Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Management Report
CITY OF OAK PARK HEIGHTS, MINNESOTA MANAGEMENT REPOR I December 31, 2001 F f, — — Noma. A&L 06- now- ftdRid wO WA — 4i —— m-- a �.k fft k -. t 4 F °Y! 0 Management Report Report Summary SPORT SUMMARY Several reports are issued in conjunction with the audit. A very brief summary is as follows: Required ort - Annual Financial Repoa7 (AFR) ® Financial statements ® Unqualified ( "clean ") ® Footnotes opinion on the General ® Supplemental information Purpose Financial Statements Report on Compliance and Internal Results of'testing . No compliance findings Conta•ol ® Internal controls over ® No reportable conditions financial reporting in internal control. In ® Compliance with laws, prior years, the City regulations, contracts and corrected the lack of grants segregation of duties. State Legal Complianee Repoat ® Results of testing certain w No findings provisions of Minnesota Statutes Discretionary a or Management Repod Intended to be a working tool fof• See page 3 of this report City Council for Executive Summary • Comparisons and trend analysis • Outside factors influencing the City, such as State funding • Policies and procedures Management Report Executive Summary EXECUTIVE SUMMARY Several areas highlighted for your reference include the following: O The City's property tax collection rate continues to be very strong (99.7% for 2001). Page 4 O During 2001 the City adopted a policy regarding fixed assets. Page 8 O The City has minor delinquent special assessment balances, which is the result of very good collection rates (99.9% for 2001). Page 9 Ga The General Fund balance decrease of $ 107,000 during 2001 is a result of unfavorable budget variances in revenues. Page 16 j i b The General Fund balance at December 31, 2001 was not sufficient to fulfill all the reserve requirements per City policy. The contingency reserve was page 26 $275,000 less than the amount per City policy. O During 2001 City staff identified and corrected various items relating to sewage processed and billed. Page 60 d O City's accomplishments. b Items to consider for changes in policies and long -range planning. . o Management Report Combined Balance Sheet COMBINED ALANCE SHEET The Combined Financial Statements of the City are presented in Statements 1 through 5 of the 2001 Annual Financial Deport. The following comments relate to these financial statements of the City. Prol)erty Taxes Property taxes receivable consist of taxes levied in the previous seven years by the City but not yet collected by the County and remitted to the City. The collection rate on property taxes remains strong as illustrated below. 1998 1999 2000 2001 Delinquent taxes - January 1 $10,947 $16,863 $23,980 $22,116 Current levy 1,524,047 1,409,400 1,440,200 1,588,435 Total collectible 1,534,994 1,426,263 1,464,180 1,610,551 Receipts: Current 1,541,155 1,394,993 1,426,390 1,566,938 Delinquent 5,726 4,296 13,454 16,563 Total receipts 1,546,881 1,399,289 1,439,844 1,583,501 Adjustments 28,750 (2,994) (2,220) (2,851) Delinquent taxes - December 31 $16,863 $23,980 $22,116 $24,199 Current collection as a percent of current levy 99.2% 99.0% 99.0% 98.6% Total collections as a percent of current levy 10 1.5% 99.3% 100.0% 99.7% Management Report Combined Balance Sheet The negative adjustments to property taxes receivable consist of abatements of property taxes as a result of market valuation adjustments. As shown on the previous page, tax collection rates have averaged 100% over the past four years representing an excellent collection rate for the City. This financial indicator (i.e., property tax collection rate) is one of the criteria used by the City's bond rating agency. Tax bevies, T ax Rates and Tax Capacity A comparison of values for taxes payable 2001 and taxes payable 2002 is as follows: 2000 2001 2002 Market value $325,495,900 $324,581,100 $349,905,900 Tax capacity values: Real estate $6,571,300 $7,249,830 $5,085,897 Personal property 120,574 120,220 77,543 Subtotal 6,691,874 7,370,050 5,163,440 Fiscal disparity contribution (784,872) (918,384) (611,097) Fiscal disparity distribution 298,275 343,723 221,368 Total $6,205,277 $6,79 $4,773,711 Tax capacity rates 23.620 23.692 41.741 Tax levy $1,440,200 $1,588,435 $1,967,579 • ® ® • II I I ^ • Management Report Combined Balance Sheet The Minnesota Property Tax System is complex with the number of different classes of property defined in State Statutes. However, the formulas are based on a simple equation, which is as follows: Market Value x Class Rate = Tax Capacity Market value is the starting point in the property tax equation and in theory is consistently applied to all properties. Class rate is the mechanism used to allocate property taxes on a basis other than market value. An illustration of the above concept is as follows: Percent Decrease Property Classification Market Value Class Rate Tax Capacity in Tax Capacity ........... Residential Homestead $150,000 1 st $76,000 - 1 $1, Remainder - 1.65% / Residential Homestead $500,000 1st $76,000 - 1.00% $7,756 Remainder - 1.65% Commercial $500,000 l st $150,000 - 2.40% $11,900 Remainder - 3.40% Commercial $1,500,000 1 st $150,000 - 2.40% $49,500 Remainder - 3.40% Residential Homestead $150,000 1st $500,000 - 1.00% l $1,500 24% Remainder - 1.25% Residential Homestead $500 1 st $500,000 - 1.00% $5,000 35% Remainder - 1.25% Commercial $500,000 1st $150,000 - 1.50% $9,250 22% Remainder - 2.00% Commercial $1,500,000 1st $150,000 - 1.50% $29,250 40% Remainder - 2.00% O ® • O Management Report Combined Balance Sheet As shown on the previous page, all properties experienced a decrease in tax capacity. However, higher value commercial property have the largest percentage decrease in tax capacity. In this example, the changes in class rates have the impact of shifting the property tax burden from higher value commercial property to other classes of property. The principal taxpayers for the past three years are as follows: Percent of Total City Tax Capacity "Taxpayer 1999 2000 2001 Xcel Energy, Inc. 55.3% 53.1% 36.7% 5C Mall, LLC 5.2% 5.3% 4.4% KTJ Limited Partnership Eleven 5.0% 5.3% 4.2% Mcnards, Inc. 3.6% 3.5% 2.8% Wal -Mart Real Estate Business 2.4% 2.4% 1.9% Tax rate is determined after the tax capacity and tax levy are known. The formula for tax rate (not including fiscal disparities adjustment) is as follows: Tax Levy — Tax Capacity = Tax Rate For the City of Oak Park Heights, the tax rate increased as a result of decreased tax capacity and increased tax levy. __Am Management Report Combined Balance Sheet The City portion of property tax is calculated as follows: a b c d e (a x b) (c x d) Market Class Tax Tax City Value Rate Capacity Rate Tax A comparison of City tax for 2001 and 2002 is as follows: Market Tax Tax City Percent Property Type I Value Capacity Rate Tax � Increase M. Residential Homestead $150,000 $1,981 23.692 $469 Residential Homestead 500,000 7,756 23.692 1,837 Commercial 1,500,000 49,500 23.692 11,727 .......... Residential Homestead 150,000 1,500 41.741 626 33% Residential Homestead 500,000 5,000 41.741 2,087 13% Commercial 1,500,000 29,250 41.741 12,209 4% ter. , ............. ......<....... i......,,,, ,::::.::::... ,. : : :...::.::...,.........,. 4 .. ... r.. :.... :......., . , , .. ... ... ...... ................ .., w Fixed Assets Beginning in 2004, the City will be required to include infrastructure assets on its balance sheet. Infrastructure assets consist primarily of streets. Additionally, the City will be required to report depreciation on all of its fixed assets. Currently, only fixed assets of the Utility Funds are required to report depreciation. During 2001, City staff took the first step towards implementation of this requirement by adopting a fixed asset policy. Additional steps to be taken include: • Inventory and valuation of infrastructure assets • Calculation of prior accumulated depreciation • • Management Report Combined Balance Sheet Special Assessments Receivable Special assessments receivable consisted of the following types and amounts: December 31, Increase Description 2000 2001 (Decrease) Delinquent $4,161 $197 ($3,964) Deferred 1,543,456 1,205,984 (337,472) Due from County 417 7,817 7,400 Totals $1,548,034 $1,213,998 ($334,036) Delinquent special assessments receivable consist of amounts which have been spread for collection in 2001 and prior years but have not been collected at December 31, 2001. The City has minor delinquent balances which is the result of very good collection rates (99.9% for 2001). Deferred special assessments consist of the remaining principal installments on assessment rolls. These assessments are generally collectible over a time period consistent with the debt payment schedule of the related bond issue. • • ® ® • Management Report Combined Balance Sheet Bo nds Pavable The City had four bond issues outstanding during 2001. A summary of the 2001 activity of each bond issue is as follows: General Obligation General General General Crossover Obligation Obligation Obligation Refmding Improvement Improvement Refunding Bonds Bonds Bonds Bonds of 1993 of 1995 of 1998 of 2001 Totals Balance - January 1, 2001 $715,000 $600,000 $1,700,000 $ - $3,015,000 Bonds issued - - 490,000 490,000 Principal payments (100,000) (600,000) (150,000) - (850,000) Balance - December 31, 2001 $615,000 $0 $1,550,000 $490,000 $2,655,000 Detail of outstanding bond issues is contained in Exhibit 2 of the 2001 Annual Financial Report. A summary of the City's bond issues is as follows: Maturity Bond Issue Repayment Source Date Bonds of 1993 Connection charges 12/1/06 Bonds of 1998 Special assessments and connection charges 12/1/13 Bonds of 2001 ]Property taxes and special assessments 12 /1 /05 1 Management Report General Fund GENERAL FUND The General Fund of the City is maintained to account for expenditures common to all cities (general government, public safety, public works, recreation and community development). 4 history of major revenue sources that support the General Fund are as follows: Property Taxes State Aids All Other Total Revenue Year Amount Percent An10Unt Percent Amount Percent Arnount Percent 1993 $1,241,127 71% $87,874 5% $413,444 24% $1,742,445 100% 1994 1,232,906 68% 118,768 7% 465,964 25% 1,817,638 100% 1995 1,354,677 68% 124,860 6% 520,466 26% 2,000,003 100% 1996 1,390,443 66% 119,274 6% 581,850 28% 2,091,567 100% 1997 1,387,227 65% 137,951 6% 619,874 29% 2,145,052 100 %n 1998 1,479,490 69% 133,484 6% 529,143 25% 2,142,117 100% 1999 1,333,194 62% 139,875 7% 674,762 31% 2,147,831 100% 2000 1,405,002 62% 145,514 6% 712,026 32% 2,262,542 t00% 2001 1,524,300 66% 142,292 6% 631,284 28% 2,297,876 100% 2002* 1,931,179 75% 72,921 3% 583,690 23% 2,587,790 101% * Budgeted • Management Report General Fund A graph of property taxes, state aids, and other revenue for the General Fund is as follows: i I 52,500,000 General Fund Revenue by Source S2,000,000 - - - -- - - - - - -- --- - - - - -- - 11,500.000 f - - -- - -- - - _._._ U State Auls 00tim Revenue _. ❑ Property Taxes Sixo,000 _— ____ —_ ____ - - -_ _- _____- -- 1500,000 So 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Budget -ism O Management Report General Fund State Aids State aids of the General Fund have consisted of the following for the past six years (with 2002 budget): 2002 State Aid 1996 1997 1998 1999 2000 2001 Budget H.A.C.A.t' $67,063 $73,065 $74,464 $74,983 $79,583 $79,603 $ - LGA - - - - 4,878 4,878 4,881 Local performance aid - 4,186 5,133 4,884 - - - Police aid 52,211 44,900 51,198 56,409 57,013 53,650 59,000 Other state revenue - - 2,689 3,599 4,040 4,161 9,040 Snowplowing - 15,800 - - - - - Totals $119,274 $137,951 $133,484 $139,875 $145,514 $142,292 $72,921 Change $18,677 ($4,467) $6,391 $5,639 ($3,222) ($69,371) % Change 16% (3 %) 5% 4% (2 %) (49 %) ( ' ) Does not include market value Homestead Credit ror 2002 estimated at $93,000. Market Value Homestead Credits A new credit is applied to Residential Homestead property beginning in 2002. The credit is .40% of the market value to a maximum of $304, reduced by $9 per $10,000 of market value over $76,000. A $76,000 homestead receives the maximum credit of $304 and a $414,000 homestead receives $0. A new credit is applied to agricultural homestead land beginning in 2002. The credit is .20% of the market value on the first $115,000 of market value, to a maximum of $230. These credits proportionately reduce the tax for each taxing district, including the county, based on each district's share of the total tax. OW EE O . Management Report General Fund Other General Fund Revenue Other revenue of the General Fund have consisted of the following for the past five years (with 2002 budget): 2002 Description 1997 1998 1999 2000 2001 Budget Licenses and permits $ 204,986 $125,678 $227,693 $314,527 $213,651 $229,010 Charges for services: Refuse collection 87,830 - - - - - Ref ise charge - Junker settlement - 28,887 25,718 27,655 28,422 28,400 Enterprise 102,100 63,525 80,655 99,400 95,300 89,780 Tax increment administration fee - 27,009 7,253 3,450 452 - Construction /engineering fee - - 56,632 - - - Other 2,456 26,910 23,767 18,092 30,097 9,000 Inspections 24,150 40,468 36,122 45,018 43,047 40,000 Fines and forfeits 60,682 60,183 58,886 56,326 63,655 66,400 Earnings on investments 55,885 45,848 36,970 48,363 48,559 48,000 Other 81,785 110,635 121,066 99,195 108,101 73,100 Total $619,874 $529,143 $674,762 $712,026 $631,284 $583,690 Refuse Collection Prior to 1998, the City accounted for refuse collection in the General Fund. Beginning in 1998, this activity is reported in the Enterprise Fund which also accounts for the water and sewer operations. The General Fund transferred $83,000 to the Enterprise Fund during 2001 to subsidize refuse collection operations. • Management Report General Fund Effective January 1, 1998, the City council authorized an additional charge of $6.50 per quarter. This additional charge is effective for five years. This surcharge was designed to recover a 1996 court judgment and other costs of approximately $140,000 related to the landfill lawsuit. Surcharge revenue has been as follows: Year Amount 1998 $28,887 1999 25,718 2000 27,655 2001 28,422 Total $110,682 .Administrative Fee - Enterp,°ise Prior to 1998, the General Fund received an administrative fee from the Mater and Sewer Utility Fund. This fee was designed to reimburse the General Fund for labor and overhead costs incurred. Beginning in 1998, the City eliminated the labor portion of the administrative fee and began allocating actual labor costs directly to the Water and Sewer Utility Fund. The administrative fee is designed to reimburse the General Fund for overhead costs only. AM 0 Management Report General Fund Administrative Fee W Ca pital Proiects The City's General Fund incurs costs related to capital improvement projects. These costs include staff time, supplies, and other overhead items. The City established a 1 1 /2% administrative fee to recover these costs effective January 1, 1999. The administrative fee is charged to a project with the corresponding revenue receipted in the General Fund. The fee is charged at project inception and is based on the contract awarded. During 2001, no new projects were started, and therefore no construction fees charged. Budget Versus Ac tual Comparison The fund balance of the General Fund was $1,173,000 at December 31, 2001 representing a $107,000 decrease during 2001. The following schedule illustrates the change in fund balance on a budget variance basis. 