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06-08-2020 Council Packet
EXPANDED AGENDA CITY COUNCIL AGENDA Monday, June 8, 2020 *********** 6:30 p.m. (Scheduled to be broadcast on Channel 16) City Council: Mayor Rafferty, Councilmembers Cavegn, Lyden, Ruhland and Stoesz City Administrator: Jeff Karlson CITY COUNCIL MEETING, 6:30 P.M. Call to Order and Roll Call - Councilmembers Stoesz, Lyden, Ruhland, Cavegn and Mayor Rafferty were present Pledge of Allegiance Open Mike / Public Comment Jamie Jensen, St. Clair Estates developer, asked for assistance in finalizing his accounts with the City; he has also submitted a formal data request Setting the Agenda: Addition or Deletion of Agenda Items The agenda was approved as presented. 1. CONSENT AGENDA A) Consideration of Expenditures: i) June 8, 2020 (Check No. 112310 through 112371) in the amount of $379,704.51 B) Consideration of Not Waiving Monetary Limits on Tort Liability per Minnesota Statute 466.04 C) Consider Approval of Resolution No. 20-55, Approving 2020-2021 Tobacco License Renewals D) Consider Approval of Resolution 20-56, Approving the Renewal of Liquor, Wine and Beer Licenses E) Consider Approval of an Exempt Gambling Permit for St. Joseph’s Catholic Church Action Taken: Motion by Lyden, seconded by Ruhland,, to approve Consent Agenda Items 1A through 1E as presented, was adopted 2. FINANCE DEPARTMENT REPORT A) Consider Resolution No. 20-57, Awarding the Sale of $4,800,000 General Obligation Utility Revenue Bonds, Series 2020A, Sarah Cotton Action Taken: Motion by Stoesz, seconded by Cavegn, to approve Resolution No. 20-57 as presented, was adopted Council Agenda -2- June 8, 2020 B) Accept 2019 Annual Audit Report, Sarah Cotton Action Taken: Motion by Stoesz, seconded by Ruhland,, to accept the audit report as presented, was adopted 3. ADMINISTRATION DEPARTMENT REPORT No report 4. PUBLIC SAFETY DEPARTMENT REPORT No report 5. PUBLIC SERVICES DEPARTMENT REPORT A) Consider Approval of Resolution No. 20-49, Accepting Quotes and Awarding a Construction Contract, 2020 Trail Maintenance Project, Diane Hankee Action Taken: Motion by Lyden, seconded by Stoesz, to approve Resolution No. 20-49 as presented, was adopted B) Lift Station No.5 Forcemain Project Restoration, Diane Hankee i. Consider Resolution No. 20-54, Accepting Quotes, Pavement Restoration ii. Consider Resolution No. 20-58, Accepting Quotes, Concrete Restoration Action Taken: Motion by Lyden, seconded by Ruhland,, to approve Resolutions No. 20-54 and 20-58 as presented, was adopted 6. COMMUNITY DEVELOPMENT REPORT No report 7. UNFINISHED BUSINESS None 8. NEW BUSINESS None Adjournment Following adjournment of the regular meeting, the Council will reconvene for a closed meeting to discuss the Diehl v. Lino Lakes lawsuit. Following the closed meeting, the Council will hold a work session to discuss the City Administrator position. Community Calendar – A Look Ahead June 8, 2020 through June 22, 2020 Wednesday, June 10 6:30 pm, Zoom Mtg. Planning & Zoning Board Monday, June 22 6:00 pm, Council Chambers Council Work Session Monday, June 22 6:30 pm, Council Chambers City Council Meeting Updated 6/5/2020 CITY COUNCIL AGENDA Monday, June 8, 2020 *********** 6:30 p.m. (Scheduled to be broadcast on Channel 16) City Council: Mayor Rafferty, Councilmembers Cavegn, Lyden, Ruhland and Stoesz City Administrator: Jeff Karlson CITY COUNCIL MEETING, 6:30 P.M. Call to Order and Roll Call Pledge of Allegiance Open Mike / Public Comment Setting the Agenda: Addition or Deletion of Agenda Items 1. CONSENT AGENDA A) Consideration of Expenditures: i) June 8, 2020 (Check No. 112310 through 112371) in the amount of $379,704.51 B) Consideration of Not Waiving Monetary Limits on Tort Liability per Minnesota Statute 466.04 C) Consider Approval of Resolution No. 20-55, Approving 2020-2021 Tobacco License Renewals D) Consider Approval of Resolution 20-56, Approving the Renewal of Liquor, Wine and Beer Licenses E) Consider Approval of an Exempt Gambling Permit for St. Joseph’s Catholic Church. 2. FINANCE DEPARTMENT REPORT A) Consider Resolution No. 20-57, Awarding the Sale of $4,800,000 General Obligation Utility Revenue Bonds, Series 2020A, Sarah Cotton B) Accept 2019 Annual Audit Report, Sarah Cotton 3. ADMINISTRATION DEPARTMENT REPORT No report 4. PUBLIC SAFETY DEPARTMENT REPORT No report Council Agenda -2- June 8, 2020 5. PUBLIC SERVICES DEPARTMENT REPORT A) Consider Approval of Resolution No. 20-49, Accepting Quotes and Awarding a Construction Contract, 2020 Trail Maintenance Project, Diane Hankee B) Lift Station No.5 Forcemain Project Restoration, Diane Hankee i. Consider Resolution No. 20-54, Accepting Quotes, Pavement Restoration ii. Consider Resolution No. 20-58, Accepting Quotes, Concrete Restoration 6. COMMUNITY DEVELOPMENT REPORT No report 7. UNFINISHED BUSINESS None 8. NEW BUSINESS None Adjournment Following adjournment of the regular meeting, the Council will reconvene for a closed meeting to discuss the Diehl v. Lino Lakes lawsuit. Following the closed meeting, the Council will hold a work session to discuss the City Administrator position. Community Calendar – A Look Ahead June 8, 2020 through June 22, 2020 Wednesday, June 10 6:30 pm, Zoom Mtg. Planning & Zoning Board Monday, June 22 6:00 pm, Council Chambers Council Work Session Monday, June 22 6:30 pm, Council Chambers City Council Meeting Expenditures June 8, 2020 Check #112310 to #112371 $379,704.51 City of Lino Lakes Activity Codes Code Description Code Description 401 Mayor/Council 817 Spring Fling 402 Administration 818 Winter Festival 403 Elections 819 Community Gardens 404 Cable TV 822 Family Corn Roast 405 Charter Administration 827 Gobbler Games 407 Finance 830 Adult Golf Lessons 414 Legal Consultants 835 Youth Skating Class 415 Economic Development 850 Golf Academy 416 Planning & Zoning 856 Youth Soccer 417 Engineering 857 Soccer Fundamentals 418 Community Development 860 Secret Shop 420 Police Protection 864 Preschool Playtime 421 Fire Protection 868 Little Goblins Party 422 Building Inspections 871 Flag Football 430 Streets 875 Snow Day 431 Fleet Management 876 Kite Day 432 Government Buildings 877 Rockin' in the Park 450 Parks 879 Movies in the Park 451 Recreation 890 Senior Programs 461 Environmental 462 Solid Waste Abatement 463 Forestry 494 Water 495 Sanitary Sewer 499 Other 802 Dodgeball Camp 806 Youth T-Ball 808 Youth Baseball Camp 810 Youth Playground 811 Youth Safety Camp 812 Youth Art Camps 814 Senior Programs/Book Club AP Checks by Account Number 06/08/2020 City Council Meeting Vendor Fund/Dept Account Amount Check #Description Central Pension Fund 101-000 101-000-2040-000 5,445.00 112311 May Central Pension Fund Fidelity Security Life Insurance Co. 101-000 101-000-2040-000 9.74 112327 June Vision Insurance Lincoln National Life Ins Co 101-000 101-000-2040-000 1.75 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-000 101-000-2040-000 1,068.32 112345 Life Insurance Premiums Fidelity Security Life Insurance Co. 101-000 101-000-2048-000 76.34 112327 June Vision Insurance Lincoln National Life Ins Co 101-000 101-000-3416-000 0.14 112345 Life Insurance Premiums 101-000 Total 6,601.29 Lincoln National Life Ins Co 101-402 101-402-4133-000 95.30 112346 Disability Insurance Premiums Lincoln National Life Ins Co 101-402 101-402-4133-000 8.22 112345 Life Insurance Premiums Occupational Health Centers of MN P.C. 101-402 101-402-4300-000 141.00 112356 New Hire Testing - Police Kennedy & Graven Chartered 101-402 101-402-4310-000 164.50 112339 April Legal Shred-it c/o Stericycle Inc. 101-402 101-402-4410-000 112.64 112312 Document Destruction 101-402 Total 521.66 Kimball Midwest 101-403 101-403-4200-000 417.00 112340 Face Masks Anoka County Treasury Office 101-403 101-403-5000-000 4,677.26 112315 Elections Joint Powers Agreement 101-403 Total 5,094.26 Lincoln National Life Ins Co 101-407 101-407-4133-000 6.98 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-407 101-407-4133-000 68.14 112346 Disability Insurance Premiums Finke Brian 101-407 101-407-4330-000 738.90 112328 Tuition Reimbursement B. Finke 101-407 Total 814.02 GDO Law 101-414 101-414-4303-000 8,500.00 112331 May Legal Prosecutor Contract 101-414 Total 8,500.00 MN Metro North Tourism Board 101-415 101-415-4900-000 974.00 112351 April Tourism Tax 101-415 Total 974.00 Lincoln National Life Ins Co 101-416 101-416-4133-000 25.19 112346 Disability Insurance Premiums Lincoln National Life Ins Co 101-416 101-416-4133-000 2.25 112345 Life Insurance Premiums 101-416 Total 27.44 WSB & Associates Inc. 101-417 101-417-4300-000 143.00 112370 March GPS/GIS Miscellaneous Assistance WSB & Associates Inc. 101-417 101-417-4300-000 143.00 112370 March GPS/GIS Miscellaneous Assistance WSB & Associates Inc. 101-417 101-417-4300-000 535.50 112370 March GPS/GIS Miscellaneous Assistance 101-417 Total 821.50 Lincoln National Life Ins Co 101-418 101-418-4133-000 4.50 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-418 101-418-4133-000 43.08 112346 Disability Insurance Premiums WSB & Associates Inc. 101-418 101-418-4300-000 1,190.00 112370 March GPS/GIS Miscellaneous Assistance 101-418 Total 1,237.58 Lincoln National Life Ins Co 101-420 101-420-4133-000 66.48 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-420 101-420-4133-000 627.64 112346 Disability Insurance Premiums Innovative Office Solutions LLC 101-420 101-420-4200-000 192.84 112337 Stapler Toner Paper Pens Bound Tree Medical LLC 101-420 101-420-4211-000 178.15 112319 Purell Sanitizer Emergency Response Solutions 101-420 101-420-4211-000 1,639.35 112325 Filters for Face Masks Magtech Ammunition Inc. 101-420 101-420-4211-000 1,074.00 112347 9MM Luger 124 FMC & 5.56 x 45 55gr FMJ M193 Magtech Ammunition Inc. 101-420 101-420-4211-000 -106.43 112347 Excise Tax Credit Primary Products Company 101-420 101-420-4211-000 240.87 112361 Nitrile Powder Free Gloves Emergency Automotive Technologies 101-420 101-420-4240-000 48.48 112324 Code 3 Z3 Mic. Aspen Mills Inc. 101-420 101-420-4370-000 112.62 112316 Uniform Allowance - A. Riehm Aspen Mills Inc. 101-420 101-420-4370-000 42.85 112316 Uniform Allowance - N. Hamann Xcel Energy 101-420 101-420-4381-000 3.54 112371 Electric-Police Midwest Radar & Equipment Inc 101-420 101-420-4410-000 440.00 112350 Radar Unit Maintenance Pace Systems Inc. 101-420 101-420-4410-000 2,400.00 112359 Pace Scheduler Annual Software Subscription Shred-it c/o Stericycle Inc. 101-420 101-420-4410-000 240.77 112312 Document Destruction 101-420 Total 7,201.16 Lincoln National Life Ins Co 101-421 101-421-4133-000 4.40 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-421 101-421-4133-000 50.52 112346 Disability Insurance Premiums Menards - Forest Lake 101-421 101-421-4214-000 46.50 112348 Flat Strap PC Bungee Menards - Forest Lake 101-421 101-421-4214-000 28.52 112348 Flat Strap Municipal Emergency Services 101-421 101-421-4240-000 737.39 112353 Seek Reveal Fire PRO Nardini Fire Equipment Co 101-421 101-421-4240-000 54.00 112354 Red Matted Flag Seal Aspen Mills Inc. 101-421 101-421-4370-000 188.50 112316 Fire Uniform - V. Kasprowicz 101-421 Total 1,109.83 Lincoln National Life Ins Co 101-422 101-422-4133-000 7.87 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-422 101-422-4133-000 72.38 112346 Disability Insurance Premiums Page 1 AP Checks by Account Number 06/08/2020 City Council Meeting Vendor Fund/Dept Account Amount Check #Description 101-422 Total 80.25 Lincoln National Life Ins Co 101-430 101-430-4133-000 119.64 112346 Disability Insurance Premiums Lincoln National Life Ins Co 101-430 101-430-4133-000 14.63 112345 Life Insurance Premiums Menards - Forest Lake 101-430 101-430-4211-000 55.70 112348 Materials for Five Station Signs Earl F. Andersen 101-430 101-430-4223-000 1,156.65 112322 Private Drive Signs and End of Road Barricade Panel Cargill Inc. 101-430 101-430-4228-000 2,139.59 112320 Clear Lane Deicer Xcel Energy 101-430 101-430-4385-000 461.85 112371 Electric-Street Lights Anoka County Treasury Office 101-430 101-430-4410-000 706.20 112315 1st Quarter Signal Maintenance SealTech Inc. 101-430 101-430-4410-000 2,700.00 112365 Crack Repair Pine St SealTech Inc. 101-430 101-430-4410-000 10,800.00 112365 Clean and Fill Cracks on Varies City Streets 101-430 Total 18,154.26 Lincoln National Life Ins Co 101-431 101-431-4133-000 3.37 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-431 101-431-4133-000 27.28 112346 Disability Insurance Premiums Safety-Kleen Systems Inc. 101-431 101-431-4211-000 50.42 112364 Parts Washer Service - Solvent Blaine Brothers 101-431 101-431-4221-000 3.30 112318 #252 1/2" Plastic Air Line Emergency Automotive Technologies 101-431 101-431-4221-000 124.42 112324 #383 Sho-Me Ignition Override Frontier Ag & Turf 101-431 101-431-4221-000 16.02 112330 #Stock LV Hygard Hugo Equipment Company 101-431 101-431-4221-000 7.18 112335 Chainsaw Repair L.T.G. Power Equipment 101-431 101-431-4221-000 130.90 112342 #507 Oil Filter. Hydro Charge Kit Menards - Forest Lake 101-431 101-431-4221-000 7.97 112348 Air Regulator Coupling O'Reilly Automotive Stores 101-431 101-431-4221-000 90.81 112358 #231 Stoplight CN Lano Equipment 101-431 101-431-4300-000 504.47 112343 #414 BPA Switch FNR Assy Safelite Fulfillment Inc. 101-431 101-431-4300-000 503.05 112363 #619 Windshield Replacement Emergency Apparatus Maintenance 101-431 101-431-4410-000 549.21 112323 Grass Rig G-21 #606 Repair Emergency Apparatus Maintenance 101-431 101-431-4410-000 376.73 112323 Grass Rig G-21 #606 Service 101-431 Total 2,395.13 Kimball Midwest 101-432 101-432-4200-000 417.00 112340 Face Masks Primary Products Company 101-432 101-432-4200-000 124.87 112361 Nitrile Powder Free Gloves Frattallone's/Circle Pines Ace 101-432 101-432-4211-503 1.72 112329 Fastener & Bolt Menards - Forest Lake 101-432 101-432-4211-503 3.98 112348 Red Electric Tape Menards - Forest Lake 101-432 101-432-4211-503 137.96 112348 Acrylic Sheet Anoka County Treasury Office 101-432 101-432-4300-500 75.00 112315 June Broadband Anoka County Treasury Office 101-432 101-432-4300-501 75.00 112315 June Broadband Anoka County Treasury Office 101-432 101-432-4300-503 75.00 112315 June Broadband Comcast 101-432 101-432-4321-502 342.41 112321 June Phone & Internet Xcel Energy 101-432 101-432-4381-501 390.23 112371 Electric-Fire Station #1 Xcel Energy 101-432 101-432-4381-502 903.69 112371 Electric-Fire Station #2 Xcel Energy 101-432 101-432-4381-503 3,438.63 112371 Electric-Civic Complex Metro Sales Incorporated 101-432 101-432-4410-503 103.41 112349 Copier Maintenance Ricoh/MP C307 101-432 Total 6,088.90 Lincoln National Life Ins Co 101-450 101-450-4133-000 11.69 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-450 101-450-4133-000 100.21 112345 Disability Insurance Premiums Frattallone's/Circle Pines Ace 101-450 101-450-4211-000 113.91 112329 Hoses & Nozzles Hugo Feed Mill & Hardware 101-450 101-450-4211-000 125.90 112336 Bag Seeder/Spreader Xcel Energy 101-450 101-450-4381-000 113.03 112371 Electric-Parks 101-450 Total 464.74 Lincoln National Life Ins Co 101-451 101-451-4133-000 5.70 112346 Disability Insurance Premiums Lincoln National Life Ins Co 101-451 101-451-4133-000 0.45 112345 Life Insurance Premiums 101-451 Total 6.15 Lincoln National Life Ins Co 101-461 101-461-4133-000 0.85 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-461 101-461-4133-000 7.28 112346 Disability Insurance Premiums 101-461 Total 8.13 Lincoln National Life Ins Co 101-462 101-462-4133-000 0.56 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-462 101-462-4133-000 4.85 112346 Disability Insurance Premiums 101-462 Total 5.41 Lincoln National Life Ins Co 101-463 101-463-4133-000 0.84 112345 Life Insurance Premiums Lincoln National Life Ins Co 101-463 101-463-4133-000 7.28 112346 Disability Insurance Premiums Gerten Greenhouses & Garden Center Inc. 101-463 101-463-4211-000 120.44 112332 EAB Injection Supplies 101-463 Total 128.56 Twin Cities Transport & Recovery 207-420 207-420-4300-000 85.00 112367 ICR #20-114872 Lincoln MKX Twin Cities Transport & Recovery 207-420 207-420-4300-000 85.00 112367 ICR #20-121635 Pontiac Grand Prix Gt Page 2 AP Checks by Account Number 06/08/2020 City Council Meeting Vendor Fund/Dept Account Amount Check #Description 207-420 Total 170.00 Advanced Graphix Inc. 402-420 402-420-5000-000 395.00 112314 Squad #315 - Kit Custom Reflective Graphics 402-420 Total 395.00 North Valley Inc. 421-499 421-499-4400-133 186,905.78 112355 2020 Rehabilitation Project 421-499 Total 186,905.78 Lincoln National Life Ins Co 601-494 601-494-4133-000 5.05 112345 Life Insurance Premiums Lincoln National Life Ins Co 601-494 601-494-4133-000 39.17 112346 Disability Insurance Premiums Ferguson Waterworks #2518 601-494 601-494-4211-000 38.12 112326 4 x 5 21 Wire Flag Blue Ferguson Waterworks #2518 601-494 601-494-4211-000 176.26 112326 3 x 8 M/Hole Sign & 8 Curb ST WRCH Ferguson Waterworks #2518 601-494 601-494-4211-000 156.10 112326 16 x 1 CC DBL STUD SDL 17.40 1 CC TAP S&S Industrial Hardware Supply 601-494 601-494-4211-000 11.50 112362 Deerwood/Fox Pavement Project Winnick Supply Inc. 601-494 601-494-4211-000 201.76 112369 Brass Closet Spud Pipe Wrench Sloan O Ring and Vacuum Breaker Hawkins Inc. 601-494 601-494-4222-000 4,091.21 112333 Chlorine Cylinders Hawkins Inc. 601-494 601-494-4222-000 15.00 112333 Chlorine Cylinder Circle Pines Post Office 601-494 601-494-4322-000 370.30 112310 Utility Billing Postage Xcel Energy 601-494 601-494-4381-000 3,424.32 112371 Electric-Water Instrumental Research Inc. 601-494 601-494-4410-000 200.00 112338 April Water Testing 601-494 Total 8,728.79 Lincoln National Life Ins Co 602-495 602-495-4133-000 5.08 112345 Life Insurance Premiums Lincoln National Life Ins Co 602-495 602-495-4133-000 39.18 112346 Disability Insurance Premiums Olson's Sewer Service Inc. 602-495 602-495-4300-000 210.00 112357 7939 Marilyn Dr. - Televised Sewer Line Flash Drive Water Conservation Service Inc 602-495 602-495-4300-000 298.12 112368 Leak Locate - Snow Goose Circle WSB & Associates Inc. 602-495 602-495-4304-000 286.00 112370 March GPS/GIS Miscellaneous Assistance Circle Pines Post Office 602-495 602-495-4322-000 370.30 112310 Utility Billing Postage Xcel Energy 602-495 602-495-4381-000 2,340.42 112371 Electric-Sewer ABM Equipment & Supply 602-495 602-495-5000-000 71,682.00 112313 Jetter 602-495 Total 75,231.10 KLM Engineering Inc. 801-000 801-000-2300-000 4,400.00 112341 Antenna Inspection Services - Verizon Tower No. 1 KLM Engineering Inc. 801-000 801-000-2300-000 3,050.00 112341 Antenna Inspection Services - AT&T Houle Guy 801-000 801-000-2318-000 4,400.00 112334 Escrow Release - 6701 Ruffed Grouse Rd Paul Emmerich Construction Inc. 801-000 801-000-2318-000 3,400.00 112360 Escrow Release - 1985 Rosewood Street TJB Homes Inc. 801-000 801-000-2318-000 9,900.00 112366 Escrow Release - 2018 Otter Lake Drive Lennar MN Division 801-000 801-000-2336-106 18,255.96 112344 Escrow Reduction - Watermark Molin Concrete Products Co. 801-000 801-000-2343-103 1,988.61 112352 Escrow Closure - Molin Concrete Asphalt Restoration Co. Inc. 801-000 801-000-2353-106 2,645.00 112317 Damaged Driveway Repair 801-000 Total 48,039.57 Grand Total 379,704.51 Page 3 Electronic Funds Transfer MN Statute 471.38 Subd. 3 Council Meeting June 8, 2020 Transfer In/(Out) 5/27/2020 Wire in Commercial Partners Title 225,000.00 5/29/2020 Payroll #11 (137,084.65) 5/29/2020 Payroll #11 Federal Deposit (40,192.67) 5/29/2020 Payroll #11 PERA (42,127.43) 5/29/2020 Payroll #11 State (9,441.98) 5/29/2020 Payroll #11 Child Support (276.29) 5/29/2020 Payroll #11 H.S.A. Bank Pretax (3,265.50) 5/29/2020 Payroll #11 TASC Pretax (947.66) 5/29/2020 Payroll #11 ICMA 457 Def. Comp #301596 (4,665.00) 5/29/2020 Payroll #11 ICMA Roth IRA #706155 (615.75) 5/29/2020 Payroll #11 MSRS HCSP #98946-01 (1,691.86) 5/29/2020 Payroll #11 MSRS Def. Comp #98945-01 (3,210.00) 5/29/2020 Payroll #11 MSRS Roth IRS #98945-01 (575.00) CITY COUNCIL CONSENT AGENDA ITEM 1B STAFF ORIGINATOR: Sarah Cotton MEETING DATE: June 8, 2020 TOPIC: Consideration of Not Waiving Monetary Limits on Tort Liability per Minnesota Statute 466.04 VOTE REQUIRED: 3/5 INTRODUCTION As a part of the annual insurance renewal process, the City Council is being asked by the League of Minnesota Cities Insurance Trust to update the Liability Coverage Waiver Form. BACKGROUND Each year, the City has the option of waiving its monetary limits on tort liability to the extent of the coverage purchased. The decision to waive or not to waive the statutory limits has the following effects: If the city does not waive the statutory tort limits, an individual claimant would be able to recover no more than $500,000 on any claim to which the statutory tort limits apply. The total which all claimants would be able to recover for a single occurrence to which the statutory tort limits apply would be limited to $1,500,000. These statutory tort limits would apply regardless of whether or not the city purchases the optional excess liability coverage. If the city does waive the statutory tort limits and does not purchase excess liability coverage, a single claimant could potentially recover up to $2,000,000 on a single occurrence (under this option, the tort cap liability limits are waived to the extent of the city’s liability coverage limits, and the LMCIT per occurrence limit is $2,000,000). The total which all claimants would be able to recover for a single occurrence to which the statutory limits apply would also be limited to $2,000,000, regardless of the number of claimants. If the city does waive the statutory tort limits and purchases excess liability coverage, a single claimant could potentially recover an amount up to the limit of the coverage purchased. The total which all claimants would be able to recover for a single occurrence to which the statutory tort limits apply would also be limited to the amount of coverage purchased, regardless of the number of claimants. Claims to which the statutory municipal tort limits do not apply are not affected by this decision. The city carries $1,000,000 in excess liability coverage ($1,000,000 per occurrence and annual limit). The City of Lino Lakes has never waived its’ monetary limits on tort liability. RECOMMENDATION The city does not wish to waive the monetary limits on municipal tort liability established by Minnesota Statute, Section 466.04. ATTACHMENTS Liability Coverage – Waiver Form LIABILITY COVERAGE – WAIVER FORM Members who obtain liability coverage through the League of Minnesota Cities Insurance Trust (LMCIT) must complete and return this form to LMCIT before the member’s effective date of coverage. Return completed form to your underwriter or email to pstech@lmc.org. The decision to waive or not waive the statutory tort limits must be made annually by the member’s governing body, in consultation with its attorney if necessary. Members who obtain liability coverage from LMCIT must decide whether to waive the statutory tort liability limits to the extent of the coverage purchased. The decision has the following effects: • If the member does not waive the statutory tort limits, an individual claimant could recover no more than $500,000 on any claim to which the statutory tort limits apply. The total all claimants could recover for a single occurrence to which the statutory tort limits apply would be limited to $1,500,000. These statutory tort limits would apply regardless of whether the member purchases the optional LMCIT excess liability coverage. • If the member waives the statutory tort limits and does not purchase excess liability coverage, a single claimant could recover up to $2,000,000 for a single occurrence (under the waive option, the tort cap liability limits are only waived to the extent of the member’s liability coverage limits, and the LMCIT per occurrence limit is $2,000,000). The total all claimants could recover for a single occurrence to which the statutory tort limits apply would also be limited to $2,000,000, regardless of the number of claimants. • If the member waives the statutory tort limits and purchases excess liability coverage, a single claimant could potentially recover an amount up to the limit of the coverage purchased. The total all claimants could recover for a single occurrence to which the statutory tort limits apply would also be limited to the amount of coverage purchased, regardless of the number of claimants. Claims to which the statutory municipal tort limits do not apply are not affected by this decision. 2 LMCIT Member Name: __________________________________________________________________________ Check one: o The member DOES NOT WAIVE the monetary limits on municipal tort liability established by Minn. Stat. § 466.04. o The member WAIVES the monetary limits on municipal tort liability established by Minn. Stat. § 466.04, to the extent of the limits of the liability coverage obtained from LMCIT. Date of member’s governing body meeting: _____________________________________________ Signature: Position: ________________________________ CITY COUNCIL AGENDA ITEM 1C STAFF ORIGINATOR: Lisa Hogstad-Osterhues, Deputy City Clerk MEETING DATE: June 8, 2020 TOPIC Consider Resolution No. 20-55, Approving 2020-2021 Tobacco License Renewals VOTE REQUIRED: Simple Majority (3/5 Vote Required) INTRODUCTION All tobacco licenses in the City of Lino Lakes expire on June 30, 2020. Staff has been working with the license holders to put in place all renewal requirements to allow for Council consideration at this time. BACKGROUND Attached is a list of the establishments that have submitted renewal applications. As indicated, the applicants have completed the necessary documentation and paid the fee that is required for the license. The Lino Lakes Public Services Department performs the investigation and reports any information that would make applicants ineligible for license renewal. Each license is contingent upon the background investigation. No license will be released until all requirements are met. RECOMMENDATION Adopt Resolution 20-55, approving renewal of tobacco licenses for the period of July 1, 2020 through June 30, 2021. ATTACHMENTS Resolution 20-55 2020-2021 Tobacco License Renewal List CITY OF LINO LAK ES RESOLUTION NO. 20-55 Approving Renewal of Tobacco Licenses for the 2020/2021 Licensing Period WHEREAS, the licensing period for tobacco licenses in the City of Lino Lakes is one year, commencing on July 1 and ending on June 30 the following year; and WHEREAS, the City Council is required to approve the renewal of tobacco licenses; and WHEREAS, city staff has reviewed the renewal applications that have been submitted and verified that licensing requirements are met; and WHEREAS, the Public Safety Department has completed the required background investigations; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lino Lakes, Minnesota: The City of Lino Lakes hereby approves the renewal of tobacco licenses as set forth in Exhibit A that is attached to this resolution. Adopted by the Council of the City of Lino Lakes this 8th of June, 2020. The motion for the adoption of the foregoing resolution was introduced by Council Member _____________and was duly seconded by Council Member _____________ and upon vote being taken thereon, the following voted in favor thereof: The following voted against same: ________________________ Rob Rafferty, Mayor ATTEST: ________________________ Julianne Bartell, City Clerk 2020-21 Tobacco License Renewal List Applicant License Type KLVZ Corporation d/b/a Eagle Liquor 617 Apollo Drive Lino Lakes, MN 55014 Tobacco JP’s Liquor, Wine & Beer 6501 Ware Road Lino Lakes, MN 55014 Tobacco Holiday Stationstores d/b/a Holiday Stationstore #376 7509 Lake Drive Lino Lakes, MN 55014 Tobacco KRO, Inc. d/b/a Lino Lakes One Stop 6501 Ware Road, Suite 360 Lino Lakes, MN 55014 Tobacco Anoka County Parks Chomonix Golf Course 700 Aqua Lane Lino Lakes, MN 55014 Tobacco Fast Break 7601 Lake Drive Lino Lakes, MN 55014 Tobacco TJ Lino Lakes d/b/a Corner Express 7997 Lake Drive Lino Lakes, MN 55014 Tobacco Cherokee Liquors, Inc. d/b/a G-Will Liquors 8040 Lake Drive Lino Lakes, MN 55014 Tobacco Rademacher Co. Inc. d/b/a Bill’s Superette 8020 Lake Drive Lino Lakes, MN 55014 Tobacco Lakes 1 Stop 7090 21st Ave. No. Lino Lakes, MN 55038 Tobacco Lino Lakes Tobacco 717 Apollo Drive, Suite 110 Lino Lakes, MN 55014 Tobacco Ecig Crib 7860 Lake Drive Lino Lakes, MN 55014 Tobacco CITY COUNCIL AGENDA ITEM 1D STAFF ORIGINATOR: Lisa Hogstad-Osterhues, Deputy City Clerk MEETING DATE: June 8, 2020 TOPIC: Resolution No. 20-56 Approving the Renewal of Liquor, Wine and Beer Licenses VOTE REQUIRED: 3/5 BACKGROUND All liquor, wine and beer (3.2) licenses in the City of Lino Lakes expire on June 30, 2020. Staff has been working with license holders on meeting the requirements for renewal so as to allow the council to consider approval at this time. A majority of these licenses require additional approval by the Minnesota Department of Public Safety Alcohol and Gambling Division and they will be forwarded to the state if local approval is granted. Attached is a list of the establishments that have submitted renewal applications. Under city policy, applicants applying for license renewal are required to undergo a background investigation each year. The Lino Lakes Public Services Department performs the investigation and reports any information that would make applicants ineligible for license renewal. Each license is contingent upon the background investigation. Licensees are also required to submit verification of liquor liability and workers’ compensation insurance as well as pay appropriate fees. No license will be released until all requirements are met. The city code requires that when the city council considers the issuance of a liquor license, opportunity shall be given to any person to be heard for or against the granting of the license. RECOMMENDATION Adopt Resolution 20-56 approving renewal of liquor, wine and beer licenses for the period of July 1, 2020 through June 30, 2021. ATTACHMENTS Resolution 20-56 Exhibit A - 2020-2021 Liquor, Wine and Beer License Renewal List CITY OF LINO LAKES RESOLUTION NO. 20-56 Approving the Renewal of Liquor, Wine and Beer licenses for the 2020/2021 licensing period WHEREAS, the licensing period for liquor, wine and beer licenses in the City of Lino Lakes is one year, commencing on July 1 and ending on June 30 the following year; WHEREAS, the City Council is required to approve the renewal of liquor and wine licenses, in some cases, prior to State issuance of a license; WHEREAS, City staff has reviewed the renewal applications that have been submitted and verified that local licensing regulations are met; WHERAS, the Lino Lakes Public Service Department has conducted the required background investigations for license renewals; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LINO LAKES, MINNESOTA: The City of Lino Lakes hereby approves the renewal of liquor, wine and beer licenses as set forth in Exhibit A that is hereby attached, with said approval contingent upon applicants meeting all city and state requirements for said licenses. Adopted by the Council of the City of Lino Lakes this 8th day of June, 2020. The motion for the adoption of the foregoing resolution was introduced by Council Member _____________and was duly seconded by Council Member _____________ and upon vote being taken thereon, the following voted in favor thereof: The following voted against same: ________________________ Rob Rafferty, Mayor ATTEST: ________________________ Julianne Bartell, City Clerk 2020-21 Liquor, Wine and Beer License Renewals Applicant License Type American Legion Post 566 7731 Lake Drive Lino Lakes, MN 55014 On Sale Club Sunday KLVZ Corporation d/b/a Eagle Liquor 617 Apollo Drive Lino Lakes, MN 55014 Off Sale C.A. Wagner, Inc. **d/b/a The Tavern on Main 8001 Lake Drive Lino Lakes, MN 55014 Off Sale On Sale Sunday *2 a.m. JP’s Liquor, Wine and Beer 6501 Ware Road Lino Lakes, MN 55014 Off Sale Trapper’s Bar & Grill, LLC d/b/a Trapper’s 6810 Lake Drive Lino Lakes, MN 55014 Off Sale On Sale Sunday Anoka County d/b/a Chomonix Golf Course 700 Aqua Lane Lino Lakes, MN 55014 On Sale Sunday Target Corporation Store T-1448 749 Apollo Drive Lino Lakes, MN 55014 Off Sale Hammerheart, LLC d/b/a:Hammerheart Brewing Co. 7785 Lake Drive Lino Lakes, MN 55014 Off-Sale Brewer On-Sale Taproom Rm Off-Sale Growler & Sunday Cherokee Liquors, Inc. d/b/a G-Will Liquors 8040 Lake Drive Lino Lakes, MN 55014 Off-Sale Don Julio Lino Lakes Inc. d/b/a Don Julio Mexican Restaurant 701 Apollo Drive Suite #130 Lino Lakes, MN 55014 On Sale Sunday Myithar LLC Chili Thai Cuisine Pa Pra 730 Apollo Drive, Suite 110 Lino Lakes, MN 55014 3.2 On-Sale Wine No Sunday Sales License Closed Campanelle Restaurant & Bar 7114 Otter Lake Road, #150 Lino Lakes, MN 55028 On Sale Sunday CITY COUNCIL AGENDA ITEM 1E STAFF ORIGINATOR: Lisa Hogstad-Osterhues, Deputy Clerk MEETING DATE: June 8, 2020 TOPIC: Consider Approving Application for an Exempt Permit for Lawful Gambling Conducted by St. Joseph of the Lakes Catholic Church VOTE REQUIRED: 3/5 Vote INTRODUCTION St. Joseph of the Lakes Catholic Church has applied for an exempt permit to conduct a raffle on Saturday, August 9, 2020 for a fundraiser benefit event. BACKGROUND Non-profit organizations are allowed, under the State Gambling Statutes, to apply for an exemption from a gambling license if they conduct five (5) or fewer gambling occasions per calendar year. St. Joseph of the Lakes Catholic Church conducts five (5) or less per calendar year and, therefore, remains exempt from requiring a gambling license. Minnesota Statutes, Chapter 349, Section 349.166, Subd. 2 does, however, require that the non- profit organizations applying for the exemption permit, notify the city that they are applying for the exemption and receive local approval. The application and background materials are on file in City Clerk’s office. RECOMMENDATION Adopt a motion approving the application for exemption with no waiting period. CITY COUNCIL AGENDA ITEM 2A STAFF ORIGINATOR: Sarah Cotton, Finance Director MEETING DATE: June 8, 2020 TOPIC: Consider Resolution No. 20-57, Awarding the Sale of $4,800,000 General Obligation Utility Revenue Bonds, Series 2020A VOTE REQUIRED: 3/5 INTRODUCTION The City of Lino Lakes has awarded bids and will be undertaking the construction of Water Tower No. 3. As previously discussed, the construction of Water Tower No. 3 will be financed through the issuance of bonded debt. BACKGROUND On August 26, 2019, the City Council accepted bids and awarded a construction contract for the 2019 Water Tower No. 3 Project. Water Tower No. 3 is a 1.5 million gallon (MG) composite tower located off Birch Street and Centerville Road (City Property). In order to finance these improvements, the City planned to issue General Obligation Utility Revenue Bonds. On April 6, 2020, the City Council received preliminary information regarding the issuance of bonds to finance Water Tower #3, including financing recommendations. Total project cost, based on bids awarded and a construction contingency of 5%, is approximately $4,682,367. The General Obligation Utility Revenue Bonds will be repaid over a 15-year period by utilizing revenues from the City’s Area and Unit Trunk Utility fund. On April 27, 2020, the City Council approved Resolution No. 20-43, providing for the issuance of approximately $4,800,000 General Obligation Utility Revenue Bonds, Series 2020A to finance the improvements noted above. The City has since issued its Official Statement and advertised for bids for this issue. Bids are scheduled to be received the morning of June 8 by the City’s financial advisor, Baker Tilly. Terri Heaton of Baker Tilly will be in attendance to present the results of the bidding process. Approval of Resolution No. 20-57 awards sale of General Obligation Utility Revenue Bonds, Series 2020A, in the proposed aggregate principal amount of $4,800,000. RECOMMENDATION Staff is recommending approval of Resolution No. 20-57. ATTACHMENTS Preliminary Official Statement Resolution No. 20-57 _________________________ * Preliminary; subject to change. The information contained in this Preliminary Official Statement is deemed by the City to be final as of the date hereof; however, the pricing and underwriting information is subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED MAY 19, 2020 NEW ISSUE S&P Rating: Requested BANK QUALIFIED In the opinion of Kennedy & Graven, Chartered, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect) and, assuming compliance with certain covenants, interest to be paid on the Bonds is excluded from gross income for federal income tax purposes and, to the same extent, is excluded from taxable net income of individuals, estates, and trusts for Minnesota income tax purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is subject to Minnesota franchise taxes on certain corporations (including financial institutions) measured by income. No opinion will be expressed by Bond Counsel regarding the other state or federal tax consequences caused by the receipt or accrual of interest on the Bonds or arising with respect to ownership of the Bonds. See “TAX EXEMPTION” herein. $4,800,000* City of Lino Lakes, Minnesota General Obligation Utility Revenue Bonds, Series 2020A (the “Bonds”) (Book Entry Only) Dated Date: Date of Delivery Interest Due: Each February 1 and August 1, commencing February 1, 2021 The Bonds will mature February 1 in the years and amounts* as follows: 2021 $320,000 2022 $290,000 2023 $295,000 2024 $300,000 2025 $305,000 2026 $305,000 2027 $310,000 2028 $315,000 2029 $320,000 2030 $325,000 2031 $330,000 2032 $335,000 2033 $345,000 2034 $350,000 2035 $355,000 Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. The City may elect on February 1, 2029, and on any day thereafter, to redeem Bonds due on or after February 1, 2030 at a price of par plus accrued interest. The Bonds are general obligations of the City for which the City pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge net revenues of the City’s water utility for repayment the Bonds. The proceeds of the Bonds will be used to finance Water Tower #3 located within the City. Proposals shall be for not less than $4,737,600 plus accrued interest, if any, on the total principal amount of the Bonds. Proposals shall specify rates in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity as stated on the proposal must be 98.0% or greater. Following receipt of proposals, a good faith deposit will be required to be delivered to the City by the lowest bidder as described in the “Terms of Proposal” herein. Award of the Bonds will be made on the basis of True Interest Cost (TIC). The City will designate the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Bonds. Individual purchases may be made in book entry form only, in the principal amount of $5,000 and integral multiples thereof. Investors will not receive physical certificates representing their interest in the Bonds purchased. (See “Book Entry System” herein.) U.S. Bank National Association, Saint Paul, Minnesota will serve as registrar (the “Registrar”) for the Bonds. The Bonds will be available for delivery at DTC on or about July 8, 2020. PROPOSALS RECEIVED: Monday, June 8, 2020 until 10:00 A.M., Central Time CONSIDERATION OF AWARD: Council meeting commencing at 6:30 P.M., Central Time on Monday, June 8, 2020 Further information may be obtained from Baker Tilly Municipal Advisors, LLC, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101-2887 (651) 223-3000. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC. CITY OF LINO LAKES, MINNESOTA CITY COUNCIL Rob Rafferty Mayor Tony Cavegn Council Member Christopher Lyden Council Member Michael Ruhland Council Member Dale Stoesz Council Member CITY ADMINISTRATOR Jeffrey Karlson FINANCE DIRECTOR Sarah Cotton MUNICIPAL ADVISOR Baker Tilly Municipal Advisors, LLC Saint Paul, Minnesota BOND COUNSEL Kennedy & Graven, Chartered Minneapolis, Minnesota For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the City from time to time, may be treated as a Preliminary Official Statement with respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or correction) by the City. By awarding the Bonds to any underwriter or underwriting syndicate submitting a Proposal therefor, the City agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded copies of the Final Official Statement in the amount specified in the Terms of Proposal. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds, other than as contained in the Preliminary Official Statement or the Final Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Preliminary Official Statement or the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness or accuracy. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE PRELIMINARY OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE PRELIMINARY OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATE THEREOF. References herein to laws, rules, regulations, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Preliminary Official Statement or the Final Official Statement, they will be furnished upon request. Any CUSIP numbers for the Bonds included in the Final Official Statement are provided for convenience of the owners and prospective investors. The CUSIP numbers for the Bonds are assigned by an organization unaffiliated with the City. The City is not responsible for the selection of the CUSIP numbers and makes no representation as to the accuracy thereof as printed on the Bonds or as set forth in the Final Official Statement. No assurance can be given by the City that the CUSIP numbers for the Bonds will remain the same after the delivery of the Final Official Statement or the date of issuance and delivery of the Bonds. TABLE OF CONTENTS Page(s) Terms of Proposal .............................................................................................................................. i-v Introductory Statement ....................................................................................................................... 1 Continuing Disclosure ....................................................................................................................... 1 The Bonds .......................................................................................................................................... 2 Authority and Purpose ....................................................................................................................... 4 Sources and Uses of Funds ................................................................................................................ 5 Security and Financing ...................................................................................................................... 5 Future Financing ................................................................................................................................ 5 Litigation ............................................................................................................................................ 5 Legality .............................................................................................................................................. 6 Tax Exemption ................................................................................................................................... 6 Bank-Qualified Tax-Exempt Obligations .......................................................................................... 7 Rating ................................................................................................................................................. 8 Municipal Advisor ............................................................................................................................. 8 Certification ....................................................................................................................................... 8 City Property Values .......................................................................................................................... 9 City Indebtedness ............................................................................................................................... 10 City Tax Rates, Levies and Collections ............................................................................................. 13 Funds on Hand ................................................................................................................................... 14 Investments ........................................................................................................................................ 14 General Information Concerning the City ......................................................................................... 15 Governmental Organization and Services .......................................................................................... 20 Proposed Form of Legal Opinion............................................................................................. Appendix I Continuing Disclosure Certificate ............................................................................................ Appendix II Summary of Tax Levies, Payment Provisions, and Minnesota Real Property Valuation ..................................................................................... Appendix III Excerpt of 2018 Comprehensive Annual Financial Report .................................................... Appendix IV * Preliminary; subject to change. Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC. - i - THE CITY HAS AUTHORIZED BAKER TILLY MUNICIPAL ADVISORS, LLC TO NEGOTIATE THIS ISSUE ON ITS BEHALF. PROPOSALS WILL BE RECEIVED ON THE FOLLOWING BASIS: TERMS OF PROPOSAL $4,800,000* CITY OF LINO LAKES, MINNESOTA GENERAL OBLIGATION UTILITY REVENUE BONDS, SERIES 2020A (BOOK ENTRY ONLY) Proposals for the above-referenced obligations (the “Bonds”) will be received by the City of Lino Lakes, Minnesota (the “City”) on Monday, June 8, 2020 (the “Sale Date”) until 10:00 A.M., Central Time (the “Sale Time”) at the offices of Baker Tilly Municipal Advisors, LLC (“Baker Tilly MA”), 380 Jackson Street, Suite 300, Saint Paul, Minnesota, 55101, after which time proposals will be opened and tabulated. Consideration for award of the Bonds will be by the City Council at its meeting commencing at 6:30 P.M., Central Time, of the same day. SUBMISSION OF PROPOSALS Baker Tilly MA will assume no liability for the inability of a bidder or its proposal to reach Baker Tilly MA prior to the Sale Time, and neither the City nor Baker Tilly MA shall be responsible for any failure, misdirection or error in the means of transmission selected by any bidder. All bidders are advised that each proposal shall be deemed to constitute a contract between the bidder and the City to purchase the Bonds regardless of the manner in which the proposal is submitted. (a) Sealed Bidding. Completed, signed proposals may be submitted to Baker Tilly MA by email to bondservice@bakertilly.com or by fax (651) 223-3046, and must be received prior to the Sale Time. OR (b) Electronic Bidding. Proposals may also be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all proposals submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic proposal in a timely manner and in compliance with the requirements of the Terms of Proposal. Neither the City, its agents, nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the City, its agents, nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The City is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Bonds, and PARITY® is not an agent of the City. If any provisions of this Terms of Proposal conflict with information provided by PARITY®, this Terms of Proposal shall control. Further information about PARITY®, including any fee charged, may be obtained from: PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5000 - ii - DETAILS OF THE BONDS The Bonds will be dated as of the date of delivery and will bear interest payable on February 1 and August 1 of each year, commencing February 1, 2021. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature February 1 in the years and amounts* as follows: 2021 $320,000 2022 $290,000 2023 $295,000 2024 $300,000 2025 $305,000 2026 $305,000 2027 $310,000 2028 $315,000 2029 $320,000 2030 $325,000 2031 $330,000 2032 $335,000 2033 $345,000 2034 $350,000 2035 $355,000 * The City reserves the right, after proposals are opened and prior to award, to increase or reduce the principal amount of the Bonds or the amount of any maturity or maturities in multiples of $5,000. In the event the amount of any maturity is modified, the aggregate purchase price will be adjusted to result in the same gross spread per $1,000 of Bonds as that of the original proposal. Gross spread for this purpose is the differential between the price paid to the City for the new issue and the prices at which the proposal indicates the securities will be initially offered to the investing public. Proposals for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption scheduled to conform to the maturity schedule set forth above. In order to designate term bonds, the proposal must specify “Years of Term Maturities” in the spaces provided on the proposal form. BOOK ENTRY SYSTEM The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository for the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The lowest bidder (the “Purchaser”), as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC. REGISTRAR The City will name the registrar which shall be subject to applicable regulations of the Securities and Exchange Commission. The City will pay for the services of the registrar. OPTIONAL REDEMPTION The City may elect on February 1, 2029, and on any day thereafter, to redeem Bonds due on or after February 1, 2030. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All redemptions shall be at a price of par plus accrued interest. - iii - SECURITY AND PURPOSE The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge net revenues of the City's water utility fund for repayment of the Bonds. The proceeds of the Bonds will be used to finance Water Tower #3 located within the City. BANK QUALIFIED TAX-EXEMPT OBLIGATIONS The City will designate the Bonds as qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. BIDDING PARAMETERS Proposals shall be for not less than $4,737,600 plus accrued interest, if any, on the total principal amount of the Bonds. No proposal can be withdrawn or amended after the time set for receiving proposals on the Sale Date unless the meeting of the City scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 1/100 or 1/8 of 1%. The initial price to the public for each maturity as stated on the proposal must be 98.0% or greater. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional proposals will be accepted. ESTABLISHMENT OF ISSUE PRICE In order to provide the City with information necessary for compliance with Section 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (collectively, the “Code”), the Purchaser will be required to assist the City in establishing the issue price of the Bonds and shall complete, execute, and deliver to the City prior to the closing date, a written certification in a form acceptable to the Purchaser, the City, and Bond Counsel (the “Issue Price Certificate”) containing the following for each maturity of the Bonds (and, if different interest rates apply within a maturity, to each separate CUSIP number within that maturity): (i) the interest rate; (ii) the reasonably expected initial offering price to the “public” (as said term is defined in Treasury Regulation Section 1.148-1(f) (the “Regulation”)) or the sale price; and (iii) pricing wires or equivalent communications supporting such offering or sale price. [However, such Issue Price Certificate may indicate that the Purchaser has purchased the Bonds for its own account in a capacity other than as an underwriter or wholesaler, and currently has no intent to reoffer the Bonds for sale to the public.] Any action to be taken or documentation to be received by the City pursuant hereto may be taken or received on behalf of the City by Baker Tilly MA. The City intends that the sale of the Bonds pursuant to this Terms of Proposal shall constitute a “competitive sale” as defined in the Regulation based on the following: (i) the City shall cause this Terms of Proposal to be disseminated to potential bidders in a manner that is reasonably designed to reach potential bidders; (ii) all bidders shall have an equal opportunity to submit a bid; (iii) the City reasonably expects that it will receive bids from at least three bidders that have established industry reputations for underwriting municipal bonds such as the Bonds; and (iv) the City anticipates awarding the sale of the Bonds to the bidder who provides a proposal with the lowest true interest cost, as set forth in this Terms of Proposal (See “AWARD” herein). Any bid submitted pursuant to this Terms of Proposal shall be considered a firm offer for the purchase of the Bonds, as specified in the proposal. The Purchaser shall constitute an “underwriter” as said term is defined in the Regulation. By submitting its proposal, the Purchaser confirms that it shall require any agreement among underwriters, a selling group agreement, or other agreement to which it is a party relating to the initial sale of the Bonds, to include provisions requiring compliance with the provisions of the Code and the Regulation regarding the initial sale of the Bonds. - iv - If all of the requirements of a “competitive sale” are not satisfied, the City shall advise the Purchaser of such fact prior to the time of award of the sale of the Bonds to the Purchaser. In such event, any proposal submitted will not be subject to cancellation or withdrawal. Within twenty-four (24) hours of the notice of award of the sale of the Bonds, the Purchaser shall advise the City and Baker Tilly MA if 10% of any maturity of the Bonds (and, if different interest rates apply within a maturity, to each separate CUSIP number within that maturity) has been sold to the public and the price at which it was sold. The City will treat such sale price as the “issue price” for such maturity, applied on a maturity-by-maturity basis. The City will not require the Purchaser to comply with that portion of the Regulation commonly described as the “hold-the-offering-price” requirement for the remaining maturities, but the Purchaser may elect such option. If the Purchaser exercises such option, the City will apply the initial offering price to the public provided in the proposal as the issue price for such maturities. If the Purchaser does not exercise that option, it shall thereafter promptly provide the City and Baker Tilly MA the prices at which 10% of such maturities are sold to the public; provided such determination shall be made and the City and Baker Tilly MA notified of such prices whether or not the closing date has occurred, until the 10% test has been satisfied as to each maturity of the Bonds or until all of the Bonds of a maturity have been sold. GOOD FAITH DEPOSIT To have its proposal considered for award, the Purchaser is required to submit a good faith deposit via wire transfer to the City in the amount of $48,000 (the “Deposit”) no later than 1:00 P.M., Central Time on the Sale Date. The Purchaser shall be solely responsible for the timely delivery of its Deposit, and neither the City nor Baker Tilly MA have any liability for delays in the receipt of the Deposit. If the Deposit is not received by the specified time, the City may, at its sole discretion, reject the proposal of the lowest bidder, direct the second lowest bidder to submit a Deposit, and thereafter award the sale to such bidder. A Deposit will be considered timely delivered to the City upon submission of a federal wire reference number by the specified time. Wire transfer instructions will be available from Baker Tilly MA following the receipt and tabulation of proposals. The successful bidder must send an e-mail including the following information: (i) the federal reference number and time released; (ii) the amount of the wire transfer; and (iii) the issue to which it applies. Once an award has been made, the Deposit received from the Purchaser will be retained by the City and no interest will accrue to the Purchaser. The amount of the Deposit will be deducted at settlement from the purchase price. In the event the Purchaser fails to comply with the accepted proposal, said amount will be retained by the City. AWARD The Bonds will be awarded on the basis of the lowest interest rate to be determined on a true interest cost (TIC) basis calculated on the proposal prior to any adjustment made by the City. The City's computation of the interest rate of each proposal, in accordance with customary practice, will be controlling. The City will reserve the right to: (i) waive non-substantive informalities of any proposal or of matters relating to the receipt of proposals and award of the Bonds, (ii) reject all proposals without cause, and (iii) reject any proposal that the City determines to have failed to comply with the terms herein. BOND INSURANCE AT PURCHASER'S OPTION The City has not applied for or pre-approved a commitment for any policy of municipal bond insurance with respect to the Bonds. If the Bonds qualify for municipal bond insurance and a bidder desires to purchase a policy, such indication, the maturities to be insured, and the name of the desired insurer must be set forth on the bidder’s proposal. The City specifically reserves the right to reject any bid specifying municipal bond insurance, even though such bid may result in the lowest TIC to the City. All costs associated with the issuance and administration of such policy and associated ratings and expenses (other than any independent rating requested by the City) shall be paid by the successful bidder. Failure of the municipal bond insurer to issue the policy after the award of the Bonds shall not constitute cause for failure or refusal by the successful bidder to accept delivery of the Bonds. - v - CUSIP NUMBERS If the Bonds qualify for the assignment of CUSIP numbers such numbers will be printed on the Bonds; however, neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the Purchaser to accept delivery of the Bonds. Baker Tilly MA will apply for CUSIP numbers pursuant to Rule G-34 implemented by the Municipal Securities Rulemaking Board. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the Purchaser. SETTLEMENT On or about July 8, 2020, the Bonds will be delivered without cost to the Purchaser through DTC in New York, New York. Delivery will be subject to receipt by the Purchaser of an approving legal opinion of Kennedy & Graven, Chartered of Minneapolis, Minnesota, and of customary closing papers, including a no-litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the City or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has been made impossible by action of the City, or its agents, the Purchaser shall be liable to the City for any loss suffered by the City by reason of the Purchaser's non-compliance with said terms for payment. CONTINUING DISCLOSURE In accordance with SEC Rule 15c2-12(b)(5), the City will undertake, pursuant to the resolution awarding sale of the Bonds, to provide annual reports and notices of certain events. A description of this undertaking is set forth in the Official Statement. The purchaser's obligation to purchase the Bonds will be conditioned upon receiving evidence of this undertaking at or prior to delivery of the Bonds. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Bonds, and said Preliminary Official Statement has been deemed final by the City as of the date thereof within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For an electronic copy of the Preliminary Official Statement or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the City, Baker Tilly Municipal Advisors, LLC, by telephone (651) 223-3000, or by email bondservice@bakertilly.com. The Preliminary Official Statement will also be made available at https://go.bakertilly.com/bond-sales-calendar. A Final Official Statement (as that term is defined in Rule 15c2-12) will be prepared, specifying the maturity dates, principal amounts, and interest rates of the Bonds, together with any other information required by law. By awarding the Bonds to the Purchaser, the City agrees that, no more than seven business days after the date of such award, it shall provide to the Purchaser an electronic copy of the Final Official Statement. The City designates the Purchaser as its agent for purposes of distributing the Final Official Statement to each syndicate member, if applicable. The Purchaser agrees that if its proposal is accepted by the City, (i) it shall accept designation and (ii) it shall enter into a contractual relationship with its syndicate members for purposes of assuring the receipt of the Final Official Statement by each such syndicate member. Dated April 27, 2020 BY ORDER OF THE CITY COUNCIL /s/ Julie Bartell City Clerk ____________________________ * Preliminary; subject to change. - 1 - OFFICIAL STATEMENT $4,800,000* CITY OF LINO LAKES, MINNESOTA GENERAL OBLIGATION UTILITY REVENUE BONDS, SERIES 2020A (BOOK ENTRY ONLY) INTRODUCTORY STATEMENT General This Official Statement contains certain information relating to the City of Lino Lakes, Minnesota (the “City”) and its issuance of $4,800,000* General Obligation Utility Revenue Bonds, Series 2020A (the “Bonds”). The Bonds are general obligations of the City for which it pledges its full faith and credit and power to levy direct general ad valorem taxes. In addition, the City will pledge net revenues of the City's water utility fund for repayment of the Bonds. Inquiries may be directed to Ms. Sarah Cotton, Finance Director, City of Lino Lakes, 600 Town Center Parkway, Lino Lakes, Minnesota 55014, by telephoning (651) 982-2410, or by emailing sarah.cotton@ci.lino-lakes.mn.us. Inquiries may also be made to Baker Tilly Municipal Advisors, LLC, 380 Jackson Street, Suite 300, Saint Paul, Minnesota 55101-2887, by telephoning (651) 223-3000, or by e-mailing bondservice@bakertilly.com. Potential Impacts Resulting from Coronavirus (COVID-19) On March 11, 2020, the World Health Organization proclaimed the novel strain of Coronavirus (COVID-19) to be a pandemic. In an effort to lessen the risk of transmission of COVID-19, the United States government, state governments, local governments and private industries have taken measures to limit social interactions in an effort to limit the spread of COVID-19, affecting business activities and impacting global, state and local commerce and financial markets. The emergence of COVID-19 and the spread thereof is an emerging and evolving issue. As the federal, state, and local governments, including the City, continue efforts to contain and limit the spread of COVID-19, future tax and other revenue collections may deviate from historical or anticipated collections and may have an adverse impact on the financial position and operations of the City and its ability to fund debt obligations, including the Bonds in accordance with their terms. The City is not able to predict and makes no representations as to the economic impact of the COVID-19 pandemic on the City or its financial position. CONTINUING DISCLOSURE In order to assist the Underwriter in complying with SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission, pursuant to the Securities Exchange Act of 1934, as the same may be amended from time to time, and official interpretations thereof (the “Rule”), pursuant to the resolution awarding the sale of the Bonds (the “Resolution”), the City has entered into an undertaking (the “Undertaking”) for the benefit of holders including beneficial owners of the Bonds to provide certain financial information and operating data relating to the City to the Electronic Municipal Market Access system (“EMMA”) annually, and to provide notices of the occurrence of certain events enumerated in the Rule to EMMA or the - 2 - Municipal Securities Rulemaking Board (the “MSRB”). The specific nature of the Undertaking, as well as the information to be contained in the annual report or the notices of material events, is set forth in the Undertaking to be executed and delivered at the time the Bonds are delivered in substantially the form attached hereto as Appendix II. The City believes it has complied for the past five years in accordance with the terms of its previous continuing disclosure undertakings entered into pursuant to the Rule, except to the extent the following are deemed to be material. In reviewing its past disclosure practices, the City notes the following: • Prior continuing disclosure undertakings entered into by the City included language stating that the City’s audited financial statements would be filed “as soon as available.” Although not always filed “as soon as available,” the audited financial statements were filed within the required twelve (12) month timeframe as required in each undertaking. A failure by the City to comply with the Undertaking will not constitute an event of default on the Bonds or under any provisions of the Resolution (although holders will have any other available remedy at law or in equity subject to certain limitations). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. THE BONDS General Description The Bonds are dated as of the date of delivery and will mature annually on February 1 as set forth on the front cover of this Official Statement. The Bonds are issued in book entry form. Interest on the Bonds is payable on February 1 and August 1 of each year, commencing February 1, 2021. Interest will be payable to the holder (initially Cede & Co.) registered on the books of the Registrar as of the fifteenth day of the calendar month next preceding such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Principal of and interest on the Bonds will be paid as described in the section herein entitled “Book Entry System.” U.S. Bank National Association, Saint Paul, Minnesota will serve as Registrar for the Bonds, and the City will pay for registrar services. Redemption Provisions Thirty days’ written notice of redemption shall be given to the registered owner(s) of the Bonds. Failure to give such written notice to any registered owner of the Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Bonds. All Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment. Optional Redemption The City may elect on February 1, 2029, and on any day thereafter, to redeem Bonds due on or after February 1, 2030. Redemption may be in whole or in part and if in part at the option of the City and in such manner as the City shall determine. If less than all the Bonds of a maturity are called for redemption, the City will notify DTC of the particular amount of such maturity to be redeemed. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All redemptions shall be at a price of par plus accrued interest. - 3 - Book Entry System The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit - 4 - notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or its agent on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or its agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to City or its agent. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. AUTHORITY AND PURPOSE The Bonds are being issued pursuant to Minnesota Statutes, Chapters 444 and 475. The proceeds of the Bonds will be used to finance Water Tower #3 located within the City. - 5 - SOURCES AND USES OF FUNDS The composition of the Bonds is estimated to be as follows: Sources of Funds: Principal Amount $4,800,000 Total Sources of Funds $4,800,000 Uses of Funds: Deposit to Project Fund $4,682,367 Estimated Underwriter’s Compensation 62,400 Estimated Costs of Issuance 55,233 Total Uses of Funds $4,800,000 SECURITY AND FINANCING The Bonds will be general obligations of the City for which the City will pledge its full faith and credit and power to levy direct general ad valorem taxes; however, the City does not anticipate the need to levy taxes for repayment of the Bonds. Pursuant to Minnesota Statutes, Chapter 444 and the Resolution, the City will covenant to impose and collect charges for the service, use, availability and connection to the water utility to produce net revenues in amounts sufficient to support the operation of the water utility and to pay 105% of debt service on obligations to which it has pledged its water utility revenues. The City is required to annually review the budget of the water utility to determine whether current rates and charges are sufficient and to adjust such rates and charges as necessary. FUTURE FINANCING The City does not anticipate issuing any additional long-term general obligation debt within the next 90 days. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. - 6 - LEGALITY The Bonds are subject to approval as to certain matters by Kennedy & Graven, Chartered, of Minneapolis, Minnesota, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify any of the financial or statistical statements or data contained in this Official Statement and will express no opinion with respect thereto. A legal opinion in substantially the form set out in Appendix I herein will be delivered at closing. TAX EXEMPTION In the opinion of Kennedy & Graven, Chartered, Bond Counsel, based on present federal and Minnesota laws, regulations, rulings and decisions (which excludes any pending legislation which may have a retroactive effect), and assuming compliance with certain covenants set forth in the Resolution, the interest on the Bonds is excluded from gross income for federal income tax purposes and, to the same extent, from taxable net income of individuals, estates, and trusts for Minnesota income tax purposes, and is not a preference item for purposes of computing the federal alternative minimum tax or the Minnesota alternative minimum tax imposed on individuals, trusts, and estates. Such interest is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. Noncompliance following the issuance of the Bonds with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”) and covenants of the Resolution may result in the inclusion of interest on the Bonds in gross income of the owners thereof for federal income tax purposes and in net taxable income of individuals, estates, and trusts for Minnesota income tax purposes. No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to federal or State of Minnesota income taxation. The Code provides that in the case of an insurance company subject to the tax imposed by Section 831 of the Code, the amount which otherwise would be taken into account as “losses incurred” under Section 832(b)(5) shall be reduced by an amount equal to the applicable percentage of the interest on the Bonds that is received or accrued during the taxable year. For purposes hereof, the applicable percentage is 5.25% divided by the highest rate in effect under Section 11(b) of the Code. Interest on the Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code. Under certain circumstances, interest on the Bonds may be subject to the tax on “excess net passive income” of Subchapter S corporations imposed by Section 1375 of the Code. The above is not a comprehensive list of all federal tax consequences which may arise from the receipt of interest on the Bonds. The receipt of interest on the Bonds may otherwise affect the federal or Minnesota income tax liability of the recipient based on the particular taxes to which the recipient is subject and the particular tax status of other items or deductions. Bond Counsel expresses no opinion regarding any such consequences. All prospective purchasers of the Bonds are advised to consult their own tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Bonds. Original Issue Premium All or certain maturities of the Bonds (the “Premium Bonds”) may be sold to the public at an amount in excess of their stated redemption price at maturity. Such excess of the purchase price of the Bonds over its stated redemption price at maturity constitutes a premium with respect to such Premium Bonds. A purchaser of a Premium Bond must amortize the premium over the term of the Premium Bond using - 7 - constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the basis in the Premium Bond is reduced by a corresponding amount, resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or other disposition of such Premium Bond prior to its maturity. Even though the purchaser’s basis is reduced, no federal income tax deduction is allowed. Purchasers of Premium Bonds, whether at the time of initial issuance or subsequent thereto, should consult with their tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning such Premium Bonds. Original Issue Discount All or certain maturities of the Bonds (the “Discount Bonds”) may be sold at a discount from the principal amount payable on such Discount Bonds at maturity. The difference between the price at which a substantial amount of the Discount Bonds of a given maturity is first sold to the public (the “Issue Price”) and the principal amount payable at maturity constitutes “original issue discount” under the Code. The amount of original issue discount that accrues to a holder of a Discount Bond under section 1288 of the Code is excluded from federal gross income to the same extent that stated interest on such Discount Bond would be so excluded. The amount of the original issue discount that accrues with respect to a Discount Bond under section 1288 is added to the owner’s federal tax basis in determining gain or loss upon disposition of such Discount Bond (whether by sale, exchange, redemption or payment at maturity). Interest in the form of original issue discount accrues under section 1288 pursuant to a constant yield method that reflects semiannual compounding on dates that are determined by reference to the maturity date of the Discount Bond. The amount of original issue discount that accrues for any particular semiannual accrual period generally is equal to the excess of (1) the product of (a) one-half of the yield on such Bonds (adjusted as necessary for an initial short period) and (b) the adjusted issue price of such Bonds, over (2) the amount of stated interest actually payable. For purposes of the preceding sentence, the adjusted issue price is determined by adding to the Issue Price for such Bonds the original issue discount that is treated as having accrued during all prior semiannual accrual periods. If a Discount Bond is sold or otherwise disposed of between semiannual compounding dates, then the original issue discount that would have accrued for that semiannual accrual period for federal income tax purposes is allocated ratably to the days in such accrual period. If a Discount Bond is purchased at a price that exceeds the sum of the Issue Price plus accrued interest and accrued original issue discount, the amount of original issue discount that is deemed to accrue thereafter to the purchaser is reduced by an amount that reflects amortization of such excess over the remaining term of such Bond. No opinion is expressed as to state and local income tax treatment of original issue discount. It is possible under certain state and local income tax laws that original issue discount on a Discount Bond may be taxable in the year of accrual, and may be deemed to accrue differently than under federal law. Holders of Discount Bonds should consult their tax advisors with respect to the computation and accrual of original issue discount for federal income tax purposes and with respect to the state and local tax consequences of owning such Discount Bonds. BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS The City will designate the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code, as amended, relating to the ability of financial institutions to deduct from income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. - 8 - RATING Application for a rating of the Bonds has been made to S&P Global Ratings (“S&P”), 55 Water Street, New York, New York. If a rating is assigned, it will reflect only the opinion of S&P. Any explanation of the significance of the rating may be obtained only from S&P. There is no assurance that a rating, if assigned, will continue for any given period of time, or that such rating will not be revised, suspended or withdrawn, if, in the judgment of S&P, circumstances so warrant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the Bonds. MUNICIPAL ADVISOR The City has retained Baker Tilly Municipal Advisors, LLC, of Saint Paul, Minnesota as municipal advisor in connection with certain aspects of the issuance of the Bonds. In preparing this Official Statement, Baker Tilly Municipal Advisors, LLC has relied upon governmental officials, and other sources, who have access to relevant data to provide accurate information for this Official Statement. Baker Tilly Municipal Advisors, LLC has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. Baker Tilly Municipal Advisors, LLC is an independent advisory firm, registered as a municipal advisor, and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. CERTIFICATION The City has authorized the distribution of the Preliminary Official Statement for use in connection with the initial sale of the Bonds and a Final Official Statement following award of the Bonds. The Purchaser will be furnished with a certificate signed by the appropriate officers of the City stating that the City examined each document and that, as of the respective date of each document and the date of such certificate, each document did not and does not contain any untrue statement of material fact or omit to state a material fact necessary, in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. - 9 - CITY PROPERTY VALUES Trend of Values(a) Assessment/ Assessor’s Market Value Adjusted Collection Estimated Sales Economic Homestead Taxable Taxable Net Year Market Value Ratio(b) Market Value(c) Exclusion Market Value Tax Capacity 2018/19(d) $2,183,201,500 92.9% $2,348,967,021 $71,760,604 $2,082,803,803 $23,969,208 2017/18 2,062,069,400 94.0 2,193,275,173 74,831,995 1,959,826,108 22,666,480 2016/17 1,912,116,700 93.2 2,050,592,347 81,545,887 1,808,417,118 20,973,767 2015/16 1,807,065,400 92.1 1,961,793,323 85,498,525 1,699,288,883 19,819,213 2014/15 1,798,481,600 95.8 1,875,798,422 84,278,943 1,694,366,064 19,669,590 (a) For a description of the Minnesota property tax system, see Appendix III. (b) Sales Ratio Study for the year of assessment as posted by the Minnesota Department of Revenue, https://www.revenue.state.mn.us/economic-market-values. (c) Economic market values for the year of assessment as posted by the Minnesota Department of Revenue, https://www.revenue.state.mn.us/economic-market-values. (d) 2018/19 is the most recent information; 2019/20 is not yet available. Source: Anoka County, Minnesota, October 2019, except as otherwise noted. 2018/19 Adjusted Taxable Net Tax Capacity: $23,969,208* Real Estate: Residential Homestead $17,089,918 75.3% Commercial/Industrial and Public Utility 3,294,449 14.5 Residential Non-Homestead 1,464,874 6.5 Agricultural 313,049 1.4 Seasonal Recreational 53,051 0.2 Personal Property 471,895 2.1 2018/19 Net Tax Capacity $22,687,236 100.0% Less: Captured Tax Increment (606,568) Contribution to Fiscal Disparities (1,322,808) Plus: Distribution from Fiscal Disparities 3,211,348 2018/19 Adjusted Taxable Net Tax Capacity $23,969,208 * Excludes mobile home valuation of $14,944. Ten of the Largest Taxpayers in the City 2018/19 Net Taxpayer Type of Property Tax Capacity AX Lino Lakes LP Commercial $ 371,186 Target Corporation Retail 225,052 Xcel Energy Utility 214,794 MN WI Biynah LLC Industrial 207,126 Minnegasco Inc. Utility 138,204 Gargaro Properties Inc. Industrial 130,356 Molin Concrete Products Co. Concrete Products 121,210 Taylor Corporation Promotional/Printing Products 109,834 Kohls Department Store Retail 92,196 Marmon/Keystone Corp. Industrial 89,730 Total $1,699,688* * Represents 7.1% of the City's 2018/19 adjusted taxable net tax capacity. - 10 - CITY INDEBTEDNESS Legal Debt Limit and Debt Margin* Legal Debt Limit (3% of 2018/19 Estimated Market Value) $ 65,496,045 Less: Outstanding Debt Subject to Limit (12,324,485) Legal Debt Margin as of July 8, 2020 $ 53,171,560 * The legal debt margin is referred to statutorily as the “Net Debt Limit” and may be increased by debt service funds and current revenues which are applicable to the payment of debt in the current fiscal year. NOTE: Certain types of debt are not subject to the legal debt limit. See Appendix III – Debt Limitations. General Obligation Debt Supported Solely by Taxes* Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 7-8-2020 11-15-12 $1,580,000 Improvements 2-1-2024 $ 650,000 5-28-15 2,635,000 Street Reconstruction 2-1-2031 2,030,000 8-25-15 963,000 Equipment Certificates 12-31-2020 201,000 1-16-16 294,525 Capital Equipment 2-1-2026 136,950 3-1-17 311,000 Equipment Certificates 12-31-2020 103,000 2-1-18 303,900 Equipment Certificates 12-31-2021 200,000 12-19-18 4,950,000 Street Reconstruction 2-1-2034 4,950,000 2-1-19 388,535 Equipment Certificates 12-31-2022 388,535 Total $8,659,485 * These issues are subject to the legal debt limit. General Obligation Special Assessment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 7-8-2020 7-15-13 $ 615,000 Taxable Improvements 2-1-2024 $ 255,000 11-20-14 1,510,000 Improvements 2-1-2026 450,000 11-23-16 1,975,000 Taxable Improvements Refunding 2-1-2021 510,000 Total $1,215,000 General Obligation Tax Increment Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 7-8-2020 7-15-07 $4,215,000 Tax Increment 2-1-2024 $1,020,000 General Obligation Tax Abatement Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 7-8-2020 5-28-15 $460,000 Tax Abatement 2-1-2026 $ 280,000 11-23-16 1,600,000 Tax Abatement Refunding 2-1-2023 870,000 Total $1,150,000 - 11 - General Obligation Utility Revenue Debt Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 7-8-2020 11-20-14 $1,135,000 Water Revenue 2-1-2025 $ 590,000 11-23-16 1,420,000 Water Utility Revenue 2-1-2027 1,015,000 12-19-18 1,670,000 Water and Sewer Utility Revenue 2-1-2034 1,600,000 12-19-18 295,000 Water Utility Revenue 2-1-2029 275,000 7-8-20 4,800,000 Water Tower #3 (the Bonds) 2-1-2035 4,800,000 Total $8,280,000 Lease Obligations* Est. Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 7-8-2020 6-18-15 $4,350,000 Fire Station 4-1-2036 $3,665,000 * These bonds were issued by the Lino Lakes Economic Development Authority, Minnesota (the “Authority”) and are payable from annual appropriation lease payments made by the City to the Authority pursuant to a lease agreement. This issue is subject to the legal debt limit. Estimated Calendar Year Debt Service Payments Including the Bonds G.O. Debt Supported G.O. Special Solely by Taxes Assessment Debt Principal Principal Year Principal & Interest Principal & Interest 2020 (at 7-8) $ 530,000 $ 669,861 (Paid) $ 12,885 2021 844,000 1,096,939 $ 845,000 863,614 2022 747,325 978,681 100,000 109,851 2023 640,790 850,640 100,000 106,604 2024 665,790 854,310 100,000 103,286 2025 515,790 685,807 35,000 36,208 2026 525,790 677,823 35,000 35,403 2027 575,000 705,394 2028 555,000 662,681 2029 575,000 663,044 2030 590,000 661,056 2031 610,000 662,803 2032 415,000 451,656 2033 430,000 452,656 2034 440,000 447,700 Total $8,659,485* $10,521,051 $1,215,000 $1,267,851 * 71.3% of this debt will be retired within ten years. - 12 - Estimated Calendar Year Debt Service Payments Including the Bonds (Continued) G.O. Tax G.O. Tax Increment Debt Abatement Debt Principal Principal Year Principal & Interest Principal & Interest 2020 (at 7-8) (Paid) $ 20,863 (Paid) $ 8,968 2021 $ 230,000 267,126 $ 320,000 335,698 2022 245,000 272,504 335,000 345,980 2023 265,000 282,016 350,000 355,763 2024 280,000 285,775 45,000 47,575 2025 50,000 51,625 2026 50,000 50,563 Total $1,020,000 $1,128,284 $1,150,000 $1,196,172 G.O. Utility Revenue Debt Lease Obligations Principal Principal Year Principal & Interest(a) Principal & Interest 2020 (at 7-8) (Paid) $ 54,237 (Paid) $ 61,094 2021 $ 680,000 863,695 $ 180,000 299,488 2022 660,000 824,581 185,000 299,013 2023 675,000 824,882 190,000 298,388 2024 695,000 829,379 200,000 302,538 2025 710,000 829,085 205,000 301,463 2026 590,000 694,766 210,000 300,238 2027 605,000 695,384 215,000 298,863 2028 465,000 541,899 220,000 297,338 2029 480,000 545,906 230,000 300,588 2030 450,000 506,470 235,000 298,613 2031 465,000 511,917 245,000 301,106 2032 470,000 506,628 250,000 298,063 2033 485,000 510,609 260,000 298,800 2034 495,000 508,758 270,000 298,200 2035 355,000 358,816 280,000 297,200 2036 290,000 295,800 Total $8,280,000(b) $9,607,012 $3,665,000(c) $4,846,793 (a) Includes the Bonds at an assumed average annual interest rate of 1.76%. (b) 72.6% of this debt will be retired within ten years. (c) 56.5% of this debt will be retired within ten years. - 13 - Overlapping Debt 2018/19 Debt Applicable to Adjusted Taxable Est. G.O. Debt Tax Capacity in City Taxing Unit(a) Net Tax Capacity As of 7-8-2020(b) Percent Amount Anoka County $ 395,512,424 $ 64,255,000(c) 6.1% $ 3,919,555 ISD No. 12 (Centennial) 38,536,228 93,272,738 43.7 40,760,187 ISD No. 624 (White Bear Lake) 90,511,287 315,530,000 3.0 9,465,900 ISD No. 831 (Forest Lake) 62,678,598 161,160,000 7.0 11,281,200 Metropolitan Council 4,281,620,797 3,635,000(d) 0.6 21,810 Metropolitan Transit 3,433,535,041 221,425,000 0.7 1,549,975 Total $66,998,627 (a) Only those units with outstanding general obligation debt are shown here. (b) Excludes general obligation tax and aid anticipation certificates and revenue-supported debt. (c) Includes certificates of participation. (d) Excludes general obligation debt supported by wastewater revenues and housing rental payments. Includes certificates of participation. Debt Ratios* G.O. G.O. Direct & Direct Debt Overlapping Debt To 2018/19 Estimated Market Value ($2,183,201,500) 0.72% 3.79% Per Capita (21,347 – 2018 MN State Demographer Estimate) $76 $3,874 * Excludes general obligation utility revenue debt and includes lease obligations. CITY TAX RATES, LEVIES AND COLLECTIONS Tax Capacity Rates for a City Resident in Independent School District No. 12 (Centennial) 2018/19 For 2014/15 2015/16 2016/17 2017/18 Total Debt Only Anoka County(a) 38.443% 39.398% 37.273% 35.820% 34.908% 3.800% City of Lino Lakes 43.770 46.019 45.140 42.826 41.817 7.942 ISD No. 12 (Centennial)(b) 36.562 36.426 29.097 34.970 35.984 23.560 Special Districts(c) 5.701 5.901 5.378 5.172 4.865 1.839 Total 124.476% 127.744% 116.888% 118.788% 117.574% 37.141% (a) Includes Anoka County Library and County/City Radio. (b) Independent School District No. 12 (Centennial) also has a 2018/19 tax rate of 0.28318% spread on the market value of property in support of an excess operating levy. (c) Special districts include Metropolitan Council, Metropolitan Transit District, Metropolitan Mosquito Control, Rice Creek Watershed, and Anoka County Railroad Authority. NOTE: This table includes only net tax capacity based rates. Certain other tax rates are based on market value. See Appendix III. - 14 - Tax Levies and Collections Collected During Collected and/or Abated Net Collection Year As of 6-17-19 Levy/Collect Levy* Amount Percent Amount Percent 2018/19 $10,050,225 (In Process of Collection) 2017/18 9,771,791 $9,724,860 99.5% $9,755,554 99.8% 2016/17 9,486,823 9,447,023 99.6 9,480,463 99.8 2015/16 9,053,413 9,012,162 99.5 9,048,661 99.9 2014/15 8,680,907 8,626,115 99.4 8,678,768 99.9 * The net levy excludes state aid for property tax relief and fiscal disparities, if applicable. The net levy is the basis for computing tax capacity rates. See Appendix III. FUNDS ON HAND As of March 31, 2020 General Fund $ 4,532,439 Special Revenue Funds 697,814 Capital Project Funds 18,211,724 Enterprise Fund 15,670,342 Debt Service Funds 2,417,317 Agency Funds 1,851,099 Total Cash and Investments $43,380,735 INVESTMENTS As of March 31, 2020, the City had total investments of $43,380,735, invested in the following manner: Percent of Portfolio Checking/CDs/money market $31,802,183 93.31% U.S. treasuries and agencies 503,968 1.16 Bonds 11,074,584 25.53 Total $43,380,735 100.00% In October 1997, the City adopted an investment policy that is in accordance with Minnesota Statutes, Chapter 118A. Some highlights of the City’s investment policy are as follows: 1. The primary objective is the safety of the principal. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risks and interest rate risk. a. Investments will be limited to those investments specified in Minnesota Statutes, Chapter 118A. - 15 - b. Annually appointing the financial institutions, brokers/dealers, intermediaries and advisors. c. Diversifying the investment portfolio so that potential losses on individual securities will be minimized. d. Investing funds in primarily shorter-term securities. 2. The secondary objective is to have the portfolio remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. 3. The third objective is to attain a market rate of return through budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. 4. The Director of Finance and his/her appointed employees in case of unavailability are authorized to manage the investment program. A system of internal controls shall be followed and shall be designed to prevent losses from theft or misuse to provide reasonable assurance that the objectives are met. 5. The Director of Finance will prepare an investment report monthly for the City Administrator. 6. All City Funds must be invested with financial institutions authorized to provide investment services per statute 118A.06, with representatives who are licensed and with institutions which have a minimum capital requirement of $5 million and at least five years of operation. GENERAL INFORMATION CONCERNING THE CITY The City is located in southeast Anoka County, approximately 20 miles north of the City of Saint Paul. The City is part of the Minneapolis/Saint Paul metropolitan area and covers an area of approximately 33 square miles (21,120 acres). Population The City’s population trend is shown below. Percent Population Change 2018 MN State Demographer Estimate 21,347 5.6% 2010 U.S. Census 20,216 20.4 2000 U.S. Census 16,791 90.7 1990 U.S. Census 8,807 77.3 1980 U.S. Census 4,966 -- Sources: Minnesota State Demographic Center, mn.gov/admin/demography and United States Census Bureau, http://www.census.gov/. - 16 - The City’s estimated population by age group for the past five years is as follows: Data Year/ Report Year 0-17 18-34 35-64 65 and Over 2019/20 5,076 5,426 9,686 2,331 2018/19 5,075 5,274 9,761 2,132 2017/18 5,049 5,071 9,709 1,942 2016/17 5,113 4,957 9,805 1,772 2015/16 5,233 4,843 9,940 1,613 Sources: Environics Analytics, Claritas, Inc., and The Nielsen Company. Transportation Interstate 35E, Interstate 35W, and Minnesota Highway 49 traverse the community. Major Employers Approximate Number Employer Product/Service of Employees State of Minnesota Correctional Facility Medium security prison 478(b) Independent School District No. 12 (Centennial) Public education 391(a) Target Corporation Retail 200 Molin Concrete Products Co. Concrete products 130 Anoka County Juvenile Center Juvenile detention center 130 Rehbein Transit Inc. Bus transportation 130 Kohls Retail 123 Distribution Alternatives Warehousing/distribution 120 YMCA Health/fitness 120(b) City of Lino Lakes Government 70(a) Northern Wholesale Warehousing/distribution 61 Star Equipment LTD Mechanical/repair 51 (a) Includes full- and part-time employees. (b) As of October 2018; most recent information available. Sources: This does not purport to be a comprehensive list and is based on a May 2019 best efforts telephone survey of individual employers and the City’s 2017 Comprehensive Annual Financial Report. Some employers do not respond to inquiries. - 17 - Labor Force Data Annual Average March 2016 2017 2018 2019 2020 Labor Force: Anoka County 192,442 195,304 196,586 198,938 197,315 Minneapolis/Saint Paul MSA 1,938,642 1,979,780 2,016,208 2,023,566 2,006,195 State of Minnesota 3,035,241 3,057,358 3,071,433 3,109,647 3,065,293 Unemployment Rate: Anoka County 3.7% 3.3% 2.8% 3.1% 3.6% Minneapolis/Saint Paul MSA 3.6 3.3 2.7 3.0 3.4 State of Minnesota 3.9 3.4 2.9 3.2 3.9 Source: Minnesota Department of Employment and Economic Development, https://apps.deed.state.mn.us/lmi/laus. 2020 data are preliminary. Retail Sales and Effective Buying Income (EBI) City of Lino Lakes Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2019/20 $179,281 $708,068 $88,594 2018/19 190,482 747,718 87,295 2017/18 257,154 669,361 84,273 2016/17 142,434 643,078 83,989 2015/16 151,324 600,358 80,238 Anoka County Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI 2019/20 $6,081,846 $10,914,936 $67,906 2018/19 5,776,881 10,462,844 66,813 2017/18 5,068,800 9,874,841 64,857 2016/17 4,857,435 9,421,969 62,169 2015/16 4,428,876 8,946,250 60,388 The 2019/20 Median Household EBI for the State of Minnesota was $60,915. The 2018/19 Median Household EBI for the United States was $54,686. Sources: Environics Analytics, Claritas, Inc., and The Nielsen Company. - 18 - Permits Issued by the City New Single New Total Value* Family Residential Commercial/Industrial (All Permits) Year Number Value Number Value 2020 (to 3-31) 26 $ 7,117,727 0 $ 0 $ 9,350,081 2019 114 28,706,490 5 2,917,800 42,723,699 2018 160 37,379,597 2 2,828,860 51,853,544 2017 133 32,003,018 1 844,771 55,799,312 2016 100 26,157,239 2 13,241,334 54,291,475 2015 47 12,807,908 2 6,196,000 27,324,068 2014 33 9,046,060 2 1,111,000 13,812,706 2013 30 7,666,210 5 4,505,422 18,337,053 2012 26 6,366,995 0 0 10,751,626 2011 34 8,511,974 0 0 11,192,264 * In addition to building permits, the total value includes all other permits issued by the City (i.e. heating, lighting, plumbing, roof replacement, etc.). Source: City of Lino Lakes. Recent Development Economic Development Development activities have remained steady over the past four years. Residential new construction permits continue to exceed 100 annually, while commercial development is expanding to support the growing residential market. Lennar Homes is currently building out their 1st and 2nd phases of an 864-unit residential development along the Interstate 35E corridor. Approximately 269,000 square feet of warehousing and distribution space, in the Marshan Industrial Park along the Interstate 35W corridor, was recently filled. Recently approved for development in 2020 is a 200-unit senior residential care facility. Residential Development The following table shows projected lot development in existing subdivisions for single-family homes: As of March 2020 Subdivision Total Lots Lots Remaining Eastside Villas 32 28 Golden Acres 4 4 Foxborough 57 4 Northpointe 6th Addition 15 6 Northpointe 7th Addition 28 5 Saddle Club 28 3 Saddle Club 2nd Addition 17 3 Saddle Club 4th Addition 8 8 Watermark 193 134 Watermark 2nd Addition 52 52 - 19 - Financial Institutions* City residents are served by First Resource Bank, which had total deposits of $178,849,000 as of December 31, 2019. In addition, branch offices of Farmers & Merchants Savings Bank; Wells Fargo Bank, National Association; and U.S. Bank National Association are located throughout the City. * This does not purport to be a comprehensive list. Source: Federal Deposit Insurance Corporation, https://www.fdic.gov/. Health Care Services The following is a summary of health care facilities located near the City: Facility Location No. of Beds Mercy Hospital City of Coon Rapids 546 hospital beds 27 infant bassinets Park River Estates Care Center City of Coon Rapids 99 nursing home beds Camilia Rose Care Center LLC City of Coon Rapids 80 nursing home beds Birchwood Health Care Center City of Forest Lake 100 nursing home beds St. John’s Hospital – Health East Care System City of Maplewood 184 hospital beds 44 infant bassinets Ramsey County Care Center City of Maplewood 164 nursing home beds Maplewood Care Center City of Maplewood 128 nursing home beds Good Samaritan Society City of Maplewood 71 nursing home beds Fairview Lakes Medical Center City of Wyoming 61 hospital beds 12 infant bassinets Source: Minnesota Department of Health, http://www.health.state.mn.us/. Education Public Education The following districts serve the residents of the City: 2019/20 District Grades Enrollment ISD No. 624 (White Bear Lake) PK-12 8,889 ISD No. 12 (Centennial) PK-12 6,840 ISD No. 831 (Forest Lake) PK-12 6,024 Source: Minnesota Department of Education, www.education.state.mn.us. - 20 - Non-Public Education City residents are also served by the following private schools: 2019/20 School Grades Enrollment Liberty Classical Academy K-12 232 St. Peter K-8 208 Frassati Catholic Academy K-8 206 Gentry Academy 5-12 116 Magnuson Christian K-8 82 White Bear Montessori K-4 25 Source: Minnesota Department of Education, www.education.state.mn.us. GOVERNMENTAL ORGANIZATION AND SERVICES Organization The City was incorporated as a village in 1955, became a statutory city on January 1, 1974, and is governed by a Home Rule Charter as adopted on January 12, 1982. The City is governed by a Mayor and four Council members. The Mayor is elected to a two-year term of office and Council members are elected to overlapping four-year terms. The following individuals comprise the current City Council: Expiration of Term Rob Rafferty Mayor December 31, 2021 Tony Cavegn Council Member December 31, 2021 Christopher Lyden Council Member December 31, 2023 Michael Ruhland Council Member December 31, 2023 Dale Stoesz Council Member December 31, 2021 The City Administrator, Mr. Jeffrey Karlson, is the Chief Executive Officer of the City. Mr. Karlson has been with the City since August 2010. The City's Finance Director is Ms. Sarah Cotton, who has been with the City since August 2015. The City’s Community Development Director is Mr. Michael Grochala, who has been with the City since June 2001. The City has 68 regular full-time and 2 regular part-time employees. Services Police protection is provided by 27 sworn police officers. Effective January 2016, fire protection is provided by the Lino Lakes Public Safety Fire Division, which is comprised of a Deputy Director of Fire Operations, cross-trained police officers, and paid-on-call firefighters. The City has a Public Protection Classification of 4/4Y as rated by ISO. - 21 - The City has established a Comprehensive Plan to direct all areas of growth within the City. The plan was adopted in 1973 and amended several times, most recently in 2018. The City’s 2040 Plan Update is currently being reviewed by the Metropolitan Council. Nineteen parks and playgrounds are maintained by the City and include ball fields, hockey and skating rinks, playground and picnic facilities, and 30 miles of trails. Anoka County also owns a 5,500-acre park and an 18-hole golf course within the City. The City currently provides municipal sewer and water through the operation of six wells, two water towers, and 13 lift stations. The City currently has 5,276 users of its sewer system and 4,900 users of its water system. The City has a policy that municipal water services will be extended only to sewered areas. Labor Contracts The status of labor contracts in the City is as follows: No. of Expiration Date Bargaining Unit Employees of Current Contract LELS -- Patrol 19 December 31, 2020 LELS -- Sargent 5 December 31, 2020 49ers – Public Works 16 December 31, 2020 AFSCME 20 December 31, 2020 Subtotal 60 Non-unionized employees 10 Total employees 70 Employee Pensions All full-time and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF), which are cost-sharing multiple-employer retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All new members must participate in the Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by the PEPFF. The City’s contributions to GERF and PEPFF are equal to the contractually required contributions for each year as set by State Statute, and are as follows for the past five years: GERF PEPFF 2018 $202,526 $420,821 2017 192,510 416,665 2016 193,684 424,970 2015 182,102 393,560 2014 162,934 314,426 Lino Lakes Fire Division Volunteer firefighters of the City’s Public Safety Department – Fire Division are eligible for pension benefits through membership in the Statewide Volunteer Firefighter Retirement Plan (SFV), an agent multiple-employer, lump-sum defined benefit pension plan administered by PERA. The plan is established - 22 - and administer in accordance with Minnesota Statutes, Chapter 353G. A member who has completed five or more years of service in the fire department shall at age 50 be entitled to a lump-sum benefit. Plan provisions include a pro-rated vesting schedule that increase from 5 years at 40% through 20 years at 100%. State aids, investment earnings and City contributions fund the plan. The City’s contributions to the SFV for the past two years are as follows*: City’s Contributions 2018 $64,869 2017 58,800 2016 44,394 * The City created its fire department in 2016, therefore information prior to 2016 is unavailable. For more information regarding the liability of the City with respect to its employees, please reference “Note 7, Defined Benefit Pension Plans - PERA” and “Note 8, Defined Benefit Pension Plans - Fire Division” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2018, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019 is not yet available.) Sources: City’s Comprehensive Annual Financial Reports. GASB 68 The Government Accounting Standards Board (GASB) has issued Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68) and related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment to GASB 68, which revised existing standards for measuring and reporting pension liabilities for pension plans provided to City employees and require recognition of a liability equal to the City’s proportionate share of net pension liability, which is measured as the total pension liability less the amount of the pension plan's fiduciary net position. The City’s proportionate shares of the pension costs and the City’s net pension liability for GERF and PEPFF for the past four years are as follows: GERF PEPFF Proportionate Net Proportionate Net Share of Pension Share of Pension Pension Costs Liability Pension Costs Liability 2018 0.0381% $2,113,632 0.2426% $ 2,585,866 2017 0.0414 2,642,949 0.2570 3,469,806 2016 0.0387 3,142,248 0.2590 10,394,121 2015 0.0410 2,124,883 0.2490 2,829,223 For more information regarding GASB 68 with respect to the City, please reference “Note 7, Defined Benefit Pension Plans - PERA” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2018, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019 is not yet available.) Additional and detailed information about GERF’s net position is available in a separately-issued PERA financial report, which may be obtained at www.mnpera.org; by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088; or by calling 1-800-652-9026. - 23 - Other Post-Employment Benefits The Government Accounting Standards Board (GASB) has issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB 75), establishing new accounting and financial reporting requirements related to post-employment healthcare and other non-pension benefits (referred to as Other Post-Employment Benefits or “OPEB”). The implementation of GASB 75 required the restatement of the City’s beginning net position for the fiscal year ended December 31, 2016. Please see “Note 20, Change in Accounting Principle” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2018. The City provides benefits to eligible employees through the City’s health insurance plan. Active employees who retire from the City when over age 50 and with 20 years of service may continue coverage for both themselves and their eligible dependent(s) under the City’s health benefits program until age 65. Benefits and eligibility provisions are established by the City through its personnel manual and collective bargaining agreements with employee groups. The employee is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they participate. As of January 1, 2018, participants of the plan consisted of: Active employees 46 Inactive employees/beneficiaries currently receiving benefits 6 Total 52 The City’s net OPEB liability was measured as of December 31, 2018, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of January 1, 2017. Components of the City’s OPEB liability and related ratios for the fiscal year ended December 31 are as follows: 2017 2018 Total fiduciary net position – beginning of year $789,627 $746,540 Service cost 16,990 16,547 Interest 22,542 21,355 Changes of benefit terms 0 0 Differences between expected and actual experience (51,083) 0 Benefit payments (31,536) (27,798) Net changes $ (43,087) $ 10,104 Total fiduciary net position – end of year $746,540 $756,644 Covered Employee Payroll $3,499,836 $3,240,932 Total OBEB Liability as a Percentage of Covered Employee Payroll 21.3% 23.3% For more information regarding the City’s OPEB plan with respect to its employees, please reference “Note 9, Post-Employment Benefits Other than Pensions (OPEB)” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2018, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019 is not yet available.) Sources: City’s Comprehensive Annual Financial Reports. - 24 - General Fund Budget Summary 2019 Budget(a) 2019 Actual(b) 2020 Budget Revenues: Taxes $ 8,232,124 $ 8,161,217 $ 8,407,756 Licenses and Permits 895,144 941,569 932,346 Intergovernmental 638,291 623,256 616,459 Special Assessments 0 106 0 Charges for Services 321,459 344,685 297,337 Fines and Forfeits 99,132 98,390 116,100 Investment Earnings 30,000 159,482 30,000 Refunds and Reimbursements 731,854 731,908 42,082 Miscellaneous 168,663 170,225 173,090 Total Revenues $11,116,667 $11,230,838 $10,615,170 Expenditures: General Government $ 3,031,343 $ 2,957,550 $ 2,090,169 Public Safety 4,855,819 4,731,147 5,135,174 Public Services 2,234,609 2,287,041 2,261,065 Conservation of Natural Resources 214,377 207,919 202,850 Community Development 469,498 453,055 502,912 Contingency 0 0 75,000 Total Expenditures $10,805,646 $10,636,712 $10,267,170 Revenues Over (Under) Expenditures $ 311,021 $ 594,126 $ 348,000 Other Financing Sources (Uses): Transfers In $ 256,480 $ 256,480 $ 380,000 Transfers Out (943,145) (943,554) (928,000) Total Other Financing Sources (Uses) $ (686,665) $ (687,074) $ (548,000) Net Increase (Decrease) in Fund Balance $ (375,644) $ (92,948) $ (200,000) Fund Balance – Beginning of Year $ 6,886,142 $ 6,886,142 $ 6,793,194 Fund Balance – December 31 $ 6,510,498 $ 6,793,194 $ 6,593,194 (a) 2019 Amended Budget. (b) Unaudited. Source: The City. Major General Fund Revenue Sources Revenue 2014 2015 2016 2017 2018 Taxes $7,147,977 $7,489,040 $7,037,596 $7,338,876 $8,146,307 Licenses and Permits 407,681 551,202 895,581 1,447,571 1,260,046 Intergovernmental 512,064 649,611 654,447 667,520 651,993 Charges for Services 313,826 277,423 342,690 302,038 317,122 Miscellaneous 131,485 168,952 221,034 266,387 201,956 Fines and Forfeits 119,715 127,803 220,905 147,977 114,991 Sources: City’s Comprehensive Annual Financial Reports. APPENDIX I I-1 PROPOSED FORM OF LEGAL OPINION $__________ City of Lino Lakes, Minnesota General Obligation Utility Revenue Bonds Series 2020A We have acted as bond counsel to the City of Lino Lakes, Minnesota (the “Issuer”) in connection with the issuance of its General Obligation Utility Revenue Bonds, Series 2020A (the “Bonds”), originally dated July 8, 2020, and issued in the original aggregate principal amount of $________. In such capacity and for the purpose of rendering this opinion we have examined certified copies of certain proceedings, certifications and other documents, and applicable laws as we have deemed necessary. Regarding questions of fact material to this opinion, we have relied on certified proceedings and other certifications of public officials and other documents furnished to us without undertaking to verify the same by independent investigation. Under existing laws, regulations, rulings and decisions in effect on the date hereof, and based on the foregoing we are of the opinion that: 1. The Bonds have been duly authorized and executed, and are valid and binding general obligations of the Issuer, enforceable in accordance with their terms. 2. The principal of and interest on the Bonds are payable primarily from net revenues of the water system of the Issuer, but if necessary for the payment thereof, ad valorem taxes are required by law to be levied on all taxable property of the Issuer, which taxes are not subject to any limitation as to rate or amount. 3. Interest on the Bonds is excludable from gross income of the recipient for federal income tax purposes and, to the same extent, is excludable from taxable net income of individuals, trusts, and estates for Minnesota income tax purposes, and is not a preference item for purposes of the computation of the federal alternative minimum tax, or the computation of the Minnesota alternative minimum tax imposed on individuals, trusts and estates. However, such interest is subject to Minnesota franchise taxes on corporations (including financial institutions) measured by income. The opinion set forth in this paragraph is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes and from taxable net income for Minnesota income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes and taxable net income for Minnesota income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. 4. The rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditor’s rights generally and by equitable principles, whether considered at law or in equity. I-2 We have not been asked and have not undertaken to review the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds, and accordingly we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligation to update, revise, or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Dated July ___, 2020 at Minneapolis, Minnesota. APPENDIX II II-1 CONTINUING DISCLOSURE CERTIFICATE $____________ City of Lino Lakes, Minnesota General Obligation Utility Revenue Bonds Series 2020A CONTINUING DISCLOSURE CERTIFICATE July __, 2020 This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Lino Lakes, Minnesota (the “Issuer”) in connection with the issuance of its General Obligation Utility Revenue Bonds, Series 2020A (the “Bonds”), in the original aggregate principal amount of $___________. The Bonds are being issued pursuant to resolutions adopted by the City Council of the Issuer (the “Resolutions”). The Bonds are being delivered to _________________ (the “Purchaser”) on the date hereof. Pursuant to the Resolutions, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events. The Issuer hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders (as defined herein) of the Bonds in order to provide for the public availability of such information and assist the Participating Underwriter(s) (as defined herein) in complying with the Rule (as defined herein). This Disclosure Certificate, together with the Resolutions, constitutes the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule. Section 2. Definitions. In addition to the defined terms set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Annual Report” means any annual report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” means annual financial statements of the Issuer, prepared in accordance with GAAP as prescribed by GASB. “Bonds” means the General Obligation Utility Revenue Bonds, Series 2020A, issued by the Issuer in the original aggregate principal amount of $___________. “Disclosure Certificate” means this Continuing Disclosure Certificate. “EMMA” means the Electronic Municipal Market Access system operated by the MSRB and designated as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. “Final Official Statement” means the deemed Final Official Statement, dated June ____, 2020, which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB. II-2 “Financial Obligation” means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a Financial Obligation as described in clause (a) or (b). The term “Financial Obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. “Fiscal Year” means the fiscal year of the Issuer. “GAAP” means generally accepted accounting principles for governmental units as prescribed by GASB. “GASB” means the Governmental Accounting Standards Board. “Holder” means the person in whose name a Bond is registered or a beneficial owner of such a Bond. “Issuer” means the City of Lino Lakes, Minnesota, which is the obligated person with respect to the Bonds. “Material Event” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board located at 1300 I Street NW, Suite 1000, Washington, DC 20005. “Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds. “Purchaser” means __________________. “Repository” means EMMA, or any successor thereto designated by the SEC. “Rule” means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC. “SEC” means Securities and Exchange Commission, and any successor thereto. Section 3. Provision of Annual Financial Information and Audited Financial Statements. (a) The Issuer shall provide to the Repository not later than twelve (12) months after the end of the Fiscal Year commencing with the year that ends December 31, 2019, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report. (b) If the Issuer is unable or fails to provide to the Repository an Annual Report by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repository and the MSRB. (c) The Issuer shall determine each year prior to the date for providing the Annual Report the name and address of each Repository. II-3 Section 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or incorporate by reference the following sections of the Final Official Statement: 1. City Property Values 2. City Indebtedness 3. City Tax Rates, Levies and Collections In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Disclosure Certificate. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Material Events. (a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults, if material; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701–TEB), or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; 7. Modifications to rights of security holders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the securities, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of the obligated person; 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; II-4 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; 15. Incurrence of a Financial Obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders, if material; and 16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties. (b) The Issuer shall file a notice of such occurrence with the Repository or with the MSRB within ten (10) business days of the occurrence of the Material Event. (c) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer’s information. Section 6. EMMA. The SEC has designated EMMA as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until the EMMA system is amended or altered by the MSRB and the SEC, the Issuer shall make all filings required under this Disclosure Certificate solely with EMMA. Section 7. Termination of Reporting Obligation. The Issuer’s obligations under the Resolutions and this Disclosure Certificate shall terminate upon the redemption in full of all Bonds or payment in full of all Bonds. Section 8. Agent. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under the Resolutions and this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor dissemination agent. Section 9. Amendment; Waiver. Notwithstanding any other provision of the Resolutions or this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolutions requiring continuing disclosure pursuant to the Rule and this Disclosure Certificate, or any provision hereof, shall be null and void in the event that the Issuer delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which impose the continuing disclosure requirements of the Resolutions and the execution and delivery of this Disclosure Certificate are invalid, have been repealed retroactively or otherwise do not apply to the Bonds. The provisions of the Resolutions requiring continuing disclosure pursuant to the Rule and this Disclosure Certificate may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the Issuer to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance with the Rule. II-5 Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event. Section 11. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under the Resolutions and this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the Bonds and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Participating Underwriters, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. IN WITNESS WHEREOF, we have executed this Disclosure Certificate in our official capacities effective as of the date and year first written above. CITY OF LINO LAKES, MINNESOTA Mayor City Administrator APPENDIX III III-1 SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION Following is a summary of certain statutory provisions relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value. Each parcel of real property subject to taxation must, by statute, be appraised at least once every five years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value, which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the “Estimated Market Value.” The 2013 Minnesota Legislature established the Estimated Market Value as the value used to calculate a municipality’s legal debt limit. Economic Market Value. The Economic Market Value is the value of locally assessed real property (Assessor’s Estimated Market Value) divided by the sales ratio as provided by the State of Minnesota Department of Revenue plus the estimated market value of personal property, utilities, railroad, and minerals. Taxable Market Value. The Taxable Market Value is the value that Net Tax Capacity is based on, after all reductions, limitations, exemptions and deferrals. Net Tax Capacity. The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Taxable Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Taxable Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the State Legislature. Property taxes are the sum of the amounts determined by (i) multiplying the Net Tax Capacity by the tax capacity rate, and (ii) multiplying the referendum market value by the market value rate. Market Value Homestead Exclusion. In 2011, the Market Value Homestead Exclusion Program (MVHE) was implemented to offset the elimination of the Market Value Homestead Credit Program that provided relief to certain homesteads. The MVHE reduces the taxable market value of a homestead with an Assessor’s Estimated Market Value up to $413,800 in an attempt to result in a property tax similar to the effective property tax prior to the elimination of the homestead credit. The MVHE applies to property classified as Class 1a or 1b and Class 2a, and causes a decrease in the City’s aggregate Taxable Market Value, even if the Assessor’s Estimated Market Value on the same properties did not decline. Property Tax Payments and Delinquencies (Chapters 275, 276, 277, 279-282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the year preceding the collection year. A listing of property taxes due is prepared by the county auditor and turned over to the county treasurer on or before the first business day in March. III-2 The county treasurer is responsible for collecting all property taxes within the county. Real estate and personal property tax statements are mailed out by March 31. One-half (1/2) of the taxes on real property is due on or before May 15. The remainder is due on or before October 15. Real property taxes not paid by their due date are assessed a penalty on homestead property of 2% until May 31 and increased to 4% on June 1. The penalty on nonhomestead property is assessed at a rate of 4% until May 31 and increased to 8% on June 1. Thereafter, an additional 1% penalty shall accrue each month through October 1 of the collection year for unpaid real property taxes. In the case of the second installment of real property taxes due October 15, a penalty of 2% on homestead property and 4% on nonhomestead property is assessed. The penalty for homestead property increases to 6% on November 1 and again to 8% on December 1. The penalty for nonhomestead property increases to 8% on November 1 and again to 12% on December 1. Personal property taxes remaining unpaid on May 16 are deemed to be delinquent and a penalty of 8% attaches to the unpaid tax. However, personal property that is owned by a tax-exempt entity, but is treated as taxable by virtue of a lease agreement, is subject to the same delinquent property tax penalties as real property. On the first business day of January of the year following collection all delinquencies are subject to an additional 2% penalty, and those delinquencies outstanding as of February 15 are filed for a tax lien judgment with the district court. By March 20 the county auditor files a publication of legal action and a mailing of notice of action to delinquent parties. Those property interests not responding to this notice have judgment entered for the amount of the delinquency and associated penalties. The amount of the judgment is subject to a variable interest determined annually by the Department of Revenue, and equal to the adjusted prime rate charged by banks but in no event is the rate less than 10% or more than 14%. Property owners subject to a tax lien judgment generally have three years (3) to redeem the property. After expiration of the redemption period, unredeemed properties are declared tax forfeit with title held in trust by the State of Minnesota for the respective taxing districts. The county auditor, or equivalent thereof, then sells those properties not claimed for a public purpose at auction. The net proceeds of the sale are first dedicated to the satisfaction of outstanding special assessments on the parcel, with any remaining balance in most cases being divided on the following basis: county - 40%; town or city - 20%; and school district - 40%. Property Tax Credits (Chapter 273, Minnesota Statutes) In addition to adjusting the taxable value for various property types, primary elements of Minnesota's property tax relief system are: property tax levy reduction aids; the homestead credit refund and the renter’s property tax refund, which relate property taxes to income and provide relief on a sliding income scale; and targeted tax relief, which is aimed primarily at easing the effect of significant tax increases. The homestead credit refund, the renter’s property tax refund, and targeted credits are reimbursed to the taxpayer upon application by the taxpayer. Property tax levy reduction aid includes educational aids, local governmental aid, equalization aid, county program aid and disparity reduction aid. Debt Limitations All Minnesota municipalities (counties, cities, towns and school districts) are subject to statutory “net debt” limitations under the provisions of Minnesota Statutes, Section 475.53. Net debt is defined as the amount remaining after deducting from gross debt the amount of current revenues that are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: 1. Obligations issued for improvements which are payable wholly or partly from the proceeds of special assessments levied upon property specially benefited thereby, including those which are general obligations of the municipality issuing them, if the municipality is entitled to reimbursement in whole or in part from the proceeds of the special assessments. III-3 2. Warrants or orders having no definite or fixed maturity. 3. Obligations payable wholly from the income from revenue producing conveniences. 4. Obligations issued to create or maintain a permanent improvement revolving fund. 5. Obligations issued for the acquisition, and betterment of public waterworks systems, and public lighting, heating or power systems, and of any combination thereof or for any other public convenience from which a revenue is or may be derived. 6. Debt service loans and capital loans made to a school district under the provisions of Minnesota Statutes, Sections 126C.68 and 126C.69. 7. Amount of all money and the face value of all securities held as a debt service fund for the extinguishment of obligations other than those deductible under this subdivision. 8. Obligations to repay loans made under Minnesota Statutes, Section 216C.37. 9. Obligations to repay loans made from money received from litigation or settlement of alleged violations of federal petroleum pricing regulations. 10. Obligations issued to pay pension fund or other postemployment benefit liabilities under Minnesota Statutes, Section 475.52, subdivision 6, or any charter authority. 11. Obligations issued to pay judgments against the municipality under Minnesota Statutes, Section 475.52, subdivision 6, or any charter authority. 