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06-02-14 Council Packet
WORK SESSION AGENDA CITY OF LINO LAKES Monday, June 2, 2014 CITY COUNCIL WORK SESSION Community Room (not televised) 5:30 P.M. A Special City Council meeting has been called at 5:30 p.m. (preceding the regular work session- see separate agenda) 1. Annual Audit Report, CliftonLarsonAllen 2. Street Reconstruction Plan, Terri Heaton (Springsted) 3. Mattamy Homes Presentation, Katie Larsen 4. Century Farm North, PUD Amendment (Regular Agenda Item), Katie Larsen 5. NorthPointe, PUD Final Plan/Final Plat (Regular Agenda Item), Katie Larsen 6. Snowmobile Use on Main Street Trail Bridge (discussion requested by council) 7. Sign Ordinance (Flags), Michael Grochala 8. 2015 Budget Discussion to follow 9. Monthly Progress Report, Jeff Karlson Review Regular Agenda Adjourn WS – Item 1 WORK SESSION STAFF REPORT Work Session Item 1 Date: June 2, 2014 To: City Council From: Al Rolek Re: 2013 Annual Audit Report Background Rachel Flanders and Chris Knopik of CliftonLarsonAllen, LLC will be in attendance at the meeting to provide an overview of the City’s 2013 Annual Financial Report, present the auditor’s management analysis and answer any questions you may have with regard to the financial condition of the City. The 2013 annual audit was undertaken earlier this year, with field work being completed in April. The auditors review all financial transactions and the financial reports of the City over the previous year for their fairness in presentation and for full disclosure of all material aspects of the City’s financial condition. This review is conducted in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in U.S. Government Auditing Standards, issued by the Comptroller General of the United States. The auditors concluded that the City’s financial statements for 2013 presented fairly, in all material respects, the financial position of the City as of December 31, 2013. The auditors also issue their reports on the City’s legal compliance with certain laws, regulations, contracts, etc., our internal control structure, and management issues. It should be noted that the City has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada for its 2012 Comprehensive Annual Financial Report. The city has received this award each year since 1995. We believe that the report issued for 2013 continues to uphold the high standards of reporting excellence that this prestigious award represents. The presentation at the work session will be comprehensive and is intended to provide the opportunity for council members to ask any questions or make comments about the audit report and the state of city finances. Ms. Flanders and Mr. Knopik will also give an abbreviated presentation at the regular City Council meeting on June 9, 2014, and the staff recommends that the City Council formally, by motion, accept the 2013 Annual Audit Report at that time. Requested Council Direction None. Attachments Audit Powerpoint Presentation 2013 Comprehensive Annual Financial Report sonAllen LLP o n L a r s o n A l l e n L L P ©2014 CliftonLars © 2 0 1 4 C l i f t o Ci t y of Li n o La k e s , Mi n n e s o t a Wo r k Se s s i o n Wo r k Se s s i o n De c e m b e r 31 , 20 1 3 Au d i t o r Co m m u n i c a t i o n s Au d i t o r Co m m u n i c a t i o n s CL A c o n n e c t . c o m Ra c h e l Fl a n d e r s , Pr i n c i p a l Ch r i s Kn o p i k , Ma n a g e r sonAllen LLP Ag e n d a ©2014 CliftonLars Ag e n d a • R e q u i r e d Co m m u n i c a t i o n s • A u d i t Re s u l t s • F i n a n c i a l Re s u l t s • O t h e r It e m s 2 sonAllen LLP Re q ui r e d Co m m u n i c a t i o n s ©2014 CliftonLars q • A u d i t pr o v i d e s re a s o n a b l e , bu t no t ab s o l u t e as s u r a n c e At i li i • A cc o u n ti ng po li c i es –G A S B 65 : It e m s pr e v i o u s l y re p o r t e d as As s e t s an d Li a b i l i t i e s –G A S B 66 : Te c h n i c a l Co r r e c t i o n s ‐ 20 1 2 • Si g n i f i c a n t ac c o u n t i n g es t i m a t e s • Si g n i f i c a n t ac c o u n t i n g es t i m a t e s –U s e f u l li v e s of ca p i t a l as s e t s –V a l u a t i o n of in v e s t m e n t s Al l f db t f l t – Al l ow a n c e f or d ou bt f u l ac c o u n t s – C o m p e n s a t e d ab s e n c e s pa y a b l e –O t h e r po s t e m p l o y m e n t be n e f i t s pa y a b l e d d •O n e pa s s e d a d ju s t m e n t • R e c e i v e d fu l l co o p e r a t i o n of ma n a g e m e n t 3 sonAllen LLP Au d i t Re s u l t s ©2014 CliftonLars Au d i t Re s u l t s • U n m o d i f i e d (i . e . “c l e a n ” ) op i n i o n on th e fi n a n c i a l st a t e m e n t s It l tl ti l k td • I n t er n a l co n t ro l s – no ma t er i a l we a k ne s s e s no t e d du r i n g 20 1 3 ’ s au d i t • M i n n e s o t a le g a l co m p l i a n c e –n o ex c e p t i o n s noted 4 sonAllen LLP Fi n a n c i a l Re s u l t s ©2014 CliftonLars Fi n a n c i a l Re s u l t s Go v e r n m e n t - w i d e S t a t e m e n t s $3 8 , 0 0 0 , 0 0 0 $4 2 , 0 0 0 , 0 0 0 $2 6 , 0 0 0 , 0 0 0 $3 0 , 0 0 0 , 0 0 0 $3 4 , 0 0 0 , 0 0 0 $1 4 , 0 0 0 , 0 0 0 $1 8 , 0 0 0 , 0 0 0 $2 2 , 0 0 0 , 0 0 0 20 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Ca s h & I n v e s t m e n t s Ex p e n s e s Ex p e n d a b l e N e t P o s i t i o n 5 sonAllen LLP Fi n a n c i a l Re s u l t s (c o n t i n u e d ) ©2014 CliftonLars Fi n a n c i a l Re s u l t s (c o n t i n u e d ) $1 0 , 5 0 0 , 0 0 0 Ge n e r a l Fu n d Re v e n u e s $6 , 5 0 0 , 0 0 0 $7 , 5 0 0 , 0 0 0 $8 , 5 0 0 , 0 0 0 $9 , 5 0 0 , 0 0 0 $1 0 , 5 0 0 , 0 0 0 $1 5 0 0 0 0 0 $2 , 5 0 0 , 0 0 0 $3 , 5 0 0 , 0 0 0 $4 , 5 0 0 , 0 0 0 $5 , 5 0 0 , 0 0 0 20 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Mi s c e l l a n e o u s $1 7 2 , 7 5 0 $1 3 6 , 0 2 9 $1 5 2 , 8 4 2 $1 4 9 , 9 7 8 $1 0 4 , 8 1 9 $114,390 Re f u n d s $8 , 6 3 7 $2 0 , 3 3 2 $2 6 , 8 4 1 $2 7 , 6 4 1 $5 8 , 4 1 6 $38,092 In v e s t m e n t In c o m e $1 3 4 , 5 2 1 $1 0 5 , 4 4 3 $4 5 , 8 1 1 $5 4 , 3 9 0 $3 8 , 6 0 3 $(12,250) $5 0 0 , 0 0 0 $1 ,50 0 ,00 0 Fi n e s $1 3 3 , 5 3 1 $1 1 1 , 8 0 7 $1 2 7 , 2 0 3 $1 5 4 , 0 2 0 $1 5 5 , 9 5 6 $119,079 Ch a r g e s fo r Se r v i c e $4 4 9 , 5 5 5 $3 7 6 , 5 0 3 $3 6 4 , 6 0 5 $3 6 7 , 0 3 7 $3 0 9 , 7 7 7 $296,185 In t e r g o v e r n m e n t a l $5 1 7 , 2 4 2 $4 3 5 , 0 3 4 $6 0 9 , 7 8 1 $5 9 0 , 3 9 2 $4 6 2 , 0 2 3 $500,963 Li c e n s e s an d Pe r m i t s $8 0 2 , 1 3 5 $3 0 7 , 7 1 4 $3 3 0 , 1 3 8 $3 2 2 , 0 3 0 $3 1 9 , 1 7 2 $431,654 Sp e c i a l As s e s s m e n t s $4 , 3 2 3 $6 , 9 1 7 $1 0 , 1 7 2 $2 1 , 8 1 3 $3 3 , 3 5 8 $20,616 Pr o p e r t y Ta x e s $7 , 6 9 1 , 5 7 6 $7 , 9 3 9 , 2 3 1 $7 , 5 6 6 , 0 9 9 $7 , 4 9 9 , 1 0 9 $7 , 1 8 3 , 4 4 4 $7,187,801 6 sonAllen LLP Fi n a n c i a l Re s u l t s (c o n t i n u e d ) ©2014 CliftonLars Fi n a n c i a l Re s u l t s (c o n t i n u e d ) Ge n e r a l Fu n d Ex p e n d i t u r e s $6 , 5 0 0 , 0 0 0 $7 , 5 0 0 , 0 0 0 $8 , 5 0 0 , 0 0 0 $9 , 5 0 0 , 0 0 0 $2 5 0 0 0 0 0 $3 , 5 0 0 , 0 0 0 $4 , 5 0 0 , 0 0 0 $5 , 5 0 0 , 0 0 0 20 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Ec o n o m i c De v e l o p m e n t $7 4 5 , 1 2 7 $6 0 1 , 6 2 0 $6 0 2 , 8 9 1 $5 7 2 , 2 8 4 $4 3 0 , 1 0 2 $409,487 Ci t l Ot l $7 0 0 0 6 $4 1 0 0 4 $1 0 0 4 1 $2 9 5 9 7 $3 4 2 8 3 $41 100 $5 0 0 , 0 0 0 $1 , 5 0 0 , 0 0 0 $2 ,50 0 ,00 0 C ap it a l O u tl ay $7 0 ,00 6 $4 1 ,00 4 $1 0 ,04 1 $2 9 ,59 7 $3 4 ,28 3 $41 ,100 Co n s e r v a t i o n of Na t u r a l Re s o u r c e s $1 7 8 , 2 5 4 $1 9 4 , 2 3 5 $1 7 5 , 0 6 2 $1 3 4 , 1 2 2 $1 6 5 , 8 5 8 $134,127 Re c r e a t i o n an d Pa r k s $8 4 7 , 5 4 2 $9 2 7 , 5 6 2 $7 8 5 , 4 6 2 $8 5 2 , 7 1 7 $8 6 8 , 0 6 8 $842,253 Pu b l i c Wo r k s $1 , 3 6 8 , 6 3 0 $1 , 2 6 2 , 7 7 4 $1 , 2 8 4 , 5 1 9 $1 , 3 2 4 , 2 4 6 $1 , 2 2 6 , 8 6 5 $1,281,135 Pu b l i c Sa f e t y $3 , 8 0 6 , 3 8 9 $4 , 1 2 2 , 3 5 2 $3 , 7 9 8 , 1 0 6 $3 , 7 9 1 , 3 2 9 $3 , 8 6 1 , 2 6 5 $3,744,957 Gl G $ $ $ $ $ $ G en e r a l G ov e r n m e n t $2, 0 4 6 , 5 0 0 $1, 9 0 5 , 8 9 5 $1, 7 2 5 , 8 7 1 $1, 7 6 1 , 7 7 6 $1, 6 0 8 , 2 4 0 $1,535,416 7 sonAllen LLP Fi n a n c i a l Re s u l t s (c o n t i n u e d ) ©2014 CliftonLars Fi n a n c i a l Re s u l t s (c o n t i n u e d ) Ge n e r a l F u n d R e v e n u e s & E x p e n d i t u r e s $9 , 0 0 0 , 0 0 0 $9 , 5 0 0 , 0 0 0 $1 0 , 0 0 0 , 0 0 0 $7 0 0 0 0 0 0 $7 , 5 0 0 , 0 0 0 $8 , 0 0 0 , 0 0 0 $8 , 5 0 0 , 0 0 0 $$5 , 5 0 0 , 0 0 0 $6 , 0 0 0 , 0 0 0 $6 , 5 0 0 , 0 0 0 $7 ,00 0 ,00 0 $5, 0 0 0 , 0 0 0 20 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Re v e n u e s Ex p e n d i t u r e s 8 sonAllen LLP Fi n a n c i a l Re s u l t s (c o n t i n u e d ) ©2014 CliftonLars Fi n a n c i a l Re s u l t s (c o n t i n u e d ) Un r e s e r v e d / Un a s s i g n e d Fu n d Ba l a n c e ‐ Ge n e r a l Fu n d 80.0%90.0%100.0% $5 , 4 0 0 , 0 0 0 $5 , 5 0 0 , 0 0 0 40.0%50.0%60.0%70.0% $5 , 1 0 0 , 0 0 0 $5 , 2 0 0 , 0 0 0 $5 , 3 0 0 , 0 0 0 0.0%10.0%20.0%30.0% $4 , 8 0 0 , 0 0 0 $4 , 9 0 0 , 0 0 0 $5 , 0 0 0 , 0 0 0 20 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Un r e s e r v e d / U n a s s i g n e d Fu n d Ba l a n c e % of An n u a l Ex p e n d i t u r e s 9 sonAllen LLP Fi n a n c i a l Re s u l t s (c o n t i n u e d ) ©2014 CliftonLars Fi n a n c i a l Re s u l t s (c o n t i n u e d ) En t e r p r i s e F u n d s - O p e r a t i n g I n c o m e $3 5 0 , 0 0 0 $4 5 0 , 0 0 0 $1 5 0 , 0 0 0 $2 5 0 , 0 0 0 -$ 5 0 , 0 0 0 $5 0 , 0 0 0 -$ 1 5 0 , 0 0 0 20 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Wa t e r F u n d Se w e r F u n d 10 sonAllen LLP Fi n a n c i a l Re s u l t s (c o n t i n u e d ) ©2014 CliftonLars Fi n a n c i a l Re s u l t s (c o n t i n u e d ) $8 5 0 0 0 0 0 En t e r p r i s e F u n d s - U n r e s t r i c t e d ( S p e n d a b l e ) N e t P o s i t i o n $6 , 5 0 0 , 0 0 0 $7 , 5 0 0 , 0 0 0 $8 ,50 0 ,00 0 $4 , 5 0 0 , 0 0 0 $5 , 5 0 0 , 0 0 0 $1 5 0 0 0 0 0 $2 , 5 0 0 , 0 0 0 $3 , 5 0 0 , 0 0 0 $1 ,50 0 ,00 0 20 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 Fi s c a l Y e a r Wa t e r F u n d Se w e r F u n d Wa t e r Fu n d Se w e r Fu n d 11 sonAllen LLP Fi n a n c i a l Re s u l t s (c o n t i n u e d ) ©2014 CliftonLars Fi n a n c i a l Re s u l t s (c o n t i n u e d ) Fu t u r e D e b t S e r v i c e - N e x t 5 Y e a r s $3 , 5 0 0 , 0 0 0 $4 , 0 0 0 , 0 0 0 $2 , 0 0 0 , 0 0 0 $2 , 5 0 0 , 0 0 0 $3 , 0 0 0 , 0 0 0 $5 0 0 0 0 0 $1 , 0 0 0 , 0 0 0 $1 , 5 0 0 , 0 0 0 $0 $5 0 0 ,00 0 20 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 12 sonAllen LLP Ot h e r It e m s ©2014 CliftonLars Ot h e r It e m s • GF O A Ce r t i f i c a t e of Ac h i e v e m e n t fo r Ex c e l l e n c e in Fi n a n c i a l Re p o r t i n g – R e c e i v e d fo r 20 1 2 St t h ti – S ev e n t ee n th co n s e c u ti ve ye a r • GA S B No 68 – Pa r t i c i p a n t s in Mu l t i ‐Em p l o y e r • GA S B No . 68 – Pa r t i c i p a n t s in Mu l t i ‐Em p l o y e r Pe n s i o n Pl a n s – E f f e c t i v e 20 1 5 13 sonAllen LLP Qu e s t i o n s a n d F e e d b a c k ©2014 CliftonLars Qu e s t i o n s an d Fe e d b a c k Th a n k yo u ! Ra c h e l Fl a n d e r s , Pr i n c i p a l Ph . 61 2 /39 7 ‐30 2 7 / ra c h e l . f l a n d e r s @ c l a c o n n e c t . c o m Ch r i s Kn o p ik , Ma n a g er p, g Ph . 61 2 / 3 9 7 ‐32 6 6 ch r i s t o p h e r . k n o p i k @ c l a c o n n e c t . c o m 14 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF LINO LAKES, MINNESOTA FOR THE YEAR ENDED DECEMBER 31, 2013 Prepared By: Finance Department Alan Rolek, Director of Finance Paula Schloer, Accountant CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference Number I. INTRODUCTORY SECTION Principal City Officials 1 Organizational Chart 2 Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 8 II. FINANCIAL SECTION Independent Auditors’ Report 9 Management’s Discussion and Analysis 12 Basic Financial Statements Statement of Net Position Statement 1 22 Statement of Activities Statement 2 23 Balance Sheet - Governmental Funds Statement 3 25 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement 4 27 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds Statement 5 28 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance to the Statement of Activities Statement 6 30 Statement of Net Position - Proprietary Funds Statement 7 31 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds Statement 8 32 Statement of Cash Flows - Proprietary Funds Statement 9 33 Statement of Net Position - Fiduciary Funds – Agency Funds Statement 10 34 Notes to Financial Statements 35 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference Number Required Supplementary Information General Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Statement 11 60 Note to Required Supplementary Information 66 Schedule of Funding Progress for Postemployment Benefit Plan Statement 12 67 Combining Fund Financial Statements Combining Balance Sheet – Nonmajor Governmental Funds Statement 13 68 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds Statement 14 74 Special Revenue Fund – Program Recreation: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual Statement 15 80 Statement of Changes in Assets and Liabilities – Fiduciary Funds – Agency Funds Statement 16 81 Supplementary Financial and Other Information Combined Schedule of Indebtedness Exhibit 1 82 Schedule of Deferred Tax Levies Exhibit 2 84 Debt Service Payments to Maturity - All Bonds Exhibit 3 86 Insurance in Force Exhibit 4 89 Taxable Valuations, Tax Levies and Tax Rates Exhibit 5 90 III. STATISTICAL SECTION Net Position by Component – Last Ten Fiscal Years Table 1 91 Changes in Net Position - Last Ten Fiscal Years Table 2 92 Fund Balances, Governmental Funds - Last Ten Fiscal Years Table 3 94 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years Table 4 96 Assessed and Actual Value of Taxable Property - Last Ten Fiscal Years Table 5 98 CITY OF LINO LAKES, MINNESOTA TABLE OF CONTENTS Page Reference Number Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years Table 6 99 Principal Property Taxpayers Table 7 100 Property Tax Levies and Collections – Last Ten Fiscal Years Table 8 101 Ratios of Outstanding Debt by Type Table 9 103 Direct and Overlapping Governmental Activities Debt Table 10 105 Legal Debt Margin Information Table 11 106 Demographic and Economic Statistics Table 12 108 Principal Employers, Current Year and Nine Years Ago Table 13 109 Full-Time Equivalent Employees by Type Table 14 110 Operating Indicators by Function/Program Table 15 112 Capital Asset Statistics by Function/Program Table 16 114 I. INTRODUCTORY SECTION CITY OF LINO LAKES, MINNESOTA PRINCIPAL CITY OFFICIALS December 31, 2013 1 Elected Officials Term Expires Mayor: Jeff Reinert December 31, 2013 Council Members: Dale Stoesz December 31, 2015 Rob Rafferty December 31, 2013 Jeff O’Donnell December 31, 2013 Dave Roeser December 31, 2015 Appointed Personnel City Administrator Jeff Karlson Director of Finance Alan Rolek Director of Public Safety John Swenson Director of Community Development Michael Grochala Director of Public Service Rick DeGardner 2 City of Lino Lakes Organizational Chart Cable Parks and Recreation Economic Development Planning and Zoning Fire Environmental Commissions City Clerk Engineering Attorney Fiscal Professional Consultants Parks Public Works Recreation Public Services Police Emergency Management Public Safety Human Resources Administrative Services Administration Planning Economic Development Engineering Environmental Services Inspections Community Development Accounting Management Information Systems Utility Billing Finance City Administrator Honorable Mayor and City Council Citizens 3 May 28, 2014 Honorable Mayor Members of the City Council Citizens of the City of Lino Lakes, Minnesota Minnesota State law requires that cities over 2,500 population publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepte d accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants and submit them to the state auditor. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Lino Lakes, Minnesota for the fiscal year ended December 31, 2013. This report consists of management’s representations concerning the finances of the City of Lino Lakes. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Lino Lakes has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Lino Lakes’ financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Lino Lakes’ financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2013, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit that there was a reasonable basis for rendering an unqualified opinion that the City ’s financial statements for the fiscal year ended December 31, 2013, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. GAAP require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Lino Lakes’ MD&A can be found immediately following the report of the independent auditors. 4 Profile of the Government The City of Lino Lakes, incorporated in 1955, is a growing community in the southeast corner of the County of Anoka. It covers an area of 33 square miles and has a population of approximately 20,700. The population has more than doubled from the 1990 census figure of 8,807 and has grown by 2 3% since 2000. Within the City’s borders lies the 2,550 acre Rice Creek Chain of Lakes Regional Park. Access to St. Paul and Minneapolis is provided by I-35W and I-35E. The City Charter, as amended, establishes a mayor-council form of government and grants the city council full policy-making and legislative authority to the mayor and four council members. The City council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring a City administrator. The City administrator has the responsibility of carrying out the policies and ordinances of the City council, for overseeing the day-to-day operation of the city. The City council is elected at-large on a non-partisan basis, with council members serving four-year terms and the mayor serving a two-year term. Elections are held every two years with two council seats and the mayor being up for election each election cycle. The City provides a full range of municipal services. These services include: general government, p ublic safety (police and fire), public works (streets and fleet), parks and recreation, conservation of natural resources (environmental and solid waste abatement), public improvements, providing and maintaining sanitary and storm sewer, water infrastructure, and two enterprise funds, the water and sewer funds. The annual budget is the foundation for the City of Lino Lakes’ financial planning and control. All divisions are required to submit appropriations requests to the City administrator for review and consolidation into a proposed budget. The City administrator is responsible for submitting the proposed annual budget to the City Council in August of each year. The city council is required to hold a public hearing on the proposed budget and to adopt by resolution a final budget and certify it no later than December 28. The budget amounts cannot increase beyond the estimated receipts except to the extent that actual receipts exceed the estimate. Division directors may make transfers of appropriations within a department, but transfers of appropriations between departments require council approval. Budget-to-actual comparisons for the general fund and the recreation program fund, the only funds for which an annual budget has been adopted, are provided in this report beginning on pages 60 and 80, respectively. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Lino Lakes operates. Local economy. The economic development effort established by the City Council in 1993 increased the commercial/industrial tax base in the City from 3% of the total tax base to 9% in 2011. Development of three industrial parks - Apollo Business Park on 35W, Marshan Industrial Park on Lake Drive, and the Clearwater Creek Development Center on 35E, provided excellent opportunities for manufacturing and distribution businesses to move their headquarters to Lino Lakes. Before the recession began in late 2007 the Lino Lakes Town Center, comprising approximately 200 acres surrounding the 35W/Lake Drive interchange, was developing at a rapid pace. SuperTarget and Kohl’s anchor the shopping center quadrant, while Apollo Busi ness Park brought approximately 1,000 new employees to the area. Land was purchased by Anoka County on a third quadrant for future development of a regional library. Due to economic conditions, the County has pushed back construction of the library to 2015. 5 Factors Affecting Financial Condition (Continued) In 2004, the City entered into an agreement with a master developer to develop 40 acres in the southeast quadrant of I-35W and Lake Drive. Called Legacy at Woods Edge, this mixed-use development is intended to include diverse opportunities for housing, retail and office uses. To date, the development includes the Lino Lakes Civic Complex (which houses the city hall and police station), the Chain of Lakes YMCA, a 60 -unit workforce housing project, 13,000 square feet of leasable commercial space, and an assisted living facility. The Civic Complex and YMCA provide a civic and community focus as part of the vision for Town Center. A workforce family housing and assisted living facility provide diversity in housing to underserved populations within the City. In 2006, the City placed a major focus on reconstruction of the 35W/Lake Drive interchange and completion of public improvements in Legacy at Woods Edge to accommodate planned development and completed the improvements by 2008. However, it became evident at the end of 2007 that development was stalling. The recession has had negative impacts on the Legacy development. Both the master developer and lender defaulted, sending the remaining 22 acres intended for townhomes and commercial uses into tax forfeit. Development conditions have begun to improve relative to the Legacy property. During 2013, the assisted living facility purchased an adjoining parcel to expand its current operation. The 36-room addition is scheduled to begin occupancy in early 2014. In addition, the State Legislature approved City-initiated special legislation which has allowed the City to acquire the tax forfeited property from the State at no cost except for an administrative fee payable to Anoka County if future sale revenues exceed to value of the special assessments on the property. The acquisition of this property will allow the City greater control in marketing the property to potential developers. The solid foundation that was built and strong interest by developers prior to the recession ensures that better economic times will once again bring the interest in residential and commercial growth needed to complete the vision. Street, streetscape, water, sewer, and storm water improvements, as well as a small community park, have been installed within the development area and assessed to the development. This $11.1 million improvement was financed through the joint efforts of MNDOT, Anoka County and the City of Lino Lakes. The City has issued $4,215,000 in G.O. Tax Increment bonds and will use tax increment financing and Minnesota State Aid funds to finance its portion of the project cost. Once construction gains its footing again the City can assess the benefitting properties. The City continues to look for ways to resurrect the project and strives to be prepared to market the property when the economy recovers. Building activity and development continued to be soft in 2013, however, improvement in developer activity is evident. Building permits for new homes in 2013 numbered 30, compared to 25 in 2012. In addition, 5 permits for new commercial were issued in 2013, compared to 0 in 2012. In anticipation of a strengthening economy, the City took the lead on developing the infrastructure needed to service future growth on the 35E/County Road 14 interchange area. A major reconstruction of the interchange completed a multi-year improvement of County Road 14 from Highway 61 in Hugo, through Centerville, to 35W in Lino Lakes. The City portion of the cost for this bridge reconstruction project is being financed through Anoka County, with the City issuing an initial $4.26 million General Obligation Note to the County. Due to cost savings in this project the Note was amended to $3.695 million in 2011. With both major interstate interchanges complete, the City is preparing for development of several hundred acres in all quadrants of 35E/14. Interest in the commercial interchange has spurred the extension of Otter Lake Road North east of I-35E and planning for the extension of 21st Avenue west of I-35E, which will leave the City well poised to accommodate significant future industrial, commercial and residential development. Already the development of a McDonald’s restaurant is underway at CSAH 14 and Otter Lake Road. In addition, Metropolitan Transit has received approval to develop a Park and Ride at I35-E at CSAH 14 and 21st Avenue. 