HomeMy WebLinkAboutManagement Report and Recommendations 12/31/1993CITY OF LINO LAKES, MINNESOTA
MANAGEMENT REPORT
AND RECOMMENDATIONS
DECEMBER 31, 1993
TAUTGES, REDPATH & CO., LTD.
CERTIFIED PUBLIC ACCOUNTANTS
To the Honorable Mayor and
_ Members of the City Council
City of Lino Lakes, Minnesota
WNW
We have completed our audit of the financial statements of the City of Lino Lakes and issued
our opinion thereon. In conjunction with our audit of the financial statements, we have prepared
this report to assist the City in the analysis of financial results, fmancial trends, the fund balances
of the various funds of the City, and compliance procedures related to Federal and State regulations
and/or statutes as they directly relate to financial matters.
Based on the above areas, we offer recommendations for improvement as appropriate with a
summary of such recommendations on the last page of this report. Additionally, we are available
to discuss the contents of this report with the City Council upon request.
Respectfully submitted,
_ t�.x/2.
Tautges, Redpath & Co., Ltd.
May 23, 1994
4810 White Bear Parkway • White Bear Lake, Minnesota 55110 • 612/426 -7000 • FAX /426 -5004 • Member of HLB International
City of Lino Lakes, Minnesota
Management Report, Page 2
_ ACCOUNT BALANCE ANALYSIS OF THE
COMBINED FINANCIAL STATEMENTS
The combined financial statements of the City of Lino Lakes are presented in Statements 1
through 5 of the 1993 Annual Financial Report. The following comments relate to the Combined
Balance Sheet - All Funds (Statement 1).
Cash and Investments
Cash and investments were as follows at December 31, 1992 and 1993:
December 31, Increase
Description 1992 1993 (Decrease)
Treasurer's balance - checking ($2,128) $1,909 $4,037
Petty cash 150 150 0
Investments:
Certificates of deposit 3,042,947 389,659 (2,653,288)
Commercial paper 0 1,347,997 1,347,997
FNMA pool 761,013 1,468,090 707,077
NOW account 460,576 596,553 135,977
GNMA 326,715 0 (326,715)
Investment pools 1,431,852 3,975,538 2,543,686
Federal Farm Credit Bank 100,000 500,000 400,000
Federal Home Loan Mortgage Corp. 595,773 200,000 (395,773)
Treasury Security 1,525,693 2,604,485 1,078,792
Federal Home Loan Bank 343,656 0 (343,656)
Repurchase agreement 596,850 0 (596,850)
Federal agriculture mortgage, discount notes 0 842,633 842,633
Totals .$9,183,097 $11,927,014 . $2,743,917
The City occasionally maintains a negative balance in the City's checking account. These
negative balances are "book" balances only. These balances indicate that the City is depositing
cash which is not needed for current expenses into interest bearing accounts. We concur with the
City's practice of maintaining minimal balances in the City's checking account to increase interest
earnings.
_ Interest on investments totaled $615,011 in 1993 and $379,369 in 1992. The increase in
interest earnings is the result of gains on sale of U.S. Treasury zero- coupon investments. The
ability of a city to generate investment earnings is an indication of sound fiscal management. The
interest earnings of the General Fund indicate that the City is maintaining operating reserves in this
fund. Operating reserves are mandatory to compensate for cash flow timing differences in the
receipt of major revenue sources and for various other purposes as discussed later in this report
(see "General Fund ").
City of Lino Lakes, Minnesota
Management Report, Page 3
pue from Other Governmental Units
Included in due from other governmental units are various Federal and State grants receivable
that the City has earned as of December 31, 1993. The following schedule details these amounts:
Description
December 31,
1992 1993
State:
MSA - construction allotments $676,235 $47,343
MSA - maintenance 0 8,625
Police - post board reimbursement 0 2,686
Federal:
Community Development Block Grant 2,325 13,648
Local:
Anoka County:
Apollo Drive 0 1,010,007
Recycling Reimbursement 14,250 18,607
Fines 5,159 5,958
Other 1,011 289
MWCC - Maintenance Agreement 13,061 3,836
MWCC - Reshanau Lake Trunk Sanitary Sewer 0 33,456
Centennial Fire District 15,154 0
City of Centerville 1,343 0
City of White Bear Lake 0 536
Total
$728,538
$1,144,991
Excluded from the above schedule is the gas franchise receivable which represents the City's
share in the 1992 profits of the gas franchise operated by Circle Pines within the City of Lino
Lakes. The amount is due each May following the year in which the amount is earned As such,
the payment is measurable but not available and therefore is recognized in the year received (see
later comments).
City of Lino Lakes, Minnesota
Management Report, Page 4
Property Taxes Receivable
Delinquent taxes receivable were as follows for the past several years:
1990 1991 1992 1993
Delinquent balance - January 1 $46,393 $50,963 $59,664 $76,791
Current Levy 1,529,821 1,717,474 1,865,188 2,073,987
Total receivable 1,576,214 1,768,437 1,924,852 2,150,778
Receipts:
County:
Current 1,082,674 1,333,954 1,408,779 1,588,279
Delinquent 21,620 24,342 24,395 50,099
State 411,973 340,224 397,193 469,323
Total receipts 1,516,267 1,698,520 1,830,367 2,107,701
Unadjusted balance
Adjust to County
Delinquent balance
Total collections as a percent
of current levy
59,947 69,917 94,485 43,077
(8,984) (10,253) (17,694) (13,543)
$50,963 $59,664 $76,791 $29,534
99% 99% 98% 102%
The City has experienced a solid tax collection rate over the past five years. The adjustments
represent amounts provided by Anoka County for abatements and other adjustments to the
delinquent balances.
City of Lino Lakes, Minnesota
Management Report, Page 5
Tax Increment Receivable
The City had delinquent tax increments in the amount of $9,436 at December 31, 1993 as
follows:
TIF TIF
1 -1 1 -2 Total
Delinquent Balance - January 1 $12,031 $1,055 $13,086
Current Levy 178,031 140,843 318,874
Total receviable 190,062 141,898 331,960
Receipts:
Current 176,660 115,932 292,592
Delinquent 3,969 1,054 5,023
Total receipts 180,629 116,986 297,615
Unadjusted balance
Adjustments
9,433 24,912 34,345
0 (24,909) (24,909)
Delinquent Balance - December 31 ®3 ==== $3 $9,436
The adjustments consist of excess tax increments returned to other taxing jurisdictions.
Special Assessments Receivable
Special assessments receivable consisted of the following amounts at December 31, 1992 and.
1993:
December 31, Increase
1992 1993 (Decrease)
Delinquent $118,688 $43,036 ($75,652)
Deferred 3,774,176 3,066,724 (707,452)
City property 10,510 10,510 0
Due from County 44,975 26,125 (18,850)
Special deferred 895,698 297,113 (598,585)
Totals $4,844,047 $3,443,508 ($1,400,539)
Delinquent assessments receivable consist of amounts collectible in 1993 and prior years which
the City has not yet received. Special deferred assessments consist of residents who have not yet
hooked up to the water and sewer system and will be assessed at the time of hook up.
City of Lino Lakes, Minnesota
Management Report, Page 6
_ A summary of assessment collections for the past four years is as follows:
1990 1991 1992 1993
Delinquent balance - January 1 $161,751 $132,985 $126,088 $118,690
Ad&
Current installment 245,618 351,941 379,521 632,067
Amount collectible 407,369 484,926 505,609 750,757
Less:
Current collections 168,442 293,452 306,443 580,678
Delinquent collections 107,879 65,396 82,664 39,313
Total collections 276,321 358,848 389,107 619,991
Adjustments 1,937 10 2,188 (87,730)
Delinquent balance - December 31 $132,985 $126,088 $118,690 $43 036
Current collection rate
Total collections as a percent
of current levy
69% 83% 81% 92%
113% 102% 103% 98%
As shown above, the current collection rate continues to increase. The primary funding of debt
payments is special assessments. Timely collection of special assessments is required to assure
timely availability of cash to meet the scheduled debt payments. We recommend the City continue
to monitor the collection rate and provide supplemental financing if assessment collections are not
adequate to meet bonded debt payments.
The City collects special assessments through Anoka County. Beginning in 1993, the County
began providing limited data regarding delinquent assessment receivables. We recommend the
City continue to request improved data from the County.
City of Lino Lakes, Minnesota
Management Report, Page 7
Fixed Assets
As discussed in prior management reports, the City does not maintain complete fixed asset
accounting records. Advantages of maintaining such a system include the following:
• Availability of insurable value amounts
• Increased safeguarding of movable assets
• Availability of database to determine capital equipment replacement needs
• Improved financial reporting
Currently, the auditors opinion on the financial statements is qualified for lack of a fixed asset
system. A fixed asset system would enable the City to obtain an unqualified or "clean" opinion on
the financial statements. This would allow the City to submit its Annual Financial Report to the
Government Finance Officers Association's Certificate of Achievement for Excellence in Financial.
Reporting program.
City of Lino Lakes, Minnesota
Management Report, Page 8
INDIVIDUAL FUND/FUND TYPE ANALYSIS
GENERAL FUND
The general fund of the City is maintained to account for the current operating and capital
outlay expenditures common to all cities. These basic services include general government, public
safety, public works and parks and recreation.
A summary of the revenue sources of the general fund is as follows:
State Aids Property Taxes All Other Total
Year Amount Percent Amount Percent Amount Percent Amount Percent
1986 $491,041 37.2% $585,137 443% $244,581 18.5% $1,320,759 100.0%
- 1987 585,674 36.2% 714,892 44.2% 316,720 19.6% 1,617,286 100.0%
1988 549,567 30.7% 769,915 42.9% 473,490 26.4% 1,792,972 100.0%
1989 682,407 32.8% 848,472 40.8% 550,916 26.5% 2,081,795 100.0%
1990 600,419 26.2% 994,399 433% 699,831 30.5% 2,294,649 100.0%
1991 456,273 18.8% 1,179,087 48.7% 786,174 32.5% 2,421,534 100.0%
1992 564,514 20.9% 1,206,998 44.6% 934,282 34.5% 2,705,794 100.0%
1993 628,790 19.8% 1,420,369 44.7% 1,128,503 35.5% 3,177,662 100.0%
- 1994* 639,630 19.1% 1,586,677 47.3% 1,126,142 33.6% 3,352,449 100.0%
* Budgeted
All other revenue consists of charges for services, fines and forfeits, licenses and permits, and
interest on investments. As shown above, property taxes as a percent of total revenue has
consistently been approximately 45 %.
