HomeMy WebLinkAboutManagement Report and Recommendations 12/31/1992CITY OF LINO LAKES, MINNESOTA
MANAGEMENT REPORT
AND RECOMMENDATIONS
DECEMBER 31, 1992
CITY OF LINO LAKES, MINNESOTA
MANAGEMENT REPORT AND RECOMMENDATIONS
Table of Contents
Pam
Transmittal Page 1
General and Special Revenue Funds - Summary data and analysis
of revenue and expenditures compared to prior periods 4
Account Balance Analysis - A look at changes in various accounts
such as cash, investments and receivables 8
Individual Fund/Fund Type Analysis - Review of significant changes in
fund balances and other matters
Internal Controls
Recommendations Summary
14
47
49
To the Honorable Mayor and
Members of the City Council
City of Lino Lakes, Minnesota
TAUTGES, REDPATH & CO., LTD.
CERT,FrIED PUBLIC ACCOLA TAN 7
The first part of this report analyzes state funding of Cities. This information is presented to
allow for an understanding of 1) aid reductions on a Statewide basis; and, 2) aid reductions as they
specifically affect the City. The balance of this report updates financial analysis of funds and
account balances including the following:
• Financial results
• Financial trends
• Internal control structure
• The fund balances of the various funds of the City
• 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 recornirtendations 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,
Tautges, Redpath & Co., Ltd.
April 7, 1993
IL
4810 White Bear Parkway • White Bear Lake. Mnnesota 55110 • 612/426-7000 • FAX/426-5004 • Member of HLB International
City of Lino Lakes, Minnesota
Management Report, Page 2
STATE FUNDING
— State aids account for approximately 25% of the revenue of the City of Lino Lakes' General
Fund. The table below summarizes the State funding of cities.
Irmw
Vow
Local
Government
Aid
State Totals for Cities
Homestead
and Tax Base
Agricultural Equalization
Aid Aid
Disparity
Reduction
Aid
Increase
Total (Decrease)
1989 $376,376,000
1990 317,343,000
1991 283,640,000
1992 303,500,000
1993 * 288,109,000
$106,308,000 $0
146,523,000 19,513,000
155,690,000 19,476,000
173,220,000 21,078,000
189,181,000 20,011,000
$20,853,000
14,201,000
14,500,000
13,954,000
13,767,000
* Before any cuts as a result of the 1993 legislative session
$503,537,000
497,580,000 ($5,957,000)
473,306,000 (24,274,000)
511,752,000 38,446,000
511,068,000 (684,000)
A chart of the major funding categories to cities is as follows:
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
1989
1990 1991
1992
1993
State Funding
to Cities
(in $1,000)
O Equalization
® Disparity
▪ HACA
❑ LGA
City of Lino Lakes, Minnesota
Management Report, Page 3
Property tax related State aids for the City of Lino Lakes have been as follows:
City of Lino Lakes
Local Homestead and Tax Base
Government Agricultural Equalization Increase
Year Aid Credit Aid Aid Total (Decrease)
1987 $232,159 $277,294 $509,453
1988 232,157 300,698 532,855 $23,402
1989 330,823 284,060 614,883 82,028
1990 163,165 362,289 $49,684 575,138 (39,745)
1991 95,440 290,400 49,701 435,541 (139,597)
1992 94,960 347,674 53,727 496,361 60,820
1993 * 90,141 415,857 50,035 556,033 59,672
* Amounts are shown before reduction due to 1993 legislative actions
A graph of the above tables is as follows:
City of Lino Lakes
$700,000 -
$600,000 -
$500,000
$400,000
$300,000
$200,000
$100,000
$0
■
State (in $1,000)
■•�. ' - $500,000
i •,► ■i
M
- $400,000
- $300,000
- $200,000
- $100,000
1987 1988 1989 1990 1991 1992 1993
$0
Imw
City of Lino Lakes, Minnesota
Management Report, Page 4
The calculation of LGA for the City of Lino Lakes for the last three years is as follows:
1991 1992 1993
Prior year aid $163,433 $163,433 $87,664
Reduction under 1991 law (4.034% of 1991 revenue base) (75,769)
Reduction for State demographer costs (8) (153) (153)
Increase under 1992 law (3% of 1992 LGA) 2,630
Subtotal 163,425 87,511 90,141
Aid transfer to schools (3.4% of net tax capacity) 0 0
Final Aid 163,425 87,511 90,141
Aid cuts subsequent to Budget adoption and levy certification:
1991 legislative cut (2.052% of 1991 Revenue Base) (37,848)
1991 legislative cut (1.60% of 1991 Revenue Base) (30,137)
1992 statutory increase (8.50% of initial LGA) 7,449
1993 proposed cut (3% of 1992 LGA) (2,630)
Adjusted aid $95,440 $94,960 $87,511
As shown above, the 1993 Governor's budget proposal includes a provision to cut LGA by
3% of 1992 LGA. This cut is after levy certification and is not replaced by levy authority.
GENERAL AND SPECIAL REVENUE FUNDS
The General and Special Revenue Funds of the City are maintained to account for the current
operating and capital outlay expenditures common to all cities. These basic services include (but
are not limited to) public safety, public works, public welfare and general government.
Since 1981, State aids and local property taxes used to finance the General and Special
Revenue Funds of the City of Lino Lakes were as follows:
State Aids
Property Taxes Total
Year Amount Percent Amount Percent Amount Percent
1981 $300,971 42% $212,914 30% $513,885 72%
1982 283,089 37% 305,804 40% 588,893 77%
1983 349,076 38% 355,684 38% 704,760 76%
1984 403,127 35% 510,245 44% 913,372 79%
1985 455,059 33% 550,302 40% 1,005,361 73%
1986 491,041 35% 585,137 42% 1,076,178 77%
1987 545,674 34% 714,892 44% 1,260,566 78%
1988 549,567 30% 769,915 43% 1,319,482 73%
1989 682,407 33% 848,472 41% 1,530,879 74%
1990 600,419 28% 994,399 46% 1,594,818 74%
1991 452,364 21% 1,179,087 55% 1,631,451 76%
1992 564,514 22% 1,206,998 47% 1,771,512 69%
1993 * 615,176 24% 1,310,477 52% 1,925,653 76%
* 1993 is based on City budget and State estimates
City of Lino Lakes, Minnesota
Management Report, Page 5
State aids for the General Fund have consisted of the following amounts from 1987 through 1992
actual and 1993 budgeted:
1993
State Aids 1987 1988 1989 1990 1991 1992 Budgeted
Local Government Aid $232,159 $232,157 $330,823 $163,165 $95,440 $94,960 $90,141
Homestead Credit 265,530 259,384 270,645 324,828 251,303 290,428 356,181
Equalization aid 0 0 0 44,547 42,991 45,547 42,854
Police Aid 26,828 33,298 32,739 35,662 43,044 44,692 42,000
MSA - Streets 13,935 13,935 13,935 13,935 13,170 81,232 84,000
Other Aids 7,222 10,793 34,265 18,282 6,416 7,655 0
Totals $545,674 $549,567 $682 407 $600,419 $452,364 $564,514 $615 176
Percent change 11.13% 0.71% 24.17% (12.01)% (24.66)% 24.79% 8.97%
A graph of the above State aids (with a comparison to property tax amounts) is as follows:
$1,250,000
$1,000,000
$750,000
$500,000
$250,000
$0
General Fund
•
•
1987
1988
1989
1990
1991
1992
LGA 4' :. :: ::: ::::::a I3ACA ®Equal-
ization
Aid
=MI Other '"" - Property
Aids Taxes
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
1993
Budgeted
City of Lino Lakes, Minnesota
Management Report, Page 6
Revenue of the General and Special Revenue Funds for the past three years has been as
- follows:
Imam
Property taxes
Licenses and permits
Intergovernmental revenue:
Federal
State
County
Charges for services
Fines and forfeits
Interest on investments
Other
Totals
1990
Amount Percent
$994,399 44.1%
254,620 11.3%
595,597
29,500
172,188
83,618
63,052
60 060
26.4%
1.3%
7.6%
3.7%
2.8%
2.8%_
1991
1992
Amount Percent Amount Percent
$1,179,087 48.7% $1,206,998 44.6%
332,392 13.7% 493,977 18.3%
3,909
452,364
26,742
195,190
86,603
47,373
97 874
0.2% 9,662 0.4%
18.7% 563,039 20.8%
1.1% 33,655 1.2%
8.1% 210,129 7.8%
3.6% 79,643 2.9%
2.0% 41,927 1.5%
3.9% 66 764 2.5%
$2,253,034 100.0% $2,421,534 100.0% $2,705,794 100.0%
Detail of the above revenue is presented in Statements 7 and 9 of the 1992 Annual Financial
Report.