12. All other obligations which under the provisions of law authorizing their issuance are not to be included in computing the net debt of the municipality. Levies for General Obligation Debt (Sections 475.61 and 475.74, Minnesota Statutes) Any municipality that issues general obligation debt must, at the time of issuance, certify levies to the county auditor of the county(ies) within which the municipality is situated. Such levies shall be in an amount that if collected in full will, together with estimates of other revenues pledged for payment of the obligations, produce at least five percent in excess of the amount needed to pay principal and interest when due. Notwithstanding any other limitations upon the ability of a taxing unit to levy taxes, its ability to levy taxes for a deficiency in prior levies for payment of general obligation indebtedness is without limitation as to rate or amount. Metropolitan Revenue Distribution (Chapter 473F, Minnesota Statutes) “Fiscal Disparities Law” The Charles R. Weaver Metropolitan Revenue Distribution Act, more commonly known as “Fiscal Disparities,” was first implemented for taxes payable in 1975. Forty percent of the increase in commercial- industrial (including public utility and railroad) net tax capacity valuation since 1971 in each assessment district in the Minneapolis/Saint Paul seven-county metropolitan area (Anoka, Carver, Dakota, excluding the City of Northfield, Hennepin, Ramsey, Scott, excluding the City of New Prague, and Washington Counties) is contributed to an area-wide tax base. A distribution index, based on the factors of population and real property market value per capita, is employed in determining what proportion of the net tax capacity value in the area-wide tax base shall be distributed back to each assessment district. III-4 STATUTORY FORMULAE: CONVERSION OF TAXABLE MARKET VALUE (TMV) TO NET TAX CAPACITY FOR MAJOR PROPERTY CLASSIFICATIONS Local Tax Payable Property Type 2016-2020 Residential Homestead (1a) Up to $500,000 1.00% Over $500,000 1.25% Residential Non-homestead Single Unit (4bb) Up to $500,000 1.00% Over $500,000 1.25% 2-3 unit and undeveloped land (4b1) 1.25% Market Rate Apartments Regular (4a) 1.25% Low-Income (4d) Up to $150,000(c) 0.75% Over $150,000(c) 0.25% Commercial/Industrial/Public Utility (3a) Up to $150,000 1.50%(a) Over $150,000 2.00%(a) Electric Generation Machinery 2.00% Commercial Seasonal Residential Homestead Resorts (1c) Up to $600,000 0.50% $600,000 - $2,300,000 1.00% Over $2,300,000 1.25%(a) Seasonal Resorts (4c) Up to $500,000 1.00%(a) Over $500,000 1.25%(a) Non-Commercial (4c12) Up to $500,000 1.00%(a)(b) Over $500,000 1.25%(a)(b) Disabled Homestead (1b) Up to $50,000 0.45% Agricultural Land & Buildings Homestead (2a) Up to $500,000 1.00% Over $500,000 1.25% Remainder of Farm Up to $1,880,000(d) 0.50%(b) Over $1,880,000(d) 1.00%(b) Non-homestead (2b) 1.00%(b) (a) State tax is applicable to these classifications. (b) Exempt from referendum market value based taxes. (c) Legislative increases, payable 2020. Historical valuations are: Payable 2019 - $139,000; Payable 2018 - $121,000; Payable 2017 - $115,000; and Payable 2016 - $106,000. (d) Legislative increases, payable 2020. Historical valuations are: Payable 2019 - $1,900,000; Payable 2018 - $1,940,000; Payable 2017 - $2,050,000; and Payable 2016 - $2,140,000. NOTE: For purposes of the State general property tax only, the net tax capacity of non-commercial class 4c(1) seasonal residential recreational property has the following class rate structure: First $76,000 – 0.40%; $76,000 to $500,000 – 1.00%; and over $500,000 – 1.25%. In addition to the State tax base exemptions referenced by property classification, airport property exempt from city and school district property taxes under M.S. 473.625 is exempt from the State general property tax (MSP International Airport and Holman Field in Saint Paul are exempt under this provision). APPENDIX IV IV-1 EXCERPT OF 2018 COMPREHENSIVE ANNUAL FINANCIAL REPORT Data on the following pages was extracted from the City’s Comprehensive Annual Financial Report (“CAFR”) for fiscal year ended December 31, 2018. (The City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019 is not yet available.) The reader should be aware that the complete financial statements may contain additional information which may interpret, explain or modify the data presented here. The City’s CAFRs for the years ending 1996 through 2018 were awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized CAFR, whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. IV-2 FINANCIAL SECTION IV-3 INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota ReportontheFinane1aISUtements 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, Minnesola, as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City of Lino Lakes, Minnesota's basic financial statements as list.ed 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. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted om audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Aud/Ung Standards, issued by the Comptroller General of the United States. Those -dards 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. Toe procedures selected depend on the auditor's 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 accomrting 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. 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, Minnesota, as of December 31, 2018, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accowtting principles generally accepted in the United States of America. Other Matten Required Supplementary Information Accounting principles generally accepted in the United Stau:s of America require that the management's discussion and analysis, the budgetary cQP11)8rison infonnation, and the schedules of OPEB and pension information, 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 s1atements, 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 --. generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the in.formation 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, Minnesota's basic financial statements. The in1roductory section, combining and individual nonmajor fund financial statements and schedules, statistical section and other information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the widerlying accounting and other records used to prepare the basic financial statements. Sueh information has been subjected to the auditing procedures applied in the audit of the bssic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other n:cords used to prepare the bssic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United Stat.es of America. In our opinion, the combining and individual nonmajor ftmd financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section, the statistical section and other information 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 them. Other Reporting Required by Govmunent Arulltlng Standllrtls In accordance with Government Auditing Standards, we have also issued our report dated May 24, 2019, on our consideration of the City of Lino Lakes, Minnesota's 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. Toe purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Lino Lakes, Minnesota's internal control over financial reporting or on compliance. That report is an intx:graJ part of an audit performed in accordance with Government Auditing Standards in considering the City of Lino Lakes, Minnesota's internal control over financial reporting and compliance. ~...J_ ~' "'· REDPAIB AND COMPANY, LTD. SL Paul, Minnesota May24,2019 IV-4MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Lino Lakes, Minnesota (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2018. 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 in the introductory section of this report. Financial Highlights The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $100,077,798 (net position). Of this amount, $32,148,347 (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 increased by $6,784,185. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of$33,255,201, an increase of$9,199,079. Of this amount, $9,824,255 is restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. At the end of the current fiscal year, the general fund balance was $6,886,142. Unassigned fund balance for the general fund was $6,599,956, or 62% of total general fund expenditures and other financing uses. Total outstanding debt increased by $4,476,595 during 2018. General Obligation Bonds and certificates of indebtedness totaling $7,218,900 were issued, while regularly scheduled principal payments were made during the year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: I) government-wide financial statements, 2) fund financial statements, and 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's finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or Management's Discussion and Analysis decreases in net position may serve as a useful indicator of whether the financial position of the City 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 vacation leave). Both of the government-wide financial statements distinguish functions of the City 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 include general government, public safety, public services, conservation of natural resources and community development. The business-type activities of the City include a water utility and sewer utility. The government-wide financial statements are statements l and 2 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, 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 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 fmancial 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 financial 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 City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures and change in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. IV-5Management's Discussion and Analysis The City maintains six individual major 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 balance for the following major funds: • General Fund • G.O. Improvement Note of2009A-Debt Service Fund • G.O. Improvement Bonds of2016B-Debt Service Fund • Area and Unit Charge -Capital Project Fund • MSA Construction -Capital Project Fund • 2018 Street Reconstruction -Capital Project Fund Data from the other governmental funds are combined into a single, aggregated 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 adopts an annual appropriated budget for its General Fund and its Program Recreation special revenue fund. A budgetary comparison schedule has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements are statements 3 through 6 of this report. Proprietary funds. The City maintains two enterprise funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer 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 water and sewer funds, which are considered to be major funds of the City. The basic proprietary fund financial statements are statements 7 through 9 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held by the City as an agent for individuals, private organimtions, or other governments. Fiduciary funds are not reflected by the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The basic fiduciary fund statements are Statements 10 and 28. Notes to the fmancial 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 following Statement 10. Other information. The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the required supplementary Management's Discussion and Analysis information. Combining and individual fund statements and schedules are presented as Statements 19 through 27. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $100,077,798 at the close of the most recent fiscal year. The largest portion of the City's net position ($57,349,634, or 57%) reflects its net investment in capital assets ( e.g. land, buildings, equipment, and infrastructure) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's 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. City of Lino Lakes' Net Position Govemmental. Activities Business-!m! Activities Total, 2018 2017 2018 2017 2018 _ill! ,._, Current:andotberasaets $41,949,582 $32,942,034 $16,003,964 $15,272,668 $57,953,546 $48,214,702 capital usets 4411021567 4~6111027 3'?:,.109,019 3118311950 7618111646 74,442{/77 Totaluset:s $86,0521149 S7S~S3106l ~7131043 $471104i§:18 $1341765,192 $122,657,679 Def'ened outflows of resources $4.305,683 $51625~20 $61906 $97118 $4,3671589 SS,722.338 Liabilities: Long-tem1. liabilitie1 outstanding $30,443,714 $27,257,669 $312,016 $413,334 $30,755,730 $27,671,003 Other liabilities 11981J50 894136 87787 43~53 ~069J37 ~ TotaJliabilities $321425~64 $281151,805 $3991803 $4561787 $32.825.067 ~ Deferred inflows of resources $611341676 ~4101858 $95~ $66.254 $6~91916 ~812 Net position: Net investment in capital asaets $24,640,555 $22,868,259 $32,709,079 $31,831,950 $57,349,634 $54,700,209 Restricted 10,579,817 11,730,147 10,579,817 11,730,147 u..--i 161577,520 12,017,212 1515701827 1418461045 321148J47 26,863,257 Totalnetposition $51.7971892 ~6151618 ~791906 $46,6771995 $10010771798 ~·13 $10,579,817 of the City's net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($32,148,347) may be used to meet ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City 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. IV-6Management's Discussion and Analysis The City's net position increased by $6,784,185 during 2018. Key elements of this increase are as follows: City of Lino Lakes' Changes in Net Position Governmental Activities Business-Te Activitiea Total, 2018 2017 2018 2017 2018 2017 Revenues: Program revenues: Charges for services $2,602,483 $3,600,902 $2,971,301 $2,849,797 $5,573,784 $6,450,699 Operating grants and contnbutions 861,429 1,106,014 861,429 1,106,014 Capital gmnb and oontnbution, 5,187,023 4,141,383 1,242,032 836,029 6,429.055 4,977,412 General revenues: General property taxes 9,767,468 9,441,819 9,767,468 9,441,819 Tax Increment 462,223 312,152 462,223 312,152 Grants and contributions not restricted to specific programs 59,508 181,712 59,508 181,712 Unrestricted investment earnings 369,485 207,792 213,434 106,488 582,919 314,280 Gain on disposal of capital assets 17318 38,022 17 318 -----1!,!!B Total revenues 19J26,937 19,029,796 4,426,767 3~14 23,753,704 22.822.II<I_ Expenses, General government 2,345,386 2,395,633 2,345,386 2,395,633 Public safety 4,749,394 5,166,538 4,749,394 5,166,538 Public services 5,384,522 5,492,395 5,384,522 5,492,395 Conservation of naturual resources 201,590 200,016 201,590 200,016 Community development 576,794 459,455 576.794 459,455 lntereat and fees DD. long-term debt 414,607 518,897 414,607 518,897 w-1,332,755 1,245,249 1,332,755 1,245,249 Sewer 1,964,471 119011s21 1,964,471 ~ To1Bl expen,e, 13,072,a93 t4,a32,934 3.297.226 3,147,070 16.969,519 17,380,004 Increase in net position before transfers 5,654,644 4,796,862 1,129,541 645,244 6,784,185 5,442,106 Transfer, (472,370l '3081694l 472370 ~ Change in net position s11B21214 41488,168 116011911 953 938 6,784,185 5,442,106 Net position-January 1, as previously reported 46,615,618 42,819,930 46,677,995 45,724,057 93,293,613 88,543,987 Prior period adjustment ~480l ~480l Net position -January 1, as restated 4616151618 421127.450 46.677/195 4517241057 93,2931613 s11ss11s01 Net position -December 31 $51,797,892 S46.6IS16I8 $48,279,906 $46,611.995 SI00,077,798 $93,293,611 Governmental Activities Governmental activities increased the City's net position by $5,182,274 during 2018. The cumulative effect of decreased charges for services, increased capital grants and contributions, and a decrease in public safety expenses account for the increase in 2018. This increase was partially offset by transfers out to business-type activities of$472,370. Management's Discussion and Analysis Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Governmental Activities -Revenues a,,q,,.r.,,...-"" """'-"" Governmental Activities -Expenses Pubk Semi!• ,,,. c--... ..... ._ "" IV-7Management's Discussion and Analysis Business-Type Activities Business-type activities increased the City's net position by $1,601,911 during 2018. The increase was due to contributions of capital assets from private sources, as well as the City's governmental activities, in the amount of$l,956,547, offset by transfers out of$242,l45. Below are specific graphs which provide comparisons of the business-type activities revenues and expenses: Bu•inwe-TypeAetiviti• -Revenuee --.... __ ,.,.,. -__ ..... ...... .... Wu .... Management's Discussion and Analysis Financial Analysis of the Government's Funds Governmental Funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of$33,255,201. Approximately 30% of this total amount ($9,824,255) constitutes fund balance restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. $388,184 of fund balance is not in a spendable form, $182,613 has been committed, $19,195,652 has been assigned, and $3,664,497 is unassigned. The fund balance of the General Fund increased by $69,217 in 2018, while the City anticipated the use of $32,288 of the general fund balance. Overall, signs of continued economic recovery are being seen with increased building and development activities taking place which resulted in increased license and permit revenues for the year. The City also saw a significant increase in the number of roofing and siding permits issued during the year due to a storm causing significant damage throughout the City in June of 2017. Finally, reduced expenditures, primarily for personal services through vacant positions, and professional and contractual services helped to increase the year end fund balance. The G.O. Improvement Note of2009A fund was established to service the debt issued by Anoka County as the City's financial commitment for the I-35E interchange project. The City prepaid the remaining balance of the note in 2017 using MSA funds. As deferred special assessments are received, MSA funds will be replenished. The fund began and ended the year with a fund balance of$0, and transferred $647,371 to the MSA Construction fund. The G.O. Improvement Bonds of2016B fund decreased by $217,643. The 2016B series bonds were issued to refund the 2005A series bonds and fund the Legacy at Woods Edge improvements. Future tax increment and land sale proceeds are expected to cover debt service and the interfund loan payable . The Area and Unit Charge fund has a total fund balance of$8,l56,800, all of which is assigned for financing capital improvements. The fund balance during the current year increased by $500,645 due to the collection of prepaid special assessments and trunk utility development fees. The MSA Construction fund has a total fund balance of$3,919,729, all of which is assigned to capital improvements for City MSA designated roadways. The fund balance during the current year increased by $3,076,355 primarily due to an advance of funds for MSA street projects completed in prior years. IV-8Management's Discussion and Analysis The 2018 Street Reconstruction fund has a total fund balance of$5,300,079. The fund balance increased during the year by $5,497,747 due to proceeds from bond issuance exceeding the expenditures incurred related to the West Shadow Lake Drive and LaMotte Area Street Reconstruction project. The combined fund balance of other governmental funds increased by $272,758 during 2018. Primary reasons for the increase include the closeout of the debt service fund associated with the 2006E Series G.0. CIP Refunding Bonds, the transfer of$500,000 from the General Fund for park and trail improvements, and the closeout of the Birch Street turn lane and utility project, offset by debt service expenditures exceeding revenues. Proprietary funds. The City's 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$23,481,908, of which $6,008,956 is unrestricted. The increase in net position of $860,344 was primarily due to capital contributions, partially offset by a net operating loss. The sewer fund has total net position at year-end of$24,797,998 of which $9,561,871 is unrestricted. The increase in net position of$741,567 was primarily due to capital contributions, partially offset by a net operating loss and a transfer to the 2018 Street Reconstruction fund. , Budgetary Highlights General Fund The General Fund budget was amended during the year to reflect increased revenues relative to building and licensing activities and state aid and decreased revenues related to a grant funded police officer and fines and forfeitures. Changes to expenditure areas include decreased personal services due to personnel vacancies, changes to professional and contracted services, variances in supplies, investment in the Civic Complex air conditioning units 2 & 3, and the final transfer for the park land loan and the comprehensive plan update budgeted over 3 years (2016-2018). The final amended expenditure budget was $315,569 less than the original adopted budget. Revenues were $96,898 over budget for the year. General property tax, special assessments, fines and forfeits, and miscellaneous refunds and reimbursements were $71,231 under budget; however, this variance was more than offset by greater than anticipated license and permit revenues, intergovernmental revenue, charges for services, and investment earnings. Expenditures came in under budget by $5,219 due to many factors including lower than expected personal service costs from vacant positions and favorable professional and contracted service activity. Fuel costs were much higher than anticipated due to an increase in the average fuel price, as well as an increase in the number of snow events. Professional Management's Discussion and Analysis and contracted service activity in parks was much higher than anticipated due to costs associated with council initiated projects that were not originally planned for in 2018. Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for its governmental and business-type activities as of December 31, 2018, amounted to $76,811,646 (net of accumulated depreciation), an increase of $2,368,669 from the prior year. This investment in capital assets includes land, wetland credits, construction in progress, buildings, equipment, vehicles, and infrastructure. The City completed the Birch Street turn lane and utility improvements, Phase II of the upgrades to the Civic Complex air conditioning system, the Council Chambers upgrade, and Century Farms North trail improvements. The City has continued to work to complete the land preparation activities for NorthPointe Park in 2018. In addition, the City started trunk watermain and trail improvements on Lake Drive, trunk utility improvements at 49&J, drainage improvements in the NE Area of the City, Water Tower #3, Phase II of the controls automation upgrade at the Civic Complex, Woods Edge Park improvements, and street and utility improvements in the West Shadow Lake Drive and LaMotte areas. Developer lead infrastructure improvements at various stages of completion include NorthPointe 4th, 5th, 6th and 7th Additions, Saddle Club 3rd Addition, Century Farms 6th and ~ Additions, St Clair Estates, and Chavez Estates. Land wetland credits Construction in progress Buildmgs Office equipment and furniture Vehicles Machinery and shop equipment Other equipment lnliastructure Total City of Lino Lakes' Capital Assets (Net of Depreciation) Governmental Activities Business-Tn! Activities ..2Q!!__ 2017 2018 --1!!!l $3,320,059 $3,320,059 167,224 162,372 3,595,457 2,482,238 1,623,032 1,507,153 6,375,432 6,376,011 270,711 236,777 1,945,189 2,016,355 1,126,246 1,133,624 161,538 167,440 330,618 267,096 2~971,631 26,616,495 30,924,509 30,157,357 $44,102,567 $42,611,027 $32,709,079 $31,831,950 Totals 2018 $3,320,059 167,224 5,218,489 6,375,432 270,711 1,945,189 1,287,784 330,618 57,896,140 $7618 ll 1646 2017 $3,320,059 162,372 3,989,391 6,376,011 236,777 2,016,355 1,301,064 267,096 56,773,852 $74,442,977 Additional information on the City's capital assets can be found in Note 5 to the financial statements. IV-9 Management's Discussion and Analysis Long-term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of$24,452,838. Of this amount, $19,848,900 comprises tax supported debt and $3,890,000 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 has a note payable to the City of Circle Pines for its share of the cost of capital equipment to be used by the North Metro Telecommunications Commission in the operation of a cable communications system in the amount of $202,125. City of Lino Lakes' Outstanding Debt Governmental Activities Business-Tll_!e Activities Totals 2018 2017 2018 2017 2018 2017 General obligation bonds $20,051,025 $14,947,725 $ $ $20,051,025 $14,947,725 G.O. special assessment bonds 3,890,000 4,905,000 3,890,000 4,905,000 Bond premium 511,813 123,518 511,813 123,518 Total $24,452,838 $19,976,243 $0 $0 $24,4521838 $19,976,243 The City of Lino Lakes' total bonded debt increased by $4,476,595 during the current fiscal year. The key factors for the change include the issuance of$303,900 of Certificates of Indebtedness to finance capital equipment purchases, $4,950,000 of General Obligation Bonds to finance the West Shadow Lake Drive and LaMotte Area street and utility improvements, and $1,965,000 to fmance the Lake Drive water utility improvements. Principal retired in the amount of$3,130,600 during the year. Additional information on the City's long-term debt can be found in Note 6. Requests for information. This financial report is designed to provide a general overview of the City's fmances for all 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. IV-10 BASIC FINANCIAL STATEMENTS IV-11 CITY OF LINO LAKES, MINNESOTA STATEMENT OF NET POSITION December 31, 2018 Assets: Cash and investments Accrued interest receivable Due from other governmental units Accounts receivable -net Prepaid items Internal balances Inventory Taxes receivable Special assessments receivable Long-term note receivable Net pension asset Capital assets -nondepreciable Capital assets -net of accumulated depreciation Total assets Deferred outflows of resources related to pensions Liabilities: Accounts payable and other current liabilities Accrued interest payable Compensated absences payable: Due within one year Due in more than one year Other post employment benefits Bonds and notes payable: Due within one year Due in more than one year Net pension liability: Due in more than one year Total liabilities Deferred inflows of resources: Pension related OPEB related Total deferred inflows of resources Net position: Net investment in capital assets Restricted for: Debt service Tax increment purposes Park improvements Economic development Environmental improvements -nonexpendable Environmental improvements -expendable Other purposes Unrestricted Total net position Primary Government Governmental Business-Type Activities Activities $34,714,073 $14,999,488 124,736 77,256 1,982 61,051 366,298 288,184 37,188 (559,110) 559,110 39,898 198,715 6,654,764 225,000 164,913 7,082,740 1,623,032 37,019,827 31,086,047 86,052,149 48,713,043 4,305,683 61,906 1,834,176 87,787 147,374 497,161 28,292 316,711 4,586 748,050 8,594 2,815,075 21,637,763 4,428,954 270,544 32,425,264 399,803 6,087,516 95,240 47,160 6,134,676 95,240 24,640,555 32,709,079 8,954,265 557,211 227,540 225,000 100,000 33,853 481,948 16,577,520 15,570,827 $51,797,892 $48,279,906 The accompanying notes are an integral part of these financial statements. Total $49,713,561 124,736 79,238 427,349 325,372 39,898 198,715 6,654,764 225,000 164,913 8,705,772 68,105,874 134,765,192 4,367,589 1,921,963 147,374 525,453 321,297 756,644 2,815,075 21,637,763 4,699,498 32,825,067 6,182,756 47,160 6,229,916 57,349,634 8,954,265 557,211 227,540 225,000 100,000 33,853 481,948 32,148,347 $100,077,798 IV-12CITY OF LINO LAKES, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2018 Functions/Programs Primacy government: Governmental activities: General government Public safety Public services Conservation of natural resources Cornrnwrity development Interest and fees on long-term debt Total governmental activities Business-type activities: Water Sewer Total business-type activities Total primary government Expenses $2,345,386 4,749,394 5,384,522 201,590 576,794 414,607 13,672,293 1,332,755 1,964,471 3,297,226 $16,969,519 The accompanying notes are an integral part of these financial statements. Program Revenues Charges For Services $562,816 1,591,658 448,009 2,602,483 1,217,589 1,753,712 2,971,301 $5,573,784 Pro!!!!!!! Revenues Operating Capital Grants and Grants and Contributions Contributions $16,688 $ 462,856 29,261 282,392 5,157,762 99,493 861,429 5,187,023 487,444 754,588 0 1,242,032 $861,429 $614291055 General revenues: General property taxes Tax increment Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on disposal of capital assets Transfers Total general revenues and transfers Change in net position Net position -January I Net position -December 31 Net (Expense) Revenue and Changes in Net Position Prim!!!I Government Governmental Business-Type Activities Activities Total ($1,765,882) $ ($1,765,882) (2,665,619) (2,665,619) 503,641 503,641 (102,097) (102,097) (576,794) (576,794) (414,607l (414,607l (5,021,358) 0 (5,021,358) 372,278 372,278 543,829 543,829 0 916,107 916,107 (5,021,358) 916,107 (4,105,251) 9,767,468 9,767,468 462,223 462,223 59,508 59,508 369,485 213,434 582,919 17,318 17,318 (472,370) 472,370 10,203,632 685,804 10,889,436 5,182,274 1,601,911 6,784,185 46,615,618 46,677,995 93,293,613 $51,797,892 $48,279,906 $100,077,798 IV-13CITY OF LINO LAKES, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2018 Assets Cash and investments Accrued interest receivable Due from other governmental units Accounts receivable -net Prepaid items Advances to other funds Taxes receivable: Due from county Delinquent Special assessments receivable: Due from county Delinquent Deferred htterfund loan receivable Long-term note receivable Total assets Liabilities, Deferred Inflows of Resources, and Fund Balances Liabilities: Accounts payable Salaries payable Due to other governmental units Advances from other funds Con1racts payable htterfund loan payable Total liabilities Deferred inflows of resources: Unavailable revenue Fund balance: Nonspendable Restricted Committed Assigned Unassigned Total fund balance Total liabilities, deferred inflows of resources, and fund balance 333G.O. Improvement General Fund Note of2009A $6,669,584 $ 124,736 77,256 30,894 286,186 96,116 69,625 1,418 106 2,100,886 $7,354,503 $2,102,304 $218,936 $ 132,239 47,455 1,418 398,630 1,418 69,731 2,100,886 286,186 6,599,956 6,886,142 0 $7,354,503 $2,102,304 The accompanying notes are an integral part of these financial statements. 342G.O. Improvement Bonds of2016B $726,988 2,994,379 $3,721,367 $450 2,876,643 2,877,093 2,994,379 (2,150,105) (2, 1 SO, !OS) $3,721,367 485 Other Total 406Areaand 420MSA 2018 Street Governmental Governmental UnitC~ Construction Reconstruction Funds Funds $8,164,676 $3,921,001 $6,400,371 $8,831,453 $34,714,073 124,736 77,256 24,575 S,582 61,051 1,998 288,184 1,418 1,824 3,242 19,022 115,138 13,952 83,577 8,785 32,846 43,049 27,768 14,614 42,382 969,375 504,587 6,569,333 3,095,946 3,095,946 225,000 225,000 $9,195,179 $3,922,419 $6,400,371 $12,746,824 $45,442,967 $31,538 $2,690 $83,410 $165,850 $502,874 132,239 46 44,933 92,434 1,824 3,242 9,698 1,016,836 80,095 1,106,629 778,413 3,655,056 41,236 2,690 1,100,292 1,071,115 S 492,474 997,143 533,153 6,695,292 101,998 388,184 4,788,701 5,035,554 9,824,255 182,613 182,613 8,156,800 3,919,729 511,378 6,607,745 19,195,652 (785,354) 3,664,497 8,156,800 3,919,729 SJ00,079 11,142,556 33,255,201 $9,195,179 $3,922,419 $6,400,371 $12,746,824 $45,442,967 IV-14 CITY OF LINO LAKES, MINNESOTA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2018 Fund balance -total governmental funds (Statement 3) Net position reported for governmental activities in the Statement ofNet Position is different because: Certain assets used in governmental activities are not current financial resources and, therefore, are not reported in the funds. Capital assets Net pension asset Other long-term assets are not available to pay for current-period expenditures and therefore, are reported as unavailable revenue in the funds: Delinquent taxes receivable Delinquent special assessments receivable Deferred special assessments receivable Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Long-term liabilities at year end consist of: Bonds and notes payable Unamortized bond premiums Unamortized bond discounts Accrued interest payable Compensated absences payable Other post employment benefits Net pension liability Deferred outflows and inflows of resources related to pensions and OPEB are associated with long-term liabilities that are not due and payable in the current period, and therefore, are not reported in the funds. Balances at year end are: Deferred outflows of resources Deferred inflows of resources Net position of governmental activities (Statement 1) $33,255,201 44,102,567 164,913 83,577 42,382 6,569,333 (23,941,025) (527,800) 15,987 (147,374) (813,872) (748,050) (4,428,954) 4,305,683 (6,134,676) $51,797,892 IV-15CITY OF LINO LAKES, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31, 2018 333 G.O. 342G.O. 485 Other Total Improvement Improvement 406Areaand 420MSA 2018 Street Governmental Governmental General Fund Note of 2009A Revenues: Bonds of2016B UnitC~e Construction Reconstruction Funds Funds General property taxes $8,146,307 $ $ $ $ $ $1,607,231 $9,753,538 Tax increment 462,223 462,223 Licenses and permits 1,260,046 1,260,046 Intergovernmental 651,993 2,801,307 3,453,300 Special assessments 1,777 644,846 536,180 823,167 2,005,970 Charges for services 317,122 264,957 421,817 1,003,896 Fines and forfeits 114,991 22,949 137,940 Inves1ment earnings 75,880 2,525 6,445 114,617 33,143 1,219 135,656 369,485 Miscellaneous 201,956 121423 323,379 Total revenues 10,770,072 647,371 6,445 915,754 2,834,450 1,219 3,594,466 18,769,777 Expenditures: Current: General government 1,927,378 21,531 1,948,909 Public safety 4,536,585 39,372 4,575,957 Public services 2,176,523 42,467 2,690 926,378 3,148,058 Conservation of natural resources 199,026 199,026 Community development 451,919 120,991 572,910 Capital outlay: General government 54,010 189,798 243,808 Public safety 45,049 182,479 227,528 Public services 16,853 327,393 2,006,051 647,575 2,997,872 Debt service: Principal 480,000 2,650,600 3,130,600 Interest and fiscal charges 22,225 415,434 437,659 Total expenditures 9,407,343 0 502,225 369,860 2,690 2,006,051 5,194,158 17,482,327 Revenues over (under) expenditures 1,362,729 647,371 (495,7801 545,894 2,831,760 (2,004,8321 (1,599,6921 1,287,450 Other financing sourees (uses): Transfers in 278,137 38,000 647,371 510,159 2,792,773 4,266,440 Transfers out (1,293,512) (647,371) (407,022) (402,776) (1,273,614) (4,024,295) Issuance of debt 295,000 6,620,000 303,900 7,218,900 Bond premium 28,773 372,420 401,193 Proceeds from sale of capital assets 49,391 49,391 Total other financing sourees (uses) (1,293,5121 (647,37Q 278,137 (45,2491 244,595 7,502,579 1,872,450 7,911,629 Net change in fimd balance 69,217 0 (217,643) 500,645 3,076,355 5,497,747 272,758 9,199,079 Fund balance -January I 6,816,925 (1,932,462) 7,656,155 843,374 (197,6681 10,869,798 24,056,122 Fund balance -December 31 $6,886,142 $0 ($2,150,1051 $8,156,800 $3,919,729 $5,300,079 $11,142,556 $33,255,201 The accompanying notes are an integral part of these financial statements. IV-16 CITY OF LINO LAKES, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2018 Net change in fund balance -total governmental funds (Statement 5) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Capital outlay Depreciation Various other transactions involving capital assets increase (decrease) net position on the Statement of Activities, but are not reported in governmental funds because they do not provide ( or use) current financial resources: Contributions of infrastructure from private sources Contributions of infrastructure to business-type activities Miscellaneous other differences related to capital assets Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds: Change in delinquent taxes receivable Change in delinquent special assessments receivable Change in deferred special assessments receivable The issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effects of bond premiums and discounts when the debt is first issued, whereas amounts are deferred and amortized over the life of the debt in the Statement of Activities. Bonds and notes issued Bond premium received Repayment of principal Amortization of bond premiums and discounts Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Expenses reported in the Statement of Activities include the effects of the changes in these expense accruals as follows: Change in accrued interest payable Change in compensated absences payable Change other post employment benefits liability and related deferred inflows of resources Pension expense in governmental funds is measured by current year employee contributions. Pension expense in the Statement of Activities is measured by the change in the net pension liability and related deferred inflows and outflows of resources. This is the amount by which pension expense ($353,072) differed from pension contributions ($688,216). Change in net position of governmental activities (Statement 2) The accompanying notes are an integral part of these financial statements. $9,199,079 3,469,208 (2,940,774) 1,690,433 (714,515) (12,812) 13,930 24,102 (1,364,050) (7,218,900) (401,193) 3,130,600 12,898 10,154 (44,964) (6,066) 335,144 $5,182,274 IV-17 CITY OF LINO LAKES, MINNESOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2018 Assets: Current assets: Cash and cash equivalents Due from other governmental units Accounts receivable -net Prepaid items Inventory Total current assets Noncurrent assets: Interfund loan receivable Capital assets: Construction in progress Equipment Water and sewer systems Total capital assets Less: Allowance for depreciation Net capital assets Total assets Deferred outflows of resources related to pensions Total assets and deferred outflows Liabilities: Current liabilities: Accounts payable Salaries payable Due to other governments Other accrued liabilities Compensated absences payable -current portion Total current liabilities Noncurrent liabilities: Compensated absences payable -noncurrent portion Other post employment benefits Net pension liability Total noncurrent liabilities Total liabilities Deferred inflows of resources related to pensions Total liabilities and deferred inflows Net position: Investment in capital assets Unrestricted Total net position Business-T~e Activities -Ente!:Erise Funds 601 Water 602 Sewer Total $6,022,044 $8,977,444 $14,999,488 1,982 1,982 150,405 215,893 366,298 13,909 23,279 37,188 39,898 39,898 6,226,256 9,218,598 15,444,854 559,110 559,110 818,359 804,673 1,623,032 154,909 333,754 488,663 25,796,237 24,042,195 49,838,432 26,769,505 25,180,622 51,950,127 (9,296,553} (9,944,495) (19,241,048) 17,472,952 15,236,127 32,709,079 23,699,208 25,013,835 48,713,043 30,953 30,953 61,906 23,730,161 25,044,788 48,774,949 28,110 33,294 61,404 4,952 4,952 9,904 8,453 2,952 11,405 3,110 1,964 5,074 14,146 14,146 28,292 58,771 57,308 116,079 2,293 2,293 4,586 4,297 4,297 8,594 135,272 135,272 270,544 141,862 141,862 283,724 200,633 199,170 399,803 47,620 47,620 95,240 248,253 246,790 495,043 17,472,952 15,236,127 32,709,079 6,008,956 9,561,871 15,570,827 $23,481,908 $24,797,998 $48,279,906 The accompanying notes are an integral part of these financial statements. IV-18 CITY OF LINO LAKES, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For The Year Ended December 31, 2018 Business-Type Activities -Enterprise Funds Operating revenues: Charges for services Hook-up charges Water meter sales Other operating revenue Total operating revenues Operating expenses: Personal services Materials and supplies Contractual services MCES sewer charges Depreciation Utilities Other Total operating expenses Operating income (loss) Nonoperating revenues: Investment earnings Income (loss) before contributions and transfers Contributions and transfers: Capital contributions from private sources Capital contributions from governmental activities Transfer out Total contributions and transfers Change in net position Net position -January 1 Net position -December 31 Amounts reported above Amounts reported for business-type activities in the statement of activities are different because: Transfer in of capital assets from governmental activities Amounts reported on the statement of activities 601 Water $1,122,136 40,030 50,518 4,905 1,217,589 270,608 205,025 140,187 597,571 105,453 13,911 1,332,755 (115,166) 82,783 (32,383) 487,444 405,283 892,727 860,344 22,621,564 $23,481,908 602 Sewer $1,721,958 31,754 1,753,712 275,907 35,821 132,250 949,776 495,856 45,775 29,086 1,964,471 (210,759) 130,651 (80,108) 754,588 309,232 (242,145) 821,675 741,567 24,056,431 $24,797,998 Capital Contributions $1,956,547 (714,515) $1,242,032 The accompanying notes are an integral part of these financial statements. Totals $2,844,094 71,784 50,518 4,905 2,971,301 546,515 240,846 272,437 949,776 1,093,427 151,228 42,997 3,297,226 (325,925) 213,434 (112,491) 1,242,032 714,515 (242,145) 1,714,402 1,601,911 46,677,995 $48,279,906 Transfers -Net ($242,145) 714,515 $472,370 IV-19 CITY OF LINO LAKES, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended December 31, 2018 Cash flows from operating activities: Receipts from customers and users Payment to suppliers Payment to employees Net cash flows provided by operating activities Cash flows from noncapital financing activities: Receipts from interfund loans Transfers out Net cash flows provided by noncapital financing activities Cash flows from capital and related financing activities: Acquisition of capital assets Cash flows from investing activities: Investment earnings Net increase in cash and cash equivalents Cash and cash equivalents -January 1 Cash and cash equivalents -December 31 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation Changes in assets and liabilities: Decrease (increase) in due from other governmental units Decrease (increase) in accounts receivable -net Decrease (increase) in prepaid items Decrease (increase) in inventory Decrease (increase) in deferred outflows of resources Increase (decrease) in payables Increase (decrease) in other accrued liabilities Increase (decrease) in compensated absences Increase (decrease) in other post employment benefits Increase (decrease) in net pension liability Increase (decrease) in deferred inflows of resources Total adjustments Net cash provided by operating activities Noncash investing, capital and financing activities: Contributions of capital assets Business-Type Activities -Enterprise Funds 601 Water 602 Sewer Totals $1,224,192 $1,757,400 $2,981,592 (461,280) (1,171,306) (1,632,586) (289,518) (294,817) (584,335) 473,394 291,277 764,671 355,839 355,839 (242,145) (242,145) 113,694 113,694 (11,479) (2,530) (14,009) 82,783 130,651 213,434 544,698 533,092 1,077,790 5,477,346 8,444,352 13,921,698 $6,022,044 $8,977,444 $14,999,488 ($115,166) ($210,759) ($325,925) 597,571 495,856 1,093,427 (368) (368) 6,603 4,056 10,659 (4,654) (5,452) (10,106) (9,530) (9,530) 17,606 17,606 35,212 17,659 27,458 45,117 (179) (604) (783) (16,839) (16,839) (33,678) 57 57 114 (33,877) (33,877) (67,754) 14,143 14,143 28,286 588,560 502,036 1,090,596 $473,394 $291,277 $764,671 $892,727 $1,063,820 $1,956,547 The accompanying notes are an integral part of these financial statements. IV-20 CITY OF LINO LAKES, MINNESOTA STATEMENT OF NET POSITION FIDUCIARY FUNDS December 31, 2018 Assets: Cash and investments Liabilities: Deposits payable The accompanying notes are an integral part of these financial statements. $1,450,303 $1,450,303 IV-21CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lino Lakes, Minnesota (tbe City) is a public corporation fonned under Minnesota Statute 410. As such, tbe City is under home rule charter regulations and applicable statutory guidelines. The basic financial statements oftbe City have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by tbe Governmental Accountiug Standards Board (GASB). The following is a summary of significant accountiug policies: A. FINANCIAL REPORTING ENTITY In accordance with GASB pronouncements and accountiug principles generally accepted in tbe United States of America, tbe financial statements oftbe reporting entity include those oftbe City (tbe primacy government) and its component units. The component units discussed below are included in tbe City's reporting entity because oftbe significance oftbeir operational or financial relationships with tbe City. COMPONENT UNITS In confonnity with accountiug principles generally accepted in tbe United States of America, tbe financial statements oftbe component units have been included in tbe financial report as blended component units. The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from tbe City. However, for financial reporting purposes, tbe EDA is reported as ifit were a part oftbe City's operation because tbe governing body is substantially tbe same as tbe governing body oftbe City and a financial benefit or burden relationship exists between tbe City and tbe EDA. The EDA does not issue separate financial statements. The Housing and Development Authority (HRA) of Lino Lakes is an entity legally separate from tbe City. However, for financial reporting purposes, tbe HRA is reported as ifit were part oftbe City's operations because tbe members oftbe City Council serve as commission members and a financial benefit or burden relationship exists between tbe City and tbe HRA. The HRA has not yet incurred any financial activity. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., tbe Statement of Net Position and tbe Statement of Activities) report information on all oftbe non-fiduciary activities oftbe primary government and its component units. 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 for support. The Statement of Activities demonstrates tbe degree to which tbe direct expenses of a given function or business-type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. Program revenues include I) eharges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting tbe operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues. The fund financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though tbe latter are excluded from tbe government-wide financial statements. The emphasis of governmental and proprietary fund financial statements is on major individual CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 governmental and enterprise funds, with each displayed as separate columns in tbe fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operatiug revenues, such as charges for services, result from exchange transactions associated with tbe principal activity of tbe fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperatiug revenues, such as subsidies and investment earnings, result from nonexchange transactions or incidental activities. The City reports tbe following major governmental funds: General Fund is tbe City's primary operatiug fund. It accounts for all financial resources oftbe general government, except those required to be accounted for in another fund. General Obligation Improvement Note of2009A Fund accounts for tbe accumulation of resources for, and tbe payment ot; interest, principal and related costs on general long-term debt. The note was used to finance improvement projects at tbe I-35E and County Road 14 interchange. General Obligation Improvement Bonds of2016B Fund accounts for tbe accumulation of resources for, and tbe payment ot; interest, principal and related costs on general long-term debt. Area and Unit Charge Fund accounts for tbe collection of water and sewer unit charges to be used for debt payments and construction of governmental infrastructure. MSA Construction Fund accounts for tbe financing of future reconstruction of state aid eligible streets. 2018 Street Reconstruction Fund accounts for street and utility improvements within tbe West Shadow Lake Drive and LaMotte neighborhoods. The City reports tbe following major proprietary funds: The Water Fund accounts for customer water service charges which are used to finance water system operatiug expenses. The Sewer Fund accounts for customer sewer service charges which are used to finance sanitary sewer system operating expenses. Additionally, tbe City reports tbe following fund type: Agency fands account for assets held as an agent for individuals, private organizations and other governmental units. 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 financial statements are reported using tbe economic resources measurement focus and tbe accrual basis of accounting, as are tbe proprietary fund financial statements. 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 tbe year for which Ibey are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements IV-22CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 imposed by the provider have been met. The City's only fiduciary funds are agency funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. 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. Revenues are considered to be available when they are collectible within the current period at soon enough thereafter to pay liabilities of the current period. Fat this purpose, the City considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one yea, of the end of the current fiscal period. Expenditures generally are recatded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recOtded only when payment is due. Property taxes, special assessments, intergovernmental revenues, chatges fat services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the po,tion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. As a general rule the effect ofinterfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures at expenses if they involved external organi,:ations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City. Elimination of these chatges would distort the direct costs and program revenues reported fat the various functions concerned. 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 revenues of the water and sewer enterprise funds are chatges to customers fat sales and services. Operating expenses fat 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 accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted fat the General Fund and the Program Recreation Special Revenue Fund. Budgeted expenditure appropriations lapse at yeat-end. Budgeted amounts are reported as originally adopted and as amended by the City Council. Budgeted expenditure appropriations lapse at yea, end. Encumbrance accounting, under which purchase Otders, contracts, and other commitments fat the expenditure of monies are recorded in Older to reserve that po,tion of the appropriation, is not employed by the City because it is at present not considered necessa,y to assure effective budgetary control or to facilitate effective cash management. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 E. LEGAL COMPLIANCE-BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: I. The City AdministratOt submits to the City Council a proposed operating budget (including the General Fund and Program Recreation Special Revenue Fund) for the fiscal yea, commencing the following January I. The operating budget includes proposed expenditures and the means of financing them. 2. Public heatings ate conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution on a depattmental basis and can expended by each depattment based upon detailed budget estimates fat individual expenditure accounts. 4. The City AdministratOt is authorized to transfer appropriations within any depattment budget. Additional interdepattmental or interfimd appropriations and deletions are at may be authorized by the City Council with fund ( contingency) reserves at additional revenues. 5. Fatmal budgetary integration is employed as a management control device during the yea, fat the General Fund. 6. Legal debt obligation indentures determine the appropriation level and debt service tax levies fat the Debt Service Funds. Supplementaty budgets ate adopted fat the Proprietary Funds to determine and calculate user chatges. These debt service and budget amounts represent general obligation bond indenture provisions and net income fat operation and capital maintenance and are not reflected in the financial statements. 7. A capital improvement program is reviewed periodically by the City Council for the Capital Project Funds. However, appropriations fat major projects are not adopted until the actual bid aWatd of the improvement. The appropriations are not reflected in the financial statements. 8. Expenditures may not legally exceed budgeted appropriations at the depattment level unless approved by the City Council. Therefore, the legal level of budgetary control is at the depattment 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 authorized investments. Investment income is allocated to individual funds on the basis of the fund's equity in the cash and investment pool. Investments are stated at fair value, except for investments in external investment pools that meet GASB 79 requirements, which are stated at amortized cost. Interest eatnings ate accrued at yea,-end. For purposes of the Statement of Cash Flows, the proprietary funds consider all highly liquid investments with a maturity of three months at 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 at less. Therefore, the entire balance in such fund types is considered cash equivalents. IV-23CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 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 REVENUE RECOGNITION The City C01mcil 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 C01D1ty 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 I 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 government-wide financial statements, the City recognizes property tax revenue in the period for which taxes were levied. Uncollectible property taxes are not material and have not been reported. 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 received by the City in July, December, and the following January are recognized as revenue for the current year. Taxes collected by the county by December 31 (remitted to the City the following January) are classified as due from county. Taxes not collected by the county by December 31 are classified as delinquent taxes receivable. Delinquent taxes receivable are fully offset by deferred inflows of resources because they are not available to finance current expenditures. 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. H. 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. Once a special assessment roll is adopted, the am01D1t 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 C01D1cil 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 OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 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. Within the government-wide financial statements, the City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. 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, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred inflows of resources. I. INVENTORY For governmental funds, the original cost of materials and supplies are recorded as expenditures at the time of purchase. These funds do not maintain material amounts of inventories. Inventories of the proprietary funds are stated at cost, which approximates market, using the first-in, first-out (FIFO) method. J. PREPAID ITEMS Certain prepayments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. K. INTERFUND TRANSACTIONS During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. 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/expenses in the fund that is reimbursed. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund. Such advances are classified as "advances to/from other funds." Long-term interfund loans are classified as "interfund loan receivable/payable." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." All other interfund transactions are reported as transfers. IV-24CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 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 are defined by the City as assets with an initial, individual cost of more than $2,500 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. All existing City infrastructure has been capitali7.ed regardless of date placed in service. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitali7.ed. Major outlays for capital assets and improvements are capitalized as projects are constructed. 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 15 to 50 years for infrastructure. . M. COMPENSATED ABSENCES It.is the City's policy to permit employees to accumulate eamed but unused vacation, PTO (Personal Time Oft), extended leave and sick pay benefits. All vacation pay and PTO and the portion of sick pay allowable as severance is accrued in the government-wide and proprietary fimd financial statements. The current portion is calculated based on historical trends. N. LONG-TERM OBLIGATIONS In the government-wide financial statements and proprietary fimd types in the fimd financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fimd type Statement of Net Position. Bond premiums and discounts are amortized over the life of the related debt. In the fimd financial statements, governmental fimd types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. 0. DEFINED BENEFIT PENSION PLANS For purposes of measuring the net pension liability, deferred outflows and inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to and 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 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 payments and refimds 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 financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to future periods and so will not be recoguized as an outflow of resources (expense) that time. The City has one item that qualifies for reporting in the category. It is the pension related deferred outflows of resources reported in the government-wide Statement of Net Position and the proprietary fimds Statement ofNet Position. In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods, and therefore, will not be recognized as an inflow of resources (revenue) until that time. The City has pension and OPEB related deferred inflows of resources reported in the government-wide Statement of Net Pension and the proprietary fimds Statements of Net Position. The City also has a type of item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental fimds balance sheet. The governmental fimds report unavailable revenue from the following sources: property taxes and special assessments not collected within 60 days from year-end. Q. FUND BALANCE CLASSIFICATIONS In the fimd financial statements, governmental fimds report fimd balance in classifications that disclose constraints for which amounts in those fimds can be spent. These classifications are as follows: Nonspendab/e -consists of amounts that are not in spendable form, such as prepaid items and corpus of any permanent fimd. Restricted -consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed -consists of internally imposed constraints. These constraints are established by a resolution approved by the City Council, and committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by resolution. Assigned-consists of internally imposed constraints for the specific purpose of the City's intended use. These constraints are established by the City Council and/or management. The City Council passed a resolution authorizing the Finance Director to assign fimd balances and their intended uses. Unassigned -is the residual classification for the general fimd and also reflects negative residual amounts in other fimds. When both restricted and unrestricted resources are available for use, it is the City's policy to first use restricted resources, and then use unrestricted resources as they are needed. When committed, assigned or unassigned resources are available for use, it is the City's policy to use resources in the following order: 1) committed 2) assigned and 3) unassigned. IV-25CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 The City fonnally adopted a fund balances policy for the general fund. The policy establishes an unassigned fund balance range of 40% -50% of general fund operating expenditures. R. USEOFESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depositorY banks authorized by the City Council, all of which are members of the Federal Reserve System. Custodial Credit Risk-Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned to it. Minnesota Statutes require that insurance, surety bonds or collateral protect all City deposits. The market value of collateral pledged must equal 1100/o of deposits not covered by insurance or bonds. The City has no additional deposit policies addressing custodial credit risk. At December 31, 2018, the bank balance of the City's deposits was insured by the FDIC or covered by pledged collateral held in the City's name. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a) United States government treaswy bills, treaswy notes, treasmy bonds; b) Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; c) General obligation securities of any state or local government with lasing powers which is rated . "A" or better by a national bond rating service, or revenue obligation securities of any state or local government with lasing powers which is rated "AA" or better by a national bond rating service; d) General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation; and I) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. At December 31, 2018, the carrying amount of the City's deposits with financial institutions was $4,714,688. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 B. INVESTMENTS Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities, or organizations created by an act of congress, excluding mortgage-backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax-exempt securities, or repurchase or reverse repurchase agreements. c) State and local securities as follows: I) any security which is a general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; . 2) any security which is a revenue obligation of any state or local government with lasing powers which is rated "AA" or better by a national bond rating service; and 3) a general obligation of the Minnesota Housing Finance Agency which is a moral obligation of the State of Minnesota and is rated "A" or better by a national bond rating agency. d) Bankers acceptance of United States banks. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. I) Repurchase or reverse repurchase agreements 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 ofNew York; certain Minnesota securities broker-dealers; or, a bank qualified as a depositor. g) General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.61, subdivision 6. IV-26CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 At December 31, 2018, the City bad the following investments and maturities: Investment Maturities (in Years) Less Investment~ !!!l!!I. Fair Value Than 1 I - 3 _1..:..§. Brokered certificates of deposit Municipal bonds Federal Home Loan Mortgage Corp. 4Mfund First American Govi Obligation fund Invesco Govi & Agency fund Total * AAA $1,627,686; AA+ $1,671,406 AA $3,908,093; AA-$3,851,826 A+ $228,655; A $608,094 Not rated . AAA Not rated AAAm AAAm $21,764,879 11,895,760 1,481,550 9,227,709 1,478,455 599,883 ~ $5,281,248 3,630,158 9,227,709 1,478,455 599,883 $20,217,453 · $13,223,194 6,205,751 $19,428,945 Total investments Deposits Petty cash Total cash and investments These amounts are presented in the financial statements as follows: Cash and investments: Governmental and business-type {Statement 1) Fiduciazy {Statement 10) Total $49,713,561 1,450,303 $51,163,864 $3,260,437 2,059,851 1,481,550 $6,801,838 $46,448,236 4,714,688 940 $51,163,864 The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The hierarchy has three levels. Level I investments are valued using inputs that are based on quoted prices in active markets for identical assets. Level 2 investments are valued using inputs that are based on quoted prices for similar assets or inputs that are observable, either directly or indirectly. Level 3 investments are valued using inputs that are unobservable. