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HomeMy WebLinkAbout06/05/2006 Council PacketWORK SESSION AGENDA CITY OF LINO LAKES Monday June 5, 2006 CITY COUNCIL WORK SESSION Community Room (not televised) 5:30 P.M. 5:30 Regular Agenda Items 6:00 1. 2005 Audit Report 2. Hardwood Creek Development Update 3. NPDES MS4 Permit 4. Lake Driven -35W Interchange Project Update 5. Community Festival Funding 6. Lino Lakes Visioning Project 7. City Hall Access - Secured Areas 8. Adjourn Page 1 r M.T. FABYANSKE MARK W. WESTRA JEREMIAH J. KEARNEY SCOTT LLOYD ANDERSON PAUL L RATELLE GREGORY T. SPALJ DEAN B. THOMSON GARY C. EIDSON KYLE E. HART JUDITH E. KROW STEPHEN A. MELCHER RICHARD G. JENSEN THOMAS J. TUCCI CHARLES G. CARPENTER, III STEVEN C. COX JULIE A. DOHERTY KATHLEEN S. MARA AARON A. DEAN DYANNA L STREET PATRICK J. LEE-OHALLORAN FABYANSKE, WESTRA, HART & THOMSON A PROFESSIONAL ASSOCIATION BY MAIL AND EMAIL William G. Hawkins Hawkins & Associates 2140 Fourth Avenue North Anoka, Minnesota 55303 SUITE 1900 800 LASALLE AVENUE MINNEAPOLIS, MINNESOTA 55402 TELEPHONE 812- 338 -0115 FAX 612 -338 -3857 WWW.FWHTLAW.COM May 26, 2006 Re: Millers Crossroads Shopping Center, City of Lino Lakes Our File No.: 80134 -011 Dear Mr. Hawkins: VI S +i169( a Jo c Wroz .. s455-10\(- \ FREDERICK H. LADNER RODERICK A. MAUSZYCKI NATHAN E. RAY THEODORE V. ROBERTS MATTHEW T. COLLINS JEFFREY W. JONES BRITTNEY L. DOHERTY DANIEL J. GILCHRIST RORY 0. DUGGAN DAVID M. CULLEN KRISTINE KROENKE OF COUNSEL: GORDON P. HE1NSON DANNETTE S. LUND• RETIRED: B.C. HART NOT LICENSED IN MINNESOTA EMAIL SCOX @FWHTLAW.COM DIRECT (612) 359-7617 My firm represents Bruggeman Properties, the owner of a property in Lino Lakes on which it plans to build the Millers Crossroads Shopping Center. In 2003 the City re -zoned the property to Limited Business, approved my client's proposed PUD plan under Resolution No. 03 -142, and granted a CUP permitting the use of the property as a day care center under Resolution No. 03 -143. Following those approvals, however, my client's plans changed and it did not construct the shopping center as approved. My client is now ready to proceed with developing the shopping center, with a minor modification. Instead of the day care center, my client now desires to lease space in the shopping center to a coffee shop tenant. To accommodate the potential coffee shop tenant, my client needs to add an accessory drive - through and an outdoor seating area. Under the Limited Business zoning district, both of those uses require a conditional use permit. Accordingly, my client requested a CUP permitting it to build a drive - through and seating area. On March 8, 2006, the Planning and Zoning Board approved the CUP that my client requested. City staff then recommended, in a staff memo by Jeff Smyser April 24, 2006, that the City Council approve the requested CUP because the proposed project meets the requirements for granting the CUP. The CUP request was on the City Council agenda for Monday, May 8, 2006. However, my client learned before the May 8 meeting that the City Council members were likely to vote to N:\PL \SCC\494756.doc William G. Hawkins May 26, 2006 Page 2 deny the CUP. Therefore, my client asked that the CUP request be pulled from the agenda so it could consider the import of the council members' apparent opposition. After reviewing the status of the CUP request to date, we believe that Bruggeman Properties is entitled to the CUP it has requested, and we would like to have the City Council grant the CUP. As you know, if an applicant meets the requirements under an applicable ordinance for obtaining a conditional use permit, the City must issue the permit. Trisko v. City of Waite Park, 566 N.W.2d 349 (Minn. Ct. App. 1997). The City cannot deny the CUP because of neighborhood opposition or expressions of concern for public safety. Id. If the City wrongly denies a request for a CUP, the applicant is entitled to obtain a court order directing the City to issue the CUP. As the April 24, 2006 staff memo details, my client's proposed use meets the requirements under the ordinance for the granting of a CUP. Therefore, notwithstanding any neighborhood opposition, concerns about competition with the nearby CuppaJoe coffee shop, or any council members' personal preferences, the City is legally obligated to issue the CUP. I understand that the Mayor has expressed the opinion that my client might not be entitled to a CUP because this property is zoned PUD. That, of course, is not true. Under the City's ordinance, granting a PUD request is not a rezoning, it is merely the City's approval of certain deviations from the underlying zoning. As this property remains zoned Limited Business, my client is entitled to apply for a CUP permitting an accessory drive through and outdoor seating in accordance with the Limited Business zoning ordinance. Indeed, as I mentioned above, the City previously issued a CUP to my client simultaneously with the issuance of the PUD approval. Accordingly, my client hereby requests that its CUP request be placed back on the City Council agenda for the next meeting, and respectfully asks that the City Council members approve the request. My client always prefers to address any concerns that neighbors or council members raise about its projects to the best that it can, and prefers to cooperate with neighbors and the City council rather than proceed in an adversarial manner. Indeed, in this case my client believes it has done everything it reasonably could to satisfy valid concerns about the Millers Crossroads project. Among other things, my client made architectural enhancements to the building that the Planning Commission requested, even though it was not obligated to make such changes. My client also included significantly more landscaping and a greater setback for buffering than the original site plan approval required. Moreover, my client paid for a traffic signal and has clearly demonstrated that the drive - through will not have an adverse effect on traffic. N:\PL \SCC\494756.doc i William G. Hawkins May 26, 2006 Page 3 The drive - through is critical to the success of this project, and my client has invested substantial money and time in this project over the years. We hope, therefore, that the City Council will comply with its obligation to grant the CUP my client has requested. Thank you. cc: Michael Grochala Jeff Smyser Becky Nelson Peter Hilger N:\PL\SCC\494756.doc Very trul yours, i 4 by email by email by email by email WS -1 WORK SESSION MEMORANDUM STAFF ORIGINATOR Al Rolek MEETING DATE June 5, 2006 TOPIC 2005 Audit Report BACKGROUND] Darwin Viker of Larson, Allen, Weishair & Company will be in attendance at the meeting to distribute the 2005 Annual Financial Report and provide an overview of the City's financial statements, present the auditor's management analysis and answer any questions you may have with regard to the financial condition of the City. The 2005 annual audit was undertaken by the City's auditors, Larson, Allen, Weishair & Company, LLP, earlier this year, with field work being completed in late March. 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. Govemment Auditing Standards, issued by the Comptroller General of the United States. The auditors concluded that the City's financial statements for 2005 presented fairly, in all material respects, the financial position of the City as of December 31, 2005. 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 2004 Comprehensive Annual Financial Report. We believe that the report issued for 2005 continues to uphold the standards of reporting excellence that this prestigious award represents. The presentation at the work session will be comprehensive and is intended to provide the opportunity for council members to ask any questions or make comments about the audit report and the state of city finances. Mr. Viker will also give an abbreviated presentation at the regular City Council meeting on June 12, 2006, and the staff recommends that the City Council formally, by motion, accept the 2005 Annual Audit Report at that time. CITY OF LINO LAKES, MINNESOTA OTHER AUDITOR REPORTS YEAR ENDED DECEMBER 31, 2005 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS DECEMBER 31, 2005 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards Report on Minnesota Legal Compliance Other Required Auditor Communications Management Letter Page 1 -2 3 4 -6 7 -11 Lars nAllen CPAs, Conidultanis & Advisors www.larsonallen.com REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and Members of the City Council City of Lino Lakes, 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 as of and for the year ended December 31, 2005, which collectively comprise the City's basic financial statements and have issued our report thereon dated March 24, 2006. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Lino Lakes, Minnesota's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be a material weakness. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operations that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Lino Lakes, Minnesota's financial statements are free of 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 Govemment Auditing Standards. (1) Lannn, llh�n, AI'cishair & (:o., LLP I An Independcnr AIemher of Li,11.er "1 illy 1nrcrnariunal We also noted certain additional matters that were reported to the management of the City of Lino Lakes, Minnesota in a separate letter dated March 24, 2006. This report is intended solely for the information and use of the audit committee, management, the Office of the State Auditor, and federal awarding agencies and pass- through entities and is not intended to be and should not be used by anyone other than these specified parties. Austin, Minnesota March 24, 2006 LARSON, ALLEN, WEISHAIR & CO., LLP (2) Lars nAllen CPAs, Consultants & Advisors www.larsonallen.com REPORT ON MINNESOTA LEGAL COMPLIANCE Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota We have audited the financial statements of the City of Lino Lakes, Minnesota as of and for the year ended December 31, 2005, and have issued our report thereon dated March 24, 2006. We conducted our audit in accordance with U.S. generally accepted auditing standards, the standards applicable to financial audits contained in Governmental Auditing standards, issued by the Comptroller General of the United States, and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government, promulgated by the State Auditor pursuant to Minnesota Statute 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Local Government covers seven main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our study included all of the listed categories. The results of our tests indicate that, with respect to the items tested, the City of Lino Lakes, Minnesota complied with the material terms and conditions of applicable legal provisions referred to in the preceding paragraph. This report is intended solely for the use of the City of Lino Lakes, Minnesota, the Office of the State Auditor, and other state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Austin, Minnesota March 24, 2006 `y-• ; "-lla••y LARSON, ALLEN, WEISHAIR & CO., LLP (3) L.i on. iicu, AFcishair & ( :o., LI,I' ± \n Inrlepcndcnr Alembcr of l kcr'1 ills Internarional Lars: nAllen CPAs, Consultants & Advisors www.larsonallen.com OTHER REQUIRED AUDITOR COMMUNICATIONS Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota Dear Committee Members: We have audited the financial statements of the City of Lino Lakes for the year ended December 31, 2005, and have issued our report thereon dated March 24, 2006. Professional standards require that we provide you with the following information related to our audit. Our Responsibility Under U.S. Generally Accepted Auditing Standards As stated in our engagement letter dated December 28, 2005, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material misstatement and are fairly presented in accordance with U.S. generally accepted accounting principles. Because an audit is designed to provide reasonable, but not absolute assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. As part of our audit, we considered the internal control of the City of Lino Lakes. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such intemal control. Other Information in Documents Containing Audited Financial Statements Our responsibility for other information in documents containing the City of Lino Lakes financial statements, including the supplementary information, does not extend beyond the information identified in our report on the financial statements, and we have no professional responsibility to perform audit procedures on such other information. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City of Lino Lakes are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2005. We noted no transactions entered into by the City during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. (4) (.:1 rJUn, Aller, A\cishair & C:u., I.LP An Indepcndenr Nlemlier of Rul:cr rills Inrcrnarional Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Annual depreciation is provided using rates sufficient to fully depreciate the related capital assets over their useful lives based on past experiences. The year end valuation of investments at fair value. The City has recognized a liability for earned sick leave benefits. The amount recorded includes amounts earned through December 31, 2005 by employees eligible for retirement at that date. In addition, an amount is recorded for those individuals not eligible for retirement at December 31, 2005, but for whom pay -out of the amount earned to that date is reasonably expected. This estimate is derived by an analysis of the pay -out history and current and anticipated future employment conditions. We evaluated the key factors and assumptions used to develop the above estimates in determining that it is reasonable in relation to the financial statements taken as a whole. Audit Adjustments For purposes of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the City, either individually or in the aggregate, indicate matters that could have a significant effect on the City's financial reporting process. Management did not identify and we did not notify them of any uncorrected financial statement misstatements. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. 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 governmental unit's financial statements or a determination of the type of auditors' opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. (5) Issues Discussed Prior to Retention of Independent Auditors 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. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of the Finance Committee, Board of Directors, and management of the City of Lino Lakes and is not intended to be, and should not be used by anyone other than these specified parties. Austin, Minnesota March 24, 2006 C/ ■ LARSON, ALLEN, WEISHAIR & CO., LLP (6) Lars nAllern' CPAs, Consultants & Advisors www.larsonallen.com Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota In planning our audit of the financial statements of the City of Lino Lakes for the year ended December 31, 2005, we considered its internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control. We noted no matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect City's ability to initiate, record, process, and report financial data consistent with the assertions of management in the financial statements. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions Our consideration of internal control would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. During the course of our audit, several items came to our attention that we feel could be addressed by the City of Lino Lakes to more efficiently run the City's operations or improve its internal controls. We herein submit the following suggestions to the City of Lino Lakes for their consideration. Auditor Comments: Capital Project Deficits The financial statements for the capital project funds are presented in Statements 3, 5, 12 and 13 of the 2005 Annual Financial Report. As of December 31, 2005, five of the capital project funds have deficit fund balances equaling a combined deficit of $859,840. This compares to six capital project funds with a combined deficit fund balance of $1,195,975 as of December 31, 2004. The most significant remaining deficit is in the Dedicated Parks fund in the amount of $734,870. While we recognize the significant improvements made related to fund balance deficits since fiscal year 2003, we urge the City to continue its review of capital projects as they progress. Plans should be made to address projected deficits as they are identified. (7) I.ar,on. Allen, A1ekhair & Co.. 1.1,1' I An Independent Member of Baker "hilly Internutional SAC Revolving The SAC Revolving Fund was established in 1990 to account for a refund from the MCES (formerly MWCC) of past SAC charges which were paid by residents that had not hooked up to the sewer system. A summary of financial activity of this fund is as follows: Revenue SAC refund Investment earnings Total revenue Expenditures: Refunds Prior Years 2005 Total $ 368,816 $ - $ 368,816 253,541 9,614 263,155 622,357 9,614 631,971 $ 257,808 $ 2,186 259,994 Fund balance - December 31, 2005 $ 371,977 The City is allowing current homeowners to request a refund with 4% interest. If refunds and claims are not submitted, the City will pay the full SAC charge from this fund at the time of hook -up. This policy will likely require a supplemental future revenue source as the current MCES SAC charges times the potential hookups exceeds the available balance. If the MCES SAC fees continue to increase at a rate that is faster than the investment earnings rate, other revenue sources will be needed in the future to fund the actual connections when they occur. Area and Unit Charge Fund On January 11, 1988, the City Council approved Resolution 1 -88, which established the Area and Unit Charge Fund for the City. The purpose of this fund is to collect various area and unit charges to be used to meet debt payments. Before October 1 of each year, the City estimates the required transfer needed to meet debt payments for the subsequent year. In December, these estimated amounts are transferred to the various debt funds. We recommend that the City continue to closely monitor actual versus projected area and unit assessment collections to assure that debt payment requirements will be met. Designations of balances required for debt service is necessary to define discretionary construction balances available to the City. The financing plan for the following bond issues have pledged area and unit charges for the repayment of debt service: • Improvement and Utility Bonds of 2004A • Improvement Refunding Bonds of 1999A • Water Revenue Bonds of 1999B • Water Revenue Bonds of 1996B The Improvement and Utility Bonds of 2004A and Improvement Refunding Bonds of 1999A have future debt service requirements (principal and interest) totaling $1,744,719 and $363,342, respectively. During 2005, a transfer of $383,000 was made to the Improvement Refunding Bonds of 1999A debt service fund. (8) The Water Revenue Bonds of 1999B and 1996B have future debt service requirements totaling $349,114 and $2,572,441 (principal and interest). The City annually transfers amounts from the Area and Unit Charge Fund to the Water Fund sufficient to help cover the debt services of these bonds. During 2005, a transfer of $304,195 was made to the Water Fund. It is the City's intention to repay the Water Revenue Bonds of 1999B and 1996B with revenues of the Water Fund. If revenues are not sufficient to meet the debt requirements, funds will be transferred from the Area and Unit Charge Fund. In addition to the transfers above, the Area and Unit Charge Fund transferred $444,785 to the Improvement Refunding Bonds of 2003A Fund for debt service requirements, $155,069 to Legacy Woods Edge Improvement Fund for the Legacy at Woods Edge project, and $205,500 to Municipal State Aid Fund for the Elm Street Reconstruction project. DEBT SERVICE FUNDS Debt service funds are a type of governmental fund used to account for the accumulation of resources for the payment of principal and interest on general obligation debt (other than enterprise fund debt). Debt service funds may have one or a combination of revenue sources pledged to retire debt including property taxes, tax increments, special assessments and area and unit charges. The diverse nature of the type of debt included in the same fund type requires careful analysis to determine the adequacy of the fund balance and projected fund balance. The following schedule extracts information from Exhibits 1, 2 and 3 of the 2005 Annual Financial Report to assist in this analysis. The following schedule compares outstanding debt with assets pledged for debt retirement. This comparison provides a means to judge (at least on a preliminary basis) the financial position of each individual debt service fund. December 31, 2005 Scheduled Total Remaining Fund Deferred Property Resources Debt Service Fund Description Balance Revenue Total Taxes Available Scheduled General Debt: Certificates of Indebtedness $ 95,399 $ 4,285 $ 99,684 $ 477,785 $ 477,785 $ 455,033 Lease Revenue Bonds of 1998A 893,418 4,854 898,272 5,863,379 6,761,651 6,267,512 Public Project Revenue Bonds 1999C 342,041 1,992 344,033 248,126 592,159 549,223 $ 1,330,858 $ 11,131 $ 1,341,989 $ 6,589,290 $ 7,831,595 $ 7,271,768 Special Assessment Debt: Improvement Bonds of 1998A $ 2,551,966 $ 190,541 $ 2,742,507 $ - $ 2,742,507 $ 3,534,475 Improvement Bonds of 1998B 1,687,599 263,378 1,950,977 1,396,515 3,347,492 1,792,104 Refunding Imp. Bonds of 1999A 3,702 818 4,520 290,270 294,790 363,342 Improvement Bonds of 2002A 516,188 117,423 633,611 51,595 685,206 501,449 Improvement Bonds of 2002B 513,443 1,336,776 1,850,219 - 1,850,219 2,161,041 Improvement Bonds of 2003A 297,981 319,625 617,606 - 617,606 1,928,334 Improvement Bonds of 2003B 102,848 49,278 152,126 198,105 350,231 311,530 Improvement Bonds of 2004A 332,641 416,150 748,791 1,891,136 2,639,927 1,744,719 Improvement Bonds of 2005A 37,712 5,090,691 5,128,403 8,555,411 13,683,814 8,148,010 Refunding Imp. Bonds of 2005B 7,552 - 7,552 4,863,519 4,871,071 4,631,923 $ 6,051,632 $ 7,784,680 $ 13,836,312 $ 17,246,551 $ 31,082,863 $ 25,116,927 Note: Deferred revenue in the above table does not include the future scheduled "interest portion" of the adopted assessment rolls. The 1999A and 2004A Improvement Bonds also include a pledge from the Area and Unit Fund that has not been included above. The above table provides a means for the monitoring the status of the debt service funds. For the General Debt funded solely by property taxes, it appears that there are adequate planned levies to retire the debt when the future lease revenues scheduled to be received from the school district are included. (9) DEBT SERVICE FUNDS (Continued) While in total the City has a surplus of total resources available over remaining scheduled debt service based on the calculation above, certain individual funds are operating at a deficit. These deficits will need to be funded by future adopted assessment rolls, special assessment levies, investment earnings, transfers from other funds, property taxes or other available means. Factors to consider when analyzing debt service funds: • Are all the anticipated assessment rolls being adopted as soon as appropriate? • Have all the planned financing sources been identified, such as pledged amounts from the area and unit fund or future MSA funds? • Are there significant "prepayments" received from property owners? In the current investment environment, will the earnings the City will receive on these prepayments be lower than the interest rate that was being charged on the adopted assessment roll? We recommend that all Debt Service Funds of the City be reviewed at least annually by applying the above criteria. The Area & Unit Fund is committed to the debt service of some special assessment bonds as well as toward the water revenue bonds. We recommend that the City determine the full commitment of the Area and Unit Fund whenever this fund is used to pledge toward future bond issues and construction projects. Budget Appropriations Each year the City adopts an annual budget for the general fund. Each department receives an appropriation based upon detailed budget estimates for individual expenditure accounts. Department heads have the ability to transfer appropriations within a department. This can be helpful and improves flexibility in meeting department needs as they change during the year. However, such a policy can lead to unnecessary or unauthorized expenditures. For example, equipment purchases. We suggest the City review this policy and consider adding controls on the amounts that can be transferred within a department without bringing it to the City Council for approval. These controls could include dollar limits, restrictions on the types of purchases or getting the approval of someone in administration. Developer Escrow Accounts The City maintains an Agency Fund to account for the activity related to developer escrows. It is our understanding that developers deposit an escrow prior to a project beginning and that certain costs may be applied against this escrow. We noted that there are several escrow accounts that carry a "negative" balance, which represents an additional receivable balance from the developer. We recommend that the City monitor these escrow balances and if they go negative that the developer be contacted so that an additional deposit can be made. Conclusion We welcome the opportunity to discuss the points mentioned in this letter or any other accounting and procedural issues in order to coordinate our efforts with you, the mutual objective being the development of more effective accounting procedures for the City. We understand that some of the aforementioned points are in the process of implementation or may already have been implemented; however, these points are noted so that effective follow -up can be accomplished. (10) We sincerely appreciate all the courtesies and cooperation extended to us by you and the staff of the City, and thank you for the opportunity to be of service to you. We look forward to working with you in the future. This report is intended solely for the information and use of the City, management, the City Council and others within the administration and is not intended to be and should not be used by anyone other than these specified parties. A11'`'ie i q-' Zvi Gam' LARSON, ALLEN, WEISHAIR & CO., LLP Austin, Minnesota March 24, 2006 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF LINO LAKES, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2005 Prepared By: Finance Department Alan Rolek, Director of Finance Paula Schloer, Accountant CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference Number I. INTRODUCTORY SECTION Principal City Officials 1 Organizational Chart 2 Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 7 II. FINANCIAL SECTION Independent Auditors' Report 8 Management's Discussion and Analysis 10 Basic Financial Statements Statement of Net Assets Statement 1 20 Statement of Activities Statement 2 21 Balance Sheet - Governmental Funds Statement 3 23 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement 4 25 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds Statement 5 26 Reconciliation of the Governmental Funds Statement of Revenue, Expenditures and Changes in Fund Balance to the Statement of Activities Statement 6 28 Statement of Net Assets - Proprietary Funds Statement 7 29 Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Funds Statement 8 30 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Statement of Cash Flows - Proprietary Funds Statement of Net Assets - Fiduciary Funds Notes to Financial Statements Required Supplementary Information General Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Notes to Required Supplementary Information Combining Fund Financial Statements Combining Balance Sheet — Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balance — Nonmajor Governmental Funds Special Revenue Fund — Program Recreation: Schedule of Revenue, Expenditures and Changes in Fund Balance — Budget and Actual Statement of Changes in Assets and Liabilities — Fiduciary Funds Supplementary Financial Information Combined Schedule of Indebtedness Schedule of Deferred Tax Levies Debt Service Payments to Maturity - All Bonds Insurance in Force Taxable Valuations, Tax Levies and Tax Rates III. STATISTICAL SECTION General Fund: Expenditures By Function - Last Ten Fiscal Years Revenue By Source - Last Ten Fiscal Years Page Reference Number Statement 9 31 Statementl0 32 1 1 1 33 1 1 Statementll 54 60 1 Statement 12 61 Statement 13 68 ' Statement 14 75 ' Statement 15 76 Exhibit 1 77 Exhibit 2 79 Exhibit 3 81 1 Exhibit 4 84 Exhibit 5 85 1 Table 1 86 1 Table 2 87 1 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Property Tax Levies and Collections - Last Ten Fiscal Years Special Assessment Levies and Collections - Last Ten Fiscal Years Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures - Last Ten Fiscal Years Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years Table 8 94 Computation of Direct and Overlapping Debt including Debt Ratios Table 9 95 Computation of Legal Debt Margin Table 10 96 Page Reference Number Table 3 88 Table 4 89 Table 5 90 Table 6 91 Table 7 93 Schedule of Revenue Bond Coverage - Water Fund - Last Ten Fiscal Years Table 11 97 Principal Taxpayers Table 12 98 Property Value, Construction Permits and Bank Deposits - Last Ten Fiscal Years Table 13 99 Demographic Statistics Table 14 100 Miscellaneous Statistics Table 15 101 I. INTRODUCTORY SECTION CITY OF LINO LAKES, MINNESOTA PRINCIPAL CITY OFFICIALS December 31, 2005 Elected Officials Mayor: John Bergeson Term Expires December 31, 2005 Council Members: Caroline Dahl December 31, 2005 Jeff Reinert December 31, 2005 Donna Carlson December 31, 2007 Daniel Stoltz December 31, 2007 Appointed Personnel City Administrator Gorden Heitke Director of Administration Daniel Tesch Director of Finance Alan Rolek Director of Public Safety David Pecchia Director of Community Development Micheal Grochala Director of Public Service Rick DeGardner 1 City of Lino Lakes Organizational Chart Citizens , ), - -my- I - Honorable Mayor and City Council Commissions Cable Parks and Recreation Economic Development Planning and Zoning Fire Environmental City Clerk City Administrator ! ! ! Professional Consultants Engineering Attomey Public Services Parks Public Works Recreation Public Safety . I Administration Police Human Resources Emergency Management Administrative Services 2 Community Development --- Planning Economic Development Engineering • Environmental Services Inspections Fiscal Finance Accounting Management Infomration Systems • Utility Billing June 1, 2006 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 U.S. 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, 2005. 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 Larson, Allen, Weishair and Co., LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2005, 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 unqualified opinion that the City's financial statements for the fiscal year ended December 31, 2005, are fairly presented in conformity with GAAP. The independent auditor's 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. 