Intergovernmental
22.4%
1992 Revenue By Source
Licenses & Permits
18.3%
Charges for Services
7.8%
Property Taxes 44.6%
Fines and forfeits
2.9%
Interest & All Other
4.0%
City of Lino Lakes, Minnesota
Management Report, Page 7
Expenditures of the General and Special Revenue Funds for the past three years are as follows:
Current
General government
Public safety
Highways and streets
Parks, recreation
and forestry
Other
Capital outlay
Totals
1990
Amount Percent
1991
Amount Percent
1992
Amount Percent
$679,174
804,363
432,813
185,780
31,941
30,316
31.4%
37.2%
20.0%
8.6%
1.4%
1.4%
$659,490
845,420
468,616
243,787
28,912
22,414
29.1%
37.3%
20.7%
10.7%
1.2%
1.0%
$743,114
909,399
465,830
323,301
35,559
78,994
29.1%
35.6%
18.2%
12.6%
1.4%
3.1%
$2,164,387
100.0% $2,268,639
100.0% $2,556,197
100.0%
1992 Expenditures By Category
Capital Outlay &
Other 4.5%
Parks 12.7%
Highways & Streets
18.2%
General Government
29.0%
Public Safety 35.6%
Details of the above expenditures are presented in Statements 7 and 9 of the 1992 Annual
Financial Report.
City of Lino Lakes, Minnesota
Management Report, Page 8
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 1992 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, 1991 and 1992:
December 31, Increase
Description 1991 1992 (Decrease)
Treasurer's balance - checking ($29,132) ($2,128) $27,004
Petty cash 150 150 0
Investments:
Certificates of deposit 5,296,747 3,042,947 (2,253,800)
Commercial paper 598,997 (598,997)
4M money market fund 65 (65)
FNMA pool 178,301 761,013 582,712
NOW account 765,841 460,576 (305,265)
GNMA 129,745 326,715 196,970
AIM 1,423,474 1,431,852 8,378
Federal Farm Credit Bank 100,000 100,000
Federal Home Loan Mortgage Corp. 595,773 595,773
Treasury Security 1,525,693 1,525,693
Federal Home Loan Bank 343,656 343,656
Repurchase agreement 596,850 596,850
Totals
$8,364,188 $9,183,097 $818,909
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 $379,369 in 1992 and $540,063 in 1991. 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 9
Due 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, 1992. The following schedule details these amounts:
December 31,
Description 1991 1992
State:
MSA - construction allotments $29,984 $676,235
Federal:
Community Development Block Grant 3,450 2,325
Local:
Anoka County:
Recycling Reimbursement 13,382 14,250
Fines 5,193 5,159
Other 2,626 1,011
MWCC - Maintenance Agreement 14,564 13,061
MWCC - SAC Reimbursement 1,950
Centennial Fire District 15,154
City of Centerville 1,343
Total $71,149 $728,538
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).
The receivable from the MWCC for maintenance was submitted for reimbursement subsequent
to year end. The City may request this reimbursement earlier (in six month intervals) to accelerate
the reimbursement process and improve the cash flow of the City.
UMW
City of Lino Lakes, Minnesota
Management Report, Page 10
Taxes Receivable
Delinquent taxes receivable were as follows for the past several years:
1989 1990 1991 1992
Delinquent balance - January 1 $41,388 $46,393 $50,963 $59,664
Current Levy 1,146,850 1,529,821 1,717,474 1,865,188
Total receivable 1,188,238 1,576,214 1,768,437 1,924,852
Receipts:
County:
Current 836,569 1,082,674 1,333,954 1,408,779
Delinquent 16,811 21,620 24,342 24,395
State 283,691 411,973 340,224 397,193
Total receipts 1,137,071 1,516,267 1,698,520 1,830,367
Unadjusted balance 51,167 59,947 69,917 94,485
Adjust to County (4,774) (8,984) (10,253) (17,694)
Delinquent balance $46,393 _ $50,963 $59,664 $76,791
Total collections as a percent
of current levy
99% 99% 99% 98%
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 11
Tax Increment Receivable
The City had delinquent tax increments in the amount of $13,086 at December 31, 1992 as
follows:
TIF TIF
1 -1 1 -2 Total
Delinquent Balance - January 1 $67,100 $3 $67,103
Current Levy 196,060 134,748 330,808
Total receviable 263,160 134,751 397.911
Receipts:
Current 180,208 131,503 311,711
Delinquent 37,611 37,611
Total receipts 217,819 131,503 349,322
Unadjusted balance 45,341 3,248 48,589
Adjustments (33,310) (2,193) (35,503)
Delinquent Balance - December 31 $12,031 $1,055 $13,086
The adjustments consist of tax forfeited property within the District.
Special Assessments Receivable
Special assessments receivable consisted of the following amounts at December 31, 1991 and
1992:
December 31, Increase
1991 1992 (Decrease)
Delinquent $126,090 $118,688 ($7,402)
Deferred 2,235,119 3,774,176 1,539,057
City property 142,553 10,510 (132,043)
Tax forfeit 101,508 0 (101,508)
Due from County 10,500 44,975 34,475
Special deferred 895,696 895,698 2
Totals $3,511,466 $4,844,047 $1,332,581
Delinquent assessments receivable consist of amounts collectible in 1992 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.