2001 Favorable (Unfavorable) 2002 Budget Actual Variance Budget Revenue: General property taxes: Current and delinquent $1,529,035 $1,524,288 ($4,747) $1,908,179 Payment in lieu of taxes 60,000 (2,223) (62,223) 23,000 Other taxes - 2,235 2,235 - Total general property taxes 1,589,035 1,524,300 (64,735) 1,931,179 Intergovernmental 161,231 179,591 18,360 88,521 Licenses and permits 245,280 213,651 (31,629) 229,010 Charges for services 234,900 197,318 (37,582) 167,180 Fines and forfeits 66,400 63,655 (2,745) 66,400 Earnings on investments 50,000 48,559 (1,441) 48,000 Refunds and reimbursements 56,600 68,154 11,554 57,500 Donations and contributions - 1,200 1,200 - Sale of property - 1,448 1,448 - Total revenue 2,403,446 2,297,876 (105,570) 2,587,790 • Management Report General Fund 2001 Favorable (Unfavorable) 2002 Budget Actual Variance Budget Expenditures General government: Mayor and council $58,650 $58,822 ($172) $83,900 City administrator 238,400 216,974 21,426 202,910 Legal 31,500 36,221 (4,721) 31,500 General management and building 74,950 80,682 (5,732) 82,170 Elections 800 110 690 8,000 Finance 164,025 160,458 3,567 169,495 Computer system 25,800 13,736 12,064 22,300 Audit 12,500 12,361 139 13,000 Insurance 167,795 219,151 (51,356) 207,340 Assessing 17,000 18,070 (1,070) 18,000 Planning and zoning 29,500 58,719 (29,219) 29,500 Engineering 30,000 18,541 11,459 30,000 General contingency 20,000 34,435 (14,435) 10,000 Total general government 870,920 928,280 (57,360) 908,115 Public safety: Police department 814,025 786,149 27,876 825,485 Building inspections 106,830 99,312 7,518 116,400 Fire protection 81,105 79,930 1,175 91,890 Animal control 900 1,863 (963) 1,150 Total public safety 1,002,860 967,254 35,606 1,034,925 Public works: Street maintenance 29,950 37,643 (7,693) 41,175 Snow removal 69,800 60,196 9,604 68,500 Street lighting 46,000 43,121 2,879 45,000 Arborist 12,925 10,802 2,123 - Tree removal and planting 16,900 16,254 646 28,925 Total public works 175,575 168,016 7,559 183,600 Recreation: Parks, playgrounds and rinks 100,095 109,486 (9,391) 112,270 Cornmunity development 112,700 106,537 6,163 119,605 Total expenditures 2,262,150 2,279,573 (17,423) 2,358,515 Revenue over (under) expenditures 141,296 18,303 (122,993) 229,275 Other financing sources (uses): Operating transfers to Enterprise Fund (83,000) (83,000) (88,500) Operating transfers to Capital Prgject Fund (30,275) (42,286) (12,011) (112,375) Total other financing sources (uses) (113,275) (125,286) (12,011) (200,875) Net increase (decrease) in fund balance $28,021 (106,983) ($135,004) $28,400 AM • Management Report General Fund As shown on the previous page, the General Fund balance decreased by $107,000 as the result of positive budget variances with both revenue and expenditures as follows: Budget Actual Variance Revenue /transfers in $2,403,000 $2,298,000 ($105,000) Expenditures /transfers out 2,375,000 2,405,000 (30,000) Increase in fund balance $28,000 ($107,000) ($ 135,000) A summary of the significant budget variances is as follows: Revenue: Property Taxes — The 2001 budget anticipated greater PILOT than the amount actually received ($60,000). License and permits — This budget variance relates to projects that were anticipated ($32,000). Charges for services — The budget variance is primarily reduced administrative charges to TIF and construction fiends ($38,000). ..Am Management Report General Fund Expenditures: General government: Planning and Zoning — The budget variance relates to costs regarding fern Center and Carriage Homes that were not reimbursable ($29,000). Citv Administrator — The positive budget variance relates to a vacant position ($21,000). Public Safetv ® The positive variance is primarily the result of salaries less than expected ($27,000). Public Works — The budget variance is related to street sweeping and crack repair greater than expected ($7,000). Recreation — The budget variance is primarily due to salaries of temporary employees greater then expected ($9,000). G eneral Fund — Long Term Commitmen During 1995, the City approved a pledge of $200,000 to the St. Croix Sport Facility Commission. A summary of the activity related to this pledge is as follows: Year Payments Balance Beginning balance $200,000 1998 $50,000 150,000 1999 15,000 135,000 2000 15,000 120,000 2001 15,000 105,000 The remaining amount will be paid in annual installments of $15,000. Management Report General Fund General Fund Reserves The fiend balance of the General Fund increased in .2001. The schedule below reflects the General Fund balance for the past ten years: Year Ended Fund Increase December 31, Balance (Decrease) 1992 $1,013,422 1993 1,106,882 $93,460 1994 1,197,835 90,953 1995 1,280,597 82,762 1996 1,312,593 31,996 1997 1,246,347 (66,246) 1998 1,186,663 (59,684) 1999 1,191,081 4,418 2000 1,280,101 89,020 2001 1,173,118 (106,983) The 1997 decrease in fund balance was the result of the council decision to use fund balance rather than levy taxes for the Bonds of 1995. The 1998 decrease in fund balance was a budgeted decrease. AM s Management Report General Fund ]Fund Balance $1,500,000 - -- $1,400,000 - -- - $1,300,000 $1,200,000 - - -- $1,100,000 ®� Actual Fund Balance a $1,000,000 Desired Fund Balance __- -___ -- $900,000 $800,000 - - -- - $700,000 -- ---- - - - - -- -- $600,000 - 1995 1996 1997 1998 1999 2000 2001 Deserve balances are an important component of City financial management. When evaluating the adequacy of reserve balances, there are a number of important factors that must be considered. Several areas to consider are illustrated as follows: «...: < » .::::...::. .. ... .. ... ... .,.::::::.:: .. .... ,..... .. ».f ...... ...... ........ .. .::::. ::::..:...:<.:,:..:.. , > :::: ::::,<. :.. <.::...:... .:... Vii.,, Flow Timing s: # > >" So lements revenues .:::: ......::..£'s. < Favorable bon( ratio �:::::. ....... :............. ....,....... :..: ... Difference � �,;:.;:: ;.. «..::::. �,:::... :::::..;:;,..::.::.::.,::,...;: , , <. :...f indicator with investment income iXX Intergovernmental :::::.:.: ^.. £ ............. ,... ................ ,,:,..:,,::. 9 .....:: Revenue Cutbacks ..... ....... ».....f, ,i.».... .... f........... ... ....._»:.:;;.,:......:.. .... ........ ............. .. .. ...... G. f. ............ ........... ............... /...,s.. Avoids temporary ........:G ».:. ».» :.� S<:of, Provides resources for nor to �. ° �. major minor projects or overdrafts p J recei is feasibility reports P .......::... z .f,.. :...:. .. ...............: ........ : . . ..:::::::::.....::.. ....... .:.. ,...:..:.. 5 .................... . .. f .. . ..................... . Avoids overburdenin ... .::.:::.::.::.::.:: ::::: >::: Provides the C� ..... ...... �. "....... ..::::.:::::.:::..:::::..::: of annual budgets for ..,.:> : >: >::. ::£::: > ::..:::::.:::.:!..::::. .;£:.:;::.' "7 ; .r .:.. „i.:::::. # ;k greater options to deal ... Emergency ��:.;,;:..:.: >::;:;:::. : > % %;,;: .;�r .. ;. capital outlay s certain :... .....i!,.....! ,.