5.2. SR 06-06-2011Ells REQUEST FOR ACTION
River
1'o Item Number
Ci Council 5.2
Agenda Section Meeting Date Prepared by
Administration une 6, 2011 Tim Simon, Finance Director
Item Description Reviewed by
Presentation of the Comprehensive Annual Financial Report
and Audit Results for the Year Ended December 31, 2010 Reviewed by
Action Requested
The City Council is asked to review and accept the Comprehensive Annual Financial Report for the City
of Elk River for the year ended December 31, 2010.
Background/Discussion
Andrew Berg, Governmental Services Partner with Abdo, Eick, & Meyers will present a Powerpoint
presentation of the City's 2010 Comprehensive Annual Financial Report (CAFR) and audit results. The
presentation on the CAFR will review the general fund activity, some of the special revenue funds, and all
the enterprise funds. Much of this information is summarized in the Ciry of Elk River Management
Letter. The Fire Relief report will be briefly discussed as a formal presentation was made at the quarterly
board meeting on June 1. The CAFR will be available on the City's website shortly after this Council
meeting.
The following are some highlighted areas of the CAFR and corresponding page numbers.
Transmittal letter -page 1-4
Independent Auditor's report -page 8-9
Management's Discussion and Analysis -page 10-19
Budget and Actual (General Fund) -page 27
Enterprise Funds -page 28-35
Statistical Section -page 90-119
Financial Impact
None
Attachments
The following items have been distributed to the Mayor and Council
• Comprehensive Annual Financial Report for the year ended December 31, 2010
• City of Elk River Management Letter
• Other Required Reports (Legal compliance)
• Elk River Fire Department Relief Association Financial Statements and Supplementary Information
• Elk River Fire Relief Management Letter
Action Motion by Second by Vote
FOIIOW Up
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Minnesota
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CITY OF ELK RIVER, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
1
For the Year Ended December 31, 2010
PREPARED BY THE FINANCE DEPARTMENT
Member of Government Finance Officers Association
' of the United States and Canada
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CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2010
I. INTRODUCTORY SECTION
Letter of Transmittal
Certificate of Achievement
Organizational Chart
Elected and Appointed Officials
II. FINANCIAL SECTION
Page No•
Independent Auditor's Report 8
Management's Discussion and Analysis 10
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 20
Statement of Activities 21
Fund Financial Statements:
Balance Sheet -Governmental Funds 23
Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Assets 24
Statement of Revenues, Expenditures, and Changes in
Fund Balances -Governmental Funds 25
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 26
Statement of Revenues, Expenditures, and Changes in
Fund Balance -Budget and Actual -General Fund 27
Statement of Net Assets -Proprietary Funds 28
Statement of Revenues, Expenses, and Changes in
Fund Net Assets -Proprietary Funds 30
Statement of Cash Flows -Proprietary Funds 32
Statement of Fiduciary Net Assets -Developer
Escrow Agency Fund 36
Notes to Financial Statements 37
Required Supplementary Information
Schedule of Funding Progress -Elk River Fire Relief Pension Plan 65
Schedule of Funding Progress -Other Postemployment Benefits 65
Combining and Individual Fund Statements and Schedules:
Nonmajor Governmental Funds:
Combining Balance Sheet - Nonmajor Governmental Funds 66
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances - Nonmajor Governmental Funds 67
Nonmajor Special Revenue Funds:
Subcombining Balance Sheet - Nonmajor Special Revenue Funds 68
Subcombining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Special Revenue Funds 70
Special Revenue Funds:
Schedules of Revenues, Expenditures, and Changes in
Fund Balance -Budget and Actual:
Library 72
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CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS '
DECEMBER 31, 2010
Page No. '
Ice Arena 73
Pinewood Golf Course 74
Landfill 75
Economic Development Authority 76
Nonmajor Debt Service Funds: '
Subcombining Balance Sheet - Nonmajor Debt Service Funds 77
Subcombining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Debt Service Funds 79 '
Nonmajor Capital Projects Funds:
Subcombining Balance Sheet - Nonmajor Capital Projects Funds
Subcombining Statement of Revenues, Expenditures, and Changes in 81 '
Fund Balances - Nonmajor Capital Projects Funds 83
Statement of Changes in Assets and Liabilities -
Developer Escrow Agency Fund
85 '
Component Unit Financial Statements:
Housing and Redevelopment Authority: '
Fund Financial Statements:
Balance Sheet 86
Reconciliation of the Governmental Fund Balance Sheet '
to the Statement of Net Assets 87
Statement of Revenues, Expenditures, and Change in Fund Balance 88
Reconciliation of the Statement of Revenues, Expenditures,
and Change in Fund Balance of Governmental Fund to the '
Statement of Activities 89
III. STATISTICAL SECTION (UNAUDITED)
Net Assets by Component 90
Changes in Net Assets 92
Fund Balances of Governmental Funds 96
Changes is Fund Balances of Governmental Funds 98
Electric Sales 100
Principal Electric Customers
101 '
Tax Capacity, Market Value and Estimated Actual Value of Taxable Property 102
Property Tax Rates 104
Principal Taxpayers 105
Property Tax Levies and Collections
106 '
Ratios of Outstanding Debt by Type 107
Ratios of General Bonded Debt Outstanding
Computation of Direct and Overlapping Debt 109
110 ,
Legal Debt Margin. Information 111
Pledged-Revenue Coverage 113
Demographic and Economic Statistics 115 '
Principal Employers 116
Full-Time Equivalent Employees by Function 117
Operating Indicators by Function 118
Capital Asset Statistics by Function
119 '
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INTRODUCTORY SECTION
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City of
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June 6, 2011
' Honorable Mayor, Members of the City Council,
and Citizens of Elk River:
' The Comprehensive Annual Financial Report (CAFR) for the City of Elk River for the fiscal year ended
December 31, 2010, is hereby submitted. Minnesota State Statutes and the City's ordinance require an
annual audit of the City's accounts by the State Auditor's Office or by independent certified public
accountants. The firm of Abdo, Eick, and Meyers was selected to perform the City's audit and their
unqualified opinion has been included in this report. The independent auditor's report is included in the
financial section of this report.
This report was prepared by the City's Finance Department and responsibility for both the completeness
and accuracy of this data, as well as the fairness of this presentation including all enclosures, rests with
the City. To the best of my knowledge and belief, the enclosed data are accurate in all material respects
and are recorded in a manner designed to present fairly the financial position and the results of operations
of the various funds of the City. To provide a reasonable basis for making these representations,
management of the City has established a comprehensive internal control framework that is designed to
both protect the City's assets from loss, theft, or misuse, and to compile sufficient reliable information
for the preparation of these financial statements in accordance with generally accepted accounting
principles (GAAP). Internal accounting controls are designed to provide reasonable but not absolute
' assurance regarding the safeguarding of the City's assets against loss, theft, or misuse, and ensuring that
adequate financial records are maintained for preparing financial statements, and maintaining
accountability for assets. The development of an appropriate internal control system requires estimates
' and judgments by management to ensure that the costs do not exceed the benefits of the system. The
City of Elk River's internal control structure is designed so that the estimated costs of control do not
exceed the benefits.
Generally accepted accounting principles require that management provide a narrative introduction
overview and analysis to accompany the basic financial statements in the form of MD&A. This letter of
' transmittal is designed to compliment the MD&A and should be read in conjunction with it. The City of
Elk River's MD&A can be found immediately following the report of the independent auditors.
Profile of the Government
' The City of Elk River was originally incorporated in 1880 and consolidated with Elk River Township in
1978 to form a city of 44 square miles. The City of Elk River is located in Sherburne County and serves
' as the county seat. Elk River is located approximately halfway between the metropolitan areas of
Minneapolis/St. Paul and Saint Cloud along the Mississippi River. The City of Elk River has been
growing and will not reach full development in the near future. The current population is approximately
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22,974. Population at full build out is estimated to be 35,000. Urban services are available to about one-
third of the land area in the City.
The City of Elk River operates under a statutory form of government consisting of a four member City
Council and a Mayor who is also a voting member. Council members are elected by ward to a four-year
term with two Council seats up for election each even year. The Mayor is also elected to a four-year
term. The City Council is responsible for adopting the City's budget and tax levy, passing resolutions
and ordinances, all hiring and firing decisions, policy making, development and growth planning, and
overall direction of the City.
In addition to providing general government services, the City of Elk River provides a full range of other
services including police and fire protection, building and other safety inspections, planning and zoning,
economic development, environmental services, parks and recreation, library, street, snow removal,
infrastructure maintenance and repair, and others. The City also provides municipal water, sewer,
garbage, and electric services and operates two off-sale liquor stores.
The annual budget serves as the foundation for the City of Elk River's financial planning and control.
Budget requests are submitted by all departments to the Finance Department each May. The Finance
Department compiles these requests into a proposed budget. The Finance Department and City
Administrator review the information and present a draft budget to the Council in August for
consideration. Following Council discussion and public input, the final tax levy and budget are approved
in December. The City's Financial Management Plan allows department heads to make administrative
budget amendments (excluding personal service and capital outlay) throughout the year as long as the
total department budget does not change and the amendment is approved by the City Administrator and
Finance Director. The Council approves additional budget amendments in December of each year.
Budget to actual comparisons are provided in this report for each individual governmental fund for which
an appropriated annual budget has been adopted. For the general fund this comparison is presented on
page 27 as part of the basic financial statements for the governmental funds. For other governmental
funds with appropriated annual budgets this comparison is presented in the governmental fund subsection
of this report.
Local economy
The local economy has showed some evidence of growth by the increase in building permits with a
construction value of $18,166,228 being issued in 2010. This is an 80 percent increase from 2009. New
commercial, industrial, and institutional building accounted for $5,120,272 of new value, and an
additional $9,947,037 in additions and remodeling and $3,098,919 in residential construction make up
the balance. The number of new housing units declined from 20 in 2009 to 15 in 2010. The average
value of new homes increased to $206,594. Single family homes accounted for 15 of the new housing
units compared to 16 built in 2009.
Many of Elk River's largest employers reported stable or growing employment levels between 2010 and
2011. This is largely due to the diversified economic base. Elk River experienced very few incidental
layoffs among its larger employers. The companies experiencing the most employment growth were in
the industrial sector.
Despite the downturn in the national economy, the City saw a number of private investments including,
Depot Apartments with 56 units near Northstar Depot Station, Dove Tree Apartments $1-million
rehabilitation of 64 units, United Healthcare data center 50,000-sf expansion, and the addition of two
restaurants Pompeii Pizzeria and Mucho Loco Authentic Mexican.
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' Long-term financial planning
As part of a yearly budget process the City Council reviews the updated Financial Management Plan. The
Financial Management Plan provides along-range forecast that brings together future expenditures,
revenues, and development of the City. The Council has been diligent in maintaining a level tax rate.
This plan provides the information needed to develop in a manner that will sustain or expand City
' services while keeping the property taxes stable. Department heads take part in this process to estimate
staff additions, service levels, and capital needs for the next ten years.
In addition, the City Council continually reviews cash flow analysis and long-term planning as part of the
comprehensive Capital Improvement Plan (CIP) process. The CIP is a 5-year planning tool that forecasts
the City's capital needs based on the City's long-range plans, goals, and policies.
' Relevant Financial Policies
The City Council has adopted several financial management policies. The financial management policies
' include: revenues, property taxes, investments, purchasing, financial reporting, reserves, fund balance,
capital investment, and debt policies. The City's policy on fund balance states that the City will maintain
an unassigned fund balance of not less than 40% of budgeted general fund operating expenditures. The
' percentage of unassigned fund balance at December 31, 2010 is 41.5%. Since property tax payments are
received by the City in two installments in July and December, the City needs adequate cash reserves for
cash flow in order to avoid short-term borrowing to finance operations.
Changes in state law over the past several years have resulted in funding changes for both schools and
local governments. Reductions in both Market Value Homestead Credits (MVHC) and Local
' Government Aids (LGA) programs have resulted in revenue losses to the City. Due to the uncertainty in
receiving the aid from the state, the LGA and MVHC revenues are not included in the 2011 budget. The
City does not expect in the short-term to see LGA and MVHC amounts restored to previously years
' levels. In addition, the State Legislature did reinstate levy limits starting in 2009 for three consecutive
years and will have an impact on future budgeting parameters through the 2011 budget.
' Major Initiatives
In 2010, the City completed the land use plan for 171 S` Avenue Focus Area Study and the development
' opportunities surrounding the Northstar Commuter Rail Station and the adjacent City-owned Gateway
Business Park. The City also initiated an AUAR and preliminary engineering for phase I of the 171 S`
Avenue Focus Area. In addition, Elk River's Northstar station continues to have one of the largest
' ridership numbers along the rail line that runs from Minneapolis to Big Lake.
' Awards and Acknowledgements
The Government Finance Officers Association of the United Stated and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Elk River for its CAFR
' for the fiscal year ended December 31, 2009. This was the 21st consecutive year that the City has
received this prestigious award. In order to be awarded a Certificate of Achievement the government
must publish an easily readable and efficiently organized comprehensive annual financial report. This
' report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR
' continues to meet the Certificate of Achievement program requirements and it will be submitted to the
GFOA to determine its eligibility for another certificate.
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The City received the GFOA Award for the Distinguished Budget Presentation for the City budget for the '
fiscal year beginning January 1, 2010. It was the 2"d consecutive year the City received the award for the
document. '
The preparation of this report is made possible by the efficient and dedicated. services of the entire staff
of the City Administrator's office and Finance Department. The Mayor and City Council are to be '
commended for their diligence and resolve in keeping the City in sound and stable financial condition.
The City Council's commitment to continually plan for the City's future and dedication to maintain high
financial standards has helped the City maintain its strong financial condition during a long period of '
growth and subsequent slowdown.
Respectfully submitted,
~ s
Timoth Simon ,
Y
Finance Director
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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Elk River
Minnesota
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2009
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
' reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
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CITY OF ELK RIVER
ORGANIZATIONAL CHART
- City Clerk -Finance -Planning -Police Admin. -Fire Admin. -Recreation -Building Maint. -Electric
- HR/Payroll -Information Tech. -Building Safety -Patrol -Fire Inspections -Park Maintenance -Engineering -Water
- Cable TV -Liquor -Environmental -Investigations -Emergency Mgmt. - Sr. Center -Streets
- Economic Develop. -Support Services -Ice Arena -Equip. Services
- Reserves -Golf Course -Sewer
- Library
CITY OF ELK RIVER, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
YEAR ENDED DECEMBER 31, 2010
CITY COUNCIL
Stephanie Klinzing
Nicholas Zerwas
Jerry Gumphrey
Paul Motin
Matthew Westgaard
Mayor
Council member
Council member
Council member
Council member
APPOINTED PERSONNEL
Lori Johnson
Timothy Simon
Bradley Rolfe
T. John Cunningham
Vacant
Justin Femrite
Term Expires
December 31.
2010
2010
2012
2010
2012
City Administrator
Finance Director
Police Chief
Fire Chief
Parks & Recreation Director
City Engineer
7
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FINANCIAL SECTION
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City of
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Suite 250
Edina. MN ~54i(
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Council
City of Elk River, Minnesota
We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely
presented component unit, each major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota
(the City), as of and for the year ended December 31, 2010, which collectively comprise the City's basic financial statements as
listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to
express opinions on these financial statements based on our audit. The prior year comparative information has been derived from
the City's 2009 financial statements and, in our report dated May 13, 2010, we expressed unqualified opinions on the respective
proprietary fiind financial statements.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of
the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the City as of December 31, 2010, and the respective changes in financial position and
cash flows, where applicable, thereof and the budgetary comparison for the General fund for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
As described in Note 4 to the basic financial statements, the City adopted the provisions of Governmental Accounting Standards
Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions for the year ended
December 31, 2010. Adoption of the provisions of this statement resulted in significant changes to the classifications of the
components of fund balance.
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis
on pages 10 through 19 and the Schedule of Funding Progress on page 65 be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
952.835.9090 Fax 952.835.3261
' www.aemcpas.com
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Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City's '
financial statements as a whole. The introductory section, combining and individual fund financial statements and schedules, and
statistical section are presented for the purpose of additional analysis and are not a required part of the financial statements. The
combining and individual fund financial statements and schedules are the responsibility of management and were derived from
and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has '
been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the
financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing '
standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material
respects in relation to the financial statements as a whole. The introductory section and statistical section have not been subjected
to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or
provide any assurance on them. '
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May 12, 2011 ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota Certified Public Accountants '
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952.835.9090 Fax 452.835.3261
www.aemcpas.com
Management's Discussion and Analysis
As management of the City of Elk River, we offer readers of the City's financial statements this narrative overview and
analysis of the financial activities of the City for the fiscal year ended December 3 1, 2010. We encourage readers to
consider the information presented here in conjunction with the additional information that we have furnished in our letter
of transmittal, which can be found on pages 1 - 4 of this report.
Financial Highlights
The assets of the City of Elk River exceeded its liabilities at the close of the most recent fiscal year by $200,560,678 (net
assets). Of this amount, $46,892,695 (unrestricted net assets) may be used to meet the City's ongoing obligations to
citizens and creditors.
The City's total net assets increased by $733,398.
As of the close of the current fiscal year, the City of Elk River's governmental funds reported combined ending fund
balances of $31,514,713.
Special Debt Capital
General Revenue Service Projects Total
Nonspendable $ - $ 93,080 $ - $ - $ 93,080
Restricted - 4,878,438 2,057,675 - 6,936,] 13
Committed 91,502 2,506,814 - - 2,598,316
Assigned 727,443 228,589 - 16,755,472 17,7] 1,504
Unassigned 5,187,520 - - (1,01],820) 4,175,700
$ 6,006,465 $ 7,706,921 $ 2,057,675 $15,743,652 $ 31,514,713
The City of Elk River's total long-term liabilities decreased $6,087,139 during the current fiscal year, from $50,990,399 to
$44,903,260.
Governmental activities:
' Bonds payable
Capital leases
Contracts for deeds
' Compensated absences
Net OPEB obligation
Total governmental activities
Business-type activities:
Bonds payable
Notes payable
Compensated absences
Net OPEB obligation
Total business-type activities
Total City long-term liabilities
Beginning Ending
Balance Additions Reductions Balance
$ 28,384,473 $ 5,975,584 $ (8,093,406) $ 26,266,651
16,992 - (8,496) 8,496
1,629,500 - (138,250) 1,491,250
1,063,812 496,771 (362,098) 1,198,485
91,619 - (117) 91,502
31,186,396 6,472,355 (8,602,367) 29,056,384
16,910,000 1,210,637 (5,051,141) 13,069,496
2,524,646 - (179,328) 2,345,3 ] 8
340,037 293,482 (240,630) 392,889
29,320 9,853 - 39,173
19,804,003 1,513,972 (5,471,099) 15,846,876
$ 50,990,399 $ 7,986,327 $(14,073,466) $44,903,260
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Over«e«~ of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City of Elk River's basic fmancial statements.
The City's basic financial statements comprise three components: 1) government-wide fmancial statements, 2) fund
financial statements, and 3) notes to the fmancial statements. This report also contains other supplemental 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 oven~iew of the City of Elk
River's finances, in a manner similar to aprivate-sector business.
The statement of net assets presents information on all of the City of Ells River's assets and liabilities, with the difference
between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of
whether the fmancial position of the City of Elk River is improving or deteriorating.
The statement of activities presents information shoeing 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 Elk River 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 Elk River include general government, public safety, public works, culture and
recreation, economic development and interest on long-term debt. The business-type activities of the City of Elk River
include municipal liquor, garbage, sewer, water, and electric.
The government-wide financial statements include not only the City of Elk River itself (known as the primary
government), but also a legally separate Housing & Redevelopment Authority (HRA) for which the City of Elk River is
financially accountable. Financial information for the HRA is reported separately from the fmancial information presented
for the primary government itself. The Elk River Municipal Utilities, although also legally separate, functions for all
practical purposes as a department of the City of Elk River, and therefore has been included as an integral part of the
primary government.
The government-wide financial statements can be found on pages 20 - 22 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 Elk River, like other state and local government,
uses fund accounting to ensure and demonstrate compliance with fmance-related legal requirements. All of the funds of
the City of Elk River can be divided into three categories: governmental funds, proprietary funds and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide fmancial statements. However, unlike the government-wide fmancial
statements, governmental fund fmancial statements focus on near-term inflows and outflows of spendable resources, as
well as on balances of spendable resources available at the end of the fiscal year. Such information maybe useful in
evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to
compare the information presented for governmental funds with similar information presented for governmental activities
in the government-wide financial statements. By doing so, readers may better understand the long-term impact by the
government's near-term fmancing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
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The City of Elk River maintains two individual major governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund
balances for the General fund and Improvement Projects. Data from the other governmental funds are combined into a
single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the
form of combining statements elsewhere in this report.
The City of Elk River adopts an annual appropriated budget for its General fund and some special revenue funds. A
budgetary comparison statement has been provided for those funds to demonstrate compliance v~ith this budget.
• The basic governmental fund fmancial statements can be found on pages 23 - 27 of this report.
Proprietary funds. When the City of Elk River charges customers for the services it provides -whether to outside
customers or to other departments of the City -these services are generally reported in proprietary funds. Proprietary
funds are reported in the same way that all activities are reported in the statement of net assets and the statement of
revenues, expenses, and changes in net assets. The enterprise funds are the same as the business-type activities reported in
the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary
funds. The City of Elk River uses enterprise funds to account for its municipal liquor, garbage, sewer, water, and electric
operations.
The basic proprietary fund financial statements can be found on pages 28 - 35 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government.
Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not
available to support the City of Elk River's own program. The accounting used for fiduciary funds is much like that used
for proprietary funds.
The basic fiduciary fund fmancial statements can be found on page 36 of this report.
Notes to Financial Statements. The notes provide additional information that is essential to a full understanding of the
data provided in the government-wide and fund fmancial statements. The notes to the financial statements can be found on
pages 37 - 64 of this report.
Other Information. In addition to the basic fmancial statements and accompanying notes, this report also presents
certain required supplementary information concerning the City of Elk River's progress in funding its obligation to provide
pension and other postemployment benefits to its employees. Required supplementary information can be found on
page 65 of this report.
The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately
following the required supplementary information. Combining and individual fund statements and schedules can be found
on pages 66 - 89 of this report.
Government-wide Financial Analysis
' As noted earlier, net assets may serve over time as a useful indicator of a government's fmancial position. In the case of
the City of Elk River, assets exceeded liabilities by $200;560,678 at the close of the most recent fiscal year.
' By far, the largest portion of the City of Elk River's net assets (73 percent) reflects its investment in capital assets (e.g.,
land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The
City of Elk River uses these capital assets to provide services to citizens; consequently, these assets are not available for
' future spending. Although the City of Elk River's investment in its capital assets is reported net of related debt, it should
be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
' 12
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City of Elk River Net Assets '
Governmental Business-type
Activities Activities Total
2010 2009 2010 2009 2010 2009 '
Current and other assets $37,928,982 $37.178,428 $24,399,894 $24,144,259 $62,328,876 $61,322,687
Capital assets 112,020,488 115,740,382 76,387,652 79,036,507 188,408,140 194,776,889
Total assets 149,949,470 152,918,810 100.787,546 103,180,766 250,737,016
256,099,576 '
Long-term liabilities
outstanding 29,056,384 31,186,396 15.846,876 19,804,003 44,903,260
50,990,399 '
Other liabilities 2,166,924 2,271,663 3,106,154 3,010,234 5,273,078 5,281,897
Total liabilities 31,223,308 33,458,059 18,953,030 22,814,237 50,176,338 56,272,296 '
Invested in capital assets
net of related debt 84,629,091 86,149,417 60.872,584 59,601.861 145,501,675 145,751,278
Restricted 7,341,554 4,723,030 724,500 724,500 8,066,054
5,447,530 '
Unrestricted 26,755,517 28,588,304 20,237,432 20,040,168 46,992,949 48,628,472
Total net assets $1 18,726,162 $1 19,460,751 $81.834,516 $80,366,529 $200,560,678 $199,827,280 '
An additional portion of the City of Elk River's net assets (4 percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets ($46,992,949) may be used to meet t
the City of Elk River's ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the City of Elk River is able to report positive balances in all three categories of net '
assets, both for the City as a whole, as well as for its separate governmental and business-type activities.