6 Factors Affecting Financial Condition (Continued) Long-term financial planning. The City’s currently adopted five-year financial plan identifies street and utility improvements totaling $23,287,990 over the five-year period. These improvements are anticipated to be funded through a number of funding sources, including special assessments, municipal state aid road fun ds, the area and unit trunk fund, the stormwater management fund and voter-approved tax levies. Also included in the final year of the plan is a feasibility study for a new public works facility. Scheduled capital equipment and office equipment needs and the financing for those needs are also included in the plan. The five-year plan also includes funding projections for operations and operating impacts for the five-year period. This plan is in the process of being revised to reflect the anticipated activity through the year 2018. Relevant Financial Policies The City uses a variety of financial policies to guide its fiscal actions and ensure fiscal stability. Fund balance policy. The City had adopted a Fund Balance policy which identified the required des ignated amounts in the Fund Balance of the General Fund at fiscal year-end and directed the transfer of any excess revenues to other funds for specific purposes, as identified annually. For the year ended December 31, 2011 and subsequent years, the City amended its Fund Balance policy to conform to the requirements of GASB 54. The new policy targets the unassigned fund balance of the general fund in a range of 40% to 50% of budgeted general fund expenditures and other financial uses. In addition, fund balan ces are classified in compliance with GASB 54 according to the hierarchy of usable fund balance resources. The unassigned general fund balance as of December 31, 2013 was $5,209,286, which is 61% of general fund budgeted expenditures and other financing us es for the year. Cash management policies and practices. The City’s policy is to invest all available moneys at competitive rates in accordance with Minnesota law. Investments are made by minimizing credit and market risks while maintaining a competitive yield. Funds are invested in certificates of deposit, commercial paper and U.S. government agencies. Cash is pooled in one account to provide maximum return. The City Council reviews the investment policy annually. The City’s investment policy’s primary objective is safety of principal. Therefore, all deposits were either insured by Federal depository insurance or were collateralized as required by State Statute. Due to the weakened economy, a historically low interest rate environment has persisted over the last several years and has had a dramatic impact on the city’s investment earnings. The average interest income yield on investments for 2013 was 1.07%. Total investment income also includes positive or negative changes in the fair value of investments. Changes in fair value of investments during the current year resulted in unrealized losses of $428,867, or -1.39%, for a total investement yield of -0.32%. The changes in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts, especially in the case of temporary changes in the fair value of investments the City intends to hold to maturity. It is the City’s practice to purchase and hold investments to maturity and, accordingly, changes in fair value over the term of the City’s investments are expected to net to book value. 7 Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awards the Certificate of Achievement for excellence in financial reporting to cities that meet certain criteria. The City of Lino Lakes received this award for its comprehensive annual financial report for the year ended December 31, 201 2. This marks the seventeenth consecutive year the City has received this prestigious award. A governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, the contents of which conform to program requirements. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City is submitting the 201 3 report to GFOA for consideration of the Certificate of Achievement for Excellence in Financial Reporting. We believe our current report continues to conform to the high standards of the Certificate program. The timely preparation of this report could not have been accomplished without the dedicated services of the Finance Department, auditors and other city staff. A special thank you goes to city accountant, Paula Schloer, for her efforts in assembling and reviewing information presented in this report. I also want to express my appreciation to the Mayor and City Council for their support for maintaining the highest standard of professionalism in the management of the financial operation of the City. Respectfully submitted, Alan J. Rolek Director of Finance 8 II. FINANCIAL SECTION 9 An independent member of Nexia International INDEPENDENT AUDITORS’ REPORT Honorable Mayor and Members of the City Council City of Lino Lakes, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes, as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including th e assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financ ial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also inc ludes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Honorable Mayor and Members of the City Council City of Lino Lakes 10 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Lino Lakes as of December 31, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the ye ar then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and schedule of funding progress to postemployment benefit plan, as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of pre paring the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Lino Lakes’ basic financial statements. The combining fund financial statements and other supplementary financial and other information, the introductory section, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining fund statements, the combining schedule of indebtedness, and the debt service payments to maturity – all bonds schedule are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining fund statements, the combining schedule of indebtedness, and the debt service payments to maturity – all bonds schedule are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section, schedule of deferred tax levies, schedule of insurance in force, schedule of taxable valuations, tax levies, and tax rates, and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Honorable Mayor and Members of the City Council City of Lino Lakes 11 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 28, 2014, on our consideration of the City of Lino Lakes' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Lino Lakes’ internal control over financial reporting and compliance. CliftonLarsonAllen LLP Minneapolis, Minnesota May 28, 2014 CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 12 As management of the City of Lino Lakes, Minnesota, we offer readers of the City of Lino Lakes’ financial statements this narrative overview and analysis of the financial activities of the City of Lino Lakes for the fiscal year ended December 31, 2013. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 3-7 of this report. FINANCIAL HIGHLIGHTS The assets of the City of Lino Lakes exceeded its liabilities at the close of the most recent fiscal year by $91,513,956 (net position). Of this amount $29,848,818 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors in accordance with the City’s fund designations and fiscal policies. The City’s total net position decreased by $786,644 primarily due to annual depreciation of capital assets and the use of municipal state aid funds that were advanced during 2012 for infrastructure construction. As of the close of the current fiscal year, the City of Lino Lakes’ governmental funds reported combined ending fund balance of $21,577,573, an increase of $53,472 in comparison with the prior year primarily due to the prepayment of special assessments for the I35-E/CSAH 14 interchange (Improvement Note 2009F). Approximately 8% of this amount, or $1,815,739, is available for spending at the City’s discretion (unassigned fund balance). At the end of the current fiscal year, unassigned fund balance for the general fund was $5,209,286, or 61% of total general fund expenditures and other financing uses. The City’s total bonded debt decreased by $1,841,000 (8.7%) during the current fiscal period. The City issued 2013A Equipment Certificates of $193,000 and a general obligation bond in the amount $615,000 to finance the Otter Lake Road Extension project. Principal in the amount of $2,649,000 was retired during the year. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City of Lino Lakes’ basic financial statements. The City of Lino Lakes’ basic financial statements comprise three components: 1. Government-wide financial statements 2. Fund financial statements 3. Notes to the financial statements This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Lino Lakes’ finances, in a manner similar to private- sector business. The statement of net position presents information on all of the City of Lino Lakes’ assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Lino Lakes is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences and OPEB liabilities). CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 13 OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Government-wide financial statements (Continued) Both of the government-wide financial statements distinguish functions of the City of Lino Lakes that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Lino Lakes include general government, public safety, public services, parks, recreation and forestry, conservation of natural resources and community development. The business-type activities of the City of Lino Lakes include a water utility and sewer utility. The government-wide financial statements can be found on pages 22-24 of this report. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Lino Lakes, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Lino Lakes can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental functions and governmental activities. The City of Lino Lakes maintains forty individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General fund, G.O. Improvement Bonds 2005A fund, Improvement Note 2009F fund, Municipal State Aid fund and Area and Unit Charge fund all of which are considered to be major funds. Data from the other thirty-four governmental funds are combined into a single, aggregate presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Lino Lakes adopts an annual appropriated budget for its general and program recreation special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 25 through 30 of this report. Proprietary funds – The City of Lino Lakes maintains two proprietary type funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Lino Lakes uses enterprise funds to account for its sewer and water utilities. The proprietary fund statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the sewer fund and the water fund, which are considered to be major funds of the City of Lino Lakes. The basic proprietary fund financial statements can be found on pages 31 through 33 of this report. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 14 OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Fiduciary funds Fiduciary funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments. Notes to the financial statements – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 35-59 of this report. Other information – The combining statements and schedules referred to earlier in conjunction with nonmajor governmental funds can be found on pages 68-81 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. The City of Lino Lakes’ assets exceeded liabilities by $91,513,956 at the close of the most recent fiscal year, an decrease of $786,644 from the previous year. This decrease is primarily due annual depreciation of capital assets and the use of municipal state aid that was advanced to the City during 2012. By far the largest portion of the City of Lino Lakes’ net position (55%) reflects its net investment in capital assets (e.g. land, buildings, machinery, equipment, and infrastructure). The City of Lino Lakes uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Lino Lakes’ investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Condensed versions of the statements of net position at December 31, 2013 and 2012 are as follows: 2013 2012 2013 2012 2013 2012 Current and Other Assets 33,326,625$ 34,456,692$ 13,092,332$ 12,194,619$ 46,418,957$ 46,651,311$ Capital Assets 37,854,973 39,634,563 28,423,284 28,798,095 66,278,257 68,432,658 Total Assets 71,181,598 74,091,255 41,515,616 40,992,714 112,697,214 115,083,969 Noncurrent Liabilities Outstanding 20,006,657 21,875,614 54,182 43,410 20,060,839 21,919,024 Other Liabilities 1,083,451 815,149 38,968 49,196 1,122,419 864,345 Total Liabilities 21,090,108 22,690,763 93,150 92,606 21,183,258 22,783,369 Net Position: Net Investment in Capital Assets 22,241,821 22,166,342 28,423,284 28,798,095 50,665,105 50,964,437 Restricted 11,000,033 11,595,112 - - 11,000,033 11,595,112 Unrestricted 16,849,636 17,639,038 12,999,182 12,102,013 29,848,818 29,741,051 Total Net Position 50,091,490$ 51,400,492$ 41,422,466$ 40,900,108$ 91,513,956$ 92,300,600$ Governmental Activities Business-Type Activities Total Of the remaining balance of the City of Lino Lakes’ net position, restricted net position (12%) are to be used for debt service requirements and a nonexpendable environmental fund. Unrestricted net position (33%) may be used to meet the government’s ongoing obligations to citizens and creditors. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 15 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) At the end of the current fiscal year, the City of Lino Lakes is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Governmental activities Governmental activities decreased the City of Lino Lakes’ net position by $1,309,002. Reductions in Capital Grants and Contributions and in the fair value of investments, interest on long-term debt service and property tax delinquencies account for this reduction for 2013. Business-type activities Business-type activities increased the City of Lino Lakes’ net position by $522,358. Revenue from Charges for Services and transfers in provided directly for this increase. Condensed statements of revenues, expenses, and changes in net position highlights are as follows for the years ended December 31, 2013 and 2012: 2013 2012 2013 2012 2013 2012 REVENUES Program Revenues: Charges for Services $ 1,452,169 $ 1,476,261 $ 2,725,139 $ 2,877,590 $ 4,177,308 $ 4,353,851 Operating Grants and Contributions 527,368 450,179 - - 527,368 450,179 Capital Grants and Contributions 941,960 5,125,693 883 20,018 942,843 5,145,711 General Revenues: Property Taxes 8,392,601 8,461,621 - - 8,392,601 8,461,621 Franchise Taxes 109,438 95,003 - - 109,438 95,003 Other Taxes 61,556 54,085 - - 61,556 54,085 Contributions Not Restricted to Specific Programs 4,442 4,941 - - 4,442 4,941 Unrestricted Investment Earnings 216,488 202,828 113,402 102,073 329,890 304,901 Change in Market Value (270,692) - (158,175) - (428,867) - Gain on Disposal of Capital Assets - 4,175 - - - 4,175 Total Revenues 11,435,330 15,874,786 2,681,249 2,999,681 14,116,579 18,874,467 EXPENSES General Government 1,566,388 1,883,961 - - 1,566,388 1,883,961 Public Safety 3,950,197 4,046,415 - - 3,950,197 4,046,415 Public Service 4,540,888 5,584,283 - - 4,540,888 5,584,283 Parks, Recreation and Forestry 835,783 1,210,867 - - 835,783 1,210,867 Conservation of Natural Resources 141,204 184,051 - - 141,204 184,051 Community Development 404,726 430,121 - - 404,726 430,121 Interest on Long-Term Debt 951,842 837,755 - - 951,842 837,755 Water - - 927,800 949,121 927,800 949,121 Sewer - - 1,584,395 1,527,637 1,584,395 1,527,637 Total Expenses 12,391,028 14,177,453 2,512,195 2,476,758 14,903,223 16,654,211 CHANGE IN NET POSITION BEFORE TRANSFERS (955,698) 1,697,333 169,054 522,923 (786,644) 2,220,256 Transfers (353,304) 41,043 353,304 (41,043) - - CHANGE IN NET POSITION (1,309,002) 1,738,376 522,358 481,880 (786,644) 2,220,256 Net Position - Beginning of Year 51,400,492 49,662,116 40,900,108 40,418,228 92,300,600 90,080,344 NET POSITION - END OF YEAR 50,091,490$ 51,400,492$ 41,422,466$ 40,900,108$ 91,513,956$ 92,300,600$ Governmental Activities Business-Type Activities Total CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 16 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Below are specific graphs that provide comparisons of the government activities’ direct program revenues with their expenditures. Any shortfalls in direct revenues are primarily supported by property tax levy or general state aid. Expenses and Program Revenues – Governmental Activities $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 Expenses Revenues Revenues by Source – Governmental Activities Charges for services 13%Operating grants and contributions 5% Capital grants and contributions 8% Property taxes 73% Franchise taxes 1% Unrestricted grants and contributions 0% Unrestricted investment earnings 0% Other 0% CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 17 GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Below are specific graphs that provide comparisons of the business-type activities’ direct program revenues with their expenditures. Excess revenues are retained within each fund until such time that capital replacement is needed. Expenses and Program Revenues – Business-type Activities $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 Water Sewer Expenses Revenues Revenues by Source – Business-type Activities Charges for services 95% Operating grants and contributions 0% Capital grants and contributions 0% Other 5% CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 18 FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Funds – The focus of the City of Lino Lakes’ governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Lino Lakes’ financing requirements. GASB Statement 54, divides fund balances into five categories: nonspendable, restricted, committed, assigned and unassigned. Definitions of these categories can be found in Note 1.O in the Notes to the Financial Statements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for unrestricted spending at the end of the fiscal year. Approximately 8% of the total fund balance amount, or $1,815,739, constitutes unassigned fund balance, which is available for spending at the government’s discretion. The remainder of fund balance is not available for new spending because it is restricted or has already been committed or assigned for other purposes. As of the end of the current fiscal year, the City of Lino Lakes’ governmental funds reported combined ending fund balances of $21,577,573, an increase of $53,472, or 0.2%, from the previous year. This increase is primarily due to the receipt of special assessment prepayments for the Improvement Note 2009F fund. The general fund is the primary operating fund of the City of Lino Lakes. At the end of the current fiscal year, unassigned fund balance of the general fund stood at $5,209,286, while the total fund balance was $5,386,083. As a measure of the general fund’s liquidity, it may be useful to compare unassigned fund balance and total fund balance to total fund expenditures and financing uses. Unassigned fund balance represents 61% of total general fund expenditures and financing uses, while total fund balance represents 63% of that same amount. The fund balance of the City of Lino Lakes’ general fund increased by $152,266 during the current fiscal year, while the city budget anticipated the use of up to $129,947 of the general fund balance. Overall, the continued soft real estate market again resulted in reduced building activities this year which decreased permit revenue. Even as signs of economic recovery were being seen, the remaining effects of the recession also had an impact on property tax delinquencies. In addition, reduced expenditures, primarily for personal services through vacant positions, and contractual services helped to offset the reduced revenues. Overall, the general fund’s revenues were within approximately 2% of the amended budget, while expenditures and transfers were 4% below budgeted levels. The G.O. improvement bonds 2005A fund has a total fund deficit of ($2,101,738). This fund is related to the bonds issued for the Legacy Woods Edge improvement project. The payment of debt service and delinquency in the collection of special assessments dedicated to this issue caused a significant decrease in this fund. An interfund loan from the Capital Improvements fund has aided in the payment of debt service for this issue. The Improvement Note 2009F fund, to service the debt issued to Anoka County as the City’s financial commitment for the I-35E interchange project, ended the year with a fund balance of $996,291, an increase of $995,800. The increase was directly due to the prepayment of a special assessment in 2013 for this project. This note, which was originally in the amount of $4,260,000, was reduced in 2011 to the current amount of $3,695,000 to reflect cost savings during the contruction of this project. The Municipal State Aid fund, a capital projects fund used to finance reconstruction of state aid eligible streets, ended the year with a fund balance of $4,595,797. This fund received a large advance from the Minnesota Municipal State Aid in 2012 equal to the next five annual construction installments. These funds will be used over the next several years to pay debt service on the Tax Increment Bonds 2007A and the Improvement Notes 2009F, and for future MSA projects. The area and unit charge fund has a total fund balance of $4,170,051, all of which is assigned for financing capital improvements. The fund balance during the current year increased by $197,335, due in large part to the partial repayment of an interfund loan from the Dedicated Parks fund. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 19 FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS (CONTINUED) Proprietary funds – The City of Lino Lakes’ proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The water fund has total net position at year-end of $18,833,063, of which $4,972,620 is unrestricted. The increase in net position of $519,918 was primarily due to operating income and capital contributions from governmental activities. Total net position in the sewer fund at the end of 2013 was $22,589,403, of which $8,026,562 was unrestricted. The increase in net position of $2,440 was primarily due to capital contributions from governmental activities. The water rates, which reflect water conservation efforts through a tiered rate structure, and sewer rates were unchanged in 2013. A review of utility rates was completed in 2013. A 2% adjustment of water rates and 4% adjustment of sewer rates will go into effect in January, 2014. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget was amended several times during the year reflecting increases licences and permits, public safety charges for services, MSA maintenance aid and police aid; reductions in property tax revenue, fines revenue, interest earnings and other miscellaneous revenues; and reallocating resources within the original budget. The final amended budget is $36,000 less than the original adopted budget. Revenues were $64,908 under budget for the year. This is due primarily due to change in market value of investments which is not budgeted for and accounted for $50,343 of this variance, tax collections also came in under budget by $88,321. These two larger variances were offset by greater than anticipating planning and engineering fees and licenses due to increased construction activity and greater than anticipated public safety charges for services due to higher than anticipated traffic control contracts. Expenditures came in under budget by $337,910 due mainly to lower than expected personal services costs from vacant positions and unspent contingency budgets. Energy costs for fuels and electricity were higher than budgeted amounts, and supplies costs were generally lower than anticipated. Spending on contractual services was lower overall from budgeted levels. The contingency budget of $147,975 was unspent for the year, contributing 44% of the expenditure variance. There were also net transfers from the general fund of $565,789. This resulted in a net fund balance increase of $152,266 for the fiscal year, compared to the planned reduction of $129,947. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 20 CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets – The City of Lino Lakes’ investment in capital assets for its governmental and business- type activities as of December 31, 2013, is $66,278,257. This investment in capital assets includes land, buildings, office equipment and furniture, vehicles, machinery and equipment, other capital assets, and infrastructure. This represents a decrease in the City of Lino Lakes’ investment in capital assets of approximately 3.1%. The extension of Otter Lake Road north of CSAH 14 was completed during the year by the City, adding to road and utility infrastructure. The only additions were from projects in progress. The decrease within the governmental activities is attributable to the depreciation of buildings, constructed streets, underground infrastructure and vehicles. Within the business-type activities decreases were also attributable to depreciation of existing assets of the water and sewer funds. 2013 2012 2013 2012 2013 2012 Land 3,275,859$ 3,275,859$ -$ -$ 3,275,859$ 3,275,859$ Buildings 3,301,916 3,324,186 - - 3,301,916 3,324,186 Office Equipment and Furniture 407,616 450,739 - - 407,616 450,739 Vehicles 1,064,565 1,148,061 - - 1,064,565 1,148,061 Machinery and Shop Equipment 340,245 392,625 232,927 195,903 573,172 588,528 Other Equipment 182,700 205,040 - - 182,700 205,040 Infrastructure 29,282,072 30,838,053 28,190,357 28,602,192 57,472,429 59,440,245 Capital Assets, Net 37,854,973$ 39,634,563$ 28,423,284$ 28,798,095$ 66,278,257$ 68,432,658$ Governmental Activities Business-Type Activities Total Capital Assets at Year-End (Net of Accumulated Depreciation) Additional information on the City’s capital assets can be found in the notes to the financial statements on pages 46-47. Long-term debt – At the end of the current fiscal year, the City of Lino Lakes had total bonded debt outstanding of $15,585,000. Of this amount $9,865,000 comprises tax supported debt and $5,720,000 is special assessment debt. All outstanding debt carries the general obligation backing for which the City is liable in the event of default by the property owners subject to the specific taxes, special assessments or revenues pledged to the retirement of the debt. In addition, the City carries a note to Anoka County for its share of the cost of the I-35E/County Road 14 Interchange project in the amount of $3,695,000. 2013 2012 2013 2012 2013 2012 G.O. Bonds 9,865,000$ 10,646,000$ -$ -$ 9,865,000$ 10,646,000$ G.O. Special Assessment Bonds 5,720,000 6,780,000 - - 5,720,000 6,780,000 Note Payable - Anoka County 3,695,000 3,695,000 - - 3,695,000 3,695,000 Total Outstanding Debt 19,280,000$ 21,121,000$ -$ -$ 19,280,000$ 21,121,000$ Governmental Activities Business-Type Activities Total Outstanding Debt at Year-End The City of Lino Lakes’ total bonded debt decreased by $1,841,000 (10.6%) during the current fiscal year. The key factors for the change include the issuance of $193,000 in 2013A Equipment Certificates and the issuance of a general obligation bond in the amount $615,000 to finance the extension of Otter Lake Road. Principal in the amount of $2,649,000 was retired during the year. Additional information on the City’s long-term debt can be found in the notes to the financial statements on pages 48-50. CITY OF LINO LAKES, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2013 21 ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The unemployment rate for the City of Lino Lakes at year-end is 4.5%, which is a great improvement from a rate of 5.6% a year ago. This is slightly lower than the state’s average unemployment rate of 4.6% and significantly lower than the national average of 6.5% at the end of 2013. Residential growth in the City has continued to be significantly below the rates of the mid 2000’s due to the general residential real estate market weakness, with about one-third the number of new home permits issued in 2013 as in 2007, and less than 84% of new home permits issued in 2005. This is an improvement over recent years. Recently increased building and development activities are signalling the beginning of a recovery of the housing market. Property values of the existing tax base are expected to firm will continue to have an impact on the City’s tax base for 2014. Energy costs are expected to continue to increase over the coming months. This will have an impact on the City’s budget for the coming year and thereafter. Property tax reforms and State budget deficits have significantly impacted state aid payments the City of Lino Lakes receives. Local government aid and market value homestead credit was reduced to zero for 2003 and 2004-2011. The City is exempted from local government aid and the state legislature has discontinued the market value homestead credit in favor of a new market value exclusion, which excludes a portion of residential homestead property value from property taxes. The Federal Reserve Board has continued the federal funds rates at historical lows, currently to between 0.00% – 0.25%, which is expected to result in sizable decreases in the City’s investment earnings. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of Lino Lakes’ finances for all of those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, City of Lino Lakes, 600 Town Center Parkway, Lino Lakes, Minnesota, 55014. BASIC FINANCIAL STATEMENTS 22 CITY OF LINO LAKES, MINNESOTA Statement 1 STATEMENT OF NET POSITION December 31, 2013 Governmental Activities Business-type Activities Total ASSETS Cash and investments 22,028,036$ 12,077,789$ 34,105,825$ Accrued interest receivable 71,531 - 71,531 Accounts receivable 112,717 415,086 527,803 Due from other governments 67,878 1,643 69,521 Internal balances (559,110) 559,110 - Taxes receivable 301,342 - 301,342 Special assessments receivable 10,779,249 2,624 10,781,873 Long-term notes receivable 225,000 - 225,000 Prepaid items 178,507 21,396 199,903 Inventory - 14,684 14,684 Permanently restricted cash and investments 121,475 - 121,475 Capital assets: Land 3,275,859 - 3,275,859 Other capital assets, net of depreciation 34,579,114 28,423,284 63,002,398 Total assets 71,181,598 41,515,616 112,697,214 LIABILITIES Accounts payable 398,205 23,951 422,156 Salaries payable 243,829 14,720 258,549 Contracts and retainage payable 143,141 - 143,141 Accrued interest payable 295,994 - 295,994 Due to other governments 517 - 517 Other accrued liabilities 1,765 297 2,062 Non-current liabilities: Due within one year 3,426,332 34,824 3,461,156 Due in more than one year 16,580,325 19,358 16,599,683 Total liabilities 21,090,108 93,150 21,183,258 NET POSITION Net Investment in Capital Assets 22,241,821 28,423,284 50,665,105 Restricted for: Debt service - expendable 10,653,558 - 10,653,558 Economic development 225,000 - 225,000 Environmental improvements - expendable 21,475 - 21,475 Environmental improvements - nonexpendable 100,000 - 100,000 Unrestricted 16,849,636 12,999,182 29,848,818 Total net position 50,091,490$ 41,422,466$ 91,513,956$ The accompanying notes are an integral part of these basic financial statements. 23 CITY OF LINO LAKES, MINNESOTA STATEMENT OF ACTIVITIES Year Ended December 31, 2013 Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental activities: General government 1,566,388$ 93,118$ 24,197$ -$ Public safety 3,950,197 697,584 207,187 - Public services 4,540,888 456,024 231,753 941,960 Parks, recreation and forestry 835,783 175,978 16,204 - Conservation of natural resources 141,204 1,347 48,027 - Community development 404,726 28,118 - - Interest on long-term debt 951,842 - - - Total governmental activities 12,391,028 1,452,169 527,368 941,960 Business-type activities: Water 927,800 1,208,742 - 442 Sewer 1,584,395 1,516,397 - 441 Total business-type activities 2,512,195 2,725,139 - 883 Total 14,903,223$ 4,177,308$ 527,368$ 942,843$ General revenues: Taxes: Property taxes, levied for general purpose Franchise taxes Other taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Change in market value Transfers Total general revenues and transfers Change in net position Net position - beginning Net position - ending The accompanying notes are an integral part of these basic financial statements. Program Revenues 24 Statement 2 Governmental Activities Business-type Activities Total (1,449,073)$ -$ (1,449,073)$ (3,045,426) - (3,045,426) (2,911,151) - (2,911,151) (643,601) - (643,601) (91,830) - (91,830) (376,608) - (376,608) (951,842) - (951,842) (9,469,531) - (9,469,531) - 281,384 281,384 - (67,557) (67,557) - 213,827 213,827 (9,469,531) 213,827 (9,255,704) 8,392,601 - 8,392,601 109,438 - 109,438 61,556 - 61,556 4,442 - 4,442 216,488 113,402 329,890 (270,692) (158,175) (428,867) (353,304) 353,304 - 8,160,529 308,531 8,469,060 (1,309,002) 522,358 (786,644) 51,400,492 40,900,108 92,300,600 50,091,490$ 41,422,466$ 91,513,956$ Net (Expense) Revenue and Changes in Net Position 25 CITY OF LINO LAKES, MINNESOTA BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2013 G.O.Improvement Municipal Improvement Note State Assets General Bonds 2005A 2009F Aid Cash and investments 5,300,509$ 157,905$ 996,291$ 4,595,797$ Accrued interest receivable 71,531 - - - Accounts receivable 88,282 - - - Due from other governmental units 66,378 - - - Interfund receivable - - - - Taxes receivable: Delinquent 185,420 - - - Due from county 79,849 - - - Delinquent tax increment - - - - Special assessments receivable: Delinquent - - 515 - Noncurrent 6,451 5,561,118 3,548,573 - Due from county - - - - Long-term notes receivable - - - - Prepaid items 176,797 - - - Permanently restricted cash and investments - - - - Advances to other funds - - - - Total assets 5,975,217$ 5,719,023$ 4,545,379$ 4,595,797$ Liabilities , Deferred Inflows of Resources and Fund Balances Liabilities: Interfund payable -$ 2,259,643$ -$ -$ Accounts payable 153,157 - - - Salaries payable 243,589 - - - Contracts and retainage payable - - - - Due to other governmental units 517 - - - Advances from other funds - - - - Unearned revenue - - - - Total liabilities 397,263 2,259,643 - - Deferred inflows of resources: Unavailable resources 191,871 5,561,118 3,549,088 - Fund balances: Nonspendable 176,797 - - - Restricted - - 996,291 - Committed - - - - Assigned - - - 4,595,797 Unassigned 5,209,286 (2,101,738) - - Total fund balances 5,386,083 (2,101,738) 996,291 4,595,797 Total liabilities , deferred inflows of resources and fund balances 5,975,217$ 5,719,023$ 4,545,379$ 4,595,797$ The accompanying notes are an integral part of these basic financial statements. 26 Statement 3 Area and Other Total Unit Governmental Governmental Charge Funds Funds 3,661,631$ 7,315,903$ 22,028,036$ - - 71,531 24,434 - 112,716 - 1,500 67,878 - 2,534,940 2,534,940 - 24,648 210,068 - 11,127 90,976 - 298 298 34,776 22,580 57,871 905,126 672,090 10,693,358 23,189 4,831 28,020 - 225,000 225,000 - 1,710 178,507 - 121,475 121,475 460,881 - 460,881 5,110,037$ 10,936,102$ 36,881,555$ -$ 834,407$ 3,094,050$ 84 244,963 398,204 - 240 243,829 - 143,141 143,141 - - 517 - 460,881 460,881 - 1,765 1,765 84 1,685,397 4,342,387 939,902 719,616 10,961,595 - 101,710 278,507 - 2,655,259 3,651,550 - 121,075 121,075 4,170,051 6,944,854 15,710,702 - (1,291,809) 1,815,739 4,170,051 8,531,089 21,577,573 5,110,037$ 10,936,102$ 36,881,555$ 27 CITY OF LINO LAKES, MINNESOTA Statement 4 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION Total Fund Balances for Governmental Funds 21,577,573$ Total net position reported for governmental activities in the statement of net position is different because: Land 3,275,859$ Buildings, Net of Accumulated Depreciation 3,301,916 Office Equipment and Furniture, Net of Accumulated Depreciation 407,616 Vehicles, Net of Accumulated Depreciation 1,064,565 Machinery and Shop Equipment, Net of Accumulated Depreciation 340,245 Other Equipment, Net of Accumulated Depreciation 182,700 Infrastructure, Net of Accumulated Depreciation 29,282,072 37,854,973 10,961,595 (295,994) Bonds Payable (15,585,000) Unamortized Premiums (50,835) Unamortized Discounts 22,683 Notes Payable (3,695,000) Other Postemployment Benefits (83,969) Compensated Absence Payable (614,536) (20,006,657) Total Net Position of Governmental Activities 50,091,490$ The accompanying notes are an integral part of these basic financial statements. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is included in the statement of net position. Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and, therefore, are not reported as fund liabilities. All liabilities - both current and long-term - are reported in the statement of net position. Balances at year-end are: December 31, 2013 Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Those assets consist of: Some of the City's property taxes and special assessments will be collected after year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as a deferred inflow of resources in the governmental funds. 28 CITY OF LINO LAKES, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS Year Ended December 31, 2013 G.O.Improvement Municipal Improvement Note State Revenue:General Bonds 2005A 2009F Aid General property taxes 7,187,801$ -$ -$ -$ Tax increments - - - - Licenses and permits 431,654 - - - Intergovernmental 500,963 - - - Special assessments 20,616 290,500 1,037,820 - Charges for services 296,185 - - - Fines and forfeits 119,079 - - - Investment earnings 38,093 - 324 49,950 Net increase (decrease) in fair value of investments (50,343) - (14) (70,035) Refunds 38,092 - - - Miscellaneous 114,390 - - - Total revenue 8,696,530 290,500 1,038,130 (20,085) Expenditures: Current: General government 1,535,416 - - - Public safety 3,744,957 - - - Public works 1,281,135 - - - Parks, recreation and forestry 842,253 - - - Conservation of natural resources 134,127 - - - Community development 409,487 - - - Capital outlay: General government 3,206 - - - Public safety 32,008 - - - Public works - - - - Conservation of natural resources 5,886 - - - Debt service: Principal - 345,000 - - Interest and fiscal charges - 186,713 132,558 - Bond issuance costs - - - - Total expenditures 7,988,475 531,713 132,558 - Revenue over (under) expenditures 708,055 (241,213) 905,572 (20,085) Other financing sources (uses): Transfer in 10,000 142,736 90,228 - Transfer out (565,789) - - (421,254) Sale of property - - - - Issuance of debt - - - - Premium on bonds issued - - - Payment on refunding bonds - - - - Total other financing sources (uses)(555,789) 142,736 90,228 (421,254) Net increase (decrease) in fund balance 152,266 (98,477) 995,800 (441,339) Fund balance - beginning of year 5,233,817 (2,003,261) 491 5,037,136 Fund balance - December 31 5,386,083$ (2,101,738)$ 996,291$ 4,595,797$ 29 Statement 5 Area and Other Total Unit Governmental Governmental Charge Funds Funds -$ 1,021,594$ 8,209,395$ - 265,819 265,819 - - 431,654 - - 500,963 486,434 295,149 2,130,519 244,481 176,634 717,300 - - 119,079 51,435 83,008 222,810 (43,232) (112,652) (276,276) - 17,238 55,330 - 215,029 329,419 739,118 1,961,819 12,706,012 - 34,306 1,569,722 - - 3,744,957 64,545 1,608,289 2,953,969 - 160,544 1,002,797 - - 134,127 - 9,046 418,533 - 6,053 9,259 - 192,782 224,790 51,200 - 51,200 - - 5,886 - 1,869,000 2,214,000 - 454,901 774,172 - 17,137 17,137 115,745 4,352,058 13,120,549 623,373 (2,390,239) (414,537) - 1,479,577 1,722,541 (426,038) (237,736) (1,650,817) - 16,727 16,727 - 808,000 808,000 - 6,558 6,558 - (435,000) (435,000) (426,038) 1,638,126 468,009 197,335 (752,113) 53,472 3,972,716 9,283,202 21,524,101 4,170,051$ 8,531,089$ 21,577,573$ 30 CITY OF LINO LAKES, MINNESOTA Statement 6 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES Net Change in Fund Balances-Total Governmental Funds 53,472$ Amounts reported for governmental activities in the statement of activities are different because: Capital outlays 1,306,334$ Loss on disposal of capital assets (159,650) Proceeds from sales of capital assets (16,727) Depreciation expense (2,909,547) (1,779,590) Issuance of bonds (615,000) Issuance of equipment certificates (193,000) Bond premium (6,558) Repayment of bond principal 2,649,000 Change in accrued interest expense for general obligation bonds 38,046 Write-off of bond issuance costs (219,206) Amortization of bond premium 23,096 Amortization of bond discount (2,469) 1,673,909 Unavailable resources - December 31, 2012 12,232,276 Unavailable resources - December 31, 2013 10,961,595 (1,270,681) 13,888 Change in Net Position of Governmental Activities (1,309,002)$ The accompanying notes are an integral part of these basic financial statements. Year Ended December 31, 2013 In the statement of activities, compensated absences and other post employment benefits are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). During fiscal year 2013, compensated absence payable and other post employment benefits payable decreased. Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Also, governmental funds report the effect of premiums and discounts when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Interest is recognized as an expenditure in the governmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues, regardless of when it is due. The net effect of these differences in the treatment of general obligation bonds and related items is as follows: Delinquent and noncurrent property taxes and special assessments receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period’s expenditures and, therefore, are not available in the governmental funds. 31 CITY OF LINO LAKES, MINNESOTA Statement 7 STATEMENT OF NET POSITION - PROPRIETARY FUNDS December 31, 2013 Total Water Sewer 2013 Current assets: Cash and cash equivalents 4,791,243$ 7,286,546$ 12,077,789$ Accounts receivable 207,315 207,771 415,086 Due from other governmental units - 1,643 1,643 Interfund receivable - 559,110 559,110 Due from county - special assessments 1,312 1,312 2,624 Prepaid items 6,877 14,519 21,396 Total current assets 5,006,747 8,070,901 13,077,648 Non-current assets: Inventory 14,684 - 14,684 Capital assets being depreciated: Buildings 48,690 - 48,690 Equipment 155,276 390,235 545,511 Water and sewer systems 20,088,392 21,406,972 41,495,364 Total capital assets 20,292,358 21,797,207 42,089,565 Less: allowance for depreciation (6,431,915) (7,234,366) (13,666,281) Net capital assets 13,860,443 14,562,841 28,423,284 Total noncurrent assets 13,875,127 14,562,841 28,437,968 Total assets 18,881,874 22,633,742 41,515,616 Current liabilities: Accounts payable 14,064 9,887 23,951 Salaries payable 7,359 7,361 14,720 Other accrued liabilities 297 - 297 Compensated absences payable - current portion 17,412 17,412 34,824 Total current liabilities 39,132 34,660 73,792 Non-current liabilities: Compensated absences payable - long term 9,679 9,679 19,358 Total liabilities 48,811 44,339 93,150 Investment in capital assets 13,860,443 14,562,841 28,423,284 Unrestricted 4,972,620 8,026,562 12,999,182 Total net position 18,833,063$ 22,589,403$ 41,422,466$ The accompanying notes are an integral part of these basic financial statements. Assets Liabilities Net position 32 CITY OF LINO LAKES, MINNESOTA Statement 8 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - PROPRIETARY FUNDS Total Water Sewer 2013 Operating revenue: Charges for services 1,176,917$ 1,508,997$ 2,685,914$ Hook-up charges 8,750 7,400 16,150 Water meter sales 12,332 - 12,332 Other operating revenue 10,743 - 10,743 Total operating revenue 1,208,742 1,516,397 2,725,139 Operating expenses: Personal services 187,942 192,292 380,234 Materials and supplies 148,516 65,547 214,063 Contractual services 58,886 80,653 139,539 MCES sewer charges - 747,199 747,199 Depreciation 416,468 437,725 854,193 Utilities 96,850 45,123 141,973 Other 19,138 15,856 34,994 Total operating expenses 927,800 1,584,395 2,512,195 Net income (loss) from operations 280,942 (67,998) 212,944 Other income (expense): Investment earnings 43,075 70,327 113,402 Net increase (decrease) in fair value of investments (60,082) (98,093) (158,175) Special assessments 442 441 883 Total other expense (16,565) (27,325) (43,890) Net income before contributions and transfers 264,377 (95,323) 169,054 Capital contributions and transfers: Capital contributions from primary government 291,403 133,625 425,028 Transfer out (35,862) (35,862) (71,724) Total contributions and transfers 255,541 97,763 353,304 Change in net position 519,918 2,440 522,358 Net position - January 1 18,313,145 22,586,963 40,900,108 Net position - December 31 18,833,063$ 22,589,403$ 41,422,466$ The accompanying notes are an integral part of these basic financial statements. Year Ended December 31, 2013 33 CITY OF LINO LAKES, MINNESOTA Statement 9 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Year Ended December 31, 2013 Total Water Sewer 2013 Cash flows from operating activities: Cash receipts from customers 1,222,831$ 1,520,747$ 2,743,578$ Cash paid to suppliers (304,250) (962,241) (1,266,491) Cash paid to employees (180,975) (185,675) (366,650) Net cash flows from operating activities 737,606 372,831 1,110,437 Cash flows from noncapital financing activities: Net transfers (35,862) (35,862) (71,724) Cash flows from capital and related financing activities: Collection of special assessments (835) 682 (153) Acquisition of capital assets (3,000) (51,353) (54,353) Net cash flows used by capital and related financing activities (3,835) (50,671) (54,506) Cash flows from investing activities: Interest on investments (17,007) (27,766) (44,773) Net increase in cash and cash equivalents 680,902 258,532 939,434 Cash and cash equivalents - January 1 4,110,341 7,028,014 11,138,355 Cash and cash equivalents - December 31 4,791,243$ 7,286,546$ 12,077,789$ Reconciliation of operating income to net cash from operating activities: Operating income (loss)280,942$ (67,998)$ 212,944$ Adjustments to reconcile operating income to net cash flows from operating activities: Depreciation 416,468 437,725 854,193 Change in assets and liabilities: Increase in receivables 14,089 4,350 18,439 (Increase) decrease in prepaid items 2,660 (2,957) (297) Increase in inventory 24,614 - 24,614 Increase (decrease) in payables (1,167) 1,711 544 Net cash flows from operating activities 737,606$ 372,831$ 1,110,437$ Noncash investing, capital, and financing activities: Capital asset contributions from government 291,403$ 133,625$ 425,028$ The accompanying notes are an integral part of these basic financial statements. 34 CITY OF LINO LAKES, MINNESOTA Statement 10 STATEMENT OF NET POSITION - FIDUCIARY FUNDS - AGENCY FUNDS December 31, 2013 2013 Assets Cash and investments 669,478$ Liabilities Deposits payable 669,478$ The accompanying notes are an integral part of these financial statements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 35 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lino Lakes is a public corporation formed under Minnesota Statute 410. As such, the City is under home rule charter regulations and applicable statutory guidelines. The basic financial statements of the City of Lino Lakes have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies: A. FINANCIAL REPORTING ENTITY As required by U.S. generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Lino Lakes and its component units. A component unit is a legally separate entity for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit include whether or not the primary government appoints the voting majority of the potential component unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. COMPONENT UNITS In conformity with U.S. generally accepted accounting principles, the financial statements of component units have been included in the financial reporting entity either as blended component units or as discretely presented component units. Blended Component Units The Economic Development Authority (EDA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the EDA is reported as if it were part of the City's operations because the members of the City Council serve as commission members. The EDA does not issue separate financial statements. The Housing and Redevelopment Authority (HRA) of Lino Lakes is an entity legally separate from the City. However, for financial reporting purposes, the HRA is reported as if it were part of the City's operations because the members of the City Council serve as commission members. The HRA has not yet incurred any financial activity. B. BASIC FINANCIAL STATEMENTS 1. Government-Wide Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) display information about the primary government and its component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external parties for support. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s enterprise funds and various other functions of government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 36 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIC FINANCIAL STATEMENTS (CONTINUED) 1. Government-Wide Statements (Continued) In the government-wide statement of net position, both the governmental and business-type activities columns: (a) are presented on a consolidated basis by column; and (b) are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City’s net position is reported in three parts: (1) net investment in capital assets; (2) restricted net position; and (3) unrestricted net position. The City first utilizes restricted resources to finance qualifying activities. The statement of activities demonstrates the degree to which the direct expenses of each function of the City’s governmental activities and different business-type activities are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Program revenues include: (1) fees, fines, and charges paid by the recipients of goods, services, or privileges provided by a given function or activity; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 2. Fund Financial Statements The fund financial statements provide information about the City’s funds, including its fiduciary funds and blended component unit. Separate statements for each fund category (governmental, proprietary, and fiduciary) are presented. The emphasis of governmental and proprietary fund financial statements is on major individual governmental and enterprise funds, with each displayed as separate columns in the fund financial statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or incidental activities. The City reports the following major governmental funds: General Fund The general fund is the City’s primary operating fund. It accounts for all financial resources of the genera l government, except those required to be accounted for in another fund. General Obligation Improvement Bonds 2005A Fund The general obligation improvement bonds 2005A fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. Improvement Note 2009F Fund The improvement note 2009F fund accounts for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. Municipal State Aid Fund The Municipal State Aid fund accounts for the collection of assessments on municipal state aid projects. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 37 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIC FINANCIAL STATEMENTS (CONTINUED) 2. Fund Financial Statements (Continued) Area and Unit Charge Fund The area and unit charge fund accounts for the collection of water and sewer unit charges to be used for debt payments and construction of governmental infrastructure. The City reports the following major proprietary funds: Water Fund The water fund accounts for customer water service charges that are used to finance water operating expenses. Sewer Fund The sewer fund accounts for customer water service charges that are used to finance water operating expenses. Additionally, the City reports the following fiduciary funds: Agency Funds - to account for assets held as an agent for individuals, private organizations, other governmental units, and/or other funds. The City’s agency fund accounts for pass-through contractor’s deposits relating to prospective developments. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds, which are included in the Fiduciary Funds, do not have a measurement focus. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognize d as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. The City considers all revenues to be available if they are collected within 60 days after the end of the current period. Property and other taxes, licenses, and interest are all considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent that they have matured. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 38 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING (CONTINUED) Amounts reported as program revenues include: 1. Charges to customers or applicants for goods, services, or privleges provided, 2. operating grants and contributions, and 3. capital grants and contributions, including special assessments. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of the City’s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. BUDGETS Budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Annual appropriated budgets are adopted for the General Fund and the Program Recreation Special Revenue Fund. Budgeted expenditure appropriations lapse at year-end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is not presently considered necessary to assure effective budgetary control or t o facilitate effective cash management. E. LEGAL COMPLIANCE – BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Administrator submits to the City Council a proposed operating budget (including the General Fund and Program Recreation Special Revenue Fund) for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution on a departmental basis and can be expended by each department based upon detailed budget estimates for individual expenditure accounts. 4. The City Administrator is authorized to transfer appropriations within any department budget. Additional interdepartmental or interfund appropriations and deletions are or may by authorized by the City Council with fund (contingency) reserves or additional revenues. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund. 6. Legal debt obligation indentures determine the appropriation level and debt service tax levies for the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to determine and calculate user charges. These debt service and budget amounts represent general obligation bond indenture provisions and net income for operation and capital maintenance and are not reflected in the financial statements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 39 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. LEGAL COMPLIANCE – BUDGETS (CONTINUED) 7. A capital improvement program is reviewed periodically by the City Council for the Capital Project Funds. However, appropriations for major projects are not adopted until the actual bid award of the improvement. The appropriations are not reflected in the financial statements. 8. Expenditures may not legally exceed budgeted appropriations at the department level unless approved by the City Council. Therefore, the legal level of budgetary control is at the department level (i.e. administration, community development, public safety, public services, and other). 9. The City Council may authorize transfers of budgeted amounts between City funds. F. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in investments authorized by Minnesota Statutes. Earnings from investments are allocated to individual funds on the basis of the fund's equity in the cash and investment pool. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund in the governmental fund financial statements, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund payables are eliminated for statement of Net position presentation. Investments are stated at fair value and interest earnings are accrued at year-end. For purposes of the statement of cash flows the Proprietary Fund considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the proprietary fund types have original maturities of 90 days or less. Therefore, the entire balance in such fund types is considered cash equivalents. Permanently restricted cash and investments represents the principal portion of resources received that must be retained in a permanent fund. Only earnings from these funds may be used for purposes that support environmental maintenance and improvements. G. PROPERTY TAX CREDITS Property taxes on homestead property (as defined by State Statutes) are partially reduced by property tax credits. These credits are paid to the City by the State in lieu of taxes levied against homestead property. The State remits these credits through installments each year. These credits are recognized as revenue by the City at the time of collection. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 40 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 15 and December 15 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. Within the governmental fund financial statements, the City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and the following January are recognized as revenue for the current year. Taxes and credits not received at the year-end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January is fully offset by deferred inflows of resources because it is not available to finance current expenditures. Deferred inflows of resources in governmental fund are susceptible to full accrual on the government-wide statements. The City's property tax revenue includes payments from the Metropolitan Revenue Distribution (Fiscal Disparities Formula) per State Statute 473F. This statute provides a means of spreading a portion of the taxable valuation of commercial/industrial real property to various taxing authorities within the defined metropolitan area. The valuation "shared" is a portion of commercial/industrial property valuation growth since 1971. Property taxes paid to the City through this formula for 2013 totaled $1,094,578. Receipt of property taxes from this "fiscal disparities pool" does not increase or decrease total tax revenue. I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Within the fund financial statements, the revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the County and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, noncurrent and special assessments receivable in governmental funds are completely offset by deferred inflow of resources. Deferred inflows of resources in governmental funds are susceptible to full accrual on the government-wide statements. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 41 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. SPECIAL ASSESSMENT REVENUE RECOGNITION (CONTINUED) Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. J. INVENTORIES AND PREPAIDS The original cost of materials and supplies has been recorded as expenditures/expenses at the time of purchase in both the Governmental and Proprietary Funds. These funds do not maintain material amounts of materials and supplies. Certain payments to vendors reflect costs applicable to future accounting periods and are reported as prepaid items under the purchases method in both government-wide and fund financial statements. K. INTERFUND RECEIVABLES/PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. The year-end balances are classified as interfund receivables and payables on the governmental fund balance sheets. The non-current portion of interfund loans are reported as “advances to/from other funds.” Advances between funds are offset by a nonspendable fund balance account in applicable governmental funds to indicate they are not available for appropriation and are not expendable from available financial resources. L. CAPITAL ASSETS Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, sidewalks, street lights, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets exceeding the City’s capitalization threshold of $2,500 are recorded at historical cost or estimated historical cost if purchased or constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. All existing City infrastructure has been capitalized regardless of date placed in service. Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of Activities with accumulated depreciation reflected in the Statement of Net position. Capital assets are depreciated using the straight-line method over their estimated useful lives. Since surplus assets are sold for an immaterial amount when declared as no longer needed for City purposes, no salvage value is taken into consideration for depreciation purposes. Useful lives vary from 3 to 30 years for Buildings, Office Furniture and Equipment, Vehicles, Machine Shop and Equipment and Other assets, and 25 to 50 years for Infrastructure. Capital assets not being depreciated include land and construction in progress. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 42 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation, PTO (Personal Time Off), extended leave and sick pay benefits. All vacation pay and PTO and the portion of sick pay allowable as severance pay is accrued in the government-wide and proprietary fund financial statements. The current portion is calculated based on historical trends. N. LONG-TERM OBLIGATIONS In the entity-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issue costs, if material, are amortized over the term of the related debt using the straight-line method. In the governmental fund financial statements, bond premiums and discounts, as well as bond issue costs are recognized during the current period. The face amount of the debt issue is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issue costs are reported as debt service expenditures. O. FUND EQUITY In the fund financial statements, governmental funds report fund balances in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows: Nonspendable – portions of fund balance related to prepaids, inventories, long-term receivables, and corpus on any permanent fund. Restricted – funds are constrained by external parties (statute, grantors, bond agreements, etc). Committed – funds are established and modified by a resolution approved by the City Council. Assigned – consists of internally imposed constraints. These constraints are established by the City Council and/or management. The City Council also delegates the authority to assign fund balance to the Finance Director. Unassigned – is the residual classification for the General Fund and also reflects negative residual amounts in other funds. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, it is the City’s policy to use restricted first, then unrestricted fund balance. When an expenditure is incurred for purposes for which committed, assigned, and unassigned amounts are available, it is the City’s policy to use committed first, then assigned, and finally unassigned amounts. The City formally adopted a fund balance policy for the General Fund. The policy establishes an unassigned fund balance range of 40% - 50% of General Fund operating expenditures. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 43 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. FUND EQUITY (CONTINUED) The fund equity balances in the proprietary funds have been classified into two broad categories: Net position – net investment in capital assets Unrestricted net position Net position represents the differences between assets and liabilities in the government-wide financial statements. Net position – net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the ouststanding balance of any long-term debt used to build or acquire capital assets. Net position is reported as restricted in government-wide financial statements when there are limitations on their use thorugh external restrictions imposed by creditors, grantors, or laws or regulations of other governments. P. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures or expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. All Interfund transactions are eliminated except for activity between governmental activities and business - type activities for presentation in the entity-wide statements of Net position and statements of activities. Note 2 DEPOSITS AND INVESTMENTS Components of Cash and Investments Cash and investments at year-end consists of the following: Deposits 3,252,636$ Investments 31,643,322 Cash on Hand 820 Total 34,896,778$ Cash and investments are presented in the financial statements as follows: Cash and Investments - Statement of Net Position 34,105,825$ Permanent restricted Cash and Investments - Statement of Net Position 121,475 Cash and Investments - Statement of Net Position - Fiduciary Funds 669,478 Total 34,896,778$ A. DEPOSITS The City maintains a cash and investment pool that is available for use by all funds. Each fund type’s portion of this pool is displayed on the statement of net position and the balance sheet as “Cash and Investments.” In accordance with Minnesota Statutes, the City maintains deposits at financial institutions which are authorized by the City Council. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 44 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) A. DEPOSITS (CONTINUED) Custodial Credit Risk – Custodial credit risk for deposits is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City does not have a specific deposit policy for custodial credit risk but rather follows Minnesota Statutes for deposits. Minnesota Statutes require that all deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or corporate surety bonds. Authorized collateral include: U.S. government treasury bills, notes, or bonds; issues of a U.S. government agency; general obligations of a state or local government rated “A” or better; revenue obligations of a state or local government rated “AA” or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits insured by a federal agency. Minnesota Statutes require securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust department of a commercial bank or other financial institution not owned or controlled by the depository. The City’s deposits in banks at December 31, 2013 were entirely covered by federal depository insurance or by surety bonds and collateral in accordance with Minnesota Statutes. B. INVESTMENTS The City may also invest idle funds as authorized by Minnesota Statutes as follows: Direct obligations or obligations guaranteed by the United States or its agencies Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, is rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of thirteen months or less General obligations rated “A” or better; revenue obligations rated “AA” or better General obligations of the Minnesota Housing Finance Agency rated “A” or better Banker’s acceptances of United States banks eligible for purchase by the Federal Reserve System Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by a least two nationally recognized rating agencies, and maturing in 270 days or less Guaranteed investment contracts guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debt obligations of the issuer or the collateral pledged by the issuer is in the top two rating categories Repurchase or reverse purchase agreements and securities lending agreements financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers Any security which is an obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to section 126C.55. Investments Held with Broker – Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City’s policy to minimize interest rate risk includes investing primarily in short-term securities and structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations. Information about the sensitivity of the fair values of the City’s investments to market interest rate risk fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity: CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 45 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. INVESTMENTS (CONTINUED) 12 Months 13 to 24 25 to 60 More than Type Total or Less Months Months 60 Months Minnesota Municipal Money Market Trust Fund 944,001$ 944,001$ -$ -$ -$ Federal Home Loan Bank 2,434,579 - - - 2,434,579 Federal Home Loan Mortgage Corp.348,593 - - 348,593 - Federal National Mortgage Assn.2,543,496 - - 597,449 1,946,047 Negotiable CDs 12,899,752 6,410,000 4,057,457 2,432,295 - Municipal Bonds 10,953,310 1,145,804 2,135,439 5,704,334 1,967,733 Mutual Fund 1,519,591 1,519,591 - - - Total 31,643,322$ 10,019,396$ 6,192,896$ 9,082,671$ 6,348,359$ Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. The City’s policy to minimize credit risk includes limiting investing funds to those allowable under Minnesota Statute 118A, annually appointing all financial institutions where investments are held, and diversifying the investment portfolio. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The following chart summarizes year-end ratings for the City’s investments as rated by Moody’s Investors Service: Credit Type Quality Rating Amount Minnesota Municipal Money Market Trust Fund Aa2 944,001$ Federal Home Loan Bank Aaa/AA+2,434,579 Federal Home Loan Mortgage Corp.Aaa/AA+348,593 Federal National Mortgage Assn.Aaa/AA+2,543,496 Negotiable CDs Not Rated 12,899,752 Municipal Bonds A-Aaa 10,953,310 Mutual Fund Not Rated 1,519,591 Total 31,643,322$ The Minnesota Municipal Money Market Fund Trust is a common law trust organized in accordance with the Minnesota Joint Powers Act, which invests only in investment instruments allowable under Minnesota statutes as described on the previous page. Its investments are valued at amortized cost, which approximates market value in accordance with Rule 2a-7 of the Investment Company Act of 1940. The amortized cost method of valuation values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the fair value of instruments. The Minnesota Municipal Money Market Trust Fund does not have its own credit rating. MBIA, Inc., who administers the Minnesota Municipal Money Market Fund Trust holds an organization credit rating of Aa2. For an investment, custodial credit risk is the risk that, in the event of failure of the counterparty, the City will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. The City’s investment policy doesn’t specifically address custodial credit risk. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 46 Note 2 DEPOSITS AND INVESTMENTS (CONTINUED) B. INVESTMENTS (CONTINUED) Concentration of Credit Risk The City places no limit on the amount that it may invest in any one issuer. The following is a list of investments which individually comprise more than 5% of the City’s total investments: Type Amount Percentage Federal National Mortgage Assn.2,543,496$ 8.04% Federal Home Loan Bank 2,434,579 7.69% Note 3 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2013 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital Assets, Not Being Depreciated: Land 3,275,859$ -$ -$ 3,275,859$ Capital Assets, Being Depreciated: Buildings 6,530,334 195,783 - 6,726,117 Office Equipment and Furniture 1,372,230 36,904 (26,102) 1,383,032 Vehicles 2,514,738 159,041 (130,829) 2,542,950 Machinery and Shop Equipment 923,595 (3,000) 920,595 Other Equipment 952,447 - - 952,447 Infrastructure 77,876,924 914,606 (183,726) 78,607,804 Total Capital Assets, Being Depreciated 90,170,268 1,306,334 (343,657) 91,132,945 Accumulated Depreciation for: Buildings (3,206,148) (218,053) - (3,424,201) Office Equipment and Furniture (921,491) (80,027) 26,102 (975,416) Vehicles (1,366,677) (242,537) 130,829 (1,478,385) Machinery and Shop Equipment (530,970) (52,380) 3,000 (580,350) Other Equipment (747,408) (22,339) - (769,747) Infrastructure (47,038,870) (2,294,211) 7,349 (49,325,732) Total Accumulated Depreciation (53,811,564) (2,909,547) 167,280 (56,553,831) Total Capital Assets, Being Depreciated, Net 36,358,704 (1,603,213) (176,377) 34,579,114 Governmental Activities Capital Assets, Net 39,634,563$ (1,603,213)$ (176,377)$ 37,854,973$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 47 Note 3 CAPITAL ASSETS (CONTINUED) Beginning Ending Balance Increases Decreases Balance Business-Type Activities: Capital Assets, Being Depreciated: Buildings 48,690$ -$ -$ 48,690$ Machinery and Shop Equipment 503,871 54,354 (12,714) 545,511 Water and Sewer Lines 41,070,336 425,028 - 41,495,364 Total Capital Assets, Being Depreciated 41,622,897 479,382 (12,714) 42,089,565 Accumulated Depreciation for: Buildings (48,690) - - (48,690) Machinery and Shop Equipment (307,968) (17,330) 12,714 (312,584) Water and Sewer Lines (12,468,144) (836,863) - (13,305,007) Total Accumulated Depreciation (12,824,802) (854,193) 12,714 (13,666,281) Total Capital Assets, Being Depreciated, Net 28,798,095 (374,811) - 28,423,284 Business-Type Capital Assets, Net 28,798,095$ (374,811)$ -$ 28,423,284$ Depreciation expense charged to functions/programs of the primary government as follows: Governmental Activities: General Government 238,194$ Public Safety 114,976 Public Services 2,413,609 Parks, Recreation and Forestry 142,268 Community Development 500 Total Depreciation Expense, Governmental Activities 2,909,547$ Business-type Activities: Water 416,468$ Sewer 437,725 Total Depreciation Expense, Governmental Activities 854,193$ The City contributed $425,028 of capital assets from the governmental activities to the business-type activities. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 48 Note 4 CITY INDEBTEDNESS City indebtedness at December 31, 2013 is composed of the following: Final Issue Maturity Interest Original Payable Date Date Rate Issue 12/31/2013 Governmental Activities: General Obligation Bonds: 2011A Equipment Certificates 2/14/2011 12/31/2014 1.00%120,000$ 41,000$ 2012A Equipment Certificates 2/1/2012 12/31/2014 1.00%150,000 101,000 2013A Equipment Certificates 2/1/2013 12/31/2015 1.00%193,000 193,000 G.O. Tax Abatement Bonds, Series 2006C 8/15/2006 2/1/2023 4.00%-4.30%2,460,000 2,220,000 G.O. Utility Revenue Bonds, Series 2006D 8/15/2006 2/1/2017 4.00%-4.15%570,000 255,000 G.O. CIP Refunding Bonds, Series 2006E 11/1/2006 2/1/2018 4.00%2,990,000 1,930,000 G.O. Tax Increment Financing Bonds, Series 2007A 7/15/2007 2/1/2024 4.00%-4.125%4,215,000 3,110,000 G.O. Refunding Bonds, Series 2012A 11/15/2012 2/1/2024 1.00%-2.00%2,015,000 2,015,000 Total General Obligation Bonds 12,713,000 9,865,000 Special Assessment Bonds: G.O. Improvement Bonds, Series 2003B 12/1/2003 2/1/2014 3.20%-5.60%250,000 35,000 G.O. Improvement Bonds, Series 2005A 11/1/2005 2/1/2021 4.35%-5.15%5,550,000 3,505,000 G.O. Improvement Refunding Bonds, Series 2005B 11/1/2005 2/1/2015 3.75%-5.00%3,755,000 845,000 G.O. Improvement & Utility Revenue Refunding Bonds, Series 2010A 7/9/2010 2/1/2020 2.00%-3.00%1,000,000 720,000 G.O. Improvement Bonds, Series 2013A 7/15/2013 2/1/2024 1.25%-4.00%615,000 615,000 Total Special Assessment Bonds 11,170,000 5,720,000 Total Bonds 23,883,000 15,585,000 Note Payable - Anoka County - 2009A 8/1/2009 8/1/2024 4.00%-3.70%4,260,000 3,695,000 Unamortized Bond Discounts (45,490) (22,683) Unamortized Bond Premiums 202,370 50,835 Compensated Absences Payable N/A 614,536 Other Post Employment Benefit Plan N/A 83,969 Total Governmental Activities 28,299,880$ 20,006,657$ Business-Type Activities: Revenue Bonds: Compensated Absences Payable N/A 54,182$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 49 Note 4 CITY INDEBTEDNESS (CONTINUED) The following is a schedule of changes in City indebtedness for the year ended December 31, 2013: Payable Payable Due Within 12/31/2012 Issues Payments 12/31/2013 One Year Governmental activities: Bonded debt: General Obligation 10,646,000$ 193,000$ 974,000$ 9,865,000$ 1,129,000$ Special Assessment 6,780,000 615,000 1,675,000 5,720,000 920,000 Unamortized Bond Discounts (25,152) - (2,469) (22,683) - Unamortized Bond Premiums 67,373 6,558 23,096 50,835 - Note Payable - Anoka County 3,695,000 - - 3,695,000 995,000 Compensated Absences Payable 634,572 528,925 548,961 614,536 382,332 Other Post Employment Benefit Plan 77,821 6,148 - 83,969 - Total Governmental Activities 21,875,614 1,349,631 3,218,588 20,006,657 3,426,332 Business-Type Activities: Compensated Absences Payable 43,410 43,197 32,425 54,182 34,824 Total 21,919,024$ 1,392,828$ 3,251,013$ 20,060,839$ 3,461,156$ All long-term bonded indebtedness outstanding at December 31, 2013 is backed by the full faith and credit of the City, including special assessment bond issues. Minimum annual principal and interest payments required to retire long-term debt, not including compensated absences payable are as follows. Principal Interest Principal Interest Principal Interest Years Ending December 31, 2014 2,049,000$ 552,473$ 995,000$ 114,951$ 3,044,000$ 667,424$ 2015 2,231,000 467,294 360,000 100,345 2,591,000 567,639 2016 1,850,000 392,528 375,000 90,945 2,225,000 483,473 2017 1,875,000 324,288 390,000 80,945 2,265,000 405,233 2018 1,660,000 258,245 405,000 70,345 2,065,000 328,590 2019-2023 5,410,000 547,878 1,170,000 154,314 6,580,000 702,192 2024-2026 510,000 8,436 - - 510,000 8,436 Total 15,585,000$ 2,551,141$ 3,695,000$ 611,845$ 19,280,000$ 3,162,986$ Bonded Debt Notes Payable Total Description and Restrictions of Long-Term Debt General Obligation Bonds – The bonds were issued for improvements or projects which benefited the City as a whole and are, therefore, repaid from ad valorem levies. Special Assessment Bonds – These bonds were issued to finance various improvements and will be repaid primarily from special assessments levied on the properties benefiting from the improvements. However, some issues are partly financed by ad valorem levies. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 50 Note 4 CITY INDEBTEDNESS (CONTINUED) Description and Restrictions of Long-Term Debt (Continued) Revenue Bonds – These bonds were issued to finance various improvements in the water fund and will be repaid primarily from pledged revenues derived from the constructed assets. In July 2013, the City issued General Obligation Improvement Bonds of $615,000 to fund the Otter Lake Extension project. The $615,000 is being funded by special assessments related to the improvement project that the City has collected. The bond was issued at a rate of 1.25% . The bonds will be called in 2024. Liability for Compensated Absences – This liability represents vested benefits earned by governmental fund employees through the end of the year which will be paid or used in future periods. For the governmental activities, compensated absences and other postemployment benefit liability are generally liquidated by the general fund. The liability for Proprietary Fund employees is included in the accrued liabilities of those funds. Note 5 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Lino Lakes’ legal debt margin for 2013 is computed as follows: 12/31/2013 Market value 1,519,857,242$ Applicable percentage 3.0% Debt Limit 45,595,717 Amount of debt applicable to debt limit: Total bonded debt 15,585,000 Less: Special assessment bonds (5,720,000) Tax abatement bonds (2,220,000) Utility revenue bonds (255,000) Tax increment financing bonds (3,110,000) Total debt applicable to debt limit 4,280,000 Legal debt margin 41,315,717$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 51 Note 6 DEFINED BENEFIT PENSION PLANS – STATEWIDE A. PLAN DESCRIPTION All full-time and certain part-time employees of the City of Lino Lakes are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are a cost-sharing, multiple-employer retirement plan. This plan is established and administered in accordance with Minnesota Statutes, Chapter 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0% for each year of service. For GERF and PEPFF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime annuity that ceases upon the death of the retiree, no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees, who are entitled to benefits but are not receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the internet at www.mnpera.org, by writing to PERA at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651) 296-7460 or 1-800-652-9026. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 52 Note 6 DEFINED BENEFIT PENSION PLANS – STATEWIDE (CONTINUED) B. FUNDING POLICY Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 6.25% respectively, of their annual covered salary. PEPFF members were required to contribute 9.6% of their annual covered salary in 2012. The City is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan members, 7.25% for Coordinated Plan members, and 14.4% for PEPFF members. The City's contributions to the General Employees Retirement Fund for the years ended December 31, 2013, 2012, and 2011 were $160,392, $164,317, and $187,186, respectively. The City’s contributions to the Public Employees Police & Fire Fund for the years ended December 31, 2013, 2012, and 2011 were $290,737, $315,541, and $285,356, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. Note 7 METROPOLITAN COUNCIL ENVIRONMENTAL SERVICES During 1971, the Metropolitan Waste Control Commission (MWCC) was organized to provide for consolidation of the sanitary sewer collection, treatment and disposal in the seven county metropolitan area surrounding Minneapolis and St. Paul. Previously, these operations were maintained by the city governments on an in dividual or collective basis. The MWCC merged with the Metropolitan Council during 1994 to form Metropolitan Council Wastewater Services (MCWS) and is now called the Metropolitan Council Environmental Services (MCES). The MCES bills the City annually based upon estimated volume and budgeted costs. The City follows the accounting policy of recognizing these charges as an expense of the sewer utility operation in the year for which they are billed. Note 8 STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY A. DEFICIT FUND BALANCES The City has deficit fund balances at December 31, 2013 as follows: Fund Balance Deficit Dedicated Parks (444,279)$ 21st Ave. Extension 1-13 (29,455) Tax Increment Financing 1-11 (770,196) Improvement and Utility Revenue Refunding Bonds 2010 (47,879) G.O. Improvement Bonds 2005A (2,101,738) The City intends to fund these deficits through future tax levies, special assessment levies, tax increments, transfers from other funds, and various other sources. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 53 Note 8 STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY (CONTINUED) B. EXPENDITURES IN EXCESS OF BUDGET The following is a listing of expenditure categories that exceed budget appropriations for non-major funds: Budget Actual Excess Program Recreation Special Revenue Fund: Supplies 51,675$ 73,185$ (21,510)$ Note 9 CONTINGENCIES Tax Increment Districts – The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance which could have a material effect on the financial statements. Federal and State Funds – The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2013. Litigation – The City, in connection with the normal conduct of its affairs, is involved in various claims, judgments, and litigation. As of December 31, 2013 any potential affect this may have on the City is not estimable, however it is not expected to have a material effect on the financial statements of the City. Note 10 DEFERRED AD VALOREM TAX LEVIES - BONDED DEBT General Obligation bond issues sold by the City are financed by ad valorem tax levies and special assessment bond issues sold by the City are partially financed by ad valorem tax levies in addition to special assessments levied against the benefiting properties. When a bond issue to be financed partially or completely by ad valorem tax levies is sold, specific annual amounts of such tax levies are stated in the bond resolution and the County Auditor is notified and instructed to levy these taxes over the appropriate years. The future tax levies are subject to cancellation when and if the City has provided alternative sources of financing. The City Council is required to levy any additional taxes found necessary for full payment of principal and interest. These future scheduled tax levies are not shown as assets in the accompanying financial statements at Decembe r 31, 2013. Future scheduled tax levies for all bonds outstanding at December 31, 2013 totaled $16,589,767. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 54 Note 11 FUND BALANCE At December 31, 2013, the City had various fund balances restricted, committed, or assigned through legal restriction and City Council authorization. Major fund balance appropriations at December 31, 2013 are shown on the various balance sheets as segregations of the fund balance. The fund balances are as follows: Total Nonspendable Restricted Committed Assigned Unassigned General Fund:5,209,286$ -$ -$ -$ -$ 5,209,286$ Prepaid Items 176,797 176,797 - - - - Total General Fund 5,386,083 176,797 - - - 5,209,286 G.O. Improvement Bonds 2005A: Deficit Fund Balance (2,101,738) - - - - (2,101,738) Improvement Bonds 2009F: Debt Service 996,291 - 996,291 - - - Municipal State Aid: Construction Projects 4,595,797 - - - 4,595,797 - Area and Unit Charge: Advances to Other Funds 460,881 - - - 460,881 - Construction Projects 3,709,170 - - - 3,709,170 - Total Area and Unit Charge 4,170,051 - - - 4,170,051 - Nonmajor Governmental Funds: Prepaid Items 1,710 1,710 - - - - Economic Development - Loan Receivable 225,000 - 225,000 - - - Corpus of Permanent Fund 100,000 100,000 - - - - Program Recreation 110,457 - - 110,457 - - Cable TV Fund 10,618 - - 10,618 - - Environmental Improvements 21,475 - 21,475 - - - Debt Service 2,408,784 - 2,408,784 - - - Construction Projects 6,944,854 - - - 6,944,854 - Deficit Fund Balance (1,291,809) - - - - (1,291,809) Total Nonmajor Funds 8,531,089 101,710 2,655,259 121,075 6,944,854 (1,291,809) Total Fund Balances 21,577,573$ 278,507$ 3,651,550$ 121,075$ 15,710,702$ 1,815,739$ Note 12 SHARE IN GAS FRANCHISE PROFITS The City receives a share of the gross billing for natural gas sales by a neighboring City, which provides service within the City of Lino Lakes. The amount reported as revenue in the General Fund during fiscal year 2013 was $61,280. Note 13 INTERFUND RECEIVABLE AND PAYABLES The purpose of the interfund receivable and payable balances is for the elimination of negative cash between funds and at December 31, 2013 are as follows: Receivable Payable Governmental Activity: G.O. Improvement Bonds 2005A -$ 2,259,643$ Other Nonmajor Governmental Funds 2,534,940 834,407 Business-Type Activity: Sewer Fund 559,110 - 3,094,050$ 3,094,050$ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 55 Note 13 INTERFUND RECEIVABLE AND PAYABLES (CONTINUED) Interfund receivable and payable balances not expected to be repaid within one year are reported as advances to and from other fund and at December 31, 2013 are as follows: Receivable Payable Governmental Activity: Area and Unit Charge 460,881$ -$ Other Nonmajor Governmental Funds - 460,881 460,881$ 460,881$ The purpose of the advance from the Area and Unit Charge Fund is to temporarily finance projects in the Dedicated Parks Fund. Note 14 INTERFUND TRANSFERS Individual fund transfers for fiscal year 2013 are as follows: Transfer In Transfer Out Governmental Activity: General Fund 10,000$ (565,789)$ G.O. Improvement Note 2009A 142,736 - Improvement Bonds of 2009F 90,228 - Area and Unit Charge - (426,038) Municipal State Aid - (421,254) Other Nonmajor Governmental Funds 1,479,577 (237,736) Total Governmental Activity 1,722,541 (1,650,817) Business-Type Activity: Water Fund - (35,862) Sewer Fund - (35,862) Total Business-Type Activity - (71,724) Total 1,722,541$ (1,722,541)$ Interfund transfers are other financing sources and uses within the fund financial statements. The purpose of the transfers is to provide funding for capital improvement projects, capital outlay, and debt service as well as to open and close funds. Note 15 RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Workers compensation coverage is provided through a pooled self-insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not subject to a deductible. The City’s workers compensation coverage is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 56 Note 15 RISK MANAGEMENT (CONTINUED) Property and casualty insurance is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portion of the insurance policies and for any exclusions from the insurance policie s. These amounts are considered immaterial to the financial statements. The City continues to carry commercial insurance for all other risks of loss, including disability and employee health insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. Note 16 CONDUIT DEBT OBLIGATIONS The City has issued Industrial Development Revenue Bonds and Commercial Revenue Notes to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities which are deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector entity served by the bond issue. The City is not obligated in any manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2013, one series of Industrial Revenue Bonds was outstanding with an aggregate remaining principal balance of $540,000, and one series of Commercial Revenue Notes was outstanding with an aggregate remaining principal balance of $2,152,037. Note 17 JOINT VENTURES Fire The Centennial Fire District (the District) was established under a joint powers agreement between the City of Lino Lakes and two other cities. The general purpose of the District is to provide fire protection services including, but not limited to, fire prevention, firefighting and rescue service. Each member city is entitled to appoint two commissioners to the District’s Board. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 57 Note 17 JOINT VENTURES (CONTINUED) Fire (Continued) Each calendar year, participating cities are to pay the District its share of the total operating and capital budget in accordance with a funding formula contained in Section VII of the joint powers agreement. The funding formula takes into account each city’s average number of calls, population, and total market value. During 2013, the City of Lino Lakes’ contributions to the District were as follows: Operating 511,770$ Capital 85,250 Total 597,020$ The audited financial statements of the District as of December 31, 2012 can be reviewed upon request of the Centennial Fire District. In January 2014 the City Council voted to start the process to withdraw from the District which will be effective January 27, 2016. The City is currently exploring options for fire protection starting in January 2016. Anoka County The City of Lino Lakes has a joint powers agreement with Anoka County for the reconstruction of County State Aid Highway 14 (Main Street) and I-35E Interchange County Project. Note 18 OTHER POSTEMPLOYMENT BENEFIT PLAN At December 31, 2008, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. The City engaged an actuary to determine the City’s liability for postemployment healthcare benefits other than pensions as of January 1, 2011. A. PLAN DESCRIPTION The City provides benefits for retirees as required by Minnesota Statute §471.61 subdivision 2b. Active employees, who retire from the City when over age 50 and with 20 years of service, may continue coverage with respect to both themselves and their eligible dependent(s) under the City’s health benefits program until age 65. Pursuant to the provisions of the plan, retirees are required to pay the total premium cost. As of December 31, 2013 there were approximately 49 active participants and 7 retired participants receiving benefits from the City’s health plans. B. FUNDING POLICY The City funds its OPEB obligation on a pay as you go basis. For fiscal year 2013, the City contributed $21,289 to the plan. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 58 Note 18 OTHER POSTEMPLOYMENT BENEFIT PLAN (CONTINUED) C. ANNUAL OPEB COST AND NET OPEB OBLIGATION The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any un-funded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually paid from the plan, and changes in the City’s net OPEB obligation. Annual Required Contribution 29,449$ Interest on Net OPEB Obligation 1,663 Adjustment to Annual Required Contribution (3,675) Annual OPEB Cost (Expense)27,437 Contributions Made (21,289) Increase in Net OPEB Obligation 6,148 Net OPEB Obligation- Beginning of Year 77,821 Net OPEB Obligation- End of Year 83,969$ The City’s annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 and the two preceding years: Percentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Contributed Obligation 12/31/2011 27,917$ 65.9%72,808$ 12/31/2012 29,610 65.2%77,821 12/31/2013 27,437 77.6%83,969 D. FUNDED STATUS AND FUNDING PROGRESS As of January 1, 2011, the most recent actuarial valuation date, the City’s unfunded actuarial accrued liability (UAAL) was $474,770. The annual payroll for active employees covered by the plan in the actuarial valuation was $4,953,560 for a ratio of UAAL to covered payroll of 9.6%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2013 59 Note 18 OTHER POSTEMPLOYMENT BENEFIT PLAN (CONTINUED) E. ACTUARIAL METHODS AND ASSUMPTIONS Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2011 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 2% inflation rate, a 2% investment rate of return (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer’s own investments calculated based on the funded level of the plan at the valuation date. The initial healthcare trend rate was 0%, increasing to an ultimate rate of 4% after three years. The UAAL is being amortized as a level percentage of projected payrolls on an open basis. The remaining amortization period at December 31, 2013 was not to exceed 30 years. REQUIRED SUPPLEMENTARY INFORMATION 60 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 1 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenue: General property taxes: Current and delinquent 7,330,538$ 6,306,938$ 6,218,617$ (88,321)$ Fiscal disparities - 983,600 958,004 (25,596) Excess tax increments - - 11,180 11,180 Total general property taxes 7,330,538 7,290,538 7,187,801 (102,737) Licenses and permits: Business 80,300 97,800 100,685 2,885 Non-business 269,000 304,000 330,969 26,969 Total licenses and permits 349,300 401,800 431,654 29,854 Intergovernmental: State: Market value credit - - 3,988 3,988 Police state aid 165,000 199,000 199,076 76 MSA maintenance 200,000 231,000 231,753 753 Other 35,000 35,000 18,968 (16,032) County/Regional: Solid waste 35,000 35,000 45,831 10,831 Other 4,000 4,000 1,347 (2,653) Total intergovernmental 439,000 504,000 500,963 (3,037) Special assessments: Penalties and Interest 15,000 15,000 20,616 5,616 Charges for services: General government 17,600 3,600 5,446 1,846 Planning/engineering 8,000 8,000 24,968 16,968 Fees retained from collection for other governments - SAC/surcharge 1,000 1,000 1,822 822 Administrative charge - other funds 50,000 50,000 50,100 100 Aerial map charge - other funds 5,000 5,000 3,150 (1,850) Public safety 151,500 186,500 210,699 24,199 Total charges for services 233,100 254,100 296,185 42,085 Fines and forfeits 140,000 118,000 119,079 1,079 Investment earnings 40,000 28,000 38,093 10,093 Change in market value - - (50,343) (50,343) Refunds 25,000 37,000 38,092 1,092 Miscellaneous: Gas franchise fees 50,000 50,000 61,280 11,280 Cable TV 37,500 37,500 37,500 - Donations 5,000 5,000 - (5,000) Other 11,000 20,500 15,610 (4,890) Total miscellaneous 103,500 113,000 114,390 1,390 Total revenue 8,675,438 8,761,438 8,696,530 (64,908) Year Ended December 31, 2013 2013 61 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 2 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2013 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures: General government: Mayor and council: Current: Personal services 40,581$ 32,481$ 31,511$ 970$ Other services and charges 25,000 20,800 14,997 5,803 Contractual services 15,270 15,270 15,429 (159) Total mayor and council 80,851 68,551 61,937 6,614 Elections: Current: Personal services 7,025 7,025 7,610 (585) Supplies 100 100 98 2 Other services and charges 2,500 2,500 2,147 353 Contractual services 500 500 - 500 Capital outlay 3,000 3,000 2,940 60 Total elections 13,125 13,125 12,795 330 Administration: Current: Personal services 350,592 350,592 315,260 35,332 Other services and charges 20,360 16,360 14,817 1,543 Contractual services 6,100 6,100 4,116 1,984 Total administration 377,052 373,052 334,193 38,859 Finance: Current: Personal services 293,053 288,053 289,397 (1,344) Supplies 1,200 1,200 1,117 83 Other services and charges 114,600 114,600 104,677 9,923 Contractual services 100,900 100,900 99,005 1,895 Total finance 509,753 504,753 494,196 10,557 Cable TV: Current: Personal services 2,167 2,167 1,556 611 Supplies 50 50 - 50 Capital outlay 500 500 266 234 Total cable TV 2,717 2,717 1,822 895 Consultants: Current: Legal 140,000 140,000 123,111 16,889 2013 62 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 3 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2013 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) General government (continued): Engineering/planning: Current: Contractual services 106,400$ 106,400$ 108,700$ (2,300)$ Charter commission: Current: Other services and charges 1,500 1,500 818 682 General government buildings: Current: Personal services 2,174 2,174 2,128 46 Supplies 27,000 35,000 34,024 976 Other services and charges 292,380 322,880 300,651 22,229 Contractual services 68,000 68,000 64,247 3,753 Total general government buildings 389,554 428,054 401,050 27,004 Total general government 1,620,952 1,638,152 1,538,622 99,530 Public safety: Police: Current: Personal services 2,867,445 2,875,445 2,887,198 (11,753) Supplies 35,000 35,000 30,299 4,701 Other services and charges 88,760 78,760 71,176 7,584 Contractual services 41,220 41,220 35,210 6,010 Capital outlay 30,000 30,000 32,008 (2,008) Total police 3,062,425 3,060,425 3,055,891 4,534 Fire protection: Current: Contractual services 533,673 533,673 511,770 21,903 Building inspection: Current: Personal services 199,866 201,366 201,560 (194) Supplies 1,050 1,050 417 633 Other services and charges 7,320 7,320 6,240 1,080 Contractual services 500 1,500 1,087 413 Total building inspection 208,736 211,236 209,304 1,932 Total public safety 3,804,834 3,805,334 3,776,965 28,369 2013 63 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 4 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Public works: Streets: Current: Personal services 544,399$ 551,399$ 522,512$ 28,887$ Supplies 115,000 107,500 114,084 (6,584) Other services and charges 109,060 109,060 105,289 3,771 Contractual services 172,275 172,275 152,909 19,366 Total streets 940,734 940,234 894,794 45,440 Fleet: Current: Personal services 101,689 100,689 101,548 (859) Supplies 201,000 201,000 229,661 (28,661) Other services and charges 52,880 48,880 53,034 (4,154) Contractual services 2,700 2,700 2,098 602 Total fleet 358,269 353,269 386,341 (33,072) Total public works 1,299,003 1,293,503 1,281,135 12,368 Parks and recreation: Parks: Current: Personal services 442,618 448,718 450,592 (1,874) Supplies 26,500 26,500 24,964 1,536 Other services and charges 48,400 55,400 54,840 560 Contractual services 35,800 35,800 15,737 20,063 Total parks 553,318 566,418 546,133 20,285 Recreation: Current: Personal services 272,714 277,014 277,151 (137) Supplies 2,500 2,500 2,685 (185) Other services and charges 14,750 14,750 15,047 (297) Contractual services 400 400 1,237 (837) Total recreation 290,364 294,664 296,120 (1,456) Total parks and recreation 843,682 861,082 842,253 18,829 2013 Year Ended December 31, 2013 64 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 5 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2013 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Conservation of natural resources: Forestry: Current: Personal services 33,753$ 33,753$ 33,775$ (22)$ Supplies 1,250 1,250 897 353 Other services and charges 400 400 355 45 Contractual services 5,500 5,500 305 5,195 Capital outlay 5,000 5,000 5,886 (886) Total forestry 45,903 45,903 41,218 4,685 Environmental: Current: Personal services 50,322 50,322 50,906 (584) Supplies 1,400 1,400 333 1,067 Other services and charges 8,550 8,550 4,322 4,228 Contractual services 1,300 1,300 130 1,170 Total environmental 61,572 61,572 55,691 5,881 Solid waste abatement: Current: Personal services 29,399 29,399 29,889 (490) Supplies - - 396 (396) Other services and charges 550 550 350 200 Contractual services 6,000 12,000 12,469 (469) Total solid waste abatement 35,949 41,949 43,104 (1,155) Total conservation of natural resources 143,424 149,424 140,013 9,411 2013 65 CITY OF LINO LAKES, MINNESOTA Statement 11 GENERAL FUND Page 6 of 6 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2013 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Community development: Community development: Current: Personal services 191,352$ 192,852$ 194,283$ (1,431)$ Supplies 100 100 54 46 Other services and charges 8,500 8,500 1,803 6,697 Contractual services 1,400 1,400 267 1,133 Total community development 201,352 202,852 196,407 6,445 Economic development: Current: Personal services 91,388 49,388 49,313 75 Supplies 150 150 - 150 Other services and charges 53,750 68,750 64,666 4,084 Contractual services 400 400 250 150 Total economic development 145,688 118,688 114,229 4,459 Planning and zoning commission: Current: Personal services 81,275 78,275 70,713 7,562 Supplies 200 200 - 200 Other services and charges 16,900 11,900 7,343 4,557 Contractual services 24,000 19,000 20,795 (1,795) Total planning and zoning commission 122,375 109,375 98,851 10,524 Total community development 469,415 430,915 409,487 21,428 Other : Contingency 145,075 147,975 - 147,975 Total expenditures 8,326,385 8,326,385 7,988,475 337,910 Revenue over expenditures 349,053 435,053 708,055 273,002 Other financing sources (uses): Transfer in - - 10,000 10,000 Transfer out (515,000) (565,000) (565,789) (789) Net increase (decrease) in fund balance (165,947)$ (129,947)$ 152,266 282,213$ Fund Balance - January 1 5,233,817 Fund balance - December 31 5,386,083$ 2013 66 CITY OF LINO LAKES, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION Note 1 BUDGETS Actual in Final Excess of Budget Actual Budget General Fund: General government: Engineering/planning 106,400$ 108,700$ (2,300)$ Public works: Fleet 353,269 386,341 (33,072) Parks and recreation: Recreation:294,664 296,120 (1,456) Conservation of natural resources: Solid waste abatement 41,949 43,104 (1,155) The General Fund budget is legally adopted on a basis consistent with U.S. Generally Accepted Accounting Principles. The legal level of budgetary control is at the department level. The following is a listing of expenditures that exceeded budget appropriations. December 31, 2012 The excess expenditures were covered by more than anticipated revenues during 2013. 