�!' Special with unexpected event �^ Unanhci ated ::>::>:>::>:;:::::.:::>::> �: >:: >r: ": >.:,. ";: %;:.: >:...!: <:; P ..:::: yi'� p P ii o' cts Pr e ..::.::... . ........... .: ,...... :^ ^ :..1:: : :. .... ..... ... ... Expenditures .... ... ;.. .. ..._....... .. .' ` >3 >.. :, #' .::...::::..: . ,f,: ` EN Management Report General Fund In 1987, the City adopted Resolution 87 -10 -42 establishing General Fund reserves/ designations for cash flow, employee benefits and general contingency based upon formulas for each category. At December 31, 2000 and 2001, the General Fund balance was reserved or designated as follows: General Fund Balance December 31, 2000 2001 Designated for: Cash slow $807,000 $956,000 Contingent employee benefits 161,090 104,161 General contingency 273,682 112,957 Capital improvement 12,011 - Employee insurance benefits 26,318 - Subtotal - designated 1,280,101 1,173,118 Undesignated - - Total fund balance $1,280,101 $1,173,118 • Management Report General Fund Cash Flow Reserve Property taxes and state aids account for approximately 70% of the revenue of the General Fund. Property taxes and state aids are not received until July and December of each year (i.e., the second half of the year). As a result, the City is required to have sufficient reserves at the beginning of the year to fund operations of the first half of the year. For the City of Oak Park Heights, the recommended cash flow reserve is $956,000, computed as follows: Gash Flow Reserve 2002 tax levy $1,908,179 2002 budgeted LGA 4,881 Total $1,913,060 Recommended reserve (one -half of tax levy and state aids) $ 956,000 • Management Report General Fund The following graph of monthly General Fund cash balances illustrates the impact of receiving property taxes and state aids in the second half of the year: General fund Monthly Cash Balances 51,400,000 - -- -- - - S1.200.000 - I ---- `;;c' - -- - -- - - - - -- - -- -- SR6 (loo - % %Y I 1 cease c cc i $400.000 : : :.:.----- :[: %:;':'- - ::.:.: --- .7:: > ;;' -- ::::::. ::...•:: ----- :i:::' ,:...:� :::.: "L': --- -- -- - %: IIE j % S200 SO /1 /01 1/31/0 /28/01 3/31/01 4/30/0 5/31/01 6/30/01 7/31 /01 8/11/01 6/30/01 10 /31/01 11/30 /CI 12/31/01 i EIS —I ! 51,301,(100 - $1,152,000 5984,000 S81R 000 5649,000 _ SSUS,000 S<140,000 SI 172,000 1 5967,000 $808,000 - 56)8,000 5570,000 51,14 ,000 As shown above, the cash balance decreased $861,000 between January 1 and June 30, illustrating the need for the cash flow reserve. We recommend the City continue to monitor the cash flow needs of the General Fund. WN • Management Report General Fund Contingent Employee Benefit Deserve The employee benefits reserve is computed based upon accrued, but unpaid, employee benefits as follows: Employee Benefits Reserve Dece mber 31, Employee Benefit 2000 2001 Vacation leave carryover $46,552 $24,067 Severance 76,866 80,094 Unused sick leave 37,672 - Total $161 $104,161 This reserve was established to recognize the actual /potential liability for vacation and sick leave. When the reserve was established, a conservative approach was taken in which an amount equal to all vacation leave, all severance and twenty -five percent of the sick leave balance was deemed the appropriate reserve amount. history has shown that this level of reserve is not required. The City amended this reserve component to an amount equal to 50% of vacation leave, 100% of severance and 0% of sick leave. Management Report General Fund General Contingency Reserve The amount of General Fund reserve required to meet emergency and/or unanticipated expenditures iw not readily quantifiable. Rather, the level of this requirement must he established by the City based on the history of the City and the philosophy of "adequate" reserve coverage. Currently, the City of Oak Park Heights has set this reserve equal to|5Y6 of the General Fund operating budget subject to availability of such amounts, amfollows: General Contingency Reserve _ oosoripdon _ 2001 2002 Ensuing Year's Budget $2,402,525 $2,587 Reserve Amount (tt)l5% $360,000 $388,000 Amount available @ December 3l $273.682 $112,957 As shown above, the fund balance available at December 31, 2001 is less than the amount needed tofuUfiU the contingency reserve requirement. 1 , 1 Wili 1 1 1 11111 1� I&I / • Management Report Special Revenue Funds SPECIAL REVENUE FUNDS Special Revenue Funds are a classification of funds to account for revenues (and expenditures related thereto) segregated by City policy, Federal or State statutes for specific purposes. The City maintained two Special Revenue Funds during 200 t. Forfeiture and Seiz Fund This fund was established in 1991 to account for property forfeited pursuant to MS 609.531. A summary of the financial activity of this fund from inception is as follows: Prior Years 2001 Total Revenue: Earnings on investments $3,729 $1,245 $4,974 Reimbursements 1,680 181 1,861 Confiscated property 62,293 4,529 66,822 Sale of municipal property 1,867 650 2,517 Total $69,569 $6,605 76,174 Expenditures: Public safety: Materials and supplies $14,656 $687 15,343 Contractual services 2,121 1,167 3,288 Capital outlay 27,635 12,741 40,376 Total $44,412 $14,595 59,007 Fund balance - December 31, 2001 $17,167 The use of these funds is restricted by MS 609.531 subd. 5 to "supplement the agency's operating fund or similar fund for use in law enforcement." low 0 Management Report Special Revenue Funds Econom Development Fund This fund was established in 1998 to account for the activity of the Oak Park Heights Economic Development Authority. A summary of the financial activity of this fund is as follows: Prior Years 2001 'Total Revenue: Earnings on investments $13,634 $3,539 $17,173 lnterfund loan interest 1,113 - 1,113 Refunds and reimbursements 2,531 - 2,531 Sale of municipal property 76 - 76 Transfer from Capital Revolving Fund - 260,000 260,000 Total revenue $17,354 $263,539 280,893 Expenditures: Community development: Materials and supplies $457 $ 457 Contractual services 28,739 400 29,139 Interfund loan interest 50,000 20,000 70,000 Capital outlay 121,500 - 121,500 Transfer to Capital Revolving Fund - 11,113 11,113 Total expenditures $200,696 $31,513 232,209 Fund balance - December 31, 2001 $48,684 • Management Report Special Revenue Funds The 1998 expenditures consist primarily of the Bell property purchase. The City demolished the building in 1999 and is marketing the property as a business and industrial site. The estimated value of the property is approximately $124,500 (61,000 square feet G $2.04 per square foot). The fund deficit was funded by a $260,000 interfund loan from the Capital Revolving Fund. This fund did not have the resources to repay the interfund loan. Therefore, the City forgave the interfund loan. If a sale of the Bell property occurs, the proceeds should be receipted in the Capital Revolving Fund. s , Management Report Debt Service Funds DEBT SERVICE FUNDS The combining financial statements for the Debt Service Funds are presented in Statements 10 and 11 of the 2001 Annual Financial Report. Debt Service Funds are a type of governmental fund to account for the accumulation of resources for the payment of interest and principal on debt (other than Enterprise Fund debt). The City maintained three Debt Service Funds during 2001 as follows: Fluid Balance December 31, Increase Fetid 2000 2001 (Decrease) G.O. Revemic Bonds of 1991 /0 Refunding Bonds of 1993 $299,691 $325,406 825,715 G.O. Improvement Bonds of 1995/Refunding Bonds of 2001 195,986 182,841 (13,145) G.O. Improvement Bonds of 1998 31,596 121,372 89,776 Totals $527,273 $629,619 $102,346 i Management Report Debt Service Funds Water and Sewer Refunding Bonds of 1993 The Water and Sewer Revenue Bonds of 1991 were issued to provide financing for Phase I of the City's Annexation Area Extended (A.A.E.) Trunk facility improvements. The City established special area connection charges to provide for the retirement of these bonds and for financing additional trunk facilities in this area. These bonds were refinanced by the Refunding Bonds of 1993 to reduce interest costs by approximately $95,000 over the remaining term of these bond issues. During 2001, the City transferred $140,000 from