600 Town Center Parkway, Lino Lakes, Minnesota 55014 -1182 Phone: 651 - 982 -24430 • Fax: 651 - 982 -2499 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 19,285. The population has more than doubled from the 1990 census figure of 8,807 and has grown by 15% since 2000. Within the City's borders lies the 2,550 acre Rice Creek Chain of Lakes Regional Park. Access to St. Paul and Minneapolis is provided by I -35W and I -35E. The City Charter, as amended, establishes a mayor - council form of government and grants the city council full policy- making and legislative authority to the mayor and four council members. The city council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring a city administrator. The city administrator has the responsibility of carrying out the policies and ordinances of the city council, for overseeing the day -to -day operation of the city. The city council is elected at -large on a non - partisan basis, with council members serving four -year terms and the mayor serving a two -year term. Elections are held every two years with two council seats and the mayor being up for election each election cycle. The City provides a full range of municipal services. These services include: general government, public safety (police & fire), public works (streets & fleet), parks and recreation, conservation of natural resources (environmental & solid waste abatement), public improvements, providing and maintaining sanitary and storm sewer, water infrastructure, and two enterprise funds, the water and sewer funds. The annual budget is the foundation for the City of Lino Lakes' financial planning and control. All divisions are required to submit appropriations requests to the city administrator for review and consolidation into a proposed budget. The city administrator is responsible for submitting the proposed annual budget to the City Council in August of each year. The city council is required to hold a public hearing on the proposed budget and to adopt by resolution a final budget and certify it no later than December 28. The budget amounts cannot increase beyond the estimated receipts except to the extent that actual receipts exceed the estimate. Division directors may make transfers of appropriations within a department, but transfers of appropriations between departments require council approval. Budget -to- actual comparisons for the general fund and the recreation program fund, the only funds for which an annual budget has been adopted, are provided in this report beginning on pages 54 and 75, respectively. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Lino Lakes operates. Local economy. The economic development effort established in 1993 by the city council has made an impact in the diversity of the City's tax base. Since 1993, the city has added more than $100 million in additional commercial /industrial market value. Development of the Apollo Business Park on I -35W is nearly completed, and the Clearwater Creek Development Center on I -35E continues to attract industrial development. The commercial retail center on Lake Drive and Apollo Drive in the Town Center area, known as the Lino Lakes Marketplace, has continued to develop. The two anchor tenants, Target and Kohl's, were completed and opened in 2002. A Dairy Queen Grill `n Chill restaurant was completed and opened in 2003, and a Discount Tire store opened in mid -2004. Two new retail buildings of approximately 6,000 square feet each were added to the area during 2005, and the developer is currently obtaining leases for this space. A Wells Fargo branch bank was also constructed in this area during 2005 and opened in early 2006. 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Building permits for new homes in 2005 numbered 196, exceeding 2004 permits by 6 units. Commercial /industrial development continued at a steady pace. A 12,582 square foot building was built by Schwan's in the Marshan Industrial Park on the southwest quadrant of I -35W and Lake Drive was completed in 2005, further contributing jobs and adding approximately $1.3 million in value to the city's growing commercial /industrial tax base. A two -story office building is currently being constructed at the intersection of Lake Drive and Hodgson Road which will house E.G. Rud Surveyors and several other tenants. The City initiated an Alternative Urban Areawide Review (AUAR) of property in excess of 4,000 acres in the northeast quadrant of the city, which includes property in the I -35E corridor, to assess the impact of future development scenarios in this area. The AUAR was completed and accepted by the City Council in October, 2005. The AUAR included the proposed Hardwood Creek development, a 360 acre master - planned mixed -use development. If approved, the development would include approximately 1,100 dwelling units and 600,000 square feet of commercial /retail buildings and preserve 90 acres of green space. Long -term financial planning. The city has entered into an agreement with Hartford Development LL, LLC, to develop 40 acres in the southeast quadrant of I -35W and Lake Drive. This mixed -use development will occur over a period of two to five years and would include up to 450 dwelling units, retail commercial business, a community green and park and trail amenities and a 60 -unit motel. Anoka County is considering placing a branch library in the development as well. Country Inn and Suites began construction in early 2006 and will complete the building by fall. The YMCA, in partnership with the city, is also planning a facility within the development. The city's participation in the YMCA will be $2.35 million of the $8.2 million project, plus land and infrastructure. The city plans to issue G.O. Tax Abatement bonds to finance its contribution to this project, as well as $4.0 million in conduit debt. The city has also secured a CDBG grant of $125,000 to be used toward a teen center within the YMCA. Construction on the facility is scheduled to begin in late spring, 2006. To facilitate this development, street, streetscape, water, sewer, and storm water improvements must be installed within the development area, as well as improvements to the existing Lake Drive. Engineering estimates for these improvements is estimated at approximately $9 million. Construction began in Fall, 2005, financed with the sale of $5,550,000 in G.O. Improvement and the future issuance of G.O. Tax Increment bonds. It is acknowledged that this development will result in additional ongoing costs involved in servicing and maintaining the streets and public areas, which will be addressed in future operating budgets. The city's five -year financial plan, which is currently under review, identifies street and utility improvements totaling $33,173,000 over the period of 2006 through 2010. 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, tax increment financing and voter - approved tax levies. Improvements to several of the city's neighborhood parks and the city's trail system are also planned over this period in the amount of $230,000. These improvements will be funded through park dedication fees and the dedicated parks fund. Cash management policies and practices. The City's policy is to invest all available moneys at competitive rates in accordance with Minnesota law. Investments are made by minimizing credit and market risks while maintaining a competitive yield. Funds are invested in certificates of deposit, commercial paper and U.S. government agencies. Cash is pooled in one account to provide maximum return. The City Council reviews the investment policy annually and last amended it in 1998. The City is implementing the Government Accounting Standards Board (GASB) Statement No. 40 relating to Deposit and Investment Risk Disclosures and amending GASB Statement No. 3, which can be found in the Notes to the Financial Statements beginning on page 41. 5 Cash temporarily idle during the year was invested in certificates of deposit, commercial paper, and obligations of the U.S. Treasury. 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 low interest rate environment has persisted over the few years and has had a significant impact on the city's investment earnings. The average yield on investments for 2005 was 2.98%. Investment income includes positive or negative changes in the fair value of investments. 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. Risk management. The City's general property, liability and worker's compensation coverage is provided through the League of Minnesota Cities Trust (LMCIT). At the beginning of the insurance year, the city deposits with LMCIT a premium determined by calculating estimated payroll and applying experience modification ratios. An audit is performed at the end of the insurance year, which may produce a refund or an adjustment due. LMCIT's reserves and rates are reviewed annually by an actuary to assure that the program remains financially strong. Pension benefits. The City of Lino Lakes participates in a statewide defined benefit pension plan administered by the Public Employees Retirement Association of Minnesota (PERA). All full -time and part-time employees are covered by PERA. PERA administers the Public Employees Retirement Fund (PERF) which is a cost - sharing, multiple - employer retirement plan. A plan description and funding policy are included in the Notes to the Financial Statements beginning on page 48. 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, 2004. This marks the ninth consecutive year that 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 U.S. generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City is submitting the 2005 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 also want to express my appreciation to the Mayor and City Council for their support for maintaining the highest standard of professionalism in the management of the financial operation of the City. Respectfully submitted, Alan J. Rolek Director of Finance 6 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Lino Lakes, Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 3 l , 2004 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual Financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. e/a.4,60..7 President 7 Executive Director II. FINANCIAL SECTION Lars:- :nAllen" CPAs, Consultants & Advisors www.larsonallen.com INDEPENDENT AUDITORS' REPORT Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota 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, 2005, which collectively comprise the City's basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the 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, 2005, and the respective changes in financial position and cash flows, where applicable, thereof and for the year then ended in conformity with U.S. generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated March 24, 2006 on our consideration of the City of Lino Lakes Minnesota's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grants, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management's discussion and analysis and budgetary comparison information as listed in the table of contents are not a required part of the basic financial statements but are supplemental information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquires of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 8 Larson, Allen. W'eishair & Co.. LLP 1 An Independent Member of Baker Tilly International Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information, such as the introductory section, combining fund financial statements, supplementary financial information and statistical section listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information, except for the introductory and statistical sections on which we express no opinion, has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Austin, Minnesota March 24, 2006 ; fy`s°N`= #1',-(046044-- LARSON, ALLEN, WEISHAIR & CO., LLP 9 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 As management of the City of Lino Lakes, Minnesota, we offer readers of the City of Lino Lakes' financial statements this narrative overview and analysis of the financial activities of the City of Lino Lakes for the fiscal year ended December 31, 2005. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 3 -6 of this report. FINANCIAL HIGHLIGHTS: • The assets of the City of Lino Lakes exceeded its liabilities at the close of the most recent fiscal year by $85,003,253 (net assets). Of this amount $19,149,409 (unrestricted net assets) 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 assets increased by $5,443,025. • As of the close of the current fiscal year, the City of Lino Lakes' governmental funds reported combined ending fund balance of $21,302,986, an increase of $5,825,395 in comparison with the prior year. Approximately 60% of this total amount, or $12,724,100 is available for spending at the City's discretion (unreserved fund balance). • At the end of the current fiscal year, unreserved fund balance for the general fund was $5,300,156, or 72% of total general fund expenditures. • The City of Lino Lakes' total bonded debt increased by $7,116,000 (35 percent) during the current fiscal period. The key factors for the increase were the financing of improvements in the Legacy Woods Edge development and the refunding of the 1998A and 1998B Improvement bonds that will be called and retired in February, 2006. OVERVIEW OF THE FINANCIAL STATEMENTS: This discussion and analysis are intended to serve as an introduction to the City of Lino Lakes' basic financial statements. The City of Lino Lakes' basic financial statements comprise three components: 1. Government -wide financial statements 2. Fund financial statements 3. Notes to the financial statements This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Lino Lakes' finances, in a manner similar to private - sector business. The statement of net assets presents information on all of the City of Lino Lakes' assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Lino Lakes is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). 10 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 Both of the government -wide financial statements distinguish functions of the City of Lino Lakes that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Lino Lakes include general government, public safety, public services, parks, recreation and forestry, conservation of natural resources and community development. The business -type activities of the City of Lino Lakes include a water utility and sewer utility. The government -wide financial statements can be found on pages 20 -22 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Lino Lakes, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. All of the funds of the City of Lino Lakes can be divided into 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 financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long -term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental functions and governmental activities. The City of Lino Lakes maintains forty -three individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, G.O. improvement bonds 2002B fund, G.O. improvement bonds 2005A fund, area and units charge fund and Legacy Woods Edge improvement fund, all of which are considered to be major funds. Data from the other thirty -eight governmental funds are combined into a single, aggregate presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Lino Lakes adopts an annual appropriated budget for its general and program recreation special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 23 and 28 of this report. Proprietary funds. The City of Lino Lakes maintains two proprietary type funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Lino Lakes uses enterprise funds to account for its sewer and water utilities. The proprietary fund statements provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the sewer fund and the water fund, which are considered to be major funds of the City of Lino Lakes. The basic proprietary fund financial statements can be found on pages 29 through 31 of this report. 11 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 33 -53 of this report. Other information. The combining statements and schedules referred to earlier in conjunction with nonmajor governmental funds can be found on pages 61 -74 of this report. GOVERNMENT -WIDE FINANCIAL ANALYSIS: As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The City of Lino Lakes' assets exceeded liabilities by $85,003,253 at the close of the most recent fiscal year, an increase of $5,443,025 over the previous year. By far the largest portion of the City of Lino Lakes' net assets (63 percent) reflects its investment in capital assets (e.g. land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that is still outstanding. The City of Lino Lakes uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Lino Lakes' investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. A condensed version of the Statement of Net Assets at December 31, 2005 follows: Net Assets at Year -end (in millions) Governmental Business -type Total Activities Activities Government 2005 2004 2005 2004 2005 2004 Current and other assets $32.88 $20.88 $5.72 $4.89 $38.60 $25.77 Capital assets 45.45 46.10 30.77 29.42 76.22 75.52 Total assets 78.33 66.98 36.49 34.31 114.82 101.29 Non - current liabilities outstanding 25.42 17.82 2.45 2.75 27.87 20.57 Other liabilities 1.82 1.06 .12 .10 1.94 1.16 Total liabilities 27.24 18.88 2.57 2.85 29.81 21.73 Net assets: Invested in capital assets, net of related debt 25.46 28.80 28.35 26.71 53.81 55.51 Restricted 12.05 3.07 12.05 3.07 Unrestricted 13.58 16.23 5.57 4.75 19.15 20.98 Total net assets $51.09 $48.10 $33.92 $31.46 $85.01 $79.56 Of the remaining balance of the City of Lino Lakes' net assets, restricted net assets (14 percent) are to be used for debt service requirements. Unrestricted net assets (23 percent) may be used to meet the government's ongoing obligations to citizens and creditors. 12 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 At the end of the current fiscal year, the City of Lino Lakes is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business -type activities. Governmental activities. Governmental activities increased the City of Lino Lakes' net assets by $2,986,228, thereby accounting for 55 percent of the total growth in the net assets of the City of Lino Lakes. The most significant change in governmental net assets is due to the effect of accounting for net assets under the full accrual basis. Under full accrual accounting, current year outlay for infrastructure will be expensed over the useful life of the infrastructure. This capital outlay for the infrastructure is budgeted for during the current year. Business -type activities. Business -type activities increased the City of Lino Lakes' net assets by $2,456,797, thereby accounting for 45 percent of the total growth in the net assets of the City of Lino Lakes. Developers' contribution of infrastructure assets to the water and sewer funds accounted for a significant portion of that increase. Condensed statements of revenues, expenses, and changes in net assets highlights are as follows for the year ended December 31, 2005: Governmental and Business -Type Activities For the Year Ended December 31, 2005 (in millions) Governmental Business -Type Total Activities Activities Government 2005 2004 2005 2004 2005 2004 Revenues Program revenues Charges for services $1.77 $1.91 $2.39 $2.26 $4.16 $4.17 Operating grants and contributions .76 .68 - - .76 .68 Capital grants and contributions 10.13 7.52 1.74 1.59 11.87 9.11 General revenues Property taxes 7.25 6.52 7.25 6.52 Franchise taxes .14 .11 .14 .11 Unrestricted investment earnings .44 .22 .12 .03 .56 .25 Contribution to permanent fund .10 .00 .00 .00 .10 .00 Other .06 1.28 - - .06 1.28 Total revenues 20.65 18.24 4.25 3.88 24.90 22.12 Expenses General government Public safety Public services Parks, recreation and forestry Conservation of natural resources Community development Interest on long -term debt Water Sewer Total expenses Change in net assets before transfers Transfers Change in net assets Net assets - beginning Net assets - ending 2.94 2.52 - 2.94 2.52 3.09 2.80 3.09 2.80 9.19 7.25 - 9.19 7.25 .80 1.20 .80 1.20 .15 .12 .15 .12 .38 .42 .38 42 .80 .76 .80 .76 .88 .91 .88 .91 1.22 1.13 1.22 1.13 17.35 15.07 2.10 2.04 19.45 17.11 3.30 3.17 2.15 1.84 5.45 5.01 (.31) (.30) .31 .30 - 2.99 2.87 2.46 2.14 5.45 5.01 48.10 45.23 31.46 29.32 79.56 74.55 $51.09 $48.10 $33.92 $31.46 $85.01 $79.56 13 1 1 1 1 1 1 1 1 1 1 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 Below are specific graphs that provide comparisons of the government activities' direct program revenues with their expenditures. Any shortfalls in direct revenues are primarily supported by property tax levy or general state aid. Expenses and Program Revenues — Governmental Activities $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- e\`\* e\N e \a \go Gen llilllllll{_ Ges \�ose�\Ges aEo \es\� \peso \>c b P`' teo \e�\o� o��a\vta ��\ �� Pats, eta \`o G ors • Expenses 1 • Revenues t ec`\. a e b\ pt Je \o , \O`' ae \o� eko� \r\ete Revenues by Source — Governmental Activities Unrestricted investment earnings 2% Franchise fees 1% Roperty taxes 35% Other 14 0% Charges for services 9% Operating grants and contributions 4% Capital grants and contributions 49% City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 Below are specific graphs that provide comparisons of the business -type activities' direct program revenues with their expenditures. Excess revenues are retained within each fund until such time that capital replacement is needed. Expenses and Program Revenues — Business -type Activities $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- Water Sewer r ❑ Expenses • Revenues Revenues by Source — Business -type Activities Capital grants and contributions 41% Other 3% 15 Charges for services 56% City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS: As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Funds. The focus of the City of Lino Lakes' governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Lino Lakes' financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of Lino Lakes' governmental funds reported combined ending fund balances of $21,302,986, an increase of $5,825,395, or 38% over the previous year. Approximately 75% of this total amount, or $12,724,100, constitutes unreserved fund balance, which is available for spending at the government's discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to liquidate contracts and purchase orders of the prior period ($150,415), 2) to pay debt service ($7,371,359), 3) to fund interfund advances ($957,112), or 4) to fund environmental improvements ($100,000). The general fund is the primary operating fund of the City of Lino Lakes. At the end of the current fiscal year, unreserved fund balance of the general fund was $5,300,156, while the total fund balance was $5,448,808. As a measure of the general fund's liquidity, it may be useful to compare unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 72 percent of total general fund expenditures, while total fund balance represents 74 percent of that same amount. The fund balance of the City of Lino Lakes' general fund increased by $238,343 during the current fiscal year. Reasons for this increase include increased building activities which increased permit revenue, increased federal and state aid for police operations, a higher investment earnings due to a rising rate environment, and increased gas franchise taxes due to rising energy costs. In addition. reduced expenditures, primarily for personal services, contributed toward the increase in fund balance. Overall, the general fund's revenues were slightly below the amended budget, while expenditures were 4% below budgeted levels. The G.O. taxable improvement bonds 2002B fund has a total fund balance of $513,443, all of which is reserved for the retirement of related debt. The net increase of $9,815 in fund balance is the result of the closure of the related capital projects fund to the related debt service fund. The G.O. improvement bonds 2005A fund has a total fund balance of $37,712, all of which is reserved for the retirement of related debt. This is related to the bonds issued for the Legacy Woods Edge improvement project. The area and unit charge fund has a total fund balance of $2,578,898, of which $957,112 is reserved for advances to other funds, and $1,621,786 is unreserved and available for financing capital improvements. The decrease in fund balance during the current year was $1,627,697 and was the result of funding infrastructure projects within the city and transfers for capital projects and for debt service payments. Proprietary funds. The City of Lino Lakes' proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The water fund has total net assets of $14,000,428, of which $1,918,665 are unrestricted. The increase in net assets of $1,279,482 was primarily due to contributions from private sources and an operating transfer from a capital projects fund and net income. 16 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 Total net assets in the sewer fund at the end of 2005 were $19,914,742, of which $3,653,673 was unrestricted. Net assets increased $1,177,315 during the current year resulting from contributions from private sources and net income. The water and sewer rates remained the same in 2005 as in 2004. A rate study is planned for 2006. GENERAL FUND BUDGETARY HIGHLIGHTS: The original budget was amended four times during the year reflecting donations and grants received primarily for police personnel and equipment. Revenues were $82,066 under budget due mainly to property tax collections. Federal and state intergovernmental revenues, primarily police grant related, were over budget for the year. Investment earnings, due to rising interest rates, and gas franchise fees, as a result of rising energy costs, were also over budget. Expenditures came in under the budgeted amounts by $321,191 due to lower than expected personal services costs. There were also net transfers from the general fund of $467,782. This resulted in a net fund balance increase of $238,343 for the fiscal year. CAPITAL ASSET AND DEBT ADMINISTRATION: Capital assets. The City of Lino Lakes' investment in capital assets for its governmental and business - type activities as of December 31, 2005, amounts to $76,218,607 (net of accumulated depreciation). This investment in capital assets includes land, buildings, office equipment and furniture, vehicles, machinery and equipment, other capital assets, and infrastructure. The total increase in the City of Lino Lakes' investment in capital assets (net of accumulated depreciation) was 1 percent. Most of this increase within the governmental activities can be found in the addition of constructed streets, underground infrastructure and vehicles. Within the business -type activities the most significant increases occurred in infrastructure installation in relation to the water and sewer funds. Land Buildings Office equipment and furniture Vehicles Machinery and equipment Other Infrastructure Construction in Progress Subtotal Accumulated depreciation Capital assets, net Capital Assets at Year -end (in millions) Governmental Business -type Activities Activities Totals 2005 2004 2005 2004 2005 2004 $2.81 $3.09 $ - $ - $2.81 $3.09 6.44 6.44 .05 .05 6.49 6.49 .97 .98 .97 .98 1.52 1.47 - 1.52 1.47 .69 .65 .27 .26 .96 .91 .96 .93 - - .96 .93 67.33 65.22 37.09 35.38 104.42 100.60 - .36 - .36 80.72 78.78 37.77 35.69 118,49 114.47 35.27 32.69 7.00 6.27 42.27 38.96 $45.45 $46.09 $30.77 $29.42 $76.22 $75.51 17 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 Additional information on the City's capital assets can be found in the notes to the financial statements on pages 33 -53. Long -term debt. At the end of the current fiscal year, the City of Lino Lakes had total debt outstanding of $27,165,000. Of this amount $5,335,000 comprises tax supported debt, $19,405,000 is special assessment debt and $2,425,000 is revenue supported 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. Debt Outstanding at Year -end (in millions) Governmental Business -type Activities Activities Totals 2005 2004 2005 2004 2005 2004 G.O. tax supported debt $ 5.34 $ 5.76 $ $ 5.34 $ 5.76 G.O. special assessment debt 19.40 11.58 - - 19.40 11.58 G.O. revenue debt 2.43 2.71 2.43 2.71 Total $24.74 $17.34 $2.43 $2.71 $27.17 $20.05 The City of Lino Lakes' total bonded debt increased by $7,116,000 (35 percent) during the current fiscal year. The primary reasons for the increase were financing of improvements in the Legacy Woods Edge development, for which $5,550,000 in G.O. Improvement bonds were issued, and the refunding of the 1998A and 1998B Improvement bonds that will be called and retired in February, 2006, for which $3,755,000 in G.O. Improvement Refunding bonds were issued. Both issues are supported by special assessments levied upon benefited parcels. The City of Lino Lakes received an an Al rating from Moody's Investors Service for general obligation debt. More detailed information on the City's long -term liabilities is presented in the notes to the financial statements. Additional information on the City's long -term debt can be found in the notes to the financial statements on pages 33 -53. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES: • The unemployment rate for the City of Lino Lakes is currently 3.8 percent, which is a decrease from a rate of 5.0 percent a year ago. This compares favorably to the state's average unemployment rate of 4.0 percent and the national average of 5.1 percent. • The City of Lino Lakes continues to see increased commercial /industrial construction growth. Residential growth continues to be robust with an increase in the number of new home permits. • Property tax reforms and State budget deficits have significantly impacted local government aid payments the City of Lino Lakes receives. Local government aid and market value homestead credit was reduced to zero for 2003, 2004 and 2005, and are expected to remain at that level for the foreseeable future. • The Federal Reserve Board has begun to increase the fed funds rates, and interest rates are expected to increase over the next year, which are expected to result in increases in the city's investment earnings. 18 City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2005 REQUESTS FOR INFORMATION: This financial report is designed to provide a general overview of the City of Lino Lakes' finances for all of those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, City of Lino Lakes, 600 Town Center Parkway, Lino Lakes, Minnesota, 55014. 