2006 Audited Financial Statements0
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CITY OF ALBERTVILLE
Wright County, Minnesota
Audited Financial Statements
For the Fiscal Year Ended December 31, 2006
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CITY OF ALBERTVILLE
Wright County, Minnesota
TABLE OF CONTENTS
ELECTED OFFICIALS AND ADMINISTRATION ...................................................... 1
INDEPENDENT AUDITORS' REPORT ......................................................................... 2
MANAGEMENT'S DISCUSSION AND ANALYSIS ..................................................... 5
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Statement of Net Assets ................................................................................................... 14
Statement of Activities ..................................................................................................... 15
Fund Financial Statements:
Balance Sheet -Governmental Funds ............................................................................. 16
Reconciliation of the Balance Sheet to the Statement of Net Assets -
Governmental Funds ..................................................................................................... 18
Reconciliation of the Statement of Net Assets -Business-Type Activities .................... 19
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds ..................................................................................................... 20
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances to the Statement of Activities -Governmental Funds ......................... 22
Reconciliation of the Revenues, Expenses and Changes in Net Assets -
Business-Type Activities .............................................................................................. 23
Statement of Revenues, Expenditures and Changes in Fund Balances -Budget
and Actual -General Fund ........................................................................................... 24
Statement of Net Assets -Proprietary Funds .................................................................. 25
Statement of Revenues, Expenses and Changes in Fund Net Assets -
Proprietary Funds .......................................................................................................... 26
Statement of Cash Flows -Proprietary Funds ................................................................. 27
Statement of Fiduciary Net Assets ................................................................................... 28
Notes to the Financial Statements .......................................................................................... 29
SUPPLEMENTARY INFORMATION:
Combining Balance Sheet - Nonmajor Governmental Funds ............................................... 57
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Nonmajor Governmental Funds .......................................................................................... 63
Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and
Actual -General Fund ........................................................................................................ 69
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ......................... 71
REPORT ON LEGAL COMPLIANCE ............................................................................ 73
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE AND
INTERNAL CONTROL .................................................................................................. 74
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CITY OF ALBERTVILLE
Wright County, Minnesota
ELECTED OFFICIALS AND ADMINISTRATION
December 31, 2006
Elected Officials Position Term Expires
Don Peterson Mayor December 31, 2006
Tom Fay Council Member December 31, 2006
Ron Klecker Council Member December 31, 2006
LeRoy Berning Council Member December 31, 2008
John Vetsch Council Member December 31, 2008
Administration
Larry Kruse
City Administrator
Appointed
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' April 27, 2007
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KERN • D~WENTER•VIERE
INDEPENDENT AUDITORS' REPORT
Honorable Mayor and Members
of the City Council
City of Albertville
Albertville, Minnesota
We have audited the accompanying financial statements of the governmental activities, business-
/ We conducted our audit in accordance with U.S. generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those Standards require that we plan and perform the
' audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles
' used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
type activities, each major fund and the aggregate remaining fund information of the City of
Albertville, Minnesota, as of and for the year ended December 31, 2006, which collectively
comprise the City's basic financial statements as listed in the Table of Contents. These financial
statements are the responsibility of the City's management. Our responsibility is to express
opinions on these financial statements based on our audit.
' In our opinion, the basic financial statements referred to above present fairly, in all material
respects, the financial position of the governmental activities, business-type activities, each
major fund and the aggregate remaining fund information of the City of Albertville, Minnesota,
as of December 3 1, 2006, and the respective changes in financial position and cash flows, where
' applicable, thereof and the budgetary comparison for the General Fund for the year then ended in
conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated
April 27, 2007, on our consideration of the City's internal control over financial reporting and
our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on the internal control over financial reporting or on compliance. That
' report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
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The Management's Discussion and Analysis, which follows this report letter, is not a required
part of the basic financial statements but is supplementary information required by U.S.
generally accepted accounting principles. We have applied certain limited procedures, which
consisted primarily of management inquiries regarding the methods of measurement and
presentation of the supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was performed for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying supplementary
information identified in the Table of Contents is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information has been subjected
to the auditing procedures applied to the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements taken as a whole.
' KERN, DEWENTER, VIERS, LTD.
St. Cloud, Minnesota
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CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
As management of the City of Albertville, we offer readers of the City of Albertville's financial
statements this narrative overview and analysis of the financial activities of the City of
Albertville for the fiscal year ended December 31, 2006.
Financial Highlights
The assets of the City of Albertville exceeded its liabilities at the close of the most recent fiscal
year by $41,203,069 (net assets). Of this amount, $4,168,582 (unrestricted net assets) maybe
used to meet the government's ongoing obligations to citizens and creditors.
As of the close of the current fiscal year, the City of Albertville's governmental funds reported
combined ending fund balances of $10,364,563.
At the end of the current fiscal year, unreserved, undesignated fund balance for the general fund
was $549,004, or 17% of total general fund 2006 expenditures.
Overview of the Financial Statements
' This discussion and analysis are intended to serve as an introduction to the City of Albertville's
basic financial statements. The City of Albertville's basic financial statements are comprised of
three components: 1) government-wide financial statements, 2) funds financial statements, and
' 3) notes to the financials 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
designated to provide readers with a broad overview of the City of Albertville's finances, in a
manner similar to aprivate-sector business. There are two government-wide statements, the
Statement of Net Assets and Statement of Activities.
The statement of net assets presents information on all the City of Albertville's assets and
liabilities, with the difference between the two reported as net assets. Over time, increases or
' decreases in net assets may serve as a useful indicator of whether the financial position of the
City of Albertville is improving or deteriorating.
The statement of activities presents information showing how the government's net assets
changed during the most recent fiscal year. All changes in net assets are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
' cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City of Albertville
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
Albertville include general government, public safety, public works, culture and recreation and
economic development. The business-type activities of the City of Albertville include a Water,
Sanitary Sewer and Storm Sewer distribution and/or operation.
CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
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
Albertville, 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
Albertville 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 inflow and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information maybe
useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the government's near-term
financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and the government-wide perspective.
The City of Albertville adopts an annual budget for its general fund. A budgetary comparison
statement has been provided for the general fund to demonstrate compliance with this budget.
Proprietary funds. The City of Albertville maintains three individual proprietary funds.
Enterprise funds are used to report the same functions presented as business-type activities in
government-wide financial statements. The City of Albertville uses enterprise funds to account
for its Water, Sanitary Sewer and Storm Sewer distribution and operation.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of
parties outside the government. Fiduciary funds are not reflected in the government-wide
financial statement because the resources of those funds are not available to support the City of
Albertville's own programs. The accounting used for fiduciary funds is much like that used for
proprietary funds.
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.
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. In the case of the City of Albertville, assets exceeded liabilities by $41,203,069 at the
close of the most recent fiscal year.
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CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
By far the largest portion of the City of Albertville net assets reflects its investment in capital
assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire
those assets that is still outstanding. The City of Albertville uses these capital assets to provide
services to citizens; consequently, these assets are not available for future spending. Although
the City of Albertville's investment in its capital assets is reported net of related debt, it should
be noted that the resources needed to repay this debt must be provided from other sources, since
the capital assets themselves cannot be used to liquidate these liabilities.
Statement of Net Assets
Governmental Activities
2005 2006
Current and other
assets 9,451,310 7,338,589
Capital assets 25,772,972 28,112,203
Total assets 35,224,282 35,450,792
Long-Term liabilities 8,924,863 8,154,579
Other liabilities 1,684,066 1,457,081
Total liabilities 10,608,929 9,611,660
Business-Type Activities
2005 2006
9,641,105 9,296,489
11,296, 561 12,248,726
20,937,666 21,545,215
5,676,331 5,253,394
922,126 927,884
6,598,457 6,181,278
Total
2005 2006
19,092,415 16,635,078
37,069,533 40,360,929
56,161,948 56,996,007
14,601,194 13,407,973
2,606,192 2,384,965
17,207,386 15,792,938
Net assets:
Invested in capital
assets, net of related
debt 16,171,687 19,214,778
Restricted 7,520,556 5,642,284
Unrestricted 923,110 982,070
Total net assets 24,615,353 25,839,132
5,219,803 6,572,396
4,895,012 5,605,029
4,224,394 3,186,512
14,339,209 15,363,937
21,391,490 25,787,174
12,415,568 11,247,313
5,147,504 4,1.68,582
38,954,562 41,203,069
An additional portion of the City of Albertville's net assets represents resources that are subject
to external restrictions on how they maybe used. The remaining balance of unrestricted net
assets ($4,168,582) may be used to meet the government's ongoing obligations to citizens and
creditors.
Change in Net Assets
The increase in net assets occurs as a result of the City's revenues and transfers being more than
its expenses for the year ended December 31, 2006.
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CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
Governmental
Activities
REVENUES
Program Revenues
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
General Revenues -
Taxes
Aids and Payments from State
Other Sources
Total Revenues
EXPENSES
Business-type
Activities
Total '
2005 2006
1,332,518 1,329,332 1,922,727 2,666,973 3,255,245 3,996,305
57,704
104,713
-
-
57,704
104,713 ,
2,964,230 688,136 181,278 102,532 3,145,508 790,668
1,801,170 2,096,259 - - 1,801,170 2,096,259 '
24,860 13,056 - - 24,860 13,056
168,573 888,783 119,174 265,578 287,747 1,154,361
6,349,055 5,120,279 2,223,179 3,035,083 8,572,234 8,155,362
General Government 1,347,789 939,143 - - 1,347,789 939,143
Public Safety
831,158
1,200,821
-
-
831,158
1,200,821 ,
Public Works 654,660 3,150,492 - - 654,660 3,150,492
Culture & Recreation 781,043 59,069 - - 781,043 59,069
Economic Development 98,603 624,550 - - 98,603 624,550 '
Sanitary Sewer - - 555,858 834,895 555,858 834,895
Water - - 194,918 917,083 194,918 917,083
Storm Sewer - - 101,160 114,825 101,160 114,825
Interest on Long-Term Debt 65,895 415,400 - - 65,895 415,400 ,
Total Expenses 3,779,148 6,389,475 851,936 1,866,803 4,631,084 8,256,278
Change in Net Assets, Before Transfers 2,569,907 (1,269,196) 1,371,243 1,168,280 3,941,150 (100,916) '
Transfers 336,081 - (336,081) - -
Net Assets -Beginning, Restated 21,815,016 26,772,247 12,967,966 14,531,738 34,782,982 41,303,985
Net Assets -Ending 24,384,923 25,839,132 14,339,209 15,363,937 38,724,132 41,203,069
'
The net cost of governmental activities is their total costs less program revenues applicable to
each category. '
2005 2006 2005 2006
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CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
Total Cost of Services
2005 2006
Net Cost of Services
Revenue (Expense)
2005 2006
General Government 1,347,789 939,143 (153,904) 299,414
Public Safety 831,158 1,200,821 (729,572) (1,039,898)
Public Works 424,230 3,150,492 2,551,274 (2,454,650)
Culture and Recreation 781,043 59,069 (697 566) (32 210
Economic Development 98,603 624,550 (98,603} (624,550)
Interest on Long Term Debt 65,895 415,400 (65,895) (415,400)
Sanitary Sewer 555,858 834,895 1,036,377 580,394
Water 194,918 917,083 183,321 294,857
Storm Sewer 101,160 114,825 32,371 27,451
Total Expense 4,400,654 8,256,278 2,057,803 (3,364,592)
Financial Analysis of the Government's Funds
As noted earlier, the City of Albertville uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
Governmental Activities.
The focus of the City of Albertville'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 Albertville's financing requirements. In particular, unreserved 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 Albertville's governmental funds reported
combined ending fund balances of $10,364,563. Approximately $2,839,076 constitutes
unreserved undesignated fund balance. The remainder of the fund balance is reserved to indicate
that it is not available for new spending because it has already been committed for a variety of
purposes such as capital assets and debt service.
The general fund is the chief operating fund of the City of Albertville.
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CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
Revenues and Expenditures -Governmental Funds
Other Financing Fund Balance
Revenue Expenditures Sources (Uses) Increase (Decrease)
General 3,232,138 3,301,238 (492,477) (561,577)
Special Revenue Funds:
Sewer Access 799,073 74,166 (1,590,085) (865,178)
Water Access 130,900 42 1,382,767 1,513,625
Debt Service:
2003 A GO Imp Bonds 180,805 531,978 38,675 (312,498)
Capital Project Funds:
Closed Capital Projects 354,312 2,259 (223,299) 128,754
Prairie Run 841,076 216,774 - 624,302
City Hall 9,281 3,435,218 - (3,425,937)
Ice Arena Locker Rooms 266,164 123,760 448,364 590,768
52nd Streetllndustrial Park - 689,516 - (689,516)
Other Non-major funds 609,013 1,002,227 564,818 171,604
Totals 6,422,762 9,377,178 128,763 (2,825,653)
General Fund Budgetary Highlights
The original budget was not amended during fiscal year 2006. Differences between the final
budget and actual operations are briefly summarized as follows:
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CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
General Government increase of $150,065 was due mostly to an increase in City Assessor
contract with Wright County, a land purchase and some miscellaneous items. The increase of
$136,805 in public works was due to an employee retiring, street overlay project, street seal coat
project and some miscellaneous items. The increase in Economic Development was due to the
actual City of Albertville portion for the senior center was higher than expected. The overage in
Capital outlay for Public Safety was due to the purchase of a new fire truck.
The under budget items for Public Safety and Park and Recreation, Economic Development and
Capital outlay were due to insurance costs were less than expected and to put monies away for
capital outlay for planned purchases in the near future.