Vmm
City of Lino Lakes, Minnesota
Management Report, Page 12
Special assessments receivable on City property decreased by $132,043 during 1992. This
was a result of the settlement of the Black Duck Estate litigation, the writing off of assessments on
the City Hall property relating to the Main Street Project, and development of the Sunrise Meadows
Subdivision.
A summary of assessment collections for the past four years is as follows:
Delinquent balance - January 1
1989 1990 1991 1992
$123,153 $161,751 $132,985 $126,088
Add:
Current installment 326,516 245,618 351,941 379,521
Amount collectible 449,669 407,369 484,926 505,609
Less:
Current collections 223,757 168,442 293,452 306,443
Delinquent collections 64,161 107,879 65,396 82,664
Total collections 287,918 276,321 358,848 389,107
Adjustments 0 1,937 10 2,188
Delinquent balance - December 31 $161,751 $132,985 $126,088 $118,690
Current collection rate 69% 69% 83% 81%
Total collections as a percent
of current levy 88% 113% 102% 103%
The ability of the City to collect special assessments is vital to the financing of the Special
Assessment Debt Service Funds of the City. 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 that the City monitor the collection rate
and provide supplemental financing if assessment collections are not adequate to meet bonded debt
payments.
City of Lino Lakes, Minnesota
Management Report, Page 13
The City collects special assessments through Anoka County. This agency arrangement has
advantages to the City primarily in saving administrative time and effort required to bill and collect
special assessments. A certain level of control however, is lost through the agency arrangement
insofar as accounting records are located and maintained at both the County and the City.
Correlation of these records is required to assure accurate tabulation of receivables and amounts
received. The City has improved internal records with regard to deferred assessments and
compares such records periodically to County records. However, Anoka County is not providing
detail of delinquent balances. We recommend that the City request improved data from the
County.
Calculation of Special Assessments
Audit procedures disclosed that special assessments are not consistently calculated for residents
who originally opted out of improvement projects and later chose to hook up to the sewer and
water system. The City's engineering firm has been calculating the assessments using a published
index. City staff have been calculating the assessments using a simple interest calculation. We
recommend that the City adopt a formal policy for calculating assessments on properties that
originally opted out of improvement projects.
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
Our firm can assist the City in establishing fixed asset systems. Our assistance would include
the following:
1) Plan the implementation.
2) Assist in taking physical inventories.
3) Assist in defining historical or estimated historical cost.
4) Enter all such assembled data into a specialized fixed asset system for governments.
5) Generate complete fixed asset reports as of the completion date of the engagement.
Vow
City of Lino Lakes, Minnesota
Management Report, Page 14
INDIVIDUAL FUND /FUND TYPE ANALYSIS
GENERAL FUND
The financial statements of the General Fund are presented in Statements 6 and 7 of the 1992
Annual Financial Report. The fund balance of the General Fund increased by $141,060 in 1992 as
follows:
Actual revenues over (under) budgeted revenues:
Property taxes $28,886
Licenses and permits 3,952
Intergovernmental revenue (8,577)
Charges for services (15,505)
Fines and forfeits (1,357)
Interest on investment (3,073)
Miscellaneous 4,908
Net revenue over budget
Actual expenditures under (over) budgeted expenditures:
General government 8,555
Public safety 2,350
Highways and streets 50,285
Parks, recreation and forestry (572)
Other (4,214)
Capital outlay 16,156
Contingency 71 ,165
Operating transfer out (11,899)
Net expenditures under budget
$9,234
131,826
Total increase in fund balance $141,060
Detail of the preceding budget variances are presented in Statement 7 of the 1992 Annual
Financial Report.
City of Lino Lakes, Minnesota
Management Report, Page 15
The City's December 31, 1992 fund balance totaled $1,406,296. The City's General Fund
balance has been as follows for the past ten years:
Fund Balance
Reserved/
December 31, Designated Undesignated Total Increase
1983 $51,084 $80,032 $131,116
1984 116,770 126,153 242,923 $111,807
1985 77,624 350,675 428,299 185,376
1986 83,714 455,666 539,380 111,081
1987 52,593 589,799 642392 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
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:
1993 Budgeted Levy (Includes Homestead Credit) $1,776,369
1993 Anticipated Local Government Aid 90,141
Total $1,866,510
Minimum Required Cash -Flow Reserve (50% of total) $933,255
The general contingency reserve is equal to 15% of the City's General Fund expenditure
budget for the ensuing year as follows:
1993 budgeted expenditures
$2,809,404
15%
$421,411
City of Lino Lakes, Minnesota
Management Report, Page 16
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
Reserve General
Requirement Fund
Per City Balance
Policy Available Difference
Prepaid items $77,789 $77,789 $0
Cash flow 933,255 933,255 0
General contingency 421,411 385,204 36,207
Contingent employee benefits 229,771 0 229,771
Equipment purchases 10,048 (10,048)
Totals $1,662,226 $1,406,296 $255,930
Without adequate General Fund reserve, the independence and autonomy of the City may be
impaired. 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 conditions.
City of Lino Lakes, Minnesota
Management Report, Page 17
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.
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.
•
Supplements revenues with investment earnings.
Intergovernmental revenue cutbacks,
•
Provides resources for minor projects or
feasibility reports.
The City is vulnerable to legislative actions at both the Federal
& State leveL Federal funding to Local government has been
substantially curtailed in recent years. Annual adjustment of
•
Avoids temporary overdrafts prior to
Local Government Aid & HACA formulas is a constant threat
major receipts.
Capital outlay replacement,
•
•
City may study effects of revenue cuts before
gradual program reductions.
Avoids overburdening of annual budgets for
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.
Emergency or unanticipated expenditures,
certain capital outlay.
Examples include natural disasters, law suits, comparable
worth implementation and premature breakdown
•
Provides the City greater options to deal with
of vital equipment.
unexpected events.
Special City Council Projects.
Preliminary studies, interfund loans and minor projects
are examples of reserve uses.
SPECIAL REVENUE FUND
The financial statements for the City's Special Revenue Fund are presented in Statements 8 and
9 of the 1992 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.
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 Financial Report in accordance with the
National Council on Governmental Accounting Statement No. 3, Defining the Governmental
Reporting Entity. Statement No. 3 requires inclusion of the EDA due to the City Council having
oversight responsibility of the EDA's activities.
City of Lino Lakes, Minnesota
Management Report, Page 18
During 1992, the City transferred $3,172 to the EDA Fund from Tax Increment Financing
— District Capital Project Funds 1 -1 and 1 -2. This transfer was made pursuant to MS 469.176 Subd.
3 for past and current year administrative expenses incurred in the EDA Fund. We recommend that
the City continue to transfer funds from the Tax Increment Capital Project Funds to the EDA Fund
for qualifying administrative expenditures on an annual basis.
■
DEBT SERVICE FUNDS
The combining financial statements for the Debt Service Funds are presented in Statements 10
and 11 of the 1992 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 the following revenue sources pledged
to retire debt as follows:
• Property Taxes. Primarily for general City benefit projects such as parks and
municipal buildings. Property taxes may also be used to fund special assessment
bonds which are not fully assessed.
• Tax Increments. Pledged exclusively for tax increment/economic development
districts.
