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2006 Management Letter C C n n 7 J I~~ CIS C CITY OF ALBERTVILLE Wright County, Minnesota Management Letter For the Fiscal Year Ended December 31, 2006 Aril 27, 2007 p u I~DV KERN • DEWENTER• MERE Honorable Mayor and Members of the City Council City of Albertville Albertville, Minnesota ' The accompanying memorandum includes financial trend information for your City and suggestions for improvement of accounting procedures and internal accounting control measures that came to our attention as a result of our audit of the basic financial statements of the City of Albertville, Minnesota, for the year ended December 31, 2006. The matters discussed herein were considered by us during our audit and they do not modify the opinion expressed in our Independent Auditors' Report dated Apri127, 2007, on such statements. ' In planning and performing our audit of the financial statements of the City of Albertville, Minnesota as of and for the year ended December 31, 2006, in accordance with U.S. generally accepted auditing standards, we considered the City's internal control over financial reporting ' (internal control) 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. Accordingly, we do not express an opinion on the ' effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might be ' significant deficiencies or material weaknesses. Also, projection of any evaluation of the internal control to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or the degree of compliance may deteriorate. However, as discussed below, we identified certain deficiencies in internal control that we consider to be significant deficiencies and other deficiencies that we consider to be material weaknesses. ' A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of 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 City's ability to initiate, authorize, record, process or report financial data reliably in accordance with U.S. generally accepted accounting principles 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 prevented or detected by the ' City's internal control. We consider the following deficiencies to be significant deficiencies in internal control: ' • Lack of Segregation of Accounting Duties • Cash did not balance to General Ledger at year-end • Withholding Accounts are not reconciled on a regular basis KERN DeWEN I'ER VIERS ' 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 City's internal control. We believe the following ' deficiency constitutes a material weakness. • Material Adjustments • Prior Period Adjustments The accompanying memorandum includes financial trend information for your City and recommendations for improvement of accounting procedures and internal accounting control measures that came to our attention as a result of our audit of the basic financial statements of Albertville, Minnesota, for the year ended December 31, 2006. The matters discussed herein ' were considered by us during our audit and they do not modify the opinion expressed in our Independent Auditors' Report dated April 27, 2007, on such statements. This report is intended solely for the information and use of the City's management, City ' Council and federal and state oversight agencies, and others within the City and is not intended to be and should not be used by anyone other than these specified parties. We would like to express our appreciation for the cooperation extended to us by the management and employees of the City during our audit. KERN, DEWENTER, VIERS, LTD. ' St. Cloud, Minnesota u i I!~ ' CITY OF ALBERTVILLE Wright County, Minnesota MATTERS OF COMMUNCIATION December 31, 2006 We have audited the basic financial statements of the City of Albertville, Minnesota, for the year ' ended December 31, 2006 and have issued our report dated Apri127, 2007. Professional standards require that we provide you with the following information related to our audit. THE AUDITOR'S RESPONSIBILITY UNDER U.S. GENERALLY ACCEPTED AUDITING STANDARDS AND GOVERNMENTAUDITINGSTANDARDS As stated in our audit engagement letter, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance that the basic financial statements are free of material misstatement and are fairly presented in accordance with U.S. generally accepted accounting principles. Because an audit is designed to ' provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. ' As part of our audit, we considered the internal control of the City. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. ' SIGNIFICANT ACCOUNTING POLICIES ' Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City are described in Note 1 of the financial statements. We noted no significant unusual transactions and one significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. MANAGEMENT JUDGMENTS AND ACCOUNTING ESTIMATES Accounting estimates are an integral part of the basic financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly ' sensitive because of their significance to the basic financial statements and because of the possibility that future events affecting them may differ significantly from those expected. ' The most sensitive estimate affecting the financial statements was: • Depreciation -The City is currently depreciating its capital assets over their estimated useful lives, as determined by management, using the straight-line method. • Expense Allocation -Certain expenses are allocated to functions based on an estimate of the benefit to that particular function. Examples are salaries, benefits and supplies. ' We evaluated the key factors and assumptions used to develop the above estimate in determining that they are reasonable in relation to the financial statements taken as a whole. ' 3 ~'i L~ fl u ~l ~i ~~ '-1 0 CITY OF ALBERTVILLE Wright County, Minnesota MATTERS OF COMMUNCIATION December 31, 2006 SIGNIFICANT AUDIT ADJUSTMENTS An audit adjustment, whether or not recorded by the City, is a proposed correction of the basic financial statements that, in our judgment, may not have been detected except through our auditing procedures performed. Audit adjustments, individually or in the aggregate, may have a significant effect on the City's financial reporting process.. Matters underlying adjustments proposed by us but not recorded by the City could potentially cause future financial statements to be materially misstated, even though we may have concluded that the adjustments are not material to the current financial statements. We proposed significant audit adjustments in the following areas: capital assets, investments and related revenue, receivables, property taxes, special assessments, debt and accounts/contracts payable. All entries proposed by us were recorded by the City. DISAGREEMENTS WITH MANAGEMENT Disagreements with management, whether or not satisfactorily resolved, are defined as matters that individually or in the aggregate could be significant to the City's financial statements or the auditors' report. Disagreements may occasionally arise over the application of accounting principles to the City's specific transactions and events and the basis for management's judgments about accounting estimates. Disagreements may also arise regarding the scope of the audit, disclosures to be included in the City's financial statements, and the wording of the auditors' report. No such disagreements with management occurred during the course of our audit. CONSULTATIONS WITH OTHER ACCOUNTANTS In some cases, management may decide to consult with other accountants about auditing and accounting matters. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that maybe expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. We are aware of no consultations by the City's management with other accountants during the course of our audit. MAJOR ISSUES DISCUSSED WITH MANAGEMENT PRIOR TO RETENTION We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management prior to retention as the City's auditors. These discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT We encountered no difficulties in dealing with management related to the performance of our audit. 4 r 1 CITY OF ALBERTVILLE Wright County, Minnesota LEGAL COMPLIANCE FINDING December 31, 2006 ALL CITY DISBURSEMENTS MUST BE PUBLIC PURPOSE EXPENDITURES ' During our audit, we noted there was an expenditure made 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 public purpose expenditures. We recommend the City refrain from paying for items that are not for a public purpose. C! ii 1 1 t C~ i~ t CITY OF ALBERTVILLE Wright County, Minnesota MATERIAL WEAKNESSES December 31, 2006 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, special assessments, property taxes, 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. PRIOR PERIOD ADJUSTMENTS Prior period adjustments were proposed to correct prior financial statements. In the Sewer Fund, the adjustments were for capital assets not recorded in previous years that were identified during our audit. In the closed Capital Project 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. Controls should be implemented to properly identify completed projects and the appropriate presentation of these items as it relates to the financial statements. 0 u ~l J II n ~~ CITY OF ALBERTVILLE Wright County, Minnesota SIGNIFICANT DEFICIENCIES December 31, 2006 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. 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 the reconciliation of the investments include specific procedures for identifying the changes in market value and investment income and these be recorded timely. 7 1 ii 1 i1 CITY OF ALBERTVILLE Wright County, Minnesota SIGNIFICANT DEFICIENCIES December 31, 2006 RECONCILE WITHHOLDING ACCOUNTS 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. 