Capital Assets and Debt Administration
Capital Assets: The City of Albertville's investment in capital assets for its governmental and
business type activities include land, buildings, systems, improvements, machinery, equipment,
park facilities, roads and some miscellaneous items. Total capital assets for the City amounts to
$40,369,929 (net of accumulated depreciation).
Major Capital asset events during the current fiscal year included the following:
Waste Water Treatment Facility Expansion
New City Hall Facility
52°d Street Improvements
School Pedestrian Trail
Ice Arena Locker Room
At December 31, 2006 the City has $282,320 in commitments outstanding for capital
expenditures.
Long-term Debt: At the end of the current fiscal year, the City had total bonded debt
outstanding of $14,573,755 (net of unamortized bond costs). The City of Albertville maintains
an "A2" rating.
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CITY OF ALBERTVILLE
Wright County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2006
Economic Factors and Next Year's Budget
The City of Albertville expects to continue its residential and commercial growth at the same
rate experienced the past couple of years.
Capital Projects 2006-2007
Requests for Information
52na Street
Industrial Park
Storm Water
70th Street
CSAH 19 South
Lachman Ave NE
CSAH 19 North
City Hall South Parking Lot
Winter Park
Lift Station (County Rd. 37)
Decommission one Waste Treatment Pond
The financial report is designed to provide a general overview of the City of Albertville's
finances for all those with an interest in the government's finances. Questions concerning any of
the information provided in this report or requests for additional financial information should be
addressed to the City of Albertville, 5959 Main Ave NE, P O Box 9, Albertville, MN 55301.
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BASIC FINANCIAL STATEMENTS
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CITY OF ALBERTVILLE
Wright County, Minnesota
STATEMENT OF NET ASSETS
December 31, 2006
ASSETS:
Cash and Investments
(Including Cash Equivalents)
Cash in Trust
Restricted Cash in Trust
Property Tax Receivable
Accounts Receivable
Interest Receivable
Due from Other Governments
Notes Receivable
Land Held for Resale
Special Assessments Receivable:
Delinquent
Deferred
Capital Assets not being Depreciated:
Land
Construction In Progress
Capital Assets being Depreciated:
Infrastructure
Buildings
Improvements
Vehicles
Machinery and Equipment
Sewer Plant and Lines
Water Main
Storm Sewer Lines
Less Accumulated Depreciation
Total Assets
LIABILITIES AND NET ASSETS:
Liabilities:
Accounts Payable
Salaries and Benefits Payable
Interest Payable
Deferred Charges
Bond Principal Payable:
Payable Within One Year
Payable After One Year
Compensated Absences Payable:
Payable Within One Year
Payable After One Year
Total Liabilities
Net Assets:
Investment in Capital Assets, Net of Related Debt
Restricted for:
Capital Asset Acquisition
Debt Service
Land Held for Resale
Tax Increments
Other Projects
Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The Notes to the Financiai Statements are an integral part of this statement.
Governmental Business-Type
Activities Activities Total
$ 1,256,020 $ 8,399,900 $ 9,655,920
939,989 - 939,989
78,390 - 78,390
81,000 - 81,000
424,203 695,501 1,119,704
42,559 - 42,559
63,385 1,713 65,098
21,200 - 21,200
2,735,714 - 2,735,714
293,467 - 293,467
1,402,662 199,375 1,602,037
3,732,869 190,269 3,923,138
8,509,707 - 8,509,707
19,387,922 - 19,387,922
2,622,939 4,702,684 7,325,623
518,391 - 518,391
1,512,248 - 1,512,248
305,425 236,270 541,695
- 8,192,884 8,192,884
- 820,487 820,487
- 215,556 215,SS6
(8,477,298) (2,109,424) (10,586,722)
$ 35,450,792 $ 21,545,215 $ 56,996,007
$ 570,663 $ 458,365 $ 1,029,028
10, 118 1,834 11,952
106,662 44,749 151,411
570 - 570
743,860 422,936 5,997,254
8,153,565 5,253,394 8,576,501
25,208 - 25,208
1,014 - 1,014
9,611,660 6,181,278 15,792,938
19,214,778 6,572,396 25,787,174
1,256,744 - 1,256,744
1,572,132 - 1,572,132
2,735,714 - 2,735,714
56,494 - 56,494
21,200 5,605,029 5,626,229
982,070 3,186,512 4,168,582
25,839,132 15,363,937 41,203,069
S 35,450,792 $ 21,545,215 $ 56,996,007
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15
CITY OF ALBERTVILLE
Wright County, Minnesota
BALANCE SHEET -GOVERNMENTAL FUNDS
December 31, 2006
Debt Service Capital Projects
2003A G.O.
Improvement Sewer Access Water Access
General (101) Bonds (357) (204) (206)
ASSETS:
Cash and Investments
(Including Cash Equivalents) $ 603,009 $ - $ 3,892,029 $ 1,586,915
Cash in Trust 923,142 - - _
Restricted Cash in Trust _ _ _ _
Taxes Receivable -Delinquent 67,270 3,023 - -
Special Assessment Receivable:
Delinquent _ _ _ _
Deferred - 316,437 176,314 23,061
Accounts Receivable, Net of Allowance 87,088 - - _
Interest Receivable 42,559 - - _
Due from Other Governments 29,238 865 - -
Notes Receivable _ _ _ _
Land Held for Resale - 2,735,714 - -
Total Assets $ 1,752,306 $ 3,056,039 $ 4,068,343 $ 1,609,976
LIABILITIES AND FUND BALANCES:
Liabilities:
Cash Overdraft $ - $ 377,067 $ - $ -
Accounts and Contracts Payable 125,344 - - 73,290
Accrued Salaries and Related Benefits 10,118 - -
Deferred Revenue 67,840 319,460 t76,314 23,061
Total Liabilities 203,302 696,527 176,314 96,351
Fund Balances:
Reserved for:
Debt Service - _ _ _
Special Revenue - - _ _
Land Held for Resale - 2,735,714 - -
Unreserved, Reported in:
General Fund -Designated 1,000,000 - - _
General Fund - Undesignated 549,004 - - _
Debt Service Funds - Undesignated - (376,202) - _
Capital Projects Funds -Designated - - 525,000. 189,000
Capital Projects Funds - Undesignated - - 3,367,029 1,324,625
Total Fund Balances 1,549,004 2,359,512 3,892,029 1,513,625
Total Liabilities and
Fund Balances $ 1,752,306 $ 3,056,039 $ 4,068,343 $ 1,609,976
The Notes to the Financial Statements are an integral part of this statement.
16
C;apitat Yro)ects
Closed Capital
Projects (400, 52nd Street Other Total
450, 451, 452, Prairie Run City Hall Industrial Park Governmental Governmental
453) (473) (482) (492) Funds Funds
$ - $ - $ 181,928 $ - $ 2,826,160 $ 9,090,041
16,847 939,989
78,390 78,390
- - - - 10,707 81,000
r - 220,018 - - 73,449 293,467
196,884 644,384 - - 244,957 1,602,037
337,115 - - - - 424,203
- - _ - 42,559
18,273 _ 15,009 63,385
- - - - 21,200 21,200
- - - - - 2,735,714
$ 533,999 $ 882,675 $ 181,928 $ - $ 3,286,719 $ 15,371,985
$ 115,218 $ 809,199 $ - $ 673,279 $ 380,314 $ 2,355,077
71,517
- 70,123
- 255,522 18,737 29,420
- 643,953
10,118
196,884 864,402 _ _ 350,313 1,998,274
383,619 1,743,724 255,522 692,016 760,047 5,007,422
r
- - - - 1,225,679 1,225,679
- - - - 159,771 159,771
2,735,714
_ _ _ _ - 1,000,000
549,004
(81,014) (457,216)
150,380 - - - 1,539,943 2,404,323
- (861,049) (73,594) (692,016) (317,707) 2,747,288
150,380 (861,049) (73,594) (692,016) 2,526,672 10,364,563
1 $ 533,999 $ 882,675 $ 181,928 $ - $ 3,286,719 $ 15,371,985
17
CITY OF ALBERTVILLE '
Wright County, Minnesota
RECONCILIATION OF THE BALANCE SHEET TO ,
THE STATEMENT OF NET ASSETS -GOVERNMENTAL FUNDS
December 31, 2006
Total Fund Balances -Governmental Funds $ 10,364,563
Amounts reported for governmental activities in the Statement of Net Assets ,
are different because:
Capital assets used in governmental activities are not current financial resources
and, therefore, are not reported as assets in governmental funds.
Cost of Capital Assets 36 589 501
Less Accumulated Depreciation 8 477 298
~ )
Long-term liabilities, including bonds payable, are not due and payable in
the current period and, therefore, are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of:
Bond Principal Payable (9,160,000)
Compensated Absences Payable (26 222)
Governmental funds report debt issuance discounts and costs as
an other financing use and a current expenditure, respectively, at '
the time of issuance. Discounts and issuance costs are reported as
an unamortized asset in the government-wide financial statements. 262,575
Delinquent receivables will be collected in subsequent years, but are not available
soon enough to pay for the current period's expenditures and, therefore, are deferred
in the funds.
Property Taxes 81,000
Special Assessments 293,467 ,
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds.
Deferred Special Assessments Receivable
1,402,662
Notes Receivable 21,200
Governmental funds do not report a liability for accrued interest
due and payable. (106,662)
Water Access Capital Projects Fund is proprietary in nature and, therefore,
reported in the business-type activities in the Statement of Net Assets. (1,513,625)
Sewer Access Capital Projects Fund is proprietary in nature and, therefore,
reported in the business-type activities in the Statement of Net Assets. (3,892,029)
Total Net Assets -Governmental Activities $ 25,839,132
The Notes to the Financial Statements are an integral part of this statement. 18
CITY OF ALBERTVILLE
Wright County, Minnesota
RECONCILIATION OF THE STATEMENT OF NET ASSETS -
BUSINESS-TYPE ACTIVITIES
December 31, 2006
Total Net Assets -Proprietary Funds $ 9,758,908
Amounts reported for business-type activities in the Statement of Net Assets
are different because:
The Sewer Access Capital Projects Fund is proprietary in nature and relates
to the sewer access charges for the Sanitary Sewer Fund. Therefore, it is
included as a business-type activity. 3 892 029
The Sewer Access Capital Projects Fund recorded deferred special
assessments receivable. In the fund statements, deferred special assessments
are not available in the current period and, therefore, are deferred in the funds.
This revenue is recognized when earned as a business-type activity. 176,314
The Water Access Capital Projects Fund is proprietary in nature and relates
to the water access charges for the Water Fund. Therefore, it is
~ included as a business-type activity. 1,513,625
The Water Access Capital Projects Fund recorded deferred special
assessments receivable. In the fund statements, deferred special assessments
are not available in the current period and, therefore, are deferred in the funds.
This revenue is recognized when earned as a business-type activity. 23,061
Total Net Assets -Business-Type Activities $ 15 363 937
The Notes to the Financial Statements are an integral part of this statement. 19
CITY OF ALBERTVILLE
Wright County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
Debt Service Capital Projects
1
2003A G.O.
Improvement Sewer Access Water Access
General (101) Bonds (357) (204) (206)
REVENUES:
Taxes $ 1,620,927 $ 76,028 $ - $ -
Tax Increments _ _ _ _
Special Assessments - 54,269 67,635 7,778
Licenses and Permits 487,132 - - -
Intergovernmental 115,528 50,508 - -
Charges for Services 645,272 - 636,502 109,417
Fines and Forfeitures 3,702 - - -
Miscellaneous:
Investment Income 180,147 - 94,936 13,705
Miscellaneous 179,430 - - -
Total Revenues 3,232,138 180,805 799,073 130,900
EXPENDITURES:
Current:
General Government 925,032 - - -
Public Safety
Public Works 1,080,046
582,576 -
- -
- -
-
Park and Recreation 149,145 - - -
Economic Development 4,322 - - -
Debt Service:
Principal - 450,000 - -
Interest and Other Charges - 81,978 - -
Capital Outlay:
General Government 10,796 - - -
Public Safety 502,545 - - -
Public Works 22,895 - 74,166 42
Park and Recreation 23,881 - - -
Total Expenditures 3,301,238 531,978 74,166 42
Excess of Revenues Over
(Under) Expenditures (69,100) (351,173) 724,907 130,858
OTHER FINANCING SOURCES (USES):
Transfers In 120,218 38,675 - 1,382,767
Transfers Out (612,695) - (1,590,085) -
Total Other Financing Sources (Uses) (492,477) 38,675 (1,590,085) 1,382,767
Net Change in Fund Balances (561,577) (312,498) (865,178) 1,513,625
FUND BALANCES:
Beginning of Year, as Previously Stated 2,110,581 (155,096) 4,798,599 -
Prior Period Adjustment - 2,827,106 (41,392) -
Beginning of Year, Restated 2,110,581 2,672,010 4,757,207 -
End of Year $ 1,549,004 $ 2,359,512 $ 3,892,029 $ 1,513,625
The Notes to the Financial Statements are an integral part of this statement . 20
' Capital Projects
Closed Capital
Projects (400, Ice Arena 52nd Street Other Total
450, 451, 452, Prairie Run City Hall Locker Rooms Industrial Park Governmental Governmental
453) (473) (482) (488) (492) Funds Funds
$ - $ - $ - $ - $ - $ 259,929 $ 1,956,884
- - _ - - 98,546 98,546
165,934 841,076 55,171 1,191,863
- - - - - - 487,]32
- _ - = 1,733
25,012 167,769
1,416,203
3,702
- - 9,281 - = 69,358 367,427
188,378 266,164 99,264 733,236
354,312 841,076 9,281 266,164 - 609,013 6,422,762
- - - - - - 925,032
- - - 1,080,046
_ _ _ 582,576
68,763 217,908
- - - - - 54,747 59,069
- _ - _ 275,000 725,Ob0
311,014 392,992
- - 3,435,218 - - - 3,446,014
502,545
2,259 216,774 - - 689,516 289,388 1,295,040
- - - 123,760 - 3,315 150,956
2,259 216,774 3,435,218 123,760 689,516 1,002,227 9,377,178
352,053 624,302 (3,425,937) 142,404 (689,516) (393,214) (2,954,416)
102,561 - - 448,364 - 2,050,284 4,142,869
(325,860) - - - - (],485,466) (4,014,106)
(223,299) 448,364 564,818 128,763
128,754 624,302 (3,425,937) 590,768 (689,516) 171,604 (2,825,653)
(76,006) (1,485,351) 3,352,343 590 768
~ ) 2 500
~ ) 2 405 068 10 356 870
,
97,632 - - - - (50,000) 2,833,346
21,626 (1,485,351) 3,352,343 (590,768) (2,500) 2,355,068 13,190,216
$ 150,380 $ (861,049) $ (73,594) $ - $ (692,016) $ 2,526,672 $ 10,364,563
21
CITY OF ALBERTVILLE
Wright County, Minnesota
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO
THE STATEMENT OF ACTIVITIES -GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
Total Net Change in Fund Balances -Governmental Funds $ (2,825,653)
Amounts reported for governmental activities in the Statement of Activities
are different because:
Capital outlays are reported in governmental funds as expenditures. However, in the Statement of
Activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense.