19 BASIC FINANCIAL STATEMENTS CITY OF LINO LAKES, MINNESOTA STATEMENT OF NET ASSETS December 31, 2005 Statement 1 Governmental Business -type Activities Activities Total ASSETS Cash and investments $ 21,274,603 $ 5,257,590 $ 26,532,193 Cash and investments with escrow agent 496,875 - 496,875 Accrued interest receivable 233,023 - 233,023 Accounts receivable 197,916 300,763 498,679 Due from other governments 221,720 - 221,720 Taxes receivable 182,943 182,943 Special assessments receivable 9,880,796 148,905 10,029,701 Prepaid items 150,415 11,095 161,510 Unamortized bond issue costs 143,471 - 143,471 Permanently restricted cash and investments 100,000 100,000 Capital assets: Land 2,809,059 - 2,809,059 Construction in progress 356,061 356,061 Other capital assets, net of depreciation 42,641,724 30,411,763 73,053,487 Total assets 78,332,545 36,486,177 114,818,722 LIABILITIES Accounts payable 1,191,870 35,594 1,227,464 Salaries payable 101,784 5,757 107,541 Contracts and retainage payable 158,976 15,860 174,836 Accrued interest payable 358,888 59,786 418,674 Due to other governments 7,789 - 7,789 Other accrued liabilities - 1,510 1,510 Non - current liabilities: Due within one year 6,332,871 312,874 6,645,745 Due in more than one year 19,092,284 2,139,626 21,231,910 Total liabilities 27,244,462 2,571,007 29,815,469 NET ASSETS Invested in capital assets, net of related debt 25,460,528 28,342,832 53,803,360 Restricted for: Debt service 11,950,484 11,950,484 Environmental improvements - nonexpendable 100,000 - 100,000 Unrestricted 13,577,071 5,572,338 19,149,409 Total net assets $ 51,088,083 $ 33,91 5,170 $ 85,003,253 The accompanying notes are an integral part of these basic financial statements. 20 1 CITY OF LINO LAKES, MINNESOTA STATEMENT OF ACTIVITIES Year Ended December 31, 2005 Program Revenues 1 Operating Charges for Grants and Capital Grants and Functions /Programs Expenses Services Contributions Contributions 1 Governmental Activities: General government $ 2,941,279 $ 111,480 $ 62,233 $ Public safety 3,091,174 998,210 329,403 Public services 9,187,436 434,087 183,019 10,128,024 Parks, recreation and forestry 799,335 196,951 153,595 - Conservation of natural resources 150,092 4,873 33,674 Community development 383,211 26,985 - - Interest on long -term debt 797,341 Total governmental activities 17,349,868 1,772,586 761,924 10,128,024 Business -type activities: Water 876,592 1,031,175 784,599 Sewer 1,217,825 1 ,361,759 949,176 Total business -type activities 2,094,417 2,392,934 1,733,775 Total $ 19,444,285 $ 4,165,520 $ 761,924 $ 11,861,799 General revenues: Taxes: Property taxes, levied for general purpose Franchise Taxes Other taxes Unrestricted investment earnings Contributions to permanent fund principal Other Transfers Total general revenues and transfers Change in net assets Net assets - beginning Net assets - ending 1 The accompanying notes are an integral part of these basic financial statements. 1 1 1 1 1 21 Statement 2 Net (Expense) Revenue and Changes in Net Assets Governmental Business -type Activities Activities Total $ (2,767,566) $ $ (2,767,566) (1,763,561) (1,763,561) 1 ,557,694 1,557,694 (448,789) (448,789) (111,545) - (111,545) (356,226) (356,226) (797,341) (797,341) (4,687,334) (4,687,334) 939,182 939,182 1,093,110 1,093,110 2,032,292 2,032,292 (4,687,334) 2,032,292 (2,655,042) 7,247,977 7,247,977 134,487 134,487 951 - 951 433,387 120,310 553,697 100,000 - 100,000 60,955 - 60,955 (304,195) 304,195 - 7,673,562 424,505 8,098,067 2,986,228 2,456,797 5,443,025 48,101,855 31,458,373 79,560,228 $ 51,088,083 $ 33,915,170 $ 85,003,253 22 CITY OF LINO LAKES, MINNESOTA BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2005 Assets Cash and investments Cash and investments with escrow agent Accrued interest receivable Accounts receivable Due from other governmental units lnterfund receivable Taxes receivable: Delinquent Due from county Delinquent tax increment Special assessments receivable: Delinquent Deferred Due from county Prepaid items Advances to other funds Total assets Liabilities and equity Liabilities: Interfund payable Accounts payable Salaries payable Contracts and retainage payable Due to other governmental units Advances from other funds Deferred revenue Total liabilities Fund balances: Reserved Reserved for prepaid items Reserved for debt retirement Reserved for advances to other funds Reserved for environmental improvements Unreserved: Designated: General fund Special revenue funds Capital projects funds Undesignated reported in: Debt service funds Capital projects funds Permanent funds Total equity and other credits Total liabilities and equity General $ 4,882,703 231,565 121,527 216,720 62,468 87,542 70,462 148,652 957,112 $ 5,821,639 $ 1,850,219 $ 5,128,403 $ 4,482,761 G.O. Improvement Bonds 2002B $ 513,443 52,259 1,284,517 G.O. Improvement Bonds 2005A $ 37,712 5,090,691 Area and Unit Charge $ 1,787,335 20,139 11,630 1,702,724 3,821 177,878 101 ,444 5,967 87,542 372,831 148,652 5,300,156 1,336,776 1,336,776 513,443 5,090,691 5,090,691 37,712 $ 169,815 19,694 1,714,354 1,903,863 957,112 1,621,786 5,448,808 513,443 37,712 2,578,898 $ 5,821,639 $ 1,850,219 $ 5,128,403 $ 4,482,761 The accompanying notes are an integral part of these basic financial statements. 23 State►nent 3 Legacy Woods Edge Improvement Other Governmental Funds $ 3,174,478 $ 10,978,932 496,875 1,458 56,250 5,000 13,591 10,384 964 6,683 1,724,285 4,186 1,763 Total Governmental Funds $ 21 ,374,603 496,875 233,023 197,916 221,720 62,468 101,133 80,846 964 70,572 9,802,217 8,007 150,415 957,112 $ 3,174,478 $ 13,300,371 $ 33,757,871 $ $ 759,945 67,636 62,468 84,232 340 71,646 1,822 957,112 1,745,523 827,581 2,923,143 1,763 6,820,204 100,000 74,716 1,456,519 $ 62,468 1,191,870 101,784 158,976 7,789 957,112 9,974,886 12,454,885 150,415 7,371,359 957,112 100,000 5,300,156 74,716 3,078,305 2,346,897 1,923,173 4,270,070 853 853 2,346,897 10,377,228 21,302,986 $ 3,174,478 $ 13,300,371 $ 33,757,871 24 CITY OF LINO LAKES, MINNESOTA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS December 31, 2005 Statement 4 Total Fund Balances for Governmental Funds $ 21,302,986 Total net assets reported for governmental activities in the statement of net assets is different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Those assets consist of: Land 2,809,059 Buildings, Net of Accumulated Depreciation 4,756,524 Office Equipment and Furniture, Net of Accumulated Depreciation 429,158 Vehicles, Net of Accumulated Depreciation 741,617 Machinery and Shop Equipment, Net of Accumulated Depreciation 251,406 Equipment, Net of Accumulated Depreciation 464,472 Infrastructure, Net of Accumulated Depreciation 35,998,547 45,450,783 Some of the City's property taxes and special assessments will be collected after year -end, but are not available soon enough to pay for the current period's expenditures, and therefore are reported as deferred revenue in the governmental funds. 9,974,886 Bond issuance costs are reported as expenditures in the governmental funds and are shown net of accumulated amortization on the statement of net assets as prepaid items. 143,471 Interest on long -term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is included in the statement of net assets. Long -term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities - both current and Tong -term - are reported in the statement of net assets. Balances at year -end are: Bonds payable Unamortized premiums Unamortized discounts Compensated absence payable Total Net Assets of Governmental Activities The accompanying notes are an integral part of these basic financial statements. 25 (358,888) (24,740,000) (176,166) 5,594 (514,583) (25,425,155) $ 51,088,083 CITY OF LINO LAKES, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS Year Ended December 31, 2005 G.O. G.O. Area and Improvement Improvement Unit Revenue: General Bonds 2002B Bonds 2005A Charge General property taxes $ 6,054,104 $ - $ $ - Tax increments Licenses and permits 812,172 - Intergovernmental 591,649 - Special assessments 3,461 223,112 701,775 Charges for services 197,475 209,676 Fines and forfeits 100,980 Investment earnings 115,015 8,762 160 105,814 Refunds and reimbursements 32,509 Miscellaneous 138,480 120,500 Total revenue 8,045,845 231 ,874 160 1,1 37,765 Expenditures: Current: General govemment 2,292,159 Public safety 3,099,032 Public works 964,338 897,913 Parks, recreation and forestry 733,176 Conservation of natural resources 140,334 Capital outlay: General government 61,360 Public safety 42,000 Public works 5,000 Parks, recreation and forestry Conservation of natural resources 2,321 Debt service: Principal - 175,000 - Interest and fiscal charges 92,558 5,972 Total expenditures 7,339,720 267,558 5,972 897,913 Revenue over (under) expenditures 706,125 (35,684) (5,812) 239,852 Other financing sources (uses): Transfer in 45,499 Transfer out (467,782) (1,867,549) Sale of property - Issuance of debt 43,524 Premium on bonds issued - Total other financing sources (uses) (467,782) 45,499 43,524 (1,867,549) Net increase (decrease) in fund balance 238,343 9,815 37,712 (1,627,697) Fund balance Beginning of year Fund balance - December 31 5,210,465 503,628 4,206,595 $ 5,448,808 $ 513,443 $ 37,712 $ 2,578,898 The accompanying notes are an integral part of these basic financial statements. 26 Statement Lcgacy Other Total Woods Edge Governmental Governmental Improvement Funds Funds $ $ 884,733 $ 6,938,837 291,450 291,450 812,172 I ,200,000 16,462 1,808,111 841,473 1,769,821 194,397 601,548 100,980 8,632 195,002 433,385 49,350 81,859 607,170 866,150 1,208,632 3,080,037 13,704,313 409,572 2,701,731 3,099,032 4,379,572 829,499 7,071,322 378,125 1,111,301 140,334 61,360 142,521 184,521 129,848 134,848 81,503 81,503 2,321 1,841,000 2,016,000 51,292 689,128 838,950 4,430,864 4,501,196 17,443,223 (3,222,232) (1,421,159) (3,738,910) 155,069 2,450,901 2,651,469 - (620,333) (2,955,664) - 280,269 280,269 5,506,476 3,862,000 9,412,000 4,874 171,357 176,231 5,666,419 6,144,194 9,564,305 2,444,187 4,723,035 5,825,395 (97,290) 5,654,193 15,477,591 $ 2,346,897 $ 10,377,228 $ 21,302,986 27 CITY OF LINO LAKES, MINNESOTA Statement 6 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES Ycar Ended December 31, 2005 Net Change in Fund Balances -Total Governmental Funds 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, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. Capital outlays 814,226 Contributed capital assets 1,581,610 Loss on disposal of capital assets (9,236) Proceeds from sales of capital assets (280,269) Depreciation expense (2,751,516) The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net assets, however, issuing debt increases long -term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Also, governmental funds report the effect of issuance costs, premiums and discounts when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Interest is recognized as an expenditure in the governmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues, regardless of when it is due. The net effect of these differences in the treatment of general obligation bonds and related items is as follows: $ 5,825,395 (645,185) Issuance of general obligation bonds (9,305,000) Issuance of equipment certificates (107,000) Bond premium (176,231) Bond issuance costs 96,101 Repayment of bond principal 2,016,000 Interest expense for general obligation bonds (52,226) Amortization of bond issuance costs (5,244) Amortization of bond premium 3,376 Amortization of bond discount (398) (7,530,622) Delinquent and deferred property taxes and special assessments receivable will be collected subsequent to year -end, but are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the governmental funds. Deferred revenue - December 31, 2004 Deferred revenue - December 31, 2005 4,595,455 9,974,886 5,379,431 In the statement of activities, compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). During fiscal year 2005, compensated absence payable increased. (42,791) Change in Net Assets of Governmental Activities $ 2,986,228 The accompanying notes are an integral part of these basic financial statements. 28 CITY OF LINO LAKES, MINNESOTA STATEMENT OF NET ASSETS - PROPRIETARY FUNDS December 31, 2005 Statement 7 Water Totals Sewer 2005 Assets Current assets: Cash and cash equivalents $ 1,759,526 $ 3,498,064 $ 5,257,590 Accounts receivable 130,602 170,161 300,763 Special assessments receivable: Due from county 708 708 1,416 Prepaid items 5,145 5,950 11,095 Total current assets 1,895,981 3,674,883 5,570,864 Non - current assets: Special assessments, long term 147,489 147,489 Capital assets: Construction in Progress 356,061 356,061 Buildings 48,690 - 48,690 Equipment 105,935 160,042 265,977 Water and sewer systems 17,198,789 19,895,691 37,094,480 Total capital assets 17,709,475 20,055,733 37,765,208 Less: allowance for depreciation (3,202,712) (3,794,672) (6,997,384) Net capital assets 14,506,763 16,261,061 30,767,824 Total noncurrent assets 14,654,252 16,261,061 30,915,313 Total assets 16,550,233 19,935,944 36,486,177 Liabilities Current liabilities: Accounts payable $ 30,982 $ 4,612 $ 35,594 Salaries payable 2,917 2,840 5,757 Contracts and retainage payable 15,860 - 15,860 Other accrued liabilities 1,510 1,510 Accrued interest payable 59,786 59,786 Bonds payable - current portion 295,000 - 295,000 Compensated absences payable - current portion 8,937 8,937 17,874 Total current liabilities 414,992 16,389 431,381 Non - current liabilities: Bonds payable - long term 2,130,000 - 2,130,000 Compensated absences payable - long term 4,813 4,813 9,626 Total noncurrent liabilities 2,134,813 4,813 2,139,626 Total liabilities 2,549,805 21,202 2,571,007 Net assets Invested in capital assets, net of related debt 12,081,763 16,261,069 28,342,832 Unrestricted 1,918,665 3,653,673 5,572,338 Total net assets $ 14,000,428 $ 19,914,742 $ 33,915,170 The accompanying notes are an integral part of these basic financial statements. 29 CITY OF LINO LAKES, MINNESOTA Statement 8 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS - PROPRIETARY FUNDS Year Ended December 31, 2005 Totals I Water Sewer 2005 Operating revenue: Charges for services $ 918,409 $ 1,319,849 $ 2,238,258 I Hook -up charges 53,510 41,910 95,420 Water meter sales 57,276 57,276 Other operating revenue 1,980 1,980 I Total operating revenue 1,031,175 1,361,759 2,392,934 Operating expenses: Personal services 153,940 155,575 309,515 I Materials and supplies 158,992 49,608 208,600 Contractual services 27,316 49,974 77,290 MCES sewer charges - 541,039 541,039 I Depreciation 338,451 390,628 729,079 Utilities 48,114 23,241 71,355 Other 16,927 7,760 24,687 I Total operating expenses 743,740 1,217,825 1,961,565 Net income (loss) from operations 287,435 143,934 431,369 Other income (expense): 1 Investment earnings 36,105 84,205 120,310 Special assessments 13,239 1,006 14,245 I Bond interest (131,327) (131,327) Paying agent fees (1,525) (1,525) Total other income (expense) (83,508) 85,211 1,703 I Net income before contributions and transfers 203,927 229,145 433,072 Contributions and transfers: IContributions from private sources 771,360 948,170 1,719,530 Transfer from capital projects fund 304,195 304,195 Total contributions and transfers 1,075,555 948,170 2,023,725 Net income (loss) 1,279,482 1,177,315 2,456,797 1 Net Assets - January 1 12,720,946 18,737,427 31,458,373 Net Assets - December 31 $ 14,000,428 $ 19,914,742 $ 33,915,170 1 The accompanying notes are an integral part of these basic financial statements. I 1 1 30 CITY OF LINO LAKES, MINNESOTA STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Year Ended December 31, 2005 Statement 9 Cash flows from operating activities: Cash receipts from customers Cash paid to suppliers Cash paid to employees Net cash flows from operating activities Cash flows from noncapital financing activities: Transfer from capital project funds Net cash flows from noncapital financing activities Cash flows from capital and related financing activities: Principal paid on revenue bonds Collection of special assessments Interest and paying agent fees on revenue bonds Acquisition of capital assets Net cash flows from capital and related financing activities Cash flows from investing activities: Interest on investments Net increase in cash and cash equivalents Cash and cash equivalents - January 1 Cash and cash equivalents - December 31 Reconciliation of operating income (loss) to net cash from operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash flows from operating activities: Depreciation Change in assets and liabilities: Decrease (increase) in receivables Decrease (increase) in prepaid items Increase (decrease) in payables Net cash flows from operating activities Water Sewer Totals 2005 $ 1,027,184 $ 1,347,529 $ 2,374,713 (221,978) (686,732) (908,710) (162,685) (161,657) (324,342) 642,521 499,140 1,141,661 304,195 304,195 (280,000) 34,989 (132,852) (356,081) (733,944) 303 (2,794) (2,491) 304,195 304,195 (280,000) 35,292 (132,852) (358,875) (736,435) 36,105 84,205 120,310 580,854 829,731 2,917,210 4,427,859 248,877 1,510,649 $ 1,759,526 $ 3,498,064 $ 5,257,590 $ 287,435 $ 143,934 $ 431,369 338,451 (3,991) 293 20,333 $ 642,521 - Water lines in the amount of $771,360 were contributed to the Water Fund in 2005. - Sewer lines in the amount of $948,170 were contributed to the Sewer Fund in 2005. The accompanying notes are an integral part of these basic financial statements. 31 390,628 (14,230) 172 (21,364) $ 499,140 729,079 (18,221) 465 (1,031) $ 1,141,661 CITY OF' LINO LAKES, MINNESOTA STATEMENT OF NET ASSETS - FIDUCIARY FUNDS December 31, 2005 Statement 10 Assets Cash and investments Deposits receivable Totals 2005 $ 1,380,493 10,520 Total assets $ 1,391,013 Liabilities Accounts payable Deposits payable $ 88,580 1,302,433 Total liabilities $ 1,391,013 The accompanying notes are an integral part of these financial statements. 32 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lino Lakes is a public corporation formed under Minnesota Statute 410. As such, the City is under home rule charter regulations and applicable statutory guidelines. The basic financial statements of the City of Lino Lakes have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies: A. FINANCIAL REPORTING ENTITY As required by U.S. generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Lino Lakes and its component units. A component unit is a legally separate entity for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component include whether or not the primary government appoints the voting majority of the potential component unit's board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. COMPONENT UNITS In conformity with U.S. generally accepted accounting principles, the financial statements of component units have been included in the financial reporting entity either as blended component units or as discretely presented component units. Blended Component Units.. The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the EDA is reported as if it were part of the City's operations because the members of the City Council serve as commission members. The EDA does not issue separate financial statements. The Housing and Redevelopment Authority (HRA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the HRA is reported as if it were part of the City's operations because the members of the City Council serve as commission members. The HRA has not yet incurred any financial activity. B. BASIC FINANCIAL STATEMENTS 1. Government -Wide Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) display information about the primary government and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges to external parties for support. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the City's enterprise funds and various other functions of government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. 33 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIC FINANCIAL STATEMENTS (CONTINUED) 1. Government -Wide Statements (Continued) In the government -wide statement of net assets, both the governmental and business -type activities columns: (a) are presented on a consolidated basis by column; and (b) are reported on a full accrual, economic resource basis, which recognizes all long -term assets and receivables as well as long -term debt and obligations. The City's net assets are reported in three parts: (1) invested in capital assets, net of related debt; (2) restricted net assets; and (3) unrestricted net assets. The City first utilizes restricted resources to finance qualifying activities. The statement of activities demonstrates the degree to which the direct expenses of each function of the City's governmental activities and different business -type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Program revenues include: (1) fees, fines, and charges paid by the recipients of goods, services, or privileges provided by a given function or activity; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 2. Fund Financial Statements The fund financial statements provide information about the City's funds, including its fiduciary funds and blended component unit. Separate statements for each fund category-- governmental, proprietary, and fiduciary- -are presented. The emphasis of governmental and proprietary fund financial statements is on major individual governmental and enterprise funds, with each displayed as separate columns in the fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or incidental activities. The City reports the following major governmental funds: General Fund The general fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. General Obligation Improvement Bonds 2002B Fund The general obligation improvement bonds 2002B fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long -term debt. General Obligation Improvement Bonds 2005A Fund The general obligation improvement bonds 2005A fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long -term debt. Area and Unit Charge Fund The area and unit charge fund accounts for the collection of water and sewer unit charges to be used for debt payments and construction of infrastructure. 34 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIC FINANCIAL STATEMENTS (CONTINUED) 2. Fund Financial Statements (Continued) Legacy Woods Edge Improvement Fund The legacy woods edge improvement fund accounts for construction costs related to infrastructure improvements in the Legacy Woods Edge development. The City reports the following major proprietary funds: Water Fund The water fund accounts for customer water service charges that are used to finance water operating expenses. Sewer Fund The sewer fund accounts for customer water service charges that are used to finance water operating expenses. Additionally, the City reports the following fiduciary funds: Agency Funds - to account for assets held as an agent for individuals, private organizations, other governmental units, and/or other funds. The City's agency fund accounts for pass - through contractor's deposits relating to prospective developments. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government -wide and proprietary fund fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds, which are included in the Fiduciary Funds, do not have a measurement focus. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Private - sector standards of accounting and financial reporting issued on or before November 30, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private- sector guidance. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. The City considers all revenues to be available if they are collected within 60 days after the end of the current period. Property and other taxes, licenses, and interest are all considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long -term debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent that they have matured. Proceeds of general long -term debt and acquisitions under capital leases are reported as other financing sources. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. 35 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING (CONTINUED) Proprietary funds distinguish operating revenues and expenses from nonoperating item. Operating revenues and expenses generally result from providing services and producing and delivering goods in connections with a proprietary fund's principal ongoing operations. The principal operating revenue of the City's enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. BUDGETS Budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Annual appropriated budgets are adopted for the General Fund and the Program Recreation Special Revenue Fund. Budgeted expenditure appropriations lapse at year end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is not presently considered necessary to assure effective budgetary control or to facilitate effective cash management. E. LEGAL COMPLIANCE - BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Administrator submits to the City Council a proposed operating budget (including the General Fund and Program Recreation Special Revenue Fund) for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution on a departmental basis and can be expended by each department based upon detailed budget estimates for individual expenditure accounts. 4. The City Administrator is authorized to transfer appropriations within any depaitiuent 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. 36 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. LEGAL COMPLIANCE — BUDGETS (CONTINUED) 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 total fund level. Monitoring of budgets is maintained at the expenditure category level (i.e., personal services, supplies; other services and charges; capital outlay) within each activity. 9. The City Council may authorize transfer of budgeted amounts between City funds. F. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in investments authorized by Minnesota Statutes. Earnings from investments are allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund in the governmental fund financial statements, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund payables are eliminated for statement of net assets presentation. Investments are stated at fair value as of the balance sheet date. Interest earnings are accrued at the balance sheet date. For purposes of the statement of cash flows the Proprietary Fund considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the proprietary fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types is considered cash equivalents. Permanently restricted cash and investments represents the principal portion of resources received that must be retained in a permanent fund. Only earnings from these funds may be used for purposes that support environmental maintenance and improvements. G. PROPERTY TAX CREDITS Property taxes on homestead property (as defined by State Statutes) are partially reduced by property tax credits. These credits are paid to the City by the State in lieu of taxes levied against homestead property. The State remits these credits through installments each year. These credits are recognized as revenue by the City at the time of collection. 37 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy /assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 15 and December 15 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. Within the governmental fund financial statements, the City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and the following January are recognized as revenue for the current year. Taxes and credits not received at the year end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by deferred revenue because it is not available to finance current expenditures. Deferred revenue in governmental activities is susceptible to full accrual on the government -wide statements. The City's property tax revenue includes payments from the Metropolitan Revenue Distribution (Fiscal Disparities Formula) per State Statute 473F. This statute provides a means of spreading a portion of the taxable valuation of commercial/industrial real property to various taxing authorities within the defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property valuation growth since 1971. Property taxes paid to the City through this formula for 2005 totaled $724,299. Receipt of property taxes from this "fiscal disparities pool" does not increase or decrease total tax revenue. I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Within the fund financial statements, the revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the County and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funding are completely offset by deferred revenues. Deferred revenue in governmental activities is susceptible to full accrual on the government -wide statements. 38 1 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOIJNTING POLICIES (CONTINUED) I. SPECIAL ASSESSMENT REVENUE RECOGNITION (CONTINUED) Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. J. INVENTORIES The original cost of materials and supplies has been recorded as expenditures /expenses at the time of purchase of both the Governmental and Proprietary Funds. These funds do not maintain material amounts of materials and supplies. K. INTERFUND RECEIVABLES /PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. The year -end balances are classified as interfund receivables and payables on the governmental fund balance sheets. The non - current portion of interfund loans are reported as "advances to /from other funds." Advances between funds are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not expendable from available financial resources. L. CAPITAL ASSETS Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, sidewalks, street lights, and similar items) are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets exceeding the City's capitalization threshold of $2,500 are recorded at historical cost or estimated historical cost if purchased or constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. All existing City infrastructure has been capitalized regardless of date placed in service. Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of Activities with accumulated depreciation reflected in the Statement of Net Assets. Capital assets are depreciated using the straight -line method over their estimated useful lives. Since surplus assets are sold for an immaterial amount when declared as no longer needed for City purposes, no salvage value is taken into consideration for depreciation purposes. Useful lives vary from 3 to 30 years for Buildings, Office Furniture and Equipment, Vehicles, Machine Shop and Equipment and Other assets, and 25 to 50 years for Infrastructure. Capital assets not being depreciated include land and construction in progress. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay and the portion of sick pay allowable as severance pay is accrued as incurred in the government -wide and proprietary fund financial statements. The current portion is calculated based on historical trends. N. LONG -TERM OBLIGATIONS In the entity -wide financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight -line method. Bond issue costs, if material, are reported as prepaid items and amortized over the term of the related debt using the straight -line method. In the governmental fund financial statements, bond premiums and discounts, as well as bond issue costs are recognized during the current period. The face amount of the debt issue is reported as on other financing source. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issue costs are reported as debt service expenditures. O. FUND EQUITY In the governmental fund financial statements, reservations of fund balance represent those portions of fund equity not appropriable for expenditure or legally restricted by outside parties for use for a specific purpose. Designated fund balances represent tentative plans for future use of financial resources that are subject to change. P. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures /expenses initially made from it that are properly applicable to another fund, are recorded as expenditures /expenses in the reimbursing fund and as reductions of expenditures or expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. All Interfund transactions are eliminated except for activity between governmental activities and business -type activities for presentation in the entity-wide statements of net assets and statements of activities. 40 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 2 DEPOSITS AND INVESTMENTS A. Deposits The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the combined balance sheet as "Cash and Temporary Investments." In accordance with Minnesota Statutes the City maintains deposits at financial institutions which are authorized by the City Council. Custodial Credit Risk — Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City does not have a specific deposit policy for custodial credit risk but rather follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or corporate surety bonds. Authorized collateral include: U.S. government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of a state or local government rated "A" or better; revenue obligations of a state or local government rated "AA" or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits insured by a federal agency. Minnesota statutes require securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust departments of a commercial bank or other financial institution not owned or controlled by the depository. The City's deposits in banks at December 31, 2005 in the amount of $4,194,130 were entirely covered by federal depository insurance or by surety bonds and collateral m accordance with Minnesota statutes. B. Investments The City may also invest idle funds as authorized by Minnesota Statutes as follows: • Direct obligations or obligations guaranteed by the United States or its agencies. • Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, is rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a finial maturity of thirteen months or less • General obligations rated "A" or better; revenue obligations rated "AA" or better • General obligations of the Minnesota Housing Finance Agency rate "A" or better • Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System. • Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by a least two nationally recognized rating agencies, and maturing in 270 days or less. • Guaranteed investment contracts guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debt obligations of the issuer or the collateral pledged by the issuer is in the top two rating categories. • Repurchase or reverse purchase agreement and securities lending agreements financial institutions qualified as a "depository" by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker - dealers. 41 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) At December 31, 2005, the City's investment balances were as follows: Cash Investments Held by Trustee — Type Amount Mutual Funds $ 496,875 The above mutual fund invests in U.S. Treasury Securities. These investments are held by an escrow agent in accordance with escrow agreements established wit the sale of the Lease Revenue Bonds Series 1998A and the Public Project Revenue Refunding Bonds Series 1999C. The proceeds of these issues were used to finance the construction of the Civic Complex, and to refund the 2000 through 2010 maturities of the City's 1990A Public Project Revenue Bonds. Investments Held with Broker — Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities to meet cash requirements for ongoing operations. Information about the sensitivity of the fair values of the City's investments to market interest rate risk fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: 12 Months 13 to 24 25 to 60 More than Type Total or Less Months Months 60 Months Minnesota Municipal Money Market Trust Fund $ 109,822 $ 109,822 $ $ $ Commercial Paper 12,929,002 12,929,002 Government Agencies 10,196,004 6,171,797 2,336,006 1,494,951 193,250 Mutual Fund 254,418 254,418 - - Total $ 23,489,246 S 19,465,039 5 2,336,006 $ 1,494,951 $ 193,250 Credit Risk. Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following chart summarizes year -end ratings for the City's investments as rated by Moody's Investors Service: Credit Type Quality Rating Amount Minnesota Municipal Money Market Trust Fund Aa2 $ 109,822 Commercial Paper P -1 12,929,002 Government Agencies Aaa 10,196,004 Mutual Fund Not Rated 254,418 Total $ 23,489,246 42 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) The Minnesota Municipal Money Market Fund Trust is a common law trust organized in accordance with the Minnesota Joint Powers Act, which invests only in investment instruments allowable under Minnesota statutes as described on the previous page. Its investments are valued at amortized cost, which approximates fair value in accordance with Rule 2a -7 of the Investment Company Act of 1940. The amortized cost method of valuation values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of instruments. Credit Risk — The Minnesota Municipal Money Market Trust Fund does not have its own credit rating. MBIA, Inc., who administers the Minnesota Municipal Money Market Fund Trust holds an organization credit rating of Aa2. Concentration of Credit Risk. The City places no limit on the amount that it may invest in any one issuer. The following is a list of investments which individually comprise more than 5 percent of the City's total investments: Type Amount Percentage Federal Home Loan Bank $ 6,254,544 22.88% Federal National Mortgage Association 3,046,531 11.14% General Electric Capital Commercial Paper 6,363,903 23.28% Rhineland Funding Commercial Paper 5,034,315 18.42% 43 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 3 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2005 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital Assets, Not Being Depreciated Land $ 3,093,490 $ - $ (284,431) $ 2,809,059 Total capital assets, not being depreciated 3,093,490 - (284,431) 2,809,059 Capital Assets, Being Depreciated: Buildings 6,444,455 - 6,444,455 Office Equipment and Furniture 982,815 75,952 (89,585) 969,182 Vehicles 1,470,443 139,868 (87,787) 1,522,524 Machinery and Shop Equipment 645,151 44,974 (2,948) 687,177 Other 929,765 31,072 960,837 Infrastructure 65,224,680 2,103,970 67,328,650 Total Capital Assets, Being Depreciated 75,697,309 2,395,836 (180,320) 77,912,825 Accumulated Depreciation for: Buildings (1,472,741) (215,190) (1,687,931) Office Equipment and Furniture (555,671) (73,938) 89,585 (540,024) Vehicles (687,299) (177,795) 84,187 (780,907) Machinery and Shop Equipment (404,322) (32,923) 1,474 (435,771) Other (443,798) (52,567) (496,365) Infrastructure (29,131,000) (2,199,103) (31,330,103) Total Accumulated Depreciation (32,694,831) (2,751,516) 175,246 (35,271,101) Total Capital Assets, Being Depreciated, Net 43,002,478 (355,680) (5,074) 42,641,724 Governmental Activities Capital Assets, Net $ 46,095,968 $ (355,680) $ (289,505) $ 45,450,783 Depreciation expense was charged to governmental functions as follows: Governmental Activities: General government $ 265,874 Public safety 103,027 Public services 2,235,628 Parks, recreation and forestry 144,854 Community development 2,133 Total Depreciation Expense, Governmental Activities $ 2,751,516 Beginning Balance Increases Business -Type Activities: Capital Assets, Not Being Depreciated Construction in Progress Decreases Ending Balance $ $ 356,061 $ $ 356,061 Total capital assets, not being depreciated 356,061 356,061 Capital Assets, Being Depreciated: Buildings 48,690 - Machinery and Shop Equipment 264,907 2,802 Water and Sewer Lines 35,376,819 1,719,550 Total Capital Assets, Being Depreciated 35,690,416 1,722,352 48,690 (1,732) 265,977 (1,889) 37,094,480 (3,621) 37,409,147 Accumulated Depreciation for: Buildings (48,690) - (48,690) Machinery and Shop Equipment (190,486) (15,309) 1,732 (204,063) Water and Sewer Lines (6,032,742) (713,770) 1,881 (6,744,631) Total Accumulated Depreciation (6,271,918) (729,079) 3,613 (6,997,384) Total Capital Assets, Being Depreciated, Net 29,418,498 993,273 (8) 30,411,763 Business -Type Capital Assets, Net $ 29,418,498 $ 1,349,334 $ (8) $ 30,767,824 44 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 4 CITY INDEBTEDNESS City indebtedness at December 31, 2005 is composed of the following: Final Issue Maturity Interest Original Date Date Rate Issue Payable 12/31/2005 Governmental Activities: General Obligation Bonds: 2003A Equipment Certificates 2/1/2003 12/31/2006 6.00% $ 130,000 $ 40,000 2003B Equipment Certificates 3/31/2003 12/31/2006 4.00% 200,000 85,000 2004A Equipment Certificates 2/1/2004 12/31/2007 4.00% 274,000 193,000 2005A Equipment Certificates 2/1/2005 12/31/2008 4.00% 107,000 107,000 Civic Complex Lease Rev. Bonds - 98A 8/1/1998 2/1/2019 4.20%-5.35% 5,350,000 4,420,000 Public Project Revenue Ref. Bonds - 99C 9/1/1999 2/1/2010 4.75% -5.10% 980,000 490,000 Total General Obligation Bonds 7,041,000 5,335,000 Special Assessment Bonds: G.O. Improvement Bonds, Series 1998A 8/1/1998 2/1/2015 4.50 % - 4.90% 4,310,000 2,860,000 G.O. Improvement Bonds, Series 1998B 8/1/1998 2/1/2015 4.50% -4.90% 2,000,000 1,430,000 G.O. Improvement Refunding Bonds, Series 1999A 9/1/1999 2/1/2006 4.25% -4.70% 1,725,000 355,000 G.O. Improvement Bonds, Series 2002A 8/1/2002 2/1/2013 3.00 % - 4.10% 645,000 455,000 G.O. Improvement Bonds, Series 2002B 8/1/2002 2/1/2013 3.20 % -5.55% 2,110,000 1,765,000 G.O. Improvement Refunding Bonds, Series 2003A 12/1/2003 2/1/2019 3.00% -4.10% 2,090,000 1,655,000 G.O. Improvement Bonds, Series 2003B 12/1/2003 2/1/2014 3.20% -5.55% 250,000 250,000 G.O. Improvement and Utility Bonds, Series 2004A 11/15/2004 2/1/2020 1.90 % - 4.45% 1,330,000 1,330,000 G.O. Improvement Bonds, Series 2005A 11/1/2005 2/1/2021 4.35% -5.15% 5,550,000 5,550,000 G.O. Improvement Refunding Bonds, Series 2005B 11/1/2005 2/1/2015 3.75 % -5.00% 3,755,000 3,755,000 Total Special Assessment Bonds 23,765,000 19,405,000 Total Bonds 30,806,000 24,740,000 Unamortized Bond Discounts (6,057) (5,594) Unamortized Bond Premiums 179,797 176,166 Compensated Absences Payable N/A 514,583 Total Governmental Activities $ 30,979,740 $ 25,425,155 Business -Type Activities: Revenue Bonds: G.O. Water Revenue Bonds, Series 1996B 10/1/1996 2/1/2012 4.10 % -5.70% $ 3,320,000 $ 2,100,000 G.O. Water Revenue Bonds, Series 1999B 9/1/1999 2/1/2008 4.25% -4.90% 680,000 325,000 Total Revenue Bonds 4,000,000 2,425,000 Compensated Absences Payable N/A 27,500 Total Business -Type Activities $ 4,000,000 $ 2,452,500 45 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 4 CITY INDEBTEDNESS (CONTINUED) The following is a schedule of changes in City indebtedness for the year ended December 31, 2005: Payable Payable Due Within 12/31/2004 Issues Payments 12/31/2005 One Year Governmental activities: Bonded debt: I General obligation $ 5,764,000 $ 107,000 $ 536,000 $ 5,335,000 $ 570,000 Special assessment 11,580,000 9,305,000 1,480,000 19,405,000 5,465,000 Unamortized Bond Discounts (5,992) - (398) (5,594) - Unamortized Bond Premiums 3,311 176,231 3,376 176,166 - Compensated absences payable 471,792 402,195 359,404 514,583 297,871 Total governmental activities 17,813,111 9,990,426 2,378,382 25,425,155 6,332,871 Business -Type activities: Revenue bonds 2,705,000 - 280,000 2,425,000 295,000 II Compensated absences payable 40,368 27,120 39,988 27,500 17,874 Total business -type activities 2,745,368 27,120 319,988 2,452,500 312,874 Total $ 20,558,479 $ 10,017,546 $ 2,698,370 $ 27,877,655 $ 6,645,745 I All long -term bonded indebtedness outstanding at December 31, 2005 is backed by the full faith and credit of the City, including special assessment bond issues. For the governmental activities, compensated absences are generally liquidated by the general fund. Minimum annual principal and interest payments required to retire long -term debt, not including compensated absences payable are as follows. Governmental Activities Business -Type Activities Principal Interest Principal Interest Total Years ending December 31, 2006 $ 6,035,000 $ 899,093 $ 295,000 $ 122,868 $ 7,351,961 2007 1,883,000 833,643 305,000 107,835 3,129,478 2008 1,542,000 765,085 325,000 91,733 2,723,818 2009 1,465,000 699,964 345,000 74,035 2,583,999 2010 1,385,000 636,550 365,000 54,683 2,441,233 2011 -2015 7,180,000 2,165,791 790,000 45,408 10,181,199 2016 - 2020 4,725,000 698,406 - 5,423,406 2021 525,000 13,519 - 538,519 Total $ 24,740,000 $ 6,712,051 $ 2,425,000 $ 496,562 $ 34,373,613 Description and Restrictions of Long -Term Debt General Obligation Bonds - The bonds were issued for improvements or projects which benefited the City as a whole and are, therefore, repaid from ad valorem levies. Special Assessment Bonds - These bonds were issued to finance various improvements and will be repaid 1 primarily from special assessments levied on the properties benefiting from the improvements. However, some issues are partly financed by ad valorem levies. 1 46 1 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 4 CITY INDEBTEDNESS (CONTINUED) Public Project Revenue Bonds and Civic Complex Lease Revenue Bonds — These bonds were issued by the Economic Development Authority (EDA) of Lino Lakes for the purpose of financing the construction of public facilities. Pursuant to Minnesota Statutes and a lease purchase contract between the EDA and the City of Lino Lakes, a Trust Indenture between the EDA and a regional bank has been established for the purpose of financing payment of these bonds. The City has pledged rental payments in amounts equal to the debt service requirements and plans to annually appropriate City funds available for this purpose. As required by bond covenant, a reserve account has been established with a trustee, which is to be used to pay principal and interest on the bonds in the event that other available resources are inadequate to do so. On November 1, 2005 the City issued $3,755,000 of General Obligation Improvement Refunding Bonds, Series 2005B. The proceeds will be used to refund, in advance of their stated maturities, the 2007 through 2015 maturities of the City's 1998A General Obligation Improvement and 1998B General Obligation Improvement Bonds totaling $3,880,000. This "crossover refunding" reduced the City's total future debt service payments by approximately $203,995, and resulted in a present value savings of approximately $175,876. Liability for Compensated Absences — This liability represents vested benefits earned by governmental fund employees through the end of the year which will be paid or used in future periods. For the governmental activities, compensated absences are generally liquidated by the general fund. The liability for Proprietary Fund employees is included in the accrued liabilities of those funds. Note 5 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Lino Lakes' legal debt margin for 2005 computed as follows: Market value Applicable percentage Debt Limit Amount of debt applicable to debt limit: Total bonded debt Less: Special assessment bonds Public project revenue bonds Revenue bonds Total debt applicable to debt limit Legal debt margin 47 12/31/05 $ 1,534,933,700 2.0% 30,698,674 27,165,000 (19,405,000) (490,000) (2,425,000) 4,845,000 $ 25,853,674 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 6 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION All full -time and certain part-time employees of the City of Lino Lakes are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) which is a cost - sharing, multiple - employer retirement plan. This plan is established and administered in accordance with Minnesota Statutes, Chapter 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement 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 PERF's Coordinated and Basic Plan members. The retiring member receives the higher of step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A normal annuity is a lifetime annuity that ceases upon the death of the retiree, no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF. That report may be obtained on the web at mnpera.org, by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103 -2088 or by calling (651) 296 -7460 or 1- 800 - 652 -9026. 48 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 6 DEFINED BENEFIT PENSION PLANS — STATEWIDE (CONTINUED) B. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 5.10% respectively, of their annual covered salary. Contribution rates in the Coordinated Plan will increase in 2006 to 5.5 %. The City is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members, and 5.53% for Coordinated Plan PERF members. Employer contribution rates for the Coordinated Plan will increase to 6.0% effectively January 1, 2006. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2005, 2004, and 2003 were $136,230, $128,263, and $124,431, respectively. The City's contributions to the Public Employees Police & Fire Fund for the years ending December 31, 2005, 2004, and 2003 were $158,282, $146,820, and $139,726, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. Note 7 METROPOLITAN COUNCIL ENVIRONMENTAL SERVICES During 1971, the Metropolitan Waste Control Commission (MWCC) was organized to provide for consolidation of the sanitary sewer collection, treatment and disposal in the seven county metropolitan area surrounding Minneapolis and St. Paul. Previously, these operations were maintained by the city governments on an individual or collective basis. The MWCC merged with the Metropolitan Council during 1994 to form Metropolitan Council Wastewater Services (MCWS) and is now called the Metropolitan Council Environmental Services (MCES). The MCES bills the City annually based upon estimated volume and budgeted costs. The City follows the accounting policy of recognizing these charges as an expense of the sewer utility operation in the year for which they are billed. Note 8 STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY Deficit Fund Balances The City has deficit fund balances at December 31, 2005 as follows: Fund Balance Deficit Dedicated Parks $ (734,870) Municipal State Aid (49,353) Tax Increment Financing 1 -11 (23,977) Birch Hodgson Street Improvement (36,728) CSAH 14/8 Reconstruction Project (14,912) The City intends to fund these deficits through future tax levies, special assessment levies, tax increments, transfers from other funds, and various other sources. 49 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 9 CONTINGENCIES Litigation - The City attorney has indicated that 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 attorney, remotely recoverable by plaintiffs. 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, 2005. Note 10 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at December 31, 2005. Future scheduled tax levies for all bonds outstanding at December 31, 2005 totaled $23,835,841. Note 11 DESIGNATIONS AND RESERVATIONS OF FUND EQUITY At December 31, 2005, the City had designated and reserved portions of its various fund equities through legal restriction and City Council authorization. Major fund equity appropriations at December 31, 2005 are shown on the various balance sheets as segregations of the fund equity. A summary of such designations is as follows: Governmental Activity: General Fund Reserved for prepaid items Designated for cash flow reserve Improvement Bonds of 2002B Reserved for debt retirement Improvement Bonds of 2005A Reserved for debt retirement Area and Unit Charge Reserved for advance to other funds Designated for capital improvements Other Nonmajor Governmental Funds Reserved for prepaid items Reserved for debt retirement Reserved for environmental improvements Designated for recreation purposes Designated for capital improvements 50 12/31/05 $ 148,652 5,300,156 513,443 37,712 957,112 1,621,786 1,763 6,820,204 100,000 74,716 1,456,519 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 12 SHARE IN GAS FRANCHISE PROFITS The City receives a share of the gross billing for natural gas sales by a neighboring City, which provides service within the City of Lino Lakes. The amount reported as revenue in the General Fund during fiscal year 2005 was $116,010. Note 13 INTERFUND RECEIVABLE AND PAYABLES Individual fund receivable and payable balances at December 31, 2005 are as follows: Receivable Governmental Activity: General Fund Other Nonmajor Governmental Funds Payable $ 62,468 $ $ 62,468 62,468 $ 62,468 Interfund receivable and payable balances represent the elimination of negative cash between funds. Note 14 INTERFUND TRANSFERS Individual fund transfers for fiscal year 2005 are as follows: Governmental Activity: General Fund Improvement Bonds of 2002B Area and Unit Charge Legacy Woods Edge Improvement Fund Other Nonmajor Governmental Funds Total Governmental Activity Business -Type Activity: Water Fund Transfer In 45,499 155,069 2,450,901 2,651,469 304,195 $ 2,955,664 Transfer Out $ (467,782) (1,867,549) (620,333) (2,955,664) $ (2,955,664) Interfund transfers are other financing sources and uses within the fund financial statements. The purpose of the transfers are to provide funding for capital improvement projects, capital outlay, and debt service as well as open and close funds. 51 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 15 RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Workers compensation coverage is provided through a pooled self - insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not subject to a deductible. The City's workers compensation coverage is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. Property and casualty insurance is provided through a pooled self - insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portion of the insurance policies and for any exclusions from the insurance policies. These amounts are considered immaterial to the financial statements. The City continues to carry commercial insurance for all other risks of loss, including disability and employee health insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Note 16 CONDUIT DEBT OBLIGATIONS The City has issued Industrial Development Revenue Bonds to provide financial assistance to private- sector entities for the acquisition and construction of industrial and commercial facilities which are deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issue. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2005, two series of Industrial Revenue Bonds were outstanding with aggregate remaining principal balances of $1,625,000 and $2,800,000, respectively. Note 17 LEASE COMMITMENT The City of Lino Lakes entered into an agreement dated December 8, 1997 to lease space within the City Hall complex to the Independent School District No. 12 (ISD 12). The lease term continues through June 30, 2009 and requires payments of $110 per square foot over the lease term for a total of $1,200,000. The schedule of remaining payments is as follows: Amount 2006 $ 112,500 2007 112,500 2008 112,500 2009 75,000 Total $ 412,500 52 CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 17 LEASE COMMITMENT (CONTINUED) The prorated carrying value of the building being leased is as follows: Building Less Accumulated Depreciation $ 929,970 (185,994) Net $ 743,976 Note 18 JOINT FIRE VENTURE The Centennial Fire District (the District) was established under a joint powers agreement between the City of Lino Lakes and two other cities. The general purpose of the District is to provide fire protection services including, but not limited to, fire prevention, firefighting and rescue service. Each member city is entitled to appoint two commissioners to the District's Board. Each calendar year participating cities are to pay the District its share of the total operating and capital budget in accordance with a funding formula contained in Section VII of the joint powers agreement. The funding formula takes into account each city's average number of calls, population, and total market value. During 2005, the City of Lino Lakes' contributions to the District were as follows: Operating $ 390,951 Capital 68,500 Total $ 459,451 Separate financial statements of the District can be obtained by contacting the Centennial Fire District. The audited condensed fmancial statements of the District as of December 31, 2005 are as follows: Total Assets $ 940,773 Total Liabilities 138,584 Total Net Assets 802,189 Total Operating Revenue 611,916 Total Operating Expenses 658,499 53 REQUIRED SUPPLEMENTARY INFORMATION CITY OF LINO LAKES, MINNESOTA GENERAL FUND SCIIEDULE OF REVENUES, EXPENDITURES AND CI IANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2005 Statement 11 Page 1 of 6 2005 Variance with Original Final Final Budget Budget Budget Actual Positive (Negative Revenue: General property taxes: Current and delinquent $ 6,389,211 $ 6,389,211 $ 5,422,178 $ (967,033) Fiscal disparities - - 631,926 631,926 Total general property taxes 6,389,211 6,389,211 6,054,104 (335,107) Licenses and permits: Business 33,500 33,500 45,676 12,176 Non - business 743,750 743,750 766,496 22,746 Total licenses and permits 777,250 777,250 812,172 34,922 Intergovernmental: Federal: Other 125,000 125,000 175,696 50,696 State: Market Value Credit 4,348 4,348 Police state aid 120,000 120,000 153,706 33,706 MSA maintenance 160,000 160,000 160,519 519 Other 40,000 40,000 58,833 18,833 County /Regional: Solid waste 35,000 35,000 33,674 (1,326) Other 5,000 5,000 4,873 (127) Total intergovernmental 485,000 485,000 591,649 106,649 Special Assessments: Penalties and Interest 5,000 5,000 3,461 (1,539) Charges for services: General government 28,000 28,000 26,034 (1,966) Planning/engineering 15,000 15,000 12,135 (2,865) Fees retained from collection for other governments - SAC /surcharge 4,000 4,000 4,397 397 Administrative charge - other funds 55,000 °55,000 52,500 (2,500) Aerial map charge - other funds 10,000 10,000 14,850 4,850 Public safety 81,000 86,000 87,559 1,559 Total charges for services 193,000 198,000 197,475 (525) Fines and forfeits 100,000 100,000 100,980 980 Investment earnings 65,000 65,000 115,015 50,015 Refunds and reimbursements 45,000 20,000 32,509 12,509 Miscellaneous: Gas franchise fees 65,000 65,000 116,010 51,010 Cable TV 15,250 15,250 18,478 3,228 Donations 5,000 8,200 3,992 (4,208) Total miscellaneous 85,250 88,450 138,480 50,030 Total Revenue 8,144,711 8,127,911 8,045,845 (82,066) 54 CITY OF LINO LAKES, MINNESOTA (i1 NERAL FUND SCI IEDULE OF REVENUES, EXPENDITURES AND (I IANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2005 Statement 11 Page 2 of 6 2005 Variance with Original Final Final Budget Budget Budget Actual Positive (Negative Expenditures: General government: Mayor and council: Current Personal services $ 40,631 $ 40,631 $ 35,925 $ 4,706 Supplies 400 400 15 385 Other services and charges 78,950 78,950 50,244 28,706 Contractual Services 28,062 28,062 28,397 (335) Total mayor and council 148,043 148,043 114,581 33,462 Elections: Current Personal services 10,479 10,479 6,014 4,465 Supplies 200 200 96 104 Other services and charges 1,300 1,300 2,326 (1,026) Contractual Services 500 500 500 Capital outlay 18,000 Total elections 30,479 12,479 8,436 4,043 Administration: Current Personal services 421,427 421,427 402,376 19,051 Supplies - 171 (171) Other services and charges 20,000 20,000 18,172 1,828 Contractual Services 10,800 10,800 8,075 2,725 Total administration 452,227 452,227 428,794 23,433 Finance: Current Personal services 271,563 271,563 268,321 3,242 Supplies 1,500 1,500 227 1,273 Other services and charges 53,500 53,500 49,533 3,967 Contractual Services 80,850 80,850 76,008 4,842 Capital outlay 20,000 - - - Total finance 427,413 407,413 394,089 13,324 Cable TV: Current Personal services 3,024 3,024 1,845 1,179 Supplies 50 50 50 Capital outlay 500 500 500 Total cable TV 3,574 3,574 1,845 1,729 Consultants: Current Legal 153,000 153,000 162,823 (9,823) Community Development: Current Personal services 192,383 192,383 160,961 31,422 Supplies 100 100 20 80 Other services and charges 4,625 4,625 2,175 2,450 Contractual Services 750 750 821 (71) Capital outlay 5,160 5,160 2,900 2,260 203,018 203,018 166,877 36,141 55 CITY OF LINO LAKES, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES ANI) CHANGES IN FUND BALANCE - BUDGET AND ACI'UAI, Year Ended December 31, 2005 Statement I1 Page 3 of 6 2005 Variance with Original Final Final Budget Budget Budget Actual Positive (Negative General government: (continued) Economic Development: Current Personal services $ 78,671 $ 78,671 $ 74,898 $ 3,773 Other services and charges 11,750 11,750 6,019 5,731 Contractual services 138,700 138,700 128,787 9,913 Total economic development 229,121 229,121 209,704 19,417 Planning and zoning commission: Current Personal services 152,201 152,201 144,938 7,263 Supplies 200 (200) Other services and charges 28,245 28,245 16,968 11,277 Contractual services 26,600 26,600 4,779 21,821 Capital outlay 3,500 3,500 - 3,500 Total planning and zoning commission 210,546 210,546 166,885 43,661 Engineering /planning: Current Contractual services 185,000 185,000 174,068 10,932 Total engineering /planning 185,000 185,000 174,068 10,932 Senior Service Current Personal services 28,581 28,581 27,164 1,417 Other services and charges 1,150 1,150 1,220 (70) Capital outlay 500 500 3,872 (3,372) Total charter commission 30,231 30,231 32,256 (2,025) Charter commission: Current Other services and charges 1,850 1,850 1,802 48 Total charter commission 1,850 1,850 1,802 48 General government buildings: Current Personal services 74,447 74,447 74,804 (357) Supplies 40,000 40,000 41,145 (1,145) Other services and charges 281,380 281,380 291,320 (9,940) Contractual services 29,000 29,000 29,502 (502) Capital outlay 68,000 53,000 54,588 (1,588) Total general government buildings 492,827 477,827 491,359 (13,532) Total general government 2,567,329 2,514,329 56 2,353.519 160,810 CITY OF LINO LAKES, MINNESOTA GENERAL FUND SCI IEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2005 Statement 11 Page 4 of 6 2005 Variance with Original Final Final Budget Budget Budget Actual Positive (Negative Public safety: Police: Current Personal services $ 2,281,050 $ 2,281,050 $ 2,200,715 $ 80,335 Supplies 43,812 50,012 61,118 (11,106) Other services and charges 73,400 75,400 95,704 (20,304) Contractual services 33,900 33,900 38,401 (4,501) Capital outlay 23,495 23,495 28,496 (5,001) Total police 2,455 ,657 2,463,857 2,424,434 39,423 Fire protection: Current Contractual services 402,591 402,591 399,770 2,821 Building inspection: Current Personal services 299,426 299,426 276,170 23,256 Supplies 880 880 476 404 Other services and charges 24,875 24,875 25,245 (370) Contractual services 600 600 1,433 (833) Capital outlay 15,000 15,000 13,504 1,496 Total building inspection 340,781 340,781 316,828 23,953 Total public safety 3,199,029 3,207,229 3,141,032 66,197 Public works: Streets: Current Personal services 448,278 448,278 416,925 31,353 Supplies 84,500 84,500 89,374 (4,874) Other services and charges 76,500 71,500 76,729 (5,229) Contractual services 259,858 45,858 57,253 (11,395) Capital outlay - 5,000 5,000 - Total streets 869,136 655,136 645,281 9,855 Fleet: Current Personal services 94,439 94,439 105,436 (10,997) Supplies 141,000 171,000 183,021 (12,021) Other services and charges 44,880 44,880 35,600 9,280 Contractual services 1,200 1,200 - 1,200 Capital outlay 150,000 - - Total fleet 431,519 311,519 324,057 (12,538) Total public works 1,300,655 966,655 969,338 (2,683) 57 (TTY OF LINO LAKES, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND ('I IANGtS IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2005 Statement 11 Page 5 of 6 2005 Variance with Original Final Final Budget Budget Budget Actual Positive (Negative Parks and recreation: ('arks: Current Personal services $ 418,619 $ 418,619 $ 405,167 8 13,452 Supplies 42,000 42,000 46,313 (4,313) Other services and charges 33,420 33,420 26,138 7,282 Contractual services 10,900 10,900 11,737 (837) Capital outlay 50,000 - - - Total parks 554,939 504,939 489,355 15,584 Recreation: Current Personal services 240,309 240,309 229,922 10,387 Supplies 2,500 2,500 2,060 440 Other services and charges 16,500 16,500 10,769 5,731 Contractual services 890 890 1,070 (180) Total recreation 260,199 260,199 243,821 16,378 Total parks and recreation 815,138 765,138 733,176 31,962 Conservation of natural resources: Forestry: Current Personal services 29,656 29,656 29,308 348 Supplies 1,200 1,200 67 1,133 Other services and charges 850 850 540 310 Contractual services 7,850 7,850 7,540 310 Capital outlay 27,000 2,000 1,028 972 Total forestry 66,556 41,556 38,483 3,073 Environmental: Current Personal services 54,873 54,873 53,253 1,620 Supplies 600 600 585 15 Other services and charges 9,640 9,640 7,722 1,918 Contractual services 4,100 4,100 2,445 1,655 Capital outlay 2,000 2,000 1,293 707 Total environmental 71,213 71,213 65,298 5,915 58 CITY OF LINO LAKES, MINNESOTA GENERAL FUND SCIIEDULE OF REVENUES, EXPENDITURES AND CI IANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2005 Statement 11 Page 6 of 6 2005 Variance with Original Final Final Budget Budget Budget Actual Positive (Negative Conservation of natural resources: (continued) Solid waste abatement: Current Personal services $ 26,191 $ 26,191 $ 27,299 $ (1,108) Other services and charges 2,200 2,200 634 1,566 Contractual services 16,400 16,400 10,941 5,459 Capital outlay 5,000 5,000 - 5,000 Total solid waste abatement 49,791 49,791 38,874 10,917 Total conservation of natural resources 187,560 162,560 142,655 19,905 Other Contingency 75,000 45,000 45,000 Total Expenditures 8,144,711 7,660,911 7,339,720 321,191 Revenue over Expenditures 467,000 706,125 239,125 Other financing sources (uses): Transfer out (467,000) (467,782) (782) Total other financing sources (uses) (467,000) (467,782) (782) Net increase (decrease) in fund balance $ $ 238,343 $ 238,343 Fund Balance - January 1 5,210,465 Fund balance - December 31 $ 5,448,808 59 CITY OF LINO LAKES, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2005 Note 1 BUDGETS The General Fund budget is legally adopted on a basis consistent with U.S. Generally Accepted Accounting Principles. 