Governmental activities. Governmental activities account for 59% of the City of Elk River's net assets. Governmental
activities decreased the City's net assets by $734,589. '
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Key elements of the relevant changes are as follows:
City of F1k River Changes in Net Assets
Governmental
Activities
Business-type
Activities Total
2010 2009 2010 2009 2010 2009
Revenues:
Progam revenues:
Charges for services $ 2,300,004 $ 2,150,803 $37,439,166 $35,270,716 $ 39,739,170 $ 37,421,519
Operatinggants and contributions 763,551 758,958 103,324 92,957 866,875 851,915
Capital gants and contributions 1,318,660 2,599,593 480,325 267,233 1,798,985 2,866,826
General revenues:
Property taxes 12,325,851 12,521,]33 - - 12,325,851 12,521,133
Other taxes 193,466 156,894 - - 193,466 156,894
Grants and contributions not
restricted to specific progams 2,000,923 1,940,274 - - 2,000,923 1,940,274
Unrestricted investment earnings 359,733 548,651 220,602 367,883 580,335 916,534
Gain on disposal of capital assets 61,308 20,013 - - 61,308 20,013
Total revenues 19,323,496 20,696,319 38,243,417 35,998,789 57,566,913 56,695,108
Expenses
General government 3,028,102 2,777,568 - - 3,028,102 2,777,568
Public safety 6,011,477 6,106,181 - - 6,011,477 6,106,181
Public works 5,447,282 5,397,058 - - 5,447,282 5,397,058
Culture and recreation 3,702,671 3,767,312 - - 3,702,671 3,767,312
Economic development 1,438,742 1,569,432 - - 1,438,742 1,569,432
Interest on long-term debt 1,085,149 1,252,493 - - 1,085,149 1,252,493
Municipalliquor - - 5,267,455 5,374,867 5,267,455 5,374,867
Garbage - - 1,331,514 1,256,177 1,331,514 1,256,177
Sewer - - 1,965,055 1,784,428 1,965,055 1,784,428
Water - - 2,100,552 2,348,707 2,100,552 2,348,707
Electric - - 25,455,516 23,269,553 25,455,516 23,269,553
Totalexpenses 20,713,423 20,870,044 36,120,092 34,033,732 56,833,515 54,903,776
Increase (decrease) in net
assets before transfers (1,389,927) (173,725) 2,123,325 1,965,057 733,398 1,791,332
Transfer of capitalassets (303,051) - 303,051 - - -
Transfers 958,389 1,045,002 (958,389) (1,045,002) - -
Chang in net assets (734,589) 871,277 1,467,987 920,055 733,398 1,791,332
Net assets -beginning 119,460,751 118,589,474 80,366,529 79,446,474 ]99,827,280 198,035,948
Net assets -ending $ 118,726,162 $ 119,460,751 $81,834,516 $80,366,529 $200,560,678 $199,827,280
• Local Government Aid and Market Value Homestead Credit decreased by approximately $680,000 due to aid
cuts by the State.
• Special assessments levied in 2010 were about $465,000 lower than in 2009 due to a decrease in development
activity.
• Investment income decreased by $189,000 due to market rate conditions.
• For the most part, decreases in expenses were due to sound fiscal control by city departments.
14
Business-type activities. Business-type activities increased the City of Elk River's net assets by $],467,987. Key
elements of this increase are as follows:
• Charges for services for business-type activities increased over $2,100,000 when compared to 2009. This increase
was due to increased electric usage related to the warmer summer weather in 2010. The electric utility accounts
for 72% of the total charges for services.
• The increase in operating expenses is a result from the increase in purchased power for the electric utility of
$2,200,000 or 14% over 2009.
Expenses and Program Revenues -Business-type Activities
$30, 000,000
$25,000,000 __~ _~~ __.. ,, _
~~~ #~
$15,000,000 - _. a__,~._- _~~_.~. ~ ___.__~..~ ,
:~
__
$]0,000,000 _~__.~_~. ra.. ~__a___ ~:~.__.~_...____ .
- ~ 4
$5,000,000 '~ ~ _-___ K ._ _ _ , _ >
_ .. .. m
Municipal liquor Garbage Sewer Water Electric
^ Revenue ^ Expense
16
Financial Analysis of the Government's Funds
Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows,
outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements.
In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for
spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of
$3 ],514,713. Approximately 13% of this total amount ($4,175,700) constitutes unassigned fund balance. The remainder of
fund balance ($27,339,013) is not available for new spending because it is either 1) nonspendable ($93,080) , 2) restricted
($6,936,113), 3) committed ($2,598,316) or 4) assigned ($17,711,504) for other purposes.
The General fund is the chief operating fund of the City of Elk River. The total fund balance of the General fund increased
$165,866 during the current year. Key factors are as follows:
• Total revenues were under budget by $175,000. Property tax collections were down by $90,000, gravel tax
collections were down by $72,000 and interest income was down by $97,000.
• Licenses and permits and charges for services were over budget due to a couple of large building/expansion
projects.
• Expenditures were under budget by $484,000 due to sound fiscal control by city departments.
The Improvement Projects fund increased $310,982, due to special assessment collections and no significant improvement
projects during 2010.
Proprietary funds. The City of Elk River's proprietary funds provide the same type of information found in the
government-wide statements, but in more detail.
Unrestricted net assets in the respective proprietary funds are Municipal Liquor - $4,629,560, Garbage - $500,819,
Sewer - $4,774,365, Water - $2,974,745, and Electric - $7,257,689. The Sewer fund net assets decreased $256,534 due
mainly to the increase in depreciation expense related the sewer system improvements in 2009. All other proprietary funds
had increases in net assets.
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General Fund Budgetary Highlights '
Differences between the original budget and the final budget for the General fund amounted to $147,111. The revenue
budgets were amended to reflect the addition of cable franchise taxes, an increase in building permit collections, the award '
of a federal grant for project conserve, and reduction in the fire contract due to decreased fire calls. The expenditure
budgets were amended to reflect the increase in expenditures related to the federal grant award and additional recreation
programs.
Capital Asset and Debt Administration '
Capital Assets. The City of Elk River's investment in capital assets for its governmental and business type activities as of ,
December 31, 2010, amounts to $188,408,140 (net of accumulated depreciation). This investment in capital assets includes
land, buildings, improvements, equipment and infrastructure. The total decrease in the City of Elk River's investment in
capital assets for the current year was 3 percent (a 3 percent decrease for governmental activities and a 3 percent decrease
for business-type activities). '
Major capital asset events during the current fiscal year included the following:
• $463,000 in park improvements and equipment, $483,000 in public safety vehicles and $339,000 in public works
equipment.
• Reconstruction of residential and collector streets totaled $473,000.
• Completion in 2010 of a new east/west street corridor within the City which totaled $4,066,000. '
• System improvements for Electric totaled $998,000.
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City of>F1k River Capital Assets
(Net of Depreciation)
t Governmental Business-type
Activities Activities
Total
2010 2009 2010 2009 2010 2009
' Land $ 37,469,632 $ 37,407,782 $ 1,516,631 $ 1,516,631 $ 38,986,263 $ 38,924,413
Construction in progress 4,555,760 418,985 84,648 418,985 4,640,408
Buildings 26,491,458 27,751,898 12,290,251 12,938,824 38,781,709 40,690,722
Other improvements 2,530,725 2,497,413 - - 2,530,725 2,497,413
Equipment 3,799,930 3,635,105 1,182,440 1,359,287 4,982,370 4,994,392
Infrastructure 41,728,743 39,892,424 60,979,345 63,137,117 102,708,088 103,029,541
' Total $112,020,488 $115,740,382 $ 76,387,652 $ 79,036,507 $188,408,140 $ 194,776,889
' Additional information on the City's capital assets can be found in Note 3D on pages 48 - 49 of this report.
Long-term debt. At the end of the current fiscal year, the City had total long-term debt outstanding of $44,903,260, a
decrease of $6,087,139 from 2009. General obligation improvement bonds ($22,002,000) were issued to finance the
' construction of a library, a recreation facility, a public safety/city hall facility, and a street corridor project. General
obligation revenue bonds ($13,660,000) were used to finance the construction of an ice arena, a liquor store, and sewer,
water and electric systems. Special assessment bonds ($3,460,000) fmanced improvement projects within the City and are
' assessed to the benefiting properties. Tax increment bonds ($375,000) fmanced the City's economic development program.
Certificates of indebtedness ($87,400) financed capital equipment purchases.
' City of F1k River Outstanding Debt
Governmental Bus fines s-type
Activities Activities Total
' 2010 2009 2010 2009 2010 2009
Bonds payable:
CzO. bonds $ 22,002,000 $ 16,677,757 $ - $ - $ 22,002,000 $ 16,677,757
' G.O. revenue bonds 540,000 700,000 13,120,000 16,910,000 13,660,000 17,610,000
Lease revenue bonds 6,175,000 6,175,000
Special assessment bonds 3,460,000 3,970,000 - - 3,460,000 3,970,000
Tax increment bonds 375,000 440,000 ~ ~ 375,000 440,000
' Certificates of indebtedness 87,400 421,716 87,400 421,716
Unamortized premium and
deferred amount on refunding (197,749) - (50,504) - (248,253) -
' 4
Total bonds payable, net 26,266,651 28,384,473 13,069,496 16,910,000 39,336,147 45,294,
73
Capital leases 8,496 16,992 8,496 16,992
' ~ ~
Contracts for deeds 1,491,250 1,629,500 1,491,250 1,629,500
Notes payable - - 2,345,318 2,524,646 2,345,318 2,524,646
Compensated absences. 1,198,485 1,063,812 392,889 340,037 1,591,374 1,403,849
' Net OPI.B obligation 91,502 91,619 39,173 29,320 130,675 120,939
Total $ 29,056,384 $ 31,186,396 $ 15,846,876 $ 19,804,003 $44,903,260 $ 50,990,399
' 18
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Additional long-term debt in the amount of $8,496 is for capital leases, $1,491,250 is for contracts for deeds, $2,345,318 is '
for notes payable, $1,591,374 is for compensated absences, and $130,675 is for other postemployment benefits obligations.
The City maintains a bond rating of AA+ from Standard & Poor's for general obligation debt.
State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Taxable
Market Value. The current debt limitation for the City of Elk River is $64,126,188. Only $16,876,673 of the City's net
outstanding debt is counted within the statutory limitation.
Additional information on the City of Elk River's long-term debt can be found in Note 3G on pages 51 - 55 of this report.
Economic Factors and Next Year's Budget
The City of Elk River estimates that the demand for city services will grow at a slower level as in prior years due to the
economic slowdown in building activity. This was taken into consideration in preparation of the City's 2011 budget. The
property tax levy is set annually and is adjusted as necessary to fund the cost of providing services to our citizens and
customers. Charges for services are evaluated each year and adjusted if warranted. The City expects to keep the tax rate
consistent in upcoming years.
Requests for Information
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This financial report is designed to provide a general overview of the City of Elk River's finances for all those with an '
interest in the City's finances. Questions concerning any of the information provided in this report or requests for
additional financial information should be addressed to City of Elk River, Attn: Finance Director, 13065 Orono Pkwy, Elk
River, Minnesota 55330 or by calling (763) 635-1000.
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BASIC FINANCIAL STATEMENTS
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cty of
Elk -~-1 ~
River
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This page has been left blank intentionally
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CITY OF ELK RIVER, MINNESOTA
STATEMENT OF NET ASSETS
DECEMBER 31, 2010
Primary Government
ASSETS
Cash and investments
Restricted cash and investments
Receivables (net);
Interest
Taxes
Accounts
Special assessments
Notes
Due from other governments
Due from primary government
Internal balances
Inventories
Prepaid items
Deferred charges
Property held for resale
Capital assets:
Nondepreciable
Depreciable (net)
Total assets
LIABILITIES
Accounts payable
Salaries payable
Due to other governments
Due to component unit
Accrued interest payable
Unearned revenue
Non-current liabilities:
Due within one year
Due in more than one year
Total liabilities
NET ASSETS
Invested in capital assets,
Governmental Business-type
Activities Activities Total
$ 31,938,327 $ 18,520,199 $ 50,458,526
- 724,500 724,500
164,426 49,146 213,572
742,184 - 742,184
458,354 2,596,968 3,055,322
3,655,454 - 3,655,454
888,816 - 888,816
73,933 20,939 94,872
(138,857) 138,857 -
- 1,956,307 1,956,307
93,080 163,216 256,296
53,265 229,762 283,027
Component
Unit - HRA
$ 688,616
18,582
400,000
295,619
720,000
37,469,632 1,935,616 39,405,248 -
74,550,856 74,452,036 149,002,892 -
149,949,470 100,787,546 250,737,016 2,122,817
675,478 2,655,559 3,331,037 45
262,008 108,234 370,242 2,106
- 122,280 122,280 -
295,619 - 295,619 -
456,846 198,947 655,793 -
476,973 21,134 498,107 -
2,723,424 1,722,211 4,445,635 -
26,332,960 14,124,665 40,457,625 -
31,223,308 18,953,030 50,176,338 2,151
net of related debt 84,629,091 60,972,838 145,601,929 -
Restricted for:
Debt service 3,787,324 724,500 4,511,824 -
Landfill mitigation 1,478,516 - 1,478,516 -
Economic development 2,075,054 - 2,075,054 -
Law enforcement 660 - 660 -
Unrestricted 26,755,517 20,137,178 46,892,695 2,120,666
Total net assets $ 118,726,162 $ 81,834,516 $ 200,560,678 $ 2,120,666
The notes to the financial statement s are an integral part of this statement.
20
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2010
Functions/Prosrams
Primary Government:
Governmental Activities:
General government
Public safety
Public works
Culture and recreation
Economic development
Interest on long-term debt
Total governmental activities
Business-type Activities:
Municipal liquor
Garbage
Sewer
Water
Electric
Total business-type activities
Total primary government
Component Unit:
Housing and Redevelopment Authority
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
$ 3,028,102 $ 301,509 $ 40,127 $ -
6,011,477 722,073 255,484 20,740
5,447,282 61,605 117,749 983,553
3,702,671 1,089,058 304,485 314,367
1,438,742 125,759 45,706 -
1,085,149 - - -
20,713,423 2,300,004 763,551 1,318,660
5,267,455 5,953,626 - -
1,331,514 1,282,013 103,324 -
1,965,055 1,483,120 - 242,230
2,100,552 1,944,185 - 173,334
25,455,516 26,776,222 - 64,761
36,120,092 37,439,166 103,324 480,325
$ 56,833,515 $ 39,739,170 $ 866,875 $ 1,798,985
$ 220,402 $ - $ 33,211 $ -
General revenues:
Property taxes:
Levies for general purposes
Levies for debt service
Tax increments
Other taxes
Grants and contributions not restricted
Unrestricted investment earnings
Gain on disposal of capital assets
Transfers of capital assets
Transfers
Total general revenues and transfers
Change in net assets
Net assets -beginning
Net assets -ending
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The notes to the financial statements are an integral part of this statement.
21 '
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental Business-Type Component
Activities Activities Total Unit - HRA
$ (2,686,466) $ - $ (2,686,466) $ -
(5,013,180) - (5,013,180) -
(4,284,375) - (4,284,370 -
(1,994,761) - (1,994,761) -
(1,267,277) - (1,267,277) -
(1,085,149) - (1,085,149) -
(16,331,208) - (16,331,208) -
- 686,171 686,171 -
- 53,823 53,823 -
- (239,705) (239,705) -
- 16,967 16,967 -
- 1,385,467 1,385,467 -
- 1,902,723 1,902,723 -
(16,331,208) 1,902,723 (14,428,485) -
- (187,191)
10,231,542 - 10,231,542 310,513
1,023,210 - 1,023,210 -
1,071,099 - 1,071,099 -
193,466 - 193,466 -
2,000,923 - 2,000,923 11,703
359,733 220,602 580,335 6,910
61,308 - 61,308 -
(303,051) 303,051 - -
958,389 (958,389) - -
15,596,619 (434,736) 15,161,883 329,126
(734,589) 1,467,987 733,398 141,935
119,460,751 80,366,529 199,827,280 1,978,731
$ 118,726,162 $ 81,834,516 $ 200,560,678 $ 2,120,666
22
CITY OF ELK RIVER, MINNESOTA '
GOVERNMENTAL FUNDS
BALANCE SHEET
DECEMBER 31, 2010 '
General Improvement Other
Governmental Total
Governmental
Fund Projects Funds Funds
ASSETS
Cash and investments $ 6,321,652 $ 4,394,334 $ 21,222,341 $ 31,938,327
Receivables: ,
Interest 39,119 23,034 102,273 164,426
Taxes 563,529 5,775 172,880 742,184
Accounts 10,564 - 447,790 458,354 '
Special assessments - 1,459,835 2,195,619 3,655,454
Notes - - 888,816 888,816
Due from other governments
Due from other funds 38,819
80,149 12,018
- 23,096
675,870 73,933
756,019 '
Due from component unit 5,052 - - 5,052
Prepaid items - - 93,080 93,080
Total assets $ 7,058,884 $ 5,894,996 $ 25,821,765 $ 38,775,645 '
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 356,405 $ 1,208 $ 317,865 $ 675,478 '
Salaries payable 244,226 - 17,782 262,008
Due to other funds 7,164 - 887,712 894,876
Due to component unit - - 300,671 300,671
Deferred revenue
444,624
1,462,738
3,220,537
5,127,899 '
Total liabilities 1,052,419 1,463,946 4,744,567 7,260,932
Fund balances:
Nonspendable
-
-
93,080
93,080 '
Restricted - - 6,936,113 6,936,113
Committed 91,502 - 2,506,814 2,598,316
Assigned 727,443 4,431,050 12,553,011 17,711,504 '
Unassigned 5,187,520 - (1,011,820) 4,175,700
Total fund balances 6,006,465 4,431,050 21,077,198 31,514,713
Total liabilities and fund balances $ 7,058,884 $ 5,894,996 $ 25,821,765 $ 38,775,645 '
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The notes to the fmancial statements are an integral part of this statement.
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CITY OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET ASSETS
DECEMBER 31, 2010
FUND BALANCE -TOTAL GOVERNMENTAL FUNDS
Amounts reported for govermnental activities in the statement of net assets are different because:
1. Capital assets used in governmental acti~rities are not current fmancial resources
and therefore are not reported in the governmental funds:
Governmental capital assets
Less accumulated depreciation
2. Deferred revenue in governmental funds is susceptible to full accrual on the
govermnent-wide statements.
3. Long-term liabilities are not payable with current fmancial resources and are
therefore not reported in the governmental funds:
Bonds payable
Unamortized premium, issuance costs and deferred charge from refunding
Capital leases
Contracts for deeds
Accrued interest payable
Compensated absences
Net OPEB obligation
NET ASSETS OF GOVERNMENTAL ACTIVITIES
The notes to the fmancial statements are an integral part of this statement.
24
$163,419,909
(51,399,421)
$ 31,514,713
112,020,488
4,650,926
(26,464,400)
251,014
(8,496)
(1,491,250)
(456,846)
(1,198,485)
(91,502) (29,459,965)
$118,726,162
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CITY OF ELK RIVER, ~'IINNESOTA
STATEIVIENT OF REVENUES, EXPENDITURES, AN-D CHANGES IN FUND BALANCES
GOVER~N>\~NT.~I. FUNDS
FOR THE YEAR E'~~ED DECEMBER 31, 2010
REVENUES
Taxes:
Property taxes
Other taxes
Licenses and permits
Intergovernmentalrevenue
Charges for services
Fines and forfeits
Special assessments
Interest income
Miscellaneous:
Landfill host fee
Refunds and reimbursements
Other
Total revenues
EXPENDITURES
Current:
General government
Public safety
Public works
Culture and recreation
Economic development
Debt service:
Principal
Interest and service charges
Bond issuance costs
Capital outlay:
General government
Public safety
Public works
Culture and recreation
Infrastructure/development projects
Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Issuance of debt
Issuance of refunding bonds
Premium on debt issued
Payment to refunded bond escrow agent
Sale of capital assets
Total other financing sources (uses)
Net change in fund balances
Fund balances -January 1
Fund balances -December 31
Other Total
Genera] Improvement Goverrunental Governmental
Fund Projects Funds Funds
$ 9,377.409 $ 51,874 5 2,926,670 $ 12,355,953
193,466 - - 193,466
402,076 - - 402,076
348,073 12,018 .774,969 1,13 5,060
533,476 2,729 1,191,071 1,727,276
132,968 - 28,106 161,074
- 238,137 761,496 999,633
62,779 49,240 247,712 359,731
- - 1,290,351 1,290,351
66,625 - 107,031 173,656
30,583 - 1,093,181 1,123,764
11,147,455 353,998 8.420,587 19,922,040
2,480,825 - 148,906 2,629,731
5,258,550 - 8,253 5,266,803
1,777,912 42,202 471,082 2,291,196
1,596,267 - 973,197 2,569,464
- - 1,512,138 1,512,138
- - 2,411,062 2,411,062
- - 1,126,789 1,126,789
- - 56,204 56,204
69,754 - - 69,754
10,303 - 482,065 492,368
3,741 - 330,122 333,863
- - 279,735 279,735
- 40,814 663,070 703,884
11,197,352 83,016 8,462,623 19,742,991
(49,897) 270,982 (42,036) 179,049
596,100 40,000 2,046,462 2,682,562
(380,337) - (1,343,836) (1,724,173)
- - 79,243 79,243
- - 6,105,000 6,105,000
- - 255,238 255,238
- - (6,303,897) (6,303,897)
- - 61,308 61,308
215,763 40,000 899,518 1,155,281
165,866 310,982 857,482 1,334,330
5,840,599 4,120,068 20,219,716 30,180,383
$ 6,006,465 $ 4,431,050 $ 21,077,198 $ 31,514,713
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The notes to the fmancial statements are an integral part of this statement. '
25
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CITY OF ELK RIVER, >\IINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EKPENDITURES,
A1STD CHANGES IN FUND BALANCES OF GOVER.NDIENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
YEAR ENDED DECEA'IBER 31, 2010
Amounts reported for govermmental activities in the statement of activities are different because:
NET CHANGE 1N FUND BALANCES -TOTAL GOVERNMENTAL FUNDS
1. Governmental funds 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. This is the amount by
which depreciation exceeded capital outlays in the current period.
Capital outlay
Depreciation expense
2. The net effect of various miscellaneous transactions involving capital assets
including transfers and disposals, which decrease net assets.
Transfers of capital assets
Disposals
Depreciation on disposals
3. Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the governmental funds.
Property taxes
Special assessments
Notes receivable
4. The issuance of long-term debt provides current financial resources to governmental
funds, while the repayment of the principal of long-term debt consumes the current
fmancial resources of governmental funds. Neither transaction, however, has any
effect on net assets. This amount is the net effect of these differences in the
treatment of long-term debt and related items.
Issuance of long-term debt
Repayment of principal of long-term debt
Payment to escrow agent for refunding
Bond premium
Issuance costs
5. Some expenses reported in the statement of activities do not require use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
' Accrued interest payable
Amortization of issuance premium
Amortization of issuance costs
Amortization of deferred charge from refunding
' Compensated absences
Net OPEB obligation
' CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES
The notes to the fmancial statements are an integral part of this statement.
$ 1,872,345
(5,287,075)
(303,051)
(858,399)
856,286
(30,101)
(581,586)
26,835
(6,184,243)
2,411,062
6,303,897
(255,238)
56,204
52,550
13,346
(2,939)
(24,256)
(134,673)
117
$ 1,334,330
(3,414,730)
(305,164)
(584,852)
2,331,682
(95,855)
$ (734,589)
' 26
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J
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CITY OF ELK RIVER, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2010
Budget Variance with
Original Final Actual Final Budget
REVENUES
Taxes:
Property taxes $ 9,467,850 $ 9,467,850 $ 9,377,409 $ (90,441)
Other taxes 135,000 266,111 193,466 (72,645)
Licenses and permits 299,050 369,050 402,076 33,026
Intergovernmental revenue 288,900 338,900 348,073 9,173
Charges for services 540,700 488,050 533,476 45,426
Fines and forfeits 135,000 135,000 132,968 (2,032)
Interest income 160,000 160,000 62,779 (97,221)
Miscellaneous revenue:
Refunds and reimbursements 72,000 72,000 66,625 (5,375)
Other 25,200 25,200 30,583 5,383
Total revenues 11,123,700 11,322,161 11,147,455 (174,706)
EXPENDITURES
Current:
General government 2,649,500 2,693,750 2,480,825 212,925
Public safety 5,355,700 5,355,700 5,258,550 97,150
Public works 1,894,300 1,894,300 1,777,912 1 16,388
Culture and recreation 1,640,650 1,647,750 1,596,267 51,483
Capital outlay:
General government 70,900 70,900 69,754 1,146
Public safety 11,400 11,400 10,303 1,097
Public works 8,300 8,300 3,741 4,559
Total expenditures 11,630,750 11,682,100 11,197,352 484,748
Excess (deficiency) of revenues
over (under)expenditures (507,050) (359,939) (49,897) 310,042
OTHER FINANCING SOURCES (USES)
Transfers in 596,100 596,100 596,100 -
Transfers out (414,050) (414,050) (380,337) 33,713
Total other financing sources (uses) 182,050 182,050 215,763 33,713
Net change in fund balance (325,000) (177,889) 165,866 343,755
Fund balance -January 1 5,840,599 5,840,599 5,840,599 -
Fund balance -December 31 $ 5,515,599 $ 5,662,7]0 $ 6,006,465 $ 343,755
The notes to the financial statements are an integral part of this statement.
27
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF NET ASSETS '
PROPRIETARY FtINDS
DECEMBER 31, 2010
Municipal Liqu or Garbage
Current Year Prior Year Current Year Prior Year
ASSETS
Current assets: '
Cash and investments $ 4,122,226 $ 3,826,409 $ 467,670 $ 363,322
Restricted cash and investments - - - -
Cash with fiscal agent - - - -
Receivables (net): '
Interest 2],608 21,185 2,290 1,935
Accounts - 1,181 12,028 7,297
Due from other governments - - 19,312 53,099
Due from other funds
-
-
106,340
95,831 '
Inventories 899,467 852,451 - -
Prepaid items 4,678 7,688 - -
Total current assets 5,047,979 4,708,914 607,640 521,484 '
Noncurrent assets:
Deferred charges 1,688 2,102 - -
Capital assets:
Nondepreciable
823,761
823,761
-
- '
Depreciable 3,051,787 3,270,350 - -
Accumulated depreciation (1,224,548) (1,319,981) - -
Total capital assets 2,651,000 2,774,130 - -
Total noncurrent assets
2,652,688
2,776,232
-
- '
Total assets 7,700,667 7,485,146 607,640 521,484
LIABILITIES 1
Current liabilities:
Accounts payable 303,366 367,839 105,995 137,266
Salaries payable 18,099 18,022 826 720
Due to other governments
-
-
-
- '
Due to other funds - - - -
Unearned revenue 1,967 1,525 - -
Accrued interest 16,500 18,375 - -
Compensated absences payable -current
29,464
24,789
-
- '
Notes payable -current - - - -
Bonds payable -current 150,000 100,000 - -
Total current liabilities 519,396 530,550 106,821 137,986 '
Noncurrent liabilities:
Compensated absences payable 46,585 58,586 - -
Net other postemployment benefits obligation 4,126 4,126 - -
Notes payable
-
-
-
- ,
Bonds payable 730,000 880,000 - -
Total noncurrent liabilities 780,71 1 942,712 - -
Total liabilities 1
300
107 I
473
262 106
821 137
986 '
,
, ,
, , ,
NET ASSETS
Invested in capital assets, net of related debt
1,771,000
1,794,130
-
- '
Restricted for debt service - - - -
Unrestricted 4,629,560 4,217,754 500,819 383,498
Total net assets $ 6,400,560 $ 6,011,884 $ 500,819 $ 383,498 '
Th
t
t
th
f
i
l
i l
e no
es
o
inanc
e
a
statements are an ntegra
part of this statement.
