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HomeMy WebLinkAboutAnnual Financial Report CITY OF OAK PARK HEIGHTS, MINNESOTA ANNUAL FINANCIAL REPORT December 31, 2004 This page intentionally left blank - CITY OF OAK PARK HEIGI -ITS, MINNESOTA TABLE OF CONTENTS Page Reference No. INTRODUCTORY SECTION Elected and Appointed Officials 3 FINANCIAL SECTION Independent Auditor's Report 7 Management's Discussion and Analysis 11 Basic Financial Statements: Government -Wide Financial Statements: Statement of Net Assets Statement 1 24 Statement of Activities Statement 2 25 Fund Financial Statements: Balance Sheet - Governmental Funds Statement 3 26 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds Statement 4 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds Statement 5 30 Statement of Net Assets - Proprietary Fund Statement 6 31 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Fund Statement 7 32 Statement of Cash Flows - Proprietary Fund Statement 8 33 Statement of Fiduciary Net Assets Statement 9 34 Notes to Financial Statements 35 Required Supplementary Information: Budgetary Comparison Schedule - General Fund Statement 10 60 Budgetary Comparison Schedule - Note to RSI 64 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds Statement 11 68 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds Statement 12 69 CITY OF OAK PARK HEIGHTS, MINNESOTA TABLE OF CONTENTS Page Reference No. Subcombining Balance Sheet - Nonmajor Special Revenue Funds Statement 13 70 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Special Revenue Funds Statement 14 71 Subcombining Balance Sheet - Nonmajor Debt Service Funds Statement 15 72 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Debt Service Funds Statement 16 73 Subcombining Balance Sheet - Nonmajor Capital Project Funds Statement 17 74 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Capital Project Funds Statement 18 76 Enterprise Fund: Statement of Net Assets Statement 19 78 Comparative Statement of Revenue, Expenses and Changes in Net Assets Statement 20 79 Statement of Cash Flows Statement 21 80 Agency Fluids: Subcombining Balance Sheet Statement 22 81 Subcombining Statement of Changes in Assets and Liabilities Statement 23 82 Supplemental Financial Information: Debt Service Payments to Maturity: Revenue Bonds and General Debt Bonds Exhibit 1 84 Taxable Valuations, Tax Levies and Tax Rates Exhibit 2 85 Schedule of Construction Costs Exhibit 3 86 STATISTICAL SECTION (UNAUDITED) General and Special Revenue Funds - Expenditures by Function - Years 1995 through 2004 Table 1 88 General and Special Revenue Funds - Revenue by Source - Years 1995 through 2004 Table 2 89 Property Tax Levies and Collections - Years 1995 through 2004 Table 3 90 Special Assessment Collections - Years 1995 through 2004 Table 4 91 Principal Taxpayers Table 5 92 INTRODUCTORY SECTION 1 - This page intentionally left blank - 2 CITY OF OAK PARK HEIGHTS, MINNESOTA ELECTED AND APPOINTED OFFICIALS December 31, 2004 Term Expires Mayor: David Beaudet December 31, 2008 Councilmembers: Les Abrahamson December 31, 2006 Mark Swenson December 31, 2006 Jack Doerr December 31, 2008 Mary McComber December 31, 2008 Administrator: Eric Johnson Appointed Deputy Clerk/Finance Director: Judy Holst Appointed 3 - This page intentionally left blank - 4 FINANCIAL SECTION 5 - This page intentionally left blank - 6 Fau Redpa �nrdfi�d PuNiCAnCooni8nLu axd Cn0SU|iax�u INDEPENDENT AUDITOR'S REPORT Iu the Honorable Mayor and Members of the City Council City of Oak Park Heights, Minnesota YV � audited (� accompanying financial i i i �(� (o|ooL ion the � ovcc�u�rn�000 ��nvcr00000 activities, busioeaa-b/pcuotiviiieu each major fund, and the aggregate remaining fund information of the City of Oak Park Heights, Minnesota, as of and for the year ended December 31, 2004 which collectively comprise the City ofOak Park Heights, Minnesota's basic fiouooiu} s{o&emneuia as listed in the table of contents. Ihcuo bounciu| oLotcnneuis are the nomynnVibi}iLy o[ the City nf Oak Park Heights, Minnesota's management. Our responsibility ia\uexpress opinions onthese financial statements based ou our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States o[ America and the otuuduuiu yyplicnh]c to financial audits contained in Government Auditing S/ondu/us issued by the Comptroller General of the United Siu&uu. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial yru1cuueu1u are free of material rnims<uiemocuL An audit ioo|udom examining, onutest buaiu evidence supporting the amounts and disclosures in the financial mtutcozeoia. /\n audit also includes assessing the accounting principles used and the significant estimates made 6ymanagement, no well as uvu}outiog the overall financial statement presentation. We believe that our audit provides uccuoouoblo basis for our opinion. lu our opinion, based on our audit, the fiunociu} xiaLoncrdu referred to above present fair/y, in all mater respects, the respective fiuuuoia/position ofthe governmental activities, the business-type activities, each major fund, and the aggregate remaining fund informat of the City of Oak Park ,Miuneouia respect changes io financial position and cash flows, where applicable, thereof for the year then ended i0000fbznmiiy with accounting principles generally accepted iu the United States of America. As described io Note l5bo the basic fiounciu|statements, the City ofOak Park Heights, Minnesota adopted the provisions of Governmental Accounting Standards Board StoLcrnon( No. 34, Basic Financial Statements — and Management's Discussion and Analysis —for State and Local Governments, Statement 37, Basic Financial Statements — and Management's /)ivruxx/oo and Analysis —for S/o/r and Local Governments: {)n/n/b//x, and Statement 38, kN/k/8o / 6nDQ� 481OVV!ituBuur|/orkw� VVhi| Uu / |aku K�i/ �/i '/l1U US� [d | U�1 42G /U0U haxJ;51 42G!J)04 /{no1111goDffiou. 1203 3nxd)Fron1.ugeRoad Sui\u 13 Hnx|iogs. VIN SS03J' USA [o|op|woe, 661 48O49BO Fux� 061 VG 5-004 - 'Phis page intentionally left blank - g Certain Financial Statement Note Disclosures, as of January 1, 2004. This results in a change in the format and content of the basic financial statements. In accordance with Government Auditing Standards, we have also issued a report dated March 1, 2005 on our consideration of the City of Oak Park Heights, Minnesota'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, 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 read in conjunction with this report in considering the results of our audit. The Management's Discussion and Analysis and the budgetary comparison information, as listed in the table of contents, are not a required part of the basic financial statements but ark; supplementary information required by accounting principles generally accepted in the United States of America. 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 (fiat, collectively comprise the City of Oak Park Heights, Minnesota's basic financial statements. The introductory section, combining and individual fund statements and schedules, supplementary financial information and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules and supplementary financial information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. 4 % c HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota March 1, 2005 9 This page intentionally left blank - 10 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Oak Park Heights, we offer readers of the City of Oak Park Heights' financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2004. Financial Ili2hlis!hts The assets of the City of Oak Park Heights exceeded its liabilities at the close of the most recent fiscal year by $25,059,000 (Net assets). Of this amount, $8,160,000 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. The City's total net assets increased by $821,000. As of the close of the current fiscal year, the City of Oak Park Heights' governmental funds reported combined ending fund balances of $7,765,000. At the end of the current fiscal year the general fund balance was $1,847,000 of which $1,700,000 is designated. The General Fund balance increased by $153,000 as a result of positive budget variances in both revenues and expenditures. The City was able to transfer an additional $125,000 from the General Fund to the Budgeted Projects Fund for capital improvements for streets, parks, trails, storage area, and computers. The Sanitary Sewer Connection Charge Fund, Water Connection Charge Fund and Storm Sewer Connection Charge Fund did not collect connection charges in the year 2004. With the exception of sanitation, all four enterprise fund operations reported net operating income in 2004. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City of Oak Park Heights' 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 supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Oak Park Heights' finances, in a manner similar to a private- sector business. 11 Management's Discussion and Analysis The statement of net assets presents information on all of the City of Oak Park Heights' assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Oak Park Heights 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 of Oak Park Heights that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Oak Park Heights include general government, public safety, public works and parks and recreation. The business -type activities of the City of Oak Park Heights include a water, sanitary sewer, sanitation and storm sewer. The government -wide financial statements are statements 1 and 2 of this report. Fund Financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Oak Park Heights, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City of Oak Park Heights can be divided into two categories: governmental funds and proprietary 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 resource, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term financial requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statement. By doing so, readers may better understand the long -term impact of the City's near term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and change in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 12 Management's Discussion and Analysis The City of Oak Park Heights maintains five individual major governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fiend statement of revenues, expenditures, and changes in fund balances for the following major funds: • General Fund • G.O. Improvement Bonds of 1998 — Debt Service Fund • Renewal and Replacement Fund — Capital Project Fund • McKean Square Fund — Capital Project Fund • AAE — Storm Sewer Connection Fund — Capital Project Fund Data from the other governmental funds are combined into a single, aggregated presentation. Individual fiend data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of Oak Park Heights adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for this fund to demonstrate compliance with this budget. The basic governmental fund financial statements are statements 3 through 5 of this report. Proprietary funds. The City of Oak Park Heights maintains four enterprise funds as a part of its proprietary fund type. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Oak Park Heights uses enterprise finds to account for its water, sanitary sewer, sanitation and storm sewer 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 the following funds: Enterprise funds: Water Sanitary Sewer Sanitation Storm Sewer The basic proprietary fund financial statements are statements 6 through 8 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 by the government -wide financial statements because the resources of those funds are not available to support the City of Oak Park Heights, Minnesota's own programs. The basic fiduciary fund statements are Statements 9, 22 and 23. 