60 Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for particular purposes. The City maintained the following nonmajor Special Revenue Funds during the year. Economic Development Authority - established to account for the receipt and uses of funds for economic purposes. Program Recreation - established to account for various self - supporting recreational programs. Debt Service Funds The Debt Service Funds account for the accumulation of resources for, and the payment of, interest, principal and related costs on general long -term debt. The City's Debt Service Funds account for three types of bonded indebtedness: General Debt Bonds - are repaid primarily from property taxes. Improvement Bonds - are repaid primarily from special assessments. Public Facility Lease Revenue Bonds - are repaid primarily from lease revenues received from the EDA leasing the buildings to the City of Lino Lakes and other tenants. Capital Project Funds Capital Project Funds account for the acquisition or construction of major capital facilities other than those financed by Proprietary Funds and Trust Funds. The City maintained the following nonmajor Capital Project Funds during the year: Capital Improvement Projects - to account for the proceeds from Equipment Certificates. Closed Bond Fund - to account for excess funds from matured bond issues. Street Reconstruction — to account for the financing of future reconstruction of City streets. Sealcoating - to account for money received from assessments and developer deposits for future street sealcoating projects. Surface Water Management - to account for the financing of surface water management and storm water improvements. SAC Revolving - to account for refunds from the Metropolitan Council Environmental Service for properties that paid Sewer Area Charges (SAC) that will be collected in the future. Interim Construction - to account for the construction of public improvements. Town Center Project and Infrastructure Funds - to account for costs associated with the construction of the City Town Center project. Tax Increment Funds - to account for development projects financed with tax increments. Lake /Apollo Drive Improvement Fund - established to account for the costs of upgrading Lake Drive and Apollo Drive east of Lake Drive for the Market Place development. Capital Project Funds (Continued) Twilight Acres /W. Shadow Pond Improvement Fund - established to account for the costs of installing sewer infrastructure in the Twilight Acres area and to install utility and street improvements on West Shadow Ponds Drive. Birch Hodgson Street Improvement Fund — to account for costs to improve the intersection at Birch Street and Hodgson Road. Dedicated Parks — to account for the receipts and use of monies collected from dedicated parks fees. Municipal State Aid — to account for the collection of assessments on municipal state aid projects. Office Equipment Revolving Fund — to account for the receipt and use of funds for office equipment purchases. CSAH 14/8 Reconstruction Fund — established to account for the costs associated with the reconstruction of County and State Highways 14 and 8. Permanent Funds Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City's programs. The City maintained the following nonmajor Permanent Fund during the year. Foxborough Environment Fund - established to account for the use of funds received for environmental maintenance and improvements in the Foxborough area. CITY OF LINO LAKES, MINNESOTA COMI3INING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2005 Assets Cash and investments ('ash and investments with escrow agent Accrued Interest Receivable Accounts receivable Duc from other governmental units 'faxes receivable: Delinquent Due from County Delinquent tax increment Special assessments receivable: Delinquent Defen•ed Duc from County Prepaid Items Special Revenue Economic Special Development Program Revenue Authority Recreation Subtotal $ 78,134 $ 78,134 1,763 1,763 Total assets $ $ 79,897 $ 79,897 Liabilities and Fund Balance Liabilities: Interfund payable Accounts payable Salaries Payable Contracts and retainage payable Due to Other Governments Advances from Other Funds Deferred revenue Total liabilities $ $ 3,078 3,078 340 340 3,418 3,418 Fund balance (deficit): Reserved for Prepaid Items 1,763 1,763 Reserved for Debt Retirement Reserved for Environmental Improvement Unreserved: Designated: Recreation Programs 74,716 74,716 Capital improvements Undesignated Total fund balance (deficit) - 76,479 76,479 1 1 Debt Service 1 Improvement Improvement Bonds of Bonds of I998A 1998B $ 2,551,966 $ 1,685,746 r 2,227 1,684 390 190,541 260,761 169 $ 2,742,507 $ 1,950,977 $ $ 1 190,541 263,378 190,541 263,378 2,551,966 1,687,599 1 2,551,966 1,687,599 Total liabilities and fund balance $ $ 79,897 $ 79,897 $ 2,742,507 $ 1,950,977 61 1 1 1 1 Statement 12 Page 1 of 4 Debt Service (continued) Lease Improvement Public Project Improvement Certificates Revenue Refunding Refunding Improvement Refunding Improvement of Bonds Bonds Bonds Bonds of Bonds of Bonds of Indebtedness of 1998A of 1999A of 1999C 2002A 2003A 200313 $ 87,910 $ 340,837 $ 3,702 $ 327,947 $ 516,188 $ 295,914 $ 102,598 486,293 10,582 1,458 56,250 4,285 4,854 3,204 3,726 818 1,992 - - 233 1,520 250 1,257 883 - 116,166 318,742 49,045 - 2,067 - $ 95,399 $ 893,418 $ 4,520 $ 342,041 $ 633,611 $ 617,606 $ 152,126 $ - $ - $ $ $ - $ $ 4,285 4,285 4,854 4,854 818 1,992 117,423 319,625 49,278 818 1,992 117,423 319,625 49,278 888,564 3,702 340,049 516,188 297,981 102,848 91,114 888,564 3,702 340,049 516,188 297,981 102,848 $ 95,399 $ 893,418 $ 4,520 $ 342,041 $ 633,611 $ 617,606 $ 152,126 62 1 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2005 Debt Service (continued) Capital Projects Improvement and Improvement Utility Revenue Refunding Debt Capital Closed Bonds of Bonds of Service Improvement Bond 2004A 2005B Subtotal Projects Fund Assets Cash and investments $ 332,188 $ 7,552 $ 6,252,548 $ 1,070,502 $ 1,001,400 Cash and investments with escrow agent 496,875 Accrued Interest Receivable 1,458 Accounts receivable 56,250 - Due from other governmental units - - Taxes receivable: Delinquent - 13,591 Due from County - 10,384 - Delinquent tax increment - - - Special assessments receivable: Delinquent - 2,530 - 1,531 Deferred 416,150 - 1,352,223 19,898 Due from County 453 - 2,689 479 Prepaid Items - - - Total assets $ 748,791 $ 7,552 $ 8,188,548 $ 1,070,502 $ 1,023,308 Liabilities and Fund Balance Liabilities: 'Met-fund payable $ $ $ $ - $ - Accounts payable - 9,697 8,476 Salaries Payable - - - Retainage payable Due to Other Governments - Advances from Other Funds - - Deferred revenue 416,150 1,368,344 - 21,429 Total liabilities 416,150 1,368,344 9,697 29,905 Fund balance (deficit): Reserved for Prepaid Items - - - - Reserved for Debt Retirement 332,641 7,552 6,820,204 - Reserved for Environmental Improvement - - - - Unreserved: Designated: Recreation Programs Capital improvements - - - Undesignated - - 1,060,805 993,403 Total fund balance (deficit) 332,641 7,552 6,820,204 1,060,805 993,403 Total liabilities and fund balance $ 748,791 $ 7,552 $ 8,188,548 $ 1,070,502 $ 1,023,308 1 1 1 63 1 Statement 12 Page 2 of 4 Capital Projects (Continued) Surface Town Town Street Water SAC Interim Center Center Reconstruction Sealcoating Management Revolving Construction Project Infrastructure $ 604,503 $ 153,525 $ 303,717 $ 371,977 $ 281,620 $ 283,004 $ 22,206 5,000 27 2,595 1,129 351,035 1,018 $ 604,503 $ 154,681 $ 663,365 $ 371.977 $ 281,620 $ 283,004 $ 22,206 1,187 58,069 2,008 1,156 353,630 2,343 413,707 604,503 152,338 249,658 - 281,620 - 22,206 - - - 371,977 - 283,004 - 604,503 152,338 249,658 371,977 281,620 283,004 22,206 $ 604,503 $ 154,681 $ 663,365 $ 371,977 $ 281,620 $ 283,004 $ 22,206 64 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2005 Capital Projects (continued) Tax Tax Tax Lake /Apollo Dr Twilight Acres/ Increment Increment Increment Improvement W Shadow Pond Financing Financing Financing Market Place Improvement 1 -4 1 -5 1 -9 Assets Cash and investments $ $ $ 33,972 $ 31,475 $ 83,810 Cash and investments with escrow agent - - Accrued Interest Receivable Accounts receivable - - Due from other governmental units - - Taxes receivable: Delinquent Due from County - Delinquent tax increment - 964 Special assessments receivable: Delinquent - - - Deferred - Due from County - Prepaid Items - - Total assets $ $ $ 33,972 $ 31,475 $ 84,774 I Liabilities and Fund Balance Liabilities: I Interfund payable $ $ $ $ - $ - Accounts payable - 386 855 Salaries Payable - Retainage payable - I Due to Other Governments - - 1,822 Advances from Other Funds - - Deferred revenue - 964 Total liabilities - 2,208 1,819 I Fund balance (deficit): Reserved for Prepaid Items - - Reserved for Debt Retirement Reserved for Environmental Improvement - Unreserved: Designated: Recreation Programs Capital improvements 33,972 29,267 82,955 Undesignated - - - - Total fund balance (deficit) 33,972 29,267 82,955 Total liabilities and fund balance $ $ $ 33,972 $ 31,475 $ 84,774 1 1 1 65 1 Statement 12 Page 3 of 4 Capital Projects (Continued) Tax Tax Office Increment Increment Birch Street Equipment CSAH 14/8 Financing Financing Hodgson Road Dedicated Municipal Revolving Reconstruction 1 -10 1 -11 Improvement Parks State Aid Fund Project $ 21,134 $ $ $ 231,439 $ $ 53,113 $ S 21,134 $ - $ $ 231.439 $ $ 53,113 $ - $ 22,899 $ 16,828 $ $ 7,829 $ $ 14,912 423 1,078 - 983 19,900 9,197 40,541 957,112 - 423 23,977 36,728 966,309 49,353 - 14,912 20,711 20,711 (23,977) (23,977) $ 21.134 $ (36,728) (734,870) (49,353) 53,113 (36,728) (734,870) (49,353) 53,113 (14,912) (14,912) $ 231,439 $ $ 53,113 $ 66 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2005 Statement 12 Page 4 of 4 Permanent Capital Projects Fund Capital Foxborough Projects Environment Total Subtotal Fund 2005 Assets ('ash and investments $ 4,547,397 $ 100,853 $ 10,978,932 ('ash and investments with escrow agent 496,875 Accrued Interest Receivable - 1,458 Accounts receivable - 56,250 Due from other govemmcntal units 5,000 5,000 'faxes receivable: Delinquent - - 13,591 Due from County - 10,384 Delinquent tax increment 964 - 964 Special assessments receivable: Delinquent 4,153 6,683 Deterred 372,062 1,724,285 Due from County 1,497 4,186 Prepaid Items - - 1,763 Total assets $ 4,931,073 $ 100,853 $ 13,300,371 Liabilities and Fund Balance Liabilities: Interfund payable $ 62,468 $ - $ 62,468 Accounts payable 81,154 84,232 Salaries Payable 340 Retainage payable 71,646 71,646 Due to Other Governments 1,822 1,822 Advances from Other Funds 957,1 12 - 957,112 Deferred revenue 377,179 - 1,745,523 Total liabilities 1,551,381 - 2,923,143 Fund balance (deficit): Reserved for Prepaid Items 1,763 Reserved for Debt Retirement - - 6,820,204 Reserved for Environmental Improvement 100,000 100,000 Unreserved: Designated: Recreation Programs - - 74,716 Capital improvements 1,456,519 - 1,456,519 Undesignated 1,923,173 853 1,924,026 Total fund balance (deficit) 3,379,692 100,853 10,377,228 Total liabilities and fund balance $ 4,931,073 $ 100,853 $ 13,300,371 67 1 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2005 Special Revenue Debt Service Economic Special Improvement Improvement Development Program Revenue Bonds of Bonds of Authority Recreation SubTotal 1998A 19988 Revenue: General property taxes $ $ $ $ $ 144,194 fax increments - Intergovernmental Special assessments - - - 29,703 54,834 Charges for services - 194,397 194,397 - Investment earnings 2,713 2,713 6,023 12,374 Refunds and reimbursements - - - - Miscellaneous - - Total revenue - 197,110 197,110 35,726 211,402 I Expenditures: Current: General government: 580 580 Public works: - - Parks. recreation and forestry 180,167 180,167 - Capital outlay: Public safety - Public works - Parks, recreation and forestry Debt service: Principal 290,000 120,000 Interest and fiscal charges 152,074 70,326 Total expenditures 580 180,167 180,747 442,074 190,326 Revenue over (under) expenditures (580) 16,943 16,363 (406,348) 21,076 Other financing sources (uses): Transfer in 782 782 375,000 fi Transfer out - - Sale of property - Issuance of debt 2,410,643 1,310,000 Premium on bonds issued - 171,357 - Total other financing sources (uses) 782 782 2,957,000 1,310,000 Net increase (decrease) in fund balance 202 16,943 17,145 2,550,652 1,331,076 I Fund balance (deficit) Beginning of year (202) 59,536 59,334 1,314 356,523 Fund balance (deficit) - December 31 $ $ 76,479 $ 76,479 $ 2,551,966 $ 1,687,599 1 1 1 1 1 68 Statement 13 1'age 1 of 4 Debt Service (continued) Lease Improvement Public Project Improvement Certificates Revenue Refunding Refunding Improvement Refunding Improvement of Bonds Bonds Bonds Bonds of Bonds of Bonds of Indebtedness of 1998A of I999A of I999C 2002A 2003A 2003B $ 271,574 $ 317,293 $ - $ 129,300 $ $ - $ 22,372 200 213 7,807 89 74,482 62,929 13,566 3,776 16,767 6,780 8,696 2,140 1 12,500 275,550 446,773 7,807 136,169 83,178 62,929 38,078 236,000 195,000 365,000 105,000 95,000 435,000 - 34,806 234,440 25,278 29,081 17,615 53,352 11,853 270,806 429,440 390,278 134,081 112,615 488,352 11,853 4,744 17,333 (382,471) 2,088 (29,437) (425,423) 26,225 383,000 - 148,211 444,785 383,000 - 148,211 444,785 4,744 17,333 529 2,088 118,774 19,362 26,225 86,370 871,231 3,173 337,961 397,414 278,619 76,623 $ 91,114 $ 888,564 $ 3,702 $ 340,049 $ 516,188 $ 297,981 $ 102,848 69 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CI IANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2005 Debt Service (continued) Improvement and Utility Revenue Bonds of 2004A Improvement Refunding Bonds of 2005B Revenue: General property taxes $ $ Tax increments Intergovernmental Special assessments 263,998 Charges for services - Investment earnings 5,693 Refunds and reimbursements Miscellaneous Total revenue 269,691 Expenditures: Cunrent: General government: Public works: Parks, recreation and forestry Capital outlay: Public safety Public works Parks, recreation and forestry Debt service: Principal Interest and fiscal charges 33,466 Total expenditures 33,466 Revenue over (under) expenditures 236,225 Other financing sources (uses): Transfer in Transfer out Sale of property Issuance of debt Premium on bonds issued Total other financing sources (uses) Net increase (decrease) in fund balance 236,225 Fund balance (deficit) Beginning of year 96,416 Fund balance (deficit) - December 31 $ 332,641 32 Debt Service SubTotal Capital Projects Capital Improvement Projects $ 884,733 $ 507,821 62,281 112,500 32 1,567,335 26,837 26,837 (26,805) 34,357 34,357 7,552 1,841,000 689,128 2,530,128 (962,793) 1,350,996 3,755,000 171,357 5,277,353 4,314,560 2,505,644 27,292 149,198 176,490 2,678 142,521 115,928 261,127 (84,637) 150,000 (84,418) 280,269 107,000 452,851 Closed Bond Fund 3,204 25,928 29,132 11,918 11,918 17,214 368,214 17,214 692,591 976,189 $ 7,552 $ 6,820,204 $ 1,060,805 $ 993,403 70 Statement 13 Page 2 of 4 Capital Projects Surface Town Town Street Water SAC Interim Center Center Reconstruction Sealcoating Management Revolving Construction Project Infrastructure 16,462 122,412 15,118 153,992 883 207,153 1,766 16,753 49,350 - 51,999 223,906 96,517 192,234 9,614 7,264 9,614 7,264 6,609 87,287 573 93,896 573 2,186 873 216,054 96,517 192,234 216,054 2,186 - 873 57,475 (140,235) 7,852 7,428 7,264 93,023 57 214,000 - (342,205) 214,000 (342,205) 57,475 73,765 (334,353) 7,428 7,264 93,023 573 547,028 78,573 584,011 364,549 274,356 189,981 21,633 604,503 $ 152,338 $ 249,658 $ 371,977 $ 281,620 $ 283,004 $ 22,206 71 1 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CI IANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2005 Capital Projects (Continued) Lake /Apollo Dr Twilight Acres/ Tax Increment Tax Increment Tax Increment Improvement W Shadow Pond Financing Financing Financing Market Place Improvement 1 -4 1 -5 1 -9 Revenue: General property taxes 5 $ $ $ - $ - Fax increments 62,309 200,513 Intergovernmental - Special assessments Charges for services - - - Investment eamings 1,142 4,407 876 756 2,868 Refunds and reimbursements - - - Miscellaneous 2,036 - Total revenue 3,178 4,407 876 63,065 203,381 II Expenditures: ('urrcnt: General government: - 56,487 333,247 Public works: 4,258 - - Parks, recreation and forestry - Capital outlay: Public safety Public works Parks, recreation and forestry Debt service: Principal Interest and fiscal charges Total expenditures 4,258 - 56,487 333,247 Revenue over (under) expenditures 3,178 149 876 6,578 (129,866) Other financing sources (uses): Transfer in Transfer out (45,499) (148,211) Sale of property - - Issuance of debt - Premium on bonds issued Total other financing sources (uses) (45,499) (148,211) Net increase (decrease) in fund balance (42,321) (148,062) 876 6,578 (129,866) Fund balance (deficit) Beginning of year 42,321 148,062 33,096 22,689 212,821 Fund balance (deficit) - December 31 $ $ $ 33,972 $ 29,267 $ 82,955 1 1 1 1 1 72 Statement 13 Page 3 of 4 Capital Projects (Continued) Office Tax Increment Tax Increment Birch Street Equipment CSAH 14/8 Financing Financing Hodgson Road Dedicated Municipal Revolving Reconstruction 1 -10 1 -11 Improvement Parks State Aid Fund Project 28,628 101 83 7,892 113 156,149 28,729 83 164,041 113 525 1,078 - - 98,356 221,088 992 197,958 13,920 81,503 525 1,078 98,356 279,461 221,088 14,912 28,204 (1,078) (98,273) (115,420) (221,088) 113 (14,912) 84,418 50,000 547,705 53,000 84,418 50,000 547,705 53,000 28,204 (1,078) (13,855) (65,420) 326,617 53,113 (14,912) (7,493) (22,899) (22,873) (669,450) (375,970) $ 20,711 $ (23,977) $ (36,728) $ (734,870) $ (49,353) $ 53,113 $ (14,912) 73 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDfI'URES AND CI IANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2005 Statement 13 Page 4 of 4 Permanent Capital Projects Fund Capital Foxborough Projects Environment Totals SubTotal Fund 2005 Revenue: General property taxes $ $ $ 884,733 Tax increments 291,450 291,450 Intergovernmental 16,462 - 16,462 Special assessments 333,652 841,473 Charges for services - - 194,397 Investment earnings 129,155 853 195,002 Refunds and reimbursements 49,350 49,350 Miscellaneous 394,670 100,000 607,170 Total revenue 1,214,739 100,853 3,080,037 Expenditures: Current: General government: 408,992 409,572 Public works: 829,499 829,499 Parks, recreation and forestry 197,958 378,125 Capital outlay: Public safety 142,521 142,521 Public works 129,848 129,848 Parks, recreation and forestry 81,503 81,503 Debt service: Principal 1,841,000 Interest and fiscal charges 689,128 Total expenditures 1,790,321 4,501,196 Revenue over (under) expenditures (575,582) 100,853 (1,421,159) Other financing sources (uses): Transfer in 1,099,123 2,450,901 Transfer out (620,333) (620,333) Sale of property 280,269 280,269 Issuance of debt 107,000 3,862,000 Premium on bonds issued - 171,357 Total other financing sources (uses) 866,059 6,144,194 Net increase (decrease) in fund balance 290,477 100,853 4,723,035 Fund balance (deficit) Beginning of year 3,089,215 5,654,193 Fund balance (deficit) - December 31 $ 3,379,692 $ 100,853 $ 10,377,228 74 CITY OF LINO LAKES, MINNESOTA SPECIAL REVENUE FUND - PROGRAM RECREATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2005 Statement 14 2005 Variance with Original Final Final Budget Budget Budget Actual Positive (Negative) Revenue: Charges for services: Recreation Fees $ 213,255 $ 213,255 $ 194,397 $ (18,858) Investment earnings 2,713 2,713 Total revenue 213,255 213,255 197,110 (16,145) Expenditures: Current: Personal services 117,230 117,230 93,171 24,059 Supplies 59,000 59,000 79,484 (20,484) Other services and charges 9,920 9,920 765 9,155 Contractual services 19,990 19,990 6,747 13,243 Total expenditures 206,140 206,140 180,167 25,973 Net increase (decrease) in fund balance $ 7,115 $ 7,115 16,943 $ 9,828 Fund balance - January 1 59,536 Fund balance - December 31 $ 76,479 75 Fiduciary Funds Agency Fund Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments. The City maintained the following Agency fund during the year: Contractor's Deposits — to account for pass - through costs relating to prospective developers. CITY OF LINO LAKES, MINNESOTA STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - FIDUCIARY FUNDS Year Ended December 31, 2005 Statement 15 Assets Cash and investments Deposits receivable Total assets Balance Balance January 1, December 31, 2005 Additions Deductions 2005 $ 1,432,706 $ 1,541,069 $ 1,593,282 $ 1,380,493 10,520 10,520 $ 1,443,226 $ 1,541,069 $ 1,593,282 $ 1,391,013 Liabilities Accounts payable $ 79,095 $ 902,033 $ 892,548 $ 88,580 Deposits payable 1,364,131 1,690,343 1,752,041 1,302,433 Total Liabilities $ 1,443,226 $ 2,592,376 $ 2,644,589 $ 1,391,013 76 SUPPLEMENTARY FINANCIAL INFORMATION CITY OF LINO LAKES, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2005 General Obligation Bonds: 2002 Equipment Certificates 2003A Equipment Certificates 2003B Equipment Certificates 2004A Equipment Certificates 2005 Equipment Certificates Civic Complex Lease Revenue Bonds - 1998A Public Project Revenue Refunding Bonds - 1999C Total General Obligation Bonds Interest Rates Dated Final Maturity Date 6.00% 2/1/02 12/31 /05 6.00% 2/1/03 12/31/06 4.00% 3/31/03 12/31/06 4.00% 2/1/04 12/31/06 4.00% 2/1/05 12/31/08 4.20% -5.35% 8/ 1 /98 2/1/19 4.75% -5.10% 9/1/99 2/1/10 Special Assessment Bonds: G. O. Improvement Bonds of 1998A 4.50 % - 4.90% 8/1/98 2/1/15 G. O. Improvement Bonds of 1998B 4.50 % - 4.90% 8/1/98 2/1/15 G. O. Improvement Refunding Bonds of 1999A 4.25% -4.70% 9/1/99 2/1/06 G. 0. Improvement Bonds of 2002A 3.00% -4.10% 8/1/02 2/1/13 G. O. Improvement Bonds of 2002B 3.20% -5.55% 8/1/02 2/1/13 G. O. Improvement Refunding Bonds of2003A 2.00 % - 4.25% 12/1/03 2/1/19 G. O. Improvement Bonds of2003B 3.20% -5.60% 12/1/03 2/1/14 G. 0. Improvement and Utility Bonds of2004A 1.90 % - 4.45% 11/15/04 2/1/20 G. O. Improvement Bonds of2005A 4.35 % - 5.15% 11/1/05 2/1/21 G. 0. Improvement Refunding Bonds of 2005B 3.75 % - 5.00% 11/1/05 2/1/15 Total General Improvement Bonds with special assessments pledged Revenue Bonds: G. O. Water Revenue Bonds of 1996B G. O. Water Revenue Refunding Bonds of 1999B Total Revenue Bonds Total City indebtedness 77 4.10% -5.70% 10/1/96 2/1/12 4.25% -4.90% 9/1/99 2/1/08 1 1 Exhibit 1 1 IPrior Years Principal Interest Original Payable 2005 Payable Due Due Issue Payments 1/1/05 Issued Payments 12/31/05 In 2006 In 2006 I $ 140,000 $ 95,000 $ 45,000 $ $ 45,000 $ - $ $ 130,000 45,000 85,000 - 45,000 40,000 40,000 2,400 I 200,000 50,000 150,000 65,000 85,000 85,000 3,400 274,000 274,000 81,000 193,000 95,000 7,750 - 107,000 - 107,000 35,000 8,203 5,350,000 735,000 4,615,000 - 195,000 4,420,000 210,000 221,860 I 980,000 385,000 595,000 105,000 490,000 105,000 21,534 7,074,000 1,310,000 5,764,000 107,000 536,000 5,335,000 570,000 265,147 I 4,310,000 1,160,000 3,150,000 290,000 2,860,000 2,860,000 66,488 2,000,000 450,000 1,550,000 120,000 1,430,000 1,430,000 33,526 1,725,000 1,005,000 720,000 365,000 355,000 355,000 8,343 645,000 95,000 550,000 95,000 455,000 100,000 14,115 I 2,110,000 170,000 1,940,000 - 175,000 1,765,000 185,000 84,725 2,090,000 2,090,000 435,000 1,655,000 445,000 43,950 250,000 250,000 250,000 25,000 11,853 1,330,000 1,330,000 - 1,330,000 65,000 46,249 I - 5,550,000 5,550,000 - 207,613 3,755,000 3,755,000 117,516 14,460,000 2,880,000 11,580,000 9,305,000 1,480,000 19,405,000 5,465,000 634,378 I 3,320,000 1,035,000 2,285,000 185,000 2,100,000 190,000 109,725 680,000 260,000 420,000 95,000 325,000 105,000 13,143 4,000,000 1 ,295,000 2,705,000 280,000 2,425,000 295,000 122,868 25,534,000 5,485,000 20,049,000 9,412,000 2,296,000 27,165,000 6,330,000 1,022,393 1 1 1 1 1 1 1 78 CITY OF LINO LAKES, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES December 31, 2005 G.O. Lease G. O. Improvement Year of Equipment Equipment Equipment Equipment Revenue Improvement Refunding Levy/ Certificates Certificates Certificates Certificates Bonds Bonds Bonds of Collection of 2003A of 2003B of 2004A of 2005 of 1998A of 1998B 1999A 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 $ 44,520 $ 92,820 $ 107,888 $ 45,363 $ 343,382 $ 152,519 107,016 39,774 353,031 153,729 40,404 361,562 154,704 368,387 155,441 485,462 155,796 485,987 155,757 490,655 155,313 489,001 154,537 491,258 158,719 492,413 497,716 501,215 503,310 $ 290,270 $ 44,520 $ 92,820 $ 214,904 $ 125,541 $ 5,863,379 $ 1,396,515 S 200.270 79 Exhibit 2 Public G.O. G. O. Project G. 0. G. 0. Improvement G. 0. Improvement Refunding Improvement Improvement and Utility Improvement Refunding Bonds Bonds Bonds Bonds Bonds Bonds 1999C of 2002A of 2003B of 2004A of 2005A of 2005B Total $ 121,459 $ 8,897 $ 23,688 $ 124,450 $ 568,073 $ 609,902 $ 2,533,231 126,667 5,259 22,828 128,292 570,502 585,113 2,092,211 7,467 21,844 126,520 568,297 574,022 1,854,820 6,496 20,741 124,472 569,084 557,484 1,802,105 5,446 19,534 127,439 569,084 546,197 1,908,958 - 9,645 23,524 124,793 568,297 524,213 1,892,216 8,385 21,917 127,187 566,722 512,925 1,883,104 - - 20,248 129,268 569,609 490,613 1,853,276 23,781 125,772 566,197 463,050 1,828,777 - 122,133 567,247 - 1,181,793 - 128,853 572,497 1,199,066 124,548 571,184 1,196,947 125,388 574,072 - 1,202,770 125,898 574,907 700,805 126,123 579,639 705,762 $ 248,126 $ 51,595 $ 198,105 $ 1,891,136 $ 8,555,411 $ 4,863,519 $23,835,841 80 CITY OF LINO LAKES, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY - ALL BONDS December 31, 2005 G. O. G. 0. Equipment Equipment Equipment Equipment Improvement Improvement Certificates Certificates Certificates Certificates Bonds Bonds 2003A 2003B 2004A 2005 of 1998A of 19988 Bonds payable $ 40,000 $ 85,000 $ 193,000 $ 107,000 $ 2,860,000 $ 1,430,000 Future interest payable 2,400 3,400 11,670 12,563 674,475 362,104 Totals $ 42,400 $ 88,400 $ 204,670 $ 119,563 $ 3,534,475 $ 1,792,104 Payments to maturity: 2006 42,400 88,400 102,750 43,203 416,450 184,352 2007 - - 101,920 37,880 403,400 183,840 2008 - - 38,480 385,462 183,103 2009 - - 372,637 182,140 2010 - - 359,670 180,882 2011 - 346,489 179,256 2012 - - - 333,094 177,248 2013 - 319,485 174,888 2014 - 305,805 172,230 2015 291,983 174,165 2016 - 2017 - 2018 2019 2020 $ 42,400 $ 88,400 $ 204,670 $ 119,563 $ 3,534,475 $ 1,792,104 81 G. O. Improvement G. O. G. O. Refunding Improvement Improvement Bonds Bonds Bonds of 1999A of 2002A of 2002B G. O. Improvement Refunding Bonds 2003A G. O. Improvement Bonds 2003B $ 355,000 $ 455,000 $ 1,765,000 $ 1,655,000 $ 250,000 8,342 46,449 396,041 273,334 61,530 $ 363,342 $ 501,449 $ 2,161,041 $ 1,928,334 $ 311,530 363,342 114,115 269,725 120,883 266,568 117,253 267,688 29,893 272,613 28,930 271,388 27,930 269,310 31,830 271,395 30,615 272,354 G. O. Improvement and Utility Bonds 2004A G. O. Improvement Bonds 2005A G. O. Improvement Refunding Bonds 2005B $ 1,330,000 $ 5,550,000 $ 3,755,000 414,719 2,598,010 876,923 $ 1,744,719 $ 8,148,010 $ 4,631,923 488,950 36,453 111,250 541,022 580,859 474,000 35,584 119,500 543,335 557,250 82,813 34,590 117,437 541,235 546,688 81,301 33,490 115,187 541,985 530,938 79,611 32,315 112,900 541,985 520,188 82,638 35,950 120,420 541,235 499,250 80,537 34,390 117,700 539,735 488,500 78,438 32,778 114,810 542,485 467,250 81,088 35,980 116,702 539,235 441,000 78,488 - 118,182 540,235 - 80,788 114,382 545,235 77,988 115,482 543,985 79,994 116,382 546,735 81,700 117,013 547,530 - 117,372 552,038 $ 363,342 $ 501,449 $ 2,161,041 $ 1,928,334 $ 311,530 $ 1,744,719 $ 8,148,010 $ 4,631,923 82 CITY OF LINO LAKES, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY - ALL BONDS (CONTINUED December 31, 2005 Exhibit 3 G. O. G. O. Water Civic Public Water Revenue Complex Project Revenue Refunding Revenue Revenue Bonds Bonds Bonds Bonds of 1996B of 1999B of 1998A of 1999C Totals Bonds payable $ 2,100,000 $ 325,000 $ 4,420,000 $ 490,000 $ 27,165,000 Future interest payable 472,441 24,114 1,847,512 59,223 8,177,466 Totals $ 2,572,441 $ 349,114 $ 6,267,512 $ 549,223 $ 35,342,466 Payments to maturity: 2006 299,725 118,143 431,860 126,534 4,361,539 2007 299,680 113,154 441,625 116,640 3,817,266 2008 298,915 117,817 450,282 111,790 3,295,561 2009 419,034 - 457,595 101,964 3,140,786 2010 419,682 346,594 92,295 2,988,450 2011 418,864 455,094 2,978,447 2012 416,541 455,068 2,948,050 1 2013 459,002 2,494,118 2014 456,790 2,150,844 2015 458,415 1,663,483 2016 458,990 1,201,411 2017 463,181 1,202,653 2018 465,845 1,210,974 2019 467,171 1,215,433 2020 671,430 $ 2,572,441 $ 349,114 $ 6,267,512 $ 549,223 $ 35,342,466 CITY OF LINO LAKES, MINNESOTA INSURANCE IN FORCE December 31, 2005 1 Exhibit 4 1 1 Coverage General Liability: Bodily Injury/Property Damage Personal Injury /Police Professional Liability Employee Benefit Liability Fire Legal Liability Medical Expense Occurrence Limit Medical Expense Aggregate Property Damage ($500 Deductible) Property: Buildings and Contents (including Mobile and EDP - Electronic Equipment & Valuable Papers) Faithful Performance Blanket Bond Storage Tank Liability Rented/Leased Equipment ($500 Deductible) Public Official and Employee Liability ($500 Deductible each occurrence) Automotive: Bodily injury and property damage Comprehensive and Collision Uninsured motorists Workmen's compensation Umbrella Liability Crime - Theft Disappearance and Destruction ($500 Deductible) 84 Amount 1 $ 1,000,000 1,000,000 1,000,000 50,000 1,000 10,000 1 19,932,235 500,000 100,000 250,000 1,000,000 1,000,000 1 Actual Cash Value 1,000,000 Statutory 1,000,000 1 100,000 1 1 1 1 1 CITY OF LINO LAKES, MINNESOTA TAXABLE VALUATIONS, TAX LEVIES AND TAX RATES Exhibit 5 Tax Capacity Tax Capacity Values Values 2004/2005 2003/2004 Taxable valuations: Total $ 16,620,861 $ 14,493,687 Fiscal disparities: Distribution 1,749,152 1,708,178 Contribution (881,474) (679,357) Less: Captured Tax Increment Value (274,702) (246,042) $ 17,213,837 $ 15,276,466 Tax Tax Certified Capacity Certified Capacity Levy Rate Levy Rate Taxes Levied: Revenue 6,342,211 36.838 5,623,542 36.302 Bond and Interest 927,091 5.385 927,078 5.985 Totals $ 7,269,302 42.223 $ 6,550,620 42.287 The tax capacity rate is based on the total certified levy net of the fiscal disparity distribution 85 III. STATISTICAL SECTION CITY OF LINO LAKES, MINNESOTA GENERAL FUND EXPENDITURES BY FUNCTION Last Ten Fiscal Years (Unaudited) Table I Fiscal Total General Public Public Parks and Other Year Expenditures Government Safety Works Recreation Functions 1996 $ 3,966,738 $ 1,289,751 $ 1,446,985 $ 694,455 $ 535,547 $ - 1997 4,400,087 1,366,602 1,751,226 697,934 439,263 145,062 1998 5,328,796 1,560,268 1,778,898 673,156 722,728 593,746 1999 5,237,554 1,771,069 1,958,169 628,070 647,163 233,083 2000 5,513,148 1,770,528 2,158,346 786,420 655,863 141,991 2001 5,808,265 1,871,615 2,246,146 868,289 663,360 158,855 2002 6,213,645 1,982,096 2,519,152 872,193 696,511 143,693 2003 6,335,322 1,963,561 2,628,766 902,764 725,042 115,189 2004 6,758,483 2,165,245 2,832,647 899,483 737,930 123,178 2005 7,339,720 2,353,519 3,141,032 969,338 733,176 142,655 S6 CITY OF LINO LAKES, MINNESOTA GENERAL FUND REVENUES BY SOURCE Last Ten Fiscal Years (Unaudited) Table 2 Total General General Property Licenses Inter- Charges Fines Fiscal Fund Taxes and Governmental for and Other Year Revenue Levied Permits Revenues Services Forfeits Revenue 1996 $ 4,627,532 $ 2,327,048 $ 788,480 $ 816,794 $ 308,262 $ 86,158 $ 300,790 1997 4,736,496 2,658,485 566,561 881,459 291,090 99,390 239,511 1998 5,722,363 2,904,888 726,599 1,380,063 347,485 102,489 260,839 1999 5,343,453 2,962,664 823,719 940,053 278,510 87,434 251,073 2000 5,613,395 3,306,057 884,746 702,606 272,145 124,458 323,383 2001 6,193,834 4,125,264 1,016,456 409,607 278,863 101,559 262,085 2002 6,841,420 4,543,106 913,498 893,861 196,351 100,393 194,211 2003 6,893,830 5,258,505 766,524 385,439 216,302 97,223 169,837 2004 7,201,542 5,354,282 867,909 468,551 199,404 106,053 205,343 2005 8,045,845 6,054,104 812,172 591,649 197,475 100,980 289,465 CITY OF LINO LAKES, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years (Unaudited) Table 3 Percent of Percent of Total Tax Delinquent Total CuITCnt Percentage Delinquent Total Collections Outstanding Taxes to Fiscal Tax Tax of Levy Tax Tax To Tax Delinquent Tax Year Levy Collections Collected Collections Collections Levy Taxes Levy 1996 $ 3,040,000 $ 3,011,917 99.08% $ 15,641 $ 3,027,558 99.59% $ 22,489 0.74% 1997 3,349,400 3,316,426 99.02% 23,962 3,340,388 99.73% 32,598 0.97% 1998 3,589,617 3,564,611 99.30% 30,186 3,594,797 100.14% 29,774 0.83% 1999 4,116,312 4,085,625 99.25% 23,876 4,109,501 99.83% 23,199 0.56% 2000 4,571,888 4,534,998 99.19% 19,452 4,554,450 99.62% 46,344 1.01% 2001 5,098,609 5,047,912 99.01% 40,513 5,088,425 99.80% 56,056 1.10% 2002 5,902,158 5,847,692 99.08% 50,882 5,898,574 99.94% 61,349 1.04% 2003 6,124,621 6,062,273 98.98% 53,216 6,115,489 99.85% 106,351 1.74% 2004 6,550,620 6,145,419 93.81% 92,444 6,237,863 95.23% 92,006 1.40% 2005 7,269,302 6,881,838 94.67% 57,000 6,938,838 95.45% 101,133 1.39% Note: Does not include tax increment levies and collections. Note: Current tax collections include State levy related credits (HACA and Market Value Credit) 88 CITY OF LINO LAKES, MINNESOTA SPECIAL ASSESSMENT LEVIES AND COLLECTIONS Last Ten Fiscal Years (Unaudited) 'Fable 4 % of Current % of Total Current Current Collections Delinquent Collections Total Fiscal Assmts. Assmts. to Assmts. Assessments Total to Current Outstanding Year Due Collected Due Collected Collected Assmts. Due Del. Assmts. 