the A.A.E. Connection Charge Funds to this Debt Service Fund for this bond issue. This cash transfer (along with special assessments and other assets committed to these bonds) will be sufficient to meet the 2002 and 2003 scheduled debt payments. Future (2002 through 2004) projected cash transfers are as follows: Sanitary Water Year Sewer Works Total 2002 $20,000 $125,000 $145,000 2003 30,000 135,000 165,000 2004 5,000 50,000 55,000 Totals $55,000 $310,000 $365,000 • ® 0 0 Management Report Debt Service Funds A projection of cash flow of the Water and Sewer Refunding Bonds of 1993 assuming cash transfers from the Connection Charge Fund is as follows: City of Oak Park Heights, Minnesota Projection of Cashflow Water and Sewer Refunding Bonds of 1993 Total Cash Balance Property Special Other investment Projected Debt Other Cash Balance Year January 1 Taxes Assessments Receipts Interest Receipts Payments Disbursements December 31 2002 $325,406 $ $ $145,000 $9,521 $154,521 $150,325 $ $329,602 2003 329,602 165,000 9,740 174,740 149,805 354,537 2004 354,537 55,000 10,236 65,236 158,805 260,968 2005 260,968 - 7,323 7,323 166,805 101,486 2006 101,486 - 2,818 2,818 78,900 25,404 Total $0 $0 $365,000 $39,638 $404,638 $704,640 $0 Assumptions Special assessment collection rate .................... 95% Property tax collection rate . ............................... 99% Investment interest rate ..... ............................... 3.00% Negative interest charged to funds ? .................. no As shown above, this fund has a projected surplus of $25,404 upon final bond maturity. This projection is dependent on sufficient transfers from the Connection Charge Fund. 6 Management Report Debt Service Funds G.O. Refundln2 Bonds of 2001 This bond was issued to provide financing for the first phase of the street reconstruction project. This bond will be repaid by a combination of special assessments and property taxes. A projection of cash flow of the Refunding Bonds of 2001 is as follows: City of Oak Park Heights, Minnesota Projection of Cashflow General Obligation Refunding Bonds of 2001 Total Cash Balance Property Special Other Investment Projected Debt Other Cash Balance Year January 1 Taxes Assessments Receipts Interest Receipts Payments Disbursements December 31 2002 $183,185 $58,806 $36,750 $ $5,727 $101,283 $145,180 $ $139,288 2003 139,288 61,380 34,854 4,480 100,714 135,762 104,240 2004 104,240 61,380 32,958 3,449 97,787 132,325 69,702 2005 69,702 61,380 31,062 2,474 94,916 113,575 51,044 2006 51,044 - - 1,531 1,531 - 52,575 Total $242,946 $135,625 $0 $17,661 $396,232 $526,842 $0 Assumptions Special assessment collection rate .................... 95% Property tax collection rate . ............................... 99% Investment interest rate ..... ............................... 3.00% Negative interest charged to funds ? .................. no As shown above, this fund is projected to have a surplus of $52,575 upon final bond maturity. This projection is dependent on levying the scheduled property taxes (or providing alternative financing) and experiencing a special assessment collection rate of 95 %. 0 Management Report Debt Service Finds G.O. Improvement Bonds of 1998 This bond was issued in 1998 to provide financing for Fern Center and Phase Three of the 58 Street improvement. This bond is scheduled to be repaid by special assessments and connection charges. The assessment rolls for both projects were adopted in 1999. A projection of cash flow of the Improvement Bonds of 1998 is as follows: City of Oak Park heights, Minnesota Projection of Cashflow General Obligation Improvement Bonds of 1998 Total Cash Balance Property Special Other Investment Projected Debt Other Cash Balance Year January 1 Taxes Assessments Receipts Interest Receipts Payments Disbursements December 31 2002 $115,378 $ $119,694 $75,000 $3,530 $198,224 $214,163 $ $99,439 2003 99,439 115,659 80,000 3,091 198,750 208,462 89,727 2004 89,727 111,625 55,000 2,827 169,452 177,688 81,491 2005 81,491 107,590 50,000 2,586 160,176 172,812 68,855 2006 68,855 103,555 55,000 1239 160,794 167,813 61,836 2007 61,836 99,521 50,000 2,037 151,558 162,687 50,707 2008 50,707 95,486 50,000 1,725 147,211 157,500 40,418 2009 40,418 91,452 50,000 1,438 142,890 152,250 31,058 2010 31,058 87,417 50,000 1,180 138,597 146,938 22,717 2011 22,717 83,382 45,000 941 129,323 141,562 10,478 2012 10,478 79,348 50,000 611 129,959 136,125 4,312 2013 4,312 75,313 42,000 430 117,743 t30,625 (8,570) 2014 (8,570) 71,278 - 277 71,555 62,985 Total $0 $1,241,320 $652,000 $22,912 $1,916,232 $1,968,625 $0 Assumptions Special assessment collection rate .................... 95% Property tax collection rate . ............................... 99% Investment interest rate ..... ............................... 3.00% Negative interest charged to funds ? .................. no As shown above, this Debt Service Fund will require connection charge revenue to finance the debt service. • Management Report Capital Project Funds CAPITAL PROJECT FUNDS The financial statements for the Capital Project Funds are presented in Statements 12 and 13 of the City's 2001 Annual Financial Report. The fund balance (deficits) of the Capital Project Funds were as follows at December 31, 2000 and 2001: December 31, Increase Fund 2000 2001 (Decrease) Capital Revolving $438,392 $258,296 ($180,096) Budgeted Projects and Equipment Revolving 53,834 47,618 (6,216) 57th Street /Oakgreen extension 30,632 - (30,632) SuperamericaNalvoline Oil 1,311 1,960 649 Park Development 302,359 320,406 18,047 St. Croix Mall (TIF) 91,663 - (91,663) Street Reconstruction 334,855 367,317 32,462 Deep Well #3 (1,153) (668) 485 Renewal and Replacement 1,599,177 1,830,661 231,484 Central Business District (12,866) (190) 12,676 Brekke Park Memorial 777 824 47 AAE - Kern Center 30 8,260 8,230 AAE - Brackey - Oak Park Pond (22,417) - 22,417 AAE - Brackey - Outlots A & B 22,336 - (22,336) AAE - 58th Street Improvement - Phase II1 32,452 4,201 (28,251) AAE - First Student 3,099 - (3,099) AAE - Sanitary Sewer Connection 362,829 357,804 (5,025) AAE - Water Connection 280,662 203,804 (76,858) AAE - Storm Sewer Connection 541,815 554,867 13,052 Totals $4,059,787 $3,955,160 ($10 • Management Report Capital Project Funds Capital Devolving Fund During 1984, the City established the Capital Revolving Fund (formerly Closed Bond Fund). Initial financing for this fund was provided through the residual balances of closed (or defeased) special assessment Debt Service Funds of the City. A summary of transactions for 2000 and 2001 is as follows: Capital Revolving Fund Description 2000 2001 Financial resources: General property taxes $16 $26 Special assessments 100,609 94,034 Earnings on investments 6,268 12,331 Connection charges: East Oaks 12,560 - Interfund loan interest 20,000 20,000 Transfers in: Storm Sewer Bonds of 1992 6,961 - AAE - Storm Sewer 50,000 20,000 Total financial resources 196,414 146,391 Financial uses: Expenditures 25,450 60,521 Transfers out: Economic Development - 260,000 57th Street /Oakgreen extension 68,000 5,966 Total fmancial uses 93,450 326,487 Increase (decrease) in fund balance 102,964 (180,096) Fund balance - January 1 335,428 438,392 Fund balance - December 31 $438,392 $258,296 0 ® ® 0 Management Report Capital Project Funds In addition to the fund balance on the previous page, this fund has future assets as follows ® Assessments receivable of $163,000 relating to the 58th Street Improvement Project and the Brackey West /Stillwater Ford utility and street improvements. Budgeted Projects and Equipment Revolvin Fund The Budgeted Projects and Equipment Revolving Fund (formerly Capital Improvements Fund) was established in 1978 to