State aids for the General Fund have consisted of the following amounts from 1988 through
1993 actual and 1994 budgeted
1994
State Aids 1988 1989 1990 1991 1992 1993 Budgeted
- LocalGovemmentAid $232,157 $330,823 $163,165 $95,440 $94,960 $90,138 $145,445
Homestead Credit 259,384 270,645 324,828 251,303 290,428 356,182 369,185
Equalization aid 0 0 44,547 42,991 45,547 42,854 0
- Police Aid 33,298 32,739 35,662 43,044 44,692 47,253 45,000
MSA - Streets 13,935 13,935 13,935 13,170 81,232 86,246 80,000
Other Aids 10 793 34 265 18,282 6 416 7 655 6117 0
Totals $549,567 $682,407 $600,419 $452,364 $564,514 $628,790 $639,630
Percent change 0.71% 24.17% (12.01)% (24.66)% 24.79% 11.39% 1.72%
City of Lino Lakes, Minnesota
Management Report, Page 9
Revenue of the general fund for the past two years has been as follows:
Property taxes
Licenses and permits
Intergovernmental revenue:
Federal
State
County
Charges for services
Fines and forfeits
Interest on investments
Other
Totals
1992
Amount Percent
$1,206,998 44.6%
493,977 18.3%
9,662 0.4%
563,039 20.8%
33,655 1.2%
210,129 7.8%
79,643 2.9%
41,927 1.5%
66 764 2.5%
1993
Amount Percent
$1,420,369 44.7%
565,684 17.8%
9,351
628,790
35,803
239,562
83,019
66,820
128 264
03%
19.8%
1.1%
7.5%
2.6%
2.1%
4.1%
$2,705,794 100.0% $3,7,
17662 100.0%
Inaease
()
$213,371
71,707
(311)
65,751
2,148
29,433
3,376
24,893
61 500
$471,868
Detail of the above revenue is presented in Statement 7 of the 1993 Annual Financial Report.
General Fund
1993 Revenue By Source
Intergovernmental
21.2%
Licenses & Permits
17.8%
Property Taxes 44.7%
Charges for Services
7.5%
Fines and Forfeits
2.6%
Interest & All Other
6.2%
City of Lino Lakes, Minnesota
Management Report, Page 10
Expenditures of the general fund for the past two years are as follows:
Current
General government
Public safety
Highways and streets
Parks, recreation and forestry
Economic development
Other
Capital outlay
Totals
1992
Amount Percent
$743,114
909,399
465,830
323,301
0
35,559
78,994
29.1%
35.6%
18.2%
12.6%
0.0%
1.4%
3.1%
$2,556,197 100.0%
1993
Amount Percent
$817,374 28.9%
950,824 33.6%
530,265 18.7%
312,257 11.0%
64,682 2.3%
28,576 1.0%
125,224 4.5%
$2,829,202 e • 100.0%
•
General Fund
1993 Expenditures By Category
Capital Outlay &
Other 7.8%
General Government
28.9%
Public Safety 33.6%
Details of the above expenditures are presented in Statement 7 of the 1993 Annual Financial
Report.
City of Lino Lakes, Minnesota
Management Report, Page 11
The fund balance of the general fund increased by $350,363 in 1993 as follows:
Actual revenues over (under) budgeted revenues:
Property taxes $43,033
Licenses and permits 49,729
Intergovernmental revenue 20,831
Charges for services 51,711
Fines and forfeits (181)
Interest on investment 21,820
Miscellaneous 2,078
Operating transfer in 4,801
Net revenue over budget
Actual expenditures under (over) budgeted expenditures:
General government 30,512
Public safety 14,414
Highways and streets 8,106
Parks, recreation and forestry 29,030
Other 11,717
Economic development 4,604
Capital outlay (9,980)
Contingency 71,036
Operating transfer out (2,898)
Net expenditures under budget
$193,822
156,541
Total increase in fund balance $350,363
Detail of the preceding budget variances are presented in Statement 7 of the 1993 Annual
Financial Report.
City of Lino Lakes, Minnesota
Management Report, Page 12
The City's December 31, 1993 fund balance totaled $1,756,659. The City's General Fund
balance has been as follows for the past ten years:
Fund Balance
Reserved/
December 31, Designated Undesignated Total Increase
1984 $116,770 $126,153 $242,923
1985 77,624 350,675 428,299 $185,376
1986 83,714 455,666 539,380 111,081
1987 52,593 589,799 642,392 103,012
1988 96,626 747,836 844,462 202,070
1989 53,290 976,763 1,030,053 185,591
1990 1,169,624 0 1,169,624 139,571
1991 1,265,236 0 1,265,236 95,612
1992 1,406,296 0 1,406,296 141,060
1993 1,756,659 0 1,756,659 350,363
The increase in designated fund balance reflects the City's adoption of a reserve policy
pursuant to resolution 91 -3. The reserve policy addresses three areas: 1) Cash flow requirements,
2) Contingent employee benefits, and 3) General contingencies.
The City's cash flow reserve requirement is computed as follows:
1994 Budgeted Levy (Includes Homestead Credit)
1994 Anticipated Local Government Aid
Total
$1,955,862
145,445
$2,101,307
Cash -Flow Reserve (50% of total) $1,051,000
The general contingency reserve is equal to 15% of the City's general fund expenditure budget
for the ensuing year as follows:
1994 budgeted expenditures $3,352,449
Applicable percentage 15%
General contingency reserve $502,867
City of Lino Lakes, Minnesota
Management Report, Page 13
The contingent employee benefit reserve is equal to an amount computed at December 31 for
accrued vacation and sick leave.
A summary of these reserves is as follows:
Reserve/Designation
Prepaid items
Cash flow
General contingency
Contingent employee benefits
Totals
Reserve General
Requirement Fund
Per City Balance
Policy Available Difference
$88,984
1,051,000
502,867
286.589
$1,929,440
$88,984
1,051,000
502,867
113.808
$0
0
0
172.781
$1,756,659 $172,781
The City of Lino Lakes has improved the financial position of its General Fund over the past
several years. We commend the City for these actions and encourage the City to continue to
monitor this reserve balance. An adequate reserve structure will enable the City to retain its
financial independence and integrity during adverse economic condition&
A summary of the purposes and benefits of general fund reserve balances is as follows:
Purpose of Reserves
Benefits of Reserves
Cash flow timing differences,
• Favorable bond rating indicator.
• Supplements revenues with investment earnings.
- • Provides resources for minor projects or
feasibility reports.
• Avoids temporary overdrafts prior to
major receipts.
• City may study effects of revenue cuts before
gradual program reductions.
• Avoids overburdening of annual budgets for
certain capital outlay.
• Provides the City greater options to deal with
unexpected events.
Expenditures are incurred somewhat evenly throughout the
year. Property taxes & State aids are not received until the
second half of the year. A reserve of one-half of such
revenues is therefore recommended.
Intergovernmental revenue cutbacks.
The City is vulnerable to legislative actions at both the Federal
& State leveL Federal funding to local government has been
substantially curtailed in recant years. Annual adjustment of
Local Government Aid & HACA formulas is a constant threat
Capital outlay replacement.
Internal escrow for purchases which may exceed amounts
available in any single budget cycle. This may also be
accomplished through transfers to dedicated replacement funds.
)✓mergency or unanticipated expenditures,
Examples include natural disasters, law suits, comparable
worth implementation and premature breakdown
of viral equipment
Special City Council Projects.
Preliminary studies, interfund loans and minor projects
are examples of reserve uses.
Maw
-
City of Lino Lakes, Minnesota
Management Report, Page 14
SPECIAL REVENUE FUNDS
The financial statements for the City's special revenue fund are presented in Statements 8 and 9
of the 1993 Annual Financial Report. Special revenue funds are a type of governmental fund to
account for the proceeds of specific revenue sources (other than expendable trusts or for major
capital projects) that are legally restricted to expenditures for specified purposes. The City
maintained the following special revenue funds in 1992 and 1993:
Fund Balance
December 31, Increase
Fund 1992 1993 (Decease)
Economic Development Authority ($190) ($134) $56
Program Recreation 0 3,073 3,073
Total ($190) $2,939 $3,129 •
Economic Development Authority
During 1990, the City adopted Resolution 33-90 which authorized the City to establish an
Economic Development Authority (EDA) pursuant to Minnesota Statutes sections 469.00 through
469.108. The EDA was established with specific powers and obligations to promote and to
provide incentives for economic development within the City of Lino Lakes. The financial activity
of the EDA has been reported in the City's Annual Fmancial Report in accordance with the
Governmental Accounting Standard Board (GASB) Statement No. 14.
Program Recreation
This fund was established in 1993 to account for self - supporting recreation programs A
summary of 1993 fmancial activity is as follows:
Revenue:
Recreation fees $41,257
Interest 306
Total revenue 41,563
Expenditures:
Personal services 22,793
Supplies 12,922
Other services 2,775
Total expenditures 38,490
Revenue over expenditures $3,073
City of Lino Lakes, Minnesota
Management Report, Page 15
DEBT SERVICE FUNDS
The combining financial statements for the debt service funds are presented in Statements 10
and 11 of the 1993 Annual Financial Report. Debt service funds are a type of governmental fund
to account for the accumulation of resources for the payment of interest and principal on 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.
Pledged assets may be divided into three categories: 1) Recorded as fund assets with the
revenue deferred until collected (levied assessments and levied taxes); 2) Actually received by the
fund and included in fund balances (collected assessments, interest, bond proceeds, etc.); and, 3)
Future pledged assets not recorded as assets but intended to be collected at a future date (scheduled
property taxes and estimated tax increment collections).
