HomeMy WebLinkAboutItem 14 - City of Lake Elmo Financial Statements 12-31-12 CITY OF LAKE ELMO, MINNESOTA
FINANCIAL STATEMENTS
DECEMBER 31, 2012
CITY OF LAKE ELMO, MINNESOTA
FINANCIAL STATEMENTS
For the Fiscal Year Ended December 31, 2012
TABLE OF CONTENTS
REFERENCE PAGE
INTRODUCTORY SECTION
Elected and Appointed Officials i
FINANCIAL SECTION
Independent Auditor's Report 1
Management's Discussion and Analysis 3
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position FORM A-1 15
Statement of Activities FORM A-2 16
Fund Financial Statements
Balance Sheet-Governmental Funds FORM B-1 20
Reconciliation of Net Position in the Government-wide
Financial Statements and Fund Balances in the Fund
Basis Financial Statements FORM B-2 23
Statement of Revenues, Expenditures, and Changes in
Fund Balances-Governmental Funds FORM B-3 24
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities FORM B-4 27
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Budget and Actual-General Fund FORM B-5 28
Combining Statement of Net Position - Proprietary Funds FORM C-1 30
Combining Statement of Revenues, Expenses and Changes in
Net Position - Proprietary Funds FORM C-2 34
Combining Statement of Cash Flows-Proprietary Funds FORM C-3 36
Statement of Fiduciary Net Position - Fiduciary Funds FORM D-1 37
Notes to Financial Statements 41
Required Supplemental Information
Schedule of Funding Progress -Other Post Employment Benefits FORM E-1 79
Combining Nonmajor Fund Statements and Schedules
Combining Balance Sheet-Nonmajor Governmental Funds FORM F-1 82
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances- Nonmajor Governmental Funds FORM F-2 83
Combining Balance Sheet-Nonmajor Special Revenue Funds FORM G-1 84
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances-Nonmajor Special Revenue Funds FORM G-2 85
Combining Balance Sheet- Nonmajor Capital Projects Funds FORM H-1 86
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances-Nonmajor Capital Projects Funds FORM H-2 88
Combining Statement of Net Position - Internal Service Funds FORM 1-1 90
Combining Statement of Revenues, Expenses and Changes in Fund
Net Position -Internal Service Funds FORM I-2 91
Combining Statement of Cash Flows- Internal Service Funds FORM 1-3 92
Statements of Revenues, Expenditures and Change in Fund Balance-
Budget and Actual - General Fund FORM J-1 94
Combining Balance Sheet- Debt Service Funds FORM K-1 98
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances- Debt Service Funds FORM K-2 100
Combining Schedule of Changes in Assets and Liabilities-Agency Funds FORM L-1 102
OTHER REPORT SECTION
Independent Auditor's Report on Minnesota Legal Compliance 105
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CITY OF LAKE ELMO, MINNESOTA
INTRODUCTORY SECTION
DECEMBER 31, 2012
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CITY OF LAKE ELMO, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
December 31, 2012
POSITION NAME TERM EXPIRES
ELECTED OFFICIALS
City Council:
Mayor Dean Johnston December 31, 2012
Council Member Brett Emmons December 31, 2012
Council Member Nicole Park December 31, 2014
Council Member Mike Pearson December 31, 2014
Council Member Anne Smith December 31, 2012
APPOINTED OFFICIALS
City Administrator Dean Zuleger Continuous
Finance Director Cathy Bendel Continuous
i
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CITY OF LAKE ELMO, MINNESOTA
FINANCIAL SECTION
DECEMBER 31, 2012
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SMITH•SCHAFER
& ASSOCIATES, L T D. Members of American Institute of CPA's.
Certified Public Accountants and Consultants Private Companies Practice Section, Minnesota Society of CPA's
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members of
the City Council
City of Lake Elmo, 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 Lake Elmo, Minnesota,
as of and for the year ended December 31, 2012, 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.
Auditor's 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. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.
An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the 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 financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purposes of expressing an opinion on the effectiveness of the entity's internal control. Accordingly,
we express no such opinion. An audit also includes evaluating the appropriateness of accounting principles
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.
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 Lake Elmo, Minnesota, as of December 31, 2012, and the
respective changes in financial position and, where applicable, cash flows thereof and the budgetary
comparison for the General Fund for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
1
Maplewood Office • 2035 E County Road D • Suite A • Maplewood MN 55109 • PH (651) 770-8414 • FAX(651) 770-5175
Rochester Office • 220 South Broadway • Suite 102 • Rochester, MN 55904 • (PH(507)288-3277 • FAX(507)288-4571
Red Wing Office • 519 Bush Street • Red Wing, MN 55066 • PH(651)388-2858 • FAX(651)388-6414
Edina Office • 6800 France Avenue South • Suite 178 • Edina, MN 55435 • PH(952)920-1455 • FAX(952)920-6603
Honorable Mayor and Members of
the City Council
City of Lake Elmo, Minnesota
Page 2
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis on pages 3 through 13 and the Schedule of Funding Progress - Other Post-
Employment Benefits on page 73 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 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
preparing 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 Lake Elmo, Minnesota financial statements. The introductory section and combining and
individual nonmajor fund financial statements listed in the Table of Contents are presented for purposes of
additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements 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 and
individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic
financial statements as a whole.
The introductory section has 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.
Maplewood, Minnesota
June 28, 2013
2
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Lake Elmo, Minnesota, we offer readers of the City's financial
statements this narrative overview and analysis of the financial activities of the City of Lake Elmo,
Minnesota for the fiscal year ended December 31, 2012.
New Accounting Pronouncement. The City implemented GASB 63, Financial Reporting of
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position in fiscal year 2012.
This standard provides guidance for reporting deferred outflows of resources, deferred inflows of
resources and net position in a statement of financial position and related disclosures. The reader will
notice a change in terminology from "net assets"to "net position".
FINANCIAL HIGHLIGHTS
• The assets of the City of Lake Elmo, Minnesota exceeded its liabilities at the close of the
most recent fiscal year by $21,840,460 (net position). Of this amount, $2,310,132
(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 increased by $194,070. The increase is attributed to both
business-type and governmental activities.
• As of the close of the current fiscal year, the City of Lake Elmo, Minnesota's governmental
funds reported combined ending fund balances of $6,972,221, an increase of $58,835 from
the prior year.
• At the end of the current fiscal year, unassigned fund balance for the general fund was
$2,414,692, or 88.1% of total general fund expenditures. The nonspendable portion of the
general fund balance as of December 31, 2012 ($1,024,433) related to the interfund loan to
the Village Project fund and prepaid expenses.
• The City's total noncurrent liabilities increased by $4,550,014 or 36% during the current fiscal
year. The increase was primarily related to this issuance of the 2012A G.O. water revenue
crossover refunding bonds and the 2012E G.O. improvement bonds. The City continues to
carry the 2005A water revenue bonds until the point they are refunded with the proceeds of
the issuance of the 2012A G.O. water revenue crossover refunding bonds.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City of Lake Elmo,
Minnesota's basic financial statements. The City's basic financial statements are comprised of the
following three components: 1) government-wide financial statements, providing information for the
City as a whole, 2) fund financial statements, providing detailed information for the City's significant
funds, and 3) notes to the financial statements, providing additional information that is essential to
understanding the government-wide and fund 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 Lake Elmo, Minnesota's finances,
in a manner similar to a private-sector business.
3
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
The statement of net position presents information on all of the City of Lake Elmo, Minnesota's
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 Lake Elmo, Minnesota 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 the 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 vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Lake Elmo,
Minnesota 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
Lake Elmo, Minnesota include general government, public safety, public works, and culture and
recreation. The business-type activities of the City of Lake Elmo, Minnesota include the water,
sewer and storm sewer funds.
The government-wide financial statements can be found on pages 15-17 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
Lake Elmo, Minnesota, 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
Lake Elmo, Minnesota 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 financial 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 funds and governmental activities.
The City of Lake Elmo, Minnesota maintains twenty-one individual governmental funds, eight of
which are debt service 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, the debt service fund, the village project fund and the 2012 street
improvements fund, all of which are considered to be major funds. Data from the other
governmental funds are combined into a single, aggregated presentation. Individual fund data for
4
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
each of these nonmajor governmental funds is provided in the form of combining statements or
schedules elsewhere in this report.
The City of Lake Elmo, Minnesota adopts an annual budget for its general fund. Budgetary
comparison statements have been provided for this fund (pages 28 and 94 to 97) to demonstrate
compliance with the budget.
The basic governmental fund financial statements can be found on pages 20-27 of this report.
Proprietary funds. The City of Lake Elmo, Minnesota maintains two different types of proprietary
funds. Enterprise funds are used to report the same functions presented as business-type
activities in the government-wide financial statements. The City of Lake Elmo, Minnesota uses
enterprise funds to account for its water, sewer and storm sewer operations. Internal service funds
are an accounting device used to accumulate and allocate costs internally among the City of Lake
Elmo, Minnesota's various functions. The City of Lake Elmo, Minnesota uses internal service funds
to account for certain capital acquisition activities. Because all of these services predominantly
benefit governmental rather than business-type functions, they have been included within
governmental activities in the government-wide financial statements.
Proprietary funds 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 water, sewer and storm sewer funds, all of which are considered to be major
funds of the City of Lake Elmo, Minnesota.
The proprietary fund financial statements can be found on pages 30-36 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties
outside the City. Fiduciary funds are not reflected in the government-wide financial statements
because the resources of those funds are not available to support the City's own programs. The
accounting use for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statement can be found on page 37 of this report.
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 41-75 of this report.
Other Information. The combining statements referred to earlier in connection with non-major
governmental funds and internal service funds can be found on pages 82-102 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. In the case of the City of Lake Elmo, Minnesota, assets exceeded liabilities by
$21,840,460 at the close of the most recent fiscal year.
5
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
The largest portion of the City of Lake Elmo, Minnesota's net position, $15,571,217 (71%) reflects
its investment in capital assets (e.g. land, buildings and improvements, and machinery and
equipment), less any related debt used to acquire those assets that is still outstanding. The City of
Lake Elmo, Minnesota uses these capital assets to provide services to citizens; consequently,
these assets are not available for future spending. Although the City of Lake Elmo, Minnesota's
investment in 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.
City of Lake Elmo Minnesota's Net Position
Governmental Business-Type
Activities Activities Total
Current and other assets $ 8,276,848 $ 5,861,208 $ 14,138,056
Capital assets 14,656,197 10,870,749 25,526,946
Total assets 22,933,045 16,731,957 39,665,002
Long-term liabilities outstanding 8,411,173 8,714,727 17,125,900
Other liabilities 614,789 83,853 698,642
Total liabilities 9,025,962 8,798,580 17,824,542
Net position:
Net investment in capital assets 8,782,840 6,788,377 15,571,217
Restricted 3,959,111 3,959,111
Unrestricted 1,165,132 1,145,000 2,310,132
Total net position $ 13,907,083 $ 7,933,377 $ 21,840,460
An additional portion of the City of Lake Elmo, Minnesota's net position (18 percent) represents
resources that are subject to external restrictions on how they may be used. The remaining
balance of unrestricted net position ($2,310,132) may be used to meet the government's ongoing
obligations to citizens and creditors.
At the end of the current fiscal year, the City of Lake Elmo, Minnesota is able to report positive
balances in all categories of net position for the City as a whole.
6
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
Governmental activities. Governmental activities account for 64% of the City of Lake Elmo,
Minnesota's net position. The total increase in net position for governmental activities was
$132,815, accounting for 68% of the total increase in the net position of the City of Lake Elmo,
Minnesota. Key elements of this increase include:
• Charges for services increased by $131,701 from the prior year.
• Property tax revenue increased by $389,302 from the prior year.
Business-type activities. Business-type activities increased the City of Lake Elmo, Minnesota's
net position by $61,255 accounting for 32% of the total increase in the net position of the City of
Lake Elmo, Minnesota. This increase is due primarily to an increase in charges for services and
capital grants received in the enterprise funds.
City of Lake Elmo, Minnesota's Change in Net Position
Governmental Business-Type
Activities Activities Total
Revenues:
Program revenues:
Charges for services $ 440,630 $ 936,125 $ 1,376,755
Operating grants and contributions 160,060 160,060
Capital grants and contributions 160,444 115,127 275,571
General revenues:
Property taxes 3,183,078 3,183,078
Other 154,304 10,282 164,586
Total revenues 4,098,516 1,061,534 5,160,050
Expenses:
General government 1,093,204 1,093,204
Public safety 1,302,857 1,302,857
Public works 891,169 891,169
Culture and recreation 362,432 362,432
Interest on long-term debt 316,039 316,039
Water 872,786 872,786
Sewer 53,903 53,903
Storm sewer 73,590 73,590
Total expenses 3,965,701 1,000,279 4,965,980
Change in net position 132,815 61,255 194,070
Net position - beginning of year 13,774,268 7,872,122 21,646,390
Net position - end of year $ 13,907,083 $ 7,933,377 $ 21,840,460
7
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
Below are specific graphs that provide comparisons of the governmental 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
$1,500,000
■Program revenues
$1,250,000 --
®Expenses
S1,000,000 - - - —
$750,000
$500,000 - - - -
$250,000 —
$0 - - -,
safer! P (.�s a(eG(ea`\o11
e(a e a�
Gea Gv\`J(
Revenues by Source-Governmental Activities
Operating grants
and contributions
4% Other
Capital grants and 4%
contributions
4%
Charges for
services
11%
Property taxes
77%
8
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following graphs related the business-type activity's program revenues with its expenditures.