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 The City has the following recurring fair value measurements at December 31, 2018: Investment~ Investtnents at fair value: Brokered certificates of deposit Municipal bonds Federal Home Loan Mortgage Corp. Investtnents not categorized: 4Mfund First American Go~ Obligation fund Invesco Govi & Agency fund Total investments 12/31/2018 $21,764,879 11,895,760 1,481,550 9,227,709 1,478,455 599,883 ~ Fair Value Measurement Us!!!s. ~ Level2 ~ $0 $21,764,879 11,895,760 1,481,550 $35,142,189 $0 The 4M fund is an external investment pool investment which is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. It is an unrated pool and the fair value of the position in the pool is the same as the value of pool shares. The pool is managed to maintain a portfolio weighted average maturity of no greater than 60 days and seeks to maintain a constant net asset value {NA V) of $1 per share. The pool measures its investments at amortized cost in accordance with GASB Statement No. 79. The 4M Plus fund requires funds to be deposited for a minimwn of 14 calendar days. Withdrawals prior to the 14-day restriction period are subject to penalty equal to 7 days interest on the amount withdrawn. The First American Government Obligation money market fund and the Invesco Government & Agency money market fund are external investment pools. Each fund seeks to maintain a constant net asset value {NA V) of $1 per share. The securities held by each fund are valued on the basis of amortized cost. Shares may be redeemed without penalty on any business day. C. INVESTMENT RISKS Custodial Credit Risk -Investments -For investments in securities, custodial credit risk is the risk that in the event of failure of the counterparty to a transaction, the City will not be able to recover the value of its investment securities that are in the possession of an outside party. Investments in investment pools and money markets are not evidenced by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. The City's investment policy requires its brokers be licensed with the appropriate federal and state agencies. A minimwn capital requirement of $5,000,000 and at least five years of operation is mandatory. Investments in securities are held by the City's broker-dealers. The securities at each broker-dealer are insured $500,000 through SIPC. Each broker-dealer has provided additional protection by providing additional insurance. This insurance is subject to aggregate limits applied to all of the broker-dealer's accounts. 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. IV-27CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 ~ -Credit risk is the risk than 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 organi7.81:ion. Concentration of Credit Risk -Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government's investment in a single issuer. The City places no limit on the ammmt it may invest in any one issuer. At December 31, 2018, no individual investments exceeded 5% of the City's total investment portfolio. Note 3 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2018 are as follows: Property Special Taxes Assessments Notes Receivable Receivable Receivable Major Funds: GeneralFund $43,378 $ $ G.O. Improvement Note of2009A 2,076,882 G.O. Improvement Bonds of2016B 2,994,379 Area and Unit Charge 884,651 Total $43,378 2,076,882 2,994,379 884,651 Nonmajor Funds 8692 435,924 225,000 ~616 Total $52,070 $6,391,836 $225,000 $6,668,906 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Note 4 UNAVAILABLE REVENUE Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of unavailable revenue reported in the governmental funds are as follows: Property Special Taxes Assessments Receivable Receivable ~ Major Funds: General Fund $69,625 $106 $69,731 G.O. ImprovementNoteof2009A 2,100,886 2,100,886 G.0. lmprovement Bonds of2016B 2,994,379 2,994,379 Area and Unit Charge 997,143 997,143 Nonmajor Funds 13,952 519JOI ----2ll,_l 53 Total $83.2TI__ $6,611,715 $6,695~92 IV-28CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 No~S 'APIT,Y, ASSET§ Capital asset activity for the year ended December 31, 2018 was as follows: Beginning Balance Increases Governmental activities: Capital assc1s, not being depreciated: Land $3,320,059 $ Wetland credits 162,372 13,117 Construetion in progress :!,482~8 3,653,869 Total capital assets, not being depreeiated 519641669 3,666,986 Capital assc1s, being depreeiated: Buildings 10,921,748 378,911 Office equipment and furniture 783,626 86,190 Vehicles 4,344,818 315,814 Machine,y and shop equipment 2,557,317 235,298 Other equipment l,lll,410 85,048 Infrastrocture 85,882,657 2,306,583 Total capital assc1s, being depreciated 105,601,576 3,407,844 Less accumulated depreeiation for: Buildings 4,545,737 379,490 Office equipment and :furniture 546,849 52,256 Vehicles 2,328,463 352,988 Machinery and shop equipment 1,423,693 183,067 Olher equipment 844,314 21,526 Infrastrocture 59,266,162 1,951,447 Total accumulated depreciatioo 68,955,218 2,940,774 Total capital assets being depreeiated -net 36,646,358 467070 Govenunental activities capital assets • net $4216111027 $4,1341056 Beginning Balance Increases Business-type activities: Capital assets, not being depreciated: Construction in progress $115071153 $1,242,031 Capital assc1s, being depreciated: Machinery and shop equipment 474,654 14,009 Water and sewer systems 47,997,765 1,840,667 Total capital assc1s, being depreciated 48,472,419 1,854,676 Accumulated depreciation for: Machinery and shop equipment 307,215 19,910 W-and sewer systems 17,840,406 1,073,517 TotaJ accmnulated depreciation 18,147,621 1,093,427 Total capital assets being depreciated -net 30,324,798 761~9 Business-type activities capital assets -net $31,831,951 $2,0031280 Ending Decreases Transfm Balance $ $ $3,320,059 (8,265) 167,224 !1,826,135) !714,515) 3,595,457 !1,834,400) !714,515) 7,082,740 11,300,659 (8,266) 861,550 (103,778) 4,556,854 (84,670) 2,707,945 1,196,458 88,189~40 (196,714) 0 108,812,706 4,925,227 (8,266) 590,839 (69,786) 2,611,665 (25,061) 1,581,699 865,840 61~17,609 !103,113) 0 71,792,879 !93,601) 0 37,019,827 ,s1192s1001l ($714,515) $44,1021567 Ending Decreases Transfers Balance !Sl1840166ZJ $714 515 __!!,S032 488,663 49,838,432 0 0 50,327,095 327,125 18,913,923 0 0 19~1,048 0 0 31,086,047 ,st1840166Zl $714 515 $32,7091079 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government Public safety Public services Conservation of natural resources Total depreciation expense -governmental activities Business-type activities: Water Sewer Total depreciation expense -business-type activities $396,284 326,006 2,217,634 850 $2,940,774 $597,571 495,856 $1,093,427 IV-29CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Note6 WNG-TERM DEBT The City issues general obligation bonds and certificates of indebtedness to provide funds for the acquisition and construction of major capital facilities and equipment. City indebtedness at December 31, 2018 consisted of the following: Final Issue M-hy inme,t Original Payablo ~~ Rate Issue ---12:!lli!L_ Governmental activities: General Obligation Bonds: 20159 Certificates oflndebtedness 08/25/15 12/31/20 I.SO% 963,000 398,000 2016A Certificates oflndebtedness 02/01/16 12/31/19 1.00% 469,000 158,000 2017A Certificates oflndebtedness 03/01/17 12/31/20 1.00% 311,000 209,000 2018A Ccrtificatcs oflndcbtedness 02/01/18 12/31/21 1.00% 303,900 303,900 G.O. TIF Bonds, Series 2007A 07/15/07 02/01/24 4.00%-4.125% 4,215,000 1,435,000 0.0. Refi.mding Bonds, Series 2012A 11/15112 02/01/24 1.00% -2.00% 2,0IS,000 1,040,000 G.O. Bonds, Series 2015A 08/01115 02/01/31 2.00% -3.00% 3,095,000 2,710,000 EDA Lease Revenue Bonds, Series 2015B 10/01/15 04/01/36 2.00% -3.00% 4,350,000 4,015,000 0.0. Utility Revenue Bonds, Series 2016A 11123/16 02/01/27 2.00% 1,420,000 1,290,000 G.O. Tax Abatement Refunding Bonds, Series 2016C 11123/16 02/01/23 1.00%-1.50% 1,600,000 1,375,000 G.O. Bonds,. Series 2018A 12/19/18 02/01/34 3.00%-5.00% 619151000 609ts,ooo Total General Obligation Bonds 25,656,900 19,848,900 Special Assessment Bonds: G.O. lmp It Utility Revenue Bond,, Serio, 2010A 07/09/10 02/01120 2.00%-3.00% 1,000,000 220,000 G.O.Improvemont8onds,Sories,2013A 07/15/13 02/01/24 1.25% -4.00% 615,000 375,000 G.O. Improvement Bonda, Series 2014A 11/20/14 02/01/26 0.40% -2.30% 2,645,000 1,800,000 G.O.ImprovemontRofundiog8onds,Series20l6B 11/23/16 02/01/21 0.875%-1.50% 1191s,ooo ~ Total Specia!Asseumen!Bonds 6.235,000 3,890,000 G.O. Cap;tal Note, Serio, 2016A 04/14/16 02/01/26 2.00% 294,525 202,125 Unamortized bond premiums 575,188 527,800 Unamortiz.ed bond diacowrts (38,362) (15,987) Compensated absences payable NIA ___!!1AZ!_ Total Government Activities $3~723~1 $25,266,710 Business-Type Activities: Compensated absences payable NIA ~ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 CHANGES IN LONG-TERM DEBT The following is a schedule of changes in City indebtedness for the year ended December 31, 2018: Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental Activities: General obligation bonds $14,714,250 $7,218,900 $2,084,250 $19,848,900 $1,747,900 Special assessment bonds 4,905,000 1,0151000 3,890,000 110351000 Total bonded debt 19,619,250 7,218,900 3,099,250 23,738,900 2,782,900 capital note 233,475 31,350 202,125 32,175 Unamortized bond premiums 142,182 401,193 15,575 527,800 Unamortized bond discounts (18,664) (2,677) (15,987) Compensated abseru:es payable 768 908 634 743 589 779 813 872 497161 Total governmental activities $20,745,151 $812541836 $3,733~77 $25~661710 ~236 Business-Type Activities: Compensated abseru:es payable $66,556 $33,311 $66,989 $32,878 ~292 DESCRIPTIONS OF LONG-TERM DEBT General Obligation Bonds -The bonds were issued for improvements or projects which benefited the City as a whole and, therefore, are repaid from ed valorem levies. Special Assessment Bonds -The 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 ed valorem levies. Capital Note -This note was issued to fund the cost of the acquisition of capital equipment to be used by the North Metro Telecommunications Commission in the operation of a cable communications system. The note will be repaid from franchise fee revenue. Utility 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. IV-30CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 DEHT SERVICE REQUIREMENTS Future principal and interest payments required to retire long-term debt are as follows: Years Ending Bonded Debt C!!J:!italNote December31 Princi.l?!!.._ Interest Princil!!! Interest 2019 $2,782,900 $543,811 $32,175 $4,042 2020 2,696,000 600,599 33,000 3,399 2021 2,615,000 542,386 33,000 2,739 2022 1,830,000 483,876 33,825 2,079 2023 1,905,000 428,672 34,650 1,403 2024-2028 5,950,000 1,463,166 35,475 710 2029-2033 4,535,000 628,950 2034-2036 1,425,000 61438 Total $23,738,900 $4,752,898 $202,125 $14,372 It is not practicable to determine the specific year for payment oflong-term compensated absences payable. For governmental activities, compensated absences are liquidated by the General Fund. For business-type activities, compensated absences are liquidated by the Water and Sewer Funds. DEFERRED ADV ALOREM TAX LEVIES -BONDED DEBT All long-term bonded indebtedness is backed by the full faith and credit of the City, including special assessment and revenue bond issues. General Obligation bond issues are financed by ad valorem tax levies and special assessment bond issues 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 necessa,y for full payment of principal and interest. The future scheduled tax levies are not shown as assets in the accompanying financial statements. Future scheduled tax levies for all bonds outstanding at December 31, 2018 totaled $18,719,815. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 REVENUE PLEDGED Future revenue pledged for the payment of long-term debt is as follows: ReYenuePI c-,,iy.., -Principol -I~~~ -andln1mSt Ro,en,e Bondlaue UseofProceedl ~ ............ Poid """""" ICertificatesofhldclbtedness --Advaloremtaxes f 2016-2021 Sl,091,430 $537,650 I $562,872 [2007A 0.0. TIF Bonds --Tax incnment, MSA I 200, -202, I SI,622,ml $252,126 I $252.776 fundingviatransfen 2010A Improvement and Utility Oenaal mdwaterinfrastructure Special asscssmmts, I 2011-201, I 1226,1so I s113,11s I $113,281 !R,,enuoBmdo -tnmkutility ....... 2012A o.o. Bonds --Ad valorem taxes. 2013-2023 $1,083,433 $244,660 $193,492 --l2013A Improvement Bonds ----2014-2023 $419,700 $74,460 $222,639 l2014A Improvement Bonds --Special usessments 2015-2025 $1,894,869 $399,632 $402,403 12015A 0.0. Bonds Infrastructure improvements Advolman"""' 2016-2030 $3,139,093 $258,262 $273,420 l201se EDA Lease hveoue Bonds Consttuctionofafirestation Advalorcm taxes 2016-203S SS,387,068 S300,888 $318,282 l2016ACapital.Note ICable communications equipment Franchiscfccs 2016-2025 $216,497 $36,019 $37,820 l2016A Utility Rcvawc Bonds lwaaer infrastructure improYemeDts :''"°""""v1, 2011-202• 1 s1,40B.200 I s1S1,100 I $163,764 20168 lmpmvementBands 1-"'-=.:assessments.taxi 2017-2020 I Sl,S26,473 J sso1.s1s I $278,137 l2016C 0.0. Tax Abatancnt Bonds 'Infrastructure improvements Advol<xanmxe, I 2011-2022 I $1,424,7631 $244,150 I S27S,421 l2018A 0.0. Bonds 1,--~:ataxes,tnm1tl 2019-2003 I $9,267.2461 s I s IV-31CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December31,2018 Note 7 DEFINED BENEFIT PENSION PLANS -PERA A. PLAN DESCRIPTION The City participates in the following cost-sharing multiple-employer defined benefit pensioo plans administered by the Public Employees Retirement Associatioo of Minnesota (PERA). PERA's defined benefit pensioo plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA's defined benefit pensioo plans are tax qualified plans under Sectioo 401(a) of the Internal Revenue Code. I. General Employees Retirement Fund (GERF) All full-time (with the exceptioo of employees covered by PEPFF) and certain part-time employees of the City are covered by the General Employees Retirement Fund (GERF). GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 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 I, 1999, the PEPFF also covers police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to PERA. B. BENEFITS PROVIDED PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can ooly be modified by the state legislature. 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. I. GERF Benefits Benefits are based oo a member's highest average sala,y 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 members. Members hired prior to July I, 1989, receive the higher of Method I or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method I, the accrual rate for Coordinated members is 1.2% for each of the first ten years and I. 7% for each additional year. Under Method 2, the accrual rate for Coordinated Plan members is I. 7% for all years of service. The accrual rates for former Minneapolis Employees Retirement Fund (MERF) members is 2.0"/o for each of the first IO years of service and 2.5% for each additional year. For members hired prior to July I, 1989 a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired oo or after July I, 1989 normal retirement age is the age for unreduced Social Secwity benefits capped at 66. Beginoing January I, 2019, benefit recipients will receive a future annual increase equal to 50 percent of the Social Security Cost of Living Adjustment, not less than 1.0 percent and not more than 1.5 percent. For retirements oo or after January I, 2024, the first benefit increase is delayed until the retiree reaches Normal Retirement Age (not applicable to Rule of90 retirees, disability benefit recipients, or survivors). A benefit recipient who has been receiving a benefit for at least CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 12 full mooths as of June 30 will receive a full increase. Members receiving benefits for at least ooe month but less than 12 full months as of June 30 will receive a pro rata increase. 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"/o after five years up to I 00"/o after ten years of credited service. Benefits for PEPFF members first hired after June 30, 2014, vest oo a prorated bases from 50% after ten years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average sala,y for each year of service. For PEPFF members who were first hired prior to July I, 1989, a full annuity is available when age plus years of service equal at least 90. Beginning in 2019, the COLA will be fixed at I percent. Under funding measurements from 2017, the 2.5 percent COLA trigger was never expected to occur and was subsequently removed from law. Post retirement increases are given each year except for annuitants who have been receiving a benefit for only 31 to 41 mooths. These annui-will receive a prorated amount of the increase oo a sliding scale. C. CONTRIBUTIONS Minnesota Statutes Chapter 353 sets the rates for employer and employee cootributions. Cootribution rates can oo1y be modified by the state legislature. I. GERF Cootributioos Coordinated Plan members were required to cootribute 6.5% of their annual covered sala,y in fiscal year 2018; the City was required to contribute 7.5% for Coordinated Plan members. The City cootributions to the GERF for the year ended December 31, 2018 were $202,526. The City contributions were equal to the required contributions as set by state statute. 2. PEPFF Cootn'butions Legislation increased both employee and employer contributioo rates in the Police and Fire Plan. Employee rates increased from I 0.80 percent of pay to 11.30 percent and employer rates increase from 16.20 percent to 16.95 percent on Janua,y I, 2019. On January 1, 2020 employee rates increase to 11.80 percent and employer rates increase to 17. 70 percent. The City cootributions to the PEPFF for the year ended December 31, 2018 were $420,821. The City cootributions were equal to the required contributioos as set by state statute. D. PENSION COSTS I. GERF Pensioo Costs At December 31, 2018, the City reported a liability of $2,113,632 for its proportiooate share of GERF's net pensioo liability. The City's net pensioo liability reflected a reductioo due to the State of Minnesota's cootributioo of$16 millioo to the fund in 2018. The State ofMinnesota is considered a non-employer cootributing entity and the state's cootribution meets the definition ofa special fimding situation. The State of Minnesota's proportionate share of the net pensioo liability associated with the City totaled $69,419. The net pensioo liability was measured as of June 30, IV-32CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 2018, 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 I, 2017 through June 30, 2018, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2018, the City's proportionate share was 0.0381 %, which was a decrease of0.0033% from its proportionate share measured as of June 30, 2017. Post-retirement benefit increases were changed from 1.0% per year with a provision to increase to 2.5% upon attainment of 900/o funding ratio to 500/o of the Social Secwity Cost of Living Adjustment, not less than 1.0% and not more than 1.5%, beginning January I, 2019. For the year ended December 31, 2018, the City recognized pension expense of $169,283 for its proportionate share of the GERF's pension expense. In addition, the City recognized an additional $16,188 as pension expense {and grant revenue) for its proportionate share of the State of Minnesota's contribution of$16 million to the GERF. At December 31, 2018, 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: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $55,944 $58,978 Changes in actuarial assumptions 193,160 237,489 Difference between projected and actual investment earnings 225,376 Changes in proportion 128,974 222,223 Contributions paid to PERA subsequent to the measurement date 105,563 Total $483M!._ $744,066 $105,563 reported as deferred outflows ofresources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability during 2019. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended December 31, 2019 2020 2021 2022 2023 Thereafter Pension Ex.eense $32,999 (118,211) (236,660) (44,116) CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 2. PEPFF Pension Costs At December 31, 2018, the City reported a liability of $2,585,866 for its proportionate share of the PEPFF's net pension liability. The net pension liability was measured as of June 30, 2018 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 I, 2017 through June 30, 2018, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2018, the City's proportion was 0.2426%, which was a decrease of O.oI 44% from its proportion measured as of June 30, 2017. The City also recognized $21,834 for the year ended December 31, 2018 as revenue {and an offsetting reduction ofnet pension liability) 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 contnlmting $9 million to the PEPFF each year, starting in fiscal year 2014. Beginning in January I, 2019, the COLA will be fixed at I percent. Under funding measurements from 2017, the 2.5 percent COLA trigger was never expected to occur and was subsequently removed from law. For the year ended December 31, 2018, the City recognized pension expense of$261,970 for its proportionate share of the PEPFF's pension expense. At December 31, 2018, 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: Differences between expected and actual economic experience Changes in actuarial assumptions Difference between projected and actual investment earnings Changes in proportion Contributions paid to PERA subsequent to the measurement date Total Deferred Outflows of Resources $104,225 3,167,169 307,549 227,348 $3,806,291 Deferred Inflows of Resources $620,175 3,806,731 560,207 439,714 $5,426,827 A total of $227,348 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 during 2019. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as outflows: IV-33CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Year Ended December 31, 2019 2020 2021 2022 2023 Thereafter Pension E!!!!ense ($91,934) (204,554) (394,691) (1,060,238) (96,467) The net pension liability will be liquidated by the general, water and sewer funds. E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assmnptions: Inflation Salary Growth Investment rate of return GERF 2.50% per year 3.25% per year after 26 years of service 7.50% PEPFF 2.50% per year 3.25% per year after 25 years of service 7.50% The total pension liability for each of the defined benefit cost-sharing plans was determined by an actuarial valuation as of June 30, 2018, using the entry age normal actuarial cost method. Inflation is assumed to be 2.50 percent for the General Employees Plan. Salary growth assumptions in the General Employees Plan decrease in annual increments from 11.25 percent after one year of service, to 3.25 percent after 26 years of service. In the Police and Fire Plan, salary growth assumptions decrease from 12.25 percent after one year of service to 3.25 percent after 25 years of service. Mortality rates for all plans are based on RP-2014 mortality tables. The tables are adjusted slightly to fit PERA's experience. Actuarial assumptions for the General Employees Plan are reviewed every four to six years. The most recent six-year experience study for the General Employees Plan was completed in 2015. The most recent four-year experience study for the Police and Fire Plan was completed in 2016. The following changes in actuarial assumptions occurred in 2018: General Employees Fund The mortality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was changed from 1.0 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year. Police and Fire Fund The mortality projection scale was changed from MP-2016 to MP-2017. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return 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 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic stocks 36% 5.100/o International stocks 17% 5.300/o Bonds (fixed income) 200/o 0.75% Alternative assets (private markets) 25% 5.900/o Cash 2% 0.000/o Totals ~ F. DISCOUNTRATE The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employees will be made at the rate set in Minnesota statutes. Based on that assumption, the fiduciary net position of the GERF and the PEPFF was projected to be available to make all projected future benefit payments of current plan members. 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. G. PENSION LIABILITY 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 ifit were calculated using a discount rate I percentage point lower or I percentage point higher than the current discount rate: 1 % Decrease in I% Increase in DiscouotRate (6.5%! Discount Rate !7.5%! Discount Rate (8.5%! City's proportionate share of the GERF net pension liability $3,434,922 $2,113,632 $1,022,944 City's proportionate share of the PEPFF net pension liability $5,544,259 $2,585,866 $139,398 H. PENSION PLAN FIDUCIARY NET POSfflON 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 at www .mnpera.org. IV-34CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 L PENSION EXPENSE Pension expense recognized by the City for the year ended December 31, 2018 is as follows: GERF PEPFF Fire Pension Plan (Note 8) Total $185,471 261,970 57,541 $504,982 Note 8 DEFINED BENEFIT PENSION PLAN -FIRE DIVISION A, PLAN DESCRIPTION The Lino Lakes Public Safety Deparbnent -Fire Division participates in the Statewide Volunteer Firefighter Retirement Plan (SVF), an agent multiple-employer lump-sum defined benefit pension plan administered by the Public Employees Retirement Association of Minnesota (PERA). The SVF plan covers volunteer firefighters of municipal fire deparbnents or independent nonprofit firefighting corporations that have elected to join the plan. At December 31, 2018 (measurement date), the plan covered 24 active firefighters and zero vested terminated fire fighters whose pension benefits are deferred. The plan is established and administered in accordance with Minnesota Statutes, Chapter 3530. B. BENEFITS PROVIDED The SVF provides lump-sum retirement, death, and supplemental benefits to covered firefighters and survivors. Benefits are paid based on the number of years of service multiplied by a benefit level per year of service approved by the City of Lino Lakes. Members are eligible for a lump-sum retirement benefit at 50 years of age with five years of service. Plan provisions include a pro-rated vesting schedule that increases from 5 years at 40"/o through 20 years at I 00%. C. CONTRIBUTIONS The SVF is funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota statutes, and vohmtary City contributions. The State of Minnesota contributed $118,144 in fire state aid to the plan for the year ended December 31, 2018. Required employer contributions are calculated annually based on statutory provisions. The City's statutorily-required contributions to the SVF plan for the year ended December 31, 2018 were $0. The City's contributions were equal to the required contributions as set by state statute, if applicable. In addition, the City made voluntary contributions of $64,869 to the plan. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 D. PENSION COSTS At December 31, 2018, the City reported a net pension asset of $164,913 for the SVF plan. The net pension asset was measured as of December 31, 2018. The total pension liability used to calculate the net pension asset in accordance with GASB 68 was determined by PERA applying an actuarial formula to specific census data certified by the fire deparbnent. The following table presents the changes in net pension liability during the year. Plan Not Total Fiducial}' Pension Pension Net Liability Liability Position (Asset) &_ ~ _J!:!!l Beginning balance December 31, 2017 $97,711 $225,705 ($127,994) Changes for the year: Service cost 48,182 48,182 Inrerest on pension liability 8,754 8,754 Actuarial experience (gains) I losses 69,760 69,760 Projected investment earnings 13,542 (13,542) Contributions -employer 64,869 (64,869) Contributions -State of MN 118,144 (118,144) Asset (gain) / loss (32,238) 32,238 Benefit payouts PERA administrative fee (7021 702 Not changes 126,696 163 615 (36,919l Balance end of year December 31, 2018 $224407 $389,320 ($164,913l There were no benefit provision changes during the measurement period. For the year ended December 31, 2018, the City recognized pension expense of $57,541. At December 31, 2018, the City reported deferred inflows of resources from the following sources: Difference between projected and actual investment earnings Differences between expected and actual economic experience Total Deferred Outflows of Resources $21,849 55,808 $77,657 Deferred Inflows of Resources $ 11,863 $11,863 IV-35CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended December 31, 2019 2020 2021 2022 2023 Thereafter E. ACTUARIAL ASSUMPTIONS Pension Ex~ $13,444 15,185 16,767 20,398 The total pension liability at December 31, 2018, was determined using the ent,y age normal actuarial cost method and the following actuarial assumptions: • Retirement eligibility at the later of age 50 or 20 years of service • Investment rate of return of 6.0% • Inflation rate of3.0% There were no changes in actuarial assumptions in 2018 F. DISCOUNT RATE The discount rate used to measure the total pension liability was 6.0"/o. The projection of cash flows used to determine the discount rate assumed that contributions to the SVF plan will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. 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, 2018 G. PENSION LIABILITY SENSITIVITY The following presents the City's net pension asset for the SVF plan, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's net pension asset would be if it were calculated using a discount rate I% lower or I% higher than the current discount rate: Net pension asset H. PLAN INVESTMENTS I. Investment Policy 1 % Decrease in Discount Rate (5.0%) $146,940 Discount Rate (6.0%) $164,913 l o/o Increase in Discount Rate (7.0"A,) $181,913 The Minnesota State Board of Investment (SBI) is established by Atticle XI of the Minnesota Constitution to invest all state funds. Its membership as specified in the Constitution is comprised of the Governor (who is designated as chair of the Board), State Auditor, Secreta,y of State and State Attorney General. All investments undertaken by the SBI are governed by the prudent person rule and other standards codified in Minnesota Statutes, Chaplet I !A and Chapter 3530. Within the requirements defined by state law, the SBI, with assistance of the SBI staff and the Investment Advisory Council, establishes investment policies for all funds under its control. These investment policies are tailored to the patticular needs of each fund and specify investment objectives, risk tolerance, asset allocation, investment management structure and specific performance standards. Studies guide the on-going management of the funds and are updated periodically. 2. Asset Allocation To match the long-term nature of the pension obligations, the SBI maintains a strategic asset allocation for the SVF that includes allocations to domestic equity, international equity, bonds and cash equivalents. The long-term target asset allocation and long-term expected real rate of return is the following: Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic Stocks 35% 5.10% International Stocks 15% 5.30% Bonds 45% 0.75% Cash 5% 0.00"/o 100% The 6% long-term expected rate of return on pension plan investments was determined using a building-block method. Best estimates for expected future real rates of return ( expected returns, net of inflation) were developed for each asset class using both long-term historical returns and long-term capital market expectations from a number of investment management and consulting IV-36CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 organizations. The asset class estimates and the target allocations were then combined to produce a geometric, long-term expected real rate of return for the portfolio. Inflation expectations were applied to derive the nominal rate of return for the portfolio. 3. Description of Significant Investment Policy Changes During the Year The SBI made no significant changes to their investment policy during fiscal year 2018 for the Statewide Volunteer Firefighter Retiremoot Plan. L PENSION PLAN FIDUCIARY NET POSITION Detailed information about the SVF plan's fiduciary net position at June 30, 2018 is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org. Note 9 POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS {OPEBl A. PLAN DESCRIPTION In addition to providing the pension benefits described in Notes 7 and 8, the City provides post-employment health care benefits, as defined in paragraph B, through its group health insurance plan {the plan). The plan is a single-employer defined benefit OPEB plan administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. No assets are accumulated in a trust that meets the criteria in paragraph 4 ofGASB Statement No. 75. B. BENEFITS PROVIDED The City is required by State Statute to allow retirees to continue participation in the City's group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. 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. The City provides health coverage for peace officers or firefighters disabled or killed in the line of duty in accordance with Minnesota Statute 299A.465. The amount of coverage provided is equal to the employer portion of health insurance premiums that would have otherwise been paid if the officer or firefighter was an active employee. During 2018, benefits were provided to one officer killed in the line of duty. All health care coverage is provided through the City's group health insurance plans. The retiree is required to pay I 00% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy {benefit). The coverage levels are the same as those CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 afforded to active employees. Upon a retiree reaching age 65, Medicare becomes the primary insurer and the City's plan becomes secondary. C. PARTICIPANTS As of the January I, 2017 actuarial valuation, participants of the plan consisted of: Active employees Inactive employees or beneficiaries currently receiving benefits Total 46 6 52 D. TOTAL OPED LIABILITY AND CHANGES IN TOTAL OPED LIABILITY The City's total OPEB liability of$756,644 was measured as of December 31, 2018, and was determined by an actuarial valuation as ofJanuary I, 2017. Changes in the total OPEB liability during 2018 were: Balance -beginning of year Changes for the year: Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments Net changes Balance -end of year The OPEB liability will be liquidated by the general, water and sewer funds. E. ACTUARIAL ASSUMPTIONS AND OTHER INPUTS $746,540 16,547 21,355 (27,798) 10,104 $7~644 The total OPEB liability in the January I, 2017 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation Salary increases Discount rate Investment rate of return Healthcare cost trend rates Retirees' share of benefit-related costs 3.50% 3.50%, 2.85% 2.85% 8.00% for 2017, decreasing 1.00"/o per year to an ultimate rate of3.00o/o for 2022 and beyond 100% IV-37CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Since the plan is ftmded on a pay-as-you-go basis, both the discount rate and the investment rate of return was based on the 20 year AA rated municipal bond rate as ofNovember 22, 2017, obtained from www.finsbonds.com/market-yields. Mortality rates were based on the SOA RP-2014 Total Dataset Mortality tables with Scale MP-2014 and Improvement Scale BB. Based on past experience of the plan, 90% of future retirees are assumed to continue medical coverage until age 65. 50"A, of police/fire employees are assumed to retire at age 55, the balance at age 65. 50% of other City employees are assumed to retire at age 62, the balance at age 65. F. SENSITIVITY OF THE TOTAL OPED LIABILITY TO CHANGES IN THE DISCOUNT RATE The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is I% lower (1.85%) or I% higher (3.85%) than the current discount rate: Total OPEB liability !%Decrease {1.85%) $841,593 Discount Rate {2.85%) $756,644 !%Increase (3.85%) $681,860 G. SENSITIVITY OF THE TOTAL OPED LIABILITY TO CHANGES IN THE HEALTHCARE COST TREND RATES The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rates that are I% lower (7% decreasing to 2%) or 1% higher (9"A, decreasing to 4%) than the current healthcare cost trend rates: Total OPEB liability 1% Decrease (7% decreasing to 2%) $671,431 Healthcare Cost Trend Rates (8% decreasing to 3%) $756,644 !%Increase (9% decreasing to 4%) $855,544 H. OPED EXPENSE AND DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES RELATED TO OPED For the year ended December 31, 2018, the City recognized $33,979 ofOPEB expense. At December 31, 2018, the City reported deferred outflows and inflows of resources related to OPEB from the following sources: Differences between expected and actual experience Deferred Outflows of Resources $0 Deferred Inflows of Resources $47,160 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended December 31, 2019 2020 2021 2022 2023 Thereafter OPEB Ex.e.ense ($3,923) (3,923) (3,923) (3,923) (3,923) (27,545) ($47,160) Note 10 STEWARDSHIP. COMPLIANCE AND ACCOUNTABILITY A. DEFICIT FUND BALANCES The City has deficit ftmd balances at December 31, 2018 as follows: Major Funds: G.O. Improvement Bonds of2016B Nonmajor Funds: Tax Increment Financing 1-11 2040 Comp Plan Update Fund Balance Deficit ($2,150,105) (782,682) {2,672) The City intends to fund these deficits through future tax levies, special assessment collections, tax increments, transfers from other funds, and various other sources. IV-38CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 B. EXPENDITURES IN EXCESS OF BUDGET The following is a listing of departments within the General Fund that exceeded budget appropriations: Final Budget Actual ~e General government: Elections $30,640 $31,311 $671 Cable TV 2,500 2,728 228 Legal consultants 135,000 141,407 6,407 Government buildings 521,323 521,533 210 Public safety: Building inspection 278,738 286,935 8,197 Public services: Streets 883,161 888,558 5,397 Fleet 427,452 464,915 37,463 Parks 604,554 619,420 14,866 Recreation 214,486 220,483 5,997 Community development: Economic development 100,827 104,270 3,443 Planning and zoning commission 134,852 136,816 1,964 Note 11 INTERFUND RECEIVABLES AND fAYABLE§ Short-term advances to funds that have insufficient cash balances are classified as advances to/from other funds. Long-term interfimd loans are classified as interfund loan receivable/payable. A summary of interfund receivables and payables at December 31, 2018 is as follows: Receivable ~able Short-term advances: Major Funds: G.O. Improvement Note of 2009A $ $1,418 MSA Construction 1,418 Nonmajor Fonds: Closed Bond Fund 1,824 2040 Comp Plan Update 1824 $3 242 $3,242 Long-tenn interfund loans: Major Funds: G.O. Improvement Bonds of 2016B $ $2,876,643 Sewer Fund 559,110 Nonmajor Funds: Closed Bond Fund 778,413 Building and Facilities 2,317,533 Tax Increment Financing 1-11 778 413 $3,655,056 $31655,056 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Note 12 INTERFUND TRANSFERS Individual fund transfers for fiscal year 2018 are as follows: Major Funds: General Fund G.O. Improvement Note of2009A G.O. Improvement Bonds of2016B Area and Unit Charge MSA Construction 2018 Street Reconstruction Sewer Fund Nonmajor governmental funds Total Transfer In $ 278,137 38,000 647,371 510,159 2J21:,,773 $4~440 Transfer Out $1,293,512 647,371 407,022 402,776 242,145 IJTh.614 $4~440 During 2018, transfers were made to provide funding for capital improvement projects and capital outlay in accordance with the City's capital improvement plan. Transfers were also made to provide resources for debt service payments, to close capital project funds and debt service funds, and to allocate financial resources to funds that received benefit from services provided by another fund. These transfers are routine and consistent with past practices. IV-39CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 Note 13 FUND BALANCE At December 31, 2018, a summary of the governmental fund balance classifications is as follows: Ncmpendable: --Corpus ofpc:rmanent fund Total nompendable Restrictedfor: Debtservice Capital improvemmts Economlcdovelopn,,ot Blue Heron Days Narcotics and forfeiture funds K-9 Unit pmposes Tax increment purpoaes Environmental. pU!p08e8 Totalrestricwd Commitlalfor: --Economic developmant Cable1VJ)UIPOSCS Total committed A,.;gn,dfur. Caphalhnprovemonb u-Tatalfundbalance o.o. Other Oencnt1 Improvement Area and MSA 2018 Street GovemmentaJ. ~ ~ ~ ~ ~ ___l'!!!!__ ----1:!?!L_ $286,186 $ $ S S $1,9518 $288.184 ---·----·----·---------·-~ ~ ~ ----• ----• ----• ____ o -----1!!s!!!... -----2!!.t!!!.. 3,740,709 3,740,709 4,788,701 227,S40 5,016,241 225,000 225,000 9,695 9,695 204,357 204.357 37,189 37,189 557,211 SS1,2l1 ---·----·-___ ._ --------·-~ ~ ----• ----• ----• ____ o ~ ~ ~ 18,497 18,497 89,S41 89,S41 ---·--------------·----·-~ ~ ----• ----• ----• ----• ____ o ~ ~ ---·----·-~ ~ ~ ~ 19,195,652 ~ ~ ---·----·------~ 3,664.497 ~ (S2,IS01I05) ~ $3,9191729 $513001079 ~ ~ Note 14 PROPERTY UNDER LEASE AGREEMENT The City entered into an agreement to lease space within the City Hall Complex, which at year end had a cost of $4,744,742 and a net book value of$1,647,0IO, to New Creations Child Care and Learning Center, LLC. The lease is dated July I, 2014 and continues through J1D1e 30, 2019. As of December 31, 2018, future minimum lease payments receivable in 2019 amolDlt to $39,522. An agreement to extend the lease through ]IDie 30, 2029 is expected to be signed during J1D1e 2019. Note 15 TAX INCREMENT DISTRICTS The City is the administrating authority for three 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. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 The following table reflects values at December 31, 2018: TIF 1-5 Cottage Homesteads Authorizing law M.S.469 Year established 1994 Final year of district 2022 Net tax capacity: Original $128 Current (payable 2018) 37~75 TIF 1-10 Panattoni M.S.469 2004 2023 $15,869 228,752 Captured -retained $37,247 ~883 Note 16 COMMITMENTS AND CONTINGENCIES A. LffiGATION TIF 1-11 TIF 1-12 Woods Clearwater ~ Creek M.S.469 M.S.469 2005 2006 2031 2026 $25,291 $21,416 159,792 215,294 $134~~878 Existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance, of an immaterial amo1D1t, or, in the judgment of the City's management, remotely recoverable by plaintiffs. B. FEDERALANDSTATEFUNDS 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, 2018. C. COMMITTED CONTRACTS At December 31, 2018, the City had commitments of $4,912,466 for IDlcompleted construction contracts. In addition, the City has entered into construction contracts during 2019 totaling $1, 790,574. Note 17 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. W orlcers 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 IV-40CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 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 expetience 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 necessacy 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 18 RECENTLY ISSUED ACCOUNTING STANDARDS The Governmental Accounting Standards Boards (GASB) recently approved the following statements which were not implemented for these financial statements: Statement No. 83 Certain Asset Retirement Obligations. The provisions of this Statement are effective for reporting petiods beginning after June 15, 2018. Statement No. 84 Fiduciary Activities. The provisions of this Statement are effective for reporting petiods beginning after December 15, 2018. Statement No. 87 Leases. The provisions of this Statement are effective for reporting petiods beginning after December 15, 2019. Statement No. 88 Certain Disclosures &lated to Debt, including Direct Bo"owings and Direct Placements. The provisions of this Statement are effective for reporting periods beginning after June 15, 2018. Statement No. 89 Accounting for Interest Cost Incu"ed before the End of a Constructwn Period. The provisions of this Statement are effective for reporting periods begimting after December 15, 2019. Statement No. 90 Majority Equity Interests. The provisions of this Statement are effective for reporting periods beginning after December 15, 2018. The effect these standards may have on future financial statements is not determinable at this time, but it is expected that Statement No. 84 and Statement No. 87 may have a material impact. REQUIRED SUPPLEMENTARY INFORMATION IV-41CITY OF LINO LAKES, MINNESOTA CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE -GENERAL FUND BUDGETARY COMPARISON SCHEDULE-GENERAL FUND For The Year Ended December 31, 2018 For The Year Ended December 31, 2018 Variance with Variance with Final Budget -Final Budget -2018 Actual Positive 2018 Actual Positive Bgeted Amounts Amounts ~·eve) Budgeted Amounts Amounts ~·eve) Ori!!!!!!! Final Ori!!!!!!! Final Revenues: Expenditures: General propery taxes: General government: Current and delinquent $8,205,859 $7,132,701 $7,018,912 ($113,789) Mayor and city council: Fiscal disparities 1,058,158 1,126,142 67,984 Current: Excess tax increments IJ53 1,253 Personal services 41,811 41,811 39,044 2,767 Total general property taxes 8,205,859 8,190,859 81146,307 (44,552) Other services and charges 20,000 17,000 18,629 (1,629) Licenses and pennits: Contractual services 17,500 17,500 17 433 67 Business 130,515 149,515 163,235 13,720 Total mayor and city council 79,311 76,311 75,106 1,205 Non-business 556,532 l,035J53 1,096,811 61,558 Elections: Total licenses and pennits 687047 1,184,768 1,260,046 75,278 Current: Intergovernmental: Personal services 20,640 23,840 23,855 (15) State: Supplies 5,400 5,600 6,170 (570) Police state aid 224,660 254,660 256,885 2,225 Other services and charges 1,200 700 282 418 OTSgrant 74,546 14,000 14,395 395 Contractual services 500 1,004 (504) MSA maintenance 240,000 260,000 261,197 1,197 Total elections 27,240 30640 31,311 (671) Other 19,000 19,000 28,673 9,673 Administration: County solid waste grant 87,161 87,161 90,843 3 682 Current: Total intergovernmental 645 367 634,821 651,993 17,172 Personal services 483,610 464,949 455,995 8,954 Special assessments 9,000 4000 1,777 (2,223) Other services and charges 20,360 18,360 23,609 (5,249) Charges for services: Contractual services 7,959 7,959 4,619 3J40 General government 15,571 22,071 16,860 (5,211) Total administration 511,929 491,268 484,223 7045 Engineering and planning fees 15,000 27,000 37,065 10,065 Finance: Public safety 201,200 191,200 193,672 2,472 Current: Public services 16,500 11,000 14,525 3,525 Personal services 336,633 338,847 336,133 2,714 Investment management charge to other ftmds 50000 50,000 55 000 5 000 Supplies 1,000 1,000 776 224 Total charges for services 298,271 301,271 317,122 15 851 Other services and charges 202,500 195,500 182,542 12,958 Fines and forfeits 134,132 120,600 114 991 (5,609) Contractual services 102,167 102,167 103,453 (1,286) Investment earnings 30,000 30,000 75,880 45,880 Total finance 642,300 637,514 622,904 14,610 Miscellaneous: Cable TV: Gas franchise fees 50,000 50,000 56,422 6,422 Current: Building lease revenue 102,848 102,848 105,133 2,285 Personal services 2500 2,500 2,728 (228) Reftmds and reimbursements 50,000 50,000 31,153 (18,847) Legal consultants: Donations 5,000 500 500 Current: Other 3,507 3 507 8748 5,241 Contractual services 135,000 135,000 141,407 (6,407) Total miscellaneous 211~ 206,855 201,956 (4,899) Engineering/planning: Current: Total revenues 10,221,031 10,673,174 10,770,072 96,898 Contractual services 111,583 111,583 101677 ___ 9,906 IV-42CITY OF LINO LAKES, MINNESOTA CITY OF LINO LAKE8, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE-GENERAL FUND BUDGETARY COMPARISON SCHEDULE -GENERAL FUND For The Year Ended December 31, 2018 For The Year Ended December 31, 2018 Variance with Variance with Final Budget -Final Budget -2018 Actual Positive 2018 Actual Positive Bud!!:!!:!! Amounts Amounts Q::!el!!!!ve) Bud&eted Amounts Amounts Q::!el!!!!ve) Ori!!!!!!! Final ----2!!1!!.nal Final Expenditures: (continued) Expenditures: (continued) General government: ( continued) Public services: Charter commission: Streets: Current: Current: Other services and charges 2 500 I 000 499 501 Personal services 585,569 589,161 606,651 (17,490) Government buildings: Supplies 149,302 119,302 105,513 13,789 Current: Other services and charges 102,600 102,600 85,328 17,272 Personal services 2,468 2,468 1,165 1,303 Contractual services 63,000 62,400 81,368 (18,968) Supplies 40,546 38,546 34,233 4,313 Capital outlay 9,698 9698 9698 Other services and charges 368,099 358,099 364,904 (6,805) Total-910,169 883,161 888,558 (5,39z.l Contractual services 68,200 68,200 67,221 979 Fleet: Capital outlay II 000 54,010 54,010 Current: Total government buildings 490,313 521,323 521,533 (210) Personal services 123,552 124,328 129,039 (4,711) Supplies 165,427 154,927 186,852 (31,925) Total general government 2,002,676 2,007,139 1,981,388 25 751 Other services and charges 66,042 66,042 74,581 (8,539) Contractual services 76,000 76,000 68,288 7,712 Public safety: Capital outlay 7 655 6155 6155 Police: Total fleet 438 676 427,452 464,915 (37,463) Current: Parks: Personal services 3,622,030 3,529,928 3,522,834 7,094 Current: Supplies 35,825 35,825 26,195 9,630 Personal services 490,689 493,704 452,144 41,560 Other services and charges 116,716 116,716 121,020 (4,304) Supplies 25,500 25,500 20,422 5,078 Contractual services 42,102 42,102 42,110 (8) Other services and charges 40,650 40,650 80,371 (39,721) Capital outlay 17,602 17,602 17,596 6 Contractual services 43,700 43,700 65,483 (21,783) Total police 3,834,275 3,742,173 3,729,755 12,418 Capital outlay 1,000 1,000 1,000 Fire protection: Total parks 601,539 604,554 619,420 (14,866) Current: Recreation: Personal services 500,003 467,344 439,336 28,008 Current: Supplies 22,261 22,261 20,773 1,488 Personal services 241,291 195,186 203,979 (8,793) Other services and charges 47,405 47,405 47,050 355 Supplies 2,500 2,500 83 2,417 Contractual services 30,851 30,851 30,332 519 Other services and charges 15,800 15,800 16,141 (341) Capital outlay 28,282 28,282 27,453 829 Contractual services 1,000 1,000 280 720 Total fire protection 628,802 596143 564944 31,199 Total recreation 260,591 214,486 220,483 (5199z.l Building inspection: Current: Total public services 2~10,975 2,129,653 2,193,376 (63,723) Personal services 242,670 264,343 277,136 (12,793) Supplies 1,650 1,800 2,463 (663) Other services and charges 8,920 9,270 7,271 1,999 Contractual services 3J25 3 325 65 3~60 Total building inspection 256,565 278,738 286,935 (8,197l Total public safety 4,719,642 4,617,054 4,581,634 ___ 3_5,420 IV-43CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE -GENERAL FUND For The Year Ended December 31, 2018 Expenditures: ( continued) Conservation of natural resources: Forestry: Current: Personal services Supplies Other services and charges Contractusl services Total forestry Environmental: Current: Personal services Supplies Other services and charges Contractual services Total environmental Solid waste abatement: Current: Personal services Supplies Other services and charges Contractual services Total solid waste abatement Total conservation of natural resources Community development: Community development: Current: Personal services Supplies Other services and charges Contractual services Total community development Economic development: Current: Personal services Other services and charges Contractual services Total economic development Bud~ Amounts Ori.&!!!!!..._ Final 37,153 37,408 2,950 2,950 380 380 20,000 20,000 60,483 60738 51,413 51,663 1,000 700 8,950 8,450 1,100 1100 62,463 61,913 54,561 54,776 1,400 1,400 14,700 14,700 16,500 16,500 ~ 87,376 210,!QZ_ 210,027 203,861 204,110 JOO JOO 7,900 7,900 900 900 212,761 213,010 21,627 14,627 90,500 85,500 700 700 112~ 100,827 Variance with Final Budget -2018Actual Positive Amounts Q:!el!!!!ve) 37,177 231 2,859 91 354 26 20,287 (287) 60,677 61 47,181 4,482 221 479 5,176 3,274 931 169 53,509 8,404 52,255 2,521 2,239 (839) 8,659 6,041 21,687 (5,187) 84,840 2536 199,026 11,001 204,532 (422) 49 51 5,627 2,273 625 275 210,833 2177 13,277 1,350 90,298 (4,798) 695 5 104,270 (3,443) CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE -GENERAL FUND For The Year Ended December 31, 2018 Expenditures: ( continued) Planning and zoning commission: Current: Personal services Supplies Other services and charges Contractual services Total planning and zoning commission Total community development Other: Contingency Total expenditures Revenues over (under) expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balance Fund balance -January I Fund balance -December 31 Bu!!J!eted Amounts Ori.ll!.nal Final 104,693 105,402 200 200 16,250 16,250 38,000 13,000 159,143 134,852 484,731 448,689 100,000 9,728,131 9,412,562 492,900 1,260,612 0,217,900) (1,292,900) 0,217,900) (1,292,900) ($725,000) ($32,288) Variance with Final Budget -2018 Actual Positive Amounts Q:!•ll!!!!ve) 105,516 (114) 30 170 11,991 4,259 19279 (6,279) 136,816 (1,964) 451,919 (3,230) 9,407,343 5,219 1,362,729 ---1Qbll7 0,293,512) (612) 0,293,512) (612) 69,217 $101,505 6,816,925 $6,886,142 IV-44CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN TIIB TOTAL OPEB LIABILITY AND RELATED RATIOS For The Year Ended December 31, 2018 Total OPEB liability: Service cost Interest Changes of benefit tenns Differences between expected and actual experience Changes in assumptions Benefit payments Net change in total OPEB liability Total OPEB liability -beginning Total OPEB liability -ending Covered-employee payroll Total OPEB liability as a percentage of covered-employee payroll 2018 $16,547 21,355 (27,798) 10,104 746,540 $756,644 $3,240,932 23.3% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2017 and is intended to show a ten year trend. Additional years will be added as they become available. 2017 $16,990 22,542 (51,083) (31,536) (43,087) 789627 $746,540 $3,499,836 21.3% CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY -GENERAL EMPWYEES RETIREMENT FUND For The Year F.ndec!December 31, 2018 State's Proportionate Share City's City's (Am01D1t) Proportionate Proportionate oftheNet Share Share(Amount) Peosion Measurement Fiseal Year (Percentage) of of the Net Liability Date F.nding the Net Pension Pension Associated June 30, December 31, Liabili!J: Liabiliw(•l withCi!J:!!?) 2015 2015 0.0410% $2,124,883 $ • 2016 2016 0.0387% 3,142,248 41,033 2017 2017 0.0414% 2,642,949 33,230 2018 2018 0.0381% 2,ll3,632 69,419 City's Proportionate Share of the Net Pension Liability and the State's Proportionate Share of the Net Peosion Liability Associated with Covered aw !•+bl P!!l'.!!,!ll(c) $2,124,883 $2,407,426 3,183,281 2,401,546 2,676,179 2,666,880 2,183,051 2,563,053 The schcdule is provided prospectively beginning with the City's fiscal year ended December 31, 201S and is intended to show a ten year trend. Additional years will be reported es they become available. City's Proportionate Plan Share of the Fiduciary Net Net Pension Position Liability ... ... Percentage Pen:eotage of the of its Total Covered Peosioo P!!l'.!!,!ll !(a+b)ic) Liabili!J: 88.3% 78.2% 132.6% 68.9% 100.3% 75.9% 85.2% 79.5% IV-45CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION CONTRIBUTIONS -GENERAL EMPWYEES RETIREMENT FUND For The Year Eoded December 31, 2018 Statutorily Contributioos in Contribution Fiscal Year Required Relation to the Deficiency Covered Ending Contribution Statutorily Required (Excess) Payroll December 31 ,__ (a) Contribution (!!) (a-b) {c) 2015 $182,102 $182,102 $ $2,428,027 2016 193,684 193,684 2,582,452 2017 192,510 192,510 2,566,800 2018 202,526 202,526 2,700,347 Contributions as a Percentage of Covered Pal'.!!!11 (!?Le) 7.5% 7.5% 7.5% 7.5% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY -PUBLIC EMPLOYEES POLICE AND FIRE FUND For The Year Ended December 31, 2018 Proportionate Proportion Share (Amount) Measurement Fiscal Year (Percentage) of of the Net Date Ending the Net Pension Pension J~ December 31, Liabili!): Liabili!): (a) 2015 2015 0.2490% $2,829,223 2016 2016 0.2590% 10,394,121 2017 2017 0.2570% 3,469,806 2018 2018 0.2426% 2,585,866 Proportionate Share of the Net Pension Liability ss a Percentage of its Covered Covered Pa~ll!.J!l Pa~ll(e/b) $2,284,973 123.8% 2,495,778 416.5% 2,643,314 131.3% 2,556,951 101.1% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. Piao Fiduciary Net Position as a Percentase of the Total Pension Liabili!): 86.6% 63.9% 85.4% 88.8% IV-46CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION CONTRIBUTIONS -PUBLIC EMPWYEES POLICE AND FIRE FUND For The Year Ended December 31, 2018 Statutorily Contributions in Contribution Fiscal Year Required Relation to the Deficiency Covered Ending Contribution Statutorily Required (Excess) Payroll December 31,..._ (a) Contribution (!!2 (a-b) (c) 2015 $393,551 $393,551 $ $2,429,327 2016 424,970 424,970 2,623,271 2017 416,665 416,665 2,572,006 2018 420,821 420,821 2,597,660 Contributions as a Percentage of Covered Pa;e?ll Q!!c) 16.2% 16.2% 16.2% 16.2% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN TIIE NET PENSION LIABILITY AND RELATED RATIOS -LINO LAKES PUBLIC SAFETY DEPARTMENT-FIRE DMSION For The Year Ended December 31, 2018 Fiscal year ending and measurement date Total pension liability: Service cost Interest on pension liability Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability -beginning Total pension liability-ending (a) Plan fiduciary net position: Contributions -employer Contributions -State of Minnesota Net investment income Benefit payments, including refunds of employee contributions Administrative expense Net change in plan fiduciary net position Plan fiduciary net position -beginning Plan fiduciary net position -ending (b) Net pension Iiabilityl(asset) -ending (a) -(b) Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered employee payroll December 31, 2018 $48,182 8,754 69,760 126,696 97,711 $224,407 $64,869 118,144 (18,696) (702) 163,615 225,705 $389,320 ($164,913) 173% NIA NIA NIA-the Lino Lakes Fire Department is comprised of paid on-call firefighters, whose pay does not meet the definition of covered payroll. The City created its own fire department in 2016. Therefore, information prior to 2016 is not available. December 31, 2017 $47,952 6,191 (11,672) 42,471 55,240 $97,711 $58,800 113,797 9,153 (572) 181,178 44,527 $225,705 ($127,994) 231% NIA NIA IV-47CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS -LINO LAKES PUBLIC SAFETY DEPARTMENT-FIRE DIVISION For The Year Ended December 31, 2018 Statutorily Contributions in Contribution Fiscal Year Required Relation to the Deficiency Covered Ending Contribution Statutorily Required (Excess) December 31.__ !a) Contribution !!?2 !a-b) 2016 $ $44,394 ($44,394) 2017 58,800 (58,800) 2018 64,869 (64,869) NIA-the Lino Lakes Fire Department is comprised of paid on-call firefighters, whose pay does not meet the defintion of covered payroll. Payroll !c) NIA NIA NIA The City created its own fire department in 2016. Therefore, information prior to 2016 is not available. Contributions as a Percentage of Covered-Employee P~ll!!?Lc) NIA NIA NIA CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2018 Note A LEGAL COMPLIANCE -BUDGETS The General Fund budget is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the department level for the General Fund. Note B OPED INFORMATION No assets are accumulated in a trust that meets the criteria in paragraph 4 ofGASB Statement No. 75 to pay related benefits. There are no :fuctors that affect trends in the amounts reported, such as changes of benefit terms or asswnptions. Note C PENSION INFORMATION PERA-General Employees Retirement Fnnd 2018 Changes in Actuarial Asswnptions: • The mortality projection scale was changed from MP-2015 to MP-2017. • The asswned benefit increase was changed from 1.00°/o per year through 2044 and 2.50% per year thereafter to 1.25% per year. 2017 Changes in Actuarial Assumptions: • The Combined Service Annuity (CSA) loads were changed from 0.8% for active members and 60% for vested and non-vested deferred members. The revised CSA loads are now 0.()% for active member liability, 15.0% for vested deferred member liability and 3.0% for non-vested deferred member liability. • The asswned post-retirement benefit increase rate was changed from 1.0% per year for all years to 1.0% per year through 2044 and 2.5% per year thereafter. 2016 Changes in Actuarial Asswnptions: • The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year thereafter to 1.0% per year for all future years. The assumed investment return was changed from 7 .9% to 7 .5%. The single discount rate was changed from 7.9% to 7.5%. • Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. IV-48 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2018 PERA -Public Employees Police and Fire Fund 2018 Changes in Actuarial Assumptions • The mortality projection scale was changed from MP-2016 to MP-2017. 2017 Changes in Actuarial Assumptions: • The single discount rate was changed from 5.6% to 7.5%. • Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. • Assumed rates ofretirement were changed, resulting in fewer retirements. • The Combined Service Annuity (CSA) load was 30 percent for vested and non-vested deferred members. The CSA has been changed to 33 percent for vested members and 2 percent for non- vested members. • The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of2006), with male rates adjusted by a factor of0.96. The mortality improvement scale was changed from Scale AA to Scale MP- 2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. • Assumed termination rates were decreased to 3% for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. • Assumed percentage of married female members was decreased from 65% to 60%. • Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. • The assumed percentage offemale members electing Joint and Survivor annuities was increased. • The assumed post-retirement benefit increase rate was changed from 1.00% for all years to 1.00% per year through 2064 and 2.50% thereafter. 