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2007 Audited Financial Statements L CITY OF ALBERTVILLE, MINNESOTA TABLE OF CONTENTS DECEMBER 31, 2007 Pa eg No• ' INTRODUCTORY SECTION Elected and Appointed Officials 1 ' FINANCIAL SECTION Independent Auditor's Report 2 - 3 Management's Discussion and Analysis I - XI Basic Financial Statements Government-wide Financial Statements Statement of Net Assets 4 Statement of Activities 5 - 6 ' Fund Financial Statements Governmental Funds ' Balance Sheet Reconciliation of the Balance Sheet to the Statement of Net Assets 7 - 8 9 Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) 10 - 11 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 12 ' General Fund Statement of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual 13 Proprietary Funds Statements of Net Assets 14 - 15 Reconciliation of the Proprietary Statements of Net Assets to the Statement of Net Assets 16 Statements of Revenues, Expenses and Changes in Fund Net Assets 17 - 18 ' Reconciliation of the Statement of Revenues, Expenses and Changes in Fund Net Assets to the Statement of Activities 19 Statements of Cash Flows 20 - 23 Fiduciary Funds ' Statement of Fiduciary Net Assets 24 Notes to the Financial Statements 25 - 51 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Nonmajor Governmental Funds Combining Balance Sheet 52 ' Combining Statement of Revenues, Expenditures and Changes in Fund Balances 53 Nonmajor Capital Projects Funds Combining Balance Sheet 54 - 58 ' Combining Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) 59 - 63 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual 64 - 68 Debt Service Fund ' Combining Balance Sheet 69 - 71 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances (Deficits) 72 - 74 ' Agency Funds Combining Statement of Changes in Assets and Liabilities 75 Summary Financial Report Revenues and Expenditures for General Operations -Governmental Funds 76 ~~ L ' April 7, 2008 I~ Ci I~DV Expert advice. When you need it.s"' 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, the business-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, 2007, 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. The prior year partial comparative information has been derived from the City's 2006 financial statements and, in our report dated Apri127, 2007, we expressed unqualified opinions on the respective financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information. 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 our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, ' the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Albertville, Minnesota, as of December 31, 2007, and the respective changes in financial position and, ' where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in conformity with U.S. generally accepted accounting principles. 7 ~ ' 0 u n 0 u L n C I~DV In accordance with Government Auditing Standards, we have also issued our report dated April 7, 2008, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the 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. 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 principally of inquiries of management 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 conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual fund financial statements and schedules identified in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of 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. Minneapolis, Minnesota J l J n 0 u 0 Management's Discussion and Analysis As management of the City of Albertville, Minnesota, (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2007. Financial Highlights • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $46,852,729 (net assets). Of this amount, $5,587,783(unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors. • The City's total net assets increased by $4,574.805. This increase is due to the large increases in capital grants and contributions in both the governmental and business-type activities. • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $11,379,685, an increase of $1,015,122 in comparison with the prior year. Approximately 75 percent of this total amount, $8,538,240, is available for spending at the City's discretion. • At the end of the current fiscal year, unreserved fund balance for the General fund was $792,457, or 25 percent of total General fund 2007 expenditures. • The City's total debt increased by $2,842,565 or 19 percent during the current fiscal year. The key factor of this increase was the issuance of the 2007 G.O. Improvement bond. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves. -I- Management Discussion and Analysis -Continued February 14, 2008 The fmancial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of combining and individual fund financial statements and schedules which further explain and support the information in the financial statements. Figure 1 shows how the required parts of this annual report are arranged and relate to one another. In addition to these required elements, we have included a section with combining and individual fund financial statements and schedules that provide details about non-major governmental funds, which are added together and presented in single columns in the basic financial statements. Figure 1 Required Components of the City's Annual Financial Report Management's Sasic Financial Required Discussion and Statements Supplementary Analysis Information Government-wide Fund Notes to the Financial Financial Financial Statements Statements Statements Summary Detail _II_ ~~ J ii ~~ ~'. rl Management Discussion and Analysis -Continued February 14, 2008 Figure 2 summarizes the major features of the City's financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management's discussion and analysis explains the structure and contents of each of the statements. Figure 2 Major features of the Government-wide and Fund Financial Statements Fund Financial Statements Government-wide Governmental Funds Proprietary Funds Statements Scope Entire City government The activities of the City that Activities the City operates (except fiduciary funds) and are not proprietary or similar to private businesses, the City's component units fiduciary, such as police, fire such as the water and sewer and parks system Required financial • Statement of Net Assets • Balance Sheet • Statements of Net Assets statements . Statement of Activities • Statement of Revenues, • Statements of Revenues, Expenditures, and Expenses and Changes in Changes in Fund Fund Net Assets Balances • Statements of Cash Flows Accounting Basis and Accrual accounting and Modified accrual accounting Accrual accounting and measurement focus economic resources focus and current financial economic resources focus resources focus Type of asset/liability All assets and liabilities, both Only assets expected to be All assets and liabilities, both information financial and capital, and used up and liabilities that financial and capital, and short-term and long-term come due during the year or short-term and long-term soon thereafter; no capital assets included Type of in flow/out flow All revenues and expenses Revenues for which cash is All revenues and expenses information during year, regardless of received during or soon after during the year, regardless of when cash is received or paid the end of the year; when cash is received or paid expenditures when goods or services have been received and payment is due during the year or soon thereafter Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to aprivate-sector business. The statement of net assets presents information on all of the City'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 is improving or deteriorating. The statement of activities presents information showing how the City'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 that are principally supported by taxes and intergovernmental revenue (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 include general government, public safety, public works, culture and recreation, economic development and interest on long-term debt. The business-type activities of the City include sewer, water, and storm water. The government-wide financial statements can be found on pages 4 - 6 of this report. -III- Management Discussion and Analysis -Continued February 14, 2008 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, 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 can be divided into three categories: ' governmental funds, proprietary funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near term financing requirements. I J ~~ 1 u 1 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 by the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 42 individual governmental funds, thirteen of which are debt service funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General fund, Debt Service, Sewer Access, Water Access, Closed Capital Projects, Prairie Run and CSAH 19 and 50th Street funds -all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements or schedules elsewhere in this report. The City adopts an annual appropriated budget for its General fund. A budgetary comparison statement has been provided for the General fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 7 - 13 of this report. Proprietary funds. The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide fmancial statements. The City uses enterprise funds to account for its sewer, water and storm water operations. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for each of the enterprise funds. The basic proprietary fund financial statements can be found on pages 14 - 23 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on page 24 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 25 - 51 of this report. -IV- Management Discussion and Analysis -Continued February 14, 2008 Other Information The combining statements referred to earlier in connection with non-major governmental funds are presented following the notes to financial statements. Combining and individual fund statements and schedules can be found on pages 52 - 76 of this report. 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, assets exceeded liabilities by $46,852,729 at the close of the most recent fiscal year. By far, the largest portion of the City's net assets (59 percent) 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 uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City'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. Assets ' Current and other assets Capital assets ' Total assets Liabilities Long-term liabilities outstanding ' Other liabilities i7 u Total liabilities Net Assets Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Summary of Net Assets Governmental Activities Increase 2007 2006 (Decrease) Business-type Activities Increase 2007 2006 (Decrease) $ 10,469,073 $ 7,338,589 $ 3,130,484 $ 11,205,227 $ 9,296,489 $ 1,908,738 32,185,893 28,112,203 4,073,690 12,358,898 12,248,726 110,172 42,654,966 35,450,792 7,204,174 23,564,125 21,545,215 2,018,910 11,664,502 8,923,647 2,745,855 6,144,691 5,676,330 468,361 1,188,099 688,013 500,086 364,070 504,948 (140,878) 12,857,601 9,611,660 3,245,941 6,508,761 6,181,278 327,483 20,784,940 19,214,778 1,570,162 6,894,960 6,572,396 322,564 7,295,286 5,642,284 1,653,002 6,289,760 5,605,029 684,731 1,717,139 982,070 735,069 3,870,644 3,186,512 684,132 $ 29,797,365 $ 25,839,132 $ 3,958,233 $ 17,055,364 $ 15,363,937 $ 1,691,427 An additional portion of the City's net assets, $13,585,046, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unresti°icted net assets $5,587,783 may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the City as a whole, as well as for its separate governmental and business-type activities. The City's net assets increased $4,574,805 during the current fiscal year. The business type activities increased the net assets by $1,494,577, and the governmental activities increased the net assets by $3,080,228. i 1 1 u Management Discussion and Analysis -Continued February 14, 2008 Governmental activities. Governmental activities increased the City's net assets by $3,080,228, thereby accounting for 67 percent of the total growth in the ne t assets of the City. Key elements of this incre ase are as follows: Changes in Net Assets Governmental Activities Busine ss-type Activities Increase Increase 2007 2006 (Decrease) 2007 2006 (Decrease) Revenues Program revenues Charges for services $ 867,131 $ 1,329,332 $ (462,201) $ 1,981,295 $ 2,666,973 $ (685,678) Operating grants and contributions 317,112 104,713 212,399 4,664 - 4,664 Capital grants and contributions 2,967,450 1,304,416 1,663,034 1,906,378 102,532 1,803,846 General revenues Taxes Properiytaxes 2,272,532 1,997,713 274,819 - - - Tax increment 109,895 98,546 11,349 - - - State aids 94,814 13,056 81,758 - - - Grants and contributions not restricted to specific programs 27,003 13,717 13,286 - - - Gain on sale of capital assets 129;854 - 129,854 - - - Unrestricted investment earnings 194,044 258,786 (64,742) 314,190 265,578 48,612 Total revenues 6,979,835 5,120,279 1,859,556 4,206,527 3,035,083 1,171,444 Expenses General government 905,429 939,143 (33,714) - - - Public safety 1,202,529 1,200,821 1,708 - - - Public works 1,344,124 3,150,492 (1,806,368) - - - Culture and recreation 268,040 59,069 208,971 - - - Economicdevelopment 235,425 624,550 (389,125) - - - Interest on long-term debt 424,709 415,400 9,309 - - - Sewer - - - 858,726 834,895 23,831 Water - - - 1,297,307 917,083 380,224 Storm water - - - 75,268 114,825 (39,557) Total expenses 4,380,256 6,389,475 (2,009,219) 2,231,301 1,866,803 364,498 Increase in net assets before transfers 2,599,579 (1,269,196) 3,868,775 1,975,226 1,168,280 806,946 Transfer 480,649 336,081 144,568 (480,649) (336,081) (144,568) Change in net assets 3,080,228 (933,115) 4,013,343 1,494,577 832,199 662,378 Net assets, January 1 25,839,132 24,384,921 1,454,211 15,363,937 14,339,209 