13 Management's Discussion and Analysis 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 following Statement 9. Other information. The combining statements referred to earlier in connection with non - major governmental fiends are presented immediately following the required supplementary information on budgetary comparisons. Combining and individual fund statements and schedules are presented as Statements 11 through 23. Government -Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Oak Park Heights, assets exceeded liabilities by $25,059,000 at the close of the most recent fiscal year. The largest portion of the City of Oak Park Heights' net assets ($15,706,000 or 63% percent) reflects its investment in capital assets (e.g. land, improvements, buildings and structures, machinery and equipment, and furniture and fixtures) less any related debt used to acquire those assets that is still outstanding. The City of Oak Park Heights uses these capital assets to provide services to citizens; consequently, these assets are not available for fixture spending. Although the City of Oak Park Heights' 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. With the first year implementation of Governmental Accounting Standards Board Statement 34, the City is not presenting comparable columns in the various comparison's and analyses for the previous year. Comparative information will be provided in future years. 14 Management's Discussion and Analysis City of Oak Park Heights' Net Assets Governmental Business -Type Activities Activities Total Current and other assets $8,969,078 $917,162 $9,886,240 Capital assets 11,524,715 5,646,237 17,170,952 Total assets $20,493,793 $6,563,399 $27,057,192 Long -term liabilities outstanding $1,211,107 $16,429 $1,227,536 Other liabilities 703,986 65,906 769,892 Total liabilities $1,915,093 $82,335 $1,997,428 Net assets: Invested in capital assets, net of related debt $10,059,989 $5,646,237 $15,706,226 Restricted 1,192,681 - 1,192,681 Unrestricted 7,326,030 834,827 8,160,857 Total net assets $18,578,700 $6,481,064 $25,059,764 A portion of the City of Oak Park Heights' net assets represent resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Oak Park Heights is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business -type activities. 15 Management's Discussion and Analysis Governmental Activities Governmental activities increased the City of Oak Park Heights' net assets by $750,000 during 2004. Key elements of this increase are as follows: City of Oak Park Heights' Changes in Net Assets Governmental Business -Type Activities Activities Total Revenues: Program revenues: Charges for services $948,633 $1,133,238 $2,081,871 Operating grants and contributions 68,358 - 68,358 Capital grants and contributions 212,635 58,706 271,341 General revenues: General property taxes 1,979,288 - 1,979,288 Grants and contributions not restricted to specific programs 3,060 - 3,060 Other revenue 29,125 - 29,125 Unrestricted investment earnings 199,737 19,148 218,885 Total revenues 3,440,836 1,211,092 4,651,928 Expenses: General government 832,609 - 832,609 Public safety 1,155,243 - 1,155,243 Public works 602,111 - 602,111 Parks and recreation 123,737 - 123,737 Interest on long -tern debt 67,365 - 67,365 Water - 323,527 323,527 Sanitary sewer - 517,595 517,595 Sanitation - 167,258 167,258 Storm sewer - 41,082 41,082 Total expenses 2,781,065 1,049,462 3,830,527 Increase in net assets before transfers 659,771 161,630 821,401 Transfers 90,423 (90,423) - Change in net assets 750,194 71,207 821,401 Net assets - January 1, 2004 17,828,506 6,409,857 24,238,363 Net assets - December 31, 2004 $18,578,700 $6,481,064 $25,059,764 16 Management's Discussion and Analysis Below are specific graphs which provide comparisons of the governmental activities revenues and expenditures: Governmental Activities - Revenues ow< unmanm<d im can,cnt pan-g, c, ^,�„ (barge, ear >.r,.«, as ^ t 5 gF K ` v k :5 • .r.t'a :v'.r ;,�: z ;'r / �•', i "',F ',Y %'� o g r.,n[,.nd a ��i,,������k,,,� k � C � art d' ;. "s ' •�� � /.;h ��[� ,;y h•, e roperry 57 "5, �. Y.,:.. Cepual g inn and inntnbut 1, " Governmental Activities - Expenses Parks and Inlercsc on Lnng- Rurcubon 4%, Tum D.bt 2 ' Cicnir::l litr � mutt t'ubbc WV ,ks 30% l w� s Public Safcty 42% 17 Management's Discussion and Analysis Business -Type Activities Business -type activities increased net assets by $71,000 during 2004. Below are graphs showing the business -type activities revenue and expense comparisons: Business -Type Activities - Revenues C'ntrihunom So. Imcslmcnt Lamings i� Y • y' � Charge. ftrt Scry , 93', I Business - Type Activities - Expenses SI. S. 6% Sa„�cam 3 i a �2 Sanitary Sewer 58 18 Management's Discussion and Analysis Financial Analysis of the Government's Funds Governmental Funds. The focus of the City of Oak Park Heights' governmental fiends is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Oak Park Heights' 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. At the end of the current fiscal year, the City of Oak Park Heights' governmental funds reported combined ending fund balances of $7,765,000. The general fund increased by $153,000 in 2004, which was due primarily to revenues exceeding budget expectations. Revenues related to building activities contribute to the revenue increase. The G.O. Improvement Bonds of 1998 debt service fund decreased by $4,400 during 2004. The Renewal and Replacement capital project fund increased by $215,000 during 2004. This fund receives an annual transfer from the proprietary funds in an amount equal to depreciation expense. The McKean Square capital project fund is firnded by direct charges to developers. The AAE — Storm Sewer Connection capital project fund decreased by $65,000 due to monies expended for the Kern Center pond expansion. The nonmajor special revenue funds decreased by $3,000 during 2004. The nonmajor debt service funds decreased by $131,000 during 2004. The nonmajor capital project fund increased by $68,000 during 2004. Proprietary funds. The City of Oak Park Heights' proprietary fund provides the same type of information found in the government -wide financial statements, but in more detail. Budgetary Highlights General Fund The expenditure budget was amended to provide for changes in activity that occurred during the year. The revenue budget was amended to recognize increased property taxes expected which are offset by the State of Minnesota's market value credit and for additional miscellaneous revenue collected. 19 Management's Discussion and Analysis Capital Asset and Debt Administration Capital assets. The City of Oak Park Heights', investment in capital assets for its governmental and business -type activities as of December 31, 2004, amounts to $17,170,000 (net of accumulated depreciation). This investment in capital assets includes land, buildings and structures, infrastructure, machinery and equipment and furniture and fixtures. City of Oak Park Heights' Capital Assets (Diet of Depreciation) Beginning Beginning Balance, Ending primary Government Balance Restated as Restated Increases Decreases Balance Governmental activities: Capital assets, not being depreciated: Land $1,183,690 $431,425 $1,615,115 $ - $ - $1,615,115 Construction in progress - 1,089,842 1,089,842 622,218 (155,429) 1,556,631 Total capital assets, not being depreciated 1,183,690 1,521,267 2,704,957 622,218 (155,429) 3,171,746 Capital assets, being dcprcciatcd: Buildings and structures 1,150,544 - 1,150,544 - (32,398) 1,118,146 Otherimprovcmcnts 587,601 587,601 - (26,638) 560,963 Machinery and equipment 450,396 450,396 44,566 (88,902) 406,060 Furniture and fixtures 213,296 - 213,296 5,538 (78,913) 139,921 Infrastructure - 10,047,511 10,047,511 96,723 - 10,144,234 Total capital assets, being depreciated 2,401,837 10,047,511 12,449,348 146,827 (226,851) 12,369,324 Less accumulated depreciation for: Buildings and structures - 381,644 381,644 25,404 (32,398) 374,650 Other improvements - 141,923 141,923 5,426 (26,638) 120,711 Machinery and equipment 264,611 264,611 49,246 (88,902) 224,955 Furniture and fixtures 154,971 154,971 11,283 (78,913) 87,341 Infrastructure - 2,889,792 2,889,792 318,906 3,208,698 Total accumulated depreciation 0 3,832,941 3,832,941 410,265 (226,851) 4,016,355 Total capital assets being depreciated - net 2,401,837 6,214,570 8,616,407 (263,438) 8,352,969 Governmental activities capital assets - net $3,585,527 $7,735,837 $11,321,364 $358,780 ($155,429) $11,524,715 n Restated for previously unreported infrastructure, construction in progress and accumulated depreciation as of December 31, 2003. 20 Management's Discussion and Analysis Beginning Ending Balance Increases Decreases Balance Business -type activities: Capital assets, not being depreciated: Land $60,000 $ $ $60,000 Total capital assets, not being depreciated 60,000 0 0 60,000 Capital assets, being depreciated: Buildings and structures 1,320,334 1,320,334 Machinery and equipment 205,039 14,992 (6,072) 213,959 Distribution and collection systems 6,454,890 58,705 - 6,513,595 Total capital assets, being depreciated 7,980,263 73,697 (6,072) 8,047,888 Less accumulated depreciation: Buildings and structures 432,906 29,858 462,764 Machinery and equipment 92,259 10,031 (5,353) 96,937 Distribution and collection systems 1,772,844 129,106 1,901,956 Less accumulated depreciation 2,298,009 168,995 (5,353) 2,461,651 Total capital assets being depreciated - net 5,682,254 (95,298) (719) 5,586,237 Business -type activities capital assets - net $5,742,254 ($95,298) ($719) $5,646,237 Additional information on the City of Oak Park Heights' capital assets can be found in Note 4. Long-term debt. At the end of the current fiscal year, the City of Oak Park Heights had total long -term debt outstanding of $1,460,000, a decrease of $400,000 from 2003. Additional long -term debt in the amount of $182,000 for compensated absences was also outstanding at the end of 2004. City of Oak Park Heights' Outstanding Debt General Obligation Improvement Bonds and Compensated Absences: Governmental Business -Type Activities Activities 2004 2004 Total General Obligation Bonds $1,460,000 $ - $1,460,000 Compensated absences 163,934 18,433 182,367 Total $1,623,934 $18,433 $1,642,367 21 Management's Discussion and Analysis State statutes limit the amount of general obligation debt a Minnesota city may issue to 2% of total Estimated Market Value. The current debt limitation for the City of Oak Park Heights is $8,957,000. Of the City's outstanding debt, none is counted within the statutory limitation. Additional information on the City of Oak Park Heights' long -term debt can be found in Note 5. Requests for information. This financial report is designed to provide a general overview of the City of Oak Park Heights' finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, 14168 Oak Park Boulevard, Oak Park Heights, Minnesota 55082 -2007. 22 BASIC FINANCIAL STATEMENTS 23 CITY OF OAK PARK HEIGHTS, MINNESOTA STATEMENT OF NET ASSETS Statement 1 December 31, 2004 Primary Government Governmental Business -Type Assets: Activities Activities Total Cash and investments $7,816,131 $699,416 $8,515,547 Accrued interest receivable 102,098 9,671 111,769 Accounts receivable - net 33,887 183,692 217,579 Due from other governmental units 41,153 - 41,153 Due from developers 6,958 - 6,958 Prepaid items - 24,383 24,383 Taxes receivable: Delinquent 41,632 - 41,632 Due from County 16,640 - 16,640 Special assessments receivable 910,579 - 910,579 Capital assets (net of accumulated depreciation): Land 1,615,115 60,000 1,675,115 Building and structures 743,496 857,570 1,601,066 Other improvements 440,252 - 440,252 Machinery and equipment 181,105 117,022 298,127 Furniture and fixtures 52,580 - 52,580 Infrastructure 6,935,536 4,611,645 11,547,181 Construction in progress 1,556,631 - 1,556,631 Total assets 20,493,793 6,563,399 27,057,192 Liabilities: Accounts payable 89,894 27,531 117,425 Salaries payable 1,136 2,026 3,162 Contracts payable 182,284 - 182,284 Due to other governmental units 1,772 34,345 36,117 Due to developers 11,347 - 11,347 Accrued interest payable 4,726 - 4,726 Compensated absences payable: Due within one year 17,827 2,004 19,831 Due in more than one year 146,107 16,429 162,536 Bonds payable: Due within one year 395,000 - 395,000 Due in more than one year 1,065,000 - 1,065,000 Total liabilities 1,915,093 82,335 1,997,428 Net assets: Invested in capital assets, net of related debt 10,059,989 5,646,237 15,706,226 Restricted for: Debt service 1,192,681 - 1,192,681 Unrestricted 7,326,030 834,827 8,160,857 Total net assets $18,578,700 $6,481,064 $25,059,764 The accompanying notes are an integral part of these financial statements. 