• Capitalized Interest Portion of Bond Proceeds. After the sale of bonds, the project
— may not produce revenue (tax increments or special assessments) for a period of one to
two years. Bonds are issued with this timing difference considered in the form of
capitalized interest.
• Special Assessments. Charges to benefited properties for various improvements.
• Area and Unit Charges.
In addition to the preceding pledged assets, other funding sources may be received by Debt
-- Service Funds as follows:
WPM
• Residual Project Proceeds from the Capital Project Fund
• Investment Earnings
• State or Federal Grants
• Transfers from Other Funds
City of Lino Lakes, Minnesota
Management Report, Page 19
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 1992 Annual Financial Report to assist in this
analysis:
December31, 1992 Scheduled Final
Fund Deferred Outstanding Property Maturity
Fund Description Balance Revenue Total Debt Taxes Date
General Debt
1989A Certificates of Indebtedness $2,586 $3,287 $5,873 $120,000 $140,458 5/1/94
1989B Certificates of Indebtedness 68,988 2,875 71,863 175,000 138,506 2/1/95
1990 Certificates of Indebtedness 1,559 885 2,444 53,500 63,699 1/1/96
1991 Certificates of Indebtedness 3,188 1,427 4,615 90,000 100,241 1/1/95
Public Project Revenue Bonds of 1990A 48,903 2,677 51,580 1,115,000 2,100,477 2/1/10
Total general debt 125,224 11,151 136,375 1,553,500 2,543,381
Special Assessment Debt
Improvement Bonds of 1988 945,688 204,349 1,150,037 800,000 2/1/97
Temporary Improvement Bonds of 1990B 332,130 33,402 365,532 1,015,000 8/1/93
Temporary Improvement Bonds of 1991A 1,385,240 1,171,213 2,556,453 4,260,000 8/1/94
Improvement Bonds of 1992A 576,176 1,139,107 1,715,283 3,640,000 4,108,344 2/1/06
Total special assessment debt 3,239,234 2,548,071 5,787,305 9,715,000 4,108,344
Total - All Debt Service Funds $3,364,458 $2,559,222 $5,923,680 $11,268,500 $6,651,725
tow
Inr
City of Lino Lakes, Minnesota
Management Report, Page 20
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
Cautions
E1. Is the City experiencing favorable
collection rates for special assess-
ments?
2. Are anticipated investment interest
rates eamed 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. Ls arbitrage or negative arbitrage
an issue?
law
WNW
The debt service fund
is clearly adequately
funded. Plan for eventual
use of surplus.
Conclusion 1
Condition B
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 funding
sources available?
4. Are there future assets to pledge
such as assessments, MSA allot-
ments, etc
The debt service fund
is clearly II9t 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 21
Improvement Bonds of 1986
The Improvement Bonds of 1986 were issued to refinance the -Improvement Bonds of 1982
and to finance the Sunset Road Improvements. These bonds were called for redemption and
prepayment on February 1, 1992.
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. Final maturity of these bonds is scheduled for
February 1, 1997.
1989 Temporary Improvement Bonds
The City issued these bonds to finance Reshanau Phase 2B and 3A, West Central Sewer and
Water Trunk, Sunrise Meadows, and Woodridge Estates Improvements. During 1990, West
Central Sewer and Water Trunk, Sunrise Meadows, and Woodridge Estates were assessed.
Reshanau 2B was assessed in 1991. These bonds matured during 1992. Bond proceeds in the
amount of $3,279,272 from the Improvement Bonds of 1992A were used to retire the 1989 bonds.
The remaining assets of the Temporary Bonds of 1989 were transferred to the Improvement Bonds
of 1992A Debt Service Fund.
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. These bonds will mature
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.
City of Lino Lakes, Minnesota
Management Report, Page 22
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.
White Tail Ridge and Brandywood Estates assessments were adopted in 1991. Assessments for
Pheasant Hills, Pine Ridge Addition, Reshanau Lake Sanitary Sewer Trunk and Wenzel Farms
were adopted in 1992. The remaining assets of the 1988 Temporary Improvement Debt Service
Fund have been pledged for retirement of the 1991A issue.
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 S56,734
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 23
Arbitrage Regulations
Federal law prohibits excess earnings on bond proceeds maintained in construction or debt
service funds. The regulations are complex and for "large issuers" (over $5 million of bonds
issued in one year) there are rebate requirements. If the City of Lino Lakes issues over $5 million
of bonds in one year, they will be required to comply with arbitrage regulations.
Reimbursement Bond Regulations
The Treasury Regulations Section 1.103 -17 pertains to "reimbursement bonds." Areas
affected by these regulations are; all governmental bonds, all qualified 501(c)(3) or nonprofit
borrowings issued after September 7, 1991 and which apply to reimbursement of previously paid
expenditures. With the new regulations, the City will not be allowed to issue tax exempt bonds for
expenditures it has previously paid unless it meets certain regulations. We recommend the City
confer with the fiscal consultant and bonding attorney to monitor compliance with these
regulations.
City of Lino Lakes, Minnesota
Management Report, Page 24
CAPITAL PROJECT FUNDS
- The financial statements for the Capital Project Funds are presented in Statements 12 and 13 of
the 1992 Annual Financial Report. The fund balances (deficits) of the Capital Project Funds at
December 31, 1991 and 1992 are as follows.
I ow
Fund
Dedicated Park
Capital Improvement Projects
Community Development Block Grant
Area and Unit Charge
Surface Water Management
Centennial Fire Station
Interim Construction
MSA Construction
Sealcoating
SAC Revolving
1988B Construction
1989 Construction
1990 Construction
1991 Construction
1993 Construction
Industrial Park Construction
Apollo Drive Construction
Tax Increment #1 -1
Tax Increment #1 -2
Tax Increment #1 -3
Tax Increment #1.4
Totals
Fund Balance (Deficit)
December 31, Increase
1991 1992 (Decrease)
$220,620
142,852
(13,958)
1,981,364
(23,182)
84,072
(183,653)
25,542
2,801
412,459
20,938
290,101
77,218
194,579
0
0
0
500,393
68,220
(16,535)
(10,379)
$204,536 ($16,084)
131,303 (11,549)
(9,800) 4,158
3,292,873 1,311,509
53,438 76,620
78,982 (5,090)
(266,410) (82,757)
37,100 11,558
90,811 88,010
431,816 19,357
0 (20,938)
224,640 (65,461)
73,226 (3,992)
(208,745) (403,324)
(170,092) (170,092)
(73,901) (73,901)
(117,156) (117,156)
740,155 239,762
200,418 132,198
(17,893) (1,358)
(13,399) (3,020)
$3,773,452 $4,681,902
$908,450
City of Lino Lakes, Minnesota
Management Report, Page 25
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 $42,950 of park dedication fees in 1992. The fund balance of $204,536 at
December 31, 1992 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, 1992:
Proceeds from issuance of 1981 Certificates $111,400
Proceeds from issuance of 1985 Certificates 107,500
Proceeds from issuance of 1987 Certificates 78,260
Proceeds from issuance of 1989 Certificates 300,566
Proceeds from issuance of 1989B Certificates 275,000
Proceeds from issuance of 1990 Certificates 88,642
Proceeds from issuance of 1991 Certificates 135,135
Interest earnings 68,730
Property taxes 14,554
State - MSA, Computer purchase 4,944
Donations 16,000
Transfer from Debt Service Fund 2,390
Total revenue and other sources
Expenditures:
1981 - 1991
1992
Total expenditures
916,356
155,462
$1,203,121
1,071,818
Fund Balance - December 31, 1992 $131,303
After the scheduled purchases of equipment are made in 1992, the remaining fund balance
should be closed to the related Certificates of Indebtedness Debt Service Fund (or be expended on
qualifying equipment purchases).
