - - - - - - - 2026/2027 - - - - - - - 2027/2028 - - - - - - - 2028/2029 - - - - - - - 2029/2030 - - - - - - - 2030/2031 - - - - - - - 2031/2032 - - - - - - - 2032/2033 - - - - - - - 2033/2034 - - - - - - - 2034/2035 - - - - - - - 2035/2036 - - - - - - - 68,933$ 357,032$ 214,247$ 1,071,376$ 2,872,299$ 2,185,566$ 924,210$ 97 Exhibit 2 G.O. G. O. Improvement and G.O. G.O. G.O. EDA TIF Utility Revenue G.O. Improvement Improvement Improvement Leased Revenue Bonds Refunding Bonds Refunding Bonds Bonds Bonds Bonds Bonds 2007A 2010A 2012A 2013A 2014A 2015A 2015B Total 500,983$ 121,537$ 266,406$ 8,544$ 11,640$ -$ -$ 2,754,819$ 506,023 118,387 259,128 7,158 3,324 57,041 168,208 2,904,907 268,723 120,488 261,868 5,772 6,301 56,096 173,713 2,048,644 271,243 117,180 258,849 3,882 4,595 55,151 178,531 1,990,929 278,593 124,372 182,417 1,992 1,505 54,206 178,210 1,938,466 285,313 - 179,687 4,722 2,148 53,261 191,815 1,054,463 291,403 - 181,949 1,992 2,865 52,316 196,681 1,077,653 301,855 - 183,899 - 3,655 51,371 201,518 742,298 306,127 - 180,330 - 4,500 50,426 209,924 751,307 - - - - - 54,731 210,740 265,471 - - - - - 53,681 215,880 269,561 - - - - - - 213,863 213,863 - - - - - - 218,836 218,836 - - - - - - 224,607 224,607 - - - - - - 229,489 229,489 - - - - - - 238,787 238,787 - - - - - - 243,660 243,660 - - - - - - 268,780 268,780 - - - - - - 279,118 279,118 - - - - - - 289,456 289,456 - - - - - - 299,793 299,793 3,010,263$ 601,964$ 1,954,533$ 34,062$ 40,533$ 538,280$ 4,431,609$ 18,304,907$ 98 CITY OF LINO LAKES, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY - ALL BONDS December 31, 2015 G. O. Equipment Equipment Equipment Equipment Improvement Certificates Certificates Certificates Certificates Bonds 2013A 2014A 2015A 2015B 2005A Bonds payable 65,000$ 335,000$ 198,250$ 963,000$ 2,760,000$ Future interest payable 650 5,030 5,796 57,356 445,644 Totals 65,650$ 340,030$ 204,046$ 1,020,356$ 3,205,644$ Payments to maturity: 2016 65,650$ 170,350$ 68,800$ 204,686$ 530,236$ 2017 - 169,680 68,333 204,790 534,611 2018 - - 66,913 203,895 532,861 2019 - - - 202,970 534,633 2020 - - - 204,015 534,784 2021 - - - - 538,519 2022 - - - - - 2023 - - - - - 2024 - - - - - 2025 - - - - - 2026 - - - - - 2027 - - - - - 2028 - - - - - 2029 - - - - - 2030 - - - - - 2031 - - - - - 2032 - - - - - 2033 - - - - - 2034 - - - - - 2035 - - - - - 2036 - - - - - 65,650$ 340,030$ 204,046$ 1,020,356$ 3,205,644$ 99 Exhibit 3 G.O. G.O. G.O. G.O. Tax Utility CIP G.O. Improvement and Abatement Revenue Refunding TIF Utility Revenue G.O. Bonds Bonds Bonds Bonds Refunding Bonds Refunding Bonds 2006C 2006D 2006E 2007A 2010A 2012A 1,925,000$ 135,000$ 1,210,000$ 2,405,000$ 525,000$ 1,725,000$ 367,429 5,707 74,400 413,351 40,425 92,021 2,292,429$ 140,707$ 1,284,400$ 2,818,351$ 565,425$ 1,817,021$ 248,381$ 69,254$ 420,800$ 469,526$ 114,250$ 247,618$ 260,858 71,453 430,100 473,926 111,250 241,311 267,464 - 433,500 252,126 113,175 244,660 278,327 - - 254,326 110,025 242,590 293,233 - - 261,026 116,725 170,520 302,183 - - 267,126 - 168,560 315,103 - - 272,504 - 166,400 326,880 - - 282,016 - 169,001 - - - 285,775 - 166,361 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,292,429$ 140,707$ 1,284,400$ 2,818,351$ 565,425$ 1,817,021$ 100 CITY OF LINO LAKES, MINNESOTA Exhibit 3 DEBT SERVICE PAYMENTS TO MATURITY - ALL BONDS (CONTINUED) December 31, 2015 Note G.O. G.O. G.O. EDA Payable - Improvement Improvement Improvement Leased Revenue Anoka Bonds Bonds Bonds Bonds County - 2013A 2014A 2015A 2015B 2009A Totals Bonds payable 555,000$ 2,645,000$ 3,095,000$ 4,350,000$ 1,720,000$ 24,611,250$ Future interest payable 91,755 190,267 640,558 1,811,960 1,016,549 5,258,898 Totals 646,755$ 2,835,267$ 3,735,558$ 6,161,960$ 2,736,549$ 29,870,148$ Payments to maturity: 2016 76,815$ 138,543$ 81,090$ 174,767$ 465,945$ 3,546,711$ 2017 75,780 402,223 257,112 299,237 470,945 4,071,609 2018 74,460 399,633 258,263 300,888 475,345 3,623,183 2019 72,900 406,158 259,312 302,438 483,195 3,146,874 2020 71,100 401,788 255,313 298,938 485,070 3,092,512 2021 69,000 406,390 256,262 299,487 356,049 2,663,576 2022 71,500 162,055 252,163 299,013 - 1,538,738 2023 68,900 159,280 253,013 298,388 - 1,557,478 2024 66,300 161,151 258,712 302,538 - 1,240,837 2025 - 162,644 259,263 301,462 - 723,369 2026 - 35,402 254,481 300,237 - 590,120 2027 - - 254,362 298,862 - 553,224 2028 - - 209,400 297,337 - 506,737 2029 - - 209,587 300,587 - 510,174 2030 - - 209,150 298,612 - 507,762 2031 - - 208,075 301,106 - 509,181 2032 - - - 298,063 - 298,063 2033 - - - 298,800 - 298,800 2034 - - - 298,200 - 298,200 2035 - - - 297,200 - 297,200 2036 - - - 295,800 - 295,800 646,755$ 2,835,267$ 3,735,558$ 6,161,960$ 2,736,549$ 29,870,148$ 101 CITY OF LINO LAKES, MINNESOTA Exhibit 4 INSURANCE IN FORCE December 31, 2015 Coverage Amount General Liability: Bodily Injury/Property Damage 1,500,000$ Personal Injury/Police Professional Liability 1,500,000 Fire Legal Liability 50,000 Medical Expense Occurrence Limit 1,000 Medical Expense Aggregate 10,000 Property Damage ($500 Deductible) Property: Buildings and Contents (including Mobile and EDP - Electronic Equipment & Valuable Papers) 31,598,180 Faithful Performance Blanket Bond 500,000 Storage Tank Liability 250,000 Rented/Leased Equipment ($1,000 Deductible) 500,000 Public Official and Employee Liability ($1,000 Deductible Each Occurrence) 1,500,000 Automotive: Bodily Injury and Property Damage 1,500,000 Comprehensive and Collision Actual Cash Value Uninsured Motorists 200,000 Workmen's Compensation Statutory Umbrella Liability 1,000,000 Crime - Theft Disappearance and Destruction ($1,000 Deductible) 250,000 102 CITY OF LINO LAKES, MINNESOTA Exhibit 5 TAXABLE VALUATIONS, TAX LEVIES AND TAX RATES Tax Capacity Tax Capacity Values Values 2014/2015 2013/2014 Taxable valuations: Total 18,339,615$ 16,439,245$ Fiscal disparities: Distribution 2,639,444 2,623,227 Contribution (1,072,910) (1,063,999) Less: Captured Tax Increment Value (236,559) (232,280) 19,669,590$ 17,766,193$ Tax Tax Certified Capacity Certified Capacity Levy Rate Levy Rate Taxes Levied: Revenue 7,490,578$ 37.819 7,098,922$ 39.784 Bond and Interest 1,195,494 5.951 1,197,122 6.899 Totals 8,686,072$ 43.770 8,296,044$ 46.683 The tax capacity rate is based on the total certified levy net of the fiscal disparity distribution III. STATISTICAL SECTION (Unaudited) Statistical Section (Unaudited) This part of the Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about overall financial health. The following are the categories of the various schedules that are included in this section. Financial Trends Tables 1-4 These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity Tables 5-8 These schedules contain information to help the reader assess the City’s most significant revenue sources. Debt Capacity Tables 9-12 These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information Tables 13-14 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating information Tables 15-17 These schedules contain service and infrastructure data to help the reader understand how the information the City’s financial report relates to the services the City provides and the activities it performs. 103 CITY OF LINO LAKES, MINNESOTA Table 1 NET POSITION BY COMPONENT, LAST TEN FISCAL YEARS (accrual basis of accounting) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental Activities Net Investment in Capital Assets 29,549,174$ 36,789,153$ 28,472,865$ 23,400,453$ 22,562,217$ 24,600,103$ 22,166,342$ 22,241,821$ 19,540,807$ 18,230,746$ Restricted 10,704,508 10,324,467 9,870,676 9,414,474 8,428,025 11,598,803 11,595,112 11,000,033 8,666,357 8,635,293 Unrestricted 14,516,466 6,339,528 10,790,359 15,926,322 16,738,885 13,463,210 17,639,038 16,849,636 20,527,704 13,888,120 Total Governmental Activities Net Position 54,770,148$ 53,453,148$ 49,133,900$ 48,741,249$ 47,729,127$ 49,662,116$ 51,400,492$ 50,091,490$ 48,734,868$ 40,754,159$ Business-Type Activities Net Investment in Capital Assets 29,485,942$ 29,836,775$ 30,372,670$ 30,071,840$ 29,648,461$ 29,216,866$ 28,798,095$ 28,423,284$ 27,556,022$ 29,127,829$ Unrestricted 6,880,547 8,063,983 9,028,778 10,112,207 10,728,626 11,201,362 12,102,013 12,999,182 13,888,278 14,672,630 Total Business-Type Activities Net Position 36,366,489$ 37,900,758$ 39,401,448$ 40,184,047$ 40,377,087$ 40,418,228$ 40,900,108$ 41,422,466$ 41,444,300$ 43,800,459$ Primary Government Net Investment in Capital Assets 59,035,116$ 66,625,928$ 58,845,535$ 53,472,293$ 52,210,678$ 53,816,969$ 50,964,437$ 50,665,105$ 47,096,829$ 47,358,575$ Restricted 10,704,508 10,324,467 9,870,676 9,414,474 8,428,025 11,598,803 11,595,112 11,000,033 8,666,357 8,635,293 Unrestricted 21,397,013 14,403,511 19,819,137 26,038,529 27,467,511 24,664,572 29,741,051 29,848,818 34,415,982 28,560,750 Total Primary Government Net Position 91,136,637$ 91,353,906$ 88,535,348$ 88,925,296$ 88,106,214$ 90,080,344$ 92,300,600$ 91,513,956$ 90,179,168$ 84,554,618$ Fiscal Year 104 CITY OF LINO LAKES, MINNESOTA CHANGES IN NET POSITION, LAST TEN FISCAL YEARS (accrual basis of accounting) 2006 2007 2008 2009 2010 2011 Expenses Governmental activities: General government 2,886,825$ 2,197,672$ 2,323,358$ 2,201,439$ 1,987,415$ 1,990,137$ Public safety 3,516,376 3,730,504 4,051,162 4,299,366 3,971,261 4,019,101 Public services 3,871,968 10,580,560 7,608,626 4,027,553 3,968,063 8,110,979 Parks, recreation and forestry 1,162,458 1,357,133 919,948 1,313,560 1,124,907 1,218,472 Conservation of natural resources 156,592 183,420 184,624 215,607 197,571 139,544 Community development 691,880 1,122,802 1,114,158 1,005,997 1,105,254 617,747 Interest on long-term debt 926,021 980,849 1,045,781 928,668 1,064,172 927,535 Total governmental activities expenses 13,212,120$ 20,152,940$ 17,247,657$ 13,992,190$ 13,418,643$ 17,023,515$ Business-type activities: Water 976,575$ 1,170,902$ 1,020,770$ 1,089,569$ 1,045,901$ 966,643$ Sewer 1,228,123 1,298,963 1,287,943 1,432,107 1,466,847 1,638,063 Total business-type activities 2,204,698 2,469,865 2,308,713 2,521,676 2,512,748 2,604,706 Total primary government expenses 15,416,818$ 22,622,805$ 19,556,370$ 16,513,866$ 15,931,391$ 19,628,221$ Program Revenues Governmental activities: Charges for services: General government 88,924$ 91,646$ 79,844$ 101,741$ 98,403$ 103,687$ Public safety 844,514 1,078,995 1,296,418 725,747 691,005 713,985 Public works 420,741 389,489 413,040 428,174 427,223 382,287 Parks, recreation and forestry 188,439 185,803 187,285 165,994 177,984 210,976 Conservation of natural resources 6,854 4,559 3,660 3,858 4,153 4,392 Community development 20,530 15,839 11,623 8,667 14,148 5,138 Operating grants and contributions 643,749 851,791 693,065 682,797 617,450 593,798 Capital grants and contributions 5,963,204 7,189,346 1,094,789 1,357,015 1,388,984 7,347,613 Total governmental activities program revenues 8,176,955$ 9,807,468$ 3,779,724$ 3,473,993$ 3,419,350$ 9,361,876$ Business-type activities: Charges for services: Water 1,175,172$ 1,215,763$ 1,058,493$ 1,365,817$ 1,087,013$ 1,090,104$ Sewer 1,391,702 1,446,112 1,472,093 1,502,164 1,498,218 1,494,188 Operating grants and contributions - - - 62,710 - - Capital grants and contributions 1,535,631 80,750 10,117 8,769 8,709 1,462 Total business-type activities program revenues 4,102,505 2,742,625 2,540,703 2,939,460 2,593,940 2,585,754 Total primary government program revenues 12,279,460$ 12,550,093$ 6,320,427$ 6,413,453$ 6,013,290$ 11,947,630$ Net (Expense)/Revenue Governmental activities (5,035,165)$ (10,345,472)$ (13,467,933)$ (10,518,197)$ (9,999,293)$ (7,661,639)$ Business-type activities 1,897,807 272,760 231,990 417,784 81,192 (18,952) Total primary government net expense (3,137,358)$ (10,072,712)$ (13,235,943)$ (10,100,413)$ (9,918,101)$ (7,680,591)$ General Revenues and Other Changes in Net Position Governmental activities: Property taxes 8,269,944$ 8,785,280$ 9,424,697$ 9,808,324$ 8,764,183$ 8,768,805$ Unrestricted grants and contributions - 256,877 129,607 11,321 4,389 4,072 Unrestricted investment earnings 713,794 864,578 576,071 429,325 225,677 251,250 Change in market value - - - - - - Gain on sale of capital assets 33,217 17,424 12,512 12,644 - 37,579 Miscellaneous - - - - - - Transfers (299,725) (895,687) (994,202) (136,068) (7,078) 66,122 Total governmental activities 8,717,230$ 9,028,472$ 9,148,685$ 10,125,546$ 8,987,171$ 9,127,828$ Business-type activities: Unrestricted investment earnings 253,787$ 365,822$ 274,498$ 228,747$ 104,770$ 126,215$ Change in market value - - - - - - Transfers 299,725 895,687 994,202 136,068 7,078 (66,122) Total business-type activities 553,512 1,261,509 1,268,700 364,815 111,848 60,093 Total primary government 9,270,742$ 10,289,981$ 10,417,385$ 10,490,361$ 9,099,019$ 9,187,921$ Change in Net Position Governmental activities 3,682,065$ (1,317,000)$ (4,319,248)$ (392,651)$ (1,012,122)$ 1,466,189$ Business-type activities 2,451,319 1,534,269 1,500,690 782,599 193,040 41,141 Total primary government change in net position 6,133,384$ 217,269$ (2,818,558)$ 389,948$ (819,082)$ 1,507,330$ Fiscal Year 105 Table 2 2012 2013 2014 2015 1,883,961$ 1,566,388$ 2,036,550$ 2,016,351$ 4,046,415 3,950,197 4,107,759 5,135,865 5,584,283 4,540,888 4,786,121 6,822,972 1,210,867 835,783 1,093,909 1,148,740 184,051 141,204 159,649 186,111 430,121 404,726 407,448 432,268 837,755 951,842 618,680 632,876 14,177,453$ 12,391,028$ 13,210,116$ 16,375,183$ 949,121$ 927,800$ 965,641$ 1,394,897$ 1,527,637 1,584,395 1,628,258 2,089,842 2,476,758 2,512,195 2,593,899 3,484,739 16,654,211$ 14,903,223$ 15,804,015$ 19,859,922$ 129,151$ 93,118$ 103,072$ 818,468$ 642,745 697,584 763,470 199,498 476,296 456,024 464,486 454,845 191,832 175,978 156,735 149,021 19,297 1,347 1,882 - 16,940 28,118 39,395 - 450,179 527,368 840,676 526,107 5,125,693 941,960 335,733 1,176,732 7,052,133$ 2,921,497$ 2,705,449$ 3,324,671$ 1,371,809$ 1,208,742$ 965,425$ 1,014,836$ 1,505,781 1,516,397 1,564,099 1,621,633 - - 263,024 263,024 20,018 883 1,035 3,035,031 2,897,608 2,726,022 2,793,583 5,934,524 9,949,741$ 5,647,519$ 5,499,032$ 9,259,195$ (7,125,320)$ (9,469,531)$ (10,504,667)$ (13,050,512)$ 420,850 213,827 199,684 2,449,785 (6,704,470)$ (6,704,470)$ (10,304,983)$ (10,600,727)$ 8,610,709$ 8,563,595$ 8,806,886$ 9,243,236$ 4,941 4,442 4,443 5,363 202,828 216,488 172,738 163,825 - (270,692) 92,957 (50,864) 4,175 - 1,727 17,836 - - - - 41,043 (353,304) 69,294 66,834 8,863,696$ 8,160,529$ 9,148,045$ 9,446,230$ 102,073$ 113,402$ 96,213$ 81,084$ - (158,175) 58,255 (29,917) (41,043) 353,304 (69,294) (66,834) 61,030 308,531 85,174 (15,667) 8,924,726$ 8,469,060$ 9,233,219$ 9,430,563$ 1,738,376$ (1,309,002)$ (1,356,622)$ (3,604,282)$ 481,880 522,358 284,858 2,434,118 2,220,256$ (786,644)$ (1,071,764)$ (1,170,164)$ Fiscal Year 106 CITY OF LINO LAKES, MINNESOTA FUND BALANCES, GOVERNMENTAL FUNDS, LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2006 2007 2008 2009 General Fund Reserved 153,009$ 181,759$ 190,825$ 196,568$ Unreserved 5,337,225 5,356,272 5,393,316 5,191,396 Nonspendable - - - - Unassigned - - - - Total general fund 5,490,234$ 5,538,031$ 5,584,141$ 5,387,964$ All Other Governmental Funds Reserved reported in: Special Revenue Funds 1,813$ 226,921$ 226,973$ 227,176$ Capital Projects Funds 957,112 885,825 812,400 736,772 Debt Service Funds 3,992,952 3,925,402 3,405,272 3,457,349 Permanent Funds 100,000 100,000 100,000 100,000 Unreserved reported in: Special Revenue Funds 82,385 100,955 106,573 93,956 Capital Projects Funds 5,525,508 8,395,827 5,927,411 11,611,835 Debt Service Funds - - - (558,443) Permanent Funds 5,378 17,023 22,224 15,824 Nonspendable - - - - Restricted - - - - Committed - - - - Assigned - - - - Unassigned - - - - Total all other governmental funds 10,665,148$ 13,651,953$ 10,600,853$ 15,684,469$ Total all funds 16,155,382$ 19,189,984$ 16,184,994$ 21,072,433$ Note: Governmental Accounting Standards Board Statement No. 54 was implemented in 2011. Fiscal Year 107 Table 3 2010 2011 2012 2013 2014 2015 181,471$ -$ -$ -$ -$ -$ 5,445,334 - - - - - - 165,079 180,786 176,797 253,471 220,677 - 5,440,101 5,053,031 5,209,286 5,053,064 5,725,736 5,626,805$ 5,605,180$ 5,233,817$ 5,386,083$ 5,306,535$ 5,946,413$ 227,342$ -$ -$ -$ -$ -$ 658,875 - - - - - 2,986,102 - - - - - 100,000 - - - - - 110,471 - - - - - 12,537,841 - - - - - (1,093,765) - - - - - 12,676 - - - - - - 906,010 823,113 101,710 101,302 101,177 - 2,658,010 3,041,524 3,651,550 2,830,526 2,637,638 - 110,568 115,196 121,075 152,078 163,239 - 10,808,268 15,573,179 15,710,702 18,027,773 15,022,852 - (3,154,496) (3,262,728) (3,393,547) (375,851) (3,815,304) 15,539,542$ 11,328,360$ 16,290,284$ 16,191,490$ 20,735,828$ 14,109,602$ 21,166,347$ 16,933,540$ 21,524,101$ 21,577,573$ 26,042,363$ 20,056,015$ Fiscal Year 108 CITY OF LINO LAKES, MINNESOTA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS, LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2006 2007 2008 2009 Revenues Property Taxes 8,103,263$ 8,529,846$ 9,095,085$ 9,561,570$ Licenses and Permits 581,582 694,435 802,135 307,714 Intergovernmental 1,818,519 6,143,689 1,004,476 1,259,016 Special Assessments 2,901,100 1,961,253 950,188 968,995 Charges for Services 687,551 753,698 872,534 778,163 Fines and Forfeits 101,518 139,932 133,531 111,807 Investment Earnings 713,795 864,578 576,071 429,325 Net Increase (Decrease) in Fair Value of Investments - - - - Miscellaneous 716,692 889,901 516,415 513,306 Total revenues 15,624,020 19,977,332 13,950,435 13,929,896 Expenditures Current: General Government 2,614,303 1,953,960 2,058,267 1,918,246 Public Safety 3,314,159 3,513,460 3,806,389 4,122,352 Public Works 7,755,727 8,446,911 5,542,308 1,965,640 Parks, Recreation and Forestry 1,076,727 1,103,021 1,033,260 1,106,006 Conservation of Natural Resources 143,653 183,346 183,024 209,466 Community Development 683,036 1,107,328 1,113,232 1,005,095 Capital Outlay 835,770 2,008,073 585,875 501,806 Debt Service: Principal 2,155,000 1,973,000 1,749,000 1,908,000 Interest and Fiscal Charges 1,011,157 937,895 1,074,052 994,809 Bond Issuance Costs - - - - Total expenditures 19,589,532 21,226,994 17,145,407 13,731,420 Excess (deficiency) of revenues over expenditures (3,965,512) (1,249,662) (3,194,972) 198,476 Other Financing Sources (Uses) Sale of Property 28,818 54,037 13,750 35,700 Proceeds from Issuance of Debt 6,327,000 4,375,000 209,000 4,596,000 Premium on Bonds Issued 450 - - 11,141 Discount on Bonds Issued (13,635) (25,798) - - Payment to Refunded Bond Escrow Agent (7,225,000) - - - Loan Payable Reapportionment - - - - Transfer In 5,811,452 2,900,249 4,763,391 1,413,985 Transfer Out (6,111,177) (3,019,224) (4,796,159) (1,367,863) Total other financing sources (uses) (1,182,092) 4,284,264 189,982 4,688,963 Net change in fund balances (5,147,604)$ 3,034,602$ (3,004,990)$ 4,887,439$ Debt service as a percentage of noncapital expenditures 16.9% 15.1% 27.6% 22.7% Fiscal Year 109 Table 4 2010 2011 2012 2013 2014 2015 8,647,488$ 8,655,971$ 8,560,340$ 8,475,214$ 8,612,011$ 8,950,507$ 330,138 322,030 319,172 431,654 407,681 551,202 1,176,863 1,331,914 5,267,570 500,963 823,025 679,627 851,270 904,522 816,998 2,130,519 1,278,202 703,141 780,044 812,604 744,633 717,300 731,640 696,501 127,203 154,020 155,956 119,079 149,653 127,803 225,677 251,244 202,825 222,810 173,422 163,497 - - - (276,276) 92,372 (50,582) 502,992 460,710 414,088 384,749 767,477 766,072 12,641,675 12,893,015 16,481,582 12,706,012 13,035,483 12,587,768 1,730,390 1,773,515 1,619,215 1,569,722 1,692,175 1,643,966 3,798,106 3,791,329 3,861,265 3,744,957 3,845,732 11,895,482 1,902,411 2,192,732 3,339,430 2,953,969 3,213,688 3,943,512 945,821 1,059,191 1,056,976 1,002,797 942,809 836,184 185,232 134,122 176,318 134,127 149,292 191,038 1,098,682 624,286 435,154 418,533 402,750 422,935 282,938 4,209,593 616,931 291,135 674,488 1,566,057 1,866,000 2,030,000 2,145,000 2,214,000 3,664,000 2,802,511 1,042,883 983,129 831,875 774,172 696,780 542,166 - - 47,054 17,137 - 62,831 12,852,463 16,797,897 14,129,218 13,120,549 15,281,714 23,906,682 (210,788) (3,904,882) 2,352,364 (414,537) (2,246,231) (11,318,914) 20,600 50,953 4,175 16,727 1,727 54,522 1,170,000 120,000 2,165,000 808,000 3,140,000 8,606,250 10,980 - - 6,558 114,960 114,960 - - - - - - (965,000) - - (435,000) - - - (565,000) - - - - 1,195,747 2,971,715 1,979,457 1,722,541 2,608,534 3,392,971 (1,127,625) (2,905,593) (1,910,435) (1,650,817) (2,539,240) (3,336,137) 304,702 (327,925) 2,238,197 468,009 3,325,981 8,832,566 93,914$ (4,232,807)$ 4,590,561$ 53,472$ 1,079,750$ (2,486,348)$ 23.7% 18.6% 22.1% 25.3% 77.9% 14.0% Fiscal Year 110 CITY OF LINO LAKES, MINNESOTA Table 5 ASSESSED AND ACTUAL VALUE OF TAXABLE PROPERTY, LAST TEN FISCAL YEARS Commercial/ Total Taxable Payable Residential Industrial Personal Assessed Total Direct Year Property Property Property Value Tax Rate 2006 15,825,619$ 2,740,583$ 271,665$ 18,837,867$ 41.40 2007 17,605,080 3,047,965 288,290 20,941,335 38.99 2008 18,382,645 3,431,107 279,102 22,092,854 38.97 2009 18,919,087 4,002,349 275,496 23,196,932 38.73 2010 17,978,917 3,800,004 291,904 22,070,825 37.91 2011 16,214,698 3,223,901 303,964 19,742,563 42.04 2012 14,743,557 2,945,026 310,870 17,999,453 42.89 2013 13,693,905 2,571,769 336,047 16,601,721 46.77 2014 13,646,798 2,450,473 341,974 16,439,245 46.68 2015 15,455,516 2,536,783 347,316 18,339,615 43.77 Source: Anoka County, Minnesota Assessors' Office Note: The tax capacity (assessed taxable value) of the property is calculated by applying a statutory formula to the estimated market value of the property. 111 CITY OF LINO LAKES, MINNESOTA Table 6 DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (rate per $100 of Tax Capacity) Fiscal Year Basic Rate General Obligation Debt Service Total Direct Centennial School District ISD # 12 Anoka County Other Taxing Districts Total Overlapping Total Direct and Overlapping Tax Rate 2006 36.044 5.354 41.398 40.253 32.096 6.479 78.828 120.226 2007 34.356 4.638 38.994 38.090 30.696 5.578 74.364 113.358 2008 34.560 4.407 38.967 35.258 31.078 6.956 73.292 112.259 2009 34.716 4.017 38.733 34.593 32.078 5.611 72.282 111.015 2010 34.086 3.819 37.905 37.285 35.189 5.879 78.353 116.258 2011 37.425 4.616 42.041 43.695 39.952 6.278 89.925 131.966 2012 37.501 5.393 42.894 40.010 41.146 6.691 87.847 130.741 2013 40.964 5.810 46.774 43.681 44.411 6.940 95.032 141.806 2014 39.784 6.899 46.683 46.186 43.239 6.712 96.137 142.820 2015 37.819 5.951 43.770 36.562 38.123 6.021 80.706 124.476 Source: Anoka County Property Records and Tax Division Notes: The majority of Lino Lakes is served by Independent School District No. 12. Rates for debt service are based on each year's requirements. City Direct Rate Overlapping Rates 112 CITY OF LINO LAKES, MINNESOTA Table 7 PRINCIPAL PROPERTY TAXPAYERS, CURRENT YEAR AND NINE YEARS AGO 2015 2006 Percentage Percentage of Total of Total City City Taxable Taxable Taxable Taxable Net Tax Net Tax Net Tax Net Tax Taxpayer Capacity Rank Capacity Capacity Rank Capacity Target Corporation 201,790$ 1 1.10 % 263,094$ 1 1.40 Xcel Energy 186,413 2 1.02 133,655 4 0.71 Lino Lakes Realty LLC 175,742 3 0.96 240,710 2 1.28 Moline Concrete Products 106,606 4 0.58 112,313 5 0.60 Taylor Corporation 97,498 5 0.53 110,926 6 0.59 Kohl's Department Store 96,836 6 0.53 162,956 3 0.87 Gargaro Properties LLC 85,130 7 0.46 85,878 7 0.46 Marmon/Keystone Corp 73,342 8 0.40 80,960 8 0.43 CenterPoint Energy 69,458 9 0.38 - - Lino Lakes Business Center LLC 56,928 10 0.31 78,802 9 0.42 F&G Incorporated - - 76,746 10 0.41 Total 1,149,743$ 6.27 % 1,346,040$ 7.17 Source: Anoka County 113 CITY OF LINO LAKES, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS. LAST TEN FISCAL YEARS Collected within the Taxes Levied for the Fiscal Year Fiscal Year of Levy Percentage Fiscal Operating Debt Total Tax of Year Tax Levy Tax Levy Levy Amount Levy 2006 7,042,626$ 934,281$ 7,976,907$ 7,594,019$ 95.2% 2007 7,558,995 897,333 8,456,328 8,324,180 98.4% 2008 7,973,236 893,720 8,866,956 8,581,974 96.8% 2009 8,295,172 949,166 9,244,338 8,982,756 97.2% 2010 7,816,232 879,182 8,695,414 8,400,439 96.6% 2011 7,719,240 940,760 8,660,000 8,486,845 98.0% 2012 7,192,818 1,034,441 8,227,259 8,095,502 98.4% 2013 7,190,538 1,025,090 8,215,628 8,094,911 98.5% 2014 7,098,922 1,197,122 8,296,044 8,229,986 99.2% 2015 7,490,578 1,195,494 8,686,072 8,630,830 99.4% Notes: Current year levies and collections include State levy related credits. Does not include tax increment levies and collections. 114 Table 8 Total Collections to Date Collections in Percentage Outstanding Percentage Subsequent of Delinquent of Levy Years Amount Levy Taxes Outstanding 63,059$ 7,657,078$ 96.0% 319,829$ 4.0% 105,490 8,429,670 99.7% 26,658 0.3% 129,169 8,711,143 98.2% 155,813 1.8% 194,317 9,177,073 99.3% 67,265 0.8% 182,139 8,582,578 98.7% 112,836 1.5% 124,287 8,611,132 99.4% 48,868 0.9% 71,940 8,167,442 99.3% 59,817 0.9% 60,514 8,155,425 99.3% 60,203 1.5% 31,851 8,261,837 99.6% 34,207 0.8% - 8,630,830 99.4% 55,242 0.6% 115 CITY OF LINO LAKES, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Business-Type Governmental Activities Activities General General Special Other Obligation Total Fiscal Obligation Assessments Long-Term Revenue Primary Year Bonds Payable Debt Bonds Government 2006 7,177,000$ 13,940,000$ -$ 4,410,000$ 25,527,000$ 2007 11,569,000 12,520,000 - 1,855,000 25,944,000 2008 11,184,000 11,365,000 - 1,530,000 24,079,000 2009 10,712,000 10,265,000 4,260,000 1,170,000 26,407,000 2010 10,141,000 9,175,000 4,260,000 795,000 24,371,000 2011 9,482,396 7,985,000 3,695,000 405,000 21,567,396 2012 10,688,221 6,780,000 3,695,000 - 21,163,221 2013 9,893,152 5,720,000 3,695,000 - 19,308,152 2014 9,227,177 7,445,000 2,080,000 - 18,752,177 2015 16,271,250 6,620,000 1,720,000 - 24,611,250 Notes: Details regarding the District's outstanding debt can be found in the notes to the financial statements. See the Demographic and Economic Statistics schedule for personal income and population data. (1) Personal income information is not available after 2013 from the Bureau of Economic Analysis Report 116 Table 9 Percentage Percentage of Assessed of Personal Per Market Value Income Capita 1.47 3.54 1,293$ 1.35 3.41 1,307 1.19 3.08 1,205 1.24 3.44 1,301 1.22 3.13 1,206 1.20 2.59 1,049 1.29 2.47 1,024 1.18 2.19 931 1.14 1.77 893 1.29 N/A 1,161 117 CITY OF LINO LAKES, MINNESOTA RATIOS OF NET GENERAL BONDED DEBT LAST TEN FISCAL YEARS Governmental Activities General Special Other Total Fiscal Obligation Assessments Long-Term Primary Year Bonds Payable Debt Government 2006 7,177,000$ 13,940,000$ -$ 21,117,000$ 2007 11,569,000 12,520,000 - 24,089,000 2008 11,184,000 11,365,000 - 22,549,000 2009 10,712,000 10,265,000 4,260,000 25,237,000 2010 10,141,000 9,175,000 4,260,000 23,576,000 2011 9,482,396 7,985,000 3,695,000 21,162,396 2012 10,688,221 7,095,000 3,695,000 21,478,221 2013 9,893,152 5,720,000 3,695,000 19,308,152 2014 9,227,177 7,445,000 2,080,000 18,752,177 2015 16,271,250 6,620,000 1,720,000 24,611,250 Notes: Details regarding the District's outstanding debt can be found in the notes to the financial statements. See the Demographic and Economic Statistics schedule for personal income and population data. (1) Personal income information is not available after 2013 from the Bureau of Economic Analysis Report 118 Table 10 Less: Amounts Percentage Per Available in Debt Net of Assessed Per Capita (Total) Service Funds Bonded Debt Market Value Capita (Net) 1,070$ 3,992,952$ 17,124,048$ 1.24 1,091$ 1,213 3,925,402 20,163,598 1.14 1,109 1,128 3,405,272 19,143,728 1.02 1,034 1,243 3,457,349 21,779,651 1.08 1,130 1,166 2,986,102 20,589,898 1.07 1,058 1,032 2,638,129 18,524,267 1.05 923 1,041 3,035,557 18,442,664 1.10 879 933 3,357,196 15,950,956 1.18 766 893 2,501,738 16,254,262 0.99 774 1,161 2,813,226 21,798,024 1.29 1,028 119 CITY OF LINO LAKES, MINNESOTA Table 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT As of December 31, 2015 Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable Debt Overlapping: Anoka County 118,321,284$ 6.3% 7,409,135$ ISD 12 96,173,685 45.2% 43,480,557 ISD 624 93,420,000 3.3% 3,097,231 ISD 831 30,325,000 7.0% 2,133,471 Metropolitan Council 1,419,891,649 0.6% 8,096,348 Rice Creek Watershed District 200,000 33.2% 66,309 Anoka County Railroad Authority 52,600,000 6.3% 3,293,748 Total Overlapping 67,576,799 City of Lino Lakes Direct Debt 24,611,250$ 100% 24,611,250 Total Direct and Overlapping Debt: 92,188,049$ Determined by ratio of net tax capacity (after fiscal disparities and tax increment adjustment) of property subject to taxation in overlapping unit to valuation of property subject to taxation in City. Sources: Taxable value data used to estimate applicable percentages provided by the County Property Appraiser. Debt outstanding data provided by each governmental unit. Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 120 CITY OF LINO LAKES, MINNESOTA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2006 2007 2008 2009 Debt limit 34,686,356$ 38,556,150$ 60,658,830$ 64,036,746$ Total net debt applicable to limit 4,332,000 4,039,000 3,804,000 3,642,000 Legal debt margin 30,354,356$ 34,517,150$ 56,854,830$ 60,394,746$ Total net debt applicable to the limit as a percentage of debt limit 12.49% 10.48% 6.27% 5.69% Fiscal Year 121 Table 12 Legal Debt Margin Calculation for Fiscal Year 2015 Market value 1,694,366,064$ Debt limit (3% of market value) 50,830,982 Debt applicable to limit 11,941,250 Legal debt margin 38,889,732$ 2010 2011 2012 2013 2014 2015 60,622,086$ 54,123,645$ 45,595,717$ 45,595,717$ 45,297,635$ 50,830,982$ 3,386,000 2,961,000 4,280,000 4,280,000 4,191,000 11,941,250 57,236,086$ 51,162,645$ 41,315,717$ 41,315,717$ 41,106,635$ 38,889,732$ 5.59% 5.47% 9.39% 9.39% 9.25% 23.49% Fiscal Year 122 CITY OF LINO LAKES, MINNESOTA Table 13 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS (2) Personal Per Income Capita (3) (4) Fiscal (1)(thousands Personal School Unemployment Year Population of dollars)Income Enrollment Rate 2006 19,736 720,680$ 36,516$ 6,986 4.1 2007 19,851 759,718 38,271 6,846 4.8 2008 19,987 781,132 39,082 6,768 6.9 2009 20,305 768,341 37,840 6,725 7.8 2010 20,216 777,912 38,480 6,523 7.1 2011 20,505 831,170 40,535 6,426 5.9 2012 20,625 857,753 41,588 6,421 5.6 2013 20,833 879,903 42,236 6,392 4.5 2014 21,129 917,252 43,412 6,410 3.4 2015 21,200 N/A N/A 6,371 3.3 Source: (1) Estimates from Metropolitan Council, except for 2010 which is per the U.S. Census & 2014 which is city estimate (2) Information from Bureau of Economic Analysis Report - Anoka County statistics used as local information is unavailable (3) Information from ISD 12 Website (4) Information from MN Department of Employment and Economic Development - Anoka County statistics used as local information is unavailable Note: Information not available is marked N/A 123 CITY OF LINO LAKES, MINNESOTA Table 14 PRINCIPAL EMPLOYERS, CURRENT YEAR AND NINE YEARS AGO 2015 2006 (1) (1) Percentage Percentage of Total of Total Employer Employees Rank Employment Employees Rank Employment State of Minnesota Corrections 447 1 N/A % 450 1 N/A % ISD 12 - Centennial Schools 391 2 N/A - - N/A Target Corporation 200 3 N/A 230 2 N/A Curtis 1000 162 4 N/A - - N/A Taylor Corporation 160 5 N/A - - N/A Anoka County Juvenile Center 130 6 N/A 150 7 N/A Molin Concrete Products 130 7 N/A 163 6 N/A Rehbein Transit, Inc. 130 8 N/A - - N/A Kohls 123 9 N/A 115 10 N/A YMCA 120 10 N/A - - N/A AdGraphics - - N/A 200 3 N/A Synovis Interventional Systems - - N/A 180 4 N/A Summit Fire Protection - - N/A 175 5 N/A Nol-Tech Systems, Inc - - N/A 65 8 N/A Customer Manufacturing - - N/A 50 9 N/A Total 1,993 - % 1,778 - % Source: City of Lino Lakes Official Statements/Employer Surveys 124 CITY OF LINO LAKES, MINNESOTA FULL-TIME-EQUIVALENT EMPLOYEES BY TYPE LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 General Government Administration 5.00 5.00 5.00 5.00 4.00 Seniors 0.63 0.63 0.63 0.63 0.63 Finance 3.50 3.50 3.50 3.50 3.00 Economic Development 1.00 1.00 1.00 1.00 1.00 Planning 2.00 2.00 2.00 2.00 2.00 Community Development 2.75 2.75 2.75 2.75 2.25 Engineering - - - - - Building 1.00 1.00 1.00 1.00 1.00 Other 1.15 1.40 1.40 1.40 1.40 Total General Government 17.03 17.28 17.28 17.28 15.28 Public Safety Officers 26.00 26.00 27.00 27.00 27.00 Civilians 4.75 4.75 4.75 4.75 4.25 Fire - - - - - Building Inspection 4.25 4.25 4.25 4.25 2.75 Total Public Safety 35.00 35.00 36.00 36.00 34.00 Public Works Streets 6.85 7.35 7.35 7.35 6.85 Other 1.15 1.15 1.15 1.15 1.15 Total Public Works 8.00 8.50 8.50 8.50 8.00 Parks, Recreation and Forestry 9.55 9.80 9.80 9.80 9.30 Water 2.15 2.15 2.15 2.15 2.15 Sewer 2.15 2.15 2.15 2.15 2.15 Total 73.88 74.88 75.88 75.88 70.88 Source: City Finance Office Fiscal Year 125 Table 15 2011 2012 2013 2014 2015 3.50 3.50 3.50 3.50 3.50 - - - - - 3.00 3.00 3.00 3.00 3.00 1.00 1.00 - - - 1.00 1.00 1.00 1.00 1.00 2.00 2.00 2.00 2.00 2.00 - - - - - - - - - - 0.70 0.70 0.70 0.70 0.70 11.20 11.20 10.20 10.20 10.20 25.00 25.00 25.00 25.00 26.00 4.00 3.00 3.00 4.00 4.00 - - - 1.00 1.00 2.50 2.50 2.50 2.00 2.00 31.50 30.50 30.50 32.00 33.00 7.00 7.00 7.00 7.00 7.00 1.00 1.00 1.00 1.00 1.00 8.00 8.00 8.00 8.00 8.00 9.00 9.00 8.70 8.70 8.70 2.15 2.15 2.30 2.30 2.30 2.15 2.15 2.30 2.30 2.30 64.00 63.00 62.00 63.50 64.50 Fiscal Year 126 CITY OF LINO LAKES, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN YEARS Function/Program 2006 2007 2008 2009 2010 General Government Elections 2 1 2 1 2 Registered Voters 11,618 10,908 12,723 11,805 12,284 Number of Votes Cast 8,284 2,337 11,051 4,354 8,545 Voter Participation (Registered) 71.3% 21.4% 86.9% 36.9% 69.6% Public Safety Police: Calls for Service 6,990 7,053 6,871 6,353 6,398 Traffic Citations & Warnings 5,964 3,805 3,252 3,187 2,743 Part I Crimes 3,372 1,279 1,461 1,075 982 Part II Crimes 4,890 3,432 3,767 3,151 2,911 Inspections: Building Permits (1) 686 2,297 5,041 1,535 509 Value of Building Permits 42,078,007$ 30,539,559$ 15,852,780$ 9,586,160$ 11,295,493$ Public Works General Maintenance (hours) 5,692 6,758 6,129 5,870 4,945 Street Maintenance (hours) 3,631 2,916 3,851 3,267 3,099 Fleet Maintenance (hours) 4,460 4,144 5,043 4,782 4,850 Snow Plowing/Sanding (hours) 867 1,425 1,353 950 1,638 Culture and Recreation Parks: Park Maintenance (hours) 10,368 10,939 11,136 12,406 9,257 Utilities Water Maintenance (hours) 4,387 4,256 5,716 5,041 3,560 Sanitary Sewer Maintenance (hours) 3,347 4,148 3,760 3,486 3,531 Source: Various City Departments Notes: Information not available is labeled N/A. (1) 1,565, 4,337 and 581 repair permits issued in 2007 and 2009, respectively, due to storm damage. Fiscal Year 127 Table 16 2011 2012 2013 2014 2015 12121 11,705 13,478 12,020 12,610 12,143 4,314 11,546 1,575 7,854 4,085 36.9% 85.7% 13.1% 62.3% 33.6% 6,384 6,344 6,210 6,210 6,210 2,604 2,694 2,597 2,597 2,199 1,117 N/A N/A N/A N/A 2,911 N/A N/A N/A N/A 452 459 490 431 654 11,295,493$ 10,751,626$ 17,683,665$ 13,535,514$ 26,570,593$ 7,416 6,939 3,994 5,200 7,839 4,352 5,926 5,740 3,840 3,347 4,214 3,945 4,548 4,746 4,322 1,534 594 1,639 2,141 754 9,813 9,739 8,480 8,537 8,332 3,568 3,585 3,119 3,189 3,240 3,557 3,517 3,109 3,178 3,240 Fiscal Year 128 CITY OF LINO LAKES, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN YEARS Function/Program 2006 2007 2008 2009 2010 Public Safety Police: Stations 11111 Patrol Units 12 12 12 12 12 Fire (Joint Powers): Stations in City 1 1 1 1 1 Fire Trucks 55555 Public Works Lights 673 673 673 673 673 Vehicles 29 29 29 29 29 City Streets (miles) 96 96.1 100.71 100.71 100.71 Culture and Recreation Parks: Parks 1818181818 Park Acres 141 141 141 141 141 Trails (miles) 20 26 26 26 26 Park Shelters 77777 Basketball Courts 6 6 6 6 6 Fishing Pier 11111 Skating Rinks 4 4 4 4 4 Soccer Fields 8 8 8 8 8 Baseball/Softball Fields 20 20 20 20 20 Tennis Courts 2 2 2 2 2 Playgrounds 1616161616 Water Distribution System (miles) 51.1 64.7 74.7 74.7 74.7 Water Connections 4,090 4,112 4,247 4,340 4,382 Gallons Pumped (millions) 565 595 590 589 498 Number of Fire Hydrants 538 538 538 538 538 Water Tower Capacity (millions gallons) 2 2 2 2 2 Sanitary Sewer Collection System (miles) 63.3 64.5 69.8 69.8 69.8 Sewer Connections 4,282 4,428 4,447 4,486 4,530 Storm Sewer Pipe (miles) 34.1 34.3 41.4 41.4 41.4 Source: Various City Departments Fiscal Year 129 Table 17 2011 2012 2013 2014 2015 1111 1 12 12 12 12 12 1111 2 5555 7 673 673 673 673 673 29 29 29 29 29 100.71 100.71 100.71 100.71 100.71 18 18 18 18 18 141 141 141 141 141 26 26 26 26 26 6666 6 6666 6 1111 1 4444 4 8888 8 20 20 20 20 20 2222 2 16 16 16 16 16 74.7 74.7 74.7 74.7 74.7 4,424 4,424 4,484 4,520 4,520 492 609 536 536 449 538 538 538 538 1024 2222 2 69.8 69.8 69.8 69.8 77.9 4,567 4,567 4,624 4,685 4,685 41.4 41.4 41.4 41.4 41.4 Fiscal Year CliftonLarsonAllen LLP CLAconnect.com Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes (the City) for the year ended December 31, 2015, and have issued our report thereon dated REPORT DATE. We have previously communicated to you information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. Professional standards also require that we communicate to you the following information related to our audit. Significant audit findings Qualitative aspects of accounting practices Accounting policies Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. As described in Note 1, during the fiscal year ended December 31, 2015, the City changed accounting policies related to its accounting for pensions by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 68, Accounting and Financial Reporting for Pensions, and the related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment of GASB Statement No. 68. Accordingly, this change in principle resulted in the restatement of beginning net position related to the recognition of the City’s proportionate share of the Public Employees’ Retirement Association of Minnesota General Employees’ Retirement Fund’s and the Public Employees Police and Fire Fund’s net pension liabilities. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Management’s estimate of the useful lives of capital assets is based on authoritative guidance and past experience. We evaluated the key factors and assumptions used to develop the useful lives of capital assets in determining that it is reasonable in relation to the financial statements taken as a whole. Honorable Mayor and Members of the City Council City of Lino Lakes Page 2 Qualitative aspects of accounting practices (continued) Accounting estimates (continued) Management’s estimate of the allowance for doubtful accounts is based on a historical review of delinquent accounts and subsequent collections and other collection options available to the City. Management’s estimate of the amount of the year-end compensated absences payable to employees is based on historical trends and anticipated leave time activity. Management’s estimate of the investments at fair value is based on published market values at December 31, 2015. Management’s estimate of other postemployment benefits payable is based on an actuarial study performed by an independent third-party and the City’s historical activity. We evaluated the key factors and assumptions used to develop the other postemployment benefits payable in determining that it is reasonable in relation to the financial statements taken as a whole. Management’s estimate of the net pension liability is based on an actuarial computed amount. We evaluated the key factors and assumptions used to develop the net pension liability in determining that it is reasonable in relation to the financial statements taken as a whole. Change in Accounting Estimate This year involved a change in accounting estimate when it comes to depreciation of fixed assets. In prior years, there was no depreciation taken in the first year of acquiring an asset. Beginning in fiscal year 2015, the City is depreciating assets immediately once acquired. Financial statement disclosures Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. There were no particularly sensitive financial statement disclosures. The financial statement disclosures are neutral, consistent, and clear. Difficulties encountered in performing the audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Uncorrected misstatements Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management did not identify and we did not notify them of any uncorrected financial statement misstatements. Corrected misstatements None of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. No such disagreements arose during our audit. Honorable Mayor and Members of the City Council City of Lino Lakes Page 3 Management representations We have requested certain representations from management that are included in the management representation letter dated REPORT DATE. Management consultations with other independent accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Significant issues discussed with management prior to engagement We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to engagement as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our engagement. Other audit findings or issues We have provided a separate letter to you dated REPORT DATE, communicating internal control related matters identified during the audit. Audits of group financial statements We noted no matters related to the group audit that we consider to be significant to the responsibilities of those charged with governance of the group. We have provided a separate letter to you dated REPORT DATE, communicating internal control related matters relevant to the group audit and identified by us or by a component auditor during the audit. Other information in documents containing audited financial statements With respect to the required supplementary information (RSI) accompanying the financial statements, we made certain inquiries of management about the methods of preparing the RSI, including whether the RSI has been measured and presented in accordance with prescribed guidelines, whether the methods of measurement and preparation have been changed from the prior period and the reasons for any such changes, and whether there were any significant assumptions or interpretations underlying the measurement or presentation of the RSI. We compared the RSI for consistency with management’s responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained during the audit of the basic financial statements. Because these limited procedures do not provide sufficient evidence, we did not express an opinion or provide any assurance on the RSI. Honorable Mayor and Members of the City Council City of Lino Lakes Page 4 With respect to the combining fund statements and other supplementary financial information (collectively, the supplementary information) accompanying the financial statements, on which we were engaged to report in relation to the financial statements as a whole, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period or the reasons for such changes, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We have issued our report thereon dated REPORT DATE. The introductory and statistical sections accompanying the financial statements, which is the responsibility of management, was prepared for purposes of additional analysis and is not a required part of the financial statements. Such information was not subjected to the auditing procedures applied in the audit of the financial statements, and, accordingly, we did not express an opinion or provide any assurance on it. * * * * * * This communication is intended solely for the information and use of the Mayor and City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties. CliftonLarsonAllen LLP Minneapolis, Minnesota REPORT DATE An independent member of Nexia International INDEPENDENT AUDITORS’ REPORT ON MINNESOTA LEGAL COMPLIANCE Honorable Mayor and Members of the City Council City of Lino Lakes Lino Lakes, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standard applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes, Minnesota, as of December 31, 2015 and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents and have issued our report thereon dated REPORT DATE. The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statute § 6.65 contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories. In connection with our audit, nothing came to our attention that caused us to believe that the City of Lino Lakes, Minnesota failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City of Lino Lakes, Minnesota’s noncompliance with the above-referenced provisions. The purpose of this report is solely to describe the scope of our testing of compliance relating to the provisions of the Minnesota Legal Compliance Audit Guide for Cities and the results of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose. CliftonLarsonAllen LLP Minneapolis, Minnesota REPORT DATE CliftonLarsonAllen LLP CLAconnect.com An independent member of Nexia International INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and Members of the City Council City of Lino Lakes Lino Lakes, Minnesota We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes, as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City of Lino Lakes’ basic financial statements, and have issued our report thereon dated REPORT DATE. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Lino Lakes' internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Lino Lakes’ internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Lino Lakes’ internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Honorable Mayor and Members of the City Council City of Lino Lakes Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Lino Lakes' financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. CliftonLarsonAllen LLP Minneapolis, Minnesota REPORT DATE WS – Item 2 WORK SESSION STAFF REPORT Work Session Item No. 2 Date: June 6, 2016 To: City Council From: Michael Grochala, Community Development Director Re: VLAWMO Joint Powers Agreement Background The Vadnais Lake Area Water Management Organization (VLAWMO) was established in 1983 and is responsible for managing a watershed area in northern Ramsey County and southeastern Anoka County. The watershed area includes a small area of approximately 1,000 acres in Lino Lakes. The balance of the City is managed by the Rice Creek Watershed District (RCWD). VLAWMO operates under a Joint Powers Agreement between the Cities of Gem Lake, Lino Lakes, North Oaks, Vadnais Heights, and White Bear Lake and the Township of White Bear. The organization is managed by a Board of Directors made up of one represented, who must be an elected official, from each community. Council member Rafferty currently serves as the director representing Lino Lakes. Funding for the organization is currently provided through stormwater utility charges on property within the VLAWMO service area. The City Council approved the last extension in April of 2012. The existing JPA is set to expire on December 31, 2016. VLAWMO has drafted and distributed for consideration an updated 10 year JPA that will run from 2017 through 2026. Most of the changes beyond the dates noted above are relatively minor in nature. Statutory references have been updated by their attorney. Ditch authority language was discussed with the Minnesota Board of Water & Soil Resources (BWSR) and the VLAWMO attorney and updated accordingly. VLAWMO remains the ditch authority for County Ditches 13 and 14 and will continue its management efforts. The Annual meeting of the watershed may now be held in April to allow new board appointments and annual reporting to be completed. The Board offices of Secretary and Treasurer have been officially combined which reflects current practice. Financial disbursement practice language has been updated to reflect what meets current government accounting standards. Stephanie McNamara, Administrator for VLAWMO will be present at the work session to address any questions. Requested Council Direction Staff is requesting Council direction to place the JPA on the June 13, 2016 regular meeting for consideration. Attachments 1. VLAWMO Area Map 2. Draft JPA 476792v6 KRH VA245-1 1 JOINT POWERS AGREEMENT TO PROTECT AND MANAGE THE VADNAIS LAKE AREA WATERSHED THIS AGREEMENT, made and entered into as of the last date of execution, by and between the participating units of local government of the Cities of Gem Lake, Lino Lakes, North Oaks, Vadnais Heights, and White Bear Lake and the Township of White Bear, hereafter referred to as “Members” and individually as “Member”, agree to continue the Vadnais Lake Area Water Management Organization, as a public agency. SECTION I GENERAL PURPOSE The Vadnais Lake Area Water Management Organization (VLAWMO), created pursuant to Minnesota Statutes, Section 471.59, is dependent upon the sincere desire of each Member to work cooperatively to meet the requirements of the Metropolitan Surface Water Management statute, Minnesota Statutes, Section 103B.201 et seq. (and Chapter 103D - Watershed Law), hereafter collectively referred to as the “Act”. It is the general purpose of the parties to this Agreement to establish an organization to: 1) Continue the Vadnais Lake Area Water Management Organization; 2) Develop and amend a water management plan; and 3) Operate appropriate programs including those to: a) protect, preserve and use natural surface water and groundwater storage and retention systems; b) minimize capital expenditures necessary to correct flooding and water quality problems; c) identify and plan for means to effectively protect and improve surface and groundwater quality; d) establish more uniform local policies and official controls for surface and groundwater management; e) prevent erosion of soil into surface water systems; f) promote groundwater conservation and recharge; and g) protect and enhance fish and wildlife habitat and water recreational facilities and secure other benefits associated with the proper management of surface and groundwater, and be in accordance with the Act. SECTION II VADNAIS LAKE AREA WATERSHED VLAWMO shall manage a watershed area in northern Ramsey County and southeastern Anoka County shown on the map set forth on Appendix A. 476792v6 KRH VA245-1 2 SECTION III DEFINITIONS For purposes of this Agreement, the following terms shall have the meanings as defined in this Section. “Agreement” – This Agreement pursuant to Minnesota Statutes, Section 471.59 reconstituting the Vadnais Lake Area Water Management Organization (VLAWMO). “Area” – The boundaries of the Vadnais Lake Area Watershed as set forth on the map set forth on Appendix A and hereafter referred to as the “Area”. “Board of Directors” or “Board” – The governing board of VLAWMO consisting of one elected official from each of the Members which are parties to this Agreement. “Capital Improvement Program” – An itemized program for at least a five-year prospective period, and any amendments to it, subject to at least biennial review, setting forth the schedule, timing, and details of specific contemplated capital improvements by year, together with their estimated cost, the need for each improvement, financial sources, and the financial effect that the improvements will have on the local government unit or watershed management organization. “City Council or Town Board” – The governing body of a governmental unit which is a Member to this Agreement. “City Staff” – Persons hired by units of local government whether as an employee or an independent contractor. “Commissioner” – A person appointed by each Member to the Technical Commission. “Comprehensive Plan” or “comprehensive plan” – The meaning given it in Minnesota Statutes, Section 473.852, Subdivision 5. “Director” – An elected official appointed by each Member as a representative to the Board of Directors. “Governmental Unit” – Any city, town, township, county, school district, or other political subdivision or an “instrumentality of a governmental unit” as described in Minnesota Statutes, Section 471.59, Subdivision 1. “Local Government Unit” – Cities, counties and towns, not including school districts, as described in Minnesota Statutes, Section 473.852, Subd. 7. “Local Water Management Plan” - A plan adopted by the each of the members pursuant to Minnesota Statutes, Section 103B.235. 476792v6 KRH VA245-1 3 “Member” – Each local governmental unit that is a party to this Agreement. “Technical Commission” – A commission composed of a technically skilled person appointed by each Member. “Vadnais Lake Area Watershed” – The area contained within a line drawn around the extremities of all terrain whose surface drainage is tributary to Vadnais Lake or as described in Appendix A. “VLAWMO” – The abbreviated name of the organization created by this Agreement, the full name of which is the “Vadnais Lake Area Water Management Organization”. “Watershed Management Plan” - A plan adopted by VLAWMO pursuant to Minnesota Statutes, Section 103B.231. SECTION IV ORGANIZATION OF VLAWMO; RESPONSIBILITIES OF MEMBERS Subdivision 1. Board of Directors. The governing body of the VLAWMO shall be its Board of Directors. Subdivision 2. Appointment of Directors. Each Member shall appoint one representative, who must be an elected official, to the Board, and said representative shall be called a “Director”. The appointment process shall follow Minnesota Statutes, Section 103B.227, Subdivisions 1 and 2. Subdivision 3. Term of Office. Each Director shall serve at the will and consent of the Member making the appointment and for a three-year term of office as follows: 1) The Directors appointed by the Cities of Lino Lakes and White Bear Lake and the Township of White Bear shall be appointed for three-year terms, the beginning date of which was January 1, 2013 and every three years there after. 