HomeMy WebLinkAboutManagement Report and Recommendations 12/31/1987CITY OF LINO LAKES, MINNESOTA
MANAGEMENT REPORT AND RECOMMENDATIONS
DECEMBER 31, 1987
CITY OF LINO LAKES, MINNESOTA
MANAGEMENT REPORT AND RECOMMENDATIONS
TABLE OF CONTENTS
Pages
Transmittal Page 1
General and Special Revenue Funds - Summary data and analysis of revenue
and expenditures compared to prior periods and the 1988 budget. 2
Account Balance Analysis - A look at changes in various accounts such as
cash, investments and receivables. 6
Individual Fund /Fund Type Analysis - Review of significant changes in
fund balances and other matters.
Internal Control Report
Recommendations Summary
15
46
49
VOTO, TAUTGES, REDPATH & CO., LTD.
CERTIFIED PUBLIC ACCOUNTANTS
V1:K
Birch Lake Professional Building • 1310 E. Hwy. 96 • White Bear Lake, MN 55110 • Phone 426 -3263
ROBERT J. VOTO, CPA
ROBERT G. TAUTGES, CPA
JAMES 5. REDPATH, CPA
To the Honorable Mayor and
Members of the City Council
City of Lino Lakes, Minnesota
The Annual Financial Report of the City is complete and has been transmitted
to the City Council. In conjunction with our examination, we have prepared this
report to assist the City in the analysis of the 1987 financial statements.
Financial areas which may be of particular interest to the City are as follows:
1. During 1987 the fund balance of the General Fund increased by
$103,000.
2. The City's first tax increment district has been established.
3. The MWCC estimated billings to the City increased by 9.3 %.
4. The City earned the initial year of its share in the profits
of the gas franchise and subsequently received $9,615
in May, 1988.
Page #
15
38
41
43
In addition to the above areas, financial trend analysis has been updated
throughout the report. The funding of operations of the City continue to be
vulnerable to legislative actions of the State. We are committed to identifying
the effects of such legislative actions on the City.
We are available to discuss this report and other topics with the City
Council.
MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS • PRIVATE COMPANIES PRACTICE SECTION
MINNESOTA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
GOVERNMENT FINANCE OFFICERS ASSOCIATION • MINNESOTA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS
City of Lino Lakes, Minnesota
Management Report, Page 2
General and Special Revenue Funds
The General and Special Revenue Funds of the City are maintained to account for the
current and capital outlay expenditures that are common to cities. The City maintains a
General Fund and had one Special Revenue Fund (Revenue Sharing). Financial reporting
standards in effect allow a city to reasonably compare its financial operations with its
prior year or other similar cities.
Total revenue for these funds for the past three years have been as follows:
Local taxes
Licenses and permits
Intergovernmental revenue:
State
Federal
Charges for services
Court fines
Interest on investments
Other
Total s
1987
Amount
$ 714,892
164,115
Percent
44.20%
10.15
545,674 33.74
59,069 3.65
68,448 4.23
16,756 1.04
48,332 2.99
1986
Amount Percent
$ 585,137 41.77%
137,879 9.84
491,185 35.07
28,358 2.02
59,249 4.23
65,369 4.67
17,371 1.24
16.204 1.16
1985
Amount Percent
$ 550,302 39.86$
110,343 7.99
455,467
41,693
98,179
68,492
7,356
49.009
32.98
3.02
7.11
4.96
.53
3.55
$1,617,286 100.00% $1,400,752 100.00% $1,380,841 100.00%
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Property
Taxes
MM
State Aids Licenses & Charges for Federal
Permits Services
revenue
■ 1985 E 1986 ® 1987
NkfirM
Court Fines Interest &
All Other
City of Lino Lakes, Minnesota
Management Report, Page 3
Since 1979, State aids and local property taxes used to finance the General Fund of
the City of Lino Lakes were as follows:
State Aids Property Taxes Total
Year Amount Percent Amount Percent Amount Percent
1979 $184,184 35.05% $166,149 31.62% $ 350,333 66.67%
1980 239,622 39.57 171,440 28.32 411,062 67.89
1981 300,971 41.92 212,914 29.78 513,885 71.70
1982 283,089 36.63 305,804 39.57 588,893 76.20
1983 349,076 37.50 355,684 38.21 704,760 75.71
1984 403,127 34.80 510,245 44.04 913,372 78.84
1985 455,059 32.96 550,302 39.86 1,005,361 72.82
1986 491,041 35.06 585,137 41.77 1,076,178 76.83
1987 545,674 33.74 714,892 44.20 1,260,566 77.94
A graph of the above primary funding sources is as follows:
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
1 �::. �: 1
1980 1981 1982 1983 1984 1985 1986 1987
R State Aids
Property Taxes
City of Lino Lakes, Minnesota
Management Report, Page 4
The above total State aids consist of the following amounts:
State Aids 1980 1981 1982 1983 1984 1985 1986 1987
Local Government Aid $146,504 $157,862 $148,794 $171,011 $185,196 $196,177 $219,728 $232,159
Homestead Credits 78,792 112,911 111,829 139,767 188,906 227,711 238,336 265,530
Police Aid 11,296 12,188 14,326 14,245 13,970 13,509 18,722 26,828
MSA - Streets 8,080 -0- 13,110 13,935 13,935 13,935 13,935
Other Aids 3,030 9,930 8,140 10,943 1,120 3,727 320 7,222
Totals
Percent change
$239,622 $300,971 $283,089 $349,076 $403,127 $455,059 $491,041 $545,674
25.60% (5.94 %) 23.31% 15.48% 12.88$
7.91% 11.13%
A graph of the above state aids compared to property taxes is as follows:
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
General & Special
Revenue Funds
-4 $800,000
- $700,000
• - $600,000
$500,000
$400,000
$300,000
$200,000
$100,000
1980
1981
1982
1983
1984
1985
1986
$0
1987
Other Aids
0 Homestead Credits II Local Government •■• Property Taxes
Aid
The 1988 local government aid will reflect a zero increase over 1987. The 1989
local government aid, however, is currently anticipated to reflect a 22.7% increase (or
$55,160). The current LGA formula, however, is under a constitutional challenge by
various metro cities. We recommend that the City closely monitor the effects of this
lawsuit and incorporate flexibility into the 1989 budget.
City of Lino Lakes, Minnesota
Management Report, Page 5
Total expenditures for the General and Special Revenue Funds for the past three
years have been as follows:
Current:
General government
Public safety
Highways and streets
Parks
Other
Capital outlay
Totals
1987
Amount Percent
$ 409,645
530,785
383,271
82,117
14,783
98.588
1986
1985
Amount Percent Amount Percent
26.96% $ 363,256 26.37% $ 290,098 25.31%
34.94 464,499 33.73 429,545 37.48
25.23 344,767 25.03 287,822 25.11
5.41 74,144 5.38 64,261 5.60
.97 10,149 .73 15,320 1.34
6.49 120,448 8.76 59,089 5.16
$1,519,189 100.00% $1,377,263 100.00% $1,146,135 100.00%
The increase in capital outlay for 1986 is primarily due to the accounting treatment
applied to the purchase of the fire hall. Generally Accepted Accounting Principles
require the total cost of the fire hall be recognized in the current year even though
the City will be making contract payments over a period of five years.
A graphic illustration of the above expenditures is as follows:
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
General & Special Revenue
Funds
General
Government
Public Safety
Highways &
Streets
Parks
11 1985 0 1986 ® 1987
Capital Outlay &
Other
Details of the above expenditure categories are presented in Statements 7 and 9 of
the Annual Financial Report.
IICity of Lino Lakes, Minnesota
Management Report, Page 6
1
1
1
1
1
1
1
1
1
1
1
1
1
Combined Financial Statements
The Combined Financial Statements of the City are presented in Statements 1 through
5 of the 1987 Annual Financial Report. The following comments relate to those state-
ments.
Cash and Investments
Cash and investments held by the City at December 31, 1987 totaled $2,296,090 as
compared to the 1986 balance of $1,415,996. Additionally, the City increased the fund
balance of the General Fund (see later comments). Cash and investments are summarized
as follows:
December 31, Increase
Description 1987 1986 (Decrease)
Treasurer's balance - checking $ 13,452 $ (55,091) $ 68,543
Petty cash 150 150
Investments:
Certificate of deposits 1,752,331 706,932 1,045,399
Small Business Administration
(SBA) 67,970 71,577 (3,607)
FNMA Pool 304,722 398,114 (93,392)
NOW account 157,465 294,314 (136,849)
Totals $2,296,090 $1,415,996 $ 880,094
The City had interest earnings on investments of $108,098 in 1987 as compared to
1986 earnings of $146,689. The decrease in interest earnings was caused primarily by
lower cash balances available throughout 1987.