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 several sections of the 1993 Annual Financial Report to assist in this
analysis:
December 31, 1993 Scheduled Final
Fund Defected Outstanding Property Maturity
Fund Description Balance Revenue Total Debt Taxes Date
General Debt
1989A Certificates of Indebtedness $9,696 $1,443 $11,139 $60,000 $67,819 5/1/94
1989B Certificates of Indebtedness 78,882 1,302 80,184 120,000 67,190 2/1/95
1990 Certificates of Indebtedness 3,349 402 3,751 36,000 20,889 1/1/96
1991 Certificates of Indebtedness 5,115 726 5,841 45,000 49,801 1/1/95
1992 Certificates of Indebtedness (3,383) 0 (3,383) 150,000 166,305 2/1/95
Public Project Revenue Bonds of 1990A 133,088 1,291 134,379 1,115,000 2,019,338 2/1/10
Total general debt 226,747 5,164 231,911 1,526,000 2,391,342
Special Assessment Debt:
Improvement Bonds of 1988 881,927 122,841 1,004,768 655,000 0 2/1/97
Temporary Improvement Bonds of 1991A 2,317,472 706,299 3,023,771 4,260,000 0 8/1/94
Improvement Bonds of 1992A 657,389 432,156 1,089,545 3,490,000 3,849,304 2/1/06
Total special assessment debt 3.856,788 1.261,296 5.118.084 8,405,000 3.849.304
Total - All Debt Service Funds $4,083,535 $1,266,460 $5,349,995 $9,931,000 $6,240,646
UMW
MEW
City of Lino Lakes, Minnesota
Management Report, Page 16
Deferred revenue of the preceding schedule primarily consists of uncollected special
assessments. The preceding schedule compares outstanding debt with: 1) fund balance; and, 2)
deferred revenue.
Debt Service Funds should be evaluated at least annually. The following chart summarizes
steps to consider.
Condition A
Condition B
Cautions
t1. Is the City experiencing favorable
collection rates for special assess-
ments?
2. Are anticipated investment interest
rates earned on prepayments ade-
quate to replace assessment interest?
3. Is the timing of receipts sufficient to
meet bonded debt payments as
they become due?
4. Are significant portions of assess-
ments not scheduled for collection
(green acres, tax forfeit,etc.)?
5. Is arbitrage or negative arbitrage
an issue?
1. Are sufficient future assets
scheduled (such as property taxes)
to meet bonded debt payments?
2. Are cash assets sufficient to
generate investment earnings?
3. Are transfers or other fundmg
sources available?
4. Are there future assets to pledge
such as assessments, MSA allot-
ments, etc.?
Conclusion 1
The debt service fund
is clearly fill adequately
funded. Plan for altern-
ative funding (taxes,
transfers, other sources).
Conclusion 2
Variables and possible
outcomes are too diverse.
Prepare projections to
analyze possible
scenarios and options.
Conclusion 3
City of Lino Lakes, Minnesota
Management Report, Page 17
Improvement Bonds of 1988
The Improvement Bonds of 1988 were issued to provide permanent financing for the
Temporary Improvement Bonds of 1985 and to finance Ash Street and Main Street improvements.
The remaining assets in the Temporary Improvement Bonds of 1985 were transferred into the 1988
Improvement Bonds Debt Service Fund in 1988.
1990B Temporary Improvement Bonds
The City issued these bonds to finance the 2nd Avenue Project and to retire the 1987
Temporary Improvement Bonds. The remaining assets of the 1987 Temporary Improvement Debt
Service Fund have been pledged for the retirement of the 1990B issue. This bond issue matured
on August 1, 1993.
1990A Public Project Revenue Bonds
These bonds were issued by the City's Economic Development Authority for the construction
of a fire station and the purchase of related equipment. These bonds are obligations of the EDA
and will be payable solely from revenues received from the City pursuant to an Installment
Purchase Contract. The City will levy taxes for payment of the installment contract.
1991A Temporary Improvement Bonds
The City issued these bonds to finance various projects and to retire the 1988 Temporary
Improvement Bonds. The bonds financed White Tail Ridge, Brandywood Estates, Pheasant Hills,
Pine Ridge Addition, Reshanau Lake Sanitary Sewer Trunk and Wenzel Farms Improvements.
City of Lino Lakes, Minnesota
Management Report, Page 18
Improvement Bonds of 1992A
The City issued the bond to retire the 1989 Temporary Improvement Bonds and provide
additional financing for projects originally financed by the 1989 Bonds.
The proceeds of the bonds were allocated as follows:
Capital Projects:
West Central Trunk $56,734
Woodridge Estates 73,843
Sunrise Meadows 53,833
Reshanau II B 26,888
Reshanau III A 38,772
Total Capital Projects 250,070
Debt Service:
1989 Temporary Bond refinancing 3,279,272
Improvement Bonds of 1992A 73,068
Total Debt Service 3,352,340
Total proceeds $3,602,410
City of Lino Lakes, Minnesota
Management Report, Page 19
CAPITAL PROJECT FUNDS.
The financial statements for the capital project funds are presented in Statements 12 and 13 of
the 1993 Annual Financial Report. The fund balances (deficits) of the Capital Project Funds at
December 31, 1992 and 1993 are as follows.
Fund Balance (Deficit)
December 31, Ina ease
Fund 1992 1993 (Decrease)
Dedicated Park $204,536 $173,018 ($31,518)
Capital Improvement Projects 131,303 78,569 (52,734)
Community Development Block Grant (9,800) (8,314) 1,486
Area and Unit Charge 3,292,873 3,981,637 688,764
Surface Water Management 53,438 231,007 177,569
Centennial Fire Station 78,982 0 (78,982)
Interim Construction (266,410) (172,276) 94,134
MSA Construction 37,100 45,568 8,468
Sealcoating 90,811 157,047 66,236
SAC Revolving 431,816 457,274 25,458
1989 Construction 224,640 167,256 (57,384)
1990 Construction 73,226 0 (73,226)
1991 Construction (208,745) 151,138 359,883
1993 Construction (170,092) 15,842 185,934
1994 Construction 0 (21,775) (21,775)
Industrial Park Construction (73,901) (74,676) (775)
Apollo Drive Construction (117,156) 379,169 496,325
Tax Increment #1 -1 740,155 954,886 214,731
Tax Increment #1 -2 200,418 294,960 94,542
Tax Increment #1 -3 (17,893) 0 17,893
Tax Increment #1-4 (13,399) (20,329) (6,930)
Totals
$4,681,902 $6,790,001 _ $2,108,099
City of Lino Lakes, Minnesota
Management Report, Page 20
_ Dedicated Parks
This fund was established to account for dedicated park fees. The City uses the Parks and
Playground Fund to collect ordinance restricted fees and donations from various groups. This
fund collected $56,483 of park dedication fees in 1993. The fund balance of $173,018 at
December 31, 1993 is available for expenditures by the City to fund capital outlay and maintenance
of dedicated park lands.
The City normally collects park dedication fees upon subdivision. The City has made
exceptions for the Lino Air Park development to allow for payment upon development (as opposed
to subdivision). The amount of the park dedication fee receivable for Lino Air Park of $4,400 has
been outstanding for the past eight years. The City anticipates collecting this fee when additional
development occurs.
Capital Improvement Projects Fund
This fund accounts for the proceeds of Equipment Certificates. The following schedule
summarizes the activity of this fund through December 31, 1993:
Prior
Years 1993 Total
Revenue and other sources:
Proceeds from equipment certificates $1,096,503 $150,319 $1,246,822
Interest earnings 68,730 7,361 76,091
Property taxes 14,554 4 14,558
MSA 4,944 0 4,944
Donations 16,000 0 16,000
Transfer from Agency fund 0 20,156 20,156
Transfer Debt Service Fund 2,390 0 2,390
Total $1,203,121 . $177,840 1,380,961
Expenditures:
Capital outlay $1,071,818 $230,574 1,302,392
Fund balance - December 31, 1993 $78,569
City of Lino Lakes, Minnesota
Management Report, Page 21
Community Development Block Grant
The Community Development Block Grant (CDBG) Fund was established in 1982 to account
for the financial activity related to the projects to be funded by the CDBG program. The City
entered into an agreement with Anoka County to receive CDBG funds. The County of Anoka,
along with other governmental units, was awarded the grant. The City of Lino Lakes is considered
to be a sub - grantee and must comply with the provisions of the grant agreement. The City has
established the compliance procedures that are required to be documented in City records. Proper
documentation with the grant agreement has aided the City in receiving the monies applied for
regarding the reimbursement of City expenditures.
As of December 31, 1993 this fund had a deficit fund balance of $8,314. This deficit is
expected to be eliminated through a transfer in 1994.
Our prior management report disclosed that CDBG reimbursements were not requested on a
timely basis. Beginning in 1993, the finance staff is responsible for CDBG reimbursement. Audit
procedures disclosed that CDBG reimbursements are current as of December 31, 1993.
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 will estimate
the required transfer needed to meet debt payments for the subsequent year. In December, these
estimated amounts shall be transferred to the various debt funds. The City has estimated scheduled
area and unit assessments needed to meet debt requirements. We recommend that the City monitor
actual versus projected area and unit assessment collections to assure that debt payment
requirements will be met.
The City intends to retire debt from the various area and unit charges. Careful monitoring of
anticipated collections compared to actual is required to assure timely availability of monies to retire
debt. Balances available after debt commitments are met can then be used for non - assessable
system improvements.
City of Lino Lakes, Minnesota
Management Report, Page 22
A schedule of transactions of this fund from inception is as follows:
Revenue and other sources:
Area and unit charges (4):
Temporary Bonds of 1987 (1)
Temporary Bonds of 1988 (2)
Temporary Bonds of 1989 (3)
Temporary Bonds of 1990
Temporary Bonds of 1991
Improvement Bonds of 1992A
MSA
Transfer from 1989 construction
Transfer from Water and Sewer
Total revenue and other sources
Expenditures and other uses:
Professional services
Transfer to Capital Project Funds
Transfer to Temporary Bonds of 1990E
Transfer to Water Fund
Transfer to Interim Construction Fund
Transfer to 1991 Construction Fund
Total expenditures and other uses
Fund balance - December 31,1993
Prior
Yeats
$265,468
301,819
2,014,483
38,639
523,443
0
0
29,842
229.397
1993
$273,448
23,301
242,376
12,663
924,723
294,767
11,342
0
132.175
$3,403,091 $1,914,795
$91,059
19,159
0 665,232
0 89,347
0 54,024
0 388,965
$110,218 $1,226,031
Total
$538,916
325,120
2,256,859
51 ,302
1,448,166
294,767
11,342
29,842
361,572
5,317,886
$28,463 119,522
19,159
665,232
89,347
54,024
388,965
1,336,249
$3,981,637
(1) Pledged to the 1990B Temporary Improvement Bonds
(2) Pledged to the 1991A Temporary Improvement Bonds
(3) Pledged to the 1992A Improvement Bonds
(4) Area and unit charge revenue consists of prepayments, current and delinquent assessments and
interest on investments
Designations of balances by bond issue and area and unit charge type are required to monitor
financing plan performance and to define discretionary construction balances available to the City.