Since this activity requires significant physical assets to operate, any excess revenues are held for
planned capital expenditures to keep pace with growing demand for services.
Expenses and Program Revenues -Business-Type Activities
■Program revenues
®Expenses
S1,00 .—
S750,000 —
$500,000 —
S250,000 - -
SO - —
'44a"o �e�et
Revenues by Source-Governmental Activities
Other
Capital grants and 1%
contributions
11%
Charges for
services
88%
9
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial Analysis of the Government's Funds
As noted earlier, the City of Lake Elmo, Minnesota uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements.
Governmental funds. The focus of the City of Lake Elmo, Minnesota's 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 Lake Elmo, Minnesota's financing requirements. In
particular, unassigned fund balance may serve as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City of Lake Elmo, Minnesota's governmental funds
reported combined ending fund balances of $6,972,221, an increase of$58,835 in comparison with
the prior year. Approximately 17 percent of this total fund balance, or $1,165,505, constitutes
assigned and unassigned fund balance, which is available for spending at the government's
discretion. The remainder of the fund balance ($5,806,716) is restricted and nonspendable to
indicate that it is not available for new spending because it has already been restricted by creditors,
grantors or regulations of other governments or has been expensed for prepaid items, or is
unavailable because the funds have been loaned to another fund.
The general fund is the chief operating fund of City of Lake Elmo, Minnesota. At the end of the
current fiscal year, unassigned fund balance of the general fund was $2,414,692. As a measure of
the general fund's liquidity, it may be useful to compare the unassigned fund balance to total fund
expenditures. Unassigned fund balance represents 88% of total general fund expenditures. The
general fund's total fund balance increased by $525,205 during the current fiscal year due primarily
to increases in property taxes and building permits and improved collections of delinquent property
taxes.
The debt service fund decreased its fund balance by $33,943 due primarily to debt service
expenditures in excess of property taxes, special assessments and intergovernmental revenues
allocated to this fund.
The Village Project fund decreased its fund balance by $52,710 as a result of investment interest
owed to other funds related to the fund balance deficit in this fund. The 2012 street improvements
fund decreased its fund balance by $95,726 due primarily to capital outlay expenditures related to
the 2012 street improvement project in excess of debt proceeds and prior to the collection of
special assessments for these improvements.
The special revenue funds decreased their overall fund balances by $72,568 due primarily to
capital outlay expenditures in the library fund related to the purchase of the library building in
excess of property taxes allocated to that fund.
The capital projects funds, other than the village project and 2012 street improvements funds
described previously, decreased their collective fund balance by $211,423 due primarily to capital
outlay expenditures in excess of special assessments and investment earnings allocated to the
funds.
Proprietary funds. The City of Lake Elmo, Minnesota's proprietary funds provide the same type of
information found in the government-wide financial statements, but in more detail.
10
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
Unrestricted net position for water operations, sewer operations and storm sewer operations at the
end of the year amounted to $667,175, $81,867 and $395,958, respectively. The water fund
decreased its net position by $59,670 for the year ended December 31, 2012 while the sewer and
storm sewer increased their net position by $22,648 and $98,277, respectively. Other factors
concerning the finances of these three funds have already been addressed in the discussion of the
City of Lake Elmo, Minnesota's business-type activities.
General Fund Budgetary Highlights
The City's General Fund budget was not amended during the year. The budget called for no
change in General Fund balance. The actual net change to the General Fund balance was an
increase of $525,205. Revenues exceeded budget by $366,392 for the year ended December 31,
2012 due primarily to better than anticipated collection of property taxes and an increase in licenses
and permits revenue over expectations. Total expenditures exceeded budget by $16,187 for the
year. Two departments had expenditures in excess of budget: general government expenditures
exceeded budget by $56,119 and public safety expenditures exceeded budget by $28,396. These
over expenditures were primarily related to increased personnel and professional services
expenses. Additionally, the City had budgeted for $175,000 of transfers out that were not required
to be made.
Capital Asset and Debt Administration
Capital assets. The City of Lake Elmo, Minnesota's investment in capital assets for its
governmental and business-type activities as of December 31, 2012, amounted to $25,526,946
(net of accumulated depreciation). This investment in capital assets includes land, buildings and
improvements, and machinery and equipment. Total capital assets increased by $547,456, or
22%, for the year ended December 31, 2012, due primarily to construction in progress on various
capital projects within the City.
City of Lake Elmo, Minnesota's Capital Assets
(net of depreciation)
Governmental Business-Type
Activities Activities Total
Land $ 3,453,979 $ 54,675 $ 3,508,654
Construction in progress 2,290,314 569,738 2,860,052
Buildings 2,925,354 2,925,354
Improvements other than buildings 493,529 493,529
Machinery and equipment 785,684 127,433 913,117
Infrastructure 4,707,337 10,118,903 14,826,240
Total $ 14,656,197 $ 10,870,749 $ 25,526,946
Additional information on the City of Lake Elmo, Minnesota's capital assets can be found in Note
3D beginning on page 56 of this report.
Long-term debt. At the end of the current fiscal year, the City of Lake Elmo, Minnesota had
$16,905,000 in bonds and certificates outstanding. The entire $16,905,000 outstanding comprises
debt backed by the full faith and credit of the government.
11
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
City of Lake Elmo, Minnesota's Outstanding Debt
General Obligation Bonds and Certificates
Governmental Business-Type
Activities Activities Total
General obligation bonds $ 8,120,000 $ 8,635,000 $ 16,755,000
General obligation certificates 150,000 150,000
Total $ 8,270,000 $ 8,635,000 $ 16,905,000
The City of Lake Elmo, Minnesota's total bonds and certificates payable increased by $4,454,000
during the current fiscal year. The increase was due primarily to the issuance of the City's 2012A
general obligation water revenue crossover refunding bonds and 2012E general obligation
improvement bonds.
The City of Lake Elmo, Minnesota maintains an Aa2 bond rating from Moody's for general
obligation debt.
State statutes limit the amount of general obligation debt a Minnesota City may issue to 3% of its
market value of taxable property. Net debt is payable solely from ad valorem taxes. The City is
currently well within this limit.
Economic Factors and Next Year's Budgets and Rates
• The City's taxable market value decreased 8.5 percent from 2011 to 2012, and increased
1.2 percent from 2012 to 2013.
• Total property taxes levied for 2013 increased 1.6% percent over property taxes levied for
2012. This is primarily due to an increase in the debt service component of the levy.
• Plans are underway for extensive development in the following three areas:
o The 1-94 Corridor where a mixed use development featuring commercial/retail
business as well as residential (2012-2017).
o The Old Village re-development project of commercial and residential expansion
(2013-2018).
o The Highway 36 Corridor residential expansion due to the completion of the new
federally funded bridge linking Minnesota and Wisconsin (targeted completion in
2017).
o Provision of sanitary sewer service to the Old Village/Downtown area
o Improvements to the City's water distribution system including the Keats trunk water
main and development of Well No. 4.
Requests for Information
This financial report is designed to provide a general overview of the City of Lake Elmo,
Minnesota's finances for all those with an interest in the City's finances. Questions concerning any
of the information provided in this report or requests for additional information should be addressed
to City of Lake Elmo, Minnesota, 3800 Laverne Avenue North, Lake Elmo, Minnesota, 55042.
12
CITY OF LAKE ELMO, MINNESOTA
FINANCIAL STATEMENTS
DECEMBER 31, 2012
This Page Left Blank Intentionally
FORM A-1
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF NET POSITION
December 31,2012
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments $ 4,532,496 $ 1,097,692 $ 5,630,188
Cash with fiscal agent 2,855,141 4,017,679 6,872,820
Receivables 392,281 560,932 953,213
Due from other governmental units 275,000 275,000
Prepaid expenses 19,035 19,035
Unamortized deferred charges 202,895 184,905 387,800
Capital assets:
Nondepreciable 5,744,293 624,413 6,368,706
Depreciable, net 8,911,904 10,246,336 19,158,240
Total Assets 22,933,045 16,731,957 39,665,002
LIABILITIES
Accounts payable 388,539 29,610 418,149
Accrued expenses 40,766 2,816 43,582
Accrued interest 93,620 48,576 142,196
Escrow deposits 75,000 75,000
Due to other governmental units 164 2,851 3,015
Unearned revenue 16,700 16,700
Noncurrent liabilities:
Due within one year 3,374,241 168,381 3,542.622
Due in more than one year 5,036.932 8,546,346 13,583.278
Total Liabilities 9,025,962 8,798.580 17,824,542
NET POSITION
Net investment in capital assets 8,782,840 6,788,377 15,571,217
Restricted
Debt service 3,500,799 3,500,799
Street improvement 183,229 183,229
City facilities 275,083 275,083
Unrestricted 1,165,132 1,145,000 2,310.132
Total Net Position $ 13,907,083 $ 7,933,377 $ 21,840,460
See Notes to Financial Statements
15
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2012
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Governmental activities:
General government $ 1,093,204 $ 48,476 $ $
Public safety 1,302,857 379,557 38,823
Public works 891,169 3,256 103,166 160,444
Culture and recreation 362,432 9,341 18,071
Interest on long-term debt 316,039
Total governmental activities 3,965,701 440,630 160,060 160,444
Business-Type activities:
Water 872,786 699,159 104,652
Sewer 53,903 65,737 10,475
Storm sewer 73,590 171,229
Total business-type activities 1,000,279 936,125 115,127
Total $ 4,965,980 $ 1,376,755 $ 160,060 $ 275,571
General revenues:
General property taxes
Interest earnings
Miscellaneous
Total general revenues
Change in net position
Net position - beginning
Net position -ending
See Notes to Financial Statements
16
FORM A-2
Net(Expense) Revenue
and Changes in Net Position
Governmental Business-Type
Activities Activities Total
$ (1,044,728) $ (1,044,728)
(884,477) (884,477)
(624,303) (624,303)
(335,020) (335,020)
(316,039) (316,039)
(3,204,567) (3,204,567)
$ (68,975) (68,975)
22,309 22,309
97,639 97,639
50,973 50,973
(3,204,567) 50,973 (3,153,594)
3,183,078 3,183,078
111,705 10,282 121,987
42,599 42,599
3,337,382 10,282 3,347,664
132,815 61,255 194,070
13,774,268 7,872,122 21,646,390
$ 13,907,083 $ 7,933,377 $ 21,840,460
17
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CITY OF LAKE ELMO, MINNESOTA
FUND FINANCIAL STATEMENTS
DECEMBER 31, 2012
CITY OF LAKE ELMO, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2012
2012 Street
General Fund Debt Service Village Project Improvements
ASSETS
Cash and investments $ 2,126,829 $ 659,158 $ $
Cash with fiscal agent 2,855,141
Receivables (Net of allowance for
uncollectibles)
Accounts 16,500
Delinquent taxes 64,105
Special assessments 186,992
Accrued interest 24,338
Due from other funds 604,124
Advances to other funds 1,005,398
Due from other governmental units 41,202 275,000
Prepaid expenses 19,035
TOTAL ASSETS $ 3,901,531 $ 3,976,291 $ $
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ 340,671 $ 13,500 $ $ 5,632
Escrow deposits payable
Accrued liabilities 40,766
Due to other governments 164
Due to other funds 252,710 100,744
Advances from other funds 1,005,398
Deferred revenue 80,805 461,992
Total liabilities 462,406 475,492 1,258,108 106,376
FUND BALANCE
Nonspendable 1,024,433
Restricted 3,500,799
Assigned
Unassigned 2,414,692 (1,258,108) (106,376)
Total Fund Balance 3,439,125 3,500,799 (1,258,108) (106,376)
TOTAL LIABILITIES AND
FUND BALANCE $ 3,901,531 $ 3,976.291 $ $
See Notes to Financial Statements
20
FORM B-1
Other
Governmental
Funds Total
$ 1,703,439 $ 4,489,426
2,855,141
16,500
64,105
59,144 246,136
24,338
112,576 716,700
1,005,398
316,202
19,035
$ 1,875,159 $ 9,752,981
$ 28,736 $ 388,539
75,000 75,000
40,766
164
315,498 668,952
1,005,398
59,144 601,941
478,378 2,780,760
1,024,433
458,312 3,959,111
1,244,900 1,244,900
(306,431) 743,777
1,396,781 6,972,221
$ 1,875,159 $ 9,752,981
21
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FORM B-2
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF NET POSITION IN THE
GOVERNMENT-WIDE FINANCIAL STATEMENTS AND FUND BALANCES
IN THE FUND BASIS FINANCIAL STATEMENTS
December 31, 2012
Amounts reported for governmental activities in the statement of net assets are different because:
Total governmental fund balances (pages 20-21) $ 6,972,221
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds:
Governmental funds- capital assets $ 18,754,088
Accumulated depreciation (4,297,875)
14,456,213
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are deferred in the funds:
Delinquent property taxes $ 64,105
Deferred special assessments 246,136
Due from other governmental units 275,000
585,241
Long-term liabilities are not due and payable in the current period
and therefore are not reported in the funds:
Bonds payable $ (8,270,000)
Compensated absences (60,675)
Post employment benefit obligation (66,505)
Accrued interest (93,620)
Unamortized premium (13,993)
Unamortized discount and bond issuance costs 202,895
(8,301,898)
Internal service funds are used by management to charge the cost
of services to individual funds. The assets and liabilities are
included in the governmental statement of net position. 195,306
Net position of governmental activities (page 15) $ 13,907,083
See Notes to Financial Statements
23
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31,2012
2012 Street
General Fund Debt Service Village Project Improvements
REVENUES
Taxes $ 2,549,986 $ 411,669 $ $
Licenses and permits 330,819
Intergovernmental 162,029 75,225
Charges for services 5,726
Fines and forfeitures 58,385
Special assessments 97,552
Investment earnings 90,983 14,864 (6,999)
Miscellaneous revenue 69,450
TOTAL REVENUES 3,267,378 599,310 (6,999)
EXPENDITURES
Current
General government 1,034,712
Public safety 1,109,937
Public works 446,541
Culture and recreation 150,983
Capital Outlay
Public safety
Public works 5,711 918,898
Culture and recreation
Debt Service
Principal 406,000
Interest and other charges 227,253 40,000
Bond issuance costs 41,828
TOTAL EXPENDITURES 2,742,173 633,253 45,711 960,726
Excess(deficiency)of revenues
over(under)expenditures 525,205 (33,943) (52,710) (960,726)
OTHER FINANCING SOURCES
Issuance of debt 865,000
Net change in fund balances 525,205 (33,943) (52,710) (95,726)
FUND BALANCES(DEFICIT), Beginning 2,913,920 3,534,742 (1,205,398) (10,650)
FUND BALANCES(DEFICIT), Ending $ 3,439,125 $ 3,500,799 $ (1,258,108) $ (106,376)
See Notes to Financial Statements
24
FORM B-3
Other
Governmental
Funds Total
$ 260,078 $ 3,221,733
330,819
237,254
5,726
58,385
38,598 136,150
12,889 111,737
18,112 87,562
329,677 4,189,366
1,034,712
1,109,937
446,541
109,421 260,404
35,661 35,661
193,329 1,117,938
275,257 275,257
406,000
267,253
41,828
613.668 4,995,531
(283,991) (806,165)
865,000
(283,991) 58,835
1,680,772 6,913,386
$ 1,396,781 $ 6,972,221
25
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FORM B-4
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2012
Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances -total governmental funds (pages 24-25) $ 58,835
Governmental funds report capital outlay as expenditures.