The City maintains an average 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 recommend that the City continue this practice of minimal balances in the
City's checking account to increase interest earnings.
City of Lino Lakes, Minnesota
Management Report, Page 7
The City currently has a federally secured investment of the Small Business
Administration (SBA). This type of investment is acceptable for Minnesota cities.
There have been notices from the SBA that payments from the borrower have been late and
therefore payments to the City have been delayed. At December 31, 1987 payments were
one month delinquent. The City received full early payment of this investment in June,
1988.
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, 1987. The following schedule
details these amounts.
Description
December 31,
1987 1986
State:
Fines and forfeits $ 5,536 $ 4,771
Video game refund 30
MSA 127,613
Federal:
Community Development Block Grant 5,846
Federal Revenue Sharing 742
LAWCON 5,135
Local:
MWCC - Maintenance Agreement 10,071 3,068
Final cost allocation 4,136 5,011
Police contract 12,695
Ditch payments:
Anoka County 13,116
Rice Creek Watershed 9,600
Centerville - salt 232
White Bear Township 2,735
Total
$ 191,580 $ 18,757
Excluded from the above schedule is the gas franchise tax receivable which repre-
sents the City's share in the 1988 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 8
The receivable from the MWCC for maintenance was submitted for reimbursement on May
31, 1988. The City may request this reimbursement earlier (in six month intervals) to
accelerate the reimbursement process and improve the cash flow of the City.
The City currently receives approximately $14,000 annually in MSA maintenance
monies. The City also has available approximately $213,000 annually in MSA construc-
tion allotments. These construction allotments ordinarily can be used to finance
construction costs relating to MSA designated streets. Unused construction allotments
total approximately $513,000 at December 31, 1987. The City may be able to justify
and request up to 25% of such annual total allotments for maintenance purposes (i.e.,
25% of $227,000 or $57,000 per year). This could increase the total MSA receipts of
the City during periods in which the City does not have qualifying MSA construction
projects. Additionally this option normally accelerates the receipt of MSA allot-
ments. Once received, the City retains the option of internally allocating the
receipts to construction funds as needed. We recommend that the City consider this
option.
Taxes Receivable
Delinquent taxes receivable
Delinquent balance - January 1
Current levy
Total receivable
Receipts:
County:
Current
Delinquent
State
Total receipts
Unadjusted balance
Adjust to County balance
Delinquent balance
Total collections as a percent
of current levy
were as follows for 1983 through
1987
$ 99,694
990,000
1,089,694
694,652
35,455
277,295
1,007,402
82,292
(54,297)
1987:
1986 1985 1984 1983
$100,004 $ 86,141 $ 84,603 $ 81,671
835,500 775,000 690,000 587,845
935.504 861.141 774.603 669.516
557,533 514,978 467,696 380,063
28,464 19,630 33,045 34,223
249,813 226,529 187,721 170,627
835,810 761,137 688,462 584,913
99,694 100,004 86,141 84,603
$ 27,995 $ 99,694 $100,004 $ 86,141 $ 84,603
102% 100% 98% 100% 99%
City of Lino Lakes, Minnesota
Management Report, Page 9
Property taxes are a primary revenue source of the City. The reduction in property
taxes receivable represents an adjustment to County records. The County made this
report available for 1987 for the first time. The prior receivable balance represented
arrived at balances (levies minus collections). The adjustments, therefore, cover
multiple years. The adjustments represent abatements, forfeits and other such property
tax adjustments.
In 1982 the State arbitrarily reduced homestead credits received by the City. No
replacement aid was provided. The State proposes changes in tax credits annually. We
recommend that the City continue efforts to monitor State financial legislation to react
to adverse proposals on a timely basis.
The City's collectible 1988 tax levy and budget reflects an under allocation of tax
levies for debt as follows:
Initial budgeted tax levy per Resolution 71 -87
Reserved for debt
$ 1,146,850
48,000
Balance - General Fund $ 1,098,850
Second budget (adjusted for lower debt tax levy)
Reserved for debt
Balance - General Fund
Third revised budget
Reserved for debt
$ 1,146,850
43,500
$ 1,103,350
$ 1,146,850
117,000
Balance - General Fund $ 1,029,850
The third revised budget is closer to the actual amount required for debt service,
however, the allocation remains under the anticipated levies as follows:
1985 Certificates
1987 Certificates
Total
Authorized Per Third
by Bond Revised
Resolution Budget Difference
$ 39,000 $ 39,000 $ -0-
87,428 78,000 (9,428)
$ 126,428 $ 117,000 $ (9,428)
City of Lino Lakes, Minnesota
Management Report, Page 10
The above difference will cause a cash overdraft in the 1987 Certificates of
Indebtedness Debt Service Fund in 1988. Additionally, the budget amendments were made
on a preliminary basis and not as yet authorized by the City Council. We recommend that
the City:
1. Determine full levies required for debt prior to authorizing the budget
and tax levy.
2. Consider using Capital Improvements Fund residual bond proceeds for
Debt Service if required.
3. Review the revised 1988 budget and determine if amendments are adequate
and have the City Council review and take action to amend the budget if
appropriate.
Special Assessments Receivable
Special assessments receivable consisted of the following:
December 31, Increase
1987 1986 (Decrease)
Delinquent $ 195,457 $ 290,525 $ (95,068)
Deferred 1,646,410 1,899,133 (252,723)
City property 148,096 148,096
Tax forfeit 102,572 102,572
Total $2,092,535 $2,337,754 $ (245,219)
City of Lino Lakes, Minnesota
Management Report, Page 11
Delinquent assessments consist of amounts which were spread for collection in 1987
and prior years which have not yet been received. For 1982 through 1987, special
assessment collections were as follows:
Delinquent balance - January 1
Add:
Current installment
Delinquent - previously not
spread for collection
Amount collectible
Less:
Current collections
Delinquent collections
Total collections
Adjustments
Delinquent balance - December 31
Total collections as a percent
of current levy
1987 1986 1985 1984 1983 1982
$290,525 $271,588 $182,722 $123,970 $ 31,780 $ 16,356
388,798 162,553 183,830 201,280 227,230 215,629
8,446
679,323 434,141 366,552 333,696 259,010 231,985
194,196 78,980 63,292 124,395 123,535 185,968
190,508 63,103 31,672 25,945 6,578 14,237
384,704 142,083 94,964 150,340 130,113 200,205
(105,013) (1,533) -0- (634) (4,927) -0-
$189,606 $290,525 $271,588 $182,722 $123,970 $ 31,780
99% 87% 52% 75% 57% 93%
The 1987 adjustments primarily represent tax forfeit assessments. The assessments
are related to the Black Duck area of the City. The possible non - collection of these
assessments was anticipated by the City and therefore a property tax levy was included
in the bond resolution (see later comments).
As the above schedule shows, special assessment collection rates have fluctuated
substantially over the past several years. 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 collec-
tion of special assessments are required to assure timely availability of cash to meet
the scheduled debt payments. If the City continues to experience high delinquency
City of Lino Lakes, Minnesota
Management Report, Page 12
rates, the funds which rely on assessments will be unable to meet scheduled bond maturi-
ties on a timely basis. We recommend that the City monitor the collection rate and pro-
vide supplemental financing if assessment collections are not adequate to meet bonded
debt payments.
The amount listed as "City property" totaled $148,096 at December 31, 1987.
The City acquired these properties in order to recover the assessments levied against
these properties. The City has received clearance to permit development of these lots
from various authorities (Army Corps of Engineers and State DNR). The City intends to
sell the properties and recover the related assessments. The City has determined that
the amounts will not be fully recoverable. The City has received bids on the property
and is currently litigating a settlement.
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. In order to assure that the
City's best interests are guarded, the City should improve internal records with regard
to special assessments and compare such records periodically to County records.
Additionally, Anoka County is not providing detail of penalty and interest on delinquent
collections. In light of the magnitude of past delinquencies, this allocation should be
provided (penalties and late charges totaled over $75,000 for the City in 1987).
Estimated allocations were made for these amounts for 1987. We recommend that the City
request improved data from the County.