24 CITY OF OAK PARK HEIGHTS, MINNESOTA STATEMENT OF ACTIVI'T'IES Statement 2 For The Year Ended December 31, 2004 Net (Expense) Revenue and Program Revenues Changes in Net Assets Operating Capital Primary Government Charges For Grants and Grants and Governmental Business -Type Functions /Programs Expenses Services Contributions Contributions Activities Activities Total Primary government: Government activities: General government $832,609 $124,073 $250 $ - ($708,286) $ ($708,286) Public safety 1,155,243 480,163 67,377 (607,703) (607,703) Public works 602,111 344,397 731 212,635 (44,348) (44,348) Parks and recreation 123,737 - - - (123,737) - (123,737) Interest on long -term debt 67,365 - - - (67,365) (67,365) Total government activities 2,781,065 948,633 68,358 212,635 (1,551,439) 0 (1,551,439) Business -type activities: Water 323,527 388,198 - 32,843 97,514 97,514 Sanitary sewer 517,595 577,253 25,863 85,521 85,521 Sanitation 167,258 96,909 - (70,349) (70,349) Storm sewer 41,082 70,878 - - - 29,796 29,796 Total business -type activities 1,049,462 1,133,238 0 58,706 0 142,482 142,482 Total primary government $3,830,527 $2,081,871 $68,358 $271,341 (1,551,439) 142,482 (1,408,957) General revenues: General property taxes 1,979,288 - 1,979,288 Grants and contributions not restricted to specific programs 3,060 - 3,060 Unrestricted investment earnings 199,737 19,148 218,885 Other 29,125 - 29,125 Transfers 90,423 (90,423) - Total general revenues and transfers 2,301,633 (71,275) 2,230,358 Change in net assets 750,194 71,207 821,401 Net assets - beginning 17,828,506 6,409,857 24,238,363 Net assets - ending $18,578,700 $6,481,064 $25,059,764 The accompanying notes are an integral part of these financial statements. 25 CITY OF OAK PARK HEIGHTS, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2004 G.O. Improvement Bonds of 1998 Debt Service Assets General Fund Cash and investments $1,798,853 $77,560 Accrued interest receivable 19,614 1,554 Accounts receivable 30,445 - Due from other governmental units 41,153 - Due from developers _ _ Taxes receivable: Delinquent 40,359 - Due from County 16,155 - Special assessments receivable 93 744,294 Total assets $1,946,672 $823,408 Liabilities and Fund Balances Liabilities: Accounts payable $55,795 $ - Salaries payable 1,136 - Contracts payable - _ Due to other governmental units 1,772 - Due to developers - _ Deferred revenue 40,361 710,264 Total liabilities 99,064 710,264 Fund balance: Reserved for debt service - 113,144 Unreserved: Designated reported in General Fund 1,699,961 - Designated reported in Special Revenue Funds - - Designated reported in Capital Project Funds - Undesignated reported in General Fund 147,647 - Total fund balance 1,847,608 113,144 Total liabilities and fiend balance $1,946,672 $823,408 Fund balance reported above Amounts reported for 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 in the funds Other long -term assets are not available to pay for current- period expenditures and, therefore, are deferred in the finds. Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds: Bonds payable Compensated absences payable Accrued interest payable Net assets of governmental activities The accompanying notes are an integral part of these financial statements. 26 Statement 3 „aa, w; a, i,,;;a,ma;wuw;nus +, +mon uu;u,uuvw uuuuw;awum„ ao;w,uiuu ;.; uwvuwwcuunw wa „aawuww;wrwu wuuau a ;,;,wu,;u;uw;a ua awwruur w,u , ;nswa.ua uwmu.a vawue wmaneuum.wru;ww;w;.dww;ua wu;,n;;am uow uw;wu imauawua urwwai wwu: ,au,i, Renewal McKean AAE - Storm and Square Sewer Replacement Capital Connection Other Total Capital Project Project Capital Project Governmental Governmental Fund Fund Fund Funds Funds $2,376,418 $70,000 $934,591 $2,558,709 $7,816,131 31,158 - 13,260 36,512 102,098 - - - 3,442 33,887 - - - - 41,153 6,958 6,958 - - - 1,273 41,632 - - - 485 16,640 - - 37,973 128,219 910,579 $2,407,576 $70,000 $985,824 $2,735,598 $8,969,078 $ - $6,840 $22,829 $4,430 $89,894 - - - - 1,136 51,813 59,732 70,739 182,284 - - - 1 ,772 11,347 - - 11,347 - 37,973 128,844 917,442 0 70,000 120,534 204,013 1,203,875 - - - 341,550 454,694 - 1,699,961 - - - 81,167 81,167 2,407,576 - 865,290 2,108,868 5,381,734 - - - - 147,647 2,407,576 0 865,290 2,531,585 7,765,203 $2,407,576 $70,000 $985,824 $2,735,598 $8,969,078 $7,765,203 11,524,715 917,442 (1,460,000) (163,934) (4,726) $18,578,700 The accompanying notes are an integral part of these financial statements. 27 CITY OF OAK PARK HEIGHTS, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31, 2004 G.O. Improvement Bonds of 1998 Debt Service General Fund Revenues: General property taxes $1,910,848 $ - Special assessments - 115,211 Intergovernmental 70,362 - Licenses and permits 304,594 - Chargesforservices 150,126 - Fines and forfeits 78,274 - Earnings on investments 39,188 3,078 Direct charges to developers - - Refunds and reimbursements 88,860 - Other 1,758 - Total revenues 2,644,010 118,289 Expenditures: Current: General government 793,403 - Public safety 1,109,809 - Public works 170,443 - Parks and recreation 88,180 - Capital outlay 15,878 - Debt service: Principal - 125,000 Interest - 52,687 Construction costs - - Total expenditures 2,177,713 177,687 Revenues over (under) expenditures 466,297 (59,398) Other financing sources (uses): Transfers from other funds - 55,000 Transfers to other funds (313,300) - Total other financing sources (uses) (313,300) 55,000 Net increase (decrease) in fund balance 152,997 (4,398) Fund balance - January 1 1,694,611 117,542 Fund balance - December 31 $1,847,608 $113,144 The accompanying notes are an integral part of these financial statements. 28 Statement 4 awouuu. wmuu mer urrar..oau w,,iummuuewa✓'awuuw imnu. wi.wawruwwau,uma ow wurw,uwu,auawuuwuuauuumi uu,L UnueamvuwwuuermW UU, auewww. uwVwwuduvuuwuuuumiwaurmwuamuew awuuwwwe¢.muwuwru.wuwruua,a wusaaswwuamuuwauawmruawuu uuuuu. uwu w,a, wu, urasiue,W.,uuswmwuowu wa a. ,u „ms Renewal McKean AAE - Storm and Square Sewer Replacement Capital Connection Other Intra Total Capital Project Project Capital Project Governmental Activity Governmental Fund Fund Fund Funds Eliminations Funds - $58,359 $ - $1,969,207 - 18,987 171,560 - 305,758 - - - 70,362 - - - 304,594 - - - 150,126 - - - 78,274 61,689 - 26,253 69,529 - 199,737 - 357,503 - 16,738 - 374,241 - - 21,098 - 109,958 - - - 18,569 - 20,327 61,689 357,503 45,240 355,853 0 3,582,584 - - - 468 - 793,871 - - 9,724 - 1,119,533 - - 126,554 - 296,997 - - 88,180 - 34,226 - 50,104 275,000 - 400,000 - - - 15,647 - 68,334 - 357,503 92,581 172,134 - 622,218 0 357,503 92,581 633,753 0 3,439,237 61,689 0 (47,341) (277,900) 0 143,347 154,023 - - 304,700 (334,800) 178,923 - - (17,600) (92,400) 334,800 (88,500) 154,023 0 (17,600) 212,300 0 90,423 215,712 0 (64,941) (65,600) 0 233,770 2,191,864 - 930,231 2,597,185 - 7,531,433 $2,407,576 $0 $865,290 $2,531,585 $0 $7,765,203 The accompanying notes are an integral part of these financial statements. 29 CITY OF OAK PARK HEIGHTS, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, Statement 5 EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS For The Year Ended December 31, 2004 WIiYY dI•WYYII'1L1 L8mWVYV., ,iuWd WLWI WJYYWY' Y1WLIdYW .64Y4WWdlbidvlJ'4YWI.WldW411 PlJrilmJ.YtluJYdloLbWIYIW WiY6LYYW WWLL 61 WW1 iWtl4WUWIJUJ16YY1l4 YJW4•IWYIdWII dLWsYWYi4d WYLYYWY'l41LWl iLYdtlb W.WattlWW:iWVdYdIWWd lJ.tlfLVL11Wl iLWUW',WLdlWWVU1WWL4WYWWtlWWV llY.W tlWYd WJdY4WW11WWY 4YWWYW1WtlY4W11LWl,IIW wJ'.IWJ1114L Ul sll o uullLL Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds (Statement 4) $233,770 Governmental fiords report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Depreciation (410,265) Capital outlay 672,322 Capital contribution (58,706) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the fiends: Change in delinquent taxes 10,081 Change in deferred and delinquent special assessments (93,123) The issuance of long -term debt (e.g., bonds, leases) provides current financial resources to governmental fiords, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. The amount of this difference is: Principal payments on bonds payable 400,000 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Expenses reported in the statement of activities include the effects of the changes in these expense accruals as follows: Change in compensated absences payable (4,854) Change in accrued interest payable 969 Change in net assets of governmental activities (Statement 2) $750,194 The accompanying notes are an integral part of these financial statements. 30 CITY OF OAK PARK HEIGHTS, MINNESOTA STATEMENT OF NET ASSETS Statement 6 PROPRIETARY FUND December 31, 2004 Business -Type Activities Enterprise Fund Assets: Utility Fund Current assets: Cash and cash equivalents $699,416 Accrued interest receivable 9,671 Accounts receivable: Customers 150,598 Certified to County 33,059 Other 35 Prepaid items 24,383 Total current assets 917,162 Noncurrent assets: Capital assets: Land 60,000 Buildings and structures 1,320,334 Machinery and equipment 213,959 Infrastructure 6,513,595 Total capital assets 8,107,888 Less: Allowance for depreciation (2,461,651) Net capital assets 5,646,237 Total noncurrent assets 5,646,237 Total assets 6,563,399 Liabilities: Current liabilities: Accounts payable $27,531 Salaries payable 2,026 Due to other governments 34,345 Compensated absences payable - current portion 2,004 Total current liabilities 65,906 Noncurrent liabilities: Compensated absences payable 16,429 Total liabilities 82,335 Net assets: Invested in capital assets, net of related debt 5,646,237 Unrestricted 834,827 Total net assets $6,481,064 The accompanying notes are an integral part of these financial statements. 31 CITY OF OAK PARK HEIGHTS, MINNESOTA STATEMENT OF REVENUES, EXPENSES AND Statement 7 CHANGES IN FUND NET ASSETS PROPRIETARY FUND For The Year Ended December 31, 2004 Business -Type Activities Enterprise Fund Utility Fund Operating revenue: Customer billings $1,089,789 Penalties 12,690 Plumbing permits 6,195 Meter sales 14,367 Charges for services 10,197 Total operating revenue 1,133,238 Operating expenses: Personal services 230,122 Contractual services 278,382 Recycling award 595 MCES charges 267,705 Materials and supplies 12,082 Administrative and personnel charges 90,860 Depreciation 168,996 Total operating expenses 1,048,742 Operating income 84,496 Nonoperating revenue (expense): Earnings on investments 19,148 Doss on disposal of fixed assets (720) Total nonoperating revenue (expense) 18,428 Income before contributions and transfers 102,924 Capital contributions 58,706 Transfers: Transfers from other fiords 88,500 Transfers to other funds (178,923) Total transfers and capital contributions (90,423) Change in net assets 71,207 Net assets - January 1 6,409,857 Net assets - December 31 $6,481,064 The accompanying notes are an integral part of these financial statements. 32 CITY OF OAK PARK HEIGHTS, MINNESOTA STATEMENT OF CASH FLOWS Statement 8 PROPRIETARY FUND For The Year Ended December 31, 2004 Business -Type Activities Enterprise Fund Utility Fund Cash flows from operating activities: Receipts from customers and users $1,107,203 Payment to suppliers (522,162) Payment to employees (337,443) Miscellaneous revenue 24,564 Net cash flows from operating activities 272,162 Cash flows from noncapital financing activities: Transfer to other funds (178,923) Transfer from other finds 88,500 Net cash flows from noncapital financing activities (90,423) Cash flows from capital and related financing activities: Acquisition of capital assets (14,993) Cash flows from investing activities: Investment income 9,477 Net increase in cash and cash equivalents 176,223 Cash and cash equivalents - January 1 523,193 Cash and cash equivalents - December 31 $699,416 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income $84,496 Adjustments to reconcile operating income to net cash flows from operating activities: Depreciation 168,996 Change in assets and liabilities: Decrease (increase) in receivables (1,471) Decrease (increase) in prepaid expenses (2,044) Increase (decrease) in payables 22,185 Total adjustments 187,666 Net cash provided by operating activities $272,162 Noncash investing, capital and financing activities: Contribution of capital asset $58,706 The accompanying notes are an integral part of these financial statements. 33 CITY OF OAK PARK HEIGHTS, MINNESOTA STATEMENT OF FIDUCIARY NET ASSETS Statement 9 AGENCY FUNDS December 31, 2004 2004 Assets: Cash and investments $52,752 Due from developers 9,237 Total assets 61,989 Liabilities: Escrow deposits payable 7,000 Accounts payable 7,535 Due to developers 47,454 Total liabilities 61,989 Net assets: Unrestricted $0 The accompanying notes are an integral part of these financial statements. 