The accounting system and other such systems have been modified to achieve this result.
_ The assessment portion which relates directly to current construction costs (lateral assessment
charges) is pledged directly to the related debt service fund to retire outstanding bonds. The area
and unit charge portion of the assessment roll, however, is governed by the City's policy which
was established by Resolution #1 -88. Such area and unit charges are contingently pledged to the
related debt service fund in accordance with this policy. These amounts are to be segregated to the
Area and Unit Charge Fund and such amounts are transferred on an as needed basis to the related
debt service fund. Any surplus accruing above the amount required to retire bonds will be
available for expansion of the core water and sewer systems of the City.
City of Lino Lakes, Minnesota
Management Report, Page 23
During 1989 the City amended its procedure relative to adoption of assessment rolls. The
amended procedure requires that the City split assessment rolls between the Area and Unit Charge
Fund and the related Debt Service Fund. Budgeted versus actual water and sewer utility
connections for the period January 1, 1989 through December 31, 1993 are as follows:
Water Connections
1987 1988 1989
Temporary Temporary Temporary
Bands Bonds Bands
(Refinanced (Refinanced (Refinanced 199013 1991A 1991
by 1990E by 1991A by 1992 Temporary Temporary Additional Fudge Total All
Them) Temp Bad) Bands Bonds Projects Projects Bonds
Taal Number Lots 461 76 937 14 -Tr 91 124
Total Budgeted Connections 206 76 608 14 298 0 0 1,202
Budgeted 1989 through 1992 206
Actual Collected 1989 through 1992 165
Total budgeted 1993 0
Total collected 1993 89
To date total collected 19894993 254
Balance roquired over (under) 48
=ram [ collation budgeted
Budgeted 1994
Budgeted 1995
Budgeted 1996
Budgeted 1997
Balance Required Over (Ui)
Total Number Lots
Total Budgeted Connections
76 608
73 740
O 0
3 130
76 870
O 262
14 298
13 143
O 43
1 109
14 252
0 (46)
o o 0 0
o o 0 0
O 0 0 0
O 0 0 0
10
10
0
0
48 0 262 0 (26)
1987 1988
Ten racy Temporary
Bards Bonds
(Refinanced (Refinanced
by 1990B by 1991A
Temp) Temp)
177 76
206 76
Sewer Connections
1989
Temporary
Bands
(Refinanced 19903 1991A
by 1992 Temporary Temporary
Bad) Bonds Bonds
866 14 734
552 14 648
Budgeted 1989 through 1992 206 76 552
Actual Collected 1989 through 1995 78 73 674
Total budgeted 1993
Total collected 1993
To date total collected 1989 -1993
Balance required over (under)
Future year collection budgeted
Budgeted 1994
Budgeted 1995
Budgeted 1996
Budgeted 1997
0
15
0
3
0
130
93 76 804
(113) 0 252
0
0
0
0_
0
0
0
0
0
0
0
Balance Required Over (Under) (113) 0 252
14 648
13 230
0 133
1 222
14 452
0 (196)
0 84
O 134
O 35
0 38
0 95
0 0 1,202
1 0 1,135
0 0 43
15 1 348
16 0 1,482
16 0 280
0
0
0
0
0
0
0
0
10
10
0
0
16 0 300
1991
Additional Future Total All
Projects Projects Bonds
91 124 2,082
O 0 1,496
O 0 1,496
1 0 1,069
O 0 133
15 1 387
16 1 1,456
16 1 (40)
O 84 168
O 134 268
O 35 70
O 38 76
16 292 542
City of Lino Lakes, Minnesota
Management Report, Page 24
Surface Water Management Fund
This fund was established in 1989 to account for the financing of surface water management
planning and stone sewer trunk lines. During 1990, the City levied its first assessments for
surface water management charges. The City is currently working through a three phase surface
water management plan. The cost of the plan will be financed by developer charges.
Interim Construction
The Interim Construction Fund was established in 1985 to account for the preliminary
construction costs prior to permanent bonding or other financing determination. The various
projects accounted for in this fund are detailed in Exhibit 4 of the 1993 Annual Financial Report.
The fund balance of this fund was a deficit of $172,276 at December 31, 1993. The fund deficit is
primarily the result of expenditures related to the Highway 49 and Lake Drive project. This deficit
will be eliminated in 1994 with the issuance of improvement bonds.
MSA Construction
The MSA Construction Fund was established in 1990 to account for the collection of
assessments on MSA projects in accordance with the City's Public Improvement Financing Policy.
The fund balance of this fund was $45,568 at December 31, 1993.
Sealcoating
This fund was established in 1991 to account for money received from private developers for
future sealcoating in new housing developments. A summary of transaction of this fund is as
follows:
Prior
Years 1993 Total
Revenue and other sources:
Special assessments $84,138 $150,286 $234,424
Interest earnings 743 6,854 7,597
Refunds and reimbursements 5,930 18,920 24,850
Total $90,811 $176,060 . 266,871
Expenditures $0 $109,824 109,824
Fund balance - December 31, 1993 $157,047
City of Lino Lakes, Minnesota
Management Report, Page 25
SAC Revolving
The SAC Revolving Fund was established in 1990 to account for a refund from the 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:
Prior
Years 1993 Total
Revenue
SAC refund $365,175 $0 $365,175
Interest earning 66,641 25,458 92,099
Total revenue $431,816 i $25,458 457,274
Expenditures $0 4 0 0
Fund Balance - December 31, 1993 $457,274
Vommr
City of Lino Lakes, Minnesota
Management Report, Page 26
1989 Construction
This fund accounts for the various projects financed by the Temporary Improvement Bonds of
1989. During 1992, the City allocated $250,070 of additional bond proceeds from the
Improvement Bonds of 1992A to this fund. The fund balance of this fund was $167,256 at
December 31, 1993. A summary of the financial activity of this fund from inception is as follows:
Financing Sources:
Bond proceeds
MSA construction
Interest earnings
Special assessments
Other
Total sources
Financing Uses:
Construction costs:
West Central Trunk
Woodridge Estates
Sunrise Meadows
Reshanau 3rd
Reshanau 4th & 5th
Transfers out
Area and unit charge
Temp Bonds of 1989
Dedicated parks
Interim construction
Surface water management
Total uses
Budget Actual Variance
$4,120,767
105,800
0
0
0
$4,226,567
$2,047,335
819,933
894,064
206,925
258,310
$4,367,450 $246,683
0 (105,800)
323,358 323,358
758,312 758,312
1,200 1,200
5,450,320 $1,223,753
1,985,414 ($61,921)
851,967 32,034
886,179 (7,885)
252,047 45,122
464,339 206,029
0 163,601 163,601
0 580,643 580,643
0 18,561 18,561
0 48,400 48,400
0 31,913 31,913
$4,226,567. 5,283,064 $1,056,497
Fund Balance - December 31,1993 $167,256
The transfers to the Area and Unit Charge Fund and the Temporary Improvement Bonds of
1989 were to transfer assessment collections to the appropriate funds. The transfer to the Interim
Fund was for reimbursement of prior expenditures. During 1992 and 1993, the City recorded
costs incurred on the Reshanau 5th Addition within this Fund. These costs were not originally
budgeted at the time the bond was issued. We recommend the City determine a financing source
for this project.
City of Lino Lakes, Minnesota
Management Report, Page 27
1991 Construction
This fund accounts for the various projects financed by the Temporary Improvement Bonds of
1991A. A summary of financial activity of this fund is as follows:
Financing Sources:
Bond proceeds
Special assessments
Transfer from area and unit charge
Interest earnings
Refunds and reimbursements
Total sources
Financing Uses:
Construction costs:
White Tail Ridge
Brandywood Estates
Pheasant Hills
Pine Ridge Estates
Reshanau Lake Trunk
Wenzel Farms
Total uses
Budget
$3,949,214
0
0
0
0
$3,949,214
Actual Variance
$3,947,649 ($1,565)
13,360 13,360
388,965 388,965
73,875 73,875
144,977 144,977
4,568,826 $619,612
$50,600 60,437 $9,837
790,015 793,464 3,449
583,762 714,511 130,749
592,771 588,925 (3,846)
1,016,286 1,232,960 216,674
915,780 1,027,391 111,611
$3,949,214 4,417,688 • $468,474
Fund Balance - December 31, 1993 $151,138
The assessments for White Tail Ridge and Brandywood Estates were adopted in 1991. The
assessments for Pheasant Hills, Pine Ridge Estates, Reshanau Lake Trunk and Wenzel Farms
were adopted in 1992. During 1992, the City received a reimbursement from the MWCC for a
portion of the Reshanau Lake Trunk which was constructed by the City for the MWCC.
Industrial Park Construction
This fund was established in 1992 to account for construction costs in developing the City's
industrial park. This fund had a deficit of $74,676 at December 31, 1993. The City expects to
finance these improvements through the sale of property within the park and the adoption of
assessments.
Apollo Drive Construction
This fund was established in 1992 to account for improvements to Apollo Drive. The fund
balance of this fund was $379,169 at December 31, 1993.
ROMP
City of Lino Lakes, Minnesota
Management Report, Page 28
Tax Increment Financing #1 -1
On January 26, 1987 the City established the Economic Development District #1. Within the
District, the City established Housing District #1 -1. The housing plan calls for adequate numbers
of low to moderate housing units pursuant to MS 273.73 subd. 11.
Financial activity of this fund from inception is as follows:
Revenue and other sources:
Tax increments
HACA
Interest on investments
Total revenue and other sources
Expenditures and other uses:
Transfer to TIF 1 -3
Professional services
Transfer to Special Revenue Fund
Total expenditures
Prior
Years 1993 Total
$671,820 $180,628 $852,448
8,683 0 8,683
66,273 47,379 113,652
$746,776 $228,007 974,783
$0 $9,484 9,484
5,035 3,792 8,827
1,586 0 1,586
$$6,621 . $13,276 19,897 •
Fund balance - December 31,1993 $954,886
The tax increment plan also includes an annual administrative fee. Minnesota Statute 469.176
Subd. 3 reads as follows:
Limitation on administrative expenses. (a) For districts for which certification
was requested before August 1, 1979, or after June 30, 1982, no tax increment shall be
-- used to pay any administrative expenses for a project which exceed ten percent of the total
tax increment expenditures authorized by the tax increment financing plan or the total tax
increment expenditures for the project, whichever is less.