Wow
law
Ilmos
City of Lino Lakes, Minnesota
Management Report, Page 26
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, 1992 this fund had a deficit fund balance of $9,800. This deficit is
expected to be eliminated through the reimbursement of the Senior citizen coordinator's wages. As
of December 31, 1992, the City has not requested funds for the 1992/1993 funding year from the
County for the Senior Citizen Program. We recommend that the City apply for reimbursement of
CDBG funds on a timely basis.
During 1992 the City transferred $11,899 into the CDBG Fund from the General Fund to
reduce the fund deficit. The deficit was caused by unreimbursable costs being recorded in the
fund. The funding source of this transfer consisted of $11,567 of additional Local Government
and Equalization Aid from the State's Local Government Trust Fund and $242 of General Fund
reserves.
The City has designated its allotment for the funding year 1992/1993 as follows:
Surface Water Management $ 11,113
Senior Center Coordinator 9,800
Rise Inc. 2,100
Anoka County Community Action 4,125
Alexandra House 1,600
$28,738
City of Lino Lakes, Minnesota
Management Report, Page 27
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.
A schedule of transactions of this fund from inception is as follows:
Balance 1992 Balance
January 1, Current and December 31,
1992 Prepayments Delinquent Interest 1992
Revenue and other sources:
Area and unit charges:
Temporary Bonds of 1987 (1) $62,237 $194,682 $8,549 $265,468
Temporary Bonds of 1988 (2) 266,691 22,696 $2,712 9,720 301,819
Temporary Bonds of 1989 (3) 1,541,176 361,965 46,465 64,877 2,014,483
Temporary Bonds of 1990 34,646 2,749 1,244 38,639
Temporary Bonds of 1991 478,630 27,955 16,858 523,443
Total revenue and other sources 1,904,750 1,060,722 77,132 101,248 3,143,852
Expenditures and other uses:
Professional services 85,913 5,146 0 0 91,059
Transfer from 1989 construction 29,842 29,842
Transfer from Water and Sewer 132,685 96,712 229,397
Transfer to Capital Project Funds (19,159) (19,159)
Net increase in fund balance $1,981,364 $1,133,129 $77,132 $101,248 $3,292,873
(1) Pledged to the 1990B Temporary Improvement Bonds
(2) Pledged to the 1991A Temporary Improvement Bonds
(3) Pledged to the 1992A Improvement Bonds
City of Lino Lakes, Minnesota
Management Report, Page 28
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.
Inews
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.
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, 1992 are as follows:
City of Lino Lakes, Minnesota
Management Report, Page 29
Total Number Lots/Units
Total Budgeted Connections
Water Connections
1987 1988 1989
Temporary Temporary Temporary
Bonds Bonds Bonds
(Refinanced (Refinanced (Refinanced 1990B 1991A 1992
by 1990B by 1991A by 1992 Temporary Temporary Additional Total All
Temp) Temp) Bond) Bonds Bonds Pro'ects Bonds
206 76 974 14 285 39 1,594
206 76 623 14 283 0 1,202
Budgeted 1989 through 1991 206 76 453 8 94 0 837
Actual Collected 1989 through 1991 74 66 668 12 30 0 850
Total budgeted 1992 0 0 170 6 126 0 302
Total collected 1992 39 7 92 1 134 4 277
To date total collected 1989 -1992 113 73 760 13 164 4 1,127
Balance required over (under) (93) (3) 137 (1) (119) 4 (75)
Future year collection budgeted
Budgeted 1993 0 0 0 0 43 0
Budgeted 1994 0 0 0 0 10 0
Budgeted 1995 0 0 0 0 10 0
Budgeted 1996 0 0 0 0 0 0
Budgeted 1997 0 0 0 0 0 0
43
10
10
0
Balance Required Over (Under) (93) (3) 137 (1) (56) 4 (12)
City of Lino Lakes, Minnesota
Management Report, Page 30
Sewer Connections
1987 1988 1989
Temporary Temporary Temporary
Bands Binds Bonds
(Refinanced (Refinanced (Refinanced 1990B 1991A 1992
by 1990B by 1991A by 1992 Temporary Temporary Additional Total All
Temp) Temp) Bond) Bonds Bonds Pro'ects Bands
Total Number Lots/Units 206 76 903 14 640 39 1,878
Total Budgeted Connections 206 76 567 14 639 0 1,502
Budgeted 1989 through 1991 206 76 397 8 94 0 781
Actual Collected 1989 through 1991 74 66 602 12 29 0 783
Total budgeted 1992 0 0 170 6 115 0 291
Total collected 1992 3 7 92 1 170 4 277
To date total collected 1989 -1992 77 73 694 13 199 4 1,060
Balance required over (under) (129) (3) 127 (1) (440) 4 (442)
—
Future year collection budgeted
— Budgeted 1993 0 0 0 0 133 0 133
Budgeted 1994 0 0 0 0 84 0 84
Budgeted 1995 0 0 0 0 140 0 140
Budgeted 1996 0 0 0 0 35 0 35
Budgeted 1997 0 0 0 0 38 0 38
Balance Required Over (Under) (129) (3) 127 (1) (10) 4 (12)
Centennial Fire Station
This fund was established by the City's EDA in 1990 to account for construction costs of the
City's new Fire Station. The bond proceeds for this project are being held at First Trust and the
City must submit qualifying expenditures to First Trust for reimbursement. The project was
substantially complete as of December 31, 1992. We recommend this fund be closed in 1993 after
final costs have been paid in accordance with indenture of trust dated September 1, 1990.
City of Lino Lakes, Minnesota
Management Report, Page 31
Surface Water Management Fund
This fund was established in 1989 to account for the financing of surface water management
planning and storm sewer trunk lines. During 1990, the City levied its first assessments for
surface water management charges. The City is currently working on phase one of 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 1992 Annual Financial Report.
The fund balance of this fund was a deficit of $266,410 at December 31, 1992. The City has
determined financing sources for certain projects.
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 $37,100 at December 31, 1992.
Sealcoatinz
This fund was established in 1991 to account for money received from private developers for
future sealcoating in, new housing developments. The fund balance of this fund was $90,811 at
December 31, 1992.
City of Lino Lakes, Minnesota
Management Report, Page 32
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 1992 Total
Revenue
SAC refund $365,175 $365,175
Interest earning 47,284 $19,357 66,641
Total revenue $412,459 $19,357 431,816
Expenditures $0 $0 0
Fund Balance - December 31, 1992 $431,816
1988B Construction
This fund accounted for the various projects financed by the Temporary Improvement Bonds
of 1988. The City closed this fund in 1992.