Capital Outlays 3,851,975
Depreciation Expense (1,025,332)
7
Compensated absences are recognized as paid in the governmental funds but recognized
as the expense is incurred in the Statement of Activities. 540
Principal payments on long-term debt are recognized as expenditures in the governmental
funds, but as an increase in the net assets in the Statement of Activities. 725,000
Interest on long-term debt in the Statement of Activities differs from the amount reported in the
governmental funds because interest is recognized as an expenditure in the funds when it is due and
thus requires use of current financial resources. In the Statement of Activities, however, interest
expense is recognized as the interest accrues, regardless of when it is due. (1,268)
Bond discounts and issuance costs are amortized in the Statement of Activities, whereas
governmental funds record the discount and issuance cost as an expenditure at the time of issuance. (21,140)
Certain revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Deferred Special Assessments (1,287,494)
Notes Receivable (35,378)
Delinquent receivables will be collected in subsequent years, but are not available soon
enough to pay for the current period's expenditures and, therefore, are deferred in the funds.
Delinquent Special Assessments 293,253
Delinquent Property Taxes 40 829
Sewer Access Capital Projects Fund is proprietary in nature and, therefore, is reported
with business-type activities. 865,178
Water Access Capital Projects Fund is proprietary in nature and, therefore, is reported
with business-type activities. (1,513,625)
Change in Net Assets -Governmental Activities $ (933,115)
The Notes to the Financial Statements are an integral part of this statement. 22
CITY OF ALBERTVILLE
Wright County, Minnesota
RECONCILIATION OF REVENUES, EXPENSES AND
CHANGES IN NET ASSETS -BUSINESS-TYPE ACTIVITIES
For the Year Ended December 31, 2006
Total Net Chan e in Fund Net Assets -Pro rieta Funds
g P ry
$ 80,790
Amounts reported for business-type activities in the Statement of Activities
are different because:
Recognize current year activity from the Sewer Access Capital Projects Fund
with the business-type activities. (865,178)
Deferred special assessments from the Sewer Access Capital Projects Fund are
not available in the current period and, therefore, are deferred in the Funds. 79,901
Recognize current year activity from the Water Access Capital Projects Fund
with the business-type activities. 1,513,625
Deferred special assessments from the Water Access Capital Projects Fund are
not available in the current period and, therefore, are deferred in the Funds. 23,061
Change in Net Assets -Business-Type Actvities $ 832 199
The Notes to the Financial Statements are an integral part of this statement. 23
CITY OF ALBERTVILLE
Wright County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL -GENERAL FUND
For the Year Ended December 31, 2006
Variance with
Budgeted Amounts Final Budget -
Original Final Actual Amounts Over (Under)
REVENUES:
Taxes $ 1,735,899 $ 1,735,899 $ 1,620,927 $ (114,972)
Licenses and Permits 551,940 551,940 487,132 (64,808)
Intergovernmental 74,150 74,150 115,528 41,378
Charges for Services 489,228 489,228 645,272 156,044
Fines and Forfeitures 100 100 3,702 3,602
Miscellaneous Revenues:
Investment Income 75,000 75,000 180,147 105,147
Miscellaneous 10,000 10,000 179,430 169,430
Total Revenues 2,936,317 2,936,317 3,232,138 295,821
EXPENDITURES:
Current:
General Government 774,967 774,967 925,032 (150,065)
Public Safety 1,183,167 1,183,167 1,080,046 103,121
Public Works 445,771 445,771 582,576 (136,805)
Park and Recreation 158,559 158,559 149,145 9,414
Economic Development 4,000 4,000 4,322 (322)
Capital Outlay:
General Government 153,000 153,000 10,796 142,204
Public Safety 53,400 53,400 502,545 (449,145)
Public Works 37,500 37,500 22,895 14,605
Park and Recreation 47,500 47,500 23,881 23,619
Total Expenditures 2,857,864 2,857,864 3,301,238 (443,374)
Excess of Revenues Over
(Under) Expenditures 78,453 78,453 (69,100) (147,553)
OTHER FINANCING SOURCES (USES):
Transfers In - - 120,218 120,218
Transfers Out - - (612,695) (612,695)
Total Other Financing Sources (Uses) - - (492,477) (492,477)
Net Change in Fund Balances $ 78,453 $ 78,453 (561,577) $ (640,030)
FUND BALANCES:
Beginning of Year 2,110,581
End of Year $ 1,549,004
The Notes to the Financial Statements are an integral part of this statement.
24
7
u
i
CITY OF ALBERTVILLE
Wright County, Minnesota
STATEMENT OF NET ASSETS -PROPRIETARY FUNDS
December 31, 2006
ASSETS:
Current Assets:
Cash and Investments
(Including Cash Equivalents)
Accounts Receivable
Due from Other Governments
Total Current Assets
Sanitary Storm Water
Sewer (601) Water (602) (604) Total
$ 1,475,095 $ 752,157 $ 693,704 $ 2,920,956
352,470 290,113 52,918 695,501
- 150 1,563 1,713
1,827,565 1,042,420 748,185 3,618,170
Noncurrent Assets:
Capital Assets:
Land 190,269 - - 190,269
Sewer Plant and Lines 8,192,884 - 8,192,884
Water Main 820,487 = 820,487
Storm Sewer Lines - - 215,556 215,556
Machinery and Equipment 193,560 42,710 236,270
Building 4,702,684 = 4,702,684
Total Capital Assets 13,279,397 863,197 215,556 14,358,150
Less Accumulated Depreciation
Net Capital Assets (1,998,975)
11
280
422 (103,279)
759
918 (7,170)
208
386 (2,109,424)
12
248
726
,
, , , ,
,
Total Assets $ 13,107,987 $ 1,802,338 $ 956,571 $ 15,866,896
LIABILITIES AND NET ASSETS:
Current Liabilities:
' Accounts and Contracts Payable $ 284,297 $ 56,188 $ 44,590 $ 385,075
Accrued Salaries and Related Benefits 840 994 1,834
Accrued Interest Payable 44,749 - - 44,749
Amount Due Within One Year 422,936 - - 422,936
' Total Current Liabilities 752,822 57,182 44,590 854,594
Noncurrent Liabilities:
Bonds Payable, Net of Unamortized Charges
5,676,330
5,676,330
Less Amount Due Within One Year (422,936) - - (422,936)
Total Noncurrent Liabilities 5,253,394 - - 5,253,394
' Total Liabilities 6,006,216 57,182 44,590 6,107,988
Net Assets:
Invested in Capital Assets, Net of Related Debt 5,604,092 759,918 208,386 6,572,396
Unrestricted 1,497,679 985,238 703,595 3,186,512
Total Net Assets 7,101,771 1,745,156 911,981 9,758,908
Total Liabilities and Net Assets $ 13,107,987 $ 1,802,338 $ 956,571 $ 15,866,896
The Notes to the Financial Statements are an integral part of this statement. 25
r
CITY OF ALBERTVILLE
Wright County, Minnesota
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN FUND NET ASSETS -PROPRIETARY FUNDS
For the Year Ended December 31, 2006
C
C
Sanitary Storm Water '
Sewer (601) Water (602) (604) Total
OPERATING REVENUES:
Charges for Services
$ 622,660
$ 1,001,152
$ 40,427
$ 1,664,239 '
Penalties and Interest - 8,112 37,240 45,352
Trunk Charges - - 64,609 64,609
Total Operating Revenues 622,660 1,009,264 142,276 1,774,200
OPERATING EXPENSES:
Wages, Salaries and Compensation 67,757 66,714 - 134,471
Materials and Supplies
46,283
7,645
-
53,928 '
Repairs and Maintenance 15,759 35,797 293 51,849
Professional Services 6,103 10,200 107,243 123,546
Insurance 2,066 783 - 2,849
Utilities 56,243 - - 56,243
Depreciation 296,758 23,621 5,389 325,768
Equipment 17,031 1,777 - 18,808
Miscellaneous 2,532 3,712 1,900 8,144
Joint Powers Reimbursements - 686,305 - 686,305
Total Operating Expenses 510,532 836,554 114,825 1,461,911
L
i
I
O 112
128 172
710 27
451 312
289
oss)
perat
ng
ncome ( , , , ,
NONOPERATING REVENUES (EXPENSES):
Investment Income 117,882 26,623 12,432 156,937
Special Assessments 6,365 20,754 - 27,119
Meter Sales - 27,407 27,407
Meter Purchases - (80,487) - (80,487) '
Refunds and Reimbursements 2,226 - - 2,226
Bond Interest and Fiscal Charges (250,197) - - (250,197)
Miscellaneous Operating Revenues - 14,259 - 14,259
Total Nonoperating Revenues (Expenses)
(123,724)
8,556
12,432
(102,736) '
Income before Capital Contributions and Transfers (11,596) 181,266 39,883 209,553
Transfers In 1,254,004 - - 1,254,004
Transfers Out - (1,382,767) - (1,382,767)
Change in Net Assets 1,242,408 (1,201,501) 39,883 80,790 ,
NET ASSETS:
Beginning of Year, As Previously Stated 5,625,442 2,946,657 872,098 9,444,197 '
Prior Period Adjustment 233,921 - - 233,921
Beginning of Year, Restated 5,859,363 2,946,657 872,098 9,678,118
End of Year $ 7,101,771 $ 1,745,156 $ 911,981 $ 9,758,908
The Notes to the Financial Statements are an integral part of this statement. 26
i
i
7
CITY OF ALBERTVILLE
Wright County, Minnesota
STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS
For the Year Ended December 31, 2006
CASH FLOWS -OPERATING ACTIVITIES:
' Receipts from Customers and Users
Payments to Suppliers
Payments to Employees
Net Cash Flows -Operating Activities
' CASH FLOWS - NONCAPITAL FINANCING ACTNITIES:
Transfer from Other Funds
Transfer to Other Funds
Net Cash Flows - Noncapital Financing Activities
CASH FLOWS -CAPITAL AND RELATED
FINANCING ACTIVITIES:
Principal Paid on Debt
Interest Paid on Debt
Special Assessments
Acquisition of Capital Assets
Purchases of Water Meters
Sales of Water Meters
Other Miscellaneous Receipts
Net Cash Flows -Capital and Related Financing Activities
CASH FLOWS -INVESTING ACTIVITIES:
Interest and Dividends Received
Net Change in Cash and Cash Equivalents
,' Cash and Cash Equivalents, January 1
' Cash and Cash Equivalents, December 31
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH FLOWS -OPERATING ACTIVITIES:
' Operating Income (Loss)
Adjustments to Reconcile Operating Income (Loss)
to Net Cash Flows -Operating Activities:
Depreciation Expense
Accounts Receivable
Due from Other Governments
Accounts Payable
' Salaries Payable
Total Adjustments
Net Cash Flows -Operating Activities
7
Sanitary Storm Water
Sewer (601) Water (602) (604) Total
$ 557,247 $ 877,386 $ 134,322 $ 1,568,955
(183,685) (824,446) (69,046) (1,077,177)
(67,998) (66,801) - (134,799)
305,564 (13,861) 65,276 356,979
1,254,004 - - 1,254,004
(1,382,767) - (1,382,767)
1,254,004 (1,382,767) - (128,763)
(404,925) - - (404,925)
(242,745) - - (242,745)
6,365 20,754 - 27,119
(1,082,837) - - (1,082,837)
- (80,487) - (80,487)
- 27,407 - 27,407
2,226 14,259 - 16,485
(1,721,916) (18,067) - (1,739,983)
117,882 26,623 12,432 156,937
(44,466) (1,388,072) 77,708 (1,354,830)
1,480,736 2,140,229 615,996 4,236,961
$ 1,436,270 $ 752,157 $ 693,704 $ 2,882,131
$ 112,128 $ 172,710 $ 27,451 $ 312,289
296,758 23,621 5,389 325,768
(66,447) (131,728) (7,950) (206,125)
1,034 (150) (4) 880
(37,668) (78,227) 40,390 (75,505)
(241) (87) - (328)
193,436 (186,571) 37,825 44,690
$ 305,564 $ (13,861) $ 65,276 $ 356,979
' The Notes to the Financial Statements are an integral part of this statement. 27
CITY OF ALBERTVILLE '
Wright County, Minnesota
STATEMENT OF FIDUCIARY NET ASSETS '
December 31, 2006
Albertville Landsca in
P g
Friendly City Escrows
ASSETS: Total '
Cash and Investments
(Including Cash Equivalents) $ 10,191 $ 76,996 $ 87,187
LIABILITIES:
Accounts Payable $ 10,191 $ 76,996 $ 87,187 '
The Notes to the Financial Statements are an integral part of this statement. 28
I~
' CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Albertville is a statutory city governed by an elected mayor and four council
members. The accompanying financial statements present the government entities for which the
government is considered to be financially accountable.