However, in the statement of activities the cost of those assets
is allocated over their estimated useful lives and reported as
depreciation expense:
Capital outlay $ 1,387,725
Depreciation expense (611,245)
776,480
Revenues in the statement of activities that do not provide current
financial resources are not reported as revenues in the funds:
Deferred revenue, end of year $ 585,241
Deferred revenue, beginning of year (674,827)
(89,586)
Some expenses reported in the statement of activities do not require
the use of current financial resources and, therefore, are not
reported as expenditures in governmental funds:
Compensated absences, end of year $ (60,675)
Compensated absences, beginning of year 41,731
Post employment benefit obligation, end of year (66,505)
Post employment benefit obligation, beginning of year 43,561
(41,888)
Bond, contract and loan proceeds provide current financial resources
to governmental funds, but issuing debt increase long-term
liabilities in the statement of net position. Repayment of long-term
debt is an expenditure in the governmental funds, but the
repayment reduces long-term liabilities in the statement of net
position:
Principal retirement on long-term debt $ 406,000
Issuance of long-term debt (865,000)
Change in accrued interest, bond premium, bond
discount and bond issuance costs 8,003
(450,997)
Internal service funds are used by management to charge the costs of
capital equipment replacement to individual funds. The net revenue
of certain activities of internal service funds is reported with
govermental activities in the government-wide financial statements (120,029)
Change in net position of governmental activities (page 17) $ 132,815
See Notes to Financial Statements
27
FORM B-5
CITY OF LAKE ELMO, MINNESOTA
GENERALFUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2012
Variance with
2012 Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES
Taxes $ 2,490,403 $ 2,490,403 $ 2,549,986 $ 59,583
Licenses and permits 181,100 181,100 330,819 149,719
Intergovernmental 133,249 133,249 162,029 28,780
Charges for services 8,850 8,850 5,726 (3,124)
Fines and forfeits 53,000 53,000 58,385 5,385
Investment earnings 20,000 20,000 90,983 70,983
Miscellaneous Revenue 14,384 14,384 69,450 55,066
TOTAL REVENUES 2,900,986 2,900,986 3,267,378 366,392
EXPENDITURES
Current
General government 978,593 978,593 1,034,712 (56,119)
Public safety 1,081,541 1,081,541 1,109,937 (28,396)
Public works 482,749 482,749 446,541 36,208
Culture and recreation 183,103 183,103 150,983 32,120
TOTAL EXPENDITURES 2,725,986 2,725,986 2,742,173 (16,187)
Excess (deficiency) of revenues
over(under) expenditures 175,000 175,000 525,205 350,205
OTHER FINANCING SOURCES (USES)
Transfers to other funds (175,000) (175,000) 175,000
Net change in fund balance 525,205 525,205
FUND BALANCE, beginning 2,913,920 2,913,920 2,913,920
FUND BALANCE, ending $ 2,913,920 $ 2,913,920 $ 3,439,125 $ 525,205
See Notes to Financial Statements
28
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CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Net Position
December 31, 2012
Water Sewer Storm Sewer
ASSETS
Current Assets
Cash and investments $ 925,250 $ 52,989 $ 119,453
Cash with fiscal agent 4,017,679
Receivables
Accounts 219,560 26,324 225,222
Special assessments 44,335 11,543 33,948
Due from other funds 668 23,915
Total Current Assets 5,207,492 90,856 402,538
Noncurrent Assets
Property and Equipment
Land 54,675
Machinery and equipment 282,860
Infrastructure 11,745,589 346,607 595,833
Construction in progress 486,843 12,514 70,381
Total Property and Equipment 12,569,967 359,121 666,214
Less: Accumulated depreciation 2,482,547 186,669 55,337
Net Property and Equipment 10,087,420 172,452 610,877
Unamortized deferred charges 184,905
Total Noncurrent Assets 10,272,325 172,452 610,877
TOTAL ASSETS $ 15,479,817 $ 263,308 $ 1,013,415
See Notes to Financial Statements
30
FORM C-1
Internal
Total Service Funds
$ 1,097,692 $ 43,070
4,017,679
471,106
89,826
24,583
5,700,886 43,070
54,675
282,860 598,435
12,688,029
569,738
13,595,302 598,435
2,724,553 398,451
10,870,749 199,984
184,905
11,055,654 199,984
$ 16,756,540 $ 243,054
31
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Net Position (Continued)
December 31, 2012
Water Sewer Storm Sewer
LIABILITIES AND NET POSITION
Current Liabilities
Accounts payable $ 23,821 $ 3,916 $ 1,873
Accrued salaries payable 1,407 611 798
Accrued interest payable 48,576
Due to other funds 24,583
Due to other governments 2,851
Current portion of compensated absences 1,907 1,026 448
Current portion of bonds payable 165,000
Total Current Liabilities 268,145 5,553 3,119
Long-term Liabilities
Other postemployment benefits payable 7,377 1,852 2,769
Compensated absences payable 2,946 1,584 692
Unamortized premium on bonds 59,126
Bonds payable 8,470,000
Total Long-term Liabilities 8,539,449 3,436 3,461
Total Liabilities 8,807,594 8,989 6,580
Net Position
Net investment in capital assets 6,005,048 172,452 610,877
Unrestricted 667,175 81,867 395,958
Total Net Position 6,672,223 254,319 1,006,835
TOTAL LIABILITIES AND
NET POSITION $ 15,479,817 $ 263,308 $ 1,013,415
See Notes to Financial Statements
32
Internal
Total Service Funds
$ 29,610 $
2,816
48,576
24,583 47,748
2,851
3,381
165,000
276,817 47,748
11,998
5,222
59,126
8,470,000
8,546,346
8,823,163 47,748
6,788,377 199,984
1,145,000 (4,678)
7,933,377 195,306
$ 16,756,540 $ 243,054
33
CITY OF LAKE ELMO, MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Revenues, Expenses
and Changes in Net Position
For the Year Ended December 31, 2012
Water Sewer Storm Sewer
Operating Revenues $ 634,607 $ 54,710 $ 147,162
Operating Expenses
Personnel services 84,755 25,316 34,862
Supplies 37,903 21 3,236
Professional services 70,164 2,052 18,839
Repairs and maintenance 11,768 194 1,465
Insurance 6,162
Utilities 111,800 17,581
Depreciation 323,055 8,739 15,188
Total Operating Expenses 645,607 53,903 73,590
Operating Income (Loss) (11,000) 807 73,572
Other Revenue (Expense)
Investment earnings 9,305 339 638
Rents 46,001
Special assessments 18,551 11,027 24,067
Amortization of deferred charges (6,050)
Interest expense (221,129)
Total Other Revenue (Expense) (153,322) 11,366 24,705
Income (Loss) Before Contributions (164,322) 12,173 98,277
Capital contributions 104,652 10,475
Net Income (Loss) (59,670) 22,648 98,277
Net Position, Beginning of Year 6,731,893 231,671 908,558
Net Position, End of Year $ 6,672,223 $ 254,319 $ 1,006,835
See Notes to Financial Statements
34
FORM C-2
Internal
Total Service Funds
$ 836,479 $
144,933
41,160
91,055
13,427 69,663
6,162
129,381
346,982 50,334
773,100 119,997
63,379 (119,997)
10,282 (32)
46,001
53,645
(6,050)
(221,129)
(117,251) (32)
(53,872) (120,029)
115,127
61,255 (120,029)
7,872,122 315,335
$ 7,933,377 $ 195,306
35
FORM C-3
CITY OF LAKE ELMO,MINNESOTA
PROPRIETARY FUNDS
Combining Statement of Cash Flows
For the Year Ended December 31,2012
Internal Service
Water Sewer Storm Sewer Total Funds
Cash Flows from Operating Activities
Cash received from customers $ 645,578 $ 57,782 $ 207,711 $ 911,071 $
Cash payments to suppliers (241,762) (17,934) (26,314) (286,010) (77,444)
Cash payments to employees (83,980) (23,248) (34,220) (141,448)
Net Cash Provided By(Used In)
Operating Activities 319,836 16,600 147,177 483,613 (77,444)
Cash Flows From Investing Activities
Interest earnings received 9,305 339 638 10,282 (32)
Cash Flows from Noncapital Financing Activities
Rents received 46,001 46,001
(Increase)decrease in due from other funds (668) (23,915) (24,583) 13,676
Increase(decrease)in due to other funds 24,583 24,583 34,072
Net Cash Provided By(Used In)Noncapital
Financing Activities 69,916 (23,915) 46,001 47,748
Cash Flows from Capital and Related Financing Activities
Acquisition of capital assets (117,712) (12,514) (31,831) (162,057) (6,236)
Connection fees received 104,652 10,475 115,127
Special assessments 18,551 11,027 24,067 53,645
Proceeds from issuance of long-term debt 4,035,000 4,035,000
(Increase)in unamortized bond charges (72,934) (72,934)
Increase in unamortized bond premiums 53,363 53,363
Principal paid on long-term debt (40,000) (40,000)
Interest paid on long-term debt (189,706) (189,706)
Net Cash Provided By(Used In)Capital and
Related Financing Activities 3,791,214 8,988 (7,764) 3,792,438 (6,236)
Net Increase(Decrease)In Cash
and Cash Equivalents 4,190,271 25,927 116,136 4,332,334 (35,964)
Cash and Cash Equivalents,January 1 752,658 27,062 3,317 783,037 79,034
Cash and Cash Equivalents,December 31 $ 4,942,929 $ 52,989 $ 119,453 $ 5,115,371 $ 43,070
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Operating income(loss) $ (11,000) $ 807 $ 73,572 $ 63,379 $ (119,997)
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation 323,055 8,739 15,188 346,982 50,334
(Increase)decrease in:
Accounts receivable (4,908) 14,099 59,351 68,542
Special assessments 15,879 (11,027) 1,198 6,050
Increase(decrease)in:
Accounts payable (1,843) 1,914 (2,238) (2,167) (7,781)
Accrued salaries payable 133 323 445 901
Due to other governments (2,122) (536) (2,658)
Other postemployment benefits payable 2,563 639 961 4,163
Compensated absences payable (1,921) 1,106 (764) (1,579)
Net Cash Provided By Operating Activities $ 319,836 $ 16,600 $ 147,177 $ 483,613 $ (77.444)
Noncash Capital and Related Financing Activities
Amortization of deferred charges $ 6,050 $ $ $ 6,050 $
Amortization of bond premiums 1,345 1,345
See Notes to Financial Statements
36
FORM D-1
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
December 31, 2012
Agency Funds
ASSETS
Cash and investments $ 427,455
Accounts receivable 128
TOTAL ASSETS $ 427,583
LIABILITIES
Accounts payable $ 8,000
Deposits payable 419,583
TOTAL LIABILITIES $ 427,583
See Notes to Financial Statements
37
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2012
This Page Left;Blank Intentionally
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The financial statements of the City of Lake Elmo, Minnesota (the City) have been prepared in
conformity with generally accepted accounting principles (GAAP) as applied to governmental
units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting
body for establishing governmental accounting and financial reporting principles. The more
significant of the City's accounting principles are described below.