28 '
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Sewer
Current Year Prior Year
Water
Current Year Prior Year
Electric
Current Year
Prior Year
Total
$ 4,550,144 S 3,954,869 8 2,793,142 S 2,500,960 S 6,587,017 $ 5,366,820 S 18,520,199
_ _ - 724,500 724,500 724,500
- - - 2,588,901 - - -
23,853 21,893 279 27,684 1,116 26,090 49,146
15,516 2,813 113,693 101,538 2,455,731 2,061,623 2,596,968
_ _ _ - 1,627 37,124 20,939
289,674 291,222 128,850 128,850 7,264 1,581 532,128
- - 38,748 28,722 1,018,092 1,034,829 1,956,307
- - 18,422 12,184 140,116 75,288 163,216
4,879,187 4,270,797 3,093,134 5,388,839 10,935,463 9,327,855 24,563,403
13,340 15,964 99,959 110,622 114,775 117,724 229,762
411,095 411,095 93,049 81,539 607,711 284,884 1,935,616
36,880,768 36,886,514 32,183,277 31,688,565 51,051,029 50,450,158 123,166,861
(13,651,175) (12,662,155) (9,969,185) (9,013,862) (23,869,917) (21,864,361) (48,714,825)
23,640,688 24,635,454 22,307,141 22,756,242 27,788,823 28,870,681 76,387,652
23,654,028 24,651,418 22,407,100 22,866,864 27,903,598 28,988,405 76,617,414
28,533,215 28,922,215 25,500,234 28,255,703 38,839,061 38,316,260 101,180,817
62,320 34,806 45,672 29,818 2,138,206 1,958,988 2,655,559
13,359 11,545 4,295 5,515 71,655 60,809 108,234
_ _ 2 - 122,278 107,997 122,280
- - 13,350 14,810 379,921 305,232 393,271
- - 19,167 - - - 21,134
16,422 18,589 54,765 114,136 111,260 124,284 198,947
14,661 11,350 46,805 37,998 113,845 79,840 204,775
_ _ _ - 182,436 179,328 182,436
160,000 160,000 477,000 3,012,500 548,000 512,500 1,335,000
266,762 236,290 661,056 3,214,777 3,667,601 3,328,978 5,221,636
6,449 9,387 34,292 30,893 100,788 87,194 188,114
4,951 4,951 - - 30,096 20,243 39,173
_ _ _ - 2,162,882 2,345,318 2,162,882
905,000 1,065,000 3,615,899 4,167,500 6,483,597 7,012,500 11,734,496
916,400 1,079,338 3,650,191 4,198,393 8,777,363 9,465,255 14,124,665
1,183,162 1,315,628 4,311,247 7,413,170 12,444,964 12,794,233 19,346,301
22,575,688 23,410,454 18,214,242 15,576,242 18,411,908 18,821,035 60,972,838
_ _ _ - 724,500 724,500 724,500
4,774,365 4,196,133 2,974,745 5,266,291 7,257,689 5,976,492 20,137,178
$ 27,350,053 $ 27,606,587 $ 21,188,987 $ 20,842,533 $ 26,394,097 $ 25,522,027 $ 81,834,516
29
11
CITI' OF ELK RIA~R MINNESOTA
STATEMENT OF RE«NUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2010
Municipal Liquor Garbage
Current Year Prior Year Current Year Prior Year
Sales and cost of sales:
Sales $ x,948,986 $ 6,076,245 $ - $ -
Cost of sales (4,273,029) (4,34,597) - -
Gross profit 1,675,957 1,721,648 - -
Operating revenues:
User charges - - 1,271,275 1,188,754
Delinquency collections - - 10,738 6,183
Other 4,640 4,727 103,324 92,957
Total operating revenues 4,640 4,727 1,385,337 1,287,894
Operating expenses:
Personal services 579,959 595,758 29,705 29,631
Supplies 32,639 13,755 23,268 41,438
Purchased power - - - -
Other service charges 218,309 239,496 1,278,541 1,185,108
Depreciation 123,130 126,391 - -
Total operating expenses 954,037 975,400 1,331,514 1,256,177
Operating income (loss) 726,560 750,975 53,823 31,717
Nonoperating revenues (expenses):
Connection charges - - - -
Interest income 43,920 68,932 5,041 6,783
Miscellaneous revenue - 13,086 - -
Interest expense (39,975) (44,456) - -
Amortization expense (414) (414) - -
Gain (]oss) on disposal of capital assets - - - -
Total nonoperating revenues (expenses) 3,531 37,148 5,041 6,783
Income before contributions and transfers 730,091 788,123 58,864 38,500
Capital contributions - - - -
Transfers in - - 58,457 25,639
Transfers out (341,415) (400,500) - -
Change in net assets 388,676 387,623 117,321 64,139
Total net assets -January 1 6,011,884 5,624,261 383,498 319,359
Total net assets -December 31 $ 6,400,560 $ 6,011,884 $ 500,819 $ 383,498
The notes to the financial statements are an integral part of this statement.
30
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1
Sewer Water Electric Total
Current Year Prior Year Current Year Prior Year Current Year Prior Year Current Year
S _ $ _ S _ $ _ ~, _ $ - S 5,948,986
_ _ _ _ - - (4,273,029)
_ _ _ _ _ - 1,675,957
1,465,988 1,502,423 1,876,363 2,182,110 26,316,948 23,846,258 30,930,574
15,407 - 19,723 24,319 237,319 209,064 283,187
1,725 2,362 - - 173,534 172,421 283,223
1.483,120 1,504,785 1,896,086 2,206,429 26,727,801 24,227,743 31,496,984
441,058 398,697 370,523 423,126 1,773,380 1,700,994 3,194,625
89,443 100,902 248,259 248,326 116,299 133,347 509,908
_ _ _ - 18,527,610 16,318,126 18,527,610
398,640 403,649 370,954 430,985 2,681,960 2,647,498 4,948,404
993,042 833,135 955,323 956,993 2,062,942 2,126,794 4,134,437
1
922
183 1
736
383 1,945,059 2,059,430 25,162,191 22,926,759 31,314,984
,
, ,
,
(439,063) (231,598) (48,973) 146,999 1,565,610 1,300,984 1,857,957
242,230 105,647 173,334 83,378 64,761 78,208 480,325
49,895 71,859 31,798 132,452 89,948 87,857 220,602
- - 48,099 12,387 48,421 30,377 96,520
(40,248) (45,421) (143,361) (274,958) (272,897) (299,452) (496,481)
(2,624) (2,624) (12,132) (14,319) (8,819) (11,169) (23,989)
_ _ _ - (11,609) (32,173) (11,609)
249
253 129
461 97,738 (61,060) (90,195) (146,352) 265,368
, ,
(189,810) (102,137) 48,765 85,939 1,475,415 1,154,632 2,123,325
(1,724) - 304,775 - - - 303,051
- - 17,914 - 53,741 - 130,112
(65
000) 000)
(65 (25,000) (20,000) (657,086) (585,141) (1,088,501)
, ,
(256,534) (167,137) 346,454 65,939 872,070 569,491 1,467,987
587
27
606 724
27
773 20,842,533 20,776,594 25,522,027 24,952,536 80,366,529
,
, ,
,
$ 27,350,053 $ 27,606,587 $ 21,188,987 $ 20,842,533 $ 26,394,097 $ 25,522,027 $ 81,834,516
31
li
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
PEAR ENDED DECEMBER 31, 2010
CASH FLO«'S FROM OPERATING ACTIVITIES
Receipts from customers and users
Other operating cash receipts
Payments to suppliers
Pa}nnents to employees
Net cash provided by operating activities
CASH FLO«'S FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers from other funds
Transfers to other funds
Decrease (increase) in due from other funds
Increase (decrease) in due to other funds
Net cash provided (used) by
noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition of capital assets
Proceeds from sale of capital assets
Principal paid on capital debt
Proceeds of refunding bonds issued
Withdrawal from escrow fund
Payment to escrow agent for refunded bond
Interest paid on capital debt
Principal paid on promissory note
Net cash used by capital
and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Net increase in cash and cash equivalents
Cash and cash equivalents, January I
Cash and cash equivalents, December 31
Municipal Liquor Garbage
Current Year Prior Year Current Year Prior Year
$ 6,950,609 $ 6,076;662 $ 1,300,560 $ 1,140,154
4;640 23,143 103,324 92,957
(4,632,456) (4,588,952) (1,333,080) (1,182,124)
(587,208) (593,994) (29,599) (29,579)
735,585 916,859 41,205 21,408
- - 58,457 25,639
(341,415) (400,500) - -
(341,415) (400,500) 58,457 25,639
- (28,556) - -
(100,000) (95,000) -
(41,850) (46,237) - -
(141,850) (169,793) - -
43,497 79,569 4,686 7,635
295,817 426,135 104,348 54,682
3,826,409 3,400,274 363,322 308,640
$ 4,122,226 $ 3,826,409 $ 467,670 $ 363,322
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Reconciliation of cash and cash equivalents '
to the statement of net assets:
Cash and investments $ 4,122,226 $ 3,826,409 $ 467,670 $ 363,322
Restricted cash and invesnnents - - - -
Total cash and cash equivalents $ 4,122,226 $ 3,826,409 $ 467,670 $ 363,322 '
n
The notes to the financial statements are an integral part of this statement.
32 '
Continued
Sewer Water Electric Total
Current Year Prior Year Current Year Prior Year Current Year Prior Year Current Year
' $ 1,712,470 $ 1,609,454 $ 2,053,663 $ 2,419,649 $ 26,414,254 $ 24,114,123 S 37,431,556
1,725 2,362 68,000 65,563 55,110 L,506 232,799
(460,569) (606,043) (650,962) (718,046) (21,426,298) (18,793,418) (28,503,365)
(438,871) (392,540) (325,328) (377,420) (1,446,237) (1,332,138_) (2,827,243)
814,755 613,233 1,145,373 1,389,746 3,596,829 4,001,073 6,333,747
' - - 17,914 - 53,741 - 130,112
(65,000) (65,000) (25,000) (20.000) (657,086) (585,141) (1,088,501)
_ _ _ - (5,683) 1,621 (5,683)
- - (1,460) (3,168) 74,689 (21,385) 73,229
(65,000) (65,000) (8,546) (23,168) (534,339) (604,905) (890,843)
- (319,054) (201,447) (211,199) (998,645) (1,214,469) (1,200,092)
_ _ _ - 5,952 - 5,952
(160,000) (150,000) (3,012,500)
201,506 (426,250) (512,500)
1,105,905 (328,750) (3,785,000)
1,307,411
- - 2,575,000 - - - 2,575,000
- (279,396) - (1,099,671) - (1,379,067)
(42,415) (47,452) (200,912) (280,778) (278,928)
328
179 (306,657)
348)
(177 (564,105)
328)
(179
)
(
, , ,
(202
415) (516
506) (917,749) (918,227) (1,957,215) (2,027,224) (3,219,229)
, ,
47,935 85,880 73,104 117,151 114,922 89,324 284,144
' 595,275 117,607 292,182 565,502 1,220,197 1,458,268 2,507,819
3,954,869 3,837,262 2,500,960 1,935,458 6,091,320 4,633,052 16,736,880
' 550,144 $
$ 4 3,954,869 $ 2,793,142 $ 2,500,960 $ 7,311,517 $ 6,091,320 $ 19,244,699
,
$ 4,550,144 $ 3,954,869 $ 2,793,142 $ 2,500,960 $ 6,587,017 $ 5,366,820 $ 18,520,199
_ _ _ - 724,500 724,500 724,500
' $ 4,550,144 $ 3,954,869 $ 2,793,142 $ 2,500,960 $ 7,311,517 $ 6,091,320 $ 19,244,699
' 33
CITY OF ELK RIFER, A'IINNESOTA
STATEMENT OF CASH FLO~YS
PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2010
Reconciliation of operafing income (loss) to net cash
pro~zded by operating acti~~6es:
Operating income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Other revenue related to operations
Depreciation expense
(Increase) decrease in assets:
Accounts receivable
Due from other funds
Due from other goverments
Inventories
Prepaid items
Increase(decrease)in:
Accounts payable
Salaries payable
Due to other govermnents
Unearned revenue
OPEB liability
Compensated absences payable
Net cash provided by operating activities
Noncash capital and related financing acti~2ties:
Municipal Liquor Garbage
Current Year Prior Year Current Year Prior Year
$ 726,560 $ 750,975 $ 53.823 $ 31;717
- 18,416 - -
123,130 126,391 - -
1,181 105 (4,731) 5,372
- - (10,509) (6,428)
- - 33,787 (53,099)
(47,016) 33,980 - -
3,010 (142) - -
(64,473) (14,941) (31,271) 43,794
77 1,335 106 52
442 311 - -
(7,326) 429 - -
$ 735,585 $ 916,859 $ 41,205 $ 21,408
Amortization of deferred charges $ 414 $ 414 $ - $ -
Amortization of deferred charges on refunding - - - -
Contribution of capital assets from (to) municipality - - - -
Disposal of capital assets 218,563 27,301 - -
Interestpayment on revenue bonds from escrow cash - - - -
The notes to the fmancial statements are an integral part of this statement.
34
Sewer Water Electric Total
Current Year Prior Year Current Year Prior Year Current Year Prior Year Current Year
(439,063) $ (231,598) $ (48,973) $ 146,999 S 1,565,610 $ 1,300,984 $ 1,857,957
242,230 105.647 221,433 95,765 113,182 108,585 576,845
993,042 833,135 955,323 956,993 2,062,942 2,126,794 4,134,437
(12,703) (2,813) (12,155) 187,270 (394,108) (38,435) (422,516)
1,548 4,556 - - - - (8,961)
_ _ _ - 35,497 (33,963) 69,284
- - (10,026) 2,889 16,737 294,630 (40,305)
- - (6,238) (3,497) (64,828) (13,660) (68,056)
27,514 (101,851) 15,854 1,781 179,218 246,563 126,842
1,814 2,739 (1,220) 757 10,846 21,086 11,623
_ _ 2 - 14,281 10,248 14,283
- - 19,167 - - - 19,609
_ _ _ - 9,853 10,030 9,853
373 3,418 12,206 789 47,599 (31,789) 52,852
$ 814
755 $ 613,233 $ 1,145,373 $ 1,389,746 $ 3,596,829 $ 4,001,073 $ 6,333,747
,
$ 2,624 $ 2,624 S 12,132 $ 14,319 $ 8,819 $ 11,169 $ 23,984
- - 1,820 - 6,993 - 8,813
(1,724) - 304,775 - - - 303,051
- 142,238 - - 74,947 266,697 293,510
_ _ - 84,834 - - -
35
CITY OF ELK RIVER, AZINNESOTA
STATEMENT OF FIDUCIARY NET ASSETS
DEVELOPER ESCROW AGENCY FU1VD
DECEMBER 31, 2010
ASSETS
Cash
Accounts receivable
Total assets
LIABILITIES
Refundable deposits payable
The notes to the fmancial statements are an integral part of this statement.
36
Agency
$ 84,348
4.304
$ 88,652
$ 88,652
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2010
' Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
' The City of Elk River operates under the "Optional Plan A" form of government as defined in the State of Minnesota
Statutes. Under this plan, the government of the City is directed by a Council composed of an elected Mayor and four
elected Council Members. The Council exercises legislative authority and determines all matters of policy. The Council
' appoints personnel responsible for the proper administration of all affairs relating to the City. As required by generally
accepted accounting principles, the financial statements of the reporting entity include those of the City of Elk River (the
primary government) and its component units. The Elk River Municipal Utilities is considered to be part of the primary
government.
' The Elk River Municipal Utilities was established and statutory authority is provided in accordance with Chapter
412.321 of the Minnesota Statutes and is considered to be part of the City. The Utilities Commission has three council
' approved members who serve overlapping three year terms. The statutes provide the City Council all the discretionary
authority necessary to operate the utilities, except as its powers have been delegated to the Commission. The Utility
funds are included with the enterprise funds of this report. Separate financial statements for the Utilities maybe obtained
at the Elk River Municipal Utilities, 13069 Orono Pkwy, Elk River.
' The City has considered all potential units for which it is financially accountable, and other organizations for which the
nature and significance of their relationship with the City are such that exclusion would cause the City's financial
' statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth
criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of
an organization's governing body, and (1) the ability of the primary government to impose its will on that organization o
(2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary
' government. The City has the following component units:
Blended Component Unit
' The Economic Development Authority (EDA) was created to carry out economic and industrial development and
redevelopment within the City in accordance with policies established by the City Council. The seven member board
consists of three Council Members, the Mayor and three other council approved members. The EDA may not exercise
' any of its authorized powers without prior approval of the City Council. The activities of the EDA are blended and
reported as a special revenue fund.
' Discretely Presented Component Unit
The Housing and Redevelopment Authority (HRA) is a separate legal entity created for the purpose of providing
redevelopment within the government's jurisdiction. The board consists of five council appointed members, one of
' which is a Council Member. The City Council has the ability to approve the HRA's budget. The HRA is presented as a
governmental fund type. The financial statements for the HRA are included in the financial section of this report.
r
' B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the sta
information on all of the nonfiduciary activities of the
' the effect of interfund activity has been removed from
supported by taxes and intergovernmental revenues, ar
significant extent on fees and charges for support. Lik
' legally separate component units for which the primary
tement of net assets and the statement of activities) report
primary government and its component units. For the most part,
these statements. Governmental activities, which normally are
e reported separately from business-type activities, which rely to a
ewise, the primary government is reported separately from certain
government is financially accountable.
' 37
CITY OF ELK RIVER MINNESOTA '
NOTES TO FINANCIAL STATEMENTS '.
DECEMBER 31, 2010
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED '
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset
by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.
Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, '
services, or privileges pro~~ided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues. '
Separate fmancial 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 funds and major
individual enterprise funds are reported as separate columns in the fund fmancial statements. t
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide fmancial statements are reported using the economic resources measurement focus and the accrual '
basis of accounting, as are the proprietary fund fmancial 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 funds.
Agency funds 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 fmancial resources measurement focus and the '
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are '
collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to
compensated absences and claims and judgments, are recorded only when payment is due. '
Properly taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special
assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the '
current period. All other revenue items are considered to be measurable and available only when cash is received by the
government.
Non-exchange transactions, in which the City receives value without directly giving equal value in return, include '
property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the
year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all
eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year
'
when the resources are required to be used or the year when use is first permitted, matching requirements, in which the
City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the
resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange
transactions must also be available before it can be recognized. '
Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and
entitlements received before eligibility requirements are met are also recorded as deferred revenue. On the modified '
accrual basis, receivables that will not be collected within the available period have also been reported as deferred
revenue in the fund financial statements.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States '
of America requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates. '
38 '
C
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
The government reports the following major governmental funds:
The General fund is the government's primary operating fund. It accounts for all fmancial resources of the general
government, except those required to be accounted for in another fund.
The bnprovement Projects capital projects fund is used to account for the construction of various improvements
within the City.
The government reports the following major proprietary funds:
The Municipal Liguor fund accounts for the operations of the City's off-sale liquor stores.
The Garbage fund accounts for the activities of the City's garbage collection and recycling programs.
The Sewer fund accounts for the activities of the City's sanitary sewer treatment system.
The mater fund accounts for the activities of the City's water distribution system.
The Electric fund accounts for the activities of the City's electric distribution system
Additionally, the government reports the following fund types:
Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. The
Developer Escrow agency fund is used to account for resources received from developers for the payment of
expenses incurred by the City for private development projects. The Developer Escrow agency fund is omitted
from the government-wide financial statements, and is included separately within the statement of fiduciary net
assets.
Private-sector standards of accounting and fmancial reporting issued prior to December 1, 1989, generally are followed
in both the government-wide and proprietary fund fmancial 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 interfund activity has been eliminated from government-wide fmancial statements.
Exceptions to this general rule are charges between the City's sewer, water and electric functions and various other
functions of the government. 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 funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a proprietary
fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds are charges to
' customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
' When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted
resources first, then unrestricted resources as they are needed.
' 39
CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010 '
Note l: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED '
D. Assets, Liabilities, and Net Assets or Equity
I. Deposits and Investments '
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments
with original maturities of three months or less from the date of acquisition.
Cash balances from al] funds are combined and invested to the extent available in authorized investments. Earnings ,
from such investments are allocated to the respective funds on the basis of applicable cash balance participation of
each fund. Investments are reported at fair value, based upon quoted market prices. The Minnesota Municipal ,
Money Market fund operates in accordance with appropriate State of Minnesota laws and regulations. The reported
value of the pool is the same as the fair value of the pool shares
2. Receivables and Payables '
Due To/From Other Funds
During the course of operations, numerous transactions occur between individual funds for goods provided or '
services rendered. These receivables and payables are classified as "due from other funds" or "due to other funds" on
the balance sheets of the fund financial statements. Any residual balances outstanding between the governmental
activities and business-type activities are reported in the government-wide financial statements as "internal balances." '
Property Taxes
The City Council annually adopts a tax levy and certifies it to the County in December each year for collection the '
following year. The County is responsible for collecting all property taxes for the City. These taxes attach an
enforceable lien on taxable property as of January 1 and are payable by the property owner in May and October each
year. The taxes are collected by the County Treasurer and tax settlements are made to the City three times a year, in '
January, July and December.
Taxes payable on homestead property, as defined by Minnesota statutes, are partially reduced by a market value
credit aid. The credit is paid to the City by the State in lieu of taxes levied against the homestead property. The State '
remits this credit in two equal installments in October and December each year.
In the fund financial statements, taxes that remain unpaid at December 31 are classified as delinquent taxes receivable '
and are fully offset by deferred revenue, because they are not known to be available to finance current expenditures.
Deferred revenue in governmental activities is susceptible to full accrual on the government-wide statements.
Accounts Receivable '
Accounts receivable include amounts billed for services provided before year end. It is the City's policy to charge
uncollectibles directly to operations as accounts become worthless. The Utilities has established a reserve for '
uncollectible accounts which is adjusted annually based on the receivable activity. No substantial losses from present
receivable balances are anticipated. A summary of the Utilities' uncollectible account balances at December 31,
2010 and December 31, 2009 is as follows:
Increase '
2010 2009 (Decrease)
Electric $ 78,750 $ 78,750 $ -
Water 26,250 26,250 - '
Total $ 105,000 $ 105 000 $ -
~~
40 '
LI
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Special Assessments
Special assessments receivable include the following components:
• Delinquent -includes amounts billed to property owners but not paid.
• Deferred -includes assessment installments that will be billed to property owners in future
years.
Special assessments in the fund fmancial statements are recognized as receivable and deferred revenue when the levy
against the benefited property is adopted by the City Council and certified to the County for collection. Deferred
revenue for governmental activities is susceptible to full accrual on the government-wide statements.
Notes Receivable
The City received grant proceeds from the State of Minnesota to fund economic development projects. These funds
have been loaned to several businesses and the terms of repayment vary with each loan. Notes receivable in the
Revolving Loan fund is offset by deferred revenue. Deferred revenue in governmental activities is susceptible to full
accrual on the government-wide statements.
3. Inventories and Prepaid Items
For the proprietary funds, inventories are valued at cost, which approximates market, using the first-in, first-out
(FIFO) method. Inventories are recorded as an expense when sold or consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in
both government-wide and fund financial statements.
4. Restricted Assets
The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond
issues. They will be used for future debt service.
5. 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 fmancial statements. Capital assets are defined by the government as assets with an initial, individual cost of
more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or
' estimated historical cost if purchased or constructed. 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. Donated capital assets are recorded at
estimated fair market value at the date of donation.
' With the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities), the City
chose to include all such items regardless of their acquisition date. The City was able to obtain historical costs for the
initial reporting of these assets through public works project records. Major expenditures for improvements or capital
' asset projects 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, net of interest
earned on the invested proceeds over the same period.
' 41
CTTY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTLNTG POLICIES -CONTINUED
Property, plant, and equipment of the City, as well as the component units, are depreciated using the straight line
method over the following estimated useful lives:
Assets Years
Buildings and improvements 10 - 40
Other park improvements 10 - 20
Machinery and equipment 3 - 20
Public domain infrastructure 15 - 50
System infrastructure 4 - 50
6. Compensated Absences
It is the government's policy to permit employees to accumulate earned but unused vacation and sick pay benefits.
Unused vacation can be accrued by the employees up to a maximum of 240 hours, the limit of which is determined
by years of service. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial
statements. A liability for these amounts is reported in governmental funds only if they have matured, for example,
as a result of employee resignations and retirements. In the event a liability is recorded in the governmental funds,
the General fund would be used to liquidate the compensated absences payable.