The financial statements present the City and its component units. The City includes all funds,
account groups, organizations, institutions, agencies, departments and offices that are not legally
separate from such. Component units are legally separate organizations for which the elected
' officials of the City are financially accountable and are included within the basic financial
statements of the City because of the significance of their operational or financial relationships
with the City.
The City is considered financially accountable for a component unit if it appoints a voting
majority of the organization's governing body and it is able to impose its will on the organization
by significantly influencing the programs, projects, activities or level of services performed or
' provided by the organization, or there is a potential for the organization to provide specific
financial benefits to or impose specific financial burdens on, the City.
As a result of applying the component unit definition criteria above, certain organizations have
been defined in accordance with Governmental Accounting Standards Board (GASB) Statement
No. 14 and are presented in this report as follows:
' Joint Ventures and Jointly Governed Organizations -The relationship of the City with the
entity is disclosed
' For the category above, the specific entities are identified as follows:
1. Joint Ventures and Jointly Governed Organizations
Joint Powers Board Water Fund
In 1977, the City of Albertville entered into an agreement with the Cities of St. Michael,
' Hanover and Frankfort Township to construct a water system under a grant bond
arrangement with the City of Albertville Economic Development Administration (EDA).
Water Revenue Bonds were issued in the name of the City of Albertville and purchased by
the City of Albertville EDA. The Joint Powers Board remits the annual bond and interest
payment to the City of Albertville which, in turn, remits the payment to the City of
Albertville EDA.
' 29
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity (Continued)
1. Joint Ventures and Jointly Governed Organizations (Continued)
Joint Powers Board Water Fund (Continued) '
The Joint Powers Agreement states in the event the Joint Powers Board Water Fund does not ,
generate sufficient revenue to pay operating costs and principal and interest on bonds, the
participants agree to contribute from their General Fund an amount sufficient to pay for such
deficiency. At the time of the original Agreement, each City and Town was to contribute
25% of the required amount. In 1996, Frankfort Township was annexed into the Cities of St.
Michael, Albertville and Otsego and no longer exists as a township. Therefore, the City of
Albertville is now required to contribute one-third of any potential deficiencies of the Joint
Powers Board.
A summary of the financial information of the Joint Powers Board Water Fund for the year
ended December 31, 2006 is: '
Total Assets $ 26,659,818
Total Liabilities $ 13,462,113
Total Net Assets 13,197,705
Total Liabilities and Net Assets $ 26 659 818
Operating Revenue $ 2,047,923 ,
Operating Expense 1,170,700
Other Income (Expense) 541,708
Change in Net Assets $ 1,418,931
,
Financial statements for the Joint Powers Board Water Fund maybe obtained at the
Albertville City Hall.
St. Michael-Albertville Ice Arena
In 1996 and 1997, the City of Albertville entered into a Joint Powers Agreement with the City
of St. Michael and Independent School District No. 885, St. Michael-Albertville, for ,
construction and maintenance of a qualified ice arena. In addition, the City received notice in
1996 of being selected as a Mighty Ducks Grant recipient to help fund the cost of the
St. Michael-Albertville Ice Arena (STMA Arena). The STMA Arena was constructed with the
Mighty Ducks Grant funds, donations and contributions by the Cities of St. Michael and
Albertville and Independent School District No. 885.
30 '
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
i
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity (Continued)
1. Joint Ventures and Jointly Governed Organizations (Continued)
St. Michael-Albertville Ice Arena (Continued)
' The Joint Powers Agreement states the City is to execute a revenue note in the amount of
$ 133,333, which will be paid back with funds available from the operation of the STMA
Arena. The total amount of the revenue note is to be $ 400,000, of which each participant is
one-third responsible. If funds are deficient, the City must pay one-third of the amount
necessary to make up the shortage. In addition, the City must allocate an amount sufficient
to pay one-third of any projected shortfall in annual revenues available for the operation and
maintenance of the STMA Arena.
During 1998, the City contributed the required $ 133,333 toward the STMA Arena. In
addition, in 1998 the City's Storm Water Enterprise Fund provided STMA Arena with a
short-term loan in the amount of $ 83,333. In 2006, 2005 and 2004, the City did not make
any contributions nor receive any payments on the loan. The City did, however, cancel the
short-term loan, due from other governments, in the amount of $ 83,333 as a bad debt
expense.
A summary of the financial information of the STMA Arena for the year ended
December 31, 2005 (information for 2006 was not available) is:
' Total Assets $ 828,081
Total Liabilities $ 681,688
Total Net Assets 146,393
Total Liabilities and Equity $ 828,081
Total Revenues $ 198,747
Operating Expenses 213,242
Other Income (Expense) 190
Change in Net Assets $ (14,305)
Financial statements for the STMA Arena maybe obtained at the Albertville City Hall.
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CITY OF ALBERTVILLE ,
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS '
December 31, 2006
NOTE 1 - S MM
U ARY OF SIGNIFICANT ACCOUNTING POLICIES
B. Government-Wide and Fund Financial Statements '
The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of
Activities) report information on all of the nonfiduciary activities of the City. The fiduciary
funds are only reported in the Statement of Fiduciary Net Assets at the fund financial statement
level. For the most part, the effect of interfund activity has been removed from these Statements.
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 r
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Interest on general long-term debt is
considered an indirect expense and is reported separately in the Statement of Activities.
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 and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements. '
The Agency Funds are presented in the fiduciary fund financial statements. Since, by definition,
these assets are being held for the benefit of a third party (other local governments, private
parties, etc.) and cannot be used to address activities or obligations of the City, these Funds are 1
not incorporated into the government-wide 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 and fiduciary
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.
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CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
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. 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 only
when payment is due.
Property taxes, franchise taxes, licenses 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.
Description of Funds:
Major Governmental Funds:
'1
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General Fund -This Fund is the City's primary operating fund. It accounts for all financial
resources of the general City, except those required to be accounted for in another fund.
2003A G.O. Improvement Bonds Debt Service Fund -This Fund accounts for the debt
associated with street improvement projects.
Sewer Access Capital Projects Fund -This Fund accounts for the resources accumulated
from sewer availability charges collected by the City.
Water Access Capital Projects Fund -This Fund accounts for the resources accumulated for
water access connection collected by the City.
Closed Capital Projects Fund -This Fund accounts for costs associated with replacement of
the City's utility and road systems. It also covers minor costs for project funds closed and
completed.
Prairie Run Capital Projects Fund -This Fund accounts for the resources and payments made
for construction of public improvements at the Prairie Run Development.
City Hall Capital Projects Fund -This Fund accounts for the resources and payments made
for construction of the City Hall.
' 33
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Description of Funds: (Continued) ,
Major Governmental Funds: (Continued)
Ice Arena Locker Rooms -This Fund accounts for the resources and payments made for
construction of the ice arena locker rooms.
52°d Street Industrial Park -This Fund accounts for the resources and payments made for
construction related to the Industrial Park.
Major Proprietary Funds:
Sanitary Sewer Fund -This Fund accounts for the operations of the City's sanitary sewer
utility.
Water Fund -This Fund accounts for the operations of the City's water utility.
'
Storm Water Fund -This Fund accounts for the activities of the City
s storm drainage
operations.
Fiduciary Fund:
Agency Funds -These Funds account for landscaping escrow deposits and funds for the
Cit
's "Friendly Days" held by the Cit
in a strictl
custodial ca
acit ,
y
y
y
p
y.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government-wide and proprietary fund financial statements to
the extent that those standards do not conflict with or contradict guidance of the GASB.
Governments also have the option of following subsequent private-sector guidance for their
business-type activities and enterprise funds, subject to this same limitation. The City has
elected not to follow subsequent private-sector guidance.
As a general rule, the effect of interfund activity has been eliminated from the government- '
wide financial statements. Exceptions to this general rule are charges between the City's
sanitary sewer function 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. ,
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CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
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.
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 Sanitary Sewer, Water and Storm Water Enterprise Funds are
charges to customers for sales and services. Operating expenses for enterprise funds include the
cost of sales and services, administrative expenses and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses.
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 Assets or Equity
1. Deposits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and
short-term investments with original maturities of three months or less from the date of
acquisition.
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies
and instrumentalities, shares of investment companies whose only investments are in the
aforementioned securities, obligations of the State of Minnesota or its municipalities,
bankers' acceptances, future contracts, repurchase and reverse repurchase agreements and
' commercial paper of the highest quality with a maturity of no longer than 270 days and in the
Minnesota Municipal Investment Pool.
Custodial Credit Risk -Deposits: Custodial credit risk is the risk that in the event of a bank
failure, the City's deposits may not be returned to it. Minnesota Statutes require all deposits
made by cities with financial institutions are collateralized in an amount equal to 110% of
deposits in excess of Federal Deposit Insurance Corporation (FDIC) insurance.
35
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued) 1
1. Deposits and Investments (Continued)
Concentration of Credit Risk: The City's investment policy has addressed concentration of ~
credit risk as to diversification and is required to limit potential losses to no more than the
income generated by the portfolio. '
Interest Rate Risk: The City's policy also addresses interest rate risk by not allowing the
City to invest in securities maturing more than five years from the date of purchase. Also, no
more than 50% of the dollar value of the City's investments will mature more than two years
from the date of purchase. The City will not purchase investments that cannot be held to
maturity. The policy also covers that the City will handle its investment transactions with
several legal, competing, reputable investment security dealers. The City's policy has not
addressed exposure to credit risk and custodial credit risk.
Custodial Credit Risk -Investments: For an investment, this is the risk that in the event of
the failure of the counterparty the City will not be able to recover the value of its investment
or collateral securities that are in the possession of an outside party.
Investments for the City are reported at fair value. The Minnesota Municipal Investment
Pool is an external investment pool not registered with the Securities Exchange Commission
(SEC) that follows the same regulatory rules of the SEC under Rule 2.a.7. The fair value of
the position in the pool is the same as the value of the pool shares.
2. Restricted Assets
Certain proceeds of the Public Facilities Authority's revenue bonds, as well as certain
resources set aside for their repayment, are classified as restricted assets in the Balance
Sheet -Governmental Funds Statement because they are maintained in separate bank
accounts and their use is limited by the Public Facilities Authority Loan Agreement.
3. Property Tax Receivables ,
All property tax receivables are shown at a gross amount since both are assessable to the
property taxes and are collectible upon the sale of the property.
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CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
3. Property Tax Receivables (Continued)
The City levies its property tax for the subsequent year during the month of December.
December 28 is the last day the City can certify a tax levy to the County Auditor for collection
the following year. Such taxes become a lien on January 1 and are recorded as receivables by
the City at that date. The property tax is recorded as revenue when it becomes measurable and
available. Wright County is the collecting agency for the levy and remits the collections to the
City three times a year. The tax levy notice is mailed in March with the first half of the
payment due on May 15 and the second half of the payment due on October 15. Taxes not
collected as of December 31 each year are shown as delinquent taxes receivable.
The County Auditor prepares the tax list for all taxable property in the City, applying the
applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for
each property. The County Auditor also collects all special assessments, except for certain
prepayments paid directly to the City.
The County Auditor submits the list of taxes and special assessments to be collected on each
parcel of property to the County Treasurer in January of each year.
4. Land Held for Resale
The City of Albertville acquires properties for redevelopment purposes. Land held for resale
is reported as an asset at its net realizable value in the 2003 G.O. Improvement Bonds Debt
Service Fund. Any costs incurred that are above a property's net realizable value are
reported as expenditures of the current period. Land Held for Resale is offset by a fund
balance reservation in the 2003 G.O. Improvement Bonds Debt Service Fund to indicate that
it is not available for appropriation and is not expendable available financial resources.
5. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,
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 estimated useful life greater than one year and with an initial
individual cost as shown on the following page.
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CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
5. Capital Assets (Continued)
Land $ 10,000
Land Improvements 25,000
Infrastructure 100,000 '
Buildings 25,000
Building Improvements 25,000
Vehicles 5,000
Other Equipment 5,000
Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the date of
donation.
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.
Property, plant and equipment of the City are depreciated using the straight-line method over
the following estimated useful lives:
Assets Years
Land Improvements 5-30
Infrastructure 15-50
Buildings 15-40
Vehicles 3-15
Other Equipment 3-20
6. Vacation, Sick and Compensatory Benefits
The City compensates employees who resign or retire with due notice for unused vacation
and compensatory time. Employees may carry over vacation time from one vacation year to
another vacation year as established by the employee's anniversary date. Compensatory time
is accumulated at 1.5 times for overtime hours worked. A maximum of 40 hours of
compensatory time maybe accumulated.