City of Lino Lakes, Minnesota
Management Report, Page 13
The above procedures will allow the City greater assurance that all of its special
assessments are properly spread for collection. Additionally, the City will have the
ability to generate year end balances for annual financial reporting with greater ease
and accuracy. The increased level of control required is partially a function of
increased assessment activity. Special assessments receivable (City -wide) was less than
$100,000 in 1979. Assessments receivable were over $2 million at December 31, 1987.
Fixed Assets
The City does not currently maintain accounting records of its general fixed assets.
This situation is not uncommon for Metropolitan suburban communities. The benefits of a
fixed asset system are improved financial reporting, better availability of insurance
information, availability of data base for determining capital replacement needs and an
overall improved safeguard over City assets. The implementation of such a system may
not be a priority of the City at this time. We recommend, however, that the City con-
sider the benefits of implementing a general fixed asset system at some future date.
City of Lino Lakes, Minnesota
Management Report, Page 14
Fund Equity
Fund
Fund Balance:
General Fund
Special Revenue Fund:
Revenue Sharing
Debt Service:
1985 Certificates of Indebtedness
Improvement Bonds of 1977
Improvement Bonds of 1980
Improvement Bonds of 1981
Improvement Bonds of 1982
Improvement Bonds of 1983
Improvement Bonds of 1984
Improvement Bonds of 1985
Improvement Bonds of 1986
Improvement Bonds of 1987
Capital Projects:
Parks and Playgrounds
Capital Improvements
Community Development Block Grant
LAWCON Grant
Lakes Addition #7
Baldwin Lake Mobile Home Court
Tomahawk Trail
Reiling Road
Rice Lake Estates
North Road
Main Street
West Shadow Lake Drive
Sunset Road
Deer Pass Trail
Comp Area Wide Water
Reshanau Estates
Ericksons
Ash Street East Extension
Otter Bay
West Central Sewer & Water Trunk
Comprehensive Sanitary Sewer
74th Street
1160 Main
2nd Avenue
4th Avenue
80th Street
Ash Street Sewer
Totals
Retained Earnings:
Sewer and Water Fund
Grand Totals
Fund Position (Deficit)
December 31,
1987 1986
$ 642,392
$ 539,380
Increase
(Decrease)
$ 103,012
-0- 2,377 (2,377)
5,780
-0-
74,833
20,677
356,789
6,961
10,170
232,876
42,532
37,625
116,870
98,018
117
-0-
(17,288)
15,466
-0-
(2,834)
379,051
1,442
(59,689)
(10,819)
153,060
(997)
242,580
88,367
50,825
(3,289)
(1,808)
(5,500)
(556)
(803)
(11,300)
(55)
5,589
(17,972)
(49,887)
2,399,223
14,458
1,985 3,795
19,648 (19,648)
(45,103) 119,936
19,532 1,145
628,272 (271,483)
6,405 556
4,413 5,757
79,358 153,518
33,057 9,475
-0- 37,625
131,907 (15,037)
43,417 54,601
1,713 (1,596)
(47,244) 47,244
(17,288)
13,013 2,453
304 (304)
(2,779) (55)
513,292 (134,241)
(6,090) 7,532
(330) (59,359)
(10,819)
145,013 8,047
(377) (620)
242,580
88,367
50,825
(3,289)
(1,808)
(5,500)
(556)
(803)
(11,300)
(55)
258,818
(12,744)
(49,887)
604,624
(253,229)
(5,228)
1,794,599
20,874
(6,416)
$2,413,681 $1,815,473 $ 598,208
City of Lino Lakes, Minnesota
Management Report, Page 15
The following section of this report relates to the various changes in the fund
positions.
General Fund
The financial statements for the General Fund are presented in Statement 6 and 7 of
the 1987 Annual Financial Report. The fund balance of the General Fund was $642,392 at
December 31, 1987 representing a $103,012 increase in fund balance during 1987 as result
of the following:
Budgeted increase (decrease) in fund balance
Actual revenues over (under) budgeted revenues:
Tax collections
Licenses and permits
Intergovernmental revenue
Charges for services
Court fines
Interest on investments
Miscellaneous
Net revenue over budget
Actual expenditures under (over)
budgeted expenditures:
General government
Public safety
Highways and streets
Parks
Other
Net expenditures under budget
Actual net transfers in over budget - net
Total improvement
$ 32,422
52,115
6,984
(9,631)
20,948
16,756
32,332
(36,936)
13,021
1,189
321
(14,783)
$ (16,641)
151,926
(37,188)
4,915
$ 103,012
Statement 7 of the 1987 Annual Financial Report presents additional detail relating
to the above budget variances.
City of Lino Lakes, Minnesota
Management Report, Page 16
* Cash flow timing differences.
Expenditures are incurred somewhat
evenly throughout the year. Property
taxes & State aids are not recceived
until the second half of the year. A
reserve of one -half of such revenues
is therefore recommended.
* Emergency or unanticipated
expenditures.Examples include natural
disasters, law suits, comparable worth
implementation and premature breakdown
of vital equipment.
* Capital outlay replacement.
Internal escrow for purchases which
may exceed amounts available in
any single budget cycle. This may
also be accomplished through tran-
sfers to dedicated replacement funds.
* Special City Council Projects.
Preliminary studies, interfund loans
and minor improvement projects are
examples of reserve uses.
The overall fund balance of
several years:
Year Ended
December 31,
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
the
* Intergovernmental revenue cutbacks.
The City is vulnerable to legislative actions at
both the Federal & State level. The recent
elimination of Revenue Sharing is one example.
Annual analysis of Local Government Aid &
Homestead Credit formulas is a constant threat.
General Fund has been as follows
Fund Balance (Deficit)
for the past
Increase
(Decrease) in
Designated Undesignated Undesignated
$ 11,464 $ 51,249
14,655 50,652 $ (597)
18,766 (19,730) (70,382)
19,876 30,109 49,839
46,466 13,355 (16,754)
51,084 80,032 66,677
116,770 126,153 46,121
77,624 350,675 224,522
83,714 455,666 104,991
52,593 589,799 134,133
City of Lino Lakes, Minnesota
Management Report, Page 17
* Avoids temporary overdrafts
prior to major receipts.
* Supplements revenues
with investment earnings.
* City may study effects of
revenue cuts before gradual
program reductions.
Benefits of
Reserves
* Provides resources
for minor projects or
feasability reports.
* Provides the City
greater options to deal
with unexpected events.
* Avoids overburdening
of annual budgets for
certain capital outlay.
The amount of General Fund reserve required to meet emergency and /or unanticipated
expenditures is not readily quantifiable. Rather, the level of this requirement must be
established by the City based on the history of the City and the philosophy of
"adequate" reserve coverage.
The reserve requirement to deal with unforeseen intergovernmental revenue reductions
is also difficult to quantify. State and federal legislation dealing with shared aids
is somewhat unpredictable. The City must strive to remain current on the effects of
changing legislation and budget such aids accordingly. A reserve balance in the City's
General Fund will mitigate the adverse effects of aid reductions which are received
after expenditure budget commitments are made.
City of Lino Lakes, Minnesota
Management Report, Page 18
The City increased the overall fund balance by $103,012 in 1987. A portion of the
balance is committed to specific use (i.e., $52,593 is prepaid insurance). A graphic
illustration of fund balance compared to expenditures and transfers out is as follows:
$1,600
$1,500
$1,400
$1,300
$1,200
$1,100
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
$1,600
"=").- $1,500
$1,400
— $1,300
$1,200
$1,100
$1,000
$900
$800
$700
— $600
-- $500
1-• $400
$300
$200
$100
$0
1978 1979
1980 1981
1982 1983
1984
1985
1986
1987
0 Expenditures and Transfers '•' Fund Balance
The City's minimum cash flow reserve requirement is measurable. For the City of
Lino Lakes, the minimum required surplus is $630,975 computed as follows:
1988 Budgeted Levy (Includes Homestead Credit)
1988 Anticipated Local Government Aid
$1,029,850
232,100
Total $1,261,950
Minimum Required Cash -Flow Reserve (One -Half of Total) $ 630,975
The City improved the financial position and undesignated reserve balance of the
General Fund substantially in 1986 and 1987. This increase (plus incremental increases
over the past several years) will allow the City to better manage the financial position
of the General Fund.
City of Lino Lakes, Minnesota
Management Report, Page 19
The City is now approaching the minimum cash flow reserve amount of fund balance in
the General Fund. This is a very commendable achievement especially in light of the
fact that the City had virtually no reserves prior to 1983. When the City has met this
primary reserve requirement, we recommend that the City consider adopting a formal City
Council approved policy on reserves. The reserve policy can be "self- adjusting" by
including formulas for reserves as follows:
Cash flow reserve - One half of total General Fund property tax levies and
state aids (see previous schedule).