1,024,728 Prior period adjustment 878,005 2,387,326 (1,509,321) 196,850 192,529 4,321 Net assets, December 31 $ 29,797,365 $ 25,839,132 $ 3,958,233 $ 17,055,364 $ 15,363,937 $ 1,691,427 • Capital grants and contributions increased by $1,663,034, primarily due to the collection of special assessments. • Total expenses decreased $2,009,219, with the largest decrease occurring in Public Works. -VI- Management Discussion and Analysis -Continued February 14, 2008 The following graph depicts various governmental activities and shows the revenue and expenses directly related to those activities. Expenses and Program Revenues -Governmental Activities $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- General Public safety Public works Culture and Economic Interest on long- government recreation development term debt ^ Expenses ^ Program revenues Revenues by Source -Governmental Activities Gain on sale of capital assets 1.9% Grants and contributions unrestricted 0.4% State a; 1.4% Unrestricted investment earnings Charges for services 2.8% 12.4% Operating grants and ributions 4.5% Capital grants and contributions 42.5% 34.1% For the most part, increases in expenses closely paralleled inflation and. growth in the demand for services. -VII- Management Discussion and Analysis -Continued February 14, 2008 Business-type activities. Business-type activities increased the City's net assets by $1,494,577, accounting for 33 percent of the growth in the City's net assets. Key elements of this increase are as follows: Expenses and Program Revenues -Business-type Activities $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 $- Revenues by Source -Business-type Activities Charges for services 47.1 Operating grants and contributions 0.1% Investment earnings 7.5% vital grants and .,ontributions 45.3% • Capital grants and contributions increased by $1,803,846, primarily due to the collection of WAC and SAC fees. • All three enterprise funds were able to show positive changes in net assets from operations. • Although expenditures increased in each fund, the increase in revenues was able to offset that change. -VIII- Sewer Water Storm Water ^ Expenses ^ Program revenues ' Management Discussion and Analysis -Continued February 14, 2008 Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds: The focus of the City'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'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's governmental funds had combined ending fund balances of $11,379,685, an increase of $1,015,122 in comparison with the prior year. Approximately 75 percent of this total amount, $8,538,240, constitutes unreserved fund balance, which is available for spending at the City's discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed for land held for resale in the amount of $2,735,714 and long-term receivables in the amount of $105,731. The General fund is the chief operating fund of the City. At the end of the current year, the fund balance of the General fund was $792,457. As a measure of the General fund's liquidity, it maybe useful to compare fund balance to the following year's budget. This fund balance represents 24 percent of 2008 budgeted expenditures. 1 The fund balance of the City's General fund decreased $756,547 during the current fiscal year. The key factor of this decrease was transfers to other funds. The Debt Service fund balance decreased $12,399 from the prior year for an ending fund balance of $3,491,778. The Sewer Access fund has a total fund balance of $4,555,077, which was an increase of $663,048 from the prior year. The increase was the result of the fund collecting resources, but having no expenses other than transfers to other funds. This fund 1 accumulates resources necessary for future expansion of the City's sewer utility. The Water Access fund showed a decrease of fund balance of $14,962. The ending fund balance was $1,498,663. The primary causes for the decrease are capital expenditures and transfers to other funds. The Closed Capital Projects fund has an ending fund deficit of $131,985. The fund balance (deficit) decreased $282,365 during the year, primarily due to transfers to other funds. The fund deficit is planned to be eliminated through transfers from other funds. The Prairie Run fund has a deficit fund balance of $805,932, which was an increase of $55,117 from the prior year. The increase was attributable to collection of special assessments. The CSAH 19 and 50`}' Street fund deficit was $5,716 at the end of the year. The fund balance decreased $2,791 .during 2007. The decrease in fund balance was caused by expenditures exceeding bond proceeds during the year. ' Proprietary funds: The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the enterprise funds at the end of the year amounted to $3,897,330. The total growth in net assets for the funds was $809,846. Other factors concerning the fmances of these funds have already been addressed in the discussion of the City's business-type activities. 1 -IX- 1 General fund Budgetary Highlights Management Discussion and Analysis -Continued February 14, 2008 The City's General fund budget was not amended during the year. The budget called for an increased fund balance. However the actual results were largely different. Expenditures exceeded revenues by $22,134; however the City did not budget for any other financing sources or uses. Other financing uses provided for $734,413 of the total $756,547 decrease in fund balance. Some of the significant variances provided by revenues and expenditures are briefly summarized as follows: • A $168,801 positive variance in miscellaneous revenue was offset by negative variances of $190,707 and $147,642 in Licenses and Permits and Property Taxes respectively. • An $87,621 negative variance in current expenditures was offset with a $91,552 positive variance in capital expenditures. • The two largest variances were provided by: General government exceeded appropriations by $199,168 and Public Safety was under budget by $131,795. Capital Asset and Debt Administration Capital Assets: The City's investment in capital assets for its governmental and business-type activities as of December 31, 2007, amounts to $44,544,791 (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, structures, improvements, machinery and equipment, park facilities, roads, highways and bridges. The total increase in the City's investment in capital assets for the current fiscal year was a 8 percent increase for governmental activities and business- type activities combined. Additional information on the City's capital assets can be found in Note 3C on pages 36 - 37 of this report. ' Capital Assets Net of Deprecia tion ' G B i A i i i overnmental Activities us ness-type ct v t es Increase Increase ' 2007 2006 (Decrease) 2007 2006 (Decrease) Land $ 4,760,719 $ 3,732,869 $ 1,027,850 $ 190,269 $ 190,269 $ - Construction in progress 7,220,100 8,509,707 (1,289,607) 369,932 - 369,932 ' Buildings 2,831,999 2,229,430 602,569 4,472,399 4,589,966 (117,567) Infrastructure 15,300,014 12,978,215 2,321,799 7,208,881 7,404,972 (196,091) Land improvements 1,011,091 419,272 591,819 - - - Vehicles 790,320 891,081 (100,761) 19,460 27,584 (8,124) Machinery and equipment 271,650 262,362 9,288 97,957 110,059 (12,102) ' Total $ 32,185,893 $ 29,022,936 $ 3,162,957 $ 12,358,898 $ 12,322,850 $ 36,048 ~ , r~ J Long-term debt: At the end of the current fiscal year, the City had total bonded debt outstanding of $17,764,357. This amount consists of general obligation tax increment, general obligation special assessment, general obligation revenue bonds and revenue bonds. While many of these bonds have their own revenue streams, they are backed by the full faith and credit of the City. Outstanding Debt Governmental Activities Increase 2007 2006 (Decrease) Management Discussion and Analysis -Continued February 14, 2008 Business-type Activities Increase 2007 2006 (Decrease} General obligation tax ' increment bonds General obligation special assessment bonds General obligation revenue bonds Compensated absences ii n 0 LI C i C $ 30,000 $ 55,000 $ (25,000} $ - $ - $ - 5,515,000 2,775,000 2,740,000 800,000 - 800,000 6,085,000 6,330,000 (245,000) 5,334,357 5,761,792 (427,435) 39,502 26,222 13,280 10,334 - 10,334 Total $ 11,669,502 $ 9,186,222 $ 2,483,280 $ 6,144,691 $ 5,761,792 $ 382,899 The City's total debt increased $2,842,565 (19 percent) during the current fiscal year. This is primarily due to the issuance of the 2007 G.O. Special Assessment bond. This bond was issued to pay for many improvements throughout the City. During 2007, the City made over $1,100,000 of annual debt service payments. Minnesota statutes limit the amount of net general obligation debt a City may issue to 2 percent of the market value of taxable property within the City. Net debt is debt payable solely from ad valorem taxes. The City's applicable debt does not exceed the limit set forth in statute. Additional information on the City's long-term debt can be found in Note 3E on pages 41 - 44 of this report. Economic Factors and Next Year's Budgets and Rates • Property valuations within the City have remained stable during the past year. • Inflationary trends in the region compare favorably to national indices. • Utility rates need to be adjusted to meet future capital requirements. • The City has a number of capital projects in store for 2008, including: CSAH 19 North Improvements, Winter Park, County Road 37 Lift Station, Utility and Street Improvements to CSAH 37 as well as the decommissioning of a treatment pond. All of these factors were considered in preparing the City's budget for the 2008 fiscal year. Requests for Information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, City of Albertville, P.O. Box 9, 5959 Main Avenue, Albertville, Minnesota 55301. ' -XI- CITY OF ALBERTVILLE, MINNESOTA STATEMENT OF NET ASSETS DECEMBER 31, 2007 ASSETS Cash and temporary investments Restricted cash Receivables Interest Delinquent taxes Accounts Notes Special assessments Internal balances Due from other governments Unamortized bond discount Land held for resale Capital assets Land and construction in progress Depreciable assets, net of accumulated depreciation TOTAL ASSETS LIABILITIES Accounts payable Contracts payable Accrued interest payable Accrued salaries payable Unearned revenue Noncurrent liabilities Due within one year Compensated absences payable Bonds payable Due in more than one year Compensated absences payable Bonds payable TOTAL LIABILITIES NET ASSETS Invested in capital assets, net of related debt Restricted for Sewer and water access charges Long-term receivable Debt service Capital assets acquisition Land held for resale Special revenue Unrestricted TOTAL NET ASSETS The notes to the financial statements are an integral part of this statement. -4- Governmental Business-type Activities Activities Total $ 5,206,162 $ 7,235,569 $ 12,441,731 77,206 - 77,206 23,624 - 23,624 140,939 - 140,939 338,366 916,800 1,255,166 15,435 - 15,435 3,556,918 418,001 3,974,919 (2,506,172) 2,506,172 - 613,590 5,020 618,610 267,291 123,665 390,956 2,735,714 - 2,735,714 11,980,819 560,201 12,541,020 20,205,074 11,798,697 32,003,771 42,654,966 23,564,125 66,219,091 949,941 310,114 1,260,055 83,058 - 83,058 142,241 5 0,973 193,214 11,539 2,983 14,522 1,320 - 1,320 31,908 8,418 40,326 790,000 455,027 1,245,027 7,594 1,916 9,510 10,840,000 5,679,330 16,519,330 12,857,601 6,508,761 19,366,362 20,784,940 6,894,960 27,679,900 - 6,289,760 6,289,760 105,731 - 105,731 3,531,625 - 3,531,625 754,378 - 754,378 2,735,714 - 2,735,714 167,838 - 167,838 1,717,139 3,870,644 5,587,783 $ 29,797,365 $ 17,055,364 $ 46,852,729 CITY OF ALBERTVILLE, MINNESOTA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2007 Program Revenues Operating Capital Grants Charges for Grants and and Functions/Programs Expenses Services Contributions Contributions Governmental activities General government $ 905,429 $ 775,544 $ 164,971 $ - Public safety 1,202,529 85,887 84,884 - Public works 1,344,124 5,700 50,000 2,424,801 Culture and recreation 268,040 - 17,257 - Economic development 235,425 - - 542,649 Interest on long-term debt 424,709 - - - Total governmental activities 4,380,256 867,131 317,112 2,967,450 Business-type activities Sewer utility 858,726 692,890 4,636 1,104,426 Water utility 1,297,307 1,118,401 - 601,616 Storm Water utility 75,268 170,004 28 200,336 Total business-type activities 2,231,301 1,981,295 4,664 1,906,378 Total $ 6,611,557 $ 2,848,426 $ 321,776 $ 4,873,828 General revenues Taxes Property taxes levied for general purposes Property taxes levied for debt service Tax increments State aids Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of capital assets Transfers Total general revenues and transfers Change in net assets Net assets, January 1 Prior period adjustment Net assets, December 31 The notes to the financial statements are an integral part of this statement. -5- Net (Expenses) Revenues and Changes in Net Assets Governmental Business-type $ 35,086 $ - $ 35,086 (1,031,758) - (1,031,758) 1,136,377 - 1,136,377 (250,783) - (250,783) 307,224 - 307,224 (424,709) - (424,709) (228,563) - (228,563) - 943,226 943,226 - 422,710 422,710 - 295,100 295,100 - 1,661,036 1,661,036 (228,563) 1,661,036 1,432,473 1,921,855 - 1,921,855 350,677 - 350,677 109,895 - 109,895 94,814 - 94,814 27,003 - 27,003 194,044 314,190 508,234 129,854 - 129,854 480,649 (480,649) - 3,308,791 (166,459) 3,142,332 3,080,228 1,494,577 4,574,805 25,839,132 15,363,937 41,203,069 878,005 196,850 1,074,855 $ 29,797,365 $ 17,055,364 $ 46,852,729 -6- CITY OF ALBERTVILLE, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2007 ASSETS Cash and temporary investments Restricted cash Receivables Interest Delinquent taxes Accounts Special assessments Loans Due from other funds Due from other governments Land held for resale TOTAL ASSETS LIABILITIES AND FUND BALANCES (DEFICITS) LIABILITIES Accounts payable Contracts payable Due to other funds Accrued salaries payable