Full-time employees are entitled to sick leave at the rate of one day per month to a maximum
of 120 days, or 480 hours. Hours accumulated in excess of the maximum are applied to the
City's sick leave incentive program. An employee earns 1/4 day paid vacation or 1/4 days'
pay in lieu of excess sick leave at the employee's option. This option is only active and
available when the beginning sick leave balance for each month is 60 days. The cash in lieu
option is paid in December of each year.
38
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CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO TAE FINANCIAL STATEMENTS
December 31, 2006
' NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIE
S
D. Assets, Liabilities and Net Assets or Equity (Continued)
6. Vacation, Sick and Compensatory Benefits (Continued)
Vacation, sick and compensatory benefits are considered expenditures in the year due in the
governmental fund types, while in the proprietary fund types, vacation and sick pay are
charged to expense when earned. All estimated vacation and compensatory benefit time is
recorded when incurred in the government-wide and proprietary fund statements.
' 7. Long-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
Statement of Net Assets.
' 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.
8. Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for
use for a specific purpose. Designations of fund balance represent tentative management
plans that are subject to change.
9. Net Assets
Net assets represent the difference between assets and liabilities in the government-wide
financial statements. Net Assets invested in capital assets, net of related debt consists of
capital assets, net of accumulated depreciation, reduced by the outstanding balance of any
long-term debt used to build or acquire the capital assets. Net assets are reported as restricted
in the government-wide financial statement when there are limitations on their use through
external restrictions imposed by creditors, grantors, or laws or regulations of other
governments.
39
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CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 1 -SUMMARY F
O SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
10. Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Estimates also affect the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from those
estimates.
11. Change in Accounting Principle
The City changed the cash and investment footnote (Note 3.B.) presentation from weighted
average maturity to segmented time. There is no financial impact as a result of this change.
NOTE 2 -STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
1. In August of each year, City staff submits to the City Council, a proposed operating
budget for the fiscal year commencing the following January 1. The operating budget
includes proposed expenditures and the means of financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comments.
3. The budget is legally enacted through passage of a resolution after obtaining taxpayer
comments.
4. Budgets for the General and Special Revenue Funds are adopted on a basis consistent
with U.S. generally accepted accounting principles.
5. Expenditures may not legally exceed budgeted appropriations at the department level.
No fund's budget can be increased without City Council approval. The City Council may
authorize transfer of budgeted amounts between departments within any fund.
Management may amend budgets within a department level, so long as the total
department budget is not changed.
6. Annual appropriated budgets are adopted during the year for the General and Special
Revenue Funds. Annual appropriated budgets are not adopted for Debt Service Funds
because effective budgetary control is alternatively achieved through bond indenture
provisions. Budgetary control for Capital Projects Funds is accomplished through the use
of project controls and formal appropriated budgets are not adopted.
40
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
N TE 2 - TEW
O S ARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information (Continued)
7. Budgeted amounts are as originally adopted or as amended by the City Co uncil.
Individual amendments were not material in relation to the original amoun ts budgeted.
Budgeted expenditure appropriations lapse at year-end..
1 B. Fund Balance Deficits
The following funds had deficit fund balances at December 31, 2006:
1 Major Funds:
2003A G.O. Improvement Bonds Debt Service Fund $ (376,202)
Prairie Run Capital Projects Fund (861,049)
City Hall Capital Projects Fund (73,594)
52nd Street Industrial Park (692,016)
Nonmajor Funds:
Debt Service Funds:
City Hall Bonds (1,649)
1996A G.O. TIF Bonds (79,365)
Capital Projects Funds:
TIF No. 10 -Mold-Tech (5,399)
TIF No. 11 - Land of Lakes Tile (19,774)
CSAH 19 Widening (154,269)
County Road 37 Traffic Light (55,567)
I-94 (588)
School Pedestrian Bike Trail (72,666)
CSAH 19 and 57th Intersection (3,450)
CSAH 19 and 50th Street (2,925)
Wright County Shop Property (283)
Flood Mitigation Project (2,786)
These deficits will be eliminated by future levies, collections of special assessments, operating
transfers and developer reimbursements.
1
41
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 2 -STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
C. Excess of Expenditures Over Appropriations
Expenditures exceeded appropriations during the year ended December 31, 2006 by the
following amounts:
Appropriations Expenditures Excess
General Fund $ 2,857,864 $ 3,301,238 $ 443,374
NOTE 3 -DEPOSITS AND INVESTMENTS
Cash balances of the City's funds are combined (pooled) and invested to the extent available in
various investments authorized by Minnesota Statutes. Each fund's portion of this pool (or
pools) is displayed on the financial statements as "cash and cash equivalents" or "investments."
For purposes of identifying risk of investing public funds, the balances and related restrictions
are summarized on the next page.
A. Deposits
As of December 31, 2006, the City had deposits as follows:
Checking $ 1,564,862
Savings 2,258,941 '
Certificates of Deposit 843,919
Total Deposits $ 4,667,722
As of December 31, 2006, the City's bank balance was not exposed to custodial credit risk
because it was insured and fully collateralized with securities held by the pledging financial
institution's trust department or agent and in the City's name.
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CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 3 -DEPOSITS AND INVESTMENTS
B. Investments
As of December 31, 2006, the City had the following investments:
~ Investment Maturities ~
Fair Less than Greater than
Investment Type Value 1 Year 1-2 Years 2-5 Years 5 Years
Money Market Mutual Funds $ 42,816 $ 42,816 $ - $ - $ -
4M 231,833 231,833 - - -
U.S. Treasury 1,018,379 1,018,379 - - -
U.S. Government
Agency Securities 1,669,632 98,594 293,313 982,882 294,843
Municipal Bonds 849,564 249,573 133,618 466,373 -
Brokered Certificate of Deposit 2,281,290 1,715,434 477,797 88,059 -
Total Investments $6,093,514 $3,356,629 $ 904,728 $1,537,314 $ 294,843
Maximum
Maturity Investm~
Less than One Year 46%
One to Two Years 18%
Two to Five Years 30%
More than Five Years 0%
Interest Rate Risk: In accordance with the investment policy, the City manages exposures to
declines in fair values by investing 50% or more of its portfolio in investments that mature in
two or less years.
Concentration of Credit Risk: More than 5% of the City's investments are in:
Dollars Percent of Total
Investment Invested Investment
Federal Home Loan Bank Note
Coon Rapids, Minnesota Tax Increment B
$ 1,471,413 28.99%
333,137 6.56%
43
CITY OF ALBERTVILLE '
Wright County, Minnesota
NOTES TO TAE FINANCIAL STATEMENTS '
December 31, 2006
NOTE 3 -DEPOSITS AND INVESTMENTS
B. Investments (Continued) 1
Credit Rate Risk: The City's investments in U.S. governmental securities were all rated as AAA
by Moody's and AAA by Standard & Poor's (S&P). The following are the ratings for municipal ,
bonds:
Description Moody's S & P
Coon Rapids Minnesota Refunding TI Bonds AAA
Coon Rapids Minnesota Refunding TI Bonds AAA
St. Cloud Minn TI - Series B AA3 AA
Iowa City Iowa Series B AAA
Ramsey Minnesota TI - Series A Al ,
Kirkwood Community College Iowa New AA3 AA-
Cook County, Illinois School District No. 155 AAA '
Custodial Credit Risk -Investments: As of Decemb er 31, 2006, the City's investment balance
was not exposed to custodial credit risk. '
Summary of cash, deposits and investments as of December 31, 2006:
Petty Cash $ 250
Deposits 4,667,722
Investments 6,093,514
Total $ 10,761,486
Cash, deposits and investments are presented in the December 31, 2006 basic financial t
statements as follows:
Statement of Net Assets: '
Cash and Investments $ 9,655,920
Cash in Trust
Restricted Cash in Trust 939,989
78,390
Statement of Fiduciary Net Assets:
Agency Funds 87,187
Total Deposits and Investments $ 10,761,486
44
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 4 -ACCOUNTS RECEIVABLE
Accounts receivable as of year-end for the City's individual major funds, including the
applicable allowances for uncollectible accounts, are as follows:
Governmental Activities
Closed
General Capital
Fund Projects Total
Accounts Receivable $ 87,088 $ 578,027 $ 665,115
Less Allowance for Uncollectibles - (240,912) (240,912)
Net Accounts Receivable -
Governmental Activities $ 87,088 $ 337,115 $ 424,203
Business-Type Activities
Sanitary Storm
Sewer Water Water
Fund Fund Fund Total
Accounts Receivable -
Business-Type Activities $ 352,470 $ 290,113 $ 52,918 $ 695,501
45
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 5 -CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2006 was as follows:
Restated,
Beginning
Balance Increases Decreases
Governmental Activities:
Capital Assets not being Depreciated:
Land $ 3,732,869 $ - $ - $ 3,732,869
Construction in Progress 5,838,623 4,472,440 1,801,356 8,509,707
Total Capital Assets not
being Depreciated 9,571,492 4,472,440 1,801,356 12,242,576
Capital Assets being Depreciated:
Buildings 2,622,939 - - 2,622,939
Infrastructure 18,771,642 616,280 - 19,387,922
Improvements Other than Buildings S 18,391 - - S 18,391
Vehicles 992,802 S 19,446 - 1,S 12,248
Machinery and Equipment 260,260 4S,16S - 30S,42S
Total Capital Assets
being Depreciated 23,166,034 1,180,891 - 24,346,925
Less Accumulated Depreciation for:
Buildings 199,706 63,803 - 263,509
Infrastructure 6,651,041 799,400 - 7,450,441
Improvements Other than Buildings 64,SS9 34,559 - 99,118
Vehicles 514,009 107,158 - 621,167
Machinery and Equipment 22,651 20,412 - 43,063
Total Accumulated
Depreciation 7,451,966 1,025,332 - 8,477,298
Total Capital Assets being
Depreciated, Net 15,714,068 1SS,SS9 - 15,869,627
Governmental Activities Capital
Assets, Net ..$.25,285,560 $ 4,627,999 $ 1,801,356 $ 28,112,203
Beginning balance was restated to reflect the addition of land values (Note 14)
u
0
0
u
0
C
u
n
0
C
L
Ending
Balance
46
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 5 -CAPITAL ASSETS
Business-Type Activities:
Capital Assets not being Depreciated:
Land
Construction in Progress
Total Capital Assets
not being Depreciated
Restated,
Beginning
Balance
Increases Decreases
Ending
Capital Assets being Depreciated:
Sewer Plant and Lines
Water Main
Storm Sewer
Building
Machinery and Equipment
Total Capital Assets
being Depreciated
Less Accumulated Depreciation for:
Sewer Plant and Lines
Water Mains
Storm Sewer
Building
Machinery and Equipment
Total Accumulated
Depreciation
Total Capital Assets being
Depreciated, Net
$ 190,269 $ - $ - $ 190,269
4,360,637 - 4,360,637 -
4,550,906 - 4,360,637 190,269
7,979,992 212,892 - 8,192,884
436,894 383,593 - 820,487
71,251 144,305 - 215,556
- 4,702,684 - 4,702,684
236,270 - - 236,270
8,724,407 5,443,474 - 14,167,881
1,567,286 171,768 - 1,739,054
58,799 18,933 - 77,732
1,781 5,389 - 7,170
- 112,718 - 112,718
155,790 16,960 - 172,750
1,783,656 325,768 - 2,109,424
6,940,751 5,117,706 - 12,058,457
Business-Type Activities
Capital Assets, Net $ 11,491,657 $ 5,117,706 $ 4,360,637 $ 12,248,726
Beginning balance was restated to reflect additions to the Sewer System (Note 14).
47
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 5 -CAPITAL ASSETS
Depreciation expense was charged to functions/programs as follows:
Governmental Activities:
General Government $ 544
Public Safety 72,500
Public Works 907,378
Park and Recreation 44,910
0
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i
C
Total Depreciation Expense -Governmental Activities $ 1,025,332
Business-Type Activities:
Sewer $ 296,758
Water 23,621
Storm Sewer 5,389
Total Depreciation Expense -Business-Type Activities $ 325,768
NOTE 6 - INTERFUND TRANSFERS
The composition of interfund transfers as of December 31, 2006 is as follows:
Transfers In
C
2003A G.O. Water Closed Ice Arena Nonmajor
Improvement Access Capital Locker Governmental
General Bonds Charges Projects Rooms Funds Sanitary
Sewer
Total '
Transfer Out:
General Fund $ - $ - $ - $ - $ - $ 612,695 $ - $ 612,695
Sewer Access 27,930 38,675 - - - 269,476 1,254,004 .1,590,085
Closed Capital Projects - - - - 187,029 138,831
-
325,860 '
Nonmajor
Governmental Funds 92,288 - - 102,561 261,335 1,029,282 - 1,485,466
Water - - 1,382,767 - - - - 1,382,767 '
Total $ 120,218 $ 38,675 $ 1,382,767 $ 102,561 $ 448,364 $ 2,050,284 $ 1,254,004 $ 5,396,873
The purpose of the above transfers is to provide funding for capital improvement projects and '
capital outlay, provide funding for operating purposes and other miscellaneous items.
~~
48
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 7 -LONG-TERM DEBT
A. Components of Long-Term Liabilities
Issue
Govemmental Activities:
Revenue Bonds:
Public Facility Authority
Lease Revenue Bonds,
Series 1999
Public Project Lease Revenue
Bonds, Series 2004
Public Project Lease Revenue
Bonds, Series 200SB
Total Revenue Bonds
G.O. Special Assessment Bonds:
G.O. Improvement Bonds,
Series 1999A
G.O. Improvement Bonds,
Series 2003A
Total G.O. Special
Assessment Bonds
G.O. Tax Increment Bond,
Series 1996A
Unamortized Charges
Total Governmental Bonds
Compensated Absences
Total Long-Term Liabilities,
Govemmental Activities
Business-Type Activities:
Revenue Debt:
Public Facility Authority, G.O.