City of Lino Lakes, Minnesota
Management Report, Page 29
Tax Increment Financing #1 -2
The City established Tax Increment Financing District #1 -2. This district qualifies as a
Economic Development TIF district pursuant to Minnesota Statutes 469.174, subdivision 12.
District #1 -2 has anticipated projects/bonding requirements as follows:
Estimated Actual
Land acquisition for Ross site $65,000
Demolition and site preparation for Ross site 10,000
Sewer and water extension for Sunrise Meadows 170,000
Relocation costs 15,000
Administrative expenses 22,200 $14,365
Capitalized interest and bond discount 107,800
Total $390,000 $14,365
The Ross Site was decertified from TIF District #1 -2 and placed in TIF District #1 -3.
Tax Increment Financing #1 -3
The City established Tax Increment District #1 -3 during 1989 by resolution 68 -89. District #1-
3 qualifies as a redevelopment district pursuant to Minnesota Statutes 469.174 Subd. 10(a)(2).
This district was decertified in 1993.
Tax Increment Financing #1-4
The City established Tax Increment District #1-4 during 1990 by resolution 10 -90. District #1-
4 is an Economic Development District. The duration of the district is eight years from the date of
the receipt of the first increment or ten years from the date of approval of the TIF plan. At
December 31, 1993 this fund had a deficit balance of $20,329.
District #1-4 has anticipated project requirements as follows:
Estimated Actual
Land acquisition $400,000
Public improvements 1,050,000
Administrative 100,000 $35,939
Bond discount 40,000
Capitalized interest 360,000
Total $1,950,000 $35,939
City of Lino Lakes, Minnesota
— Management Report, Page 30
— Tax Increment Financing #1 -5
The City established Tax Increment District #1 -5 pursuant to MS 469.174 Subdivision 11
which qualifies it as a Housing District. The duration of the District is twenty-five years from the
—
date of the first increment. The plan for District #1 -5 was approved and adopted on December 14,
1992.
City of Lino Lakes, Minnesota
Management Report, Page 31
ENTERPRISE (UTILITY FUND)
The City maintains three enterprise operating funds. The financial statements for these funds
are presented in Statements 14 through 16 of the 1993 Annual Financial Report. During the 1993
year end closing process, the accounting for the water and sewer operations were split into two
separate funds. Statements of income and expense for 1993 (excluding depreciation on contributed
assets) for the water and sewer utility fund are shown in the following schedule:
Water Sewer
Operating revenue:
Charges for services $177,536 $291,062
Other 55,863 5,237
Total operating revenue 233,399 296,299
Operating expenses:
Personal services 47,796 43,942
Materials and supplies 79,808 1,192
Contractual services 11,502 19,983
Repair and maintenance 8,297 9,702
MWCC sewer charges 0 168,891
Depreciation 18 713
Other 22,028 21,324
Total operating expenses 169,449 265,747
Income from operations 63,950 30,552
Other income (expense):
Interest on investments 6,251 377
Maintenance agreement - MWCC 0 7,294
Area and unit charges 132,175 0
Bond interest and paying agent fees (75,350) 0
Total other income (expense) 63,076 7,671
Net income before transfers 127,026 38,223
Transfer from Area and Unit Charge Fund 93,238 0
Transfer to Area and Unit Charge Fund (132,175) 0
Net increase in retained earnings 88,089 38,223
Retained earnings - January 1, 1993 30,538 65,499
Retained earnings - December 31, 1993 $118,627 $103,722
City of Lino Lakes, Minnesota
Management Report, Page 32
As shown above, the water and sewer operations reflect retained earnings of $118,627 and
$103,722, respectively. Retained earnings should not be equated with fund balance.
The Utility operations are financed by user fees which are billed and collected only after the
services are provided. This creates a timing difference between payment of expenses and
collection of service charges (i.e., accounts receivable). Additionally, certain costs are paid in
advance (prepaid expenses) and/or supply items are purchased in advance (i.e., inventories).
These items create a timing difference between payment of expenses and cost recovery through
service changes. Those items (commonly referred to as Working Capital needs) are noncash
assets.
In addition, the Retained Earnings of the Utility Operation include the fixed assets of such
operations which are depreciated and charged (annually) against income. Such undepreciated fixed
assets are also a noncash asset. The following schedule has been prepared to illustrate the effects
of working capital needs and fixed assets upon the total equity of the City's water and sewer
operations:
Water Sewer
Cash and investments $114,772 $6,919
Working capital needs:
Accounts receivable 89,179 103,092
Prepaid expenses 1,412 20,252
Due from other governments 145 3,980
Payables (35,948) (34,818)
Long -term payable - bonds (1,060,000) 0
Purchased fixed assets - net 1,009,067 4,297
Retained earnings $118,627 , $103,722
City of Lino Lakes, Minnesota
Management Report, Page 33
The MWCC bills the City annually on an estimated basis. These billings are adjusted at a later
date and the City is billed the additional amount or given a refund. The MWCC billings for
calendar years 1984 through 1994 have been as follows:
Billings from MWCC
Estimated Final
Percent Percent
Year Amount Change Amount Change
1984 $26,107 37.21% $22,011 (7.77)%
1985 30,050 15.10% 25,039 13.76%
1986 33,283 10.76% 29,147 16.41%
1987 37,845 13.71% 32,519 11.57%
1988 41,351 9.26% 40,197 23.61%
1989 52,098 25.99% 48,521 20.71%
1990 67,232 29.05% 70,243 44.77%
1991 78,048 16.09% 96,542 37.44%
1992 104,090 33.37% 131,251 35.95%
1993 141,730 36.16% N/A N/A
1994 198,918 40.35% N/A N/A
$200,000
$175,000
$ 150,000
$125,000
$100,000
$75,000
$50,000
$25,000
SO
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
® Estimated Billings Actual Billings
City of Lino Lakes, Minnesota
Management Report, Page 34
There are two basic factors which contribute to increased billings from the MWCC:
1. Changes in use of the system. The MWCC has increased the 1994 estimated flow for
the City of Lino Lakes by 35%.
2. Increased cost to process sewage. The MWCCs cost to process (per million gallons)
increased to an estimated $1,243 in 1994 from an estimated $1,201 in 1993. This
represents an increase of 3.5%.
The combination of the above factors has increased the City's estimated cost in 1993 by 40%.
During 1988 the City adopted a policy of charging a water user fee for core system
improvements. The add-on charge is calculated based on a fixed amount per quarter. This charge
is collected as revenue of the water enterprise fund along with normal charges. Such amounts are
then transferred to the Area and Unit Charge Fund which financed (or will finance) such
improvements. During 1993 the City transferred $132,175 to the Area and Unit Charge Fund.
The area and unit charge fund transferred $89,347 to the water enterprise fund for debt service
payments on the revenue bond issue to construct the water tower.
City of Lino Lakes, Minnesota
Management Report, Page 35
GAS UTIL.1TY FUND
Portions of the City of Lino Lakes have gas service through a franchise agreement between the
City of Circle Pines and the City of Lino Lakes. The City of Circle Pines operates the gas utility.
We have reviewed the initial distribution of gas franchise profits received by the City of Lino
Lakes under the terms of the franchise agreement. The revenue was calculated on the following
basis:
1992 1993
Residential and Commercial Revenue $292,903 @ 7% = $20,503 $400,038 @ 7% = $28,003
Interruptible Service 126,267 @ 3% = 3,788 125,360 @ 3% = 3,761
Total , $419,170 . 24,291 > $525,398 < 31,764
Remitted by Circle Pines
Difference
24.267 31,675
$24 $89
The above differences relate to bad debts within the City of Lino Lakes. The franchise
agreement allows for adjustment from gross revenue of net bad debts. The City of Lino Lakes had
bad debts of approximately $515 in 1992 and $1,257 in 1993.
City of Lino Lakes, Minnesota
Management Report, Page 36
Gas utility sales have been as follows:
Residential
Commercial Total
Increase / (Decrease)
Increase / (Decrease) Increase / (Decrease)
Year Amount Amount Percent Amount Amount Percent Amount Amount Percent
1982 $88,195 $18,781 $106,976
1983 96,272 $8,077 9.16% 22,478 $3,697 19.68% 118,750 $11,774 11.01%
1984 97,007 735 0.76% 23,829 1,351 6.01% 120,836 2,086 1.76%
1985 102,156 5,149 5.31% 29,356 5,527 23.19% 131,512 10,676 8.84%
1986 90,407 (11,749) (11.50)% 24,764 (4,592) (15.64)% 115,171 (16,341) (12.43)%
1987 82,787 (7,620) (8.43)% 19,866 (4,898) (19.78)% 102,653 (12,518) (10.87)%
1988 114,883 32,096 38.77% 21,845 1,979 9.96% 136,728 34,075 33.19%
1989 120,060 5,177 4.51% 21,303 (542) (2.48)% 141,363 4,635 3.39%
1990 148,802 28,742 23.94% 17,669 (3,634) (17.06)% 166,471 25,108 17.76%
•.• 1991 207,162 58,360 39.22% 20,013 2,344 13.27% 227,175 60,704 36.47%
1992 274,811 67,649 32.66% 18,092 (1,921) (9.60)% 292,903 65,728 28.93%
1993 378,573 103,762 37.76% 21,465 3,373 18.64% 400,038 107,135 36.58%
Bad Debts Interruptible Sales
Increase / (Decrease) Increase / (Decrease)
Year Amount Amount Percent Amount Amount Percent
1982 $118,734
1983 146,092 $27,358 23.04%
1984 155,626 9,534 6.53%
1985 149,590 (6,036) (3.88)%
1986 92,822 (56,768) (37.95)%
1987 $3,334 $3,334 3.25% 88,509 (4,313) (4.65)%
1988 2,757 (577) (1731)% 83,363 (5,146) (5.81)%
1989 3,394 637 23.10% 111,977 28,614 34.32%
1990 53 (3,341) (98.44)% 108,699 (3,278) (2.93)%
1991 2,500 2,447 4616.98% 113,869 5,170 4.76%
1992 515 (1,985) (79.40)% 126,267 12,398 10.89%
1993 1,257 742 144.08% 125,360 (907) (0.72)%
Prior to 1987, bad debts were netted with sales.