account for monies set aside for various capital improvements. A schedule of activity for 2000 and 2001 is as follows: Description 2000 2001 Financial resources: Earnings on investments $2,254 $2,063 Donations /other 21,171 1,852 Transfers in: General Fund 5,000 30,275 Enterprise Fund 5,750 15,400 Total financial resources 34,175 49,590 Financial uses: Expenditures: Scalcoat - 42,660 Crackfilling - 12,100 Unallocated: Other 1,056 1,046 Transfers out: St. Croix Sport Facility 15,000 - Total financial uses 16,056 55,806 Increase (decrease) in fund balance 18,119 (6,216) Fund balance - January 1 35,715 53,834 Fund balance - December 31 $53,834 $47,618 Management Report Capital Project Funds This fund is budgeted annually by the City Council in conjunction with the City's budget process. As part of such process, the City allocates the monies in this fund to specific projects and /or programs. Such allocation/designations were as follows at December 31, 2001: Balance Balance Purpose 12/31/00 Revenues Expenditures Reallocation 12/31/01 Sealcoat /crack seal $51,113 $12,000 ($54,760) $4,842 $13,195 Recreation 2,439 10,852 (796) - 12,495 Land acquisition 5,000 - - (5,000) - Perro Creek 7,180 (7,180) St. Croix Valley Hockey Arena (15,000) - 15,000 Vehicles (24,260) 24,175 85 - Trees 19,700 - - - 19,700 Unallocated 7,662 2,563 (250) (7,747) 2,228 Totals $53,834 $49,590 ($55,806) $0 $47,618 Superarnerica/Valy ®line Oil This fund accounts for the escrow deposits associated with the development agreement with Superamerica /Valvoline Oil. The City does not anticipate any City costs associated with this project. ES Management Report Capital Project Funds Park Devel opment This fund was established by Resolution 88 -12 -33 to account for the development of the City's parks and recreational areas. The fund balance was $320,406 at December 31, 2001, as follows: Prior Years 2 Total Financing sources: Park fees $322,800 $ - $322,800 Earnings on investments 110,116 18,398 128,514 Donations and contributions 4,937 - 4,937 Total financing sources $437,853 $18,398 456,251 Financing uses: Professional services $24,182 $351 24,533 Park signs 15,902 - 15,902 Valley View Park bridge 65,616 _ 65,616 Trail paving 29,794 - 29,794 Total financing uses $135,494 $351 135,845 Fund balance - December 31, 2001 $320,406 .INN Ell , Management Report Capital Project Funds A summary of park dedication fees is as follows: Park Development Fee AAE Area: Autumn Ridge - Phase I $11,700 Autumn Ridge - Phase II 4,294 Autumn Ridge - Phase III 11,250 Brackey Addition 98,735 Haase Addition 25,795 River Hills 12,150 Wal -Mart 36,750 Brackey - Oak Park Pond 28,823 Brackey - Outlets A & B 9,047 Subtotal 238,544 All Other: East Oaks - Swager 10,400 Valley View Estates - I 18,140 Valley View Estates - II 12,580 Valley View Estates - IV 7,700 Stillwater Ford 21,036 Other 14,400 Subtotal 84,256 Total $322,800 The above balance at December 31, 2001 has not been designated for any specific project. e e ® s Management Report Capital Project Funds St. Croix Mall (TIF) This fund was established in 1989 to account for the St. Croix Mall TIF project. Additionally, this fund accounted for the City's 58th Street and Osgood Avenue Improvement Project. The City entered into a development agreement with Matson Center, Inc., whereby 60% of the tax increment generated is paid to the developer as reimbursement for land acquisition and site improvement costs. The maximum amount of developer assistance is $84.7,770. During 1995, the City adopted resolution 95- -03 -12 modification No. I to the 1989 St. Croix Mall Tax Increment Plan, This modification provided for street reconstruction costs to be included in the tax increment financing plan. The following schedule summarizes the past financial activity for this project: Prior Years 2001 Totals Financial resources: T.I.F. taxes $1,072,901 $ - $1,072,901 Earnings on investments 32,052 5,082 37,134 Total financial resources $1,104,953 $5,082 1,110,035 Financial uses: Construction costs: 58th Street/Osgood improvement project $150,078 $ - 150,078 Professional fees 20,325 1,193 21,518 Contractual services 862 - 862 Developer assistance - Watson 643,255 - 643,255 Developer assistance - Andersen - 95,100 95,100 Administrative charge 37,712 452 38,164 Transfer out: General Fund (investment interest) 10,591 - 10,591 Street reconstruction 145,800 145,800 Central Business District 4,667 - 4,667 Total financial uses $1,013,290 $96,745 1,110,035 Fund balance - December 31, 2001 $0 e ® e s , Management Report Capital Project Funds Street IRec®nstruction This fund was established to account for the first phase of the street reconstruction program. A summary of financial activity is as follows: Prior Years 2001 Total Financial resources: Bond proceeds $1,062,456 $ - $1,062,456 Earnings on investments 83,609 20,451 104,060 Refunds and reimbursements 10,000 - 10,000 Transfers in: General Fund - 12,011 12,011 St. Croix Mall TIF 145,800 - 145,800 Budgeted projects and equipment revolving 352,718 - 352,718 Renewal and replacement 15,854 - 15,854 Total financial resources $1,670,437 $32,462 1,702,899 Financial uses: Project costs $1,327,916 $ - 1,327,916 Residual equity transfer (7,666) Fund balance - December 31, 2001 $367,317 The City combined all street reconstruction monies during 1998 by transferring the street reconstruction portion of the Budgeted Projects and Equipment Revolving Fund to this fiend. These monies will provide partial financing for the next phase of street reconstruction. low 0 , Management Report Capital Project Funds Deep Well #3 This fund was established in 2000 to account for costs associated with the construction of Deep Well #3. A summary of financial activity is as follows: 2000 2001 Financial resources: Earnings on investments $4 $21 Transfer from Renewal /Replacement Fund 59,00 1,129 Total financial resources 59,004 1,150 Financial uses: Contractor $15,709 $ - Engineer 37,944 - Legal 2,469 - Othcr 4,035 665 Total financial uses 60,157 665 Fund balance - December 31 ($1,153) ($668) moons M, • Management Report Capital Project Funds Renewal and Replacement This fund was established in 1994 for the purpose of creating a reserve balance for partial financing of future costs to renew and/or replace existing utility systems. This partial financing will be required as these systems are replaced because it is anticipated the City will be unable to assess 100% of such replacements. Initial funding was provided by a transfer of $574,378 from the Water and Sewer Utility Fund. This transfer represented depreciation charges accumulated since 1969. Annually thereafter, additional transfers equal to depreciation on contributed assets are to be transferred. A summary of the financial activity from inception is as follows: Prior Years 2001 Total Financial sources: Transfer from water and sewer utility: Initial (1994) $574,378 $ - $574,378 Annual 722,056 135,276 857,332 Earnings on investments 379,178 97,337 476,515 Total financial sources $1,675,612 $232,613 1,908,225 Financial uses: Flouride system $1,581 $ - 1,581 Transfer out: Deep Well #3 59,000 1,129 60,129 Street reconstruction 15,854 - 15,854 Total financial uses $76,435 $1,129 77,564 Fund balance - December 31, 2001 $1,830,661 a. ' 0 Management Report Capital Project Funds Central Business District This fund was established in 1999 to account for costs associated with the Central Business District. Prior Years 2001 Total Financial sources: Met Council grant $9,497 $ - $9,497 Earnings on investments 46 1,753 1,799 Contributions: VSSA 2,500 -• 2,500 Nolde 500 - 500 Other 3,500 - 3,500 Transfer from General Fund 15,000 - 15,000 Transfer from Economic Development Fund - 