Deferred revenue TOTAL LIABILITIES FUND BALANCES (DEFICITS) Reserved for Long-term receivable Land held for resale Unreserved, designated for Working capital Capital expenditures Unreserved, undesignated, reported in Debt service funds Special revenue funds Capital projects funds TOTAL FUND BALANCES (DEFICITS) Capital Projects Debt Sewer $ 845,763 $ 1,420,608 $ 1,939,381 - 77,206 - 23,624 - - 118,764 22,175 - 42,709 - - 50,151 2,628,336 205,530 - - 2,615,696 38,064 3,738 - - 2,735,714 - $ 1,119,075 $ 6,887,777 $ 4,760,607 $ 144,844 $ - $ - - 745,488 - 11,539 - - 170,235 2,650,511 205,530 326,618 3,395,999 205,530 - 2,735,714 - 792,457 - - 756,064 - - - 4,555,077 792,457 3,491,778 4,555,077 TOTAL LIABILITIES AND FUND BALANCES (DEFICITS) $ 1,119,075 $ 6,887,777 $ 4,760,607 The notes to the financial statements are an integral part of this statement. -7- i Capital Projects Closed CSAH 19 Other Total Water Capital Prairie and 50th Governmental Governmental Access Projects Run Street Funds Funds $ 1,509,553 $ - $ - $ 1,263 $ 2,938,528 $ 8,655,096 - - - - - 77,206 - - - - - 23,624 - - - - - 140,939 - 295,657 - - - 338,366 30,490 - 776,101 - 102,330 3,792,938 - - - - 15,435 15,435 - - - - - 2,615,696 - - 16,969 - 554,819 613,590 - - - - - 2,735,714 $ 1,540,043 $ 295,657 $ 793,070 $ 1,263 $ 3,611,112 $ 19,008,604 $ 10,890 $ - $ 2,898 $ 6,979 $ - 70,533 - - - 357,109 820,003 - 30,490 - 776,101 - 41,380 427,642 1,599,002 6,979 625,678 $ 791,289 189,230 259,763 693,096 2,615,696 - 11,539 1,625,769 7,628,919 105,731 105,731 - 2,735,714 - 792,457 1,597,012 1,597,012 - - - - - 756,064 - - - - 167,838 167,838 1,498,663 (131,985) (805,932) (5,716) 114,762 5,224,869 1,498,663 (131,985) (805,932) (5,716) 1,985,343 11,379,685 $ 1,540,043 $ 295,657 $ 793,070 $ 1,263 $ 3,611,112 $ 19,008,604 -8- 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 CITY OF ALBERTVILLE, MINNESOTA RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2007 Total fund balances -governmental $ 11,379,685 Amounts reported for the governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Cost of capital assets 42,021,513 Less: accumulated depreciation (9,835,620) 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: Compensated absences payable (39,502) Bond principal payable (11,630,000) Less bond discount net of accumulated amortization 267,291 Some receivables are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the funds. Special assessments 3,556,918 Taxes 140,939 Loans 15,435 Governmental funds do not report a liability for accrued interest until due and payable. (142,241) Activity of certain funds are presented as governmental funds. However, their functions on a government-wide perspective are business-type. Sewer Access (4,555,077) Water Access (1,498,663) Phillip Morris Lift Station 116,687 Total net assets -governmental activities $ 29,797,365 The notes to the fmancial statements are an integral part of this statement. -9- CITY OF ALBERTVILLE, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2007 REVENUES Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Special assessments Interest on investments Miscellaneous TOTAL REVENUES EXPENDITURES Current General government Public safety Public works Culture and recreation Economic development Capital outlay General government Public safety Public works Culture and recreation Economic development Debt service Principal Interest and other TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Bond issuance Discount on bonds issued Sale of capital assets Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICITS), JANUARY 1 FUND BALANCES (DEFICITS), DECEMBER 31 The notes to the financial statements are an integral part of this statement. -10- Debt Capital Projects Sewer $ 1,861,916 $ 350,677 $ - 283,287 - - 189,669 - - 587,864 - 965,691 3,450 - - - 350,018 101,422 61,496 45,013 149,307 178,801 50,000 - 3,166,483 795,708 1,216,420 849,643 - - 1,122,988 - - 544,352 - - 169,137 - - 24,549 - - 421,132 - - 34,968 - - 6,400 - - 15,448 - - - 765,000 - - 401,882 - 3,188,617 1,166,882 - (22,134) (371,174) 1,216,420 133,208 509,105 - - 71,883 - - (24,690) - 129,854 - - (997,475) (197,523) (553,372) (734,413) 358,775 (553,372) (756,547) (12,399) 663,048 1,549,004 3,504,177 3,892,029 $ 792,457 $ 3,491,778 $ 4,555,077 Capital Projects Closed CSAH 19 Other Total Water Capital Prairie and 50th Governmental Governmental Access Projects Run Street Funds Funds $ - $ - $ - $ - $ 109,895 $ 2,322,488 - - - - - 283,287 - - - - 527,887 717,556 589,979 - - - 6,626 2,150,160 - - - - - 3,450 11,637 - 120,478 - 108,278 691,833 56,214 - - 12,658 74,877 399,565 - - - - 12,128 240,929 657,830 - 120,478 12,658 839,691 6,809,268 849,643 1,122,988 19,103 - - - - 563,455 - - - - 77,370 246,507 - - - - 72,001 96,550 - - - - 173,115 594,247 - - - - - 34,968 379,273 15,671 65,361 1,628,394 1,200,521 3,295,620 - - - - 8,005 23,453 - - - - 792,858 792,858 765,000 401,882 ~7a,~io i~,oii o~,~oi i,o~a,~y4 ~,~a~,aiv a,iai,i~i 259,454 (15,671) 55,117 (1,615,736) (1,484,179) (1,977,903} - - - - 1,491,737 2,134,050 - - - 1,613,239 1,549,878 3,235,000 - - - - - (24,690) - - - - - 129,854 (274,416) (266,694) - (294) (191,415) (2,481,189) (274,416) (266,694) - 1,612,945 2,850,200 2,993,025 (14,962) (282,365) 55,117 (2,791) 1,366,021 1,015,122 1,513,625 150,380 (861,049) (2,925) 619,322 10,364,563 $ 1,498,663 $ (131,985) $ (805,932) $ (5,716) $ 1,985,343 $ 11,379,685 -11- CITY OF ALBERTVILLE, NIINNESOTA 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, 2007 Total net change in fund balances 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 Depreciation expense The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Principal repayments Debt issued or incurred Less costs of issuance Interest on long-term debt in the statement of activities differs from the amount reported in the governmental fund because interest is recognized as an expenditure in the funds when it is due, and thus requires the 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. Governmental fund report debt issuance premiums and discounts as an other financing source or use at the time of issuance. Premiums and discounts are reported as an unamortized asset or liability in the district-wide financial statements. Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Compensated absences Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of accounting certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. Special assessments Taxes Loans Activity of certain funds are presented as governmental funds. However, their functions on a government-wide perspective are business-type. Sewer Access Water Access Phillip Morris Lift Station Change in net assets -governmental activities The notes to the financial statements are an integral part of this statement. -12- $ 1,015,122 4,280,188 (1,117,230) 765,000 (3,235,000) 56,154 (35,579) (18,712) (13,279) 1,860,789 59,939 (5,765) (663,048) 14,962 116,687 $ 3,080,228 1 1 1 1 1 1 i 1 1 1 i i i i i i i i i i i i i i i CITY OF ALBERTVILLE, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2007 REVENUES Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Interest on investments Miscellaneous TOTAL REVENUES EXPENDITURES Current General government Public safety Public works Culture and recreation Economic development Capital outlay General government Public safety Public works Culture and recreation TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Sale of capital assets Transfers out Variance with Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) $ 2,009,558 $ 2,009,558 $ 1,861,916 $ (147,642) 473,994 473,994 283,287 (190,707) 82,500 82,500 189,669 107,169 616,295 616,295 587,864 (28,431) 200 200 3,450 3,250 75,000 75,000 61,496 (13,504) 10,000 10,000 178,801 168,801 3,267,547 3,267,547 3,166,483 (101,064) 650,475 650,475 849,643 (199,168) 1,254,783 1,254,783 1,122,988 131,795 524,101 524,101 544,352 (20,251) 183,989 183,989 169,137 14,852 9,700 9,700 24,549 (14,849) 390,500 390,500 421,132 (30,632} 91,500 91,500 34,968 56,532 40,000 40,000 6,400 33,600 47,500 47,500 15,448 32,052 3,192,548 3,192,548 3,188,617 3,931 74,999 74,999 (22,134) (97,133) - - 133,208 133,208 - - 129,854 129,854 - - (997,475) (997,475) TOTAL OTHER FINANCING SOURCES (USES) - - (734,413) (734,413) NET CHANGE IN FUND BALANCES 74,999 74,999 (756,547) (831,546) FUND BALANCES, JANUARY 1 1,549,004 1,549,004 1,549,004 - FUND BALANCES, DECEMBER 31 $ 1,624,003 $ 1,624,003 $ 792,457 $ (831,546) The notes to the financial statements are an integral part of this statement. -13- CITY OF ALBERTVILLE, MINNESOTA STATEMENTS OF NET ASSETS PROPRIETARY FUNDS DECEMBER 31, 2007 AND 2006 Business-type Activities -Enterprise Funds Sewer Water 2007 2006 2007 2006 ASSETS CURRENT ASSETS Cash and temporary investments $ 1,515,584 $ 1,475,095 $ 888,144 $ 752,157 Receivables Accounts 399,904 352,470 449,710 290,113 Special assessments, current portion 16,187 - 22,364 - Due from other governments 1,904 - 1,145 150 TOTAL CURRENT ASSETS 1,933,579 1,827,565 1,361,363 1,042,420 NONCURRENT ASSETS Deferred special assessments, net of current portion - - - - Unamortizedbond discount, net 110,054 - - - CAPITALASSETS, AT COST Land 190,269 190,269 - - Buildings 4,702,684 4,702,684 - - Improvements, other than buildings 8,192,884 8,192,884 820,487 820,487 Machinery and equipment 144,690 144,690 74,124 - Vehicles 48,870 48,870 42,710 42,710 Construction in progress - - - - Less: Accumulated depreciation (2,298,049) (1,998,975) (132,700) (103,279) NET CAPITAL ASSETS 10,981,348 11,280,422 804,621 759,918 TOTAL NONCURRENT ASSETS 11,091,402 11,280,422 804,621 759,918 TOTAL ASSETS 13,024,981 13,107,987 2,165,984 1,802,338 LIABILITIES CURRENT LIABILITIES Accounts payable 191,767 284,297 92,800 56,188 Accrued interest payable 40,295 44,749 - - Accrued salaries payable 1,532 840 1,451 994 Compensated absences payable, current portion 4,209 - 4,209 - Bonds payable, current portion 455,027 422,936 - - TOTAL CURRENT LIABILITIES 692,830 752,822 98,460 57,182 NONCURRENT LIABILITIES Compensated absences payable 958 - 958 - Bonds payable 4,879,330 5,253,394 - - TOTALNONCURRENT LIABILITIES 4,880,288 5,253,394 958 - TOTAL LIABILITIES 5,573,118 6,006,216 99,418 57,182 NET ASSETS Invested in capital assets, net of related debt 5,757,045 5,604,092 804,621 759,918 Unrestricted 1,694,818 1,497,679 1,261,945 985,238 TOTAL NET ASSETS $ 7,451,863 $ 7,101,771 $ 2,066,566 $ 1,745,156 The notes to the financial statements are an integral part of this statement. -14- i i i i i i i i i i i i i Business-type Activities -Enterprise Funds -Continued Storm Water Totals 2007 2006 2007 2006 $ 1,382,907 $ 693,704 $ 3,786,635 $ 2,920,956 67,186 52,918 916,800 695,501 12,530 - 51,081 - 1,971 1,563 5,020 1,713 1,464,594 748,185 4,759,536 3,618,170 130,900 - 130,900 - 13,611 - 123,665 - - - 190,269 190,269 - - 4,702,684 4,702,684 215,556 215,556 9,228,927 9,228,927 - - 218,814 144,690 - - 91,580 91,580 253,245 - 253,245 - (12,559) (7,170) (2,443,308) (2,109,424) 456,242 208,386 12,242,211 12,248,726 600,753 208,386 12,496,776 12,248,726 7,494 44,590 292,061 385,075 10,678 - 50,973 44,749 - - 2,983 1,834 - - 8,418 - - - 455,027 422,936 18,172 44,590 809,462 854,594 - - 1,916 - 800,000 - 5,679,330 5,253,394 800,000 - 5,681,246 5,253,394 818,172 44,590 6,490,708 6,107,988 216,608 208,386 6,778,274 6,572,396 1,030,567 703,595 3,987,330 3,186,512 $ 1,247,175 $ 911,981 $ 10,765,604 $ 9,758,908 -15- CITY OF ALBERTVILLE, MINNESOTA STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 Business-type Activities -Enterprise Funds Sewer Water 2007 2006 2007 2006 OPERATING REVENUES Charges for services $ 692,890 $ 617,078 $ 1,083,165 $ 997,259 OPERATING EXPENSES Personal services 91,218 67,757 81,582 66,714 Supplies 24,571 24,004 23,458 88,132 Professional services 82,662 6,103 14,371 10,200 Utilities 67,299 56,702 - 250 Insurance 5,000 2,066 3,175 783 Repairs and maintenance 12,986 15,304 18,415 18,797 Remittance to Joint Powers Board - - 705,867 686,305 Depreciation 299,074 296,758 29,421 23,621 Other charges 45,569 41,838 22,642 22,240 TOTAL OPERATING EXPENSES 628,379 510,532 898,931 917,042 OPERATING INCOME 64,511 106,546 184,234 80,217 NONOPERATING REVENUES (EXPENSES) Interest income 42,608 117,882 27,816 26,623 Special assessments 668 6,365 - 20,754 Interest expense and other (230,347) (250,197) - - Other income 4,636 7,808 35,236 53,672 TOTAL NONOPERATING REVENUES (EXPENSES) (182,435) (118,142) 63,052 101,049 INCOME (LOSS) BEFORE TRANSFERS (117,924) (11,596) 247,286 181,266 TRANSFERS Transfers in 345,290 1,254,004 - - Transfers out - - - (1,382,767) TOTAL TRANSFERS 345,290 1,254,004 - (1,382,767) CHANGE IN NET ASSETS 227,366 1,242,408 247,286 (1,201,501) NET ASSETS, JANUARY 1 7,101,771 5,625,442 1,745,156 2,946,657 PRIOR PERIOD ADJUSTMENT 122,726 233,921 74,124 - NET ASSETS, DECEMBER 31 $ 7,451,863 $ 7,101,771 $ 2,066,566 $ 1,745,156 The notes to the financial statement are an integral part of this statement. -17- i i i i i i i i i i i i i i i i i i i i i i i i i i Business-type Activities -Enterprise Funds -Continued Storm Water Totals 2007 2006 2007 2006 $ 170,004 $ 142,376 $ 1,946,059 $ 1,756,713 - - 172,800 134,471 172 - 48,201 112,136 5 6,242 107,243 15 3,275 123, 546 - - 67,299 56,952 - - 8,175 2,849 2,488 2,193 33,889 36,294 - - 705,867 686,305 5,389 5,389 333,884 325,768 - - 68,211 64,078 64,291 114,825 1,591,601 1,542,399 105,713 27,551 354,458 214,314 3 8,245 12,432 108,669 156,93 7 200,336 - 201,004 27,119 (10,977) - (241,324) (250,197) 28 (100) 39,900 61,380 227,632 12,332 108,249 (4,761) 333,345 39,883 4,635 - 349,925 1,254,004 (2,786) - (2,786) (1,382,767) 1,849 - 347,139 (128,763) 335,194 39,883 809,846 80,790 911,981 872,098 9,758,908 9,444,197 - - 196,850 233,921 $ 1,247,175 $ 911,981 $ 10,765,604 $ 9,758,908 -18- i i i i i i i i i i i i CITY OF ALBERTVILLE, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS TO THE STATEMENT OF ACTIVITIES PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2007 Total net change