The City of Lino Lakes had rights to receive payment of net income after the accumulated
retained earnings deficit was eliminated. Prior to 1988, the City received no such distributions.
The Circle Pines gas utility has accumulated a positive retained earnings balance in excess of
$1,000,000. At December 31, 1993 the Lino Lakes Franchise has a positive fund balance of
$69,368.
City of Lino Lakes, Minnesota
Management Report, Page 37
The current franchise agreement provides a revenue source to the City of Lino Lakes. Key
features of the new agreement are as follows:
1. Term: January 1, 1987 through March 31, 2012.
2. Revenue to the City of Lino Lakes based on 7% of sales except for interruptible sales
which are based on 3 %.
3. Cancelable by the City of Circle Pines commencing on January 1, 1992. The City of
Lino Lakes has the right to cancel the franchise agreement through the purchase of this
system beginning on January 1, 1992.
4. Right to inspect the financial/accounting records to verify revenue calculations.
5. Revenue began accruing on January 1, 1987. Revenue will be received four and one-
half months after the year end (i.e., first receipt was in May, 1988).
6. The City has the right to purchase the system at stated terms beginning on January 1,
1992.
We commend the City for the successful efforts to receive a supplemental financing source for
the City. The City received $31,675 in 1994 which represents the 1993 share of earnings.
Earnings from inception of the new a -zement total $124,680. Financial uncertainties facing
metropolitan cities require diversity of revenue sources to assure adequate funding of operations
without severe property tax increases.
City of Lino Lakes, Minnesota
Management Report, Page 38
AGENCY FUNDS
An Agency Fund is designed to account for transactions for other individuals, private
organizations and/or other funds. At December 31, 1993, the City had four Agency Funds as
follows:
• Contractor's Deposits
• Pending Assessments
• Investment Fund
• Deferred Compensation
The Contractor's Deposits Fund is used to account for "pass through" types of expenditures
relating to prospective developers. The City pays certain legal, engineering and planning amounts
to assure compliance with various City ordinances relating to pertinent applications. The City
receives deposits and/or bills the various developers for costs incurred. We recommend that the
City continue to maintain detailed records of amounts due from developers and assure that adequate
deposits are received prior to incurring expenses on a developer's behalf.
The Pending Assessments Fund was established in 1991 to account for the prepayment of
special assessments by contractors prior to the final assessment being adopted by the City Council.
The Investment Fund is designed to pool all available cash balances of the City to maximize the
investment efficiency of the City. Interest is allocated to funds annually based on the average cash
balance of the participating funds.
The Deferred Compensation Fund was established in 1987 in response to the issuance of the
Governmental Accounting Standards Board (GASB) Statement No. 2. GASB Statement No. 2
requires deferred compensation plans adopted under the provisions of Internal Revenue Code
Section 457 to be included in the City's Annual Financial Report.
City of Lino Lakes, Minnesota
Management Report, Page 39
FEDERAL SINGLE AUDIT
Federal regulations require a City to obtain a federal compliance audit if the City receives over
$25,000 in federal funds. During 1993, the City of Lino Lakes received $68,952 of federal funds
as follows:
Grant Amount
Oak Wilt Cooperative Suppression Program $3,368
Re -Leaf Grant 7,000
CDBG 52,601
Community Tree Planting Grant 3,240
A.T.A.C. 2,743
Total $68,952
We have completed the federal compliance audit as required and issued our reports under a
separate cover. The findings identified in the report are summarized below:
1) Each grant program requires submission of certain reports by a specified date identified in
the grant document. For two of the above grants, status reports were not submitted by the
required date.
2) Each grant requires reports regarding financial activity. For three of the above grants, the
amounts reported to the grantor agency did not agree with the City's accounting records.
UNIIIN
City of Lino Lakes, Minnesota
Management Report, Page 40
SUMMARY
During 1994, we recommend that the City:
• Continue to monitor the special assessment collection rate and provide supplemental
financing if assessment collections are not adequate to meet bonded debt payments. (Page
_ 6)
• Continue to request improved delinquent assessment receivable data from Anoka County.
(Page 6)
— • Continue to monitor reserve balances. (Page 13)
• Monitor actual versus projected area and unit assessment collections to assure that debt
payment requirements will be met. (Page 21)
• Determine a financing source for the Reshanau 5th Addition Project. (Page 26)
• Continue to maintain detailed records of amounts due from developers and assure that
adequate deposits are received prior to incurring expenses on a developer's behalf. (Page
37)
OMNI
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page l of 13
INITIAL YEAR
ESTIMATED
IMPACT
1993 MS
429.061
Subd. 5
#42 Special assessments: Cities are now required to
pay to the county auditor the administrative expenses
incurred by the county auditor for administering the
collection of special assessments.
1993 MS #41 Purchase of investments: Cities must provide
475.667 Subd. 6 securities broker - dealers a written notification of investment
restrictions and include a provision that all future transactions
are to be made in accordance with State Statutes governing
investment of public funds. Additionally, the broker - dealer
must acknowledge receipt of the notification and agree to
handle the city's transactions in accordance with State
Statutes.
1993 MS #40 Payment of claims prior to council approval:
412.271 Subd. 8 A city council may delegate its authority to pay certain claims
to a city administrative official provided adequate internal
accounting and administrative controls are in place. A list of
all claims paid under this procedure must be presented to the
council for informational purposes only at the next council
meeting. City council delegation must be made by
resolution.
1993 MS
477A.03
#39 Aid eliminations: Equalization aid and disparity
reduction aid is eliminated. However, the 1994 LGA base
includes these amounts.
No net impact since
equalization aid was
added to local
government aid.
1993 #38 LGA formula change: Beginning in calendar year 1994 LGA increased
MS477A.03 1994 and thereafter, a City's LGA is determined using the by 2% over 1993.
following formula:
(City aid base x (100 - base reduction %)) + City aid increase
= LGA
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 2 of 13
INI TAL YEAR
ESTIMATED
IMPACT
1992 MS
144.3831
Subd. 1
#37 Authorized the Commissioner of Health to assess an
annual fee of $5.21 for every service connection to a public
water supply that is owned or operated by a City or Town.
Statewide estimates
not yet available. No
impact on City of
Lino Lakes if fee is
passed through to
user.
1992 MS #36 Sales tax on purchases by political subdivisions of the
297A.25 Subd. State is imposed. School districts, hospitals, nursing homes
11 and ambulance services owned and operated by political
subdivisions. The tax is effective for sales made after May
31, 1992 pursuant to Article 8 Section 39.
Statewide impact of
$68 million for State
fiscal year 1993.
City of Lino Lakes
impact of $16,000
for 1992.
1992 MS #35 Expenses incurred by Counties and Cities in the
207A.10 Subd. administration of the presidential primary shall be reimbursed
1 by the Secretary of State.
1992 MS #34 Increased the total amount of equalization Aid to
477A.03 Subd. $20,011,000 for aids payable in 1993 and thereafter.
1
State wide increase
of $525,316.
1992 MS #33 Adjusted LGA formula. For aids payable in 1993 and
477A.013 Subd. thereafter, City will receive an amount equal to 103% of
3 LGA it received in 1992 before any non - permanent
reductions made under 477A.0132.
1992 MS #32 Authorize the Commissioner of Revenue to make
16A.711 Subd. adjustments in aid amounts in the second fiscal year of each
5 biennium if anticipated total revenues is less than anticipated
total obligations of the local government trust fund.
Prepared by Tautges, Redpath & Co., Ltd.
MEW
Wow
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 3 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1991 MS 275.51 #31 Authorized contingent addition to the levy limit by the
Subd. 7 amount of lost aid of local governments located in a County
where the local sales and use tax was not enacted.
If local sales and use
tax is adopted there
will be no impact.
1991 MS
477A.0132
Subd. 1 and 2
#30 Further reductions in local government aid for aids
payable in 1992. Estimated reduction percent is 4.034% of
1992 revenue base. Revenue replaced by property tax levy
authority.
Statewide decrease in
1992 LGA of $43
million. City of Lino
Lakes decrease
$75,900. (Replaced
by levy authority).
1991 #29 Approved LGA cut for December, 1991 aid payment.
MS 477A.0132 Cut is estimated to be 1.6% of 1992 revenue base. Aid cut
Subd. 1 and 2 ffit replaced with levy authority.
Statewide reduction
of $16.7 million.
City of Lino Lakes
reduction $30,000.
1991 #28 Adjusted the HACA base as the 1991 certified HACA Statewide estimates
MS 273.1398 less any 1991 permanent HACA reductions. not yet calculated.
Subd. 1 City of Lino Lakes -
no impact.
'- 1991 HF 1698 #27 Authorized the establishment of a local option sales tax
Art. 2 Section 6 of 1/2% on all retail sales in the County. If the County does
not authorize the additional 1/2% sales tax, Cities and Towns
within the County which have a majority of the population
may override the County action by sending copies of
approving resolutions to the County Auditor by August 1,
1991.
Because it is likely
that most Counties
will approve the local
option sales tax,
there will not likely
be a competitive
disadvantage within
the State of
Minnesota. The
increase of 1/2% in
sales tax however,
provides a possibly
greater competitive
edge for surrounding
States.
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 4 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1991 HF 1698
Section 5
#26 If any County does not approve the local option sales
tax of 112% there would be no payments made to the local
government trust fund to the County or to City, Town or
Special Taxing Jurisdictions located in the County. (See #30
for increased levy authority).
If the local option
sales tax is not
passed, the City of
Lino Lakes would
lose $491,000 of
State aid beginning
in 1992.
1991 BF 1698
Art. 2 Section 3
#25 The local government trust fund is authorized to make
the following payments to Counties, Cities, Towns and
special taxing districts:
1) HACA
2) Disparity Reduction Aid
3) Local Government Aid and Equalization Aid
4) Increased HACA Guarantees
5) Supplemental ,Homestead Property Tax Relief
6) Disparity Reduction Credit
7) 25% of the State Aid for County Human Services
8) Attach Machinery Aid, a fee for the Commissioner of
Revenue to administer the local option tax ($852,000
for 1992 and $660,000 for fiscal year 1993).