2) The Directors appointed by the Cities of North Oaks, Gem Lake and Vadnais Heights shall be appointed for a term of three years, the beginning date of which is January 1, 2014 and every three years there after. The term of office of each Director shall commence from the date of their appointment and will continue until their successors are selected. A Directors appointed to fill a vacancy shall serve out the remainder of the term of the Director the person succeeded. Subdivision 4. Eligibility to Serve. Each Member shall determine the eligibility or qualification standards for its Director appointment. Eligible appointees must be elected officials and compliant with Minnesota Statutes, Section 103B.227, which, among other things, provides that local units of government staff may not serve as a Director. Subdivision 5. Record of Appointment. Each governmental unit shall, within thirty (30) days following the appointment of a Director or Successor Director, file a written notice of such appointment with the Secretary-Treasurer of the Board. 476792v6 KRH VA245-1 4 Subdivision 6. Appointment of Alternate Director. One Alternate Director shall be appointed by each of the Members to this Agreement. The Alternate may attend the meetings of the Board of Directors, but only the appointed Director, or the Alternate Director in the absence of the Director, shall be allowed to vote on any matters before the Board. Subdivision 7. Appointment of Technical Commission Representative. Each Member to this Agreement shall appoint one commissioner and may appoint one alternate to serve on the Technical Commission. Subdivision 8. Compensation. Directors shall serve without compensation and without expense allowance from VLAWMO. A Director may be reimbursed for out-of-pocket expenses incurred on VLAWMO business with the approval of the Board. A Member may compensate its Director or Alternate for his/her service, in the discretion of the Member. SECTION V ORGANIZATION OF THE BOARD OF DIRECTORS Subdivision 1. Annual Meeting; Election of Officers. At a meeting of the Board held no later than April of each calendar year, also known as the Annual Meeting, the Board shall elect from among the Directors a Chair, Vice Chair, and a Secretary-Treasurer, and such other officers as it deems necessary to conduct its meetings and affairs (“Officers”). An Alternate Director may not serve as an officer of VLAWMO. Subdivision 2. Duties of Officers. 1) The Chair shall preside over meetings of the Board, and in the absence of the Chair, the Vice Chair shall perform this duty. In the absence of the Chair or Vice Chair, the Treasurer shall preside. The Chair shall retain all rights of a Director to speak, make motions and vote. 2) The Vice Chair shall preside at meetings when the Chair is absent and shall automatically be promoted to complete the annual term of the Chair if the then current Chair resigns or is removed from the Board. 3) The Secretary-Treasurer shall maintain a record of the proceedings of the Board, be responsible for the custody of the records of the Board, see that notices are duly given and complete such other duties as the Board may assign. The Secretary-Treasurer shall also be responsible for all monies of VLAWMO and shall periodically report the fiscal condition of VLAWMO to the Board. If the duties of the Secretary-Treasurer are delegated to a VLAWMO employee, the Secretary-Treasurer shall supervise the performance of those duties. Subdivision 3. Quorum. A majority of the Members present shall constitute a quorum at all Board meetings. No business or decision may be made without a quorum. Subdivision 4. Meetings. Regular meetings of the Board shall be held at least bi-monthly on a day and time selected by the Board. All meetings of the Board are subject to the Minnesota Open Meeting Law. Notice of the time and place of each meeting shall be sent to all Members, 476792v6 KRH VA245-1 5 provided to the public requesting this information, and follow notice requirements outlined in Minnesota Statutes, Section 13D.04. Meetings shall be conducted in accordance with rules adopted by the Board. Subdivision 5. Voting. Each Director shall have one (1) vote in all matters, as follows: 1) approval of the proposed annual VLAWMO operating budget shall require approval of a simple majority of all Directors; 2) approval of capital improvement projects will require approval of two-thirds (2/3) of all Directors; and 3) approval of all others matters will be determined by a simple majority of Directors present and voting. Subdivision 6. Committees. The Board may appoint such committees and subcommittees as it deems appropriate. At least one Board member shall be the appointed as the Chairperson of each committee and all committees shall regularly report their activities to the Board. Subdivision 7. Public Participation. The Board may appoint such committees and subcommittees composed of citizens as needed to provide for public participation and input in watershed activities and the responsibilities of VLAWMO. Such citizen committees shall be advisory. SECTION VI RESPONSIBILITIES AND DUTIES OF THE BOARD OF DIRECTORS Subdivision 1. Policies and Procedures. The Board shall adopt rules and regulations as it deems necessary to carry out its duties and the purpose of this Agreement. Such rules and regulations may be amended from time to time in either a regular or special meeting of the Board provided that notice of such proposed amendment has been given to each Director at least ten (10) days prior to the meeting at which the proposed amendment will be considered. These rules and regulations, after adoption, shall be recorded in the VLAWMO policy book. Subdivision 2. Watershed Management Plan (Plan). The Board shall adopt a water management plan, as required by the Act. The Plan shall be subject to the appropriate governmental unit review as required by the Act. Subdivision 3. Data. The Board, in order to give effect to the purposes of the Act may: 1) Acquire and record appropriate data within the Area; and 2) Establish and maintain devices for acquiring and recording hydrological or other data within the Vadnais Lake Area Watershed. Subdivision 4. Local Studies. Each Member reserves the right to conduct separate or concurrent studies on any matter under study by VLAWMO. The Member shall make every effort to coordinate its studies with the VLAWMO in order to maximize the use of resources. 476792v6 KRH VA245-1 6 Subdivision 5. Transfer of Drainage System. VLAWMO shall have the authority of a watershed district under Minnesota Statutes, Chapter 103B, Chapter 103E, and other applicable law to accept the transfer of drainage systems in the watershed, to repair, improve, and maintain the transferred drainage systems, and to construct all new drainage systems and improvements of existing drainage systems in the watershed. All such activities and projects shall be carried out in accordance with the powers and procedures set forth in Minnesota Statutes, Chapters 103B and other applicable law, and must be in conformance with the Watershed Management Plan adopted pursuant to Minnesota Statutes, Chapters 103A through103H. Subdivision 6. Capital Improvement. Each Member agrees to contribute its proportionate share of all approved capital improvement expenditures, which includes engineering, planning, legal and administrative costs, based on the benefit to be received by each Member or other entity from the improvement or management project. The Board shall submit, in writing, a statement to each Member or other entity, setting forth in detail the expenses incurred by VLAWMO for each project. Capital improvement projects may be initiated either by: (1) recommendation of the VLAWMO Board to the governmental unit(s) affected; or (2) petition to the Board by the affected governmental unit. In either case, and after study and approval by two -thirds (2/3) of the Directors, the Board shall provide the affected governmental units with estimated costs and a description of the benefits to be realized by those affected and the costs to be borne based on benefit. Subdivision 7. Water Conveyances. The Board may order any local governmental unit to construct, clean, repair, alter, abandon, consolidate, reclaim or change the course of terminus of any ditch, drain, storm sewer, water course, natural or artificial, that affects the Vadnais Lakes Area Watershed in accordance with its adopted plans. Subdivision 8. Watershed Operations. The Board may order any local government unit to acquire, operate, construct or maintain dams, dikes, reservoirs and appurtenant works in accordance with adopted plans. Subdivision 9. Storm and Surface Waters. The Board shall regulate, conserve and control the use of storm and surface water within the Vadnais Lakes Area Watershed pursuant to its Watershed Management Plan. Subdivision 10. Entrance upon Land. To the extent permitted by Minnesota Statutes, the Board or its designated representatives may enter upon lands within or outside the Vadnais Lakes Area Watershed to make surveys and investigations to accomplish the purposes of VLAWMO and the Act. Subdivision 11. Legal and Technical Assistance. The Board may obtain and provide legal and technical assistance in connection with its on-going operations and projects, as well as in matters of litigation or other proceedings between one or more of its Members and any other political subdivision, commission, board or agency relating to the planning or construction of facilities to drain or pond storm waters within the Area. 476792v6 KRH VA245-1 7 Subdivision 12. Permits. VLAWMO shall cooperate with appropriate local, state, and federal agencies in obtaining required permits and shall review permits issued by local units of government to accomplish the purposes identified in Section I of this Agreement. Subdivision 13. Office. VLAWMO shall maintain an office within the Area. All notices to VLAWMO shall be mailed or delivered to such office. Subdivision 14. Insurance. VLAWMO may contract for or purchase such insurance as the Board deems necessary for its protection. Subdivision 15. Financial Records. The Board shall maintain the books and accounts of VLAWMO consistent with generally accepted accounting principles and provide the separate accounting of operations and capital improvement projects. Subdivision 16. Audit. The Board shall annually cause an independent certified audit of the books and accounts of VLAWMO. Subdivision 17. Claims. To the extent required by Minnesota Statutes, VLAWMO shall be responsible for damages caused by it. All Minnesota Statutes governing notices of claims and limits on municipal liability shall be applicable to VLAWMO. To the extent permitted by Minnesota Statutes, VLAWMO shall be treated as a single municipal entity for municipal liability purposes. Subdivision 18. Employees. The Board may employ or subcontract to persons or entities to fulfill defined responsibilities of VLAWMO with the approval of a majority of the Board. Subdivision 19. Contracts. The Board may make such contracts and enter into such agreements as necessary to fulfill its obligations under this Agreement. Any such contract or agreement shall be in accordance with the Uniform Municipal Contracting Law, Minnesota Statutes, Section 471.345, the Joint Powers Act, Minnesota Statutes, Section 471.59, and other applicable laws. Subdivision 20. Annual Report to Members. The Board shall make and file a report to all of the Members at least once each year including the following information: 1) the financial condition of VLAWMO; 2) the status of all VLAWMO projects and work; and 3) the business transacted by VLAWMO and other matters which affect the interests of VLAWMO. Copies of said report shall be transmitted to the administrator of each Member. Subdivision 21. Records. VLAWMO’s books, reports and records shall be available for and open to inspection at reasonable times. Subdivision 22. Other Powers. The Board may exercise such other powers necessary and incidental to the implementation of the purposes set forth herein as authorized by the Members. 476792v6 KRH VA245-1 8 Subdivision 23. Amendments to this Agreement. The Board may recommend changes in this Agreement to the Members. This Agreement may be amended only by the Agreement of each of its members. SECTION VII RESPONSIBILITIES AND DUTIES OF TECHNICAL COMMISSION Subdivision 1. Duties and Responsibilities. The Board shall establish a Technical Commission (Commission) that will provide technical expertise for the planning and operation of VLAWMO programs and projects. This Commission through the VLAWMO Administrator and other VLAWMO employees shall administer the day-to-day operations of VLAWMO. The VLAWMO Administrator shall serve as a non-voting member of the Commission. Each Member shall appoint a representative, who will be known as Commissioner, and an alternate to the Commission. Subdivision 2. Eligibility to Serve. Each Member shall determine the eligibility or qualification standards for its Commission appointment, following guidelines promulgated by the Board. Subdivision 3. Technical Commission Officers. The Board shall annually appoint a Chair from among the Commissioners. At the first meeting of the Commission each calendar year, the Commission shall elect from among the Commissioners a Vice Chair and Secretary, and such other officers as it deems necessary to conduct its meetings and affairs. An Alternate Commissioner may not serve as an officer of the Commission. Subdivision 4. Meetings. Regular monthly meetings of the Commission shall be held on a day and time selected by the Commissioners. All meetings of the Commission are subject to the Minnesota Open Meeting Law. Notice of the time and place of each meeting shall be sent to all commissioners, and provided to the public requesting this information, and follow notice requirements outlined in Minnesota Statutes, Section 13D.04. Meetings shall be conducted in accordance with the latest version of Roberts Rules of Order. Each Commissioner shall have one vote. A majority of the Commissioners present shall constitute a quorum at all Commission meetings. In the absence of a quorum, a scheduled meeting shall be opened, re-scheduled and adjourned. Subdivision 5. Watershed Management Plan (Plan). The Commission shall prepare and/or update a water management plan, as required by the Act. The Plan, either a new one or an updated one, shall be recommended to the Board of Directors for approval. The Plan shall be compliant with Minnesota Statutes, Ch. 103B as it may be amended and applicable Minnesota Rules. The Plan shall be subject to the appropriate governmental unit review as required by the Act. Subdivision 6. Local Water Management Plan. After the adoption of a new or revised watershed management plan, each Member and any other local government unit within the Area shall review its local water management plan for changes needed for it to be consistent with the new or revised Watershed Management Plan. Each local water management plan shall include shall be consistent with state law. After consideration, but before adoption of a new or revised local water management plan by the governmental unit, each Member or any other governmental 476792v6 KRH VA245-1 9 units in the Area shall submit its water management plan to the Board. The Board shall within sixty (60) days approve or disapprove the plan or parts thereof. If the Board fails to complete its review within the prescribed period, and unless an extension is agreed to by the Member or other local governmental unit, the local plan shall be deemed approved consistent with applicable state laws. Subdivision 7. Appeals of Decisions and Recommendations of the Commission. Members shall comply with Commission’s determinations as to the force and effect of the Watershed Management Plan, the Local Water Management Plans and any cost allocations for improvements initiated pursuant to these plans. Any governmental unit which disputes a determination of the Commission as to force and effect of the Watershed Management Plan, any Local Water Management Plan, or the cost allocations for improvements, initiated pursuant to these plans, may appeal the recommendation or decision to the Board within thirty (30) days of receipt of such written notice of such determination. Should the appeal not be completed to the satisfaction of all parties, a party may submit the dispute to arbitration. Arbitration shall be conducted in the following manner: 1) A governmental unit shall have thirty (30) days from receipt of the written decision on the appeal by the Board to submit a dispute to arbitration by giving written notice to an officer of the Board; 2) The Board of Arbitration shall consist of three Members, one appointed by the governmental unit initiating the arbitration, one appointed by the Board and one appointed by the Chief Administrative Law Judge of the State of Minnesota, if willing to do so and if not, by the Chief Judge of the Ramsey County District Court. The third member so appointed shall preside at the arbitration hearing; 3) The arbitration cost of the neutral arbitrator shall be divided equally between VLAWMO and the government unit initiating the arbitration; and 4) Arbitration shall be conducted in accordance with the Uniform Arbitration Act (Minnesota Statutes, Chapter 572), except as modified above. Subdivision 8. Other Duties. The Commission shall exercise such other duties necessary and incidental to the implementation of the purposes set forth herein as authorized by the Board. SECTION VIII FINANCING VLAWMO Subdivision 1. Annual Operating Budget. On or before September 1st of each year, the Board shall prepare a proposed annual operating budget for the following calendar year. The budget shall provide funds to operate VLAWMO for the next calendar year. The proposed operating budget and the sources for these funds shall be recommended for approval to the Members. The annual operating budget may be funded by one or more of the following: 476792v6 KRH VA245-1 10 1) An authorized special tax levy authorized by the State of Minnesota for an amount approved by the Members; 2) VLAWMO operates Storm Water Utility authorized by the State of Minnesota and approved by the Members; 3) Annual payment from each governmental unit party to this agreement and other entities based on an annual assessment as determined in Subdivision 2 in this Section; and 4) Service fees, grants, interest or other funding sources as available. Each Member shall pay its annual assessment in the following manner: 1) The entire amount shall be due by January 31st of the year due; or 2) One-half (1/2) of each Members entire amount shall be due by January 31 of the year due and the second one-half (1/2) of the entire amount shall be due by August 31 of the year due. Failure to pay the required amounts by the due dates will cause a one percent (1%) per month service fee to be added to the unpaid amount due. Subdivision 2. Budget Meeting and Approval. The proposed annual Operating and Capital Improvement budget for the next calendar year shall be prepared by September 1 each calendar year. Subdivision 3. Annual Assessment for Services. The annual contribution of each Member or other entity shall be calculated upon the following formula: 1) Forty percent (40%) based upon the assessed valuation of all real property of each government unit within the Area; 2) Forty percent (40%) based upon the total area of the property within each governmental unit with the Area; and 3) Twenty percent (20%) based upon the population of each governmental unit within the Area. Subdivision 4. Capital Improvement Projects Program and Funding. On or before July 1 of each year the Board shall prepare a capital improvements program and budget for projects to be started or completed in the following year as described in the Water Plan. Each proposed project shall be described and its estimated cost and time for completion shall be provided. Only projects described in the Watershed Management Plan or its amendments may be included in the capital improvement budget. Funding in the capital improvement budget shall be calculated as follows: 1) If money raised by the Special tax levies to be used for Capital Projects, the Members shall be provided the opportunity to review and approve the amount of the tax levy that will be 476792v6 KRH VA245-1 11 used for Capital Projects within sixty (60) days of receipt of the Board’s Capital Improvement Budget; 2) If a capital project is to be funded wholly or in part by one or more governmental unit(s), they will be provided the opportunity to review and approve or disapprove the capital improvement budget within sixty (60) days of receipt of the Board's Capital Improvement Budget; and 3) If service fees, grants, interest or other funding sources are available the source and amounts of such funds shall be shown. If the capital improvement budget is approved, as provided above, each governmental unit shall contribute its budgeted share of the cost of constructing said capital improvement projects. Subdivision 5. Governmental Unit Financing. Members may establish a watershed management tax district in the Area for the purpose of paying costs of the engineering and planning required to develop a watershed management plan for the Area. After the plan is adopted and approved, a tax district may be established for the purpose of paying capital costs of projects described in the plan (including normal and routine maintenance of projects). If required, the tax district shall be established by ordinance adopted after a hearing by a local government unit, following provisions of Minnesota Statutes, Chapter 103B. Subdivision 6. Reserve Funds. The Board may accumulate reserve funds for the purposes herein mentioned and may invest funds of the Board not currently needed for its operations in the manner and subject to the laws of Minnesota applicable to statutory cities. Any and all reserve funds must be clearly indicated on the annual financial audit provided to the Members. Subdivision 7. Gifts; Grants; Loans. VLAWMO may, within the scope of this Agreement, accept gifts, apply for and use grants or loans of money or other property from the United States, the State of Minnesota, a unit of government or other governmental unit or organization or any person or entity for the purposes described herein; may enter into any reasonable agreement required in connection therewith, shall comply with any laws or regulations applicable thereto, and may hold, use and dispose of such money or property in accordance with the terms of the gift, grant, loan or agreement related thereto. Subdivision 8. Disbursements. All VLAWMO disbursements shall be sent to the Secretary- Treasurer of the Board and the finance officer of the Technical Commission for review. Checks issued by VLAWMO shall have two signatures. Officers and the VLAWMO Administrator may be authorized to sign checks. An Officers bond shall be maintained by VLAWMO in the amount of at least $10,000. VLAWMO will be responsible for paying the premium on said bond. 476792v6 KRH VA245-1 12 SECTION IX DURATION OF THIS JOINT POWERS AGREEMENT Subdivision 1. Duration of Agreement. Each Member agrees to be bound by the terms of this Agreement until December 31, 2026, and that it may be continued thereafter at the option of the Members. This Agreement shall be in full force and effect upon the filing of certified copy of the resolution approving said Agreement by each governmental unit. Subdivision 2. Termination of Agreement. This agreement may be terminated prior to January 1, 2025, by the unanimous consent of the parties. If the agreement is to be terminated, a notice of the intent to dissolve the VLAWMO shall be sent to the Board of Water and Soil Resources and to Ramsey and Anoka Counties at least 90 days prior to the date of dissolution. Subdivision 3. Dissolution. In addition to the manner provided in Subdivision 2 for termination, any member may petition the Board of Directors to dissolve the agreement. Upon 90 days’ notice in writing to the clerk of each member governmental unit and to the Board of Water and Soil Resources and to Anoka and Ramsey County, the Board shall hold a hearing and upon a favorable vote by a majority of all eligible votes of then existing Board members, the Board may by Resolution recommend that the VLAWMO be dissolved. Said Resolution shall be submitted to each member governmental unit and if ratified by three-fourths of the councils of all eligible members within 60 days, said Board shall dissolve the VLAWMO allowing a reasonable time to complete work in progress and to dispose of personal property owned by the VLAWMO. Subdivision 4. Assets. Upon a set of findings and order for dissolution of VLAWMO by the State Board of Water and Soil Resources, all property of VLAWMO shall be transferred, either jointly or severally, to the governmental units of VLAWMO. Such transfer of VLAWMO assets may be made in proportion the total contribution of each Member as required by the last annual operating budget. The transfer of real estate property of VLAWMO pursuant to this section shall not affect the benefits or damages for any improvement previously constructed by VLAWMO before dissolution. The real estate property affected shall remain liable for its proper share of any outstanding indebtedness of VLAWMO applying to the property before the dissolution, and levies assessment for the indebtedness continue in force until the debt is paid off. SECTION XI EFFECTIVE DATE Subdivision 1. Adoption of Agreement. This agreement shall be in full force and effect upon the filing of a certified copy of the resolution approving said agreement by all six members. Said resolution shall be filed with the Chair of the existing VLAWMO who shall notify all members in writing of its effective date and shall set the date for the next meeting to be conducted under this amended Joint Powers Agreement. IN WITNESS WHEREOF, the undersigned governmental units, by action of their governing bodies, have caused this agreement to be executed in accordance with the authority of Minnesota Statutes, Sections 103B. 211 and 471.59. 