Sewer Revenue Note
G.O. Lease Revenue
Bonds, Series 2000A
G.O. Sewer Revenue
Bonds, Series 200SA
Unamortized Charges
Total Business-Type
Activities
Interest Original Final Principal Due Within
Rate Issue Maturity Outstanding One Year
07/20/99 5.00%-5.60% $ 860,000 02/01/19 $ 685,000 $ 40,000
09/09/04 3.75%-4.90% 2,100,000 02/01/25 2,070,000 75,000
12/22/05 3.30%-4.70% 3,700,000 12/01/25 3,575,000 130,000
6,330,000 245,000
07/29/99 4.10%-5.20% 1,760,000 02/01/IS 400,000 40,000
08/15/03 2.00%-4.15% 3,235,000 02/01/19 2,375,000 455,000
2,775,000 495,000
11/22/96 4.25%-5.40% 400,000 02/01/08 55,000 25,000
(262,575) (21,140)
8,897,425 743,860
26,222 25,208
8,923,647 769,068
10/19/93 3.32%
11/20/00 4.50%-5.25%
12/22/05 3.15%-4.25%
1,454,514 08/20/14
2,550,000 02/01/16
4,000,000 12/01/25
696,792 77,434
1,205,000 205,000
3,860,000 145,000
(85,462) (4,498)
5,676,330 422,936
Total all Long-Term
Liabilities $ 14,599,977 $ 1,192,004
Long-term bonded indebtedness listed above were issued to finance acquisition and construction
of capital facilities or to refinance (refund) previous bond issues.
49
n
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 7 -LONG-TERM DEBT
B. Changes in Long-Term Liabil ities
Long-term liability activity for the year ended D ecember 31, 2006, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Revenue Bonds $ 6,520,000 $ - $ 190,000 $ 6,330,000 $ 245,000
G.O. Special Assessment Bonds 3,285,000 - S 10,000 2,775,000 495,000
G.O. Tax Increment Bond 80,000 - 25,000 SS,000 25,000
Unamortized Charges (283,715) - (21,140) (262,575) (21,140)
Compensated Absences 26,762 33,572 34,112 26,222 25,208
Total Governmental
Activities 9,628,047 33,572 737,972 8,923,647 769,068
Business-Type Activities:
G.O. Sewer Revenue Note 4,771,718 - 214,926 4,556,792 222,434
Lease Revenue Bonds 1,395,000 - 190,000 1,205,000 205,000 '
Unamortized Charges (89,961) - (4,499) (85,462) (4,498)
Total Business-Type
Activities 6,076,757 - 400,427 5,676,330 422,936
Total $ 15,704,804 $ 33,572 $ 1,138,399 $ 14,599,977 $ 1,192,004
C. Amortization Requirements '
The annual requirements to amortize all bonded debt outstanding are as follows:
Governmental Activities '
Year Ending Revenue Bonds G.O. Special Assessment Bonds G.O. Tax Increment Bond
December 31, Principal Interest Principal Interest Principal Interest Total
2007 $ 245,000 $ 274,796 $ 495,000 $ 90,91 S $ 25,000 $ 2,295 $ 1,133,006
2008 250,000 265,399 510,000 76,247 30,000 810 1,132,456
2009 265,000 2SS,469 520,000 60,048 - - 1,100,517
2010 270,000 244,985 125,000 49,462 - - 689,447
2011 280,000 234,024 130,000 44,466 - - 688,490
2012-2016 1,580,000 985,039 665,000 133,OS0 - - 3,363,089
2017-2021 1,830,000 574,601 330,000 20,958 - - 2,7SS,SS9
2022-2026 1,610,000 213,473 - - - - 1,823,473 '
Total $ 6,330,000 $ 3,047,786 $ 2,775,000 $ 475,146 $ SS,000 $ 3,lOS $ 12,686,037
$~
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 7 -LONG-TERM DEBT
C. Amortization Requirements (Continued)
Year Ended Business-Type Activities
December 31, Principal Interest Total
2007 $ 427,434 $ 226,167 $ 653,601
2008 455,027 208,809 663,836
2009 287,706 194,630 482,336
2010 300,474 184,006 484,480
2011 318,336 173,543 491,879
2012-2016 1,802,815 661,162 2,463,977
2017-2021 1,115,000 358,263 1,473,263
2022-2026 1,055,000 113,245 1,168,245
Total $ 5,761,792 $ 2,119,825 $ 7,881,617
NOTE 8 -FUND BALANCES
A. Designated/Rese rved Fund Balance
Designated and reserved fund balances are comprised of the following components:
Capital Projects
2003A G.O. Closed Nonmajor
Improvement Sewer Water Capital Governmental
General Bonds Access Access Projects Funds Total
Unreserved:
Designated for
Working Capital $ 1,000,000 $ - $ - $ _ $ _ $ - $ 1,000,000
Designated for
Capital Expenditures - - 525,000 189,000 .150,380 1,539,943 2,404,323
Reserved:
Land Held for Resale - 2,735,714 - - - - 2,735,714
Debt Service - - - - - 1,225,679 1,225,679
Special Revenue - - - - - 159,771 159,771
Total $ 1,000,000 $ 2,735,714 $ 525,000 $ 189,000 $ 150,380 $ 2,925,393 $ 7,525,487
51
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS '
December 31, 2006
NOTE 9 - RISK MANA E
G MENT
The City purchases commercial insurance coverage through the League of Minnesota Cities
Insurance Trust with other cities in the state, which is a public entity risk pool currently operating
as a common risk management and insurance program. The City pays an annual premium to the
League for its insurance coverage. The League is self-sustaining through commercial companies
for excess claims. The City is covered through the pool for any claims incurred but unreported,
but retains risk for the deductible portion of its insurance policies. The amount of these
deductibles is considered immaterial to the financial statements.
There were no significant reductions in insurance from the previous year or settlements in excess
of insurance coverage for any of the past three fiscal years. '
The City's workers' compensation insurance policy is retrospectively rated. With this type of
policy, final premiums are determined after loss experience is known. The amount of premium
adjustment for 2006 is estimated to be immaterial based on workers' compensation rates and
salaries for the year.
At December 31, 2006, there were no other claims liabilities reported in the Fund based on the ,
requirements of GASB Statement No. 10, which requires a liability for claims be reported if
information prior to the issuance of the financial statements indicates that it is probable that a
liability has been incurred at the date of the financial statements and the amount of the loss can ,
be reasonably estimated.
NOTE 10 -DEFINED BENEFIT PENSION PLANS -STATE-WIDE
Public Employees' Retirement Association
A. Plan Description
All full-time and certain part-time employees of the City Albertville are covered by defined
benefit plans administered by the Public Employees' Retirement Association of Minnesota
(PERA). PERA administers the Public Employees' Retirement Fund (PEKE) and the Public
Employees Police and Fire Fund (PEPFF), which are cost-sharing, multiple-employer retirement
plan. These Plans are established and administered in accordance with Minnesota Statutes '
Chapters 353 and 356.
PERF members belong to either the Coordinated Plan or Basic Plan. Coordinated Plan members
are covered by social security and Basic Plan members are not. All new members must
participate in the Coordinated Plan. All police officers, firefighters and peace officers who
qualify for membership by statute are covered by the PEPFF.
PERA provides retirement benefits as well as disability benefits to members, and benefits to
survivors upon death of eligible members. Benefits are established by state statute, and vest after
three years of credited service. The defined retirement benefits are based on a member's highest
average salary for any five successive years of allowable service, age and years of credit at
termination of service.
52 ,
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J
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 10 -DEFINED BENEFIT PENSION PLANS -STATE-WIDE
Public Employees' Retirement Association (Continued)
A. Plan Description (Continued)
Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members.
The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a
level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan
member is 2.2% of average salary for each of the first 10 years of service and 2.7% for each
remaining year. The annuity accrual rate for a Coordinated. Plan member is 1.2% of average
salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the
annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated
Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0% for
each year of service. For all PEPFF and PERF 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
equa190. Normal retirement age is 55 for PEPFF and 65 for Basic and Coordinated Plan
members hired prior to July 1, 1989. Normal retirement age for unreduced social security
benefits is capped at 66 for Coordinated Plan members hired on or after July 1, 1989. A reduced
retirement annuity is also available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single-life
annuity is a lifetime annuity that ceases upon the death of the retiree-no survivor annuity is
payable. There are also various types of joint and survivor annuity options available which will
be payable over joint lives. Members may also leave their contributions in the Fund upon
termination of public service in order to qualify for a deferred annuity at retirement age.
Refunds of contributions are available at any time to members who leave public service, but
before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and
apply to active Plan participants. Vested, terminated employees who are entitled to benefits but
are not yet receiving them, 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 PERF. That report maybe obtained on the Internet at
www.mnpera.org, by writing to PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota
55103-2088 or by calling (651) 296-7460 or (800) 652-9026.
53
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 10 -DEFINED BENEFIT PENSION PLANS -STATE-WIDE
Public Employees' Retirement Association (Continued)
B. Funding Policy
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These
Statutes are established and amended by the state legislature. The City makes annual contributions
to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and
Coordinated Plan members were required to contribute 9.1% and 5.5%, respectively, of their
annual covered salary in 2006. Contribution rates in the Coordinated Plan will increase in 2007 to
5.75%. PEPFF members were required to contribute 7.0% of their annual covered salary in 2006.
That rate will increase to 7.8% in 2007. The City of Albertville is required to contribute the
following percentages of annual covered payroll: 11.78% for Basic Plan PERF members, 6.0% for
Coordinated Plan PERF members and 10.5% for PEPFF members. Employer contribution rates
for the Coordinated Plan and PEPFF will increase to 6.25% and 11.7%, respectively, effective
January 1, 2007. The City's contributions to the PERF for the years ending December 31, 2006,
2005 and 2004 were $ 34,470, $ 27,219 and $ 24,493, respectively. The City's contributions were
equal to the contractually required contributions for each year as set by state statute.
NOTE 11 -CONDUIT DEBT OBLIGATIONS
Conduit debt obligations are certain limited-obligation revenue bonds or similar debt instruments
issued for the express purpose of providing capital financing for a specific third party. The City
has issued revenue bonds to provide funding to private-sector entities for projects deemed to be
in the public interest. Although these bonds bear the name of the City, the City has no
obligations for such debt beyond the resources provided by related leases or loans. Accordingly,
the bonds are not reported as liabilities in the financial statements of the City.
NOTE 12 -CONDUIT DEBT OBLIGATIONS
As of December 31, 2006, the following issues were outstanding:
Name
Date Original
of Issue Amount
Cottages of Albertville:
Multi Family Housing Revenue Bonds,
Series 1999A 12/23/99
Subordinated Multi-Family Housing Revenue
Bonds, Series 1999C
$ 3,230,000
09/30/99 425,000
n
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I
i
Outstanding
December 31, 2006
$ 3 180 000 ,
425,000
54
CITY OF ALBERTVILLE
Wright County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2006
NOTE 13 - COMMITTMENTS
The City has entered into several public improvement projects contracts. The remaining
commitments under these contracts at December 31, 2006 follow:
r Project
2004 Prairie Run
2004 School Pedestrian Trail
City Hall
Ice Arena Locker Arena
Industrial Park Improvements
r
C
Total
NOTE 14 -PRIOR PERIOD ADJUSTMENTS
Original Commitment
Contract Remaining
$ 1,575,734 $ 217,718
353,877 32,084
3,091,000 4,411
650,322 1,650
529,139 26,457
$ 282,320
Net assets for governmental activities were restated to reflect City owned land valued at
$ 2,387,326 and infrastructure overstated at $ 544,966. Net assets for the Sewer Fund were
restated by $ 233,921 to reflect assets not captured in a prior year. Within the fund financial
statements a prior period adjustment of $ 2,827,106 was recorded to reflect land held for resale
previously classified as capitalized land. A $ (41,392) adjustment was recorded to reflect
additional project liabilities and fund balance in the Closed Capital Projects Fund was restated by
$ 97,632 to reflect a reduction in contracts payable for contracts that were paid in full during
2005.
NOTE 15 -LAWSUITS/CONTINGENT LIABILITIES
Subsequent to year-end and at December 31, 2006, the City was involved as a defendant in two
lawsuits. Both lawsuits, unless settled, are expected to go to trial in December of 2007. The
outcome and any potential contingent liability is unknown.
55
(THIS PAGE LEFT BLANK INTENTIONALLY.)
n
SUPPLEMENTARY INFORMATION
56
CITY OF ALBERTVILLE
Wright County, Minnesota
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2006
Special Revenue Debt Service
1993A G.O.