9) Other fees to the Commissioner of Finance and to the
Advisory Commission on inter - governmental relations.
If revenue is insufficient to pay each of the above amounts,
the Commissioner of Revenue is authorized to reduce the
payments of the first four items (HACA and LGA).
There should be no
impact on the City of
Lino Lakes or other
governmental
jurisdictions if
revenues reach
forecasted levels. If
however, revenue is
less than anticipated,
there likely will be
reductions in HACA
and local government
aid. The HACA
reductions, if made
during the year, will
cause property tax
collection rates to be
reduced. This is an
extremely
unfavorable bond
indicator which is
already impacting
Minnesota Local
Governments based
on 1991 reductions
in HACA. Note: The
tax rate "buy down"
will increase HACA.
Prepared by Tautges, Redpath & Co., Ltd.
,
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 5 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1991 HF 1698
— Art. 2 Section 2
wmo
#24 Created the local government trust fund to be used
exclusively to pay local governments for inter - governmental
aid and to repay advances made by the State's general fund
as may have been required to make all required payments as
provided by law. If revenues of the trust fund are
insufficient to pay commitments, all commitments to local
governments will be proportionately reduced unless other
provisions have been made. If the estimated receipts of the
trust fund exceed estimated payments by $1 million or more
the appropriation from the trust fund to each inter-
governmental aid program would be increased
proportionately unless there are specific provisions which
prohibit such increase.
The creation of the
local government
trust fund will impact
the City of Lino
Lakes only if the
estimated revenues of
the fund fluctuate
significantly from
estimates. Revenue
shortfalls should be
budgeted to anticipate
cuts late in the
operating year.
Budget practices
should therefore be
amended to consider
a factor for possible
reductions based on
suppressed economic
conditions in any
given year.
1991 HF 1698
Art. 2 Section 1
#23 Establish the advisory commission on inter-
governmental relations with an initial membership of twenty
through July 1, 1992. After July 1, 1992 the commission is
reduced to fourteen members. The commissioners are to be
representative of the various geographic and governmental
jurisdictions of the State.
The commission is in
an "advisory"
position to the
legislature. As such
the commission has
little or no power and
therefore cannot
directly impact the
StateortheCity of
Lino Lakes.
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 6 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1991 MS 273.13 #22 Approve further adjustments to the commercial
Subd. 32 industrial tax rate for valuations in excess of $100,000.
Adjusted rates effective through 1994 as follows:
1990 1991 1992 1993 1994 1995
Rate Rate Rate Rate Rate Rate
Feat 3100,000 of
market vale 3.30% 3.20% 3.10% 3.00% 3.00% 3.00%
Mullet value over Targeted to
3100,000 5.06% 4.95% 4.75% 4.70% 4.60% eventually be
4%
Tax burden shifts
from commercial
industrial property.
Tax increment
districts may reflect
lower than
anticipated revenue
flows.
1991 MS #21 Prohibits municipalities from conscientiously excluding
Section 473F.02 most commercial - industrial development within their
Subd. 8 community for reasons other than preserving agricultural use
through restrictive comprehensive zoning and planning
policies.
For those
communities deemed
to violate this statute,
they may be excluded
from the fiscal
disparities pool
within the seven
county metropolitan
area. The impact for
such excluded
communities would
likely be a significant
increase in their local
tax rates.
1991
MS 273.13
Subd. 22
#20 For aid payable in 1992, HACA will increase for
certain cities as a result of the adjusted property class rates
(see #19 and #22) and the net tax capacity adjustment (see
#12). The net tax capacity adjustment is calculated as
follows:
(previous year total net tax capacity - current year total net tax
capacity) x current local tax rate.
State aid increase in
funding to cities not
yet available. 1992
HACA increase to
City of Lino Lakes of
$64,600 or 22 %.
The HACA increase
is primarily due to
the net tax capacity
adjustment.
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 7 of 13
i
INITIAL YEAR
ESTIMATED
IMPACT
4
1991 #19 Approved adjustments to residential homestead
MS 273.13 property (class la). Adjusted rates are as follows:
Subd. 22
First Tier of Market Value
Up to $68,000
Up to $72,000
Payable Payable Payable
1991 1992 1993
Rate Rate Rate
1.00%
Second Tier of Market Value
$68,001 to $110,000 2.00%
$72,001 to $115,000
over $72,000
Third Tier of Market Value
over $110,000
over $115,000
3.00%
1.00% 1.00%
2.00%
2.00%
2.50%
The change in class
rates applied to
residential property
will not impact the
total revenue raised
by the City or shift
the tax burden
between property
classes but rather will
increase the amount
of HACA received
by the City. (see
#20) Note: The
increased HACA
payments are subject
to adequate revenue
available in the local
government trust
fund. (see #25)
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 8 of 13
i
INITIAL YEAR
ESTIMATED
IMPACT
1991
MS 270.12
Subd. 2
#18 Establish methodology used in preparing assessments
/sales ratio studies requiring them to be consistent with the
most recent Standard on Assessment /Sales Ratio Studies
published by the Assessment Standards Committee of the
International Association of Assessment Officers.
The assessment/sales
ratio factor of the
local government aid
formula affected a
variety of Cities in
1990. This current
change in
methodology should
be reviewed and
challenged by Cities
if they believe the
methodology results
in a higher
adjustment to market
values within the
City which directly
impacts tax capacity.
Recent state
legislative actions
have targeted aid
reductions to Cities
with high tax
capacity.
1991 #17 1991 LGA initially frozen at 1990 levels, then in
MS 477A.0132 subsequent actions, aid was cut. The 1991 reduction equals
Subd. 1 & 2 2.052% of the City's Revenue Base. This aid cut will first
reduce LGA. If the City's LGA is insufficient, then the cut
will affect Equalization Aid, HACA and Disparity Reduction
Aid, in that order. Aid cut not replaced by levy authority.
Statewide reduction
in funding to cities
$20.5 million. City
of Lino Lakes
reduction $39,000.
1991 HF 47 #16 State Aid road allotments were reduced to Cities.
Statewide reduction
$3.8 million. City of
Lino Lakes reduction
$15,100.
Prepared by Tautges, Redpath & Co., Ltd.
w
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 9 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1990 Ch. 604 #15 Levy limits for Cities repealed starting with
Art. 3 Section 47 collectible 1993 levy.
1990 #14 Approved potential LGA and HACA cuts related to
MS 273.1399 tax increment districts formed after April 30, 1990.
Subd. 5
Anticipated extension
and delay of start
likely to result in no
impact.
Estimated reduction
in aids not calculated.
Legislation designed
to discourage new
tax increment
districts.
1990
MS 477A.013
Subd. 7
#13 Further reductions in LGA to cities. The Legislature
reduced LGA by 1.53% of the revenue base. This
permanent cut occurred after City budgets were adopted and
the operating year was one third elapsed. The Legislation
did not provide a replacement revenue source.
Statewide decrease
in 1990 LGA
$14 4 million, City
of Lino Lakes
decrease $26,300.
1990
MS 273.1398
Subd. 2
#12 The prior year (1990) HACA cut related to LGA is
extended to also reduce 1991 HACA. Established a
"Homestead and Agricultural Credit Base ". HACA base is
defined as the previous year's certified HACA aid. For aid
payable in 1991, HACA is determined as shown in #7. For
aid payable in 1992, HACA is determined as follows:
(HACA base x growth adjustment factor) + net tax capacity
adjustment + fiscal disparity adjustment.
Reduction equal or
greater than 1990
HACA cut. For aid
payable in 1992,
HACA will increase
for certain cities
based on the tax rate
change "buy down ".
(see #20)
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 10 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1990 #11 Commercial property tax rates lowered. (See #22).
MS 273.13
Subd. 24 & 32
First $100,000 of
market value
Market value over
$100,000
1990 1991 1992 1993
Rate Rate Rate Rate
3.30% 3.20% 3.10% 3.00%
Targeted to
5.06% 4.95% eventually be 4%
Tax burden shifted to
residential and other
property classes.
Existing commercial
based tax increment
districts to produce
lower revenue
stream to cities.
1990 #10 Equalization Aid limited to 12% increase over 1990
MS 477A.013 Equalization Aid. Also Equalization Aid subject to reduction
Subd. 5,6,7 if LGA is not sufficient to absorb cuts based on revenue
base. Equalization Aid capped Statewide at $19,485,684.
Maximum
equalization aid
established to limit
future increases.
City of Lino Lakes
increase $5,962.
1989
MS 477A.013
Subd. 5
#9 Tax Base Equalization Aid, is a program that
targets aid to low tax base cities starting in 1990. Tax Base
Equalization Aid to be administered similar to HACA
whereby the county auditor to deduct the aid from the
amount of taxes certified by the city. Payments of Tax Base
Equalization Aid to be made on July 20 and December 15,
1990 from the Department of Revenue.
Statewide initial year
increase in aid
$19.5 million. City
of Lino Lakes
increase $49,684.
1989 SP1 Ch 1, #8 1989 levy limits for Cities repealed starting with
Art. 5 Section 51 collectible 1992 levy. In 1990 the effective date was
extended to collectible 1993 levies. (See #15).
Anticipated extension
and delay of start
likely to result in no
impact.
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 11 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1989
MS 273.1398
Subd. 2
#7 Transition Aid re- termed to Homestead and
Agricultural Credit Aid (HACA). The formula for
distribution was modified from the 1988 Transition Aid
formula for Unique Taxing Jurisdictions (UTJ) as follows:
Payable 1989 gross taxes of UTJ less [Payable 1989 local
tax rate X payable 1990 net tax capacity X .9767)
As with the original Transition Aid the above HACA to be
distributed to local governments based on the percent of local
government levy to total UTJ levies. HACA was subject to
additional reductions if the level of local government aid was
insufficient to absorb the education aid shift and other cuts.
The education shift and the subsequent cuts were first taken
from LGA, then from Equalization Aid, then from HACA
and finally from Disparity Reduction Aid.
Statewide HACA
reductions totaled
$1.9 million . City
of Lino Lakes - no
HACA cut because
LGA was sufficient
to absorb entire cut.