Intergovernmental revenue reductions - a Council designated
intergovernmental revenue of the General Fund.
Emergency /unanticipated expenditures - a Council designated
operating expenditure budget.
Other reserves - as adopted by specific City Council action.
percent of total
percent of
The formula aspect of a reserve policy allows for annual adjustment without specific
Council action. The City currently has enough fund balance to reserve for cash flow.
Other reserve requirements may require further improvements in fund balance to fully
meet the City's objectives.
The level of fund balance of the City's General Fund is one indicator of the finan-
cial strength or independence of a city. This often becomes critical during periods of
high inflation; decreasing State aids; and, poor economic growth. With adequate reser-
ves, these external factors are more manageable by the City. We commend the City for
the improvements made in recent years to the General Fund reserve balance. These impro-
vements indicate a responsible approach to City government which will assure the con-
tinued ability of the City to deliver basic required services on a timely basis.
City of Lino Lakes, Minnesota
Management Report, Page 20
Aerial Map Charges
The City's General Fund incurred over $20,000 for aerial maps in 1987. The maps are
required for water management purposes and to assist in development. On January 28,
1988 the City established a system to recover the costs of the maps. The City will
charge as follows:
Sale of Maps - 1st 1/2 sheet $50.00
Sale of Maps - Additional 1/2 sheets 5.00
Per Acre Plat Charge 10.00
Construction Funds 1% of construction costs
We recommend that the City add the above charges to the budget process and establish
procedures to assure that all charges are made on a timely basis.
Special Revenue Funds
The financial statements of the Special Revenue Funds are presented in Statements 8
and 9 of the 1987 Annual Financial Report. A special revenue fund is a classification
of funds to account for revenues segregated by City ordinance or Federal or State
Statutes for specific purposes. The City maintained the Federal Revenue Sharing Fund as
the only Special Revenue Fund of the City. Federal legislation has eliminated the
Revenue Sharing Program. The City closed the Special Revenue Fund in 1987 by trans-
ferring the remaining balance of $2,377 to the General Fund.
Debt Service Funds
The combining financial statements for the Debt Service Funds are presented in
Statements 10 and 11 of the 1987 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).
City of Lino Lakes, Minnesota
Management Report, Page 21
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 Increment. 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 con-
sidered in the form of capitalized interest.
- Special Assessments. Charges to benefited properties for various improvements.
In addition to the above pledged assets, other funding sources may be received by
Debt_Service Funds as follows:
- Residual project proceeds from the Capital Project Fund.
- Investment earnings.
- State or federal grants.
- Transfers from other funds.
- Connection 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).
New reporting standards have been implemented for the City of Lino Lakes whereby the
Special Assessment Fund type has been eliminated. Such funds are now combined with the
City's Debt Service Fund. 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 sec-
tions of the Annual Financial Report to assist in this analysis.
City of Lino Lakes, Minnesota
Management Report, Page 22
Fund Description
General Debt:
1985 Certificates of Indebtedness
1987 Certificates of Indebtedness
Total general debt
Special Assessment Debt:
Improvement Bonds of 1980
Improvement Bonds of 1981
Improvement Bonds of 1982*
Improvement Bonds of 1983
Improvement Bonds of 1984
Temporary Improvement Bonds of 1985
Improvement Bonds of 1986
Temporary Improvement Bonds of 1987
Total special assessment debt
Total - All Debt Service Funds
Fund
Balance
December 31, 1987
Deferred
Revenue Total
Outstanding
Debt
Scheduled
Property
Taxes
Final
Maturity
Date
$ 5,780 $ 922 $ 6,702 $ 37,500 $ 39,000 12/1/88
78,000 78,000 11/1/88
5.780
922
6.702
74,833 34 74,867
20,677 18,833 39,510
356,789 327,424 684,213
6,961 70,880 77,841
10,170 14,585 24,755
232,876 1,347,753 1,580,629
42,532 152,509 195,041
37.625 60.081 97.706
115.500 117.000
20,000
115,000
60,000
24,500
1,850,000
475,000
1,650,000
782,463 1,992,099 2,774,562 4,194,500
12/1/91
2/1/81
10/1/93
119 11/1/94
11/1/88
75,513 2/1/97
9/1/90
75.632
$ 788,243 $1,993,021 $2,781,264 $4,310,000 $ 192,632
* Assets pledged to pay debt of Improvement Bonds of 1986.
Deferred revenue of the preceding
schedule primarily consists of uncollected special
assessments. The preceding schedule composes
and, 2) deferred revenue.
Debt Service Funds
outstanding debt with: 1) fund balance;
should be evaluated at least annually. The following decision
chart summarizes steps to consider.
City of Lino Lakes, Minnesota
Management Report, Page 23
Condition A
Fund balance plus
deferred revenue
meets or exceeds
bonds payable.
Cautions
1. 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?
The debt service fund
is clearly adequately
funded. Plan for eventual
use of surplus.
Conclusion 1
Condition B
Fund balance plus
deferred revenue
is Tess than
bonds payable.
Questions
1. Are sufficent 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 nQI 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 o•tions.
Conclusion 3
Improvement Bonds of 1980
The 1980 Special Assessment Bonds fully matured in 1986. The remaining balance
can be transferred to another City fund at the discretion of the City Council. We
recommend that the City plan for the use of this remaining balance. One option is to
use this to establish a closed bond fund. This fund may be used to finance deficits of
other Debt Service Funds or may be used to finance minor projects for which bonding
is not cost effective. The monies in this type of fund are not restricted to transfer
within this Fund type. The Council may elect to use the residual monies for any
City of Lino Lakes, Minnesota
Management Report, Page 24
governmental purpose. We recommend that the City consider establishing a Closed Bond
Fund in-1988 and transfer the residual balances of the 1980 Bond Fund.
This fund has experienced poor collection rates on assessments. Delinquent
assessments relate to one major property owner. The fund therefore had a cash deficit
of nearly $40,000 at December 31, 1986. In 1987, the City collected over $88,000 of
delinquent assessments and substantial penalty and late payment charges. These collec-
tions reversed the cash deficit situation. The cash balance of $74,833 is available for
transfer as approved by the City Council. One option available is a transfer to the
City's General Fund to further improve the reserve balance (see earlier comments).
Improvement Bonds of 1982
The Improvement Bonds of 1982 were refinanced by the Improvement Bonds of 1986.
Bonds maturing in the years 1989 through 1991, representing $375,000, were called on
February 1, 1987. Upon final bond maturity in 1988, the remaining assets of this fund
should be transferred to the Improvement Bonds of 1986. The City has received bids on
the sale of the City property in 1986 (see earlier commentary). There were over
$177,800 of delinquent assessments receivable at December 31, 1986 compared to $22,886
at December 31, 1987.
The fund experienced a 1985 collection rate on current assessments receivable of 13%
causing an increase in delinquent assessments of $86,000. The City recovered nearly
$74,000 of such prior delinquencies. Additionally, $110,728 of prior delinquencies were
reclassified to tax forfeit status.
Temporary Improvement Bonds of 1985
The Temporary Improvement Bonds of 1985 were issued to finance Weber's Addition
(Tomahawk Trail) and the Rice Lake Estates Addition. Final payment on these bonds is
due November, 1988 at which time definitive bonds will be required. Weber Addition was
City of Lino Lakes, Minnesota
Management Report, Page 25
completed and assessed in 1985. Rice Lake Estates was assessed in 1986. The permanent
financing of this temporary issue should not require tax levy support as follows:
December 31, 1987:
Cash in debt fund $ 230,810
Assessments receivable 1,349,819
Cash in construction fund 439,191
Total 2,019,820
Bonds outstanding 1,850,000
Difference $ 169,820
The Debt Service Fund has over $165,000 of delinquent assessments. Prior to final-
izing the terms of the permanent bond issue, we recommend that the City determine the
nature of the delay in assessment receipts.
Improvement Bonds of 1986
The Improvement Bonds of 1986 were issued to refinance the Improvement Bonds of 1982 II
and to finance the Sunset Road improvements. Upon final maturity of the 1982
Improvement Bonds, the remaining assets should be transferred to this fund.
Temporary Improvement Bonds of 1987
The City issued bonds to finance the following projects in 1987:
North Road
Deer Pass Trail
Comprehensive Water
Reshanau Lake Estates South
Erickson's
4th Avenue
Bond
Proceeds
$ 9,473
11,108
664,671
481,833
381,422
84,942
Total $1,633,449
North Road, Deer Pass Trail and 4th Avenue were assessed in 1987. The remaining
projects are scheduled for assessment in 1988.