11,113 11,113 Transfer from TIF Fund 4,667 - 4,667 Total financial sources $35,710 $12,866 48,576 Financial uses: Professional services 47,463 190 47,653 Interfund loan interest 1,113 - 1,113 Total financial uses $48,576 $190 48,766 Fund balance - December 31, 2001 ($190) A Management Report Capital Project Funds Brekke Park Memorial This fund was established in 1999 to account for the donations received for Brekke Park. The fund balance was $824 at December 31, 2001. Fern Center This fund accounts for costs associated with the Kern Business Center (Phase I and 11). This project is being financed by the 1998 G.O. Improvement Bonds. A summary of financial activity to date is as follows: Phase I and II 55th Street Total Revenue and other sources: Bond proceeds $995,983 $ $995,983 Earnings on investments 38,479 - 38,479 Reimbursements 12,695 38,810 51,505 Transfer from Sanitary Sewer Connection Fund 20,200 - 20,200 Transfer from Water Connection Fund 35,200 - 35,200 Transfer from Storm Sewer Connection Fund 44,600 - 44,600 Total revenue and other sources 1,147,157 38,810 1,185,967 Expenditures and other uses: Contractor 831,502 24,748 856,250 Engineer 167,761 12,216 179,977 Legal and fiscal 21,090 55 21,145 Other 120,335 - 120,335 Total expenditures and other uses 1,140,688 37,019 1,177,707 Fund balance - December 31, 2001 $6,469 $1,791 $8,260 • ® • • Management Report Capital Project Funds This project is complete and was assessed in 1999. The amount of the assessment roll was $560,000. In addition to the assessment, there are connection charges related to this project. A summary of the connection charges is as follows: Sanitary sewer $214,376 Water 373,048 Storm sewer 472,640 Total $1,060,064 These connection charges have the following commitments: • A portion of the connection charges are committed to pay debt service on the Bonds of 1998. • Several of the properties in this area currently have septic systems. These properties are not required to connect (and pay) for six years (by 2005). • Management Report Capital Project Funds AAE ® 58th Street Imp - Phase III This fund accounts for costs associated with the extension of 58th Street from Wal -Mart to Oakgreen Avenue. This project is being financed by the 1998 G.O. Improvement Bonds. A summary of financial activity to date is as follows: Revenues: Bond proceeds $945,808 Earnings on investments 46,052 Total revenues 991,860 Expenditures: Contractor 730,687 Engineer 140,207 Legal and fiscal 10,261 Land acquisition 75,682 Other 30,822 Total expenditures 987,659 Fund balance - December 31, 2001 $4,201 This project is anticipated to be completed in 2002. • Management Report Capital Project Funds AAE — Boutwells Landim! This fund was established in 1999 to account for expenditures associated with the developer agreement with Malley Senior Service Alliance. A summary of the financial activity is as follows: Actual Budget Revenues: Developer reimbursement $1,569,728 $2,330,760 Expenditures: Contractor 1,281,521 1,942,300 Engineer 257,944 - Legal 30,020 388,460 Other 243 - Total expenditures 1,569,728 2,330,760 Fund balance - December 31, 2001 $0 $0 • Management Report Capital Project Funds Sanitary Sewer Co C I+und A summary of the financial activity of this fund from inception is as follows: Prior Years 2001 Total Revenue: Special assessments $13,002 $5,439 $18,441 Earnings on investments 72,230 22,621 94,851 Connection charges: River Hills lst and 2nd 39,725 - 39,725 Highway 36 10,551 - 10,551 Wal -Mart 38,751 - 38,751 ISD 9834 201,373 - 201,373 Brackey 25,447 - 25,447 Brackey West - Oak Park Pond 45,461 - 45,461 Brackey West - Outlots A & B 6,052 - 6,052 Autumn Ridge 1 st, 2nd and 3rd 65,547 - 65,547 Haase addition 3,186 - 3,186 Valley Senior Service Alliance 139,131 - 139,131 Other 66,015 14,690 80,705 Total revenue $726,471 $42,750 769,221 Expenditures: Transfer to debt service $152,500 $47,775 200,275 Kern Center 20,200 - 20,200 School District improvements 160,000 - 160,000 River Hills 1st 30,942 - 30,942 Total expenditures $363,642 $47,775 411,417 Fund balance - December 31, 2001 $357,804 1 Management Report Capital Project Funds Water Connection Charge Fund A summary of the financial activity of this fund from inception is as follows: Prior Years 2001 Total Revenue: Special assessments $22,574 $9,441 $32,015 Earnings on investments 91,756 17,788 109,544 Connection charges: IZiver Hills 1 st and 2nd 64,798 - 64,798 Highway 36 18,352 - 18,352 Wal -Mart 67,088 - 67,088 ISD #834 405,341 - 405,341 Brackey 44,260 - 44,260 Brackey West - Oak Park Pond 78,917 - 78,917 Brackey West - Outlots A & B 10,506 - 10,506 Autumn Ridge 1 st, 2nd and 3rd 103,372 - 103,372 Haase addition 5,542 - 5,542 Valley Senior Service Alliance 241,522 - 241,522 Other 184,573 25,538 210,111 Total revenue $1,338,601 $52,767 1,391,368 Expenditures: Transfer to debt service $848,000 $129,625 977,625 School District improvements 145,000 - 145,000 River Hills 1st 29,739 - 29,739 Kern Center 35,200 - 35,200 Total expenditures $1,057,939 $129,625 1,187,564 Fund balance - December 31, 2001 $203 ,804 Management Report Capital Project Funds Storm Sewer Connection Charge Fund A summary of the financial activity of this fund from inception is as follows: Prior Years 2001 Total Revenue: Special assessments $28,474 $12,120 $40,594 Earnings on investments 95,274 33,978 129,252 Connection charges: River Hills 1 st and 2nd 50,411 - 50,411 Highway 36 23,253 - 23,253 Wal -Mart 68,511 - 68,511 lSD #834 289,348 - 289,348 Brackey 56,079 - 56,079 Brackey West - Oak Park Pond 99,974 - 99,974 Brackey West - Outlots A & B 13,310 - 13,310 Autumn Ridge 1st, 2nd and 3rd 124,046 - 124,046 Haase addition 7,021 - 7,021 Valley Senior Service Alliance 305,968 - 305,968 Other 145,544 32,374 177,918 Total revenue $1,307,213 $78,472 1,385,685 Expenditures: Transfer to Revolving Capital Fund $250,000 $20,000 270,000 Transfer to Debt Service Fund - 17,600 17,600 Long Lake storm sewer - 27,820 27,820 Kern Center 44,600 - 44,600 Wal -Mart 41,232 - 41,232 Storm drainage report 9,910 - 9,910 River Hills 1st 13,757 - 13,757 Valley Point 2nd 17,211 - 17,211 School district improvement 289,348 - 289,348 Brackey addition 99,340 - 99,340 Total expenditures $765,398 $65,420 830,818 Fund balance - December 31, 2001 $554,867 Management Report Capital Project Funds Connection Charge Fund Commitments The fund balance at December 31, 2001 is committed for future debt service payments for the Refunding Bonds of 1993. Such future commitments (cash transfers) are as follows: Future Transfers to 1993 Bonds Debt Service Fund Sanitary Water Year sewer Works Total 2002 $20,000 $125,000 $145,000 2003 30,000 135,000 165,000 2004 5,000 50,000 55,000 Totals $55,000 $310,000 $365,000 As shown above, the Connection Charge balances at December 31, 2001 represent sufficient amounts to meet the sanitary sewer debt commitments for 2002 through 2004 and the water works debt service commitments for 2002 and a portion of 2003. EM • Management Report Capital Project Funds This fund is also committed for future debt service payments on the Bonds of 1998. Such fixture commitments (cash transfer) are as follows: Future Transfers to 1998 Bond Debt Service Fund Sanitary Water Storm Year Sewer Works Sewer Total 2002 $37,875 $13,125 $24,000 $75,000 2003 40,400 14,000 25,600 80,000 2004 27,775 9,625 17,600 55,000 2005 25,250 8,750 16,000 50,000 2006 27,775 9,625 17,600 55,000 2007 25,250 8,750 16,000 50,000 2008 25,250 8,750 16,000 50,000 2009 25,250 8,750 16,000 50,000 2010 25,250 8,750 16,000 50,000 2011 22,725 7,875 14,400 45,000 2012 25,250 8,750 16,000 50,000 2013 21,210 7,350 13,440 42,000 Total $329,260 $114,100 $20 $65 2, 0 00 • ® o • Management