1 CITY OF ALBERTVILLE Wright County, Minnesota CONTROL DEFICIENCIES December 31, 2006 UPDATE AUTHORIZED SIGNER CARDS HELD AT BANK Copies of signature cards maintained at Premier Bank were reviewed during our audit process. We noted only one signature was required for withdrawals. It is essential for the Finance Director to update the signature card to require two signatures since it is the City's internal control to have checks signed by two authorized signers. We recommend the Finance Director update its authorized signature card at Premier Bank to require two signatures for withdrawal of funds. In addition, it was noted an authorized signer at Rogers State Bank was no longer an employee of the City. We recommend the Finance Director obtain a current authorized signers card from the bank and make the appropriate changes. .ESTABLISH AN APPROVAL PROCESS FOR JOURNAL ENTRIES During our audit and test of the journal entry process, we noted journal entries are. not approved ,~ by someone other than the person writing the entry. Due to the lack of segregation of accounting duties, we recommend each journal entry include adequate documentation and be reviewed/approved by asecond person to ensure accuracy. MAINTAIN PROPER SEQUENCING OF CHECKS AND PROPRIETY OF CASH CUTOFF The numerical sequencing of checks did not follow the dates checks were written. This occurred as a result of an accounts payable batch of checks actually written in 2007, but posted to the ' general ledger for 2006. When checks are written out of order or dates when checks are written are not accurate, it compromises the sequencing which helps to ensure that all disbursements are accounted for. We recommend the Finance Director maintain proper sequencing of checks numerically and by date. This becomes even more important during year-end procedures. J CITY OF ALBERTVILLE Wright County, Minnesota MANAGEMENT RECOMMENDATIONS December 31, 2006 NEGATIVE CASH BALANCES/FUND BALANCE DEFICITS At December 31, 2006, 14 of the City's funds had a deficit cash balance. The proper presentation of these deficits is through the use of interfund loans. We recommend the Council develop a plan that details which funds should be loaning cash to the funds with a negative cash ' balance. In addition to the negative cash balances, all but one of these funds also has deficit fund balance position. If these projects are substantially completed, the funds should be closed and the deficit eliminated as soon as all portions of the project have been paid for. For projects that are just beginning, we recommend the Council develop a plan for funding that would include what the expected sources of revenue are and also where the fund should be closed to if the project is determined to be unachievable or is complete. STATEMENTS OF AUDITING STANDARDS (STANDARDS) NOS. 104-111 In March 2006, the Auditing Standards Board (ASB) issued Statements of Auditing Standards (Standards) Nos. 104 - 111 that provide extensive guidance concerning the auditors' assessment of the risks of material misstatement in a financial statement audit and the design and performance of audit procedures whose nature, timing and extent are in response to the identified assessed risks. Additionally, the Standards establish standards and provide guidance on planning and supervision, the nature of audit evidence and evaluating whether the audit evidence obtained provides a reasonable basis for an opinion on the financial statements being audited. These Standards will be effective for audits of financial statements for periods beginning on or after December 15, 2006. Audit teams will be performing additional procedures to gain a more in-depth understanding of the City's environment, including its internal control. This will involve evaluating the design of In summary, these Standards will result in a substantial change in audit practice. The Standards will strengthen the auditors' understanding of the City and its environment, including its internal control, to identify the risks of material misstatement in the financial statements and determine what the entity is doing to mitigate those risks. Auditors will identify assessed risks based on the understanding obtained. There will be an improved correlation between those assessed risks and the nature, timing and extent of audit procedures performed in response to those risks. the controls and determining those controls have been implemented. The audit procedures performed to obtain the necessary understanding are called "risk assessment procedures" and require more than simple inquiries of management. The Standards specifically call for inquiries of management and other personnel, analytical procedures and observation and inspection. The procedures also involve discussions among the audit team to determine whether the potential exists for misstatements. These Standards also expand the documentation requirements for auditors. 