2016 Changes in Actuarial Assumptions: • The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037 and 2.5% per year thereafter to 1.0% per year for all future years. • The assumed investment return was changed from 7 .9% to 7 .5%. The single discount rate changed from 7.9% to 5.6%. • The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. Single Employer -Fire Division There are no factors that affect trends in the amounts reported, such as change of benefit terms or assumptions. With only three years reported in the RSI, there is no additional information to include in the notes. PROPOSAL SALE DATE: JUNE 8, 2020 ________________________________ Phone: 651-223-3000 * Preliminary; subject to change. Fax: 651-223-3046 Email: bondservice@bakertilly.com City of Lino Lakes, Minnesota $4,800,000* General Obligation Utility Revenue Bonds, Series 2020A For the Bonds of this Issue which shall mature and bear interest at the respective annual rates, as follow, we offer a price of $_________________ (which may not be less than $4,737,600) plus accrued interest, if any, to the date of delivery. Year Interest Rate (%) Yield (%) Dollar Price Year Interest Rate (%) Yield (%) Dollar Price 2021 % % % 2029 % % % 2022 % % % 2030 % % % 2023 % % % 2031 % % % 2024 % % % 2032 % % % 2025 % % % 2033 % % % 2026 % % % 2034 % % % 2027 % % % 2035 % % % 2028 % % % Designation of Term Maturities Years of Term Maturities In making this offer on the sale date of June 8, 2020 we accept all of the terms and conditions of the Terms of Proposal published in the Preliminary Official Statement dated May 19, 2020 including the City’s right to modify the principal amount of the Bonds. (See “Terms of Proposal” herein.) In the event of failure to deliver these Bonds in accordance with said Terms of Proposal, we reserve the right to withdraw our offer, whereupon the deposit accompanying it will be immediately returned. All blank spaces of this offer are intentional and are not to be construed as an omission. By submitting this proposal, we confirm that we have an established industry reputation for underwriting municipal bonds such as the Bonds. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: $____________________________ TRUE INTEREST RATE: ______________ % The Bidder will not will purchase municipal bond insurance from . Account Members ______________________________ Account Manager By: ___________________________ Phone: ________________________ ........................................................................................................................................................................................................ The foregoing proposal has been accepted by the City. Attest: _______________________________ Date: ________________________________ ........................................................................................................................................................................................................ Extract of Minutes of Meeting of the City Council of the City of Lino Lakes, Anoka County, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Lino Lakes, Minnesota, was duly held was held in the City Hall in said City on Monday, June 8, 2020, commencing at 6:30 P.M. The following members were present: and the following were absent: * * * * * * * * * The Mayor announced that the next order of business was consideration of the proposals which had been received for the purchase of the City’s General Obligation Utility Revenue Bonds, Series 2020A, to be issued in the original aggregate principal amount of $4,800,000. The City Administrator presented a tabulation of the proposals that had been received in the manner specified in the Terms of Proposal for the Bonds. The proposals were as set forth in EXHIBIT A attached hereto. After due consideration of the proposals, Member ________ then introduced the following written resolution, the reading of which was dispensed with by unanimous consent, and moved its adoption: 2 RESOLUTION NO. 20-57 A RESOLUTION AWARDING THE SALE OF GENERAL OBLIGATION UTILITY REVENUE BONDS, SERIES 2020A, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF $4,800,000; FIXING THEIR FORM AND SPECIFICATIONS; DIRECTING THEIR EXECUTION AND DELIVERY; AND PROVIDING FOR THEIR PAYMENT BE IT RESOLVED By the City Council (the “City Council”) of the City of Lino Lakes, Anoka County, Minnesota (the “City”), as follows: Section 1. Sale of Bonds. 1.01. Authorization for Sale of Bonds. Pursuant to a resolution adopted by the City Council on April 27, 2020, the City authorized the sale of its General Obligation Utility Revenue Bonds, Series 2020A (the “Bonds”), to finance the construction of various improvements to the City’s water system, including the construction of a new water tower (the “Project”), pursuant to Minnesota Statutes, Chapters 444 and 475, as amended (the “Act”). 1.02. Award to the Purchaser and Interest Rates. The proposal of _______________ (the “Purchaser”) to purchase the Bonds of the City is hereby found and determined to be a reasonable offer and is hereby accepted, the proposal being to purchase the Bonds at a price of $_______________ (par amount of the Bonds $4,800,000, [plus original issue premium of $_________,] [less original issue discount of $_________,] less an underwriter’s discount of $_________), plus accrued interest, if any, to date of delivery, for Bonds bearing interest as follows: Year Interest Rate Year Interest Rate 2021 % 2029 % 2022 2030 2023 2031 2024 2032 2025 2033 2026 2034 2027 2035 2028 True interest cost: _________% 1.03. Purchase Contract. The sum of $__________, being the amount proposed by the Purchaser in excess of $4,737,600, shall be credited to the Debt Service Fund hereinafter created or deposited in the Construction Fund hereinafter created, as determined by the Finance Director of the City in consultation with the City’s municipal advisor. The Finance Director is directed to deposit the good faith check or deposit of the Purchaser, pending completion of the sale of the Bonds, and to return the good faith deposits of the unsuccessful proposers. The Mayor and City Administrator are directed to execute a contract with the Purchaser on behalf of the City. 1.04. Terms and Principal Amounts of the Bonds. The City will forthwith issue and sell the Bonds pursuant to the Act in the original aggregate principal amount of $4,800,000, originally dated 3 July 8, 2020, in the denomination of $5,000 each or any integral multiple thereof, numbered No. R-1, upward, bearing interest as above set forth, and maturing serially on February 1 in the years and amounts as follows: Year Amount Year Amount 2021 $ 2029 $ 2022 2030 2023 2031 2024 2032 2025 2033 2026 2034 2027 2035 2028 1.05. Optional Redemption. The City may elect on February 1, 2029, and on any date thereafter to prepay Bonds due on or after February 1, 2030. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify DTC (as defined in Section 7 hereof) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. [1.06. Mandatory Redemption; Term Bonds. TO BE COMPLETED IF TERM BONDS ARE REQUESTED: The Bonds maturing on February 1, 20___ and February 1, 20___ shall hereinafter be referred to collectively as the “Term Bonds.” The principal amount of the Term Bonds subject to mandatory sinking fund redemption on any date may be reduced through earlier optional redemptions, with any partial redemptions of the Term Bonds credited against future mandatory sinking fund redemptions of such Term Bonds in such order as the City shall determine. The Term Bonds are subject to mandatory sinking fund redemption and shall be redeemed in part at par plus accrued interest on February 1 of the following years and in the principal amounts as follows:] Sinking Fund Installment Date February 1, 20___ Term Bond Principal Amount ____________________ * Maturity February 1, 20___ Term Bond Principal Amount ____________________ * Maturity Section 2. Registration and Payment. 2.01. Registered Form. The Bonds will be issued only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof, is payable by check or draft issued by the Registrar described herein. 4 2.02. Dates; Interest Payment Dates. Each Bond will be dated as of the last interest payment date preceding the date of authentication to which interest on the Bond has been paid or made available for payment, unless (i) the date of authentication is an interest payment date to which interest has been paid or made available for payment, in which case the Bond will be dated as of the date of authentication, or (ii) the date of authentication is prior to the first interest payment date, in which case the Bond will be dated as of the date of original issue. The interest on the Bonds is payable on February 1 and August 1 of each year, commencing February 1, 2021, to the registered owners of record thereof as of the close of business on the fifteenth day of the immediately preceding month, whether or not such day is a business day. 2.03. Registration. The City will appoint a bond registrar, transfer agent, authenticating agent and paying agent (the “Registrar”). The effect of registration and the rights and duties of the City and the Registrar with respect thereto are as follows: (a) Register. The Registrar must keep at its principal corporate trust office a bond register in which the Registrar provides for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged. (b) Transfer of Bonds. Upon surrender for transfer of a Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until that interest payment date. (c) Exchange of Bonds. When Bonds are surrendered by the registered owner for exchange the Registrar will authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity as requested by the registered owner or the owner’s attorney in writing. (d) Cancellation. Bonds surrendered upon transfer or exchange will be promptly cancelled by the Registrar and thereafter disposed of as directed by the City. (e) Improper or Unauthorized Transfer. When a Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the Bond until the Registrar is satisfied that the endorsement on the Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (f) Persons Deemed Owners. The City and the Registrar may treat the person in whose name a Bond is registered in the bond register as the absolute owner of the Bond, whether the Bond is overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on the Bond and for all other purposes and payments so made to a registered owner or upon the owner’s order will be valid and effectual to satisfy and discharge the liability upon the Bond to the extent of the sum or sums so paid. 5 (g) Taxes, Fees, and Charges. The Registrar may impose a charge upon the owner thereof for a transfer or exchange of Bonds, sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to the transfer or exchange. (h) Mutilated, Lost, Stolen, or Destroyed Bonds. If a Bond becomes mutilated or is destroyed, stolen or lost, the Registrar will deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for any Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that the Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it and as provided by law, in which both the City and the Registrar must be named as obligees. Bonds so surrendered to the Registrar will be cancelled by the Registrar and evidence of such cancellation must be given to the City. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it is not necessary to issue a new Bond prior to payment. (i) Redemption. In the event any of the Bonds are called for redemption, notice thereof identifying the Bonds to be redeemed will be given by the Registrar by mailing a copy of the redemption notice by first class mail (postage prepaid) to the registered owner of each Bond to be redeemed at the address shown on the registration books kept by the Registrar and by publishing the notice if required by law. Failure to give notice by publication or by mail to any registered owner, or any defect therein, will not affect the validity of the proceedings for the redemption of Bonds. Bonds so called for redemption will cease to bear interest after the specified redemption date, provided that the funds for the redemption are on deposit with the place of payment at that time. 2.04. Appointment of Initial Registrar. The City appoints U.S. Bank National Association, Saint Paul, Minnesota, as the initial Registrar. The Mayor and the City Administrator are authorized to execute and deliver, on behalf of the City, a contract with the Registrar. Upon merger or consolidation of the Registrar with another corporation, if the resulting corporation is a bank or trust company authorized by law to conduct such business, the resulting corporation is authorized to act as successor Registrar. The City agrees to pay the reasonable and customary charges of the Registrar for the services performed. The City reserves the right to remove the Registrar upon thirty (30) days’ notice and upon the appointment of a successor Registrar, in which event the predecessor Registrar must deliver all cash and Bonds in its possession to the successor Registrar and must deliver the bond register to the successor Registrar. On or before each principal or interest due date, without further order of the City Council, the Finance Director must transmit to the Registrar moneys sufficient for the payment of all principal and interest then due. 2.05. Execution, Authentication and Delivery. The Bonds will be prepared under the direction of the Finance Director and executed on behalf of the City by the signatures of the Mayor and the City Administrator, provided that those signatures may be printed, engraved or lithographed facsimiles of the originals. If an officer whose signature or a facsimile of whose signature appears on the Bonds ceases to be such officer before the delivery of a Bond, that signature or facsimile will nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. Notwithstanding such execution, a Bond will not be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on the Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on a Bond is conclusive evidence that it has been authenticated and delivered under this resolution. When the Bonds have been so prepared, executed and authenticated, the Finance 6 Director will deliver the same to the Purchaser upon payment of the purchase price in accordance with the contract of sale heretofore made and executed, and the Purchaser is not obligated to see to the application of the purchase price. Section 3. Form of Bond. 3.01. Execution of the Bonds. The Bonds will be printed or typewritten in substantially the form attached hereto as EXHIBIT B. 3.02. Approving Legal Opinion. The City Administrator is authorized and directed to obtain a copy of the proposed approving legal opinion of Kennedy & Graven, Chartered, Minneapolis, Minnesota, and cause the opinion to be printed on or accompany each Bond. Section 4. Payment; Security; Funds; Pledges; and Covenants. 4.01. Debt Service Fund. The Bonds will be payable from the General Obligation Utility Revenue Bonds, Series 2020A Debt Service Fund (the “Debt Service Fund”) hereby created. The Debt Service Fund shall be administered by the Finance Director as a bookkeeping account separate and apart from all other funds maintained in the official financial records of the City. The City will continue to maintain and operate its Water Fund to which will be credited all gross revenues of the water system and out of which will be paid all normal and reasonable expenses of current operations of such system. Any balances therein are deemed net revenues (the “Net Revenues”) and will be transferred, from time to time, to the Debt Service Fund, which Debt Service Fund will be used only to pay principal of and interest on the Bonds and any other bonds similarly authorized. There will always be retained in the Debt Service Fund a sufficient amount to pay principal of and interest on all the Bonds, and the Finance Director must report any current or anticipated deficiency in the Debt Service Fund to the City Council. There is also appropriated to the Debt Service Fund (i) capitalized interest financed from Bond proceeds, if any; and (ii) amounts over the minimum purchase price of the Bonds paid by the Purchaser, to the extent designated for deposit in the Debt Service Fund in accordance with Section 1.03 hereof. 4.02. Construction Fund. The City hereby creates the General Obligation Utility Revenue Bonds, Series 2020A Construction Fund (the “Construction Fund”). Proceeds of the Bonds, less the appropriations made in Section 4.01 hereof, will be deposited in the Construction Fund to be used solely to defray expenses of the Project. When the Project is completed and the cost thereof paid, the Construction Fund is to be closed and any funds remaining may be deposited in the Debt Service Fund. 4.03. City Covenants. The City Council covenants and agrees with the holders of the Bonds that so long as any of the Bonds remain outstanding and unpaid, it will keep and enforce the following covenants and agreements: (a) The City will continue to maintain and efficiently operate the water system as a public utility and convenience free from competition of other like municipal utilities and will cause all revenues therefrom to be deposited in bank accounts and credited to the Water Fund, as hereinabove provided, and will make no expenditures from those accounts except for a duly authorized purpose and in accordance with this resolution. (b) The City will also maintain the Debt Service Fund as a separate account and will cause money to be credited thereto from time to time, out of Net Revenues from the water system in sums sufficient to pay principal of and interest on the Bonds when due. 7 (c) The City will keep and maintain proper and adequate books of records and accounts separate from all other records of the City in which will be complete and correct entries as to all transactions relating to the water system and which will be open to inspection and copying by any Bondholder, or the Bondholder’s agent or attorney, at any reasonable time, and it will furnish certified transcripts therefrom upon request and upon payment of a reasonable fee therefor, and said account will be audited at least annually by a qualified public accountant and statements of such audit and report will be furnished to all Bondholders upon request. (d) The City Council will cause persons handling revenues of the water system to be bonded in reasonable amounts for the protection of the City and the Bondholders and will cause the funds collected on account of the operations of such systems to be deposited in a bank whose deposits are guaranteed under the Federal Deposit Insurance Law. (e) The City Council will keep the water system insured at all times against loss by fire, tornado and other risks customarily insured against with an insurer or insurers in good standing, in such amounts as are customary for like plants, to protect the holders, from time to time, of the Bonds and the City from any loss due to any such casualty and will apply the proceeds of such insurance to make good any such loss. (f) The City and each and all of its officers will punctually perform all duties with reference to the water system as required by law. (g) The City will impose and collect charges of the nature authorized by Section 444.075 of the Act, at the times and in the amounts required to produce Net Revenues adequate to pay all principal and interest when due on the Bonds and to create and maintain such reserves securing said payments as may be provided in this resolution. (h) The City Council will levy general ad valorem taxes on all taxable property in the City when required to meet any deficiency in Net Revenues. 4.04. General Obligation Pledge. For the prompt and full payment of the principal of and interest on the Bonds, as the same respectively become due, the full faith, credit and taxing powers of the City will be and are hereby irrevocably pledged. If the balance in the Debt Service Fund is ever insufficient to pay all principal and interest then due on the Bonds and any other bonds payable therefrom, the deficiency will be promptly paid out of monies in the general fund of the City which are available for such purpose, and such general fund may be reimbursed with or without interest from the Debt Service Fund when a sufficient balance is available therein. 4.05. Debt Service Coverage. It is hereby determined that the estimated collection of Net Revenues for the payment of principal and interest on the Bonds will produce at least five percent (5%) in excess of the amount needed to meet, when due, the principal and interest payments on the Bonds and that no tax levy is needed at this time. 4.06. Filing of Resolution. The City Administrator is authorized and directed to file a certified copy of this resolution with the Manager of Property Records and Taxation of Anoka County, Minnesota and to obtain the certificate required by Section 475.63 of the Act. Section 5. Authentication of Transcript. 5.01. City Proceedings and Records. The officers of the City are authorized and directed to prepare and furnish to the Purchaser and to the attorneys approving the Bonds certified copies of 8 proceedings and records of the City relating to the Bonds and to the financial condition and affairs of the City, and such other certificates, affidavits and transcripts as may be required to show the facts within their knowledge or as shown by the books and records in their custody and under their control, relating to the validity and marketability of the Bonds, and such instruments, including any heretofore furnished, will be deemed representations of the City as to the facts stated therein. 5.02. Certification as to Official Statement. The Mayor, the City Administrator, and the Finance Director are authorized and directed to certify that they have examined the Official Statement prepared and circulated in connection with the issuance and sale of the Bonds and that to the best of their knowledge and belief the Official Statement is a complete and accurate representation of the facts and representations made therein as of the date of the Official Statement. 5.03. Other Certificates. The Mayor, the City Administrator, and the Finance Director are hereby authorized and directed to furnish to the Purchaser at the closing such certificates as are required as a condition of sale. Unless litigation shall have been commenced and be pending questioning the Bonds or the organization of the City or incumbency of its officers, at the closing the Mayor, the City Administrator, and the Finance Director shall also execute and deliver to the Purchaser a suitable certificate as to absence of material litigation, and the Finance Director shall also execute and deliver a certificate as to payment for and delivery of the Bonds. 5.04. Electronic Signatures. The electronic signature of the Mayor, the City Administrator, and/or the Finance Director to any certificate authorized to be executed hereunder shall be as valid as an original signature of such party and shall be effective to bind the City thereto. For purposes hereof, (i) “electronic signature” means a manually signed original signature that is then transmitted by electronic means; and (ii) “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a portable document format (“pdf”) or other replicating image attached to an electronic mail or internet message. Section 6. Tax Covenants. 6.01. Tax-Exempt Bonds. The City covenants and agrees with the holders from time to time of the Bonds that it will not take or permit to be taken by any of its officers, employees or agents any action which would cause the interest on the Bonds to become subject to taxation under the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder, in effect at the time of such actions, and that it will take or cause its officers, employees or agents to take, all affirmative action within its power that may be necessary to ensure that such interest will not become subject to taxation under the Code and applicable Treasury Regulations, as presently existing or as hereafter amended and made applicable to the Bonds. 6.02. No Rebate Required. (a) The City will comply with requirements necessary under the Code to establish and maintain the exclusion from gross income of the interest on the Bonds under Section 103 of the Code, including without limitation requirements relating to temporary periods for investments, limitations on amounts invested at a yield greater than the yield on the Bonds, and the rebate of excess investment earnings to the United States if the Bonds (together with other obligations reasonably expected to be issued in calendar year 2020) exceed the small-issuer exception amount of $5,000,000. (b) For purposes of qualifying for the small issuer exception to the federal arbitrage rebate requirements with respect to the Bonds, the City hereby finds, determines, and declares that 9 the aggregate face amount of all tax-exempt bonds (other than private activity bonds) issued by the City (and all subordinate entities of the City) during the calendar year in which the Bonds are issued and outstanding at one time is not reasonably expected to exceed $5,000,000, all within the meaning of Section 148(f)(4)(D) of the Code. 6.03. Not Private Activity Bonds. The City further covenants not to use the proceeds of the Bonds or to cause or permit them or any of them to be used, in such a manner as to cause the Bonds to be “private activity bonds” within the meaning of Sections 103 and 141 through 150 of the Code. 6.04. Qualified Tax-Exempt Obligations. In order to qualify the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code, the City makes the following factual statements and representations: (a) the Bonds are not “private activity bonds” as defined in Section 141 of the Code; (b) the City hereby designates the Bonds as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code; (c) the reasonably anticipated amount of tax-exempt obligations (other than any private activity bonds that are not qualified 501(c)(3) bonds) which will be issued by the City (and all subordinate entities of the City) during calendar year 2020 will not exceed $10,000,000; and (d) not more than $10,000,000 of obligations issued by the City during calendar year 2020 have been designated for purposes of Section 265(b)(3) of the Code. 6.05. Procedural Requirements. The City will use its best efforts to comply with any federal procedural requirements which may apply in order to effectuate the designations made by this section. 6.06. Reimbursement. The City has or may have incurred certain expenditures with respect to the Project that were financed temporarily from other sources but are expected to be reimbursed with proceeds of the Bonds. The City hereby declares its intent to reimburse certain costs of the Project from proceeds of the Bonds (the “Declaration”). This Declaration is intended to constitute a declaration of official intent for purposes of the Section 1.150-2 of the Treasury Regulations promulgated under the Code. Section 7. Book-Entry System; Limited Obligation of City. 7.01. DTC. The Bonds will be initially issued in the form of a separate single typewritten or printed fully registered Bond for each of the maturities set forth in Section 1.04 hereof. Upon initial issuance, the ownership of each Bond will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, and its successors and assigns (“DTC”). Except as provided in this section, all of the outstanding Bonds will be registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC. 7.02. Participants. With respect to Bonds registered in the registration books kept by the Registrar in the name of Cede & Co., as nominee of DTC, the City, the Registrar and the Paying Agent will have no responsibility or obligation to any broker dealers, banks and other financial institutions from time to time for which DTC holds Bonds as securities depository (the “Participants”) or to any other person on behalf of which a Participant holds an interest in the Bonds, including but not limited to any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any 10 other person (other than a registered owner of Bonds, as shown by the registration books kept by the Registrar) of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other person, other than a registered owner of Bonds, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The City, the Registrar and the Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bonds, and for all other purposes. The Paying Agent will pay all principal of, premium, if any, and interest on the Bonds only to or on the order of the respective registered owners, as shown in the registration books kept by the Registrar, and all such payments will be valid and effectual to fully satisfy and discharge the City’s obligations with respect to payment of principal of, premium, if any, or interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner of Bonds, as shown in the registration books kept by the Registrar, will receive a certificated Bond evidencing the obligation of this resolution. Upon delivery by DTC to the City Administrator of a written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the words “Cede & Co.” will refer to such new nominee of DTC; and upon receipt of such a notice, the City Administrator will promptly deliver a copy of the same to the Registrar and Paying Agent. 7.03. Representation Letter. The City has heretofore executed and delivered to DTC a Blanket Issuer Letter of Representations (the “Representation Letter”) which will govern payment of principal of, premium, if any, and interest on the Bonds and notices with respect to the Bonds. Any Paying Agent or Registrar subsequently appointed by the City with respect to the Bonds will agree to take all action necessary for all representations of the City in the Representation Letter with respect to the Registrar and Paying Agent, respectively, to be complied with at all times. 7.04. Transfers Outside Book-Entry System. In the event the City, by resolution of the City Council, determines that it is in the best interests of the persons having beneficial interests in the Bonds that they be able to obtain Bond certificates, the City will notify DTC, whereupon DTC will notify the Participants, of the availability through DTC of Bond certificates. In such event the City will issue, transfer and exchange Bond certificates as requested by DTC and any other registered owners in accordance with the provisions of this resolution. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In such event, if no successor securities depository is appointed, the City will issue and the Registrar will authenticate Bond certificates in accordance with this resolution and the provisions hereof will apply to the transfer, exchange and method of payment thereof. 7.05. Payments to Cede & Co. Notwithstanding any other provision of this resolution to the contrary, so long as a Bond is registered in the name of Cede & Co., as nominee of DTC, payments with respect to principal of, premium, if any, and interest on the Bond and all notices with respect to the Bond will be made and given, respectively in the manner provided in DTC’s Operational Arrangements, as set forth in the Representation Letter. Section 8. Continuing Disclosure. 8.01. Execution of Continuing Disclosure Certificate. “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate executed by the Mayor and City Administrator and dated the date of issuance and delivery of the Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. 11 8.02. City Compliance with Provisions of Continuing Disclosure Certificate. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of this resolution, failure of the City to comply with the Continuing Disclosure Certificate is not to be considered an event of default with respect to the Bonds; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section. Section 9. Defeasance. When all the Bonds and all interest thereon have been discharged as provided in this section, all pledges, covenants and other rights granted by this resolution to the holders of the Bonds will cease, except that the pledge of the full faith and credit of the City for the prompt and full payment of the principal of and interest on the Bonds will remain in full force and effect. The City may discharge all Bonds which are due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full. If any Bond should not be paid when due, it may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued to the date of such deposit. (The remainder of this page is intentionally left blank.) 12 The motion for the adoption of the foregoing resolution was duly seconded by Member _______, and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted. A-1 EXHIBIT A PROPOSALS B-1 EXHIBIT B FORM OF BOND No. R-_____ $________ UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA CITY OF LINO LAKES GENERAL OBLIGATION UTILITY REVENUE BOND SERIES 2020A Rate Maturity Date of Original Issue CUSIP February 1, 20__ July 8, 2020 Registered Owner: CEDE & CO. The City of Lino Lakes, Minnesota, a duly organized and existing municipal corporation in Anoka County, Minnesota (the “City”), acknowledges itself to be indebted and for value received hereby promises to pay to the Registered Owner specified above or registered assigns, the principal sum of $__________ on the maturity date specified above, with interest thereon from the date hereof at the annual rate specified above (calculated on the basis of a 360 day year of twelve 30 day months), payable February 1 and August 1 in each year, commencing February 1, 2021, to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the immediately preceding month. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft by U.S. Bank National Association, Saint Paul, Minnesota, as Bond Registrar, Paying Agent, Transfer Agent and Authenticating Agent, or its designated successor under the Resolution described herein. For the prompt and full payment of such principal and interest as the same respectively become due, the full faith and credit and taxing powers of the City have been and are hereby irrevocably pledged. The City may elect on February 1, 2029, and on any date thereafter to prepay Bonds due on or after February 1, 2030. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify The Depository Trust Company (“DTC”) of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant’s interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. This Bond is one of an issue in the aggregate principal amount of $4,800,000 all of like original issue date and tenor, except as to number, maturity date, interest rate, and redemption privilege, all issued pursuant to a resolution adopted by the City Council on June 8, 2020 (the “Resolution”), for the purpose of providing money to defray the expenses incurred and to be incurred in making certain improvements to the water system of the City, pursuant to and in full conformity with the home rule charter of the City and the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Chapters 444 and 475, as amended, and the principal hereof and interest hereon are payable primarily from net revenues of the water system of the City, as set forth in the Resolution to which reference is made for a full statement of B-2 rights and powers thereby conferred. The full faith and credit of the City are irrevocably pledged for payment of this Bond and the City Council has obligated itself to levy ad valorem taxes on all taxable property in the City in the event of any deficiency in net revenues pledged, which taxes may be levied without limitation as to rate or amount. The Bonds of this series are issued only as fully registered Bonds in denominations of $5,000 or any integral multiple thereof of single maturities. The City Council has designated the issue of Bonds of which this Bond forms a part as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) relating to disallowance of interest expense for financial institutions and within the $10 million limit allowed by the Code for the calendar year of issue. IT IS HEREBY CERTIFIED AND RECITED that in and by the Resolution, the City has covenanted and agreed that it will continue to own and operate the water system free from competition by other like municipal utilities; that adequate insurance on said system and suitable fidelity bonds on employees will be carried; that proper and adequate books of account will be kept showing all receipts and disbursements relating to the Water Fund, into which it will pay all of the gross revenues from the water system; that it will also create and maintain a General Obligation Utility Revenue Bonds, Series 2020A Debt Service Fund, into which it will pay, out of the net revenues from the water system a sum sufficient to pay principal of the Bonds and interest on the Bonds when due; and that it will provide, by ad valorem tax levies, for any deficiency in required net revenues of the water system. As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the City at the principal office of the Bond Registrar, by the registered owner hereof in person or by the owner’s attorney duly authorized in writing, upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or the owner’s attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange the City will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange. The City and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the City nor the Bond Registrar will be affected by any notice to the contrary. IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the home rule charter of the City and the Constitution and laws of the State of Minnesota, to be done, to exist, to happen and to be performed preliminary to and in the issuance of this Bond in order to make it a valid and binding general obligation of the City in accordance with its terms, have been done, do exist, have happened and have been performed as so required, and that the issuance of this Bond does not cause the indebtedness of the City to exceed any constitutional, statutory, or charter limitation of indebtedness. This Bond is not valid or obligatory for any purpose or entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon has been executed by the Bond Registrar by manual signature of one of its authorized representatives. IN WITNESS WHEREOF, the City of Lino Lakes, Anoka County, Minnesota, by its City Council, has caused this Bond to be executed on its behalf by the facsimile or manual signatures of the Mayor and City Administrator and has caused this Bond to be dated as of the date set forth below. B-3 Dated: July 8, 2020 CITY OF LINO LAKES, MINNESOTA (Facsimile) (Facsimile) Mayor City Administrator _________________________________ CERTIFICATE OF AUTHENTICATION This is one of the Bonds delivered pursuant to the Resolution mentioned within. U.S. BANK NATIONAL ASSOCIATION By Authorized Representative _________________________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT _________ Custodian _________ (Cust) (Minor) TEN ENT -- as tenants by entireties under Uniform Gifts or Transfers to Minors Act, State of _______________ JT TEN -- as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. ________________________________________ ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto ________________________________________ the within Bond and all rights thereunder, and does hereby irrevocably constitute and appoint _________________________ attorney to transfer the said Bond on the books kept for registration of the within Bond, with full power of substitution in the premises. Dated: B-4 Notice: The assignor’s signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program (“STAMP”), the Stock Exchange Medallion Program (“SEMP”), the New York Stock Exchange, Inc. Medallion Signatures Program (“MSP”) or other such “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended. The Bond Registrar will not effect transfer of this Bond unless the information concerning the assignee requested below is provided. Name and Address: (Include information for all joint owners if this Bond is held by joint account.) Please insert social security or other identifying number of assignee PROVISIONS AS TO REGISTRATION The ownership of the principal of and interest on the within Bond has been registered on the books of the Registrar in the name of the person last noted below. Date of Registration Registered Owner Signature of Officer of Registrar Cede & Co. Federal ID #13-2555119 STATE OF MINNESOTA ) ) COUNTY OF ANOKA ) SS. ) CITY OF LINO LAKES ) I, the undersigned, being the duly qualified and acting City Clerk of the City of Lino Lakes, Minnesota (the “City”), do hereby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the City Council of the City held on June 8, 2020, with the original minutes on file in my office and the extract is a full, true and correct copy of the minutes insofar as they relate to the issuance and sale of the City’s General Obligation Utility Revenue Bonds, Series 2020A, in the original aggregate principal amount of $4,800,000. WITNESS My hand officially as such City Clerk and the corporate seal of the City this ______ day of June, 2020. City Clerk City of Lino Lakes, Minnesota (SEAL) STATE OF MINNESOTA COUNTY OF ANOKA CERTIFICATE OF MANAGER OF PROPERTY RECORDS AND TAXATION AS TO REGISTRATION WHERE NO AD VALOREM TAX LEVY I, the undersigned Manager of Property Records and Taxation of Anoka County, Minnesota, hereby certify that a certified copy of a resolution adopted by the governing body of the City of Lino Lakes, Minnesota (the “City”), on June 8, 2020, relating to the City’s General Obligation Utility Revenue Bonds, Series 2020A, issued in the original aggregate principal amount of $4,800,000, dated July 8, 2020, has been filed in my office and said bonds have been entered on the register of obligations in my office. WITNESS My hand and official seal this _____ day of __________, 2020. MANAGER OF PROPERTY RECORDS AND TAXATION ANOKA COUNTY, MINNESOTA By Its (SEAL) LN140-122 (JAE) 655094v2 CITY COUNCIL AGENDA ITEM 2B STAFF ORIGINATOR: Sarah Cotton MEETING DATE: June 8, 2020 TOPIC: Accept 2019 Annual Audit Report VOTE REQUIRED: 3/5 BACKGROUND Andy Hering of Redpath and Company was in attendance at the June 1, 2020 City Council Work Session and provided a comprehensive overview of the City’s 2019 Annual Financial Report. In addition, he presented the auditor’s management analysis and answered any questions the Council had regarding the financial condition of the City. The 2019 annual audit was undertaken earlier this year, with field work being completed in May. 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 the City’s financial statements for 2019 presented fairly, in all material respects, the financial position of the City as of December 31, 2019. 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 2018 Comprehensive Annual Financial Report. The city has received this award each year since 1995. We believe the report issued for 2019 continues to uphold the high standards of reporting excellence this prestigious award represents. RECOMMENDATION Staff recommends the City Council formally, by motion, accept the 2019 Annual Audit Report. ATTACHMENTS 2019 Comprehensive Annual Financial Report 2019 Other Audit Reports COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF LINO LAKES, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2019 Prepared By: Finance Department Sarah Cotton, Director of Finance - This page intentionally left blank - CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference No. Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 7 Organization Chart 8 Principal City Officials 9 Independent Auditor's Report 13 Management's Discussion and Analysis 17 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position Statement 1 31 Statement of Activities Statement 2 32 Fund Financial Statements: Balance Sheet - Governmental Funds Statement 3 34 Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position Statement 4 37 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds Statement 5 38 Reconciliation of the Statement of Revenues, Expenditures and Changes In Fund Balance of Governmental Funds to the Statement of Activities Statement 6 40 Statement of Net Position - Proprietary Funds Statement 7 41 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds Statement 8 42 Statement of Cash Flows - Proprietary Funds Statement 9 43 Notes to Financial Statements 45 Required Supplementary Information: Budgetary Comparison Schedule - General Fund Statement 10 86 Schedule of Changes in the Total OPEB Liability and Related Ratios Statement 11 92 Schedule of Proportionate Share of Net Pension Liability - General Employees Retirement Fund Statement 12 93 Schedule of Pension Contributions - General Employees Retirement Fund Statement 13 94 INTRODUCTORY SECTION FINANCIAL SECTION CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference No. Schedule of Proportionate Share of Net Pension Liability - Public Employees Police and Fire Fund Statement 14 95 Schedule of Pension Contributions - Public Employees Police and Fire Fund Statement 15 96 Schedule of Changes in the Net Pension Liability and Related Ratios - Lino Lakes Public Safety Department - Fire Division Statement 16 97 Schedule of Contributions - Lino Lakes Public Safety Department - Fire Division Statement 17 98 Notes to RSI 99 Combining and Individual Nonmajor Fund Financial Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds Statement 18 106 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds Statement 19 107 Subcombining Balance Sheet - Nonmajor Special Revenue Funds Statement 20 110 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Special Revenue Funds Statement 21 112 Subcombining Balance Sheet - Nonmajor Debt Service Funds Statement 22 116 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Debt Service Funds Statement 23 118 Subcombining Balance Sheet - Nonmajor Capital Project Funds Statement 24 123 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Capital Project Funds Statement 25 126 Special Revenue Fund - Program Recreation Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Statement 26 129 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference No. Financial Trends: Net Position by Component Table 1 134 Changes in Net Position Table 2 136 Fund Balances, Governmental Funds Table 3 140 Changes in Fund Balances, Governmental Funds Table 4 142 Revenue Capacity: Assessed and Actual Value of Taxable Property Table 5 144 Direct and Overlapping Property Tax Capacity Rates Table 6 145 Principal Property Taxpayers Table 7 147 Property Tax Levies and Collections Table 8 148 Debt Capacity: Ratios of Outstanding Debt by Type Table 9 150 Ratios of Net General Bonded Debt Table 10 152 Direct and Overlapping Governmental Activities Debt Table 11 154 Legal Debt Margin Information Table 12 155 Demographic and Economic Information: Demographic and Economic Statistics Table 13 156 Principal Employers Table 14 157 Operating Information: Full-Time Equivalent City Government Employees By Function/Program Table 15 158 Operating Indicators by Function/Program Table 16 160 Capital Asset Statistics by Function/Program Table 17 162 Schedule of Long-Term Debt Exhibit 1 164 Schedule of Deferred Tax Levies Exhibit 2 166 Debt Service Payments to Maturity Exhibit 3 168 Insurance in Force Exhibit 4 172 Taxable Valuations, Tax Levies and Tax Rates Exhibit 5 173 STATISTICAL SECTION (UNAUDITED) OTHER INFORMATION (UNAUDITED) - This page intentionally left blank - INTRODUCTORY SECTION 1 - This page intentionally left blank - 2 600 Town Center Parkway, Lino Lakes, MN 55014 Phone: 651-982-2400 ∙ Fax: 651-982-2499 May 28, 2020 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, 2019. 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 Redpath and Company, Ltd., 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, 2019, 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, 2019, 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. 3 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 21,700. The population has more than doubled from the 1990 census figure of 8,807 and has grown by 28.9% 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 and for overseeing the day-to-day operations 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, fire and building inspections), public services (streets, fleet, parks and recreation), conservation of natural resources (forestry, environmental and solid waste abatement), community development, 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 30. 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 Statements 10 and 26, 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. Infrastructure investments made by the City in the late 2000’s and early 2010’s in anticipation of a strengthening economy, are leading to continued residential, commercial and industrial growth. Completion of the 35E/CSAH 14 interchange has spurred residential, commercial and industrial development along this corridor. The City’s largest residential development, the 864 lot Watermark project, is currently under construction in the northwest quadrant. The City’s largest industrial user, Distribution Alternatives, expanded into a 402,000 square foot building in 2016. Commercial interest continues to grow with the expansion of the Main Street Shoppes in the northeast quadrant. The 35E corridor also gained additional attention through a partnership with Anoka and Washington County’s, neighboring cities and Connexus Energy, the Minnesota Technology Corridor. Over 1,000 4 Factors Affecting Financial Condition (Continued) acres are available along the corridor with strong transportation, fiber and utility infrastructure to serve the growing data and tech fields. Citywide development activities continued to increase in 2019. Residential permit activity for new home construction surpassed 100 for the fourth consecutive year. Overall construction activity exceeded $42 million in new valuation. Commercial development included over 30,000 square feet of retail and service uses. Industrial vacancy rates continue to decline as over 260,000 square feet of office/warehouse space was occupied. This trend is expected to continue as national builder, Lennar Homes, continues construction in Watermark. The City also approved a development plan for a 200-unit senior living community, which is planned for construction in 2020. Long-term financial planning. The City’s current five-year capital plan identifies street and utility improvements totaling $49,335,065 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, water and sewer operating funds, and general fund tax levies. This plan is in the process of being revised to reflect the anticipated activity through the year 2024. In addition, the city’s five-year financial plan includes funding projections for operations and operating impacts for a five-year period. 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, 2019 was $6,052,388 which is 52% of general fund final 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, state and local securities, 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 2019 was 2.11%. 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 gains of $640,783, or 1.43%, for a total investment yield of 3.54%. 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 5 and, accordingly, changes in fair value over the term of the City’s investments are expected to net to book value. 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, 2018. This marks the twenty-fourth 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 2019 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. I 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 6 7 City of Lino Lakes Organizational Chart City Council City Administrator Administration Finance Community Development Public Services Public Safety City Clerk Accounting Planning Recreation Police Division Human Resources Utility Billing Economic Development Engineering Environmental Services Government Buildings Public Works Street / Fleet / Utility Maintenance Parks Building Inspections Fire Division Senior Citizen Services Advisory Board & Commissions Network Administration Emergency Management/Administration Public Information 8 CITY OF LINO LAKES, MINNESOTA PRINCIPAL CITY OFFICIALS December 31, 2019 Term Expires Mayor: Jeff Reinert December 31, 2019 Councilmembers: Dale Stoesz December 31, 2021 Rob Rafferty December 31, 2021 Melissa Maher December 31, 2019 Michael Manthey December 31, 2019 City Administrator: Jeff Karlson Appointed Directors: Community Development Michael Grochala Appointed Finance Sarah Cotton Appointed Public Safety John Swenson Appointed Public Services Richard DeGardner Appointed 9 - This page intentionally left blank - 10 FINANCIAL SECTION 11 - This page intentionally left blank - 12 55 E 5th Street Suite 1400, St. Paul, MN, 55101 651.426.7000 www.redpathcpas.com INDEPENDENT AUDITOR'S REPORT To the 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, 2019, and the related notes to the financial statements, which collectively comprise the City of Lino Lakes, Minnesota’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. Auditor’s 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 auditor’s 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. 13 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, Minnesota, as of December 31, 2019, 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. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the budgetary comparison information, and the schedules of OPEB and pension information, 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, Minnesota’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, statistical section and other information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules 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 14 procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section, the statistical section and other information 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 them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 28, 2020, on our consideration of the City of Lino Lakes, Minnesota’s 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Lino Lakes, Minnesota’s 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 the City of Lino Lakes, Minnesota’s internal control over financial reporting and compliance. REDPATH AND COMPANY, LTD. St. Paul, Minnesota May 28, 2020 15 - This page intentionally left blank - 16 MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Lino Lakes, Minnesota (the City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2019. 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 in the introductory section of this report. Financial Highlights The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $111,091,567 (net position). Of this amount, $33,877,263 (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 increased by $11,013,769. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $30,223,529, a decrease of $3,031,672. Of this amount, $6,650,462 is restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. At the end of the current fiscal year, the general fund balance was $6,793,195. Unassigned fund balance for the general fund was $6,052,388, or 52% of total general fund expenditures and other financing uses. Total outstanding debt decreased by $2,426,540 during 2019. Certificates of indebtedness totaling $388,535 were issued, while regularly scheduled principal payments were made during the year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. 17 Management’s Discussion and Analysis Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City’s 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 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 vacation leave). Both of the government-wide financial statements distinguish functions of the City 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 include general government, public safety, public services, conservation of natural resources and community development. The business-type activities of the City include a water utility and sewer utility. The government-wide financial statements are statements 1 and 2 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, 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 can be divided into two categories: governmental funds and proprietary 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 financial 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 City's near-term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures and change in fund balance provide a 18 Management’s Discussion and Analysis reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains six individual major 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 balance for the following major funds: General Fund G.O. Improvement Note of 2009A – Debt Service Fund G.O. Improvement Bonds of 2016B – Debt Service Fund Area and Unit Charge – Capital Project Fund MSA Construction – Capital Project Fund 2018 Street Reconstruction – Capital Project Fund Data from the other governmental funds are combined into a single, aggregated 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 adopts an annual appropriated budget for its General Fund and its Program Recreation special revenue fund. A budgetary comparison schedule has been provided for those funds to demonstrate compliance with this budget. The basic governmental fund financial statements are statements 3 through 6 of this report. Proprietary funds. The City maintains two enterprise funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer 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 water and sewer funds, which are considered to be major funds of the City. The basic proprietary fund financial statements are statements 7 through 9 of this report. 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 following Statement 9. Other information. The combining statements referred to earlier in connection with non- major governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules are presented as Statements 18 through 26. 19 Management’s Discussion and Analysis Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $111,091,567 at the close of the most recent fiscal year. The largest portion of the City’s net position ($64,823,873, or 58%) reflects its net investment in capital assets (e.g. land, buildings, equipment, and infrastructure) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s 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. City of Lino Lakes’ Net Position 2019 2018 2019 2018 2019 2018 Assets: Current and other assets $42,013,231 $41,949,582 $16,667,696 $16,003,964 $58,680,927 $57,953,546 Capital assets 49,859,684 44,102,567 36,390,820 32,709,079 86,250,504 76,811,646 Total assets $91,872,915 $86,052,149 $53,058,516 $48,713,043 $144,931,431 $134,765,192 Deferred outflows of resources $3,084,049 $4,305,683 $36,994 $61,906 $3,121,043 $4,367,589 Liabilities: Long-term liabilities outstanding $27,963,093 $30,443,714 $327,294 $312,016 $28,290,387 $30,755,730 Other liabilities 3,560,168 1,981,550 74,596 87,787 3,634,764 2,069,337 Total liabilities $31,523,261 $32,425,264 $401,890 $399,803 $31,925,151 $32,825,067 Deferred inflows of resources $4,970,184 $6,134,676 $65,572 $95,240 $5,035,756 $6,229,916 Net position: Net investment in capital assets $28,433,053 $24,640,555 $36,390,820 $32,709,079 $64,823,873 $57,349,634 Restricted 12,390,431 10,579,817 - - 12,390,431 10,579,817 Unrestricted 17,640,035 16,577,520 16,237,228 15,570,827 33,877,263 32,148,347 Total net position $58,463,519 $51,797,892 $52,628,048 $48,279,906 $111,091,567 $100,077,798 Governmental Activities Business-Type Activities Totals $12,390,431 of the City’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($33,877,263) may be used to meet ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City 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. 20 Management’s Discussion and Analysis The City’s net position increased by $11,013,769 during 2019. Key elements of this increase are as follows: City of Lino Lakes’ Changes in Net Position 2019 2018 2019 2018 2019 2018 Revenues: Program revenues: Charges for services $3,141,500 $2,602,483 $2,943,723 $2,971,301 $6,085,223 $5,573,784 Operating grants and contributions 870,532 861,429 - - 870,532 861,429 Capital grants and contributions 6,820,419 5,187,023 2,894,794 1,242,032 9,715,213 6,429,055 General revenues: General property taxes 10,035,681 9,767,468 - - 10,035,681 9,767,468 Tax increment 671,296 462,223 - - 671,296 462,223 Grants and contributions not restricted to specific programs 38,926 59,508 - - 38,926 59,508 Unrestricted investment earnings 1,029,944 369,485 523,554 213,434 1,553,498 582,919 Gain on disposal of capital assets 68,472 17,318 - - 68,472 17,318 Total revenues 22,676,770 19,326,937 6,362,071 4,426,767 29,038,841 23,753,704 Expenses: General government 2,466,130 2,345,386 - - 2,466,130 2,345,386 Public safety 5,053,511 4,749,394 - - 5,053,511 4,749,394 Public services 5,810,919 5,384,522 - - 5,810,919 5,384,522 Conservation of naturual resources 183,982 201,590 - - 183,982 201,590 Community development 686,421 576,794 - - 686,421 576,794 Interest and fees on long-term debt 498,587 414,607 - - 498,587 414,607 Water - - 1,322,811 1,332,755 1,322,811 1,332,755 Sewer - - 2,002,711 1,964,471 2,002,711 1,964,471 Total expenses 14,699,550 13,672,293 3,325,522 3,297,226 18,025,072 16,969,519 Increase in net position before transfers 7,977,220 5,654,644 3,036,549 1,129,541 11,013,769 6,784,185 Transfers (1,311,593) (472,370) 1,311,593 472,370 - - Change in net position 6,665,627 5,182,274 4,348,142 1,601,911 11,013,769 6,784,185 Net position - January 1 51,797,892 46,615,618 48,279,906 46,677,995 100,077,798 93,293,613 Net position - December 31 $58,463,519 $51,797,892 $52,628,048 $48,279,906 $111,091,567 $100,077,798 Business-Type Activities TotalsGovernmental Activities Governmental Activities Governmental activities increased the City’s net position by $6,665,627 during 2019. Property tax levied to reduce debt, new assessment rolls, contributions of capital assets from private sources and increased investment earnings all contributed to the increase in 2019. This increase was partially offset by transfers out to business-type activities of $1,311,593. 21 Management’s Discussion and Analysis Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: 22 Management’s Discussion and Analysis Business-Type Activities Business-type activities increased the City’s net position by $4,348,142 during 2019. The increase was due to contributions of capital assets from private sources, increased investment earnings, and a transfer in from governmental activities of $1,311,593. Below are specific graphs which provide comparisons of the business-type activities revenues and expenses: 23 Management’s Discussion and Analysis Financial Analysis of the Government's Funds Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $30,223,529. Approximately 22% of this total amount ($6,650,462) constitutes fund balance restricted by external constraints established by creditors, grantors, contributors, or by state statutory provisions. $399,749 of fund balance is not in a spendable form, $619,385 has been committed, $19,672,706 has been assigned, and $2,881,227 is unassigned. The fund balance of the General Fund decreased by $92,947 in 2019, while the City anticipated the use of $375,645 of the general fund balance. Strong investment earnings and increased license and permit revenues resulted in favorable General Fund revenues for the year. Reduced expenditures, primarily for personal services through position vacancies, and favorable professional and contractual services spending helped to increase the year end fund balance. The G.O. Improvement Note of 2009A fund was established to service the debt issued by Anoka County as the City’s financial commitment for the I-35E interchange project. The City prepaid the remaining balance of the note in 2017 using MSA funds. As deferred special assessments are received, MSA funds will be replenished. The fund began and ended the year with a fund balance of $0, and transferred $62,605 to the MSA Construction fund. The G.O. Improvement Bonds of 2016B fund decreased by $132,581. The 2016B series bonds were issued to refund the 2005A series bonds and fund the Legacy at Woods Edge improvements. Future tax increment and land sale proceeds are expected to cover debt service and the interfund loan payable. The Area and Unit Charge fund has a total fund balance of $8,307,394, all of which is assigned for financing capital improvements. The fund balance during the current year increased by $150,594 due primarily to the collection of prepaid special assessments and strong investment earnings. This increase was partially offset by feasibility and design expenditures incurred for Well #7. The MSA Construction fund has a total fund balance of $3,733,517, all of which is assigned to capital improvements for City MSA designated roadways. The fund balance during the current year decreased by $186,212 primarily due to transfers out for debt service payments. 