Report Capital Project Funds Based on existing developer agreements, the Connection Charge Funds are scheduled to receive the following future connection charges as development occurs: Estimated Future Connection Charges Sanitary Water Storm Sewer Works Water Total Brackey Addition - Outlot A and B $63,000 $111,000 $141,000 $315,000 Haase Addition - Outlot A and B 34,000 60,000 76,000 170,000 Kern Center (1998 Bonds) 189,000 328,000 415,000 932,000 Total $286,000 $499,000 $632,000 $1,417,000 • Management Report Capital Project Funds An analysis of the commitments of the connection charge funds is as follows: Sanitary Water Storm Sewer Works Water Total Fund balance - December 31, 2001 $357,804 $203,804 $554,867 $1,116,475 Future connection charges 286,000 499,000 _632,000 1,417,000 Subtotal 643,804 702,804 1,186,867 2,533,475 Debt service commitments: Bonds of 1993 (55,000) (310,000) - (365,000) Bonds of 1998 (329,260) (114,100) (208,640) (652,000) Uncommitted $259,544 $278,704 $978,227 $1,516,475 As shown above, connection charges should be sufficient to fund the debt service requirement. The City has designated a portion ($200,000) of the retained earnings of the Utility Fund to provide additional financing for the 1993 Bonds if needed. There is sufficient fund balance in the Sanitary Sewer Connection Charge Fund for the debt service commitments of these bonds. low • Management Report Enterprise Fund ENTERPRISE UND The financial statements for the Enterprise Fund (Water, Sewer and Sanitation Utilities) are presented in Statements 14, 15 and 16 of the City's 2001 Annual Financial Report. Condensed comparative operating statements of income and expense for the utility operations of the City are as follows: Water Department 2000 2001 Amount Percent Amount Percent Revenue: Customer billings and other $331,354 100.00% $344,030 100.00% Operating expenses: Personal services 100,854 30.44% 129,710 37.70% Contractual services 56,101 16.93% 70,063 20.37% Administrative and personnel charges 30,970 9.35% 30,200 8.78% Other 13,342 4.03% 4,740 1.38% Depreciation: On purchased assets 10,313 3.11% 10,411 3.03% On contributed assets 65,693 19.83% 72,062 20.95% Total operating expenses 277,273 83.69% 317,186 92.21% Net operating incorne (loss) $54,081 16.31% $26,844 7.79% 0 Management Report Enterprise Fund A chart of income from operation is as follows: Water operating Revenue & Expense $350,000 - - $300,000 - - -- - - - - -- ' $250,000 -- - - - M Depreciation - f =AII Other Expenses $200,000 - - ©Contractual Services Personal Services --a- Operating Revenue $150,000 - $10o,0o0 $50,000 -- - 1997 1998 1999 2000 2001 As shown above, the water department incurred losses in 1997 and 1998. The City had a study performed and increased water rates based on the study's results. _Iwo Management Report Enterprise Fund Sewer Department 2000 2001 Amount Percent Amount Percent Revenue: Customer billings and other $400,721 100.00% $481,751 100.00% Operating expenses: Personal services 115,134 28.73% 98,193 20.38% MCES 247,776 61.83% 243,670 50.58% Other contractual services 28,084 7.01% 32,259 6.70% Administrative and personnel charges 43,000 10.73% 43,860 9.10% Other 3,328 0.83% 3,187 0.66% Depreciation: On purchased assets 2,186 0.55% 2,761 0.57% On contributed assets 52,335 13.06% 63,214 13.12% Total operating expenses 491,843 122.74% 487,144 101.11% Not operating income (loss) ($91,122) (22.74 %) ($5,393) (1.11 %) The largest component of operating expenses is the processing charge from MCES. The MCES charges are based on gallons of sewage processed. An analysis of gallons pumped by the City, billed by MCES and billed by the City to customers is as follows: 2000 2001 Gallons of water pumped by the City 209 million 219 million Gallons of sewage processed by MCES 207 million 206 million Gallons of sewage billed by City to customers ) 167 million 191 million The gallons billed to customers is an estimate based on total revenue divided by the per 1,000 gallon charge e Sam Management Report Enterprise Fund During 2001, City staff researched possible reasons for the variance in sewage processed and billed. The City identified and corrected the following items: ® Border City sewer connection issues. ® MCES billings on actual flows rather than estimated (Sunnyside). ® Conducted an I and I Study and will implement recommendation. A chart of income from operations is as follows: $600 ,000 - -- - - -- -- - -- - Sewer Operating Revenue & Expense $500.000 -- $400,000 -- " ' E= Depreciation D Person al Services $300,000 - — - - = All Other Expenses 7 M MCES --A- Operating R 1 C: $200,000 - -- - - -- - d $100,000 1997 1998 1999 2000 2001 WOMEN. • ® • • Management Report Enterprise Fund As shown on the previous pages, the sewer operating account incurred losses for 1997 through 2001. The City revised rates as follows: Monthly Rate Monthly Rate Monthly Rate Monthly Rate Effective Effective Effective Effective Type of Charge 01/01/99 04/01/00 01/01/01 01/01/02 Water: Base fee $7.05 $7.50 $7.50 $7.50 Charge per 1,000 gallons for: Usage between 6,000 and 16,000 gallons $1.10 $1.17 $1.17 $1.17 Usage between 17,000 and 33,000 gallons $1.38 $1.47 $1.47 $ 1 417 Usage in excess of 33,000 gallons $1.65 $1.76 $1.76 $1.76 Sewer: Base fee $11.55 $12.45 $13.20 $14.00 Charge per 1,000 gallons for usage in excess of 5,000 gallons $2.15 $2.32 $2.46 $2.61 The City implemented monthly utility billings effective January 1, 1999. • ' 0 Management Report Enterprise Fund Sanitation The City began charging for refuse collection in 1988. Prior to 1998, this activity was accounted for in the General Fund. The City moved this activity to the Enterprise Fund during 1998. Refuse collection revenue as a percent of refuse collection expenditures /expense is as follows: Refuse Transfer Refuse Collection Revenue as a from Net Collection Expenditures/ Net Percent of General Income Year Revenue Expenses Cost Expenditures Fund (Loss) General Fund: 1992 $66,076 $251,121 ($185,045) 26% $ - $ 1993 103,039 297,452 (194,413) 35% - _ 1994 108,310 326,926 (218,616) 33% - 1995 110,021 334,053 (224,032) 33% - 1996 103,444 326,036 (222,592) 32% - 1997 87,830 298,842 (211,012) 29% - Enterprise Fund: 1998 93,014 309,051 (216,037) 30% 190,400 (25,637) 1999 71,585 169,210 (97,625) 42% 65,000 (32,625) 2000 87,434 175,164 (87,730) 50% 84,000 (3,730) 2001 97,575 184,179 (86,604) 53% 83,000 (3,604) 2002" 97,200 185,600 (88,400) 52% 88,500 100 Budgeted amounts, does not include $6.50 surcharge, $28,000 which is accounted for in the General Fund The 1999 loss was funded by fund balance. A transfer to the "All Funds" reserve account of $23,000 was cancelled to cover this loss. As shown above, the City subsidy of sanitation activity has decreased from $224,032 in 1995 to $88,500 budgeted for 2002. -low iqI Management Report Enterprise Fund Storm Sewer O perating The City created the stormwater utility during 1999. A monthly fee (effective October 1, 1999) was established at $1 per household and $10 per acre for commercial properties. The fee for vacant residential property is 50 cents per month and undeveloped commercial property is $1.50 an acre per month. A condensed operating statement of income and expense for this fund is as follows: Storm Sewer 2000 2001 Amount Percent Amount Percent Revenue: Customer billings $55,359 100.00% $56,913 100.00% Expenses: Personal services 37,971 68.59% 40,193 70.62% Contractual services 9,934 17.94% 4,512 7.93% Materials and supplies 969 1.75% 1,033 1.82% Administrative and personnel charges 10,750 19.42% 5,300 9.31% Other 500 0.90% - 0.00% Total operating expenses 60,124 108.60% 51,038 89.68% Net operating income (loss) ($4,765) (8.60 %) $5,875 10.32% e