in net assets -proprietary funds 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 Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of accounting certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. Special assessments Activity of certain funds are presented as governmental funds. However, their functions on a government-wide perspective are business-type. Sewer Access Water Access Phillip Morris Lift Station Change in net assets -business-type activities The notes to the financial statements are an integral part of this statement. -19- $ 809,846 116,687 36,645 663,048 (14,962) (116,687) $ 1,494,577 CITY OF ALBERTVILLE, MINNESOTA STATEMENTS OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 Business-type Activities -Enterprise Funds Sewer Water 2007 2006 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users Payments to suppliers Payments to employees NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other fiznds Proceeds from bonds issued Bond issuance costs Special assessments Intergovernmental Miscellaneous Transfers to other funds NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTIVITIES CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES Acquisition of capital assets Interest paid on bonds Principal paid on bonds NET CASH USED BY CAPITAL FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest received on investments NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, JANUARY 1 CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 629,269 $ 550,631 $ 901,204 $ 865,531 (239,546) (183,685) (751,316) (904,934) (85,359) (67,998) (?5,958) (66,801) 304,364 298,948 73,930 (106,204) 345,290 1,254,004 - - 668 6,365 - 20,754 (2,976) 1,034 (995) (150) 4,636 7,808 35,236 53,672 - - - (1,382,767) 347,618 1,269,211 34,241 (1,308,491) - (1,082,837) (zz6,666) (242,746) (427,435) (404,925) (654,101) (1,730,507) 42,608 117,882 27,816 26,623 40,489 (44,466) 135,987 (1,388,072) 1,475,095 1,519,561 752,157 2,140,229 $ 1,515,584 $ 1,475,095 $ 888,144 $ 752,157 The notes to the financial statement are an integral part of this statement. -20- i i i i i i i i i i i i i i i Business-type Activities -Enterprise Funds -Continued Storm Water Totals 1 i 1 1 1 1 1 1 2007 2006 2007 2006 $ 155,736 $ 134,426 $ 1,686,209 $ 1,550,588 (95,998) (69,046) (1,086,860) (1,157,665) - - (161,317) (134,799) 59,738 65,380 438,032 258,124 4,635 - 349,925 1,254,004 800,000 - 800,000 - (13,910) - (13,910) - 56,906 - 57,574 27,119 (408) (4) (4,379) 880 28 (100) 39,900 61,380 (2,786) - (2,786) (1,382,767) 844,465 (104) 1,226,324 (39,384) (253,245) - (253,245) (1,082,837) - - (226,666) (242,745) - - (427,435} (404,925) (253,245) - (907,346) (1,730,507) 3 8,245 12,432 108,669 156,937 689,203 77,708 865,679 (1,354,830) 693,704 615,996 2,920,956 4,275,786 $ 1,382,907 $ 693,704 $ 3,786,635 $ 2,920,956 -21- CITY OF ALBERTVILLE, MINNESOTA STATEMENT OF CASH FLOWS -CONTINUED PROPRIETARY FUNDS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 Business-type Activities -Enterprise Funds -Continued Sewer Water 2007 2006 2007 2006 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income $ Adjustments to reconcile operating income to net cash provided (used) by operating activities: 64,511 $ 106,546 $ 184,234 $ 80,217 Depreciation 299,074 (Increase) decrease in assets: Accounts receivable (47,434) Special assessments receivable (16,187) Increase (decrease) in liabilities: Accounts payable (1,459) Accrued salaries payable 692 Compensated absences payable 5,167 296,758 29,421 23,621 (66,447) (159,597) (131,728) - (22,364) - (37,668) 36,612 (78,227) (241) 457 (87) - 5,167 - NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 304,364 $ 298,948 $ 73,930 $ (106,204) SCHEDULE OF NONCASH CAPITAL AND FINANCING ACTIVITIES Prior period adjustment $ 122,726 $ 233,921 $ 74,124 $ - Amortization of bond discount 8,135 8,135 - - TOTAL NONCASH CAPITAL AND FINANCING ACTIVITIES $ 130,861 $ 242,056 $ 74,124 $ - The notes to the financial statements are an integral part of this statement. -22- 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 7 I~] J J 7 CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Albertville, Minnesota (the City) operates under the "Optional Plan A" form of government as defined in the State of Minnesota statutes. Under this plan, the government of the City is directed by a Council composed of an elected Mayor and four elected Council members. The Council exercises legislative authority and determines all matters of policy. The Council appoints personnel responsible for the proper administration of all affairs relating to the City. The City has considered all potential units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB} has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the primary government to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government. The City has no component units. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary 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. 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. -25- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED 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. Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the year in which the resources are measurable and become available. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are also recorded as deferred revenue. On the modified accrual basis, receivables that will not be collected within the available period have also been reported as deferred revenue. The preparation of financial statements in conformity with accounting principles generally accepted m the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The City reports the following major governmental funds: The General fund is the City's primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. The Debt Service fund accounts for the accumulation of resources and payment of bond principal and interest on long-term general obligation debt of governmental funds. The Sewer Access fund accounts for the accumulation of resources from sewer availability charges collected by the City. The Water Access fund accounts for the accumulation of resources from water availability charges collected by the City. The Closed Capital Projects fund accounts for the costs associated with replacement of the City's utility and road systems. It also covers minor costs for project funds closed and completed. The Prairie Run fund accounts for the accumulation of resources and payments made for construction of public improvements at the Prairie Run development. The CSAH 19 and SO`" Street fund accounts for the accumulation of resources and payments made for the road improvement project in conjunction with Wright County at the intersection of CSAH 19 and 50~' Street. -26- G i r ii CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED The City reports the following major proprietary funds: The Sewer fund accounts for the activities of the City's sewage collection utility. The Water fund accounts for the activities of the City's water utility. The Storm Water fund accounts for the activities of the City's storm drainage utility. Additionally, the City reports the following fund types: Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. The agency funds are custodial in nature and do not present results of operations or have a measurement focus. Agency funds are accounted for using the modified accrual basis of accounting. This fund is used ' to account for assets that the City holds for others in an agency capacity. 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 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 government-wide financial statements. Exceptions to this general rule are charges between the City's water and sewer functions and various ' other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. ' Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contribution, 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 City 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. n J -27- Note 1: CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED D. Assets, Liabilities and Net Assets or Equity 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. Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of the funds. The City may also invest idle funds as authorized by Minnesota statutes, as follows: 1. Direct obligations or obligations guaranteed by the United States or its agencies. 2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities in (1) above. 3. General obligations of the State of Minnesota or any of its municipalities. 4. Banker's acceptances of Unites States banks eligible for purchase by the Federal Reserve System. 5. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality, and maturing in 270 days or less. 6. Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers. 7. Guaranteed investment contracts (GIC's) issued or guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debt obligations of the issuer or the collateral pledged by the issuer is in the top two rating categories, or in the top three rating categories for lonb term GIC's issued by Minnesota banks. Investments for the City are reported at fair value. The Minnesota Municipal Money Market Fund (4M) investment pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool share. 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 fmancial statements. The funds are maintained in a separate bank account and their use is limited by the Public Facilities Authority Loan Agreement. Property Taxes The Council annually adopts a tax levy in December and certifies it to the County for collection in the following year. The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable property within the City on January 1 and are payable by the property owners in two installments. The taxes are collected by the County Auditor and tax settlements are made to the City during January, June, and November each year. -28- n n i ri r u ~I~ n CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Taxes payable on homestead property, as defined by Minnesota statutes, were partially reduced by a market value credit aid. The credit is paid to the City by the State in lieu of taxes levied against the homestead property. The State remits this credit in two equal installments in October and December each year. Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by a deferred revenue liability for delinquent taxes not received within 60 days after year end in the fund financial statements. Accounts Receivable Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund receivables are also included for services provided in 2007. The City annually certifies delinquent utility accounts to the County for collection in the following year. Therefore, there has been no allowance for doubtful accounts established. Special Assessments Special assessments represent the financing for public improvements paid for by benefiting property owners. These assessments are recorded as receivables upon certification to the County. Special assessments are recognized as revenue when they are received in cash or within 60 days after year end. All governmental fund special assessments receivable are offset by a deferred revenue liability in the fund fmancial statements. Interfund Receivables and Payables r~ L! Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." Advances between funds, as reported in the fund fmancial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Land Held for Resale The City acquires properties for redevelopment purposes. These properties are reported at their net realizable value in the financial statements. Any costs incurred that are above a property's net realizable value are reported as expenditures of the current period. The balance of land held for resale is offset with a reservation of fund balance to indicate that it is not available for appropriation. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. -29- Note 1: CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewallcs, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide fmancial statements. Capital assets are defined by the City as assets with an estimated useful life of more than one year and an initial individual cost of more than the following: Category Cost Land $ 10,000 Land Improvements 25,000 Infrastructure 100,000 Buildings 25,000 Building Improvements 25,000 Vehicles 5,000 Other Equipment 5,000 The City reports infrastructure assets on a network and subsystem basis. Accordingly, the amounts spent for the construction or acquisition of infrastructure assets are capitalized and reported in the government-wide financial statements regardless of their amount. In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the City chose to include items dating back to June 30, 1980. The City was able to estimate the historical cost for the initial reporting of these assets through backtracking (i.e., estimating the current replacement cost of the infrastructure to be capitalized and using an appropriate price-level index to deflate the cost to the acquisition year or estimated acquisition year). As the City constructs or acquires capital assets each period, including infrastructure assets, they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend its useful life beyond the original estimate. In the case of donations the City values these capital assets at the estimated fair value of the item at the date of its donation. Property, plant and equipment will be depreciated using the straight-line method over the following estimated useful lives: Useful Lives Assets in Years It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation and sick pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Land improvements Infrastructure Buildings Vehicles Other Equipment Compensated Absences -30- L~~ ~J Sto30 15 to 50 15 to 40 3 to 15 ' 3 to 20 i i u CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED Long-term Obligations In the government-wide fmancial 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. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund fmancial statements, governmental fund types recognized bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other fmancing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other fmancing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the fund fmancial statements, governmental funds report reservations of fiznd 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. Net Assets Net assets represent the difference between assets and liabilities. Net assets are displayed in three components: a. Invested in capital assets, net of related debt -Consists of capital assets, net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. b. Restricted net assets -Consist of net assets restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors, laws or regulations of other governments. c. Unrestricted net assets -All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt". Comparative Data/Reclassifications Comparative total data for the prior year have been presented only for individual enterprise funds in the fund fmancial statements in order to provide an understanding of the changes in the financial position and operations of these funds. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. -31- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for the General and special purpose funds. All annual appropriations lapse at fiscal year end. The City does not use encumbrance accounting. In June of each year, all departments of the City submit requests for appropriations to the City Administrator so that a budget may be prepared. Before September 15~, the proposed budget is presented to the Council for review. The Council holds public hearings and a fmal budget is prepared and adopted in early December. The appropriated budget is prepared by fund, function and department. The City's department heads, with the approval of the City Administrator, may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the Council. The legal level of budgetary control is the department level. Budgeted amounts are as originally adopted, or as amended by the Council. Budget amendments were not made in 2007. B. Deficit Fund Equity The following funds had deficit fund balances as of December 31, 2007: Fund Amount Major funds Closed Capital Projects $ 131,985 Prairie Run 805,932 CSAH 19 and 50th Street 5,716 Nonmaj or funds TIF #10, Mold -Tech 5,411 TIF #11, Land of Lake Tile 3,761 City Hall 39,687 52nd Street Industrial Park 18,781 New Ice Sheet 1,348 Phillip Morris Lift Station 116,687 MacIver 380,993 The Closed Capital Projects fund deficit will be eliminated through transfers from other funds. The Prairie Run fund deficit will be eliminated with future special assessment collections. The CSAH 19 and 50`I' Street fund deficit will be funded with transfers from the Capital Outlay Reserve fund. The deficit fund balances in nonmajor funds will be eliminated through operating transfers, sewer access charges and reimbursements from Independent School District No. 885. -32- iJ i I n CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS A. Deposits and Investments Deposits Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City's deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the Council, the City maintains deposits at those depository banks, all of which are members of the Federal Reserve System. Minnesota statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds (140 percent in the case of mortgage notes pledged). Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other State or local government obligations. Minnesota statutes require that securities pledged as collateral be held in safekeeping by the City or in a financial institution other than that furnishing the collateral. At year end, the City's carrying amount of deposits was $5,789,080 and the bank balance was $6,591,883. Of the bank balance, $233,111 was covered by federal depository insurance and $6,331,764 was covered by collateral held by the City's agent in the City's name. The remaining balance of $27,008 was uncollateralized. Investments As of December 31, 2007, the City had the following investments that are insured or registered, or securities held by the City or its agent in the City's name: Maturities Investment Type Minnesota Municipal Money Market Brokered Money Market US Government Agency Securities US Treasury Obligations Municipal Bonds Brokered Certificates of Deposit u Total Maturity Less than one year One to two years Two to five years Fair Less than One to Two to Value one year two years five years $ 158,604 $ 158,604 $ - $ - 93,547 93,547 - - 964,031 399,020 264,918 300,093 1,062,878 1,062,878 - - 610,400 135,029 373,816 101,555 3,925,528 3,562,297 283,102 80,129 $ 6,814,988 $ 5,411,375 $ 921,836 $ 481,777 Maximum r,,.,A~*,,,A„~~ 79% 14% 7% -33- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED U.S. Government Securities Federal Home Loan Bank Municipal Bonds Coon Rapids, MN St. Cloud, MN Iowa City, IA Ramsey, MN Kirkwood Community College, IA Cook County School District, IL (1) Ratings provided by Moody's Investor Services. Cash and Investments Summary A reconciliation of cash and investments as shown on the Statement of Net Assets for the City follows: Carrying amount of deposits $ 5,789,080 Investments 6,814,988 Cash on hand 249 Total $ 12,604,317 Cash and investments Statement of Net Assets $ 12,441,731 Restricted Cash 77,206 Statement of Fiduciary Net Assets 85,380 Total $ 12,604,317 Interest rate risk. In accordance with its investment policy, the City will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than five (5) years from the date of purchase. Reserve funds and other funds with longer-term investment horizons maybe invested in securities exceeding five (5} years if the maturities of such investments are made to coincide as nearly as practicable with the expected use of funds. Extended maturities may be utilized to take advantage of higher yields; however, no more than thirty (30) percent of the total investments should extend beyond five (5) years and in no circumstance should any extend beyond ten (10) years Concentration of credit risk. In accordance with its investment policy, the investments will be diversified by: a. Limiting investment to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities). b. Investing in securities with varying maturities. c. Investing a portion of the portfolio in readily available funds to ensure that appropriate liquidity is maintained in order to meet ongoing obligations. -34- Rating (1) AAA Rating (1) t AAA AA3 AAA AA3 AA3 AAA !J i~ CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED B. Due From Other Governments/Deferred Revenue A summary of all amounts due from other governments as of December 31, 2007 is as follows: Fund County Federal Total Governmental activities General $ 38,064 $ - $ 38,064 Debt Service 3,738 - 3,738 Prairie Run 16,969 - 16,969 Nonmajor 26,932 527,887 554,819 Total governmental activities $ 85,703 $ 527,887 $ 613,590 Business-type activities Sewer $ 1,404 $ - $ 1,904 Water 1,145 - 1,145 Storm water 1,971 - 1,971 Total business-type activities $ 5,020 $ - $ 5,020 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Fund General Delinquent taxes Deferred special assessments Other Debt Service Delinquent taxes Deferred special assessments Sewer Access Deferred speciaLassessments Water Access Deferred special assessments Prairie Run Delinquent special assessments Deferred special assessments Nonmaj or Other Delinquent special assessments Deferred special assessments Total Unavailable Unearned Total $ 118,764 $ - $ 118,764 50,151 - 50,151 - 1,320 1,320 22,175 - 22,175 2,628,336 - 2,628,336 205,530 - 205,530 30,490 - 30,490 360,577 - 360,577 415,524 - 415,524 15,435 - 15,435 71,827 - 71,827 30,503 - 30,503 $ 3,949,312 $ 1,320 $ 3,950,632 -35- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED C. Capital Assets Capital asset activity for the year ended December 31, 2007 was as follows: Restated Beginning Governmental activities Capital assets not being depreciated Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated Buildings Infrastructure Land improvements Vehicles Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for Buildings Infrastructure Land improvements Vehicles Machinery and equipment Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Increases Decreases $ 3,732,869 $ 1,027,850 $ - $ 4,760,719 8,509,707 2,753,067 (4,042,674) 7,220,100 12,242,576 3,780,917 (4,042,674) 11,980,819 2,622,939 681,941 20,539,747 3,166,018 518,391 660,985 1,512,248 - 305,425 33,000 25,498,750 4,541,944 - 3,304,880 - 23,705,765 - 1,179,376 - 1,512,248 - 338,425 - 30,040,694 (393,509) (79,372) - (472,881) (7,561,532) (844,219) - (8,405,751) (99,119) (64,166) - (168,285) (621,167) (100,761) - (721,928) (43,063) (23,712) - .(66,775) (8,718,390) (1,117,230} - (9,835,620) 16,780,360 3,424,714 - 20,205,074 $ 29,022,936 $ 7,205,631 $ (4,042,674) $ 32,185,893 -36- Ending Balance CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED Restated Beginning Balance Increases Business-type activities Capital assets not being depreciated Ending Decreases Balance Land $ 190,269 $ - $ - $ 190,269 Construction in progress - 369,932 - 369,932 Total capital assets not being depreciated 190,269 369,932 - 560,201 Capital assets being depreciated Buildings 4,702,684 - - 4,702,684 Infrastructure 9,228,927 - - 9,228,927 Vehicles 91,580 - - 91,580 Machinery and equipment 218,814 - - 218,814 Total capital assets being depreciated 14,242,005 - - 14,242,005 Less accumulated depreciation for Buildings (112,718) (117,567) - (230,285) Infrastructure (1,823,955) (196,091) - (2,020,046) Vehicles (63,996) (8,124) - (72,120) Machinery and equipment (108,755) (12,102} - (120,857) Total accumulated depreciation (2,109,424} (333,884) - (2,443,308) Total capital assets being depreciated, net 12,132,581 (333,884) - 11,798,697 Business-type activities capital assets, net $ 12,322,850 $ 36,048 $ - $ 12,358,898 Depreciation expense was charged to functions/programs of the City as follows: Governmental activities General government $ 544 Public safety 75,800 Public works 950,718 Culture and recreation 90,168 Total depreciation expense -governmental activiti es $ 1,117,230 Business-type activities Sewer utility $ 299,074 Water utility 29,421 Storm water utility 5,389 Total depreciation expense -b usiness-type activiti es $ 333,884 -37- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED D. Construction Commitments The City has active construction projects as of December 31, 2007. At year end, the City's commitments with the contractors are as follows: Spent Remaining Project to date Commitment 2004 Prairie Run $ 1,498,451 $ 81,311 City Hall 3,044,958 68,329 Phillip Morris Lift Station 94,955 46,068 CSAH 19 South 1,342,799 157,201 52nd Street Industrial Park 686,307 78,993 Winter Park 106,268 72,379 Total $ 6,773,738 $ 504,281 E. Interfund Receivables, Payables and Transfers The composition of interfund balances as of December 31, 2007, is as follows: Receivable Fund Payable Fund I 0 Amnnnt Sewer Access Interstate 94 $ 526,820 Sewer Access Prairie Run 820,003 Sewer Access Closed Capital Projects 357,109 Sewer Access TIF #10 Mold-Tech 5,411 Sewer Access TIF # 11 Land of Lake Tile 3,761 Sewer Access City Hall Capital Project 36,594 Sewer Access 52nd Street Industrial Park 9,638 Sewer Access New Ice Sheet 1,348 Sewer Access Phillip Morris Lift Station 109,524 Sewer Access G.O. Tax Increment Bonds, 1996A 81,554 Sewer Access G.O. Improvement Bonds, 2003A 663,934 Total interfund balances $ 2,615,696 The Sewer Access fund borrowed the funds above the amounts shown in order for those funds to eliminate their deficit cash balances. -38- 7 u I~ I C t CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED The composition of interfund transfers as of December 31, 2007 is as follows: Transfer in Fund Transfer out General Debt Service Sewer Access Water Access Closed Capital Projects CSAH 19 and 50th Street Nonmajor Governmental Storm Water Enterprise Total transfers out Nonmaj or Debt Governmental General Service Funds $ - $ 150,000 $ 847,475 - 81,835 115,688 - 277,270 16,228 - - 189,000 - - 266,694 294 - - 132,914 - 53,866 - - 2,786 $ 133,208 $ 509,105 $ 1,491,737 Transfer in Fund Transfer out General Debt Service Sewer Access Water Access Closed Capital Projects CSAH 19 and 50th Street Nonmajor Governmental Storm Water Enterprise Total transfers out Storm Sewer Water Enterprise Enterprise Total $ - $ - $ 997,475 - - 197,523 259,874 - 553,372 85,416 - 274,416 - - 266,694 - - 294 - 4,635 191,415 - - 2,786 $ 345,290 $ 4,635 $ 2,483,975 Transfers were made for the following purposes: Debt Service Payments • The Sewer Access fund transferred $259,874 to the Sewer fund. • The General fund transferred $150,000 to the City Hall debt service fund. • The Sewer Access fund transferred $37,975 to the 2003 G.O. Improvement fund. Close Completed Capital Project Funds • The Closed Capital Projects fund transferred $282 to the Wright County Shop Property fund. • The Closed Capital Projects fund transferred $56,576 to the 50~' Street Bike Trail fund. • The Closed Capital Projects fund transferred $55,567 to the County Road 37 Traffic Light fund. • The Closed Capital Projects fund transferred $154,269 to the CSAH 19 Widening fund. Close Completed Debt Service Funds • The Closed Debt Service fund transferred $1,649 to the 1993C Refunding Bond fund. • The 1993 G.O. Improvement fund transferred $80,186 to the Closed Debt Service fund. -39- Note 3: CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 DETAILED NOTES ON ALL FUNDS -CONTINUED Provide Cash for funds with Deficit Fund Balances • The Capital Outlay Reserve fund transferred $1,067 to the Interstate 94 fund. • The General fund transferred $264,492 to the Interstate 94 fund to fund the deficit cash balance. To Reclass Previously Collected Special Assessments • The 1999 G.O. Improvement fund