Employees can also accrue an unlimited amount of unused sick leave. Employees with two or more years of service
are entitled to receive severance pay equal to 50 percent of unused sick leave, up to a maximum of 480 hours. The
liability for severance pay is accounted for the same as accrued vacation pay.
7. Long-term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term
debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type
activities, or proprietary fund type statement of net assets. Material bond premiums and discounts, as well as
issuance costs and refunding gains/losses, are deferred and amortized over the life of the bonds using the straight-line
method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond
premium or discount and refunding gains/losses. Bond issuance costs are reported as deferred charges and amortized
over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond
issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
8. Fund Balance
In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to
which the City is bound to observe constraints imposed upon the use of resources reported in governmental funds.
These classifications are as follows:
Nonspendable -consists of amounts that cannot be spent because it is not in spendable form, such as prepaid
items.
Restricted -consists of amounts related to externally imposed constraints established by creditors, grantors or
contributors; or constraints imposed by state statutory provisions.
Committed -consists of amounts that are constrained for specific purposes that are internally imposed by formal
action (resolution) of the City Council. Those committed amounts cannot be used for any other purpose unless
42
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ii
ii
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
City Council removes or changes the specified use by taking the same type of action it employed to previously
commit those amounts.
Assigned -consists of amounts intended to be used by the City for specific purposes but do not meet the criteria
to be classified as restricted or committed. In governmental funds other than the general fund, assigned fund
balance represents the remaining amount that is not restricted or committed. In the general fund, assigned
amounts represent intended uses established by the governing body itself or by an official to which the governing
body delegates the authority. Pursuant to City Council Resolution, the City's Finance Director and/or City
Administrator is authorized to establish assignments of fund balance.
Unassigned - is the residual classification for the general fund and also reflects negative residual amounts in
other funds.
The City uses restricted amounts to be spent first when both restricted and unrestricted fund balance is available.
Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund
balance when expenditures are made.
The City Council has formally adopted a fund balance policy for the General Fund. The City's policy is to maintain a
minimum unassigned fund balance of 40% of budgeted operating expenditures for cash-flow timing needs.
' 9. Net Assets
~I
In the government-wide financial statements, net assets represent the difference between assets and liabilities. Net
assets are displayed in three components:
a. Invested in capital assets, net of related debt -Consists of capital assets, net of accumulated depreciation
reduced by any outstanding debt attributable to acquire capital assets.
b. Restricted net assets -Consist of net assets restricted when there are limitations imposed on their use
through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c. Unrestricted net assets -All other net assets that do not meet the definition of "restricted" or "invested in
capital assets, net of related debt".
' 10. Comparative Data/Reclassifications
Comparative total data for the prior year have been presented only for individual enterprise funds in the fund
' financial statements in order to provide an understanding of the changes in the financial position and operations of
these funds. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent
with the current year's presentation.
Note 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
' A. Budgetary Information
Annual budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated
' budgets are legally adopted for the General fund and the Library, Ice Arena, Pinewood Golf Course, Landfill and
Economic Development Authority special revenue funds. Project-length financial plans are adopted for all capital
projects funds. All annual appropriations lapse at fiscal year end.
' 43
CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY -CONTINUED
On or before July 1 of each year, al] departments and agencies of the City submit requests for appropriation to the City's
administrator so that a budget may be prepared. Before September 15, the proposed budget is presented to the City
Council for review and approval. The City Council holds public hearings and may add to, subtract from, or change '
appropriations. Any changes in the budget must be within the revenue and reserves estimated as available or the revenue
estimates must be changed by an affirmative vote by a majority of the City Council.
The budget is prepared by fund, function, and activity and includes information on the past year, current year estimates, '
and requested appropriations for the next fiscal year. Expenditures may not legally exceed budgeted appropriations at
the fund level without Council approval. Spending control is established by the amount of expenditures budgeted for the
fund, but management control is exercised at the department level. Reported budget amounts are as originally adopted or
as amended by Council approved supplemental appropriations and budget transfers. Supplemental budgetary '
appropriations decreased $147,111 due mainly to the increase in cable franchise fees and licenses and permits.
B. Deficit Fund Equity ,
The following funds had deficit fund balances at December 31, 2010:
Primary Government ,
Capital Projects Funds
Park Dedication $ 691,159
TIF Districts 320,661 '
The City plans to eliminate these deficits through future park dedication and tax increment fund revenues.
Note 3: DETAILED NOTES ON ALL FUNDS '
A. Deposits and Investments '
Deposits
Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or '
the City will not be able to recover collateral securities in the possession of an outside party. In accordance with
Minnesota statutes, the City maintains deposits at the 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 1 10% of the deposits not covered by
insurance or bonds. Authorized collateral includes the legal investments as prescribed by Minnesota statutes, as well as
certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that '
securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that
furnishing the collateral.
At year end, the City's carrying amount of deposits was $9,524,043 and the bank balance was $ ] 0,799,072. The bank ,
balance was covered by federal depository insurance totaling $750,000 and the remaining balance was covered by
securities held by the pledging financial institution's agent in the City's name.
The carrying amount of deposits for the HRA, a discretely presented component unit, was $688,616 and the bank ,
balance was $688,616. The bank balance was covered by federal depository insurance and securities held by the
pledging financial institution's agent in the HRA's name.
ii
44 '
' CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2010
' Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Investments
' Minnesota Statutes and the City's investment policy authorize the City to invest in the following:
a. Direct obligations or obligations guaranteed by the United States or its agencies.
' 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.
' c. General obligations of the State of Minnesota or any of its municipalities.
d. Bankers acceptances of United States Banks eligible for purchase by the Federal Reserve System.
' e. Commercial paper of the highest quality issued by United States corporations or their Canadian subsidiaries and
maturing in 270 days or less.
The City's investment policy follows Minnesota State Statutes which reduces the City's exposure to credit, custodial
' credit and interest rate risks. Specific risk information for the City is as follows:
• Custodial credit risk -For investments, custodial credit risk is the risk that in the event of a failure of the
' counterparty, the government would not be able to recover the value of its investment or collateral securities
that are in the possession of an outside party. As of December 31, 2010 all investments were insured or
registered, or securities were held by the City or its agent in the City's name.
' • Credit risk -Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. State law limits investments in commercial paper that is rated in the highest quality category by at
least two nationally recognized rating agencies. The City's investment policy does not further limit the ratings
' of their investments.
• Concentration risk -Concentration risk is the risk of loss that may be caused by the city's investment in a single
' issuer. The City does not have a formal policy that limits the amount of investments in a single issuer. As of
December 31, 2010, more than 5% of the City's investments were held in the following U.S. Agencies: Federal
Home Loan Bank (27%), Federal National Mortgage Association (16%), and Federal Home Loan Mortgage
' Corporation (7%).
• Interest rate risk - In accordance with its investment policy, the City diversifies its investment portfolio to
eliminate the risk of loss resulting from the over-concentration of assets in a specific maturity. The maturities
' selected shall provide for stability of income and reasonable liquidity.
The Minnesota Municipal Money Market Fund (4M Fund) is an external investment pool allowable under Minnesota
Statutes and regulated by the Board of Directors of the League of Minnesota Cities. The 4M Fund is a customized cash
management and investment program for Minnesota public funds designed to address the daily and long term investment
needs of Minnesota cities and other municipal entities. The 4M Fund is an unrated Za7-like pool and the fair value of the
position in the pool is the same as the value of pool shares. Financial statements of the 4M Fund can be obtained by
' contacting Voyageur Asset Management at 100 South Fifth Street Suite 2300, Minneapolis, MN 55402-1240.
' 45
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
As of December 31, 2010, the City had the following investments that are insured or registered, or securities held by the
City or its agent in the City's name.
Fair Value
Credit Segmented and
Quality/ Time Carrying
Types of Investments Ratings (1) Distribution (2) Amount
Pooled investments:
Minnesota Municipal Money Market Fund N/A Less than 6 months $ 9,348,989
Broker Money Markets N/A Less than 6 months 540,508
Total pooled investments 9,889,497
Non-pooled investments:
U.S. Government Securities AAA 1 to 5 years 12,706,838
AAA More than 5 years 9,433,799
Total U.S. Government Securities 22,140,637
Negotiable CD's N/A Less than 6 months 4,458,219
6 to 12 months 786,456
1 to 5 years 4,463,797
Total negotiable CD's 9,708,472
Total non-pooled investments 31,849,109
Total investments 41,738,606
Deposits 9,524,043
Cash on hand 4,725
Total cash and investments $ 51,267,374
(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable.
Cash and investments are presented in the fmancial statements as follows:
Primary Component
Statement of Net Assets
Cash and investments
Restricted cash and investments
Statement of Fiduciary Net Assets
Cash and investments
Total
Government Unit - HRA
$ 50,458,526 $ 688,616
724,500 -
84,348 -
$ 51,267,374 $ 688,616
46
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
B. Notes Receivable
The City has made several business subsidy loans to local businesses, some of which were funded with grant proceeds
received from the state and federal governments. The terms of repayment vary with each loan and will be repaid over a
period of five years. Under the terms of the grant agreement, the City retains the grant repayments. Notes receivable of
$477,204 in the Revolving Loan fund, and $411,612 in the DTED GrantlLoan fund are outstanding at December 31,
2010.
In 2006, the HRA issued a loan to a developer to assist in the financing of a housing development for the benefit of low
and moderate income residents which was funded with state grant proceeds. Repayment of the loan is deferred for 30
years, payable in one lump sum at an interest rate of one percent.
C. Deferred Revenue
Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be
available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection
with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components
of deferred revenue and unearned revenue reported in the governmental funds were as follows:
Delinquent property taxes receivable:
General fluid
Improvement projects fund
Nonmajor funds
Unavailable Unearned
$ 444,624 $ -
5,141 -
92,93 8 -
Delinquent special assessments:
Improvement projects fund
Nonmajor funds
Special assessments not yet due:
Improvement projects fund
Nonmajor funds
Notes receivable not yet due:
Nonmaj or funds
Unearned park dedication credits:
Nonmajor funds
Unearned miscellaneous fees:
Nonmajor funds
Total
97,608 -
62,960 -
1,359,989 -
2,110,462 -
477,204 -
- 473,569
- 3,404
$ 4,650,926 $ 476,973
' 47
CITY OF ELK RIVE MINNESOTA ,
NOTES TO FINANCIAL STATEMENTS '
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED '
D. Capital Assets
In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the '
government-wide statement of net assets. Capital asset activity for the year ended December 31, 2010 was as follows:
Beginning Ending
Primary Government
Balance
Additions
Deletions
Balance '
Governmental activities:
Capital assets not being depreciated:
Land
$ 37,407,782
$ 61,850
$ -
$ 37,469,632 '
Construction in progress 4,555,760 - (4,555,760) -
Total capital assets
not being depreciated 41,963,542 61,850 (4,555,760) 37,469,632
Capital assets being depreciated: '
Buildings 36,111,988 121,533 - 36,233,521
Other improvements 4,325,930 316,222 - 4,642,152
Equipment
9,358,539
1,001,916
(414,393)
9,946,062 ,
Infrastructure 70,951,929 4,649,760 (473,147) 75,128,542
Total capital assets
being depreciated 120,748,386 6,089,431 (887,540) 125,950,277
Less accumulated depreciation for: '
Buildings 8,360,090 1,381,973 - 9,742,063
Other improvements 1,828,517 282,910 - 2,111,427
Equipment 5,723,434 808,751 (386,053) 6,146,132
Infrastructure
31,059,505
2,813,441
(473,147}
33,399,799 '
Total accumulated depreciation 46,971,546 5,287,075 (859,200) 51,399,421
Total capital assets
being depreciated, net
73,776,840
802,356
(28,340)
74,550,856 '
Governmental activities
capital assets, net $ 115,740.382 $ 864.206 $ (4,584,1001 $ 112,020,488
Business-type activities: '
Capital assets not being depreciated:
Land $ 1,516,631 $ - $ - $ 1,516,631
Construction in progress 84,648 985,062 (650,725} 418,985 '
Total capital assets
not being depreciated 1,601,279 985,062 (650,725) 1,935,616
Capital assets being depreciated: '
Buildings 19,561,353 - (218,563) 19,342,790
Equipment 4,721,187 111,857 (80,693) 4,752,351
Collection and distribution 98,013,047 1,058,673 - 99,071,720
Total capital assets '
being depreciated 122,295,587 1,170,530 (299,256) 123,166,861
Less accumulated depreciation for:
Buildings
6,622,529
648,573
(218,563)
7,052,539 ,
Equipment 3,361,900 269,419 (61,408) 3,569,911
Collection and distribution 34,875,930 3,216,445 - 38,092,375
Total accumulated depreciation 44,860,359 4,134,437 (279,971) 48,714,825 '
Total capital assets
being depreciated, net 77,435,228 (2,963,907) (19,285) 74,452,036
'
Business-type activities
capital assets, net $ 79,036,507 $ (1,978,845) $ (670,010) $ 76,387,652
48 '
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities:
General government $ 318,141
Public safety 696,245
Public works 3,143,899
Culture and recreation 1,128,790
Total depreciation expense -governmental activities $ 5,287,075
Business-type activities:
Municipal liquor $ 123,130
Sewer 993,042
Water 955,323
Electric 2,062,942
Total depreciation expense -business-type activities $ 4,134,437
E. Interfund Receivables, Payables, and Transfers
The composition of interfund balances as of December 31, 2010 is as follows:
Due to/from other funds:
Receivable Fund
General
General
General
Garbage
Sewer
Sewer
Water
Electric
Electric
Nonmajor governmental funds
Nonmajor governmental funds
Nonmajor governmental funds
Payable Fund Amount
Electric $ 57,838
Water 13,3 50
Nonmajor governmental funds 8,961
Electric 106,340
Electric 117,874
Nonmajor governmental funds 171,800
Nonmajor governmental funds 128,850
General 7,164
Nonmajor governmental funds 100
Electric 97,869
Water 128,850
Nonmaj or governmental funds 449,151
Total $ 1,288,147
49
CITY OF ELK RIVER MINNESOTA 1
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010 '
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED '
The interfund receivable and payable balances result mainly from the distribution of utility collections and the
lending/borrowing arrangements between funds.
Due to/from component unit:
Receivable Entity Payable Entity Amount
'
Primary government -General Fund Component unit - HRA $ 5,052
Component unit - HRA Primary government - TIF Districts 300,671 '
Interfund transfers:
Governmental funds: Transfer In Transfer Out '
Major funds -
General $ 596,100 $ 380,337
Improvement projects 40,000 - '
Nonmajor funds 2,046,462 1,343,836
Total governmental funds 2,682,562 1,724,173
'
Proprietary funds:
Municipal liquor - 341,415
Garbage 58,457 -
Sewer
-
65,000 ,
Water 17,914 25,000
Electric
Total proprietary funds 53,741
130
112 657,086
1
501
088 '
, ,
,
Total $ 2,812,674 $ 2,812,674
Interfund transfers are used to 1) allocate resources to the funds that received benefit from services provided by another
fund, 2) move revenues from the fund with collection authorization to debt service fun ds as principal and interest
payments come due, and 3) close completed bond and project funds. '
F. Leases
The City has entered into a lease agreement as lessee for fmancing the acquisition of golf course equipment. The lease '
agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of
the future minimum lease payments as of the inception date. '
The assets acquired through capital leases are as follows:
Governmental '
Asset: Activities
Equipment $ 42 480
Less: Accumulated depreciation (21,240) '
Total $ 21,240
50 ,
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
The future minimum lease obligations and the net present value of these minimum lease payments as of December 31,
2010, were as follows:
Governmental
Year Ending Dec. 31. 2011 Activities
Total minimum lease payments $ 8,496
G. Long-term Debt
Long-term debt obligations outstanding at year end are summarized as follows:
PRIlI2ARY GOVERNMENT
GOVERNMENTAL ACTIVITIES:
General Obligation Bonds:
2006C G.O. Capital Improvement Bonds
2007D EDA G.O. Bonds
2008A EDA G.O. Bonds
State-Aid Road Bonds
2010A G.O. Capital Improvement Bonds
Total general obligation bonds
General Obligation Revenue Bonds:
1996C G.O. Ice Arena Bonds
Special Assessment Bonds:
2003A G.O. Improvement Bonds
2005A G.O. Improvement Bonds
2007C G.O. Improvement Bonds
Total special assessment bonds
Tax Increment Bonds
2000A G.O. Tax Increment Bonds
Certificates of Indebtedness:
2006B G.O. Equipment Certificates
Total bonded indebtedness
Capital lease
Contracts for deeds
Compensated absences payable
Net OPEB obligation
Total governmental activities indebtedness
Issue Maturity Interest Authorized Payable
Date Date Rate and Issued 12/31/10
12/14/2006 2/1/2027 3.80-4.05% $ 3,220,000 $ 2,910,000
11/8/2007 2/1/2033 3.80-4.30% 10,000,000 10,000,000
2/20/2008 2/1/2015 3.38% 2,000,000 1,510,000
7/7/2008 8/20/2013 1.31% 2,431,500 1,477,000
4/21/2010 2/1/2023 2.00-4.00% 6,105,000 6,105,000
23,756,500 22,002,000
8/1/1996 12/1/2013 5.70% 2,100,000 540,000
12/9/2003 2/1/2014 2.00-4.00°/a 1,255,000 330,000
6/14/2005 2/1/2016 2.75-3.70% 1,070,000 660,000
6/26/2007 2/1/2018 4.00% 3,090,000 2,470,000
5,415,000 3,460,000
11/1/2000 2/1/2015 4.45-5.30% 800,000 375,000
6/1/2006 2/1/2011 3.80°/a 437,000 87,400
32,508,500 26,464,400
9/13/2006 11/1/2011 42,480 8,496
10/31/2007 4/6/2013 5.00-6.00% 2,125,000 1,491,250
- 1,198,485
- 91,502
$ 34,675,980 $ 29,254,133
51
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
1~Tote 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Issue Maturity Interest Authorized Payable
PRIMARY GOVERNMENT Date Date Rate and Issued 12/31/10
BUSII~TESS-TYPE ACTIVITIES:
General Obligation Revenue Bonds:
2003B G.O. Water Revenue Bonds
2004A Electric Revenue Bonds
2005B G.O. Sewer Revenue Refunding Bonds
2005C Liquor Revenue Bonds
2006A Electric Revenue Bonds
2007A Electric Revenue Bonds
2008A Water Revenue Refunding Bonds
2010A G.O. Capital Improvement Bonds
Total bonded indebtedness
Promissory note
Compensated absences payable
Net OPEB obligation
Total business-type activities indebtedness
Total City indebtedness
12/9/2003
8/1/2004
6/ 14/2005
6/1/2005
3/2/2006
3/28/2007
2/20/2008
4/21/2010
2/ 1 /2014
2/1/2015
2/1 /2016
2/1/2015
8/1 /2021
2/1/2022
2/1/2022
8/1/2023
3/19/2002 12/31/2022
2.00-3.70% 1,995,000 895,000
3.00-4.25% 940,000 525,000
3.00-4.00% 1,660,000 1,065,000
4.50% 1,200,000 880,000
3.15-4.00% 3,595,000 2,830,000
4.00% 2,875,000 2,705,000
2.50-3.65% 3,085,000 2,955,000
2.00-4.00% 1,265,000 1,265,000
16,615,000 13,120,000
3,521,000 2,345,318
- 392,889
- 39,173
$ 20,136,000 $ 15,897,380
$ 54,811,980 $ 45,151,513
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I~
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUND5 -CONTINUED
Annual debt service requirements to maturity for long-term obligations are as follows:
Primary Government -Governmental Activities
G.O. Bonds G.O. Revenue Bonds Special Assessment Bonds
Principal Interest Principal Interest Principal Interest
2011 $ 1,326,000 $ 773,513 $ 170,000 $ 30,780 $ 505,000 $ 124,185
2012 1,317,000 744,673 180,000 21,090 505,000 105,223
2013 1,344,000 715,172 190,000 10,830 510,000 85,980
2014 870,000 684,867 - - 475,000 67,020
2015 900,000 660,258 - - 420,000 49,625
2016 - 2020 5,220,000 2,791,005 - - 1,045,000 57,928
2021 - 2025 5,155,000 1,707,986 - - - -
2026 - 2030 3,605,000 850,036 - - - -
2031 -2033 2,265,000 149,103 - - - -
Total $ 22,002,000 $ 9,076,613 $ 540,000 $ 62,700 $ 3,460,000 $ 489,961
Primary Government -Governmental Activities
Tax Increment Bonds Certificates of Indebtedness Contracts for deeds
Principal Interest Principal Interest Principal Interest
2011 $ 70,000 $ 17,458 $ 87,400 $ 1,661 $ 81,250 $ 88,762
2012 70,000 13,975 - - - 84,600
2013 75,000 10,312 - - 1,410,000 84,600
2014 80,000 6,320 - - - -
2015 80,000 2,120 - - - -
Total $ 375,000 $ 50,185 $ 87,400 $ 1,661 $ 1,491,250 $ 257,962
Primary Government -Business-Type Activities
G.O. Revenue Bonds Notes Payable
Principal Interest Principal Interest
2011 $ 1,335,000 $ 458,485 $ 182,436 $ -
2012 1,380,000 412,054 183,444 -
2013 1,455,000 362,728 186,588 -
2014 1,515,000 309,958 189,348 -
2015 1,255,000 259,648 191,508 -
2016 - 2020 4,425,000 782,310 992,628 -
2021 -2023 1,755,000 76,198 419,366 -
Total $ 13,120,000 $ 2,661,381 $ 2,345,318 $ -
53
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Long-term liability activity for the year ended December 31, 2010 was as follows:
PRIMARY GOVERNMENT
GOVERNMENTAL ACTIVITIES:
Bonds payable:
General obligation bonds
G.O. revenue bonds
Lease revenue bonds
Special assessment bonds
Tax increment bonds
Certificates of indebtedness
Deferred amounts:
Issuance premium
On refunding
Total bonds payable, net
Capital lease
Contracts for deeds
Compensated absences
Net OPEB obligation
Governmental activity
long-term liabilites
BUSINESS-TYPE ACTIVITIES:
Bonds payable
G.O. revenue bonds
Deferred amounts:
Issuance premium
On refunding
Total bonds payable, net
Notes payable
Compensated absences
Net OPEB obligation
Business-type activity
long-term liabilities
Beginning Ending
Balance Additions Reductions Balance
0
Due Within '
One Year
$ 16,677,757 $ 6,184,243 $ (860,000) $ 22,002,000 $ 1,326,000
700,000 - (160,000) 540,000 170,000
6,175,000 - (6,175,000) - -
3,970,000 - (510,000) 3,460,000 505,000
440,000 - (65,000) 375,000 70,000
421,716 - (334,316) 87,400 87,400
- 255,238 (13,346) 241,892 -
- (463,897) 24,256 (439,641) -
28,384,473 .5,975,584 (8,093,406) 26,266,651 2,158,400
16,992 - (8,496) 8,496 8,496
1,629,500 - (138,250) 1,491,250 81,250
1,063,812 496,771 (362,098) 1,198,485 475,278
91,619 - (117) 91,502 -
$ 31,186,396 $ 6,472,355 $ (8,602,367) $ 29,056,384 $ 2,723,424
$ 16,910,000 $ 1,265,000 $ (5,055,000) $ 13,120,000 $ 1,335,000
- 53,550 (3,800) 49,750 -
- (107,913) 7,659 (100,254) -
$ 16,910,000 $ 1,210,637 $ (5,051,141) $ 13,069,496 $ 1,335,000
2,524,646 - (179,328) 2,345,318 182,436
340,037 293,482 (240,630) 392,889 204,775
29,320 9,853 - 39,173 -
$ 19,804,003 $ 1,513,972 $ (5,471,099) $ 15,846,876 $ 1,722,211
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Total primary government
long-term liabilities $ 50,990,399 $ 7,986.327 $(14,073,466) $ 44,903,260 $ 4.445.635
COMPONENT UNIT
Contract for deed
$ 270,588 $ $ (270,588) $ $ -
For the governmental activities, bonds payable can be summarized in the following categories:
The general obligation bonds were used to construct a library, a recreation facility and fmance a street improvement ,
project. The recreation facility is leased to the YMCA, which has pledged to pay one-third of the $11,510,000
bonds outstanding. The bonds are general obligations of the City and are backed by its full faith and credit.
,
The general obligation revenue bonds were used for the expansion of an indoor ice arena. The bonds are payable
from revenues of the ice arena but are backed by the full faith and credit of the City.
54 '
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0
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
The lease revenue bonds were used for the construction of city hall and a public safety building and the expansion of
city hall.
The special assessment bonds are used to finance assessable improvements within the City. The bonds are payable
primarily from special assessments levied against properties benefited by the improvements. In addition, the bonds
are general obligations of the City and are backed by its full faith and credit.
The tax increment bonds are used to finance land acquisition and other public costs to facilitate development within
the tax increment district. The bonds are payable from tax increment revenues generated by existing and new
development within the district. In addition, the bonds are general obligations of the City and are backed by its full
faith and credit.
' The certificates of indebtedness are used to finance the purchase of capital equipment. The certificates are general
obligations backed by the full faith and credit of the City.
For the governmental activities, the City also entered into a capital lease to finance the purchase of capital equipment and
' contracts for deeds were used to finance the acquisition of park property. Compensated absences are generally liquidated
through the General fund.