City of Lino Lakes, Minnesota
Management Report, Page 26
Capital Project Funds
The financial statements for the Capital Project Funds are presented in Statements
12 and 13 of the 1987 Annual Financial Report. Pursuant to changes in reporting stan-
dards, the Capital Project Fund type now includes special assessment projects. The fund
balances (deficits) of the Capital Project Funds were as follows at December 31, 1987
and 1986:
Fund Balance (Deficit)
December 31, Increase
Fund 1987 1986 (Decrease)
Parks and Playgrounds $ 116,870 $ 131,907 $ (15,037)
Capital Improvement Projects 98,018 43,417 54,601
Community Development Block Grant 117 1,713 (1,596)
LAWCON (47,244) 47,244
Interim Construction Fund (258,457) 258,457
Lakes Addition #7 (17,288) (17,288)
Main Street (59,689) (330) (59,359)
West Shadow Lake Drive (10,819) (10,819)
80th Street (17,972) (17,972)
Ash Street East Extension (3,289) (3,289)
Otter Bay (1,808) (1,808)
West Central Sewer & Water Trunk • (5,500) (5,500)
74th Street (803) (803)
1160 Main (11,300) (11,300)
2nd Avenue (55) (55)
Ash Street Sewer (49,887) (49,887)
Financed by the Improvement Bonds
of 1983:
Baldwin Lake Mobile Home Court 15,466 13,013 2,453
Financed by the Improvement Bonds
of 1984:
Reiling Road (2,834) (2,779) (55)
Financed by the Temporary Improvement
Bonds of 1985:
Rice Lake Estates 379,051 513,292 (134,241)
Tomahawk Trail 304 (304)
Financed by the Improvement Bonds
of 1986:
Sunset Road 153,060 145,013 8,047
Financed by the Temporary Improvement
Bonds of 1987:
4th Avenue 5,589 5,589
North Road 1,442 (6,090) 7,532
Deer Pass Trail (997) (377) (620)
Comprehensive Area Wide Water 242,024 242,024
Reshanau Lake Estates South 88,367 88,367
Erickson's 50,825 50,825
Totals $ 968,588 $ 505,275 $ 463,313
City of Lino Lakes, Minnesota
Management Report, Page 27
Parks and Playground
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. The fund balance of $116,870 at December 31, 1987 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 several developers to allow for payment upon development (as opposed to
subdivision). The amount of these park dedication fees receivable was $5,060 for the
past three years.
Capital Improvements Fund
The 1985 and 1987 Certificates were issued to finance the acquisition of equipment
for various departments of the City. The following schedule reflects the budget and
actual expenditures for these certificates:
1985 Certificates
1985 and
1986 1987
Description Budget Actual Actual Variance
Police Cars $ 25,000 $ 24,844 $ 156
Dump Truck with Plow 60,000 39,955 $ 9,758 10,287
Mini Dump Truck with Plow 17,000 17,516 (516)
Equipment Trailer 3,000 959 2,041
Street Sweeper 3,000 3,000
Crack Filling Machine 6,000 3,650 2,350
Public Works Vehicle 4,725 4,725
Additions to Equipment 15,504 (15,504)
Totals $ 118,725 $ 90,040 $ 29,871 $ (1,186)
City of Lino Lakes, Minnesota
Management Report, Page 28
1987 Certificates
1987
Description Budget Actual Variance
Turf Mower /Snow Broom $ 15,000 $ 15,000
Two Squad Cars 23,000 23,000
Two Radar Units 2,500 2,500
Front End Loader 20,000 20,000
Civil Defense Siren 13,000 13,000
Totals
$ 73,500 $ -0- $ 73,500
The following schedule summarizes the activity of this fund through December 31,
1987.
Proceeds from issuance of 1981 certificates $ 111,400
Proceeds from issuance of 1985 certificates 107,500
Proceeds from issuance of 1987 certificates 78,260
Interest earnings:
1981 1,288
1982 9,901
1983 1,758
1984 1,300
1985 1,192
1986 5,218
1987 2,459
Property taxes 14,158
Transfer from Debt Service Fund 2,390
Total revenue and other sources
Expenditures:
1981
1982
1983
1984
1985
1986
1987
$ 2,707
55,136
50,506
10,546
7,725
82,315
29,871
$ 336,824
Total expenditures 238,806
Fund balance - December 31, 1987 $ 98,018
After the scheduled purchases of equipment are made in 1988, the remaining fund
balance should be closed to the 1987 Certificates of Indebtedness Debt Service Fund (or
be expended on qualifying equipment purchases).
City of Lino Lakes, Minnesota
Management Report, Page 29
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, were 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 determined 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 in reimbursement of City expenditures.
The CDBG allotments for 1982 to 1985 were appropriated for the Alexander House
and the Senior Citizen Facility. Anoka County allocated additional CDBG amounts for the
City in 1987 to subsidize sewer improvements of low cost housing. The terms of the
allotment are such that the City has paid CDBG proceeds to Debt Service Funds of the
City to retire outstanding assessments.
LAWCON Grant
The LAWCON Grant Fund was established to account for the grant awarded to the City
for the development of Country Lakes Park. Total grant awarded was $115,713. This
grant agreement requires the grantee to properly document all expenditures related to
the grant agreement. Documentation of these expenditures is necessary in order for the
grantee to earn the grant monies approved.
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
City of Lino Lakes, Minnesota
Management Report, Page 30
The zero fund balance of this fund is a result of the following activity since
inception:
Revenue:
State Grant (28% of expenditures)
Federal Grant (30% of expenditures)
Interest on investments
Total revenue
$ 36,867
38,822
5,069
Expenditures:
Contractor 92,985
Engineering 13,642
Other 18,292
Total expenditures
Transfers In:
Parks and Playground
General
Total transfers
30,048
14,113
$ 80,758
124,919
44,161
Fund balance - December 31, 1987 $ -0-
The 1987 transfers effectively closed this fund. The City refunded $19,499 of State
LAWCON Grant because a portion of the project was cancelled and therefore the City did
not expend the full matching portion.
Lakes Addition #7
Lakes Addition #7 has had the following transactions from inception:
Miscellaneous Revenue
Developer reimbursement
Preliminary Construction Costs
1982 and 1983 and
Prior 1984 1985 1986 Total
$ 183 $ -0- $ -0- $ 102
18,285 $ 18,570
22,767 -0- 91 13,000 35,858
Fund balance (deficit) - December 31, 1987 $(17,288)
The above deficit primarily relates to the loss of a lawsuit regarding development.
We recommend that the City designate a financial source and eliminate this fund in 1988.
City of Lino Lakes, Minnesota
Management Report, Page 31
Baldwin Lake Mobile Home Court
This project was financed by the $100,000 Improvement Bonds of 1983. The project
consisted of installations of sewer service lines to the mobile home court. The project
was completed and assessed in 1983. The fund is carrying a liability to MWCC for sewer
availability charges of $24,400. We recommend that the City remit this money to MWCC in
1988.
This project was complete at December 31, 1986. We recommend that this fund be
closed in 1988 to the Improvement Bonds of 1983 Debt Service Fund. Council authoriza-
tion is required to effect this closing.
Tomahawk Trail /Weber's Addition
The City completed this sanitary sewer project in 1985. The project was also
assessed in 1985.
This project was bonded for in 1985 with the Rice Lake Estates Project. This fund
was closed in 1987 to the Improvement Bonds of 1985 Debt Service Fund.
Reiling Road
This project was financed by the Improvement Bonds of 1984. This project was
substantially complete in 1985. Final payment to the contractor has been withheld
pending settlement of a dispute with adjacent property owners. The fund deficit at
December 31, 1987 was $2,834. We recommend that the City eliminate this deficit in 1988
through a City Council designated transfer.
Interim Construction /4th Avenue /80th Street
The interim construction fund was established in 1985 to account for the preliminary
construction costs prior to permanent bonding or other financing determination. We con-
cur with the City in establishing this fund.
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
City of Lino Lakes, Minnesota
Management Report, Page 32
The 4th Avenue project was funded primarily from MSA allotments. A portion of the
project will also be assessed. This project was bonded in 1987. Both projects were
established as separate funds in 1987. The 80th Street Fund will be financed by the
State for the construction of the bridge and Anoka County for construction of the road.
The City will pay for engineering and other minor costs.