10 CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 GENERAL FUND General Fund revenues increased from $ 2,780,042 in 2005 to $ 3,232,138 in 2006. Property tax revenues increased 18.3% from 2005 receipts and totaled $ 1,620,927. This was primarily a result in increased levy. Licenses and permits decreased $ 196,316, or 28.7%, and totaled $ 487,132. In 2005, the City had more permits purchased due to a hail storm. There was also a decline in development activity during 2006. Charges for services revenues increased 173% to $ 645,272 as result of charging administrative fees to other departments for services provided. The graph below and on the following page present the General Fund revenues by source in a graph and pie chart formats. General Fund Revenues $363,279 3 --- $ ,250,000 $3 000 000 - - - , , $412,179 $11~.~38 $2 0 000 ,75 , S6:}_~„ $2,500,000 $46 038 $103,756 ~~ $77.706 $2 250 000 , $81 739 , , 2 000 000 , 1 $98,229 $89,689 $236,136 $ , , $201,19 $55,943 $145,171 3 $1,750,000 $67,345 $487,1 2 $1 500 000 $572,230 $683,448 , , $1 250 000 $587,020 $691,839 , , $1,000,000 620 927 $1 $750,000 409 832 $1 $1 370 573 , , $1,177,380 $1,251,311 , , , , $500,000 250 000 $ , $- 2002 2003 2004 2005 2006 ^ Taxes ^ Licenses and Permits ^ Chazges for Services O Intergovernmental D Miscellaneous 11 GENERAL FUND Taxes 50% Taxes 49% CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 2006 General Fund Revenues $ 3,232,138 Licenses and Permits 15% Miscellaneous I1% 2005 General Fund Revenues $ 2,780,042 Intergovernmental 4% Charges for Services 20% Licenses and Permits Miscellaneous 15% Intergovernmental 3% ges for Services 8% 12 u u ~~ J ~~ n 0 ~J n CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 GENERAL FUND General Fund expenditures increased from $ 2,421,755 in 2005 to $ 3,301,238 in 2006, which represents a change of 36.3%. For governmental fund types, capital outlay items are included in total expenditures. For 2005, capital outlay expenditures totaled $ 76,373 compared to $ 560,153 in 2006. Without taking into consideration capital outlay, total General Fund expenditures increased 16.8%. All departments posted increased activity except for general government. The decrease in general government is due to the allocation of engineering expenditures to specific projects. Public safety increased due to the purchase of a new fire truck and payment of the administrative fees discussed in the revenue section. Public works increased due to an increase in projects during the year. A graph depicting the expenditures for the General Fund for each of the past five years is illustrated below. The following page presents the expenditures for 2005 and 2006 using a pie chart design. General Fund Expenditures $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- 2002 2003 2004 2005 2006 General Government ^ Public Safety ^ Public Works ^ Park and Recreation ^ Economic Development ^ Miscellaneous ' 13 GENERAL FUND Public Work 18% Public Vb 18% Public Safety 33% CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 2006 General Fund Expenditures $ 3,301,238 Public Safety 49% 2005 General Fund Expenditures $ 2,421,755 eneral Government 28% General Government 44% 14 Park and Recreation F.cnnnmic l~evelnnment Park and Recreation CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 GENERAL FUND Overall, expenditures exceeded revenues by $ 69,100 and net transfers out of $ 492,477 in 2006, resulting in a decrease in fund balance. A five year summary of revenues, expenditures and fund balance follows. This graph does not reflect transfer activity to and from other funds occurring during the year. It also does not reflect other financing sources and uses such as the proceeds from sales of fixed assets. General Fund $3,400,000 $3,200,000 $3,000,000 $2,800,000 $2,600,000 $2,400,000 $2,200,000 $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- 2002 2003 2004 2005 2006 ^ Revenues ®Expenditures ^ Fund Balance The 2006 fund balance of $ 1,549,004 is comprised of $ 1,000,000 designated for working capital. 15 CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 GENERAL FUND The graph below shows the budget to actual results for the General Fund revenue by revenue source. In total, actual revenues exceeded budget by $ 295,821. Most of the excess of revenues over budget was in charges for services and miscellaneous revenues. The variance in charges for services is due to plan check fees not being budgeted and also increased developer fees. A portion of the variance in miscellaneous is due to additional investment income. The City was able to negotiate better investment rates with the financial institutions with which they invest their funds. The other portion of the variation is due to receiving payments from developers as a result of aggressively collecting the receivables outstanding. 