A. Reporting Entity
The City operates under Optional Plan A as defined in the State of Minnesota statutes.
The City is governed by an elected Mayor and a four-member Council. The Council
exercises legislative authority and determines all matters of policy. The Council appoints
personnel responsible for the proper administration of all affairs relating to the City. The
City has considered all potential component units for which it is financially accountable,
and other organizations for which the nature and significance of their relationship with the
City are such that exclusion would cause the City's financial statements to be misleading
or incomplete. GASB has set forth criteria to be considered in determining financial
accountability for a component unit. These criteria include appointing a voting majority of
the component unit's governing body, and 1) the ability of the primary government to
impose its will on that component unit, or 2) the potential for the component unit to provide
specific benefits to, or impose specific financial burdens on the primary government. The
City has no component units.
Related Organizations
The Lake Elmo Firemen's Relief Association (Association) is organized as a legally
separate entity from the City by its members to provide pension and other benefits to its
members in accordance with Minnesota statutes. The membership appoints the board of
the Association and separate financial statements are issued by the Association. All
funding is conducted in accordance with Minnesota statutes. Although the City levies
property taxes for the Association, the Association is fiscally independent to determine and
levy taxes. The City's portion of the pension benefit costs related to the Association is
included in the general fund. The Association does not have any significant operational or
financial relationship with the City.
41
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all of the nonfiduciary activities of the City.
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 for support.
The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment is offset by program revenues. Direct expenses are those that
are clearly identifiable with a specific function or segment. Program revenues include 1)
charges to customers or applicants who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or segment and 2) grants and
contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among
program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds
and fiduciary funds, even though the latter are excluded from the government-wide
financial statements. Major individual governmental funds and major individual
enterprise funds are reported as separate columns in the fund financial statements.
C. Measurement Focus. Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund
financial statements. Revenues are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of related cash flows. Property taxes
are recognized as revenues in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
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. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the City
considers revenues to be available if they are collected within 60 days of the end of the
current fiscal period.
42
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accountinq and Financial Statement Presentation
(Continued)
Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, as well as expenditures related to
compensated absences and claims and judgments, are recorded when payment is due.
Property taxes, licenses and permits, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as
revenues of the current fiscal period. Only the portion of special assessments receivable
due within the current fiscal period is considered to be susceptible to accrual as revenue
of the current period. All other revenue items are considered to be measurable and
available only when cash is received by the City.
The City reports the following major governmental funds:
The general fund is the government's primary operating fund. It accounts for all
financial resources of the City, except those required to be accounted for in
another fund.
The debt service fund accounts is an accumulation of resources (special
assessments and property tax revenues) for the payments of principal and
interest on long-term general obligation debt of governmental funds.
The village project fund accounts for engineering, planning and financing of the
village area developments and redevelopments.
The 2012 street improvements fund is an accumulation of resources and costs
associated with the 2012 Street Improvement project.
The City reports the following major proprietary funds:
The water fund accounts for the activities of the City's water distribution
operations.
The sewer fund accounts for costs associated with the City's sewer system.
The storm sewer fund accounts for costs associated with the City's storm sewer
system. These costs are financed by the storm sewer surcharge.
43
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Additionally, the City reports the following fund types:
Internal service funds are used to account for the replacement of radios,
information technology and furniture, fixtures and equipment expenses of the
governmental activities. Internal service funds operate in a manner similar to
enterprise funds; however, they accumulate funding primarily from other
departments within the City on a cost reimbursement basis.
Fiduciary funds account for assets held by the City in a trustee capacity or as an
agent on behalf of others.
Agency funds are custodial in nature and do not present results of operations or
have a measurement focus. Agency funds are accounted for using the modified
accrual basis of accounting. These funds are used to account for assets that the
City holds for others in an agency capacity.
As a general rule the effect of interfund activity has been eliminated from the
government-wide financial statements. Exceptions to this general rule are payments-in-
lieu of taxes and other charges between the City's enterprise funds and various other
functions of the City. Elimination of these charges would distort the direct costs and
program revenues reported for the various functions concerned.
Amounts reported as program revenues include 1) charges to customers or applicants
for goods, services, or privileges provided, 2) operating grants and contributions, and 3)
capital grants and contributions, including special assessments. Internally dedicated
resources are reported as general revenues rather than as program revenues. Likewise,
general revenues include all taxes.
44
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
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 revenues 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 of capital assets. All other
revenues and expenses are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's
policy to use restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities and Net Position or Equity
1. Cash and investments (including cash equivalents)
Cash balances from all funds (including cash equivalents) are pooled and invested to
the extent available in various securities as authorized by Minnesota statutes.
Earnings from the pooled investments are allocated to the respective funds on the
basis of applicable cash balance (or due from other funds balance) participation by
each fund.
Investments are stated at fair value, based upon quoted market prices at the reporting
date. Cash and cash equivalents for purposes of the basic financial statements
includes amounts in demand deposits as well as all investments held by the City.
2. Receivables and payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either "due to/from other
funds" (i.e., the current portion of interfund loans) or "advances to/from other funds"
(i.e_, the non-current portion of interfund loans). All other outstanding balances
between funds are reported as "due to/from other funds." Any residual balances
outstanding between the governmental activities and business-type activities are
reported in the government-wide financial statements as "interfund balances."
45
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities and Net Position or Equity (Continued)
2. Receivables and payables (continued)
Advances between funds, if any, are offset by a fund balance reserve account in
applicable governmental funds to indicate that they are not available for appropriation
and are not expendable available financial resources.
Property tax levies are set by the City Council in December of each year and are
certified to Washington County for collection in the following year. In Minnesota,
counties act as collection agents for all property taxes. The County spreads all levies
over taxable property. Such taxes become a lien on January 1, of the following year,
and are recorded as receivables by the City at that date. Revenues from property
taxes are accrued and recognized in the year collectible, net of delinquencies.
Real property taxes may be paid by taxpayers in two equal installments on May 15 and
October 15. Personal property taxes may be paid on February 28 and June 30. The
County provides tax settlements to cities and other taxing districts normally during the
months of January, July and December.
Taxes which remain unpaid at December 31 are classified as delinquent taxes
receivable. The net amount of delinquent taxes receivable are fully offset by deferred
revenue in the governmental funds of the fund financial statements because they are
not known to be available to finance current expenditures.
Assessments are levied at various times upon City Council resolution for property
owner improvements made by the City. Generally, assessment collections are
deferred over periods ranging from ten to twenty years with interest charges ranging
from 4.5% to 7.0%. Revenue from these assessments is recognized when assessed
in the government-wide financial statements and as the annual installments become
collectible in the governmental funds of the fund financial statements. Annual
installments not collected as of each December 31 are classified as delinquent
assessments receivable. The net amount of delinquent assessments receivable are
fully offset by deferred revenue in the governmental funds of the fund financial
statements because they are not known to be available to finance current
expenditures.
46
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities and Net Position or Equity (Continued)
3. Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets
(e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable
governmental or business-type activities columns in the government-wide financial
statements. Capital assets are defined by the City as assets with an initial, individual
cost of more than $25,000. Such assets are recorded at historical cost or estimated
historical cost if purchased or constructed. The costs of normal maintenance and
repairs that do not add to the value of the asset or materially extend assets lives are
not capitalized. Donated capital assets are recorded at estimated fair market value at
the date of donation.
Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest incurred during the construction phase of capital assets of
business-type activities is included as part of the capitalized value of the assets
constructed, net of interest earned on the invested debt proceeds over the same
period.
Property, plant and equipment are capitalized when acquired, and depreciation is
provided using the straight-line method applied over the following estimated useful
lives of the assets.
Useful Life
in Years
Buildings and Improvements 10 - 50
Infrastructure 20 -40
Other Improvements 10 -25
Machinery and Equipment 5 - 20
47
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities and Net Position or Equity(Continued)
5. Postemployment benefits other than pensions
Under Minnesota Statute 471.61, subdivision 2b., public employers must allow retirees
and their dependents to continue coverage indefinitely in an employer-sponsored
health care plan, under the following conditions: 1) retirees must be receiving (or
eligible to receive) an annuity from a Minnesota public pension plan, 2) coverage must
continue in group plan until age 65, and retirees must pay no more than the group
premium, and 3) retirees may obtain dependent coverage immediately before
retirement. All premiums are funded on a pay-as-you-go basis. The liability was
determined using the alternative measurement method, in accordance with GASB
Statement No. 45.
6. Lonq-term obligations
In the government-wide financial statements and proprietary fund types in the fund
financial statements, long-term debt and other long-term obligations are reported as
liabilities in the applicable governmental activities, business-type activities or
proprietary fund type statements of net position.
Bond premiums and discounts, as well as issuance costs, are deferred and amortized
over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable bond premium or discount. Bond premiums and
discounts, as well as issuance costs, are deferred and amortized over the term of the
related debt. In the fund financial statements, governmental fund types recognize
bond premiums and discounts, as well as bond issuance costs, during the current
period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while
discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from the actual debt proceeds received, are reported as debt
service expenditures.
48
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities and Net Position or Equity (Continued)
7. Fund equity
In the government-wide and proprietary financial statements, net position is classified
in the following categories:
Net Investment in Capital Assets — This amount consists of capital assets net of
accumulated depreciation and reduced by outstanding debt attributed to the
acquisition, construction, or improvement of the assets.
Restricted Net Position — This amount is restricted by external creditors, grantors,
contributors, laws or regulations of other governments.
Unrestricted Net Position — This amount is all net position that does not meet the
definition of"net investment in capital assets" or"restricted net position."
In accordance with GASB Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions, the City classifies governmental fund balances
as follows:
Non-spendable — includes fund balance amounts that cannot be spent either
because it is not in spendable form or because of legal or contractual restraints.
Restricted — This amount is restricted by external creditors, grantors, contributors,
laws or regulations of other governments.
Committed — includes fund balance amounts that are constrained for specific
purposes that are internally imposed by the City Council through formal action
(resolution), which is the City's highest level of decision-making authority.
Committed amounts remain binding unless removed by the City Council by
subsequent formal action.
Assigned — includes fund balance amounts that are intended to be used for specific
purposes that are neither considered restricted or committed. The City Council, by
majority vote, may assign fund balances to be used for specific purposes when
appropriate. The Council has adopted a fund balance policy which delegates the
authority to assign amounts for specific purposes to the City Administrator or his or
her designee.
49
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
1. Summary of Significant Accounting Policies (Continued)
D. Assets, Liabilities and Net Position or Equity (Continued)
7. Fund equity (continued)
Unassigned — includes positive fund balances within the General Fund which have
not been classified within the above mentioned categories and negative fund
balances in other governmental funds.
The City considers restricted/committed amounts to be spent first when both restricted
and unrestricted fund balance is available unless there are legal documents/contracts
that prohibit doing this, such as a grant agreement requiring dollar for dollar spending.
Additionally, the City would first use committed, then assigned and lastly unassigned
amounts when expenditures are made. The City Council has formally adopted a fund
balance policy for the General Fund. The City's policy is to maintain a minimum
unassigned fund balance in the General Fund equal to 50 percent of budgeted
expenditures to ensure funds are available at all times to meet cash flow needs and
accommodate emergency contingency concerns.
8. Interfund transactions
Quasi-external transactions are accounted for as revenues, expenditures or expenses.
Transactions that constitute reimbursements to a fund for expenditures/expenses or
revenues/income initially made from it that are properly applicable to another fund are
recorded as expenditures/expenses or revenues/income in the fund that is reimbursed.
All other interfund transactions, except quasi-external transactions and
reimbursements, are reported as transfers.
E. Concentration of Credit Risk
Financial instruments which expose the City to a concentration of credit risk consist
primarily of cash investments and accounts and loans receivable. Credit risk related to
cash and investments is discussed in Note 3A. The City's accounts and loans receivable
are concentrated geographically, and for the most part, amounts are due from individuals
residing in and businesses located in the City of Lake Elmo, Minnesota.
F. Use of Estimates
The preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America (GAAP) requires management to make estimates
that affect amounts reported in the financial statements during the reporting period. Actual
results could differ from such estimates.
s0
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
2. Stewardship, Compliance and Accountability
A. Budgetary Information
Annual budgets are adopted on a basis consistent with accounting principles generally
accepted in the United States of America. Annual appropriated budgets are legally
adopted by Council resolution for the General Fund. Formal budgetary integration is
employed as a management control device during the year for the General Fund.
The City follows these legal compliance procedures in establishing the budgetary data
reflected in the financial statements.