34 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Oak Park Heights operates under the State of Minnesota Statutory Plan A form of government. The governing body consists of a five member City council elected by voters of the City. The financial statements of the City of Oak Park Heights have been prepared in conformity with generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. FINANCIAL REPORTING ENTITY As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Oak Park Heights (the primary government) and its component units, entities which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations and so data from these units are combined with data of the primary goverrnnent. BLENDED COMPONENT UNITS The HRA of the City of Oak Park Heights is a separate legal entity which is authorized to expend monies generated by the City's tax increment district. The City council also serve as HRA board members. Separate financial statements are not prepared for the HRA. The EDA of the City of Oak Park Heights is a separate legal entity. The EDA board members are substantially the same as the City council in that four of the five board members are council members and the fifth board member is the City finance director. Separate financial statements are not prepared by the EDA. 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 primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or business -type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business -type activity. 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 business -type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business type activity. Taxes and other items not included among program revenues are reported instead as general revenues. 35 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental finds and major individual enterprise fiords are reported as separate columns in the find financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of 'accounting, as are the Proprietary Fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The City's only fiduciary funds are agency finds. Agency finds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Governmental fund financial statements are reported using the current financial resources nnasuretnent 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 government considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services 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 government. The City reports the following major governmental funds: The general fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The G. 0. Improvement Bonds of 1998 debt service find - $ 1,990,000 bond issue to fund water, sewer, storm sewer improvements in the Kern Center and construction of Phase III of 58` Street. Bonds are to be paid over 15 years. 36 CITY OF OAK PARI{ HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 The Renewal and Replacement capital project jimd is used to account assets depreciated from the utility fiord, water and sanitary sewer departments. Funds are used to renew or replace water and sanitary sewer system assets. The McKean Square capital project fund — for construction of 2 ° `' Phase of Valley Senior Service Alliance development of an elderly retirement community, town homes and apartments. Expenditures are paid by developer. No City funds are expended. The AAE — Storm Sewer Connection capital project frond — was established in 1990 to collect connection charges for fixture storm sewer and pond improvements for the area annexed to the City west of Oakgreen Avenue. The government reports the following major proprietary fund: The utility fiord accounts for assets, liabilities, revenues, and expenditures for water, sanitary sewer, storm sewer, and sanitation operations. Additionally, the government reports the following fiord type: Agency Funds account for the assets of various developers held by the City as an agent. Private - sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary -find financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. 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 government has elected not to follow subsequent private- sector guidance. As a general rule the effect of interfind activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary finds 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 find's principal ongoing operations. The principal operating revenues of the 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. 37 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 uldlrW.,WWWr��uWd,dWU w� W; eW W uW� � ��� W�rWW,r, , WW�Wdy�,WW�W W4esW � a,saW � W,�ll���WWW���W W�Wd � ��� ��� eWWWi61494& When both restricted and unrestricted resources are available for an allowable use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. D. BUDGETS Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the General Fund, but not for Special Revenue Funds. Budgeted expenditure appropriations lapse at year end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is at present not considered necessary to assure effective budgetary control or to facilitate effective cash management. E. LEGAL COMPLIANCE - BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is legally enacted through passage of a resolution on a departmental basis and can be expended by each department based upon detailed budget estimates for individual expenditure accounts. 4. The department heads are authorized to transfer appropriations under $500 within any department budget. Additional interdepartmental or interfund appropriations and deletions are or may be authorized by the City Council with fund (contingency) reserves or additional revenues. 5. Formal budgetary integration is employed as a management control device during the year for the General Fund. 6. Legal debt obligation indentures determine the appropriation level and debt service tax levies for the Debt Service Funds. Supplementary budgets are adopted for the Proprietary Funds to determine and calculate user charges. These debt service and budget amounts represent general obligation bond indenture provisions and net income for operation and capital maintenance and are not reflected in the financial statements. 38 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 7. A capital improvement program is reviewed annually by the City Council for the Capital Project Funds. However, appropriations for major projects are not adopted until the actual bid award of the improvement. The appropriations are not reflected in the financial statements. 8. Expenditures may not legally exceed budgeted appropriations at the total fund level. Monitoring of budgets is maintained at the expenditure category level (i.e., personal services; material and supplies; contractual services; capital outlay) within each department. All amounts over budget have been approved by the City council through the disbursement approval process. 9. The City Council may authorize transfer of budgeted amounts between City funds. F. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Earnings from investments are allocated to individual finds on the basis of the find's equity in the cash and investment pool. Investments are stated at fair value, based upon quoted market prices. Investment income is accrued at the balance sheet date. For purposes of the statement of cash flows the Enterprise Fund considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the Enterprise Fund have original maturities of 90 days or less. Therefore the entire balance in the fund is considered cash equivalents. G. RECEIVABLES AND PAYABLES Property taxes and special assessments (see notes IH and I) have been reported net of estimated uncollectible accounts. Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. H. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy /assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 7 and December 2 of the same year. Delinquent collections for November and December are received the 39 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 WVYIdWdYd' uitdW11ui4ilYVIIIWI1WIppuIYWYIWI11aYtlIW111hIY4' 1YIIdYYItluYYW UU11i18tl ull Ytll'JIYIIJUI, Yidll dl JlliY' dY1tlIW 'JI'W4iW1'IYli01'Y.WWWYJiY JdYi' J! Y' WL' IbW' WIWWdJJYIOWeY11YIYWI111iWWYlYIdtlWWWYUeYWY41 'uVYdYW1W �- � " WY641YIWYYdWWYtlWYYW dtdY.JtlJWwiLYIY,LII,dWYItWtlWWIli6 following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. Government -Wide Financial Statements The City recognizes property tax revenue in the period for which the taxes were levied. Uncollectible property taxes are not material and have not been reported. Governmental Fund Financial Statements The City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City the following January) and taxes and credits not received at the year end are classified as delinquent and due from County taxes receivable. The portion of delinquent taxes not collected by the City in January are fully offset by deferred revenue because they are not available to finance current expenditures. I, SPECIAL. ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest or prepayment penalties. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until frill payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale. Proceeds of sales from tax forfeit properties are allocated first to the County's costs of administering all tax forfeit properties. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. Government -Wide Financial Statements The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. Governmental Fund Financial Statements Revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. All remaining delinquent and deferred assessments receivable in governmental funds are offset by deferred revenues. 40 CI'T'Y OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 J. INVENTORIES The original cost of materials and supplies has been recorded as expenditures at the time of purchase. The City does not maintain material amounts of inventories of goods and supplies. K. PREPAID ITEMS Certain payments to vendors reflect costs applicable to fixture accounting periods and are recorded as prepaid items in both government -wide and fiord financial statements. L. CAPITAL, ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated f ir market value at the date of donation. In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the government chose to include all such items regardless of their acquisition date. These assets are reported at historical cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 2004, no interest was capitalized in connection with construction in progress. Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight line method over the following estimated useful lives: Buildings and structures 50 years Machinery and equipment 3 -20 years Distribution and collection systems 50 years Streets 25 years Storm sewers 50 years Pathways 20 years 41 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 M. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay and accumulated sick leave benefits that is vested as accrued when incurred in the government -wide and proprietary find financial statements. A liability for these amounts is reported in governmental finds only if they have matured, for example, as a result of employee resignations and retirements. In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Coinpensuted Absences, no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. N. LONG -TERM OBLIGATIONS In the government -wide financial statements and proprietary find 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 immaterial and are expensed in the year of bond issuance. In the find financial statements, governmental find types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. O. FUND EQUITY In the find financial statements, governmental funds report reservations of fund balance for amounts not appropriable for expenditure or legally segregated for a specific fixture use. Designated fund balances represent tentative plans for fixture use of financial resources. P. INTERFUND TRANSACTIONS Interfind services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures /expenses initially made from it that are properly applicable to another find, are recorded as expenditures /expenses in the reimbursing find and as reductions of expenditures /expenses in the fund that is reimbursed. Interfund loans are reported as an interfund loan receivable or payable which offsets the movement of cash between finds. All other interf nd transactions are reported as transfers. 