The City's accounting system is a manual system which is not conducive to departmen-
tal accounting practices required to maintain an Interim Construction Fund. The City
has therefore reverted to the practice of establishing a separate fund for each
construction project. After acquiring the new computer system, we recommend that the
City establish departmental accounting for interim construction projects and other com-
monly financed projects.
Rice Lakes Estates Addition
The City began this project in 1985. The project was scheduled for completion in
1987. We recommend that this fund be closed to the Improvement Bonds of 1986 Fund after
final completion of construction.
North Road
This fund was established in 1986 to account for North Road Improvements. This pro-
ject was financed by the 1987 Temporary bond issue and was completed and assessed during
1987. We recommend that this fund be closed in 1988 to the Temporary Bonds of 1987 Debt
Service Fund.
Main Street
This fund was established in 1986 to account for the Main Street Improvements. This
project continues to reflect a deficit because funding has not been secured. We recom-
mend that the City determine the status of this project and consider methods to elimi-
nate the deficit. This project will be assessed in 1988.
City of Lino Lakes, Minnesota
Management Report, Page 33
West Shadow Lake Drive
This fund was established in 1986 to account for the West Shadow Lake Drive. This
project has not been approved and will not be constructed. We recommend that the City
consider methods to eliminate the deficit.
Sunset Road
This fund was established in 1986 to account for the Sunset Road Improvements. This
project was financed by the Improvement Bonds of 1986. This project was assessed in
1986. The City is waiting for the completion of a joint powers agreement with the City
of Blaine. After completion of the agreement, the City will be billed for its portion
of the project. We recommend that this fund be closed to the related Debt Service Fund
in 1988.
Deer Trail Pass
This fund was established in 1986 to account for the Deer Trail Pass Improvements.
This project was financed by the Temporary Improvement Bonds of 1987 and was completed
and assessed in 1987. We recommend that the City consider methods to eliminate the
deficit in this fund in 1988.
Comprehensive Area Wide Water
This fund was established in 1987 to account for the trunk water main installation
for the southwest water district. This project was financed by the Temporary
Improvement Bonds of 1987.
Reshanau Lake Estates South
This fund was established in 1987 to account for installation of water, sewer, storm
sewer and streets in the South Reshanau Lakes Estates subdivision. This project was
financed by the Temporary Improvement Bonds of 1987.
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
City of Lino Lakes, Minnesota
Management Report, Page 34
Erickson's
This fund was established in 1987 to account for installation of water, sewer, storm
sewer and streets in D. Erickson's Second Addition. This project was financed by the
Temporary Improvement Bonds of 1987.
Ash Street East Extension
This fund was established in 1987 to account for road construction into Otter Bay
subdivision. Plans and specs have been ordered. A financing source for this project
has not been determined.
Otter Bay
This fund was established in 1987 to account for City costs associated with the
installation of streets and storm sewer in the Otter Bay Development. The City has a
developer agreement and has received a contractor's deposit for this project. As of
December 31, 1987, the amount of the contractor's deposit was not sufficient to cover
City incurred costs. The City does, however, have a letter of credit for $35,000. We
recommend the City monitor this situation to assure reimbursement from the developer and
that all deposits held in the Contractors Deposits Agency Fund be reclassified to the
appropriate construction fund as costs are incurred.
West Central Sewer and Water Trunk
This fund was established in 1987 to account for installation of a sewer and water
trunk main on Second Avenue. Construction on this project has not been started. The
project is scheduled for completion in 1989. Special assessments, area wide connection
charges and possibly tax increments will be used to finance this project.
74th Street
This fund was established in 1987 to account for improvements on 74th Street. This
project has not been approved and will not be constructed. We recommend that the City
consider methods to eliminate the deficit and close this fund in 1988.
City of Lino Lakes, Minnesota
Management Report, Page 35
1160 Main Street
This fund was established in 1987 to account for costs associated with the repairs
of a failed septic system. This project will be assessed in 1988. We recommend that
the City consider methods to eliminate the deficit and close this fund in 1988.
2nd Avenue
This fund was established in 1987 to account for costs associated with the installa-
tion of storm sewers and road construction on 2nd Avenue. A portion of the costs for
this project will be funded by MSA allotments in addition to special assessments and tax
increment collections.
Ash Street Sewer
The City established this fund in 1987. Funding is anticipated from 1988 bonding.
Connection and Area Charge Fund
On January 11, 1988 the City Council approved Resolution 1 -88 which established the
Connection and Area Charge Fund for the City. The purpose of this fund is to collect
various connection and area 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 connection and area
assessments needed to meet debt requirements. We recommend that the City monitor actual
versus projected connection charge and area assessment collections to assure that debt
payment requirements will be met.
This fund will eventually account for connection charges and area assessments for
funding of various debt issues. The City has amended collection procedures.
City of Lino Lakes, Minnesota
Management Report, Page 36
The City intends to retire debt from the various connection and area 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.
The Temporary Improvement Bonds of 1987 is the first issue to rely on connection
charges pursuant to the new connection and area charge policy. A summary of anticipated
connections is as follows:
ESTIMATE OF CONNECTIONS TO TRUNK FACILITIES
Connection Charges Area Assessment
Year of Water S ^wer Water Sewer
Collection Source $1,050 $650 $800 $750
1989 Erickson & Uhde 70 70 70 70
Rep la t 6 6 6
Other 20 20
Total 96 96 76 70
Total
Assessment $ 100,800 $ 62,400 $ 60,800 $ 52,500 $ 276,500
1990 Erickson & Uhde 55 55 55 55
Lakes Addition 42 42 42 42
Other 26 26 6
Total 123 123 103 97
Assessment $ 135,546 $ 83,886 $ 86,520 $ 76,339 $ 382,291
1991 Erickson & Uhde 55 55 55 55
Other 40 40 40 40
Total 95 95 95 95
Assessment $ 109,915 $ 68,020 $ 83,790 $ 78,470 $ 340,195
Designations of balances by bond issue and connection /area 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 must be modified to
achieve this result. Our preliminary review of procedures in 1988 indicate that further
modifications are required as follows:
City of Lino Lakes, Minnesota
Management Report, Page 37
• Establish several revenue accounts to segregate connection /area charges by debt
service commitment.
• Maintain a subsidiary record of collections by debt issue and adjust annually for II
transfers to arrive at remaining designated balance.
• Allocate interest within the fund by designated balance.
We are available to assist the City in the above areas.
Administrative Construction Charges /Public Improvement Policy
The City incurs expenditures in the General Fund through use of administrative time
and effort in the completion of construction projects. It is appropriate for the City
to charge an interfund administrative fee for these services during the construction
phase of the project. A common basis for the fee is a percent of the project or of the
contract (either a flat percent or a sliding percent based on the size of the project).
During 1984, the City established a policy regarding administrative charges
(Resolution #84 -4). The policy includes a "step down" administrative charge based on
the size of the project. We concur with this approach and, in our opinion, the percen-
tages used are reasonable and comparable to those used by other suburban metropolitan
cities.
The policy (as implemented) requires one time transfers of administrative charges
from the special assessment construction funds. However, the policy was unclear as to
when the transfer for administrative charges should be made. The Public Improvement
Policy now clarifies this issue. The City engineer is to calculate the charge when the
project is 85% - 100% complete. We recommend that the City record the charge when
received from the City engineer.
On January 11, 1988, the Lino Lakes City Council approved resolution 2 -88 adopting
the Lino Lakes Public Improvement Policy. The policy covers the following areas:
City of Lino Lakes, Minnesota
Management Report, Page 38
- Financing of public improvements for existing developed areas pursuant to
Minnesota Statutes Chapter 429.
- Financing of public improvements in undeveloped areas.
- City- financed improvements - new subdivisions.
- Developer- financed improvements.
- Required public improvements.
- Trunk sewer area and connection charges.
- Trunk water main area and connection charges.
- Special assessment procedures.
We commend the City for the adoption of this policy and recommend the monitoring of
procedures to assure that the policy is adhered to.
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.
The Housing District #1 -1 has anticipated projects/bonding requirements as follows:
Public Improvements
Legal, Planning, Fiscal and Contingency
Capitalized Interest and Bond Discount
$ 974,094
25,000
216,404
Estimated bond issue $ 1,200,000
The above bonding was estimated for the Rice Lake Estates special assessment pro-
ject. That project is now complete. The tax increments generated from the Housing
District will be available to subsidize debt service (if required) or will be available
for future extensions of the overall construction within the District.