476792v6 KRH VA245-1 13 CITY OF GEM LAKE By _________________________ Mayor Dated ___/___/___ Attest _________________________ City Clerk CITY OF LINO LAKES By _________________________ Mayor Dated ___/___/___ Attest _________________________ City Clerk CITY OF NORTH OAKS By _________________________ Mayor Dated ___/___/___ Attest _________________________ City Clerk CITY OF VADNAIS HEIGHTS By _________________________ Mayor Dated ___/___/___ Attest _________________________ City Clerk CITY OF WHITE BEAR LAKE By _________________________ Mayor Dated ___/___/___ Attest _________________________ City Clerk WHITE BEAR TOWNSHIP By _________________________ Chair Dated ___/___/___ Attest _________________________ City Clerk (VLAWMOJPA2007) 476792v6 KRH VA245-1 14 Appendix A Map of the Vadnais Lake Area Water Management Organization WS – Item 3 WORK SESSION STAFF REPORT Work Session Item No. 3 Date: June 6, 2016 To: City Council From: Michael Grochala, Community Development Director Re: 550 Lilac Street Background Mr. Morteza Salehi, owner of the Apollo Business Center located at 550 Lilac Street, appeared before the City Council on April 25, 2016. Mr. Salehi was present to request council consideration to abate a delinquent utility charge that was levied against his property as a special assessment. The City Council requested that the item be placed on the work session agenda for discussion. In March of 2010 a building permit for interior remodel was obtained by the former owner of the Apollo Business Center. The addition of showers, after the fact, resulted in a Met Council Sewer Availability Charge (SAC) redetermination. Based on the change in use three units of (SAC), totaling $6,300 became due. No SAC was collected. Mr. Salehi, acquired the property in September of 2010. Based on his statements he was not aware of any outstanding fees when he purchased the property. In 2012, following a SAC review by Met Council Environmental Services, the City informed the owners that SAC, in the amount of $6,300 was owed. A second notice was sent in February of 2013. In October of 2013 the City Council approved an assessment of the property for the unpaid SAC. The assessment should have been certified against the property for taxes payable in 2014. However, in October of 2014 the City was informed that the assessment had been erroneously applied against the wrong property. The SAC was reassessed as an “Add as Omitted” special assessment in for taxes payable in 2015. Mr. Salehi disputed the validity of the SAC since it was charged prior to his acquisition of the property. He subsequently filed an Objection to Notice of Delinquent Taxes with the District Court. Neither the City or Mr. Salehi received any status update to the objection. Mr. Salehi followed up on his objection in April of 2016 and found that no action had been taken. A hearing was scheduled for May 10, 2016. At the May 2, 2016 work session the City Council directed staff to seek a postponement of the hearing and contact Metropolitan Council Environmental Services (MCES) regarding possible redetermination of the SAC charges on the property. The court hearing was rescheduled for June 21, 2016. Staff contacted MCES regarding possible options regarding the SAC units for the site. We have been informed us that they are unable to provide a credit based on the following factors: 1) nothing has changed with the tenant space to warrant a redetermination, and 2) changes in SAC determination criteria are not retroactive. It is possible that adjustments could be made with future tenant changes however, we are not certain when and what those adjustments might be. Mr. Salehi is still requesting Council consideration to abate the charges. Requested Council Direction Staff is requesting Council direction to place the abatement of the Special Assessment on the June 13, 2016 agenda for consideration. 1 WS – Item #4 WORK SESSION STAFF REPORT Work Session Item No. 4 Date: June 6, 2016 To: City Council From: Katie Larsen, City Planner Re: Watermark Development Update Background Mattamy Minneapolis, LLC submitted a land use application for PUD Development Stage Plan/Preliminary Plat review in February 2016. The proposed development is a PUD master planned residential community located in the northwest quadrant of I-35E and CSAH 14/Main Street. It contains 12 parcels totaling approximately 372 gross acres and consists of a residential density mix of 706 single family lots and 165 townhome units totaling 871 housing units. The proposed development is called as Watermark. The Watermark concept plan and PUD Development Stage Plan/Preliminary Plat have been presented and reviewed several times by City staff, Council and advisory boards over the past several years. • May 5, 2014: Council Work Session o Presentation by Rick Packer, Mattamy Homes o General discussion and overview of the project • June 2, 2014: Council Work Session o Presentation by Rick Packer, Mattamy Homes o Review of variety of housing styles and lot widths • September 24, 2014: Environmental Board o Review of land use application for Concept Plan o General review of site development, open space corridors, environmentally sensitive areas, historic preservation, noise, AUAR • October 6, 2014: Park Board o Review of land use application for Concept Plan o General review of park, trail and sidewalks locations and community center • October 8, 2014: Planning & Zoning Board o Review of land use application for Concept Plan o General review of land use history, comprehensive plan consistency, housing density, rezoning, subdivision ordinance, utilities, public land dedication, AUAR • October 9, 2014: EDAC o Review of land use application for Concept Plan o General review of commercial component 2 • November 3, 2014: Council Work Session o Review of land use application for Concept Plan o Summary of advisory board meetings and comments • May 13, 2015: Planning & Zoning Board Meeting o Presentation by Rick Packer, Mattamy Homes o Review of architectural designs, development process and schedule • June 10, 2015: Planning & Zoning Board Meeting o General discussion regarding Commercial development component Lot widths and sizes Public values • July 6, 2015: Council Work Session o General discussion regarding Commercial development component Lot widths and sizes Public values • March 23, 2016: Joint Board Meeting o General overview of project • April 13, 2016: Planning & Zoning Board o Public Hearing Comprehensive Plan Amendment Rezoning PUD Development Stage Plan/Preliminary Plat o Hearing continued to May 11th P&Z Meeting • May 11, 2016: Planning & Zoning Board o Made recommendation of approval The Planning & Zoning staff reports dated April 13, 2016 and May 11, 2016 detail the project. Overall, Watermark is consistent with the comprehensive plan and compliant with the AUAR and city ordinances. At the June 6, 2016 Council Work Sessions, staff will review in detail the Comprehensive Plan Amendment, Rezoning and PUD Development Stage Plan/Preliminary Plat. At the June 13, 2016 City Council meeting, staff will be requesting Council action on these items. Tentative Review Schedule: Complete Application Date: February 1, 2016 60-Day Review Deadline: April 1, 2016 120-Day Review Deadline: May 31, 2016 Environmental Board Meeting: April 27, 2016 Park Board Meeting: April 4, 2016 Planning & Zoning Board Meeting: April 13, 2016 & May 11, 2016 3 City Council Work Session: May 2, 2016 & June 6, 2016 City Council Meeting: June 13, 2016 Requested Council Direction None. Review of June 13, 2016 Council action items only. Attachments 1. Land Use Plan revision date May 28, 2016 LEGEND 20TH AVENUE NORTH (CSAH 54) INTERSTATE HIGHWAY NO. 35E 73RD ST.ST.REHBEINWATERMARK LAND USE PLAN f:\jobs\4721 - 4740\4724 - lino lakes property\cad\survey\layouts\4724_watermark colored exhibit-rev.dwgSave Date:05/31/16 MATTAMY HOMES 7201 Washington Avenue - Suite 201 Edina, MN 55439 Brian J. Krystofiak, P.E.1 of 1 WATERMARK Lino Lakes, Minnesota I hereby certify that this plan, specification or report was prepared by me or under my direct supervision and that I am a duly Licensed Professional Engineer under the laws of the State of Minnesota Print Name: Signature: Date:License #:01/07/16 25063 Drawn: Designed: Date:01/07/16 BJK C#Revisions: 1. Rev. Layout. 03/04/16 2.Rev. layout. 05/28/16environmental engineering surveying · · · SITE DATA Cente r vil l e Lake Peltie r LakeRice C r e e k Chain o f l a k e s Reser v e LakeResha n a u City o f Cente r vi ll e Ronde a u Lake LOCATION MAP SOIL BORINGS WETLANDS OWNER CONTACT 3890 Pheasant Ridge Drive NE, Suite 100 Blaine, MN 55449 Phone: (763) 489-7900 Fax: (763) 489-7959 www.carlsonmccain.com WS – Item #5 WORK SESSION STAFF REPORT Work Session Item No. 5 Date: June 6, 2016 To: City Council From: Katy Thompson, WSB Engineering Re: NE Lino Drainage Feasibility Study Background The surface water in the Northeast area of Lino Lakes is landlocked inhibiting site improvements within this area. The area has been historically landlocked until the installation of agricultural field drains in the early 20th century. These drainages have limited capacity, and as such, cannot convey any additional runoff from development within the watershed. The field drains also do not provide any water quality benefits to Peltier Lake. The NE Area Drainage feasibility study models the drainage for 1400 acres of land on the east and west sides of I-35E, and north of Main Street. The study evaluates water quality improvements and a new surface water outlet to Peltier Lake. Implementation of the plan will require approval from the Rice Creek Watershed District (RCWD). City staff submitted the draft NE Area Comprehensive Surface Water Management Plan (CSMP) to the RCWD in June of 2015 for review and comment. The RCWD has requested additional information as part of the approval process and which is being addressed in the study. The purpose of the feasibility study is to: • Confirm modeling results and parameters. • Examine design alternatives and develop a preferred alternative. • Prepare preliminary plans and cost estimates. • Develop and recommend proposed alignment. • Incorporate information from effected property owners and stakeholders. • Identify necessary permits and right of way • Identify potential funding options. Council authorized completion of the feasibility study in September 2015. The draft feasibility study was completed in January 2016 and after stakeholder meetings, a greenway option is recommended. The earlier preferred alternative included a new outlet to Peltier Lake, a new culvert crossing under I-35E, storm sewer along the proposed Otter Lake Road extension and regional ponding facilities with gate structures to detain peak storm flows and prevent increasing the flood levels on Peltier Lake. The new greenway option includes the new culvert crossing under I-35, storm sewer and regional storage facilities, but rather than a pipeline from Peltier Lake to 20th Avenue, an open channel design is being considered. The conceptual alignment and typical cross- section have been developed with the intent to provide live storage for large flood events, to be in agreement with the City’s AUAR and greenspace requirements, as well as to avoid wetland impacts as much as possible. The final design of the channel will require special attention to the wetlands so that the project does not inadvertently drain them via lateral effects. The greenway option also provides additional water quality treatment opportunities for the study area. At the May 25, 2016 Environmental Board meeting, the feasibility study was approved with the recommendation that additional water quality treatment be incorporated as possible. Since the last Council update, staff met with adjacent landowners and RCWD to review all the options considered for the alignment between 20th Avenue and Peltier Lake. Based on these meetings a technical memo was incorporated into the feasibility study as Appendix F. The feasibility project cost for the green way option will be incorporated prior to Council accepting the feasibility. The cost should not increase from the draft report enclosed. The goal is find the most cost effective option considering input from landowners and Rice Creek Watershed District. The proposed project includes a combination of greenway and pipe to accommodate stakeholder current and future needs. Requested Council Direction The feasibility study will be presented on June 27, 2016 for Council consideration to accept the feasibility study. Attachments 1. Draft Feasibility Study 2. Feasibility Study Appendix F – Design Options Considered TABLE OF CONTENTS Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 TITLE SHEET CERTIFICATION SHEET TABLE OF CONTENTS 1. EXECUTIVE SUMMARY ........................................................................................... 1 2. INTRODUCTION.......................................................................................................... 2 2.1. Authorization .......................................................................................................... 2 2.2. Scope ....................................................................................................................... 2 2.3. Data Available ........................................................................................................ 2 2.4. Project History ........................................................................................................ 2 3. EXISTING CONDITIONS ........................................................................................... 4 3.1. Drainage Areas and Drain Tile ............................................................................... 4 3.2. Storm Sewer ............................................................................................................ 4 3.3. Receiving Waters .................................................................................................... 5 3.4. Existing Site Limitations......................................................................................... 5 4. PROPOSED IMPROVEMENTS ................................................................................. 7 4.1. Alternatives Considered .......................................................................................... 7 4.2. Proposed Drainage Improvements .......................................................................... 9 4.3. Storm Sewer and Stormwater Management ........................................................... 9 4.4. Storm Water Quality ............................................................................................. 10 4.5. Permits and Approvals .......................................................................................... 10 4.6. Right-of-Way / Easements .................................................................................... 11 4.7. Project Phasing...................................................................................................... 11 4.8. Private Utilities ..................................................................................................... 11 4.9. Wetlands ............................................................................................................... 12 5. FINANCING ................................................................................................................ 13 5.1. Opinion of Probable Construction Cost ................................................................ 13 5.2. Funding Sources.................................................................................................... 13 6. PROJECT SCHEDULE .............................................................................................. 14 7. FEASIBILITY AND RECOMMENDATION .......................................................... 15 8. REFERENCES ............................................................................................................. 16 APPENDIX A .............................................................................................................................. 17 APPENDIX B .............................................................................................................................. 26 APPENDIX C .............................................................................................................................. 27 APPENDIX D .............................................................................................................................. 28 APPENDIX E .............................................................................................................................. 29 TABLE OF CONTENTS Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 APPENDIX F .............................................................................................................................. 30 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 1 1. EXECUTIVE SUMMARY The surface water in the Northeast area of Lino Lakes is landlocked inhibiting site improvements within this area. The area has been historically landlocked until the installation of agricultural field drains in the early 20th century. These systems of agricultural drains have limited capacity, and as such, cannot convey any additional runoff from development within the watershed. The agricultural drains also do not provide any water quality benefits. The Northeast area of Lino Lakes (Appendix A, Figure 1) is bound by Main Street to the south, the City of Hugo to the east, and Peltier Lake to the west and Rehbein Street to the north. It includes portions of Lino Lakes, Centerville, and Hugo. Land use in this area is predominantly agricultural. A majority of this watershed currently drains to the south via field drains to Clearwater Creek. Clearwater Creek is impaired for aquatic life and has had a history of significant bank erosion problems. There were multiple alternatives considered to address the surface water runoff needs for this area as detailed further within this report. These options were coordinated with the Rice Creek Watershed District (RCWD) and a draft Comprehensive Surface Water Management Plan (CSMP) was created. The CSMP and the associated surface water modeling included water quality best management practices (BMPs), volume and rate control improvements, and a new outlet to Peltier Lake. Peltier Lake is impaired for nutrients and a new system would significantly reduce the agricultural loading to the lake. The proposed project will result in a regional storm water conveyance system for 1,400 acres that will allow for development that includes: Reginal storm water treatment Storm water quality and rate control The project will be implemented using a phased approach based on preliminary development patterns. The phases and cost per phase are as follows: Development Phase Cost Phase 1 – Peltier Lake Outlet Pipe $2,114,944 Phase 2 – I-35E Crossing $689,030 Phase 3 – Otter Lake Trail Storm Sewer Extension $1,244,986 Phase 4 – Future Improvements $690,824 TOTAL COST $4,739,784 Funding for the project will be through surface water management fees, and potential grants from Rice Creek Watershed District (RCWD), Minnesota Board Water and Soil Resources (BWSR), and the Public Facilities Authority (PFA). This project is feasible, necessary, and cost-effective from an engineering standpoint and should be constructed as proposed herein. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 2 2. INTRODUCTION 2.1. Authorization On September 14, 2015, the City of Lino Lakes City Council authorized the preparation of an engineering feasibility report for the Northeast Lino Lakes Drainage System Improvements. 2.2. Scope The Northeast Lino Lakes Drainage System Improvements Project consists of providing a new outlet to Peltier Lake, new storm sewer, and drainage improvements to existing field drains to facilitate development in the project area. The project area can be seen in Appendix A, Figure 1 and encompasses the northeast section of Lino Lakes, north of Main Street and east of Peltier Lake, as well as portions of Centerville and Hugo that discharge water into the study area boundary. The objective is to develop a reginal storm water management plan to allow development of the property while protecting existing natural resources. This will be accomplished through storm water conveyance, water quality improvements and rate and volume control. 2.3. Data Available Information and materials used in the preparation of this report include the following: Rice Creek Watershed District (RCWD) record drawings RCWD topographic maps and GIS data RCWD hydrologic and hydraulic modeling files City of Lino Lakes 2030 Comprehensive Plan [September 12, 2011] City of Lino Lakes Parks, Natural Open Space/Greenways, and Trail System Plan [2004] City of Lino Lakes Surface Water Management Plan [2005] City of Lino Lakes I-35E Corridor Alternative Urban Areawide Review (AUAR) [2005] City of Lino Lakes record drawings and GIS data City of Hugo 2030 Comprehensive Plan [2010] Anoka County LIDAR contour information Field observations of the area Additional references detailed in Section 8 2.4. Project History A Comprehensive Stormwater Management Plan (CSMP) was completed in coordination with RCWD. This plan identified the existing conditions, and proposed a solution to provide surface water management within the study area. The CMSP resulted in the establishment of performance standards to be used in developing the NE Drainage Area. The standards allow for phasing of development while limiting adverse impacts to neighboring properties and waterbodies. RCWD will use the CSMP performance Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 3 standards to permit within the NE Drainage Area. The following is a brief summary of the CSMP performance standards: Development of regional storage facilities to limit discharges into Peltier Lake Gated operation of the regional storage facilities to be operated by the City Minimizes the risk of flood impact (downstream or upstream) to downstream structures, infrastructure and land currently within the floodplain Volume control through water reuse on within the drainage area The entirety of the draft performance standards are in a RCWD letter dated October 1, 2015 Appendix D. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 4 3. EXISTING CONDITIONS 3.1. Drainage Areas and Drain Tile The Northeast Area is serviced by three Anoka County drainage systems, Anoka County Ditch (ACD) 72 and Judicial Ditch (JD) 2 in the north and ACD 55 in the south (FIGURE 2). ACD 72 and JD 2 discharge directly to Peltier Lake, while ACD 55 enters Clearwater Creek, or Judicial Ditch (JD) 3, to the south before discharging into Peltier Lake. The remainder of the study area surface flows directly to Peltier Lake. The county ditches within the study area are all agricultural drain tile systems that serve an area of approximately 1,400 acres within the Cities of Lino Lakes, Centerville, and Hugo. These properties are entitled to the benefits of the drainage system and, in effect, own the drain tile system under Minnesota Statues 103E (Minnesota Department of Natural Resources 1991). The drainage of the system must be maintained in perpetuity, until such time the assessed land owners choose to petition RCWD for the abandonment of the drain tile on their property. The majority of the land in the study area is agricultural (Table 1) and drained to the ditch system via unbuffered surface inlets (Appendix A, Figure 3). Table 1. Existing land uses and areas Land Use Area (acres) Agricultural 1,059 Multifamily 2 Open Space/Conservation 116 Right-of-Way 43 Rural Residential 141 Single Family Detached 12 TOTAL 1,373 The low points in the study area remain inundated for weeks following the 100 year event due to the limited pipe capacity in the ditch system. Because the low lying areas take so long to drain back to their normal water levels, the next rain event may compound the flooding beyond the 100-year flood level. Without any drainage improvements, future developments in this area are required to design to retain the 100-year back-to-back events. 3.2. Storm Sewer There is storm sewer within the study area of Lino Lakes along Otter Lake Road and the McDonald’s site. Due to the limited capacity of the existing drain tile system, McDonald’s was required to install a temporary spray irrigation system to reduce the stormwater volume from their site; however this is not a feasible long-term solution. The City of Hugo has stormwater infrastructure and storage which serves the development along the Lino Lakes and Hugo border. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 5 3.3. Receiving Waters Peltier Lake has been listed as an impaired waterbody within the greater Anoka Chain of Lakes since 2002 for aquatic recreation, with the main pollutant identified as excess phosphorus from watershed runoff and internal loading (Minnesota Pollution Control Agency 2013). In addition, the Anoka Chain of Lakes has limited flood storage capacity. Any improvements to the drainage system will need to show no adverse impacts to receiving waters in terms of increased phosphorus loading or flooding potential. 3.4. Existing Site Limitations Anoka County Ditch (ACD) 55 and ACD 72 drain tiles were designed to provide drainage for agricultural lands and are already at capacity, limited by the crossings under I-35E. ACD 55 and ACD 72 both cross under I-35E, as shown in Appendix A, Figure 2, with a total capacity of 1.5 cubic feet per second (cfs) and 0.52 cfs, respectively (RCWD 2014). The City of Hugo contributes 210 acres of the 1,400 total acres and has an existing flow rate of 50.3 cfs into the City of Lino Lakes and the ACD 55 drain tile system. The City of Centerville contributes a minor amount of surface runoff to the study area, which under existing conditions contributes directly to Peltier Lake. The existing agricultural drainage system has been subject to repeated blow-outs and tile ruptures in recent years. In 2014, the Rice Creek Watershed District reviewed the ACD 55 and 72 systems and determined the failures were recurring due to: Deterioration of the drain tile system, including sections of pipe that have pulled apart, as well as portions of the system have collapsed or are clogged with sediment. The drain tiles themselves are undersized and unable to convey the incoming flows, resulting in a surcharged system. During the summer of 2015, RCWD maintained several sections of ACD 55 main trunk and the ACD 72 main trunk, as well as several lateral branches. The drain tile system does not provide any water quality benefits to Peltier Lake and field inlets to the system do not have adequate buffers to prevent sediments from entering the system and Peltier Lake. The constraints of the drain tile system have limited landowners’ ability to develop their land consistent with the City of Lino Lakes’ Comprehensive Plan. Development must meet RCWD Rule C for Stormwater Management Plans, which includes water quality and rate control. Because the existing drainage system is already at capacity, any new development must treat their stormwater onsite to meet the water quality, rate control and volume reduction requirements of Rule C. Unfortunately the soils underlying the majority of the study area are poorly suited for infiltration and cannot meet the volume reduction requirements. This has resulted in temporary infrastructure being built because there was not a feasible way to meet the RCWD rules for surface water quality and storage. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 6 In addition to poor underlying soils, the study area also has a significant amount of wetlands (Appendix A, Figure 5), which limit stormwater management opportunities. A detailed wetland analysis is included in Appendix B. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 7 4. PROPOSED IMPROVEMENTS 4.1. Alternatives Considered In consideration of the City’s Comprehensive Plan where this area is guided for urban and mixed uses (Appendix A, Figure 5) it was determined that the existing drainage system would need to be addressed. Through the CSMP multiple alternatives were considered based on the needs of the area (Table 2). Table 2. Full Build-Out Proposed Land Uses Land Use Area (acres) Commercial 82 Industrial 350 Mixed Use 345 Open Space/Conservation 238 Right-of-Way 43 Rural Residential 6 Single Family Detached 82 Single Family Attached 117 Medium-Density Residential 90 High-Density Residential 19 TOTAL 1,373 As the existing county drain system is not sufficient to handle the increased runoff from a developed watershed. Options were considered to provide capacity for development, with the goal of limiting adverse impacts to downstream landowners and natural resources. The following options are discussed in further detail in Appendix F. Option 1: Existing System to Remain The existing system is in need of maintenance, and RCWD completed study in 2014 outlining system improvements. The capacity of the existing system is not sufficient to develop the area as established in the City of Lino Lakes Comprehensive Plan. For property owners to make improvements in this drainage area, per RCWD rules, they may need to dedicate up to 40% of their developable land for stormwater management, including ponding of back-to-back 100-year flood events and infiltration requirements. This area has tight soils and infiltration options are costly and limited. Spray irrigation is temporarily being used to meet the requirements at the McDonald’s site until a regional BMP is constructed. The existing system does not provide treatment upstream of Peltier Lake which is classified as an impaired waterbody. Any proposed project must not impair water quality or flood storage within or downstream of Peltier Lake. Option 2: Outlet to Clearwater Creek This option considered the lands drained by ACD 55 to the east of I-35E and proposed to reroute the drainage to the south, via storm pipe, to Clearwater Creek (Appendix A, Figure 6). This Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 8 option benefits 710 acres, of which 495 acres are in Lino Lakes. This option was not recommended due to adverse impacts to Clearwater Creek including increased discharge and potential bank erosion. Option 3: New Outlet to Peltier Lake and Crossing Under I-35E When considering this option various alignments between 20th Avenue and Peltier Lake were considered. The objective in recommending an alignment was to minimize impacts to undeveloped parcels and reduce associated easement acquisitions. Alternative A – Open Channel Conveyance This option includes open-channel flow through a 10 foot deep ditch system (Appendix A, Figure 6). While feasible and consistent with the City of Lino Lakes’ I-35 Final Corridor Alternative Urban Areawide Review, it requires double the land acquisitions in a northern alignment resulting in the cost being 20 to 25 percent higher than Alternate B; and thus is not recommended. In addition, RCWD staff noted they would not permit it in a southern alignment due to potential wetland impacts. Alternative B - Storm Sewer Pipe Outlet This option is the preferred alternative and includes a new outlet at Peltier Lake via a 72- inch storm drain, or equivalent design, from Peltier Lake to I-35E to capture the ACD 55 and ACD 72 drainage systems upstream of I-35E and collect runoff from the study area (Appendix A, Figure 6). There is a proposed mixed-use development between 20th Avenue and I-35E. The development would provide surface drainage via a series of connected ponds from I-35E to the 20th Avenue. If this development proceeds, the surface drainage system would replace the proposed pipeline between 20th Avenue and I-35E. The area above the pipe could be used for public greenspace, as well as storm water ponding as this area develops in the future. Alternative C – Combination Open Channel and Storm Sewer Outlet We also considered a hybrid solution that would include a combined ditch and pipe system in lieu of a 72-inch storm drain between 20th Avenue and Peltier Lake. A smaller pipe was considered that would surcharge to an open-channel greenway above the pipe. Due to pipe depth and the pressure required to surcharge, this concept would require double the land acquisition than Alternative B. Alternative B is recommended as it provides surface water treatment, water quality improvements and rate control through draining storage systems effectively and efficiently, thereby minimizing the bounce in ponds from successive storm events. It also provides a known normal water elevation in the low areas, around which the designers may build future development to be safe from flooding. Option 3 also includes a crossing under I-35E near the existing ACD 55 crossing (Appendix A, Figure 6). Final design and coordination with RCWD and MnDOT will determine if this crossing is a single crossing or two smaller crossings under I-35E. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 9 4.2. Proposed Drainage Improvements The new outlet to Peltier Lake and crossing under I-35E via a storm sewer pipe system is recommended as the most cost-effective alternative. The proposed project (Appendix A, Figure 7) includes: A. New outfall to Peltier Lake B. New 72-inch storm drain from 20th Avenue to Peltier Lake Drive C. New 60-inch storm drain crossing under I-35E to regional storage facility D. New storm sewer to collect developed runoff from the east side of I-35E E. As feasible incorporate a public greenway corridor with additional water quality best management practice (BMP) features that could treat surface runoff before entering the storm main. F. Outlet control structures with gates on selected regional storage facilities to minimize the risk of storm water runoff from adversely impacting flood levels on Peltier Lake G. Preserve the agricultural drain tile system to maintain upstream drainage rights until all land within the study area develops. Drain tile may be abandoned or realigned as development progresses, at the benefitted landowners’ expense and discretion. The conceptual layout and system details are provided in Appendix C. Additional design requirements for land development within the study area are summarized in Appendix D. 4.3. Storm Sewer and Stormwater Management The City’s proposed storm sewer system and drainage design requirements will be in conformance with the City’s performance standards, and as permitted by RCWD. Construction of a stormwater collection and conveyance system will be necessary to direct stormwater to the new pipeline and ultimately to Peltier Lake. This system will reduce flooding within the study area and improve drainage conditions throughout the Northeast Lino Lakes Area. There are multiple ponding locations proposed with the Northeast Lino Lakes Comprehensive Stormwater Management Plan. At this time it is proposed to utilize existing wetland complexes for flood storage by providing an outlet control structure with operable gate at the normal water level. In the event of a 1-percent chance design storm, the gates can be closed to minimize the risk of increasing the flood stage on Peltier Lake, and the wetlands would store the water until the gates are opened after the flood threat on Peltier Lake has passed. The exact location and design of these regional BMPs will be determined as the design progresses. It will be expected that the storage area will experience a significant bounce in elevation during 100-year storm Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 10 event and will need to be planted with a suitable planting palette that can tolerate periodic inundation to maintain vegetation. 4.4. Storm Water Quality The study area will include a variety of measures to provide treatment and improve water quality in Peltier Lake and the Anoka Chain of Lakes to minimize impacts related to this project. All individual developments will be required to manage stormwater on site to the current and applicable Rice Creek Watershed District rules. It is anticipated the study area will include a water quality treatment train with sedimentation BMPs located in upland areas, designed to remove solids and particulate matter, combined with surface and media filtration to remove dissolved particulates, nitrogen and phosphorus, prior to entering the new storm sewer. The existing and proposed total phosphorus loading from the study area to Peltier Lake were evaluated at a conceptual level, using event mean concentrations from the Minnesota Stormwater Manual for the general land use types within the study area. While the development of the study area would result in increased total phosphorus loading to Peltier Lake by about 16 pounds annually, without treatment, the City of Lino Lakes and RCWD required water quality treatment practices will actually reduce the total phosphorus loading to below existing conditions. Refer to APPENDIX D for details and design requirements for the study area. 4.5. Permits and Approvals Construction of the pipe and outlet will disturb more than one acre of land and will require a National Pollution Discharge Elimination Systems (NPDES) General Stormwater Permit [MNR 100001] that must be obtained by Lino Lakes from the Minnesota Pollution Control Agency (MPCA). The project includes a new outlet to Peltier Lake, as such the City will need to obtain a DNR Public Waters Work permit (GP2004-0001) from the MnDNR, as well as obtain a Rice Creek Watershed District [RCWD] permit to demonstrate no adverse impacts will be created as result of this project. The project also includes a culvert crossing under I-35E; as such the City will need to obtain a Utility Accommodation on Trunk Highway Right of Way Permit (Form 2525) and a Miscellaneous Work on a Trunk Highway Right of Way permit (Form 1723) from MnDOT. The project includes a storm drain crossing under 20th Avenue (CSAH 54), a Right of Way Permit from Anoka County may be required. The storm water conveyance alignment has been chosen to avoid or minimize wetland impacts; however any modifications to existing wetlands would require approval by the Technical Evaluation Panel (TEP). Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 11 Given the complexity of the project it is anticipated that the City and staff will need to meet with the above agencies individually in order to facilitate permit approvals. 4.6. Right-of-Way / Easements Right-of-way needs will be evaluated during final design. It is anticipated that some temporary construction easements will be required. Easement acquisition for the pipeline is anticipated: the easements related to the regional storage basins will be acquired as part of the platting process for individual developments. 4.7. Project Phasing The project will be constructed in several phases (Appendix A, Figure 8), as funding and land development allows. The project will be constructed from downstream to upstream, starting with the new Peltier Lake outfall and finishing with upstream regional storage facilities. Phase 1 will include construction of the new outlet at Peltier Lake and the installation of the 72- inch storm sewer from Peltier Lake Drive to 20th Avenue. Once this outlet pipe is installed, the immediate neighboring properties can develop and discharge treated stormwater to the outlet pipe. Development of the regional stormwater facility between Peltier Lake Drive and 20th Avenue would need to be constructed concurrently with any development. The new 72-inch storm sewer will also provide an outlet for the proposed ponding facility being constructed between 20th Avenue and I-35E, also part of Phase 1. Phase 2 will include the installation of a new 60-inch crossing under I-35E and an extension of the storm sewer beyond the MnDOT right-of-way to allow for future extension of the sewer along Otter Lake Trail. Phase 3 would be constructed concurrently with the Otter Lake Trail extension and includes expanding the storm sewer system east of I-35E to the Otter Lake Trail extension and within the proposed right-of-way. Future phases include construction of additional regional storage facilities, water quality features, recreational enhancements, and additional storm sewer infrastructure as needed for development. The timing of these features will depend on individual landowners and development interests. At all times during project construction and phasing, upstream drainage will be maintained by realigning the county ditches, at the developers expense, or leaving them in place for future abandonment when the study area is fully built out. 4.8. Private Utilities The Koch Pipeline Company has three crude oil pipelines that run through the study area, roughly from 20th Avenue and 80th Street in the northwest to Main Street at the Hugo border. The proposed 60-inch crossing under I-35E avoids the Koch pipeline, but final design of the storm sewer infrastructure east of I-35E will need to ensure there are no conflicts with the Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 12 pipelines. It is anticipated that coordination with the Koch Pipeline Company will be required in order to construct the project as proposed. 4.9. Wetlands All practical measures will be taken to prevent any inadvertent temporary drainage of wetlands from the construction and placement of the new pipeline and outfall to Peltier Lake. These practices include using bentonite plugs and/or steel casing for the areas where the pipeline runs through wetlands, and prohibiting the use of gravel bedding under the pipeline in these areas. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 13 5. FINANCING 5.1. Opinion of Probable Construction Cost A detailed opinion of probable cost is included in Appendix E of this report. The opinion of probable cost is based on projected construction costs for 2016 and includes a fifteen percent (15%) construction contingency and twenty-five percent (25%) indirect costs. The indirect costs include engineering, legal, and administrative costs associated with the project. Project costs have been separated into assumed construction phases. The first phase will consist of the outlet pipe to Peltier Lake from 20th Avenue. This phase will also include volume and water quality BMP features to be constructed before any development may tie into the new outlet pipe. It is anticipated that after the outlet pipe is constructed, the new crossing under I-35E will be constructed as the second phase. The third phase would consist of constructing storm sewer connections from the new I-35E crossing upstream, and along, the future Otter Lake Trail extension. Future phases will include additional volume control and water quality BMPs, outlet control structures, and storm sewer connections, as development in the study area progresses. The total project costs, by construction phase, are summarized below. Table 3. Northeast Lino Lakes Drainage Improvement Summary of Cost Development Phase Cost Phase 1 – Peltier Lake Outlet Pipe $2,114,944 Phase 2 – I-35E Crossing $689,030 Phase 3 – Otter Lake Trail Storm Sewer Extension $1,244,986 Phase 4 – Future Improvements $690,824 TOTAL COST $4,739,784 5.2. Funding Sources Funding for the project will be through surface water management fees collected through development, and potential grants from Rice Creek Watershed District (RCWD), Minnesota Board Water and Soil Resources (BWSR), and the Public Facilities Authority (PFA). The surface water management fees per the City’s current rates and proposed land use are estimated to be $2 to $2.5 million for this area. The City could consider developing a specific fee related to this area to ensure costs are covered. If the City is eligible, a RCWD grant could be up to $50,000, and a PFA grant could be twenty- five percent (25%) principal forgiveness on Phases 1 and 2. The BWSR has various grant programs, and an estimated grant amount is unknown at this time. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 14 6. PROJECT SCHEDULE The proposed schedule for this improvement project is as follows for construction to occur in 2017: Phase 1 – Feasibility Report City Council Authorizes Feasibility Study……………………………………September 14, 2015 Public Informational Meeting……………………………………………………… February 2016 City Council Accepts Feasibility Report and Sets Public Hearing Date...........................June 2016 Hold Public Hearing / Authorize Preparation of Final Plans and Specifications............. June 2016 Phase 2 – Final Design Final Design…………………………………………………….………………….. Summer 2016 City Council Approves Plans……….………………………….…………………..…..... Fall 2016 Apply for Grant Funding…………………………………………….………….. Throughout 2016 Obtain RCWD, MnDNR, MnDOT Permits………………………..…………...………..Fall 2016 City Council Authorizes Ad for Bids………………………….………………………March 2017 Receive Contractor Bids………………..……………………………………………….April 2017 Award Contract…..………………………………………………………………………May 2017 Phase 3 - Construction Begin Construction………...…………………………………………………………….May 2017 Final Completion of Construction…………………………………………………..……Fall 2017 Note: The schedule assumes all permitting work will be complete prior to the start of construction. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 15 7. FEASIBILITY AND RECOMMENDATION The Northeast Lino Lakes Drainage System Improvement Project includes a new stormwater outlet at Peltier Lake, drainage improvements, water quality and volume control BMPs, and appurtenant work. The total cost of the project is estimated at $4,739,784. Based on our analysis and data presented, the proposed project is feasible, necessary, and cost effective from an engineering standpoint. We recommend construction of the proposed improvements as detailed in this report and as determined financially feasible by the City Council. Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Page 16 8. REFERENCES City of Hugo. "2030 Comprehensive Plan." City of Hugo. March 15, 2010. http://www.ci.hugo.mn.us/index.asp?SEC=4A42E80D-D1B1-48A1-940D- F92071D6D492&Type=B_LIST (accessed October 20, 2015). City of Lino Lakes. "2030 Comprehensive Plan." City of Lino Lakes. September 12, 2011. http://www.ci.lino-lakes.mn.us/index.asp?SEC=67FBFAB1-0B78-448F-85B7- AFF5C3B73FEF&Type=B_BASIC (accessed October 20, 2015). —. "I-35E Corridor Final Alternative Urban Areawide Review (AUAR)." City of Lino Lakes. September 26, 2005. http://www.ci.lino-lakes.mn.us/index.asp?SEC=581A5670-E592- 4178-B9B2-7B0B72922A8E&Type=B_BASIC (accessed October 20, 2015). —. "Parks, Natural Open Space/Greenways, and Trail System Plan." Park System Plan. August 2004. http://www.ci.lino-lakes.mn.us/index.asp?SEC=8F6D51B8-D88A-40BA-98DA- B5805AE7C568&DE=A2373B63-7508-48A1-A507-F42A0255D30B&Type=B_BASIC (accessed October 20, 2015). —. "Surface Water Management Plan." City of Lino Lakes. December 2005. http://www.ci.lino- lakes.mn.us/vertical/Sites/%7B92EFCBF5-B800-4B28-AD6A- B8C3B7009FB0%7D/uploads/SWMP-Final_with_Appendix.pdf (accessed October 20, 2015). Minnesota Department of Natural Resources. "Minnesota Public Drainage Manual." Minnesota Department of Natural Resources. September 1991. http://files.dnr.state.mn.us/publications/waters/Minnesota_Public_Drainage_Manual.pdf (accessed October 20, 2015). Minnesota Pollution Control Agency. "Peltier Lake and Centerville Lake TMDL." Minnesota Pollution Control Agency. July 2013. http://www.pca.state.mn.us/index.php/view- document.html?gid=20171 (accessed October 20, 2015). RCWD and Minnesota Pollution Control Agency. "Lino Lakes Chain of Lakes Nutrient TMDL." Minnesota Pollution Control Agency. July 2013. http://www.pca.state.mn.us/index.php/view-document.html?gid=17164 (accessed October 20, 2015). RCWD. "Anoka County Ditch 55 Repair Memorandum." Rice Creek Watershed District. June 16, 2014. http://www.ricecreek.org/vertical/Sites/%7BF68A5205-A996-4208-96B5- 2C7263C03AA9%7D/uploads/ACD_55_Repair_memo_FINAL_6-16-2014.pdf (accessed October 20, 2015). —. "Anoka County Ditch 72 Repair Memorandum." Rice Creek Watershed District. October 16, 2014. http://rcwd.houstoneng.net/ditchportal/Historic%20Documents/Scans/ACD%2072/Memo s%20and%20Transmittals/RCWD_ACD72_MT_10162014_11.pdf (accessed October 20, 2015). —. "Rice Creek Watershed District Rules." Rice Creek Watershed District. December 1, 2014. http://www.ricecreek.org/vertical/Sites/%7BF68A5205-A996-4208-96B5- 2C7263C03AA9%7D/uploads/Final_adopted_RCWD_rule_11-12-2014.pdf (accessed October 20, 2015). Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 APPENDIX A Figures Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 APPENDIX B Wetland Report Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 APPENDIX C Conceptual Layout and Details Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 APPENDIX D Northeast Lino Lakes Comprehensive Stormwater Management Plan October 1, 2015 Draft Performance Specifications Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 APPENDIX E Opinion of Probable Cost Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 APPENDIX F Summary of Options Considered Feasibility Report Northeast Lino Lakes Drainage Improvement Project WSB Project No. 02029-790 Building a legacy – your legacy. 701 Xenia Avenue South Suite 300 Minneapolis, MN 55416 Tel: 763‐541‐4800 Fax: 763‐541‐1700 Equal Opportunity Employer wsbeng.com K:\02029‐790\Admin\Docs\FEASIBILITY STUDY\OPTIONS CONSIDERED\Memo_MGrochala_051316.docx Memorandum To: Michael Grochala, City of Lino Lakes From: Katy Thompson, PE Date: May 19, 2016 Re: Lino Lakes Northeast Drainage Area – Options Considered WSB Project No. 02029‐790 Below is a summary of the design options that have been considered to alleviate the drainage issues in the Northeast Drainage Area of Lino Lakes. SUMMARY OF OPTIONS CONSIDERED OPTION 1: USE EXISTING DRAINAGE SYSTEMS This option is further broken down into three alternatives, utilizing the existing Anoka County Ditches within the drainage area, Anoka County Ditch 55 (ACD55) and Anoka County Ditch 72 (ACD72). The existing ditches have a 33‐foot easement, on center. Option 1A: Existing System to Remain In Place The existing system (Figure 1) is in need of maintenance, with RCWD having completed a study in 2014 outlining system improvements. The capacity of the system is not sufficient to develop the area as established in the City of Lino Lakes Comprehensive Plan. For property owners to make improvements in this drainage area, per RCWD rules, they may need to dedicate up to 40% of their developable land for stormwater management, including ponding of back‐to‐back 100‐year flood events and infiltration requirements. This area has tight soils and infiltration options are costly and limited. Spray irrigation is temporarily being used to meet the requirements at the McDonald’s site until a regional BMP is constructed. The existing system does not provide treatment upstream of Peltier Lake which is classified as an impaired waterbody. Any proposed project must not impair water quality or flood storage within or downstream of Peltier Lake. This option was not considered for further analysis. Option 1B: Outlet to Clearwater Creek This option considered the lands drained by ACD 55 to the east of I‐35E and proposed to reroute this drainage area south, via storm pipe, along the proposed Otter Lake Road extension, to Clearwater Creek (Figure 2). This option benefits 710 acres, of which 495 are in Lino Lakes. This option was not considered for further analysis in the feasibility study due to adverse impacts to Clearwater Creek, including increased discharge and potential bank erosion concerns. Mr. Michael Grochala May 19, 2016 Page 2 Option 1C: Direct Developed Runoff To ACD72 This option would use the existing ACD 72 alignment south of Eagle Brook Church and north of 77th Street East (Figure 3) and would replace the existing drain tile with 72‐inch storm sewer to serve the study area. This option would also include additional regional storage ponds to the west of Eagle Brook Church and on City‐owned parcels off of Rehbein Street. Since the alternative is utilizing the existing alignment for ACD 72, there are existing easements in place and no additional acquisitions would be necessary. Unfortunately due to the existing topography along this alignment, a large portion of the study area on the west side would be unable to connect to the new storm sewer. In order to benefit the entire study area, an additional outfall is still required. This option was not considered for further analysis in the feasibility study. Option 1D: New Outfall with ACD72 Due to the limitations of using the existing ACD72 alignment, a modification to Option 1A was considered. This option continues to use the ACD 72 ditch system for the northern portion of the study area, but includes a new outfall to Peltier Lake (Figure 4). This option would allow for the different timing of development within the watershed and facilitate the Watermark development in the short term, while providing flexibility for future development in the northern portion of the study area to tie into ACD 72 or the new outfall. Additional analysis would be required to determine the ultimate pipe sizes to accommodate the entire drainage area through these two outlets. Option 1E: New Outfall with ACD 72 and ACD 55 This option is the same as 1B, however would also use the available capacity in ACD 55 in the southern portion of the watershed for future development (Figure 5). This option would need to be evaluated to ensure no adverse impacts to Clearwater Creek occur due to increased discharge through ACD 55, as well as to determine required pipe sizes. OPTION 