1996 $ 366,146 $ 355,609 97.12% $ 26,831 $ 382,440 104.45% $ 21,040 1997 593,957 589,158 99.19% 20,153 609,311 102.59% 5,692 1998 664,912 657,041 98.82% 3,561 660,602 99.35% 12,019 1999 520,982 512,433 98.36% 8,429 520,862 99.98% 11,947 2000 503,922 434,857 86.29% 9,078 443,935 88.10% 7,919 2001 394,826 356,804 90.37% 5,614 362,418 91.79% 36,789 2002 418,871 387,559 92.52% 32,294 419,853 100.23% 36,584 2003 551,636 504,834 91.52% 38,428 543,262 98.48% 48,998 2004 635,753 584,735 91.98% 29,497 614,232 96.61% 52,819 2005 730,680 679,773 93.03% 37,324 717,097 98.14% 70,572 Note: Special assessments amounts above do not include prepayments CITY OF LINO LAKES, MINNESOTA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL EXPENDITURES Last Ten Fiscal Years (Unaudited) Table 5 Percent of Debt Service Interest Total Total Expenditures Fiscal and Debt General Fund to General Year Principal Other Service (1) Expenditures (2) Expenditures 1996 $ 188,000 $ 100,248 $ 288,248 $ 3,966,738 7.27% 1997 188,000 106,785 294,785 4,400,087 6.70% 1998 190,000 112,201 302,201 5,328,796 5.67% 1999 295,734 387,500 683,234 5,237,554 13.04% 2000 273,570 318,507 592,077 5,513,148 10.74% 2001 472,050 322,503 794,553 5,808,265 13.68% 2002 496,980 316,978 813,958 6,213,645 13.10% 2003 459,450 287,647 747,097 6,335,322 11.79% 2004 455,000 317,191 772,191 6,758,483 11.43% 2005 465,000 269,047 734,047 7,339,720 10.00% (1) Excludes tax increment, special assessment, enterprise, and payments on refunded bonds. (2) Includes expenditures of General Fund only. Note: Amounts rounded to the nearest hundred. CITY OF LINO LAKES, MINNESOTA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years (Unaudited) Taxes Real Personal Payable Property Property Total Fiscal Disparities 1996 $ 7,390,566 $ 435,045 $ 7,825,611 $ 952,790 1997 8,344,972 462,282 8,807,254 1,003,376 1998 9,244,905 434,234 9,679,139 1,036,542 1999 9,649,657 393,365 10,043,022 917,989 2000 11,003,125 395,637 11,398,762 1,001,728 2001 12,635,731 393,728 13,029,459 1,157,165 2002 10,382,371 246,594 10,628,965 851,427 2003 12,136,899 251,016 12,387,915 977,876 2004 14,234,493 259,194 14,493,687 1,028,821 2005 16,345,905 274,956 16,620,861 867,678 Source: Anoka County Department of Property Records and Taxation. 91 "Table 6 Tax Increment Assessor's Estimated Ratio of Total Net Taxable Market Value of Assessed to Value Taxable Property Actual Value $ (307,790) $ 8,470,611 $ 501,825,800 1.69% (410,724) 9,399,906 552,696,200 1.70% (555,542) 10,160,139 627,423,800 1.62% (646,438) 10,314,573 687,737,400 1.50% (804,752) 11,595,738 775,398,200 1.50% (912,580) 13,274,044 903,685,700 1.47% (566,397) 10,913,995 1,034,432,100 1.06% (676,932) 12,688,859 1,251,221,800 1.01% (246,042) 15,276,466 1,430,803,500 1.07% (274,702) 17,213,837 1,534,933,700 1.12% CITY OF LINO LAKES, MINNESOTA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENT'S Last Ten Fiscal Years (Unaudited) Table 7 Tax Rates (Per $100 of Tax Capacity) Year Taxes Payable City School (1) County Other (2) 1996 31.015 63.103 31.036 5.647 1997 31.167 66.000 30.542 5.197 1998 30.437 59.004 30.618 6.342 1999 36.039 64.802 32.265 6.830 2000 35.961 58.230 30.861 7.635 2001 35.898 69.888 28.859 6.903 2002 53.084 37.828 37.976 5.913 2003 47.603 37.467 37.714 7.050 2004 42.287 36.649 35.221 6.373 2005 42.223 37.486 33.080 6.696 (1) The majority of Lino Lakes is served by School District 12. (2) Other includes: Metropolitan Council, Mosquito Control, Metropolitan Transit, Rice Creek Watershed District and Forest Lake Hospital. Source: Anoka County Department of Property Records and Taxation. 93 Total 130.801 132.906 126.401 139.936 132.687 141.548 134.801 129.834 120.530 119.485 CITY OF LINO LAKES, MINNESOTA RATIO OF NET BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years (Unaudited) Table 8 Ratio of Less Net Bonded Net Taxable Gross Cash and Dcbt to Net Value of Bonded Investments Net Assessed Bonded Debt Year Population (1) Property Debt (2) on Eland Bonded Dcbt Value Per Capita (1) 1 996 13,756 $ 8,470,611 $ 1,378,000 $ 194,807 $ 1,183,193 13.97% 86.01 1997 14,560 9,399,906 1,415,000 111,834 1,303,166 13.86% 89.50 1998 15,053 10,160,139 6,862,734 721,623 6,141,111 60.44% 407.97 1999 15,760 10,314,573 6,904,570 666,137 6,238,433 60.48% 395.84 2000 16,791 11,595,738 6,911,450 1,271,904 5,639,546 48.63% 335.87 2001 17,386 13,274,044 6,686,430 1,171,357 5,515,073 41.55% 317.21 2002 17,942 10,913,995 6,244,450 1,290,242 4,954,208 45.39% 276.12 2003 18,368 12,688,859 6,030,000 1,221,022 4,808,978 37.90% 261.81 2004 18,725 15,276,466 5,764,000 1,285,338 4,478,662 29.32% 239.18 2005 19,285 17,213,837 5,335,000 1,253,569 4,081,431 23.71% 211.64 Population provided from Metropolitan Council except 2000 is Federal Census and 2005 is City Estimate. (2) Amount excludes tax increment, special assessment, and enterprise bonds. 94 CITY OF LINO LAKES, MINNESOTA COMPUTATION OF DIRECT AND OVERLAPPING DEBT INCLUDING DEBT RATIOS December 3 I, 2005 (Unaudited) Table 9 Bondcd G.O. Percentage Gross Bonded Debt Applicable City Share Overlapping Debt: Outstanding (1) in City(2) of Debt Anoka County $ 108,255,000 6.51% $ 7,044,334 School District 12 84,945,000 49.32% 41,891,593 School District 624 58,410,000 3.71% 2,167,236 School District 831 76,915,000 7.85% 6,037,428 SISD 916 13,560,000 2.68% 363,023 Metropolitan Council 225,585,000 0.75% 1,687,585 Total Overlapping Debt 567,670,000 59,191,199 Direct Debt: City of Lino Lakes 5,335,000 100.00% 5,335,000 Total Overlapping & Direct Debt $ 573,005,000 $ 64,526,199 Debt Ratios: Ratio of Debt per capita (19,285 population) - overlapping $ 3,069 Ratio of Debt per capita (19,285 population) - direct $ 277 Ratio of Debt per capita (19,285 population) - total $ 3,346 Ratio of Debt to estimated market valuation of $1,534,933,700 4.20% (1) Does not include general obligation debt supported by utility revenues, tax or aid anticipation certificates, State -aid road or revenue debt. (2) Determined by ratio of net tax capacity (after fiscal disparities and tax increment adjustment) of property subject to taxation in overlapping unit to valuation of property subject to taxation in City. 95 CITY OF LINO LAKES, MINNESOTA COMPUTATION OF LEGAL DEBT MARGIN December 3 I , 2005 (Unaudited) Table 10 2005 2004 Market Value $ 1,534,933,700 $ 1,430,803,500 Debt Limit Percentage 2% 2 %, Debt Limit 30,698,674 28,616,070 Total Bonded Debt 27,165,000 20,049,000 Less: Special Assessment Bonds (19,405,000) (11,580,000) Revenue Bonds - Enterprise Fund (2,425,000) (2,705,000) Public Project Revenue Bonds (490,000) (595,000) Total Debt Applicable to Debt Limit Legal Debt Margin 96 4,845,000 5,169,000 $ 25,853,674 $ 23,447,070 CITY OF LINO LAKES, MINNESOTA SCHEDULE OF REVENUE BOND COVERAGE WATER FUND Last Ten Years (Unaudited) Table 11 Net Revenue Available Interest Fiscal Gross Operating for Debt and Year Revenues (1) Expenses (2) Service Principal Fiscal Charges Total Coverage 1996 $ 466,310 $ 210,778 $ 255,532 $ 50,000 $ 170,881 $ 220,881 1.16 1997 851,173 271,575 579,598 50,000 229,900 279,900 2.07 1998 598,005 237,866 360,139 140,000 225,182 365,182 0.99 1999 604,734 380,928 223,806 205,000 220,910 425,910 0.53 2000 1 ,039,331 495,183 544,148 210,000 237,612 447,612 1.22 2001 1,173,593 508,649 664,944 155,000 185,250 340,250 1.95 2002 1,082,053 610,751 471,302 245,000 169,685 414,685 1.14 2003 1,365,681 505,407 860,274 250,000 158,669 408,669 2.11 2004 1,282,183 442,975 839,208 265,000 148,229 413,229 2.03 2005 1,335,370 405,289 930,081 280,000 132,852 412,852 2.25 (1) Total Water Fund operating revenues and transfers in. (2) Total Water Fund expenses exclusive of depreciation, interest on debt and fiscal charges. 97 CITY OF LINO LAKES, MINNESOTA PRINCIPAL TAXPAYERS (Unaudited) Table 12 Ten of the City's Largest Taxpayers Taxpayer Type of Business Percent of 2004 Net Tax City's Net Capacity Tax Capacity Target Corporation Retail $ 263,094 1.53% Kohl's Department Store Retail 154,544 0.90% Xccl Energy Utility 136,964 0.80% Molin Concrete Products Commercial /Industrial 133,481 0.78% Lino Lakes Business Center Commercial /Industrial 107,174 0.62% Taylor Corp. Commercial /Industrial 104,406 0.61 % Gargaro Properties LLC Commercial /Industrial 80,836 0.47% Marmon Keystone Corporation Commercial /Industrial 76,308 0.44% F & G, Inc. Commercial /Industrial 72,040 0.42% Minncgasco Utility 58,700 0.34% Total Ten Largest Taxpayers $ 1,187,547 6.90% Source: Anoka County Department of Property Records and Taxation. 98 CITY OF LINO LAKES, MINNESOTA PROPERTY VALUE, CONSTRUCTION PERMITS AND BANK DEPOSITS Last Ten Years (Unaudited) Table 13 Fiscal Property Number of Permit Bank Year Value (1) Building Permits Valuation Deposits (2) 1996 $ 501,825,800 588 $ 74,061,188 Not Available 1997 552,696,200 597 32,666,843 Not Available 1998 627,423,800 911 48,683,257 Not Available 1999 687,737,400 893 54,522,159 Not Available 2000 775,398,500 1,186 57,080,794 Not Available 2001 903,685,700 1,042 74,974,042 Not Available 2002 1,034,432,100 860 53,977,610 Not Available 2003 1,251,221,800 826 55,864,076 Not Available 2004 1,430,803,500 835 61,579,910 Not Available 2005 1,534,933,700 837 53,686,592 Not Available (1) Assessor's estimated market value of taxable property from Table 6. (2) Bank deposits are excluded due to the banks within the City being consolidated with banks outside the City. As a result, local deposits are unavailable. Source: City Inspection records. 99 CITY OF LINO LAKES, MINNESOTA DEMOGRAPHIC STATISTICS Last Ten Years (Unaudited) 'fable 14 Fiscal School Number of Unemployment Year Population (2) Enrollment (1) Households (2) Rate (3) 1996 13,756 6,010 4,095 2.6% 1997 14,560 6,230 4,280 2.5% 1998 15,053 6,469 4,443 1.9% 1999 15,760 6,732 4,692 2.5% 2000 16,791 6,778 4,857 2.6% 2001 17,386 6,846 5,084 4.1% 2002 18,000 6,850 5,291 4.3% 2003 18,368 6,932 5,433 5.0% 2004 18,725 6,992 5,570 4.6% 2005 19,285 6,934 5,766 3.8% (1) Centennial School District 12 (2) Metropolitan Council except 2000 is Federal Census and 2005 is City Estimate (3) Minnesota Department of Economic Security CITY OF LINO LAKES, MINNESOTA MISCELLANEOUS STATISTICS (Unaudited) Table 15 Date of Incorporation 5/11/1955 Date of Adoption of City Charter 1/12/1982 Form of Government Home Rule Charter Area of City (square miles) 33 Miles of Streets: Trunk Highways Paved - County Paved - City 17.4 28.5 100.50 Number of Street Lights 559 Fire Protection: Centennial Fire District Total Number of Stations (within Lino Lakes) Total Number of Volunteers 3 1 52 Police Protection: Number of Stations 1 Number of sworn officers 25 Recreation: Park Acreage 140 Number of Parks & Playgrounds 18 Trails 18 miles Municipal Water: Gallons Pumped 475,295,000 Number of Connections 3,825 Miles of watermain 50.8 Number of Fire Hydrants 502 Water Tower Capacity (gallons) 2,000,000 Municipal Sewer: Number of Connections Miles of sewermain Employees: Full -time Part-time 4,142 63.52 69 Elections: Registered voters - last general election 11,035 Number of votes cast 5,288 Percent of registered voters voting 48% 101 WS -2 WORK SESSION MEMORANDUM To: City Council From: Michael Grochala Date: June 5, 2006 Re: Work Session Item 2 Hardwood Creek Update PROJECT STATUS Since the joint council board meeting on April 5th staff and the development team have been concentrating efforts of defining the scope of overall transportation system and the approval process. Transportation The development team has been working with staff and Anoka County to determine the scope of transportation improvement necessary to facilitate development of the site. Primarily these discussion have centered on the upgrade of CSAH 54 (20th Avenue) to a four lane divided roadway, the interchange, and the extension of 21st Avenue North. Additional traffic modeling has been completed and has led to additional discussions with Anoka County regarding the proposed 3/4 access at the CSAH 14/21 st Avenue intersection and the possibility of realigning the existing CSAH 54 to the east of its existing location. As previously proposed and agreed upon by Anoka County, Centerville and Lino Lakes the new CSAH 14/21st Avenue will be constructed as a 3/4 intersection with the CSAH 14 reconstruction. A % intersection allows for both right -in /right -out movements as well as left turns onto 21st Avenue. The proposed intersection was designed in this fashion due to its proximity to the freeway ramps, satisfy Anoka County access spacing guidelines, and improve mobility and safety along the corridor. However, as our traffic studies have been refined it is becoming apparent that the limitation of access focuses more traffic onto CSAH 54 and its intersection with CSAH 14. 1 While additional analysis is necessary it is apparent that in both short term and long term forecasts CSAH 54 begins to take a more predominant role in the areas transportation system. The traffic modeling conducted so far indicates that a full access to the north at 21st Avenue, with signals, may improve the overall operation of the areas transportation system. Anoka County has been hesitant to modify their proposed plans based in part on the intersections inconsistency with their access spacing guidelines as well the significant debate over the intersection during the CSAH 14 design process. In order to address the accessing spacing issues the development team has also proposes the possibility of realigning CSAH 54 to tie directly into CSAH 54 immediately east of the Main Street Bank. There appears to be many advantages to this design however the access to southbound 21st Avenue becomes problematic. Additionally, Centerville is uncertain, at this time, what impact the realignment would have on their downtown project. The development team and city staff are coordinating review efforts with the City of Centerville. Anoka County has stated that they do not what to proceed with any consideration of the realignment unless there is a local request to do so. The development team will be at the work session to discuss the transportation issues and will be presenting the traffic simulation that has been prepared. Approval Process Staff has been working with the developer to establish the overall review process. The PUD process includes both a development stage plan approval and well as a final stage plan approval. Given the scope of the project, multiple end users, and the development time frame of 5 -8 years staff is recommending a process similar to what was done with the Legacy at Woods Edge project. This would include a master plan approval and establishment of design guidelines at the development stage approval with final stage plans covering the individual development proposals. Staff will provide a greater overview of this at the meeting. 2 WS -3 WORK SESSION MEMORANDUM To: Mayor and City Council From: James E. Studenski Date: June 5, 2006 Re: Work Session Item 3 — NPDES MS4 Permit In compliance with the provisions of the Clean Water Act, as amended, (33 U.S.C. 1251 et. Seq., 40CFR 122, 123 and 124, as amended et seq.); Minnesota Statues Chapters 115 and 116, as amended, and Minnesota Rules Chapter 7001, the city adopted a Storm Water Pollution Prevention Plan and authorized its submittal to the Minnesota Pollution Control Agency (MPCA) as part of the City's application for enrollment in the State of Minnesota's General National Pollution Discharge Elimination System (NPDES) Phase II Permit Authorizing the City's discharge of storm water. The NPDES MS4 Permit authorizes discharge of storm water within a framework of a Stormwater Pollution Prevention Plan (SWPPP), which has 6 control measures with a total of 34 mandatory best management practices (BMPS). 1) Public Education and Outreach 2) Public Participation/Involvement 3) Illicit Discharge Detection and Elimination 4) Construction Site Stormwater Runoff Control 5) Post - Construction Stormwater Management in New Development and Redevelopment 6) Pollution Prevention/Good Housekeeping The goal of the SWPPP is to reduce the amount of sediment and pollution that enters surface and ground water from storm sewer systems to the maximum extent practical. There are more stringent requirements for the following discharges: A. Discharges to Waters with Prohibited Discharges B. Discharges to Waters with Restricted Discharges 1 C. Discharges to Trout Waters D. Discharges to Wetlands E. Discharges requiring Environmental Review F. Discharges affecting Threatened or Endangered Species G. Discharges affecting Historic or Archeological Sites H. Discharges Affecting Source Water Protection Areas Of these, Discharge to Wetlands and Discharge Affecting Source Water Protection Areas could have applicability in Lino Lakes. The MPCA intends to protect the function and values of wetlands by prohibiting new or expanded discharge to them. The full impact of this is not clear yet. The MPCA also intends to prohibit new or expanded discharges in wellhead protection zones. Upon implementation of the Total Maximum Daily Load (TMDL) program, impaired waters will also have discharge limitations. The following are the TMDL listed waters for Lino Lakes. Lakes: Marshan, George Watch Peltier, Bald Eagle, and Centerville Creeks: Clearwater and Hardwood Attached is a BMP Timeline/Implementation Schedule. 2 1- PUBLIC EDUCATION AND OUTREACH n • m 0 O 0 fl) O 7 �r o; fl) 3 -D O` m' 0. 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Adopt and enforce the City ordinances with respect to erosion an d sedimentation control. • Continue enforcing compliance measures adopted by the City. D 0 <' BMP Timeline /Implementation Schedu 5-POST CONSTR STORMWATER MGMT IN NEW & RE- DEVELOPMEI 01 ; 0 - ...A. CT ZS ■ CT - CV':' --, CD Z Cr) C 3 -D cr v Regulatory Mechanism to Address Post Construction Runoff from New Development Development and Implementation of Structural and /or Non - structural BMPs Required BMP Title g -term Operation and Maintenance of BMPs 2006 2006 -2010 N 0 O 6) I N O 1 O N O O a) CO O 0? N O ..:.ter,:: 0 <: 'G to 0> -. • Evaluate the inspection and maintenance program. • Implement inspection and maintenance program. • Adopt or revise, as necessary, ordinances with respect to controlling post- construction runoff. • Review and update structural and non-structural BMPs. • Continue to conduct reviews of all construction projects with stormwater management being a major component and focus of the review. Activity BMP Timeline /Implementation Schedu 6- POLLUTION PREVENTION /GOOD HOUSEKEEPING Evaluate the inspection frequency and make adjustments accordingly. rn 0 v Evaluation of Inspection Frequency a 0': 0 o 0. X): o CD 03 0:v (D mac: 0 CD 0. (1) (D -C3 cp CD O � • 3 17 rn CD 0 0 w 5' 0 CD 0 O 0 (1) m 0 0" 0 0 0 (D 0 0 c n) 7' (D 0 0 C (n N O O D 0 5' 3 1 0 0)' 0 O (D D) ((DD W 3 D) 0 0 0 0 (D 0) 0 0 (D 0 (D 5n seanseaW anl}oaaaoO eut 4o • Evaluate inspection procedures annually. Measures are Necessary and the Implementation 01.0Z-900Z • Continue inspections and followup maintenance. of Whether Repair, Replacement, or Maintenance .dn- mollo4 uolfoadsul 0- 0 0n 0 0) 0 0 0 -n 0 O O 0 () Q C (0 (D m v o' O O) • Develop a plan (annual inspection procedures) for inspection follow -up. • O 0 0 v =. 0 5 0 (0 Q- 03 • o N • CA v (n (n C 0 0 O 0 Q (n m v 0 (D v • 0 0 0 0 0 3' 0) 0 0 o. O 0 (1) 0- OZ-LOOZ • Evaluate the inspections procedures. rn 0 Inspection of a Minimum of 20 percent of the MS4 • (D 0 0 v 0 0) 3 N 0 0 0 O O (D Q c (D 0 (n K O C (n SOOIAOQ loJ}uoO D 0 r,? C (n (D 0 0 0 D • Assess the compliance rate for BMP maintenance schedule CD o 3 0) 0) C v w -5: C) Cn (D CD (n 0 • O o Q Cn _ (D O (n O -0 ,, (n CD V 0> 0 0 0. C 6uideams �aeJTS 0 Q) 0; • (D (ll 0�1r 0 0) Q 0) 7' (D 0) 0 (D 0 3? Z W C 3 -0 a - v 91H1 dINB paalnbaa N'. O'. O °. O)' (D 03 3 m 3 (D 0 o' 0 O 0 (D (n (D 0 0) c (0 (D N • Revise the program to include necessary changes and develop a schedule for the • Evaluate program effectiveness and make changes, if needed. • Implement or expand the Street Sweeping Program. m os• ` !D • m; o o • w O 0 co O ) • o_ N 03 O 7 0 C 7 Q) (n -, O • 5 Q 0 Z • a) 0) 0 7 0_ 0 3 CD O Q _C 0. (o rF O 0;. 0 (L) z. 0 -y 3 CD CD 3 CD 3 CD 0 CD c `D Minnesota Pollution Control Agency Municipal Division (A) k New MS4 General Permit: Overview of Changes General NPDES /SDS Permit MNR040000 for Municipal Separate Storm Sewer Systems (MS4s) Effective June 1, 2006 Municipal Division, wq- strm4 -56, March 2006 Introduction This fact sheet provides an overview of the changes that have been made to the MS4 General Permit since it was first issued in March 2003. Why was the permit revised before it expired? The permit has been revised to meet the requirements of a May 2003 Minnesota Court of Appeals decision in which the court required the MPCA to provide opportunity for public review of the Storm Water Pollution Prevention Programs (SWPPP), and address nondegradation for all waters. The permit now includes new public notice requirements and new Appendices D and E which contain nondegradation requirements for Selected MS4s. Do I need to submit a new SWPPP? Your existing SWPPP may be modified to incorporate previous comments from the MPCA. You may need to revise your SWPPP to meet any new applicable requirements of the permit, especially Appendices C, D, and E. What are the main changes to the permit? Limitations on coverage The permit no longer specifies new or expanded discharges for all limitations on coverage, unless the requirements of Appendix C are met. The terms new or expanded as used in the permit are limited to specific activities that are regulated in rule or in the previous permit. The permit now also includes requirements for discharges affecting Source Water Protection Areas. Public notice requirements Applicants who submit a complete application that meets permit requirements are not extended coverage under the new permit until the SWPPP is public noticed and approved by the MPCA. The MPCA will provide public notice for the individual SWPPPs. Permit application deadlines Owners and operators of regulated small MS4s must apply for permit coverage by June 1, 2006. The 43 MS4s designated for coverage under Minn. R. ch. 7090 are required to obtain permit coverage by February 15, 2007. A list of MS4s is available on the MPCA Web site at: www.pca.state.mn.us/water/stormwater /stormwater- ms4.html SWPPP implementation SWPPP implementation dates have changed. Full implementation of the SWPPP must be completed by June 30, 2010. Some individual SWPPP requirements must be completed earlier; see specific dates identified in the permit. wq- strm4 -56 Minnesota Pollution Control Agency, 520 Lafayette Rd. N., St. Paul, MN 55155 -4194 (651) 296 -6300, toll -free (800) 657 -3864, TTY (651) 282 -5332 or (800) 657 -3864 This material can be made available in alternative formats for people with disabilities. Minnesota Pollution Control Agency Municipal Division Minimum control measures A new requirement has been added to minimum control measure #6 to inspect all exposed stockpile, storage and material handling areas at least annually. Modifying your SWPPP The permit now clarifies when and how a modification to the permit may be done by an MS4 (minor modification) or the Commissioner. A new requirement has been added for when SWPPP modifications are needed. You may need to modify your SWPPP to meet applicable requirements of Appendices C and D. Total Maximum Daily Load (TMDL) The permit now requires that you modify your SWPPP, as appropriate, within 18 months after the TMDL Waste Load Allocation is approved. Annual Reports The annual report submittal date has changed; annual reports must be submitted by June 30 of each year and cover the entire previous calendar year. Definitions Several definitions have been added and revised. Appendix C The MPCA will provide public notice of your proposed SWPPP modifications to meet Appendix C requirements for Discharges to Waters with Prohibited/Restricted Discharges. wq- strm4 -56, March, 2006 A new requirement has been added for protection of Source Water Protection Areas and drinking water sources. Appendix D 30 Selected MS4s will provide a study to determine if they are new or expanded significant dischargers and then propose reasonable measures they can take to keep pollutant loading of receiving waters at levels consistently attained by 1988. Nondegradation steps include: Loading Assessment; Nondegradation Report; proposed SWPPP modifications to address nondegradation; local notice and water authority review; submittal to MPCA; and MPCA review, notice, and final determination. Appendix E The submittal schedule and list of 30 Selected MS4s for this permit cycle is found in Appendix E. Need more information? For more information on the new nondegradation requirements see the MPCA fact sheet Nondegradation Reporting for Non -ORVW Waters, and the Draft Guidance Manual for Small Municipal Separate Storm Sewer Systems (MS4s) available on the MPCA Web site at: www.pca.state.mn.us /water /stormwater /stormwater- ms4.html New MS4 General Permit: Overview of Changes wq- strm4 -56 PAGE 2 WS -4 WORK SESSION MEMORANDUM To: City Council From: Michael Grochala Date: June 5, 2006 Re: Work Session Item 4 I -35W /Lake Drive Improvement Project PROJECT STATUS Staff is currently working with SEH, Inc. to complete the final design on the interchange project. Right of way acquisition will commence within the next two months. Approximately 18 parcels bordering the project may be affected. The majority of acquisitions involve, for the most part, a strip acquisition parallel with Lake Drive. Two parcel may need to be acquired in their entirety. In addition to road right -of -way, there will be a need to acquire both drainage and utility easements, as well as trail easements over portions of the project area. Temporary easements will also be required to allow for the new construction to match into existing conditions. Once the limits of right -of -way is confirmed the acquisition process will commence. SEH Inc., is preparing a Right -of -Way plat that will identify each parcel proposed for acquisition. We are anticipating that this will be brought to the council for consideration in early July. Appraisals will be completed and /or updated on each parcel and reviewed with the property owner. Staff is working with Dan Wilson of Wilson Development Services on the property acquisition. We are attempting to make offers on all the properties by mid July. Our primary goal is to acquire all the properties by direct purchase. However, if we cannot reach a settlement with all parties it may be necessary to commence eminent domain proceedings. Such proceedings cannot be initiated until 60 days have elapsed from the date of the original offer. It is important to note, in light of the recent media coverage and state legislation regarding eminent domain, that the parcel acquisition is for a public purpose to improve safety and mobility along Lake Drive. Additionally, the City needs to have possession of the necessary right -of -way and easements before County 1 and State approval of the plans and allocation of funding. Based on the existing project schedule we are anticipating bidding the project in late January or early February. Any delays in parcel acquisition may negatively impact the feasibility of the project. Staff will continue to update the council as the project moves forward. 