1992A G.O. Improvement
Revolving Loan Close d Bond Improvement Refunding
(203) Issues (300) (322) (324)
ASSETS:
Cash and Investments ,
(Including Cash Equivalents) $ 159,771 $ 87,756 $ 14,344 $ 77,577
Cash in Trust - - - -
Restricted Cash in Trust - - - -
Taxes Receivable -Delinquent - 61 S6 -
Special Assessment Receivable:
Delinquent
-
-
-
-
Deferred - 2,SS3 - -
Due from Other Governments - 1 - -
Notes Receivable 21,200 - - -
Total Assets $ 180,971 $ 90,371 $ 14,400 $ 77,577
LIABILITIES AND FUND BALANCES:
Liabilities:
Cash Overdraft $ - $ - $ - $ -
Accounts and Contracts Payable - - - -
Deferred Revenue 21,200 2,614 S6 -
Total Liabilities 21,200 2,614 S6 -
Fund Balances:
Reserved for:
Debt Service - 87,757 14,344 77,577
Special Revenue 159,771 - - -
Unreserved, Reported in:
Debt Service - Undesignated - - - -
Capital Projects -Designated - - - -
Capital Projects - Undesignated - - - -
Total Fund Balances 159,771 87,757 14,344 77,577
Total Liabilities and
Fund Balances $ 180,971 $ 90,371 $ 14,400 $ 77,577
S7
r
Debt Service
1996A G.O. 1999 Lease 1999A G.O. 2005 Lease
City Hall TIF Bonds Revenue Improvement Revenue Total Debt
Bonds (341) (353) Bonds (354) Bonds (355) Bonds (358) Service
$ - $ - $ 4,227 $ 293,463 $ 650,202 $ 1,127,569
- - 16,847 - - 16,847
78,390 78,390
81 420 2,349 1,784 5,956 10,707
- 13,819 - 106,574 - 122,946
- 111 940 166 1,766 2,984
- - - - - -
$ 81 $ 14,350 $ 102,753 $ 401,987 $ 657,924 $ 1,359,443
$ 1,649 $ 79,476 $ _ $ _ $ _ $ 81,125
81 14,239 2,349 108,358 5,956 133,653
1,730 93,715 2,349 108,358 5,956 214,778
_ = 100,404 293,629 651,968 1,225,679
(1,649) (79,365) _ _ - (81,014)
(1,649) (79,365) 100,404 293,629 651,968 1,144,665
$ 81 $ 14,350 $ 102,753 $ 401,987 $ 657,924 $ 1,359,443
58
CITY OF ALBERTVILLE
Wright County, Minnesota
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2006
Capital Projects
TIF No. 8 Vetsch
Capital Outlay TIF No . 7 Senior Cus tom Cabinets
Reserve (102) Park Fund (201) Housing {407) (408)
ASSETS:
Cash and Investments
(Including Cash Equivalents) $ 982,077 $ 249,487 $ 32,109 $ 5,242
Cash in Trust
Restricted Cash in Trust - -
- - -
- _
_
Taxes Receivable -Delinquent - - -
Special Assessment Receivable:
Delinquent - - -
Deferred - - - -
Due from Other Governments - - - -
Notes Receivable - - - -
Total Assets $ 982,077 $ 249,487 $ 32,109 $ 5,242
LIABILITIES AND FUND BALANCES:
Liabilities:
Cash Overdraft
Accounts and Contracts Payable $ - $ - $
- - -
- $ -
Deferred Revenue - - - -
Total Liabilities - - - -
Fund Balances:
Reserved for:
Debt Service - - - -
Special Revenue - - - -
Unreserved, Reported in:
Debt Service - Undesignated - - -
Capital Projects -Designated 982,077 249,487 32,109 5,242
Capital Projects - Undesignated - - -
Total Fund Balances 982,077 249,487 32,109 5,242
Total Liabihhes and
Fund Balances $ 982,077 $ 249,487 $ 32,109 $ 5,242
59
i
1
Capital Projects
School
TIF No. 9 TIF No. 10 TIF No. 11 CSAH 19 County Road Pedestrian
Barthel Bus Mold-Tech Land of Lakes Widening 37 Traffic Bike Trail
(409) (410) Tile (411) (465) Light (467) I-94 (468) (476, 487)
$ 10,853 $ - $ - $ - $ - $ 10,902 $ -
- - - - - - -
- - - - - - -
8,290 - - - - - -
- - - - - - -
$ 19,143 $ - $ - $ - $ - $ 10,902 $ -
$ $ 5,399 $ 19,774 $ 154,269 $ 55,567 $ - $ 56,576
= 11,490 16,090
- 5,399 19,774 154,269 55,567 11,490 72,666
i = _ _ _ _ _
19,143 - - - - - -
- (5,399) (19,774) (154,269) (55,567) (588) (72,666)
19,143 (5,399) (19,774) (154,269) (55,567) (588) (72,666)
$ 19,143 $ - $ - $ - $ - $ 10,902 $ -
60
CITY OF ALBERTVILLE
Wright County, Minnesota
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2006
ASSETS:
Cash and Investments
(Including Cash Equivalents)
Cash in Trust
Restricted Cash in Trust
Taxes Receivable -Delinquent
Special Assessment Receivable:
Delinquent
Deferred
Due from Other Governments
Notes Receivable
Total Assets
LIABILITIES AND FUND BALANCES:
Liabilities:
Cash Overdraft
Accounts and Contracts Payable
Deferred Revenue
Total Liabilities
Fund Balances:
Reserved for:
Debt Service
Special Revenue
Unreserved, Reported in:
Debt Service - Undesignated
Capital Projects -Designated
Capital Projects - Undesignated
Total Fund Balances
Total Liabilities and
Fund Balances
CSAH 19 and CSAH 19 and Wright County
57th Intersection 50th Street Shop Property 70th Street/
(493) (494) (495) Maclver(497)
r
$ - $ - $ - $ 248,150
- - - -
- - - 73,449
- - - 122,011
- - - 3,735
- - - -
$ - $ - $ - $ 447,345
$ 3,121 $ 1,414 $ 283 $ -
329 1,511 - -
- - - 195,460
3,450 2,925 283 195,460
- - - -
- - - 251,885
(3,450) (2,925) (283) -
(3,450) (2,925) (283) 251,885
$ - $ - $ - $ 447,345
i
61
Capital Projects
Flood Total
Mitigation Total Capital Governmental
Project (498) Projects Funds
;~
$ - $ 1,538,820 $ 2,826,160
_ = 16,847
78,390
- - 10,707
- 73,449 73,449
- 122,011 244,957
- 12,025 15,009
- - 21,200
$ - $ 1,746,305 $ 3,286,719
$ 2,786 $ 299,189 $ 380,314
29,420 29,420
- 195,460 350,313
2,786 524,069 760,047
_ 1,225,679
= 159,771
- - (81,014)
- 1,539,943 1,539,943
(2,786) (317,707) (317,707)
(2,786) 1,222,236 2,526,672
$ - $ 1,746,305 $ 3,286,719
62
CITY OF ALBERTVILLE
Wright County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
REVENUES:
Taxes
Tax Increments
Special Assessments
Intergovernmental
Charges for Services
Miscellaneous:
Investment Income
Miscellaneous
Total Revenues
EXPENDITURES:
Current:
Park and Recreation
Economic Development
Debt Service:
Principal
Interest and Other Charges
Capital Outlay:
Public Works
Park and Recreation
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
OTHER FINANCING SOURCES (USES):
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES:
Beginning of Year, As Previously Stated
Prior Period Adjustment
Beginning of Year, Restated
End of Year
Special Revenue Debt Service
1993A G.O.
1992A G.O. Improvement
Revolving Loan Closed Bond Improvement Refunding
(203) Issues (300) (322) (324)
-
- 2,160
- -
- -
-
~,
2,940 1,606 269 1,458
37,879 - - -
40,819 3,816 269 1,458
- - - -
- - - 20,000
- - - 1,073
- - - 21,073
40,819 3,816 269 (19,615)
- - - -
40,819 3,816 269 (19,615)
118,952 83,941 14,075 97,192
118,952 83,941 14,075 97,192
$ 159,771 $ 87,757 $ 14,344 $ 77,577
63
t
Debt Service
1996A G.O. 1999 Lease 1999A G.O. 2005 Lease 2005 City
City Hall TIF Bonds Revenue Improvement Revenue Hall Revenue Total Debt
Bonds (341) (353) Bonds (354) Bonds (355) Bonds (358) Bonds (359) Service
$ - $ 10
410 $ 55
907 $ 39
323 154
2
, , , $
,
39 $ - $ 259,929
= 19,177 - 22,754 - - 44,091
70 370 263 1,030 1,733
= = 3,835 4,989 9,474 = 21,631
- 29,657 60,112 67,329 164,743 - 327,384
- - - - - - -
- 25,000 35,000 40,000 30,000 125,000 275,000
- 4,076 40,056 21,456 90,875 153,478 311,014
- 29,076 75,056 61,456 120,875 278,478 586,014
- 581 (14,944) 5,873 43,868 (278,478) (258,630)
- - - - - 269,477 269,477
- - - 269
477
- - , 269,477
- 581 (14,944) 5,873 43,868 (9,001) 10,847
(1,649) (79,946) 115,348 287,756 608,100 9,001 1,133,818
- - - - - - -
(1,649) (79,946) 115,348 287,756 608,100 9,001 1,133,818
$ (1,649) $ (79,365) $ 100,404 $ 293,629 $ 651,968 $ - $ 1,144,665
64
CITY OF ALBERTVILLE
Wright County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
Capital Projects
TIF No. 8
Capital TIF No. 7 Vetsch
Outlay Senior Custom
Reserve Park Fund Housing Cabinets
(102) (201) (407) (408)
REVENUES:
Taxes $ - $ - $ - $ -
Tax Increments - - 28,941 11,325
Special Assessments - - - -
Intergovernmental - - - -
Charges for Services - 25,012 - -
Miscellaneous:
Investment Income 15,047 23,453 317 -
Miscellaneous - - - -
Total Revenues 15,047 48,465 29,258 11,325
EXPENDITURES:
Current:
Park and Recreation - - - -
Economic Development - - 12,987 5,662
Debt Service:
Principal - - - -
Interest and Other Charges - - - -
Capital Outlay:
Public Works 56,553 - - -
Park and Recreation - 2,894 - -
Total Expenditures 56,553 2,894 12,987 5,662
Excess of Revenues Over
(Under) Expenditures (41,506) 45,571 16,271 5,663
OTHER FINANCING SOURCES (USES):
Transfers In 512,695 - - -
Transfers Out (310,450) (1,067,204) - -
Total Other Financing Sources (Uses) 202,245 (1,067,204) - -
Net Change in Fund Balances 160,739 (1,021,633) 16,271 5,663
FUND BALANCES:
Beginning of Year, As Previously Stated 821,338 1,271,120 15,838 (421)
Prior Period Adjustment - - - -
Beginning of Year, Restated 821,338 1,271,120 15,838 (421)
End of Year $ 982,077 $ 249,487 $ 32,109 $ 5,242
65
i
Capital Projects
'
T
IF No. 9
TIF No. 10 TIF No. 11
Land of
NW
CSAH 19
County Road
Barthel Bus Mold-Tech Lakes Tile Commercial Widening Public Works 37 Traffic
(409) (410) (411) Park (463) (465) Facility (466) Light (467) I-94 (468)
16,580 11,205 30,495 - - - _ _
- - - - - - - -
' 692 -
- - - - =
47,385 =
16,580 11,205 30,495 - 692 - 47,385 -
- 5,603 30,495 - - - - -
'
- - - - 2,400 1,671 - 178,695
' - 5,603 30,495 - 2,400 1,671 - 178,695
' 16,580 5,602 - - (1,708) (1,671) 47,385 (178,695)
- - - 109,657 - 1,671 - 408,779
- _ - (5,251) (102,561) - - -
104,406 (1.02,561) 1,671 408,779
16,580 5,602 - 104,406 (104,269)_ - 47,385 230,084
2,563 (11,001) (19,774) (104,406) - - (102,952) (230,672)
50
000
- - - - (
,
) - - -
2,563 (11,001) (19,774) (104,406) (50,000) - (102,952) (230,672)
$ 19,143 $ (5,399) $ (19,774) $ - $ (154,269) $ - $ (55,567) $ (588)
66
CITY OF ALBERTVILLE
Wright County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2006
Capital Projects
School Wright-
Wright County Pedestrian Hennepin
Transportation CSAH 37 Bike Trail Substation
(469) Trails (470) (476, 487) (481)
REVENUES:
Taxes $ _ $ _ $ _ $ _
Tax Increments _ _ _ _
Special Assessments _ _ _ _
Intergovernmental - _ _ _
Charges for Services - _ _ _
Miscellaneous:
Investment Income _ _ _ _
Miscellaneous - - 14,000 -
Total Revenues - - 14,000 -
EXPENDITURES:
Current:
Park and Recreation - - 68,763 -
Economic Development - - - _
Debt Service:
Principal - - - _
Interest and Other Charges - - - -
Capital Outlay:
Public Works - 40,170 - -
Park and Recreation _ _ _ _
Total Expenditures - 40,170 68,763 -
Excess of Revenues Over
(Under) Expenditures - (40,170) (54,763) -
OTHER FINANCING SOURCES (USES):
Transfers In 27,549 261,816 323,072 1,624
Transfers Out - _ _ _
Total Other Financing Sources (Uses) 27,549 261,816 323,072 1,624
Net Change in Fund Balances 27,549 221,646 268,309 1,624
FUND BALANCES:
Beginning of Year, As Previously Stated (27,549) (221,646) (340,975) (1,624)
Prior Period Adjustment _ _ _ _
Beginning of Year, Restated (27,549) (221,646) (340,975) (1,624)
End of Year $ - $ - $ (72,666) $ -
67
' Capital Projects
CSAH 19
and 57th
CSAH 19 Wright
County Shop
70th Street/
Flood Total
Nonmajor
I ntersection and 50th Property Hockey Rink Maclver Mitigation Total Capital Governmental
(493) Street (494) (495) (496) (497) Project (498) Projects Funds
$ - $ - $ - $ - $ - $ - $ - $ 259,929
- - - - - - 98,546 98,546
- - - - 11,080 - 11,080 55,171
1,733
- - - - - - 25,012 25,012
' _ _ _ _ 5,278 44,787 69,358
= 61,385 99,264
- - - - 16,358 - 240,810 609,013
- - 68,763 68,763
= _ 54,747 54,747
- - - - - - - 275,000
- - - - - - - 311,014
3,450 2,925 283 - 455 2,786 289,388 289,388
- - - 421 - - 3,315 3,315
' 3,450 2,925 283 421 455 2,786 416,213 1,002,227
(3,450) (2,925) (283) (421) 15,903 (2,786) (175,403) (393,214)
- - - 133,944 - 1,780,807 2,050,284
= (1,485,466) (1,485,466)
133,944 295,341 564,818
(3,450) (2,925) (283) 133,523 15,903 (2,786) 119,938 171,604
- - - (133,523) 235,982 - 1,152,298 2,405,068
- - - - - - (50,000) (50,000)
- - - (133,523) 235,982 - 1,102,298 2,355,068
$ (3,450) $ (2,925) $ (283) $ - $ 251,885 $ (2,786) $ 1,222,236 $ 2,526,672
68
CITY OF ALBERTVILLE
Wright County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL -GENERAL FUND
For the Year Ended December 31, 2006
Variance with
Final Budget -
Budgeted Amounts Positive
Original Final Actual Amounts (Negative)
REVENUES:
Taxes $ 1,735,899 $ ],735,899 $ 1,620,927 $ (114,972)
Licenses and Permits 551,940 551,940 487,132 (64,808)
Intergovernmental Revenue:
Market Value Credit - - 10,815 10,815
Fire Aid 50,000 50,000 49,376 (624)
Police Aid 14,000 14,000 38,482 24,482
Other Grants and Aids 10,150 10,150 16,855 6,705
Total Intergovernmental Revenue 74,150 74,150 115,528 41,378
Charges for Services 489,228 489,228 645,272 156,044
Fines and Forfeitures 100 100 3,702 3,602
Miscellaneous Revenues:
Investment Income 75,000 75,000 180,147 105,147
Miscellaneous 10,000 10,000 179,430 169,430
Total Miscellaneous 85,000 85,000 359,577 274,577
Total Revenues 2,936,317 2,936,317 3,232,138 295,821
EXPENDITURES:
General Government:
Mayor and Council 38,625 38,625 41,164 (2,539)
Administrative and Finance 381,958 381,958 395,624 (13,666)
Other General Government 354,384 354,384 488,244 (133,860)
Capital Outlay 153,000 153,000 10,796 142,204
Total General Government 927,967 927,967 935,828 (7,861)
Public Safety:
Police:
Current 440,000 440,000 438,000 2,000
Total Police 440,000 440,000 438,000 2,000
Fire:
Current 310,127 310,127 231,424 78,703
Capital Outlay 38,000 38,000 500,504 (462,504)
Total Fire 348,127 348,127 731,928 (383,801)
Building Inspection:
Current 433,040 433,040 410,622 22,418
Capital Outlay 15,400 15,400 2,041 13,359
Total Building Inspection 448,440 448,440 412,663 35,777
Total Public Safety 1,236,567 1,236,567 1,582,591 (346,024)
69
CITY OF ALBERTVILLE
Wright County, Minnesota
STA TEMENT OF REVENUES, EXPENDIT URES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL -GENERAL FUND
For the Year Ended December 31, 2006
Variance with
'
Budgeted Amo
unts Final Budget -
Positive
Original Final Actual Amounts (Negative)
EXPENDITURES:
Public Works:
Streets and Highways;
Street Maintenance and Storm Sewers $ 357,771 $ 357,771 $ 476,772 $ (119,001)
Street Lighting
Street -Other Capital Outlay 48,000
37,500 48,000
37,500 61,276
22,895 (13,276)
14,605.