transferred $115,688 to the CSAH 19 and 57~' Street Intersection fund. • The 70~' Street fund transferred $52,798 to the MacIver fund. To Correct Capital • The 52"d Street Industrial Park fund transferred $4,635 to the Storm Water fund. • The CSAH 19 and 50~' Street fund transferred $294 to the General fund. • The 52"d Street Industrial Park fund transferred $84,084 to the General fund. • The CSAH 19 and 57`i' Street fund transferred $2,304 to the General fund. • The Lachman Avenue fund transferred $46,527 to the General fund. Other • The Sewer Access fund transferred $239,295 to the City Hall debt service fund and $16,228 to the City Hall capital project fund for SAC fees collected. • The Water Access fund transferred $189,000 to the City Hall capital project fund for WAC fees collected. • The Water Access fund transferred $85,416 to the Sewer fund to pay for radio read water meters. • The General fund transferred $129,854 to the Capital Outlay Reserve fund for future capital needs of the economic development authority. • The General fund transferred $453,129 to the Capital Outlay Reserve fund for budgeted capital expenditures that were not used during 2007. • The Storm Water enterprise fund transferred $2,786 to the Flood Mitigation Project in the process of converting the fund into the Storm Water fund. -40- fl 0 C! t t CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED F. Long-term Debt General Obligation Bonds. The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental activities and business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. General obligation bonds are direct obligations of the City and pledge the full faith and credit of the City. General Obligation Tax Increment Bonds The following bond was issued to finance improvements to the intersection of CSAH 19 and CSAH 37. Balance Authorized Interest Issue Maturity at Description and Issued Rate Date Date Year End G.O. Tax Increment Bonds, Series 1996A $ 400,000 4.25 - 5.40 % 11/22/96 02/01/08 $ 30,000 Annual debt service requirements to maturity for general obligation tax increment bonds are as follows: Year Ending Governmental Activities December 31, Principal Interest Total 2008 $ 30,000 $ 810 $ 30,810 General Obligation Special Assessment Bonds The following bonds were issued to finance various improvement projects in the City. Balance Authorized Interest Issue Maturity at Description and Issued Rate Date Date Year End G.O. Improvement Bonds, Series 1999A $ 1,760,000 4.10 - 5.20 % 07/29/99 02/01/15 $ 360,000 G.O. Improvement Bonds, Series 2003 3,235,000 2.00 - 4.15 08/15/03 02!01/19 1,920,000 G.O. Improvement Bonds, Series 2007A 4,035,000 3.75 - 4.10 08/16/07 02/01/23 4,035,000 Total G.O. Special Assessment Bonds $ 6,315,000 -41- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED Annual debt service requirements to maturity for general obligation special assessment bonds are as follows: Year Ending Governmental Activities December 31, Principal Interest Total 2008 $ 510,000 $ 205,658 $ 715,658 2009 520,000 189,458 709,458 2010 175,000 177,935 352,935 2011 180,000 171,064 351,064 2012 275,000 161,968 436,968 2013 - 2017 1,855,000 587,759 2,442,759 2018 - 2022 1,740,000 218,841 1,958,841 2023 260,000 5,330 265,330 Total $ 5,515,000 $ 1,718,013 $ 7,233,013 Year Ending Business-type Activities December 31, Principal Interest Total 2008 $ - $ 32,035 $ 32,035 2009 - 32,035 32,035 2010 10,000 31,848 41,848 2011 10,000 31,473 41,473 2012 35,000 30,585 65,585 2013 - 2017 295,000 120,725 415,725 2018 - 2022 365,000 55,325 420,325 2023 85,000 1,743 86,743 Total $ 800,000. _$ 335,769 $ 1,135,769 General Obligation Revenue Bonds The following bonds were issued to fmance capital improvements in the enterprise funds. They will be repaid from net revenues of the enterprise funds. Balance Authorized Interest Issue Maturity at Description and Issued Rate Date Date Year End Public Facility Authority, G.O. Sewer Revenue Notes, Series 1993 $ 1,454,514 3.32 % 10/19/93 08/20/14 $ 619,358 G.O. Sewer Revenue Bonds, Series 2000A 2,550,000 4.50 - 5.25 11/20/00 02/01/16 1,000,000 G.O. Sewer Revenue Bonds, Series 2005 4,000,000 3.15 - 4.25 12/22/05 12/01/25 3,715,000 Total G.O. Revenue Bonds $ 5,334,358 -42- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED Annual debt service requirements to maturity for general obligation revenue bonds are as follows: Year Ending Business-type Activities December 31, Principal Interest Total 2008 $ 455,027 $ 208,809 $ 663,836 2009 287,706 194,630 482,336 2010 300,474 184,006 .484,480 2011 318,335 173,543 491,878 2012 331,294 160,475 491,769 2013 - 2017 1,676,522 589,084 2,265,606 2018 - 2022 1,155,000 313,940 1,468,940 2023 - 2025 810,000 69,170 879,170 Total $ 5,334,358 $ 1,893,657 $ 7,228,015 Revenue Bonds The following bonds were issu ed to fmance buildings for Public Works, City Ha ll and Fire Department. Balance Authorized Interest Issue Maturity at Description and Issued Rate Date Date Year End Public Facility Authority, Lease Revenue Bonds, Series 1999 $ 860,000 5.00 - 5.60 % 07/20/99 02/01/19 $ 645,000 Public Project Lease Revenue Bonds, Series 2004 2,100,000 3.75 - 4.90 09/09/04 02/01/25 1,995,000 Public Project Lease Revenue Bonds, Series 2005 3,700,000 3.30 - 4.70 12/22/05 12/01/25 3,445,000 Total Revenue Bonds $ 6,085,000 Annual debt service requirements to maturity for revenue bonds are as follows: Year Ending Governmental Activities December 31, Principal Interest Total 2008 $ 250,000 $ 265,399 $ 515,399 2009 265,000 255,469 520,469 2010 270,000 244,985 514,985 2011 280,000 234,024 514,024 2012 290,000 222,524 512,524 2013 - 2017 1,655,000 916,878 2,571,878 2018 - 2022 1,840,000 525,386 2,365,386 2023 -2025 1,235,000 108,325 1,343,325 Total $ 6,085,000 $ 2,772,990 $ 8,857,990 -43- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED Changes in Long-term Liabilities Long-term liability activity for the year ended December 31, 2007 was as follows: Beginning Ending Due Within Balance Increases Decreases Balance One Yeaz Governmental activities Bonds payable: G.O. Tax Increment bonds $ 55,000 $ - $ (25,000) $ 30,000 $ 30,000 G.O. Special Assessment bonds 2,775,000 3,235,000 (495,000) 5,515,000 510,000 Revenue bonds 6,330,000 - (245,000) 6,085,000 250,000 Total bonds payable 9,160,000 3,235,000 (765,000) 11,630,000 790,000 Compensated absences payable 26,222 40,462 (27,182) 39,502 31,908 Governmental activity long-term liabilities $ 9,186,222 $ 3,275,462 $ (792,182) $ 11,669,502 $ 821,908 Business-type activities Bonds payable G.O. Revenue bonds $ 5,761,792 $ - $ (427,435) $ 5,334,357 $ 455,027 G.O. Special Assessment bonds - 800,000 - 800,000 - Total bonds payable 5,761,792 800,000 (427,435) 6,134,357 455,027 Compensated absences payable - 14,858 (4,524) 10,334 8,418 Business-type activity long-term liabilities $ 5,761,792 $ 814,858 $ (431,959) $ 6,144,691 $ 463,445 In the event an employee of the City would retire or resign, in good standing, a portion of the governmental compensated absences would mature. The portion applicable to that employee would be recorded as a liability and liquidated through the General fund. -44- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED G. Tax Increment Financing Districts The City is the administering authority for the following tax increment fmance districts. Tax Tax Tax Increment Increment Increment District No. 1-7 District No. 1-8 District No. 1-9 Authorizing law M.S. 469 M.S. 469 M.S. 469 Type of district Housing Redevelopment Redevelopment Year established 1996 1997 1997 Duration of district 25 years 15 years 15 years Tax capacity Original $ 275 $ 195 $ 2,458 Current 32,051 12,202 21,902 Captured -retained $ 31,776 $ 12,007 $ 19,444 Tax Tax Increment Increment District No. 1-10 District No. 1-11 Authorizing law M.S. 469 M.S. 469 Type of district Redevelopment Redevelopment Year established 1998 1999 Duration of district 15 years 15 years Tax capacity Original $ 710 $ 1,712 Current 13,080 35,490 Captured -retained $ 12,370 $ 33,778 The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance which would have a material effect on the fmancial statements. -45- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 4: DEFINED BENEFIT PENSION PLANS -STATEWIDE A. Plan Description All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PEKE), which is acost-sharing, multiple-employer retirement plan. This plan is established and administered in accordance with Minnesota statutes, chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by Minnesota statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of 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 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single life annuity is a lifetime annuity that ceases upon the death of the retiree - - no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF and PEPFF. That report maybe obtained on the Internet at mnpera.org, by writing to PERA, 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103-1855 or by calling 651-296-7460 or 1-800-652- 9026. 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 Minnesota statutes. PERF Basic Plan members and Coordinated Plan members were required to contribute 9.10 percent and 5.75 percent, respectively, of their annual covered salary in 2007. Contribution rates in the Coordinated Plan will increase in 2008 to 6.0 percent. The City is required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan PERF members, and 6.25 percent for Coordinated Plan PERF members. Employer contribution rates for the Coordinated Plan will increase to 6.50 percent, effective January 1, 2008. The City's contributions to the PERF for the years ending December 31, 2007, 2006 and 2005, were $36,882, $34,470 and $27,219, respectively. The City's contributions were equal to the contractually required contributions for each year as set by Minnesota statute. -46- C i CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 5: DEFINED BENEFIT PENSION PLANS -FIRE RELIEF ASSOCIATION A. Plan Description All members of the Albertville Fire Department (the Department) are covered by a defined benefit plan ' administered by the Albertville Firemen's Relief Association (the Association). The plan is a single employer defined benefit pension plan and is established and administered in accordance with Minnesota statute, chapter 69. The Association maintains a separate Special fund to accumulate assets to fund the retirement benefits earned by the Department's membership. Funding for the Association is derived from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing Guidelines Act of 1971 (chapter 261 as amended by chapter 509 of Minnesota statutes 1980). Funds are also derived from investment income. The Association issues a publicly available fmancial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Albertville Firemen's Relief Association, 5959 Main Avenue NE, Albertville, Minnesota 55301. u ii ~_ n CI n B. Funding Policy The financial requirements of the Special fund are determined in accordance with section 69.772 of the Minnesota statutes, which requires the payment of pension benefits in a lump sum or optionally in annual installments. The benefits are payable after age 50, 20 years of service, and 10 years of Association membership or upon death. The City's annual pension cost for the current year and related information for the plan is as follows: Annual Pension Cost $ 44,321 Contributions Made State Aid 44,321 Actuarial Valuation Date 12/31/07 Actuarial Cost Method Entry age normal Amortization Method Level percentage -open Remaining Amortization Period Normal cost 20 years Prior service cost 10 years Asset valuation method Market Actuarial Assumptions Investment rate of return 5% Projected salary increases N/A Inflation rate N/A Cost of living adjustments None ' -47- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 5: DEFINED BENEFIT PENSION PLANS -FIRE RELIEF ASSOCIATION -CONTINUED Three Year Trend Information Annual Percentage Year Pension of APC Net Pension Ending Cost (APC) Contributed Obligation 12/31/07 $ 44,321 100.00 % $ - 12/31 /06 49,376 143.79 - 12/31 /OS 47,310 161.95 - Required Supplementary Information Assets in Excess of Pension Actuarial Actuarial Actuarial (Unfunded) Benefit Valuation Value of Accrued Accrued Funded Per Year Date Assets Liability Liability Rate of Service 12/31/07 12/31/06 $ 385,049 $ 377,896 $ 7,153 100.0 $ 1,500 12/31/05 289,569 333,762 (44,193) 90.0 1,500 * Information not available at time of the audit. Note 6: JOINT POWERS AGREEMENTS A. Joint Powers Water Board of Albertville, Hanover and St. Michael In 1977, the City entered into an agreement with the City of St. Michael and the City of Hanover to construct a water system under a grant bond arrangement with the Albertville Economic Development Administration (EDA). Water Revenue bonds were issued in the name of the City of Albertville and purchased by the EDA. The Joint Powers Board remits the annual bond and interest payment to the City which, in turn, remits the payment to the EDA. The Joint Powers Agreement states that in the event the Joint Powers Board Water fund does not generate sufficient revenue to pay operating costs as well as principal and interest on bonds that the participants agree to contribute an amount sufficient to fund the deficiency. JOINT POWERS BOARD STATEMENT OF NET ASSETS DECEMBER 31, 2007 Assets Liabilities Net assets Total liabilities and net assets $ 28,101,490 $ 13,315,578 14,785,912 $ 28,101,490 L u i 0 D L u L C u L -48- ' ' CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 6: JOINT POWERS AGREEMENTS -CONTINUED JOINT POWERS BOARD SUMMARY STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2007 Operating revenues $ 2,307,303 Operating expenses 1,223,209 Operating income 1,084,094 Nonoperating revenues 504,113 Change in net assets 1,588,207 Net assets, January 1 13,197,705 Net assets, December 31 $ 14,785,912 B. St. Michael -Albertville Ice Arena In 1996-97, the City entered into a Joint Powers Agreement with the City of St. Michael and the Independent School District No. 885. The agreement was for the construction and maintenance of a qualified ice arena. During 2006, the City was notified as being selected as Mighty Ducks Grant recipient to help fund the cost of the ice arena. The arena was constructed with the grant reward and contributions and donations from the City of Albertville, the City of St. Michael and the Independent School District No. 885. The agreement states that each participant 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 ice arena. In the event that the arena cannot generate sufficient operating revenue, each participant is required to contribute one-third of the projected shortfall. In addition to the Revenue Note, the City provided a short term loan in the amount of $83,333 from the Storm Water enterprise fund. The City was never reimbursed for the loan, and eventually cancelled the loan in the amount of $83,333 as bad debt expense. ST. MICHAEL -ALBERTVILLE ICE ARENA ' STATEMENT OF NET ASSETS DECEMBER 31, 2006 Assets Liabilities Net assets Total liabilities and net assets $ 1,847,321 $ 755,910 1,091,411 $ 1,847,321 -49- CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 6: JOINT POWERS AGREEMENTS -CONTINUED ST. MICHAEL - ALBERTVILLE ICE ARENA SUMMARY STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2006 Operating revenues Operating expenses Operating income (loss) Nonoperating revenues Change in net assets Net assets, January 1 Net assets, December 31 Note 7: OTHER INFORMATION A. B. Risk Management $ 210,398 285,455 (75,057) 1,067,874 992,817 98,594 $ 1,091,411 The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage in any of the past three fiscal years. t Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $1,000,000. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's management is not aware of any incurred but not reported claims. Legal Debt Margin i~ In accordance with Minnesota statutes, the City may not incur or be subject to net debt in excess of two percent of the market value of taxable property within the City. Net debt is payable solely from ad valorem taxes and, , therefore, excludes debt financed partially or entirely by special assessments, enterprise fund revenues or tax increments. The City's applicable debt does not exceed the limit. u -50- 1 CITY OF ALBERTVILLE, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 7: OTHER INFORMATION -CONTINUED C. Prior Period Adjustments Net assets for the governmental and business-type activities were restated for the following reasons: Adjust beginning governmental infrastructure and related accumulated depreciation $ 910,731 L~ n n L Adjust beginning unamortized bond discount between the governmental and business-type activities. (32,726) Total governmental activities prior period adjustments $ 878,005 Adjust beginning machinery and equipment assets in the water fund $ 74,124 Adjust beginning unamortized bond discount between the governmental and business-type activities. 32,726 Adjust beginning accounts payable in the water fund 90,000 Total business-type activities prior period adjustments $ 196,850 D. Conduit Debt Obligations Conduit debt obligations are certain limited-obligation revenue bonds or similar debt instruments issued for the express purpose of providing capital fmancing for a specific third party. The City has issued revenue bonds to provide financial assistance to private-sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying fmancial statements. As of December 31, 2007, there were two revenue bonds issued. The aggregate principal amount payable at year end is $3,540,000. The original amount issued was $3,655,000. E. Contingent Liabilities For the year ended December 31, 2007, the City is involved as the Defendant in two lawsuits. The lawsuits utilized the mediation process but were not able to reach resolution. No trial date has been set as of the date of the Auditor's Report. The outcome and any potential contingent liability is currently unknown. -51- CITY OF ALBERTVILLE, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2007 ASSETS Cash and temporary investments Receivables Special assessments Delinquent Deferred Loans Due from other governments TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Contracts payable Due to other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES Reserved for Long term receivable Unreserved Designated for capital expenditures Undesignated TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES -52- Special 203 Total Revolving Capital Nonmajor Loan Projects Funds $ 167,838 $ 2,770,690 $ 2,938,528 - 71,827 71,827 - 30,503 30,503 1S,43S - 1S,43S - SS4,819 SS4,819 $ 183,273 $ 3,427,839 $ 3,611,112 $ - $ 625,678 $ 625,678 - 189,230 189,230 - 693,096 693,096 1S,43S 102,330 117,765 1S,43S 1,610,334 1,625,769 - lOS,731 lOS,731 - 1,597,012 1,597,012 167,838 114,762 282,600 167,838 1,817,SOS 1,985,343 $ 183,273 $ 3,427,839 $ 3,611,112 1 1 1 1 1 1 CITY OF ALBERTVILLE, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2007 REVENUES Tax increments Intergovernmental Charges for service Special assessments Interest on investments Miscellaneous TOTAL REVENUES EXPENDITURES Current Culture and recreation Economic development Capital outlay General government Public works Culture and recreation Economic development TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Bond issuance Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY 1 FUND BALANCES, DECEMBER 31 -53- Special 203 Total Revolving Capital Nonmajor Loan Projects Funds $ - $ 109,895 $ 109,895 - 527,887 527,887 - 6,626 6,626 - 108,278 108,278 5,449 69,428 74,877 7,128 5,000 12,128 12,577 827,114 839,691 - 77,370 77,370 4,510 67,491 72,001 - 173,115 173,115 - 1,200,521 1,200,521 - 8,005 8,005 - 792,858 792,858 4,510 2,319,360 2,323,870 8,067 (1,492,246) (1,484,179) - 1,491,737 1,491,737 - 1,549,878 1,549,878 - (191,415) (191,415) - 2,850,200 2,850,200 8,067 1,3 57,954 1,366,021 159,771 459,551 619,322 $ 167,838 $ 1,817,505 $ 1,985,343 CITY OF ALBERTVILLE, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2007 102 201 Capital Outlay Park ASSETS Cash and temporary investments Receivables Special assessments Delinquent Deferred Due from other governments TOTAL ASSETS LIABILITIES AND FUND BALANCES (DEFICITS) LIABILITIES Accounts payable Contracts payable Due to other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES (DEFICITS) Reserved for long term receivable Unreserved Designated for capital expenditures Undesignated TOTAL FUND BALANCES (DEFICITS) TOTAL LIABILITIES AND FUND BALANCES (DEFICITS) $ 1,597,012 $ 223,083 407 408 TIF #7 TIF #8 Senior Vetsch Housing Cabinets $ 21,698 $ 6,097 - - 16,970 - $ 1,597,012 $ 223,083 $ 38,668 $ 6,097 $ - $ 49,920 $ - $ - - 5,593 - - - 55,513 - - 1,597,012 - - - - 167,570 38,668 6,097 1,597,012 167,570 38,668 6,097 $ 1,597,012 $ 223,083 $ 38,668 $ 6,097 -54- t t ' CITY OF ALBERTVILLE, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET -CONTINUED DECEMBER 31, 2007 476 482 487 492 School 52nd Street Pedestrian City 50th Street Industrial Bike Trail Hall Bike Trail Park ASSETS ' Cash and temporary investments $ - $ - $ - $ - Receivables Special assessments ' Delinquent - - - - Deferred - - - - Due from other governments - - - - TOTAL ASSETS $ - $ - $ - $ - LIABILITIES AND FUND BALANCES (DEFICITS) LIABILITIES Accounts payable $ - $ 3,093 $ - $ 2,211 Contracts payable - - - 6,932 Due to other funds - 36,594 Deferred revenue - - - - 9,638 - TOTAL LIABILITIES - 39,687 - 18,781 FUND BALANCES (DEFICITS) Reserved for long term receivable - - - - Unreserved Designated for capital expenditures - - - - Undesignated - (39,687) - (18,781) 18 781) TOTAL FUND BALANCES (DEFICITS) - (39,687) - , ( TOTAL LIABILITIES AND FUND BALANCES (DEFICITS) $ - $ - $ - $ - -56- 1 1 1 1 1 1 1 i 1 1 1 1 1 i i 1 1 1 1 493 495 497 498 499 500 CSAH 19 Wright County Flood and 57th Shop Mitigation Lachman New Intersection Property 70th Street Project Avenue Ice Sheet $ 108,822 $ - $ 284,730 $ - $ 414,017 $ - - - 35,914 - - - = = 15,252 = - = $ 108,822 $ - $ 335,896 $ - $ 414,017 $ - $ - $ - $ 87,960 $ - $ 7,994 $ - - - - - 176,705 - - - - - - 1,348 - - 51,166 - - - - - 139,126 - 184,699 1,348 108,822 - 196,770 - 229,318 (1,348) 108,822 - 196,770 - 229,318 (1,348) $ 108,822 $ - $ 335,896 $ - $ 414,017 $ - -57- t t t CITY OF ALBERTVILLE, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET -CONTINUED DECEMBER 31, 2007 ASSETS Cash and temporary investments Receivables Special assessments Delinquent Deferred Due from other governments TOTAL ASSETS LIABILITIES AND FUND BALANCES (DEFICITS) LIABILITIES Accounts payable Contracts payable Due to other funds Deferred revenue TOTAL LIABILITIES FUND BALANCES (DEFICITS) Reserved for long term receivable Unreserved Designated for capital expenditures Undesignated TOTAL FUND BALANCES (DEFICITS) TOTAL LIABILITIES AND FUND BALANCES (DEFICITS} 501 Phillip Morris - 35,913 71,827 - 15,251 30,503 - - 554,819 $ - $ 136,441 $ 3,427,839 $ 7,163 $ 466,270 $ 625,678 - - 189,230 109,524 - 693,096 116,687 517,434 1,610,334 - - 105,731 - - 1,597,012 (116,687) (380,993) 114,762 (116,687) (380,993) 1,817,505 $ - $ 136,441 $ 3,427,839 502 MacIver Total - $ 85,277 $ 2,770,690 -58- CITY OF ALBERTVILLE, NIINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) FOR THE YEAR ENDED DECEMBER 31, 2007 102 201 407 408 Capital TIF #7 TIF #8 Outlay Park Senior Vetsch Reserve Fund Housing Cabinets REVENUES Tax increments $ - $ - $ 33,940 $ 12,825 Intergovernmental - - - - Charges for services - 5,287 - - Special assessments - - - - Interest on investments 33,019 7,913 828 106 Miscellaneous - 5,000 - - TOTAL REVENUES 33,019 18,200 34,768 12,931 EXPENDITURES Current Culture and recreation - 93,460 - - Economic development - - 28,209 12,076 Capital outlay General government - - - - Public works - - - - Culture and recreation - 6,657 - - Economic development - - - - TOTAL EXPENDITURES - 100,117 28,209 12,076 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 33,019 (81,917) 6,559 855 OTHER FINANCING SOURCES (USES) Transfers in 582,983 - - - Bond issuance - - - - Transfers out (1,067) - - - TOTAL OTHER FINANCING SOURCES (USES) 581,916 - - - NET CHANGE IN FUND BALANCES 614,935 (81,917) 6,559 855 FUND BALANCES (DEFICITS), JANUARY 1 982,077 244,487 32,109 5,242 FUND BALANCES (DEFICITS), DECEMBER 31 $ 1,597,012 $ 167,570 $ 38,668 $ 6,097 -59- t 409 410 411 465 467 468 TIF #9 TIF #11 County Road Barthel TIF #10 Land of Lakes CSAH 19 37 Bus Mold -Tech Tile Widening Traffic Light Interstate 94 $ 19,923 $ 11,182 $ 32,025 $ - $ - - _ _ _ _ - 527,887 850 - - - - - 20,773 11,182 32,025 - - 527,887 - 11,194 16,012 - - - _ _ _ - - 792,858 - 11,194 16,012 - - 792,858 20,773 (12) 16,013 - - (264,971) - - - 154,269 55,567 265,559 - - - 154,269 55,567 265,559 20,773 (12) 16,013 154,269 55,567 588 19,143 (5,399) (19,774) (154,269) (55,567) (588) $ 39,916 $ (5,411) $ (3,761) $ - $ - $ - -60- CITY OF ALBERTVILLE, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007 476 482 487 492 School 52nd Street Pedestrian City 50th Street Industrial REVENUES Tax increments Intergovernmental Charges for services Special assessments Interest on investments Miscellaneous TOTAL REVENUES EXPENDITURES Current Culture and recreation Economic development Capital outlay General government Public works Culture and recreation Economic development TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Bond issuance Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICITS), JANUARY 1 FUND BALANCES (DEFICITS), DECEMBER 31 $ - $ - $ - $ - - 1,339 - - - 455 - 8,703 - 1,794 - 8,703 (16,090) - - - - 173,115 - - - - - 258,791 (16,090) 173,115 - 258,791 16,090 (171,321) - (250,088) - 205,228 56,576 - - - - 1,012,042 - - - (88,719) - 205,228 56,576 923,323 16,090 33,907 56,576 673,235 (16,090) (73,594) (56,576) (692,016) $ - $ (39,687) $ - $ (18,781) -61- 493 445 497 498 CSAH 19 Wright County Flood and 57th Shop Mitigation Intersection Property 70th Street Project - - 75,799 - - - 10,786 - 1,112 - 86,585 499 500 Lachman New Avenue Ice Sheet _ $ _ 6,768 - - 6,768 - 88,902 - 268,759 - - - - - 1,348 - 88,902 - 268,759 1,348 (1,112) - (2,317) - (261,991) (1,348) 115,688 283 - 2,786 - - - - - - 537,836 - (2,304) - (52,798) - (46,527) - 113,384 283 (52,798) 2,786 491,309 - 112,272 283 (55,115} 2,786 229,318 (1,348) (3,450) (283) 251,885 (2,786) - - $ 108,822 $ - $ 196,770 $ - $ 229,318 $ (1,348) -62- t CITY OF ALBERTVILLE, MINNESOTA NONMAJOR CAPITAL PROJECTS FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007 REVENUES Tax increments Intergovernmental Charges for services Special assessments Interest on investments Miscellaneous TOTAL REVENUES EXPENDITURES Current Culture and recreation Economic development Capital outlay General government Public works Culture and recreation Economic development TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Bond issuance Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES (DEFICITS), JANUARY 1 FUND BALANCES (DEFICITS), DECEMBER 31 -63- 501 502 Phillip Morris Lift-Station MacIver Total $ - $ - $ 109,895 - - 527,887 - - 6,626 - 32,479 108,278 - - 69,428 - - 5,000 - 32,479 827,114 - 77,370 - 67,491 - - 173,115 116,687 466,270 1,200,521 - - 8,005 - - 792,858 116,687 466,270 2,319,360 (116,687) (433,791) (1,492,246) - 52,798 1,491,737 - - 1,549,878 - - (191,415) - 52,798 2,850,200 (116,687) (380,993) 1,357,954 - - 459,551 $ (116,687) $ (380,993) $ 1,817,505 CITY OF ALBERTVILLE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2007 (With comparative actual amounts for the year ended December 31, 2006) 2007 2006 Variance with Budgeted Amounts Final Budget - Actual Positive Actual Original Final Amounts (Negative) Amounts REVENUES Taxes General property taxes $ 2,009,558 $ 2,009,558 $ 1,861,916 $ (147,642) $ 1,620,927 Licenses and permits Business 50,200 50,200 91,190 40,990 70,285 Nonbusiness 423,794 423,794 192,097 (231,697) 416,847 Total 473,994 473,994 283,287 (190,707) 487,132 Intergovernmental