2006 Revenues Budget and Actual $2,000,000 -- - - -- - -_. _ 51,735,899 $1,800,000 $1,620,927 $1,600,000 .:; $1,400,000 $1,200,000 ,_ - -- --- $1,000,000 :: - -- __ _ --- $800,000 - - ~~ $645,272 $5 ti l 9-}0 $600,000 $487,132 $489,228 ,. "`` '363,279 $400,000 ,';'' -- f'. ; -- - -- - {, $200,000 $71 1 ~o - : S 115,5?3 -- $55 100 Taxes Licenses and Permits Intergovernmental Chazges for Services Miscellaneous ®Budget ^ Actual 16 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 GENERAL FUND The graph below shows the budget to actual results for the General Fund expenditures by department. Overall, the City overspent the budget by $ 443,374. The largest variation is in the public safety department, with a variance of $ 346,024. This variance was caused entirely by the purchase of a new fire truck that was not budgeted in 2006. The variance of $ 122,200 in public works was due to additional unbudgeted projects. There was a minor variance in general government due to a combination of items including increased utility costs and increased legal and engineering fees. $t,soo,ooo $t,6oo,000 $l,aoo,ooo $l,zoo,ooo $l,oogooo $soo,ooo $600,000 $400,000 $200,000 $- __~ $206,059 ~ $173,02r 17 2006 Expenditures Budget and Actual $1,582,591 General Government Public Safety Public Works Pazk and Recreation Economic Development ®Budget ^Actual CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 SEWER FUND The following graph provides a history of operating income (or loss) for the past five years for the Sewer Fund. The yellow bar represents a true measurement of operations to be used as a factor in determining whether sewer rates are sufficient to cover operating costs. As the graph indicates, rates for the past four years were sufficient to cover operating costs, which includes depreciation of fixed assets. Revenues that are sufficient to cover operating costs, including depreciation, allow for an accumulation of cash to help fund replacement of depreciable assets. Sewer Fund $soo,ooo $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- $699,424 $622,660 $495,645 $510,532 $4 20,509 $4 27,725 $ 413,803 $459 ,342 $322,028 ~ $335,797 $292,367 $386,665 $325,481 $280,142 ~: $270,005 _ $285,6 21 $112,1 28 $159,84 8 $128,142 $105,697 ~=, 2002 2003 2004 2005 2006 ^ Operating Revenues ^ Operating Expenses ^ Operating Income ^ Operating Income Without Depreciation At December 31, 2006, the Fund had a cash balance of $ 475,095 compared to $ 1,480,736 at December 31, 2005. 18 CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 WATER FUND Operating revenues, excluding Water Access Charges (WAC) fees, for the Water Fund experienced a 38% increase from $ 242,873 in 2005 to $ 314,847 in 2006. The increase in the revenue is due to getting additional customers on the radio read meters to get more accurate readings of their usage. Operating expenses decreased 8.8% from $ 164,850 to $ 150,249 in 2006 as a result of less main breaks in 2006. The Water Fund has shown operating income in all of the years presented. This is a positive sign that the rates being charged in this Fund are able to cover all operating expenses including depreciation. Water Fund $350,000 $314,847 $300,000 $274,264 $250,026 $242,873 k $250,000 $200,000 $179,643 $196,331 $182,605 $172,710 $167,541 $150,000 $148,948 $164,850 $133,016 $150,249 $100,000 ' $95,941 $109,376 _ $117,010 $106,723 $93,955 $83,702 $50,000 $78,023 $- 2002 2003 2004 2005 2006 ® Operating Revenues, net of Joint Powers Portion ^ Operating Expenses, net of Joint Powers Reimbursement ^ Operating Income ^ Operating Income Without Depreciation 19 CITY OF ALBERTVILLE Wright County, Minnesota FINANCIAL ANALYSIS December 31, 2006 MARKET VALUE, TAX CAPACITY AND TAX CAPACITY RATES The graph below and on the following page provide significant information about the growth experienced by the City to help you continue to analyze your tax rate position. The graph below depicts market value of all taxable property within the City limits, along with tax capacity generated by such growth. As is evident from the graph, property market value has increased from $ 225,728,800 in 2002 to $ 555,414,524 in 2006. During the same time, tax capacity has increased from $ 2,624,887 in 2002 to $ 6,774,663 in 2006. Tax Capacity and Market Value $s9s,ooo,ooo $a,ooo,ooo ' $555,414,524 $560,000,000 $525,000,000 $7,000,000 $490,000,000 $473,920,000 ' $455,000,000 $6,;?i 63 $6,000,000 $420,000,000 $4,615,593 $385,000,000 $5 ~ ~ X82 $5,000,000 ~, $350,000,000 '~ ~ ~ $315,000,000 $3,398,721 ~ ~ $280,000,000 $39i"" x,100 $4,000,000 U ~ $2,624,887 F, $245,000,000 ~ ~ $210,000,000 $3,000,000 $295 I I x,600 $175,000,000 ~ ~ { $22 ,,3,800 $2,000,000 $140,000,000 $105,000,000 $70,000,000 ~ _ ~ $1,000,000 $35,000,000 2002 2003 2004 2005 2006 ®Market Value ^ Tax Capacity 20