67 CITY OF LINO LAKES, MINNESOTA Statement 12 SCHEDULE OF FUNDING PROGRESS FOR POSTEMPLOYMENT BENEFIT PLAN Actuarial UAAL as a Actuarial Accrued Percentage Actuarial Value of Liability Unfunded Funded Covered of Covered Valuation Assets (AAL)AAL Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)((b-a)/c) 1/1/2008 -$ 329,191$ 329,191$ - 4,859,980$ 6.8% 1/1/2011 - 474,770 474,770 - 4,888,702 9.7% December 31, 2013 Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for particular purposes. The City maintained the following nonmajor Special Revenue Funds during the year. Economic Development Authority - established to account for the receipt and uses of funds for economic purposes. Cable TV Fund - established to account for activities relating to their Cable TV. Program Recreation - established to account for various self-supporting recreational programs. Debt Service Funds The Debt Service Funds account for the accumulation of resources for, and the payment of, interest, principal and related costs on general long-term debt. The City’s Debt Service Funds account for four types of bonded indebtedness: General Debt Bonds - are repaid primarily from property taxes. Improvement Bonds - are repaid primarily from special assessments. Public Facility Lease Revenue Bonds - are repaid primarily from lease revenues received from the EDA leasing the buildings to the City of Lino Lakes and other tenants. Revenue Bonds - These bonds were issued to finance various improvements and will be repaid primarily from pledged revenues derived from the constructed assets. Capital Project Funds Capital Project Funds account for the acquisition or construction of major capital facilities other than those financed by Proprietary Funds and Trust Funds. The City maintained the following nonmajor Capital Project Funds during the year: Capital Improvement Projects - to account for the proceeds from Equipment Certificates. Capital Equipment Revolving Fund - to account for funds held to purchase capital equipment. Closed Bond Fund - to account for excess funds from matured bond issues. Street Reconstruction - to account for the financing of future reconstruction of City streets. Sealcoating - to account for money received from assessments and developer deposits for future street sealcoating projects. Surface Water Management - to account for the financing of surface water management and storm water improvements. Birch Street Hodgson Road Improvement Fund - to account for costs to improve the intersection at Birch Street and Hodgson Road. Tax Increment Funds - to account for development projects financed with tax increments. Nonmajor Governmental Funds (Continued) Capital Project Funds (Continued) Dedicated Parks - to account for the receipts and use of monies collected from dedicated parks fees. I35E Interschange Fund - to account for activity related to the I35E/CSAH 14 Interchange Reconstruction Project. Office Equipment Revolving Fund - to account for the receipt and use of funds for office equipment purchases. Legacy Woods Edge Improvement Fund - the Legacy Woods Edge Improvement fund accounts for construction costs related to infrastructure improvements in the Legacy Woods Edge development. Traffic Signal Fund - the Legacy traffic signal charge fund accounts for costs associated with construction of traffic signals in the City. Otter Lake Road Exension Fund - this fund accounts for activities relating to the construction performed in the extension of the Otter Lake Road. 21st Ave Extension Fund - this fund accounts for activities relating to the construction performed in the extension of 21st Avenue within the City. Permanent Funds Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City’s programs. The City maintained the following nonmajor Permanent Fund during the year. Foxborough Environment Fund - established to account for the use of funds received for environmental maintenance and improvements in the Foxborough area. 68 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2013 Economic Special Certificates Improvement Improvement Development Cable TV Program Revenue of Bonds of Bonds of Authority Fund Recreation Subtotal Indebtedness 2002A 2002B Assets Cash and investments -$ 10,618$ 119,605$ 130,223$ 151,341$ 187,564$ 69,932$ Taxes receivable: Delinquent - - - - 5,001 - - Due from county - - - - 1,923 - - Special assessments receivable: Delinquent - - - - - - - Noncurrent - - - - - 39,136 - Due from county - - - - - - - Long-term notes receivable 225,000 - - 225,000 - - - Prepaid items - - 1,710 1,710 - - - Total assets 225,000$ 10,618$ 121,315$ 356,933$ 158,265$ 226,700$ 69,932$ Liabilities, Deferred Inflows of Resources and Fund Balance (Deficit) Liabilities: Accounts payable -$ -$ 7,143$ 7,143$ -$ -$ -$ Salaries payable - - 240 240 - - - Unearned revenue - - 1,765 1,765 - - - Total liabilities - - 9,148 9,148 - - - Deferred inflows of resources: Unavailable resources - - - - 5,001 39,136 - Fund balance (deficit): Nonspendable - - 1,710 1,710 - - - Restricted 225,000 - - 225,000 153,264 187,564 69,932 Committed - 10,618 110,457 121,075 - - - Assigned - - - - - - - Unassigned - - - - - - - Total fund balance (deficit)225,000 10,618 112,167 347,785 153,264 187,564 69,932 Total liabilities, deferred inflows of resources and fund balance (deficit)225,000$ 10,618$ 121,315$ 356,933$ 158,265$ 226,700$ 69,932$ Special Revenue Debt Service 69 Statement 13 Page 1 of 3 Improvement Tax Utility CIP Refunding Improvement Improvement Abatement Revenue Refunding Bonds of Bonds of Bonds of Bonds Bonds Bonds 2003A 2003B 2005B 2006C 2006D 2006E 129,030$ 53,358$ 462,017$ 206,347$ 95,579$ 828,858$ - 579 3,368 5,399 - 10,301 - 258 1,476 2,575 - 4,847 - 6,183 - - 8,287 - 87,022 24,061 81,067 - 110,495 - - - 354 - - - - - - - - - - - - - - - 216,052$ 84,439$ 548,282$ 214,321$ 214,361$ 844,006$ 2,750$ -$ -$ -$ -$ -$ - - - - - - - - - - - - 2,750 - - - - - 87,021 30,825 84,435 5,399 118,782 10,301 - - - - - - 126,281 53,614 463,847 208,922 95,579 833,705 - - - - - - - - - - - - - - - - - - 126,281 53,614 463,847 208,922 95,579 833,705 216,052$ 84,439$ 548,282$ 214,321$ 214,361$ 844,006$ Debt Service (Continued) 70 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2013 Improvement and TIF Utility Revenue Improvement Improvement Debt Capital Capital Bonds Refunding Bonds Bonds of Bonds of Service Improvement Equipment 2007A 2010 2012A 2013A Subtotal Projects Revolving Fund Assets Cash and investments 149,897$ 8,249$ 63,763$ 2,416$ 2,408,351$ 601,128$ 105,370$ Due from other governmental units - - - - - - - Interfund receivable - - - - - 1,700,533 - Taxes receivable: Delinquent - - - - 24,648 - - Due from county - - - - 11,079 - - Delinquent tax increment - - - - - - - Special assessments receivable: Delinquent - - - - 14,470 - - Noncurrent - 81,513 - - 423,294 - - Due from county - - - - 354 - - Total assets 149,897$ 89,762$ 63,763$ 2,416$ 2,882,196$ 2,301,661$ 105,370$ Liabilities, Deferred Inflows of Resources and Fund Balance (Deficit) Liabilities: Interfund payable -$ 56,128$ -$ -$ 56,128$ -$ -$ Accounts payable - - - - 2,750 143,429 - Total liabilities - 56,128 - - 58,878 143,429 - Deferred inflows of resources: Unavailable Resources - 81,513 - - 462,413 - - Fund balance (deficit): Restricted 149,897 - 63,763 2,416 2,408,784 - - Assigned - - - - - 2,158,232 105,370 Unassigned - (47,879) - - (47,879) - - Total fund balance (deficit)149,897 (47,879) 63,763 2,416 2,360,905 2,158,232 105,370 Total liabilities, deferred inflows of resources and fund balance (deficit)149,897$ 89,762$ 63,763$ 2,416$ 2,882,196$ 2,301,661$ 105,370$ Debt Service (Continued)Capital Projects 71 Statement 13 Page 2 of 3 Tax Closed Surface Birch Street Increment Bond Street Water Hodgson Road Financing Fund Reconstruction Sealcoating Management Improvement 1-5 564,295$ 620,865$ 529,065$ 518,189$ 15,677$ 135,688$ - - - 1,500 - - 834,407 - - - - - - - - - - - 48 - - - - - 298 - - - - - 492 - - 7,618 - - 818 119,764 - 128,214 - - - - - 4,477 - - 1,400,358$ 740,629$ 529,065$ 659,998$ 15,677$ 135,688$ -$ -$ -$ -$ -$ -$ - - 8,379 34,384 - - - - 8,379 34,384 - - 1,607 119,764 - 135,832 - - - - - - - - 1,398,751 620,865 520,686 489,782 15,677 135,688 - - - - - - 1,398,751 620,865 520,686 489,782 15,677 135,688 1,400,358$ 740,629$ 529,065$ 659,998$ 15,677$ 135,688$ Capital Projects (Continued) 72 CITY OF LINO LAKES, MINNESOTA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2013 Tax Tax Office Increment Increment Equipment Legacy Woods Financing Financing Dedicated I35E Revolving Edge Traffic 1-10 1-11 Parks Interchange Fund Improvement Signal Assets Cash and investments 187,194$ -$ 16,602$ 226,347$ 269,578$ 527,265$ 166,105$ Due from other governmental units - - - - - - - Interfund receivable - - - - - - - Taxes receivable: Delinquent - - - - - - - Due from county - - - - - - - Delinquent tax increment - - - - - - - Special assessments receivable: Delinquent - - - - - - - Noncurrent - - - - - - - Due from county - - - - - - - Long-term notes receivable - - - - - - - Prepaid items - - - - - - - Total assets 187,194$ -$ 16,602$ 226,347$ 269,578$ 527,265$ 166,105$ Liabilities, Deferred Inflows of Resources and Fund Balance (Deficit) Liabilities: Interfund payable -$ 770,196$ -$ -$ -$ -$ -$ Accounts payable - - - 24,243 - - 633 Salaries payable - - - - - - - Contracts and retainage payable - - - - - - 79,638 Advances from other funds - - 460,881 - - - - Unearned Revenue - - - - - - - Total liabilities - 770,196 460,881 24,243 - - 80,271 Deferred inflows of resources: Unavailable Resources - - - - - - - Fund balance (deficit): Nonspendable - - - - - - - Restricted - - - - - - - Committed - - - - - - - Assigned 187,194 - - 202,104 269,578 527,265 85,834 Unassigned - (770,196) (444,279) - - - - Total fund balance (deficit)187,194 (770,196) (444,279) 202,104 269,578 527,265 85,834 Total liabilities, deferred inflows of resources and fund balance (deficit)187,194$ -$ 16,602$ 226,347$ 269,578$ 527,265$ 166,105$ Capital Projects (Continued) 73 Statement 13 Page 3 of 3 Permanent Fund Otter Lake 21st Ave Capital Foxborough Road Ext Ext Projects Environment Total 1-13 1-13 Subtotal Fund 2013 293,961$ -$ 4,777,329$ 121,475$ 7,437,378$ - - 1,500 - 1,500 - - 2,534,940 - 2,534,940 - - - - 24,648 - - 48 - 11,127 - - 298 - 298 - - 8,110 - 22,580 - - 248,796 - 672,090 - - 4,477 - 4,831 - - - - 225,000 - - - - 1,710 293,961$ -$ 7,575,498$ 121,475$ 10,936,102$ -$ 8,083$ 778,279$ -$ 834,407$ 2,630 21,372 235,070 - 244,963 - - - - 240 63,503 - 143,141 - 143,141 - - 460,881 - 460,881 - - - - 1,765 66,133 29,455 1,617,371 - 1,685,397 - - 257,203 - 719,616 - - - 100,000 101,710 - - - 21,475 2,655,259 - - - - 121,075 227,828 - 6,944,854 - 6,944,854 - (29,455) (1,243,930) - (1,291,809) 227,828 (29,455) 5,700,924 121,475 8,531,089 293,961$ -$ 7,575,498$ 121,475$ 10,936,102$ Capital Projects (Continued) 74 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2013 Economic Special Certificates Improvement Improvement Development Cable TV Program Revenue of Bonds of Bonds of Authority Fund Recreation Subtotal Indebtedness 2002A 2002B Revenue: General property taxes -$ -$ -$ -$ 162,540$ -$ -$ Special assessments - - - - 454 9,559 - Charges for services - 10,659 165,975 176,634 - - - Investment earnings - 93 1,480 1,573 1,933 1,825 983 Net increase (decrease) in fair value of investments - (134) (2,053) (2,187) (2,659) (2,535) (1,278) Total revenue - 10,618 165,402 176,020 162,268 8,849 (295) Expenditures: Current: General government 789 - - 789 - - - Parks, recreation and forestry - - 160,544 160,544 - - - Debt service: Principal - - - - 149,000 30,000 265,000 Interest and fiscal charges - - - - 5,485 4,465 7,354 Bond issuance costs - - - - - - - Total expenditures 789 - 160,544 161,333 154,485 34,465 272,354 Revenue over (under) expenditures (789) 10,618 4,858 14,687 7,783 (25,616) (272,649) Other financing sources (uses): Transfer in 789 - - 789 - - - Transfer out - - (10,000) (10,000) - - - Payment on refunding bond - - - - - - - Total other financing sources (uses)789 - (10,000) (9,211) - - - Net increase (decrease) in fund balance - 10,618 (5,142) 5,476 7,783 (25,616) (272,649) Fund balance (deficit) - Beginning of year 225,000 - 117,309 342,309 145,481 213,180 342,581 Fund balance (deficit) - December 31 225,000$ 10,618$ 112,167$ 347,785$ 153,264$ 187,564$ 69,932$ Debt ServiceSpecial Revenue 75 Statement 14 Page 1 of 3 Improvement Tax Utility CIP Refunding Improvement Improvement Abatement Revenue Refunding Bonds of Bonds of Bonds of Bonds Bonds Bonds 2003A 2003B 2005B 2006C 2006D 2006E -$ 23,705$ 134,176$ 244,269$ -$ 456,904$ 28,356 5,918 52,126 429 15,648 832 - - - - - - 1,614 367 786 867 314 5,775 (2,075) (496) (874) (1,108) (409) (7,825) 27,895 29,494 186,214 244,457 15,553 455,686 - - - - - - - - - - - - 50,000 30,000 425,000 125,000 60,000 355,000 9,744 2,778 53,478 99,701 15,103 84,931 2,750 - - - - - 62,494 32,778 478,478 224,701 75,103 439,931 (34,599) (3,284) (292,264) 19,756 (59,550) 15,755 - - 347,600 - 71,724 - - - - - - - (435,000) - - - - - (435,000) - 347,600 - 71,724 - (469,599) (3,284) 55,336 19,756 12,174 15,755 595,880 56,898 408,511 189,166 83,405 817,950 126,281$ 53,614$ 463,847$ 208,922$ 95,579$ 833,705$ Debt Service (Continued) 76 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2013 Improvement and TIF Utility Revenue Improvement Improvement Debt Capital Capital Bonds Refunding Bonds Bonds of Bonds of Service Improvement Equipment 2007A 2010 2012A 2013A Subtotal Projects Revolving Fund Revenue: General property taxes -$ -$ -$ -$ 1,021,594$ -$ -$ Tax increments - - - - - - - Special assessments - 45,529 - - 158,851 - - Charges for services - - - - - - - Investment earnings - - - 760 15,224 6,642 1,325 Net increase (decrease) in fair value of investments - - (6) (17) (19,282) (9,283) (1,940) Refunds - - - - - - - Miscellaneous - - - - - 186,751 674 Total revenue - 45,529 (6) 743 1,176,387 184,110 59 Expenditures: Current: General government - - - - - 7,044 - Public works - - - - - 216,146 - Community development - - - - - - - Capital outlay: Public safety - - - - - 72 192,710 Debt service: Principal 285,000 95,000 - - 1,869,000 - - Interest and fiscal charges 134,757 22,225 - - 440,021 - - Bond issuance costs - - 14,387 - 17,137 - - Total expenditures 419,757 117,225 14,387 - 2,326,158 223,262 192,710 Revenue over (under) expenditures (419,757) (71,696) (14,393) 743 (1,149,771) (39,152) (192,651) Other financing sources (uses): Transfer in 416,026 - 78,438 - 913,788 - - Transfer out - - - - - - - Sale of property - - - - - - 16,727 Issuance of debt - - - 1,673 1,673 - 193,000 Payment on refunding bond - - - - (435,000) - - Total other financing sources (uses)416,026 - 78,438 1,673 480,461 - 209,727 Net increase (decrease) in fund balance (3,731) (71,696) 64,045 2,416 (669,310) (39,152) 17,076 Fund balance (deficit) - Beginning of year 153,628 23,817 (282) - 3,030,215 2,197,384 88,294 Fund balance (deficit) - December 31 149,897$ (47,879)$ 63,763$ 2,416$ 2,360,905$ 2,158,232$ 105,370$ Debt Service (Continued)Capital Projects 77 Statement 14 Page 2 of 3 Closed Surface Birch Street Tax Increment Bond Street Water Hodgson Road Financing Fund Reconstruction Sealcoating Management Improvement 1-5 -$ -$ -$ -$ -$ -$ - - - - - 37,254 1,172 15,116 - 120,010 - - - - - - - - 13,588 6,031 8,205 9,969 155 1,087 (19,541) (8,417) (11,689) (11,689) (216) (1,509) - - 17,238 - - - - - - - - - (4,781) 12,730 13,754 118,290 (61) 36,832 26,473 - - - - - - 38 457,715 40,987 - - - - - - - 600 - - - - - - - - - - - - - - - - - - - - - - - - 26,473 38 457,715 40,987 - 600 (31,254) 12,692 (443,961) 77,303 (61) 36,232 - - 490,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 490,000 - - - (31,254) 12,692 46,039 77,303 (61) 36,232 1,430,005 608,173 474,647 412,479 15,738 99,456 1,398,751$ 620,865$ 520,686$ 489,782$ 15,677$ 135,688$ Capital Projects (Continued) 78 CITY OF LINO LAKES, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2013 Office Tax Increment Tax Increment Equipment Legacy Woods Financing Financing Dedicated I35E Revolving Edge 1-10 1-11 Parks Interchange Fund Improvement Revenue: General property taxes -$ -$ -$ -$ -$ -$ Tax increments 142,736 85,829 - - - - Special assessments - - - - - - Charges for services - - - - - - Investment earnings 2,461 - 32 2,437 2,658 5,302 Net increase (decrease) in fair value of investments (3,527) - (43) (3,430) (3,716) (7,409) Refunds - - - - - - Miscellaneous - - 16,204 - - - Total revenue 141,670 85,829 16,193 (993) (1,058) (2,107) Expenditures: Current: General government:- - - - - - Public works - - - 71,428 - 25,044 Parks, recreation and forestry - - - - - - Community development 1,014 7,432 - - - - Capital outlay: General government - - - - 6,053 - Public safety - - - - - - Debt service: Principal - - - - - - Interest and fiscal charges - - 14,880 - - - Bond issuance costs - - - - - - Total expenditures 1,014 7,432 14,880 71,428 6,053 25,044 Revenue over (under) expenditures 140,656 78,397 1,313 (72,421) (7,111) (27,151) Other financing sources (uses): Transfer in - - 50,000 - 25,000 - Transfer out (142,736) (85,000) - - - - Sale of property - - - - - - Issuance of debt - - - - - - Premium on bonds issued - - - - - - Payment on refunding bond - - - - - - Total other financing sources (uses)(142,736) (85,000) 50,000 - 25,000 - Net increase (decrease) in fund balance (2,080) (6,603) 51,313 (72,421) 17,889 (27,151) Fund balance (deficit) - Beginning of year 189,274 (763,593) (495,592) 274,525 251,689 554,416 Fund balance (deficit) - December 31 187,194$ (770,196)$ (444,279)$ 202,104$ 269,578$ 527,265$ Capital Projects (Continued) 79 Statement 14 Page 3 of 3 Permanent Fund Otter Lake 21st Ave Capital Foxborough Traffic Road Ext Extension Projects Environment Total Signal 1-13 1-13 Subtotal Fund 2013 -$ -$ -$ -$ -$ 1,021,594$ - - - 265,819 - 265,819 - - - 136,298 - 295,149 - - - - - 176,634 3,360 1,784 - 65,036 1,175 83,008 (4,798) (2,340) - (89,547) (1,636) (112,652) - - - 17,238 - 17,238 - - - 203,629 11,400 215,029 (1,438) (556) - 598,473 10,939 1,961,819 - - - 33,517 - 34,306 375,975 391,501 29,455 1,608,289 - 1,608,289 - - - - - 160,544 - - - 9,046 - 9,046 - - - 6,053 - 6,053 - - - 192,782 - 192,782 - - - - - 1,869,000 - - - 14,880 - 454,901 - - - - - 17,137 375,975 391,501 29,455 1,864,567 - 4,352,058 (377,413) (392,057) (29,455) (1,266,094) 10,939 (2,390,239) - - - 565,000 - 1,479,577 - - - (227,736) - (237,736) - - - 16,727 - 16,727 - 613,327 - 806,327 - 808,000 - 6,558 - 6,558 - 6,558 - - - - - (435,000) - 619,885 - 1,166,876 - 1,638,126 (377,413) 227,828 (29,455) (99,218) 10,939 (752,113) 463,247 - - 5,800,142 110,536 9,283,202 85,834$ 227,828$ (29,455)$ 5,700,924$ 121,475$ 8,531,089$ Capital Projects (Continued) 80 CITY OF LINO LAKES, MINNESOTA Statement 15 SPECIAL REVENUE FUND - PROGRAM RECREATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2013 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenue: Charges for services: Recreation fees 198,125$ 198,125$ 165,975$ (32,150)$ Investment earnings - - 1,480 1,480 Change in market value - - (2,053) (2,053) Total revenue 198,125 198,125 165,402 (30,670) Expenditures: Current: Personal services 71,180 71,180 52,218 18,962 Supplies 51,675 51,675 73,185 (21,510) Other services and charges 5,000 5,000 348 4,652 Contractual services 43,150 43,150 34,793 8,357 Capital outlay 8,000 8,000 - 8,000 Total expenditures 179,005 179,005 160,544 18,461 Other financing sources (uses): Transers out - - (10,000) 10,000 Net increase (decrease) in fund balance 19,120$ 19,120$ (5,142) (12,209)$ Fund balance - January 1 117,309 Fund balance - December 31 112,167$ 2013 Fiduciary Funds Agency Fund Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments. The City maintained the following Agency fund during the year: Contractor’s Deposits – to account for pass-through costs relating to prospective developers. 