State Property tax credits - - 94,814 94,814 10,815 Other 72,500 72,500 80,001 7,501 97,007 County Highway aid 10,000 10,000 14,854 4,854 7,706 Total 82,500 82,500 189,669 107,169 115,528 Charges for services General government 529,351 529,351 495,950 (33,401) 570,360 Public safety 84,944 84,944 84,944 - 73,065 Culture and recreation 2,000 2,000 6,970 4,970 1,847 Total 616,295 616,295 587,864 (28,431) 645,272 Fines and forfeitures 200 200 3,450 3,250 3,702 Interest on investments 75,000 75,000 61,496 (13,504) 180,147 Miscellaneous Other 10,000 10,000 60,533 50,533 7,421 Contributions and donations - - 17,282 17,282 6,296 Refunds and reimbursements - - 100,986 100,986 165,713 Total 10,000 10,000 178,801 168,801 179,430 TOTAL REVENUES 3,267,547 3,267,547 3,166,483 (101,064) 3,232,138 -64- t t t s i CITY OF ALBERTVILLE, MINNESOTA GENERAL FUND SCHEDULE OF R EVENUES, EXPENDITU RES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL -CON TINUED FOR THE YEAR ENDED DECEMBER 31, 2007 (With comparative actual amounts for the year ended December 31, 2006) 2007 2006 Variance with Budgeted Amounts Final Budget - Actual Positive Actual Original Final Amounts (Negative) Amounts EXPENDITURES Current General government Legislative Personal services $ 20,894 $ 20,894 $ 20,866 $ 28 $ 15,873 Supplies 1,000 1,000 510 490 462 Other services and charges 17,600 17,600 24,488 (6,888) 24,829 Total 39,494 39,494 45,864 (6,370) 41,164 Administration Personal services 111,427 111,427 115,970 (4,543) 107,411 Supplies 2,750 2,750 1,747 1,003 2,262 Other services and charges 10,150 10,150 4,277 5,873 4,733 Total 124,327 124,327 121,994 2,333 114,406 City clerk Personal services 82,127 82,127 85,595 (3,468) 69,960 Supplies 7,300 7,300 6,483 817 6,715 Other services and charges 47,750 47,750 39,611 8,139 37,232 Total 137,177 137,177 131,689 5,488 113,907 Elections and voter registration Personal services - - - - 340 Supplies - - 59 (59) - Other services and charges 6,000 6,000 40 5,960 6,221 Total 6,000 6,000 99 5,901 6,561 Treasurer Personal services 85,092 85,092 87,833 (2,741) 78,026 Supplies 5,250 5,250 5,671 (421) 5,384 Other services and charges 2,200 2,200 1,901 299 1,723 Total 92,542 92,542 95,405 (2,863) 85,133 Assessing Other services and charges 35,000 35,000 31,041 3,959 31,034 Legal Other services and charges 32,760 32,760 58,640 (25,880) 67,044 -65- CITY OF ALBERTVILLE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007 (With comparative actual amounts for the year ended December 31, 2006) 2007 2006 Variance with Budgeted Amounts Final Budget - Actual Positive Actual Original Final Amounts (Negative) Amounts EXPENDITURES -CONTINUED Current -Continued General government -continued Engineering Other services and charges $ 42,500 $ 42,500 $ 124,561 $ (82,061) $ 283,845 Miscellaneous Personal services 7,322 7,322 6,832 490 859 Supplies 2,750 2,750 580 2,170 988 Other services and charges 130,603 130,603 232,938 (102,335) 180,041 Total 140,675 140,675 240,350 (99,675) 181,888 Total general government 650,475 650,475 849,643 (199,168) 925,032 Public safety Police protection Other services and charges 453,200 453,200 457,710 (4,510) 438,000 Fire protection Personal services 200,577 200,577 134,030 66,547 142,777 Supplies 11,100 11,100 15,215 (4,115) 10,033 Other services and charges 106,515 106,515 102,411 4,104 78,614 Total 318,192 318,192 251,656 66,536 231,424 Protective inspection Personal services 191,237 191,237 159,608 31,629 153,129 Supplies 8,075 8,075 5,143 2,932 5,399 Other services and charges 280,579 280,579 245,892 34,687 248,828 Total 479,891 479,891 410,643 69,248 407,356 Animal control Other services and charges 3,500 3,500 2,979 521 3,266 Total public safety 1,254,783 1,254,783 1,122,988 131,795 1,080,046 -66- t t s CITY OF ALBERTVILLE, MINNESOTA GENERAL FU1V~D SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007 (With comparative actual amounts for the year ended December 31, 2006) 2007 2006 Variance with Budgeted Amounts Final Budget - Actual Positive Actual Original Final Amounts (Negative) Amounts EXPENDITURES -CONTINUED Current -Continued Public works Streets Personal services $ 118,241 $ 118,241 $ 137,143 $ (18,902) $ 142,361 Supplies 217,975 217,975 198,213 19,762 282,784 Other services and charges 87,885 87,885 93,578 (5,693) 51,627 Total 424,101 424,101 428,934 (4,833) 476,772 Street lighting Other services and charges 55,000 55,000 67,695 (12,695) 61,276 Sanitation Supplies - - 3,195 (3,195) - Other services and charges 45,000 45,000 44,528 472 44,528 Total 45,000 45,000 47,723 (2,723) 44,528 Total public works 524,101 524,101 544,352 (20,251) 582,576 Culture and recreation Parks Personal services 113,279 113,279 94,245 19,034 75,914 Supplies 9,800 9,800 11,123 (1,323) 7,700 Other services and charges 60,910 60,910 63,769 (2,859) 65,531 Total culture and recreation 183,989 183,989 169,137 14,852 149,145 Economic Development Supplies 500 500 309 191 - Other services and charges 9,200 9,200 24,240 (15,040) 4,322 Total economic development 9,700 9,700 24,549 (14,849) 4,322 Total current expenditures 2,623,048 2,623,048 2,710,669 (87,621) 2,741,121 -67- t t CITY OF ALBERTVILLE, MINNESOTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007 (With comparative actual amounts for the year ended December 31, 2006) 2007 Budgeted Amounts Actual Original Final Amounts Variance with Final Budget - Positive Actual (Negative) Amounts EXPENDITURES -CONTINUED Capital outlay General government $ 390,500 $ 390,500 $ 421,132 $ (30,632) $ 10,796 Public safety 91,500 91,500 34,968 56,532 502,545 Public works 40,000 40,000 6,400 33,600 22,895 Culture and recreation 47,500 47,500 15,448 32,052 23,881 Total capital outlay 569,500 569,500 477,948 91,552 560,117 TOTAL EXPENDITURES 3,192,548 3,192,548 3,188,617 3,931 3,301,238 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 74,999 74,999 (22,134) (97,133) (69,100) OTHER FINANCING SOURCES (USES) Transfers in - - 133,208 133,208 120,218 Sale of capital assets - - 129,854 129,854 - Transfers out - - (997,475) (997,475) (612,695) TOTAL OTHER FINANCING SOURCES (USES) - - (734,413) (734,413) (492,477) NET CHANGE IN FUND BALANCES 74,999 74,999 (756,547) (831,546) (561,577) FUND BALANCES, JANUARY 1 1,549,004 1,549,004 1,549,004 - 2,110,581 FUND BALANCES, DECEMBER 31 $ 1,624,003 $ 1,624,003 $ 792,457 $ (831,546) $ 1,549,004 -68- CITY OF ALBERTVILLE, MINNESOTA DEBT SERVICE FUND COMBINING BALANCE SHEET DECEMBER 31, 2007 300 322 324 341 Closed 1992A 1993A Bond G.O. G.O. 1993C Issues Improvement Improvement Refunding ASSETS Cash and temporary investments $ 169,260 $ 14,826 $ - $ - Restricted cash - - - - Receivables Delinquent taxes 3 7 - - Special assessments Delinquent - - - - Deferred - - - - Due from other governments 3 - - - Land held for resale - - - - TOTAL ASSETS $ 169,266 $ 14,833 $ - $ - LIABILITIES AND FUND BALANCES (DEFICITS) LIABILITIES Due to other funds $ - $ - $ - $ - Deferred revenue 3 7 - - TOTAL LIABILITIES 3 7 - - FUND BALANCES (DEFICITS) Reserved for Land held for resale - - - - Unreserved 169,263 14,826 - - TOTAL FUND BALANCES (DEFICITS) 169,263. 14,826 - - TOTAL LIABILITIES AND FUND BALANCES (DEFICITS) $ 169,266 $ 14,833 $ - $ - -69- 1 1 1 1 1 1 1 1 1 1 1 1 1 f 1 1 1 t t t 353 354 355 357 358 359 1996A 1999 1999A 2003A 2004 G.O. Lease G.O. G.O. Lease City Hall Tax Increment Revenue Improvement Improvement Revenue Revenue $ - $ 10,794 $ 259,461 $ - $ 666,396 $ 109,943 - 77,206 - - - - 676 3,913 2,559 4,907 10,110 - - - 326 - - - - - 148,193 330,504 - - 137 340 191 1,015 2,052 - - - - 2,735,714 - - $ 813 $ 92,253 $ 410,730 $ 3,072,140 $ 678,558 $ 109,943 $ 81,554 $ - $ - $ 663,934 $ - $ 676 3,913 151,078 335,411 10,110 82,230 3,913 151,078 999,345 10,110 - - - 2,735,714 - (81,417) 88,340 259,652 (662,919) 668,448 (81,417) 88,340 259,652 2,072,795 668,448 109,943 $ 813 $ 92,253 $ 410,730 $ 3,072,140 $ 678,558 $ 109,943 -70- 1 1 i 1 1 i 1 i 1 1 1 1 1 1 1 i 1 1 1 CITY OF ALBERTVILLE, MINNESOTA DEBT SERVICE FUND COMBINING BALANCE SHEET -C ONTINUED DECEMBER 31, 2007 360 361 362 CSAH 19 Lachman Industrial 2007 2007 2007 G.O. G.O. G.O. Improvement Improvement Improvement Totals ASSETS Cash and temporary investments $ 179,404 $ 3,653 $ 6,871 $ 1,420,608 Restricted cash - - - 77,206 Receivables Delinquent taxes - - - 22,175 Special assessments Delinquent - - - 326 Deferred 659,467 373,629 1,116,217 2,628,010 Due from other governments - - - 3,738 Land held for resale - - - 2,735,714 TOTAL ASSETS $ 838,871 $ 377,282 $ 1,123,088 $ 6,887,777 LIABILITIES AND FUND BALANCES (DEFICITS) LLABILITIES Due to other funds $ - $ - $ - $ 745,488 Deferred revenue 659,467 373,629 1,116,217 2,650,511 TOTAL LIABILITIES 659,467 373,629 1,116,217 3,395,999 FUND BALANCES (DEFICITS) Reserved for Land held for resale - - - 2,735,714 Unreserved 179,404 3,653 6,871 756,064 TOTAL FUND BALANCES (DEFICITS) 179,404 3,653 6,871 3,491,778 TOTAL LIABILITIES AND FUND BALANCES (DEFICITS) $ 838,871 $ 377,282 $ 1,123,088 $ 6,887,777 -71- CITY OF ALBERTVILLE, MINNESOTA DEBT SERVICE FUND COMBINING SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) FOR THE YEAR ENDED DECEMBER 31, 2007 300 322 324 341 Closed 1992A 1993A Bond G.O. G.O. 1993C Issues Improvement Improvement Refunding REVENUES Property taxes $ 19 $ - $ - $ - Special assessments - - - - Miscellaneous - - - - Interest earnings TOTAL REVENUES EXPENDITURES Debt Service Principal Interest and other TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Bond issuance Bond discount Transfers out 2,969 482 2,609 2,969 482 2,609 - 80,186 - - 1,649 (1,649) - (80,186) - TOTAL OTHER FINANCING SOURCES (USES) 78,537 - (80,186) 1,649 NET CHANGE IN FUND BALANCE 81,506 482 (77,577) 1,649 FUND BALANCE (DEFICITS), JANUARY 1 87,757 14,344 77,577 (1,649) FUND BALANCE (DEFICITS), DECEMBER 31 $ 169,263 $ 14,826 $ - $ - -72- 1 1 1 i 1 i 1 1 1 i 1 1 1 1 1 1 i 1 1 1 1 1 1 1 1 353 1996A G.O. Tax Increment $ 10,913 $ 14,762 25,675 354 355 357 358 1999 1999A 2003A 2004 Lease G.O. G.O. Lease Revenue Improvement Improvement Revenue 61,859 $ 39,478 $ 77,333 $ 161,075 $ - 92,044 74,766 - - - 50,000 - 4,162 9,746 - 19,311 66,021 141,268 202,099 180,386 359 City Hall 25,000 40,000 40,000 455,000 75,000 130,000 2,727 38,085 19,557 71,791 88,906 149,352 27,727 78,085 59,557 526,791 163,906 279,352 (2,052) (12,064) 81,711 (324,692) 16,480 (279,352) - - - 37,975 - 389,295 - - (115,688) - - - - - (115,688) 37,975 - 389,295 (2,052) (12,064) (33,977) (286,717) 16,480 109,943 (79,365) 100,404 293,629 2,359,512 651,968 - $ (81,417) $ 88,340 $ 259,652 $ 2,072,795 $ 668,448 $ 109,943 -73- 1 1 1 1 1 1 1 1 1 1 1 1 CITY OF ALBERTVILLE, MINNESOTA DEBT SERVICE FUND COMBINING SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2007 360 361 362 CSAH 19 Lachman Industrial 2007 2007 2007 G.O. G.O. G.O. Improvement Improvement Improvement Totals REVENUES Property taxes $ - $ - $ - $ 350,677 Special assessments 168,446 - - 350,018 Miscellaneous - - - 50,000 Interest earnings - - - - TOTAL REVENUES EXPENDITURES Debt Service Principal Interest and other TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Bond issuance Bond discount Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE (DEFICITS), JANUARY 1 FUND BALANCE (DEFICITS), DECEMBER 31 171,381 978 1,840 795,708 - - - 765,000 16,048 5,349 10,067 401,882 16,048 5,349 10,067 1,166,882 155,333 (4,371) (8,227) (371,174) - - - 509,105 36,761 12,165 22,957 71,883 (12,690) (4,141) (7,859) (24,690) - - - (197,523) 24,071 8,024 15,098 358,775 179,404 3,653 6,871 (12,399) - - - ~,w4, i / / $ 179,404 $ 3,653 $ 6,871 $ 3,491,778 -74- CITY OF ALBERTVILLE, MINNESOTA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS DECEMBER 31, 2007 Albertville Friendly City Days ASSETS Cash and temporary investments Balance January 1 Balance Additions Deductions December 31 LIABILITIES Accounts payable Landscaping Escrows ASSETS. Cash and temporary investments LIABILITIES Accounts payable TOTAL AGENCY FUNDS ASSET5 Cash and temporary investments LIABILITIES Accounts payable $ 10,191 $ 10,071 $ (5,500) $ 14,762 $ 10,191 $ 10,071 $ (5,500) $ 14,762 $ 76,996 $ 74,859 $ (81,237) $ 70,618 $ 76,996 $ 74,859 $ (81,237) $ 70,618 $ 87,187 $ 84,930 $ (86,737} $ 85,380 $ 87,187 $ 84,930 $ (86,737) $ 85,380 -75- CITY OF ALBERTVILLE, MINNESOTA SUMMARY FINANCIAL REPORT REVENUES AND EXPENDITURES FOR GENERAL OPERATIONS GOVERNMENTAL FUNDS YEARS ENDED DECEMBER 31, 2007 AND 2006 r VENUES Taxes Special assessments Licenses and permits Intergovernmental ' Charges for services Fines and forfeitures Interest on investments Miscellaneous ' TOTAL REVENUES Per Capita ' EXPENDITURES Current General government ' Public safety Public works Culture and recreation ' Economic development Capital outlay General government Public safety Public works Culture and recreation ' Economic development Debt service Principal ~' Interest and other charges ' TOTAL EXPENDITURES Per Capita ' Total Long-term Indebtedness Per Capita ' General Fund Balance -December 31 Per Capita Percent Total Increase 2007 2006 (Decrease) $ 2,322,488 $ 2,055,430 12.99 691,833 1,191,863 (41.95) 283,287 487,132 (41.85) 717,556 167,769 327.70 2,150,160 1,416,203 51.83 3,450 3,702 (6.81) 399,565 367,427 g,75 240,929 733,236 (67.14) $ 6,809,268 $ 6,422,762 6.02 1,162.78 1,143.86 $ 849,643 $ 925,032 (8.15) 1,122,988 1,080,046 3.98 563,455 582,576 (3.28) 246,507 217,908 13.12 96,550 59,069 63.45 594,247 3,446,014 (82,76) 34,968 502,545 (93.04) 3,295,620 1,295,040 154.48 23,453 150,956 (84.46) 792,858 - 100.00 765,000 725,000 5.52 401,882 392,992 2.26 $ 8,787,171 $ 9,377,178 (6.29) 1,500.54 1,670.02 $ 11,630,000 $ 9,160,000 26.97 1,986.00 1,631.34 $ 792,457 $ 1,549,004 (48.84) 135.32 275.87 ' The purpose of this report is to provide a summary of financial information concerning the City of Albertville to interested citizens. The complete financial statements may be examined at City Hall, 5959 Main Avenue, Albertville, MN 55301. Questions about this report should be directed to Tina Lannes, Finance Director at (763) 497-3384. -76-