2 WS -5 WORK SESSION MEMORANDUM STAFF ORIGINATOR Al Rolek MEETING DATE June 5, 2006 TOPIC Community Festival Questions BACKGROUND` At the May 1 City Council work session the Council was asked to contribute toward the Blue Heron Days event. In turn, the City Council asked me to conduct a survey of communities to see how city involvement in celebrations such as this is handled. In response to this question I sent out a list -serve to other communities to find out if they contributed monetarily to the celebrations or provided in -kind contributions, and whether the city was the coordinator of the event. I received upwards of 70 responses. The responses varied widely relative to city contributions toward the events. Most contributed in- kind for services such as police patrol, setting of barricades, park and recreation coordination, ball fields, clean -up and refuge collection, etc. About 44% of those responding made monetary contributions, with the majority of these committing their contributions to specific functions, such as a fireworks display. The contributions ranged from $1,500 to $40,000, with proceeds coming mostly from property taxes, cable franchise fees or charitable gambling proceeds. Some communities solicited donations or had a refreshment stand or some other activity to cover some of the costs. I also asked whether the events were coordinated by the city or another entity. In most cases (80 %), the event was coordinated by an agency other than the city, such as the JC's, the Chamber of Commerce, a 501c (3) organization, or a citizen group. In many cases the city had a representative involved with these groups. I hope that this information will aid the Council in assessing its role in the Blue Heron Days celebration. I am available if you have any further questions. WS - 6 WORK SESSION STAFF REPORT Work Session Item No. 6 Date: Council Work Session, June 5, 2006 To: City Council From: Gordon Heitke Re: Community Visioning Project Background The City Council committed to undertaking a community visioning project in its 2006 goals and provided funding for this activity in its 2006 budget. The visioning project follows the community survey as the second step leading, to having an updated comprehensive plan. The actual comprehensive plan review and update will begin later this year. Staff sought proposals from four consultants who have a record of conducting community visioning. The four organizations were Dahlgren, Schardlow and Uban; Carl Neu and Assoc., Springsted Inc., and the Hoisington Koegler Group. DSU and the Hoisington Group have responded that they are unable to undertake this project within the next few months due to heavy work loads related to other comprehensive plan update projects. Carl Neu and Assoc. and Springsted Inc. have submitted proposals for your consideration. The proposals and alternatives within the Springsted proposal provide for differing numbers of meetings and numbers of participating groups which influences the costs of the services. Mr. Neu included with his proposal examples of visioning products from three communities which resulted from processes ranging from being more inclusive and expensive to less inclusive and expensive than the process used in his proposal, should Council wish to expand or reduce the process and project cost. 1 Requested Council Direction Staff is seeking direction as to whether either of the proposals are acceptable as submitted, whether revisions should be requested in terms of process, or whether additional proposals should be sought. Attachments 1. Springsted Inc. proposal 2. Neu and Assoc. proposal 3. DSU correspondence 4. Hoisington Keogler Group correspondence 2 LETTER OF TRANSMITTAL May 1, 2006 Mr. Gordon Heitke, City Administrator City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 Re: Proposal to Provide City Visioning Services Dear Mr. Heitke: I am pleased to submit Springsted's proposal to assist the City of Lino Lakes conduct a visioning process. The following proposal outlines an approach that we believe will provide you with results you desire. Springsted has significant experience with projects of this type, as we explain in our proposal. Springsted has assisted local governments throughout the United States addressing their strategic planning and visioning challenges. We have an extensive management consulting staff that includes former city and county managers, development officials, finance directors and other top professionals. Springsted is available to begin work on your time schedule and deliver a quality product. We are confident you will find that the team presented herein has the skills, demonstrated qualifications, and experience to achieve the desired outcome for the visioning process. Respectfully submitted, Craig R. Rapp, Vice President dww Proposal City of Lino Lakes , Minnesota Proposal to Provide City Visioning Services May 1, 2006 Profile of Firm 1 1. Profile of Firm History and Leadership Our Clients Springsted is one of the largest and most established independent public sector advisory firms in the United States. For over 50 years, we have continually grown in the range of our client relationships, the comprehensiveness of our services and our prominence within the industry. Our managed growth is focused on providing clients with a balance of national perspective and local expertise. Springsted is a women -owned business. Three employee - owners lead Springsted. Our headquarters are located in Saint Paul, Minnesota, with additional offices located close to our clients throughout the Midwest and mid- Atlantic states. Springsted currently employees over 60 professionals. The City of Lino LakesComprehensive Plan Update visioning process will receive direct assistance on this project from Springsted's St. Paul office. • Cities, Towns, Townships The states in gold reflect where Springsted's and Villages clients are located: • Counties • Special Service Districts • Non - Profit Organizations • Hospitals • Economic Development, Redevelopment and Port Authorities • Electric and Water Utilities • Higher Education Authorities • School Districts • Housing Authorities Scott County, Minnesota. Proposal to Provide Visioning Services as Part of the City of Lino Lakes2030 Comprehensive Plan Update Profile of Firm 2 Operating Structure The organization of our staff is based on four principles that benefit our clients: • By aligning our staff within both geographic and specialty service areas, our clients can work with one advisory firm to effectively address all of their capital and operational financial needs • With a team -based approach to service, our clients are assured that several professionals are familiar with their individual situation • Since work products are crafted and reviewed throughout our process, clients are assured that they will receive the highest quality fmal product, tailored to their individual needs • With well- conceived and managed processes, our services are delivered at cost - effective levels Our staff is organized within three divisions, with two divisions specifically dedicated to working with clients: Client Development Division This division has primary responsibility for working directly with our clients in defining their objectives and tailoring responsive options. It is organized both on a geographic basis — to focus expertise on the particular fmancial environment within each state — and in specialty areas — to concentrate resources in specific ways, such as management consulting, organizational processes, or human resources. Each area may then draw on the resources within the rest of the organization to address client issues. Geographic and Specialty Service Teams Geographic Teams • National — Higher Education — Virginia — Kansas — Mid - Atlantic — Pacific Northwest • Midwest — Iowa — Minnesota — North Dakota — South Dakota — Wisconsin Specialty Services Teams • Public Finance Services — Arbitrage /Rebate Services — Bond Services Investments • Management Consulting Services • Housing and Economic Development Services • Organizational Management and Human Resources Services • Investment Services Scott County, Minnesota. Proposal to Provide Visioning Services as Part of the City of Lino Lakes2030 Comprehensive Plan Update Profile of Firm 3 Client Service Division This division has the primary responsibility of producing our various work products in the capital finance and debt management areas. It is organized to provide comprehensive services throughout the financing process, and afterward, in the compliance areas of continuing disclosure and arbitrage reporting. Administration Division Two internal support areas complement the two client orientated divisions: our Resource Center and Information Services (IS) departments. The Resource Center is our access point to the major financial markets and professional on- line services. The Resource Center also maintains comprehensive, historical profiles of our clients and our work products. The IS department provides an in -house response team that tailors information and data processing applications to meet the needs of the client service staff. Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 4 2. Approach It is our understanding that the City of Lino Lakes desires to retain a consultant for the purpose of facilitating meetings in connection with the development of a 2030 Community Vision. Further, we understand that the City wishes to use the results of the visioning process to assist the City staff in conducting future phases of the planning process. 1) Recommended Approach — Electronic Facilitation Process Our approach to the visioning project will include the use of Springsted's Electronic Facilitation Process. This approach expands the possibilities of the visioning process by enabling the facilitator and group the opportunity to process significant amounts of information quickly, anonymously and with precision. It combines personal interaction with the style of Powerpoint presentation and the power of computer calculation. The electronic facilitation tool will be used to capture the preferences and opinions of meeting participants. A question is posed, giving several options as answers. Participants will choose their response using keypads similar to a remote control. The keypads transmit participants' responses to the system, which are then immediately tabulated and displayed in graphical form on the screen for the group to review. This tool improves group communications. It helps to address issues about which people feel very strongly, in a focused, logical way. The facilitator will then use the immediate feedback to probe more deeply, modifying or clarifying the question, and then discussing concerns with the group. Depending upon the passion of the group or the sensitivity of the issue, numerous re- polling of the group can be done on the spot. This flexibility enables the process to move quickly, yet yielding to traditional discussion facilitated by the consultant. The electronic voting approach allows participants to respond anonymously with a higher degree of honesty. Because it builds upon the many layers of an issue, audiences find it easier to keep focused, leading to a better level of understanding. Issues may be clarified immediately, the impact of intimidating personalities are minimized, and groups can quickly see where the trends are. Springsted will build a series of questions for the visioning sessions based upon a traditional approach for eliciting information about values, vision, and aspirations. In addition, we will work with City staff to incorporate questions of relevance for each specific area, understanding that the issues will be different and the audiences will have different perspectives. Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 5 Time required to prepare and facilitate four (4) visioning meetings (included in the following visioning process) are estimated as follows: Project Lead (facilitator) ...meeting attendance, preparation20 hours Project Analyst (facilitation process) .... preparation meeting attendance 18 hours 2) Optional Approaches to Visioning Process Three different approaches to visioning are presented for consideration. Each has its own advantages and disadvantages, which are listed following each description. Depending upon the City's philosophy, any of the approaches will work to develop a strategic vision. Option 1— Council Leadership Model Description: This model emphasizes the role of the City Council, and other designated groups, such as the Planning Commission, to develop a vision and mission for the City. The primary objectives of the Council- Leadership Model are to: • Engage the City Council, Commissions and the staff Steering Committee in facilitated discussions that identify potential future trends and their strategic implications for the City of Lino Lakes • Develop a preliminary vision and mission to guide the City's 2030 strategic planning process • Seek community input on the preliminary vision • Adopt the City's 2030 vision and mission, incorporating community feedback Setting the Stage- - Environmental Scan Conduct a 2 -3 -hour session including the following participants: • City Council • Invited leadership (or designees) of various boards and commissions • Staff Steering Committee Participants will receive materials in advance to prepare for the meeting. The agenda for this session would include: • Consultant and staff presentation on trends & survey results • Group process scanning the operating environment • Abbreviated SWOT analysis • Recap of major themes discussed at the session Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 6 Preliminary Vision Development and Strategic Issue Identification Conduct a 4 -6 hour facilitated session including the following participants: • City Council • Invited leadership (or designees) of various boards and commissions • Staff Steering Committee Audience participation technology will be used at this meeting to maximize participation in the time allotted for this session. The agenda for this meeting would include: • Debriefing on major themes from the first session to capture relevant future local and regional trends that could impact Lino Lakes • Initial vision discussion how do we want to define Lino Lakes in 2030 • Identify strength, weaknesses, opportunities, and threats (SWOT analysis) • Test and modify initial vision concepts • Frame strategic issues using short- and long -term time horizons • Create preliminary vision Community Outreach The primary objectives of outreach efforts will be to provide a brief overview of themes emerging through the environmental scan and to obtain feedback on the preliminary vision developed by the Council leadership team. Recommended minimum activities include: • Articles in the City's newsletters • Cable television programming • Information on the web site • Four town meetings held in different locations facilitated by Springsted using audience participation technology Optional activities can include but are not limited to: • Additional Town meetings with audience participation technology • Key informant interviews • Intercept (person -on- the - street) interviews designed to get feedback from hard -to -reach audiences • Focus groups • Interactive web site that allows residents to react to information and respond to specific questions Adopted Vision • Community feedback will be summarized and presented to the City Council, City board and Lino Lakes, Minnesota. Proposal to Provide Visioning Service! Approach 7 Comments Potential advantages of this model include its capacity to draw upon the knowledge and abilities of the City's elected and appointed leaders, emphasizing their governance role as representatives of the community. This model also makes the most efficient use of time and City resources. Potential disadvantages of this model may be its limited use of the knowledge and skills of community members and the possibility that it may not be able to reach those segments of the community that are not well - connected to the City's formal power structure. Also, by limiting community involvement, this model may not have the capacity needed to sustain long -term community support for the achieving the 2030 strategic vision. Lino Lakes, Minnesota. Proposal to Provide Visioning Services commission representatives and Staff Steering Committee in a four -hour facilitated visioning session. • Direction to refine and /or visually depict the 2030 vision will be given to the consultant and the Staff Steering Committee. • A final vision presentation will be developed and presented to the City Council, for formal adoption. Landmarks Two landmarks in the Council Leadership Model are: • Identification of preliminary vision and outreach efforts • Adoption of the vision Staff Roles Staff Steering Committee • Provide guidance to Springsted on meeting planning and preparation • Participate in all planning sessions • Provide guidance on planning and implementation of community outreach efforts Other staff roles include: • Coordinating logistics for meetings and community outreach efforts • Communications • Management of web communications Comments Potential advantages of this model include its capacity to draw upon the knowledge and abilities of the City's elected and appointed leaders, emphasizing their governance role as representatives of the community. This model also makes the most efficient use of time and City resources. Potential disadvantages of this model may be its limited use of the knowledge and skills of community members and the possibility that it may not be able to reach those segments of the community that are not well - connected to the City's formal power structure. Also, by limiting community involvement, this model may not have the capacity needed to sustain long -term community support for the achieving the 2030 strategic vision. Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 8 Option 2 — Community Participation Based Model Description: This model emphasizes the community's role in identifying the values and desired vision that will help the City plan for the future. It differs from the Council leadership model in that it places responsibility for developing the preliminary vision of the future with the community and it increases the variety of venues available for community input. It features a Community Strategic Planning Task Force appointed by the City Council and given the charge to define the City's preliminary vision through a community engagement process developed by the Task Force. The primary objectives of the Community Participation Model are to: • Place responsibility for development of the preliminary vision with a task force of community members • Create opportunities for community members to identify community values, critical long- term issues that will affect the City, and the City's desired future Setting the Stage- - Environmental Scan Conduct a 2 -3 hour session with the following participants: • Strategic Planning Task Force members • City Council • Staff Steering Committee Participants will receive materials in advance to prepare for the meeting. The agenda for this session would include: • Consultant and staff presentation on trends & survey results • Group process scanning the operating environment • Abbreviated SWOT analysis • Recap of major themes discussed at the session Major themes will be presented in the form of online polls to gauge what the community sees as those elements emerging from the environmental scan that are likely to have the most profound impact on the City. Polling results will be posted on the City's website. Preliminary Vision Development and Conduct a 4 -6 hour facilitated session for the Strategic Strategic Issue Planning Task Force, with the option to use audience participation technology, if requested. Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 9 Identification The agenda for this meeting would include: • Review of community input from the online polls • Debriefing on major themes from the first session to capture relevant future local and global trends that could impact Lino Lakes • Initial vision discussion —how do we want to define Lino Lakes in 2030 • Identify strength, weaknesses, opportunities, and threats (SWOT analysis) • Test and modify initial vision concepts • Frame strategic issues using short- and long- term time horizons Community Outreach The primary objectives of outreach efforts will be to provide a brief overview of themes emerging through the environmental scan and to obtain feedback on the preliminary vision developed by the Strategic Planning Task Force. Recommended minimum activities include: Feedback Review Council Review and Adoption of the Vision • Articles in the City's newsletters • Cable television programming • Information on the web sites • Four town meetings held in different City locations facilitated by community members or Springsted • Targeted focus groups Optional activities can include but are not limited to: • Additional Town meetings with audience participation technology • Key informant interviews with strategic partners • Intercept (person -on- the - street) interviews designed to get feedback from hard -to -reach audiences • Interactive web site that allows residents to react to information and respond to specific questions The Strategic Planning Task Force reviews and summarizes feedback received in the community outreach activities and uses this information to refine the preliminary vision in a four hour facilitated meeting. The Strategic Planning Task Force presents its work, including a summary of community feedback and a preliminary vision to the City Council in a two -hour meeting. Lino Lakes, NGnnesota. Proposal to Provide Visioning Services Approach 10 The City Council meets in a facilitated four hour session to refine the vision and give direction to Springsted and staff for presentation of the final vision. The City Council adopts the final vision. Landmarks Four landmarks in the Community -Based Model are: • Community kickoff • Identification of preliminary vision and outreach efforts • Presentation of recommended vision • Vision adopted by the City Council Staff Implications Level of senior staff support needed by the Strategic Planning Task Force will have to be determined. Other staff roles include: • Coordinating logistics for meetings and community outreach efforts • Communications • Management of web communications Comments Potential advantages of this model stem from the community's responsibility to develop and recommend a 2030 vision to the City Council and the increased stake that the community will have in supporting and achieving the 2030 vision. In addition, the increased level of community dialogue will incorporate the values and desired future of a wider cross - section of the community. Potential disadvantages of the model stem from limiting involvement of the City's elected and appointed leaders until after the initial development of the vision. The risk inherent in this model is that the City Council may not have sufficient involvement and ownership in the process to fully accept the community -based vision and values as the framework for developing the 2030 strategic plan. Consequently, some community members may feel disenfranchised if the City Council does not adopt the recommended vision, in part or in total. The cost and time associated with this model is also a potential disadvantage compared to the other two models because of the increased requirements to coordinate the Strategic Planning Task Force meetings and increased opportunities for community input. Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 11 (This page is intentionally left blank) Lino Lakes, N6nnesota. Proposal to Provide Visioning Service Approach 12 Option 3 — Community Partnership Model (Hybrid) Description: The Community Partnership model allows the City Council to partner with the community to identify community values and develop a 2030 vision. It differs from the other models by providing increased opportunities for community dialogue while placing responsibility for developing the vision with the City's elected and appointed leaders. This model also capitalizes on increased involvement of the City's strategic civic partners, recognizing that these partners may have significant contributions to make towards achieving the City's 2030 vision. The primary objectives of the Community Partnership Model are to: • Engage the City Council, Advisory Commissions and the staff Steering Committee in facilitated discussions that identify potential future trends and their strategic implications for the City of Lino Lakes • Use the expertise of strategic civic partners to scan the future and apply trends to the development of community values and a vision • Encourage and sustain community dialogue about the values, desired vision for the future and strategic issues facing the City • Develop a preliminary vision and mission to guide the City's 2030 strategic planning process • Optional: Identify alternative scenarios for community discussion and feedback • Adopt the City's 2030 vision and mission, incorporating community feedback Environmental Scan Conduct a 2 -3 hour session including the following participants: • City Council • Invited leadership (or designees) of various boards and commissions • Staff Steering Committee • Strategic civic partners Participants will receive materials in advance to prepare for the meeting. Strategic civic partners will be asked to review and comment on environmental trends based on their areas of expertise. The agenda for this session would include: • Consultant and staff presentation on trends & survey results Lino Lakes, Minnesota. Proposal to Provide Visioning Service; Approach 13 • Group process scanning the operating environment • Abbreviated SWOT analysis • Recap of major themes discussed at the session Major themes will be presented in the form of on online polls to gauge what the community sees as those elements emerging from the environmental scan that are likely to have the most profound impact on the City. Polling results will be posted on the City's website. Key informant interviews and various community presentations provide additional opportunities for explaining major themes that will impact the City in the future and obtaining community feedback. Preliminary Vision Development and Strategic Issue Identification Conduct an 4 -6 hour facilitated session including the following participants: • City Council • Port Authority • HRA • Invited leadership (or designees) of various boards and commissions • Staff Steering Committee Audience participation technology will be used at this meeting to maximize participation in the time allotted for this session. The agenda for this meeting would include: • Debriefing on major themes from the first session to capture relevant future local and global trends that could impact Lino Lakes • Initial vision discussion —how do we want to define Lino Lakes in 2030 • Identify strength, weaknesses, opportunities, and threats (SWOT analysis) • Test and modify initial vision concepts • Frame strategic issues using short- and long- term time horizons • Create preliminary vision • Optional: Two or three alternative visions are defined conceptually Community Outreach The primary objectives of outreach efforts will be to provide a brief overview of themes emerging through the environmental scan and to obtain feedback on the preliminary vision or alternative City visions developed by the Council leadership team. Recommended activities include: • Articles in the City's newsletters • Cable television programming Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 14 • Information on the web sites • Four town meetings held in different City locations facilitate by Springsted • Targeted focus groups identified and led by strategic civic partners Optional activities can include but are not limited to: • Additional Town meetings with audience participation technology • Key informant interviews • Intercept (person -on- the - street) interviews designed to get feedback from hard -to -reach audiences • Interactive web site that allows residents to react to information and respond to specific questions Adopted Vision • City staff, Springsted, and the strategic civic partners will summarize and present feedback received in the outreach activities to the City Council in a four -hour facilitated session. This information will be used by the city council to modify and refine the preliminary vision. • Direction to draft and/or visually depict the 2030 vision will be given to the consultant and the Staff Steering Committee. • A final vision presentation will be developed and presented to the City Council for formal adoption. Landmarks Three landmarks in the Community Partnership Model are: • Community kickoff • Identification of preliminary vision and outreach efforts • Vision adopted by the City Council Staff Implications Staff Steering Committee: • Identify strategic civic partners who would be willing to review and comment on the environmental scan document and attend a meeting with them • Provide guidance to Springsted on meeting planning and preparation • Participate in all planning sessions • Provide guidance on planning and implementation of community outreach efforts Other staff roles include: Lino Lakes, Minnesota. Proposal to Provide Visioning Services Approach 15 Project Lead (facilitator) ...meeting attendance, preparation...40 hours Project Analyst (project support) preparation, support Report production 18 hours Lino Lakes, Minnesota. Proposal to Provide Visioning Services • Coordinating logistics for meetings and community outreach efforts • Communications • Management of web communications Comments Potential advantages of the Community Partnership Model is the maximum use it makes of the lrnowledge and abilities of the City's elected and appointed leaders, emphasizing their governance role as representatives of the community. At the same time, the Community Partnership Model creates a role for engaging strategic civic partners and provides increased community dialogue by involving a wider cross - section of the community. Moreover, the community engagement component of this model has the capacity to build and sustain long- term community support for achieving the City's 2030 vision. Finally, the cost and time associated with this model are less when compared to the Community -Based Model. Potential disadvantages of this model include the increased time and resources compared to the Council Leadership Model. Project Lead (facilitator) ...meeting attendance, preparation...40 hours Project Analyst (project support) preparation, support Report production 18 hours Lino Lakes, Minnesota. Proposal to Provide Visioning Services References 16 3. References Waukesha County, Wisconsin Community Visioning and Strategic Planning Waukesha County is a rapidly growing county on the western side of the metropolitan Milwaukee area. It has a population of 360,000 residents who enjoy a high quality of life in what is often referred to as the" lake country area." The communities within Waukesha County are blessed with some of the highest property values and socio - economic measures in Wisconsin and the nation. Springsted has been retained by Waukesha County to conduct a year -long process which includes community visioning and the development of a long- term strategic plan. The project is underway currently and is scheduled to run from April 2005 through December 