2: NORTH OUTFALL This option aligns the new outfall to the north of the study area and would allow landowners to vacate some of the existing drain tile on their property in the interim condition, as well as require minimal easements and avoidance of existing wetlands. It does remove approximately 60 acres from the benefitted area and limits the siting of regional storage facilities (Figure 6). Option 2A: North Open Channel The initial alignment considered an open channel; however it was removed from consideration in the feasibility study due to concerns over cost and land acquisitions. Option 2B: North Storm Sewer The second north outfall option considered the same alignment, but using storm sewer, rather than an open ditch. This reduces the amount of land acquisition necessary from 100‐feet, on center, to roughly 70‐feet. OPTION 3: SOUTH OUTFALL This option would align the new outfall through existing wetlands and the reconstruction of Peltier Lake Drive along the final 700 feet of pipe (Figure 7). This option would serve the entire study area; however, it may prove difficult for landowners south of Rehbein Street to tie into the new storm sewer along the southern border. Land acquisition through this alignment would be less costly due to the presence of wetlands, than through the more developable upland area. Care must be taken during installation not Mr. Michael Grochala May 19, 2016 Page 3 to impact the existing wetlands through inadvertent drainage and to ensure the alignment is compatible with the existing Wetland Management Corridor. OPTION 4: CENTRAL OUTFALL This option would align the new outlet along property lines through the center of the study area (Figure 8). Benefits of this option include splitting the maintenance corridor between two landowners and utilizing existing low ground in the study area. Disadvantages include the cost of acquiring easements in highly‐developable land, impacts to existing wetlands, and lack of adequate cover for the pipe in some locations. OPTION 5: MODIFIED CENTRAL OUTFALL This option further refines Option 4, using the central outlet location on Peltier Lake Drive, but adjusting the alignment to follow the edges of wetlands to avoid wetland impacts (Figure 9). OPTION 6: OPEN CHANNEL This option is based on Option 5, but rather than a 72‐inch underground pipe, this option replaces the pipeline with a two‐stage open channel along roughly the same alignment. This option would require a 100‐ft easement, rather than a 70‐ft easement for the pipe option, but has more long‐term flexibility. A channel can handle larger flows, provides additional stormwater detention, and creates a public amenity for the community. Option 6 also has the added benefit of allowing for flexibility with future development plans, as it would be less costly to realign a ditch than a pipe. Ultimately the preferred option would be either Option 5 or 6, with a central outfall location. This location would benefit the most parties and be the most flexible for future development. ENVISION ANALYSIS There are a number of different rating systems to determine how sustainable, or “green,” an infrastructure project will be. The Envision™ Rating System was developed by the Institute for Sustainable Infrastructure and Harvard University’s Zofnass Program for Sustainable Infrastructure. It is a free tool, developed to be a broad‐based rating system for the evaluation of all kinds of civil infrastructure projects. The Envision™ Rating System was used to evaluate a simplistic pipe option versus greenway alignment based on their overall contribution to the economic, environmental and social aspects of sustainability, or the triple bottom line. It provides a way to holistically view the two options and ensure that the ultimate project provides the maximum value to the residents of Lino Lakes, is sustainable, and is an effective use of funding. The pipe option was evaluated against the open channel option using the Envision™ Checklist (Table 1). The pipe option received a total of 67 points out of 128 for a score of 52% of the total possible points, while the channel option (Table 2) received a total of 95 out of 129 points for a score of 75% of the total possible points. From the triple bottom line standpoint, the channel option out performs the pipe option. It does so in all the categories: Quality of Life, Resource Allocation, Natural World and Climate. It particularly fairs well in the Natural World category by providing additional environmental benefits, but it also does better in the Quality of Life by enhancing public space opportunities for the residents of Lino Lakes. It also is a more resilient option in the face of shifting climate dynamics because the capacity of the system will not be limited by a single pipeline. Mr. Michael Grochala May 19, 2016 Page 4 COST ANLYSIS In order to quickly evaluate the relative costs of the many alternatives, the options were compared solely based on the area benefitted, the length of new pipe, land acquisition necessary for easements, and any unique costs associated with that option. Unique costs include the use of bentonite for options with alignments through existing wetlands (Options 3 and 4), and the reconstruction of Peltier Lake Drive (Option 3). The summary of the relative costs is shown below: Area Served [ac] Relative Cost [$] Envision™ Score Cost per Acre Served Cost per Envision™ Point Awarded Option 1A 1256 $ - - $ - $ - Option 1B 710 $ 1,049,000 - $ 1,477 $ - Option 1C 1197 $ 1,260,000 67 $ 1,053 $ 18,800 Option 1D 1382 $ 1,945,000 67 $ 1,407 $ 29,000 Option 1E 1382 $ 1,988,000 67 $ 1,438 $ 29,700 Option 2A 1325 $ 1,552,000 95 $ 1,171 $ 16,300 Option 2B 1325 $ 2,128,000 67 $ 1,606 $ 31,800 Option 3 1382 $ 1,697,000 67 $ 1,228 $ 25,300 Option 4 1382 $ 1,429,000 67 $ 1,034 $ 21,300 Option 5 1382 $ 1,086,000 67 $ 786 $ 16,200 Option 6 1382 $ 502,000 95 $ 363 $ 5,300 The most expensive alternative is Option 2B, due to the length of new pipe and because this location has naturally high ground. The pipe will be fairly deep below the ground elevation, which will require a greater easement and associated cost. Based on this analysis Option 6, the central outfall with open channel, is the most cost‐effective and sustainable option for the City of Lino Lakes. It serves the most land, scored highest in Envision™, and the relative cost of pipe versus easement acquisition is the least of all alternatives considered. CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekdCr Main Street 80th Street East 20th AvenueRehbein Street ACD 72 Main Trk ACD 55 Main TrkA C D 5 5 M a in T r k ACD 55 Br 8 ACD 72 Br 11 ACD 72 Main Trk ACD 72 Br 1 A C D 7 2 M ain Trk Peltier Lake Figure 1. Option 1 Existing Drainage Systems N LEGEND Benefitted Area Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet §¨¦35W CENTERVILLE HUGO LINO LAKES J D 3 M a in T r k JD 3 Main TrkClearwater CreekHardwood Cr Main Street 80th Street East 20th AvenueACD 72 Main Trk ACD 55 Main TrkA C D 5 5 M a in T rk ACD 55 Br 8 ACD 72 Br 11 ACD 72 Main Trk ACD 72 Br 1 A C D 7 2 M ain Trk Peltier Lake Centerville Lake Figure 2. Option 1B Clearwater Creek Outlet N LEGEND Benefitted Area Proposed Alignment Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekdCr Main Street 80th Street East 20th Avenue77th Street East Rehbein Street Peltier Lake Figure 3. Option 1C Improve ACD72 N LEGEND Benefitted Area Proposed Alignment Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekdCr Main Street 80th Street East 20th Avenue77th Street East Rehbein Street Peltier Lake Figure 4. Option 1D New Outfall and ACD72 N LEGEND Benefitted Area Proposed Alignment Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekMain Street 80th Street East 20th Avenue77th Street East Rehbein Street Peltier Lake Figure 5. Option 1E New Outfall, ACD72 and ACD55 N LEGEND Benefitted Area Proposed Alignment Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekMain Street 80th Street East 20th AvenuePeltier Lake Figure 6. Option 2 North Outfall Alignment N LEGEND Benefitted Area Proposed Alignment Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekMain Street 80th Street East 20th AvenuePeltier Lake Figure 7. Option 3 South Outfall Alignment N LEGEND Benefitted Area Proposed Alignment Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekMain Street 80th Street East 20th AvenueRehbein Street Peltier Lake Figure 8. Option 4 Central Outfall Alignment N LEGEND Benefitted Area Proposed Alignment Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet CENTERVILLE HUGO LINO LAKES JD 3 Main TrkClearwater CreekMain Street 80th Street East 20th AvenueRehbein Street Peltier Lake Figure 9. Option 5 Modified Central Outfall Alignment N LEGEND Benefitted Area Proposed Alignment Proposed Regional Storage Existing Drain Tile Existing Open Ditch Stream 0 2,000 Feet TABLE 1. PIPE OPTION Envision Rating System Pre-Assessment Checklist YNNA 1 QL1.1 Improve Community Quality of Life 3 0 0 1 3 of 3 2 QL1.2 Stimulate Sustainable Growth and Development 1 2 0 0 1 of 3 3 QL1.3 Develop Local Skills and Capabilities 0 3 0 0 0 of 3 4 QL2.1 Enhance Public Health and Safety 0 1 0 0 0 of 1 5 QL2.2 Minimize Noise and Vibration 0 1 0 0 0 of 1 6 QL2.3 Minimize Light Pollution 0 0 1 0 of 0 7 QL2.4 Improve Community Mobility and Access 1 2 0 0 1 of 3 8 QL2.5 Encourage Alternative Modes of Transportation 0 2 0 0 0 of 2 9 QL2.6 Improve Site Accessibility, Safety and Wayfinding 3 0 0 1 3 of 3 10 QL3.1 Preserve Historic and Cultural Resources 2 0 0 1 2 of 2 11 QL3.2 Preserve Views and Local Character 1 1 0 1 1 of 2 12 QL3.3 Enhance Public Space 0 2 0 0 0 of 2 TOTAL 11 14 1 11 of 25 042 054 00413LD1.1 Provide Effective Leadership and Commitment 1 2 0 0 1 of 3 14 LD1.2 Establish a Sustainability Management System 0 1 0 0 0 of 1 15 LD1.3 Foster Collaboration and Teamwork 3 0 0 1 3 of 3 16 LD1.4 Provide for Stakeholder Involvement 3 0 0 1 3 of 3 17 LD2.1 Pursue By-product Synergy Opportunities 0 1 0 0 0 of 1 18 LD2.2 Improve Infrastructure Integration 3 0 0 1 3 of 3 19 LD3.1 Plan for Long-term Monitoring and Maintenance 2 0 0 1 2 of 2 20 LD3.2 Address Conflicting Regulations and Policies 2 0 0 1 2 of 2 21 LD3.3 Extend Useful Life 0 1 0 0 0 of 1 TOTAL 14 5 0 14 of 19 074 026 00022RA1.1 Reduce Net Embodied Energy 0 1 1 0 0 of 1 23 RA1.2 Support Sustainable Procurement Practices 0 3 0 0 0 of 3 24 RA1.3 Use Recycled Materials 0 2 0 0 0 of 2 25 RA1.4 Use Regional Materials 1 1 0 1 1 of 2 26 RA1.5 Divert Waste from Landfills 1 2 0 0 1 of 3 27 RA1.6 Reduce Excavated Materials Taken off Site 3 0 0 1 3 of 3 28 RA1.7 Provide for Deconstruction and Recycling 1 2 0 0 1 of 3 29 RA2.1 Reduce Energy Consumption 1 2 0 0 1 of 3 30 RA2.2 Use Renewable Energy 1 1 0 1 1 of 2 31 RA2.3 Commission and Monitor Energy Systems 1 2 0 0 1 of 3 32 RA3.1 Protect Fresh Water Availability 5 1 1 1 5 of 6 33 RA3.2 Reduce Potable Water Consumption 2 2 0 1 2 of 4 34 RA3.3 Monitor Water Systems 0 0 4 0 of 0 TOTAL 16 19 6 16 of 35 039 046 01535NW1.1 Preserve Prime Habitat 3 2 0 1 3 of 5 36 NW1.2 Protect Wetlands and Surface Water 2 1 0 1 2 of 3 37 NW1.3 Preserve Prime Farmland 0 0 1 0 of 0 38 NW1.4 Avoid Adverse Geology 2 0 1 1 2 of 2 39 NW1.5 Preserve Floodplain Functions 1 2 3 0 1 of 3 40 NW1.6 Avoid Unsuitable Development on Steep Slopes 002 0 of 0 41 NW1.7 Preserve Greenfields 2 0 0 1 2 of 2 42 NW2.1 Manage Stormwater 1 1 0 1 1 of 2 43 NW2.2 Reduce Pesticide and Fertilizer Impacts 0 4 1 0 0 of 4 44 NW2.3 Prevent Surface and Groundwater Contamination 3 1 0 1 3 of 4 45 NW3.1 Preserve Species Biodiversity 2 2 0 1 2 of 4 46 NW3.2 Control Invasive Species 1 2 0 0 1 of 3 47 NW3.3 Restore Disturbed Soils 1 1 0 1 1 of 2 48 NW3.4 Maintain Wetland and Surface Water Functions 4 1 0 1 4 of 5 TOTAL 22 17 8 22 of 39 0.47 0.36 0.17 49 CR1.1 Reduce Greenhouse Gas Emissions 0 1 1 0 0 of 1 50 CR1.2 Reduce Air Pollutant Emissions 0 2 0 0 0 of 2 51 CR2.1 Assess Climate Threat 0 1 0 0 0 of 1 52 CR2.2 Avoid Traps and Vulnerabilities 2 0 0 1 2 of 2 53 CR2.3 Prepare for Long-term Adaptability 0 1 0 0 0 of 1 54 CR2.4 Prepare for Short-term Hazards 2 0 0 1 2 of 2 55 CR2.5 Manage Heat Island Effects 0 1 0 0 0 of 1 TOTAL 4 6 1 4 of 10 036 055 009NATURAL WORLDSITING LAND & WATER BIODIVERSITY CLIMATEEMISSION RESILIENCELEADERSHIPCOLLABORATION MANAGEMENT PLANNING RESOURCE ALLOCATIONMATERIALS ENERGY WATERQUALITY OF LIFEPURPOSE COMMUNITY WELLBEING NE LINO PIPE OPTION TABLE 2. GREENWAY OPTION Envision Rating System Pre-Assessment Checklist YNNA 1 QL1.1 Improve Community Quality of Life 3 0 0 1 3 of 3 2 QL1.2 Stimulate Sustainable Growth and Development 1 2 0 0 1 of 3 3 QL1.3 Develop Local Skills and Capabilities 0 3 0 0 0 of 3 4 QL2.1 Enhance Public Health and Safety 0 1 0 0 0 of 1 5 QL2.2 Minimize Noise and Vibration 0 1 0 0 0 of 1 6 QL2.3 Minimize Light Pollution 0 0 1 0 of 0 7 QL2.4 Improve Community Mobility and Access 3 0 0 1 3 of 3 8 QL2.5 Encourage Alternative Modes of Transportation 2 0 0 1 2 of 2 9 QL2.6 Improve Site Accessibility, Safety and Wayfinding 3 0 0 1 3 of 3 10 QL3.1 Preserve Historic and Cultural Resources 2 0 0 1 2 of 2 11 QL3.2 Preserve Views and Local Character 2 0 0 1 2 of 2 12 QL3.3 Enhance Public Space 2 0 0 1 2 of 2 TOTAL 18 7 1 18 of 25 069 027 00413LD1.1 Provide Effective Leadership and Commitment 1 2 0 0 1 of 3 14 LD1.2 Establish a Sustainability Management System 0 1 0 0 0 of 1 15 LD1.3 Foster Collaboration and Teamwork 3 0 0 1 3 of 3 16 LD1.4 Provide for Stakeholder Involvement 3 0 0 1 3 of 3 17 LD2.1 Pursue By-product Synergy Opportunities 0 1 0 0 0 of 1 18 LD2.2 Improve Infrastructure Integration 3 0 0 1 3 of 3 19 LD3.1 Plan for Long-term Monitoring and Maintenance 2 0 0 1 2 of 2 20 LD3.2 Address Conflicting Regulations and Policies 2 0 0 1 2 of 2 21 LD3.3 Extend Useful Life 1 0 0 1 1 of 1 TOTAL 15 4 0 15 of 19 079 021 00022RA1.1 Reduce Net Embodied Energy 0 1 1 0 0 of 1 23 RA1.2 Support Sustainable Procurement Practices 0 3 0 0 0 of 3 24 RA1.3 Use Recycled Materials 0 2 0 0 0 of 2 25 RA1.4 Use Regional Materials 1 1 0 1 1 of 2 26 RA1.5 Divert Waste from Landfills 1 2 0 0 1 of 3 27 RA1.6 Reduce Excavated Materials Taken off Site 3 0 0 1 3 of 3 28 RA1.7 Provide for Deconstruction and Recycling 1 2 0 0 1 of 3 29 RA2.1 Reduce Energy Consumption 1 2 0 0 1 of 3 30 RA2.2 Use Renewable Energy 1 1 0 1 1 of 2 31 RA2.3 Commission and Monitor Energy Systems 1 2 0 0 1 of 3 32 RA3.1 Protect Fresh Water Availability 6 0 1 1 6 of 6 33 RA3.2 Reduce Potable Water Consumption 3 1 0 1 3 of 4 34 RA3.3 Monitor Water Systems 0 0 4 0 of 0 TOTAL 18 17 6 18 of 35 044 041 01535NW1.1 Preserve Prime Habitat 5 0 0 1 5 of 5 36 NW1.2 Protect Wetlands and Surface Water 3 0 0 1 3 of 3 37 NW1.3 Preserve Prime Farmland 0 0 1 0 of 0 38 NW1.4 Avoid Adverse Geology 2 0 1 1 2 of 2 39 NW1.5 Preserve Floodplain Functions 3 0 3 1 3 of 3 40 NW1.6 Avoid Unsuitable Development on Steep Slopes 002 0 of 0 41 NW1.7 Preserve Greenfields 2 0 0 1 2 of 2 42 NW2.1 Manage Stormwater 2 0 0 1 2 of 2 43 NW2.2 Reduce Pesticide and Fertilizer Impacts 5 0 0 1 5 of 5 44 NW2.3 Prevent Surface and Groundwater Contamination 4 0 0 1 4 of 4 45 NW3.1 Preserve Species Biodiversity 4 0 0 1 4 of 4 46 NW3.2 Control Invasive Species 1 2 0 0 1 of 3 47 NW3.3 Restore Disturbed Soils 2 0 0 1 2 of 2 48 NW3.4 Maintain Wetland and Surface Water Functions 5 0 0 1 5 of 5 TOTAL 38 2 7 38 of 40 0.81 0.04 0.15 49 CR1.1 Reduce Greenhouse Gas Emissions 0 1 1 0 0 of 1 50 CR1.2 Reduce Air Pollutant Emissions 1 1 0 1 1 of 2 51 CR2.1 Assess Climate Threat 0 1 0 0 0 of 1 52 CR2.2 Avoid Traps and Vulnerabilities 2 0 0 1 2 of 2 53 CR2.3 Prepare for Long-term Adaptability 1 0 0 1 1 of 1 54 CR2.4 Prepare for Short-term Hazards 2 0 0 1 2 of 2 55 CR2.5 Manage Heat Island Effects 0 1 0 0 0 of 1 TOTAL 6 4 1 6 of 10 055 036 009NATURAL WORLDSITING LAND & WATER BIODIVERSITY CLIMATEEMISSION RESILIENCELEADERSHIPCOLLABORATION MANAGEMENT PLANNING RESOURCE ALLOCATIONMATERIALS ENERGY WATERQUALITY OF LIFEPURPOSE COMMUNITY WELLBEING WS – Item #6 WORK SESSION STAFF REPORT Work Session Item No. 6 Date: June 6, 2016 To: City Council From: Diane Hankee and Katy Thompson, WSB Engineering Re: FEMA Floodplain Map Revisions Background FEMA updated their flood insurance rate maps within Anoka County, effective December 16, 2015. The maps are used to determine flooding risks and flood insurance premiums for property owners. A number of resident have been required by their mortgage companies to obtain flood insurance. Last month Council directed staff to provide information to residents laying out the process and their options regarding a Letter of Map Change, if applicable. A FEMA floodplain map update website is being prepared along with a newsletter article. The draft is enclosed. When the maps first came out staff worked with property owner to help them through the process and provide data on their property. In the past two months call received regarding FEMA floodplain issues have been minimal. Requested Council Direction None required. Information only. Attachments 1. Draft newsletter article 2. LOMA Fact Sheet 600 Town Center Parkway, Lino Lakes, MN 55014 Phone: 651-982-2400 ∙ Fax: 651-982-2499 DRAFT NEWSLETTER ARTICLE Federal Emergency Management Agency 2015 Floodplain Mapping Update The City of Lino Lakes has been a member of the National Flood Insurance Program (NFIP) since 1982. By participating in the NFIP, residents of Lino Lakes have the option to purchase flood insurance to protect their property from flood damages. Living in Minnesota, everyone is at some risk of flooding and homeowner insurance does not cover claims related to flooding; flood insurance is federally-mandated for most mortgage holders in high-risk areas. The Federal Emergency Management Agency (FEMA) has recently updated the Flood Insurance Study for Anoka County, effective December 16, 2015. As part of this study, FEMA revised floodplain boundaries throughout the county. Floodplain maps, also known as Flood Insurance Rate Maps, provide the basis for floodplain management, regulation and insurance requirements by identifying flood-prone areas. The new maps are available electronically on FEMA’s Flood Map Service Center and allow users to see the flood risk specific to their property. {Link} Since the adoption of the new flood risk maps, residents in Lino Lakes have begun receiving notices from their mortgage lenders notifying them of their flood risk and requirements for flood insurance. These notices are part of updates to the National Flood Insurance Program due to the Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014. What are your options as a property owner? 1. Purchase flood insurance. Get many quotes as the policy premiums vary based on coverage and deductible limits. Obtain an elevation certificate from a certified land surveyor to establish actual risk of flooding, which may reduce the premium rates. Consider private insurance, also called Write Your Own (WYO) policies. Reduce your flood risk. Loan programs are available to mitigate the risk of property damage due to flooding. 2. Change the map. If you believe your property was inadvertently included in the floodplain, you can submit a Letter of Map Amendment (LOMA) or Letter of Map Revision based on Fill (LOMR-F) to change the designation of your property and avoid the federal flood insurance requirements. 600 Town Center Parkway, Lino Lakes, MN 55014 Phone: 651-982-2400 ∙ Fax: 651-982-2499 A LOMA or LOMR-F requires demonstrating that your structure (including the deck) is not within the floodplain and may require an elevation certificate from a certified land surveyor. The City’s Engineering Department can provide a digital floodplain map of your property, and in some cases, provide the Base Flood Elevation data of the adjacent floodplain. If you were required to purchase flood insurance while obtaining a LOMA, you may obtain a full refund is possible for up to 23 months of paid premiums, provided no claims were made during that period. If you are considering selling your property, consider taking early action. The purchaser’s lender may require a LOMA to waive flood insurance requirements and this can delay a closing of property. Please be reminded that homeowners insurance does not cover damage from floods. Purchasing a flood insurance policy is wise, even if your property is located outside the 100-year floodplain. A Preferred Risk Policy can offer low-cost protection for homes and apartments outside of high- risk zones. Even if your lender has not contacted you, please review your property’s flood risk by going to https://msc.fema.gov/portal. You may also stop by City Hall if you would like to see the paper copies of the map. References FEMA Flood Map Service Center: https://msc.fema.gov/portal National Flood Insurance Program: www.floodsmart.gov or (888) 225-5356 or (800) 427-4661 Flood Insurance Advocate: advocate@fema.dhs.gov Flood Mitigation Assistance: https://www.fema.gov/flood-mitigation-assistance-grant-program Please contact City Engineer Diane Hankee at (651) 982-2430 or at diane.hankee@ci.lino- lakes.mn.us if you have any questions. WEB SITE ONLY Attachments 1. 1982 Flood Insurance Rate Map 2. 2015 Flood Insurance Rate Map 3. City Floodplain Information Request Form 4. Letter of Map Amendment Fact Sheet How to Request a Letter of Map Amendment (LOMA) or Letter of Map Revision Based on Fill (LOMR-F) What is a LOMA or a LOMR-F? The Federal Emergency Management Agency (FEMA) applies rigorous standards to develop Flood Insurance Rate Maps (FIRMs) and uses the most accurate hazard information available. However, limitations in the scale or topographic detail of the source maps used to prepare a FIRM may cause small elevated areas to be included in a Special Flood Hazard Area (SFHA). SFHAs are high-risk areas subject to inundation by the base (1-percent-annual-chance) flood. They are also known as 1-percent-annual-chance floodplains, base floodplains, or 100 year floodplains. To change the flood hazard designation for properties in these areas, FEMA has established the LOMA process for properties on naturally high ground and the LOMR-F process for properties elevated by the placement of fill. LOMAs and LOMR-Fs are letter determinations that officially amend an effective FIRM. They can establish that a property is not in an SFHA and, by doing so, remove the Federal flood insurance requirement. Obtaining a LOMA or LOMR-F A LOMA application form can be downloaded from the FEMA website at http:// www.fema.gov/change-flood-zone-designation-online-letter-map-change. FEMA does not charge a fee to review a LOMA request, but requesters are responsible for providing the required mapping and survey information specific to their property. For FEMA to remove a structure from the SFHA through the LOMA process, Federal regulations require the lowest ground touching the structure, or Lowest Adjacent Grade (LAG) elevation, to be at or above the Base Flood Elevation (BFE). The exception to this requirement is when the submitted property information shows that the structure is outside the SFHA. In this case, the property is referred to as “out as shown.” If elevation information is required for the LOMA request, the requester should submit the elevation data requested on the MT-EZ form (https://www.fema.gov/mt-ez-form-instructions). For More Information • For general information, contact the FEMA Map Information eXchange by telephone, toll free, at 1-877- FEMA MAP (1-877-336-2627) and choose “Option 1”; by e- mail at FEMAMapSpecialist@riskmap cds.com; or by live chat at www.floodmaps.fema.gov/fhm /fmx_main.html. • The forms and other documents referenced in this flier are also available on the “Forms, Documents, and Software” portion of the FEMA website at https://www.fema.gov/forms- documents-and-software. • For copies of effective National Flood Insurance Program maps and reports, contact the FEMA Map Information eXchange by telephone, toll free, at 1-877- FEMA MAP (1-877-336-2627) and choose “Option 3,” or via the FEMA Map Service Center website at www.msc.fema.gov. http://www.fema.gov/risk-mapping-assessment-and-planning-risk-map · 1–877–FEMA MAP An Elevation Certificate, which includes this required elevation data, may be submitted to meet this data requirement and may be available from the community in lieu of a new survey. If the property has been elevated by fill, the requester will need to use the LOMR-F process. Application forms are available at http://www.fema.gov/change-flood-zone- designation-online-letter-map-change. For a LOMR-F to be issued, the LAG must be at or above the BFE, and community floodplain officials must determine that the land and any existing or proposed structures to be removed from the SFHA are “reasonably safe from flooding.” FEMA charges a fee for the engineering review of LOMR-Fs. Fee information is located at https://www.fema.gov/flood-map-related-fees. Please send completed application forms to the attention of the LOMA Manager at the LOMC Clearinghouse, 847 South Pickett Street, Alexandria, VA 22304. What if no BFEs have been Determined? In some instances, BFEs for a certain SFHA have not yet been determined. FEMA will attempt to calculate the BFE when a LOMA application is submitted for properties of less than 50 lots or 5 acres. Sometimes, a BFE can be developed from sources such as U.S. Geological Survey topographic quadrangle maps. If that information is not available, the property owner will be asked to supply a survey for the property with the information necessary to allow FEMA to develop a site-specific BFE. National Flood Insurance Program (NFIP) regulations require that the requester determine the BFEs for properties larger than 50 lots or 5 acres. A variety of computational methods can be employed to determine BFEs, but these methods can be expensive. Before computational methods are used, every attempt should be made to obtain information, in the form of floodplain studies or previous computations, from Federal, State, or local agencies. Data obtained from these agencies may be adequate to determine BFEs with little or no additional research, calculation, or cost. The FEMA document Managing Floodplain Development in Approximate Zone A Areas, A Guide for Obtaining and Developing Base (100-Year) Flood Elevations provides guidance on computing BFEs. This document, which can be viewed on the FEMA website at https://www.fema.gov/ media-library/assets/documents/1911, provides methods for developing BFEs, as well as a list of agencies that can be contacted to determine whether BFE data are already available. How will a LOMA or LOMR-F Affect my Flood Insurance Requirement? The Federal flood insurance requirement applies to structures in SFHAs that carry a mortgage backed by a federally regulated lender or servicer. If