City of Lino Lakes, Minnesota
Management Report, Page 39
The Housing District Financing Plan indicates that the original assessed value of
the District is $19,080. The values within the District are estimated to be-$1,270,000
after completion of the project. This would result in a captured assessed value of
$1,250,920. The plan, however, refers to a captured value estimated at $141,131. This
inconsistency within the official plan should be corrected. (The $141,131 appears to be
the anticipated tax increment taxes receivable from the captured value annually.)
The tax increment plan also includes an annual administrative fee. We recommend
that the City determine if this fee will be received as an interfund charge of the
General Fund or if applicable expenses will be allocated to the appropriate Capital
Project Fund.
Tax increment districts often generate surplus amounts over the anticipated
receipts. The 1988 legislative session reduced the probability of such excesses by
required excess amounts caused by mill 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 that the
City:
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 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 has incurred preliminary expenditures (legal, administrative, etc.) to
establish the District. These expenditures have been paid from the City's General Fund.
We recommend that the City establish an Economic Development District #1 Capital Project
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
City of Lino Lakes, Minnesota
Management Report, Page 40
Fund and code all such future expenditures in this Fund. Tax increments collected will
IIbe the source of financing for such expenditures.
Enterprise Fund
The Enterprise Fund of the City of Lino Lakes are presented in the 1987 Annual
Financial Report in Statements 14 through 16.
Presented below are condensed comparative operating statements. Contributed depre-
ciation has not been included in these presentations.
Operating Income:
Water billings
Sewer billings
Other
Total operating income
Operating Expenses:
Personal services
MWCC
Repairs and maintenance
Depreciation
Other
Total operating expenses
For The Year Ended December 31,
1987 1986
Amount Percent Amount Percent
$ 21,492 22.66%
49,942 52.66
6,916 7.29
78,350 82.61
29,577 31.19
33,709 35.54
7,237 7.63
1,082 1.14
23,233 24.50
94,838 100.00
Income (Loss) From Operations (16,488) (17.39 %)
Other Income /(Expenses):
MWCC maintenance agreement
Net Income /(Loss)
10,072
$ (6,416)
$ 11,608
41,655
4,676
57,939
19.42%
69.68
7.82
96.92
16,204 27.10
28,272 47.29
5, 31 3 8.89
984 1.65
9,008 15.07
59,781 100.00
(1,842) (3.08 %)
7,100
5,258
The operating results of the Water and Sewer Utility Fund decreased by over $11,000
from 1986. The City reviewed water and sewer rates and increased rates effective April
1, 1988.
City of Lino Lakes, Minnesota
Management Report, Page 41
The Metropolitan Waste Control Commission (MWCC) bills the City annually on an esti-
mated basis. These estimated billings are adjusted at a later date and the City is then
billed the additional amount or given a refund. These estimated billings vary from year
to year and may cause material variances in annual profits or losses of the utility
fund. The MWCC billings for the period 1977 to 1988 were as follows:
Billings from MWCC
Estimated Final
Percent Percent
Year Amount Change Amount Change
1977 $ 3,046 $ 1,573
1978 3,560 16.8% 3,662 132.8%
1979 8,312 133.5 6,171 68.5
1980 6,858 (17.5) 7,123 15.4
1981 11,357 65.6 10,213 43.4
1982 15,504 36.5 14,592 42.9
1983 19,027 22.7 23,866 63.6
1984 26,107 37.2 22,011 (8.4)
1985 30,050 15.1 25,039 13.8
1986 33,283 10.8 29,147 16.4
1987 37,845 13.7 Not available
1988 41,351 9.26 Not available
A graph of the above data is as follows:
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
• Estimated Billings 0 Actual Billings
City of Lino Lakes, Minnesota
Management Report, Page 42
There are two basic factors which contribute to increased billings from the MWCC.
The first is increased use of the system. The estimated increased usage for 1988 over
1987 for the City of Lino Lakes is 7.1 %. The second factor which increases the billings
from MWCC is their increased cost to process gallonage. Their cost to process (per
million gallons) increased from an estimated $901 to an estimated $919. This represents
an increase of 2 %. The combination of these factors increased the City's estimated cost
in 1988 by 9 %. As the system gains users, the increased usage part of the overall
increase should be offset by the billings to new users. The per unit portion of the
increase, however, must be borne in full by existing users or be subsidized by overall
City operations.
The City has no control over the billings from the MWCC for the sewer treatment
costs. This operating expense comprises 67.5% of the 1987 customer billings for sewer
service charges. The City must set rates at levels adequate to pay for the pass through
costs from MWCC plus other City expenses. . In view of this arrangement with MWCC, the
City's ability to exercise control over its sewer operations is limited. The City can
be construed to be acting as an agent for the MWCC with regard to sanitary sewer opera-
tions.
The MWCC has approved a change in the district structure and will be converting
rates and other operating procedures over the next several years. We recommend that the
City monitor the effects of these changes and consider such changes on the City's sewer
rates.
City of Lino Lakes, Minnesota
Management Report, Page 43
Agency Funds
The City maintained three Agency Funds in 1987 as follows:
• Contractor's Deposits
• Investment Fund
• Deferred Compensation
An Agency Fund is designed to account for transactions for other individuals, pri-
vate organizations and /or other funds.
The Contractor's Deposits Fund is used to account for "pass through" types of expen-
ditures 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 detail records of
amounts due from developers and assure that adequate deposits are received prior to
incurring expenses on a developer's behalf.
The Deferred Compensation Fund is a new fund which reports qualified IRS 457 plan
activity. The cash is held by the escrow agent on behalf of City employees in the plan.
Franchise Agreement - Gas Utility
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.
The City of Lino Lakes has rights to receive payment of net income after the accumu-
lated retained earnings deficit is eliminated. Prior to 1988, the City received no such
distributions. The Circle Pines gas utility has accumulated a positive retained ear-
nings balance in excess of $500,000 while the Lino Lakes retained earnings account is in
a deficit position.
City of Lino Lakes, Minnesota
Management Report, Page 44
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.
• Negotiated a new franchise agreement.
The new franchise agreement will provide 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 interrup-
table sales which is based on 3 %;
3. Cancellable 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 calcula-
tions.
5. Revenue begins to be earned starting on January 1, 1987. Revenue will be
received four and one -half months after the year end (i.e., first receipt is
scheduled for 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 $9,615 in May, 1988 which represents the 1987
share of earnings. 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 45
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 calcu-
lated on the following basis:
Residential and Commercial Revenue $102,653 @ 7% = $ 7,186
Interruptible Service 88,509 @ 3% = 2,655
Total $191,162 9,841
Remitted by Circle Pines 9,615
Difference $ 226
The above difference is related 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 $3,300 in 1987. The City of Circle Pines
reports such bad debts on a combined expense line - "administrative - other ". We recom-
mend 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 such procedures within the City such as including significant
outstanding delinquent billings on assessment search records.
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
1981 $ 67,387 $ 16,526 $ 83,913
1982 88,195 $ 20,808 30.88% 18,781 $ 2,255 13.65% 106,976 $ 23,063 27.48%
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)
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
City of Lino Lakes, Minnesota
Management Report, Page 46
Bad Debts Interruptible Sales
Increase /(Decrease) Increase /(Decrease)
Year Amount Amount Percent Amount Amount Percent
1981 $105,143
1982 118,734 $ 13,591 12.93%
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)
Prior to 1987, bad debts were netted with sales. The 1987 bad debt
consists mainly of one customer.
Internal Accounting Controls
As part of our examination, we made a study and evaluation of the system of
internal accounting control of the City of Lino Lakes to the extent we considered
necessary to evaluate the system, as required by generally accepted auditing
standards. The purpose of our study and evaluation was to determine the nature,
timing and extent of the auditing procedures necessary for the expression of an
opinion on the City's financial statements. Our study was more limited than
would be necessary to express an opinion on the system of internal accounting
control taken as a whole or on any of the categories of controls identified.
The City of Lino Lakes is responsible for establishing and maintaining a
system of internal accounting control. The objective of internal accounting
control is to provide reasonable, but not absolute, assurance as to the safe-
guarding of assets against loss from unauthorized use or disposition, and the
reliability of financial records for preparing financial statements and main-
taining accountability for assets. The concept of reasonable assurance recogni-
zes that the cost of a system of internal accounting control should not exceed
the benefits derived and also recognizes that the evaluation of these factors
necessarily requires estimates and judgments by management.
There are inherent limitations that should be recognized in considering the
potential effectiveness of any system of internal accounting control. In the
performance of most control procedures, errors can result from misunderstanding
of instructions, mistakes of judgment, carelessness, or other personal factors.