24 Management’s Discussion and Analysis The 2018 Street Reconstruction fund has a total fund balance of $1,010,945. The fund balance decreased during the year by $4,289,134 due to expending proceeds from the 2018 bond issuance for the West Shadow Lake Drive and LaMotte Area Street Reconstruction project. The combined fund balance of other governmental funds increased by $1,518,608 during 2019. Primary reasons for the increase include increased investment earnings, increased tax increment revenues, and increased development activities resulting in increased developer fee revenues (park dedication, seal coating, surface water management). Increases are partially offset by increased spending for park and trail improvements, Cedar Street Reconstruction improvements, and a transfer out for the Civic Complex roof replacement project. Proprietary funds. The City’s 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 $25,527,564, of which $6,097,611 is unrestricted. The increase in net position of $2,045,656 was primarily due to capital contributions and strong investment earnings, partially offset by a net operating loss and a transfer to the Pavement Management Fund for watermain system repairs associated with the 2019 Mill & Overlay project. The sewer fund has total net position at year-end of $27,100,484 of which $10,139,617 is unrestricted. The increase in net position of $2,302,486 was primarily due to capital contributions and strong investments earnings, partially offset by a net operating loss. Budgetary Highlights General Fund The General Fund budget was amended during the year to reflect increased charges for services and municipal and police state aid and a slight decrease in revenues relative to building and licensing activities, fines and forfeitures, and refunds and reimbursements. In the budget was amended to account for a transfer in from the Municipal Buildings and Facilities Fund for the Civic Complex Roof Replacement project. The City also received $711,854 of insurance proceeds associated with the damage to the Civic Complex roof. Changes to expenditure areas include decreased personal services due to personnel vacancies, a net decrease to professional and contracted services, a decrease in parts/supplies spending, increased capital outlay, increased expenditures associated with the Civic Complex Roof project, and transfers for the comprehensive plan and summer playground program temporary staff. The final amended expenditure budget was $726,331 more than the original adopted budget. Revenues were $114,171 over budget for the year. General property tax, special assessments, and fines and forfeits were $71,543 under budget; however, this variance was 25 Management’s Discussion and Analysis more than offset by greater than anticipated license and permit revenues, intergovernmental revenue, charges for services, and investment earnings. Expenditures came in under budget by $168,830 due to many factors including lower than expected personal service costs from vacant positions and favorable professional and contracted service activity. Fuel costs were much higher than anticipated due to an increase in the average fuel price, as well as an increase in the number of snow events. Professional and contracted service activity in parks was much higher than anticipated due to costs associated with council initiated projects that were not originally planned for in 2019. Capital Asset and Debt Administration Capital assets. The City’s investment in capital assets for its governmental and business- type activities as of December 31, 2019, amounted to $86,250,504 (net of accumulated depreciation), an increase of $9,438,858 from the prior year. This investment in capital assets includes land, wetland credits, construction in progress, buildings, equipment, vehicles, and infrastructure. The City completed land preparation activities for NorthPointe Park and trunk watermain and trail improvements along Lake Drive in 2019. The City has continued to work to complete trunk utility improvements at 49&J, drainage improvements in the NE Area of the City, Water Tower #3, Phase II of the controls automation upgrade at the Civic Complex, Woods Edge Park improvements, and street and utility improvements in the West Shadow Lake Drive and LaMotte areas. In addition, the City started Civic Complex card access system upgrades, Woods of Baldwin Park improvements, Apollo Drive Trail improvements, Pheasant Hills watermain improvements, Well House #1 Rehabilitation improvements, Cedar Street Reconstruction improvements, and the purchase and build-out of two public safety vehicles. Developer lead infrastructure improvements at various stages of completion include St Clair Estates, NorthPointe 6th and 7th Additions, Saddle Club 3rdAddition, Century Farms 7th Addition, Chavez Estates, Eastside Villas, and Watermark. City of Lino Lakes’ Capital Assets (Net of Depreciation) 2019 2018 2019 2018 2019 2018 Land $3,532,930 $3,320,059 $ - $ - $3,532,930 $3,320,059 Wetland credits 170,421 167,224 - - 170,421 167,224 Construction in progress 10,094,933 3,595,457 6,123,837 1,623,032 16,218,770 5,218,489 Buildings 6,983,477 6,375,432 10,157 - 6,993,634 6,375,432 Office equipment and furniture 233,176 270,711 - - 233,176 270,711 Vehicles 1,842,573 1,945,189 - - 1,842,573 1,945,189 Machinery and shop equipment 1,087,529 1,226,246 139,603 161,538 1,227,132 1,387,784 Other equipment 835,192 330,618 - - 835,192 330,618 Infrastructure 25,079,453 26,971,631 30,117,223 30,924,509 55,196,676 57,896,140 Total $49,859,684 $44,202,567 $36,390,820 $32,709,079 $86,250,504 $76,911,646 Governmental Activities Business-Type Activities Totals Additional information on the City’s capital assets can be found in Note 5 to the financial statements. 26 Management’s Discussion and Analysis Long-term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $21,977,314. Of this amount, $18,489,535 comprises tax supported debt and $2,855,000 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 has a note payable to the City of Circle Pines for its share of the cost of capital equipment to be used by the North Metro Telecommunications Commission in the operation of a cable communications system in the amount of $169,950. City of Lino Lakes’ Outstanding Debt 2019 2018 2019 2018 2019 2018 General obligation bonds $18,659,485 $20,051,025 $ - $ - $18,659,485 $20,051,025 G.O. special assessment bonds 2,855,000 3,890,000 - - 2,855,000 3,890,000 Bond premium 462,829 511,813 - - 462,829 511,813 Total $21,977,314 $24,452,838 $0 $0 $21,977,314 $24,452,838 Business-Type Activities TotalsGovernmental Activities The City of Lino Lakes’ total bonded debt decreased by $2,426,540 during the current fiscal year. The issuance of $388,535 of Certificates of Indebtedness to finance capital equipment purchases and scheduled principal payments of $2,815,075 accounted for this change. Additional information on the City’s long-term debt can be found in Note 6. Requests for information. This financial report is designed to provide a general overview of the City’s finances for all 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. 27 - This page intentionally left blank - 28 BASIC FINANCIAL STATEMENTS 29 - This page intentionally left blank - 30 CITY OF LINO LAKES, MINNESOTA STATEMENT OF NET POSITION Statement 1 December 31, 2019 Governmental Business-Type Activities Activities Total Assets: Cash and investments $33,274,770 $15,721,760 $48,996,530 Accrued interest receivable 140,376 - 140,376 Due from other governmental units 62,818 2,238 65,056 Accounts receivable - net 108,939 324,995 433,934 Prepaid items 299,749 37,097 336,846 Internal balances (559,110) 559,110 - Inventory - 22,496 22,496 Taxes receivable 200,014 - 200,014 Special assessments receivable 7,943,006 - 7,943,006 Long-term note receivable 225,000 - 225,000 Net pension asset 317,669 - 317,669 Capital assets - nondepreciable 13,798,284 6,123,837 19,922,121 Capital assets - net of accumulated depreciation 36,061,400 30,266,983 66,328,383 Total assets 91,872,915 53,058,516 144,931,431 Deferred outflows of resources: Pension related 3,072,263 36,994 3,109,257 OPEB related 11,786 - 11,786 Total deferred outflows of resources 3,084,049 36,994 3,121,043 Liabilities: Accounts payable and other current liabilities 1,287,855 74,596 1,362,451 Deposits payable 2,139,839 - 2,139,839 Accrued interest payable 132,474 - 132,474 Other post employment benefits: Due within one year 22,728 262 22,990 Due in more than one year 531,535 6,106 537,641 Long-term liabilities: Due within one year 3,333,866 38,596 3,372,462 Due in more than one year 19,444,630 672 19,445,302 Net pension liability: Due in more than one year 4,630,334 281,658 4,911,992 Total liabilities 31,523,261 401,890 31,925,151 Deferred inflows of resources: Pension related 4,691,103 65,572 4,756,675 OPEB related 279,081 - 279,081 Total deferred inflows of resources 4,970,184 65,572 5,035,756 Net position: Net investment in capital assets 28,433,053 36,390,820 64,823,873 Restricted for: Debt service 9,900,523 - 9,900,523 Tax increment purposes 675,228 - 675,228 Park improvements 900,326 - 900,326 Other purposes 914,354 - 914,354 Unrestricted 17,640,035 16,237,228 33,877,263 Total net position $58,463,519 $52,628,048 $111,091,567 Primary Government The accompanying notes are an integral part of these financial statements. 31 CITY OF LINO LAKES, MINNESOTA STATEMENT OF ACTIVITIES For The Year Ended December 31, 2019 Program Revenues Charges For Functions/Programs Expenses Services Primary government: Governmental activities: General government $2,466,130 $612,237 Public safety 5,053,511 1,255,363 Public services 5,810,919 1,273,900 Conservation of natural resources 183,982 - Community development 686,421 - Interest and fees on long-term debt 498,587 - Total governmental activities 14,699,550 3,141,500 Business-type activities: Water 1,322,811 1,172,580 Sewer 2,002,711 1,771,143 Total business-type activities 3,325,522 2,943,723 Total primary government $18,025,072 $6,085,223 The accompanying notes are an integral part of these financial statements. 32 Statement 2 Operating Capital Grants and Grants and Governmental Business-Type Contributions Contributions Activities Activities Total $5,667 $711,854 ($1,136,372) $ - ($1,136,372) 454,372 - (3,343,776) - (3,343,776) 330,675 6,108,565 1,902,221 - 1,902,221 79,818 - (104,164) - (104,164) - - (686,421) - (686,421) - - (498,587) - (498,587) 870,532 6,820,419 (3,867,099) 0 (3,867,099) - 1,291,185 - 1,140,954 1,140,954 - 1,603,609 - 1,372,041 1,372,041 0 2,894,794 0 2,512,995 2,512,995 $870,532 $9,715,213 (3,867,099) 2,512,995 (1,354,104) General revenues: General property taxes 10,035,681 - 10,035,681 Tax increment 671,296 - 671,296 Grants and contributions not restricted to specific programs 38,926 - 38,926 Unrestricted investment earnings 1,029,944 523,554 1,553,498 Gain on disposal of capital assets 68,472 - 68,472 Transfers (1,311,593) 1,311,593 - Total general revenues and transfers 10,532,726 1,835,147 12,367,873 Change in net position 6,665,627 4,348,142 11,013,769 Net position - January 1 51,797,892 48,279,906 100,077,798 Net position - December 31 $58,463,519 $52,628,048 $111,091,567 Program Revenues Net (Expense) Revenue and Changes in Net Position Primary Government The accompanying notes are an integral part of these financial statements. 33 CITY OF LINO LAKES, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2019 333 G.O. 342 G.O. Improvement Improvement General Fund Note of 2009A Bonds of 2016B Assets Cash and investments $8,686,525 $ - $594,762 Accrued interest receivable 140,376 - - Due from other governmental units 62,818 - - Accounts receivable - net 62,494 - - Prepaid items 296,907 - - Advances to other funds - - - Taxes receivable: Due from county 77,384 - - Delinquent 86,821 - - Special assessments receivable: Due from county 523 729 - Delinquent - 560 - Deferred - 2,120,267 2,994,379 Interfund loan receivable - - - Long-term note receivable - - - Total assets $9,413,848 $2,121,556 $3,589,141 Liabilities, Deferred Inflows of Resources, and Fund Balances Liabilities: Accounts payable $146,186 $ - $805 Salaries payable 183,508 - - Due to other governmental units 60,927 - - Advances from other funds - 729 - Contracts payable 3,372 - - Deposits payable 2,139,839 - - Interfund loan payable - - 2,876,643 Total liabilities 2,533,832 729 2,877,448 Deferred inflows of resources: Unavailable revenue 86,821 2,120,827 2,994,379 Fund balance: Nonspendable 296,907 - - Restricted - - - Committed 443,900 - - Assigned - - - Unassigned 6,052,388 - (2,282,686) Total fund balance 6,793,195 0 (2,282,686) Total liabilities, deferred inflows of $9,413,848 $2,121,556 $3,589,141 resources, and fund balance The accompanying notes are an integral part of these financial statements. 34 Statement 3 485 Other Total 406 Area and 420 MSA 2018 Street Governmental Governmental Unit Charge Construction Reconstruction Funds Funds $8,301,414 $3,732,788 $1,702,759 $10,256,522 $33,274,770 - - - - 140,376 - - - - 62,818 22,102 - - 24,343 108,939 - - - 2,842 299,749 - 729 - 85,224 85,953 - - - 17,668 95,052 - - - 18,141 104,962 1,968 - - 409 3,629 26,876 - - 13,830 41,266 1,863,394 - - 920,071 7,898,111 - - - 3,117,897 3,117,897 - - - 225,000 225,000 $10,215,754 $3,733,517 $1,702,759 $14,681,947 $45,458,522 $18,090 $ - $825 $173,539 $339,445 - - - - 183,508 - - - 309 61,236 - - - 85,224 85,953 - - 690,989 9,305 703,666 - - - - 2,139,839 - - - 800,364 3,677,007 18,090 0 691,814 1,068,741 7,190,654 1,890,270 - - 952,042 8,044,339 - - - 102,842 399,749 - - 380,732 6,269,730 6,650,462 - - - 175,485 619,385 8,307,394 3,733,517 630,213 7,001,582 19,672,706 - - - (888,475)2,881,227 8,307,394 3,733,517 1,010,945 12,661,164 30,223,529 $10,215,754 $3,733,517 $1,702,759 $14,681,947 $45,458,522 The accompanying notes are an integral part of these financial statements. 35 - This page intentionally left blank - 36 CITY OF LINO LAKES, MINNESOTA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL Statement 4 FUNDS TO THE STATEMENT OF NET POSITION December 31, 2019 Fund balance - total governmental funds (Statement 3) $30,223,529 Net position reported for governmental activities in the Statement of Net Position is different because: Certain assets used in governmental activities are not current financial resources and, therefore, are not reported in the funds. Capital assets 49,859,684 Net pension asset 317,669 Other long-term assets are not available to pay for current-period expenditures and therefore, are reported as unavailable revenue in the funds: Delinquent taxes receivable 104,962 Delinquent special assessments receivable 41,266 Deferred special assessments receivable 7,898,111 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Long-term liabilities at year end consist of: Bonds and notes payable (21,514,485) Unamortized bond premiums (476,139) Unamortized bond discounts 13,310 Accrued interest payable (132,474) Compensated absences payable (801,182) Other post employment benefits (554,263) Net pension liability (4,630,334) Deferred outflows and inflows of resources related to pensions and OPEB are associated with long-term liabilities that are not due and payable in the current period, and therefore, are not reported in the funds. Balances at year end are: Deferred outflows of resources 3,084,049 Deferred inflows of resources (4,970,184) Net position of governmental activities (Statement 1) $58,463,519 The accompanying notes are an integral part of these financial statements. 37 CITY OF LINO LAKES, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31, 2019 333 G.O. 342 G.O. Improvement Improvement General Fund Note of 2009A Bonds of 2016B Revenues: General property taxes $8,160,572 $ - $ - Tax increment - - - Licenses and permits 941,569 - - Intergovernmental 645,289 - - Special assessments 751 62,605 - Charges for services 322,652 - - Fines and forfeits 98,390 - - Investment earnings 159,482 - 8,554 Miscellaneous 190,279 - - Total revenues 10,518,984 62,605 8,554 Expenditures: Current: General government 1,988,237 - - Public safety 4,683,296 - - Public services 2,256,496 - - Conservation of natural resources 207,919 - - Community development 453,056 - - Capital outlay: General government 969,313 - - Public safety 47,851 - - Public services 30,544 - - Debt service: Principal - - 490,000 Interest and fiscal charges - - 17,585 Total expenditures 10,636,712 0 507,585 Revenues over (under) expenditures (117,728)62,605 (499,031) Other financing sources (uses): Insurancy recovery 711,854 - - Transfers in 256,480 - 366,450 Transfers out (943,553)(62,605) - Issuance of debt - - - Proceeds from sale of capital assets - - - Total other financing sources (uses)24,781 (62,605)366,450 Net change in fund balance (92,947)0 (132,581) Fund balance - January 1 6,886,142 - (2,150,105) Fund balance - December 31 $6,793,195 $0 ($2,282,686) The accompanying notes are an integral part of these financial statements. 38 Statement 5 485 Other Total 406 Area and 420 MSA 2018 Street Governmental Governmental Unit Charge Construction Reconstruction Funds Funds $ - $ - $ - $1,853,724 $10,014,296 - - - 671,296 671,296 - - - - 941,569 - - 43,100 - 688,389 570,659 - - 1,301,163 1,935,178 271,134 - - 1,269,017 1,862,803 - - - 33,546 131,936 259,544 134,682 118,835 348,847 1,029,944 - - - 74,851 265,130 1,101,337 134,682 161,935 5,552,444 17,540,541 - - - 19,504 2,007,741 - - - 36,826 4,720,122 191,649 447 - 1,090,032 3,538,624 - - - - 207,919 - - - 227,363 680,419 - - - 83,417 1,052,730 - - - 96,853 144,704 178,353 127,871 4,451,069 1,459,668 6,247,505 - - - 2,325,075 2,815,075 - - - 544,886 562,471 370,002 128,318 4,451,069 5,883,624 21,977,310 731,335 6,364 (4,289,134) (331,180) (4,436,769) - - - - 711,854 - 62,605 - 2,092,128 2,777,663 (580,741) (255,181) - (708,861) (2,550,941) - - - 388,535 388,535 - - - 77,986 77,986 (580,741) (192,576) 0 1,849,788 1,405,097 150,594 (186,212) (4,289,134) 1,518,608 (3,031,672) 8,156,800 3,919,729 5,300,079 11,142,556 33,255,201 $8,307,394 $3,733,517 $1,010,945 $12,661,164 $30,223,529 The accompanying notes are an integral part of these financial statements. 39 CITY OF LINO LAKES, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES,Statement 6 EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2019 Net change in fund balance - total governmental funds (Statement 5)($3,031,672) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Capital outlay 7,444,939 Depreciation (2,988,915) Various other transactions involving capital assets increase (decrease) net position on the Statement of Activities, but are not reported in governmental funds because they do not provide (or use) current financial resources: Contributions of infrastructure from private sources 2,845,725 Contributions of infrastructure to business-type activities (1,538,315) Miscellaneous other differences related to capital assets (6,317) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds: Change in delinquent taxes receivable 21,385 Change in delinquent special assessments receivable (1,116) Change in deferred special assessments receivable 1,328,778 The issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effects of bond premiums and discounts when the debt is first issued, whereas amounts are deferred and amortized over the life of the debt in the Statement of Activities. Bonds and notes issued (388,535) Repayment of principal 2,815,075 Amortization of bond premiums and discounts 48,984 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Expenses reported in the Statement of Activities include the effects of the changes in these expense accruals as follows: Change in accrued interest payable 14,900 Change in compensated absences payable 12,690 Change in OPEB liability and related deferred outflows and inflows of resources (26,348) Pension expense in governmental funds is measured by current year employee contributions. Pension expense in the Statement of Activities is measured by the change in the net pension liability and related deferred inflows and outflows of resources. This is the amount by which pension expense ($591,394) differed from pension contributions ($705,763).114,369 Change in net position of governmental activities (Statement 2)$6,665,627 The accompanying notes are an integral part of these financial statements. 40 CITY OF LINO LAKES, MINNESOTA STATEMENT OF NET POSITION Statement 7 PROPRIETARY FUNDS December 31, 2019 601 Water 602 Sewer Total Assets: Current assets: Cash and cash equivalents $6,171,792 $9,549,968 $15,721,760 Due from other governmental units - 2,238 2,238 Accounts receivable - net 121,112 203,883 324,995 Prepaid items 14,034 23,063 37,097 Inventory 22,496 - 22,496 Total current assets 6,329,434 9,779,152 16,108,586 Noncurrent assets: Interfund loan receivable - 559,110 559,110 Capital assets: Construction in progress 3,098,608 3,025,229 6,123,837 Equipment 97,620 294,916 392,536 Water and sewer systems 26,078,583 24,042,195 50,120,778 Total capital assets 29,274,811 27,362,340 56,637,151 Less: Allowance for depreciation (9,844,858) (10,401,473) (20,246,331) Net capital assets 19,429,953 16,960,867 36,390,820 Total assets 25,759,387 27,299,129 53,058,516 Deferred outflows of resources related to pensions 18,497 18,497 36,994 Total assets and deferred outflows 25,777,884 27,317,626 53,095,510 Liabilities: Current liabilities: Accounts payable 23,852 9,089 32,941 Salaries payable 6,881 6,881 13,762 Due to other governments 9,582 3,404 12,986 Other accrued liabilities 13,572 1,335 14,907 Compensated absences payable - current portion 19,298 19,298 38,596 Other post employment benefits - current portion 131 131 262 Total current liabilities 73,316 40,138 113,454 Noncurrent liabilities: Compensated absences payable - noncurrent portion 336 336 672 Other post employment benefits - noncurrent portion 3,053 3,053 6,106 Net pension liability 140,829 140,829 281,658 Total noncurrent liabilities 144,218 144,218 288,436 Total liabilities 217,534 184,356 401,890 Deferred inflows of resources related to pensions 32,786 32,786 65,572 Total liabilities and deferred inflows 250,320 217,142 467,462 Net position: Investment in capital assets 19,429,953 16,960,867 36,390,820 Unrestricted 6,097,611 10,139,617 16,237,228 Total net position $25,527,564 $27,100,484 $52,628,048 Business-Type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 41 CITY OF LINO LAKES, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND Statement 8 PROPRIETARY FUNDS For The Year Ended December 31, 2019 601 Water 602 Sewer Totals Operating revenues: Charges for services $1,100,675 $1,745,709 $2,846,384 Hook-up charges 31,510 25,434 56,944 Water meter sales 37,442 - 37,442 Other operating revenue 2,953 - 2,953 Total operating revenues 1,172,580 1,771,143 2,943,723 Operating expenses: Personal services 297,355 305,645 603,000 Materials and supplies 174,870 30,492 205,362 Contractual services 128,800 122,540 251,340 MCES sewer charges - 977,612 977,612 Depreciation 603,559 495,816 1,099,375 Utilities 97,224 44,927 142,151 Other 18,968 25,679 44,647 Total operating expenses 1,320,776 2,002,711 3,323,487 Operating income (loss) (148,196) (231,568) (379,764) Nonoperating revenues (expenses): Investment earnings 210,056 313,498 523,554 Loss on sale of capital assets (2,035) - (2,035) Total nonoperating revenues (expenses) 208,021 313,498 521,519 Income before contributions and transfers 59,825 81,930 141,755 Contributions and transfers: Capital contributions from private sources 1,291,185 1,603,609 2,894,794 Capital contributions from governmental activities 921,368 616,947 1,538,315 Transfer out (226,722) - (226,722) Total contributions and transfers 1,985,831 2,220,556 4,206,387 Change in net position 2,045,656 2,302,486 4,348,142 Net position - January 1 23,481,908 24,797,998 48,279,906 Net position - December 31 $25,527,564 $27,100,484 $52,628,048 Capital Contributions Transfers - Net Amounts reported above $4,433,109 ($226,722) Amounts reported for business-type activities in the statement of activities are different because: Transfer in of capital assets from governmental activities (1,538,315) 1,538,315 Amounts reported on the statement of activities $2,894,794 $1,311,593 CHANGES IN FUND NET POSITION Business-Type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 42 CITY OF LINO LAKES, MINNESOTA STATEMENT OF CASH FLOWS Statement 9 PROPRIETARY FUNDS For The Year Ended December 31, 2019 601 Water 602 Sewer Totals Cash flows from operating activities: Receipts from customers and users $1,201,873 $1,782,897 $2,984,770 Payment to suppliers (393,323) (1,223,487) (1,616,810) Payment to employees (292,094) (300,384) (592,478) Net cash flows provided by operating activities 516,456 259,026 775,482 Cash flows from noncapital financing activities: Transfers out (226,722) - (226,722) Cash flows from capital and related financing activities: Acquisition of capital assets (350,042) - (350,042) Cash flows from investing activities: Investment earnings 210,056 313,498 523,554 Net increase in cash and cash equivalents 149,748 572,524 722,272 Cash and cash equivalents - January 1 6,022,044 8,977,444 14,999,488 Cash and cash equivalents - December 31 $6,171,792 $9,549,968 $15,721,760 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) ($148,196) ($231,568) ($379,764) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 603,559 495,816 1,099,375 Changes in assets and liabilities: Decrease (increase) in due from other governmental units - (256)(256) Decrease (increase) in accounts receivable - net 29,293 12,010 41,303 Decrease (increase) in prepaid items (125)216 91 Decrease (increase) in inventory 17,402 - 17,402 Decrease (increase) in deferred outflows of resources 12,456 12,456 24,912 Increase (decrease) in payables (1,200) (21,824) (23,024) Increase (decrease) in other accrued liabilities 10,462 (629)9,833 Increase (decrease) in compensated absences 3,195 3,195 6,390 Increase (decrease) in other post employment benefits (1,113)(1,113)(2,226) Increase (decrease) in net pension liability 5,557 5,557 11,114 Increase (decrease) in deferred inflows of resources (14,834) (14,834) (29,668) Total adjustments 664,652 490,594 1,155,246 Net cash provided by operating activities $516,456 $259,026 $775,482 Noncash investing, capital and financing activities: Contributions of capital assets $2,212,553 $2,220,556 $4,433,109 Business-Type Activities - Enterprise Funds The accompanying notes are an integral part of these financial statements. 43 - This page intentionally left blank - 44 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lino Lakes, Minnesota (the City) 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 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 significant accounting policies: A. FINANCIAL REPORTING ENTITY In accordance with GASB pronouncements and accounting principles generally accepted in the United States of America, the financial statements of the reporting entity include those of the City (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City. COMPONENT UNITS In conformity with accounting principles generally accepted in the United States of America, the financial statements of the component units have been included in the financial report as 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 a part of the City’s operation because the governing body is substantially 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 Development 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. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the primary government and its component units. 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 for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or business-type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues. The fund financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The emphasis of governmental and proprietary fund financial statements is on major individual 45 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 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 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 Note of 2009A Fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. The note was used to finance improvement projects at the I-35E and County Road 14 interchange. General Obligation Improvement Bonds of 2016B 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 accounts for the collection of water and sewer unit charges to be used for debt payments and construction of governmental infrastructure. MSA Construction Fund accounts for the financing of future reconstruction of state aid eligible streets. 2018 Street Reconstruction Fund accounts for street and utility improvements within the West Shadow Lake Drive and LaMotte neighborhoods. The City reports the following major proprietary funds: The Water Fund accounts for customer water service charges which are used to finance water system operating expenses. The Sewer Fund accounts for customer sewer service charges which are used to finance sanitary sewer system operating expenses. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. 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. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers all revenues, except reimbursement grants, to be available if they are collected within 60 46 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 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 revenues of the water and sewer 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 accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund and the Program Recreation Special Revenue Fund. Budgeted expenditure appropriations lapse at year-end. Budgeted amounts are reported as originally adopted and as amended by the City Council. 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 at present not 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. 47 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 3. The budget is legally enacted through passage of a resolution on a departmental basis and can 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 be 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. 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 authorized investments. Investment income is allocated to individual funds on the basis of the fund's equity in the cash and investment pool. Investments are stated at fair value, except for investments in external investment pools that meet GASB 79 requirements, which are stated at amortized cost. Interest earnings are accrued at year-end. For purposes of the Statement of Cash Flows, the proprietary funds consider 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. 48 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 G. 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 government-wide financial statements, the City recognizes property tax revenue in the period for which taxes were levied. Uncollectible property taxes are not material and have not been reported. 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 received by the City in July, December, and the following January are recognized as revenue for the current year. Taxes collected by the county by December 31 (remitted to the City the following January) are classified as due from county. Taxes not collected by the county by December 31 are classified as delinquent taxes receivable. Delinquent taxes receivable are fully offset by deferred inflows of resources because they are not available to finance current expenditures. 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. H. 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. 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. 49 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Within the government-wide financial statements, the City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. 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, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred inflows of resources. I. INVENTORY For governmental funds, the original cost of materials and supplies are recorded as expenditures at the time of purchase. These funds do not maintain material amounts of inventories. Inventories of the proprietary funds are stated at cost, which approximates market, using the first-in, first-out (FIFO) method. J. PREPAID ITEMS Certain prepayments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenditures/expenses at the time of consumption. K. INTERFUND TRANSACTIONS During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. 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/expenses in the fund that is reimbursed. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund. Such advances are classified as “advances to/from other funds.” Long- term interfund loans are classified as “interfund loan receivable/payable.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” All other interfund transactions are reported as transfers. 50 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 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 are defined by the City as assets with an initial, individual cost of more than $2,500 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. All existing City infrastructure has been capitalized regardless of date placed in service. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. 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 15 to 50 years for infrastructure. 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 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 government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Bond premiums and discounts are amortized over the life of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. O. DEFINED BENEFIT PENSION PLANS For purposes of measuring the net pension liability, deferred outflows and inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to and 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 51 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 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 financial position reports a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense) that time. The City has two items that qualify for reporting in this category. Pension related deferred outflows of resources are reported in the government-wide Statement of Net Position and the proprietary funds Statement of Net Position. OPEB related deferred outflows of resources are only reported in the governmental activities column of the government-wide Statement of Net Position as amounts applicable to business-type activities are immaterial. In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position that applies to future periods, and therefore, will not be recognized as an inflow of resources (revenue) until that time. Pension related deferred inflows of resources are reported in the government-wide Statement of Net Position and the proprietary funds Statement of Net Position. OPEB related deferred inflows of resources are only reported in the governmental activities column of the government-wide Statement of Net Position as amounts applicable to business-type activities are immaterial. The City also has a type of item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenue from the following sources: property taxes and special assessments not collected within 60 days from year-end. Q. FUND BALANCE CLASSIFICATIONS In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable - consists of amounts that are not in spendable form, such as prepaid items and corpus of any permanent fund. Restricted - consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. Committed - consists of internally imposed constraints. These constraints are established by a resolution approved by the City Council, and committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by resolution. Assigned - consists of internally imposed constraints for the specific purpose of the City’s intended use. 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. 52 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, and then use unrestricted resources as they are needed. When committed, assigned or unassigned resources are available for use, it is the City’s policy to use resources in the following order: 1) committed 2) assigned and 3) unassigned. The City formally adopted a fund balances policy for the general fund. The policy establishes an unassigned fund balance range of 40% - 50% of general fund operating expenditures. R. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Custodial Credit Risk – Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. Minnesota Statutes require that insurance, surety bonds or collateral protect all City deposits. The market value of collateral pledged must equal 110% of deposits not covered by insurance or bonds. The City has no additional deposit policies addressing custodial credit risk. At December 31, 2019, the bank balance of the City’s deposits was insured by the FDIC or covered by pledged collateral held in the City’s name. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a) United States government treasury bills, treasury notes, treasury bonds; b) Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; c) General obligation securities of any state or local government with taxing powers which is rated “A” or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; d) General obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity; e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation; and f) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. At December 31, 2019, the carrying amount of the City’s deposits with financial institutions was $4,768,651. 53 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 B. INVESTMENTS Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities, or organizations created by an act of congress, excluding mortgage-backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax-exempt securities, or repurchase or reverse repurchase agreements. c) State and local securities as follows: 1) any security which is a general obligation of any state or local government with taxing powers which is rated “A” or better by a national bond rating service; 2) any security which is a revenue obligation of any state or local government with taxing powers which is rated “AA” or better by a national bond rating service; and 3) a general obligation of the Minnesota Housing Finance Agency which is a moral obligation of the State of Minnesota and is rated “A” or better by a national bond rating agency. d) Bankers acceptance of United States banks. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase or reverse repurchase agreements 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; certain Minnesota securities broker-dealers; or, a bank qualified as a depositor. g) General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.61, subdivision 6. 54 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 At December 31, 2019, the City had the following investments and maturities: Fair Less Investment Type Rating Value Than 1 1 - 3 3 - 6 Brokered certificates of deposit Not rated $22,924,803 $7,881,574 $10,456,546 $4,586,683 Municipal bonds * 12,251,492 2,685,184 5,973,762 3,592,546 Federal Home Loan Mortgage Corp. AA+ 1,499,855 - - 1,499,855 4M fund Not rated 4,457,891 4,457,891 - - First American Gov't Obligation fund AAAm 3,092,898 3,092,898 - - Total $44,226,939 $18,117,547 $16,430,308 $9,679,084 * AAA $2,312,282; AA+ $2,599,103 Total investments $44,226,939 AA $2,607,390; AA- $1,974,259 Deposits 4,768,651 A+ $2,144,214; A $614,244 Petty cash 940 Total cash and investments $48,996,530 Investment Maturities (in Years) The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The hierarchy has three levels. Level 1 investments are valued using inputs that are based on quoted prices in active markets for identical assets. Level 2 investments are valued using inputs that are based on quoted prices for similar assets or inputs that are observable, either directly or indirectly. Level 3 investments are valued using inputs that are unobservable. The City has the following recurring fair value measurements at December 31, 2019: Investment Type 12/31/2019 Level 1 Level 2 Level 3 Investments at fair value: Brokered certificates of deposit $22,924,803 $ - $22,924,803 $ - Municipal bonds 12,251,492 - 12,251,492 - Federal Home Loan Mortgage Corp. 1,499,855 - 1,499,855 - $0 $36,676,150 $0 Investments not categorized: 4M fund 4,457,891 ` First American Gov't Obligation fund 3,092,898 Total investments $44,226,939 Fair Value Measurement Using The 4M fund is an external investment pool investment which is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. It is an unrated pool and the fair value of the position in the pool is the same as the value of pool shares. The pool is managed to maintain a portfolio weighted average maturity of no greater than 60 days and seeks to maintain a constant net asset value (NAV) of $1 per share. The pool measures its investments at amortized cost in accordance with GASB Statement No. 79. The 4M Plus fund requires funds to be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period are subject to penalty equal to 7 days interest on the amount withdrawn. The First American Government Obligation money market fund is an external investment pool. The fund seeks to maintain a constant net asset value (NAV) of $1 per share. The securities held by the 55 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 fund are valued on the basis of amortized cost. Shares may be redeemed without penalty on any business day. C. INVESTMENT RISKS Custodial Credit Risk – Investments – For investments in securities, custodial credit risk is the risk that in the event of failure of the counterparty to a transaction, the City will not be able to recover the value of its investment securities that are in the possession of an outside party. Investments in investment pools and money markets are not evidenced by securities that exist in physical or book entry form, and therefore are not subject to custodial credit risk disclosures. The City’s investment policy requires its brokers be licensed with the appropriate federal and state agencies. A minimum capital requirement of $5,000,000 and at least five years of operation is mandatory. Investments in securities are held by the City’s broker-dealers. The securities at each broker-dealer are insured $500,000 through SIPC. Each broker-dealer has provided additional protection by providing additional insurance. This insurance is subject to aggregate limits applied to all of the broker-dealer’s accounts. 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. Credit Risk – Credit risk is the risk than 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. Concentration of Credit Risk – Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government’s investment in a single issuer. The City places no limit on the amount it may invest in any one issuer. At December 31, 2019, no individual investments exceeded 5% of the City’s total investment portfolio. 56 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 3 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2019 are as follows: Property Special Taxes Assessments Notes Receivable Receivable Receivable Total Major Funds: General Fund $33,800 $ - $ - $33,800 G.O. Improvement Note of 2009A - 2,095,200 - 2,095,200 G.O. Improvement Bonds of 2016B - 2,994,400 - 2,994,400 Area and Unit Charge - 1,808,700 - 1,808,700 Nonmajor Funds 7,100 873,100 225,000 1,105,200 Total $40,900 $7,771,400 $225,000 $8,037,300 Note 4 UNAVAILABLE REVENUE Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of unavailable revenue reported in the governmental funds are as follows: Property Special Taxes Assessments Receivable Receivable Total Major Funds: General Fund $86,821 $ - $86,821 G.O. Improvement Note of 2009A - 2,120,827 2,120,827 G.O. Improvement Bonds of 2016B - 2,994,379 2,994,37 9 Area and Unit Charge - 1,890,270 1,890,270 Nonmajor Funds 18,141 933,901 952,042 Total $104,962 $7,939,377 $8,044,339 57 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 5 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2019 was as follows: Beginning Ending Balance Increases Decreases Transfers Balance Governmental activities: Capital assets, not being depreciated: Land $3,320,059 $212,871 $ - $ - $3,532,930 Wetland credits 167,224 3,197 - - 170,421 Construction in progress 3,595,457 8,418,607 (380,816) (1,538,315) 10,094,933 Total capital assets, not being depreciated 7,082,740 8,634,675 (380,816) (1,538,315) 13,798,284 Capital assets, being depreciated: Buildings 11,300,659 1,035,169 - - 12,335,828 Office equipment and furniture 861,550 23,258 (170,958) - 713,850 Vehicles 4,556,854 218,796 (158,206) - 4,617,444 Machinery and shop equipment 2,707,945 262,778 (401,864) - 2,568,859 Other equipment 1,196,458 538,199 (179,260) - 1,555,397 Infrastructure 88,189,240 51,858 - - 88,241,098 Total capital assets, being depreciated 108,812,706 2,130,058 (910,288)0 110,032,476 Less accumulated depreciation for: Buildings 4,925,227 427,124 - - 5,352,351 Office equipment and furniture 590,839 60,511 (170,676) - 480,674 Vehicles 2,611,665 321,412 (158,206) - 2,774,871 Machinery and shop equipment 1,581,699 202,207 (302,576) - 1,481,330 Other equipment 865,840 33,625 (179,260) - 720,205 Infrastructure 61,217,609 1,944,036 - - 63,161,645 Total accumulated depreciation 71,792,879 2,988,915 (810,718)0 73,971,076 Total capital assets being depreciated - net 37,019,827 (858,857)(99,570)0 36,061,400 Governmental activities capital assets - net $44,102,567 $7,775,818 ($480,386) ($1,538,315) $49,859,684 Beginning Ending Balance Increases Decreases Transfers Balance Business-type activities: Capital assets, not being depreciated: Construction in progress $1,623,032 $3,234,156 ($271,666) $1,538,315 $6,123,837 Capital assets, being depreciated: Machinery and shop equipment 488,663 - (96,127) - 392,536 Water and sewer systems 49,838,432 282,346 - - 50,120,778 Total capital assets, being depreciated 50,327,095 282,346 (96,127)0 50,513,314 Accumulated depreciation for: Machinery and shop equipment 327,125 19,900 (94,092) - 252,933 Water and sewer systems 18,913,923 1,079,475 - - 19,993,398 Total accumulated depreciation 19,241,048 1,099,375 (94,092)0 20,246,331 Total capital assets being depreciated - net 31,086,047 (817,029)(2,035)0 30,266,983 Business-type activities capital assets - net $32,709,079 $2,417,127 ($273,701) $1,538,315 $36,390,820 58 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government $452,015 Public safety 303,536 Public services 2,232,514 Conservation of natural resources 850 Total depreciation expense - governmental activities $2,988,915 Business-type activities: Water $603,559 Sewer 495,816 Total depreciation expense - business-type activities $1,099,375 59 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 6 LONG-TERM DEBT The City issues general obligation bonds and certificates of indebtedness to provide funds for the acquisition and construction of major capital facilities and equipment. City indebtedness at December 31, 2019 consisted of the following: Final Issue Maturity Interest Original Payable Date Date Rate Issue 12/31/19 Governmental activities: General Obligation Bonds: G.O. TIF Bonds, Series 2007A 07/15/07 02/01/24 4.00% - 4.125% $4,215,000 $1,235,000 G.O. Refunding Bonds, Series 2012A 11/15/12 02/01/24 1.00% - 2.00%2,015,000 810,000 G.O. Bonds, Series 2015A 08/01/15 02/01/31 2.00% - 3.00% 3,095,000 2,510,000 EDA Lease Revenue Bonds, Series 2015B 10/01/15 04/01/36 2.00% - 3.00% 4,350,000 3,840,000 G.O. Utility Revenue Bonds, Series 2016A 11/23/16 02/01/27 2.00% 1,420,000 1,155,000 G.O. Tax Abatement Refunding Bonds, Series 2016C 11/23/16 02/01/23 1.00% - 1.50% 1,600,000 1,130,000 G.O. Bonds, Series 2018A 12/19/18 02/01/34 3.00% - 5.00% 6,915,000 6,915,000 Total General Obligation Bonds 23,610,000 17,595,000 Special Assessment Bonds: G.O. Imp & Utility Revenue Bonds, Series 2010A 07/09/10 02/01/20 2.00% - 3.00% 1,000,000 115,000 G.O. Improvement Bonds, Series, 2013A 07/15/13 02/01/24 1.25% - 4.00% 615,000 315,000 G.O. Improvement Bonds, Series 2014A 11/20/14 02/01/26 0.40% - 2.30% 2,645,000 1,420,000 G.O. Improvement Refunding Bonds, Series 2016B 11/23/16 02/01/21 0.875% - 1.50% 1,975,000 1,005,000 Total Special Assessment Bonds 6,235,000 2,855,000 Direct Borrowings: G.O. Certificates of Indebtedness, Series 2015 08/25/15 12/31/20 1.50% 963,000 201,000 G.O. Certificates of Indebtedness, Series 2017 03/01/17 12/31/20 1.00% 311,000 105,000 G.O. Certificates of Indebtedness, Series 2018 02/01/18 12/31/21 1.00% 303,900 200,000 G.O. Certificates of Indebtedness, Series 2019 02/01/19 12/31/22 1.00% 388,535 388,535 G.O. Capital Note, Series 2016A 04/14/16 02/01/26 2.00% 294,525 169,950 Total Direct Borrowings 2,260,960 1,064,485 Unamortized bond premiums 575,188 476,139 Unamortized bond discounts (38,362) (13,310) Compensated absences payable N/A 801,182 Total Government Activities $32,642,786 $22,778,496 Business-Type Activities: Compensated absences payable N/A $39,268 60 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 CHANGES IN LONG-TERM DEBT The following is a schedule of changes in City indebtedness for the year ended December 31, 2019: Beginning Ending Due Within Balance Additions Deletions Balance One Year Governmental Activities: General obligation bonds $18,780,000 $ - $1,185,000 $17,595,000 $1,240,000 Special assessment bonds 3,890,000 - 1,035,000 2,855,000 1,050,000 Direct borrowings 1,271,025 388,535 595,075 1,064,485 565,000 Total bonds and notes payable 23,941,025 388,535 2,815,075 21,514,485 2,855,000 Unamortized bond premiums 527,800 - 51,661 476,139 - Unamortized bond discounts (15,987) - (2,677) (13,310) - Compensated absences payable 813,872 525,435 538,125 801,182 478,866 Total governmental activities $25,266,710 $913,970 $3,402,184 $22,778,496 $3,333,866 Business-Type Activities: Compensated absences payable $32,878 $42,194 $35,804 $39,268 $38,596 DESCRIPTIONS OF LONG-TERM DEBT General Obligation Bonds – The bonds were issued for improvements or projects which benefited the City as a whole and, therefore, are repaid from ad valorem levies. Special Assessment Bonds – The 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. Utility 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. Certificates of Indebtedness – the certificates were issued to finance capital purchases in accordance with the City’s Capital Equipment Replacement Schedule and will be repaid from ad valorem levies. Capital Note – This note was issued to fund the cost of the acquisition of capital equipment to be used by the North Metro Telecommunications Commission in the operation of a cable communications system. The note will be repaid from franchise fee revenue. The City’s agreements related to direct borrowings do not contain any significant events of default or termination events with finance-related consequences, other than a commitment to pledge future property tax and franchise fee revenues. 61 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 DEBT SERVICE REQUIREMENTS Future principal and interest payments required to retire long-term debt are as follows: Years Ending December 31 Principal Interest Principal Interest 2020 $2,290,000 $594,534 $565,000 $16,911 2021 2,515,000 541,386 264,000 6,365 2022 1,830,000 483,876 165,360 3,395 2023 1,905,000 428,672 34,650 1,403 2024 1,665,000 372,600 35,475 710 2025-2029 5,250,000 1,273,754 - - 2030-2034 4,425,000 484,200 - - 2035-2036 570,000 23,000 - - Total $20,450,000 $4,202,022 $1,064,485 $28,784 Bonded Debt Direct Borrowings It is not practicable to determine the specific year for payment of long-term compensated absences payable. For governmental activities, compensated absences are liquidated by the General Fund. For business-type activities, compensated absences are liquidated by the Water and Sewer Funds. DEFERRED AD VALOREM TAX LEVIES – BONDED DEBT All long-term bonded indebtedness is backed by the full faith and credit of the City, including special assessment and revenue bond issues. General Obligation bond issues are financed by ad valorem tax levies and special assessment bond issues 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. The future scheduled tax levies are not shown as assets in the accompanying financial statements. Future scheduled tax levies for all bonds outstanding at December 31, 2019 totaled $17,244,281. 62 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 REVENUE PLEDGED Future revenue pledged for the payment of long-term debt is as follows: Remaining Principal Pledged Term of Principal and Interest Revenue Bond Issue Use of Proceeds Type Pledge and Interest Paid Received Certificates of Indebtedness Equipment purchases Ad valorem taxes 2016 - 2022 $912,989 $578,365 $604,408 2007A G.O. TIF Bonds Infrastructure improvements 2008 - 2023 $1,368,447 $255,181 $255,181 2011 - 2019 $116,725 $110,879 $110,524 2012A G.O. Bonds Infrastructure improvements 2013 - 2023 $840,843 $243,445 $179,211 2013A Improvement Bonds Infrastructure improvements Special assessments 2014 - 2023 $346,800 $73,755 $39,000 2014A Improvement Bonds Infrastructure improvements Special assessments 2015 - 2025 $1,488,711 $410,113 $1,198 2015A G.O. Bonds Infrastructure improvements Ad valorem taxes 2016 - 2030 $2,879,781 $260,168 $268,886 2015B EDA Lease Revenue Bonds Construction of a fire station Ad valorem taxes 2016 - 2035 $5,084,631 $303,243 $314,208 2016A Capital Note Cable communications equipment Franchise fees 2016 - 2025 $180,279 $38,029 $38,028 2016A Utility Revenue Bonds Water infrastructure improvements 2017 - 2026 $1,248,750 $160,255 $160,800 2016B Improvement Bonds Infrastructure improvements 2017 - 2020 $1,019,693 $507,585 $366,450 2016C G.O. Tax Abatement Bonds Infrastructure improvements Ad valorem taxes 2017 - 2022 $1,163,085 $262,483 $287,787 2018A G.O. Bonds Infrastructure improvements 2019-2033 $9,094,557 $174,045 $835,787 Current Year 2010A Improvement and Utility Revenue Bonds General and water infrastructure improvements Special assessments, trunk utility charges Revenue Pledged Ad valorem taxes, trunk utility charges, special assessments Tax increment, MSA funding via transfers Ad valorem taxes, special assessments Special assessments, tax increment Trunk utility charges via transfers 63 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 7 DEFINED BENEFIT PENSION PLANS – PERA A. 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 (with the exception of employees covered by PEPFF) and certain part-time employees of the City are covered by the General Employees Retirement Fund (GERF). GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 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 local relief associations that elected to merge with and transfer assets and administration to PERA. B. 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. 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 members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2% of average salary for each of the first ten years and 1.7% of average salary for each additional year. Under Method 2, the accrual rate for Coordinated Plan members is 1.7% of average salary for all years 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. For members hired on or after July 1, 1989 normal retirement age is the age for unreduced Social Security benefits capped at 66. Annuities, disability benefits, and survivor benefits are increased effective every January 1. Beginning January 1, 2019, the postretirement increase will be equal to 50% of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of 1.5%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increase. For members retiring on January 1, 2024 or later, the increase will be delayed until normal retirement 64 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. 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 bases 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. A full, unreduced pension is earned when members are age 55 and vested, or for members who were first hired prior to July 1, 1989, when age plus years of service equal at least 90. Annuities, disability benefits, and survivor benefits are increased effective every January 1. Beginning January 1, 2019, the postretirement increase will be fixed at 1%. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated increase. C. 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 Coordinated Plan members were required to contribute 6.5% of their annual covered salary in fiscal year 2019; the City was required to contribute 7.5% for Coordinated Plan members. The City contributions to the GERF for the year ended December 31, 2019 were $208,807. The City contributions were equal to the required contributions as set by state statute. 2. PEPFF Contributions Police and Fire member’s contribution rates increased from 10.8% of pay to 11.3% and employer rates increased from 16.2% to 16.95% on January 1, 2019. The City contributions to the PEPFF for the year ended December 31, 2019 were $452,731. The City contributions were equal to the required contributions as set by state statute. D. PENSION COSTS 1. GERF Pension Costs At December 31, 2019, the City reported a liability of $2,200,453 for its proportionate share of GERF’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $16 million to the fund in 2019. The State of Minnesota is considered a non-employer contributing entity and the state’s contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability associated with the City totaled $68,330. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an 65 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 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, 2018 through June 30, 2019, relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2019, the City’s proportionate share was 0.0398%, which was an increase of 0.0017% from its proportionate share measured as of June 30, 2018. City's proportionate share of the net pension liability $2,200,453 State of Minnesota’s proportionate share of the net pension liability associated with the City 68,330 Total $2,268,783 For the year ended December 31, 2019, the City recognized pension expense of $258,464 for its proportionate share of the GERF’s pension expense. In addition, the City recognized an additional $5,117 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the GERF. At December 31, 2019, 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: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $61,578 $ - Changes in actuarial assumptions - 174,770 Net collective between projected and actual investment earnings - 224,356 Changes in proportion 124,187 113,155 Contributions paid to PERA subsequent to the measurement date 103,255 - Total $289,020 $512,281 66 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 $103,255 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 during 2020. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended Pension December 31, Expense 2020 ($103,476) 2021 (208,887) 2022 (17,699) 2023 3,546 2024 - Thereafter - ($326,516) 2. PEPFF Pension Costs At December 31, 2019, the City reported a liability of $2,711,539 for its proportionate share of the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2019 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 proportionate share 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, 2018 through June 30, 2019, relative to the total employer contributions received from all of PERA’s participating employers. At June 30, 2019, the City’s proportionate share was 0.2547%, which was a decrease of 0.0121% from its proportion measured as of June 30, 2018. The City also recognized $34,384 for the year ended December 31, 2019 as revenue (and an offsetting reduction of net pension liability) 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, until the plan is 90% funded or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90% funded, whoever occurs later. In addition, the state will pay $4.5 million on October 1, 2018 and October 1, 2019 in direct state aid. Thereafter, by October 1 of each year, the state will pay $9 million until full funding is reached or July 1, 2048, whichever is earlier. For the year ended December 31, 2019, the City recognized pension expense of $406,851 for its proportionate share of the PEPFF’s pension expense. 67 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 At December 31, 2019, 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: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual economic experience $115,694 $421,284 Changes in actuarial assumptions 2,289,610 3,079,016 Net collective between projected and actual investment earnings - 564,922 Changes in proportion 138,350 127,759 Contributions paid to PERA subsequent to the measurement date 234,728 - Total $2,778,382 $4,192,981 A total of $234,728 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 during 2020. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as outflows: Year Ended Pension December 31, Expense 2020 ($175,200) 2021 (382,258) 2022 (1,106,431) 2023 (8,694) 2024 23,256 Thereafter - ($1,649,327) The net pension liability will be liquidated by the general, water and sewer funds. E. ACTUARIAL ASSUMPTIONS The total pension liability in the June 30, 2019 actuarial valuation was determined using an individual entry- age normal actuarial cost method and the following actuarial assumptions: Inflation 2.50% per year Active Member Payroll Growth 3.25% per year Investment Rate of Return 7.50% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors, and disabilitants for all plans were based on RP 2014 tables for males or females, as appropriate, with slight adjustments to fit PERA’s experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25% per year for the General Employees Plan and 1.0% per year for the Police and Fire Plan. 68 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Actuarial assumptions used in the June 30, 2019 valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the General Employees Plan was completed in 2019. The most recent four-year experience study for Police and Fire Plan was completed in 2016. The following changes in actuarial assumptions and plan provisions occurred in 2019: General Employees Fund Changes in Actuarial Assumptions: The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions: The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. Police and Fire Fund The mortality projection scale was changed from MP-2017 to MP-2018. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return 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 geometric real rates of return for each major asset class are summarized in the following table: Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic equity 35.5% 5.10% International equity 17.5% 5.30% Fixed Income 20.0% 0.75% Private markets 25.0% 5.90% Cash equivalents 2.0% 0.00% Totals 100% F. DISCOUNT RATE The discount rate used to measure the total pension liability in 2019 was 7.5%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at the rate set in Minnesota statutes. Based on these assumptions, the fiduciary net position of the GERF and the PEPFF was projected to be available to make all projected future benefit payments of current plan members. 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. 69 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 G. PENSION LIABILITY 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: 1% Decrease in 1% Increase in Discount Rate (6.5%) Discount Rate (7.5%) Discount Rate (8.5%) City's proportionate share of the GERF net pension liability $3,617,426 $2,200,453 $1,030,460 City's proportionate share of the PEPFF net pension liability $5,926,920 $2,711,539 $52 H. 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 at www.mnpera.org. I. PENSION EXPENSE Pension expense recognized by the City for the year ended December 31, 2019 is as follows: GERF $263,581 PEPFF 406,851 Fire Pension Plan (Note 8) 44,225 Total $714,657 Note 8 DEFINED BENEFIT PENSION PLAN – FIRE DIVISION A. PLAN DESCRIPTION The Lino Lakes Public Safety Department – Fire Division participates in the Statewide Volunteer Firefighter Retirement Plan (SVF), an agent multiple-employer lump-sum defined benefit pension plan administered by the Public Employees Retirement Association of Minnesota (PERA). The SVF plan covers volunteer firefighters of municipal fire departments or independent nonprofit firefighting corporations that have elected to join the plan. At December 31, 2019 (measurement date), the plan covered 24 active firefighters and zero vested terminated fire fighters whose pension benefits are deferred. The plan is established and administered in accordance with Minnesota Statutes, Chapter 353G. 70 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 B. BENEFITS PROVIDED The SVF provides lump-sum retirement, death, and supplemental benefits to covered firefighters and survivors. Benefits are paid based on the number of years of service multiplied by a benefit level per year of service approved by the City of Lino Lakes. Members are eligible for a lump-sum retirement benefit at 50 years of age with five years of service. Plan provisions include a pro-rated vesting schedule that increases from 5 years at 40% through 20 years at 100%. C. CONTRIBUTIONS The SVF is funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota statutes, and voluntary City contributions. The State of Minnesota contributed $121,630 in fire state aid to the plan for the year ended December 31, 2019. Required employer contributions are calculated annually based on statutory provisions. The City’s statutorily-required contributions to the SVF plan for the year ended December 31, 2019 were $0. The City’s contributions were equal to the required contributions as set by state statute, if applicable. D. PENSION COSTS At December 31, 2019, the City reported a net pension asset of $317,669 for the SVF plan. The net pension asset was measured as of December 31, 2019. The total pension liability used to calculate the net pension asset in accordance with GASB 68 was determined by PERA applying an actuarial formula to specific census data certified by the fire department. The following table presents the changes in net pension liability during the year. Plan Net Total Fiduciary Pension Pension Net Liability Liability Position (Asset) (a)(b)(a-b) Beginning balance December 31, 2018 $224,407 $389,320 ($164,913) Changes for the year: Service cost 52,320 - 52,320 Interest on pension liability 16,603 - 16,603 Actuarial experience (gains) / losses (22,680) - (22 ,680) Projected investment earnings - 23,359 (23,359) Contributions - employer - - - Contributions - State of MN - 121,630 (121,630) Asset (gain) / loss - 54,704 (54,704) Benefit payouts - - - PERA administrative fee - (694)694 Net changes 46,243 198,999 (152,756) Balance end of year December 31, 2019 $270,650 $588,319 ($317,669) There were no benefit provision changes during the measurement period. 71 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 For the year ended December 31, 2019, the City recognized pension expense of $44,225. At December 31, 2019, the City reported deferred inflows of resources from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Difference between projected and actual investment earnings $ - $27,039 Differences between expected and actual economic experience 41,856 24,374 Total $41,856 $51,413 Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended Pension December 31, Expense 2020 ($291) 2021 1,290 2022 4,921 2023 (15,477) 2024 - Thereafter - E. ACTUARIAL ASSUMPTIONS The total pension liability at December 31, 2019, was determined using the entry age normal actuarial cost method and the following actuarial assumptions: Retirement eligibility at the later of age 50 or 20 years of service Investment rate of return of 6.0% Inflation rate of 3.0% There were no changes in actuarial assumptions in 2019 F. DISCOUNT RATE The discount rate used to measure the total pension liability was 6.0%. The projection of cash flows used to determine the discount rate assumed that contributions to the SVF plan will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. 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. 72 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 G. PENSION LIABILITY SENSITIVITY The following presents the City’s net pension asset for the SVF plan, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s net pension asset would be if it were calculated using a discount rate 1% lower or 1% higher than the current discount rate: 1% Decrease in 1% Increase in Discount Rate (5.0%) Discount Rate (6.0%) Discount Rate (7.0%) Net pension asset $296,964 $317,669 $337,322 H. PLAN INVESTMENTS 1. Investment Policy The Minnesota State Board of Investment (SBI) is established by Article XI of the Minnesota Constitution to invest all state funds. Its membership as specified in the Constitution is comprised of the Governor (who is designated as chair of the Board), State Auditor, Secretary of State and State Attorney General. All investments undertaken by the SBI are governed by the prudent person rule and other standards codified in Minnesota Statutes, Chapter 11A and Chapter 353G. Within the requirements defined by state law, the SBI, with assistance of the SBI staff and the Investment Advisory Council, establishes investment policies for all funds under its control. These investment policies are tailored to the particular needs of each fund and specify investment objectives, risk tolerance, asset allocation, investment management structure and specific performance standards. Studies guide the on-going management of the funds and are updated periodically. 2. Asset Allocation To match the long-term nature of the pension obligations, the SBI maintains a strategic asset allocation for the SVF that includes allocations to domestic equity, international equity, bonds and cash equivalents. The long-term target asset allocation and long-term expected real rate of return is the following: Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic Stocks 35% 5.10% International Stocks 15% 5.30% Bonds 45% 0.75% Cash 5% 0.00% 100% The 6% long-term expected rate of return on pension plan investments was determined using a building-block method. Best estimates for expected future real rates of return (expected returns, net of inflation) were developed for each asset class using both long-term historical returns and long-term capital market expectations from a number of investment management and consulting organizations. The asset class estimates and the target allocations were then combined to produce a 73 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 geometric, long-term expected real rate of return for the portfolio. Inflation expectations were applied to derive the nominal rate of return for the portfolio. 3. Description of Significant Investment Policy Changes During the Year The SBI made no significant changes to their investment policy during fiscal year 2019 for the Volunteer Firefighter Fund. I. PENSION PLAN FIDUCIARY NET POSITION Detailed information about the SVF plan’s fiduciary net position at June 30, 2019 is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org. Note 9 POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) A. PLAN DESCRIPTION In addition to providing the pension benefits described in Notes 7 and 8, the City provides post- employment health care benefits, as defined in paragraph B, through its group health insurance plan (the plan). The plan is a single-employer defined benefit OPEB plan administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. The plan does not issue a stand-alone financial report. B. BENEFITS PROVIDED The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. 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. The City provides health coverage for peace officers or firefighters disabled or killed in the line of duty in accordance with Minnesota Statute 299A.465. The amount of coverage provided is equal to the employer portion of health insurance premiums that would have otherwise been paid if the officer or firefighter was an active employee. All health care coverage is provided through the City’s group health insurance plans. The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. Upon a retiree reaching age 65, Medicare becomes the primary insurer and the City’s plan becomes secondary. 74 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 C. PARTICIPANTS As of the January 1, 2019 actuarial valuation, participants of the plan consisted of: Active employees 42 Inactive employees or beneficiaries currently receiving benefits 4 Total 46 D. TOTAL OPEB LIABILITY AND CHANGES IN TOTAL OPEB LIABILITY The City’s total OPEB liability of $560,631 was measured as of December 31, 2019 and was determined by an actuarial valuation as of January 1, 2019. Changes in the total OPEB liability during 2019 were: Balance - beginning of year $756,644 Changes for the year: Service cost 53,789 Interest 10,893 Changes of benefit terms - Differences between expected and actual experience (245,168) Changes in assumptions - Benefit payments (15,527) Net changes (196,013) Balance - end of year $560,631 The OPEB liability will be liquidated by the general, water and sewer funds. E. ACTUARIAL ASSUMPTIONS AND OTHER INPUTS The total OPEB liability in the January 1, 2019 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation 3.00% Salary increases 3.00% Discount rate 2.00% Investment rate of return 2.00% Healthcare cost trend rates -5.37% for 2019, 7% for 2020, decreasing 1% per year to an ultimate rate of 3% for 2024 and beyond Retirees' share of benefit-related costs 100% The previous actuarial valuation included a liability for benefits provided to the beneficiary of a deceased employee. As of the most recent actuarial valuation date, the beneficiary was not enrolled in the City’s plan, but has been assigned a 20% probability of returning to the plan. 75 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Since the plan is funded on a pay-as-you-go basis, both the discount rate and the investment rate of return was based on the 20 year AA rated municipal bond rate as of January 14, 2020, obtained from www.fmsbonds.com/market-yields. Mortality rates were based on the SOA RP-2014 Total Dataset Mortality tables with Scale MP-2019. Based on past experience of the plan, 90% of future retirees are assumed to continue medical coverage until age 65. 25% of future police/fire retirees are assumed to select spousal coverage. No spousal coverage is assumed for other future retirees. 50% of police/fire employees are assumed to retire at age 55, the balance at age 65. 50% of other City employees are assumed to retire at age 62, the balance at age 65. F. SENSITIVITY OF THE TOTAL OPEB LIABILITY TO CHANGES IN THE DISCOUNT RATE The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1% lower (1%) or 1% higher (3%) than the current discount rate: 1% Decrease Discount Rate 1% Increase 1%2%3% Total OPEB liability $595,065 $560,631 $526,577 G. SENSITIVITY OF THE TOTAL OPEB LIABILITY TO CHANGES IN THE HEALTHCARE COST TREND RATES The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower (6% decreasing to 2%) or 1% higher (8% decreasing to 4%) than the current healthcare cost trend rates: Healthcare Cost 1% Decrease Trend Rates 1% Increase (6% decreasing to 2%) (7% decreasing to 3%) (8% decreasing to 4%) Total OPEB liability $499,408 $560,631 $633,959 H. OPEB EXPENSE AND DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES RELATED TO OPEB For the year ended December 31, 2019, the City recognized $39,649 of OPEB expense. At December 31, 2019, the City reported deferred outflows and inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $11,786 $279,081 76 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended OPEB December 31,Expense 2020 ($25,033) 2021 (25,033) 2022 (25,033) 2023 (25,033) 2024 (25,033) Thereafter (142,130) ($267,295) Note 10 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 2019 as follows: Fund Balance Deficit Major Funds: G.O. Improvement Bonds of 2016B ($2,282,686) Nonmajor Funds: G.O. Improvement Bonds of 2010A (355) Tax Increment Financing 1-11 (800,286) Cedar Street Reconstruction (87,834) The City intends to fund these deficits through future tax levies, special assessment collections, tax increments, transfers from other funds, and various other sources. 77 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 B. EXPENDITURES IN EXCESS OF BUDGET The following is a listing of departments within the General Fund that exceeded budget appropriations: Final Budget Actual Overage General government: Administration $511,388 $513,627 $2,239 Legal consultants 125,000 132,227 7,227 Public services: Parks 670,639 743,144 72,505 Conservation of natural resources: Forestry 61,897 71,280 9,383 Community development: Economic development 111,248 112,912 1,664 Note 11 INTERFUND RECEIVABLES AND PAYABLES Short-term advances to funds that have insufficient cash balances are classified as advances to/from other funds. Long-term interfund loans are classified as interfund loan receivable/payable. A summary of interfund receivables and payables at December 31, 2019 is as follows: Receivable Payable Short-term advances: Major Funds: G.O. Improvement Note of 2009A $ - $729 MSA Construction 729 - Nonmajor Funds: Closed Bond Fund 85,224 - Cedar Street Reconstruction - 85,224 $85,953 $85,953 Long-term interfund loans: Major Funds: G.O. Improvement Bonds of 2016B $ - $2,876,643 Sewer Fund 559,110 - Nonmajor Funds: Closed Bond Fund 800,364 - Building and Facilities 2,317,533 - Tax Increment Financing 1-11 - 800,364 $3,677,007 $3,677,007 78 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 12 INTERFUND TRANSFERS Individual fund transfers for fiscal year 2019 are as follows: Transfer In Transfer Out Major Funds: General Fund $256,480 $943,553 G.O. Improvement Note of 2009A - 62,605 G.O. Improvement Bonds of 2016B 366,450 - Area and Unit Charge - 580,741 MSA Construction 62,605 255,181 Water Fund - 226,722 Nonmajor governmental funds 2,092,128 708,861 Total $2,777,663 $2,777,663 During 2019, transfers were made to provide funding for capital improvement projects and capital outlay in accordance with the City’s capital improvement plan. Transfers were also made to provide resources for debt service payments, to close debt service funds, and to allocate financial resources to funds that received benefit from services provided by another fund. These transfers are routine and consistent with past practices. 79 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 13 FUND BALANCE At December 31, 2019, a summary of the governmental fund balance classifications is as follows: G.O.Other General Improvement Area and MSA 2018 Street Governmental Fund Bonds of 2016B Unit Charge Construction Reconstructio n Funds Total Nonspendable: Prepaid items $296,907 $ - $ - $ - $ - $2,842 $299,749 Corpus of permanent fund - - - - - 100,000 100,000 Total nonspendable 296,907 0 0 0 0 102,842 399,749 Restricted for: Debt service - - - - - 4,187,934 4,187,934 Capital improvements - - - - 380,732 900,326 1,281,058 Economic development - - - - - 225,000 225,000 Blue Heron Days - - - - - 11,120 11,120 Narcotics and forfeiture funds - - - - - 204,648 204,648 K-9 Unit purposes - - - - - 19,604 19,604 Tax increment purposes - - - - - 675,228 675,228 Environmental purposes - - - - - 45,870 45,870 Total restricted 0 0 0 0 380,732 6,269,730 6,650,462 Committed for: Future projects 443,900 - - - - - 443,900 Recreation purposes - - - - - 25,738 25,738 Economic development - - - - - 9,714 9,714 Cable TV purposes - - - - - 140,033 140,033 Total committed 443,900 0 0 0 0 175,485 619,385 Assigned for: Capital improvements - - 8,307,394 3,733,517 630,213 7,001,582 19,672,706 Unassigned 6,052,388 (2,282,686) - - - (888,475) 2,881,227 Total fund balance $6,793,195 ($2,282,686) $8,307,394 $3,733,517 $1,010,945 $12,661,164 $30,223,529 Note 14 PROPERTY UNDER LEASE AGREEMENT The City entered into an agreement to lease space within its City Hall Complex, which at year end had a cost of $4,744,742 and a net book value of $1,488,852, to New Creations Child Care and Learning Center, LLC. The lease expires June 30, 2029, although the City has the option to terminate the lease with no less than 12 months notice any time after the 61st month of the lease. Approximate future minimum lease payments receivable under the operating lease are as follows: Year Ending December 31, Amount 2020 $82,653 2021 85,120 2022 87,679 2023 90,329 2024 93,025 Thereafter 454,022 $892,828 80 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 15 TAX INCREMENT DISTRICTS The City is the administrating authority for four 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. The following table reflects values at December 31, 2019: TIF 1-5 TIF 1-11 TIF 1-12 Cottage TIF 1-10 Woods Clearwater Homesteads Panattoni Edge Creek Authorizing law M.S. 469 M.S. 469 M.S. 469 M.S. 469 Year established 1994 2004 2005 2006 Final year of district 2022 2023 2031 2026 Net tax capacity: Original $128 $15,869 $21,032 $21,416 Current (payable 2019) 40,398 243,818 224,749 371,626 Captured - retained $40,270 $227,949 $203,717 $350,210 Note 16 COMMITMENTS AND CONTINGENCIES A. LITIGATION Existing and pending lawsuits, claims and other actions in which the City is a defendant are either covered by insurance, of an immaterial amount, or, in the judgment of the City’s management, remotely recoverable by plaintiffs. B. 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, 2019. C. COMMITTED CONTRACTS At December 31, 2019, the City had commitments of $4,910,154 for uncompleted construction contracts. In addition, the City has entered into construction contracts during 2020 totaling $2,467,839. 81 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 17 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 18 INSURANCE RECOVERY During 2019, the City received insurance proceeds in the amount of $711,854 relating to storm damage. The insurance proceeds were expended during the year to replace the roof of the Civic Complex. Note 19 PRESENTATION OF DEPOSITS PAYABLE For the year ended December 31, 2019, the City implemented GASB Statement No. 84, Fiduciary Activities. Based on the guidance provided by GASB 84, the City’s developer deposits no longer meet the definition of a fiduciary activity. Therefore, the amounts and activity previously reported in a fiduciary fund are now reported in the General Fund. This reclassification had no effect on beginning net position or fund balance. 82 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Note 20 RECENTLY ISSUED ACCOUNTING STANDARDS The Governmental Accounting Standards Board (GASB) recently approved the following statements which were not implemented for these financial statements: Statement No. 87 Leases. The provisions of this Statement are effective for reporting periods beginning after June 15, 2021. Statement No. 91 Conduit Debt Obligations. The provisions of this Statement are effective for reporting periods beginning after December 15, 2021. Statement No. 92 Omnibus 2020. The provisions of this Statement are effective for reporting periods beginning after June 15, 2021. Statement No. 93 Replacement of Interbank Offered Rates. The provisions of this Statement contain multiple effective dates, the first being for reporting periods beginning after June 15, 2020. Statement No. 94 Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The provisions of this Statement are effective for reporting periods beginning after June 15, 2022. The effect these standards may have on future financial statements is not determinable at this time, but it is expected that Statement No. 87 may have a material impact. Note 21 SUBSEQUENT EVENTS AND UNCERTAINTIES The COVID-19 pandemic continues to cause rapidly changing disruptions worldwide. Management has evaluated these conditions and believes that it is not possible to reasonably estimate the financial impact, if any, of COVID-19 on the City’s financial statements at December 31, 2019. 83 - This page intentionally left blank - 84 REQUIRED SUPPLEMENTARY INFORMATION 85 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 1 of 6 For The Year Ended December 31, 2019 Budgeted Amounts 2019 Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Revenues: General propery taxes: Current and delinquent $8,228,124 $7,066,644 $7,058,562 ($8,082) Fiscal disparities - 1,161,480 1,102,010 (59,470) Total general property taxes 8,228,124 8,228,124 8,160,572 (67,552) Licenses and permits: Business 137,600 137,285 145,822 8,537 Non-business 764,859 757,859 795,747 37,888 Total licenses and permits 902,459 895,144 941,569 46,425 Intergovernmental: State: Police state aid 224,661 249,661 251,553 1,892 OTS grant - - 22,033 22,033 MSA maintenance 250,000 255,000 255,335 335 Other 14,000 45,185 45,350 165 County solid waste grant 88,445 88,445 71,018 (17,427) Total intergovernmental 577,106 638,291 645,289 6,998 Special assessments 4,000 4,000 751 (3,249) Charges for services: General government 18,477 35,677 43,213 7,536 Engineering and planning fees 26,982 26,982 29,461 2,479 Public safety 200,800 190,800 181,858 (8,942) Public services 11,000 18,000 18,120 120 Investment management charge to other funds 50,000 50,000 50,000 - Total charges for services 307,259 321,459 322,652 1,193 Fines and forfeits 119,132 99,132 98,390 (742) Investment earnings 30,000 30,000 159,482 129,482 Miscellaneous: Gas franchise fees 50,000 55,000 58,706 3,706 Building lease revenue 107,463 107,463 107,963 500 Refunds and reimbursements 50,000 20,000 19,103 (897) Donations 500 500 550 50 Other 3,500 5,700 3,957 (1,743) Total miscellaneous 211,463 188,663 190,279 1,616 Total revenues 10,379,543 10,404,813 10,518,984 114,171 See accompanying notes to the required supplementary information. 86 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 2 of 6 For The Year Ended December 31, 2019 Budgeted Amounts 2019 Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Expenditures: General government: Mayor and city council: Current: Personal services 41,841 41,841 41,133 708 Other services and charges 23,200 19,700 19,453 247 Contractual services 17,500 17,500 18,061 (561) Total mayor and city council 82,541 79,041 78,647 394 Elections: Current: Personal services 10,082 10,082 8,879 1,203 Supplies 800 800 461 339 Other services and charges 2,000 2,000 1,518 482 Contractual services 500 - 4,741 (4,741) Capital outlay 4,800 4,800 - 4,800 Total elections 18,182 17,682 15,599 2,083 Administration: Current: Personal services 493,703 480,569 475,777 4,792 Other services and charges 22,860 22,860 31,336 (8,476) Contractual services 7,959 7,959 6,514 1,445 Total administration 524,522 511,388 513,627 (2,239) Finance: Current: Personal services 348,805 348,805 350,195 (1,390) Supplies 1,000 1,000 202 798 Other services and charges 202,500 234,190 217,010 17,180 Contractual services 106,167 106,167 106,999 (832) Total finance 658,472 690,162 674,406 15,756 Cable TV: Current: Personal services 2,643 2,643 2,471 172 Legal consultants: Current: Contractual services 125,000 125,000 132,227 (7,227) Engineering/planning: Current: Contractual services 112,760 112,760 103,307 9,453 See accompanying notes to the required supplementary information. 87 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 3 of 6 For The Year Ended December 31, 2019 Budgeted Amounts 2019 Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Expenditures: (continued) General government: (continued) Charter commission: Current: Other services and charges 2,500 1,000 325 675 Government buildings: Current: Personal services 2,487 2,487 2,374 113 Supplies 42,400 42,400 35,283 7,117 Other services and charges 380,245 380,245 354,684 25,561 Contractual services 68,200 68,200 75,287 (7,087) Capital outlay - 998,334 969,313 29,021 Total government buildings 493,332 1,491,666 1,436,941 54,725 Total general government 2,019,952 3,031,342 2,957,550 73,792 Public safety: Police: Current: Personal services 3,747,049 3,650,720 3,639,202 11,518 Supplies 36,025 36,025 30,710 5,315 Other services and charges 126,786 126,786 117,918 8,868 Contractual services 41,450 41,450 39,087 2,363 Capital outlay 24,802 24,802 18,087 6,715 Total police 3,976,112 3,879,783 3,845,004 34,779 Fire protection: Current: Personal services 529,734 483,751 442,298 41,453 Supplies 25,650 23,312 15,502 7,810 Other services and charges 46,355 46,355 45,810 545 Contractual services 42,783 42,783 31,564 11,219 Capital outlay 29,750 32,088 29,764 2,324 Total fire protection 674,272 628,289 564,938 63,351 Building inspection: Current: Personal services 331,033 331,033 307,747 23,286 Supplies 2,150 2,150 1,221 929 Other services and charges 11,240 11,240 9,997 1,243 Contractual services 3,325 3,325 2,240 1,085 Total building inspection 347,748 347,748 321,205 26,543 Total public safety 4,998,132 4,855,820 4,731,147 124,673 See accompanying notes to the required supplementary information. 88 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 4 of 6 For The Year Ended December 31, 2019 Budgeted Amounts 2019 Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Expenditures: (continued) Public services: Streets: Current: Personal services 611,149 611,149 633,020 (21,871) Supplies 144,000 139,000 114,227 24,773 Other services and charges 110,600 100,600 80,955 19,645 Contractual services 88,000 88,000 106,711 (18,711) Capital outlay 10,100 10,100 8,843 1,257 Total streets 963,849 948,849 943,756 5,093 Fleet: Current: Personal services 127,684 127,684 132,370 (4,686) Supplies 168,000 158,000 165,017 (7,017) Other services and charges 82,273 82,273 94,496 (12,223) Contractual services 70,000 65,000 35,958 29,042 Capital outlay - 5,000 4,986 14 Total fleet 447,957 437,957 432,827 5,130 Parks: Current: Personal services 493,104 493,104 493,422 (318) Supplies 43,000 49,185 56,219 (7,034) Other services and charges 39,650 39,650 74,556 (34,906) Contractual services 73,700 73,700 112,127 (38,427) Capital outlay 15,000 15,000 6,820 8,180 Total parks 664,454 670,639 743,144 (72,505) Recreation: Current: Personal services 169,509 146,364 138,541 7,823 Supplies 2,500 2,500 2,517 (17) Other services and charges 17,800 17,800 16,060 1,740 Contractual services 500 500 300 200 Capital outlay 10,000 10,000 9,895 105 Total recreation 200,309 177,164 167,313 9,851 Total public services 2,276,569 2,234,609 2,287,040 (52,431) See accompanying notes to the required supplementary information. 89 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 5 of 6 For The Year Ended December 31, 2019 Budgeted Amounts 2019 Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Expenditures: (continued) Conservation of natural resources: Forestry: Current: Personal services 38,567 38,567 45,230 (6,663) Supplies 2,950 2,950 1,943 1,007 Other services and charges 380 380 271 109 Contractual services 20,000 20,000 23,836 (3,836) Total forestry 61,897 61,897 71,280 (9,383) Environmental: Current: Personal services 52,505 52,505 52,029 476 Supplies 1,000 1,000 1,384 (384) Other services and charges 9,430 9,430 5,565 3,865 Contractual services 1,100 1,100 1,169 (69) Total environmental 64,035 64,035 60,147 3,888 Solid waste abatement: Current: Personal services 55,525 55,525 52,424 3,101 Supplies 3,000 3,000 1,458 1,542 Other services and charges 7,220 7,220 766 6,454 Contractual services 22,700 22,700 21,844 856 Total solid waste abatement 88,445 88,445 76,492 11,953 Total conservation of natural resources 214,377 214,377 207,919 6,458 Community development: Community development: Current: Personal services 212,964 211,906 210,409 1,497 Supplies 100 100 - 100 Other services and charges 7,900 7,900 5,017 2,883 Contractual services 925 925 625 300 Total community development 221,889 220,831 216,051 4,780 Economic development: Current: Personal services 21,652 18,423 15,727 2,696 Other services and charges 88,600 92,100 96,490 (4,390) Contractual services 725 725 695 30 Total economic development 110,977 111,248 112,912 (1,664) See accompanying notes to the required supplementary information. 90 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 6 of 6 For The Year Ended December 31, 2019 Budgeted Amounts 2019 Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Expenditures: (continued) Planning and zoning commission: Current: Personal services 107,970 107,970 108,059 (89) Supplies 200 200 186 14 Other services and charges 16,250 16,250 10,551 5,699 Contractual services 38,000 13,000 5,297 7,703 Total planning and zoning commission 162,420 137,420 124,093 13,327 Total community development 495,286 469,499 453,056 16,443 Other: Contingency 75,000 - - - Total expenditures 10,079,316 10,805,647 10,636,712 168,935 Revenues over (under) expenditures 300,227 (400,834) (117,728) 283,106 Other financing sources (uses): Insurance recovery - 711,854 711,854 - Transfers in - 256,480 256,480 - Transfers out (895,000) (943,145) (943,553)(408) Total other financing sources (uses)(895,000) 25,189 24,781 (408) Net change in fund balance ($594,773) ($375,645) (92,947) $282,698 Fund balance - January 1 6,886,142 Fund balance - December 31 $6,793,195 See accompanying notes to the required supplementary information. 91 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 11 SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS For The Last Ten Years 2019 2018 2017 Total OPEB liability: Service cost $53,789 $16,547 $16,990 Interest 10,893 21,355 22,542 Changes of benefit terms - - - Differences between expected and actual experience (245,168) - (51,083) Changes in assumptions - - - Benefit payments (15,527)(27,798)(31,536) Net change in total OPEB liability (196,013)10,104 (43,087) Total OPEB liability - beginning 756,644 746,540 789,627 Total OPEB liability - ending $560,631 $756,644 $746,540 Covered-employee payroll $3,379,110 $3,240,932 $3,499,836 Total OPEB liability as a percentage of covered-employee payroll 16.6%23.3%21.3% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2017 and is intended to show a ten year trend. Additional years will be added as they become available. See accompanying notes to the required supplementary information. 92 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 12 SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY - GENERAL EMPLOYEES RETIREMENT FUND For The Last Ten Years City's City's Proportionate Proportionate Plan State's Share of the Share of the Fiduciary Proportionate Net Pension Net Net Share Liability Pension Position City's City's (Amount) and the State's Liability as a Proportionate Proportionate of the Net Proportionate as a Percentage Share Share (Amount) Pension Share of the Net Percentage of the Measurement Fiscal Year (Percentage) of of the Net Liability Pension Liability of its Total Date Ending the Net Pension Pension Associated Associated with Covered Covered Pension June 30, December 31, Liability Liability (a) with City (b) City (a+b) Payroll (c) Payroll ((a+b)/c) Liability 2015 2015 0.0410%$2,124,883 $ - $2,124,883 $2,407,426 88.3%78.2% 2016 2016 0.0387%3,142,248 41,033 3,183,281 2,401,546 132.6% 68.9% 2017 2017 0.0414%2,642,949 33,230 2,676,179 2,666,880 100.3% 75.9% 2018 2018 0.0381%2,113,632 69,419 2,183,051 2,563,053 85.2%79.5% 2019 2019 0.0398%2,200,453 68,330 2,268,783 2,814,860 80.6%80.2% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. See accompanying notes to the required supplementary information. 93 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 13 SCHEDULE OF PENSION CONTRIBUTIONS - GENERAL EMPLOYEES RETIREMENT FUND For The Last Ten Years Statutorily Contributions in Contribution Contributions as a Fiscal Year Required Relation to the Deficiency Covered Percentage of Ending Contribution Statutorily Required (Excess)Payroll Covered December 31,(a)Contribution (b) (a-b)(c)Payroll (b/c) 2015 $182,102 $182,102 $ - $2,428,027 7.5% 2016 193,684 193,684 - 2,582,452 7.5% 2017 192,510 192,510 - 2,566,800 7.5% 2018 202,526 202,526 - 2,700,347 7.5% 2019 208,807 208,807 - 2,784,089 7.5% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. See accompanying notes to the required supplementary information. 94 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 14 SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY - PUBLIC EMPLOYEES POLICE AND FIRE FUND For The Last Ten Years Proportionate Share Proportionate of the Net Pension Plan Fiduciary Proportion Share (Amount) Liability as a Net Position as Measurement Fiscal Year (Percentage) of of the Net Percentage of its a Percentage Date Ending the Net Pension Pension Covered Covered of the Total June 30, December 31, Liability Liability (a) Payroll (b) Payroll (a/b) Pension Liability 2015 2015 0.2490%$2,829,223 $2,284,973 123.8%86.6% 2016 2016 0.2590%10,394,121 2,495,778 416.5%63.9% 2017 2017 0.2570%3,469,806 2,643,314 131.3%85.4% 2018 2018 0.2426%2,585,866 2,556,951 101.1%88.8% 2019 2019 0.2547%2,711,539 2,689,536 100.8%89.3% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. See accompanying notes to the required supplementary information. 95 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 15 SCHEDULE OF PENSION CONTRIBUTIONS - PUBLIC EMPLOYEES POLICE AND FIRE FUND For The Last Ten Years Statutorily Contributions in Contribution Contributions as a Fiscal Year Required Relation to the Deficiency Covered Percentage of Ending Contribution Statutorily Required (Excess)Payroll Covered December 31,(a)Contribution (b) (a-b)(c)Payroll (b/c) 2015 $393,551 $393,551 $ - $2,429,327 16.20% 2016 424,970 424,970 - 2,623,271 16.20% 2017 416,665 416,665 - 2,572,006 16.20% 2018 420,821 420,821 - 2,597,660 16.20% 2019 452,731 452,731 - 2,670,979 16.95% The schedule is provided prospectively beginning with the City's fiscal year ended December 31, 2015 and is intended to show a ten year trend. Additional years will be reported as they become available. See accompanying notes to the required supplementary information. 96 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 16 SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS - LINO LAKES PUBLIC SAFETY DEPARTMENT - FIRE DIVISION For The Last Ten Years Fiscal year ending and measurement date December 31, 2019 December 31, 2018 December 31, 2017 Total pension liability: Service cost $52,320 $48,182 $47,952 Interest on pension liability 16,603 8,754 6,191 Changes of benefit terms - - - Differences between expected and actual experience (22,680)69,760 (11,672) Changes of assumptions - - - Benefit payments, including refunds of employee contributions - - - Net change in total pension liability 46,243 126,696 42,471 Total pension liability - beginning 224,407 97,711 55,240 Total pension liability - ending (a)$270,650 $224,407 $97,711 Plan fiduciary net position: Contributions - employer $ - $ - $ - Contributions - State of Minnesota 121,630 118,144 113,797 Contributions - other - 64,869 58,800 Net investment income 78,063 (18,696)9,153 Benefit payments, including refunds of employee contributions - - - Administrative expense (694)(702)(572) Net change in plan fiduciary net position 198,999 163,615 181,178 Plan fiduciary net position - beginning 389,320 225,705 44,527 Plan fiduciary net position - ending (b)$588,319 $389,320 $225,705 Net pension liability/(asset) - ending (a) - (b)($317,669)($164,913)($127,994) Plan fiduciary net position as a percentage of the total pension liability 217%173%231% Covered payroll N/A N/A N/A Net pension liability as a percentage of covered employee payroll N/A N/A N/A N/A - the Lino Lakes Fire Department is comprised of paid on-call firefighters, whose pay does not meet the definition of covered payroll. The City created its own fire department in 2016. Therefore, information prior to 2016 is not available. Additional years will be reported as they become available. See accompanying notes to the required supplementary information. 97 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 17 SCHEDULE OF CONTRIBUTIONS - LINO LAKES PUBLIC SAFETY DEPARTMENT - FIRE DIVISION For The Last Ten Years Statutorily Contributions in Contribution Contributions as a Fiscal Year Required Relation to the Deficiency Covered Percentage of Ending Contribution Statutorily Required (Excess)Payroll Covered-Employee December 31,(a)Contribution (b)(a-b)(c)Payroll (b/c) 2016 $ - $44,394 ($44,394) N/A N/A 2017 - - - N/A N/A 2018 - - - N/A N/A 2019 - - - N/A N/A N/A - the Lino Lakes Fire Department is comprised of paid on-call firefighters, whose pay does not meet the defintion of covered payroll. The City created its own fire department in 2016. Therefore, information prior to 2016 is not available. available Additional years will be reported as they become See accompanying notes to the required supplementary information. 98 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2019 Note A LEGAL COMPLIANCE – BUDGETS The General Fund budget is legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the department level for the General Fund. Note B OPEB INFORMATION No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75 to pay related benefits. The previous actuarial valuation included a liability for benefits provided to the beneficiary of a deceased employee. As of the most recent actuarial valuation date, the beneficiary was not enrolled in the City’s plan, but has been assigned a 20% probability of returning to the plan. Note C PENSION INFORMATION PERA – General Employees Retirement Fund 2019 Changes in Actuarial Assumptions: The mortality projection scale was changed from MP-2017 to MP-2018 2019 Changes in the Plan Provisions: The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. 2018 Changes in Actuarial Assumptions: The mortality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was changed from 1.00% per year through 2044 and 2.50% per year thereafter to 1.25% per year. 2017 Changes in Actuarial Assumptions: The Combined Service Annuity (CSA) loads were changed from 0.8% for active members and 60% for vested and non-vested deferred members. The revised CSA loads are now 0.0% for active member liability, 15.0% for vested deferred member liability and 3.0% for non-vested deferred member liability. The assumed post-retirement benefit increase rate was changed from 1.0% per year for all years to 1.0% per year through 2044 and 2.5% per year thereafter. 2016 Changes in Actuarial Assumptions: The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and 2.5% per year thereafter to 1.0% per year for all future years. The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was changed from 7.9% to 7.5%. 99 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2019 Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. PERA – Public Employees Police and Fire Fund 2019 Changes in Actuarial Assumptions: The mortality projection scale was changed from MP-2017 to MP-2018 2018 Changes in Actuarial Assumptions: The mortality projection scale was changed from MP-2016 to MP-2017. 2017 Changes in Actuarial Assumptions: The single discount rate was changed from 5.6% to 7.5%. Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is proposed rates that average 0.34 percent lower than the previous rates. Assumed rates of retirement were changed, resulting in fewer retirements. The Combined Service Annuity (CSA) load was 30 percent for vested and non-vested deferred members. The CSA has been changed to 33 percent for vested members and 2 percent for non- vested members. The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014 fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to Scale MP- 2016. The base mortality table for disabled annuitants was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees. Assumed termination rates were decreased to 3% for the first three years of service. Rates beyond the select period of three years were adjusted, resulting in more expected terminations overall. Assumed percentage of married female members was decreased from 65% to 60%. Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years younger) and female members (husbands assumed to be four years older) to the assumption that males are two years older than females. The assumed percentage of female members electing Joint and Survivor annuities was increased. The assumed post-retirement benefit increase rate was changed from 1.00% for all years to 1.00% per year through 2064 and 2.50% thereafter. 2016 Changes in Actuarial Assumptions: The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037 and 2.5% per year thereafter to 1.0% per year for all future years. The assumed investment return was changed from 7.9% to 7.5%. The single discount rate changed from 7.9% to 5.6%. 100 CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2019 The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25% for payroll growth and 2.50% for inflation. Single Employer – Fire Division There are no factors that affect trends in the amounts reported, such as change of benefit terms or assumptions. With only three years reported in the RSI, there is no additional information to include in the notes. 101 - This page intentionally left blank - 102 COMBINING AND INDIVIDUAL NONMAJOR FUND FINANCIAL STATEMENTS AND SCHEDULES 103 - This page intentionally left blank - 104 SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. DEBT SERVICE FUNDS Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal and related costs on general long-term debt. CAPITAL PROJECT FUNDS Capital Project Funds account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). PERMANENT FUNDS Permanent Funds account for financial resources that are legally restricted to the extent that only earnings, and not the principal, may be used for purposes that support the City’s programs. The City maintains one permanent fund – the Environment and Stewardship Fund. This fund accounts for the use of funds received for environmental maintenance and improvements in the Foxborough area, as well as funds received for the Preserve area. 105 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET Statement 18 NONMAJOR GOVERNMENTAL FUNDS December 31, 2019 Permanent Fund Total Environment & Nonmajor Special Debt Capital Stewardship Governmental Revenue Service Project Fund Funds Assets Cash and investments $415,882 $4,178,039 $5,516,731 $145,870 $10,256,522 Accounts receivable - net - - 24,343 - 24,343 Prepaid items 2,842 - - - 2,842 Advances to other funds - - 85,224 - 85,224 Taxes receivable: Due from county - 17,590 78 - 17,668 Delinquent - 17,305 836 - 18,141 Special assessments receivable: Due from county - - 409 - 409 Delinquent - 257 13,573 - 13,830 Deferred - 712,295 207,776 - 920,071 Interfund loan receivable - - 3,117,897 - 3,117,897 Long-term note receivable 225,000 - - - 225,000 Total assets $643,724 $4,925,486 $8,966,867 $145,870 $14,681,947 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $4,716 $8,050 $160,773 $ - $173,539 Due to other governments 309 - - - 309 Advances from other funds - - 85,224 - 85,224 Contracts payable - - 9,305 - 9,305 Interfund loan payable - - 800,364 - 800,364 Total liabilities 5,025 8,050 1,055,666 0 1,068,741 Deferred inflows of resources: Unavailable revenue - 729,857 222,185 - 952,042 Fund balance: Nonspendable 2,842 - - 100,000 102,842 Restricted 460,372 4,187,934 1,575,554 45,870 6,269,730 Committed 175,485 - - - 175,485 Assigned - - 7,001,582 - 7,001,582 Unassigned - (355) (888,120) - (888,475) Total fund balance 638,699 4,187,579 7,689,016 145,870 12,661,164 Total liabilities, deferred inflows of resources, and fund balance $643,724 $4,925,486 $8,966,867 $145,870 $14,681,947 106 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 19 CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2019 Permanent Fund Total Environment & Nonmajor Special Debt Capital Stewardship Governmental Revenue Service Project Fund Funds Revenues: General property taxes $ - $1,853,669 $55 $ - $1,853,724 Tax increment - - 671,296 - 671,296 Special assessments - 497,290 803,873 - 1,301,163 Charges for services 124,063 - 1,144,954 - 1,269,017 Fines and forfeits 33,546 - - - 33,546 Investment earnings 15,979 92,702 235,349 4,817 348,847 Miscellaneous 26,555 38,028 1,468 8,800 74,851 Total revenues 200,143 2,481,689 2,856,995 13,617 5,552,444 Expenditures: Current: General government - - 19,504 - 19,504 Public safety 36,826 - - - 36,826 Public services 114,236 - 974,196 1,600 1,090,032 Community development 409 - 226,954 - 227,363 Capital outlay: General government - - 83,417 - 83,417 Public safety 25,774 - 71,079 - 96,853 Public services 85,000 - 1,374,668 - 1,459,668 Debt service: Principal - 2,325,075 - - 2,325,075 Interest and fiscal charges - 544,886 - - 544,886 Total expenditures 262,245 2,869,961 2,749,818 1,600 5,883,624 Revenues over (under) expenditures (62,102) (388,272) 107,177 12,017 (331,180) Other financing sources (uses): Transfers in 117,158 836,695 1,138,275 - 2,092,128 Transfers out (83,604) (1,553) (623,704) - (708,861) Issuance of debt - - 388,535 - 388,535 Proceeds from sale of capital assets 6,395 - 71,591 - 77,986 Total other financing sources (uses) 39,949 835,142 974,697 0 1,849,788 Net change in fund balance (22,153) 446,870 1,081,874 12,017 1,518,608 Fund balance - January 1 660,852 3,740,709 6,607,142 133,853 11,142,556 Fund balance - December 31 $638,699 $4,187,579 $7,689,016 $145,870 $12,661,164 107 - This page intentionally left blank - 108 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. Program Recreation – established to account for various self-supporting recreational programs. Economic Development Authority – established to account for the receipt and uses of funds for economic development purposes. Cable TV and Communications Fund – established to account for activities relating to Cable TV and Communications. Blue Heron Days – established to account for the activities associated with the Blue Heron Days festival. Federal Forfeitures - Justice – established to account for activities associated with the receipt and use of equitable sharing paid from the U.S. Department of Justice Asset Forfeiture Fund. State Narcotics Forfeitures – established to account for activities associated with the receipt and use of state narcotics forfeitures. DUI Forfeitures – established to account for activities associated with the receipt and use of DUI forfeitures. Other Forfeitures – established to account for activities associated with the receipt and use of other forfeitures. Federal Forfeitures - Treasury – established to account for activities associated with the receipt and use of equitable sharing paid from the U.S. Department of Treasury Forfeiture Fund. K-9 Unit – accounts for donations received by the City which are restricted for K-9 Unit purposes. 109 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2019 203 204 Cable 201 Economic TV and Program Development Communications 205 Blue Recreation Authority Fund Heron Days Assets Cash and investments $29,819 $9,714 $140,489 $11,129 Prepaid items 2,547 - - 295 Long-term note receivable - 225,000 - - Total assets $32,366 $234,714 $140,489 $11,424 Liabilities and Fund Balance Liabilities: Accounts payable $4,081 $ - $456 $9 Due to other governments - - - - Total liabilities 4,081 - 456 9 Fund balance: Nonspendable 2,547 - - 295 Restricted - 225,000 - 11,120 Committed 25,738 9,714 140,033 - Total fund balance 28,285 234,714 140,033 11,415 Total liabilities and fund balance $32,366 $234,714 $140,489 $11,424 110 Statement 20 Total 206 210 Nonmajor Federal 207 State Federal Special Forfeitures - Narcotics 208 DUI 209 Other Forfeitures - 211 K-9 Revenue Justice Forfeitures Forfeitures Forfeitures Treasury Unit Funds $19,591 $30,061 $67,534 $1,564 $86,377 $19,604 $415,882 - - - - - - 2,842 - - - - - - 225,000 $19,591 $30,061 $67,534 $1,564 $86,377 $19,604 $643,724 $ - $85 $85 $ - $ - $ - $4,716 - 193 116 - - - 309 - 278 201 - - - 5,025 - - - - - - 2,842 19,591 29,783 67,333 1,564 86,377 19,604 460,372 - - - - - - 175,485 19,591 29,783 67,333 1,564 86,377 19,604 638,699 $19,591 $30,061 $67,534 $1,564 $86,377 $19,604 $643,724 111 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2019 203 204 Cable 201 Economic TV and Program Development Communications 205 Blue Recreation Authority Fund Heron Days Revenues: Charges for services $59,544 $ - $64,519 $ - Fines and forfeits - - - - Investment earnings 946 2,218 4,507 488 Miscellaneous 1,108 - - 24,947 Total revenues 61,598 2,218 69,026 25,435 Expenditures: Current: Public safety - - - - Public services 86,699 - 3,568 23,969 Community development - 409 - - Capital outlay: Public safety - - - - Public services - 85,000 - - Total expenditures 86,699 85,409 3,568 23,969 Revenues over (under) expenditures (25,101) (83,191) 65,458 1,466 Other financing sources (uses): Transfers in 33,145 409 - - Transfers out - - - - Proceeds from sale of capital assets - 2,955 - - Total other financing sources (uses)33,145 3,364 0 0 Net change in fund balance 8,044 (79,827) 65,458 1,466 Fund balance - January 1 20,241 314,541 74,575 9,949 Fund balance - December 31 $28,285 $234,714 $140,033 $11,415 112 Statement 21 Total 206 210 Nonmajor Federal 207 State Federal Special Forfeitures - Narcotics 208 DUI 209 Other Forfeitures - 211 K-9 Revenue Justice Forfeitures Forfeitures Forfeitures Treasury Unit Funds $ - $ - $ - $ - $ - $ - $124,063 - 17,641 14,820 1,085 - - 33,546 1,253 848 2,083 45 2,773 818 15,979 - - - - - 500 26,555 1,253 18,489 16,903 1,130 2,773 1,318 200,143 3,359 7,632 6,677 255 - 18,903 36,826 - - - - - - 114,236 - - - - - - 409 25,774 - - - - - 25,774 - - - - - - 85,000 29,133 7,632 6,677 255 0 18,903 262,245 (27,880) 10,857 10,226 875 2,773 (17,585)(62,102) - - - - 83,604 - 117,158 (83,604) - - - - - (83,604) - - 3,440 - - - 6,395 (83,604)0 3,440 0 83,604 0 39,949 (111,484) 10,857 13,666 875 86,377 (17,585)(22,153) 131,075 18,926 53,667 689 - 37,189 660,852 $19,591 $29,783 $67,333 $1,564 $86,377 $19,604 $638,699 113 - This page intentionally left blank - 114 DEBT SERVICE FUNDS Debt Service Funds are used to 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 and Notes – 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 Note – this note was issued to finance cable communications equipment and will be repaid from revenues derived from franchise fees. 115 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS December 31, 2019 334 G.O. 332 G.O. Improvement 336 G.O. 315 TIF and Utility 335 G.O. Improvement Certificates Bonds Bonds Bonds Bonds of Indebtedness of 2007A of 2010A of 2012A of 2013A Assets Cash and investments $249,200 $150,051 $ - $203,425 $418,048 Taxes receivable: Due from county 5,736 - - 1,700 - Delinquent 5,832 - - 1,767 - Special assessments receivable: Delinquent - - - - - Deferred - - - - 225,668 Total assets $260,768 $150,051 $0 $206,892 $643,716 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $ - $355 $355 $355 $355 Deferred inflows of resources: Unavailable revenue 5,832 - - 1,767 225,668 Fund balance: Restricted 254,936 149,696 - 204,770 417,693 Unassigned - - (355) - - Total fund balance 254,936 149,696 (355) 204,770 417,693 Total liabilities, deferred inflows of resources, and fund balance $260,768 $150,051 $0 $206,892 $643,716 116 Statement 22 339 EDA 341 G.O. 343 G.O. Total 337 G.O. Lease 340 G.O. Utility Tax Nonmajor Improvement 338 G.O. Revenue Capital Revenue Abatement 344 G.O. Debt Bonds Bonds Bonds Note Bonds Bonds Bonds Service of 2014A of 2015A of 2015B of 2016A of 2016A of 2016C of 2018A Funds $932,086 $619,032 $298,513 $1,194 $266,634 $375,528 $664,328 $4,178,039 - 2,552 2,982 - - 2,731 1,889 17,590 - 2,582 3,012 - - 2,838 1,274 17,305 257 - - - - - - 257 - - - - - - 486,627 712,295 $932,343 $624,166 $304,507 $1,194 $266,634 $381,097 $1,154,118 $4,925,486 $3,455 $355 $355 $ - $805 $805 $855 $8,050 257 2,582 3,012 - - 2,838 487,901 729,857 928,631 621,229 301,140 1,194 265,829 377,454 665,362 4,187,934 - - - - - - - (355) 928,631 621,229 301,140 1,194 265,829 377,454 665,362 4,187,579 $932,343 $624,166 $304,507 $1,194 $266,634 $381,097 $1,154,118 $4,925,486 117 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2019 334 G.O. 331 G.O. 332 G.O. Improvement 315 CIP TIF and Utility 335 G.O. Certificates of Bonds Bonds Bonds Bonds Indebtedness of 2006E of 2007A of 2010A of 2012A Revenues: General property taxes $604,408 $763 $ - $ - $179,198 Special assessments 40 16 - 247 13 Investment earnings 11,996 - - - 3,093 Miscellaneous - - - - - Total revenues 616,444 779 0 247 182,304 Expenditures: Debt service: Principal 562,900 - 200,000 105,000 230,000 Interest and fiscal charges 15,465 - 55,181 5,879 13,445 Total expenditures 578,365 0 255,181 110,879 243,445 Revenues over (under) expenditures 38,079 779 (255,181) (110,632) (61,141) Other financing sources (uses): Transfers in - 774 255,181 110,277 - Transfers out - (1,553) - - - Total other financing sources (uses)0 (779) 255,181 110,277 0 Net change in fund balance 38,079 0 0 (355) (61,141) Fund balance - January 1 216,857 - 149,696 - 265,911 Fund balance - December 31 $254,936 $0 $149,696 ($355) $204,770 118 Statement 23 339 EDA 341 G.O. 343 G.O. Total 336 G.O. 337 G.O. Lease 340 G.O. Utility Tax Nonmajor Improvement Improvement 338 G.O. Revenue Capital Revenue Abatement 344 G.O. Debt Bonds Bonds Bonds Bonds Note Bonds Bonds Bonds Service of 2013A of 2014A of 2015A of 2015B of 2016A of 2016A of 2016C of 2018A Funds $ - $ - $268,886 $314,208 $ - $ - $287,787 $198,419 $1,853,669 39,000 1,198 18 21 - - 21 456,716 497,290 13,558 27,739 15,376 6,344 605 4,008 6,363 3,620 92,702 - - - - 38,028 - - - 38,028 52,558 28,937 284,280 320,573 38,633 4,008 294,171 658,755 2,481,689 60,000 380,000 200,000 175,000 32,175 135,000 245,000 - 2,325,075 13,755 30,113 60,168 128,243 5,854 25,255 17,483 174,045 544,886 73,755 410,113 260,168 303,243 38,029 160,255 262,483 174,045 2,869,961 (21,197) (381,176) 24,112 17,330 604 (156,247) 31,688 484,710 (388,272) - 129,011 - - - 160,800 - 180,652 836,695 - - - - - - - - (1,553) 0 129,011 0 0 0 160,800 0 180,652 835,142 (21,197) (252,165) 24,112 17,330 604 4,553 31,688 665,362 446,870 438,890 1,180,796 597,117 283,810 590 261,276 345,766 - 3,740,709 $417,693 $928,631 $621,229 $301,140 $1,194 $265,829 $377,454 $665,362 $4,187,579 119 - This page intentionally left blank - 120 CAPITAL PROJECT FUNDS Capital Project Funds account for the acquisition or construction of major capital facilities other than those financed by Proprietary Funds. The City maintained the following nonmajor Capital Project Funds during the year: Closed Bond Fund – to account for excess funds from matured bond issues. Building and Facilities – to account for the activities associated with the maintenance and replacement of municipal buildings and facilities. Capital Equipment Revolving – to account for proceeds from Equipment Certificates and funds held to purchase capital equipment. Office Equipment Revolving – to account for the receipt and use of funds for office equipment purchases. Dedicated Parks – to account for the receipts and use of monies collected from park dedication fees. Tax Increment Financing Funds – to account for development projects financed with tax increments. Pavement Management – to account for money received from levies, assessments, and developer charges for future street maintenance projects. Surface Water Management – to account for the financing of surface water management and storm water improvements. Street Reconstruction – to account for the financing of future reconstruction of City streets. Surface Water Maintenance – to account for surface water maintenance activities. Park and Trail Improvements – to account for park and trail improvement activities. 2040 Comp Plan Update – this fund accounts for the financing sources received and expenditures incurred to update the City’s 2040 Comprehensive Plan. Cedar Street Reconstruction – this fund accounts for the activities relating to the construction of roadway improvements on East Cedar Street & Elmcrest Avenue North. 121 - This page intentionally left blank - 122 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 24 NONMAJOR CAPITAL PROJECT FUNDS Page 1 of 2 December 31, 2019 402 Capital 403 Office 405 301 Closed 401 Building Equipment Equipment Dedicated Bond Fund and Facilities Revolving Revolving Parks Assets Cash and investments $157,083 $81,774 $612,632 $48,262 $906,692 Accounts receivable - net - 18,384 5,959 - - Advances to other funds 85,224 - - - - Taxes receivable: Due from county - - - - - Delinquent 836 - - - - Special assessments receivable: Due from county - - - - - Delinquent 8,877 - - - - Deferred 14,140 - - - - Interfund loan receivable 800,364 2,317,533 - - - Total assets $1,066,524 $2,417,691 $618,591 $48,262 $906,692 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $ - $10,129 $ - $ - $681 Advances from other funds - - - - - Contracts payable - - - - 5,685 Interfund loan payable - - - - - Total liabilities 0 10,129 0 0 6,366 Deferred inflows of resources: Unavailable revenue 23,853 - - - - Fund balance: Restricted - - - - 900,326 Assigned 1,042,671 2,407,562 618,591 48,262 - Unassigned - - - - - Total fund balance 1,042,671 2,407,562 618,591 48,262 900,326 Total liabilities, deferred inflows of resources, and fund balance $1,066,524 $2,417,691 $618,591 $48,262 $906,692 123 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2019 411 Tax 417 Tax 418 Tax 419 Tax 421 Increment Increment Increment Increment Pavement Financing 1-5 Financing 1-10 Financing 1-11 Financing 1-12 Management Assets Cash and investments $397,530 $197,598 $ - $182,639 $496,153 Accounts receivable - net - - - - - Advances to other funds - - - - - Taxes receivable: Due from county - - 78 - - Delinquent - - - - - Special assessments receivable: Due from county - - - - - Delinquent - - - - - Deferred - - - - - Interfund loan receivable - - - - - Total assets $397,530 $197,598 $78 $182,639 $496,153 Liabilities, Deferred Inflows of Resources, and Fund Balance Liabilities: Accounts payable $ - $ - $ - $102,539 $24,705 Advances from other funds - - - - - Contracts payable - - - - - Interfund loan payable - - 800,364 - - Total liabilities 0 0 800,364 102,539 24,705 Deferred inflows of resources: Unavailable revenue - - - - - Fund balance: Restricted 397,530 197,598 - 80,100 - Assigned - - - - 471,448 Unassigned - - (800,286) - - Total fund balance 397,530 197,598 (800,286)80,100 471,448 Total liabilities, deferred inflows of resources, and fund balance $397,530 $197,598 $78 $182,639 $496,153 124 Statement 24 Page 2 of 2 Total 422 Surface 424 Surface 425 484 486 Nonmajor Water 423 Street Water Park and Trail Comp Plan Cedar Street Capital Management Reconstruction Maintenance Improvements Update Reconstruction Project Funds $1,134,959 $778,814 $184,218 $329,159 $9,218 $ - $5,516,731 - - - - - - 24,343 - - - - - - 85,224 - - - - - - 78 - - - - - - 836 409 - - - - - 409 4,696 - - - - - 13,573 134,447 59,189 - - - - 207,776 - - - - - - 3,117,897 $1,274,511 $838,003 $184,218 $329,159 $9,218 $0 $8,966,867 $13,469 $ - $580 $5,451 $609 $2,610 $160,773 - - - - - 85,224 85,224 - - 3,620 - - - 9,305 - - - - - - 800,364 13,469 0 4,200 5,451 609 87,834 1,055,666 139,143 59,189 - - - - 222,185 - - - - - - 1,575,554 1,121,899 778,814 180,018 323,708 8,609 - 7,001,582 - - - - - (87,834) (888,120) 1,121,899 778,814 180,018 323,708 8,609 (87,834) 7,689,016 $1,274,511 $838,003 $184,218 $329,159 $9,218 $0 $8,966,867 125 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2019 402 Capital 403 Office 405 301 Closed 401 Building Equipment Equipment Dedicated Bond Fund and Facilities Revolving Revolving Parks Revenues: General property taxes $55 $ - $ - $ - $ - Tax increment - - - - - Special assessments 8,177 - - - - Charges for services - 220,347 - - 804,380 Investment earnings 33,615 8,466 23,772 1,940 27,004 Miscellaneous - - 973 - 495 Total revenues 41,847 228,813 24,745 1,940 831,879 Expenditures: Current: General government 341 5,482 - 13,681 - Public services - - - - 19,999 Community development - - - - - Capital outlay: General government - 77,422 - 5,995 - Public safety - - 71,079 - - Public services - - 298,024 - 139,094 Debt service: Interest and fiscal charges - - - - - Total expenditures 341 82,904 369,103 19,676 159,093 Revenues over (under) expenditures 41,506 145,909 (344,358) (17,736) 672,786 Other financing sources (uses): Transfers in 1,553 - - 25,000 - Transfers out (774) (256,480) - - - Issuance of debt - - 388,535 - - Proceeds from sale of capital assets - - 71,591 - - Total other financing sources (uses)779 (256,480) 460,126 25,000 0 Net change in fund balance 42,285 (110,571) 115,768 7,264 672,786 Fund balance - January 1 1,000,386 2,518,133 502,823 40,998 227,540 Fund balance - December 31 $1,042,671 $2,407,562 $618,591 $48,262 $900,326 126 Statement 25 Page 1 of 2 411 Tax 417 Tax 418 Tax 419 Tax 421 422 Surface Increment Increment Increment Increment Pavement Water 423 Street Financing 1-5 Financing 1-10 Financing 1-11 Financing 1-12 Management Management Reconstruction $ - $ - $ - $ - $ - $ - $ - 47,347 174,236 192,214 257,499 - - - - - - - - 783,258 12,438 - - - - 120,227 - - 12,200 8,242 - 2,079 23,686 46,888 25,833 - - - - - - - 59,547 182,478 192,214 259,578 143,913 830,146 38,271 - - - - - - - - - - - 857,184 7,454 - 172 2,999 17,604 206,179 - - - - - - - - - - - - - - - - - - - - - - 630,479 - - - - - - - - 172 2,999 17,604 206,179 857,184 637,933 0 59,375 179,479 174,610 53,399 (713,271)192,213 38,271 - - - - 856,722 - - - (174,236) (192,214) - - - - - - - - - - - - - - - - - - 0 (174,236) (192,214)0 856,722 0 0 59,375 5,243 (17,604)53,399 143,451 192,213 38,271 338,155 192,355 (782,682)26,701 327,997 929,686 740,543 $397,530 $197,598 ($800,286)$80,100 $471,448 $1,121,899 $778,814 127 CITY OF LINO LAKES, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES,Statement 25 EXPENDITURES AND CHANGES IN FUND BALANCE Page 2 of 2 NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2019 Total 424 Surface 425 484 2040 486 Nonmajor Water Park and Trail Comp Plan Cedar Street Capital Maintenance Improvements Update Reconstruction Project Funds Revenues: General property taxes $ - $ - $ - $ - $55 Tax increment - - - - 671,296 Special assessments - - - - 803,873 Charges for services - - - - 1,144,954 Investment earnings 6,959 14,665 - - 235,349 Miscellaneous - - - - 1,468 Total revenues 6,959 14,665 0 0 2,856,995 Expenditures: Current: General government - - - - 19,504 Public services 75,840 - 13,719 - 974,196 Community development - - - - 226,954 Capital outlay: General government - - - - 83,417 Public safety - - - - 71,079 Public services - 219,237 - 87,834 1,374,668 Debt service: Interest and fiscal charges - - - - - Total expenditures 75,840 219,237 13,719 87,834 2,749,818 Revenues over (under) expenditures (68,881) (204,572) (13,719)(87,834)107,177 Other financing sources (uses): Transfers in 140,000 90,000 25,000 - 1,138,275 Transfers out - - - - (623,704) Issuance of debt - - - - 388,535 Proceeds from sale of capital assets - - - - 71,591 Total other financing sources (uses) 140,000 90,000 25,000 0 974,697 Net change in fund balance 71,119 (114,572)11,281 (87,834) 1,081,874 Fund balance - January 1 108,899 438,280 (2,672) - 6,607,142 Fund balance - December 31 $180,018 $323,708 $8,609 ($87,834) $7,689,016 128 CITY OF LINO LAKES, MINNESOTA SPECIAL REVENUE FUND - PROGRAM RECREATION Statement 26 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended December 31, 2019 Budgeted Amounts 2019 Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Revenues: Charges for services $76,010 $76,010 $59,544 ($16,466) Investment earnings - - 946 946 Miscellaneous - - 1,108 1,108 Total revenues 76,010 76,010 61,598 (14,412) Expenditures: Public services: Current: Personal services 24,650 24,650 57,169 (32,519) Supplies 23,350 23,350 25,414 (2,064) Contractual services 12,050 12,050 4,116 7,934 Capital outlay 12,500 12,500 - 12,500 Total expenditures 72,550 72,550 86,699 (14,149) Revenues over (under) expenditures 3,460 3,460 (25,101)(28,561) Other financing sources (uses): Transfers in - - 33,145 33,145 Net change in fund balance $3,460 $3,460 8,044 $4,584 Fund balance - January 1 20,241 Fund balance - December 31 $28,285 129 - This page intentionally left blank - 130 STATISTICAL SECTION (UNAUDITED) 131 - This page intentionally left blank - 132 This part of the City of Lino Lakes, Minnesota's 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 the City's overall financial health. Table Number Financial Trends Tables 1-4 These tables 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 tables contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity Tables 9-12 These tables 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 tables offer demographic and economic indicators to help the reader understand the environment wihthin which the City's financial activities take place. Operating Information Tables 15-17 These tables contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. STATISTICAL SECTION (UNAUDITED) Contents 133 CITY OF LINO LAKES, MINNESOTA NET POSITION BY COMPONENT Last Ten Fiscal Years (Accrual Basis of Accounting) 2010 2011 2012 2013 Governmental activities: Net investment in capital assets $22,562,217 $24,600,103 $22,166,342 $22,241,821 Restricted 8,428,025 11,598,803 11,595,112 11,000,033 Unrestricted 16,738,885 13,463,210 17,639,038 16,849,636 Total governmental activities net position $47,729,127 $49,662,116 $51,400,492 $50,091,490 Business-type activities: Net investment in capital assets $29,648,461 $29,216,866 $28,798,095 $28,423,284 Unrestricted 10,728,626 11,201,362 12,102,013 12,999,182 Total business-type activities net position $40,377,087 $40,418,228 $40,900,108 $41,422,466 Primary government: Net investment in capital assets $52,210,678 $53,816,969 $50,964,437 $50,665,105 Restricted 8,428,025 11,598,803 11,595,112 11,000,033 Unrestricted 27,467,511 24,664,572 29,741,051 29,848,818 Total primary government net position $88,106,214 $90,080,344 $92,300,600 $91,513,956 GASB 68 was implemented in 2015. Net position was restated for 2014 to reflect the reporting of net pension liability and pension related deferred outflows of resources. Net position for years prior to 2014 was not restated. GASB 75 was implemented in 2017. Net position was restated for 2016 to reflect the reporting of the OPEB liability and OPEB related deferred inflows of resources. Net position for years prior to 2016 was not restated. 