you have a LOMA or LOMR-F proving that your property is not in the SFHA, the mandatory Federal flood insurance requirement no longer applies. However, your lender still has the prerogative to require flood insurance as a condition of the loan. Even if your lender requires flood insurance, however, premiums are lower for structures outside the SFHA. If FEMA issues a LOMA or LOMR-F and your lender agrees to waive the flood insurance requirement, you may be entitled to a refund of the premium paid for the current policy year. To cancel your policy, you can submit a copy of the LOMA or LOMR-F and the lender’s waiver to your flood insurance agent or broker. The agent will send these documents and a completed cancellation form to the appropriate insurance provider. It is important to note that the issuance of a LOMA or LOMR-F does not mean the risk of flooding has been eliminated. Therefore, not having a flood insurance policy could have disastrous consequences, leaving you with no financial protection from future flood losses. FEMA recommends flood insurance coverage even if it is not required by law or a lender. The good news is that you may be eligible to pay much less for flood insurance coverage if your property is removed from the SFHA. Quick Facts LOMA requests involving one or more structures: the LAG must be at or above the BFE. LOMR-F requests: the LAG must be at or above the BFE, and community floodplain officials must determine that the land and any existing or proposed structures to be removed from the SFHA are “reasonably safe from flooding.” LOMA requests involving one or more lots: the lowest point on each lot must be at or above the BFE. Review and processing fee: FEMA does not charge a fee to review a LOMA request, but there is a fee for the engineering review of LOMR-Fs. Required information: the requester is responsible for providing all the information needed for the review, including (if necessary) elevation information certified by a licensed land surveyor or registered professional engineer. http://www.fema.gov/risk-mapping-assessment-and-planning-risk-map · 1–877–FEMA MAP WS – Item 7 WORK SESSION STAFF REPORT Work Session Item No. 7 Date: June 6, 2016 To: City Council From: Michael Grochala, Diane Hankee Re: American Legion Parking Background The American Legion would like to add parking at their club located at 7731 Lake Drive. They currently have 35 regular stalls and 2 handicap stalls. Multiple options for expanding their existing parking on site were considered back in 2011. The most that could be gained was an additional 12 stalls. The American Legion is proposing a new parking lot on the adjacent City owned land that would accommodate approximately 35 additional stalls. The site plan provided does not currently include provisions for stormwater management. Council considered this request at the March 7, 2016 work session. City Council directed staff to have an appraisal prepared for the property and evaluate potential financing options. The American Legion was to prepare the design of the proposed improvement and submit to staff for review. Since that time an appraisal was completed by McKinzie Metro Appraisal on March 16, 2016. The appraised value for Lot 14 is $100,200 for the one-acre parcel ($2.30/SF). Sale of just a portion of the parcel may result in a slightly increased SF price. The price assumes that the city retains a 30 easement across the front of the property for access to Lots 12 and 13. This information was provided to the Legion. Springsted Inc., the City’s financial consultant reviewed options for financing the construction of the parking lot. The main impediment to doing so is that there does not appear to be a public purpose in constructing a parking lot for a private business. Public expenditures and activities are limited to public benefit. Even if the Council determines that the City complies with the public purpose doctrine, the financing options are somewhat limited. Additionally, the issuance costs associated with any city bonding/financing could outweigh the advantages of a city led project. Staff has not received any site planning information from the American Legion. Staff would recommend that the American Legion prepare a preliminary design, determine their land needs and make an offer on the land. If the offer is acceptable, the American Legion would be able to evaluate their private financing options and determine whether to proceed or alternatively continue discussions on City financing options. Requested Council Direction Staff is requesting council direction on next steps. The council should consider first whether they are interested in selling the property. Attachments 1. General Location Map "b !(!(!(!(G!.G!.G!.G!.########!!2 !!2 !!2!!2 !!2 !!2 2 1"PVC10"PVC 10" PVC21 " PVC21" PVC6''DIP8 '' D I P 12'' DIP6''DIP1 2 ''D IP 12''DIP12'' DI P 12''DI P 12'' DIP 6'' DIP12'' DIP8''DIP12'' DIPMH0 029 MH0 030 MH0 073MH0075 MH0 141 MH0 142 W09 7 5 W12 8 8 W12 9 0 W17 0 5 77347734 77467746 77027702 77317731 7777TTHH SSTT WW Ü 0 100 20050Feet 12/07 /2015 American Legion Parking Request General Location Map Legend Water M ains #Sewer Gr avity Mains 290.4'150.00' WS – Item 8 WORK SESSION STAFF REPORT Work Session Item No. 8 Date: June 6, 2016 To: City Council From: Michael Grochala, Community Development Director Re: Business Subsidy Criteria Amendment Background Before awarding any “business subsidy”, such as financial assistance through the use of Tax Abatement or Tax Increment Financing, the City is required to adopt criteria regarding such subsidies. Business subsidy criteria was originally adopted by the City Council in 2001 and revised in 2003. The criteria are intended to set minimum requirements which recipients must meet to be eligible to receive business subsidies. All business subsidy requests must comply with the State’s Business Subsidy Act. A business subsidy must meet a public purpose such as increasing the tax base. The requirements must include specific wage floor for the wages to be paid for jobs created. The majority of changes to the criteria include reference to both the City’s Economic Development Authority (EDA) and the Business Subsidy Act. Section 3.02 was modified to establish a minimum job creation of five (5) jobs. This provision may be waived if, after a public hearing, it is determined that job creation or retention is not part of the public purpose of the subsidy. The Economic Development Advisory Committee (EDAC) will be reviewing the policy at it’s June 2, 2016 meeting. Both the Lino Lakes EDA and the City Council will hold public hearings on Monday, June 13, 2016 to consider adoption of the proposed amendment. Requested Council Direction Staff is requesting City Council comments regarding the proposed business subsidy changes. Attachments 1. Redline Subsidy Criteria 2. MN Statutes Section 116J.993-995 RHB-232656v1 1 LN140-12 Error! Bookmark not defined. Exhibit ACITY OF LINO LAKES LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY BUSINESS SUBSIDY CRITERIA (Revised June 23, 2003_______, 2016) Section 1. Purpose; Statutory Compliance 1.01 The purpose of this document is to establish the criteria to be considered by the cityCity of Lino Lakes (the “City”) and the Lino Lakes Economic Development Authority (the “EDA”) in processing, evaluating and reviewing requests for business subsidies. It is the intent of the City and the EDA in adopting these revised criteria to comply with Minnesota Statutes, Sections 116J.993 through 116J.995 (the "“Business Subsidy Act"”). The City and the EDA hereby adopts the definitions contained in the Business Subsidy Act for application in the criteria. 1.02. Business subsidy criteria were adopted by the City on July 23, 20012001, revised on June 23, 2003 and are hereby revised. The City hasfurther revised. The Board of the EDA adopted the revised business subsidy criteria on the date hereof. The City and the EDA have the option to amend these criteria again in the future if doing so is determined necessary or appropriate. Amendments to these criteria are subject to the public hearing requirements of the Business Subsidy Act. 1.03. These criteria are intended to set specific minimum requirements which recipients must meet to be eligible to receive business subsidies. TheNeither the City nor the EDA will not adopt business subsidy criteria on a case by case basis. 1.04. In accordance with the Business Subsidy Act, all business subsidy requests must comply with the Business Subsidy Act and other applicable Minnesota statutes. The City’s and the EDA’s ability to grant business subsidies is subject to the limitations established in the Business Subsidy Act. Section 2. Goals and, Objectives, and Requirements 2.01 It is the City’s and the EDA’s intent to advance the following goals and objectives in granting business subsidies: (a) Projects must be consistent with Lino Lakes'City’s comprehensive plan and any other similar plan or guide for development of the community. (b) Business subsidies will not be provided forto projects which have the financial feasibility to proceed without a public subsidy. (c) Potential2.02 When applying for a business subsidy, potential recipients will be required to provide such studies, reports, appraisals, financial information or other data as may be requested by the City or the EDA prior to consideration of a request for a business subsidy. RHB-232656v1 2 LN140-12 479195v1 2.022.03 Business subsidies must be justified by evidence that the project cannot proceed without the benefit of the subsidy. If tax increment financing is used to grant a subsidy, the recipient must demonstrate compliance with all statutory requirements of the TIF Act, including the "“but for"” test, if applicable, and any TIF policy adopted by the City or the EDA. The recipient will be required to provide all documentation necessary for the City or the EDA to make the requisite fundingsfindings under the TIF Act and the Business Subsidy Act. 2.032.04 Recipients will be required to enter into an agreement with the City or the EDA which is consistent with statutory requirements and which contains measurable, specific and tangible goals. The agreement must include a commitment to remain in business in Lino Lakes for a minimum of five years after the benefit date (as defined in the Business Subsidy Act), benefit date means the date the item or work paid for with the business subsidy is placed in service), unless waived by the City or the EDA, and a requirement to comply with the specific job and wage goals established for the project, if any. Section 3. Business Subsidy Criteria 3.01 The City and the EDA recognize that every proposal is unique. Nothing in these criteria shall be deemed to be an entitlement or to establish a contractual right to a subsidy. The City and the EDA may modify these criteria from time to time and reserves the right to evaluate each project on its individual merits. The City and the EDA may deviate from these criteria by documenting in writing the reason for the deviation and attaching a copy of the document to its next annual report to the Minnesota state agency charged with administration thereof. 3.02 The following criteria shall be utilized in evaluating a request for a business subsidy: (a) Public purpose. A business subsidy must meet a public purpose, including but not limited to increasing the tax base. Job retention may only be considered a public purpose if the loss of jobs is specific and demonstrable. (b) Increase in tax base. While an increase in the tax base cannot be the sole rounds for granting a subsidy, the City believesand the EDA believe it is a necessary condition for any subsidy. (c) Jobs and Wages. In instances in which job creation is determined to be a goal, the City and the EDA will review all of the unique circumstances surrounding the proposed development to determine how many jobs should be required in exchange for the proposed subsidy. If job creation is determined to be one of the main goals of a proposed development, it is the City's and the EDA’s intent that the recipient create the maximum number of livable wage jobs at the site. with no fewer than 5 jobs. This may include jobs to be retained but only if retention is specific and demonstrable. The RHB-232656v1 3 LN140-12 479195v1 job and wage goal must be attained within two years of the benefit date (as defined in the Business Subsidy Act). The City and the EDA may, after a public hearing, extend for up to one year the period for meeting the job and wage goal. Qualifying jobs are those which pay, at a minimum, 110 percent of the federal minimum wage, plus benefits. Any deviation from the established wage level must be documented in conformity with the requirements set forth in the Business Subsidy Act. If the City or the EDA, following a public hearing, determines that job creation or retention is not part of the public purpose of the subsidy, the wage and job goal may be set at zero. (d) Economic Development. Projects should promote one or more of the following: 1. Encourage economic and commercial diversity within the community; 2. Contribute to the establishment of a critical mass of commercial development within an area; 3. Increase the range of goods and services available or encourage fast growing or other desirable businesses to locate or expand within the community; 4. Promote redevelopment objectives and removal of blight, including pollution cleanup; 5. Promote the retention or adaptive reuse of buildings of historical or architectural significance; 6. Promote additional or spin-off development within the community; or 7. Development of safe and affordable housing; or 8. Encourage full utilization of existing or planned infrastructure improvements. Section 4. Minimum Requirements 4.01. In order for a recipient to be eligible for a business subsidy, the following minimum requirements must be met; (a) Compliance with Sections 2.01 a, b, and c; (b) Compliance with Section 3.02 b; and (c) Compliance with Sections 3.02 c or d.Section 5. Compliance and Reporting Requirements RHB-232656v1 4 LN140-12 479195v1 5.01 Any subsidy granted by the City or the EDA will be subject to the requirement of a public hearing, if necessary. 5.02 It will be necessary for both the recipient and the City or the EDA to comply with reporting and monitoring requirements of the Business Subsidy Act. 5.03 A recipient may be authorized to move from Lino Lakesthe City within five years of the benefit date (as defined in the Business Subsidy Act) only if, after a public hearing, the City or EDA approves the request to move. The City or EDA may discontinue the subsidy if the recipient moves from the City. Document comparison by Workshare Compare on Tuesday, May 03, 2016 12:03:41 PM Input: Document 1 ID PowerDocs://DOCSOPEN/479192/1 Descriptio n DOCSOPEN-#479192-v1-Lino_Lakes_2003_Business_Subsidy_Crite ria Document 2 ID PowerDocs://DOCSOPEN/479195/1 Descriptio n DOCSOPEN-#479195-v1-2016_Revised_Business_Subsidy_Criteria Rendering set Standard Legend: Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 58 Deletions 33 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 91 1 MINNESOTA STATUTES 2015 116J.993 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. 116J.993 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 116J.993 to 116J.995, the terms defined in this section have the meanings given them. Subd. 2. Benefit date. "Benefit date" means the date that the recipient receives the business subsidy. If the business subsidy involves the purchase, lease, or donation of physical equipment, then the benefit date begins when the recipient puts the equipment into service. If the business subsidy is for improvements to property, then the benefit date refers to the earliest date of either: (1) when the improvements are finished for the entire project; or (2) when a business occupies the property. If a business occupies the property and the subsidy grantor expects that other businesses will also occupy the same property, the grantor may assign a separate benefit date for each business when it first occupies the property. Subd. 3. Business subsidy. "Business subsidy" or "subsidy" means a state or local government agency grant, contribution of personal property, real property, infrastructure, the principal amount of a loan at rates below those commercially available to the recipient, any reduction or deferral of any tax or any fee, any guarantee of any payment under any loan, lease, or other obligation, or any preferential use of government facilities given to a business. The following forms of financial assistance are not a business subsidy: (1) a business subsidy of less than $150,000; (2) assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) redevelopment property polluted by contaminants as defined in section 116J.552, subdivision 3; (5) assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50 percent of the total cost; (6) assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) assistance for housing; (8) assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under section 469.174, subdivision 23; (9) assistance for energy conservation; (10) tax reductions resulting from conformity with federal tax law; (11) workers' compensation and unemployment insurance; (12) benefits derived from regulation; 116J.993 MINNESOTA STATUTES 2015 2 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. (13) indirect benefits derived from assistance to educational institutions; (14) funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) assistance for a collaboration between a Minnesota higher education institution and a business; (16) assistance for a tax increment financing soils condition district as defined under section 469.174, subdivision 19; (17) redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) general changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) funds from dock and wharf bonds issued by a seaway port authority; (21) business loans and loan guarantees of $150,000 or less; (22) federal loan funds provided through the United States Department of Commerce, Economic De- velopment Administration; and (23) property tax abatements granted under section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. Subd. 4. Grantor. "Grantor" means any state or local government agency with the authority to grant a business subsidy. Subd. 5. Local government agency. "Local government agency" includes a statutory or home rule charter city, housing and redevelopment authority, town, county, port authority, economic development authority, community development agency, nonprofit entity created by a local government agency, or any other entity created by or authorized by a local government with authority to provide business subsidies. Subd. 6. Recipient. "Recipient" means any for-profit or nonprofit business entity that receives a business subsidy. Only nonprofit entities with at least 100 full-time equivalent positions and with a ratio of highest to lowest paid employee, that exceeds ten to one, determined on the basis of full-time equivalent positions, are included in this definition. Subd. 6a. Residence. "Residence" means the place where an individual has established a permanent home from which the individual has no present intention of moving. Subd. 7. State government agency. "State government agency" means any state agency that has the authority to award business subsidies. History: 1999 c 243 art 12 s 1; 2000 c 482 s 1; 2004 c 206 s 52; 1Sp2005 c 3 art 7 s 1; 2006 c 259 art 4 s 1; 2008 c 366 art 5 s 2 1 MINNESOTA STATUTES 2015 116J.994 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. 116J.994 REGULATING LOCAL AND STATE BUSINESS SUBSIDIES. Subdivision 1. Public purpose. A business subsidy must meet a public purpose which may include, but may not be limited to, increasing the tax base. Job retention may only be used as a public purpose in cases where job loss is specific and demonstrable. Subd. 2. Developing a set of criteria. A business subsidy may not be granted until the grantor has adopted criteria after a public hearing for awarding business subsidies that comply with this section. The criteria may not be adopted on a case-by-case basis. The criteria must set specific minimum requirements that recipients must meet in order to be eligible to receive business subsidies. The criteria must include a specific wage floor for the wages to be paid for the jobs created. The wage floor may be stated as a specific dollar amount or may be stated as a formula that will generate a specific dollar amount. A grantor may deviate from its criteria by documenting in writing the reason for the deviation and attaching a copy of the document to its next annual report to the department. The commissioner of employment and economic development may assist local government agencies in developing criteria. A copy of the criteria must be submitted to the Department of Employment and Economic Development along with the first annual report following May 15, 2000, or with the first annual report after it has adopted criteria, whichever is earlier. Notwithstanding section 116J.993, subdivision 3, clauses (1) and (21), for the purpose of this subdivision, "business subsidies" as defined under section 116J.993 includes the following forms of financial assistance: (1) a business subsidy of $25,000 or more; and (2) business loans and guarantees of $75,000 or more. Subd. 3. Subsidy agreement. (a) A recipient must enter into a subsidy agreement with the grantor of the subsidy that includes: (1) a description of the subsidy, including the amount and type of subsidy, and type of district if the subsidy is tax increment financing; (2) a statement of the public purposes for the subsidy; (3) measurable, specific, and tangible goals for the subsidy; (4) a description of the financial obligation of the recipient if the goals are not met; (5) a statement of why the subsidy is needed; (6) a commitment to continue operations in the jurisdiction where the subsidy is used for at least five years after the benefit date; (7) the name and address of the parent corporation of the recipient, if any; and (8) a list of all financial assistance by all grantors for the project. (b) Business subsidies in the form of grants must be structured as forgivable loans. For other types of business subsidies, the agreement must state the fair market value of the subsidy to the recipient, including the value of conveying property at less than a fair market price, or other in-kind benefits to the recipient. (c) If a business subsidy benefits more than one recipient, the grantor must assign a proportion of the business subsidy to each recipient that signs a subsidy agreement. The proportion assessed to each recipient must reflect a reasonable estimate of the recipient's share of the total benefits of the project. 116J.994 MINNESOTA STATUTES 2015 2 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. (d) The state or local government agency and the recipient must both sign the subsidy agreement and, if the grantor is a local government agency, the agreement must be approved by the local elected governing body, except for the St. Paul Port Authority and a seaway port authority. (e) Notwithstanding the provision in paragraph (a), clause (6), a recipient may be authorized to move from the jurisdiction where the subsidy is used within the five-year period after the benefit date if, after a public hearing, the grantor approves the recipient's request to move. For the purpose of this paragraph, if the grantor is a state government agency other than the Iron Range Resources and Rehabilitation Board, "jurisdiction" means a city or township. Subd. 4. Wage and job goals. The subsidy agreement, in addition to any other goals, must include: (1) goals for the number of jobs created, which may include separate goals for the number of part-time or full- time jobs, or, in cases where job loss is specific and demonstrable, goals for the number of jobs retained; (2) wage goals for any jobs created or retained; and (3) wage goals for any jobs to be enhanced through increased wages. After a public hearing, if the creation or retention of jobs is determined not to be a goal, the wage and job goals may be set at zero. The goals for the number of jobs to be created or retained must result in job creation or retention by the recipient within the granting jurisdiction overall. In addition to other specific goal time frames, the wage and job goals must contain specific goals to be attained within two years of the benefit date. Subd. 5. Public notice and hearing. (a) Before granting a business subsidy that exceeds $500,000 for a state government grantor and $150,000 for a local government grantor, the grantor must provide public notice and a hearing on the subsidy. A public hearing and notice under this subdivision is not required if a hearing and notice on the subsidy is otherwise required by law. (b) Public notice of a proposed business subsidy under this subdivision by a state government grantor, other than the Iron Range Resources and Rehabilitation Board, must be published in the State Register. Public notice of a proposed business subsidy under this subdivision by a local government grantor or the Iron Range Resources and Rehabilitation Board must be published in a local newspaper of general circulation. The public notice must identify the location at which information about the business subsidy, including a summary of the terms of the subsidy, is available. Published notice should be sufficiently conspicuous in size and placement to distinguish the notice from the surrounding text. The grantor must make the information available in printed paper copies and, if possible, on the Internet. The government agency must provide at least a ten-day notice for the public hearing. (c) The public notice must include the date, time, and place of the hearing. (d) The public hearing by a state government grantor other than the Iron Range Resources and Reha- bilitation Board must be held in St. Paul. (e) If more than one nonstate grantor provides a business subsidy to the same recipient, the nonstate grantors may designate one nonstate grantor to hold a single public hearing regarding the business subsidies provided by all nonstate grantors. For the purposes of this paragraph, "nonstate grantor" includes the iron range resources and rehabilitation board. (f) The public notice of any public meeting about a business subsidy agreement, including those required by this subdivision and by subdivision 4, must include notice that a person with residence in or the owner of taxable property in the granting jurisdiction may file a written complaint with the grantor if the grantor fails to comply with sections 116J.993 to 116J.995, and that no action may be filed against the grantor for the failure to comply unless a written complaint is filed. 