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For the business-type activities, the general obligation revenue bonds are used to finance the acquisition and construction
of major capital facilities. The bonds are payable from net revenues of the benefiting enterprise fund but are backed by
the full faith and credit of the City. The City also issued a promissory note to provide for the construction of a landfill
gas generator. The note is to be paid from revenue of the system and is secured by the facility.
On Apri121, 2010, the City issued $7,370,000 of G.O. Capital Improvement Plan Bonds, Series 2010A, bearing an
average coupon rate of 3.57 percent, to provide resources for the advance refunding of $5,840,000 of the Public Safety
Building Lease Revenue Bonds, Series 2002A and $1,270,000 of the City Hall Expansion Revenue Bonds, Series
2002B, which will be redeemed on February 1, 2013 The proceeds of the Series 2010A Bonds were deposited into an
escrow account which shall pay the principal and interest on the Series 2002A and Series 2002B Bonds due Apri121,
2010 through February 1, 2013 and pay the principal being called on February 1, 2013. The transaction resulted in a
reduction of $325,734 of future debt service payments, which is a present value savings of $284,826.
The HRA entered into a contract for deed for the purchase of property for subsequent resale for redevelopment purposes.
A. Fund Balance Classification
At December 31, 2010, a summary of the governmental fund balance classifications are as follows:
' Nonspendable:
Prepaid items
Other
General Improvement Governmental
Fund Projects Funds Total
$ - $ - $ 93,080 $ 93,080
' Restricted for:
Debt service $ - $ - $ 3,400,239 $ 3,400,239
Landfill mitigation = _ 1,478,516 1,478,516
' Economic development 2,056,698 2,056,698
Law enforcement - - 660 660
Total restricted - - 6,936,113 6,936,113
' S5
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Committed to:
Library operations
Ice arena
Senior citizen programs
Economic development
Insurance reserve
OPEB obligation
Total committed
Assigned to:
2011 budget
Subsequent years budgets
Severance pay
Landfill mitigation
Capital equipment
Building construction/improvements
Street improvements
Other improvement projects
Park improvements
Total assigned
Note 4: OTHER INFORMATION
A. Risk Management
General
F,m~
Other
Improvement Governmental
Projects Funds
$ - $
91,502
91,502
- $ 423,356
- 6,743
- 9,003
- 1,726,622
- 341,090
- 2,506,814
$ 336,600 $ -
339,630 -
51,213 =
- 4,431,050
727,443 4,431,050
Total
$ 423,356
6,743
9,003
1,726,622
341,090
91,502
2,598,316
$ - $ 336,600
- 339,630
- 51,213
228,589 228,589
2,294,082 2,294,082
3,478,897 3,478,897
5,112,597 5,112,597
1,256,876 5,687,926
181,970 181,970
12,553,011 17,711,504
The City is exposed to various risks of loss related to torts; theft of damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains insurance
through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with
approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation
and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for
claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City's coverage
in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IB1VRs). The City's
management is not aware of any incurred but not reported claims.
B. Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally
the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the
applicable funds. The amount, if any, of expenditures that maybe disallowed by the grantor cannot be determined at this
time, although the government expects such amounts, if any, to be immaterial.
The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA).
Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. The City's
management is not aware of any instances of noncompliance which would have a material effect on the fmancial
statements.
56
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' CITY OF ELK RIVER MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2010
' Note 4: OTHER INFORMATION -CONTINUED
C. Territorial Acquisition Agreement
' The Utilities has entered into an agreement to transfer ov~mership of electric plant and electric service to customers in
certain areas currently receiving electric service from Connexus Energy.
' The cost of property purchased from Connexus Energy will be net book value. The Utilities will also pay for loss of
revenue for each area acquired based on a formula outlined in the agreement.
In addition, the Utilities will compensate Connexus Energy for the loss of revenue from the future sale of electricity to
' electric customers in the areas acquired from Connexus Energy for a period often years from the date of sale of each
individual area.
' During 2010 and 2009, the Utilities paid $110,662 and $9,469, respectively, under this agreement, including $8,107 in
2010 and $9,469 in 2009 for loss of revenues. All amounts paid are included in properly and equipment.
' D. Pension Plans
1. Public Employees Retirement Association
' a. Plan Description
All full-time and certain part-time employees of the City of Elk River are covered by defined benefit pension
plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers
' the General Employees Retirement Fund (GERF) 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 Statutes, Chapters 353 and 356.
' GERF 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, fire fighters and peace officers who qualify for membership by statute are
covered by the PEPFF.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon
death of eligible members. Benefits are established by state statute, and vest after three years of credited
' service. The defined retirement benefits are based on a member's highest average salary for any five successive
years of allowable service, age, and years of credit at termination of service.
' Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring
member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula
(Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary
for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a
' Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each
remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan
' members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the
annuity accrual rate is 3.0 percent for each year of service. For all PEPFF and GERF members hired prior to
July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of
service equa190. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated members
hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at
' 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to
eligible members seeking early retirement.
' S7
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS '
DECEMBER 31, 2010
Note 4: OTHER INFORMATION -CONTINUED '
There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime
annuity that ceases upon the death of the retiree-no survivor annuity is payable. There are also various types '
of joint and survivor annuity options available which will be payable over joint lives.
Members may also leave their contributions in the fund upon termination of public ser~rice in order to qualify
for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who '
leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to '
active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them
yet are bound by the provisions in effect at the time they last terminated their public service.
PERA issues a publicly available financial report that includes financial statements and required supplementary '
information for GERF and PEPFF. That report maybe obtained on the Internet at www.mnpera.or~, by writing
to PERA, at 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651) 296-7460 or 1-800-
652-9026.
b. Funding Policy '
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are '
established and amended by the state legislature. The City makes annual contributions to the pension plans
equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members are
required to contribute 9.1% and 6.0%, respectively, of their annual covered salary in 2010. PEPFF members '
were required to contribute 9.4% of their annual covered salary in 2010. In 2010, the City of Elk River is
required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan members,
7% for Coordinated Plan members, and 14.1% for PEPFF members. Employer contribution rates for the
Coordinated Plan will increase to 7.0%, effective January 1, 2010. The Ciry's contributions to the Public '
Employees Retirement Fund for the years ending December 31, 2010, 2009, and 2008 were 501,726, $496,994,
and $496,832, respectively. The City's contributions to the Public Employees Police & Fire Fund for the years
ending December 31, 2010, 2009, and 2008 were $357,977, $340,677, and $317,807, respectively. The City's '
contributions were equal to the contractually required contributions for each year as set by state statute.
c. Defined Contribution Plan
Three council members of the City of Elk River are covered by the Public Employees Defined Contribution '
Plan (PEDCP), amultiple-employer deferred compensation plan administered by the Public Employees
Retirement Association of Minnesota (PERA). The PEDCP is a tax qualified plan under Section 401(a) of the '
Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of
withdrawal.
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative ,
expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and
employer contribution rates for those qualified personnel who elect to participate. An eligible elected official
who decides to participate contributes 5 percent of salary which is matched by the elected official's employer. '
For salaried employees, employer contributions are determined by the employer and must be a fixed percentage
of salary. Employees who are paid for their services may elect to make member contributions in an amount not
to exceed the employer share. Employer and employee contributions are combined and used to purchase shares
in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the '
plan, PERA receives 2 percent of employer contributions and twenty-five hundredths of one percent of the
assets in each member's account annually.
58 '
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 4: OTHER INFORMATION -CONTINUED
Total contributions made by the City of Elk River during fiscal year 2010 were:
Contribution Amount Percentage of Covered Payroll Required
Employee Employer Employee Employer Rates
$1,470 $1,470 5.0% 5.0% 5.0%
2. Volunteer Fire Department Relief Association
a. Plan Description
The Elk River Fire Relief Association is the administrator of a single employer public employee defined benefit
retirement system (PERS) established to provide benefits for members of the Elk River Fire Department.
The Fire Relief Association maintains a separate Special fund to accumulate assets to fund the retirement
benefits earned by the Fire Department's membership. Funding for the relief association is derived primarily
from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing
Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980).
The Fire Relief Association issues a publicly available fmancial report that includes financial statements and
required supplementary information. The report may be obtained by writing to the Elk River Fire Department
Relief Association, 13073 Orono Parkway, Elk River, MN 55330.
b. Funding Policy
The fmancial requirements of the Special fund are determined in accordance with Section 69.772 of the
Minnesota Statutes, which requires the payment of pension benefits in a lump sum or optionally in annual
installments. The Association is comprised of volunteers and therefore members have no contribution
requirements. During the year, the City recognized as revenue and as expenditure on-behalf payments of
$101,255 made by the State of Minnesota for the Fire Relief Association. The following summarizes the City's
annual pension cost and other related information for the current year:
Annual Pension Cost $131,255
Contributions Made:
City $30,000
State Aid $101,255
Actuarial Valuation Date 12/31/10
Actuarial Cost Method Entry age normal
Amortization Method Level dollar closed
Remaining Amortization Period:
Normal cost 20 years
Prior service cost 5 years
Asset valuation method Market
Actuarial Assumptions
Investment rate of return 5%
Projected salary increases N/A
Inflation rate N/A
Cost of living adjustments None
59
CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010 '
Note 4: OTHER INFORMATION -CONTINUED
' '
The City
s annual pension cost, the percentage of annual pension cost contributed, and the net pension
obligation for the Relief Association for the year ended December 31, 2010 and the preceding fiscal years was
as follows:
Three Year Trend Information '
Annual Percentage
Year Pension of APC Net Pension '
Ending Cost (APC) Contributed Obligation
12/31/08 $ 143,999 100% $ - '
] 2/31 /09 127,024 100% -
12/3 I /10 131,255 100% -
c. Funded Status and Funding Progress '
As of December 31, 2010, the actuarial accrued liability was $2,398,067, of which $207,240 was unfunded.
The schedule of funding progress, presented as required supplementary information following the notes to the '
financial statements, presents multi-year trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Assets in '
Excess of
Actuarial Actuarial Actuarial (Unfunded)
Valuation Value of Accrued Accrued Percentage '
Date Assets Liability Liability Funded
12/31/10 $ 2,190,827 $ 2,398,067 $ (207,240) 91.4% '
E. Other Postemployment Benefits (OPEB) '
1. City of Elk River
a. Plan Description '
The City provides other postemployment health insurance benefits for retired employees through two defined
benefit plans: Municipal Retirees Health Plan (MRHP), asingle-employer plan, and Utilities Retirees Health '
Plan (URHP), amulti-employer plan. Each plan provides benefits for eligible retirees and their dependents
through the City's group health insurance plans, which cover both active and retired members. Since the
premium is a blended rate determined on the active and retiree population, the retirees are receiving an implicit
rate subsidy. The MRHP and URHP do not issue publicly available financial reports. '
b. Funding Policy
Contribution requirements are reviewed at the time changes are made to the plans. Benefit provisions for '
MRHP are established and amended by the City. The Utilities has been delegated authority to establish and
amend benefit provisions for URHP. Eligible retirees receiving benefits are required to pay 100% of the total
premium. ,
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010
Note 4: OTHER INFORMATION -CONTINUED
c. Annual OPEB Cost and Net OPEB Obligation
The City's annual OPEB cost for each plan is calculated based on the annual required contribution (ARC) of the
employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The
ARC represents the level of funding that, if paid on an ongoing basis, is projected to cover normal cost each
year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The unfunded actuarial liabilities included in the ARC were amortized over one year for the MRHP and is
amortized over thirty years for the URHP. The URHP has elected to calculate the ARC and related information
using the alternative measurement method permitted for employers in plans with fewer than one hundred total
plan members.
The following table shows the components of the City's annual OPEB cost for the year, the amount actually
contributed to the plan, and changes in the City's net OPEB obligation:
Municipal Utility
Retiree Retiree
Health Plan Health Plan
Annual required contribution (ARC) $ 99,402 $ 10,2]3
Interest on net OPEB obligation 4,028 810
Adjustment to ARC (100,696) (1, ] 70)
Annual OPEB cost 2,734 9,853
Contributions made (2,851) -
Increase in net OPEB obligation (117) 9,853
Net OPEB obligation -beginning of year 100,696 20,243
Net OPEB obligation -end of year $ 100,579 $ 30,096
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB
obligation for 2010, 2009, and 2008 are as follows:
Percentage of
Annual Employer Annual OPEB Net Pension
Fiscal Year Ended OPEB Cost Contribution Cost Contributed Obligation
MRHP:
12/31/2008 $ 99,402 $ 2,030 2% $ 97,372
12/31/2009 5,925 2,601 44% 100,696
12/31/2010 2,734 2,851 104% 100,579
URHP:
12/31/2008 $ 10,213 $ - - % $ 10,213
12/31/2009 10,030 - - % 20,243
12/31/2010 9,853 - - % 30,096
61
CITY OF ELK RIVER MINNESOTA '
NOTES TO FINANCIAL STATEMENTS '
DECEMBER 31, 2010
Note 4: OTHER INFORMATION -CONTINUED ,
d. Funded Status and Funding Progress
As of the actuarial valuation date of January 1, 2008, the funded status of the plan was as follows: '
Municipal Utility
Retiree Retiree '
Health Plan Health Plan
Actuarial accrued liability (a) $ 88,718 $ 56,892 ,
Actuarial value of plan assets (b) - -
Unfunded actuarial accrued liability (a-b) $ 88,718 $ 56,892
Funded ratio (b/a) 0.00% 0.00% '
Covered payroll (c) $ 4,095,000 $ 2,300,000
Unfunded actuarial accrued liability as a
percentage of covered payroll ((a - b) / c) 2.17% 2.47%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions '
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan '
and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information, following the notes to the fmancial statements,
presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing '
over time relative to the actuarial accrued liabilities for benefits.
The unfunded actuarial accrued liability for the MRHP is designated in the General Fund. '
e. Actuarial Methods and Assumptions
Projections of benefits for fmancial reporting purposes are based on the substantive plan (the plan as understood '
by the employer and plan members) and include the types of benefits provided at the time of each valuation and
the historical pattern of sharing of benefit costs between the employer and plan members to that point. The
methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility ,
in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the
calculations.
For the MRHP, in the January 1, 2008 actuarial valuation, the projected unit credit actuarial cost method was '
used. The actuarial assumptions included a 4% investment rate of return and an annual healthcare cost trend
rate of 10% initially, reduced incrementally to an ultimate rate of 5% after 5 years. The actuarial value of assets
was not determined as the City has not advance-funded its obligation. The plan's unfunded actuarial accrued '
liability was amortized as a level dollar amount over an open basis of one year.
For the URHP, the following simplifying assumptions were made:
Retirement age for active employees -Based on the historical average retirement age for the covered group, '
active plan members were assumed to retire at age 62, or at the first subsequent year in which the member
would qualify for benefits. '
Participation Rate - It is assumed that 10% of active participants continue coverage until age 65. Participants
are assumed to continue in their current coverage type (single or family). It is assumed that 100% of retirees
will continue their current coverage until age 65. '
62 '
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 3l, 2010
Note 4: OTHER INFORMATION -CONTINUED
Life Expectancy -Life expectancies were based on mortality tables from the National Center for Health
Statistics. The 2000 United States Life Tables for Males and for Females were used.
Turnover -Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for
assigning active member a probability of remaining employed until the assumed retirement age and for
developing an expected future working lifetime assumption for purposes of allocating to periods the present
value of total benefits to be paid.
Healthcare cost trend rate -The expected rate of increase in healthcare insurance premiums was based on
projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 10%
initially, reduced to an ultimate rate of 5% after ten years, was used.
Health insurance premiums - 2008 health insurance premiums for retirees were used as the basis for calculation
of the present value of total benefits to be paid.
Withdrawal -The probability that an employee will remain employed until the assumed retirement age was
determined using non-group specific age-based turnover data provided in Table 1 in Paragraph 35b of GASB
45.
Actuarial Method -Projected Unit Credit with 30-year amortization of the unfunded liability.
For the URHP, a discount rate of 4% was used based on the historical and expected returns of the Utilities'
short-term investment portfolio. In addition, a simplified version of the entry age actuarial cost method was
used. The unfunded actuarial accrued liability is being amortized as a level dollar amount over an open basis.
The remaining amortization period at December 31, 2010, was thirty years.
F. Accounting Change and Restatement of Prior Year's Fund Balance
GASB Statement 54 "Fund Balance Reporting and Governmental Fund Type Definitions" enhances the usefulness of
fund balance information by providing clearer fund balance classifications that can be more consistently applied and by
clarifying the existing governmental fund type definitions. The City early implemented this standard for fiscal year
2010. Changes to the government fund type fund balance reporting is reflected in the financial statements and schedules
and related disclosures are included in Note 1 and Note 3H.
' The implementation of GASB Statement 54 resulted in the reclassification of certain funds and restatement of the City's
financial statements. This statement had the following effect on fund balances of the major and nonmajor funds as they
were previously reported:
' General
Improvement Projects
Nonmajor Governmental Funds
'
Total Governmental Funds
Fund Balance at
December 3 I , 2009
$ 5,699,575
4,120,068
20,360,740
Reclassification Fund Balance at
of Fund due to December 31, 2009
GASB 54
$ 141,024
as Restated
$ 5,840,599
- 4,120,068
(141,024) 20,219,716
$ 30,]80,383 S - $ 30,180,383
' 63
CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010 '
Note 4: OTHER INFORMATION -CONTINUED '
G. Segment Information
The City maintains five enterprise funds that account for the municipal liquor operations, garbage collections, and sewer, '
water and electric utilities. The City considers each of its enterprise funds to be a segment. Since the required segment
information is already included in the City's proprietary funds' balance sheet and statement of revenues, expenses, and
changes in net assets balance, this information has not been repeated in the notes to the basic financial statements.
H. Conduit Debt Obligations '
From time to time, the City has issued revenue bonds to provide financial assistance to private-sector entities for the
acquisition and construction of industrial and commercial, multi-family and educational facilities deemed to be in the '
public interest. The bonds are secured by the property financed and are payable solely from payment received from the
benefited entity. 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, 2010, there were six series of revenue bonds outstanding, with an aggregate principal payable
amount of $22,304,634. '
I. Commitments
In 2007 the City entered into an agreement to participate through Central Minnesota Municipal Power Agency '
(CMMPA) and five other energy companies to construct power transmission lines in Minnesota, the largest portion of
which consists of 220 miles of new power transmission lines between Brookings, South Dakota, and the Twin Cities.
The CAPX Initiative is one of several transmission projects arising from the CAPX2020 Initiative, the purpose of which ,
is to enhance the reliability of electrical power transmission for customers in Minnesota and the surrounding region.
The City is one of sixteen participants in the CAPX Initiative. The City's participant election share is $2 million for a
participant election of 15.15 percent. '
J. Subsequent Events
On March 14, 20] 1, the City approved to increase its participation in the acquisition, construction, ownership and '
operation of the electrical transmission line proposed to run from South Dakota to the Twin Cities. The City's
investment in the CAPX2020 Brookings-Twin Cities Transmission Project and financing with Central Minnesota
Municipal Power Agency (CMMPA) increased from $2 million up to $7.1 million. The return on this increased ,
investment through CMMPA is designed to provide approximately $124,000 annually over the 40 year project life.
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CITY OF ELK RIVER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2010
Elk River Fire Relief Pension Plan
Schedule of Funding Progress
Assets in
Excess of Pension
Actuarial Actuarial Actuarial (Unfunded) Benefit
Valuation Value of Accrued Accrued Percentage Per Year
Date Assets Liability Liability Funded of Service
12/31/08 $ 1,696,536 $ 2,392,353 $ (695,817) 70.9% $ 5,091
12/31/09 2,224,430 2,550,808 (326,378) 87.2% 5,091
12/31/10 2,190,827 2,398,067 (207,240) 91.4% 5,091
Other Postemployment Benefits
Schedules of Funding Progress
Municipal Retiree Health Plan
Unfunded UAAL as a
Actuarial Actuarial Actuarial Actuarial Annual Percentage
Valuation Value of Accrued Accrued Funded Covered of Covered
Date Assets (a) Liability (b) Liability (b -a) Rate Payroll (c) Payroll ((b-a)/c)
01/01/08 $ - $ 88,718 $ 88,718 0.00% $ 4,095,00 0 2.17%
Utilities Retiree Health Plan
Unfunded UAAL as a
Actuarial Actuarial Actuarial Actuarial Annual Percentage
Valuation Value of Accrued Accrued Funded Covered of Covered
Date Assets (a) Liability (b) Liability (b -a) Rate Payroll (c) Payroll ((b-a)/c)
01/01/08 $ - $ 56,892 $ 56,892 0.00% $ 2,300,000 2.47%
65
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NonMajor Governmental Funds
Special Revenue
Special revenue funds are used to account for the proceeds of proceeds of specific revenue sources that are
legally restricted to expenditures for specified purposes. They are usually required by statute or local
ordinance to finance particular functions or activities of government.
Debt Service
Debt service funds account for the accumulation of resources for, and the payment of, general long-term
debt principal, interest and other related costs.
Capital Projects
Capital projects funds are used to account for the acquisition and construction of major capital facilities
other than those financed by proprietary funds.
CITY OF ELK RIVER, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2010
Special Debt Capital Total Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
ASSETS
Cash and investments $ 6,824,691 $ 2,023,423 $ 12,374,227 $ 21,222,341
Receivables:
Interest 28,612 8,664 64,997 102,273
Taxes 44,896 68,898 59,086 172,880
Accounts 263,189 - 184,601 447,790
Special assessments - 1,180,396 ],015,223 2,195,619
Notes 888,816 - - 888,816
Due from other governments 6,471 - 16,625 23,096
Due from other funds 211,487 - 464,383 675,870
Prepaid items 93,080 - - 93.080
Total assets $ 8,361,242 $ 3,281,381 $ 14,179,142 $ 25,821,765
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 70,180 $ 4,775 $ 242,910 $ 317,865
Salaries payable 17,782 - - 17,782
Due to other funds 50,295 - 837,417 887,712
Due to component unit - - 300,671 300,671
Deferred revenue 516,064 1,218,931 1,485,542 3,220,537
Total liabilities 654,321 1,223,706 2,866,540 4,744,567
Fund balances:
Nonspendable 93,080 - - 93,080
Restricted 4,878,438 2,057,675 - 6,936,113
.Committed 2,506,814 - - 2,506,814
Assigned 228,589 - 12,324,422 12,553,011
Unassigned - - (1,011,820) (1,011,820)
Total fund balances 7,706,921 2,057,675 11,3]2,602 21,077,198
Total liabilities and fund balances $ 8,361,242 $ 3,281,381 $ 14,179,142 $ 25,821,765
66
CITY OF ELK RIVER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
PEAR ENDED DECEMBER 31, 2010
Special Debt Capital Total Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
REVENUES
Property taxes $ 803,121 $ 1,036,523 $ 1,087,026 $ 2,926,670
Intergovernmental revenue 13,989 500,605 260,375 774,969
Charges for services 985,613 - 205,458 1,191,071
Fines and forfeits 28,106 - - 28,106
Special assessments - 368,936 392,560 761,496
Interest income 83,334 1 ],068 153,310 247,712
Miscellaneous revenue:
Landfill host fee - - 1,290,351 1,290,351
Refunds and reimbursements 83,195 - 23,836 107,031
Other 141,991 243,611 707,579 1,093,181
To[al revenues 2,139,349 2,160,743 4,120,495 8,420,587
EXPENDITURES
Current:
General government (42,891 - 6,015 ]48,406
Public safety 3,055 - 5,198 8,253
Public works 103,347 - 367,735 471,082
Culture and recreation 917,634 - 55,563 973,197
Economic development 607,684 - 904,454 1,512,138
Debt service:
Principal 8,446 2,264,316 138,250 2,411,062
Interest and service charges - 1,018,524 108,265 1,126,789
Bond issuance costs - 56,204 - 56,204
Capital outlay:
Public safety 24,473 - 457,592 482,065
Public works - - 330,122 330,122
Culture and recreation - - 279,735 279,735
Infrastructure/development projects - - 663,070 663,070
Total expenditures 1,807,580 3,339,044 3,315,999 8,462,623
Excess (deficiency) of revenues
over (under) expenditures 331,769 (1,778,301) 804,496 (42,036)
OTHER FINANCING SOURCES (USES)
Transfers in 363,757 807,087 875,618 2,046,462
Transfers out (833,194) (111,655) (398,987} (1,343,836)
Issuance of debt - - 79,243 79,243
Issuance of refunding bonds - 6,105,000 - 6,105,000
Premium on refunding bonds - 255,238 - 255,238
Payment to refunded bond escrow agent - (6,303,897) - (6,303,897)
Sale of capital assets - - 61,308 61,308
Total other financing sources (uses) (469,437) 751,773 617,182 899,518
Net change in fund balances (137,668) (426,528) 1,421,678 857,482
Fund balances -,lanuary 1 7,844,589 2,484,203 9,890,924 20,219,716
Fund balances -December 31 $ 7,706,921 $ 2,057,675 $ 11,312,602 $ 21,077,198
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' NONMAJOR SPECIAL REVENUE FUNDS
Library -This fund accounts for any library maintenance costs which are not paid by the Great River
Regional Library System.
Ice Arena -This fund accounts for the operation and maintenance of the ice arena which is funded by user
' fees.
Pinewood Golf Course -This fund was established to account for the operation and maintenance of the
municipal-owned nine-hole golf course which is funded by user fees.
Senior Citizen Account -This fund is used to account for Senior Citizen program costs funded by revenues
' generated from Senior Citizen activities.
Landfill -This fund was established to segregate solid waste surcharge revenues to be used for landfill
abatement and other environmental issues.
'
s portion of state economic development
Revolving Loan -This fund was established to account for the City
grant repayments which are used to fund other economic development projects.