1. Budget requests are submitted by all department heads to the City Administrator and
Finance Officer in August of each year. The Administrator's office compiles the
budget requests into an overall preliminary City budget, balancing budget requests
with available revenue.
2. The preliminary budget is submitted to the City Council in September for its review
and/or modification.
3. City administration presents the proposed budget to the City Council which in turn,
when required, holds a truth-in-taxation public hearing on the proposed budget. The
budget resolution adopted by the City Council sets forth the budget at the department
level for the General Fund.
4. All budgeted appropriations lapse at the end of the fiscal year. The legal level of
control (the level on which expenditures may not legally exceed appropriations) for
each budget is at the department level. Administration cannot legally amend or
transfer appropriations between departments without the approval of the City Council
once the budget has been approved. Any over expenditures of appropriations or
transfers of appropriated amounts must be approved by the City Council.
5. Budgeted amounts are as originally adopted, or as amended by the City Council. The
budget cannot be amended without approval by the City Council.
All budget amounts presented in the accompanying supplementary information reflect the
original budget and the final budget (which were the same for the year ended December
31, 2012).
The City does not use encumbrance accounting.
51
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
2. Stewardship, Compliance, and Accountability
B. Expenditures Exceeding Appropriations
For the year ended December 31, 2012, the General Fund total expenditures were $16,187
more than budget. The following General Fund departments had expenditures exceeding
the latest amended budget:
2012 Budgeted 2012 Actual Amount Exceeding
Expenditures Expenditures Budgeted Amount
General government $ 978,593 $ 1,034,712 $ 56,119
Public safety 1,081,541 1,109,937 28,396
The above listed overexpenditures were approved by the City Council.
C. Fund Balance Deficits
As of December 31, 2012, the following funds had deficit fund balances:
Fund Amount
Major:
Village Project $ 1,258,108
2012 Street Improvements 106,376
Nonmajor:
Development 200
Fall Festival 59
Library 72,678
Infrastructure Reserve 90,144
Manning Avenue/Highway 36 6,319
South of 10th Street 137,031
The fund balance deficits will be eliminated by future revenue and financing sources.
52
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds
A. Deposits and Investments
In accordance with applicable Minnesota statutes, the City maintains deposits at
depository banks authorized by the City Council. All such depositories are members of
the Federal Reserve System.
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 surety bonds. Authorized collateral includes certain state or
local government obligations and legal investments described in the investment policy
section. Minnesota Statutes require that securities pledged as collateral be held in
safekeeping by the City Treasurer or in a financial institution other than the institution
furnishing the collateral.
The City's deposits were entirely covered by federal depository insurance or collateral at
December 31, 2012.
Investment Policy
The City does not maintain a formal investment policy that limits investment maturities as
a means of managing its exposure to fair value losses arising from increasing interest
rates or that would limit its investment choices as a means of managing its exposure to
credit risk.
The City is authorized by Minnesota Statutes to invest idle funds as follows:
(a) Direct obligations or obligations guaranteed by the United States or its agencies.
(b) Shares of investment companies registered under the Federal Investment Company Act
of 1940 and whose only investments are in securities described in (a) above.
(c) General obligations of the State of Minnesota or its municipalities.
(d) Bankers acceptances of United States banks eligible for purchase by the Federal
Reserve System.
(e) Commercial paper issued by United States corporations or their Canadian subsidiaries,
of the highest quality, and maturing in 270 days or less.
(f) Repurchase agreements with banks that are members of the Federal Reserve System
with capitalization exceeding $10,000,000, a reporting dealer to the Federal Reserve
Bank of New York, or certain Minnesota securities broker-dealers.
(g) Money market funds with institutions that have portfolios consisting exclusively of United
States Treasury obligations and Federal Agency issues.
(h) Guaranteed investment contracts (gic's) issued or guaranteed by United States
commercial banks or domestic branches of foreign banks or United States insurance
companies and with a credit quality in one of the top two highest categories.
53
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
A. Deposits and Investments (Continued)
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair
value of an investment. Generally, the longer the maturity of an investment, the greater the
sensitivity of its fair value to changes in market interest rates. One of the ways that the City
manages its exposure to interest rate risk is by purchasing a combination of shorter and
longer term investments and by timing cash flows from maturities so that a portion of the
portfolio is maturing or coming close to maturity evenly over time as necessary to provide
the cash flow and liquidity needs for operation.
The following is a summary of the City of Lake Elmo, Minnesota's cash and investment
portfolio including the range of maturities and investment ratings by type of investment:
Investment Range of Maturities Rating Value
Cash N/A N/A $ 2,585,134
Certificates of Deposit 6/14 N/A 800,642
Municipal Bonds 12/22 AAA 2,442,489
U.S. Government Agencies 3/22 AAA 7,102,198
Total cash and investments $ 12,930,463
N/A Not applicable or not available
A reconciliation of cash and temporary investments as shown on the Statement of Net
Position for the City follows:
Carrying amount of deposits $ 2,585,134
Investments 10,345,329
Total $ 12,930,463
Government-wide
Cash and investments $ 5,630,188
Cash with fiscal agent 6,872,820
Fiduciary
Cash and investments 427,455
Total $ 12,930,463
54
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
A. Deposits and Investments (Continued)
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 investments are rated by various credit rating
agencies, where applicable, to indicate the associated credit risk. Investment ratings by
investment type (as applicable) are included in the preceding summary of investments.
Concentration of Credit Risk
Investments in any one issuer that represented 5% or more of total investments as of
December 31, 2012 were as follows:
Issuer Investment Type Value
Lake Elmo Bank Money Market Savings $ 1,717,817
Morgan Stanley Money Market Account 701,960
U.S. Treasury U.S. Government Agencies 6,873,448
Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the
counter party, the City will not be able to recover the value of its investment securities that
are in the possession of an outside party. At December 31, 2012, all investments were
insured or registered or the securities were held by the City or its agent in the City's name.
B. Accounts Receivable
Accounts receivable as of December 31, 2012 ($487,606) are expected to be collected in
full. Based upon management's assessment of the creditworthiness of the customers
comprising the receivable balance, no allowance for uncollectible accounts is necessary.
C. Due from Other Governmental Units
Amounts due from other governmental units as of December 31, 2012 were as follows:
Minnesota
Department of
Fund Type Washington County Transportation
General Fund $ 41,202 $
Debt Service 275,000
55
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
D. Capital Assets
Capital asset activity for the City for the year ended December 31, 2012 was as follows:
Beginning Ending
Governmental Activities Balance Increases Decreases Balance
Capital assets,not being depreciated:
Land $ 3,453,979 $ $ $ 3.453,979
Construction in progress 1,397,963 1,118.268 225,917 2,290,314
Total capital assets, not being depreciated 4,851,942 1,118.268 225,917 5,744,293
Capital assets,being depreciated:
Buildings 3,393,346 241,137 3,634,483
Improvements other than buildings 1,199.541 1,199,541
Machinery and equipment 2,664,939 34,555 25,607 2,673,887
Infrastructure 5,874,402 225,917 6,100.319
Total capital assets,being depreciated 13,132,228 501,609 25,607 13,608.230
Less accumulated depreciation for:
Building 628,637 80,492 709,129
Improvements other than buildings 641,209 64,803 706,012
Machinery and equipment 1,726,011 187,799 25,607 1,888,203
Infrastructure 1,064,497 328,485 1,392,982
Total accumulated depreciation 4,060,354 661,579 25,607 4,696,326
Total capital assets,being depreciated,net 9,071,874 (159.970) 8,911,904
Governmental activities capital assets,net $ 13,923,816 $ 958.298 $ 225,917 $ 14,656,197
56
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
D. Capital Assets (Continued)
Beginning Ending
Business-Type Activities Balance Increases Decreases Balance
Capital assets,not being depreciated:
Land $ 36,573 $ 18,102 $ $ 54,675
Construction in progress 425,783 143,955 569,738
Total capital assets,not being depreciated 462,356 162,057 624,413
Capital assets,being depreciated:
Machinery and equipment 282,860 282,860
Infrastructure 12,688,029 12,688,029
Total capital assets,being depreciated 12,970,889 12,970,889
Less accumulated depreciation for:
Machinery and equipment 136,294 19,133 155,427
Infrastructure 2,241,277 327,849 2,569,126
Total accumulated depreciation 2,377,571 346,982 2,724,553
Total capital assets,being depreciated,net 10,593,318 (346,982) 10,246,336
Business-type activities capital assets,net $ 11,055,674 $ (203,027) $ $ 10,870,749
Depreciation expense for the year ended December 31, 2012 was charged to functions/programs
as follows:
Governmental Activities
General government $ 28,449
Public safety 106,398
Public works 457,486
Culture and recreation 69,246
Total $ 661,579
Business-Type Activities
Water $ 323,055
Sewer 8,739
Storm sewer 15,188
Total $ 346,982
57
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
E. Long-Term Debt
The City issues general obligation bonds to provide funds for economic development and
for the acquisition and construction of major capital assets including infrastructure.
General obligation bonds have been issued for both governmental and business-type
activities. Bonds issued to provide funds for business-type activities are reported in
proprietary funds if they are expected to be repaid from proprietary revenues.
General obligation bonds are direct obligations and pledge the full faith and credit of the
City. General obligation improvement bonds are expected to be repaid, in part, from
assessments to the benefited properties.
A summary of long-term debt outstanding at December 31, 2012 is as follows:
Range of Final Balance
Issue Date Interest Rates Maturity 12/31/12
General obligation bonds:
2004A CIP Bonds 11/1/2004 3.45% 2013 $ 3,030,000
2009A Refunding Bonds 5/1/2009 3.00%-3.85% 2017 275,000
2009E Improvement Bonds 10/1/2009 2.00%-3.05% 2020 490,000
2010A Improvement Bonds 11/15/2010 0.75%-2.80% 2021 645,000
2010B CIP Crossover Refunding Bonds 11/15/2010 1.00%-3.20% 2025 1,970,000
2011A Improvement Bonds 10/1/2011 0.50%-2.30% 2022 845,000
2012E Improvement Bonds 8/16/2012 0.50%- 1.90% 2023 865,000
General obligation certificates:
2006A Equipment Certificates 3/8/2006 4.00% 2015 150,000
General obligation revenue bonds:
2005A Water Revenue Bonds 8/10/2005 3.50%-4.375% 2030 4,200,000
2009A Refunding Bonds 5/1/2009 3.00%-3.85% 2021 400,000
2012A Refunding Bonds 8/13/2012 2.00-2.50% 2030 4,035,000
Other Liabilities:
Compensated Absences 69,278
Post Employment Benefit Obligation 78,503
Unamortized premium 73,119
Total Long-Term Debt $ 17,125,900
Liquidation of the compensated absences liability occurs within the department and fund
for which the corresponding employees are assigned.
58
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
E. Long-Term Debt (Continued)
The following is a summary of the changes in long-term debt obligations for the year
ended December 31, 2012:
Amounts
Beginning Ending Due Within Accrued
Balance Additions Reductions Balance One Year Interest
GOVERNMENTAL ACTIVITIES
Bonds and Notes Payable:
General obligation bonds:
2004 CIP Bonds $ 3,205.000 $ $ 175,000 $ 3.030,000 $ 3,030.000 S 51,455
2009A Refunding Bonds 340.000 65,000 275,000 65,000 1,857
20098 Improvement Bonds 545,000 55,000 490,000 60,000 5,666
2010A Improvement Bands 710,000 65,000 645,000 70,000 5,226
2010E CIP Crossover Refunding Bonds 1.970,000 1,970,000 19,420
2011A Improvement Bonds 845,000 845,000 75,000 5,251
2012E Improvement Bonds 865,000 865,000 4,245
General obligation certificates:
2006A Equipment Certificates 196,000 46,000 150,000 48,000 500
Other Liabilities:
Compensated Absences 41,731 65,182 46,238 60,675 26,241
Post Employment Benefit Obligation 43,561 22,944 66,505
Unamortized premium 15,137 1,144 13,993
Governmental Activities
Long-Term Liabilities 7,911,429 953,126 453,382 8,411,173 3,374,241 93,620
BUSINESS-TYPE ACTIVITIES
Bonds and Notes Payable:
General obligation revenue bonds:
2005A Water Revenue Bonds 4,200,000 4,200.000 125,000 14,585
2009A Refunding Bonds 440,000 40,000 400,000 40,000
2012A Refunding Bonds 4,035,000 4,035,000 33,991
Other Liabilities:
Compensated Absences 10,182 3,991 5,570 8,603 3,381
Post Employment Benefit Obligation 7,835 4,163 11,998
Unamortized premium 7,108 53,363 1,345 59.126
Business-Type Activities
Long-Term Liabilities 4,665,125 4,096,517 46,915 8,714.727 168,381 48,576
Total $ 12,576,554 $ 5,049,643 $ 500,297 $ 17,125,900 $ 3,542,622 $ 14�2,196
59
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
E. Long-Term Debt (Continued)
In August 2012, the City issued $4,035,000 in general obligation water revenue
crossover refunding bonds with interest rates ranging from 2.00% to 2.50%. Proceeds
from this bond issuance will be used to refund the remaining principal of the 2005A water
revenue bonds in 2015. This refunding will result in a $455,000 reduction to total debt
service payments over the next eighteen years. This will result in an economic gain
(difference between the present values of the debt service payments on the old and new
debt) of approximately $366,000.