42 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 u�uvfew smuewewmuww6wuwu.wre w�m uw�wruwmi 'Agoil"Wid'4un: wmuamm:�mu •: „ . iouuwuuuuuuuwwanuuuwm��aumwisyuuuuwuuwuuwu4n�wwum ,wuuu • uw�w�uww. mauuuutuuuwusuumiuum +nu:�omwwuw�,�uodou:uw Q. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, 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% of the deposits not covered by insurance or bonds. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a) United States government treasury bills, treasury notes, treasury bonds; b) Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the government entity; c) General obligation securities of any state or local government with taxing powers which is rated "A" or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; d) Unrated general obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity: e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation; and I) Time deposits that are fully insured by any Federal agency. 43 CITY OF OAK PARI{ HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Balances at December 31, 2004 are as follows: Bank Carrying Balances Amount 1) Insured or collateralized by securities held by the City or its agent in the City's name. $7,445,013 $7,323,496 2) Collateralized with securities held by the pledging institution trust department in the City's name. - 3) Uncollateralized or collateralized with securities not in the City's name. - - Totals $7,445,013 $7,323,496 B. INVESTMENTS Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of congress, excluding mortgage - backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax- exempt securities, or repurchase or reverse repurchase agreements. c) Obligations of the State of Minnesota or any of its municipalities as follows: 1) any security which is a general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; 2) any security which is a revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; and 3) a general obligation of the Minnesota housing finance agency which is a moral obligation of the State of Minnesota and is rated "A" or better by a national bond rating agency. d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase 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; certain Minnesota securities broker - dealers; or, a bank qualified as a depositor. 44 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 g) General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.6 1, subdivision 6. Balances at December 31, 2004 were: Carrying Custodial Credit Risk category Amount Securities Type 1 2 3 (at Fair Value) U.S. Government and Agency Securities $1,038,939 $ - $ - $1,038,939 Investments not subject to credit risk categorization: 4M Fund and money market 205,764 Total investment 1,244,703 Deposits 7,323,496 Total deposits and investments 8,568,199 Petty cash fund 100 Total $8,568,299 The City's investments are categorized above to give an indication of the level of custodial credit risk assumed at year end. Category 1 includes investments that are insured or registered or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured or unregistered investments for which the securities are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty or by its trust department or agent but not in the City's name. Following is a reconciliation of the City's deposit and investment balances as of December 31, 2004: Government -wide statement of net assets $8,515,547 Fiduciary funds statement of net assets 52,752 Total $8,568,299 45 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 3 RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2004 are as follows: Major Funds G.O Improvement AAE - Storm Bonds of Sewer Connection Nonmajor General 1998 Fund Funds Total Special assessments receivable $ - $637,046 $18,986 $57,436 $713,468 Delinquent property taxes 16,530 - - 521 17,051 Total $16,530 $637,046 $18,986 $57,957 $730,519 Governmental fiords report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental fiords 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: Unavailable Unearned Delinquent property taxes receivable (General Fund) $40,361 $ - Delinquent property taxes receivable (Nonmajor Funds) 1,273 - Special assessments receivable (Nonmajor Funds) 127,571 - Special assessments receivable (G.O. Improvement Bonds of 1998 Fund) 710,264 Special assessments receivable (AAE - Storm Sewer Connection Fund) 37,973 - Total deferred /unearned revenue for governmental funds $917,442 $0 46 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 4 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2004 as previously reported was as follows: Beginning Beginning Balance, Ending Primary Government Balance Restated as Restated Increases Decreases Balance Governmental activities: Capital assets, not being depreciated: Land $1,183,690 $431,425 $1,615,115 $ - $ - $1,615,115 Construction in proencss - 1,089,842 1,089,842 622,218 (155,429) 1,556,631 Total capital assets, not being depreciated 1,183,690 1,521,267 2,704,957 622,218 (155,429) 3,171,746 Capital assets, being depreciated: Buildings and structures 1,150,544 - 1,150,544 - (32,398) 1,118,146 Otherunprovements 587,601 - 587,601 - (26,638) 560,963 Machmey and equipment 450,396 450,396 44,566 (88,902) 406,060 Furniture and fixtures 213,296 - 213,296 5,538 (78,913) 139,921 Infrastructure - 10,047,511 10,047,511 96,723 - 10,144,234 Total capital assets, being depreciated 2,401,837 10,047,511 12,449,348 146,827 (226,851) 12,369,324 Less accumulated depreciation for Buildings and structures - 381,644 381,644 25,404 (32,398) 374,650 Other improvements 141,923 141,923 5,426 (26,638) 120,711 Machinery and equipment 264,611 264,611 49,246 (88,902) 224,955 Furniture and fixtures 154,971 154,971 11,283 (78,913) 87,341 Infrastructure - 2,889,792 2,889,792 318,906 3,208,698 Total accumulated depreciation 0 3,832,941 3,832,941 410,265 (226,851) 4,016,355 Total capital assets being depreciated - net 2,401,837 6,214,570 8,616,407 (263,438) 8,352,969 Governmental activities capital assets - net $3,585,527 $7,735,837 $11,321,364 $358,780 ($155,429) $11,524,715 n Restated for previously unreported infrastructure, construction in progress and accumulated depreciation as of December 31, 2003. 47 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Beginning Ending Balance Increases Decreases Balance Business -type activities: Capital assets, not being depreciated: Land $60,000 $ $ $60,000 Total capital assets, not being depreciated 60,000 0 0 60,000 Capital assets, being depreciated: Buildings and structures 1,320,334 1,320,334 Machinery and equipment 205,039 14,992 (6,072) 213,959 Distribution and collection systems 6,454,890 58,705 6,513,595 Total capital assets, being depreciated 7,980,263 73,697 (6,072) 8,047,888 Less accumulated depreciation: Buildings and structures 432,906 29,858 462,764 Machinery and equipment 92,259 10,031 (5,353) 96,937 Distribution and collection systems 1,772,844 129,106 1,901,950 Less accumulated depreciation 2,298,009 168,995 (5,353) 2,461,651 Total capital assets being depreciated - net 5,682,254 (95,298) (719) 5,586,237 Business -type activities capital assets - net $5,742,254 ($95,298) ($719) $5,646,237 Depreciation expense was charged to functions /programs of the primary government as follows: Governmental activities: General government $33,051 Public safety 32,969 Public works 306,285 Recreation 37,960 Total depreciation expense - governmental activities $410,265 Business -type activities: Water $94,414 Sewer 74,581 Total depreciation expense - business -type activities $168,995 48 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 5 LONG -TERM DEBT The City issues general obligation bonds to provide finds for the acquisition and construction of major capital facilities. The reporting entity's long -term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business -type activities. As of December 31, 2004, the long -term debt of the financial reporting entity consisted of the following: Final Authorized Issue Maturity Interest And Outstanding Date Date Rate Issued 12/31/04 Governmental Activities: General obligation bonds: G.O. Refunding Bonds of 2002 11/01/02 12/01/06 2.25 -2.65 $510,000 $225,000 Improvement bonds: G.O. Improvement Bonds of 1998 10/01/98 12/01/13 4.00 -4.50 1,990,000 1,125,000 G.O. Refunding Bonds of 2001 11/01/01 12/01/05 3.25 490,000 1 10,000 Compensated absences payable 163,934 Total governmental activities 1,623,934 Business -Type Activities: Compensated absences payable 18,433 Total City indebtedness $1,642,367 Annual debt service requirements to maturity for long -term debt are as follows: Year General Obligation Bonds G.O. Improvement Bonds Ending Governmental Activities Governmental Activities December 31, Principal Interest Principal Interest 2005 $160,000 $5,323 $235,000 $51,387 2006 65,000 1,722 125,000 42,813 2007 - - 125,000 37,687 2008 - - 125,000 32,500 2009 - - 125,000 27,250 2010 - - 125,000 21,938 2011 - - 125,000 16,562 2012 - - 125,000 11,125 2013 - - 125,000 5,625 Total $225,000 $7,045 $1,235,000 $246,887 49 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 It is not practicable to determine the specific year for payment of accrued compensated absences. Change in LonR -Term Liabilities Long -term liability activity for the year ended December 31, 2004, was as follows: Balance Balance Due Within 01/01/04 Additions Reductions 12/31/04 One Year Governmental Activities: Bonded debt: General obligation $375,000 $ $150,000 $225,000 $160,000 Improvement bonds 1,485,000 250,000 1,235,000 235,000 Compensated absences 159,080 62,762 57,908 163,934 17,827 Total governmental activities $2,019,080 $62,762 $457,908 $1,623,934 $412,827 Business -Type Activities: Compensated absences $35,544 $9,099 $26,210 $18,433 $2,004 Total business -type activities $35,544 $9,099 $26,210 $18,433 $2,004 For the governmental activities, compensated absences are generally liquidated by the general fund. All long -term bonded indebtedness outstanding at December 31, 2004 is backed by the full faith and credit of the City, including improvement bond issues. Delinquent assessments receivable at December 31, 2004 were $2,745. 50 CITY OF OAK PARK HEIGI -ITS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 6 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City's legal debt margin for 2004 is computed as follows: December 31, 2004 Market value $447,871,200 Debt limit percentage 2.00% Debt limit 8,957,424 Amount of debt applicable to debt limit: Total bonded debt 1,460,000 Less: Non applicable debt: Revenue bonds (225,000) Improvement bonds (1,235,000) Total amount of debt applicable to debt limit 0 Legal debt margin $8,957,424 Note 7 PENSION PLANS A. PERA DEFINED BENEFIT PLAN PLAN DESCRIPTION All frill -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 (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost - sharing, multiple- employer retirement plans. These plans are established and administered in accordance with Minnesota Statute, 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. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. 51 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENT'S December 31, 2004 �WWWIW' YYIWU' WVtWJYYY' uY; kWUIYYWhWY; LItlW4YYIIW41YtlilYbiWuWYWiWIWOLLWIIw' 6Y WJWJIYI; LIWtliVlll; ilidlill lidd' utlY411Wll' ViWWIYWWYWIIiru' IYiY4Y1' tlWWWWWJUJILI' WIW' JLWYWdIYul4uLiiWtlll; dd' , IWIWI; iWW11WWU1W4WdIWLdWWIWYOWYWJiWWdWIWWWIIYYVU1WWIhIWW' 1MIWdWIWlidl4111 'W'IYYWY "' " " " " " " "'" ""' i61WYY11WI ;lYIni,YIVYWJYWUhiWIWi'tlAl PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. 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 may be obtained by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103 -2088 or by calling (651)296 -7460 or 1- 800 - 652 -9026. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 5.10 %, respectively, of their annual covered salary. PEPFF members are required to contribute 6.20% of their annual covered salary. The City is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members, 5.53% for Coordinated Plan PERF members, and 9.30% for PEPFF members. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2004, 2003 and 2002 were $31,632, $31,701 and $38,971, respectively. The City's contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2004, 2003 and 2002 were $58,277, $55,917 and $54,554, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. B. DEFINED CONTRIBUTION PLAN The City administrator does not participate in PERA, but is covered by a defined contribution plan administered by the ICMA Retirement Corporation. The Plan is a tax qualified plan under Section 457 of the Internal Revenue Code and all contributions by or on behalf of the employee are tax deferred until time of withdrawal. The City is required to contribute 10% of the annual base salary. Plan provisions and contribution requirements are established and may be amended by the City council. Employer contributions were $7,794 for the year ended December 31, 2004. 52 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note S INTERFUND TRANSFERS Transfer In Major Funds Major Business - G.O. Improvement Nonmajor Type Fund Bonds of Renewal and Governmental Utility 1998 Fund Replacement Fund Funds Fund Total Transfer out: Governmental activities: General Fund $ $ $224,800 $88,500 $313,300 AAE - Storm Sewer Connection Fund 17,600 - - 17,600 Nonmajor Governmental Funds 37,400 - 55,000 92,400 Business -type Fund: Utility Fund - 154,023 24,900 - 178,923 Total transfers $55,000 $154,023 $304,700 $88,500 $602,223 Interfurnd transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund. With the exception of Renewal and Replacement, all of the City's interfund transfers fall under that category. The transfer to Renewal and Replacement allows the City to accumulate resources to be used for improvements. All of the 2004 transfers are considered routine and consistent with previous practices. Note 9 CONTINGENCIES A. LITIGATION The City attorney has indicated there are no existing and pending lawsuits, claims and other actions in which the City is a defendant. B. FEDERAL AND STATE FUNDS The City receives financial assistance from federal and state governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the applicable fund. However, in the opinion of management, any such disallowed claims will not have a material effect on any of the financial statements of the individual fund types included herein or on the overall financial position of the City at December 31, 2004. 53 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 10 RISK MANAGEMENT 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. Workers compensation coverage is provided through a pooled self - insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not subject to a deductible. The City's workers compensation coverage is retrospectively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. Property and casualty insurance coverage is provided through a pooled self - insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claims in excess various amounts. The City retains risk for deductible portions. These deductibles are considered immaterial to the financial statements. Employee health and disability insurance is provided through commercial insurance. The City does not have a deductible or yearly maximum on this insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. 54 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 YYIJtl!IYd11WLW1,11d!,YI AAA I W1: 1I1AWYdu, I1: WL1l IW: 4' YJLWYIddIIYllLJ: uILIWWIl Yd65YWlld' da4! A' 41YY1' YLLWYWeddWYWIYWWJJYl d4Y' Yil 'WYdIYWLWYIYub'Yd:1'NW'YIIWYpI LIW'W'YWiIlu6VY4YY:'JWIWUIUOYWd IId11dWY11WIItlidl: lfliLlldi4i1Y11111WelI1VtY1 'WIduWYwuYW'J Note l l DESIGNATIONS AND RESERVATIONS OF FUND EQUITY At December 31, 2004 the City had designated and reserved portions of its various fund equities through legal restriction and City Council authorization. Major fiend equity appropriations at December 31, 2004 are shown on the various balance sheets as segregations of the fund equity. A summary of such reservations and designations is as follows: December 31, 2004 Governmental Funds: Major Funds: General Fund: Designated for cash flow $1,147,000 Designated for contingent employee benefit 133,961 Designated for general contingency 419,000 G.O. Improvement Bonds of 1998: Reserved for debt service 113,144 Renewal and Replacement Fund: Designated for capital improvements 2,407,576 AAE -Storm Sewer Connection Fund: Designated for capital improvements 636,560 Designated for committed contracts 228,730 Nonmajor Funds: Reserved for debt service 341,550 Designated for special revenue programs 81,167 Designated for capital improvements 2,108,868 Totals $7,617,556 Note 12 MAJOR TAXPAYER The City has one major taxpayer, Xcel Energy. The total tax capacity value for this taxpayer represented approximately 25% of the City's total tax capacity value for taxes payable in 2004. 55 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 uua'v�,wwww ' m�' wu, uw' uauwuaua bwn:' wuwmuuuowauwwwiwuwmuruon, uomud, wwwoowr uuuwwu, uwruwuuansuwitmmsiimww :u'aiaw�uiwwa' arm!': wuuauu, wwwi: uwwwwm: u! wauadua�uurwiasweuwwwuu�twwuumuuwu�uatuwwuuv, Note 13 CONDUIT DEBT OBLIGATIONS From time to time, the City has issued Rental Housing or Industrial Revenue Bonds to provide financial assistance to private - sector entities for the acquisition and construction of rental housing, office space or a clinic deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private - sector entity served by the bond issuance. Neither 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 financial statements. As of December 31, 2004, there were four series of Industrial Revenue Bonds outstanding. The principal amount payable at December 31, 2004 could not be determined; however, their original issue amounts totaled $34,985,000. Note 14 COMMITMENTS Construction commitments at December 31, 2004 were composed of the following: Expended Remaining Contract as of Contract Description Authorized 12/31/04 Commitment Kern Center Pond Expansion $288,462 $59,732 $228,730 McKean Square 1,124,822 1,036,251 88,571 The McKean Square contract is 100% developer reimbursed. 56 CITY OF OAK PARK HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 15 CHANGE IN ACCOUNTING PRINCIPLE In June 1999, the Governmental Accounting Standards Board (GASB) approved Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments. The City is required to implement GASB 34 no later than the year ended December 31, 2004. The most significant effects of implementing GASB 34 during 2004 are as follows: • Government -wide financial statements are prepared using frill accrual accounting for all the City's activities. • Infrastructure and construction in progress for governmental activities has been capitalized and all capital assets are depreciated on the government -wide financial statements. See Note 4 for restatement of previously reported amounts. • The basic find financial statements focus on major funds rather than find types. • A Management's Discussion and Analysis (MD &A) is included as required supplementary information. These and other changes are reflected in the accompanying financial statements (including notes to the financial statements). The City also implemented the following pronouncements during 2004, which did not have a material effect on the accompanying financial statements: • GASB Statement 37, Basic Financial Statements — and Management's Discussion and Analysis -for State and Local Governments: Omnibus — an Amendment of GASB Statements No. 21 and No. 34. • GASB Statement 38, Certain Financial Statement Note Disclosures 57 - This page intentionally left blank - 58 REQUIRED SUPPLEMENTARY INFORMATION 59 CITY OI+ OAK PARK HEIGHTS, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 1 of 4 For The Year Ended December 31, 2004 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenue: General property taxes: Current and delinquent $1,904,203 $1,904,203 $1,893,204 ($10,999) Payment in lieu of taxes 15,000 15,000 17,209 2,209 Other taxes - - 435 435 Total general property taxes 1,919,203 1,919,203 1,910,848 _ (8,355) Intergovernmental: Federal: Safe and sober 8,000 8,000 8,402 402 Underage compliance checks 1,500 1,500 - (1,500) State: Police aid 56,000 56,000 55,912 (88) Police training aid - - 2,507 2,507 PERA rate increase aid 2,040 2,040 3,060 1,020 County: Recycling grant 13,538 13,538 - (13,538) Gravel tax allocation 700 700 - (700) Met council planning grant - - 481 481 Total intergovernmental 81,778 81,778 70,362 (11,416) Licenses and permits 157,315 181,815 304,594 122,779 Charges for services: General government 15,000 15,000 8,929 (6,071) Inspections - City of Bayport 41,000 41,000 50,337 9,337 Administrative - Enterprise Fund 90,860 90,860 90,860 - Total charges for services 146,860 146,860 150,126 3,266 Fines and forfeits 69,000 69,000 78,274 9,274 Earnings on investments 28,000 28,000 39,188 11,188 Refunds and reimbursements 60,900 60,900 88,860 27,960 Donations and contributions - - 250 250 Sale of property - - 1,508 1,508 Total revenue 2,463,056 2,487,556 2,644,010 156,454 Expenditures: General government: Mayor and council: Current: Personal services 38,990 38,990 38,891 99 Materials and supplies 1,000 1,000 499 501 Contractual services 24,000 24,000 14,981 9,019 Total mayor and council 63,990 63,990 54,371 9,619 60 CITY OF OAK PARK HEIGHTS, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 2 of 4 For The Year Ended December 31, 2004 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures: (continued) General government: (continued) City administration: Current: Personal services $161,860 $161,860 $162,713 ($853) Materials and supplies 3,950 3,950 2,471 1,479 Contractual services 11,900 11,900 7,684 4,216 Total City administration 177,710 177,710 172,868 4,842 Legal: Current: Personal services 30,000 30,000 17,823 12,177 General management and building: Current: Materials and supplies 7,600 7,600 5,775 1,825 Contractual services 55,775 55,775 56,160 (385) Total current 63,375 63,375 61,935 1,440 Capital outlay - - 15,878 (15,878) Total general management and building 63,375 63,375 77,813 (14,438) Elections: Current: Personal services 5,000 5,000 4,029 971 Materials and supplies 450 450 637 (187) Contractual services 340 340 340 - Total elections 5,790 5,790 5,006 784 Finance: Current: Personal services 154,250 154,250 153,112 1,138 Materials and supplies 2,250 2,250 1,890 360 Contractual services 3,450 3,450 2,081 1,369 Total finance 159,950 159,950 157,083 2,867 Computer system: Current: Materials and supplies 1,000 1,000 4,282 (3,282) Contractual services 19,000 19,000 5,098 13,902 Total computer system 20,000 20,000 9,380 10,620 Audit: Current: Personal services 14,500 14,500 16,498 (1,998) Insurance: Current: Contractual services 250,350 250,350 235,559 14,791 Assessing: Current: Personal services 18,700 18,700 18,126 574 61 CITY OF OAK PARK HEIGHTS, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 3 of 4 For The Year Ended December 31, 2004 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures: (continued) General government: (continued) Planning and zoning: Current: Personal services $27,000 $27,000 $22,242 $4,758 Materials and supplies 100 100 - 100 Contractual services 2,050 2,050 1,075 975 Total planning and zoning 29,150 29,150 23,317 5,833 Engineering: Current: Personal services 27,000 27,000 14,673 12,327 General contingency: Current: Contractual services 10,000 9,150 6,764 2,386 Total general government 870,515 869,665 809,281 60,384 Public safety: Police department: Current: Personal services 812,355 812,355 783,662 28,693 Materials and supplies 28,550 28,550 27,820 730 Contractual services 39,250 _ 39,250 41,389 (2,139) Total police department 880,155 880,155 852,871 27,284 Building inspections: Current: Personal services 100,460 124,960 114,896 10,064 Materials and supplies 2,800 2,800 3,446 (646) Contractual services 7,025 7,025 19,369 (12,344) Total building inspections 110,285 134,785 137,711 (2,926) Fire protection: Current: Contractual services 118,185 118,185 118,183 2 Animal control: Current: Materials and supplies 150 150 41 109 Contractual services 1,750 1,750 1,003 747 Total animal control 1,900 1,900 1,044 856 Total public safety 1,110,525 1,135,025 1,109,809 25,216 62 CITY OF OAK PARK HEIGHTS, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 4 of 4 For The Year Ended December 31, 2004 Variance with Final Budget - Budgeted Amounts Actual Positive Expenditures: (continued) Original Final Amounts (Negative) Public works: Street maintenance: Current: Personal services $22,525 $22,525 $18,345 $4,180 Materials and supplies 3,880 3,880 3,780 100 Contractual services 13,605 18,605 19,278 (673) Total street maintenance 40,010 45,010 41,403 3,607 Snow removal: Current: Materials and supplies 1,500 1,500 698 802 Contractual services 60,400 60,400 52,779 7,621 Total snow removal 61,900 61,900 53,477 8,423 Street lighting: Current: Contractual services 48,000 48,000 47,446 554 Arborist: Current: Personal services 12,600 15,000 11,746 3,254 Materials and supplies 150 150 66 84 Contractual services 155 155 155 - Total arborist 12,905 15,305 11,967 3,338 Tree removal and planting: Current: Contractual services 12,600 13,450 16,150 (2,700) Total public works 175,415 183,665 170,443 13,222 Parks and recreation: Parks, playgrounds and rinks: Current: Personal services 55,610 55,610 41,375 14,235 Materials and supplies 5,110 5,110 3,934 1,176 Contractual services 49,675 49,675 42,871 6,804 Total parks and recreation 110,395 110,395 88,180 22,215 Total expenditures 2,266,850 2,298,750 2,177,713 121,037 Revenue over expenditures 196,206 188,806 466,297 277,491 Other financing sources (uses): Transfers to Capital Project Fund (99,800) (99,800) (224,800) (125,000) Transfers to Enterprise Fund (88,500) (88,500) (88,500) - Total other financing sources (uses) (188,300) (188,300) (313,300) (125,000) Net increase in fund balance $7,906 $506 152,997 $152,491 Fund balance - January 1 1,694,611 Fund balance - December 31 $1,847,608 63 CITY OF OAK PARK HEIGHTS, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE NOTE TO RSI December 31, 2004 Note A LEGAL COMPLIANCE — BUDGETS The General Fund budget is legally adopted on a basis consistent with accounting principals generally accepted in the United States of America. The legal level of budgetary control is at the department level for the General Fund. The following is a listing of General Fund departments whose expenditures exceed budget appropriations. Expenditures Exceeding Fund and Department Budget Actual Budget Major Fund: General fund: General management and building $63,375 $77,813 $14,438 Audit 14,500 16,498 1,998 Building inspections 134,785 137,711 2,926 Tree removal and planting 13,450 16,150 2,700 64 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 65 This page intentionally left blank - 66 NONMAJOR GOVERNMENTAL. FUNDS 67 CITY OF OAK PARK HEIGHTS, MINNESOTA COMBINING BALANCE SHEET Statement 11 NONMAJOR GOVERNMENTAL FUNDS December 31, 2004 Total Nonmajor Special Debt Capital Governmental Assets Revenue Service Project Funds Cash and investments $79,976 $333,986 $2,144,747 $2,558,709 Accrued interest receivable 1,191 6,431 28,890 36,512 Accounts receivable - - 3,442 3,442 Due from developers - - 6,958 6,958 Taxes receivable: Delinquent - 1,273 - 1,273 Due from County - 485 - 485 Special assessments receivable - 27,098 101,121 128,219 Total assets $81,167 $369,273 $2,285,158 $2,735,598 Liabilities and Fund Balance Liabilities: Accounts payable $ - $ - $4,430 $4,430 Contracts payable - - 70,739 70,739 Deferred revenue - 27,723 101,121 128,844 Total liabilities 0 27,723 176,290 204,013 Fund balance: Reserved - 341,550 - 341,550 Unreserved: Designated 81,167 - 2,108,868 2,190,035 Total fund balance 81,167 341,550 2,108,868 2,531,585 Total liabilities and fund balance $81,167 $369,273 $2,285,158 $2,735,598 68 CITY OF OAK PARK HEIGHTS, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND Statement 12 CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS For The Year Ended December 31, 2004 W,u eu v,'i,WWlvd'Y WUddwlf'ilWll dlvWlloI WWI YW',dVY,: WYWI,. JalidYll ➢YILL1fnlJAl lJlWllWWlfWfy'lllWldYL dfILl4 Y "Y LLYVWIYi Wl IWlWlWllYY WvWIYWd14 LL41'¢Jl „ldiv NLWYJ' lLLIIVJWt ,111J'uW1YYliWWW'.VIWSW4 UlY'WII IY1WdW'Wil1W WLL "lyLdL YL'JJdW Wl1WVWdWU1d,4LWWJ1 "uW.L.lu3lY dl,YYIYYdWWU JWdu 111WlYdflYfl ud441lff v 11, vuJ. Total Nonmajor Special Debt Capital Governmental Revenue Service Project Funds Revenues: General property taxes $ - $58,359 $ - $58,359 Special assessments - 33,438 138,122 171,560 Earnings on investments 2,358 12,733 54,438 69,529 Direct charges to developers - - 16,738 16,738 Refunds and reimbursements 556 - 20,542 21,098 Donations and contributions - - 250 250 Other 9,999 - 8,320 18,319 Total revenues 12,913 104,530 238,410 355,853 Expenditures: Current: General govermnent 468 - - 468 Public safety 9,724 - - 9,724 Public works - - 126,554 126,554 Capital outlay 5,538 - 28,688 34,226 Debt service: Principal - 275,000 - 275,000 Interest - 15,647 - 15,647 Construction costs - - 172,134 172,134 Total expenditures 15,730 290,647 327,376 633,753 Revenues over (under) expenditures (2,817) (186,117) (88,966) (277,900) Other financing sources (uses): Transfers from other fiends - 55,000 249,700 304,700 Transfers to other fiends - - (92,400) (92,400) Total other financing sources (uses) 0 55,000 157,300 212,300 Net increase (decrease) in fund balance (2,817) (131,117) 68,334 (65,600) Fund balance - January 1 83,984 472,667 2,040,534 2,597,185 Fund balance - December 31 $81,167 $341,550 $2,108,868 $2,531,585 69 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 13 NONMAJOR SPECIAL REVENUE FUNDS December 31, 2004 Total Nonmajor Forfeiture Special and Economic Revenue Seizure Development Funds Assets Cash and investments $28,380 $51,596 $79,976 Accrued interest receivable 463 728 1,191 Total assets $28,843 $52,324 $81,167 Liabilities and Fund Balance Liabilities $ - $ - $ - Fund balance: Unreserved: Designated for special revenue programs 28,843 52,324 81,167 Total liabilities and fiend balance $28,843 $52,324 $81,167 70 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, Statement 14 EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR SPECIAL REVENUE FUNDS For The Year Ended December 31, 2004 Total Forfeiture Nonmajor and Economic Special Revenue Seizure Development Funds Revenue: Earnings on investments $917 $1,441 $2,358 Refunds and reimbursements 556 - 556 Confiscated property 9,999 - 9,999 Total revenue 11,472 1,441 12,913 Expenditures: General government: Current: Contractual services - 468 468 Public safety: Current: Materials and supplies 9,208 - 9,208 Contractual services 516 - 516 Capital outlay 5,538 - 5,538 Total expenditures 15,262 468 15,730 Revenue over (under) expenditures (3,790) 973 (2,817) Fund balance - January 1 32,633 51,351 83,984 Fund balance - December 31 $28,843 $52,324 $81,167 71 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 15 NONMAJOR DEBT SERVICE FUNDS December 31, 2004 Total G.O. G.O. Nonmajor Refunding Refunding Debt Bonds Bonds Service of 2002 of 2001 Funds Assets Cash and investments $262,232 $71,754 $333,986 Accrued interest receivable 4,786 1,645 6,431 Taxes receivable: Delinquent - 1,273 1,273 Due from County - 485 485 Special assessments: Delinquent - 311 311 Deferred - 26,139 26,139 Due from County - 648 648 Total assets $267,018 $102,255 $369,273 Liabilities and Fund Balance Liabilities: Deferred revenue $ - $27,723 $27,723 Fund balance: Reserved for debt service 267,018 74,532 341,550 Total liabilities and fund balance $267,018 $102,255 $369,273 72 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, Statement 16 EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR DEBT SERVICE FUNDS For The Year Ended December 31, 2004 iu „u,;ivae ,,, wow "ua weux u;,xw wiuw ri, u.ouim.uw uu u; ww ;wuu.uwd, umr, ww ;yww;wu;wu,uuowuu;u;nWe.mu ewuwu¢wuauwww,wowwawnis;m uvu uwwu,uu;utmwud,a,xwaWUwumux uwm wuriweninw; uuuu' eneswuuumwuwxweo ;uwwuww,au;u3uur. ;wrv;nw.uaav uusx;rlinw;,uw w; muvw�uu, a,di n,a „u ,m. Total G.O. G.O Nonmajor Refunding Refunding Debt Bonds Bonds Service of 2002 of 2001 Funds Revenue: General property taxes: Current and delinquent $ - $58,359 $58,359 Special assessments: Current and delinquent - 31,654 31,654 Prepayments - 1,587 1,587 Penalties and interest - 197 197 Earnings on investments 9,476 3,257 12,733 Total revenue 9,476 95,054 104,530 Expenditures: Debt service: Principal 150,000 125,000 275,000 Interest 8,322 7,325 15,647 Total expenditures 158,322 132,325 290,647 Revenue over (under) expenditures (148,846) (37,271) (186,117) Other financing sources: Transfer from Capital Project Fund 55,000 - 55,000 Net increase (decrease) in fund balance (93,846) (37,271) (131,117) Fund balance - January 1 360,864 111,803 472,667 Fund balance - December 31 $267,018 $74,532 $341,550 73 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING BALANCE S14EET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2004 401 Budgeted 500 Projects Capital and 405 565 Revolving Equipment Park Street Fund Revolving Development Reconstruction Assets Cash and investments $424,294 $392,215 $319,594 $400,164 Accrued interest receivable 5,803 3,616 4,481 5,610 Accounts receivable - 3,442 - - Due from developers - - - - Special assessments receivable: Deferred 53,882 - - - Total assets $483,979 $399,273 $324,075 $405,774 Liabilities and Fund Balance Liabilities: Accounts payable $1,156 $3,194 $ - $ - Contracts payable 63,861 - - - Deferred revenue 53,882 - - - Total liabilities 118,899 3,194 0 0 Fund balance: Unreserved: Designated for capital improvement 365,080 396,079 324,075 405,774 Total liabilities and fund balance $483,979 $399,273 $324,075 $405,774 74 Statement 17 AAE Totals 406 711 730 771 Nonmajor Brekke Water Oak Park Sanitary 772 Capital Park Tower Station Sewer Water Project Memorial Rental Phase I Connection Connection Funds $226 $8,334 $ - $387,480 $212,440 $2,144,747 3 15 - 5,767 3,595 28,890 - - - - - 3,442 - - 6,958 - - 6,958 - - - 17,237 30,002 101,121 $229 $8,349 $6,958 $410,484 $246,037 $2,285,158 $ - $ - $80 $ - $ - $4,430 - 6,878 - - 70,739 - - - 17,237 30,002 101,121 0 0 6,958 17,237 30,002 176,290 229 8,349 - 393,247 216,035 2,108,868 $229 $8,349 $6,958 $410,484 $246,037 $2,285,158 75 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR CAPITAL PROJECT FUNDS For The Year Ended December 31, 2004 401 Budgeted 500 Projects Capital and 728 405 565 Revolving Equipment Superamerica/ Park Street Fund Revolving Valvoline Oil Development Reconstruction Revenue: Special assessments: Current and delinquent $114,503 $ - $ Earnings on investments 11,490 7,159 (2,761) 8,871 11,108 Direct charges to developers - - - - - Refunds and reimbursements - 20,542 - - - Donations and contributions - 250 - - - Rent of municipal property - - - - - Total revenue 125,993 27,951 (2,761) 8,871 11,108 Expenditures: Public works: Materials and supplies - 13,037 - - - Contractual services 22,346 84,371 - - - Capital outlay - 28,688 - - - Construction costs 162,196 - - - - Total expenditures 184,542 126,096 0 0 0 Revenue over (under) expenditures (58,549) (98,145) (2,761) 8,871 11,108 Other financing sources (uses): Transfers from General Fund - 224,800 - - - Transfers from Enterprise Fund - 24,900 - - - Transfers to Debt Service Fund _ - _ - _ Total other financing sources (uses) 0 249,700 0 0 0 Net increase (decrease) in fund balance (58,549) 151,555 (2,761) 8,871 11,108 Fund balance - January 1 423,629 244,524 2,761 315,204 394,666 Fund balance - December 31 $365,080 $396,079 $0 $324,075 $405,774 76 Statement 18 Totals 406 711 730 771 Nonmajor Brekke Water 729 Oak Park Sanitary 772 Capital Park Tower Boutwells Station Sewer Water Project Memorial Rental Landing Phase I Connection Connection Funds $8,618 $15,001 $138,122 6 29 - - 11,419 7,117 54,438 5,780 10,958 - - 16,738 - - - - 20,542 - 250 8,320 - - - _ - 8,320 6 8,349 5,780 10,958 20,037 22,118 238,410 - - - - - 13,037 5,780 1,020 - - 113,517 - - - - 28,688 - - 9,938 - - 172,134 0 0 5,780 10,958 0 0 327,376 6 8,349 0 0 20,037 22,118 (88,966) - - - - - 224,800 24,900 - - - - (32,775) (59,625) (92,400) 0 0 0 0 (32,775) (59,625) 157,300 6 8,349 0 0 (12,738) (37,507) 68,334 223 - - - 405,985 253,542 2,040,534 $229 $8,349 $0 $0 $393,247 $216,035 $2,108,868 77 CITY OF OAK PARK HEIGHTS, MINNESOTA UTILITY FUND Statement 19 STATEMENT OF NET ASSETS December 31, 2004 With Comparative Amounts for December 31, 2003 "...,.„e.,: .• =. w.yuwee�wwwoua mwnwadue „ a .:................ . a. , ... . mumuwwurwwwui�wwJwwuwwiwwa�wuwu uw�urvuwwuuman uwu �uummmuuYi Assets: 2004 2003 Current assets: Cash and cash equivalents $699,416 $523,193 Accrued interest receivable 9,671 - Accounts receivable: Customers 150,598 166,966 Certified to County 33,059 14,257 Other 35 998 Prepaid items 24,383 22,339 Total current assets 917,162 727,753 Capital assets: Land 60,000 60,000 Buildings and structures 1,320,334 1,320,334 Machinery and equipment 213,959 205,039 Distribution and collection system 6,513,595 6,454,890 Total 8,107,888 8,040,263 Less: Allowance for depreciation (2,461,651) (2,298,009) Net capital assets 5,646,237 5,742,254 Total assets 6,563,399 6,470,007 Liabilities: Current liabilities: Accounts payable 27,531 19,904 Salaries payable 2,026 1,376 Due to other governmental units 34,345 3,326 Compensated absences payable 2,004 - Total current liabilities 65,906 24,606 Noncurrent liabilities: Compensated absences payable 16,429 35,544 Total liabilities 82,335 60,150 Net assets: Invested in capital assets, net of related debt 5,646,237 5,742,254 Unrestricted 834,827 667,603 Total net assets $6,481,064 $6,409,857 78 CITY OF OAK PARK HEIGHTS, MINNESOTA UTILITY FUND Statement 20 COMPARATIVE STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET ASSETS For The Year Ended December 31, 2004 With Comparative Totals For The Year Ended December 31, 2003 u... ui.i, J,i Wt wa. t, JI d6WY.d WJdulw b {'u IW IWYWll4 dd:ae WaYNNUa uwaWlW 41a4alw WUU'WWUW tlwWUdiultW4uWL1 aW,WUY'W W'e WJtLL.0 a.e lv' YY'IUUOW'uld6 WaLLYYYW.3iWllIWId WLWWYIIIW{ uWVWLWIP W1 WJd YWYWLdu WY1WWWW1'WdWlly+YJWlIUlY LVItltVW1{JYa,{uAeLl6u Ww1W4W 9W 4WWWluJIWWWWYW1eLY J,uuai.WJ Water Sanitary Sewer Storm Sewer Totals Operating Operating Sanitation Operating 2004 2003 Operating revenue: Customer billings $364,601 $557,401 $96,909 $70,878 $1,089,789 $1,039,739 Penalties 4,865 7,825 - - 12,690 14,051 Permits 3,815 2,030 - 350 6,195 7,640 Meter sales 14,367 - - - 14,367 17,733 Charges for services 550 9,647 - - 10,197 14,263 Total operating revenue 388,198 576,903 96,909 71,228 1,133,238 1,093,426 Operating expenses: Personal services 124,486 90,064 - 15,572 230,122 213,812 Contractual services 70,862 38,054 149,833 19,633 278,382 292,941 Refunds and reimbursements - - - - - 500 Recycling award - - 595 - 595 600 MCES charges - 267,705 - 267,705 274,430 Materials and supplies 8,839 2,556 - 687 12,082 12,495 Administrative and personnel charge 24,565 44,275 16,830 5,190 90,860 87,205 Depreciation 94,415 74,581 - - 168,996 163,220 Total operating expenses 323,167 517,235 167,258 41,082 1,048,742 1,045,203 Operating income (loss) $65,031 $59,668 ($70,349) $30,146 84,496 48,223 Nonoperating revenue (expenses): Earnings on investments 19,148 17,045 Loss on disposal of capital assets (720) - Total nonoperating revenue (expenses) 18,428 17,045 Income before contributions and transfers 102,924 65,268 Capital contributions 58,706 104,134 Transfers: Transfer from General Fund 88,500 88,500 Transfer to Capital Project Funds (178,923) (158,566) Total transfers (90,423) (70,066) Change in net assets 71,207 99,336 Net assets - January 1 6,409,857 6,310,521 Net assets - December 31 $6,481,064 $6,409,857 79 CITY OF OAK PARK HEIGHTS, MINNESOTA ENTERPRISE FUNDS Statement 21 STATEMENT OF CASH FLOWS For The Year Ended December 31, 2004 Business -Type Activities Enterprise Fund Utility Fund Cash flows from operating activities: Receipts from customers and users $1,107,203 Payment to suppliers (522,162) Payment to employees (337,443) Miscellaneous revenue 24,564 Net cash flows from operating activities 272,162 Cash flows from noncapital financing activities: Transfer to other funds (178,923) Transfer from other funds 88,500 Net cash flows from noncapital financing activities (90,423) Cash flows from capital and related financing activities: Acquisition of capital assets (14,993) Cash flows from investing activities: Investment income 9,477 Net increase in cash and cash equivalents 176,223 Cash and cash equivalents - January 1 523,193 Cash and cash equivalents - December 31 $699,416 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income $84,496 Adjustments to reconcile operating income to net cash flows from operating activities: Depreciation 168,996 Change in assets and liabilities: Decrease (increase) in receivables (1,471) Decrease (increase) in prepaid expenses (2,044) Increase (decrease) in payables 22,185 Total adjustments 187,666 Net cash provided by operating activities $272,162 Noncash investing, capital and financing activities: Contribution of capital assets $58,706 The accompanying notes are an integral part of these financial statements. 80 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING BALANCE SHEET Statement 22 AGENCY FUNDS December 31, 2004 Developer Developer Totals Deposit Escrow Agency Fund Fund Funds Assets Cash and investments $45,752 $7,000 $52,752 Due from developers 9,237 - 9,237 Total assets $54,989 $7,000 $61,989 Liabilities Escrow deposits payable $ - $7,000 $7,000 Accounts payable 7,535 - 7,535 Due to developers 47,454 - 47,454 Total liabilities $54,989 $7,000 $61,989 81 CITY OF OAK PARK HEIGHTS, MINNESOTA SUBCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Statement 23 AGENCY FUNDS For The Year Ended December 31, 2004 Balance Balance January 1, December 31, 2004 Additions Deletions 2004 Developer Deposit Fund: Assets: Cash and investments $12,137 $45,752 $12,137 $45,752 Special assessments - deferred 5,555 - 5,555 - Due from developers 17,334 9,237 17,334 9,237 Total assets $35,026 $54,989 $35,026 $54,989 Liabilities: Accounts payable $9,397 $7,535 $9,397 $7,535 Due to developers 25,629 47,454 25,629 47,454 Total liabilities $35,026 $54,989 $35,026 $54,989 Developer Escrow Fund: Assets: Cash and investments $13,000 $7,000 $13,000 $7,000 Liabilities: Escrow deposits payable $13,000 $7,000 $13,000 $7,000 Total Avenev: Assets: Cash and investments $25,137 $52,752 $25,137 $52,752 Special assessments - deferred 5,555 - 5,555 - Due from developers 17,334 9,237 17,334 9,237 Total assets $48,026 $61,989 $48,026 $61,989 Liabilities: Escrow deposits payable $13,000 $7,000 $13,000 $7,000 Accounts payable 9,397 7,535 9,397 7,535 Due to developers 25,629 47,454 25,629 47,454 Total liabilities $48,026 $61,989 $48,026 $61,989 82 SUPPLEMENTARY FINANCIAL. INFORMATI ®N 83 CITY OF OAK PARK HEIGHTS, MINNESOTA REVENUE BONDS AND GENERAL DEBT BONDS Exhibit I SCHEDULE OF DEBT SERVICE PAYMENTS TO MATURITY December 31, 2004 General Debt Bonds General General General Obligation Obligation Obligation Refunding Improvement Refunding Bonds of 2002 Bonds of 1998 Bonds of 2001 Total Bonds payable $225,000 $1,125,000 $110,000 $1,460,000 Future interest payable 7,045 243,312 3,575 253,932 Totals $232,045 $1,368,312 $113,575 $1,713,932 Payments to maturity: 2005 $165,323 $172,812 $113,575 $451,710 2006 66,722 167,813 - 234,535 2007 - 162,687 - 162,687 2008 - 157,500 - 157,500 2009 - 152,250 - 152,250 2010 - 146,938 - 146,938 2011 - 141,562 - 141,562 2012 - 136,125 - 136,125 2013 - 130,625 - 130,625 Totals $232,045 $1,368,312 $113,575 $1,713,932 84 CITY OF OAK PARK HEIGHTS, MINNESOTA TAXABLE VALUATIONS, TAX LEVIES AND TAX RATES Exhibit 2 2004/2005 2003/2004 Tax capacity: Real estate $6,840,470 $6,363,354 Personal property 78,460 82,573 Subtotal 6,918,930 6,445,927 Fiscal disparity: Contribution (954,578) (798,048) Distribution 341,985 313,675 Total $6,306,337 $5,961,554 Tax levy: City -wide: General revenue $2,293,825 $1,992,690 Debt service - 61,380 Total tax levy $2,293,825 $2,054,070 Tax capacity rate: City -wide: General revenue 36.488% 33.355% Debt service 0.000% 1.027% Total 36.488% 34.382% 85 CITY OF OAK PARK HEIGHTS, MINNESOTA SCHEDULE OF CONSTRUCTION COSTS Exhibit 3 December 31, 2004 Legal Expended and Current Prior Contractor Engineer Fiscal Other Total Year Years Storm sewer connection: Kern Center pond expansion $59,732 $32,570 $115 $164 $92,581 $92,581 $ - Capital revolving: Lighting and pathway improvements 131,411 29,263 1,251 271 162,196 162,196 - McKean Square: Street and utility improvements 1,036,251 244,765 3,410 17,428 1,301,854 357,503 944,351 Total - All Funds $1,227,394 $306,598 $4,776 $17,863 $1,556,631 $612,280 $944,351 86 STATISTICAL SECTION (UNAUDITED) 87 CITY OF OAK PARK HEIGHTS, MINNESOTA GENERAL AND SPECIAL REVENUE FUNDS Table 1 EXPENDITURES BY FUNCTION Years 1995 Through 2004 (UNAUDITED) General Public Public Parks and Community Capital Year Total Government Safety Works Sanitation Recreation Development Outlay 1995 $1,795,775 $398,640 $724,112 $86,000 $344,396 $178,567 $ - $64,060 1996 2,032,963 441,852 796,557 136,611 434,175 185,372 - 38,396 1997 2,034,181 507,902 847,015 99,412 313,302 211,244 - 55,306 1998 2,086,569 774,444 835,293 139,948 - 120,255 43,471 173,158 1999 2,092,809 772,729 887,643 192,501 - 73,241 124,331 42,364 2000 2,113,555 786,886 915,814 170,408 - 86,800 121,056 32,591 2001 2,314,568 919,622 967,854 168,011 - 109,481 126,356 23,244 2002 2,130,329 779,454 1,001,286 134,337 - 87,932 112,775 14,545 2003 2,067,832 769,032 1,020,094 160,724 - 95,818 20,186 1,978 2004 2,193,443 793,871 1,119,533 170,443 - 88,180 - 21,416 88 CITY OF OAK PARK HEIGHTS, MINNESOTA GENERAL AND SPECIAL REVENUE FUNDS Table 2 REVENUE BY SOURCE Years 1995 Through 2004 (UNAUDITED) Licenses Charges Fines Earnings Inter- and for and on Year Total Taxes govermnental Permits Services Forfeits Investments Miscellaneous 1995 $2,003,222 $1,354,677 $144,480 $117,511 $241,874 $49,020 $55,436 $40,224 1996 2,097,097 1,390,443 145,741 156,181 230,579 56,545 56,468 61,140 1997 2,156,948 1,387,227 167,132 204,986 216,536 60,682 56,501 63,884 1998 2,157,782 1,479,490 200,368 125,678 186,799 60,183 49,912 55,352 1999 2,157,915 1,333,194 192,194 227,693 230,147 58,886 42,711 73,090 2000 2,289,985 1,405,002 180,243 314,527 193,615 56,326 53,842 86,430 2001 2,308,020 1,524,300 179,591 213,651 197,318 68,184 53,343 71,633 2002 2,500,806 1,748,634 188,028 183,596 188,093 63,211 34,990 94,254 2003 2,635,521 1,859,203 79,171 313,273 209,076 61,146 34,652 79,000 2004 2,656,923 1,910,848 70,362 304,594 150,126 78,274 41,546 101,173 89 CITY OF OAK PARK HEIGHTS, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Table 3 Years 1995 Through 2004 (UNAUDITED) Percent Total of Collection Delinquent Current Delinquent Total as a Outstanding Percent of Taxes Total Current Tax Levy Tax Tax Percent Delinquent Current Payable Tax Levy Collections Collected Collections Collections of Levy Taxes Levy 1995 $1,430,985 $1,421,284 99.32% $12,034 $1,433,318 100.16% $18,813 1.31% 1996 1,392,558 1,385,501 99.49% 7,674 1,393,175 100.04% 18,196 1.31% 1997 1,396,182 1,387,730 99.39% 4,194 1,391,924 99.70% 10,946 0.78% 1998 1,524,087 1,541,166 101.12% 5,726 1,546,892 101.50% 16,863 1.11% 1999 1,409,400 1,394,993 98.98 4,296 1,399,289 99.28% 23,981 1.70% 2000 1,440,200 1,426,390 99.04% 13,454 1,439,844 99.98% 22,116 1.54% 2001 1,588,435 1,566,938 98.65% 16,563 1,583,501 99.69% 24,199 1.52% 2002 1,967,579 1,904,488 96.79% (18,789) 1,885,699 95.84% 20,174 1.03% 2003 1,993,003 1,891,046 94.88% 12,386 1,903,432 95.51% 31,552 1.58% 2004 1,965,536 1,938,726 98.64% 12,016 1,950,742 99.25% 41,632 2.12% 1996 through 2001 excludes HACA. 2002 through 2004 excludes the Market Value Homestead Credit. 90 CITY OF OAK PARK HEIGHTS, MINNESOTA SPECIAL ASSESSMENT COLLECTIONS Table 4 Years 1995 Through 2004 (UNAUDITED) Current Total Collections Collections As a Percent As a Percent Current Current Of Current Delinquent Of Current Outstanding Year Assessments Assessments Assessments Assessments Assessments Delinquent Payable Due Collected Due Collected Due Assessments 1995 $47,191 $43,888 93.00% $1,021 95.16% $2,282 1996 139,628 136,958 98.09% 1,071 98.85% 4,163 1997 166,723 162,433 97.43% 1,743 98.47% 6,582 1998 109,134 106,924 97.97% 2,503 100.27% 6,083 1999 416,712 414,520 99.47% 1,493 99.83% 6,782 2000 333,294 332,190 99.67% 1,647 100.16% 4 2001 312,038 311,840 99.94% 4,161 101.27% 197 2002 253,885 247,618 97.53% 197 97.61% 6 2003 246,290 239,390 97.20% 6,267 99.74% 634 2004 200,685 197,940 98.63% 633 98.95% 2,745 91 CITY OF OAK PARK HEIGHTS, MINNESOTA PRINCIPAL TAXPAYERS (Ten Largest Taxpayers) Table 5 Taxes Payable in 2004 (UNAUDITED) Percent of Percent of Total Total Tax Market Market Tax Capacity Property Taxpayer Value Value Capacity Value Classification Xcel Energy Inc $79,882,800 17.8% $1,594,767 24.7% Utility SC Mall LLC 18,870,300 4.2% 376,656 5.8% Comm land & bldgs VSSA Housing & Comm Sery LLC 24,294,300 5.4% 315,006 49% Res 4 or more units Prudential Insurance Company of America 10,434,200 2.3% 207,934 3.2% Comm land & bldgs Menards, Inc 8,173,400 1.8% 162,718 2.5% Comm land & bldgs Wal -Mart Real Estate Business 6,740,700 1.5% 134,064 2.1% Comm land & bldgs W.A.T.E. Enterprises, Inc. 4,481,900 1.0% 88,876 1.4% Comm land & bldgs Raduenz Dealership Properties LLC 4,155,100 0.9% 82,352 1.3% Comm land & bldgs WDBH Realty Company 3,698,400 0.8% 73,218 1.1% Comm land & bldgs .Ierden LLC 3,552,800 0.8% 70,306 1.1% Comm land & bldgs Totals $164,283,900 36.7% $3,105,897 48.2% Total City $447,871,200 $6,445,927 SOURCE: Washington County Auditor - Treasurer Taxation Division. NOTES: (1) If a taxpayer has property consisting of more than one classification, only one is shown. 92