3 MINNESOTA STATUTES 2015 116J.994 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. Subd. 6. Failure to meet goals. (a) The subsidy agreement must specify the recipient's obligation if the recipient does not fulfill the agreement. At a minimum, the agreement must require a recipient failing to meet subsidy agreement goals to pay back the assistance plus interest to the grantor or, at the grantor's option, to the account created under section 116J.551 provided that repayment may be prorated to reflect partial fulfillment of goals. The interest rate must be set at no less than the implicit price deflator for government consumption expenditures and gross investment for state and local governments prepared by the Bureau of Economic Analysis of the United States Department of Commerce for the 12-month period ending March 31 of the previous year. The grantor, after a public hearing, may extend for up to one year the period for meeting the wage and job goals under subdivision 4 provided in a subsidy agreement. A grantor may extend the period for meeting other goals under subdivision 3, paragraph (a), clause (3), by documenting in writing the reason for the extension and attaching a copy of the document to its next annual report to the department. (b) A recipient that fails to meet the terms of a subsidy agreement may not receive a business subsidy from any grantor for a period of five years from the date of failure or until a recipient satisfies its repayment obligation under this subdivision, whichever occurs first. (c) Before a grantor signs a business subsidy agreement, the grantor must check with the compilation and summary report required by this section to determine if the recipient is eligible to receive a business subsidy. Subd. 7. Reports by recipients to grantors. (a) A business subsidy grantor must monitor the progress by the recipient in achieving agreement goals. (b) A recipient must provide information regarding goals and results for two years after the benefit date or until the goals are met, whichever is later. If the goals are not met, the recipient must continue to provide information on the subsidy until the subsidy is repaid. The information must be filed on forms developed by the commissioner in cooperation with representatives of local government. Copies of the completed forms must be sent to the local government agency that provided the subsidy or to the commissioner if the grantor is a state agency. If the Iron Range Resources and Rehabilitation Board is the grantor, the copies must be sent to the board. The report must include: (1) the type, public purpose, and amount of subsidies and type of district, if the subsidy is tax increment financing; (2) the hourly wage of each job created with separate bands of wages; (3) the sum of the hourly wages and cost of health insurance provided by the employer with separate bands of wages; (4) the date the job and wage goals will be reached; (5) a statement of goals identified in the subsidy agreement and an update on achievement of those goals; (6) the location of the recipient prior to receiving the business subsidy; (7) the number of employees who ceased to be employed by the recipient when the recipient relocated to become eligible for the business subsidy; (8) why the recipient did not complete the project outlined in the subsidy agreement at their previous location, if the recipient was previously located at another site in Minnesota; (9) the name and address of the parent corporation of the recipient, if any; (10) a list of all financial assistance by all grantors for the project; and 116J.994 MINNESOTA STATUTES 2015 4 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. (11) other information the commissioner may request. A report must be filed no later than March 1 of each year for the previous year. The local agency and the Iron Range Resources and Rehabilitation Board must forward copies of the reports received by recipients to the commissioner by April 1. (c) Financial assistance that is excluded from the definition of "business subsidy" by section 116J.993, subdivision 3, clauses (4), (5), (8), and (16), is subject to the reporting requirements of this subdivision, except that the report of the recipient must include instead: (1) the type, public purpose, and amount of the financial assistance, and type of district if the assistance is tax increment financing; (2) progress towards meeting goals stated in the assistance agreement and the public purpose of the assistance; (3) if the agreement includes job creation, the hourly wage of each job created with separate bands of wages; (4) if the agreement includes job creation, the sum of the hourly wages and cost of health insurance provided by the employer with separate bands of wages; (5) the location of the recipient prior to receiving the assistance; and (6) other information the grantor requests. (d) If the recipient does not submit its report, the local government agency must mail the recipient a warning within one week of the required filing date. If, after 14 days of the postmarked date of the warning, the recipient fails to provide a report, the recipient must pay to the grantor a penalty of $100 for each subsequent day until the report is filed. The maximum penalty shall not exceed $1,000. Subd. 8. Reports by grantors. (a) Local government agencies of a local government with a population of more than 2,500 and state government agencies, regardless of whether or not they have awarded any business subsidies, must file a report by April 1 of each year with the commissioner. Local government agencies of a local government with a population of 2,500 or less are exempt from filing this report if they have not awarded a business subsidy in the past five years. The report must include a list of recipients that did not complete the recipient report required under subdivision 7 and a list of recipients that have not met their job and wage goals within two years and the steps being taken to bring them into compliance or to recoup the subsidy. If the commissioner has not received the report by April 1 from an entity required to report, the com- missioner shall issue a warning to the government agency. If the commissioner has still not received the report by June 1 of that same year from an entity required to report, then that government agency may not award any business subsidies until the report has been filed. (b) The report required under paragraph (a) is also required for financial assistance of $25,000 and greater that is excluded from the definition of "business subsidy" by section 116J.993, subdivision 3, clause (1), and of $75,000 and greater that is excluded from the definition of "business subsidy" by section 116J.993, subdivision 3, clause (21). The report for the financial assistance under this paragraph must be completed within one year of the granting of the financial assistance. The report required for financial as- sistance under this paragraph must include: 5 MINNESOTA STATUTES 2015 116J.994 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. (1) the name of the recipient, its organizational structure, its address and contact information, and its industry sector; (2) a description of the amount and use of the financial assistance and the total project budget, including a list of all financial assistance by all grantors for the project and the private sources of financial assistance; (3) the public purpose of the financial assistance, the job goals associated with both the financial as- sistance and the total project in which the financial assistance is included, the hourly wage of each job created, and the cost of health insurance provided by the employer; (4) the date the project will be completed; (5) the name and address of the parent corporation of the recipient, if any; and (6) any other information the commissioner may request. (c) Within one year of completing a report under paragraph (b), the local government agency must report to the commissioner on progress in achieving the purposes and goals under paragraph (b), clause (3). (d) The commissioner of employment and economic development must provide information on reporting requirements to state and local government agencies. Subd. 9. Compilation and summary report. The Department of Employment and Economic De- velopment must publish a compilation and summary of the results of the reports for the previous two calendar years by December 1 of 2004 and every other year thereafter. The reports of the government agencies to the department and the compilation and summary report of the department must be made available to the public. The commissioner must make copies of all business subsidy reports submitted by local and state granting agencies available on the department's Web site by October 1 of the year in which they were submitted. The commissioner must coordinate the production of reports so that useful comparisons across time periods and across grantors can be made. The commissioner may add other information to the report as the commissioner deems necessary to evaluate business subsidies. Among the information in the summary and compilation report, the commissioner must include: (1) total amount of subsidies awarded in each development region of the state; (2) distribution of business subsidy amounts by size of the business subsidy; (3) distribution of business subsidy amounts by time category; (4) distribution of subsidies by type and by public purpose; (5) percent of all business subsidies that reached their goals; (6) percent of business subsidies that did not reach their goals by two years from the benefit date; (7) total dollar amount of business subsidies that did not meet their goals after two years from the benefit date; (8) percent of subsidies that did not meet their goals and that did not receive repayment; (9) list of recipients that have failed to meet the terms of a subsidy agreement in the past five years and have not satisfied their repayment obligations; 116J.994 MINNESOTA STATUTES 2015 6 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. (10) number of part-time and full-time jobs within separate bands of wages for the entire state and for each development region of the state; (11) benefits paid within separate bands of wages for the entire state and for each development region of the state; and (12) number of employees in the entire state and in each development region of the state who ceased to be employed because their employers relocated to become eligible for a business subsidy. Subd. 10. Compilation. The Department of Employment and Economic Development must publish a compilation of granting agencies' criteria policies adopted in the previous two calendar years by December 1 of 2004 and every other year thereafter. Subd. 11. Enforcement. (a) A person with residence in or an owner of taxable property located in the jurisdiction of the grantor may bring an action for equitable relief arising out of the failure of the grantor to comply with sections 116J.993 to 116J.995. The court may award a prevailing party in an action under this subdivision costs and reasonable attorney fees. (b) Prior to bringing an action, the party must file a written complaint with the grantor stating the alleged violation and proposing a remedy. The grantor has up to 30 days to reply to the complaint in writing and may take action to comply with sections 116J.993 to 116J.995. (c) The written complaint under this subdivision for failure to comply with subdivisions 1 to 5, must be filed with the grantor within 180 days after approval of the subsidy agreement under subdivision 3, paragraph (d). An action under this subdivision must be commenced within 30 days following receipt of the grantor's reply, or within 180 days after approval of the subsidy agreement under subdivision 3, paragraph (d), whichever is later. History: 1999 c 243 art 12 s 2; 2000 c 482 s 2-11; 2001 c 7 s 28; 2003 c 128 art 13 s 24-26; 1Sp2003 c 4 s 1; 2004 c 206 s 24,25; 1Sp2005 c 1 art 4 s 23,24; 1Sp2005 c 3 art 7 s 2-5; 2008 c 366 art 5 s 3-5 1 MINNESOTA STATUTES 2015 116J.995 Copyright © 2015 by the Revisor of Statutes, State of Minnesota. All Rights Reserved. 116J.995 ECONOMIC GRANTS. An appropriation rider in an appropriation to the Department of Employment and Economic De- velopment that specifies that the appropriation be granted to a particular business or class of businesses must contain a statement of the expected benefits associated with the grant. At a minimum, the statement must include goals for the number of jobs created or enhanced, wages paid, and the tax revenue increases due to the grant. The wage and job goals must contain specific goals to be attained within two years of the benefit date. The statement must specify the recipient's obligation if the recipient does not attain the goals. At a minimum, the statement must require a recipient failing to meet the job and wage goals to pay back the assistance plus interest to the Department of Employment and Economic Development provided that repayment may be prorated to reflect partial fulfillment of goals. The interest rate must be set at no less than the implicit price deflator as defined under section 116J.994, subdivision 6. The legislature, after a public hearing, may extend for up to one year the period for meeting the goals provided in the statement. History: 1999 c 243 art 12 s 3; 2000 c 482 s 12; 2001 c 7 s 29; 2003 c 128 art 13 s 27; 1Sp2003 c 4 s 1 WS – Item 9 WORK SESSION STAFF REPORT Work Session Item No. 9 Date: June 6, 2016 To: City Council From: Michael Grochala, Community Development Director Re: United Properties 35E Distribution Center/TIF request Background United Properties has submitted a request for rezoning to Planned Unit Development, Development Stage Plan Approval and Preliminary Plat approval for the 56 acre Clearwater Creek Business Park. The proposed plat includes one 30-acre lot for a proposed distribution center and two outlots for future development. The Planning and Zoning board will be holding a public hearing for the proposal on June 8, 2016. Staff has been working with United Properties regarding construction of a warehousing/distribution facility along 35E for the past six months. This has been previously discussed with EDAC, Planning & Zoning board and City Council due to both its economic development potential and zoning related site issues. Based on revisions to the site plan the proposed distribution facility is approximately 402,552 square feet in area. The applicant is proposing to pursue a rezoning to Planned Unit Development to allow for design flexibility related to the proposed storage of semi- trailers on the site. By rotating the building (dock doors facing north/south) a number of zoning issues have been addressed. Development of the site will require the extension of 21st Avenue, from Commerce Avenue to approximately 2,100 feet south. Extension of the street includes the crossing of Clearwater Creek and filling and mitigation of floodplain areas adjacent to the creek. 21st Avenue is planned to be extended to Cedar Street, further to the south, in the Comprehensive Plan. The project proposes to dedicate right of way for the entire length of the roadway. The proposed project is valued at approximately $18,000,000. Due to costs associated with the street extension, floodplain mitigation and necessary soil corrections, the developer is requesting public assistance in the form of Tax Increment Financing (TIF). Staff is currently reviewing the application and possible establishment of an Economic Development District. An Economic Development District could provide for up to nine years of increment. A review and recommendation regarding Tax Increment Financing will be brought to the City Council for consideration in July. Requested Council Direction None Required. Discussion Only. Attachments 1. Project Area Map 2. Distribution Facility Site Plan 3. Exterior Building Rendering 4. TIF Policy City of Lino Lakes, Minnesota TIF policy: 1. Prospects must qualify according to the City business subsidy selection criteria. 2. TIF will be used to pay qualifying reimbursable costs, which include special assessments, land write down, administrative fees, landscaping and site preparation. 3. Land write down will be based on a minimum of 10,000 square feet (or more) of facility per acre of land. 4. Each project will be self-sufficient within the allowable TIF capacity of the district. 5. TIF commitments will not exceed 16% of the estimated market value. 6. Administrative fees (upfront escrow) will be reimbursed using TIF funds at the completion of the project. 7. Assessments will be paid upfront in the Apollo Business Park to allow for a more expedient return of the city’s investment in the park’s improvements. 8. In other TIF districts, the subsidy for land and assessments will be on a pay-as-you-go basis. 9. If the subsidy includes upfront payments of assessments, the city will be reimbursed first from available increment. The grantee will receive its pay-as-you-go after the city is paid back. 10. The source of the 10% local contribution will be identified before the project is approved. (This local contribution requirement was eliminated by the legislature in 2001.) Item #11 Monthly Progress Report June 6, 2016 Item Last Action Taken Staff Status Digital Scanning Project 3/14/16 – Council approved transfer of $15,000 from Contingency Fund for scanning and indexing building plans Julie Staff is in the process of executing a work statement for large format scanning. White Bear Lake Restoration Assn. v. Dept. of Natural Resources (DNR) The WBL Restoration Assn. & WBL Homeowners’ Assn. reached a settlement agreement with the DNR that imposes a three-year stay on the lawsuit so funds can be appropriated for a Northeast Metro Project. This involves a construction project to connect Northeast cities to the St. Paul Regional Water Service. Lino Lakes is one of seven cities included in the second phase of the project. Jeff The DNR developed cost estimates for augmenting White Bear Lake with surface water. Legislators and augmentation proponents questioned the construction cost estimate, which the DNR revised to $38.4 million. The total cost range is $36.5 to $78.2 million. Legion Parking Lot 3/7/16 – Staff was directed to obtain an appraisal for City property Mike Included on June 6 work session agenda Location of Veteran’s Memorial 4/4/16 – Council was directed to visit potential sites for veteran’s memorial The four locations being considered are Legacy Green, Lino Park, Fire Station 2, and Civic Complex Island Union History Report 5/4/15 – Council requested staff to put together a union history report to educate future councils Jeff Report is 85% complete Watermark Master Planned Community COUNCIL WORK SESSION June 6, 2016 1 Introduction •Watermark is a Master Planned Residential Community •Mattamy Homes is the developer •12 parcels totaling 372 acres •Housing Mix •706 single family homes •165 townhomes •871 total housing units 2 3 4 Background 5 Background 6 Background -AUAR Options Scenario 1 Scenario 2 Scenario 3 7 Background Site 8 Key Issues 9 Key Issues 10 Key Issues 11 Key Issues 12 Key Issues Total Site Townhomes & 44’ lots Remaining Single Family Net Area (acres) 256.91 45 211.91 # Units 871 249 622 Net Density (units per acre) 3.39 (4.5 allowed) 5.53 2.94 Percentage of Total Site 100%18%82%13 Key Issues 14 Key Issues Lot Width Min.Home Sq. Ft.Max. Home Sq. Ft. 44 feet 1,745 2,178 55 feet 1,847 3,856 65 feet 2,313 3,472 75 feet 2,711 5,808 15 Key Issues 16 Key Issues 17 Key Issues 18 Key Issues 19 Traffic Impact Study •TIS prepared by Spack Consulting •February 13, 2015 •Technical Memorandum Update •March 27, 2015 •Generate 7,540 daily trips 20 21 Peak Hour Level of Service Existing Peak Hour LOS Proposed Peak Hour LOS Intersection A.M. Peak P.M. Peak A.M. Peak P.M. Peak 20th Ave/Street D/Rehbein St A A A A 20th Ave/Street B (Central)--A A 20th Ave/Street A/73rd Avenue A A A A 20th Ave/Street A/Main St B B C C 21st Ave/Street A/Main St A A B B Note: A.M. Peak Hour is 7am to 8am and PM Peak Hour is 4:30pm to 5:30 pm 22 Level of Service •CSAH 54 (minor arterial) has design capacity for the daily trips •Proposed LOS do not degrade by more than 1 letter •Subdivision is not considered premature. •However, staff has concerns regarding the section of Street D near the intersection that has driveways directly accessing onto the road. •This was evaluated and reconfigured.23 24 Rehbein StreetStreet D & Rehbein Street Turn/By-Pass Lanes 25 Street B Turn/By-Pass Lanes 26 Street A & 73rd Street Turn/By-Pass Lanes Planning & Zoning Board •Public Hearing held April 13, 2016 and continued to May 11, 2016 •May 11th P&Z Meeting addressed some previous comments: •Architectural Design Standards •Street C & D reconfiguration •Street L to Street B trail connection 27 General Comments 1.In order to provide maximum flexibility to the development, architectural design standards, civil, grading and landscaping plans will be reviewed and approved with each PUD Final Plan/Final Plat. 2.Recreational center will be closer to 4,000 square feet in size with an outdoor patio and grilling area. •April 13th staff report states 5,000 s.f. 28 General Comments 3.Four 24 foot wide private driveways on the east side of the townhome neighborhood are acceptable to the fire chief. 4.No parking on either side of the private drives (24 feet or 28 feet) in the townhome neighborhood shall be allowed. 5.The open space area in the 44 foot neighborhood is a private park. 6.The site will be mass graded in two or more phases. 29 General Comments 7.The City will require a combination of land dedication and cash is lieu of land dedications. a.Land dedication for the public and private parks will be credited from the total payment in lieu. b.Costs for public park improvements and trail construction will be credited from the total payment in lieu. c.Improvements to the private parks and recreational center will not be credited. 30 Transportation Comments 31 Transportation Comments C V D W 32 33 Architectural Design Standards Definitions for both Single Family and Townhomes: 1.Exterior Materials a.Vinyl, aluminum or steel siding b.Brick c.Stone d.Stucco e.Wood f.Engineered siding products such as LP board, Hardie board or similar 2.Styles a.Lap siding b.Board and batten c.Shakes 34 Architectural Guidelines •Guidelines intended to establish a minimum baseline for architectural standards for both single family homes and townhome units. •In order to provide maximum PUD flexibility and adapt to changing market demands, detailed architectural design standards, floor plans, elevations, exterior materials, styles and color packages will be reviewed and approved with each PUD Final Plan/Final Plat. 35 Single Family Homes •Home elevations visible from 20th Avenue (CSAH 54), Street A, Street E and the public park, •1 of the following 3 elements on side and/or rear elevations: 1.A minimum of 4 inch window trim on side and/or rear elevations to match the dimensions of the front elevation. 2.Incorporate trim and banding in complementary colors to add interest and variety to the side and/or rear elevations. 3.Incorporate more than one exterior material and/or style on the side and/or rear elevations. 36 Townhome Neighborhood 37 •165 units •33 buildings •4 to 6 units per building 38 39 40 41 42 43 44 TH Architectural Standards 1.Minimum of three (3) unique building facades (A, B and C) for each elevation of the townhomes shall be provided. 2.Unique building color package shall be included for each phase of development. 3.At no point will the same façade and same color package be specified on buildings that are immediately adjacent to or directly across the road from each other. 45 Townhomes 4.A minimum of 4 inch window trim on side and/or rear elevations to match the dimensions of the front elevation. 5.In no case shall any exterior material be less than 10%. 6.Front elevations shall have a combination of 3 exterior materials and/or styles. a. At least 60% (e.g. two of the three buildings) of the facades in each phase shall include brick, stone or stucco on the front elevation.46 Townhomes 7.Rear elevations shall have a combination of 2 exterior materials and/or styles. 8.Rear elevations shall include some vertical trim or element to break up the longer horizontal planes. 9.Side elevations that are exposed to roadways or open space and are highly visible will incorporate architectural details to match the front façade (e.g. the Tanager and the Maxwell Side (exposed)). 47 Townhomes 10.Side elevations that are not exposed to roadways or open space shall require only one exterior material (e.g. Maxwell (unexposed)). 11.Decorative garage doors are required on all units. a)At least 60% of the buildings shall have decorative garage doors with windows for any given development phase. 48 Findings of Fact •Res. No. 16-50: Comprehensive Plan Amendment for one 10 acre parcel on the northwest corner •Land use guidance from Urban Reserve to Mixed Use •Sanitary District 3 to 1B •Ord. No. 04-16: Rezone property from R, Rural and R-BR, Rural-Business Reserve to PUD, Planned Unit Development •Res. No. 16-51: PUD Development Stage Plan/Preliminary Plat 49 Conclusion •Watermark is consistent with the goals and policies of the comprehensive plan in regards to: •resource management, •land use, •housing, •transportation and •utilities 50 Conclusion •Upholds the City’s public values by creating a multi- functional open space greenway corridor integrated with the stormwater conveyance system, wetland management and trails. •Consistent with mixed-use density requirements and provides a variety of market driven housing products that support life-cycle housing. •Provides safe transportation corridors and public utilities also serve the development. 51 P&Z Board Recommendation •Voted 4-2 in favor of the Comprehensive Plan Amendment •Voted 6-0 in favor of the rezoning •Voted 5-1 in favor of the PUD Development Stage Plan/Preliminary Plat •The “no” votes were due to the lack of a commercial component in the development. 52 Council Action •Res. No. 16-50: Comprehensive Plan Amendment for one 10 acre parcel on the northwest corner •Land use guidance from Urban Reserve to Mixed Use •Sanitary District 3 to 1B •Ord. No. 04-16: Rezone property from R, Rural and R-BR, Rural-Business Reserve to PUD, Planned Unit Development •Res. No. 16-51: PUD Development Stage Plan/Preliminary Plat 53 Comprehensive Plan Amendment 54 10 acre parcel