Debt service requirements to maturity for long-term debt, excluding compensated
absences and post employment benefit obligation, as of December 31, 2012 were as
follows:
General Obligation General Obligation Revenue
Improvement Bonds Equipment Certificates Bonds
Year Principal Interest Principal Interest Principal Interest
2013 $3,300,000 $ 164,256 $ 48,000 $ 6,000 $ 165,000 $ 303,431
2014 490,000 97,394 50,000 4,080 190,000 269,174
2015 510,000 90,371 52,000 2,080 3,965,000 262,574
2016 520,000 81,968 235,000 95,924
2017 455,000 72,772 235,000 90,824
2018-2022 2,195,000 220,251 1,315,000 367,896
2023-2027 650,000 27,406 1,530,000 219,438
2028-2030 1,000,000 48,776
Totals $ 8,120,000 $ 754,418 $ 150,000 $ 12,160 $8,635,000 $ 1,658,037
60
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
F. Interfund Receivables and Payables
The following schedule reports the interfund receivables and payables within the City's
funds as of December 31, 2012:
Due From Due To
Other Funds Other Funds
Major Governmental Funds:
General Fund $ 604,124 $
Village Project 252,710
2012 Street Improvements 100,744
Subtotal 604,124 353,454
Non-Major Governmental Funds:
Special Revenue
Development 200
Fall Festival 59
Library 112,576
Capital Projects
Infrastructure Reserve 65,691
City Facilities 112,576
South of 10th Street 136,972
Subtotal 112,576 315,498
Total Governmental Funds 716,700 668,952
Proprietary Funds:
Water 668 24,583
Storm Sewer 23,915
Subtotal 24,583 24,583
Internal Service Funds:
FFE Replacement 47,748
Total All Funds $ 741,283 $ 741,283
Interfund receivables and payables are the result of expenditures of funds prior to the
collection of special assessments, property taxes and other revenues. All interfund
balances will be repaid as the revenues are collected by the individual funds.
61
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
3. Detailed Notes on All Funds (Continued)
F. Interfund Receivables and Payables (Continued)
The City established an interfund loan from the General Fund to the Village Project fund.
At December 31, 2012, the outstanding balance was $1,005,398. The loan carries an
interest rate of 4 percent.
G. Fund Equity
In accordance with the requirements of GASB Statement No. 54, below is a schedule of
ending fund balances as of December 31, 2012:
Other Total
2012 Street Governmental Governmental
General Debt Service Village Project Improvements Funds Funds
Nonspendable
Prepaid items $ 19,035 $ $ $ $ $ 19,035
Advance to other funds 1,005,398 1,005,398
Total Nonspendable 1,024,433 1,024,433
Restricted
Debt service 3,500,799 3,500,799
Street improvement 183,229 183,229
City facilities 275,083 275,083
Total Restricted 3,500,799 458,312 3,959,111
Assigned
Park improvements 924.916 924.916
Vehicle acquisition 319,984 319.984
Total Assigned 1,244,900 1,244,900
Unassigned 2,414,692 (1,258,108) (106,376) (306,431) 743,777
Total Fund Balance $ 3.439,125 $ 3.500,799 $ (1,258,108) $ (106,376) $ 1.396,781 $ 6,972,221
62
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information
A. Risk Management
The City is exposed to various risks of loss related to torts: theft of, damage to, or
destruction of assets; errors or omissions; injuries to employees; and natural disasters.
The City participates in the League of Minnesota Cities Insurance Trust (LMCIT) to provide
its general liability and property coverage. The LMCIT is a public entity risk pool currently
operating as a common risk management and insurance program for participating
Minnesota Cities. All Cities in the LMCIT are jointly and severally liable for all claims and
expenses of the pool. The amount of any liability in excess of assets of the pool may be
assessed to the participating cities if a deficiency occurs. The City purchases commercial
insurance for property values in excess of the LMCIT policy limits and all other risks of loss.
Settled claims have not exceeded the LMCIT or commercial coverage in any of the past
three fiscal year.
Worker's compensation insurance is also purchased through the LMCIT. The worker
compensation program is a retrospectively rated contract with premiums or required
contributions based primarily on the experience rates of the participating cities. There were
no significant reductions in insurance coverage from the previous year or settlements in
excess of insurance coverage for any of the past three fiscal years.
B. Commitments and Contingencies
Insurance:
The City has outstanding claims subject to its insurance deductible. Although the outcome
of these actions are not presently determinable, in the opinion of management, the
resolution of these matters will not have a material adverse effect on the financial condition
of the City.
General Litigation:
There were several pending lawsuits in which the City was involved as of December 31,
2012. It is the opinion of management that any potential claim regarding any lawsuits
against the City would be covered by the liability insurance of the City and that any potential
claim against the City would not affect the financial statements.
63
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
C. Other Post Employment Benefits
Plan Description
The City administers a single-employer defined benefit healthcare plan ("the Retiree Health
Plan"). The plan provides healthcare insurance for eligible retirees and their spouses
through the City's group health insurance plan until Medicare age, which covers both active
and retired members. There are 12 active participants. Benefit provisions are established
by the Council. The Retiree Health Plan does not issue a publicly available financial report.
Funding Policy
The City has historically funded these liabilities on a pay-as-you-go basis. Contribution
requirements are negotiated between the City and union representatives on a per contract
basis. At the present time, no retiree benefits are provided except the allowance to
continue health insurance that is mandated by Minnesota Law. The City does not
contribute any of the cost of current-year premiums for eligible retired plan members or
their spouses. For fiscal year 2012, the City did not contribute anything to the plan. Plan
members receiving benefits contribute 100 percent of their premium costs.
Annual Other Postemployment Benefit Cost and Net Other Postemployment Benefit
Obligations
The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based
on the annual required contribution of the employer (ARC). The City has elected to
calculate the ARC and related information using the alternative measurement method
permitted by GASB Statement No. 45 for employers in plans with fewer than one hundred
total plan members. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover normal cost each year and to amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed thirty years.
64
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
C. Other Post Employment Benefits (Continued)
Annual Other Postemployment Benefit Cost and Net Other Postemployment Benefit
Obligations (Continued)
The following table shows the components of the City's annual OPEB cost for the year, the
amount actually contributed to the plan, and changes in the City's net OPEB obligation:
Annual required contribution $ 20,397
Interest on net OPEB obligations 1,041
Adjustment to ARC 5,669
Annual OPEB cost 27,107
Contributions during the year
Increase in net OPEB obligation 27,107
Net OPEB, beginning of year 51,396
Net OPEB, ending of year $ 78,503
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan,
and the net OPEB obligation for fiscal years ended December 31, 2012, 2011 and 2010 are
as follows:
Fiscal Year Annual Percentage Net OPEB
Ended OPEB Cost Contributed Obligation
12/31/2010 $ 17,131 0% $ 34,060
12/31/2011 17,336 0% 51,396
12/31/2012 27,107 0% 78,503
65
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
C. Other Post Employment Benefits (Continued)
Funded Status and Funding Progress
As of January 1, 2012, the actuarial accrued liability for benefits was $101,981, all of which
was unfunded. The covered payroll (annual payroll of active employees covered by the
plan) was $932,540, and the ratio of the unfunded actuarial accrued liability to the covered
payroll was 10.9 percent.
The projection of future benefit payments for an ongoing plan involves 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
the healthcare cost trend. Amounts determined regarding the funded status of the plan and
the annual required contributions of the employer are subject to continual revisions 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 financial statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or decreasing
over time relative to the actuarial accrued liabilities for benefits.
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.
The following simplifying assumptions were made:
Retirement age for active employees - Based on the historical average retirement age for
the covered group, active plan members were assumed to retire at age 63, or at the first
subsequent year in which the member would qualify for benefits. In addition, spouses of
retired employees were assumed to continue on the plan for the lesser of eighteen months
after the retired employee reaches Medicare age or until the spouse reaches Medicare age.
Marital status- Marital status of members at the calculation date was assumed to continue
throughout retirement.
66
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
C. Other Post Employment Benefits (Continued)
Methods and Assumptions (Continued)
Mortality - Life expectancies were based on mortality tables from the National Center for
Health Statistics. The 2004 United States Life Tables for Males and Females was used.
Turnover- Non-group-specific age-based turnover data from GASB Statement No. 45 were
used as the basis for assigning active members a probability of remaining employed until
the assumed retirement age and for developing an expected future working lifetime
assumptions for purposes of allocation to periods the present value of total benefits to be
paid.
Healthcare cost trend rate - The expected rate of increase in healthcare insurance
premiums was based on projections of the Office of the Actuary at the Centers for
Medicare & Medicaid Services. A rate of 2.0 percent initially, rising to an ultimate rate of
6.0 percent after six years, was used.
Health insurance premiums - 2012 health insurance premiums for retirees were used as
the basis for calculation of the present value of total benefits to be paid.
Inflation rate - The expected long-term inflation assumption of 4.00 percent was based on
projected changes in the Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W).
Payroll growth rate -The expected long-term payroll growth rate was assumed to equal the
rate of inflation.
Based on the historical and expected return of the City's short-term investment portfolio, a
discount rate of 5.0 percent was used. In addition, a simplified version of the entry age
actuarial cost method was used. The unfunded actuarial accrued liability is being
amortized as a level percentage of projected payroll on an open basis. The remaining
amortization period at December 31, 2012 was thirty years.
67
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
D. Pension Plans
The following disclosures are made in accordance with GASB Statement No. 50:
1. Public Employees Retirement Association (PERA) - Defined Benefit
A. Plan Description
All full-time and certain part-time employees of the City of Lake Elmo, Minnesota are
covered by defined benefit plans administered by the Public Employees Retirement
Association of Minnesota (PERA). PERA administers the General Employees
Retirement Fund (GERF), which is a cost-sharing, multiple-employer retirement plan.
This plan was established and is administered in accordance with Minnesota Statutes,
Chapters 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.
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 percent of average salary for each of the first 10
years of service and 2.7 percent for each remaining year. The annuity accrual rate for
a Coordinated Plan member is 1.2 percent of average salary for each of the first 10
years and 1.7 percent for each remaining year. Under method 2, the annuity accrual
rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for
Coordinated Plan members for each year of service. For GERF 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.
68
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (Continued)
A. Plan Description (continued)
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 reduce the monthly normal annuity amount, because the annuity is
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. That report may be obtained on the
Internet at www.mnpera.org, by writing to PERA, 60 Empire Drive #200, St. Paul,
Minnesota, 55103-2088 or by calling (651) 296-7460 or 1-800-652-9026.
69
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
D. Pension Plans (Continued)
1. Public Employees Retirement Association (PERA) - Defined Benefit (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 Township 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 9.1% and 6.25%, respectively, of their annual
covered salary in 2012. The City of Lake Elmo, Minnesota is required to contribute the
following percentages of annual covered payroll: 11.78% for Basic Plan members and
7.25% for Coordinated Plan members. The City's contributions to the Public
Employees Retirement Fund for the years ending December 31, 2012, 2011 and 2010
were $64,694, $56,576 and $52,277, respectively. The City's contributions were equal
to the contractually required contributions for each year as set by state statute.
2. Lake Elmo Volunteer Firefighter's Relief Association
A. Plan Description
Volunteer fire fighters of the City of Lake Elmo, Minnesota are members of the Lake
Elmo Volunteer Firefighter's Relief Association (the Association). The Association is
administrator of a single-employer defined benefit pension plan available to firefighters
that operates under the provisions of Minnesota Laws 1951, Chapter 550, as amended
and Minnesota State Statutes Section 317, as amended. It is governed by a Board of
seven officers and trustees elected by the members of the Association for two-year
terms. The Chief of the Lake Elmo Fire Department, the Mayor and Clerk of the City
of Lake Elmo, Minnesota are ex officio, non-voting members of the Board of Trustees.
The Lake Elmo Volunteer Firefighter's Relief Association issues a publicly available
financial report that includes financial statements for the Organization. That report
may be obtained by contacting the Fire Department at the City of Lake Elmo,
Minnesota.
For financial reporting purposes, the Association's financial statements are not
included in the City of Lake Elmo, Minnesota's financial statements because the
Association is not a component unit of the City.
70
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Volunteer Firefighter's Relief Association (Continued)
A. Plan Description (Continued)
The Association maintains a separate special fund to accumulate assets to fund the
retirement benefits earned by the Association's membership. Funds available for
retirement benefits are supplemented by investment income.
B. Pension Benefits
Benefits are payable in a lump sum, based upon years of service, to eligible members
of the Association. At December 31, 2012, the pension benefit level was at$3,100 per
year of service.
C. Funding Policy
Minnesota Statutes specify minimum contributions that may be required from the City
on an annual basis. These statutes are established and amended by the state
legislature. The Association is comprised of volunteers; therefore, members have no
contribution requirements. No contribution to the plan was required to be made by the
City for the year ended December 31, 2012. The Association also receives funding
from the State of Minnesota two-percent fire premium tax. The City receives the
contributions and is required by state statute to pass this through as payment to the
Association. This contribution amounted to $39,324 (including the 10% supplemental
reimbursement) for the year ended December 31, 2012.