' DTED Grant/Loan -This fund was established to account for the Department of Trade and Economic
Development grant repayments which are used to fund economic development projects.
' Develo~nent Fund -This fund was established to amact businesses to develop within the City's business
park.
' Emergency/Insurance Reserve -This fund was opened to account for insurance deductibles and litigation
costs not covered by insurance. The major source of revenue is from insurance premium refunds.
Drug Forfeiture Reserve -This fund was established to account for revenues received as a result of drug
' related crimes. These funds must be used for drug education and prevention.
YMCA Grant -This fund was established to account for grant revenues received from the County for the
' YMCA building.
Economic Development Authority -This fund was established to account for a special tax levy authorized
' to help encourage development in the City.
EDA DTED Loan -This fund was established to account for the Department of Trade and Economic
Development grant repayments of the Economic Development Authority (EDA) which are used to fund
economic development projects.
CITY OF ELK RIVER, MINNESOTA
SUBCO>•1BINING BALANCE SHEET '
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2010
'
Senior
Pinewood Citizen Revolving
Library Ice Arena Golf Course Account Landfill Loan
ASSETS '
Cash and investments $ 414,520 $ - $ 7,906 $ 11,144 $ 1,677,950 $ 1,055,742
Receivables:
Interest 2,172 - - 58 8,951 5,528
Ta~:es 3,835 - - - - -
Accounts - 95,857 - - 25,496 50,000
Notes - - - - - 477,204
Due from other governments 6,462 - - - - - '
Due from other funds - 640 - - - -
Prepaid items - - - - - -
Total assets $ 426,989 $ 96,497 $ 7,906 $ 11,202 $ 1,712,397 $ 1,588,474 '
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
$
366
$ 36,905 $ 3,022
$
2,199
$
3,764
$
S77 ,
Salaries payable - 10,830 2,265 - 1,528 -
Due to other funds 100 41,234 - - - -
Deferred revenue 3,167 785 2,619 - - 477,204 '
Total liabilities 3,633 89,754 7,906 2,199 5,292 477,781
Fund balances: '
Nonspendable - - - - - -
Restricted - - - - 1,478,516 -
Committed 423,356 6,743 - 9,003 - 1,110,693
Assigned
-
- -
-
228,589
- '
Total fund balances 423,356 6,743 - 9,003 1,707,105 1,110,693
Total liabilities and fund balances $ 426,989 $ 96,497 $ 7,906 $ 11,202 $ 1,712,397 $ 1,588,474 '
68 ,
Emergency/ Drug Economic Total Nonmajor
DTED De velopment Insurance Forfeiture YMCA Development EDA DTED Special Revenue
Grant/Loan Fund Reserve Reserve Grant Authority Loan Funds
$ 266,127 $ 354,006 $ 315,365 $ 772 $ 1,335,566 $ 1,385,593 $ - $ 6,824,691
1,398 1,855 1,652 - 6,998 - - 28,612
- 18,251 - - - 22,810 - 44,896
- 91,313 379 144 - - - 263,189
411,612 - - - - - - 888,816
_ _ _ q _ _ - 6,471
- 164,437 46,410 - - - - 211,487
- - 93,080 - - - - 93,080
$ 679,137 $ 629,862 $ 456,886 $ 925 $ 1,342,564 $ 1,408,403 $ - $ 8,361,242
$ - $ - $ 22,716 $ 265 $ - $ 366 $ - $ 70,180
_ _ _ - - 3,159 - 17,782
_ _ _ _ - 8,961 - 50,295
- 13,933 - - - 18,356 - 516,064
- 13,933 22,716 265 - 30,842 - 654,321
- - 93,080 - - - - 93,080
679,137 - - 660 1,342,564 1,377,561 - 4,878,438
- 615,929 341,090 - - - - 2,506,814
_ _ _ _ _ _ - 228,589
679,137 615,929 434,170 660 1,342,564 1,377,561 - 7,706,921
$ 679,137 $ 629,862 $ 456,886 $ 925 $ 1,342,564 $ 1,408,403 $ - $ 8,361,242
69
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
YEAR ENDED DECEMBER 31, 2010
Senior
Pinewood Citizen Revolving
Library Ice Arena Golf Course Account Landfill Loan
REVENUES
Property taxes $ 57,047 $ - $ - $ - $ - $ -
Intergovermnental revenue - - - - - -
Charges for services - 706,339 182,476 9,166 - 990
Fines and forfeits - - - - - -
Interest income 4,788 - - 141 20,457 12,386
Miscellaneous revenue:
Refunds and reimbursements - - - - - -
Other 30,040 22,644 - 3,014 - 61,293
Total revenues 91,875 728,983 182,476 12,321 20,457 74,669
EXPENDITURES
CurrenC
General government - - - - - -
Public safety - _ _ _ _ _
Public works - - - - 103,347 -
Culture and recreation 77,842 598,782 227,875 13,135 - -
Economicdevelopment - - - - - 80,735
Debt service:
Principal - - 8,496 - - -
Capital outlay:
Public safety _ _ _ _ _ _
Total expenditures 77,842 598,782 236,371 13,135 103,347 80,735
Excess (deficiency) of revenues
over (under)expenditures 14,033 130,201 (53,895) (814) (82,890) (6,066)
OTHER FINANCING SOCIRCES (USES)
Transfers in - 76,442 53,895 - 18,927 214,493
Transfers out - (239,317) - - (93,457) -
Totalotherfinancing sources (uses) - (162,875) 53,895 - (74,530) 214,493
Net change in fund balances 14,033 (32,674) - (814) (157,420) 208,427
Fund balances - January l 409,323 39,417 - 9,817 1,864,525 902,266
Fund balances -December 31 $ 423,356 $ 6,743 $ - $ 9,003 $ 1,707,105 $ l,l 10,693
~~
Emergency/ Drug Economic Total Nonmajor
DTED Development Insurance Forfeiture YMCA Development EDA DTED Special Revenue
Grant/Loan Fund Reserve Reserve Grant Authority Loan Funds
$ - $ 373,428 $ - $ - $ - $ 372,646 $ - $ 803,121
_ _ _ _ - 13,989 - 13,989
14,231 68,410 - - - 4,001 - 985,613
_ _ - 28, 106 - - - 38,106
3,413 12,440 5,085 82 16,679 8,711 153 83,334
- 45,706 37,489 - - - - 83,195
- 25,000 - - - - - 141,991
16
643 524,984 42,574 28,188 16,679 399,347 153 3,139,349
,
- - 142,891 - - - - 142,891
_ _ - 3,055 - - - 3,055
_ _ _ _ _ _ - 103,347
_ _ _ _ _ _ _ 917,634
- 354,600 - - - 172,349 - 607,684
_ _ _ _ _ _ _ 8,496
- - - 24,473 - - - 24,473
- 354,600 142,891 27,528 - 172,349 - 1,807,580
16,643 170,384 (100,317) 660 16,679 226,998 153 331,769
_ _ _ _ _ _ _ 363,757
- - (18,927) - (250,000) (17,000) (214,493) (833,194)
- - (18,927) - (250,000) (17,000) (214,493) (469,437)
16,643 170,384 (I 19,244) 660 (233,321) 209,998 (214,340) (137,668)
662,494 445,545 553,414 - 1,575,885 1,167,563 214,340 7,844,589
$ 679,137 $ 615,929 $ 434,170 $ 660 $ 1,34? 564 $ 1,377,561 $ - $ 7,706,921
71
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -LIBRARY MAINTENANCE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 3l, 2010
REVENUES
General property taxes
Interest income
Miscellaneous revenue:
Other
Total revenues
EXPENDITURES
Culture and recreation:
Current
Net increase in fund balance
Fund balance - .lanuary 1
Fund balance -December 31
Budget Variance with
Original Final Actual Final Budget
$ 58,850 $ 58,850 $ 57,047 $ (1,803)
9,500 9,500 4,788 (4,712)
27,000 27,000 30,040 3,040
95,350 95,350 91,875 (3,475)
95,350 95,350
$ - $ -
77,842 17,508
14,033 $ 14,033
409,323
$ 423,356
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CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -ICE ARENA FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2010
REVENUES
Charges for services
Miscellaneous revenue:
Vending machines
Other
Total revenues
EXPENDITURES
Culture and recreation:
Current
Budget
Original Final
$ 7]0,000 $ 710,000
18,700 18,700
4,150 4,150
732,850 732,850
Variance with
Actual Final Budget
$ 706,339 $ (3,661)
13,012 (5,688)
Excess of revenues over expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balance -January 1
Fund balance -December 31
659,550 •659,550 598,782 60,768
73,300 73,300 130,201 56,901
126,600 126,600 76,442 (50,158)
(199,900) (199,900) (239,317) (39,417)
(73,300) (73,300) (]62,875) (89,575)
$ - $ - (32,674) $ (32,674)
39,417
$ 6,743
73
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -PINEWOOD GOLF COURSE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2010
REVENUES
Charges for services
EXPENDITURES
Culture and recreation:
Current
Debt service:
Principal
Total expenditures
Deficiency of revenues under expenditures
OTHER FINANCING SOURCES
Transfers in
Budget
Original Final
$ 20 ] ,000 $ 201,000
Actual
$ 182,476
Variance with
Final Budget
Net change in fund balance
Fund balance -January 1
Fund balance -December 31
229,950 229,950 227,875 2,075
8,500 8,500 8,496 4
238,450 238,450 236,371 2,079
(37,450) (37,450) (53,895) (]6,445)
37,450 37,450 53,895 16,445
$ - $ - - $ -
$ -
74
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -LANDFILL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2010
Budget Variance with
Final Actual Final Budget
$ 28,500 $ 20,457 $ (8,043)
Original
REVENUES
Interest income $ 28,500
EXPENDITURES
Public works:
Current 121,300
Deficiency of revenues under expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balance -January 1
Fund balance -December 31
121,300 103,347 17,953
(92,800) (82,890) 9,910
- - 18,927 18,927
(153,750) (153,750) (93,457) 60,293
(153,750) (]53,750) (74,530) 79,220
$ (246,550) $ (246,550) (157,420) $ 89,130
1,864,525
$ 1,707,105
75
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -ECONOMIC DEVELOPMENT AUTHORITY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2010
REVENUES
Property taxes
Intergovernmental revenue
Charges for services
Interest income
Total revenues
EXPENDITURES
Current:
Economic development
Excess of revenues over expenditures
OTHER FINANCING USES
Transfers out
Budget
Original Final
$ 383,600 $ 383,600
3,500 3,500
407,600
407,600
261,350
146,250
146,250
(17,000) (17,000)
$ 129,250 $ 129,250
Actual
$ 372,646
] 3,989
4,001
8,71 1
399,347
172,349
226,998
Variance with
Final Budget
$ (10,954)
13,989
501
(11,789)
(8,253)
Net change in fund balance
Fund balance -January 1
Fund balance -December 31
89,001
80,748
209,998 $ 80,748
$ 1,377,561
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NONMAJOR DEBT SERVICE FUNDS
Improvement Bonds -This fund is used to account for the accumulation of resources and payment of
principal and interest on long-term general obligation special assessment debt used to finance various street,
water, sewer and storm sewer improvements.
Government Buildin Be onds -This fund is used to account for the accumulation of resources and payment
of principal and interest to fmance the construction of city facilities.
Equipment Certificates -This fund is used to account for the accumulation of resources and payment of
principal and interest to finance the purchase of public safety, streets, and parks equipment as authorized by
Minnesota Statutes.
MPFA Loan -This fund is used to account for the accumulation of resources and payment of principal and
interest to finance Municipal State Aid eligible road improvements.
Tax Increment Financin Bonds -This fund is used to account for the accumulation of resources and
payment of principal and interest to fmance administrative and development costs within the various TIF
districts.
YMCA Bonds -This fund is used to account for the accumulation of resources and payment of principal
and interest to finance the construction of a recreation facility which is leased to the YMCA.
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR DEBT SERVICE FUNDS
DECEMBER 31, 2010
ASSETS
Cash and investments
Receivables:
Interest
Taxes
Special assessments
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Deferred revenue
Total liabilities
Fund balances:
Restricted
Total liabilities and fund balances
Government
Improvement Building Equipment MPFA
Bonds Bonds Certificates Loan
$ 858,942 $ 700,222 $ 94,248 $ 421
4,501 3,669 494 -
11,860 35,486 10,557 -
1,180,396 - - -
$ 2,055,699 $ 739,377 $ 105,299 $ 421
$ 2,000 $ 2,775 $ - $ -
1,171,867 28,688 9,403 -
1,173,867 31,463 9,403 -
881,832 707,914 95,896 421
$ 2,055,699 $ 739,377 $ 105,299 $ 421
77
Total Nonmajor
Debt Service
TIF Bonds YMCA Bonds Funds
$ - $ 369,590 $ 2,023,423
- - 8,664
- 10,995 68,898
- - 1,180,396
$ - $ 380,585 $ 3,281,381
$ - $ - $ 4,775
- 8,973 1,218,931
- 8,973 1,223,706
- 371,612 2,057,675
$ - $ 380,585 $ 3,281,381
78
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR DEBT SERVICE FUNDS
YEAR ENDED DECEMBER 31, 2010
Government
REVENUES
Property taxes
Intergovernmental revenue
Special assessments
Interest income
Miscellaneous revenue:
Contributions
Total revenues
EXPENDITURES
Debt service:
Principal
Interest and service charges
Bond issuance costs
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Issuance of refunding bonds
Premium on refunding bonds
Payment to refunded bond escrow agent
Total other finance sources (uses)
Net change in fund balances
Fund balances -January 1
Fund balances -December 3 ]
Improvement Building
Bonds Bonds
$ 199,094 $ 582,473
368,936 -
6,889 3,934
Equipment MPFA
Certificates Loan
$ 93,076 $ -
- 500,605
574,919 586,407 93,076 500,605
510,000 610,000 334,316 480,000
148,276 347,427 15,175 20,184
- 56,204 - -
658,276 1,013,631 349,49 ] 500,184
(83,357) (427,224) (256,415) 421
40,000 431,321 - -
(40,000) (71,655) - -
- 6,105,000 - -
- 255,238 - -
(83,357) (11,217) (256,415) 421
965,189 719,131 352,31.1 -
$ 881,832 $ 707,914 $ 95,896 $ 421
79
Total Nonmajor
Debt Service
TIF Bonds YMCA Bonds Funds
$ - $ 161,880 $ 1,036,523
- - 500,605
- - 368,936
- 245 11,068
- 243,611 243,611
- 405,736 2,160,743
65,000 265,000 2,264,316
20,766 466,696 1,018,524
- - 56,204
85,766 731,696 3,339,044
(85,766) (325,960) (1,178,301)
85,766 250,000 807,087
- - (111,655)
- - 6,105,000
- - 255,238
- - (6,303,897)
85,766 250,000 751,773
- (75,960) (426,528)
- 447,572 2,484,203
$ - $ 371,612 $ 2,057,675
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' NONMAJOR CAPITAL PROJECTS FUNDS
' Capital Reserve -This fund was established to help build reserves for the purchase of capital equipment.
' Eauipment Replacement - This fund is used to account for the purchase of capital equipment.
Park Dedication -.This fund accounts for park dedication fees from developers and expenditures for park
' land acquisitions and park capital improvements.
Park Improvements -This fund was established to account for the replacement and maintenance of park
equipment and for the beautification of city parks.
'
Government Buildings Reserve -This fund is used to account for resources and expenditures related to
government buildings projects. The major source of revenue is from landfill host fees.
1 GRE Reserve -This fund was established to account for revenues received from the license agreement
between the City and Great River Energy.
' Street Improvements -This fund is used to account for the construction of street improvement projects
throughout the City.
' Tax Increment Financing_Districts -This fund is used to account for administrative and development costs
associated with the various tax increment financing projects.
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CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2010
Capital Equipment Park Park
Reserve Replacement Dedication Improvements
ASSETS
Cash and investments $ 1,242,335 $ 931,231 $ 11,795 $ 62,109
Receivables:
Interest 6,725 4,879 62 325
Taxes _ _ _ _
Accounts 433 30,436 - -
Special assessments 11,947 - - -
Due from other governments - - - 16,625
Due from other funds 41,234 50,819 - 103,969
Total assets $ 1,302,674 $ 1,017,365 $ 1 ],857 $ 183,028
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 52 $ 13,958 $ 210 $ 1,058
Due to other funds - - 229,237 -
Due to component unit _ _ _ _
Deferred revenue 11,947 - 473,569 -
Total liabilities 11,999 13,958 703,016 1,058
Fund balances:
Assigned 1,290,675 1,003,407 - 181,970
Unassigned - - (69 ] ,159) -
Total fund balances 1,290,675 1,003,407 (691,159) 181,970
Total liabilities and fund balances $ 1,302,674 $ 1,017,365 $ 1 1,857 $ 183,028
81
Total Nonmajor
Government Street Capital Projects
Buildings GRE Reserve Improvements TIF Districts Funds
$ 3,322,374 $ 1,125,710 $ 5,090,906 $ 587,767 $ 12,374,227
17,408 5,898 26,863 2,837 64,997
- - 1,071 58,015 59,086
140,6 ] 5 - 13,117 - 184,601
- - 1,003,276 - 1,0]5,223
_ _ _ - 16,625
- 125,268 143,093 - 464,383
$ 3,480,397 $ 1,256,876 $ 6,278,326 $ 648,619 $ 14,179,142
$ 1,500 $ - $ 165,703 $ 60,429 $ 242,910
- - - 608,180 837,417
- - - 300,671 300,671
- - 1,000,026 - 1,485,542
1,500 - 1,165,729 969,280 2,866,540
3,478,897 1,256,876 5,112,597 - 12,324,422
- - - (320,661) (1,011,820)
3,478,897 1,256,876 5,112,597 (320,661) 11,312,602
$ 3,480,397 $ 1,256,876 $ 6,278,326 $ 648,619 $ 14,179,142
82
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED DECEMBER 31; 2010
Capital Equipment Park Park Government
Reserve Replacement Dedication Improvements Buildings
REVENUES
Property taxes $ - $ - $ - $ - $ -
Intergovernmental revenue 150,968 20,740 - 17,857 -
Charges for services - - 196,509 8,949 -
Special assessments 5,218 - - - -
Interest income 15,242 9,004 368 663 41,668
Miscellaneous revenue:
Landfill host fee - - - - 1,096,798
Refunds and reimbursements 23,836 - - - -
Other 16,408 - 5,000 1,000 2,265
Total revenues 211,672 29,744 201,877 28,469 1,140,731
EXPENDITURES
Current:
General government 6,015 - - - -
Public safety 5,198 - - - -
Public works 68,069 - - - 41,571
Culture and recreation 13,000 - 3,883 38,680 -
Economic development - - - - -
Debt service:
Principal - - 138,250 - -
Interest and service charges - - 108,265 - -
Capital:
Public safety 49,725 407,867 - - -
Public works - 313,872 - - 16,250
Culture and recreation 142,612 127,379 - 9,744 -
Infrastructure - - - - -
Total expenditures 284,619 849,118 250,398 48,424 57,821
Excess (deficiency) of revenues
over (under)expenditures (72,947) (819,374) (48,521) (19,955) 1,082,910
OTHER FINANCING SOURCES (USES)
Transfers in 39,417 701,086 42,300 92,815 -
Transfersout - - - - (231,421)
Issuance of debt - - - - -
Sale of capita] assets - 6],308 - - -
Total other financing sources (uses) 39,417 762,394 42,300 92,815 (231,421)
Net change in fund balances (33,530) (56,980) (6,221) 72,860 851,489
Fund balances -January 1 1,324,205 1,060,387 (684,938) 109,110 2,627,408
Fund balances -December 31 $ 1,290,675 $ 1,003,407 $ (691,159) $ 181,970 $ 3,478,897
83
Total Nonmajor
Street Capital Projects
GRE Reserve Improvements TIF Districts Funds
$ - $ 15,927 $ 1,071,099 $ 1,087,026
- 70,1 17 693 260,375
- - - 205,458
- 387,342 - 392,560
13,519 66,366 6,480 153,310
- 193,553 - 1,290,351
- - - 23,836
681,906 1,000 - 707.579
695,425 734,305 1,078,272 4,120,495
- - - 6,015
- - - 5,198
- 258,095 - 367,735
- - - 55.563
- - 904,454 904,454
- - - 138,250
- - - 108,265
- - - 457,592
- - - 330,122
- - - 279,735
- 663,070 - 663,070
- 921,165 904,454 3,315,999
695,425 (186,860) 173,818 804,496
- - - 875,618
(81,800) - (85,766) (398,987)
- 79,243 - 79,243
- - - 61,308
(81,800) 79,243 (85,766) 6]7,182
613,625 (107,617) 88,052 1,42],678
643,251 5,220,214 (408,713) 9,890,924
$ 1,256,876 $ 5,112,597 $ (320,661) $ 11,312,602
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' AGENCY FUNDS
' Agency Funds are used to account for assets held by the City as an agent for individuals, private
organizations and/or other governmental units. The City of Elk River had the following Agency Fund
' during the year:
Developer Fee Escrow -This fund is used to account for the collection and distribution of funds relating to
' private development projects.
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CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
DEVELOPER ESCROW AGENCY FUND
YEAR ENDED DECEMBER 3l, 2010
Beginning Ending
Balance Additions Deductions Balance
ASSETS
Cash $ 43,515 $ 79,291 $ 38,458 $ 84,348
Accounts receivable 2,503 9,190 7,389 4,304
Total assets $ 46,018 $ 88,481 $ 45,847 $ 88,652
LIABILITIES
Accounts payable $ 1,234 $ 34,907 $ 36,141 $ -
Refundable deposits payable 44,784 65,300 21,432 88,652
Total liabilities $ 46,018 $ 100,207 $ 57,573 $ 88,652
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COMPONENT UNIT FINANCIAL STATEMENTS
The Housing and Redevelopment Authority of Elk River is a component unit of the City. Its operations are
presented as a separate column on the combined financial statements.
Governmental Fund
Housing; and Redevelopment Authorit~und -This fund is used to account for housing and
redevelopment activities. Revenues are derived from the HRA property tax levy.
0
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUND
DECEMBER 31, 2010
ASSETS
Cash and investments
Receivables:
Taxes
Notes
Due from primary government
Property held for resale
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Salaries payable
Deferred revenue
Total liabilities
Fund balances:
Nonspendable
Restricted
Total fund balances
Total liabilities and fund balances
$ 688,616
18,582
400,000
295,619
720,000
$ 2,122,817
$ 45
2, 106
14,894
17,045
1,120,000
985,772
2,105,772
$ 2,122,817
86
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE GOVERNMENTAL FUND
BALANCE SHEET TO THE STATEMENT OF NET ASSETS
DECEMBER 31, 2010
FUND BALANCE -TOTAL GOVERNMENTAL FUNDS
Amounts reported for governmental activities in the statement of net assets are different because:
1. Deferred revenue in governmental funds is susceptible to full accrual on the
government-wide statements.
NET ASSETS OF GOVERNMENTAL ACTIVITIES
$ 2,105,772
$ 2,120,666
87
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGE IN FUND BALANCE
GOVERNMENTAL FUND
DECEMBER 3I, 2010
REVENUES
Property taxes
Intergovernmental revenue
Interest income
Total revenues
EXPENDITURES
Current:
Economic development
Debt service:
Principal
Interest
Total expenditures
Net change in fund balance
Fund balance -January l
Fund balance -December 31
$ 311,021
44,914
6,910
362,845
2 ] 0,461
270,588
17,3 82
498,431
(135,586)
2,241,358
$ 2,105,772
88
HOUSING AND REDEVELOPMENT AUTHORITY
OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGE IN FUND BALANCE OF GOVERNMENTAL FUND
TO THE STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2010
NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS
Amounts reported for governmental activities in the statement of activities are different because:
1. Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the governmental funds.
Property taxes
2. The issuance of lonb teen debt provides current financial resources to governmental
funds, 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. This amount is the net effect of these differences in the
treatment of loner term debt and related items.
Repayment of principal of long-term debt
3. Some expenses reported in the statement of activities do not require use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
Accrued interest payable
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES
89
$ (135,586)
(508)
270,588
7,441
$ 141,935
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STATISTICAL SECTION
(UNAUDITED)
This part of the City of Elk River's comprehensive annual financial report presents detailed
information as a context for understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the government's overall
financial health.
Contents Page
Financial Trends 90
These schedules contain trend information to help the reader understand how
the city's financial performance and well-being have changed over time.
Revenue Capacity 100
' These schedules contain information to help the reader assess the city's most
significant local revenue sources; electric sales and property taxes.
' Debt Capacity 107
These schedules present information to help the reader assess the affordability
of the city's current levels of outstanding debt and the city's ability to issue
' additional debt in the future.
Demographic and Economic Information 115
' These schedules offer demographic and economic indicators to help the reader
understand the environment within which the city's financial activities take
place.
' Operating Information 117
These schedules contain service and infrastructure data to help the reader
' understand how the information in the city's financial report relates to the
services the city provides-and the activities it performs.
' Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports for the relevant year.
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CITY OF ELK RIVER, MINNESOTA
NET ASSETS BY COMPONENT
LAST EIGHT FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
Governmental activities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total governmental activities net assets
2003 2004 2005
$ 56,003,997 $ 67,061,167 $ 73,150,041
8,383,884 10,963,518 12,410,832
22,441,594 19,452,247 21,267,772
$ 86,829,475 $ 97,476,932 $ 106,828,645
Business-type activities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total business-type activities net assets
Primary government
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total primary government net assets
$ 46,341,983 $ 52,377,687 $ 54,577,074
1,947,067 2,197,066 2,256,419
11,224,115 10,480,815 11,956,851
$ 59,513,165 $ 65,055,568 $ 68,790,344
$ 102,345,980 $ 119,438,854 $ 127,727,115
10,330,951 13,160,584 14,667,251
33,665,709 29,933,062 33,224,623
$ 146,342,640 $ 162,532,500 $ 175,618,989
Note: Net assets are not available for years prior to 2003.