City of Lino Lakes, Minnesota
Management Report, Page 33
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 $224,640 at
December 31, 1992. A summary of the financial activity of this fund from inception is as follows:
Budget Actual Variance
Financing Sources:
Bond proceeds $4,120,767 $4,367,450 $246,683
MSA construction 105,800 (105,800)
Interest earnings 312,291 312,291
Special assessments 758,312 758,312
Other 1,200 1,200
Total sources $4,226,567 5,439,253 $1,212,686
Financing Uses:
Construction costs:
West Central Trunk $2,047,335 1,985,414 ($61,921)
Woodridge Estates 819,933 851,967 32,034
Sunrise Meadows 894,064 884,524 (9,540)
Reshanau 3rd 206,925 252,047 45,122
Reshanau 4th & 5th 258,310 397,543 139,233
Transfers out:
Area and unit charge 163,601 163,601
Temp Bonds of 1989 580,643 580,643
Dedicated parks 18,561 18,561
Interim construction 48,400 48,400
Surface water management 31,913 31,913
Total uses $4,226,567 5,214,613 $988,046
Fund Balance - December 31, 1992 $224,640
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. The assessments for West Central Trunk,
Woodridge Estates, and Sunrise Meadows were adopted in 1990. The assessments for Reshanau
Third and Fourth Additions were adopted in 1991 and 1992, respectively. During 1992, 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 34
1990 Construction
This fund accounts for the Second Avenue construction project which is financed by the
Temporary Improvement Bonds of 1990B. The fund balance of this fund was $73,226 at
December 31, 1992. We recommend the City submit final MSA reimbursement requests and close
this fund by transferring the remaining balance to the Debt Service Fund of the bonds issued to
provide permanent financing for the Temporary Improvement Bonds of 1990B.
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:
law
NNW
Budget Actual Variance
Financing Sources:
Bond proceeds $3,949,214 $3,947,649 ($1,565)
Interest earnings 73,875 73,875
Refunds and reimbursements 111,521 111,521
Total sources $3,949,214 4,133,045 $183,831
Financing Uses:
Construction costs:
White Tail Ridge $50,600 60,437 $9,837
Brandywood Estates 790,015 802,286 12,271
Pheasant Hills 583,762 698,962 115,200
Pine Ridge Estates 592,771 583,402 (9,369)
Reshanau Lake Trunk 1,016,286 1,176,047 159,761
Wenzel Farms 915,780 1,020,656 104,876
Total uses $3,949,214 4,341,790 $392,576
Fund Balance - December 31, 1992 ($208,745)
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.
City of Lino Lakes, Minnesota
Management Report, Page 35
During 1992, the City entered into an agreement with Arcon Construction for the payment of
retainage in accordance with MS 15.73 for the Brandywood Estates, White Tail Ridge and
Reshanau Lake Trunk Improvements. MS 15.73 reads as follows:
15.73 ALTERNATIVE FORM OF RETAINAGE.
Subdivision 1. At the option of the contractor, retainage shall be paid to the contractor in accordance with
this section.
Subdivision 2. The contractor may deposit bonds or securities with the public contracting agency or in
any bank or trust company to be held in lieu of cash retainage for the benefit of the public contracting agency.
In that event the public agency shall reduce the retainage in an amount equal to the value of the bonds and
securities and pay the amount of the reduction to the contractor. Interest on the bonds or securities shall be
payable to the contractor as it accrues.
Subdivision 3. Bonds and securities deposited or acquired in lieu of retainage, as permitted by subdivision
2, shall be of a character approved by the state treasurer, including but not limited to:
a) Bills, certificates, notes or bonds of the United States;
b) Other obligations of the United States or its agencies;
c) Obligations of any corporation wholly owned by the federal government; or
d) Indebtedness of the Federal National Mortgage Association.
Subdivision 4. If the public agency incurs additional costs as a result of the exercise of the option
described in this section, the agency may recover the costs from the contractor by reducing the final payment
due under the contract. As work on the contract progresses, the agency shall, upon demand, inform the
contractor of all accrued costs.
The purpose of this agreement is to reduce the amounts retained on progress payments to the
contractor and provide assurance to the City that the project will be completed. The escrow
agreement dated March 4, 1992 requires the contractor to deposit cash with the escrow agent to be
held in lieu of cash retainage. However, the City, instead of the contractor, deposited $100,000
with the escrow agent. This does not appear to be in compliance with the escrow agreement. We
recommend the City resolve this situation.
Industrial Park Construction
This fund was established in 1992 to account for construction costs in developing the City's
industrial park. During 1992 the City transferred $1,298 from the Industrial Park Construction
Fund to the Interim Construction Fund for reimbursement of prior years' costs. The City expects
to finance these improvements through the sale of property within the park and the adoption of
assessments.
limmr
WIMP
City of Lino Lakes, Minnesota
Management Report, Page 36
Apollo Drive Construction
This fund was established in 1992 to account for improvements to Apollo Drive. During 1992
the City transferred $14,790 from the Apollo Drive Fund to the Interim Construction Fund for
reimbursement of prior years' construction costs. Financing for this project is being provided
primarily through MSA Construction allotments. Upon completion of the project the County will
purchase the road from the City.
1993 Construction
This fund accounts for costs incurred with the Wenzel Farms Third Addition and Brandywood
Second Addition improvements. The financing of these projects will be obtained through the
issuance of bonds in 1993.
Economic Development District #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:
Prior
Years 1992 Total
Revenue and other sources:
Tax increments $454,001 $217,819 $671,820
HACA 8,683 8,683
Interest on investments 39,673 26,600 66,273
Total revenue and other sources 502,357 244,419 746,776
Expenditures and other uses:
Professional services 1,964 3,071 5,035
Transfer to Special Revenue Fund 1,586 1,586
Net increase in fund balance $500,393 $239,762 740,155
Fund balance - December 31, 1992 $740,155
City of Lino Lakes, Minnesota
Management Report, Page 37
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.
During 1992 the City transferred $3,172 to the EDA Fund from the Tax Increment Financing
District Capital Project Funds 1 -1 and 1 -2 for past and current year qualifying administrative
expenditures.
Tax increment districts often generate surplus amounts over the anticipated receipts. The 1988
legislative session reduced the probability of such excesses by requiring excess amounts caused by
tax rate increases to be spread to all taxing authorities. Excess amounts may still be generated from
captured values in excess of anticipated values. As such, we recommend that if tax increment
bonds are sold, the City should:
1. Include a bond provision which allows tax increment collections to be receipted to the
Economic Development #1 Capital Project Fund.
2. Approve and transfer funds from the Capital Project Fund as needed to the Debt Service
Fund.
The above procedures will provide the City greater options if surpluses develop. Such
surpluses may then be allocated to the other improvements within the District as allowed by the
(amended) plan.