71
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Volunteer Firefighter's Relief Association (Continued)
D. Annual Pension Cost and Net Pension Obligation as of and for the year ended
December 31, 2012:
Annual pension cost -total $ 39,324
Contributions made:
City
State Aid - pass-through 39,324
Actuarial valuation date 12/31/12
Actuarial cost method Entry age normal
Amortization method Level dollar closed
Remaining amortization period:
Normal cost 20 years
Prior service cost 10 years
Asset valuation method Fair value
Actuarial assumptions:
Investment rate of return 5%
Projected salary increases N/A
Inflation rate N/A
Cost of living adjustments None
72
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
D. Pension Plans (Continued)
2. Lake Elmo Volunteer Firefighter's Relief Association (Continued)
D. Annual Pension Cost and Net Pension Obligation (Continued)
The City's net pension obligation for the Association for the years ended December 31,
2011, 2010 and 2009 (most current information available) are as follows:
Disclosure 2012 2011 2010
Annual Pension Cost (APC) $ 39.324 $ 47,867 $ 55,081
Percentage of APC Contributed 100% 100% 100%
Net Pension Obligation N/A N/A N/A
Membership of the Association at December 31, 2011 (most current information
available)was comprised of the following:
Terminated members entitled to benefits
but have not received them 6
Current Members:
Vested (Fully or Partially) 8
Non-Vested 15
Total Plan Members 29
E. Schedule of Funding Progress (most current information available shown)
Assets in
Excess of Pension
Actuarial Actuarial Actuarial (Unfunded) Benefit Per
Valuation Value of Accrued Accrued Funded Year of
Date Assets Liabilitiy Liability Ratio Service
12/31/2012 $ 919,992 $ 717,847 $ 202,145 128.2% $ 3,100
12/31/2011 887,064 752,729 134,335 117.8% 3,100
12/31/2010 863,494 715,984 147,510 120.6% 3,100
F. Related Party Investments
As of December 31, 2012, and for the year then ended, the Association held no
securities issued by the City or other related parties.
73
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
4. Other Information (Continued)
E. Deferred Compensation Plans -Statewide
Under Minnesota statute 353.028, subdivision 2, City managers or administrators may
elect to be excluded from membership in PERA. They must choose exclusion within six
months of the day they begin employment. The law also provides for refunds of
contributions made before the election. If they elect exclusion, they and their cities may
agree that the cities will defer and contribute additional compensation on behalf of the
employees to a deferred compensation program. The program must meet federal
income tax laws. The City contribution cannot exceed the amount it would have made
under the PERA contribution.
Prior to 2012, the City Administrator was covered by deferred compensation plan 457(b)
administered by ICMA-RC. The City contributed $6,230 and $6,759 for the years ended
December 31, 2011 and 2010, respectively.
In general, any amount of compensated deferred and any income attributable to the
amounts so deferred shall be includible in gross income only for the taxable year in which
such compensation or other income is paid to the participant or other beneficiary.
Under federal requirements, a plan meets distribution requirements if under the plan
amounts will not be made available to participants or beneficiaries earlier than (1) the
calendar year in which the participant attains age 70 1/2, (2) when the participant has a
severance from employment with the employer, or (3) when the participant is faced with
an unforeseeable emergency (determined in the manner prescribed by the Secretary in
regulations).
ICMA-RC issues a publicly available financial report that includes financial statements
and required supplementary information for the 457(b) plan. That report may be
obtained by writing to ICMA-RC Headquarters, 777 North Capitol Street, NE Washington,
DC 20002 or by calling 202-962-4600.
74
CITY OF LAKE ELMO, MINNESOTA
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
5. New Accounting Pronouncements
GASB 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources,
and Net Position, implemented this year, provides financial reporting guidance for deferred
outflows of resources and deferred inflows of resources. The Statement of Net Assets is
renamed the Statement of Net Position and includes four components: assets, deferred outflows
of resources, liabilities and deferred inflows of resources. The City has determined they have no
deferred outflows or inflows as defined by this standard.
Management has not currently determined what, if any, impact implementation of the following
statements may have on the financial statements of the City.
GASB 65, Items Previously Reported as Assets and Liabilities, will be effective for the City
beginning with its year ending December 31, 2013. This statement requires certain items that are
currently reported as assets and liabilities to be reclassified as deferred outflows of resources,
deferred inflows of resources, or current-period outflows and inflows.
75
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CITY OF LAKE ELMO, MINNESOTA
REQUIRED SUPPLEMENTAL INFORMATION
December 31, 2012
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FORM E-1
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF FUNDING PROGRESS -OTHER POST EMPLOYMENT BENEFITS
For the Year Ended December 31, 2012
Unfunded
Actuarial Actuarial Actuarial Actuarial UAAL as a
Valuation Value of Accrued Accrued Funded Covered Percentage of
Date Assets Liabilitiy Liability Ratio Payroll Covered Payroll
1/1/2012 $ $ 101,981 $ 101,981 0% $ 932,540 10.94%
Actuarial valuations are provided every two or three years unless events occur(e.g. plan changes,
layoffs, etc.) that would materially impact results. See Note 4C in the Notes to Financial
Statements for more details on this schedule.
79
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CITY OF LAKE ELMO, MINNESOTA
COMBINING AND INDIVIDUAL
FUND STATEMENTS AND SCHEDULES
December 31, 2012
FORM F-1
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2012
Special Capital
Revenue Projects Total
ASSETS
Cash and investments $ 43,143 $ 1,660,296 $ 1,703,439
Receivables (Net of allowance for
uncollectibles)
Special assessments 59,144 59,144
Due from other funds 112,576 112,576
TOTAL ASSETS $ 43,143 $ 1,832,016 $ 1,875,159
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ 3,245 $ 25,491 $ 28,736
Escrow deposits payable 75,000 75,000
Due to other funds 112,835 202,663 315,498
Deferred revenue 59,144 59,144
Total liabilities 116,080 362,298 478,378
FUND BALANCE (DEFICIT)
Restricted 458,312 458,312
Assigned 1,244,900 1,244,900
Unassigned (72,937) (233,494) (306,431)
Total Fund Balance (Deficit) (72,937) 1,469,718 1,396,781
TOTAL LIABILITIES AND
FUND BALANCE $ 43,143 $ 1,832,016 $ 1,875,159
82
FORM F-2
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2012
Special Capital
Revenue Projects Total
REVENUES
Taxes $ 260,078 $ $ 260,078
Special assessments 38,598 38,598
Investment earnings 12,889 12,889
Miscellaneous revenue 18,112 18,112
TOTAL REVENUES 278,190 51,487 329,677
EXPENDITURES
Current
Culture and recreation 109,421 109,421
Capital Outlay
Public safety 35,661 35,661
Public works 200 193,129 193,329
Culture and recreation 241,137 34,120 275,257
TOTAL EXPENDITURES 350,758 262,910 613,668
Net change in fund balances (72,568) (211,423) (283,991)
FUND BALANCES (DEFICIT), Beginning (369) 1,681,141 1,680,772
FUND BALANCES (DEFICIT), Ending $ (72,937) $ 1,469,718 $ 1,396,781
83
FORM G-1
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2012
Development Fall Festival Library Total
ASSETS
Cash and investments $ $ $ 43,143 $ 43,143
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ $ $ 3,245 $ 3,245
Due to other funds 200 59 112,576 112,835
Total liabilities 200 59 115,821 116,080
FUND BALANCE (DEFICIT)
Unassigned (200) (59) (72,678) (72,937)
Total Fund Balance(Deficit) (200) (59) (72,678) (72,937)
TOTAL LIABILITIES AND
FUND BALANCE $ $ $ 43,143 $ 43,143
84
FORM G-2
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
For the Year Ended December 31, 2012
Development Fall Festival Library Total
REVENUES
Taxes $ $ $ 260,078 $ 260,078
Miscellaneous revenue 8,701 9,411 18,112
TOTAL REVENUES 8,701 269,489 278,190
EXPENDITURES
Current
Culture and recreation 15,874 93,547 109,421
Capital Outlay
Public works 200 200
Culture and recreation 241,137 241,137
TOTAL EXPENDITURES 200 15,874 334,684 350,758
Net change in fund balances (200) (7,173) (65,195) (72,568)
FUND BALANCES (DEFICIT), Beginning 7,114 (7,483) (369)
FUND BALANCES(DEFICIT), Ending $ (200) $ (59) $ (72,678) $ (72,937)
85
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
December 31, 2012
Park Infrastructure Vehicle
Dedication Reserve Acquisition
ASSETS
Cash and investments $ 925,895 $ $ 319,984
Receivables (Net of allowance for
uncollectibles)
Special assessments 59,144
Due from other funds
TOTAL ASSETS $ 925,895 $ 59,144 $ 319,984
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ 979 $ 24,453 $
Escrow deposits payable
Due to other funds 65,691
Deferred revenue 59,144
Total liabilities 979 149,288
FUND BALANCE (DEFICIT)
Restricted
Assigned 924,916 319,984
Unassigned (90,144)
Total Fund Balance (Deficit) 924,916 (90,144) 319,984
TOTAL LIABILITIES AND
FUND BALANCE $ 925,895 $ 59,144 $ 319,984
86
FORM H-1
Manning
Avenue/Hwy 2011 Street South of 10th
City Facilities 36 Improvements Street Total
$ 162,507 $ 68,681 $ 183,229 $ $ 1,660,296
59,144
112,576 112,576
$ 275,083 $ 68,681 $ 183,229 $ $ 1,832,016
$ $ $ $ 59 $ 25,491
75,000 75,000
136,972 202,663
59,144
75,000 137,031 362,298
275,083 183,229 458,312
1,244,900
(6,319) (137,031) (233,494)
275,083 (6,319) 183,229 (137,031) 1,469,718
$ 275,083 $ 68,681 $ 183,229 $ $ 1,832,016
87
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECT FUNDS
For the Year Ended December 31, 2012
Park Infrastructure Vehicle
Dedication Reserve Acquisition
REVENUES
Special assessments $ $ 38,598 $
Investment earnings 6,395 (604) 2,212
TOTAL REVENUES 6,395 37,994 2,212
EXPENDITURES
Capital Outlay
Public safety 35,661
Public works 177,397
Culture and recreation 34,120
TOTAL EXPENDITURES 34,120 177,397 35,661
Net change in fund balances (27,725) (139,403) (33,449)
FUND BALANCES (DEFICIT), Beginning 952,641 49,259 353,433
FUND BALANCES (DEFICIT), Ending $ 924,916 $ (90,144) $ 319,984
88
FORM H-2
Manning
Avenue/Hwy 2011 Street South of 10th
City Facilities 36 Improvements Street Total
$ $ $ $ $ 38,598
3,998 475 1,360 (947) 12,889
3,998 475 1,360 (947) 51,487
35,661
3,077 12,655 193,129
34,120
3,077 12,655 262,910
3,998 475 (1,717) (13,602) (211,423)
271,085 (6,794) 184,946 (123,429) 1,681,141
$ 275,083 $ (6,319) $ 183,229 $ (137,031) $ 1,469,718
89
FORM 1-1
CITY OF LAKE ELMO,MINNESOTA
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
December 31,2012
Radio IT FFE
Replacement Replacement Replacement Total
ASSETS
Current Assets
Cash and investments $ 26,834 $ 16,236 $ $ 43,070
Noncurrent Assets
Property and Equipment
Machinery and equipment 99,851 135,431 363,153 598,435
Less:Accumulated depreciation 45,072 97,890 255,489 398,451
Net Property and Equipment 54,779 37,541 107,664 199,984
TOTAL ASSETS $ 81,613 $ 53,777 $ 107,664 $ 243,054
LIABILITIES AND NET POSITION
Current Liabilities
Due to other funds $ $ $ 47,748 $ 47,748
Net Position
Net investment in capital assets 54,779 37,541 107,664 199,984
Unrestricted 26,834 16,236 (47,748) (4,678)
Total Net Position 81,613 53,777 59,916 195,306
TOTAL LIABILITIES AND
NET POSITION $ 81,613 $ 53,777 $ 107,664 $ 243,054
90
FORM 1-2
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
For the Year Ended December 31, 2012
Radio IT FFE
Replacement Replacement Replacement Total
Operating Expenses
Repairs and maintenance $ $ 1,314 $ 68,349 $ 69,663
Depreciation 8,321 12,435 29,578 50,334
Total Operating Expenses 8,321 13,749 97,927 119,997
Other Revenue(Expense)
Investment earnings 186 112 (330) (32)
Net(Loss) (8,135) (13,637) (98,257) (120,029)
Net Position, Beginning of Year 89,748 67,414 158.173 315,335