81 CITY OF LINO LAKES, MINNESOTA Statement 16 STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - FIDUCIARY FUNDS - AGENCY FUNDS Balance Balance January 1,December 31, 2013 Additions Deductions 2013 Assets Cash and investments 510,181$ 261,093$ 101,796$ 669,478$ Liabilities Deposits payable 510,181$ 261,093$ 101,796$ 669,478$ December 31, 2013 SUPPLEMENTARY FINANCIAL AND OTHER INFORMATION 82 CITY OF LINO LAKES, MINNESOTA COMBINED SCHEDULE OF INDEBTEDNESS December 31, 2013 Final Interest Maturity Rates Dated Date General Obligation Bonds: 2010A Equipment Certificates 2.00%-3.00%4/1/2010 12/31/2013 2011A Equipment Certificates 1.00%2/14/2011 12/31/2014 2012A Equipment Certificates 1.00%2/1/2012 12/31/2015 2013A Equipment Certificates 1.00%2/1/2013 12/31/2016 G.O. Tax Abatement Bonds, Series 2006C 4.00%-4.30%8/15/2006 2/1/2023 G.O. Utility Revenue Bonds, Series 2006D 4.00%-4.15%8/15/2006 2/1/2017 G.O. CIP Refunding Bonds, Series 2006E 4.00%11/1/2006 2/1/2018 G.O. Tax Increment Bonds, Series 2007A 4.00%-4.125%7/15/2007 2/1/2024 G.O. Refunding Bonds, Series 2012A 1.00%-2.00%11/15/2012 2/1/2024 Total General Obligation Bonds Special Assessment Bonds: G. O. Improvement Bonds of 2002A 3.00%-4.10%8/1/2002 2/1/2013 G. O. Improvement Bonds of 2002B 3.20%-5.55%8/1/2002 2/1/2013 G. O. Improvement Refunding Bonds of 2003A 2.00%-4.25%12/1/2003 2/1/2019 G. O. Improvement Bonds of 2003B 3.20%-5.60%12/1/2003 2/1/2014 G. O. Improvement Bonds of 2005A 4.35%-5.15%11/1/2005 2/1/2021 G. O. Improvement Refunding Bonds of 2005B 3.75%-5.00%11/1/2005 2/1/2015 G.O. Improvement & Utility Revenue Refunding Bonds, Series 2010A 2.00%-3.00%7/9/2010 2/1/2020 G.O. Improvement Bonds, Series 2013A 1.25%-4.00%7/15/2013 2/1/2024 Total General Improvement Bonds with special assessments pledged Other Long-Term Debt: Note Payable - Anoka County - 2009A 4.00%-3.70%8/01/2009 8/1/2024 Total City indebtedness 83 Exhibit 1 Prior Years Principal Interest Original Payable Payable Due Due Issue Payments 1/1/13 Issued Payments 12/31/13 In 2014 In 2014 336,000$ 276,000$ 60,000$ -$ 60,000$ -$ -$ -$ 170,000 89,000 81,000 - 40,000 41,000 41,000 410 150,000 - 150,000 49,000 101,000 50,000 1,010 193,000 - - 193,000 - 193,000 63,000 3,699 2,460,000 115,000 2,345,000 - 125,000 2,220,000 140,000 91,020 570,000 255,000 315,000 - 60,000 255,000 60,000 9,293 2,990,000 705,000 2,285,000 - 355,000 1,930,000 360,000 70,000 4,215,000 820,000 3,395,000 - 285,000 3,110,000 345,000 118,426 2,015,000 - 2,015,000 - - 2,015,000 70,000 19,213 13,099,000 2,260,000 10,646,000 193,000 974,000 9,865,000 1,129,000 313,071 645,000 615,000 30,000 - 30,000 - - - 2,110,000 1,845,000 265,000 - 265,000 - - - 2,090,000 1,605,000 485,000 - 485,000 - - - 250,000 185,000 65,000 - 30,000 35,000 35,000 980 5,550,000 1,700,000 3,850,000 - 345,000 3,505,000 365,000 168,360 3,755,000 2,485,000 1,270,000 - 425,000 845,000 425,000 31,625 1,000,000 185,000 815,000 - 95,000 720,000 95,000 19,700 615,000 - - 615,000 - 615,000 - 18,737 16,015,000 8,435,000 6,780,000 615,000 1,675,000 5,720,000 920,000 239,402 4,260,000 - 3,695,000 - - 3,695,000 995,000 114,951 35,114,000$ 12,435,000$ 21,121,000$ 808,000$ 2,649,000$ 19,280,000$ 3,044,000$ 667,424$ 2013 84 CITY OF LINO LAKES, MINNESOTA SCHEDULE OF DEFERRED TAX LEVIES December 31, 2013 G. O.G. O. G. O.G. O.Improvement Tax Year of Equipment Equipment Equipment Improvement Improvement Refunding Abatement Levy/Certificates Certificates Certificates Bonds Bonds Bonds Bonds Collection of 2011A of 2012A of 2013A of 2003B of 2005A of 2005B 2006C 2013/2014 43,481$ 53,561$ 70,034$ 23,781$ 566,197$ 463,050$ 255,381$ 2014/2015 - 54,086 69,615 - 567,247 - 264,458 2015/2016 - - 68,933 - 572,497 - 278,140 2016/2017 - - - - 571,184 - 285,411 2017/2018 - - - - 574,072 - 297,263 2018/2019 - - - - 574,907 - 313,472 2019/2020 - - - - 579,639 - 323,316 2020/2021 - - - - - - 337,517 2021/2022 - - - - - - 350,447 2022/2023 - - - - - - - 2023/2024 - - - - - - - 43,481$ 107,647$ 208,582$ 23,781$ 4,005,743$ 463,050$ 2,705,405$ 85 Exhibit 2 G. O.G.O. CIP G. O.Improvement and G.O. Refunding TIF Utility Revenue G.O.Improvement Bonds Bonds Refunding Bonds Refunding Bonds Bonds 2006E 2007A 2010A 2012A 2013A Total 443,940$ 493,843$ 121,433$ 101,149$ 10,119$ 2,645,969$ 449,820 495,103 124,688 257,620 9,331 2,291,968 460,110 500,983 121,537 266,406 8,544 2,277,150 464,100 506,023 118,387 259,128 7,158 2,211,391 - 268,723 120,488 261,868 5,772 1,528,186 - 271,243 117,180 258,849 3,882 1,539,533 - 278,593 124,372 182,417 1,992 1,490,329 - 285,313 - 179,687 4,722 807,239 - 291,403 - 181,949 1,992 825,791 - 301,855 - 183,899 - 485,754 - 306,127 - 180,330 - 486,457 1,817,970$ 3,999,209$ 848,085$ 2,313,302$ 53,512$ 16,589,767$ 86 CITY OF LINO LAKES, MINNESOTA DEBT SERVICE PAYMENTS TO MATURITY - ALL BONDS December 31, 2013 G. O.G. O. Equipment Equipment Equipment Improvement Improvement Certificates Certificates Certificates Bonds Bonds 2011A 2012A 2013A 2003B 2005A Bonds payable 41,000$ 101,000$ 193,000$ 35,000$ 3,505,000$ Future interest payable 410 1,520 5,649 980 763,741 Totals 41,410$ 102,520$ 198,649$ 35,980$ 4,268,741$ Payments to maturity: 2014 41,410$ 51,010$ 66,699$ 35,980$ 533,361$ 2015 - 51,510 66,300 - 529,736 2016 - - 65,650 - 530,236 2017 - - - - 534,611 2018 - - - - 532,861 2019 - - - - 534,633 2020 - - - - 534,784 2021 - - - - 538,519 2022 - - - - - 2023 - - - - - 2024 - - - - - 41,410$ 102,520$ 198,649$ 35,980$ 4,268,741$ 87 Exhibit 3 G. O.G.O.G.O.G.O.G.O. Improvement Tax Utility CIP G.O.Improvement and Refunding Abatement Revenue Refunding TIF Utility Revenue Bonds Bonds Bonds Bonds Bonds Refunding Bonds 2005B 2006C 2006D 2006E 2007A 2010A 845,000$ 2,220,000$ 255,000$ 1,930,000$ 3,110,000$ 720,000$ 42,125 543,492 21,831 200,000 636,103 77,375 887,125$ 2,763,492$ 276,831$ 2,130,000$ 3,746,103$ 797,375$ 456,625$ 231,020$ 69,292$ 430,000$ 463,426$ 114,700$ 430,500 240,043 66,832 415,600 464,326 117,250 - 248,381 69,254 420,800 469,526 114,250 - 260,858 71,453 430,100 473,926 111,250 - 267,464 - 433,500 252,126 113,175 - 278,327 - - 254,326 110,025 - 293,233 - - 261,026 116,725 - 302,183 - - 267,126 - - 315,103 - - 272,504 - - 326,880 - - 282,016 - - - - - 285,775 - 887,125$ 2,763,492$ 276,831$ 2,130,000$ 3,746,103$ 797,375$ 88 Exhibit 3 DEBT SERVICE PAYMENTS TO MATURITY - ALL BONDS (CONTINUED) December 31, 2013 Note G.O.Payable - G.O.Improvement Anoka Refunding Bonds Bonds County - 2012A 2013A 2009A Totals Bonds payable 2,015,000$ 615,000$ 3,695,000$ 19,280,000$ Future interest payable 129,865 128,057 611,845 3,162,993 Totals 2,144,865$ 743,057$ 4,306,845$ 22,442,993$ Payments to maturity: 2014 89,212$ 18,737$ 1,109,951$ 3,711,423$ 2015 238,632 77,565 460,345 3,158,639 2016 247,618 76,815 465,945 2,708,475 2017 241,311 75,780 470,945 2,670,234 2018 244,660 74,460 475,345 2,393,591 2019 242,590 72,900 483,195 1,975,996 2020 170,520 71,100 485,070 1,932,458 2021 168,560 69,000 356,049 1,701,437 2022 166,400 71,500 - 825,507 2023 169,001 68,900 - 846,797 2024 166,361 66,300 - 518,436 2,144,865$ 743,057$ 4,306,845$ 22,442,993$ CITY OF LINO LAKES, MINNESOTA 89 CITY OF LINO LAKES, MINNESOTA Exhibit 4 INSURANCE IN FORCE December 31, 2013 Coverage Amount General Liability: Bodily Injury/Property Damage 1,500,000$ Personal Injury/Police Professional Liability 1,500,000 Fire Legal Liability 50,000 Medical Expense Occurrence Limit 1,000 Medical Expense Aggregate 10,000 Property Damage ($500 Deductible) Property: Buildings and Contents (including Mobile and EDP - Electronic Equipment & Valuable Papers)30,331,521 Faithful Performance Blanket Bond 500,000 Storage Tank Liability 250,000 Rented/Leased Equipment ($1,000 Deductible)500,000 Public Official and Employee Liability ($1,000 Deductible Each Occurrence)1,500,000 Automotive: Bodily Injury and Property Damage 1,500,000 Comprehensive and Collision Actual Cash Value Uninsured Motorists 200,000 Workmen's Compensation Statutory Umbrella Liability 1,000,000 Crime - Theft Disappearance and Destruction ($1,000 Deductible)250,000 90 CITY OF LINO LAKES, MINNESOTA Exhibit 5 TAXABLE VALUATIONS, TAX LEVIES AND TAX RATES Tax Capacity Tax Capacity Values Values 2012/2013 2011/2012 Taxable Valuations: Total 16,601,721$ 17,999,453$ Fiscal Disparities: Distribution 2,620,748 2,762,556 Contribution (1,205,912) (1,246,881) Less: Captured Tax Increment Value (234,159) (279,219) 17,782,398$ 19,235,909$ Tax Tax Certified Capacity Certified Capacity Levy Rate Levy Rate Taxes Levied: Revenue 7,190,538$ 40.964 7,192,818$ 37.501 Bond and Interest 1,025,090 5.810 1,034,441 5.393 Totals 8,215,628$ 46.774 8,227,259$ 42.894 The tax capacity rate is based on the total certified levy net of the fiscal disparity distribution. III. STATISTICAL SECTION Statistical Section (Unaudited) This part of the Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about overall financial health. The following are the categories of the various schedules that are included in this section. Financial Trends Tables 1-4 These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity Tables 5-8 These schedules contain information to help the reader assess the City’s most significant revenue sources. Debt Capacity Tables 9-11 These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information Tables 12-13 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating information Tables 14-16 These schedules contain service and infrastructure data to help the reader understand how the information the City’s financial report relates to the services the City provides and the activities it performs. 91 CITY OF LINO LAKES, MINNESOTA Table 1 NET POSITION BY COMPONENT, LAST TEN FISCAL YEARS (accrual basis of accounting) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Governmental Activities Net Investment in Capital Assets 28,807,262$ 25,460,528$ 29,549,174$ 36,789,153$ 28,472,865$ 23,400,453$ 22,562,217$ 24,600,103$ 22,166,342$ 22,241,821$ Restricted 3,045,052 12,050,484 10,704,508 10,324,467 9,870,676 9,414,474 8,428,025 11,598,803 11,595,112 11,000,033 Unrestricted 16,249,541 13,577,071 14,516,466 6,339,528 10,790,359 15,926,322 16,738,885 13,463,210 17,639,038 16,849,636 Total Governmental Activities Net Position 48,101,855$ 51,088,083$ 54,770,148$ 53,453,148$ 49,133,900$ 48,741,249$ 47,729,127$ 49,662,116$ 51,400,492$ 50,091,490$ Business-Type Activities Net Investment in Capital Assets 26,713,498$ 28,342,832$ 29,485,942$ 29,836,775$ 30,372,670$ 30,071,840$ 29,648,461$ 29,216,866$ 28,798,095$ 28,423,284$ Unrestricted 4,744,875 5,572,338 6,880,547 8,063,983 9,028,778 10,112,207 10,728,626 11,201,362 12,102,013 12,999,182 Total Business-Type Activities Net Position 31,458,373$ 33,915,170$ 36,366,489$ 37,900,758$ 39,401,448$ 40,184,047$ 40,377,087$ 40,418,228$ 40,900,108$ 41,422,466$ Primary Government Net Investment in Capital Assets 55,520,760$ 53,803,360$ 59,035,116$ 66,625,928$ 58,845,535$ 53,472,293$ 52,210,678$ 53,816,969$ 50,964,437$ 50,665,105$ Restricted 3,045,052 12,050,484 10,704,508 10,324,467 9,870,676 9,414,474 8,428,025 11,598,803 11,595,112 11,000,033 Unrestricted 20,994,416 19,149,409 21,397,013 14,403,511 19,819,137 26,038,529 27,467,511 24,664,572 29,741,051 29,848,818 Total Primary Government Net Position 79,560,228$ 85,003,253$ 91,136,637$ 91,353,906$ 88,535,348$ 88,925,296$ 88,106,214$ 90,080,344$ 92,300,600$ 91,513,956$ Fiscal Year 92 CITY OF LINO LAKES, MINNESOTA CHANGES IN NET POSITION, LAST TEN FISCAL YEARS (accrual basis of accounting) 2004 2005 2006 2007 2008 Expenses Governmental activities: General Government 2,524,387$ 2,941,279$ 2,886,825$ 2,197,672$ 2,323,358$ Public Safety 2,799,294 3,091,174 3,516,376 3,730,504 4,051,162 Public Services 7,254,708 9,187,436 3,871,968 10,580,560 7,608,626 Parks, Recreation and Forestry 1,196,096 799,335 1,162,458 1,357,133 919,948 Conservation of Natural Resources 116,869 150,092 156,592 183,420 184,624 Community Development 420,874 383,211 691,880 1,122,802 1,114,158 Interest on long-term debt 748,832 797,341 926,021 980,849 1,045,781 Total governmental activities expenses 15,061,060$ 17,349,868$ 13,212,120$ 20,152,940$ 17,247,657$ Business-type activities: Water 914,039$ 876,592$ 976,575$ 1,170,902$ 1,020,770$ Sewer 1,130,994 1,217,825 1,228,123 1,298,963 1,287,943 Total business-type activities 2,045,033 2,094,417 2,204,698 2,469,865 2,308,713 Total primary government expenses 17,106,093$ 19,444,285$ 15,416,818$ 22,622,805$ 19,556,370$ Program Revenues Governmental activities: Charges for services: General Government 122,861$ 111,480$ 88,924$ 91,646$ 79,844$ Public Safety 1,049,858 998,210 844,514 1,078,995 1,296,418 Public Works 454,191 434,087 420,741 389,489 413,040 Parks, Recreation and Forestry 242,857 196,951 188,439 185,803 187,285 Conservation of Natural Resources 11,763 4,873 6,854 4,559 3,660 Community Development 28,952 26,985 20,530 15,839 11,623 Operating grants and contributions 677,079 761,924 643,749 851,791 693,065 Capital grants and contributions 7,515,238 10,128,024 5,963,204 7,189,346 1,094,789 Total governmental activities program revenues 10,102,799$ 12,662,534$ 8,176,955$ 9,807,468$ 3,779,724$ Business-type activities: Charges for services: Water 979,075$ 1,031,175$ 1,175,172$ 1,215,763$ 1,058,493$ Sewer 1,280,652 1,361,759 1,391,702 1,446,112 1,472,093 Operating grants and contributions - - - - - Capital grants and contributions 1,589,419 1,733,775 1,535,631 80,750 10,117 Total business-type activities program revenues 3,849,146 4,126,709 4,102,505 2,742,625 2,540,703 Total primary government program revenues 13,951,945$ 16,789,243$ 12,279,460$ 12,550,093$ 6,320,427$ Net (Expense)/Revenue Governmental activities (4,958,261)$ (4,687,334)$ (5,035,165)$ (10,345,472)$ (13,467,933)$ Business-type activities 1,804,113 2,032,292 1,897,807 272,760 231,990 Total primary government net expense (3,154,148)$ (2,655,042)$ (3,137,358)$ (10,072,712)$ (13,235,943)$ General Revenues and Other Changes in Net Position Governmental activities: Property taxes 6,630,279$ 7,383,415$ 8,269,944$ 8,785,280$ 9,424,697$ Unrestricted grants and contributions - - - 256,877 129,607 Unrestricted investment earnings 221,302 433,387 713,794 864,578 576,071 Change in market value - - - - - Gain on sale of capital assets 1,280,957 - 33,217 17,424 12,512 Miscellaneous - 160,955 - - - Transfers (303,108) (304,195) (299,725) (895,687) (994,202) Total governmental activities 7,829,430$ 7,673,562$ 8,717,230$ 9,028,472$ 9,148,685$ Business-type activities: Unrestricted investment earnings 34,833$ 120,310$ 253,787$ 365,822$ 274,498$ Change in market value - - - - - Transfers 303,108 304,195 299,725 895,687 994,202 Total business-type activities 337,941 424,505 553,512 1,261,509 1,268,700 Total primary government 8,167,371$ 8,098,067$ 9,270,742$ 10,289,981$ 10,417,385$ Change in Net Position Governmental activities 2,871,169$ 2,986,228$ 3,682,065$ (1,317,000)$ (4,319,248)$ Business-type activities 2,142,054 2,456,797 2,451,319 1,534,269 1,500,690 Total primary government change in net position 5,013,223$ 5,443,025$ 6,133,384$ 217,269$ (2,818,558)$ Fiscal Year 93 Table 2 (Continued) 2009 2010 2011 2012 2013 2,201,439$ 1,987,415$ 1,990,137$ 1,883,961$ 1,566,388$ 4,299,366 3,971,261 4,019,101 4,046,415 3,950,197 4,027,553 3,968,063 8,110,979 5,584,283 4,540,888 1,313,560 1,124,907 1,218,472 1,210,867 835,783 215,607 197,571 139,544 184,051 141,204 1,005,997 1,105,254 617,747 430,121 404,726 928,668 1,064,172 927,535 837,755 951,842 13,992,190$ 13,418,643$ 17,023,515$ 14,177,453$ 12,391,028$ 1,089,569$ 1,045,901$ 966,643$ 949,121$ 927,800$ 1,432,107 1,466,847 1,638,063 1,527,637 1,584,395 2,521,676 2,512,748 2,604,706 2,476,758 2,512,195 16,513,866$ 15,931,391$ 19,628,221$ 16,654,211$ 14,903,223$ 101,741$ 98,403$ 103,687$ 129,151$ 93,118$ 725,747 691,005 713,985 642,745 697,584 428,174 427,223 382,287 476,296 456,024 165,994 177,984 210,976 191,832 175,978 3,858 4,153 4,392 19,297 1,347 8,667 14,148 5,138 16,940 28,118 682,797 617,450 593,798 450,179 527,368 1,357,015 1,388,984 7,347,613 5,125,693 941,960 3,473,993$ 3,419,350$ 9,361,876$ 7,052,133$ 2,921,497$ 1,365,817$ 1,087,013$ 1,090,104$ 1,371,809$ 1,208,742$ 1,502,164 1,498,218 1,494,188 1,505,781 1,516,397 62,710 - - - - 8,769 8,709 1,462 20,018 883 2,939,460 2,593,940 2,585,754 2,897,608 2,726,022 6,413,453$ 6,013,290$ 11,947,630$ 9,949,741$ 5,647,519$ (10,518,197)$ (9,999,293)$ (7,661,639)$ (7,125,320)$ (9,469,531)$ 417,784 81,192 (18,952) 420,850 213,827 (10,100,413)$ (9,918,101)$ (7,680,591)$ (6,704,470)$ (9,255,704)$ 9,808,324$ 8,764,183$ 8,768,805$ 8,610,709$ 8,563,595$ 11,321 4,389 4,072 4,941 4,442 429,325 225,677 251,250 202,828 216,488 - - - - (270,692) 12,644 - 37,579 4,175 - - - - - - (136,068) (7,078) 66,122 41,043 (353,304) 10,125,546$ 8,987,171$ 9,127,828$ 8,863,696$ 8,160,529$ 228,747$ 104,770$ 126,215$ 102,073$ 113,402$ - - - - (158,175) 136,068 7,078 (66,122) (41,043) 353,304 364,815 111,848 60,093 61,030 308,531 10,490,361$ 9,099,019$ 9,187,921$ 8,924,726$ 8,469,060$ (392,651)$ (1,012,122)$ 1,466,189$ 1,738,376$ (1,309,002)$ 782,599 193,040 41,141 481,880 522,358 389,948$ (819,082)$ 1,507,330$ 2,220,256$ (786,644)$ Fiscal Year 94 CITY OF LINO LAKES, MINNESOTA Table 3 FUND BALANCES, GOVERNMENTAL FUNDS, LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2004 2005 2006 2007 General Fund Reserved 142,492$ 148,652$ 153,009$ 181,759$ Unreserved 5,067,973 5,300,156 5,337,225 5,356,272 Nonspendable - - - - Unassigned - - - - Total general fund 5,210,465$ 5,448,808$ 5,490,234$ 5,538,031$ All Other Governmental Funds Reserved reported in: Special Revenue Funds 1,718$ 1,763$ 1,813$ 226,921$ Capital Projects Funds 957,112 957,112 957,112 885,825 Debt Service Funds 2,556,300 7,371,359 3,992,952 3,925,402 Permanent Funds - 100,000 100,000 100,000 Unreserved reported in: Special Revenue Funds 57,616 74,716 82,385 100,955 Capital Projects Funds 6,241,408 7,348,375 5,525,508 8,395,827 Debt Service Funds 452,972 - - - Permanent Funds - 853 5,378 17,023 Nonspendable - - - - Restricted - - - - Committed - - - - Assigned - - - - Unassigned - - - - Total all other governmental funds 10,267,126$ 15,854,178$ 10,665,148$ 13,651,953$ Total all funds 15,477,591$ 21,302,986$ 16,155,382$ 19,189,984$ Fiscal Year 95 Table 3 (Continued) 2008 2009 2010 2011 2012 2013 190,825$ 196,568$ 181,471$ -$ -$ -$ 5,393,316 5,191,396 5,445,334 - - - - - - 165,079 180,786 176,797 - - - 5,440,101 5,053,031 5,209,286 5,584,141$ 5,387,964$ 5,626,805$ 5,605,180$ 5,233,817$ 5,386,083$ 226,973$ 227,176$ 227,342$ -$ -$ -$ 812,400 736,772 658,875 - - - 3,405,272 3,457,349 2,986,102 - - - 100,000 100,000 100,000 - - - 106,573 93,956 110,471 - - - 5,927,411 11,611,835 12,537,841 - - - - (558,443) (1,093,765) - - - 22,224 15,824 12,676 - - - - - - 906,010 823,113 101,710 - - - 2,658,010 3,041,524 3,651,550 - - - 110,568 115,196 121,075 - - - 10,808,268 15,573,179 15,710,702 - - - (3,154,496) (3,262,728) (3,393,547) 10,600,853$ 15,684,469$ 15,539,542$ 11,328,360$ 16,290,284$ 16,191,490$ 16,184,994$ 21,072,433$ 21,166,347$ 16,933,540$ 21,524,101$ 21,577,573$ Fiscal Year 96 CITY OF LINO LAKES, MINNESOTA Table 4 CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS, LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2004 2005 2006 2007 Revenues Property Taxes 6,523,938$ 7,230,287$ 8,103,263$ 8,529,846$ Licenses and Permits 867,909 812,172 581,582 694,435 Intergovernmental 2,419,531 1,808,111 1,818,519 6,143,689 Special Assessments 1,587,510 1,769,821 2,901,100 1,961,253 Charges for Services 639,565 601,548 687,551 753,698 Fines and Forfeits 106,053 100,980 101,518 139,932 Investment Earnings 221,303 433,385 713,795 864,578 Net Increase (Decrease) in Fair Value of Investments - - - - Miscellaneous 782,179 948,009 716,692 889,901 Total revenues 13,147,988 13,704,313 15,624,020 19,977,332 Expenditures Current: General Government 2,261,908 2,701,731 2,614,303 1,953,960 Public Safety 2,798,013 3,099,032 3,314,159 3,513,460 Public Works 5,126,578 7,071,322 7,755,727 8,446,911 Parks, Recreation and Forestry 954,945 1,111,301 1,076,727 1,103,021 Conservation of Natural Resources 115,631 140,334 143,653 183,346 Community Development - - 683,036 1,107,328 Capital Outlay 515,287 464,553 835,770 2,008,073 Debt Service Principal 1,960,000 2,016,000 2,155,000 1,973,000 Interest and Fiscal Charges 798,405 838,950 1,011,157 937,895 Bond Issuance Costs - - - - Total expenditures 14,530,767 17,443,223 19,589,532 21,226,994 Excess (deficiency) of revenues over expenditures (1,382,779) (3,738,910) (3,965,512) (1,249,662) Other Financing Sources (Uses) Sale of Property 1,280,957 280,269 28,818 54,037 Proceeds from Issuance of Debt 1,604,000 9,412,000 6,327,000 4,375,000 Premium on Bonds Issued - 176,231 450 - Discount on Bonds Issued (6,057) - (13,635) (25,798) Payment to Refunded Bond Escrow Agent (1,170,000) - (7,225,000) - Loan Payable Reapportionment - - - - Transfer In 5,283,306 2,651,469 5,811,452 2,900,249 Transfer Out (5,586,414) (2,955,664) (6,111,177) (3,019,224) Total other financing sources (uses)1,405,792 9,564,305 (1,182,092) 4,284,264 Net change in fund balances 23,013$ 5,825,395$ (5,147,604)$ 3,034,602$ Debt service as a percentage of noncapital expenditures 19.7%16.8%16.9%15.1% Fiscal Year 97 Table 4 (Continued) 2008 2009 2010 2011 2012 2013 9,095,085$ 9,561,570$ 8,647,488$ 8,655,971$ 8,560,340$ 8,475,214$ 802,135 307,714 330,138 322,030 319,172 431,654 1,004,476 1,259,016 1,176,863 1,331,914 5,267,570 500,963 950,188 968,995 851,270 904,522 816,998 2,130,519 872,534 778,163 780,044 812,604 744,633 717,300 133,531 111,807 127,203 154,020 155,956 119,079 576,071 429,325 225,677 251,244 202,825 222,810 - - - - - (276,276) 516,415 513,306 502,992 460,710 414,088 384,749 13,950,435 13,929,896 12,641,675 12,893,015 16,481,582 12,706,012 2,058,267 1,918,246 1,730,390 1,773,515 1,619,215 1,569,722 3,806,389 4,122,352 3,798,106 3,791,329 3,861,265 3,744,957 5,542,308 1,965,640 1,902,411 2,192,732 3,339,430 2,953,969 1,033,260 1,106,006 945,821 1,059,191 1,056,976 1,002,797 183,024 209,466 185,232 134,122 176,318 134,127 1,113,232 1,005,095 1,098,682 624,286 435,154 418,533 585,875 501,806 282,938 4,209,593 616,931 291,135 1,749,000 1,908,000 1,866,000 2,030,000 2,145,000 2,214,000 1,074,052 994,809 1,042,883 983,129 831,875 774,172 - - - - 47,054 17,137 17,145,407 13,731,420 12,852,463 16,797,897 14,129,218 13,120,549 (3,194,972) 198,476 (210,788) (3,904,882) 2,352,364 (414,537) 13,750 35,700 20,600 50,953 4,175 16,727 209,000 4,596,000 1,170,000 120,000 2,165,000 808,000 - 11,141 10,980 - - 6,558 - - - - - - - - (965,000) - - (435,000) - - - (565,000) - - 4,763,391 1,413,985 1,195,747 2,971,715 1,979,457 1,722,541 (4,796,159) (1,367,863) (1,127,625) (2,905,593) (1,910,435) (1,650,817) 189,982 4,688,963 304,702 (327,925) 2,238,197 468,009 (3,004,990)$ 4,887,439$ 93,914$ (4,232,807)$ 4,590,561$ 53,472$ 27.6%22.7%23.7%18.6%22.1%25.3% Fiscal Year 98 CITY OF LINO LAKES, MINNESOTA Table 5 ASSESSED AND ACTUAL VALUE OF TAXABLE PROPERTY, LAST TEN FISCAL YEARS Commercial/Total Taxable Payable Residential Industrial Personal Assessed Total Direct Year Property Property Property Value Tax Rate 2004 12,252,347$ 1,982,146$ 259,194$ 14,493,687$ 42.29 2005 14,055,076 2,290,829 274,956 16,620,861 42.22 2006 15,825,619 2,740,583 271,665 18,837,867 41.40 2007 17,605,080 3,047,965 288,290 20,941,335 38.99 2008 18,382,645 3,431,107 279,102 22,092,854 38.97 2009 18,919,087 4,002,349 275,496 23,196,932 38.73 2010 17,978,917 3,800,004 291,904 22,070,825 37.91 2011 16,214,698 3,223,901 303,964 19,742,563 42.04 2012 14,743,557 2,945,026 310,870 17,999,453 42.89 2013 13,693,905 2,571,769 336,047 16,601,721 46.77 Source: Anoka County, Minnesota Assessors' Office Note: The tax capacity (assessed taxable value) of the property is calculated by applying a statutory formula to the estimated market value of the property. 99 CITY OF LINO LAKES, MINNESOTA Table 6 DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (rate per $100 of Tax Capacity) Fiscal Year Basic Rate General Obligation Debt Service Redevelopment Debt Service Total Direct Centennial School District ISD # 12 Anoka County Other Taxing Districts Total Overlapping Total Direct and Overlapping Tax Rate 2004 36.302$ 5.985$ -$ 42.287$ 36.649$ 35.221$ 6.373$ 78.243$ 120.530$ 2005 36.838 5.385 - 42.223 37.486 33.080 6.696 77.262 119.485 2006 36.044 5.354 - 41.398 40.253 32.096 6.479 78.828 120.226 2007 34.356 4.638 - 38.994 38.090 30.696 5.578 74.364 113.358 2008 34.560 4.407 - 38.967 35.258 31.078 6.956 73.292 112.259 2009 34.716 4.017 - 38.733 34.593 32.078 5.611 72.282 111.015 2010 34.086 3.819 - 37.905 37.285 35.189 5.879 78.353 116.258 2011 37.425 4.616 - 42.041 43.695 39.952 6.278 89.925 131.966 2012 37.501 5.393 - 42.894 40.010 41.146 6.691 87.847 130.741 2013 40.964 5.810 - 46.774 43.681 44.411 6.940 95.032 141.806 Source: Anoka County Property Records and Tax Division Notes: The majority of Lino Lakes is served by Independent School District No. 12. Rates for debt service are based on each year's requirements. City Direct Rate Overlapping Rates 100 CITY OF LINO LAKES, MINNESOTA Table 7 PRINCIPAL PROPERTY TAXPAYERS, CURRENT YEAR AND NINE YEARS AGO Percentage Percentage of Total of Total City City Taxable Taxable Taxable Taxable Net Tax Net Tax Net Tax Net Tax Taxpayer Capacity Rank Capacity Capacity Rank Capacity Target Corporation 210,824$ 1 1.27 %252,988$ 1 1.66 % Lino Lakes Realty LLC 181,810 2 1.10 - - Xcel Energy 176,456 3 1.06 131,145 3 0.86 Moline Concrete Products 110,333 4 0.66 125,132 4 0.82 Kohl's Department Store 104,810 5 0.63 152,550 2 1.00 Taylor Corporation 97,230 6 0.59 99,752 6 0.65 Gargaro Properties LLC 85,908 7 0.52 - - Marmon/Keystone Corp 77,462 8 0.47 72,296 8 0.47 CenterPoint Energy 65,794 9 0.40 49,316 10 0.32 EOC Lino Lakes LLC 59,250 10 0.36 - - Lino Lakes Business Center - -99,752 5 0.65 Individual - -76,930 7 0.50 F&G Incorporated - -69,126 9 0.45 Total 1,169,877$ 7.05 %1,128,987$ 7.38 % Source: Anoka County 2013 2004 101 CITY OF LINO LAKES, MINNESOTA Table 8 PROPERTY TAX LEVIES AND COLLECTIONS. LAST TEN FISCAL YEARS Collected within the Taxes Levied for the Fiscal Year Fiscal Year of Levy Percentage Fiscal Operating Debt Total Tax of Year Tax Levy Tax Levy Levy Amount Levy 2004 5,623,542$ 927,078$ 6,550,620$ 6,145,419$ 93.8% 2005 6,342,211 927,091 7,269,302 6,881,838 94.7% 2006 7,042,626 934,281 7,976,907 7,594,019 95.2% 2007 7,558,995 897,333 8,456,328 8,324,180 98.4% 2008 7,973,236 893,720 8,866,956 8,581,974 96.8% 2009 8,295,172 949,166 9,244,338 8,982,756 97.2% 2010 7,816,232 879,182 8,695,414 8,400,439 96.6% 2011 7,719,240 940,760 8,660,000 8,486,845 98.0% 2012 7,192,818 1,034,441 8,227,259 8,095,502 98.4% 2013 7,190,538 1,025,090 8,215,628 8,094,911 98.5% Notes: Does not include tax increment levies and collections. Current year levies and collections include State levy related credits (HACA and Market Value Credit). 