90
i~
i~
i~
Fiscal Year
' 2006 2007 2008 2009 2010
$ 82,663,610 $ 85,293,459 $ 85,390,968 $ 86,149,417 $ 84,629,091
' 4,802,808 6,189,063 5,569,773 4,723,030 7,341,554
27,998,543 25,641,836 27,628,733 28,588,304 26,755,517
$ 115,464,961 $ 117,124,358 $ 118,589,474 $ 119,460,751 $ 118,726,162
'
$ 59,410,729 $ 59,942,345 $ 60,750,900 $ 59,601,861 $ 60,872,584
' 445,900 733,400 724,500 724,500 724,500
14,059,048 17,272,262 17,971,074 20,040,168 20,237,432
$ 73,915,677 $ 77,948,007 $ 79,446,474 $ 80,366,529 $ 81,834,516
'
$ 142,074,339 $ 145,235,804 $ 146,141,868 $ 145,751,278 $ 145,501,675
' 5,248,708 6,922,463 6,294,273 5,447,530 8,066,054
42,057,591 42,914,098 45,599,807 48,628,472 46,992,949
$ ] 89,380,638 $ 195,072,365 $ 198,035,948 $ 199,827,280 $ 200,560,678
'
r
' 91
CITY OF ELK RIVER, MINNESOTA
CHANGES IN NET ASSETS '
LAST EIGHT FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2003
2004
2005 ,
Expenses
Governmental activities:
General government $ 3,290,711 $ 2,440,200 $ 2,503,826 '
Public safety 4,229,109 4,988,424 5,255,974
Public works 3,737,678 4,277,071 4,281,725
Culture and recreation 1,747,322 2,058,882 2,535,955
Economic development
549,149
912,698
938,164 '
Interest on long-term debt 1,050,823 936,515 881,001
Total governmental activities expenses 14,604,792 15,613,790 16,396,645
Business-type activities: '
Municipal Liquor 3,621,087 3,760,156 4,344,915
Garbage 884,532 953,432 1,047,479
Sewer
1,406,713
1,464,409
1,629,353 '
Water 1,713,217 1,809,128 2,099,428
Electric 11,929,596 13,338,580 14,880,337
Total business-type activities expenses 19,555,145 21,325,705 24,001,512
Total primary government expenses
$ 34,159,937
$ 36,939,495
$ 40,398,157 '
Program Revenues
Governmental activities: '
Charges for services:
General government $ 194,246 $ 308,781 $ 288,032
Public safety 1,897,883 1,956,967 2,050,437
Public works
148,904
226,907
280,583 '
Culture and recreation 729,932 812,401 877,789
Economic development 71,379 96,396 379,002
Operating grants and contributions 487,560 427,513 480,649 '
Capital grants and contributions 6,064,491 11,879,536 7,573,752
Total governmental activities program revenues 9,594,395 15,708,501 11,930,244
Business-type activities: '
Charges for services:
Municipal Liquor 4,156,276 4,345,702 4,806,061
Garbage 820,278 973,176 1,055,753
Sewer
1,808,817
2,365,262
1,261,853 '
Water 1,807,334 2,095,018 1,365,136
Electric
Operating grants and contributions 13,774,777
10,530 14,765,479
8,615 15,955,440
9,255 '
Capital grants and contributions 1,053,994 3,028,454 3,654,383
Total business-type activities program revenues 23,432,006 27,581,706 28,107,881
Total primary government program revenues $ 33,026,401 $ 43,290,207 $ 40,038,125 '
Net (expense)/revenue
Governmental activities $ (5,010,397) $ 94,711 $ (4,466,401)
Business-type activities 3,876,861 6,256,001 4,106,369 '
Total primary government net expense $ (1,133,536) $ 6,350,712 $ (360,032)
92 '
Fiscal Year
' 2006 2007 2008 2009 2010
$ 2,560,213 $ 2,732,697 $ 3,286,350 $ 2,777,568 $ 3,028,102
' 5,606,438 5,924,093 6,715,607 6,106,181 6,011,477
6,169,030 6,527,565 5,875,992 5,397,058 5,447,282
' 2,859,058
631,437 3,598,695
1,001, 829 3,549,637
1,893,707 3,767,312
1,569,432 3,702,671
1,43 8,742
764,725 952,082 1,315,275 1,252,493 1,085,149
18,590,901 20,736,961 22,636,568 20,870,044 20,713,423
5 202,500 5,302,012 5,465,233 5,374,867 5,267,455
1,094,78 8 1,114,133 1,166,709 1,256,177 1,331,514
' 1,724,147 1,788,890 1,851,655 1,784,428 1,965,055
2,112,477 2,344,158 2,452,717 2,348,707 2,100,552
16,081,812 18,574,266 21,939,223 23,269,553 25,455,516
26,215,724 29,123,459 32,875,537 34,033,732 36,120,092
$ 44,806,625 $ 49,860,420 $ 55,512,105 $ 54,903,776 $ 56,833,515
$ 246,541 $ 283,003 $ 371,911 $ 334,100 $ 301,509
2,403,601 1,533,699 962,275 634,242 722,073
617,099 76,117 159,664 47,860 61,605
1,065,218 1,083, 081 1,084,067 1, 074,266 1, 089,05 8
178,217 92,486 65,999 60,335 125,759
387,584 362,313 977,411 758,958 763,551
' 8,117,032 4,174,427 4,302,760 2,599,593 1,318,660
13,015,292 7,605,126 7,924,087_ 5,509,354 4,382,215
5,906,768 6,043,088 6,213,657 6,094,058 5,953,626
1,106,268 1,139,763 1,160,774 1,194,937 1,282,013
' 1,352, 647 1,454,219 1,511,165 1,504,785 1,483,120
1,770,819 2,144,622 2,139,046 2,218,816 1,944,185
17,143,485 19,895,323 22,941,903 24,258,120 26,776,222
' 504,168 295,081 149,327 92,957 103,324
4,297,666 1,996,636 888,925 267,233 480,325
32,081,821 32,968,732 35,004,797 35,630,906 38,022,815
' $ 45,097,113 $ 40,573,858 $ 42,928,884 $ 41,140,260 $ 42,405,030
$ (5,575,609) $(13,131,835) $(14,712,481) $(15,360,690) $(16,331,208)
' 5,866,097 3,845,273 2,129,260 1,597,174 1,902,723
$ 290,488 $ (9,286,562) $(12,583,221) $(13,763,516) $(14,428,485)
~~
' 93
Fiscal Year
General Revenues and Other Changes in Net Assets
Governmental activities:
Property taxes
Tax increment
Other taxes
Unrestricted grants and contributions
Investment earnings
Miscellaneous
Transfers of capital assets
Transfers
Total governmental activities
Business-type activities:
Investment earnings
Miscellaneous
Transfers of capital assets
Transfers
Total business-type activities
Total primary government
Change in l~Tet Assets
Governmental activities
Business-type activities
Total primary government
2003 2004 2005
$ 5,830,468 $ 6,425,933 $ 7,569,131
682,855 734,115 768,397
2,237,750 2,141,152 2,427,605
304,237 375,550 758,612
- 9,180 326,853
639,924 866,816 677,516
9,695,234 10,552,746 12,528,114
155,802 153,218 305,923
(639,924) (866,816) (677,516)
(484,122) (713,598} (371,593)
$ 9,211,112 $ 9,839,148 $ 12,156,521
$ 4,684,837 $ 10,647,457 $ 8,061,713
3,392,739 5,542,403 3,734,776
$ 8,077,576 $ 16,189,860 $ 11,796,489
Note: Changes in net assets are not available for years prior to 2003.
94
Fiscal Year
2006 2007 2008 2009 2010
$ 8,754,923 $ 9,744,930 $ 11,095,407 $ 11,440,991 $ 11,254,752
790,882 894,595 1,041,300 1,080,142 1,071,099
- - - 156,894 193,466
2,577,700 2,395,665 1,775,536 1,940,274 2,000,923
1,151,144 1,465,401 1,215,053 548,651 359,733
28,450 23,213 - 20,013 61,308
- (511,412) - - (303,051)
908,826 778,840 1,050,301 1,045,002 958,389
14,211,925 14,791,232 16,177,597 16,231,967 15,596,619
589,210 640,876 534,485 367,883 220,602
2,108 - 2,000 - -
- 511,412 - - 303,051
(908,826) (778,840) (1,050,301) (1,045,002) (958,389)
(317,508) 373,448 (513,816) (677,119) (434,736)
$ 13,894,417 $ 15,164,680 $ 15,663,781 $ 15,554,848 $ 15,161,883
$ 8,636,316 $ 1,659,397 $ 1,465,116 $ 871,277 $ (734,589)
5,548,589 4,218,721 1,615,444 920,055 1,467,987
$ 14,184,905 $ 5,878,118 $ 3,080,560 $ 1,791,332 $ 733,398
95
~i
CITY OF ELK RIVER, MINNESOTA
FUND BALANCES OF GOVERNMENTAL FUl\TDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Fiscal Year
General fund
Reserved
Unreserved
Committed
Assigned
Unassigned
Total General fund
All other governmental funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total all other governmental funds
2001 2002 2003 2004
$ 1,268 $ 1,268 $ 348,026 $ 115,746
3,060,907 3,189,321 3,384,023 3,851,634
$ 3,062,175 $ 3,190,589 $ 3,732,049 $ 3,967,380
$ 7,046,474 $ 14,272,266 $ 12,598,358 $ 11,570,003
8,772,346 2,219,157 3,742,244 4,597,195
(29,358) 8,133,831 4,585,550 5,401,112
$ 15,789,462 $ 24,625,254 $ 20,926,152 $ 21,568,310
Note: The City implemented GASB 54 in fiscal year 2010, resulting in significant reclassification
of the components of fund balance. Years prior to 2010 have not been restated.
96
Fiscal Year
2005 2006 2007 2008 2009 2010
$ 210,298 $ - $ 5,938 $ - $ - $ -
4,391,083 4,816,386 5,346,066 5,190,662 5,699,575 -
_ _ _ _ - 91,502
_ _ _ - - 727,443
_ _ _ _ - 5,187,520
$ 4,601,381 $ 4,816,386 $ 5,352,004 $ 5,190,662 $ 5,699,575 $ 6,006,465
$ 11,475,837 $ 9,979,026 $ 14,453,663 $ 6,953,630 $ 6,535,205 $ -
5,453,061 5,070,764 3,849,815 7,751,286 7,844,537 -
8,382,625 8,091,573 9,179,236 9,574,268 10,101,066 -
_ _ _ _ - 93,080
_ _ _ _ - 6,936,113
_ _ _ _ - 2,506,814
_ _ _ _ - 16,984,061
_ _ _ _ - (1,011,820)
$ 25,311,523 $ 23,141,363 $ 27,482,714 $ 24,279,184 $ 24,480,808 $ 25,508,248
97
CITY OF ELK RIVER, MINNESOTA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Fiscal Year
2001 2002 2003 2004
Revenues
Property taxes $ 5,067,317 $ 5,462,585 $ 6,507,578 $ 7,118,568
Other taxes - - - -
Licensesandpermits 989,052 715,852 1,143,612 1,249,844
Intergovernmental revenue 1,687,430 3,978,999 2,141,277 1,544,485
Charges for services 1,503,350 1,743,948 2,042,391 2;381,670
Fines and forfeits 89,221 134,840 190,911 164,800
Special assessments 2,598,484 2,049,519 2,433,939 2,375,902
Interest 766,599 612,224 304,237 375,548
Miscellaneous 3,018,207 2,409,430 2,159,373 1,799,736
Total revenues 15,719,660 17,107,397 16,923,318 17,010,553
Expenditures
General government 1,592,027 2,200,458 2,265,779 2,161,356
Public safety 3,389,370 3,583,232 4,145,996 4,163,345
Public works 1,427,274 1,429,018 1,814,818 1,850,281
Culture and recreation 1,133,090 1,325,118 1,635,806 1,655,298
Economic development 339,660 312,387 649,463 703,591
Capital outlay 3,103,306 6,704,948 8,389,740 2,997,696
Debt service
Principal 2,203,112 1,948,275 2,355,800 2,494,483
Interest and service charges 949,235 794,511 1,102,548 965,984
Total expenditures 14,137,074 18,297,947 22,359,950 16,992,034
Excess (deficiency) of revenues
over (under) expenditures 1,582,586 (1,190,550) (5,436,632) 18,519
Other financing sources (uses)
Transfers in 2,250,518 2,578,131 4,654,396 4,666,581
Transfers out (1,556,626) (2,119,863) (4,003,800) (3,799,765)
Proceeds of long-term debt 202,000 9,696,488 1,612,100 331,000
Payment to refunded bond escrow agent (1,770,000) - - -
Premium on long-term debt issued - - - -
Discount on long-term debt issued - - (5,566) -
Capital leases issued - - - -
Sale of capital assets - - 34,562 9,180
Total other fmancing sources (uses) (874,108) 10,154,756 2,291,692 1,206,996
Net change in fund balances $ 708,478 $ 8,964,206 $ (3,144,940) $ 1,225,515
Debt service as a percentage of
noncapital expenditures' 25.3% 24.1%
1 Debt service percentages are not available prior to 2003. 98
Chi
J
n
2005 2006
Fiscal Year
2007 2008
2009 2010
$ 8,283,983 $ 9,529,773 $ 10,571,695 $ 12,037,076 $ 12,329,194 $ 12,355,953
- - - - 156,894 193,466
1,240,336 1,207,368 987,708 460,108 322,338 402,076
1,979,405 4,142,937 2,973,505 4,134,779 3,117,997 1,135,060
2,571,767 2,485,464 1,786,094 1,849,307 1,465,898 1,727,276
190,062 175,155 156,407 150,086 141,629 161,074
3,414,090 1,566,880 1,909,595 1,712,551 1,464,348 999,633
758,612 1,151,144 1,465,401 1,215,053 548,651 359,731
2,004,286 2,555,842 1,545,181 1,628,567 1,853,966 2,587,771
20,442,541 22,814,563 21,395,586 23,187,527 21,400,915 19,922,040
2,204,626 2,251,111 2,450,722 2,480,208 2,458,879 2,629,731
' 4,649,010 4,941,706 5,109,371 5,565,474 5,377,208 5,266,803
2,192,336 2,538,658 4,170,119 3,246,436 2,656,097 2,291,196
2,088,505 2,605,861 3,386,681 2,890,683 2,666,146 2,569,464
' 785,584 627,467 573,446 2,216,617 1,589,464 1,512,138
4,191,817 10,729,882 12,803,023 10,381,359 4,627,322 1,879,604
2,174,266 7,051,836 1,767,617 2,022,616 3,162,117 2,411,062
' 881,305 909,904 902,415 1,198,174 1,289,087 1,182,993
19,167,449 31,656,425 31,163,394 30,001,567 23,826,320 19,742,991
1,275,092 (8,841,862) (9,767,808) (6,814,040) (2,425,405) 179,049
'
2,888,975 5,923,474 4,785,257 3,868,359 2,887,624 2,682,562
(2,211,459) (5,014,648) (4,006,417) (2,818,058) (1,842,622) (1,724,173)
' 1,715,000 3,657,000 13,390,500 2,277,946 2,074,311 6,184,243
(6,303,897)
- - - 36,542 - 255,238
(8,560) (29,252) (50,477) = =
' 2,332,694 325,000
718,166 17,439 200,914 84,379 16,629 61,308
3,102,122 6,886,707 14,644,777 3,449,168 3,135,942 1,155,281
'
$ 4,377,214 $ (1,955,155) $ 4,876,969 $ (3,364,872) $ 710,537 $ 1,334,330
'
21.0% 37.1% 15.1% 16.9% 23.7% 20.1%
' 99
CITY OF ELK RIVER, MINNESOTA
ELECTRIC SALES
LAST TEN FISCAL YEARS
Fiscal Number of Total
Year Customers KWh's Sold Billings
2001 6,547 137,617,611 $ 9,330,341
2002 6,750 149,787,670 10,629,091
2003 7,376 161,852,054 11,679,055
2004 7,907 165,595,414 12,736,439
2005 8,306 182,515,644 14,219,289
2006 8,562 194,975,530 15,494,068
2007 8,945 211,298,886 17,704,210
2008 9,203 224,226,048 19,999,652
2009 9,170 232,772,722 21,776,837
2010 9,207 250,711,834 24,368,348
Source: Elk River Municipal Utilities
100
CITY OF ELK RIVER, MINNESOTA
PRINCIPAL ELECTRIC CUSTOMERS
DECEMBER 31, 2010
2010
Customer
Data Center 1
Data Center 2
Sherburne Co. Go~rt. Center
Walmart
Faribault Foods
E & O Tool
Jerry's Enterprises
Target
Menards
Coborns
Tescom
All Tool
Shiely
Elk River Senior High
Vanderberg Jr High
TOTAL
Percentage
Total KWh Total of Total
Sold Billings Billings
38,393,885 $ 2,823,341 11.59%
14,136,120 1,145,194 4.70%
6,020,174 529,319 2.17%
5,410,305 421,062 1.73%
5,144,548 428,556 1.76%
5,044,880 401,420 1.65%
4,853,927 369,113 1.51%
3,740,045 303,480 1.25%
3,657,650 302,447 1.24%
3,085,596 238,997 0.98%
89,487,130 $ 6,962,929 28.58%
Source: Elk River Municipal Utilities
101
2001
Percentage
Total KWh Total of Total
Sold Billings Billings
$ - -
3,975,040 129,382 1.39%
3,883,680 125,365 1.34%
4,105,440 148,396 1.59%
2,910,660 94,407 1.01%
3,5 94,140 116,473 1.25
2,298,120 74,688 0.80%
2,188,880 70,974 0.76%
1,797,226 61,130 0.66%
1,272,480 41,610 0.45%
1,264,840 41,258 0.44%
27,290,506 $ 903,683 9.69%
CITY OF ELK RIVER, MINNESOTA
TAX CAPACITY, MARKET VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Tax capacity
Real property
Personal property
Total tax capacity
Tax increment
Taxable tax capacity
Total tax capacity rate
Taxable market value
Real property
Personal property
Taxable market value
Estimated actual value
of taxable property
Taxable market value as a percentage
of estimated actual value
2001 2002 2003 2004
$ 14,650,775 $ 11,961,965 $ 13,734,734 $ 15,387,792
255,557 203,919 258,501 215,581
] 4,906,332 12,165,884 13,993,235 15,603,373
(338,069) (426,854) (588,732) (608,609)
$ 14,568,263 $ 11,739,030 $ 13,404,503 $ 14,994,764
30.596% 43.600% 44.614% 43.782%
$ 859,562,078 $ 986,560,400 $1,141,917,000 $1,299,691,938
7,628,000 10,347,400 ] 3,112,800 10,934,000
$ 867,190,078 $ 996,907,800 $ 1,155,029,800 $ 1,310,625,938
$ 985,576,523 $ 1,]45,691,994 $ 1,382,785,926 $ 1,567,581,017
87.99% 87.01 % 83.53% 83.61
Source: Sherburne County Assessor
Note: Property in the county is reassessed annually. The county assesses property at approximately 97 percent
of actual value for all types of real and personal property.
102
2005 2006 2007 2008 2009 2010
$ 17,838,528 $ 20,514,092 $ 23,166,911 $ 25,790,055 $ 26,550,210 $ 25,611,065
237,262 246,741 281,606 279,154 302,166 310,180
18,075,790 20,760,833 23,448,517 26,069,209 26,852,376 25,921,245
(654,325) (675,049) (786,795) (744,597) (899,835) (888,285)
$ 17,421,465 $ 20.085,784 $ 22,661,722 $ 25,324,6]2 $ 25,952,541 $ 25,032,960
43.763% 43.929% 43.056% 42.494% 43.280% 44.560%
$1,528,254,150 $1,773,917,600 $1,998,598,900 $2,186,595,580 $ 2,235,538,000 $ 2,121,774,900
12,020, 800 12,494,3 00 14,318,500 14,221, 560 15, 3 63,900 15, 764,700
$ 1,540,274,950 $ 1,786,41 1,900 $ 2,012,917,400 $ 2,200,817,140 $ 2,250,901,900 $ 2,137,539,600
$ 1,805,774,228 $ 2,109,366,764 $ 2,262,479,345 $ 2,457,361,368 $ 2,429,563,505 $ 2,191,955, ] 85
85.30% 84.69% 88.97% 89.56% 92.65% 97.52%
]03
CITY OF ELK RIVER, MINNESOTA
PROPERTY TAX RATES
DIRECT AND OVERLAPPING' GOVERNMENTS
LAST TEN FISCAL YEARS
City of Elk River Overlap ping Rates Total
School District
Direct & '
Fiscal Debt Referendum Special Overlapping
Year Operating Sen~ice Total County Operating Mkt. Value Districts Rates
2001 28.929 1.667 30.596 32.341 63.870 0.203 1.737 128.747 '
20022 39.214 4.386 43.600 47.577 45.969 0.082 s 2.653 142.881
2003 37.223 7.391 44.614 46.277 41.352 0.076 2.696 135.015 '
2004 35.861 7.921 43.782 44.405 30.853 0.154 3.574 122.768
2005
2006 36.713
37
179 7.050
6
750 43.763
43
929 42.028
41
555 32.848
3
0 0.148
0 5.349
4
056 124.136
125
645 '
. . . . 5.95 .155 . .
2007 37.743 5.313 43.056 40.720 33.208 0.144 3.905 121.033
2008 37.249 5.245 42.494 40.675 32.344 0.161 3.988 119.662 '
2009 38.319 4.961 43.280 41.999 36.215 0.164 4.040 125.698
2010 40.940 3.620 44.560 44.519 40.050 0.183 4.703 134.015 '
Source: Sherburne County Auditor/Treasurer '
' Overlapping rates are those of local and county governments that apply to property owners within the City of Elk River.
Not all overlapping rates apply to all City of Elk River property owners (e.g., the rates for special districts apply only to the
proportion of the city's property owners whose property is located within the geographic boundaries of the special district. '
z In 2002 tax rates for cities and counties increased significantly due to reductions in state aids and in class rates used to
calculate net tax capacity values.
j As a result of property tax reform measures enacted in 2001, tax rates for school districts for 2002 are substantially less than
the comparable figures from prior years. '
n
n
0
104 '
CITY OF ELK RIVER, MINNESOTA
PRINCIPAL TAXPAYERS
DECEMBER 31, 2010
2010 2001
Percentage Percentage
Net Tax of Total Net Net Tax of Total Net
Taxpayer Capacity Rank Tax Capacity Capacity Rank Tax Capacity
Great River Energy $ 887,734 1 3.55% $ 715,053 1 5.78%
JPM Capital Corporation 530,664 2 2.12 - - -
Target Corp. 405,240 3 1.62 165,406 5 1.34
Resource Recovery Technology 312,078 4 1.25 411,719 3 3.33
Walmart Stores 295,786 5 1.18 - - -
Bradley Operating L.P. 193,916 6 0.77 417,023 2 3.37
Menards,Inc 191,466 7 0.76 187,693 4 1.52
Minn West Bank 162,560 8 0.65 - - -
Phoenix Enterprises 160,847 9 0.64 - - -
Home Depot 145,284 10 0.58 - - -
B & G Realty, Inc. - - - 139,566 6 1.13
Hickman Land Investments - - - 109,306 7 0.88
Tescom Corporation - - - 104,209 8 0.84
Alltool Manufacturing - - - 103,332 9 0.84
Evans Meadows Apartments - - - 102,698 10 0.83
TOTAL $ 3,285,575 13.12% $ 2,456,005 19.86%
Source: Sherburne County Assessor
105
1
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Cit of '
Y
Elk -~.
..~., ~
River
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CITY OF ELK RIVER, MINNESOTA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Collected v~~ithin the
Fiscal Year of the Levy Collections in Total Collections to Date
Fiscal Total Year's Percentage Subsequent Percentage
Year Tax Levy1 Amount of Levy Years Amount of Levy
2001 $ 4,457,247 $ 4,402,150 98.76% $ 53,781 $ 4,455,931 99.97%
2002 4,754,431 4,690,876 98.66 54,156 4,745,032 99.80
2003 5,594,944 5,513,105 98.54 65,396 5,578,501 99.71
2004 6,160,102 6,051,358 98.23 100,561 6,151,919 99.87
2005 7,224,669 7,078,832 97.98 135,872 .7,214,704 99.86
2006 8,429,836 8,249,039 97.86 168,448 8,417,487 99.85
2007 9,354,375 9,133,690 97.64 196,010 9,329,700 99.74
2008 10,360,068 10,075,018 97.25 204,160 10,279,178 99.22
2009 10,802,209 10,424,835 96.51 218,289 10,643,124 98.53
2010 10,755,202 10,403,335 96.73 - 10,403,335 96.73
1 Total tax levy for years 2002-2010 does not include Market Value Homestead Credit received from the State.
106
CITY OF ELK RIVER, MINNESOTA
RATIOS OF OUTSTANDING DEBT BY TYPE '
LAST TEN FISCAL YEARS
Governmental Activities
General Permanent
Fiscal
General
Obligation Lease Special
Improvement
Tax '
Year Obligation Revenue Revenue Assessment Revolving Increment
2001 $ - $ 4,530,000 $ 2,125,000 $ 8,535,000 $ 1,840,000 $ 1,560,000 '
2002 - 2,230,000 9,950,000 7,450,000 1,575,000 1,477,500
2003 - 2,045,000 9,765,000 7,520,000 1,305,000 1,352,500
2004 - 1,850,000 9,285,000 6,460,000 1,020,000 1,116,000 '
2005 - 1,645,000 8,785,000 6,605,000 935,000 972,500
2006 3,220,000 1,430,000 8,265,000 2,130,000 - 827,500
2007 13,220,000 1,200,000 7,730,000 4,825,000 - 675,000 ,
2008 15,412,946 955,000 7,170,000 4,480,000 - .505,000
2009 16,677,757 700,000 6,175,000 3,970,000 - 440,000
2010 22,002,000 540,000 - 3,460,000 - 375,000 '
' '
Note: Detail s regarding the city
s outstanding debt can be found in the notes to the financial statements.