2005. The visioning process includes significant public involvement by stakeholders throughout the community as well as many organizations who have a financial or operational investment in the County. The strategic plan will include the creation of long -range goals for the County based upon the vision established in phase one. Springsted will be guiding the efforts to establish the goals, and work with the County Board, executive team and staff to create the strategic plan, consistent with the community vision. Contact: Ms. Allison Bussler, Chief of Staff 262.548.7802 City of Savage, Minnesota Community Visioning Savage is a fast growing community of 20,000 in the southwestern portion of the Minneapolis - St.Paul metropolitan area. It borders the Minnesota River enjoys a high quality of life and a rich history. Springsted was retained in November 2004 to conduct a visioning process for the City of Savage. The purpose of the visioning process was to establish a long -range vision for the city over the next fifteen years, which corresponded to the full build out of the community. A visioning process was established, and a broad -based committee was established to direct the activities. Using a multifaceted approach that included focus groups, town hall meetings and a community wide survey, the City gathered input from all stakeholder groups. Once the input was received, the committee worked with Springsted to identify major themes, guiding principles, and specific action steps spread over the fifteen years of the plan. The final report was presented to the City Council in June 2005. Contact: Mr. Barry Stock, City Administrator 952.882.2660 Lino Lakes, Minnesota. Proposal to Provide Visioning Services References 17 Coon Rapids, Minnesota Community Visioning and Strategic Planning Coon Rapids is a fully - developed second ring suburban community approximately 10 miles north of Minneapolis. It has a population of 67,000 citizens who enjoy a high quality of life on and near the Mississippi River which forms the western boundary of the city. Springsted has been retained by the City of Coon Rapids to conduct a year -long process which includes community visioning and the development of a long- term strategic plan. The project is underway currently and is scheduled to run from January 2005 through December 2005. The visioning process includes significant public involvement by stakeholders throughout the community as well as many organizations outside the corporate limits who have a financial or operational investment in the community. The strategic plan will include the creation of long -range goals for the community based upon the vision established in phase one. This will lead to the development of integrated capital and operating plans for the City of Coon Rapids. Springsted will be guiding the efforts to establish the goals, and work with the City Council, executive team and staff to integrate financial and operational plans to implement the strategic plan, consistent with the community vision. Time period: January 2005 — present Contact: Mr. Gerald Splinter, City Manager 763.755.2880 Lino Lakes, Minnesota. Proposal to Provide Visioning Services Resumes 18 4. Resumes Craig R. Rapp, Vice President, will be the project lead and facilitator for this project. Mr. Rapp has over 27 years of experience in municipal government management and consulting. Mr. Rapp previously served as City Manager in three cities, Director of Community Development for the Metropolitan Council, and President of his own consulting firm. He holds a master's degree in Public Administration. Mr. Rapp just completed a visioning process for the City of Savage in Scott County, and is currently engaged in a strategic planning process in Waukesha County Wisconsin which involved the use of the electronic facilitation tool to gather public input. In his previous capacity as Director of Community Development for the Metropolitan Council, Mr. Rapp was responsible for the review and oversight of 190 comprehensive plans covering the seven county area of the twin cities. Lino Lakes, Minnesota. Proposal to Provide Visioning Service: References 19 Craig R. Rapp Vice President As a Vice President for Springsted Incorporated, Mr. Rapp provides a wide range of consulting services to his clients. He particularly focuses on strategic planning and visioning, as well as housing and development projects. Prior to joining Springsted, Mr. Rapp worked for over twenty -five years as a senior executive in both the public and private sectors, holding the positions of City Manager in three cities, Community Development Director of the Metropolitan Council of the Twin Cities, Managing Principal of a planning and urban design firm, and President of his own consulting firm. Mr. Rapp has extensive experience as a facilitator and trainer. He has worked extensively with cities of all sizes conducting goal- setting retreats and working with community groups. He was responsible for facilitating the land use and station area planning process for the Hiawatha Light Rail Transit Line — the first LRT line in the Twin Cities — which involved dozens of neighborhood groups and government oversight committees. In addition, he developed a training course for public officials dealing with difficult political environments that he has presented throughout the United States. His considerable background in development includes service as City Manager of communities experiencing both high growth and significant redevelopment, including downtown revitalization. While in the private sector, Mr. Rapp assisted clients to create high quality projects and livable communities. He was directly responsible for bringing several large master planned and new urbanist developments through the approval process, working directly with developers, city councils and development authorities. During his tenure at the Metropolitan Council, Mr. Rapp directed the implementation of the Metropolitan Livable Communities Act — landmark legislation that created a region -wide response to the issues of polluted land cleanup, affordable housing, and development innovation. In addition, Mr. Rapp oversaw the development of Metro 2040, the Twin Cities first growth management plan to incorporate the principles of smart growth and address the cost of growth. Education Minnesota State University — Mankato Master of Arts in Public Administration University of Minnesota Bachelor of Arts — Urban Studies Professional Sensible Land Use Coalition — Past President Association of Metropolitan Municipalities — Past President Metropolitan Area Management Association — Past President North Hennepin Community College Advisory Board — Past President League of Minnesota Cities — former Board Member Urban Land Institute — former Minnesota Executive Board Member Minnesota City - County Management Association International City - County Management Association — Full Member Adjunct Faculty, Hamline University Lino Lakes, Minnesota. Proposal to Provide Visioning Service! Budget 20 5. Budget Springsted Incorporated will perform all tasks delineated in our proposal for a professional fee of $14,450. The team's standard hourly rates are presented below: Principal /Senior Officer $200 Officer /Project Manager Senior Associate 170 145 Associate 130 Support Staff 55 Out -Of- Pocket Expense In addition to the professional fee above, the team would charge at cost for actual out -of- pocket expenses not to exceed $700. Out -of- pocket expenses include travel and sustenance, overnight or messenger deliveries, conference calling beyond our internal capabilities, cellular phone calls, photocopying, and mailing. Additional Work Should the City request and authorize additional work outside the scope of services as agreed to or request additional revisions beyond those agreed upon at the discussion and review of the preliminary findings, we would invoice the City at our standard hourly fees. Lino Lakes, Minnesota. Proposal to Provide Visioning Services 0 COMPANY PROPOSAL for a COMMUNITY VISIONING PROJECT for the Submitted by Carl II. Neu, Jr. Neu and Company Lakewood, Colorado May 10, 2006 ©Neu and Company and the Center for the Future of Local GovernanceTM, 2006 PROPOSAL for a COMMUNITY VISIONING PROJECT for the City of Lino Lakes Submitted by Carl H. Neu, Jr. Neu and Company Lakewood, Colorado May 10, 2006 I. INTRODUCTION All cities including Lino Lakes progress over time through a series of evolutionary phases as they grow, develop and define themselves more fully. Lino Lakes, in broad terms, has experienced three evolutionary phases: start -up (1857 to 1956 beginning with a population of under 300 and concluding with the incorporation of Lino Lakes); transition from a rural village to a growing city (1955 -1995 with the city's population growing from 1,800 to 13,100); and vision - based planned growth (1995 -2005; starting with the 20/20 Community Visioning Process — a citizen created guide to Lino Lakes' Future. This 10 -year phase culminated in a highly complimentary 2005 Quality of Life Study in which citizens expressed high levels of satisfaction with the progress the community has achieved, gave testimony to their belief "the city is on the right track ", and defined issues of importance for consideration on what the next phase of the city's evolution should seek to address and be. Lino Lakes now is at the threshold of its next period of growth, development and defining more clearly the nature and quality of the community it wants to be as it progresses over the next 20 -25 years toward build -out and maturity. The community, as stated in the Mayor's Corner of Lino Lakes News (Summer 2006), now intends to revisit and update its vision, and accompanying strategic plan, that will guide the community's efforts toward becoming the Lino Lakes of the future. This proposal outlines a Community Visioning Effort to build upon the progress made during the last ten years, the information provided by the 2005 Quality of 2 Life Survey, and the community's desire for a high - quality future for Lino Lakes. The Community Visioning Effort will provide a vision and plan that will lead Lino Lakes over the next 20+ years into the future it desires. The year 2030 is the visioning and planning horizon established by the Metropolitan Council for many communities as they update their comprehensive plans. II. COMMUNITY VISIONING - — What is it; Why do it; What Benefit does it Provide to the Community? Communities are future seeking. But first, they must be able to imagine and decide what they want the future to be. Secondly, they must decide how they are going to make this desired future become a reality. Strategic leadership is a process that brings people together to think about the future, create a vision, and invent ways to make this future happen through determination, community teamwork, and disciplined actions. It is the primary function of leadership — making things happen that would not happen otherwise and preventing things from happening that might occur ordinarily. It is getting people to work together to achieve common goals and aspirations; to transform visions into reality. The Community Vision document is a record of what people think — a broad blueprint for positive change that defines a vision and key outcomes that must occur to attain this vision. Other implementation efforts and plans such as the comprehensive land use plan, financial plans, and development and redevelopment plans are policy and decision making tools that assist the city council, and administration in achieving the vision. A strategic leadership perspective and plan will challenge and stretch the community's imagination in defining what is possible and test its will to commit to a great and exciting, rather than "good enough" future. The strategic plan will forge and sustain the critical partnerships and relationships that will translate the strategic plan a reality. This Strategic Plan is a compass — a dynamic and continuous process about how a community sees, thinks about, and creates, through decisive and resolute leadership and management commitment and actions, the future it desires. It defines the long -term "big picture" framework within which all policy, fiscal, administrative, and tactical decisions need to occur. It focuses the City Council and the entire community on defining Ends and Results to be achieved and the management team on the Means necessary to achieve those Ends and Results. It does the same for the leadership and administrative elements of all other entities and community partners who have a role to play and a stake in the successful implementation of the vision and strategic plan. A community's Strategic Plan should be reviewed and updated at least every five years to ensure its currency and the continued involvement of the entire community in defining and achieving Lino Lakes' future. 3 For Lino Lakes, the Community Visioning Process will be the second element in a three -step community leadership process that engages the public actively in defining the future desired for the City and crating the policy tools to ensure that the vision is translated into positive actions, and the vision into reality. The three steps in the community leadership process are the Quality of Life Survey, the Community Visioning Process and creation and adoption of an updated Comprehensive Plan, and accompanying zoning ordinances, to guide Lino Lake's future development toward becoming the community citizens prefer. III. The Community Visioning — Strategic Planning Process (Lino Lakes) A. Community Visioning — a people oriented process. Community visioning is a process in which people who live, work in and care about their community come together in informal welcoming settings to discuss and determine the future direction of their city. People gather together (community) to explore the possibilities of the future and their aspirations and desires for what they want their community to be. They also explore how to best address and achieve their aspirations in a reasoned and strategic manner. The "visioning" or long -term strategic planning process focuses on "community building" and creates the productive relationships, understanding of issues, and framework within which the citizens, community leaders, and city's operations function as a partnership as they move together into the future. Goals are determined, surprises are anticipated, uncertainties are addressed, the "what -if's" are played out, the realities of what it takes in terms of resources and commitments to make the city we desire become a reality are defined straight forwardly and objectively, and action steps and critical partnerships are created. It is the collective recognition that the future of real communities is to be defined, achieved, managed and sustained with intent, commitment and demonstrated stewardship. Lino Lakes in 1995 started this process; it now continues its commitment to guide the community to the quality it desires in the future. B. Proposed Objectives Upon completion of this process, the City of Lino Lakes, both as a vibrant community and a municipal organization, will have: 1. committed to continuing the public /community -based visioning process started in 1995. 2. created a community vision inclusive of citizen and stakeholder perspectives and values about the future of the City of Lino Lakes. 4 3. identified the Strategic Focus Areas or Vision Elements which must be addressed from a strategic leadership perspective and commitment if the vision is to be planned and managed toward reality. 4. built the sense of partnership and stewardship throughout the community necessary to sustain commitment to the community vision and successful implementation of the future and the accompanying strategic plan. 5. prepared a visioning document and strategic plan for citizen evaluation, feedback, and implied approval. 6. linked the strategic plan into the leadership, comprehensive planning, policy setting, management, and resource generation and allocation processes for the city and other entities and institutions who will be critical alliance partners with the city in achieving the community vision and implementing the strategic plan. 7. established a process such as the Quality of Life Survey, by which the community, city, and its alliance partners can evaluate progress made, update the plan, and maintain its vitality as the means by which the community participates in defining and achieving its future. C. Projected Benefits of the Community Visioning Process 1. It provides another opportunity starting with the Quality of Life Survey, for the citizens of Lino Lakes, and especially that 40% of the population that moved into the community since 1995/96 and who now also has a major stake in the quality of Lino Lakes, to express what they want, value and will work to achieve for the future. 2. It provides an opportunity to reflect objectively on the community's history and generate ideas for the future. 3. It builds a strong citizen -city council partnership. 4. It gives the community and its municipal government, a long -term perspective for decision making and budgeting. 5. It gives the community, city, and the council a framework for goal setting, establishing priorities, and setting policy. 5 6. It allows people to dream and look into the future. 7. It allows people to experience an adventure of discovery and possibilities for the City's future. 8. It advances the community's leadership perspective toward long- term managed, sustainable growth that protects what people value; i.e., location, rural setting and quality neighborhoods. It also focuses on attaining the future development people desire. 9. It builds up and expands the "reservoir of good will" achieved within the city over the last ten years. D. Key Steps in the Process 1. Selection of a citizen volunteer steering committee representative of the community to guide the entire process. The selection is usually done by the city council, sponsor of the Community Visioning Project. 2. Establishment of a comprehensive community relations process to ensure community awareness of the Community Visioning Process and to invite active community participation in the overall process. 3. Use of focus groups, community meetings, and community surveys to identify issues to be addressed in the strategic planning process. 4. Compiling of the issues to be addressed in the strategic planning process and communicating this information to the community as a stimulus for further community involvement and participation. 5. Establishment of citizen task forces to develop goals and action strategies for addressing each of the key issues to be considered in the visioning and strategic planning process. 6. Presentation of the recommendations of the task forces to the community for response and further citizen input. 7. Preparation of a draft community vision and strategic planning document for consideration by the various "partners" in the community who will have an essential role in the implementation of the strategic plan. 8. Adoption of the community vision and strategic plan by the community and City Council as a guide to the city's future. 6 9. Initiation of a process to ensure effective long -term management of the implementation elements essential to the plan. E. Role of the Facilitator - Consultant The Facilitator - Consultant will provide the following services: 1. assist the city in developing the Visioning and Strategic Planning process and accompanying public information /communications plans to maximize citizen participation via various means in the process. 2. assist the city to achieve the fullest public outreach possible to ensure inclusion of all groups, especially underrepresented groups, and their perspectives in the process. 3. provide guidance on selection of a Visioning - Strategic Planning Steering Committee, project coordinator, and task force members. 4. design and conduct an orientation session for the Visioning- Strategic Planning Steering Committee and task force members. 5. design and facilitate, with city staff and task force members, public Community Visioning forums. 6. consolidate the qualitative information obtained from these Community Visioning forums and assist the task forces in developing appropriate approaches to validate statistically that qualitative information. 7. define, with the task forces, the emergent vision and the Strategic Focus Areas or Vision Elements that must be addressed from a strategic perspective. 8. assess, with the task force, the City's and community's "strengths and weaknesses" (SWOT) relative to each Strategic Focus Area to be addressed. 9. prepare, and present, with the task forces, a draft vision statement and strategic plan to the community for evaluation, recommendations and feedback. 10. develop, with the steering committee and task forces, the final Community Vision Statement and Strategic Plan. 7 11. assist the city and other key alliance partners in linking the Community Vision and Strategic Plan to their organizations and the contributions expected from each toward the successful implementation of the plan. F. The Role of the City in the Process. 1. initiate and sponsor a community -wide visioning and strategic planning process as one of the sponsors of the strategic planning process. 2. to provide leadership support and funding. 3. approve a project coordinator to work with the facilitator - consultant. 4. to provide information and other data that may be required by the task forces in evaluating the issues to be addressed in the strategic planning process. 5. provide clerical and staff support to the steering committee and task forces. 6. assist in locating/providing facilities for required meetings. 7. become a critical partner in the implementation process. 8 COMMUNITY VISIONING - STRATEGIC PLANNING Community Surveys Community Forums Expert/Staff Input Distribute Copies — Media, Newsletters PROCESS DEVELOPMENT SUMMARY Establish Steering Committee Engage Community Identify Issues Community Forums and Input Submit List of Issues to Steering Committee Selection of Issue Task Forces Study Issues Identified Town Hall Meetings Task Forces Citizen Input Speakers' Circuit Publish and Distribute to Community Draft Report Final VISION- STRATEGIC PLANNING Document Implementation q Neighborhood Meetings Identify Goals and Objectives Formal Approval Oversite Committee IV. Projected Facilitator- Consultant Scope of Services and Estimated Charges A. City of Lino Lakes, Minnesota Community Visioning and Strategic Planning Process Proposed Scope of Services, Schedule, and Projected Charges 10 Service/Key Action Steps Proposed Schedule Projected Cost for Consultant Services 1. Develop with City, a detailed Visioning- Strategic Plan Work Plan including accompanying public information /outcomes /communications plan. 2 days on -site: with City Council, Mayor, City Manager, and Project Coordinator $3,000.00 2. Provide guidance on selection of a Steering Committee, Visioning- Strategic Planning Coordinator and task force members. Part of the 1+ day on- site visit listed in Item 1 above. Part of Item 1. 3. Promote Community Visioning Forums To be determined No consulting time — done by city 4. Design, conduct, and summarize results from Community Visioning Forums (Recommend 2 -3 evening meetings and 1 -2 daytime meetings for this community. Each meeting lasts 2 to 3 hours) (4 -1/2 days on -site for facilitating meetings and preparation of summary results) $6,750.00 5. Design- conduct orientation session for Visioning Committee Task Forces and supporting city -staff members. 1 day on -site training- orientation session; `/s day preparation) $2,250.00 10 6. Define with Task Forces: • Emerging Community Vision • Strategic Focus Areas ( "areas of interest ") to be addressed and selection of sub - groups to address next Strategic Focus Areas. • Assessment (SWOT) process to be used to develop Strategic Plan component for each Strategic Focus Area. • Define what other survey tool is needed and process for creating. (1 day on -site to include meeting with Task Forces and supporting City Staff) 1 day preparation $3,000.00 7. Strategic Focus Area work groups complete assessment of and strategic plan recommendations for assigned topics. 1 day on -site Each work group will establish own work schedule and meeting times. $1,500.00 8. Prepare and submit draft Vision Statement and Strategic Plan to Community for evaluation and feedback. (Suggest same arrangement of meetings used in Step 4. Each meeting lasts 2 -1/2 hours) 4 Consulting Days $6,000.00 9. Prepare fmal Vision Statement and accompanying Strategic Plan for submission to, and adoption by, City Council. (Incorporate into a council study session. 1 Consultant day) $1,500.00 10. Workshop with City Council, City Staff, community leaders and alliance partners (Stakeholders in ensuring successful implementation of Community Vision and Strategic Plan). 1 Day on -site workshop. 1 Day preparation (Suggest consolidate with Step 9 for one trip) $3,000.00 11. Final debriefing with Mayor, City Manager and Key Staff in "Keeping the Process Alive "). Y2 day on -site conference. (Schedule with items 9 and 10) N/C 11 Summary of Estimated Charges: • 18 days of consulting/facilitation services at $1500.00/Day $27,000.00 • 6 trips to City of Lino Lakes $ 4,200.00 • Clerical support charges $ 2,000.00 • Orientation workshop materials $ 500.00 Total Estimated Charges $33,700.00 12 V. Estimated Other Project Costs Associated with City Activities Supporting the Process: • Publicity - mailings, etc. $2,000.00 • Facilities for meeting Donated or available • Refreshments for Community Forums $ 400.00 (Possibly donated) • Printing and distribution of drafted final plans $1,000.00 • Miscellaneous other items such as office Supplies, etc. $ 350.00 Total $3,750.00 13 VI. References and Sample Reports A. References Specific references pertaining to Community Visioning - Strategic Planning Projects include: 1. City of Prior Lake, MN Jack Haugen, Mayor Frank Boyles, City Manager 952- 447 -4230 2. City of North Las Vegas, NV Gregory Rose, City Manager Michelle Bailey - Hedgepeth, Manager of Strategic Planning 702 - 633 -1178 3. Town of Windsor, CO Rod Wensing, Town Manager 970 - 686 -7476 B. Sample Reports Included with this proposal are copies of recently prepared Community Visioning - Strategic Planning documents for the three cities referenced above. VII. Vita — Carl H. Neu, Jr. Principal Consultant, Neu and Company, and for the Lino Lakes Project. 14 CARL NEU Carl Neu Carl Neu, author and consultant, is recognized nationally as an authority on, and an experienced practitioner of, the theory and application of governance and leadership to city councils and county boards, local government managers, and community leaders. Carl has worked with over 500 local government entities, state and national municipal and county associations since 1976. Additionally, he is an experienced government official having served on the Lakewood, Colorado, city council and as chair of the city's charter commission. He currently serves as president of the Lakewood Public Building Authority. Carl's teaching affiliations include having been a lecturer at the University of Colorado's Graduate School of Public Affairs, a faculty member at its Center for the Improvement of Public Management, and a faculty member for the Rocky Mountain Institute for Public Officials. He also served as a faculty member for the University of Arizona's Local Government Leadership Institute. Carl's professional expertise focuses on development of those strategic leadership, policy development, long -range planning and teamwork skills required of elected and appointed local government officials and community leaders. These skills are necessary for effective performance in dealing with the forces and popular trends that are redefining government and governance, especially at the local level. He is a graduate of the Massachusetts Institute of Technology, and has an M.B.A. from Harvard University. Neu & Company Neu & Company provides consultation services, workshops and conferences, and professional programs to improve the leadership and service delivery performance of local governments, and the professional skills of their policy - making boards, executives, and employees. The Center for the Future of Local GovernanceTM This division of Neu and Company focuses on the development and dissemination of those strategic leadership, policy development, long -range planning and teamwork concepts and application techniques that can "awaken the best" in elected and appointed local government officials and community leaders. These insights and skills are necessary for effective performance in dealing with the forces and popular trends that are redefining government and governance, especially at the local level, during the 21St Century. 15 300 FIRST AVE N SUITE 210 MINNEAPOLIS, MN 55401 -2609 May 1, 2006 , TEL: 612- 339 -3300 FAX: 612-337 -5601 WEB: DSUPLAN.COM COMMUNITY PLANNING LAND PLANNING URBAN DESIGN LANDSCAPE ARCHITECTURE MARKET RESEARCH Gordon Heitke, City Administrator City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 -1182 RE: Request for Interest and Cost Estimate to Assist the City with Community Visioning Dear Gordon: Thank you for contacting me and requesting a cost estimate for consulting services related to the completion of a community visioning process. That is exactly the right step for Lino Lakes to be taking now, following up on your community survey and in advance of the upcoming comprehensive plan. Our current work level and standing commitments simply make it impossible for me to consider this work at this time. So, I must decline with regrets. If your working schedule holds, I would welcome the opportunity to work with your community in the comprehensive planning process. Please keep us in mind when the need to secure those services rolls around and give my best to everyone. Best regards A1.4014 Jo Shardlow ent Gordon Heitke From: Mark [Mark @hkgi.com] Sent: Thursday, May 25, 2006 2:00 PM To: Gordon Heitke Subject: Community Visioning Gordon: Thanks for taking the time with me last week to discuss your upcoming visioning process. As I mentioned, I was out of the office until today but I have had time to consider the project and to look more closely at our internal workload. As I mentioned, we are very busy at the present time. It simply doesn't appear that we have the staff capacity to undertake the visioning effort that would need to start in August or September in order to meet your time requirements for the subsequent comprehensive plan update. Thank you for letting us know about the project. If you have any questions, please feel free to call me Regards, Mark Mark Koegler Hoisington Koegler Group Inc. 123 North Third Street, Suite 100 Minneapolis, MN 55401 612.252.7120 612.338.6838 (fax) Visit us at: www.hkgi.com 1 ws - 7 WORK SESSION STAFF REPORT Work Session Item No. 7 Date: Council Work Session, June 5, 2006 To: City Council From: Gordon Heitke Re: City Hall Access Background During the discussions related to installing a new security system for the Lino Lakes Civic Center Complex and staff office area, questions were raised as to who needs access to secured areas. Staff was directed to place this item on this agenda for further discussion. Requested Council Direction Staff is seeking direction as to who is to be granted access to secured areas in order to complete a security policy for the complex. 1