102 Table 8 (Continued) Total Collections to Date Collections in Percentage Outstanding Percentage Subsequent of Delinquent of Levy Years Amount Levy Taxes Outstanding 48,430$ 6,193,849$ 94.6%356,771$ 5.4% 56,369 6,938,207 95.4%331,095 4.6% 63,030 7,657,049 96.0%319,858 4.0% 104,437 8,428,617 99.7%27,711 0.3% 126,071 8,708,045 98.2%158,911 1.8% 190,339 9,173,095 99.2%71,243 0.8% 166,378 8,566,817 98.5%128,597 1.5% 97,267 8,584,112 99.1%75,888 0.9% 55,872 8,151,374 99.1%75,885 0.9% - 8,094,911 98.5%120,717 1.5% 103 CITY OF LINO LAKES, MINNESOTA Table 9 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Business-Type Governmental Activities Activities General General Special Other Obligation Total Fiscal Obligation Assessments Long-Term Revenue Primary Year Bonds Payable Debt Bonds Government 2004 5,764,000$ 11,580,000$ -$ 2,705,000$ 20,049,000$ 2005 5,335,000 19,405,000 - 2,425,000 27,165,000 2006 7,177,000 13,940,000 - 4,410,000 25,527,000 2007 11,569,000 12,520,000 - 1,855,000 25,944,000 2008 11,184,000 11,365,000 - 1,530,000 24,079,000 2009 10,712,000 10,265,000 4,260,000 1,170,000 26,407,000 2010 10,141,000 9,175,000 4,260,000 795,000 24,371,000 2011 9,421,000 7,985,000 3,695,000 405,000 21,506,000 2012 10,331,000 7,095,000 3,695,000 - 21,121,000 2013 9,610,000 5,975,000 3,695,000 - 19,280,000 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See the Demographic and Economic Statistics schedule for personal income and population data. 104 Table 9 (Continued) (1) Less: Amounts Percentage Percentage Available in Debt Net of Assessed of Personal Per Service Funds Bonded Debt Market Value Income Capita 2,556,300$ 17,492,700$ 1.22 2.69 1,071$ 7,371,359 19,793,641 1.29 2.84 1,379 3,992,952 21,534,048 1.24 2.98 1,293 3,925,402 22,018,598 1.14 2.90 1,307 3,405,272 20,673,728 1.02 2.65 1,205 3,457,349 22,949,651 1.08 3.00 1,301 2,986,102 21,384,898 1.07 2.73 1,206 2,638,129 18,867,871 1.05 2.31 1,049 3,035,557 18,085,443 1.10 2.11 1,024 3,357,196 15,922,804 1.18 N/A 931 105 CITY OF LINO LAKES, MINNESOTA Table 10 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT As of December 31, 2012 Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable Debt Overlapping: Anoka County 156,865,958$ 6.6%10,288,289$ ISD 12 50,645,000 46.5%23,534,395 ISD 624 92,180,000 3.5%3,197,863 ISD 831 26,740,000 7.6%2,043,174 Metropolitan Council 1,396,829,257 0.6%8,274,700 Anoka County Railroad Authority 27,440,000 6.6%1,799,697 Total Overlapping 49,138,118 City of Lino Lakes Direct Debt 19,280,000$ 100%19,280,000 Total Direct and Overlapping Debt:68,418,118$ Determined by ratio of net tax capacity (after fiscal disparities and tax increment adjustment) of property subject to taxation in overlapping unit to valuation of property subject to taxation in City. Sources: Taxable value data used to estimate applicable percentages provided by the County Property Appraiser. Debt outstanding data provided by each governmental unit. Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 106 CITY OF LINO LAKES, MINNESOTA Table 11 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2004 2005 2006 2007 Debt limit 28,616,070$ 30,698,674$ 34,686,356$ 38,556,150$ Total net debt applicable to limit 5,169,000 4,845,000 4,332,000 4,039,000 Legal debt margin 23,447,070$ 25,853,674$ 30,354,356$ 34,517,150$ Total net debt applicable to the limit as a percentage of debt limit 18.06%15.78%12.49%10.48% Fiscal Year 107 Table 11 (Continued) Legal Debt Margin Calculation for Fiscal Year 2012 Market value 1,519,857,242$ Debt limit (3% of market value)45,595,717 Debt applicable to limit 4,280,000 Legal debt margin 41,315,717$ 2008 2009 2010 2011 2012 2013 60,658,830$ 64,036,746$ 60,622,086$ 54,123,645$ 45,595,717$ 45,595,717$ 3,804,000 3,642,000 3,386,000 2,961,000 4,280,000 4,280,000 56,854,830$ 60,394,746$ 57,236,086$ 51,162,645$ 41,315,717$ 41,315,717$ 6.27%5.69%5.59%5.47%9.39%9.39% Fiscal Year 108 CITY OF LINO LAKES, MINNESOTA Table 12 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS (2) Personal Per Income Capita (3)(4) Fiscal (1)(thousands Personal School Unemployment Year Population of dollars)Income Enrollment Rate 2004 18,725 650,301$ 34,729$ 6,956 4.6 2005 19,698 696,797 35,374 6,934 3.8 2006 19,736 720,680 36,516 6,986 4.1 2007 19,851 759,718 38,271 6,846 4.8 2008 19,987 781,132 39,082 6,768 6.9 2009 20,305 768,341 37,840 6,725 7.8 2010 20,216 777,912 38,480 6,523 7.1 2011 20,505 831,170 40,535 6,426 5.9 2012 20,625 857,753 41,588 6,421 5.6 2013 20,700 N/A N/A 6,392 4.5 Source: (1) Estimates from Metropolitan Council, except for 2010 which is per the U.S. Census & 2013 which is city estimate (2) Information from Bureau of Economic Analysis Report - Anoka County statistics used as local information is unavailable (3) Information from ISD 12 Website (4) Information from MN Department of Employment and Economic Development - Anoka County statistics used as local information is unavailable Note: Information not available is marked N/A 109 CITY OF LINO LAKES, MINNESOTA Table 13 PRINCIPAL EMPLOYERS, CURRENT YEAR AND NINE YEARS AGO Employer Employees Rank Employees Rank State of Minnesota Corrections 460 1 N/A %428 2 N/A % ISD 12 - Centennial Schools 362 2 N/A --N/A Taylor Corporation 160 3 N/A 223 5 N/A Target Corporation 150 4 N/A 275 3 N/A Curtis 1000 130 5 N/A - - N/A Molin Concrete Products 120 6 N/A 150 6 N/A Anoka County Juvenile Center 120 7 N/A 2,579 1 N/A Kohls 120 8 N/A 135 8 N/A YMCA 120 9 N/A - - N/A Rehbein Transit, Inc.100 10 N/A 135 9 N/A Synovis Interventional Systems - - - 231 4 N/A Summit Fire Protection - - - 150 7 N/A Custom Manufacturing - - - 70 10 N/A Total 1,842 - %4,376 - % Source: City of Lino Lakes Official Statements/Employer Surveys Notes: (1) = While information was obtainable for the largest employers within the City of Lino Lakes, information on the total employment within the City was not available. Employment of Total PercentagePercentage of Total Employment (1) 20042013 (1) 110 CITY OF LINO LAKES, MINNESOTA Table 14 FULL-TIME-EQUIVALENT EMPLOYEES BY TYPE LAST TEN FISCAL YEARS 2004 2005 2006 2007 General Government Management ServicesAdministration 5.00 5.00 5.00 5.00 Seniors 0.63 0.63 0.63 0.63 Finance 3.50 3.50 3.50 3.50 Economic Development 1.00 1.00 1.00 1.00 Planning 2.00 2.00 2.00 2.00 Community Development 2.00 2.75 2.75 2.75 Engineering - - - - Building 1.00 1.00 1.00 1.00 Other 0.55 1.15 1.15 1.40 Total General Government 15.68 17.03 17.03 17.28 Public Safety Officers 22.00 25.00 26.00 26.00 Civilians 4.00 4.75 4.75 4.75 Building Inspection 4.00 4.25 4.25 4.25 Total Public Safety 30.00 34.00 35.00 35.00 Public Works EngineeringStreets 5.85 6.35 6.85 7.35 Other 1.15 1.15 1.15 1.15 Total Public Works 7.00 7.50 8.00 8.50 Parks, Recreation and Forestry 9.15 9.05 9.55 9.80 Water 2.15 2.15 2.15 2.15 Sewer 2.15 2.15 2.15 2.15 Total 66.13 71.88 73.88 74.88 Source: City Finance Office 111 Table 14 (Continued) 2008 2009 2010 2011 2012 2013 5.00 5.00 4.00 3.50 3.50 3.50 0.63 0.63 0.63 - - - 3.50 3.50 3.00 3.00 3.00 3.00 1.00 1.00 1.00 1.00 1.00 - 2.00 2.00 2.00 1.00 1.00 1.00 2.75 2.75 2.25 2.00 2.00 2.00 - - - - - - 1.00 1.00 1.00 - - - 1.40 1.40 1.40 0.70 0.70 0.70 17.28 17.28 15.28 11.20 11.20 10.20 27.00 27.00 27.00 25.00 25.00 25.00 4.75 4.75 4.25 4.00 3.00 3.00 4.25 4.25 2.75 2.50 2.50 2.50 36.00 36.00 34.00 31.50 30.50 30.50 7.35 7.35 6.85 7.00 7.00 7.00 1.15 1.15 1.15 1.00 1.00 1.00 8.50 8.50 8.00 8.00 8.00 8.00 9.80 9.80 9.30 9.00 9.00 8.70 2.15 2.15 2.15 2.15 2.15 2.30 2.15 2.15 2.15 2.15 2.15 2.30 75.88 75.88 70.88 64.00 63.00 62.00 112 CITY OF LINO LAKES, MINNESOTA Table 15 OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN YEARS Function/Program 2004 2005 2006 2007 2008 General Government Elections 2 1 2 1 2 Registered Voters 11,718 11,035 11,618 10,908 12,723 Number of Votes Cast 10,147 5,288 8,284 2,337 11,051 Voter Participation (Registered)86.6%47.9%71.3%21.4%86.9% Public Safety Police: Calls for Service 6,797 6,973 6,990 7,053 6,871 Traffic Citations & Warnings 3,319 6,609 5,964 3,805 3,252 Part I Crimes 1,716 1,375 3,372 1,279 1,461 Part II Crimes 3,497 3,119 4,890 3,432 3,767 Inspections: Building Permits (1)835 837 686 2,297 5,041 Value of Building Permits $61,579,910 $53,686,592 $42,078,007 $30,539,559 $15,852,780 Public Works General Maintenance (hours)3,263 6,014 5,692 6,758 6,129 Street Maintenance (hours)3,533 3,106 3,631 2,916 3,851 Fleet Maintenance (hours)3,804 4,440 4,460 4,144 5,043 Snow Plowing/Sanding (hours)855 1,003 867 1,425 1,353 Culture and Recreation Parks: Park Maintenance (hours)10,210 10,577 10,368 10,939 11,136 Utilities Water Maintenance (hours)4,349 3,904 4,387 4,256 5,716 Sanitary Sewer Maintenance (hours)3,347 4,092 3,347 4,148 3,760 Source: Various City Departments Notes: Information not available is labeled N/A. (1) 1,565, 4,337 and 581 repair permits issued in 2007 and 2009, respectively, due to storm damage. Fiscal Year 113 Table 15 (Continued) 2009 2010 2011 2012 2013 1 2 1 2 1 11,805 12,284 11,705 13,478 12,020 4,354 8,545 4,314 11,546 1,575 36.9%69.6%36.9%85.7%13.1% 6,353 6,398 6,384 6,344 6,210 3,187 2,743 2,604 2,694 2,597 1,075 982 1,117 N/A N/A 3,151 2,911 2,911 N/A N/A 1,535 509 452 459 490 9,586,160$ 11,295,493$ 11,295,493$ 10,751,626$ 17,683,665$ 5,870 4,945 7,416 6,939 3,994 3,267 3,099 4,352 5,926 5,740 4,782 4,850 4,214 3,945 4,548 950 1,638 1,534 594 1,639 12,406 9,257 9,813 9,739 8,480 5,041 3,560 3,568 3,585 3,119 3,486 3,531 3,557 3,517 3,109 Fiscal Year 114 CITY OF LINO LAKES, MINNESOTA Table 16 CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN YEARS Function/Program 2004 2005 2006 2007 2008 Public Safety Police: Stations 1 1 1 1 1 Patrol Units 10 11 12 12 12 Fire (Joint Powers): Stations in City 1 1 1 1 1 Fire Trucks 4 4 5 5 5 Public Works Lights 489 559 673 673 673 Vehicles 29 29 29 29 29 City Streets (miles)94.3 95.5 96 96.1 100.71 Culture and Recreation Parks: Parks 19 18 18 18 18 Park Acres 142 141 141 141 141 Trails (miles)18 19 20 26 26 Park Shelters 5 5 7 7 7 Basketball Courts 6 6 6 6 6 Fishing Pier 1 1 1 1 1 Skating Rinks 4 4 4 4 4 Soccer Fields 8 8 8 8 8 Baseball/Softball Fields 18 18 20 20 20 Tennis Courts 2 2 2 2 2 Playgrounds 17 17 16 16 16 Water Distribution System (miles)48.2 50.8 51.1 64.7 74.7 Water Connections 3,738 3,957 4,090 4,112 4,247 Gallons Pumped (millions)474 475 565 595 590 Number of Fire Hydrants 490 523 538 538 538 Water Tower Capacity (millions gallons)2 2 2 2 2 Sanitary Sewer Collection System (miles)61.4 63.5 63.3 64.5 69.8 Sewer Connections 3,960 4,142 4,282 4,428 4,447 Storm Sewer Pipe (miles)31.9 33.1 34.1 34.3 41.4 Source: Various City Departments Fiscal Year 115 Table 16 (Continued) 2009 2010 2011 2012 2013 1 1 1 1 1 12 12 12 12 12 1 1 1 1 1 5 5 5 5 5 673 673 673 673 673 29 29 29 29 29 100.71 100.71 100.71 100.71 100.71 18 18 18 18 18 141 141 141 141 141 26 26 26 26 26 7 7 6 6 6 6 6 6 6 6 1 1 1 1 1 4 4 4 4 4 8 8 8 8 8 20 20 20 20 20 2 2 2 2 2 16 16 16 16 16 74.7 74.7 74.7 74.7 74.7 4,340 4,382 4,424 4424 4484 589 498 492 609 536 538 538 538 538 538 2 2 2 2 2 69.8 69.8 69.8 69.8 69.8 4,486 4,530 4,567 4567 4624 41.4 41.4 41.4 41.4 41.4 Fiscal Year WS – Item #2 WORK SESSION STAFF REPORT Work Session Item No. 2 Date: June 2, 2014 To: City Council From: Michael Grochala, Community Development Director Re: Street Reconstruction Plan Update Background As directed by the City Council staff has developed a 5 year Street Reconstruction Plan. The draft plan was first presented to the council in March. The plan was based on the pavement management ratings and consideration of average daily traffic on street segments. The draft plan proposed a 5 phase reconstruction process that addresses approximately 10 miles of city streets. Phase Streets Total Length (Feet) Estimated Cost I Hokah Dr, Rice Ct, Totem Tr, Arrowhead Dr, Tomahawk Tr, Tomahawk Ct, Chippewa Tr, Arrowhead Ct 10,535 $3,009,125 II West Shadow Lake Drive, Shadow Ct, LaMotte Dr, LaMotte Circle 10,643 $3,040,015 III 81st St, Danube St, Elbe St, Red Maple Ln, Holly Dr, Holly Ct 10,441 $,2,982,179 IV Oak Ln, Knoll Dr, Joyer Ln, Karth Rd, Talle Ln, Canfield Rd, Gaage Ln 9,735 $2,780,598 V 77th St, Gordon Ave, Rehbein St, Peltier Lake Dr, James St 11,229 $3,207,139 Total 52,583 $15,019,056 As noted in the plan some project areas may, after further evaluation, be identified as a candidate for reclamation. In such cases the plan would be adjusted to accommodate other street segments. The estimated costs detailed above do not include any replacement or installation of watermain or sanitary sewer. If the residents in any of these neighborhoods would like to have sanitary sewer or watermain installed as part of a street reconstruction project they will need to petition the City for these improvements and agree to be assessed 100% of the cost. The timeline for completing the plan phasing would be based on a financial analysis to determine the preferred bond structure. Springsted Inc. has prepared preliminary debt service schedules based on bond issuance of 10, 15, and 20 years. A 15 year schedule would result in annual debt service of approximately $269,000 based on a $3,000,000 project. At this time staff is proposing consideration of a street reconstruction plan schedule that includes the first two project phases over the next five years as follows: Phase Streets Total Length (Feet) Estimated Cost 2015 Hokah Dr, Rice Ct, Totem Tr, Arrowhead Dr, Tomahawk Tr, Tomahawk Ct, Chippewa Tr, Arrowhead Ct 10,535 $3,009,125 2019 West Shadow Lake Drive, Shadow Ct, Sandpiper Drive, LaMotte Dr, LaMotte Circle 10,643 $3,040,015 Staff has worked with WSB, Springsted Inc. and the City’s bond counsel Kennedy and Graven, to refine the plan to meet the provisions of Minnesota Statutes 475 relating to street reconstruction and bituminous overlays. This would allow for the City to possibly proceed with a project in 2015 regardless of the outcome of the proposed charter amendment. However, as previously discussed, the plan 1) is subject to a reverse referendum and 2) at this point would need to be funded without special assessments. Under State law street reconstruction bonds can be issued without election provided the following requirements are met: a) The City must prepare a 5 year street reconstruction plan b) The City must hold a public hearing c) The City Council must approve the plan by unanimous vote. d) A 30 day period must elapse during which time a petition may be submitted requesting an election. The petition must be signed by voters equal to 5% of the votes cast in the last municipal general election. e) If no petition is received the city may issue bonds without election. To provide for the reverse petition process and allow for preparation of a ballot question for submittal to Anoka County the required public hearing has been set for the June 23 City Council meeting. City Council consideration at the public hearing will be to approve the 5 year Street Reconstruction Plan and authorize the issuance of Street Reconstruction Bonds. Approval of the plan and bond authorization does not obligate the City to construct a project or issue bonds. Representatives from Springsted Inc. will be present at the meeting to discuss the plan. Requested Council Direction None required. The public hearing has been scheduled for June 23, 2014. Attachments 1. Draft 5 year Street Reconstruction Plan Draft Draft 5/29/2014 2015 through 2019 DRAFT Five-Year Street Reconstruction Plan for the City of Lino Lakes, Minnesota June, 2014 Draft Draft 5/29/2014 City of Lino Lakes Five-Year Street Reconstruction Plan 2015 through 2019 I. PURPOSE Street reconstruction is a major expenditure of city funds for the reconstruction of streets. Street reconstruction may include bituminous overlays, utility replacement and relocation, public safety street modifications, and other incidental activities, turn lanes and other improvements having a substantial public safety function, realignments, other modifications to intersect with state and county roads, and the local share of state and county road projects. Except in the case of turn lanes, safety improvements, realignments, intersection modifications, and local share of state and county road projects, street reconstruction does not include the portion of project costs allocable to widening a street or adding curbs and gutters where none previously existed. A Street Reconstruction Plan (“SRP”) is a document designed to anticipate street reconstruction expenditures and schedule them over a five-year period so that they may be purchased in the most efficient and cost effective method possible. An SRP helps enable the matching of expenditures with anticipated income. As potential expenditures are reviewed, the city considers the benefits, costs, alternatives and impact on operating expenditures. The City of Lino Lakes, Minnesota (the “City”) believes the street reconstruction process is an important element of responsible fiscal management. Major capital expenditures can be anticipated and coordinated so as to minimize potentially adverse financial impacts caused by the timing and magnitude of capital outlays. This coordination of capital expenditures is important to the City in achieving its goals of adequate physical public assets, preservation of public assets and sound fiscal management. Good planning is essential for the wise and prudent use of limited financial resources. The SRP is designed to be updated periodically. The Street Reconstruction Plan is a part of the City’s capital improvement plan. In this manner, it Draft Draft 5/29/2014 becomes an ongoing fiscal planning tool that continually anticipates future capital expenditures and funding sources. II. THE STREET RECONSTRUCTION PLANNING PROCESS For the City to use its authority to finance expenditures under Chapter 475.58, Subdivision 3b, it must meet the requirements provided therein. The street reconstruction planning process is as follows: The City staff prepares an SRP reflecting the street reconstruction projects anticipated to be undertaken within the next five years (based on their priority, fiscal impact, and available funding) and the estimated costs thereof. If general obligation bonding is deemed necessary, the City works with its financial advisor to prepare a bond sale and repayment schedule. A public hearing is held to solicit input from citizens on the SRP and the issuance of bonds. Notice of such hearing must be published in the official newspaper of the City at least 10, but not more than 28 days prior to the date of the public hearing. The City Council must approve the SRP and the sale of street reconstruction bonds by a unanimous vote of those members present at the meeting following the public hearing. Voters may petition for a reverse referendum on the issuance of street reconstruction bonds. If a petition bearing the signatures of voters equal to at least 5% of the votes cast in the last general election requesting a vote on the issuance of street reconstruction bonds is received by the City Clerk within 30 days after the public hearing, the City may only issue general obligation street reconstruction bonds after approval by voters at an election. If no petition is submitted, general obligation street reconstruction bonds may be issued without an election. In subsequent years, the process is repeated annually or as expenditures are completed and new needs arise. III. PROJECT SUMMARY AND FINANCING Street reconstruction projects anticipated to be undertaken within the next five years and the estimated costs thereof are set forth in Appendix A. A map of the proposed project streets is included in Appendix B. Those for Draft Draft 5/29/2014 which street reconstruction bonds are anticipated to be issued are marked with an asterisk in Appendix A and are currently anticipated to include the following: 2015 Street Reconstruction Bond Financed Expenditures – The 2015 Street Reconstruction Project includes the reconstruction of the following streets; Hokah Drive, Rice Court, Totem Trail, Arrowhead Drive, Tomahawk Trail, Tomahawk Court, Chippewa Trail, and Arrowhead Court, by replacement of curb and gutter as needed, required upgrades of the existing stormwater management system and bituminous surfacing General obligation street reconstruction bonds are proposed to be issued in 2015 in an aggregate principal amount of approximately $3,150,000 for Shenandoah Area Improvements. Such bonds may be combined with other financing tools, including general obligation improvement bonds, to finance other capital improvements in the City. Street reconstruction bonds are included in the amount of indebtedness of the City which cannot, under Minnesota Statutes, Section 475.53, exceed 3% of the assessor’s taxable market value for the City (“TMV”). The proposed bonds will not exceed statutory limits. All other foreseeable capital expenditures are expected to be financed through other revenue or financing sources. 2019 Street Reconstruction Project The 2019 Street Reconstruction Project includes the reconstruction of the following streets; West Shadow Lake Drive, Sandpiper Drive, Shadow Court, LaMotte Drive, and LaMotte Circle which may include required upgrades of existing stormwater management system and bituminous surfacing. No bonds are being contemplated for this project at the present time. Draft Draft 5/29/2014 APPENDIX A PROJECT COSTS 2015 2016 2017 2018 2019 Shenandoah Area Improvements: Hokah Dr, Rice Ct, Totem Tr, Arrowhead Dr, Tomahawk Tr, Tomahawk Ct, Chippewa Tr, Arrowhead Ct Total Shenandoah* $3,029,125 West Shadow and LaMotte Area Improvements: West Shadow Lake Drive, Shadow Ct, Sandpiper Drive, LaMotte Dr, LaMotte Circle Total West Shadow and LaMotte $3,040,015 Totals by year $3,029,125 0 0 0 $3,040,015 *Expenditures proposed to be financed by Street Reconstruction Bonds to be issued in an aggregate principal amount of approximately $3,150,000 in 2015. Rondeau Lake Peltier Lake Marshan Lake Centerville Lake George Watch Lake Sherman LakeWardsLake Reshanau Lake Rice Lake Golden Lake BaldwinLake Bald Eagle Lake AmeliaLake Otter Lake Cedar Lake Rice Creek Marsh RICE CREEKCHAIN OF LAKESREGIONAL TRAIL County Hwy 10 C o u n t y H w y 1 4 C o u n t y H w y 2 1 C o u n t y H w y 2 3 County Hwy 14 H o d g s o n R d C o u n t y H w y 2 3 Frenchman Rd C o u n t y H w y 2 1 %&d( %&c( )s Blaine B l a i n e L i n o L a k e s Shoreview C i r c l e P i n e s Lexington C i r c l e P i n e s L i n o L a k e s Circle PinesShoreview ColumbusLinoLakes Forest Lake G r a n t W h i t e B e a r T w p . H u g o L i n o L a k e s HugoWhiteBearTwp. Lino LakesNorthOaksLinoLakesShoreview Lino LakesWhiteBearTwp. Lino LakesCenterville Arrowhead Dr L a m o t t e D r L a m o t t e C i r H o k a h D r Shadow Ct H o k a h D r C h i p p e w a T r W S h a d o w L a k e D r 1 inch = 3,200 feet8 3/6/2013 Street Reconstruction PlanCity of Lino Lakes MN Document Path: K:\02029-700\GIS\Maps\StreetReconPlanNew.mxd Date Saved: 5/29/2014 9:28:32 AM Street Reconstruction Plan 2015 2019 WS – Item #3 WORK SESSION STAFF REPORT Work Session Item No. 3 Date: June 2, 2014 To: City Council From: Katie Larsen, City Planner Re: Mattamy Homes Mixed-Used Development Presentation Background Rick Packer, a representative from Mattamy Homes, will be giving a short presentation on proposed product (housing) types for their mixed-use development proposal. As discussed at the May 5, 2014 Council Work Session, the development proposes differing lot widths and housing styles. The subject site is 350+ acres in the northwest quadrant of I-35E and CR 14/Main Street. The area is guided per the comprehensive plan for a mixed-use of low-medium density residential and commercial development. From 2005-2007, this property was reviewed for a similar mixed-use development known as “Hardwood Creek”. That project never materialized due to the decline in the economy. The “Hardwood Creek” proposal was the basis for the I-35E Corridor AUAR study. No formal Land Use Application has been submitted by Mattamy Homes to the city at this time. Requested Council Direction None. Attachments 1. Site Location Map 1 Si t e L o c a t i o n M a p Ma t t a m y H o m e s 0 2 , 0 0 0 4 , 0 0 0 1, 0 0 0 Feet Pe l t i e r L a k e OH W L 8 8 4 . 7 10 0 - y r 8 8 7 . 0 Ce n t e r v i l l e L a k e OH W L 8 8 5 . 0 10 0 - y r 8 8 6 . 3 §¨¦35 E µ Item #9 Monthly Progress Report June 2, 2014 Item Last Action Taken Staff Status Digital Scanning Project 3/10/14 – Council approved employment extension for two PT scanner operators Jeff Both scanners are working on Community Development files Labor Negotiations Sergeants – Contract approved 1/27/14 Police Officers – Currently in mediation AFSCME – Contract approved 4/14/14 49er’s – Contract approved 4/28/14 Jeff Next mediation session with officers scheduled in June ECFE Building 4/14/14 – Sprout Academy decided not to pursue day care business. Another day care provider expressed strong interest. Jeff Council will be considering approval of a lease agreement with New Creations Child Care & Learning Center Fire Department Analysis 5/27/14 – Springsted presented final Fire Department Analysis Jeff 6/2/14 - Council will be considering resolution incorporating fire operations in Public Safety Dept. White Bear Lake Restoration Assn. v. Dept. of Natural Resources (DNR) 1/27/14 – Council voted against joining a NE Metro coalition to intervene in the WBL water level lawsuit Jeff Only White Bear Lake and White Bear Township elected to intervene in the lawsuit 2015 Budget Budget is continually being updated Al Included on June 2 work session agenda