Net Position, End of Year $ 81,613 $ 53,777 $ 59,916 $ 195,306
91
FORM 1-3
CITY OF LAKE ELMO,MINNESOTA
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
For the Year Ended December 31,2012
Radio IT FFE
Replacement Replacement Replacement Total
Cash Flows from Operating Activities
Cash payments to suppliers $ $ (1,314) $ (76,130) $ (77,444)
Cash Flows From Investing Activities
Interest earnings received 186 112 (330) (32)
Cash Flows from Noncapital Financing Activities
Decrease in due from other funds 13,676 13,676
Increase in due to other funds 34,072 34,072
Net Cash Provided By Noncapital Financing Activities 13,676 34,072 47,748
Cash Flows from Capital and Related Financing Activities
Acquisition of capital assets (6,236) (6,236)
Net Increase(Decrease)in Cash and Cash Equivalents 13,862 (7,438) (42,388) (35,964)
Cash and Cash Equivalents,Beginning of Year 12,972 23,674 42,388 79,034
Cash and Cash Equivalents,End of Year $ 26,834 $ 16,236 $ $ 43,070
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income(loss) $ (8,321) $ (13,749) $ (97,927) $ (119,997)
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation 8,321 12,435 29,578 50,334
Increase(decrease)in:
Accounts payable (7,781) (7,781)
Net Cash Provided By(Used In)Operating Activities $ $ (1,314) $ (76,130) $ (77,444)
92
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FORM J-1
CITY OF LAKE ELMO, MINNESOTA
GENERALFUND
STATEMENTS OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended December 31, 2012
Variance with
2012 Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUES
Taxes
Property $ 2,451,903 $ 2,451,903 $ 2,507,990 $ 56,087
Franchise 38,500 38,500 41,996 3,496
Total Taxes 2,490,403 2,490,403 2,549,986 59,583
Licenses and Permits
Business 10,250 10,250 12,935 2,685
Nonbusiness 170,850 170,850 317,884 147,034
Total Licenses and Permits 181,100 181,100 330,819 149,719
Intergovernmental
MSA- maintenance 75,000 75,000 87,578 12,578
Fire state aid 40,000 40,000 38,823 (1,177)
Other 2,749 2,749 (2,749)
County and local 15,500 15,500 35,628 20,128
Total Intergovernmental 133,249 133,249 162,029 28,780
Charges for Services 8,850 8,850 5,726 (3,124)
Fines and forfeits 53,000 53,000 58,385 5,385
Investment earnings 20,000 20,000 90,983 70,983
Miscellaneous Revenue 14,384 14,384 69,450 55,066
TOTAL REVENUES $ 2,900,986 $ 2,900,986 $ 3,267,378 $ 366,392
94
FORM J-1
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
STATEMENTS OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (CONTINUED)
For the Year Ended December 31, 2012
Variance with
2012 Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
General Government
Mayor and Council
Personnel services $ 17,692 $ 17,692 $ 17,728 $ (36)
Other services and charges 17,700 17,700 8,981 8,719
Total Mayor and Council 35,392 35,392 26,709 8,683
Election
Other services and charges 11,950 11,950 14,124 (2,174)
Administration
Personnel services 333,327 333,327 352,085 (18,758)
Supplies 8,000 8,000 11,953 (3,953)
Other services and charges 79,411 79,411 87,055 (7,644)
Total Administration 420,738 420,738 451,093 (30,355)
Communications
Personnel services 13,276 13,276 13,334 (58)
Other services and charges 44,400 44,400 39,676 4,724
Total Communications 57,676 57,676 53,010 4,666
Building
Supplies 1,400 1,400 570 830
Other services and charges 38,400 38,400 34,537 3,863
Total Building 39,800 39,800 35,107 4,693
Professional Services
Assessor 46,000 46,000 44,978 1,022
Accounting and auditing 60,000 60,000 91,048 (31,048)
Legal 65,000 65,000 71,250 (6,250)
Engineering 70,000 70,000 69,864 136
Total Professional Services $ 241,000 $ 241,000 $ 277,140 $ (36,140)
95
FORM J-1
CITY OF LAKE ELMO, MINNESOTA
GENERALFUND
STATEMENTS OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL(CONTINUED)
For the Year Ended December 31, 2012
Variance with
2012 Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
General Government
Planning and Zoning
Personnel services $ 142,937 $ 142,937 $ 120,715 $ 22,222
Supplies 750 750 1,202 (452)
Other services and charges 28,350 28,350 55,612 (27,262)
Total Planning and Zoning 172,037 172,037 177,529 (5,492)
Total General Government 978,593 978,593 1,034,712 (56,119)
Public Safety
Police
Contracted services 493,000 493,000 492,995 5
Fire Protection
Personnel services 226,950 226,950 225,006 1,944
2%fire aid 40,000 40,000 37,324 2,676
Supplies 25,500 25,500 36,890 (11,390)
Other services and charges 135,850 135,850 111,756 24,094
Total Fire Protection 428,300 428,300 410,976 17,324
Building Inspector
Personnel services 80,651 80,651 91,249 (10,598)
Supplies 500 500 1,738 (1,238)
Other services and charges 14,390 14,390 47,940 (33,550)
Total Building Inspector 95,541 95,541 140,927 (45,386)
Animal Control
Supplies 100 100 100
Other services and charges 7,600 7,600 2,121 5,479
Total Animal Control 7,700 7,700 2,121 5,579
Criminal Legal 51,000 51,000 51,474 (474)
Emergency Communications 6,000 6,000 11,444 (5,444)
Total Public Safety $ 1,081,541 $ 1,081,541 $ 1,109,937 $ (28,396)
96
FORM J-1
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
STATEMENTS OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL (CONTINUED)
For the Year Ended December 31, 2012
Variance with
2012 Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES
Public Works
General
Personnel services $ 205,924 $ 205,924 $ 191,052 $ 14,872
Supplies 133,100 133,100 91,635 41,465
Other services and charges 114,225 114,225 118,932 (4,707)
Total General 453,249 453,249 401,619 51,630
Trees 5,000 5,000 4,126 874
Street Lighting 24,500 24,500 40,796 (16,296)
Total Public Works 482,749 482,749 446,541 36,208
Culture and Recreation
Parks
Personnel services 145,103 145,103 120,905 24,198
Supplies 8,400 8,400 6,218 2,182
Other services and charges 29,600 29,600 23,860 5,740
Total Culture and Recreation 183,103 183,103 150,983 32,120
Total Expenditures 2,725,986 2,725,986 2,742,173 (16,187)
Excess (deficiency) of revenues
over(under)expenditures 175,000 175,000 525,205 350,205
OTHER FINANCING SOURCES (USES)
Transfers out (175,000) (175,000) 175,000
NET CHANGE IN FUND BALANCE 525,205 525,205
FUND BALANCE, January 1 2,913,920 2,913,920 2,913,920
FUND BALANCE, December 31 $ 2,913,920 $ 2,913,920 $ 3,439,125 $ 525,205
97
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
DEBT SERVICE FUNDS
December 31,2012
2002 GO 2006A GO 2009A GO
Improvement 2004 GO CIP Equipment Refunding
Bonds Bonds Certificates Bonds
ASSETS
Cash and investments $ 161 $ 169,596 $ 20,631 $ 2,367
Cash with fiscal agent 2,855,141
Receivables(Net of allowance for
uncollectibles)
Special assessments
Due from other governmental units 275,000
TOTAL ASSETS $ 161 $ 3,024,737 $ 20,631 $ 277,367
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ $ $ $
Deferred revenue 275,000
Total liabilities 275,000
FUND BALANCE
Restricted 161 3,024,737 20,631 2,367
TOTAL LIABILITIES AND
FUND BALANCE $ 161 $ 3,024,737 $ 20,631 $ 277,367
98
FORM K-1
20096 GO 2010A GO 2011A GO 2012E GO
Improvement Improvement Improvement Improvement
Bonds Bonds Bonds Bonds Total
$ 164,205 $ 142,844 $ 153,623 $ 5,731 $ 659,158
2,855,141
50,376 73,516 63,100 186,992
275,000
$ 214,581 $ 216,360 $ 216,723 $ 5,731 $ 3,976,291
$ $ $ 13,500 $ $ 13,500
50,376 73,516 63,100 461.992
50,376 73,516 76,600 475,492
164,205 142,844 140,123 5,731 3,500,799
$ 214,581 $ 216,360 $ 216,723 $ 5,731 $ 3,976,291
99
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
DEBT SERVICE FUNDS
For the Year Ended December 31, 2012
2002 GO 2006A GO 2009A GO
Improvement 2004 GO CIP Equipment Refunding
Bonds Bonds Certificates Bonds
REVENUES
Taxes $ $ 160,000 $ 56,532 $
Intergovernmental 75,225
Special assessments 161
Investment earnings 3,540 142 2,367
TOTAL REVENUES 161 163,540 56,674 77,592
EXPENDITURES
Debt Service
Principal 175,000 46,000 65,000
Interest and other charges 172,987 7,840 10,225
Bond issuance costs
TOTAL EXPENDITURES 347,987 53,840 75,225
Net change in fund balances 161 (184,447) 2,834 2,367
FUND BALANCES, Beginning 3,209,184 17,797
FUND BALANCES, Ending $ 161 $ 3,024,737 $ 20,631 $ 2,367
100
FORM K-2
2009E GO 2010A GO 2011A GO 2012E GO
Improvement Improvement Improvement Improvement
Bonds Bonds Bonds Bonds Total
$ 54,639 $ 64,498 $ 76,000 $ $ 411,669
75,225
11,631 12,982 72,778 97,552
1,127 988 969 5,731 14,864
67,397 78,468 149,747 5,731 599,310
55,000 65,000 406,000
12,913 12,786 10,502 227,253
67,913 77,786 10,502 633,253
(516) 682 139,245 5,731 (33,943)
164,721 142,162 878 3,534,742
$ 164,205 $ 142,844 $ 140,123 $ 5,731 $ 3,500,799
101
FORM L-1
CITY OF LAKE ELMO, MINNESOTA
COMBINING SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUNDS
For the Year Ended December 31, 2012
Balance Balance
January 1 Additions Deletions December 31
ESCROW
ASSETS
Cash and investments $ 335,383 $ 299,300 $ 207,100 $ 427,583
LIABILITIES
Accounts payable $ 5,000 $ 180,100 $ 177,100 $ 8,000
Deposits payable 330,383 316,300 227,100 419,583
TOTAL LIABILITIES $ 335,383 $ 496,400 $ 404,200 $ 427,583
YELLOW RIBBON
ASSETS
Cash and investments $ (128) $ $ $ (128)
Accounts receivable 128 128
TOTALASSETS $ $ $ $
TOTAL AGENCY FUNDS
ASSETS
Cash and investments $ 335.255 $ 299,300 $ 207,100 $ 427,455
Accounts receivable 128 128
TOTAL ASSETS $ 335,383 $ 299,300 $ 207,100 $ 427,583
LIABILITIES
Accounts payable $ 5,000 $ 180,100 $ 177,100 $ 8,000
Deposits payable 330,383 316,300 227,100 419,583
TOTAL LIABILITIES $ 335,383 $ 496,400 $ 404,200 $ 427,583
102
CITY OF LAKE ELMO, MINNESOTA
OTHER REPORT SECTION
December 31, 2012
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/ SMITH*SCHAFER
& ASSOCIATES, L T D. Members of American Institute of CPA's.
Certified Public Accountants and Consultants Private Companies Practice Section,Minnesota Society of CPA's
INDEPENDENT AUDITOR'S REPORT ON MINNESOTA LEGAL COMPLIANCE
To the Honorable Mayor and
Members of the City Council
City of Lake Elmo, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States
of America, the financial statements of the governmental activities, the business-type activities,
each major fund and the aggregate remaining fund information of the City of Lake Elmo,
Minnesota, as of and for the year ended December 31, 2012, and the related notes to the
financial statements, and have issued our report thereon dated June 28, 2013.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State
Auditor pursuant to Minnesota State Statutes Sec. 6.65, contains seven categories of compliance
to be tested: contracting and bidding, deposits and investments, conflicts of interest, public
indebtedness, claims and disbursements, miscellaneous provisions and tax increment financing.
Our audit considered all of the listed categories, except that we did not test for compliance with
the provisions for tax increment financing because the City has not established a tax increment
financing district.
In connection with our audit, nothing came to our attention that caused us to believe that the City
of Lake Elmo, Minnesota failed to comply with the provisions of the Minnesota Legal Compliance
Audit Guide for Political Subdivisions. However, our audit was not directed primarily toward
obtaining knowledge of such noncompliance. Accordingly, had we performed additional
procedures, other matters may have come to our attention regarding the City of Lake Elmo,
Minnesota's noncompliance with the above referenced provisions.
This report is intended solely for the information and use of those charged with governance and
management of the City of Lake Elmo, Minnesota and the State Auditor and is not intended to be
and should not be used by anyone other than these specified parties.
S*a4 d"
Maplewood, Minnesota
June 28, 2013
Maplewood Office • 2035 E County Road D • Suite A • Maplewood MN 55109 • PH (651) 770-8414 • FAX(651) 770-5175
Rochester Office • 220 South Broadway • Suite 102 • Rochester, MN 55904 • (PH(507)288-3277 • FAX(507)288-4571
Red Wing Office • 519 Bush Street • Red Wing, MN 55066 • PH(651)388-2858 • FAX(651)388-6414
Edina Office • 6800 France Avenue South • Suite 1781 oEdina, MN 55435 • PH(952)920-1455 • FAX(952)920-6603
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