134 Table 1 2014 2015 2016 2017 2018 2019 $19,540,807 $18,230,746 $18,597,344 $22,868,259 $24,640,555 $28,433,053 8,666,357 8,635,293 13,342,852 11,730,147 10,579,817 12,390,431 20,527,704 13,888,120 10,187,254 12,017,212 16,577,520 17,640,035 $48,734,868 $40,754,159 $42,127,450 $46,615,618 $51,797,892 $58,463,519 $27,556,022 $29,127,829 $31,860,610 $31,831,950 $32,709,079 $36,390,820 13,888,278 14,672,630 13,863,447 14,846,045 15,570,827 16,237,228 $41,444,300 $43,800,459 $45,724,057 $46,677,995 $48,279,906 $52,628,048 $47,096,829 $47,358,575 $50,457,954 $54,700,209 $57,349,634 $64,823,873 8,666,357 8,635,293 13,342,852 11,730,147 10,579,817 12,390,431 34,415,982 28,560,750 24,050,701 26,863,257 32,148,347 33,877,263 $90,179,168 $84,554,618 $87,851,507 $93,293,613 $100,077,798 $111,091,567 135 CITY OF LINO LAKES, MINNESOTA CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2010 2011 2012 2013 Expenses Governmental activities: General government $1,987,415 $1,990,137 $1,883,961 $1,566,388 Public safety 3,971,261 4,019,101 4,046,415 3,950,197 Public services 5,092,970 9,329,451 6,795,150 5,376,671 Conservation of natural resources 197,571 139,544 184,051 141,204 Community development 1,105,254 617,747 430,121 404,726 Interest and fees on long-term debt 1,064,172 927,535 837,755 951,842 Total governmental activities expenses 13,418,643 17,023,515 14,177,453 12,391,028 Business-type activities: Water 1,045,901 966,643 949,121 927,800 Sewer 1,466,847 1,638,063 1,527,637 1,584,395 Total business-type activities expenses 2,512,748 2,604,706 2,476,758 2,512,195 Total primary government expenses $15,931,391 $19,628,221 $16,654,211 $14,903,223 Program revenues Governmental activities: Charges for services: General government $98,403 $103,687 $129,151 $93,118 Public safety 691,005 713,985 642,745 697,584 Public services 605,207 593,263 668,128 632,002 Conservation of natural resources 4,153 4,392 19,297 1,347 Community development 14,148 5,138 16,940 28,118 Operating grants and contributions 617,450 593,798 450,179 527,368 Capital grants and contributions 1,388,984 7,347,613 5,125,693 941,960 Total governmental activities program revenues 3,419,350 9,361,876 7,052,133 2,921,497 Business-type activities: Charges for services: Water 1,087,013 1,090,104 1,371,809 1,208,742 Sewer 1,498,218 1,494,188 1,505,781 1,516,397 Operating grants and contributions - - - - Capital grants and contributions 8,709 1,462 20,018 883 Total business-type activities 2,593,940 2,585,754 2,897,608 2,726,022 Total primary government program revenues $6,013,290 $11,947,630 $9,949,741 $5,647,519 136 Table 2 Page 1 of 2 2014 2015 2016 2017 2018 2019 $2,036,550 $2,016,351 $2,456,864 $2,395,633 $2,345,386 $2,466,130 4,107,759 5,135,865 6,567,523 5,166,538 4,749,394 5,053,511 5,880,030 7,971,712 6,228,893 5,492,395 5,384,522 5,810,919 159,649 186,111 216,905 200,016 201,590 183,982 407,448 432,268 454,144 459,455 576,794 686,421 618,680 632,876 831,529 518,897 414,607 498,587 13,210,116 16,375,183 16,755,858 14,232,934 13,672,293 14,699,550 965,641 1,394,897 1,367,693 1,245,249 1,332,755 1,322,811 1,628,258 2,089,842 1,850,962 1,901,821 1,964,471 2,002,711 2,593,899 3,484,739 3,218,655 3,147,070 3,297,226 3,325,522 $15,804,015 $19,859,922 $19,974,513 $17,380,004 $16,969,519 $18,025,072 $103,072 $818,468 $520,231 $550,117 $562,816 $612,237 763,470 199,498 1,359,426 2,249,152 1,591,658 1,255,363 621,221 603,866 865,327 801,633 448,009 1,273,900 1,882 - - - - - 39,395 - - - - - 840,676 526,107 722,858 1,106,014 861,429 870,532 335,733 1,176,732 5,046,307 4,141,383 5,187,023 6,820,419 2,705,449 3,324,671 8,514,149 8,848,299 8,650,935 10,832,451 965,425 1,014,836 1,094,897 1,150,834 1,217,589 1,172,580 1,564,099 1,621,633 1,659,322 1,698,963 1,753,712 1,771,143 263,024 263,024 - - - - 1,035 3,035,031 1,543,947 836,029 1,242,032 2,894,794 2,793,583 5,934,524 4,298,166 3,685,826 4,213,333 5,838,517 $5,499,032 $9,259,195 $12,812,315 $12,534,125 $12,864,268 $16,670,968 137 CITY OF LINO LAKES, MINNESOTA CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2010 2011 2012 2013 Net (expense) revenue: Governmental activities ($9,999,293) ($7,661,639) ($7,125,320) ($9,469,531) Business-type activities 81,192 (18,952) 420,850 213,827 Total primary government, net (9,918,101) (7,680,591) (6,704,470) (9,255,704) General revenues and other changes in net position: Governmental activities: Property taxes 8,764,183 8,768,805 8,610,709 8,563,595 Unrestricted grants and contributions 4,389 4,072 4,941 4,442 Unrestricted investment earnings 225,677 251,250 202,828 (54,204) Gain on disposal of capital assets - 37,579 4,175 - Special item - withdrawal from fire district - - - - Transfers (7,078)66,122 41,043 (353,304) Total governmental activities 8,987,171 9,127,828 8,863,696 8,160,529 Business-type activities: Unrestricted investment earnings 104,770 126,215 102,073 (44,773) Transfers 7,078 (66,122)(41,043) 353,304 Total business-type activities 111,848 60,093 61,030 308,531 Total primary government $9,099,019 $9,187,921 $8,924,726 $8,469,060 Change in net position: Governmental activities ($1,012,122) $1,466,189 $1,738,376 ($1,309,002) Business-type activities 193,040 41,141 481,880 522,358 Total primary government change in net position ($819,082) $1,507,330 $2,220,256 ($786,644) GASB 68 was implemented in 2015. Pension expense for years prior to 2015 was not restated. GASB 75 was implemented in 2017. OPEB expense for years prior to 2017 was not restated. 138 Table 2 Page 2 of 2 2014 2015 2016 2017 2018 2019 ($10,504,667) ($13,050,512) ($8,241,709) ($5,384,635) ($5,021,358) ($3,867,099) 199,684 2,449,785 1,079,511 538,756 916,107 2,512,995 (10,304,983) (10,600,727) (7,162,198) (4,845,879) (4,105,251) (1,354,104) 8,806,886 9,243,236 9,343,500 9,753,971 10,229,691 10,706,977 4,443 5,363 91,385 181,712 59,508 38,926 265,695 112,961 210,142 207,792 369,485 1,029,944 1,727 17,836 66,255 38,022 17,318 68,472 - - 1,333,166 - - - 69,294 66,834 (914,414)(308,694)(472,370) (1,311,593) 9,148,045 9,446,230 10,130,034 9,872,803 10,203,632 10,532,726 154,468 51,167 107,119 106,488 213,434 523,554 (69,294)(66,834)914,414 308,694 472,370 1,311,593 85,174 (15,667)1,021,533 415,182 685,804 1,835,147 $9,233,219 $9,430,563 $11,151,567 $10,287,985 $10,889,436 $12,367,873 ($1,356,622) ($3,604,282) $1,888,325 $4,488,168 $5,182,274 $6,665,627 284,858 2,434,118 2,101,044 953,938 1,601,911 4,348,142 ($1,071,764) ($1,170,164) $3,989,369 $5,442,106 $6,784,185 $11,013,769 139 CITY OF LINO LAKES, MINNESOTA FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 2010 2011 2012 2013 General Fund: Reserved $181,471 $ - $ - $ - Unreserved 5,445,334 - - - Nonspendable - 165,079 180,786 176,797 Committed - - - - Unassigned - 5,440,101 5,053,031 5,209,286 Total general fund $5,626,805 $5,605,180 $5,233,817 $5,386,083 All other governmental funds: Reserved reported in: Special revenue funds $227,342 $ - $ - $ - Capital projects funds 658,875 - - - Debt service funds 2,986,102 - - - Permanent funds 100,000 - - - Unreserved reported in: Special revenue funds 110,471 - - - Capital projects funds 12,537,841 - - - Debt service funds (1,093,765) - - - Permanent funds 12,676 - - - Nonspendable - 906,010 823,113 101,710 Restricted - 2,658,010 3,041,524 3,651,550 Committed - 110,568 115,196 121,075 Assigned - 10,808,268 15,573,179 15,710,702 Unassigned - (3,154,496) (3,262,728) (3,393,547) Total all other governmental funds $15,539,542 $11,328,360 $16,290,284 $16,191,490 Total all funds $21,166,347 $16,933,540 $21,524,101 $21,577,573 The City implemented GASB Statement No. 54 for the fiscal year ended December 31, 2011. Information for years prior to 2011 is presented in accordance with fund balance classifications in effect at that time. 140 Table 3 2014 2015 2016 2017 2018 2019 $ - $ - $ - $ - $ - $ - - - - - - - 253,471 220,677 225,114 243,317 286,186 296,907 - - - - - 443,900 5,053,064 5,725,736 6,031,077 6,573,608 6,599,956 6,052,388 $5,306,535 $5,946,413 $6,256,191 $6,816,925 $6,886,142 $6,793,195 $ - $ - $ - $ - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 101,302 101,177 101,220 101,659 101,998 102,842 2,830,526 2,637,638 6,502,424 5,289,641 9,824,255 6,650,462 152,078 163,239 170,950 175,401 182,613 175,485 18,027,773 15,022,852 15,778,480 14,581,669 19,195,652 19,672,706 (375,851) (3,815,304)(978,496) (2,909,173) (2,935,459) (3,171,161) $20,735,828 $14,109,602 $21,574,578 $17,239,197 $26,369,059 $23,430,334 $26,042,363 $20,056,015 $27,830,769 $24,056,122 $33,255,201 $30,223,529 141 CITY OF LINO LAKES, MINNESOTA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years 2010 2011 2012 2013 Revenues: Property taxes $8,647,488 $8,655,971 $8,560,340 $8,475,214 Licenses and permits 330,138 322,030 319,172 431,654 Intergovernmental 1,176,863 1,331,914 5,267,570 500,963 Special assessments 851,270 904,522 816,998 2,130,519 Charges for services 780,044 812,604 744,633 717,300 Fines and forfeits 127,203 154,020 155,956 119,079 Investment earnings 225,677 251,244 202,825 (53,466) Miscellaneous 502,992 460,710 414,088 384,749 Total revenues 12,641,675 12,893,015 16,481,582 12,706,012 Expenditures: Current: General government 1,730,390 1,773,515 1,619,215 1,569,722 Public safety 3,798,106 3,791,329 3,861,265 3,744,957 Public services 2,848,232 3,251,923 4,396,406 3,956,766 Conservation of natural resources 185,232 134,122 176,318 134,127 Community development 1,098,682 624,286 435,154 418,533 Capital outlay 282,938 4,209,593 616,931 291,135 Debt service: Principal 1,866,000 2,030,000 2,145,000 2,214,000 Interest and fiscal charges 1,042,883 983,129 831,875 774,172 Bond issuance costs - - 47,054 17,137 Total expenditures 12,852,463 16,797,897 14,129,218 13,120,549 Excess (deficiency) of revenues over expenditures (210,788) (3,904,882) 2,352,364 (414,537) Other financing sources (uses): Proceeds from sale of capital assets 20,600 50,953 4,175 16,727 Insurace recovery - - - - Issuance of debt 1,170,000 120,000 2,165,000 808,000 Premium on bonds issued 10,980 - - 6,558 Payment to refunded bond escrow agent (965,000) - - (435,000) Loan payable reapportionment - (565,000) - - Transfers in 1,195,747 2,971,715 1,979,457 1,722,541 Transfers out (1,127,625) (2,905,593) (1,910,435) (1,650,817) Total other financing sources (uses)304,702 (327,925) 2,238,197 468,009 Special item - withdrawal from fire district - - - - Net change in fund balance $93,914 ($4,232,807) $4,590,561 $53,472 Debt service as a percentage of noncapital expenditures 23.1%23.9%22.0%23.3% Debt service as a percentage of total expenditures 22.6%17.9%21.1%22.8% 142 Table 4 2014 2015 2016 2017 2018 2019 $8,612,011 $8,950,507 $9,369,090 $9,772,741 $10,215,761 $10,685,592 407,681 551,202 895,581 1,447,571 1,260,046 941,569 823,025 679,627 706,944 1,080,953 3,453,300 688,389 1,278,202 703,141 4,400,635 2,283,974 2,005,970 1,935,178 731,640 696,501 1,293,556 1,327,781 1,003,896 1,862,803 149,653 127,803 251,653 613,593 137,940 131,936 265,794 112,915 210,142 207,792 369,485 1,029,944 767,477 766,072 417,448 410,640 323,379 265,130 13,035,483 12,587,768 17,545,049 17,145,045 18,769,777 17,540,541 1,692,175 1,643,966 1,845,667 1,952,669 1,948,909 2,007,741 3,845,732 11,895,482 4,333,080 4,360,517 4,575,957 4,720,122 4,156,497 4,779,696 3,203,837 3,414,412 3,148,058 3,538,624 149,292 191,038 201,635 183,392 199,026 207,919 402,750 422,935 425,402 433,144 572,910 680,419 674,488 1,566,057 3,044,615 2,152,848 3,469,208 7,444,939 3,664,000 2,802,511 2,769,525 8,058,525 3,130,600 2,815,075 696,780 542,166 816,362 640,029 437,659 562,471 - 62,831 98,906 - - - 15,281,714 23,906,682 16,739,029 21,195,536 17,482,327 21,977,310 (2,246,231) (11,318,914)806,020 (4,050,491) 1,287,450 (4,436,769) 1,727 54,522 72,182 103,328 49,391 77,986 - - - - - 711,854 3,140,000 8,606,250 5,464,000 311,000 7,218,900 388,535 - 114,960 41,497 - 401,193 - - - - - - - - - - - - - 2,608,534 3,392,971 3,521,180 6,984,443 4,266,440 2,777,663 (2,539,240) (3,336,137) (3,241,959) (7,122,927) (4,024,295) (2,550,941) 3,211,021 8,832,566 5,856,900 275,844 7,911,629 1,405,097 - - 1,111,834 - - - $964,790 ($2,486,348) $7,774,754 ($3,774,647) $9,199,079 ($3,031,672) 29.9%15.0%26.2%45.4%25.5%23.2% 28.5%14.0%21.4%41.0%20.4%15.4% 143 CITY OF LINO LAKES, MINNESOTA ASSESSED AND ACTUAL VALUE OF TAXABLE PROPERTY Table 5 Last Ten Fiscal Years Estimated Commercial/ Total Taxable Taxable Payable Residential Industrial Personal Assessed Total Direct Market Year Property Property Property Value Tax Rate Value 2010 $17,978,917 $3,800,004 $291,904 $22,070,825 37.91 $2,001,889,600 2011 16,214,698 3,223,901 303,964 19,742,563 42.04 1,804,121,500 2012 14,743,557 2,945,026 310,870 17,999,453 42.89 1,640,455,854 2013 13,693,905 2,571,769 336,047 16,601,721 46.77 1,519,857,242 2014 13,646,798 2,450,473 341,974 16,439,245 46.68 1,509,921,169 2015 15,455,516 2,536,783 347,316 18,339,615 43.77 1,694,366,064 2016 15,472,329 2,609,482 359,006 18,440,817 46.02 1,699,288,883 2017 16,480,328 2,767,099 396,378 19,643,805 45.14 1,808,417,118 2018 17,879,879 2,966,548 442,867 21,289,294 42.83 1,959,826,108 2019 18,920,892 3,294,449 471,895 22,687,236 41.82 2,082,803,803 The tax capacity (assessed taxable value) of the property is calculated by applying a statutory formula to the estimated market value of the property. Source: Anoka County, Minnesota Assessors' Office 144 CITY OF LINO LAKES, MINNESOTA DIRECT AND OVERLAPPING PROPERTY TAX CAPACITY RATES Table 6 Last Ten Fiscal Years (rate per $100 of Tax Capacity) General Centennial Other Total Direct and Fiscal Basic Obligation Total School District Anoka Taxing Total Overlapping Year Rate Debt Service Direct ISD # 12 County Districts Overlapping Tax Rate 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 2016 35.025 10.994 46.019 36.426 38.894 6.405 81.725 127.744 2017 35.105 10.035 45.140 29.097 36.841 5.810 71.748 116.888 2018 36.168 6.658 42.826 34.970 35.334 5.658 75.962 118.788 2019 33.875 7.942 41.817 35.984 34.473 5.300 75.757 117.574 The majority of the City is serviced by School District 12. Rates for debt service are based on each year's requirements Source: Anoka County Property Records and Tax Division City Direct Rate Overlapping Rates 145 - This page intentionally left blank - 146 CITY OF LINO LAKES, MINNESOTA PRINCIPAL PROPERTY TAXPAYERS Table 7 Current Year and Nine Years Ago Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Net Tax Net Tax Net Tax Net Tax Taxpayer Capacity Rank Capacity Capacity Rank Capacity AX Lino Lakes LP $371,186 1 1.64% $ - - 0.00% Target Corporation 225,052 2 0.99% 254,772 1 1.15% Northern States Power Co 214,794 3 0.95% 141,737 6 0.64% WI MN AB BIYNAH LLC 207,126 4 0.91% - - - Minnegasco Inc 138,204 5 0.61% - - - Gargaro Properties LLC 130,356 6 0.57% - - - Moline Concrete Products 121,210 7 0.53% 150,370 4 0.68% Taylor Corporation 109,834 8 0.48% 132,706 8 0.60% Kohl's Department Store 92,196 9 0.41% 140,438 7 0.64% Marmon/Keystone Corp 89,730 10 0.40% - - - Lino Lakes Realty LLC - - 242,114 2 1.10% Marshall Investment Corp - - 164,371 3 0.74% Lino Lakes Assisted Living LLC - - 147,060 5 0.67% Royal Oaks Realty Inc - - 115,350 9 0.52% F&G Incorporated - - 108,700 10 0.49% Total $1,699,688 7.49% $1,597,618 7.23% Source: Anoka County 2019 2010 147 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 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% 2016 7,018,572 2,039,856 9,058,428 9,022,964 99.6% 2017 7,360,431 2,131,424 9,491,855 9,439,688 99.5% 2018 8,165,859 1,610,873 9,776,732 9,729,472 99.5% 2019 8,193,124 1,862,292 10,055,416 9,981,243 99.3% Current year levies and collections include State levy related credits, but do not include tax increment levies and collections. 148 Table 8 Total Collections to Date Collections in Percentage Outstanding Percentage Subsequent of Delinquent of Levy Years Amount Levy Taxes Outstanding $183,079 $8,583,518 98.7%$111,896 1.3% 127,296 8,614,141 99.5%45,859 0.5% 78,631 8,174,133 99.4%53,126 0.6% 70,352 8,165,263 99.4%50,365 0.6% 42,365 8,272,351 99.7%23,693 0.3% 26,865 8,657,695 99.7%28,377 0.3% 9,148 9,032,112 99.7%26,316 0.3% 15,960 9,455,648 99.6%36,207 0.4% 30,735 9,760,207 99.8%16,525 0.2% - 9,981,243 99.3%74,173 0.7% 149 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 Fiscal Obligation Assessments Long-Term Revenue Year Bonds Payable Debt Bonds 2010 $10,141,000 $9,175,000 $4,260,000 $795,000 2011 9,421,000 7,985,000 3,695,000 405,000 2012 10,331,000 7,095,000 3,695,000 - 2013 9,610,000 5,975,000 3,695,000 - 2014 9,036,000 7,640,000 2,080,000 - 2015 16,377,291 6,620,000 1,720,000 - 2016 18,337,081 7,795,000 1,609,000 - 2017 14,837,768 4,905,000 233,475 - 2018 20,360,713 3,890,000 202,125 - 2019 18,952,364 2,855,000 169,950 - Details regarding the City'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 yet available for 2019 from the Bureau of Economic Analysis Report 150 Table 9 Total Percentage Percentage Primary of Assessed of Personal Per Government Market Value Income Capita $24,371,000 1.22%3.13%$1,206 21,506,000 1.19%2.59%1,049 21,121,000 1.29%2.46%1,024 19,280,000 1.27%2.19%925 18,756,000 1.24%2.04%888 24,717,291 1.46%2.64%1,205 27,741,081 1.63%2.84%1,334 19,976,243 1.10%1.94%946 24,452,838 1.25%2.23%1,145 21,977,314 1.03%(1)994 151 CITY OF LINO LAKES, MINNESOTA RATIOS OF NET GENERAL BONDED DEBT Last Ten Fiscal Years General Special Total Fiscal Obligation Assessments Primary Year Bonds Payable Government 2010 $10,141,000 $9,175,000 $19,316,000 2011 9,421,000 7,985,000 17,406,000 2012 10,331,000 7,095,000 17,426,000 2013 9,610,000 5,975,000 15,585,000 2014 9,036,000 7,640,000 16,676,000 2015 16,377,291 6,620,000 22,997,291 2016 18,337,081 7,795,000 26,132,081 2017 14,837,768 4,905,000 19,742,768 2018 20,360,713 3,890,000 24,250,713 2019 18,952,364 2,855,000 21,807,364 Details regarding the City's outstanding debt can be found in the notes to the financial statements. See the Demographic and Economic Statistics schedule for population data. Governmental Activities 152 Table 10 Less: Amounts Percentage Per Available in Debt Net of Assessed Per Capita (Total)Service Funds Bonded Debt Market Value Capita (Net) $955 $2,986,102 $16,329,898 0.82%$808 849 2,638,129 14,767,871 0.82%720 845 3,035,557 14,390,443 0.88%698 748 3,357,196 12,227,804 0.80%587 789 2,501,738 14,174,262 0.94%671 1,121 2,813,226 20,184,065 1.19%984 1,256 8,420,263 17,711,818 1.04%851 935 5,171,905 14,570,863 0.81%690 1,102 4,456,461 19,794,252 1.01%900 986 4,772,799 17,034,565 0.80%765 153 CITY OF LINO LAKES, MINNESOTA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Table 11 As of December 31, 2019 Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable*Debt Overlapping debt: Anoka County $73,895,000 6.1%$4,518,961 ISD 12 95,506,668 43.8%41,868,817 ISD 624 77,560,000 3.0%2,337,742 ISD 831 155,405,000 7.1%11,027,665 Metropolitan Council 1,555,384,035 0.6%8,886,568 Rice Creek Watershed District 54,315 32.4%17,615 Anoka County Railroad Authority 21,655,000 6.1%1,324,292 Total overlapping 69,981,660 City of Lino Lakes direct debt $21,977,314 100%21,977,314 Total direct and overlapping debt $91,958,974 *For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each unit's total taxable assessed value. 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. Sources: taxable value data used to estimate applicable percentages provided by the County Property Appraiser. Debt outstanding data provided by each governmental unit. 154 CITY OF LINO LAKES, MINNESOTA LEGAL DEBT MARGIN INFORMATION Table 12 Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2019 Market value $2,183,201,500 Applicable percentage 3% Debt limit 65,496,045 Debt applicable to limit: Total bonded debt 21,977,314 Less: Special assessment bonds (2,855,000) Tax abatement bonds (1,130,000) Tax increment bonds (1,235,000) Utility revenue bonds (3,120,000) 13,637,314 Legal debt margin $51,858,731 Net Debt Net Debt Legal Amount of Debt Applicable Fiscal Debt Applicable to Debt Applicable to to Limit Year Population Limit Limit Margin Debt Limit Per Capita 2010 20,216 $60,622,086 $3,386,000 $57,236,086 5.59%$167 2011 20,505 54,123,645 2,961,000 51,162,645 5.47%144 2012 20,625 49,213,676 4,591,000 44,622,676 9.33%223 2013 20,833 45,595,717 4,280,000 41,315,717 9.39%205 2014 21,129 45,297,635 4,191,000 41,106,635 9.25%198 2015 20,519 50,830,982 11,941,250 38,889,732 23.49%582 2016 20,803 50,978,666 10,122,081 40,856,585 19.86%487 2017 21,117 54,252,514 10,426,243 43,826,271 19.22%494 2018 22,000 58,794,783 14,497,838 44,296,945 24.66%659 2019 21,650 65,496,045 13,637,314 51,858,731 20.82%630 Legal Debt Margin Calculation for Fiscal Years 2010 Through 2019 155 CITY OF LINO LAKES, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Table 13 Last Ten Fiscal Years (2)(2) Personal Per Income Capita (3)(4) Fiscal (1)(thousands Personal School Unemployment Year Population of dollars)Income Enrollment Rate 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 20,519 934,764 45,556 6,371 3.3% 2016 20,803 975,682 46,901 6,473 3.9% 2017 21,117 1,028,123 48,687 6,500 3.1% 2018 22,000 1,094,205 51,258 6,558 3.9% 2019 21,650 Not available Not available 6,641 3.2% Sources: (1) Estimates from Metropolitan Council, except for 2010 which is per the U.S. Census and 2016 which is a 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 (audit report). (4) Information from MN Department of Employment and Economic Development. Anoka County statistics used as local information is unavailable. 156 CITY OF LINO LAKES, MINNESOTA PRINCIPAL EMPLOYERS Table 14 Current Year and Nine Years Ago Percentage Percentage of Total City of Total City Employer Employees Rank Employment(1)Employees Rank Employment(1) State of Minnesota Corrections 478 1 25.3% 500 1 28.4% ISD 12 - Centennial Schools 391 2 20.7% - - - Target Corporation 200 3 10.6% 271 2 15.4% Molin Concrete Products 130 4 6.9% 179 4 10.2% Rehbein Transit, Inc.130 5 6.9% 120 7 6.8% Anoka County Juvenile Center 130 6 6.9% 149 6 8.5% Kohls 123 7 6.5% - - - YMCA 120 8 6.3% - - - Distribution Alternatives 120 9 6.3% - - - City of Lino Lakes 69 10 3.6%74 8 4.2% Curtis 1000 (AdGraphics/Taylor Corp) - - - 190 3 10.8% Customer Manufacturing - - - 60 9 3.4% Nol-Tech Systems, Inc. - - - 56 10 3.2% Synovis Interventional Systems - - - 160 5 9.1% Total 1,891 1,759 (1)The statistic for total City employment is not available, therefore the percentage represents the percentage of the top ten listed. Source: City of Lino Lakes Official Statements and employer surveys 2019 2010 157 CITY OF LINO LAKES, MINNESOTA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years 2010 2011 2012 2013 General Government: Administration 4.00 3.50 3.50 3.50 Seniors 0.63 - - - Finance 3.00 3.00 3.00 3.00 Economic Development 1.00 1.00 1.00 - Planning 2.00 1.00 1.00 1.00 Community Development 2.25 2.00 2.00 2.00 Building 1.00 - - - Other 1.40 0.70 0.70 0.70 Total General Government 15.28 11.20 11.20 10.20 Public Safety: Sworn Officers 27.00 25.00 25.00 25.00 Civilians 4.25 4.00 3.00 3.00 Fire - - - - Building Inspection 2.75 2.50 2.50 2.50 Total Public Safety 34.00 31.50 30.50 30.50 Public Works: Streets 6.85 7.00 7.00 7.00 Other 1.15 1.00 1.00 1.00 Total Public Works 8.00 8.00 8.00 8.00 Parks, Recreation and Forestry 9.30 9.00 9.00 8.70 Water 2.15 2.15 2.15 2.30 Sewer 2.15 2.15 2.15 2.30 Total 70.88 64.00 63.00 62.00 Source: City Finance Office Full-Time-Equivalent Employees as of December 31, 158 Table 15 2014 2015 2016 2017 2018 2019 3.50 3.50 4.00 4.00 4.00 4.00 - - - - - - 3.00 3.00 3.50 3.50 3.50 3.50 - - - - - - 1.00 1.00 1.00 1.00 1.00 1.00 2.00 2.00 2.00 2.00 2.00 2.00 - - - - - - 0.70 0.70 0.65 0.65 0.65 0.65 10.20 10.20 11.15 11.15 11.15 11.15 25.00 26.00 27.00 27.00 27.00 27.00 4.00 4.00 4.50 4.50 4.00 4.00 1.00 1.00 1.50 1.50 1.50 1.50 2.00 2.00 2.50 2.50 2.50 3.50 32.00 33.00 35.50 35.50 35.00 36.00 7.00 7.00 6.50 6.65 6.65 6.65 1.00 1.00 1.50 1.50 1.50 1.50 8.00 8.00 8.00 8.15 8.15 8.15 8.70 8.70 7.75 7.90 6.90 6.90 2.30 2.30 2.30 2.70 3.20 3.20 2.30 2.30 2.30 2.70 3.20 3.20 63.50 64.50 67.00 68.10 67.60 68.60 Full-Time-Equivalent Employees as of December 31, 159 CITY OF LINO LAKES, MINNESOTA OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years 2010 2011 2012 2013 General Government: Elections 2 1 2 1 Registered voters 12,284 11,705 13,478 12,020 Number of votes cast 8,545 4,314 11,546 1,575 Voter participation (registered) 69.6% 36.9% 85.7% 13.1% Public Safety: Police: Calls for Service 6,398 6,384 6,344 6,210 Traffic Citations & Warnings 2,743 2,604 2,694 2,597 Part I Crime Rate 982 1,117 983 918 Part II Crime Rate 2,911 2,911 2,396 2,144 Police: Case Numbers Generated Avg Response Time (Emergency & Non-Emergency) Part I Crime Offenses Part II Crime Offenses Group A Group B Clearance Rate Fire: Fire Call Load Fire Property Loss Fire Property Saved Fire Inspections Inspections: Building Permits (1) (2) 509 452 459 490 Value of Building Permits $11,295,493 $11,192,264 $10,751,626 $17,683,665 Public Works: General Maintenance (hours)4,945 7,416 6,939 3,994 Street Mantenance (hours)3,099 4,352 5,926 5,740 Fleet Maintenance (hours)4,850 4,214 3,945 4,548 Snow Plowing/Sanding (hours)1,638 1,534 594 1,639 Culture and Recreation: Parks Park Maintenance (hours)9,257 9,813 9,739 8,480 Utilities: Water Maintenance (hours)3,560 3,568 3,585 3,119 Sanitary Sewer Maintenance (hours)3,531 3,557 3,517 3,109 (1) 4,337 and 581 repair permits issued in 2008 - 2009, respectively, due to storm damage. (2) Increase in permits issued - June 2017 storm damage. (3) The Public Safety Department modified the metrics maintained for business purposes in 2016. Those changes are reflected in the 2016-2018 Operating Indicators. (4) Transition to FBI Uniform Crime Reporting NIBRS (National Incident Based Reporting System) in 2019. January -July 2019 SRS, August-Dec 2019 NIBRS. Source: Various City Departments 160 Table 16 2014 2015 2016 2017 2018 2019 212121 12,610 12,143 13,636 12,624 12,860 13,312 7,854 4,085 11,562 2,165 10,738 3,075 62.3% 33.6% 84.8% 17.1% 83.5% 23.1% 6,281 6,210 6,210 (3) (3) (3) 2,296 2,199 2,199 (3) (3) (3) 631 1,226 1,091 (3) (3) (3) 1,836 2,395 3,635 (3) (3) (3) 16,321 18,199 14,487 13,973 5:26 minutes 4:42 minutes 5:16 minutes 5:53 minutes 224 176 195 93 (4) 746 808 587 304 (4) 266 (4) 98 (4) 73% 82% 69% 60% 269 316 356 379 $694,000 $325,100 $205,200 $246,600 $10,511,300 $6,342,100 $1,791,500 $7,548,100 53 117 107 98 431 654 761 5,422 3,281 1,107 $13,535,514 $26,570,593 $53,390,619 $50,984,047 $50,990,945 $41,766,531 5,200 7,839 5,534 6,313 420 7,420 3,840 3,347 4,053 3,765 12,418 4,328 4,746 4,322 4,437 3,986 2,648 3,504 2,141 754 960 928 2,117 2,130 8,537 8,332 9,698 8,576 9,027 9,610 3,189 3,240 3,539 3,278 4,080 3,944 3,178 3,240 3,539 3,278 4,080 3,944 161 CITY OF LINO LAKES, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Table 17 Last Ten Fiscal Years 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Public Safety: Police: Stations 1 1 1 1 1 1 1 1 1 1 Patrol Units 12 12 12 12 12 12 12 12 12 12 Fire: Stations 1 1 1 1 1 2 2 2 2 2 Fire Trucks 5 5 5 5 5 7 7 8 8 8 Public Works: Lights 673 673 673 673 673 673 815 838 854 859 Vehicles 29 29 29 29 29 29 39 39 39 39 City Streets (miles)100.7 100.7 100.7 100.7 100.7 100.7 100.7 100.7 106.9 108.2 Culture & Recreation: Parks: Parks 18 18 18 18 18 18 17 18 19 19 Park Acres 141 141 141 141 141 141 139.6 147 152 152 Trails (miles)26 26 26 26 26 26 29.75 30 30 30 Park Shelters 7 6 6 6 6 6 6 6 7 7 Basketball Courts 6 6 6 6 6 6 6 6 7 7 Fishing Pier 1 1 1 1 1 1 1 - - - Skating Rinks 4 4 4 4 4 4 4 3 3 3 Soccer Fields 8 8 8 8 8 8 6 4 4 4 Baseball/Softball Fields 20 20 20 20 20 20 8 8 8 8 Tennis Courts 2 2 2 2 2 2 2 - - 1 Playgrounds 16 16 16 16 16 16 15 16 17 17 Water: Distribution System (miles)74.7 74.7 74.7 74.7 74.7 74.7 85.6 99.4 89.0 89.5 Water Connections 4,382 4,424 4,452 4,484 4,520 4,542 4,649 4,738 4,919 4,990 Gallons Pumped (millions)498 492 609 536 536 449 452 494 508 493 Number of Fire Hydrants 538 538 538 538 538 1,024 1,024 1,028 942 937 Water Tower Capacity (millions gallons)2 2 2 2 2 2 2 2 2 2 Sanitary Sewer: Collection System (miles)69.8 69.8 69.8 69.8 69.8 77.9 77.9 87.0 79.5 80.1 Sewer Connections 4,530 4,567 4,567 4,624 4,685 4,685 4,817 4,976 5,102 5,276 Storm Sewer: Pipe (miles) 41.4 41.4 41.4 41.4 41.4 41.4 53.7 54.1 55.0 55.6 Source: Various City Departments 162 OTHER INFORMATION (UNAUDITED) 163 CITY OF LINO LAKES, MINNESOTA SCHEDULE OF LONG-TERM DEBT December 31, 2019 Final Interest Issue Maturity Rates Date Date Long-term debt: General Obligation Bonds: 2015B Certificates of Indebtedness 1.50% 8/25/15 12/31/20 2016A Certificates of Indebtedness 1.00% 2/1/16 12/31/19 2017A Certificates of Indebtedness 1.00% 3/1/17 12/31/20 2018A Certificates of Indebtedness 1.00% 2/1/18 12/31/21 2019A Certificates of Indebtedness 1.00% 2/1/19 12/31/22 G.O. TIF Bonds, Series 2007A 4.00% - 4.125% 7/15/17 2/1/24 G.O. Refunding Bonds, Series 2012A 1.00% - 2.00% 11/15/12 2/1/24 G.O. Bonds, Series 2015A 2.00% - 3.00% 8/1/15 2/1/31 EDA Lease Revenue Bonds, Series 2015B 2.00% - 3.00% 10/1/15 4/1/36 G.O. Utility Revenue Bonds, Series 2016A 2.00% 11/23/16 2/1/27 G.O. Tax Abatement Refunding Bonds, Series 2016C 1.00% - 1.50% 11/23/16 2/1/23 G.O. Bonds, Series 2018A 2.05% - 3.50% 12/19/18 2/1/34 Total General Obligation Bonds Special Assessment Bonds: G.O. Imp & Utility Revenue Bonds, Series 2010A 2.00% - 3.00% 7/9/10 2/1/20 G.O. Improvement Bonds, Series, 2013A 1.25% - 4.00% 7/15/13 2/1/24 G.O. Improvement Bonds, Series 2014A 0.40% - 2.30% 11/20/14 2/1/26 G.O. Improvement Refunding Bonds, Series 2016B 0.875% - 1.50% 11/23/16 2/1/21 Total Special Assessment Bonds G.O. Capital Note, Series 2016A 2.00% 4/14/16 2/1/26 Total long-term debt 164 Exhibit 1 Payable Payable Principal Original Prior January 1, December 31, Due in Issue Payments 2019 Issued Payments 2019 2020 963,000 565,000 398,000 - 197,000 201,000 201,000 469,000 311,000 158,000 - 158,000 - - 311,000 102,000 209,000 - 104,000 105,000 105,000 303,900 - 303,900 - 103,900 200,000 100,000 388,535 - - 388,535 - 388,535 126,000 4,215,000 2,780,000 1,435,000 - 200,000 1,235,000 215,000 2,015,000 975,000 1,040,000 - 230,000 810,000 160,000 3,095,000 385,000 2,710,000 - 200,000 2,510,000 200,000 4,350,000 335,000 4,015,000 - 175,000 3,840,000 175,000 1,420,000 130,000 1,290,000 - 135,000 1,155,000 140,000 1,600,000 225,000 1,375,000 - 245,000 1,130,000 260,000 6,915,000 - 6,915,000 - - 6,915,000 90,000 26,045,435 5,808,000 19,848,900 388,535 1,747,900 18,489,535 1,772,000 1,000,000 780,000 220,000 - 105,000 115,000 115,000 615,000 240,000 375,000 - 60,000 315,000 60,000 2,645,000 845,000 1,800,000 - 380,000 1,420,000 380,000 1,975,000 480,000 1,495,000 - 490,000 1,005,000 495,000 6,235,000 2,345,000 3,890,000 0 1,035,000 2,855,000 1,050,000 294,525 92,400 202,125 - 32,175 169,950 33,000 $32,574,960 $8,245,400 $23,941,025 $388,535 $2,815,075 $21,514,485 $2,855,000 2019 165 CITY OF LINO LAKES, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES December 31, 2019 Year of Certificates of Certificates of Certificates of Certificates of Levy/Indebtedness Indebtedness Indebtedness Indebtedness Collection 2015B 2017A 2018A 2019A 2019/2020 $214,216 $111,353 $107,100 $140,119 2020/2021 - - 106,050 140,307 2021/2022 - - - 139,493 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 - - - - $214,216 $111,353 $213,150 $419,919 166 Exhibit 2 G.O. G.O. EDA Lease Tax Abatement Refunding G.O. Revenue Refunding G.O. Bonds Bonds Bonds Bonds Bonds 2012A 2015A 2015B 2016C 2018A Total $178,080 $271,228 $317,297 $301,571 $481,799 $2,122,762 175,896 266,923 316,877 313,567 483,899 1,803,519 178,794 267,868 316,299 325,054 485,212 1,712,720 176,109 273,958 320,814 - 485,737 1,256,618 - 274,588 319,764 - 485,474 1,079,827 - 269,863 318,557 - 484,214 1,072,634 - 269,798 317,192 - 482,639 1,069,628 - 222,364 315,669 - 485,527 1,023,560 - 222,626 319,239 - 482,114 1,023,980 - 222,758 317,244 - 480,644 1,020,646 - 221,708 320,342 - 484,109 1,026,158 - - 317,231 - 481,320 798,551 - - 319,200 - 482,908 802,108 - - 318,780 - 478,170 796,950 - - 317,940 - - 317,940 - - 316,680 - - 316,680 $708,879 $2,783,681 $5,089,127 $940,191 $6,763,765 $17,244,281 167 CITY OF LINO LAKES, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY December 31, 2019 Certificates of Certificates of Indebtedness Indebtedness 2015B 2017A Bonds payable $201,000 $105,000 Future interest payable 3,015 1,050 $204,015 $106,050 Payments to maturity: 2020 204,015 106,050 2021 - - 2022 - - 2023 - - 2024 - - 2025 - - 2026 - - 2027 - - 2028 - - 2029 - - 2030 - - 2031 - - 2032 - - 2033 - - 2034 - - 2035 - - 2036 - - $204,015 $106,050 168 Exhibit 3 Page 1 of 2 G.O. Certificates of Certificates of G.O. TIF Refunding G.O. Indebtedness Indebtedness Bonds Bonds Bonds 2018A 2019A 2007A 2012A 2015A $200,000 $388,535 $1,235,000 $810,000 $2,510,000 3,000 11,389 133,447 30,843 369,781 $203,000 $399,924 $1,368,447 $840,843 $2,879,781 102,000 133,447 261,026 170,520 255,312 101,000 133,626 267,126 168,560 256,263 - 132,851 272,504 166,400 252,163 - - 282,016 169,001 253,013 - - 285,775 166,362 258,712 - - - - 259,263 - - - - 254,481 - - - - 254,362 - - - - 209,400 - - - - 209,587 - - - - 209,150 - - - - 208,075 - - - - - - - - - - - - - - - - - - - - - - - - - $203,000 $399,924 $1,368,447 $840,843 $2,879,781 169 CITY OF LINO LAKES, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY December 31, 2019 G.O. Tax EDA Lease G.O. Utility Abatement Revenue Revenue Refunding G.O. Bonds Bonds Bonds Bonds 2015B 2016A 2016C 2018A Bonds payable $3,840,000 $1,155,000 $1,130,000 $6,915,000 Future interest payable 1,244,631 93,750 33,085 2,179,556 $5,084,631 $1,248,750 $1,163,085 $9,094,556 Payments to maturity: 2020 298,937 161,700 273,770 367,788 2021 299,488 158,900 285,422 631,412 2022 299,012 156,100 296,605 637,537 2023 298,388 158,250 307,288 637,537 2024 302,538 155,350 - 641,413 2025 301,462 152,450 - 642,575 2026 300,237 154,500 - 632,987 2027 298,863 151,500 - 634,112 2028 297,338 - - 633,987 2029 300,587 - - 638,012 2030 298,613 - - 597,187 2031 301,106 - - 606,025 2032 298,062 - - 598,650 2033 298,800 - - 600,094 2034 298,200 - - 595,240 2035 297,200 - - - 2036 295,800 - - - $5,084,631 $1,248,750 $1,163,085 $9,094,556 170 Exhibit 3 Page 2 of 2 G.O. G.O. Imp & G.O. G.O. Improvement Utility Revenue Improvement Improvement Refunding G.O. Capital Bonds Bonds Bonds Bonds Note 2010A 2013A 2014A 2016B 2016A Total $115,000 $315,000 $1,420,000 $1,005,000 $169,950 $21,514,485 1,725 31,800 68,711 14,693 10,330 4,230,806 $116,725 $346,800 $1,488,711 $1,019,693 $180,280 $25,745,291 116,725 71,100 401,788 505,868 36,399 3,466,445 - 69,000 406,390 513,825 35,739 3,326,751 - 71,500 162,055 - 35,904 2,482,631 - 68,900 159,280 - 36,053 2,369,726 - 66,300 161,151 - 36,185 2,073,786 - - 162,645 - - 1,518,395 - - 35,402 - - 1,377,607 - - - - - 1,338,837 - - - - - 1,140,725 - - - - - 1,148,186 - - - - - 1,104,950 - - - - - 1,115,206 - - - - - 896,712 - - - - - 898,894 - - - - - 893,440 - - - - - 297,200 - - - - - 295,800 $116,725 $346,800 $1,488,711 $1,019,693 $180,280 $25,745,291 171 CITY OF LINO LAKES, MINNESOTA INSURANCE IN FORCE Exhibit 4 December 31, 2019 Amount General Liability: Bodily Injury/Property Damage $2,000,000 Personal Injury/Police Professional Liability 2,000,000 Medical Expense Occurrence Limit 2,500 Medical Expense Aggregate 10,000 Property Damage ($1,000 Deductible) Property: Buildings and Contents (including Mobile and EDP - Electronic Equipment & Valuable Papers)40,925,357 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 2,000,000 Comprehensive and Collision Actual Cash Value Uninsured Motorists 200,000 Worker's Compensation Statutory Employer Liability 1,500,000 Umbrella Liability 1,000,000 Crime - Theft Disappearance and Destruction ($1,000 Deductible)250,000 Coverage 172 CITY OF LINO LAKES, MINNESOTA TAXABLE VALUATIONS, TAX LEVIES AND TAX RATES Exhibit 5 Tax Capacity Tax Capacity Values Values 2018/2019 2017/2018 Taxable valuations: Total $22,687,236 $21,289,294 Fiscal disparities: Distribution 3,211,348 3,014,265 Contribution (1,322,808) (1,215,584) Less: Captured Tax Increment Value (606,568) (421,495) $23,969,208 $22,666,480 Tax Tax Certified Capacity Certified Capacity Levy Rate Levy Rate Taxes Levied: Revenue $8,193,124 33.875 $8,165,859 36.168 Bond and Interest 1,862,292 7.942 1,610,873 6.658 Totals $10,055,416 41.817 $9,776,732 42.826 The tax capacity rate is based on the total certified levy net of the fiscal disparity distribution. 173 - This page intentionally left blank - 174 55 E 5th Street Suite 1400, St. Paul, MN, 55101 651.426.7000 www.redpathcpas.com MINNESOTA LEGAL COMPLIANCE REPORT To the Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota We have audited, 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, 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, Minnesota as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the City of Lino Lakes, Minnesota’s basic financial statements and have issued our report thereon dated May 28, 2020. 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 contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions and tax increment financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statute § 6.65, insofar as they relate to accounting matters. 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, insofar as they relate to accounting matters. The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose. REDPATH AND COMPANY, LTD. St. Paul, Minnesota May 28, 2020 55 E 5th Street Suite 1400, St. Paul, MN, 55101 651.426.7000 www.redpathcpas.com INDEPENDENT AUDITOR’S 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 To the Honorable Mayor and Members of the City Council City of 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, Minnesota as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the City of Lino Lakes, Minnesota’s basic financial statements, and have issued our report thereon dated May 28, 2020. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Lino Lakes, Minnesota’s 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, Minnesota’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Lino Lakes, Minnesota’s 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. Independent Auditor’s 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 Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Lino Lakes, Minnesota’s 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 results of that testing, and not to provide an opinion on the effectiveness of the City of Lino Lakes, Minnesota’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 City of Lino Lakes, Minnesota’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. REDPATH AND COMPANY, LTD. St. Paul, Minnesota May 28, 2020 55 E 5th Street Suite 1400, St. Paul, MN, 55101 651.426.7000 www.redpathcpas.com COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE To the 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, Minnesota (the City) for the year ended December 31, 2019. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated January 6, 2020. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices 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. For the year ended December 31, 2019, the City implemented two statements recently issued by the Governmental Accounting Standards Board: • GASB Statement No. 84, Fiduciary Activities – Deposits payable held by the City are now reported on the statement of net position (Statement 1) and in the General Fund (Statement 3). It was determined the City’s defined contribution plans are not fiduciary component units, and therefore, are not included in the financial statements. • GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements – additional disclosures were added to Note 6 – Long- Term Debt as a result of this Statement. 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 are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current City of Lino Lakes, Minnesota Communication With Those Charged With Governance Page 2 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 City’s financial statements were the discount rate used to measure the net pension liability and management’s estimate relating to the collectability of Legacy at Woods Edge receivables (see page 3). The discount rate is based on actuarial studies and the collectability of receivables is based on anticipated development. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. Determining sensitivity is subjective, however, we believe the disclosures most likely to be considered sensitive are Note 6 – Long-Term Debt, Note 7 – Defined Benefit Pension Plans, Note 10A – Deficit Fund Balances and Note 21 – Subsequent Events and Uncertainties. The financial statement disclosures are neutral, consistent and clear. Difficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. There were no uncorrected misstatements that have an effect on our opinion on the financial statements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s 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 auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated May 28, 2020. City of Lino Lakes, Minnesota Communication With Those Charged With Governance Page 3 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 auditor’s 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. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention 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 retention. Receivables related to the Legacy at Woods Edge Development At December 31, 2019, the balance of receivables related to the Legacy at Woods Edge Development was $6,671,386. The receivables are presented in the financial statements as special assessments receivable ($2,994,379) and interfund loans receivable ($3,677,007). Collection of these amounts is dependent upon receiving sufficient proceeds from land sales and tax increment. Management believes all amounts are collectible. Other Matters We applied certain limited procedures to the management’s discussion and analysis, the budgetary comparison information, and the schedules of OPEB and pension information, which are required supplementary information (RSI) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining and individual nonmajor fund financial statements and schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, 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, and the information City of Lino Lakes, Minnesota Communication With Those Charged With Governance Page 4 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 were not engaged to report on the introductory, statistical or other information sections which accompany the financial statements but are not RSI. Such information has 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. Restriction on Use This information is intended solely for the information and use of the City Council and management of the City of Lino Lakes, Minnesota and is not intended to be, and should not be, used by anyone other than these specified parties. REDPATH AND COMPANY, LTD. St. Paul, Minnesota May 28, 2020 City of Lino Lakes, Minnesota2019 Audit ReviewJune 1, 2020Andy Hering, CPAPhone: 651‐407‐5877Email: ahering@redpathcpas.com1 Reports Issued by AuditorOpinion on the Fair Presentation of the Financial StatementsReport on Internal ControlsReport on Minnesota Legal Compliance Communication to Those Charged with Governance2 ResultsOpinion on the Fair Presentation of the Financial StatementsUnmodified audit opinionReport on Internal ControlsNo findingsMinnesota Legal Compliance ReportNo findingsCommunication With Those Charged with GovernanceStandard communications from auditor to governing body3 Opinion on Financial Statements – Audit ProcessDecember 2019 Planning and preliminary testingJanuary – March 2020City staff accumulate data, record year‐end accruals, prepare audit workpapers, and close the books on 2019April 2020Auditor receives trial balance and workpapers; audit planning is finalizedAudit fieldwork began April 27May 2020Financial statements are drafted by the auditor, reviewed by finance staff. Transmittal letter and MD&A are prepared.4 Opinion on Financial Statements – Audit ProcessAudit Fieldwork – auditor performs tests to verify:Occurrence: recorded transactions and events that have occurred and pertain to the CityCompleteness: all transactions and events that should have been recorded have been recordedAccuracy, Cutoff, Classification: amounts are accurately recorded in the correct year and in the correct accountsData mining techniquesJournal entriesDisbursement register5 Report on Internal ControlsWhat did we do?We gained an understanding of internal controls in place and their effectiveness in order to design our audit procedures.How did we do it?Obtain understanding of controls on each major class of transaction and account balance.Select a sample of transactions and perform detailed tests to determine adherence to controls in place and effectiveness.What is the result?No internal control findings.6 Report on Minnesota Legal ComplianceWhat did we do?•Followed the audit guide published by the Office of the State Auditor. The guide consists of seven sections:–Depositories of public funds and investments–Conflicts of interest–Public indebtedness–Contracting bid laws–Claims and disbursements–Tax increment–Miscellaneous provisionsHow did we do it?•Select sample of transactions to test for compliance with statutory provisions.What is the result?•No legal compliance findings.7 Communication to Those Charged with Governance2 new accounting standards were adoptedAccounting estimates in the financial statements•The discount rate used to measure the net pension liability ($4.9 million)•Receivable collections related to Legacy at Woods EdgeNo difficulties encountered in performing the auditCorrected and Uncorrected Misstatements•2 minor, self‐correcting misstatementsNo disagreements with managementOther Matters•Legacy at Woods Edge receivables•Property tax collection rate – 99.2% for 2019.8 Pensions9General PoliceEmployees and FirePlan Plan Total1Change in net pension liability:2 Change in actuarial assumptions (1)($36,000) ($42,000) ($78,000)3 Change in proportion (2)70,000 107,000 177,0004 Experience difference (3)31,000 31,000 62,0005 Earnings difference (4)14,000 36,000 50,0006 Lino Lakes' share of pension expense 218,000 473,000 691,0007 Contributions to the plan by City of Lino Lakes (211,000) (445,000) (656,000)8 Contributions to the plan by State of Minnesota ‐ (34,000) (34,000)9 Decrease in net pension liability 86,000 126,000 212,00010Beginning net pension liability 2,114,000 2,586,000 4,700,00011Ending net pension liability $2,200,000 $2,712,000 $4,912,0001. The mortality projection scale was updated.2. The City's proportion is based upon its contributions to the plan in comparison to all participants.3. This is the change between expected and actual experience in the measurement of the pension liability.4. This is the difference between projected and actual earnings on plan investments. Summary of Financial Activity10Notes:•Capital project funds – 2018 Street Reconstruction fund balance decreased$4,289,000 during 2019 as proceeds from 2018 bonds were expended•Enterprise funds – unrestricted fund balance increased $667,000 to $16.2MChange Fund CashDebt Interfund in Fund Balance BalanceFund Type Revenue Expenditures Issued Transfers Balance 12/31/2019 12/31/2019General Fund$11,231,000 $10,637,000 $ ‐ ($687,000) ($93,000) $6,793,000 $8,687,000Special Revenue Funds206,000 262,000 ‐ 33,000 (23,000) 639,000 416,000Debt Service Funds2,554,000 3,378,000 ‐ 1,140,000 316,000 1,905,000 4,773,000Capital Project Funds4,327,000 7,699,000 389,000 (259,000) (3,242,000) 20,741,000 19,253,000Permanent Funds14,000 2,000 ‐ ‐ 12,000146,000 146,000Enterprise Funds7,901,000 3,326,000 ‐ (227,000) 4,348,000 52,628,000 15,722,000Total $26,233,000 $25,304,000 $389,000 $ ‐ $1,318,000 $82,852,000 $48,997,000 General Fund Summary11FavorableFinal (Unfavorable)Budget Actual VarianceRevenues $11,117,000 $11,231,000 $114,000Expenditures 10,806,000 10,637,000 169,000Revenues over expenditures 311,000 594,000 283,000Other financing sources (uses): Transfers ‐ net (687,000) (687,000) ‐ Net change in fund balance ($376,000) ($93,000) $283,000 General Fund 5 Year History12Fund BalanceInterfund Ending as a Percent ofTransfers Increase Fund Expenditures &Revenues Expenditures (Net) (Decrease) Balance Transfers Out2019 $11,231,000 $10,637,000 ($687,000) ($93,000) $6,793,000 63%2018 10,770,000 9,407,000 (1,294,000) 69,000 6,886,000 64%2017 10,245,000 9,244,000 (440,000) 561,000 6,817,000 67%2016 9,417,000 8,904,000 (203,000) 310,000 6,256,000 65%2015 9,350,000 8,601,000 (110,000) 639,000 5,946,000 65% General Fund Monthly Cash Balances13 Special Revenue FundsEDA fund balance decreased $79,827 as $85,000 was used for land acquisition.Federal Forfeitures fund was split during 2019.•Federal Forfeitures – Justice•Federal Forfeitures – Treasury14 Debt Service Funds2016B bond fund balance decreased from ($2,150,000) to ($2,283,000). Future land sales and tax increment are expected to cover the deficit.Other debt service funds are operating as expected. Property taxes, tax increment and special assessments are the primary funding sources for the debt service payments.15 Capital Project Funds2018 Street Reconstruction fund ‐ $4,451,000 of expenditures were incurred for the West Shadow Lake Drive and LaMotte Area Street Reconstruction project.$857,000 of expenditures were expended from the Pavement Management Fund. The costs were funded by transfers from the General Fund ($630,000) and the Water Fund ($227,000).16 Enterprise Funds – Cash Flow172019 2018 2019 2018Water Water Sewer SewerFund Fund Fund FundCash flows from: Operating activities$517,000 $473,000 $259,000 $291,000 Investment income210,000 83,000 314,000 131,000 Transfers (227,000) ‐ ‐ 114,000 Acquisition of capital assets (350,000) (11,000) ‐ (3,000) Increase in cash150,000 545,000 573,000 533,000Cash ‐ January 1 6,022,000 5,477,000 8,977,000 8,444,000Cash ‐ December 31 $6,172,000 $6,022,000 $9,550,000 $8,977,000 CITY COUNCIL AGENDA ITEM 5A STAFF ORIGINATOR: Diane Hankee, City Engineer MEETING DATE: June 8, 2020 TOPIC: Resolution No. 20-49, Accepting Quotes and Awarding a Construction Contract, 2020 Trail Maintenance Project VOTE REQUIRED: 3/5 Vote Required INTRODUCTION Staff is requesting authorization to accept quotes and award the construction contract for the 2020 Trail Maintenance Project. BACKGROUND The 2020 Trail Maintenance Project includes: West Shadow Lake Drive - Trail Maintenance Maintenance of the trail that connects to West Shadow Lake Drive between River Birch Place and White Owl Drive includes milling and repaving the trail, root cutting along portions of the trail, and repairing existing culverts to improve drainage. A location map is enclosed. Funding for the project is from the general fund, park budget, in the amount of $40,000.00 and park and trail improvement budget in the amount of $30,000.00. Quotes for the project were received on May 28th, 2020. CONTRACTOR TOTAL QUOTE Allied Blacktop Co. $59,898.55 Arcade Asphalt, Inc. Did Not Quote Bituminous Roadways Inc. $64,911.50 Muellner Blacktop, Inc. Did Not Quote The engineers estimate for the project was $62,800. The low bid was submitted by Allied Blacktop Co. of Maple Grove, Minnesota, in the amount of $59,898.55. Allied Blacktop Co. has adequately completed numerous project in the City of Lino Lakes. The completion date for this project is September 30th, 2020. RECOMMENDATION Staff recommends adoption of Resolution No. 20-49 accepting quotes and awarding a construction contract for the 2020 Trail Maintenance Project, in the amount of $59,898.55 to Allied Blacktop, Co. ATTACHMENTS 1. Resolution No. 20-49 2. Figure 1 – Location Map CITY OF LINO LAKES RESOLUTION NO. 20-49 RESOLUTION ACCEPTING QUOTES, AND AWARDING A CONSTRUCTION CONTRACT, 2020 TRAIL MAINTENANCE PROJECT WHEREAS, pursuant to a request for quotes for the construction of the 2020 Trail Maintenance Project, quotes were received, and tabulated: CONTRACTOR TOTAL QUOTE Allied Blacktop Co. $59,898.55 Arcade Asphalt, Inc. Did Not Quote Bituminous Roadways Inc. $64,911.50 Muellner Blacktop, Inc. Did Not Quote WHEREAS, it appears that Allied Blacktop Co. of Maple Grove, Minnesota, is the lowest responsible bidder; and WHEREAS, the funding for the project is from the general fund, park budget, in the amount of $40,000.00 and park and trail improvement budget in the amount of $30,000.00; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lino Lakes that the Mayor and Clerk are hereby authorized and directed to enter into a contract Allied Blacktop Co. for the construction of the 2020 Trail Maintenance Project in the amount of $59,898.55; Adopted by the Council of the City of Lino Lakes this 8th day of June, 2020. The motion for the adoption of the foregoing resolution was introduced by Council Member _______________and was duly seconded by Council Member ________________ and upon vote being taken thereon, the following voted in favor thereof: The following voted against same: _______________________________ Rob Rafferty, Mayor ATTEST: ________________________ Julianne Bartell, City Clerk Fox Rd River Bi r c h Pl White Owl DrPrairie Flower Rd Muskrat Run F o x C i r Iron w o o d C i r 673 701 707 700 740 736 6397 748 767 6404 713 6400 647 6427 650 661 693 719 654 652 649 728 658 652 657 647 685 653 644 6407 688 720 692 656 679 680 6348 661 6429 624 696 643 725 6462 636 672 664 730 763 6334 635 641 6387 6417 6344 6391 6310 6396 759 6414 6408 6334 6325 6414 6376 6316 731 6307 6420 6408 749 737 755 743 6426 6336 6384 6456 6456 6378 6332 6447 6390 6432 63196328 6450 6333 6356 6438 6420 6402 6439 6420 6412 6383 6443 6456 6326 6318 6345 6327 6398 6384 6315 6396 6426 6444 6438 6450 6444 West Shadow Lake DrFox RdFawn LnK:\015775-000\Cad\Exhibits\015775-000 2020 Trail Maintenance Project - Location.dwg 4/23/2020 8:34:10 AMN SCALE IN FEET 0 200100 Figure 1 - Project Location 2020 Trail Maintenance Project City of Lino Lakes, Minnesota LEGEND EXISTING CITY TRAIL PROPOSED TRAIL REPAIRS WSB PROJECT NO.: 015775-000 CLEAR & GRUB AT CULVERT OUTLET AS DIRECTED BY THE ENGINEER. INSTALL 12" TRASH GUARD. EXACT LOCATION OF TRAIL REPAIRS AND ROOT CUTTING TO BE MARKED IN THE FIELD BY THE ENGINEER. CITY COUNCIL AGENDA ITEM 5B STAFF ORIGINATOR: Diane Hankee PE, City Engineer MEETING DATE: June 8, 2020 TOPIC : Lift Station No. 5 Forcemain Project Restoration i. Consider Resolution No. 20-54, Accepting Quotes, Pavement Restoration ii. Consider Resolution No. 20-58, Accepting Quotes, Concrete Restoration VOTE REQUIRED: 3/5 Vote Required INTRODUCTION Staff is requesting authorization to accept quotes for the Lift Station No. 5 Forcemain Project Restoration. BACKGROUND On April 27, 2020 the City Council approved a construction contract to install a new forcemain from lift station no. 5 to the gravity sewer in Timberwolf Dr. This work occurred along Snow Goose Circle and Pheasant Hills Drive. The forcemain installation contract intentionally did not include site restoration work. The new forcemain has been installed and area is ready for restoration. The low quote for pavement restoration was submitted by Bituminous Roadways, Inc. of Mendota Heights, Minnesota, in the amount of $25,200.00. This includes $11,000.00 of trail paving, the remainder is multiple roadway repairs. The low quote for concrete restoration was submitted by CR Fischer & Sons, Inc. of Farmington, Minnesota, in the amount of $10,700.00. This includes a driveway repair and curb and gutter replacement. Funding for the project is from the Water Operating Fund. The City’s public works department will be involved with other portions of the site restoration including landscape and irrigation repairs and sod/seeding. The start date for this project is the week of June 15, 2020. RECOMMENDATION Staff recommends adoption of Resolutions No. 20-54 and No. 20-58 accepting quotes for the Lift Station No. 5 Forcemain Project Restoration. ATTACHMENTS 1. Resolution No. 20-54 2. Resolution No. 20-58 CITY OF LINO LAKES RESOLUTION NO. 20-54 ACCEPTING QUOTES, LIFT STATION NO. 5 FORCEMAIN PROJECT RESTORATION – PAVEMENT RESTORATION WHEREAS, pursuant to a request for quotes for the Lift Station No. 5 Forcemain Project Restoration, a low quote from Bituminous Roadways, Inc. of Mendota Heights, Minnesota was received in the amount of $25,200.00; and WHEREAS, it appears that Bituminous Roadways, Inc. of Mendota Heights, Minnesota is the lowest responsible bidder; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lino Lakes that the Mayor and Clerk are hereby authorized and directed to accept the quote from Bituminous Roadways, Inc. for the construction of the Lift Station No. 5 Forcemain Project Restoration – Pavement Restoration in the amount of $25,200.00. Adopted by the Council of the City of Lino Lakes this 8th day of June, 2020. The motion for the adoption of the foregoing resolution was introduced by Council Member _______________and was duly seconded by Council Member ________________ and upon vote being taken thereon, the following voted in favor thereof: The following voted against same: _______________________________ Rob Rafferty, Mayor ATTEST: ________________________ Julianne Bartell, City Clerk CITY OF LINO LAKES RESOLUTION NO. 20-58 ACCEPTING QUOTES, LIFT STATION NO. 5 FORCEMAIN PROJECT RESTORATION – CONCRETE RESTORATION WHEREAS, pursuant to a request for quotes for the Lift Station No. 5 Forcemain Project Restoration, a low quote from CR Fischer & Sons, Inc. of Farmington, Minnesota was received in the amount of $10,700.00; and WHEREAS, it appears that CR Fischer & Sons, Inc. of Farmington, Minnesota is the lowest responsible bidder; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lino Lakes that the Mayor and Clerk are hereby authorized and directed to accept the quote from CR Fischer & Sons, Inc. for the construction of the Lift Station No. 5 Forcemain Project Restoration – Concrete Restoration in the amount of $10,700.00. Adopted by the Council of the City of Lino Lakes this 8th day of June, 2020. The motion for the adoption of the foregoing resolution was introduced by Council Member _______________and was duly seconded by Council Member ________________ and upon vote being taken thereon, the following voted in favor thereof: The following voted against same: _______________________________ Rob Rafferty, Mayor ATTEST: ________________________ Julianne Bartell, City Clerk