-
1989
MS 273.1398
Subd. 2
#6 LGA initially increased for 1990 by approximately $30
million from the 1989 level. Funding transfer to school
districts subsequently approved. The aid transfer to school
districts is a method of increasing the State financial support
for education while decreasing financial support for cities.
The aid transfer for a city is an amount equal to 3.4% of its
adjusted net tax capacity. Cities received increased property
tax levy authority to replace the aid transfer.
Statewide 1990
decrease in LGA
$44.6 million. City
of Lino Lakes
decrease related to
the transfer to
schools of $148,175
See #13 for
additional LGA
reduction.
1989 #5 LGA formula revised to reduce household guarantee
MS 477A.013 factor from 1.08 in 1989 to 1.04 in 1990 to reduce the
Subd. 3 expenditure/unlimited ratio factor by 50%. A 15% ceiling
increase over prior year LGA factor was also added.
Aid increases were
subsequently entirely
wiped out by shift
to school districts.
Initial aid increase
for 1990 was $30
million Statewide.
City of Lino Lakes
increase of $6,625.
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 12 of 13
i
INITIAL YEAR
ESTIMATED
IMPACT
1988
MS 273.13
#4 Taxes spread to property owners based on tax
capacity valuations. Taxes levied divided by tax capacity
valuations equal tax capacity rates. This is a change from the
prior system in which taxes were spread to property owners
based on assessed valuations. Taxes levied divided by
assessed valuations equaled mill rates.
Re- measurement of
valuations were
designed to have no
impact on aids or
relative valuations.
1988
MS 273.1398
Subd. 2
#3 Cities to receive Transition Aid in lieu of homestead
credits. Transition aid to be calculated on each unique
taxing jurisdiction (UTJ) and then allocated to the local units
of government within the UTJ based on the proportion of
local governments gross tax levy to total taxes within the
UTJ as follows for 1990:
Gross taxes of UTJ less [46% X 2.17% X 1989 tax capacity
rate X 1988 aggregate assessment sales ratio] X UTJ net tax
capacity X 103
The above UTJ amount to be allocated to local governments
based on percent of local governments levy to total UTJ
levies. Transition Aid to be frozen at 1990 levels.
Considering growth and inflation, this freeze is a reduction
of State funding. Transition Aid was the replacement of the
Homestead Credit Program. This Transition Aid was
subsequently re- termed as Homestead Credit and
Agricultural Aid (HACA) - see #7.
The freeze nature of
the legislation will
result in gradual
decrease of HACA
in 1991 and future
years. Actual
comparisons not
available because
Homestead Credit no
longer calculated on
the prior method.
1988
MS 273.1398
Subd. 3
#2 Targeted Cities (primarily non -metro cities) to receive
disparity reduction aid. The 1989 disparity reduction
aid to be based on 1988 gross taxes and gross tax capacity
rates. Disparity reduction aid will be frozen at 1989 levels.
Metropolitan suburban cities to receive one -half of one
percent of this aid ($300,000 of $54.3 million).
1989 increase in
Aids to Cities State-
wide $54.3 million,
City of Lino Lakes
no increase in aids.
Prepared by Tautges, Redpath & Co., Ltd.
YEAR &
STATUTE
REFERENCE
CITY OF LINO LAKES. MINNESOTA
STATE LEGISLATIVE ACTION
Appendix A
Page 13 of 13
INITIAL YEAR
ESTIMATED
IMPACT
1988
MS 477A.013
Subd. 3
#1 Local government aid (LGA) formula modified to
reflect a per household aid factor compared to prior year tax
capacity and tax base increase. Expenditure/unlimited ratio
factor established as component of LGA formula. Lower of
three -part formula to calculate initial LGA increase.
Statewide 1989 aid
increased $79.3
million, Lino Lakes
increase of
$98,666.
Prepared by Tautges, Redpath & Co., Ltd.
ACCOUNTING STANDARDS UPDATE
Appendix B
Page 1
The Governmental Accounting Standards Board (GASB) issued eight statements of
accounting standards during 1993. The following is a summary of those statements:
GASB No. 16 Accounting For Compensated Absences
This Statement was issued in November, 1992 and provides guidance for the
measurement of accrued compensated absences liabilities by state and local
governmental entities, regardless of the reporting model or fund type used to report the
transactions. Compensated absences are absences for which employees will be paid,
such as vacation, sick leave, and sabbatical leave.
This Statement requires the compensated absences liability generally to be measured
using the pay or salary rates in effect at the balance sheet date. It also requires
additional amounts to be accrued for certain salary- related payments associated with the
payment of compensated absences, for example, the employer's share of social security
and medicare taxes.
This Statement is effective for financial statements for periods beginning after June 15,
1993.
GASB No. 17 Measurement Focus and Basis of Accounting -
Governmental Fund Operating Statements: Amendment of the Effective
Dates of GASB No. 11 and Related Statements.
This Statement was issued in June, 1993 and amends GASB Statements No. 10,
Accounting and Financial Reporting for Risk Financing and Related Insurance Issues,
No. 11, Measurement Focus and Basis of Accounting - Governmental Fund Operating
Statements, and No. 13, Accounting for Operating Leases with Scheduled Rent
Increases. It defers the effective date of Statement 11 to periods beginning
approximately two years after an implementation standard is issued and modifies the
Statement 13 reference to Statement 1 l's effective date. It also establishes an effective
date for Statement 10, for entities other than pools, using the modified accrual basis of
accounting in governmental and similar trust funds, that is independent of the effective
date of Statement 11 and is effective for periods beginning after June 15, 1994.
GASB No. 18 Accounting for Municipal Solid Waste Landfill Closure
and Postclosure Care Costs
This Statement was issued in August, 1993 and establishes standards of accounting and
financial reporting for Municipal Solid Waste Landfill (MSWLF) closure and
postclosure care costs that are required to be incurred according to federal, state or local
laws and regulations.
ACCOUNTING STANDARDS UPDATE
Appendix B
Page 2
Essentially, MSWLF financial statements are required to accrue a liability during the life
of a landfill for the closure and postclosure care costs.
This Statement is effective for financial statements for periods beginning after June 15,
1993.
GASB No. 19 Governmental College and University Omnibus
Statement
This Statement was issued in September, 1993 and requires governmental colleges and
universities that follow the AICPA College Guide model to report Pell grants in a
restricted current fund. This Statement also requires that if a single fund is used to
account for risk financing activities, that fund should be reported as an unrestricted
current fund.
For Pell grants, this Statement is effective for financial statements for periods beginning
after June 15, 1993. For risk financing activities, this Statement is effective for
financial statements for periods beginning after June 15, 1994. Early application is
encouraged.
GASB No. 20 Accounting and Financial Reporting for Proprietary
Funds and Other Governmental Entities that Use Proprietary Fund,
Accounting
This Statement was issued in September, 1993 and redefines generally accepted
accounting principles (GAAP) for proprietary funds.
The authoritative status of guidance issued on or before the cutoff date of November
30, 1989, is different from the authoritative status of pronouncements issued
subsequently.
For guidance issued on or before the cutoff date, pronouncements of the FASB and its
predecessor bodies will continue to be applicable to proprietary funds unless they
conflict with or contradict GASB guidance.
For guidance issued after the cutoff date, proprietary funds make use either of the
following approaches to FASB guidance issued after November 30, 1989:
1. An entity may elect to continue to follow FASB guidance that does not conflict
with or contradict GASB guidance. If this election is made, it must be followed
consistently. It would not be appropriate to follow some FASB
pronouncements, issued subsequent to the cutoff date, but not others.
ACCOUNTING STANDARDS UPDATE
Appendix B
Page 3
2. An entity may elect not to subject itself to FASB guidance issued subsequent to
the cutoff date. In that case, even FASB amendments of guidance issued prior
to the cutoff date would not be applicable to proprietary operations.
The provisions of this Statement are effective for financial statements for periods
beginning after December 15, 1993.
GASB No. 21 Accounting for Escheat Property
This Statement was issued in October, 1993 and establishes standards for the fund type
to be used to report escheat property and for reporting liabilities and interfund transfers
relating to escheat property. An escheat is the reversion of property to a governmental
entity in the absence of legal claimants or heirs.
This Statement requires escheat property generally to be reported in either an
expendable trust fund or the fund to which the property ultimately escheats (the
"ultimate" fund). Escheat revenue should be reduced and a fund liability reported to the
extent that it is probable that escheat property will be reclaimed and paid to claimants.
Payments to claimants should reduce the liability.
If escheat property is initially reported in an expendable trust fund, amounts transferred
to the ultimate fund should be reported as an operating transfer. If, as a result of the
transfer, the remaining assets of the expendable trust fund are less than the liabilities of
the fund, the difference should be reported as an "advance to" in the expendable trust
fund and an "advance from" in the ultimate fund. If, however, the escheat assets of the
expendable trust fund exceed the liabilities of that fund, the difference should be
reported as fund balance.
The provisions of this Statement are effective for financial statements for periods
beginning after June 15, 1994.
GASB No. 22 Accounting for Taxpayer - Assessed Tax Revenues is
Governmental Funds
This Statement was issued in December, 1993 and establishes standards for the
recognition of revenues from taxpayer - assessed taxes, such as sales and income taxes,
in governmental funds. The AICPA's 1974 Industry Audit Guide essentially required
cash -basis recognition of taxpayer - assessed tax revenues. GASB No. 22 requires
revenues from taxpayer - assessed taxes, net of estimated refunds, to be recognized in
the accounting period in which they become susceptible to accrual (measurable and
available to finance expenditures of the fiscal period). This Statement is effective for
financial statements for periods beginning after June 15,1994.
ACCOUNTING STANDARDS UPDATE
Appendix B
Page 4
GASB No. 23 Accounting and Financial Reporting for Refundings of
Debt Reported by Proprietary Activities
This Statement was issued in December, 1993 and applies to current refundings and
advance refundings that result in defeasance of debt. Prior to the issuance of GASB
No. 23, the reporting of gains or losses from a defeasance was determined by APB
Opinion No. 26. APB Opinion No. 26 required the immediate recognition of a gain or
loss in determining net income in the period of extinguishment. GASB No. 23 now
requires this gain or loss to be deferred and amortized as a component of interest
expense over the shorter of the remaining life of the old debt or the life of the new debt.
This Statement is effective for financial statements issued for periods beginning after
June 15, 1994.