The City received initial tax increments of $49,808 in 1988. In 1990, 1991 and 1992 the City
had tax increment collections of $130,069, $191,326 and $217,819 respectively. Additionally,
this fund had as of December 31, 1992, $12,030 of delinquent tax increments.
MINE
WEN
City of Lino Lakes, Minnesota
Management Report, Page 38
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 $12,303
Capitalized interest and bond discount 107,800
Total $390,000 $12,303
The Ross Site was decertified from TIF District #1 -2 and placed in 1 Er District #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).
District #1 -3 has anticipated project requirements as follows:
Imor
Land acquisition
Administrative expenses
Total
Estimated Actual
$200,000
22,000 $17,893
$222,000 $17,893
The City will not issue bonds for this project. The City will enter into an agreement with the
developer to reimburse the developer for the costs of the land as increments are available.
The City established Tax Increment District #1 -4 during 1990 by resolution 10 -90.
City of Lino Lakes, Minnesota
Management Report, Page 39
District #1 -4 has anticipated project requirements as follows:
Estimated Actual
Land acquisition $400,000
Public improvements 1,050,000
Administrative 100,000 S29,009
Bond discount 40,000
Capitalized interest 360,000
Total $1,950,000 S29,009
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, 1992 this fund had a deficit balance of $13,399.
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. As of December 31, 1992 this District has not been certified with Anoka County pending
financing of the project.
Tax increment proceeds are based on the increased captured valuation of property within the
District. Forecasted values are based on estimates of future increases and other factors including
the effects of State legislation on the property tax system. The 1990 Legislature reduced the tax
capacity rates on commercial property as follows:
1990 1991 1992 1993 1994
Rate Rate Rate Rate Rate
First $100,000 of market value 3.30% 3.20% 3.10% 3.00% 3.00%
Market value over $100,000 5.26% 4.90% 4.75% 4.70% 4.60%
This decrease in rates may adversely affect future tax increment collections.
We recommend, therefore, that the City monitor actual revenue flows compared to projected
revenues to assure timely availability of cash to meet budgeted expenditures.
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City of Lino Lakes, Minnesota
Management Report, Page 40
ENTERPRISE (UTILITY FUND)
The financial statements for the Enterprise Funds are presented in Statements 14 through 16 of
the 1992 Annual Financial Report. Condensed comparative statements of income and expense for
the years 1991 and 1992 (excluding depreciation on contributed assets) for the Water and Sewer
Utility Fund are shown in the following schedule:
For The Year Ended December 31,
1991 1992
Amount Percent Amount Percent
Operating Income:
Water billings $75,434 28.56% $166,563 38.85%
Sewer billings 154,784 58.62% 204,947 47.81%
Other 33,839 12.82% 57,199 13.34%
Total operating income 264,057 100.00% 428,709 100.00%
Operating Expenses:
Personal services 79,127 29.97% 91,300 21.30%
MWCC 81,060 30.70% 111,897 26.10%
Repairs and maintenance 55,371 20.97% 67,414 15.72%
Depreciation 1,190 0.45% 1,073 0.25%
Other 71,223 26.97% 71,325 16.64%
Total operating expenses 287,971 109.06% 343,009 80.01%
Income from operations (23,914) (9.06)% 85,700 19.99%
Other income (expense):
Interest on investments 623 10,250
MWCC maintenance agreement 14,564 13,061
Area and unit charge 52,320 96,712
Bond interest (57,632)
Total other income (expense) 67,507 62,391
Net income 43,593 148,091
Operating transfer to
area and unit fund (52,320) (96,712)
Increase (decrease) in retained earnings ($8,727) $51,379
The City reviewed water and sewer rates and increased rates effective July 1, 1988 and January
1, 1989. The City increased rate by 5% effective July 1, 1991 and 5% on January 1, 1992 and
January 1, 1993. We recommend the City charge water rates at a level which will cover the cost of
retiring debt issued to construct the water tower and maintain adequate levels of retained earnings.
City of Lino Lakes, Minnesota
Management Report, Page 41
The Utility Fund had a cash balance of $105,493 at December 31, 1992. This balance is due
mainly to the issuance of the Water Tower Revenue Bonds. At December 31, $102,675 of the
cash balance consisted of unused bond proceeds which were restricted for future water tower
construction. The remaining $2,818 is available for water and sewer operations.
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 1982 through 1993 have been as follows:
Billings from MWCC
Estimated Final
Percent Percent
Year Amount Change Amount Change
1983 $19,027 22.72% $23,866 63.56%
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% N/A N/A
1993 141,730 36.16% N/A N/A
$150,000
$140,000
$130,000
$120,000
$110,000
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
MWCC Billings
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1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
® Estimated Billings •`` Actual Billings
City of Lino Lakes, Minnesota
Management Report, Page 42
The previous schedule indicates that MWCC billing increases have been substantial over the
past several years.
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 1993 estimated flow for
the City of Lino Lakes by 31 %.
2. Increased cost to process sewage. The MWCC's cost to process (per million gallons)
increased to an estimated $1,201 in 1993 from an estimated $1,157 in 1992. This
represents an increase of 3.8 %.
The combination of the above factors has increased the City's estimated cost in 1993 by 36 %.
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 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 1992 the City transferred $96,712 to the Area and Unit Charge Fund.
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Currently the City accounts for its water and sewer operations in one fund. In order to
accurately measure the results of operations of the individual services we recommend that the City
split water and sewer operations into two separate funds. This would allow the City to charge
rates that would better reflect the actual cost of operating the systems.
City of Lino Lakes, Minnesota
Management Report, Page 43
GAS UTILITY 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 1991
Residential and Commercial Revenue $292,903 @ 7% = $20,503 S227,175 @ 7% = $15,902
Interruptible Service 126,267 @ 3% = 3,788 113,869 @ 3% = 3,416
Total $419,170 24,291 $341,044 19,318
Remitted by Circle Pines 24,267 19,286
Difference
$24 $32
The previous 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, $2,500 in 1991 and $53 in 1990. The City of Circle
Pines reports such bad debts on a combined expense line "administrative - other." We recommend
the following:
1. Request that Circle Pines provide their calculation of franchise fee remittances including
bad debt adjustments.
2. Review with Circle Pines their methods of enforcing collection and consider adopting
procedures within the City such as including significant outstanding delinquent billings
on assessment search records.
City of Lino Lakes, Minnesota
Management Report, Page 44
3. Annually update the following schedule to analyze fluctuation in revenue data.
Residential
Commercial Total
Increase / (Decrease)
Increase / (Decrease) Increase / (Decrease)
Year Amount Amount Percent Amount Amount Percent Amount Amount Percent
1982 $88,195 $18,781 S106,976
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%
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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) (17.31)% 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%
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, 1992 the Lino Lakes Franchise has a positive fund balance of
$55,669.
The City has taken the following actions regarding the gas utility operations:
• Successfully worked to gain special State legislation to allow a greater number of
members on the Joint Gas Utility Commission.
• Reviewed optional criteria for representation on the Commission to allow for a fair and
equitable method of appointing members from each City.
• Analyzed accounting methods of allocating expenses between each City's gas operation.