Total Streets and Highways 443,271 443,271 560,943 (117,672)
Sanitation: '
Garbage and Other Refuse
Collection and Disposal 40,000 40,000 44,528 (4,528)
Total Sanitation 40,000 40,000 44,528 (4,528)
Total Public Works 483,271 483,271 605,471 (122,200)
Park and Recreation:
Current 158,559 158,559 149,145 9,414
Capital Outlay 47,500 47,500 23,881 23,619
Total Parks and Recreation 206,059 206,059 173,026 33,033
Economic Development:
Current
4,000
4,000
4,322
(322)
Total Expenditures 2,857,864 2,857,864 3,301,238 (443,374)
Excess of Revenues Over
' (Under) Expenditures 78,453 78,453 (69,100) (147,553)
OTHER FINANCING SOURCES (USES):
Transfers In 120,218 120,218
Transfers Out - - (612,695) (612,695)
Total Other Financing Sources (Uses) - - (492,477) (492,477)
Net Change in Fund Balances $ 78,453 $ 78,453 (561,577) $ (640,030)
FUND BALANCES:
Beginning of Year 2,110,581
End of Year $ 1.,549,004
70
I~DV i
ICERN•DtWENTER•VIERE
t
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF '
THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GO i~ERNMENT A UDITING STANDARDS
Apri127, 2007 '
Honorable Mayor and Members
of the City Council
City of Albertville
Albertville, Minnesota
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the City of Silver ,
Bay, Minnesota, as of and for the year ended December 31, 2006, and have issued our report
thereon dated Apri127, 2007. We conducted our audit in accordance with U.S. generally
accepted auditing standards and the standards applicable to financial audits contained in
Government Auditing StandaYds, issued by the Comptroller General of the United States.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in
internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, as discussed on the following page, we identified certain deficiencies in
internal control over financial reporting that we consider to be significant deficiencies.
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KDv
KERN DeWtiNI'ER V1IRE
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u
i~
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course or performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination
of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record,
process or report financial data reliably in accordance with the regulatory basis of accounting
such that there is more than a remote likelihood that a misstatement of the City's financial
statements that is more than inconsequential will not be detected by the City's internal control.
We consider the deficiencies described in the accompanying Schedule of Findings on Legal
Compliance and Internal Controls as Audit Findings 06-04, 06-OS and 06-06 to be significant
deficiencies in internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the entity's internal control. We consider the deficiencies
described in the accompanying Schedule of Findings on Legal Compliance and Internal Controls
as Audit Findings 06-O1 and 06-02 to be material weaknesses in internal control over financial
reporting.
Our consideration of the internal control over financial reporting for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in the internal control that might be significant deficiencies and, accordingly, would not
necessarily disclose all significant deficiencies that are also considered to be material
weaknesses. We did not identify any deficiencies in internal control over financial reporting that
we consider to be material weaknesses, as defined above.
COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City's financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit and, accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance that are required to be reported under Government Auditing Standards.
We also noted certain additional matters that we reported to management of the City in a
separate letter dated Apri127, 2007.
This report is intended solely for the information and use of the City Council, management,
federal and state oversight awarding agencies and pass-through entities and is not intended to be
and should not be used by anyone other than these specified parties.
1 KERN, DEWENTER, VIERS, LTD.
St. Cloud, Minnesota
72
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KERN • DEWENTER•VIERE '
REPORT ON LEGAL COMPLIANCE
Apri127, 2007
Honorable Mayor and Members
of the City Council '
City of Albertville
Albertville, Minnesota
We have audited the financial statements of the governmental activities, business-type activities,
each
j
f
d
d th
ma
or
un
an
e aggregate remaining fund information of the City of Albertville, ,
Minnesota, as of and for the year ended December 31, 2006, and have issued our report thereon
dated April 27, 2007.
We c
d
t
d
dit i
d
on
uc
e
our au
n accor
ance with U.S. generally accepted auditing standards and the
provisions of the Minnesota Legal Compliance Audit Guide for Local Government, promulgated
by the State Auditor pursuant to Minnesota Statutes Sec. 6.65. Accordingly, the audit included
such tests of the accounting records and such other auditing procedures as we considered '
necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers seven main
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 study included all of the listed categories.
The results of our tests indicate that for the items tested, the City of Albertville, Minnesota,
complied with the material terms and conditions of applicable legal provisions, except as
described in the Schedule of Findings on Legal Compliance and Internal Controls.
This report is intended solely for the information and use of the City Council, management and
the Office of the State Auditor, and is not intended to be and should not be used by anyone other ,
than these specified parties.
KERN, DEWENTER, VIERS, LTD.
St. Cloud, Minnesota
73
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CITY OF ALBERTVILLE
Wright County, Minnesota
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE
AND INTERNAL CONTROL
Year Ended December 31, 2006
CURRENT AND PRIOR YEAR LEGAL COMPLIANCE FINDINGS:
During our audit, we noted there was an expenditure to purchase employee gift certificates.
Expenditures by a city should meet a public purpose test. The Minnesota Attorney General's
Office has the opinion that payments for employee appreciation do not qualify as a public
purpose expenditure.
We recommend the City refrain from paying for items that do not meet a public purpose.
PRIOR YEAR LEGAL COMPLIANCE FINDING:
According to Minnesota Statutes 471.425, Subd. 4a, requires contracts of a municipality to have
the prime contractor pay any subcontractor within 10 days of the prime contractor's receipt of
payment. The contract also must require that the prime contractor pay interest at the rate of 1.5%
per month or any part of a month to the subcontractor for any undisputed amount not paid to the
subcontractor within the 10 days.
For the contract entered into during fiscal year 2005 for the Wastewater Treatment Plant Phase II
Expansion, the City did not include this verbiage in the contract.
' 74
ii
'
CITY OF ALBERTVILLE
Wright County, Minnesota
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE '
AND INTERNAL CONTROL
Year Ended December 31, 2006 '
CURRENT YEAR INTERNAL CONTROL FINDINGS:
Material Weakness ,
Audit Finding 06-01 -Material Audit Adjustments '
We proposed a number of audit adjustments that we considered both individually and in
the aggregate, to be quantitatively material to the financial statements. The audit '
adjustments we proposed that were material to the financial statements related to
reclassifications of capital assets, investments and related revenue, receivables, property
taxes, special assessments, debt and accounts/contracts payable and reclassification of '
back dated checks as accounts payable.
In addition, KDV drafted the financial statements for the City. These financial
statements, including disclosures, were reviewed by City management and they have '
taken responsibility for them; however, we believe City personnel would require
additional training in U.S. generally accepted accounting principles to adequately apply
them internally. '
Audit Finding 06-02 -Prior Period Adjustments
Prior period adjustments were proposed to correct prior financial statements. In the
Sewer Fund the adjustments were for capital assets that were not recorded in previous
years that were identified during our audit. In the Closed Capital Projects Fund contracts '
payable was recorded in error for projects completed and paid for as of December 31,
2005. In the government-wide financial statements the prior period adjustment was due
to construction in progress that was previously capitalized as a capital asset, essentially
recording the asset twice. '
The financial statements are the responsibility of the City Council and management's
controls should be implemented to properly identify completed projects and the '
appropriate presentation of these items as it relates to the financial statements.
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75 '
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' CITY OF ALBERTVILLE
Wright County, Minnesota
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE
AND INTERNAL CONTROL
e Year Ended December 31, 2006
CURRENT YEAR INTERNAL CONTROL FINDINGS:
Significant Deficiency
Audit Finding 06-03 -Lack of Segregation of Accounting Duties
During the year ended December 31, 2006, the City had a lack of segregation of accounting
' duties due to a limited number of office employees. Although this meets the definition of a
"significant deficiency," it may not be practical to correct since the costs of obtaining
desirable segregation of accounting duties may exceed benefits that could be derived.
' • The Finance Director receives the bank statement and initiates and posts journal entries.
The Finance Director also initiates and posts wire transfers without approval or review.
• The Finance Director receives the investment statements, records maturities and
' issuances of new investments and posts entries into the accounting system for interest
receivable, revenue and market value changes in investments.
• The Finance Director maintains and reviews vacation time, sick time and compensatory
time accrual accounts.
• The Finance Director enters invoices into the accounting system, maintains the invoices
for payment and matches check summary with summary of invoices.
• The Finance Director matches the purchase requisition and invoice, approves invoices
for payment, posts the payments to the general ledger and is responsible for the
signature stamp.
In addition to having responsibilities in the cycles listed above, the City's Finance
Director has full general ledger access and the ability to write and post journal entries.
While we believe this access is necessary to efficiently perform the financial duties
required, this access has the ability to override many of the controls and segregation that
the city has in place.
Audit Finding 06-04 -Balance Cash on a Timely Basis/Review and Approval of
Reconciliation
During our audit, we noted cash balances are not reconciled to the general ledger. It is
critical to ensure cash is reconciled on a monthly basis.
Failure to reconcile these accounts on a monthly basis can generate mispostings and
inaccurate accounting records and does not provide current reliable cash balance
information for the City Council to gauge expenditure needs. We recommend cash
balances be reconciled to the general ledger on a monthly basis, and all variances be
investigated.
Further, we recommend that the reconciliation of the investments include specific
procedures for identifying the changes in market value and investment income and these
be recorded timely.
76
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CITY OF ALBERTVILLE
Wright County, Minnesota
u
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE '
AND INTERNAL CONTROL
Year Ended December 31, 2006 '
CURRENT YEAR INTERNAL CONTROL FINDINGS:
Significant Deficiency
Audit Finding 06-OS -Reconcile Withholding Accounts
n
During our audit, we noted the payroll withholding accounts on the City's financial
records are not reconciled. All payroll withholding accounts should be reconciled on a
regular basis to ensure proper withholding amounts are posted to the general ledger and
paid.
We recommend the Finance Director reconcile the payroll withholding accounts monthly
to ensure the proper balances are recorded. The monthly reconciliations should be
reviewed for accuracy by another City employee (City Clerk or City Administrator). The
reconciliations should include signature blocks for the preparer and the reviewer. '
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