Control procedures whose effectiveness depends upon segregation of duties can be
circumvented by collusion. Similarly, control procedures can be circumvented
intentionally by management either with respect to the execution and recording of
transactions or with respect to the estimates and judgments required in the pre-
paration of financial statements.
Also, projection of any evaluation of the system to future periods is subject
to the risk that the procedures may become inadequate because of changes in con-
ditions and that the degree of compliance with the procedures may deteriorate.
City of Lino Lakes, Minnesota
Management Report, Page 47
Our study and evaluation made for the limited purpose described in the first
paragraph would not necessarily disclose all material weaknesses in the system.
Accordingly, we do not express an opinion on the system of internal accounting
control of the City of Lino Lakes taken as a whole. However, our study and eva-
luation disclosed that a substantial portion of the accounting processes are per-
formed by a single employee. Ideal conditions call for segregation of duties to
establish a system of internal testing of procedures performed. Additionally,
our evaluation disclosed that the City does not maintain a system of control over
fixed assets. These conditions are common to cities of this size. Any modifica-
tion of internal controls in these areas must be viewed from a cost /benefit
perspective.
These conditions were considered in determining the nature, timing, and
extent of the audit tests to be applied in our examination of the December 31,
1987 financial statements, and this report does not affect our report on the
financial statements dated May 27, 1988.
This report is intended solely for the use of the City of Lino Lakes and
should not be used for any other purpose.
Budgeting
The City currently budgets certain revenues on a combined basis. Additionally, as
discussed earlier in this report, certain debt levies are not clearly segregated from
operating levies in the budget. Also, the City may be budgeting in the General Fund
certain capital outlay which is scheduled to be funded by equipment certificates (i.e.,
Capital Project Fund). We recommend that in conjunction with the computer acquisition
that budgeting practices be reviewed and automated on the new system.
Utility Billing System
During 1987 the City did not reconcile utility payments from the utility system to
the general ledger. This was due primarily to a turnover in the utility clerk position.
During our examination of the utility billing system, it was discovered that payments
were not being posted to the utility system in a timely manner. We recommend that the
City post payments to the utility system on a timely basis and reconcile payments to the
general ledger.
IICity of Lino Lakes, Minnesota
Management Report, Page 48
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Comparable Worth
The City approved comparable worth salary adjustments for two City employees. The
adjustments were to be effective over a two year phase in period. The exact terms of
the phase in period were subject to differing interpretations. We recommend that future
long -term adjustments be more fully documented as to effective dates and amounts of such
incremental adjustments.
Developer Deposits
The City collects deposits from developers for costs which the City incurs during the
permit process. Remaining amounts are returned to the developer. The City has not been
consistent in coding costs against the developers deposit versus the construction funds
once a project has been started. We recommend the City develop procedures to establish
at what point costs should be charged to the construction fund rather than the develo-
pers deposit. The City's system of calculating amounts to be returned to developers
does not always produce adequate verifiable documentation. The City started to
review /improve the system in 1988. We recommend that the City continue to review the
system and improve reconciliation procedures. Our office is available to assist in this
review.
Investment Transactions
The City maintains subsidiary listings of investment activity. These records are
reconciled to the accounting system. Certain investment purchases and sales in prior
years were not recorded on the subsidiary listing. The City reviewed investment
recording procedures and amended such procedures to assure that all investment activity
is recorded on a timely basis. We commend the City for this improvement.
City of Lino Lakes, Minnesota
Management Report, Page 49
Financial Accounting System
During 1985, the City purchased an in -house computer system. This system is
intended to provide the City with the following:
• Payroll system.
• Utility billing system.
• General ledger accounting.
• Word processing.
The utility billing system, payroll and word processing have been implemented. Our
review of this portion of the system indicated that it was functioning as intended.
The general ledger accounting system was not functional as of December 31, 1987.
The City is reviewing the general ledger package and had projected an implementation
date in 1987. The City reconsidered the viability of implementing the general ledger
package because MECC has eliminated support of the system.
The City is in great need of a computerized general ledger accounting system. The
current manual system does not produce timely interim financial reports to manage the
City. Year -end efforts to produce financial statements is over - burdensome. The City
has budgeted a replacement computer system for 1988. We strongly concur with this deci-
sion are are available to review considered systems.
Summary
During 1988, the City should:
• Closely monitor the affects of the lawsuit concerning local government aid and
incorporate flexibility into the 1989 budget. (Page 4)
• Continue the practice of minimal balances in the City's checking account.
(Page 6)
• Consider the option of requesting unused MSA construction allotment for main-
tenance purposes. (Page 8)
I City of Lino Lakes, Minnesota
Management Report, Page 50
• Continue to monitor state financial legislation. (Page 9)
• Determine full levies required for debt prior to authorizing the budget and tax
levy. (Page 10)
• Consider using Capital Improvements Fund residual bonds proceeds for Debt Service
if required. (Page 10)
• Review the revised 1988 budget and determine if amendments are adequate.
(Page 10)
• Monitor the collection rate of special assessments and provide supplemental
financing if collections are not adequate to meet bonded debt payments.
(Page 12)
• Consider the benefits of implementing a general fixed asset system in the
future. (Page 13)
• Consider adopting a formal City Council approved policy on reserves. (Page 19)
• Add the aerial map charges to the budget process. (Page 20)
• Plan for the use of the remaining balance in the Improvement Bonds of 1980 Fund.
(Page 23)
• Consider establishing a Closed Bond Fund in 1988 and transfer the residual
balances of the 1980 Bond Fund. (Page 24)
• Determine the nature of the delay in assessment receipts in the Temporary
Improvement Bonds of 1985 Fund. (Page 24)
• Designate a financial source and eliminate the Lakes Addition #7 Fund in 1988.
(Page 30)
• Remit the money due MWCC in 1988. (Page 31)
• Close the Baldwin Lake Mobile Home Court Fund in 1988 to the Improvement Bonds
of 1983 Debt Service Fund. (Page 31)
• Eliminate the deficit in the Reiling Road Fund through a Council designated
transfer. (Page 31)
• Establish departmental accounting for interim construction projects. (Page 32)
• Close the Rice Lake Estates Addition Fund after completion of construction to
the Improvement Bonds of 1986 Fund. (Page 32)
• Close the North Road Fund in 1988 to the Temporary Bonds of 1987 Debt Service
Fund. (Page 32)
City of Lino Lakes, Minnesota
Management Report, Page 51
• Determine the status of the Main Street Improvement Project and consider methods
to eliminate the deficit balance. (Page 32)
• Consider methods to eliminate deficit fund balances in the West Shadow Lake
Drive Fund and Deer Trail Pass Fund. (Page 33)
• Close the Sunset Road Fund to the related Debt Service Fund in 1988. (Page 33)
• Monitor the situation regarding developer reimbursement in the Otter Bay Fund.
(Page 34)
• Close the 74th Street Fund in 1988. (Page 34)
• Close the 1160 Street Fund in 1988. (Page 35)
• Monitor actual versus projected connection charge and area assessment collection II
in the Connection and Area Charge Fund. (Page 35)
• Record administrative charges to construction funds when received from the City
engineer. (Page 37)
• Monitor the procedures of the Lino Lakes Public Improvement Policy to assure
that the policy is adhered to. (Page 38)
• Determine if the annual administrative fee will be received as an interfund
charge of the General Fund in the tax increment plan. (Page 39)
• If tax increment bonds are sold, the City should include a provision allowing
tax increment collections to be receipted to the Economic Development #1 Capital
Project Fund. (Page 39)
• Monitor the effects of changes in MWCC district structure and consider such
changes on the City's sewer rates. (Page 42)
• Continue to maintain detail records of amounts due from developers and assure
that adequate deposits are received prior to incurring expenses on a developers
behalf. (Page 43 and 48)
• Review with Circle Pines calculations of franchise fee remittances and collec-
tion procedures. (Page 45)
• In conjunction with the computer acquisition, review budgeting practice and
automate them on the new system. (Page 47)
I City of Lino Lakes, Minnesota
Management Report, Page 52
II• Post utility payments to the utility system on a timely basis and reconcile
payments to the general ledger. (Page 47)
II • Document future long -term adjustments to effective dates and amounts of such
incremental adjustments. (Page 48)
II
IIRespectfully submitted,
gto4� 449141‘41.
YT
VOTO, TAUTGES, REDPATH & CO., LTD.
' Certified Public Accountants
June 23, 1988
1
1
1
1
1
1
1
1
1
1
1