City of Lino Lakes, Minnesota
Management Report, Page 45
• Negotiated a new franchise agreement.
• Considered exercising the City's option to purchase the gas utility.
The new 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 $24,267 in 1993 which represents the 1992 share of earnings.
Earnings from inception of the new agreement total $93,005. Financial uncertainties facing
metropolitan cities require diversity of revenue sources to assure adequate funding of operations
without severe property tax increases.
In November, 1990, at the request of the City, our office prepared a discussion draft of issues
related to the possible purchase of the Lino Lakes Gas Franchise. A summary of considerations is
as follows:
• The City must pay 125% of cost (less depreciation) for assets placed in service after July 1,
1986.
• The tasks associated with administering the system may require added or re- assigned
personnel.
• The City's current Public Works Director has gas utility operation experience. If the City
should lose this position, a replacement would be required at a possibly higher or lower
cost.
City of Lino Lakes, Minnesota
Management Report, Page 46
• The cost of application to the FERC was estimated in 1986 at $12,200. The cost of the
delivery (border) facility was estimated at $50,000. These amounts may be significantly
different than estimated.
Minnesota Statutes 216B.46 and 412.321 subd.2 require an election for the acquisition of a
gas utility operation.
• A more favorable revenue bond rate is probably available if the issue is "general
_ obligation." The City's charter may require a vote to pledge property taxes to the purchase
of the system.
Dealings with the City of Circle Pines have the potential to be less than harmonious. Legal
and accounting fees may, therefore, fluctuate significantly.
• The City's accounting and billing computer system must be re- evaluated to determine if gas
utility billings will be facilitated with the current system.
• The City must determine the cost of additional equipment that must be purchased in
addition to the Circle Pines system.
• Evaluation of the adequacy of existing City staff to absorb all or a portion of the task
associated with the gas utility.
• The likelihood of voters to approve the acquisition.
• Gas purchase price and contract demand negotiations.
• Probability of growth of the system.
AGENCY FUNDS
At December 31, 1992, the City had four Agency Funds as follows:
• Contractor's Deposits
• Pending Assessments
• Investment Fund
• Deferred Compensation
An Agency Fund is designed to account for transactions for other individuals, private
organizations and/or other funds.
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 (see later comments).
City of Lino Lakes, Minnesota
Management Report, Page 47
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.
INTERNAL ACCOUNTING CONTROLS
Current auditing standards require an auditor to communicate any material weaknesses in
internal accounting controls directly to City Council and/or City Administrators. Our examination
for 1992 disclosed no material deficiencies in the City's system of internal controls not identified in
this report or past reports to the City Council.
We have audited the financial statements of the City of Lino Lakes, Minnesota
as of and for the year ended December 31, 1992, and have issued our report
thereon dated March 5, 1993.
We conducted our audit in accordance with generally accepted auditing
standards and 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.
In planning and performing our audit of the financial statements of the City of
Lino Lakes, Minnesota, for the year ended December 31, 1992, we considered its
internal control structure 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 structure.
The management of the City of Lino Lakes, Minnesota is responsible for
establishing and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that transactions
are executed in accordance with management's authorization and recorded properly
to permit the preparation of financial statements in accordance with generally
accepted accounting principles. Because of inherent limitations in any internal
City of Lino Lakes, Minnesota
Management Report, Page 48
control structure, errors or irregularities may nevertheless occur and not be
detected. Also, projection of any evaluation of the structure to future periods is
subject to the risk that procedures may become inadequate because of changes in
conditions or that the effectiveness of the design and operation of policies and
procedures may deteriorate.
For the purpose of this report, we have classified the significant internal control
structure policies and procedures in the following categories:
• control environment
• accounting system
• control procedures
For all of the internal control structure categories listed above, we obtained an
understanding of the design of relevant policies and procedures and whether they
have been placed in operation, and we assessed control risk.
We noted certain matters involving the internal control structure 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 structure that, in our judgment, could
adversely affect the City's ability to record, process, summarize, and report
financial data consistent with the assertions of management in the general purpose
financial statements.
A substantial portion of certain accounting processes are performed by a single
employee. Ideal conditions call for segregation of duties to establish a system of
internal testing of procedures performed. Additionally, our audit disclosed that the
City does not maintain a system of control over General Fixed Assets. These
conditions are common to cities of this size. Any modification of internal control
structure in this area, however, must be viewed from a cost/benefit perspective.
A material weakness is a reportable condition in which the design or operation
of the specific internal control structure elements does not reduce to a relatively low
level the risk that errors or irregularities in amounts that would be material in
relation to the general purpose 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 the internal control structure would not necessarily
disclose all matters in the internal control structure 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.
However, we believe none of the reportable conditions described above are material
weaknesses.
This report is intended for the information of management and others within the
City of Lino Lakes, Minnesota. This restriction is not intended to limit the
distribution of this report, which is a matter of public record.
City of Lino Lakes, Minnesota
Management Report, Page 49
SUMMARY
During 1993, we recommend that the City:
Monitor the collection rate of special assessments and provide supplemental financing if
assessment collections are not adequate to meet bonded debt payments. (Page 12)
• Request improved special assessment data from County. (Page 13)
• Adopt a formal policy for calculating assessments on properties that originally opted out of
improvement projects. (Page 13)
• Continue to transfer funds from the Tax Increment Capital Project Funds to the EDA Fund
for qualifying administrative expenditures on an annual basis. (Page 18)
• Confer with the fiscal consultant and bonding attorney to monitor compliance with
Treasury Regulations pertaining to reimbursement bonds. (Page 23)
• Apply for reimbursement of CDBG funds on a timely basis. (Page 26)
• Monitor actual versus projected area and unit assessment collections to assure that debt
payment requirements will be met. (Page 27)
• Close the Centennial Fire Station Fund in 1993 after fmal costs have been paid. (Page 30)
• Review status of various projects in the Interim Construction Fund and determine financing
sources. (Page 33)
• Submit final MSA reimbursement requests and close the 1990 Construction Fund. (Page
34)
• Comply with MS 15.73 concerning retainage for the Brandywood Estates, White Tail
Ridge and Reshanau Lake Trunk Improvements. (Page 35)
• In the event that tax increment bonds are sold 1) a bond provision is included which would
allow tax increment collections to be receipted to the Economic Development #1 Capital
Project Fund, and 2) funds are approved for transfer from the Capital Project Fund to the
Debt Service Fund as needed. (Page 37)
• Monitor actual revenue flows compared to projected revenues to assure timely availability
of cash to meet budgeted expenditures for Tax Increment District #1 -5. (Page 39)
• Charge water and sewer rates at a level which will cover the cost of retiring debt issued to
construct the water tower and maintain adequate levels of retained earnings. (Page 40)
• Split water and sewer operations into two separate funds. (Page 42)
• Request the calculation of franchise fee remittances for gas service from Circle Pines.
(Page 43)
City of Lino Lakes, Minnesota
Management Report, Page 50
• Review Circle Pines' methods of enforcing collection of gas utility revenue and consider
including significant outstanding delinquent billings on assessment search records. (Page
— 43)
• 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
46)