~ See the Schedule of Demographic and Economic Statistics on page 115 for personal income and population data.
1
107 '
'
Government al Activities Business-Type Activities
Total Percentage
Certificates of Revenue Certificates of Notes Primary of Personal Per
' Indebtedness Other Bonds Indebtedness Payable Government Income' Capita'
$ 559,925 $ 242,935 $ 9,945,000 $ - $ - $ 29,337,860 6.42% $ 1,688
' 661,650 148,808 11,050,000 500,000 2,854,536 37,897,494 8.06% 2,096
612,950 47,976 12,430,000 500,000 2,775,424 38,353,850 7.84% 2,045
705,967 - 11,050,000 375,000 2,663,145 34,525,112 6.27% 1,706
' 1,035,201 12,885,000 250,000 2,538,226 35,650,927 6.00% 1,654
1,134,334 1,908,725 14,200,000 125,000 3,066,820 36,307,379 5.74% 1,610
1,090,350 2,123,092 16,155,000 - 2,879,054 49,897,496 7.29% 2,152
756,033 1,839,792 17,910,000 - 2,701,994 51,730,765 6.96% 2,166
421,716 1,646,492 16,910,000 - 2,524,646 49,465,6] 1 6.76% 2,093
87,400 1,499,746 13,120,000 - 2,345,318 43,429,464 na 1,890
' 108
CITY OF ELK RIVER, MINNESOTA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING '
LAST TEN FISCAL YEARS
Less
Amount
Percentage
Net '
General in Debt Net of Net Bonded Bonded
Fiscal Bonded Service Bonded Debt to Tax Debt per
Year Debt' Funds Debt Capacity2 Capita3 '
2001 $ 559,925 $ 199,967 $ 359,958 2.47% $ 20.71
2002 8,661,650 584,853 8,076,797 66.39% 446.68 '
2003 8,612,950 704,885 7,908,065 56.51% 421.58
2004 8,420,967 791,375 7,629,592 48.90% 376.96 '
2005 8,455,201 813,832 7,641,369 43.86% 354.62
2006 11,474,334 860,393 10,613,941 52.84% 470.68 t
2007 17,792,017 861,726 16,930,291 74.71% 730.16
2008 18,391,033 1,318,186 17,072,847 67.42% 714.70 ,
2009 17,471,716 1,418,700 16,053,016 61.86% 679.26
2010 18,040,733 1,164,060 16,876,673 65.03% 734.60 ,
N
' '
ote: Details regarding the city
s outstanding debt can be found in the notes to the financial
statements.
' Only includes debt supported by tax levy.
2 See the Schedule of Tax Capacity, Market Value and Estimated Actual Value of Taxable '
Property on page 102-103 for property value data.
' Population data can be found in the Schedule of Demographic and Economic Statistics on page 115. '
109 '
L
n
CITY OF ELK RIVER, MINNESOTA
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
DECEMBER 3l, 2010
Percent
of Debt City's
Outstanding Applicable Share
Debt to City' of Debt
Direct Debt:
City of Elk River $ 43,429,464 100.00% $ 43,429,464
Overlapping Debt:
Sherburne County 30,110,000 26.61 8,012,271
School District #728 329,355,000 68.19 224,587,175
Total overlapping debt 359,465,000 232,599,446
Total direct and overlapping debt $ 402,894,464 $ 276,028,910
Debt Ratios:
Ratio of debt per capita (22,974 population)
Ratios of debt to estimated taxable market value of $2,191,955,185
$12,015
12.59%
ii
Source: Sherburne County and School District #728
Note: Overlapping governments are those that coincide, at least in part, with the geographic
boundaries of the city. This schedule estimates the portion of the outstanding debt of those
overlapping governments that is borne by the residents and business of the City of Elk River.
This process recognizes that, when considering the city's ability to issue and repay
' long-term debt, the entire debt burden borne by the residents and businesses should be taken
into account. However, this does not imply that every taxpayer is a resident, and therefore
responsible for repaying the debt of each overlapping government.
' ~ The percentage of overlapping debt applicable is estimated using taxable market property values.
Applicable percentages were estimated by determining the portion of the county's and school
district's taxable market value that is within the city's boundaries and dividing it by the county's
and school district's total taxable market value.
u
i
' 110
CITY OF ELK RIVER, MINNESOTA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
Debt limit
Bonds
Reserves
Total net debt applicable to limit
Legal debt margin
Total net debt applicable to the
limit as a percentage of debt limit
2001 2002 2003 2004
$ 17,343,802 $ 19,938,156 $ 23,100,596 $ 26,212,519
559,925 10,356,650 10,307,950 10,060,967
199,967 717,180 837,754 925,148
359,958 9,639,470 9,470,196 9,135,819
$ 16,983,844 $ 10,298,686 $ 13,630,400 $ 17,076,700
2.08% 48.35% 41.00% 34.85%
Note: Under state law, the City of Elk River's outstanding general obligation debt should not exceed
3 percent of the market value of taxable property. By law, the general obligation debt subject to the
limitation maybe offset by amounts set aside for the extinguishment of those obligations.
i Only 2/3 of the $10,000,000 GO EDA Bonds, Series 2007 and the $1,510,000 GO EDA Bonds, Series 2008A
are subject to the debt limit. The Remaining 1/3 will be paid by the YMCA.
111
2005 2006 2007 2008 2009 2010
$ 30,805,499 $ 35,728,238 $ 40,258,348 $ 66,024,514 $ 67,527,057 $ 64,126,188
10,040,201 13,124,334 ]7,792,017 18,391,033 17,471,716 18,040,733
950,793 1,003,315 861,726 1,318,186 1,418,700 1,164,060
9,089,408 12,121,019 16,930,291 17,072, 847 16,053,016 16, 876,673
$ 21,716,091 $ 23,607,219 $ 23,328,057 $ 48,951,667 $ 51,474,041 $ 47,249,515
29.51% 33.93% 42.05% 25.86% 23.77% 26.32%
Legal Debt Margin Calculation for Fiscal Year 2010
Estimated taxable market value $ 2,137,539,600
Debt limit (3% of market value) $ 64,126,188
Debt applicable to limit:
G.O. equipment certificates
G.O. capital improvement bonds
G.O. EDA bonds'
Less: Cash and investments in related
debt service funds
Total net debt applicable to limit
Legal debt margin
87,400
10,280,000
7,673,333
(1, l 64,060)
16,876,673
$ 47,249,515
112
CITY OF ELK RIVER, MINNESOTA
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
Revenue Bonds 1
Net
Fiscal Gross Operating Revenue Debt Service
Year Revenue ' Expenses j Available Principal Interest Coverage
2001 $ 14,455,781 $ 9,562,295 $ 4,893,486 $ 517,500 $ 368,819 5.52
2002 15,434,083 10,904,432 4,29,651 590,000 463,726 4.30
2003 16,432,764 12,708,022 3,724,742 615,000 486,296 3.38
2004 17,656,784 13,760,051 3,896,733 2,445,000 513,878 1.32
2005 19,791,626 15,615,453 4,176,173 1,150,000 485,777 2.55
2006 21,940,299 16,970,625 4,969,674 2,405,000 573,345 1.67
2007 25,212,616 19,212,200 6,000,416 1,045,000 595,642 3.66
2008 28,380,372 22,562,437 5,817,935 1,330,000 669,406 2.91
2009 29,665,332 23,654,659 6,010,673 1,000,000 681,124 3.58
2010 31,787,604 25,849,033 5,938,571 3,785,000 564,105 1.37
Note: Details regarding the government's outstanding debt can be found in the notes to the fmancial statements.
1 Includes Liquor, Sewer, Water and Electric revenue bonds
L Gross revenue excludes interest income, connection fees and miscellaneous revenues
j Expenses exclude depreciation, interest on bonds and miscellaneous expenses
113
ii
L
Special Assessment Bonds
Special
Assessment Debt Service
Collections Principal Interest
$ 1,757,048 $ 1,320,000 $ 488,592
1,607,767 1,085,000 370,770
1,705,463 1,185,000 321,911
1,901,427 1,060,000 297,840
1,123,407 925,000 264,999
999,232 4,475,000 198,650
231,839 395,000 64,339
611,290 345,000 192,553
421,724 510,000 168,335
368,936 510,000 148,276
Coverage
0.97
1.10
1.13
1.40
0.94
0.21
0.50
1.14
0.62
0.56
114
CITY OF ELK RIVER, MINNESOTA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Personal
Fiscal Income Per Capita Median School
Year Population) (in thousands) Income2 Age3 Enrollment4
2001 17,380 $ 456,677 $ 26,276 32 10,587
2002 18,082 470,096 25,998 32 11,]00
2003 18,758 489,284 26,084 32 11,257
2004 20,240 550,852 27,216 32 11,749
2005 21,548 593,906 27,562 32 12,259
2006 22,550 632,911 28,067 32 12,735
2007 23,187 684,689 29,529 32 13,058
2008 23,888 742,439 31,080 33 13,031
2009 23,633 732,245 30,984 33 13,073
2010. 22,974 s na na 33 ] 3,036
Data Sources:
~ State Demographer
Z Bureau of Economic Analysis
s US Census Bureau
a School District
s Minnesota Department of Employment and Economic Development
na -not available
Unemployment
Rates
3.9%
5.1%
5.8%
5.0%
4.7%
4.4%
5.6%
8.2%
9.0%
8.1%
115
CITY OF ELK RIVER, MINNESOTA
' PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2010 2001
Percentage Percentage
' of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment
Independent School District 728 1,547 1 14.36% 1,160 1 11.84%
' Sherburne County 615 2 5.71% 490 2 5.00%
Walmart 487 3 4.52% 325 5 3.32%
Guardian Angels of Elk River 323 4 3.00% 372 3 3.80%
Great River Energy 216 5 2.00% 330 4 3.37%
' City of Elk River 203 6 1.88%
Tescom Corporation 171 7 1.59% 189 9 1.93%
Menards 153 8 1.42% 195 7 1.99%
Coborn's Foods 134 9 1.24%
Elk River Ford 118 10 1.10%
Cub Foods - - - 200 6 2.04%
Target - 190 8 1.94%
E & O Tool & Plastics =
= 160 10 1.63%
Total 3,967 36.82% 3,611 36.86%
~
Total Employment 10,774 9,798
' i Minnesota Department of Employment and Economic Development
1
' 116
CITY OF ELK RIVER, MINNESOTA
FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
Function 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
General government 15.0 18.5 16.5 21.5 25.0 25.0 24.3 23.8 23.3 23.3
Public safety
Police
Officers 26.0 26.0 27.0 28.0 29.0 29.0 30.0 31.0 31.0 31.0
Civilians 7.0 7.0 7.0 8.0 8.0 9.0 9.0 9.0 8.0 8.0
Fire
Fire administration 2.0 2.0 2.0 2.0 3.0 3.0 3.5 3.5 3.5 3.7
Paid on-call volunteers 34.0 35.0 35.0 35.0 38.0 39.0 39.0 39.0 39.0 38.0
Building 9.0 9.0 9.0 10.0 9.5 9.5 9.5 8.5 5.6 5.6
Enviromnental 1.0 2.0 2.0 2.0 2.0 2.0 2.0
Public works 15.5 16.5 16.5 12.5 ' 13.5 13.5 15.0 15.0 13.1 14.0
Culture and recreation 5.5 9.0 9.3 13.8 ' 16.8 20.8 20.8 21.4 20.9 20.9
Economic development 2.0 2.0 2.0 2
0 2
0 2
0 2
0 2
0 2
0 2
0
. . . . . . .
Municipal liquor 7.7 8.0 8.0 8.0 8.0 11.5 11.0 I1.5 12.0 14.0
Sewer 4.0 4.0 4.0 4.0 5.0 5.0 6.0 6.0 6.0 6.0
Water 3.0 3.0 4.0 5.0 5.0 5.0 6.0 5.0 5.0 5.0
ElecMc 24.0 26.0 26.0 29.0 29.0 29.0 30.0 29.0 28.5 29.0
Total 154.7 166.0 166.3 179.8 193.8 203.3 208.1 206.7 199.9 202.5
Source: City of Elk River Finance Department
' The Streets/Parks department was split in 2004 to the Street Maintenance and Park Maintenance departments.
Function
Planning
Land use applications
Police
Police calls
Arrests
Fire
Fire calls
Building/enviromnental
Permits issued
Valuation of permits $
(thousands of dollars)
Public works
Street sweeping (hours)
~ Snowplowing (hours)
Equipment repair (hours)
Culture and recreation
Recreation participants
Ice arena usage (hours)
Golf rounds
Sewer
Average daily treatment flow
(thousands of gallons)
Water
Number of customers
Average daily consumption
(thousands of gallons)
Electric
Number of customers
Average daily consumption
(thousands of KWh's)
Som~ces: Various city departments
Note: The golf course was purchased in 2006.
CITY OF ELK RIVER, MINNESOTA
OPERATING INDICATORS BY FUNCTION
LAST TEN FISCAL YEARS
001 2002 2003 2004 2005 2006 2007 2008 2009 2010
131 141 123 147 142 104 85 88 64 43
17,440 18,349 18,250 18,129 19,431 18,494 19,277 2(,997 22,231 21,751
1,075 1,035 888 916 990 955 682 969 940 957
347 406 426 450 486 451 436 453 364 443
2,867 2,667 4,476 4,068 3,845 4,388 2,382 2,021 1,369 2,105
91,222 $58,893 $97,101 $120,729 $147,413 $ 95,844 $ 67,309 $ 41,006 $ 14,265 $ 22,312
1,611 1,008 1,096 1,312 1,144 1,192 627 1,085 1,287 1,063
3,474 2,560 2,808 2,610 2,640 1,648 4,380 2,737 2,305 3,425
3,168 4,932 5,448 5,600 5,700 5,660 6,440 5,038 6,482 5,378
9,106 8,164 7,557 10,232 10,537 10,633 14,104 20,631 29,124 26,061
3,965 4,162 3,683 3,784 4,187 4,266 4,193 4,386 4,684 4,943
947
1,041
3,009 3,207
1,864 1,758
6,799 7,002
379 410
10,000 10,97 l 11,533 11,079 10,707
1,082 1,114 1,180 1,163 1,190 1,230 1,300 1,200
3,513 3,824 4,074 4,317 4,413 4,508 4,467 4,511
1,936 1,784 1,934 2,226 2,394 1,992 1,941 1,718
7,376 7,907 8,306 8,562 8,945 9,203 9,170 9,207
443 454 500 534 579 614 638 687
CITY OF ELK RIVER, MINNESOTA
CAPITAL ASSET STATISTICS BY FUNCTION
LAST TEN FISCAL YEARS
Fiscal Year
Function
Public safety
Police:
Stations
Patrol units
Fire Stations
Public works
Streets (miles)
Culture and recreation
`o Parks
Parks acreage
Sewer
Sanitary sewers (miles)
Lift stations
Maximum daily treatment capacity
(thousands of gallons)
Water
Maximum daily capacity
(thousands of gallons)
Electric
Generating facilities
2001 2002 2003 2004 2005 2006 2007 2008 2009 201.0
1 1 1 1 1 1 1 1 1 1
10 10 10 10 11 11 11 12 12 12
1 1 2 2 2 2 2 2 2 2
126 131 138 145 150 151 151 151 151 151
31 37 39 40 40 44 44 44 44 44
769 847 872 883 898 927 964 964 964 964
53 61 63 67 70 73 75 78 79 79
16 19 19 19 20 21 21 21 21 21
1,600 1,600 1,600 1,600 2,200 2,200 2,200 2,200 2,200 2,200
6,696 6,696 6,696 6,696 6,900 8,100 8,100 8,100 8,100 8,100
4 5 5 5 5 6 6 6 6 6
Sources: Various city departments
Note: No capital asset indicators are available for the general government fiuiction.
~ ~ ~ ~ r ~ ~ ~ i ~ ~ ~ ~ ~ ~ ~ ~ i ~
CITY OF ELK RIVER
ELK RIVER, MINNESOTA
MANAGEMENT LETTER
FOR THE YEAR ENDED
DECEMBER 31, 2010
May 12, 2011
Management, Honorable Mayor and Council
City of Elk River, Minnesota
We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented
component unit, each major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota (the City) for
the year ended December 31, 2010. Professional standards require that we provide you with information about our responsibilities
under generally accepted auditing standards as well as certain information related to the planned scope and timing of our audit.
We have communicated such information in our letter to you dated November 2, 2010. Professional standards also require that we
provide to you the following information related to our audit.
Our Responsibility Under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions about whether
the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity
with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not
relieve you or management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements
are free of material misstatement. As part of our audit, we considered the internal control over financial reporting of the City.
Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning
such internal control over financial reporting. We are responsible for communicating significant matters related to the auditthat
are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are
not required to design procedures specifically to identify such matters.
In planning and performing our audit, we considered the City’s internal control over financial reporting as a basis for designing
ourauditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express
an opinion on the effectiveness of the City’s internal control over financial reporting.
deficiency in internal control
Aexists when the design or operation of a control does not allow management or employees, in the
normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A
material weakness
is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility
that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies,
significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting
that we consider to be material weaknesses, as defined above.
City of Elk River
May 12, 2011
Page 2
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed
tests of compliance with certain provisions of Minnesota statutes. However, the objective of our tests was not to provide an
opinion on compliance with such provisions. While our audit provides a reasonable basis for our opinion, it does not provide a
legal determination on the City’s compliance with those requirements. We noted no instances of noncompliance with Minnesota
statues.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing previously communicated to you.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used
by the City are described in Note 1 to the financial statements. The requirements of GASB statement No. 54 were adopted for the
year ended December 31, 2010.No new accounting policies were adopted and the application of existing policies was not
changed during the year. We noted no transactions entered into by the City during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper
period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s
knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are
particularly sensitive because of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most sensitiveestimates affecting the financial statements
include depreciation on capital assets as well as the liability forthe City’s Other Post Employment Benefits (OPEB).
Management’s estimate of depreciation is based on estimated useful lives of the assets. Management’s estimate of its OPEB
liability is based on several factors including, but not limited to, anticipated retirement age for active employees, life expectancy,
turnover, and healthcare cost trend rate. We evaluated the key factors and assumptions used to develop depreciationand the
OPEB liability in determining that it is reasonable in relation to the financial statements taken as a whole.
The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are
particularly sensitive because of their significance to financial statement users.
DifficultiesEncountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those
that are trivial, and communicate them to the appropriate level of management. Management has corrected all such
misstatements.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or
auditing matter,whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s
report. We are pleased to report that no such disagreements arose during the course of our audit.
City of Elk River
May 12, 2011
Page 3
Management Representations
We have requested certain representations from management that are included in the management representations letter dated
May 12, 2011.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to
obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s
financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our
professional relationship and our responses were not a conditionto our retention.
City of Elk River
May 12, 2011
Page 4
Financial Position and Results of Operations
Our principal observations and recommendations are summarized on the following pages. These recommendations resulted from
our observations made in connection with our audit of the City’s financial statements for the year ended December 31, 2010.
General Fund
The General fund is used to account for resources traditionally associated with government, which are not requiredlegally or
by sound principal management to be accounted for in another fund. The General fund balance increased $165,866from
2009. The fund balance of $6,006,465is 48.1 percent of the 2011budgeted expenditures. The total fund balance is split
between committed $91,502, assigned $727,443 and unassigned $5,187,520. More information can be found on pages 55-56
of the comprehensive annual financial report. We recommend the fund balance be maintained at a levelsufficient to fund
operations until the major revenue sources are received in June. We feel a reserve of approximately 40 to 50 percent of
planned expenditures and transfers out is adequate to meet working capital and small emergency needs.
Statement of Position
The Office of the State Auditor (the OSA) has issued a relating to fund balance stating “a local
government should identify fund balance separately between reserved and unreserved fund balance. The local government
may assign and report some or all of the fund balance as designated and undesignated.” We recommend local governments
adopt a formal policy on the level of unreserved fund balance that should be maintained in the general and special revenue
funds. This helps address citizen concerns as to the use of fund balance and tax levels.
The purposes and benefits of a General fund balance are as follows:
Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are
not received until the second half of the year. An adequate fund balance will provide the cash flow required to
finance the General fund expenditures until these revenue sources are received.
The City is vulnerable to legislative actions at the State and Federal level. The State continually adjusts the local
government aid and property tax credit formulas. We also have seen the State mandate levy limits for cities over
2,500 in population. An adequate fund balance will provide a temporary buffer against those aid adjustments and
levy limits.
Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. These
would include capital outlay replacement, lawsuits and other items. An adequate fund balance will provide the
financing needed forsuch expenditures.
A strong fund balance will assist the City in obtaining, maintaining or improving its bond rating. The result will be
better interest rates in future bond sales.
City of Elk River
May 12, 2011
Page 5
A table summarizing the General fund balance in relation to the following years’ budget follows:
Percent
of Fund
FundGeneral
Balance to
BalanceBudgetFund
Budget
YearDecember 31YearBudget
2005$4,601,3812006$10,596,550 %43.4
20064,816,386200711,648,00041.3
20075,352,004200812,572,00042.6
20085,190,662200911,975,55043.3
20095,840,599201012,096,15048.3
20106,006,465201112,500,050 *48.1
*The unassigned portion of the General fund balance is 41 percent of the 2011 budgetor $5,187,520.Other components
are committed and assigned at $91,502 and $727,443, respectively.More information can be found on pages 55-56 of the
comprehensive annual financial report.
Fund Balance as a Percent of Next Year’s Budget
$14,000,000
$12,572,000
$12,500,050
$11,975,550
$12,096,150
$11,648,000
$12,000,000
$10,000,000
$10,596,550
$8,000,000
$6,000,000
48.1%
48.3%
42.6%
43.3%
$4,000,000
41.3%
43.4%
$2,000,000
$-
2005200620072008200920102011
Actual Fund BalancesBudget
The 2010and prior budgets are the final amended budgets. The 2011budget is the adopted original budget.
City of Elk River
May 12, 2011
Page 6
The 2010operations are summarized as follows:
Final
Budgeted ActualVariance with
AmountsAmountsFinal Budget
Revenues$11,322,161$11,147,455$(174,706)
Expenditures11,682,10011,197,352484,748
Deficiency of revenues
under expenditures(359,939)(49,897)310,042
Other financing sources (uses)
Transfers in596,100596,100-
Transfers out(414,050)(380,337)33,713
Total other financing sources (uses)182,050215,76333,713
Net change in fund balances(177,889)165,866343,755
Fund balances, January 15,840,5995,840,599-
Fund balances, December 31$5,662,710$6,006,465$343,755
The City amended the General fund budget during the year. The amendment resulted in an increase of revenues ($198,461)
and an increase of expenditures ($51,350). The final budget called for adecrease of $177,889of fund balance reserves.
Actual change in fund balance was an increase of $165,866. Some of the line items with significant variances from the final
budget are highlighted below:
The City received $90,441 and $72,645less than anticipated from property taxesand othertaxes, respectively.This
is consistent with prior years and the City still maintained a strong collection rate.
The City recorded$97,221 less than anticipated from interest incomedue to historical lows in investment options
and adjustment for fair market value.
Personal service expenditures were significantly under budget in Parks & Recreation and Engineering due to staff
turnover.
Overall, general government expenditures were $214,071 under budget due to strong budget management by the
departments.
The current public worksdepartment expenditures were $116,388under budgetdue to the engineering personal
services described above.
Transfers out were under budget mainly due to the transfer out to the Ice Arena.
City of Elk River
May 12, 2011
Page 7
A comparison between 2008,2009and 2010revenues and transfers is presented below:
Percent of
SourceTotal
200820092010Per Capita
Taxes$8,751,019$9,229,859$9,570,87581.6 %$417
Licenses and permits460,108322,338402,0763.418
Intergovernmental897,492922,988348,0733.015
Charges for services692,374537,674533,4764.523
Fines and forfeitures129,504127,642132,9681.16
Interest172,23990,73062,7790.53
Miscellaneous136,19490,17897,2080.84
Transfers in463,500590,100596,1005.126
Total revenues and transfers$11,702,430$11,911,509$11,743,555100.0 %$512
A graphical presentation of 2008,2009, and 2010revenues and transfers follows:
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$-
200820092010
Taxes Intergovernmental Charges for services Other
City of Elk River
May 12, 2011
Page 8
A comparison between 2008,2009and 2010expenditures and transfers is presented below:
Percent of
Per
ProgramTotal
200820092010Capita
General government$2,372,748$2,379,939$2,480,82521.3 %$108
Public safety5,511,8295,174,5285,258,55045.5229
Public works1,800,4941,743,2271,777,91215.477
Culture and recreation1,640,4891,616,7121,596,26713.869
Capital outlay218,083105,08683,7980.74
Transfers out320,129383,104380,3373.317
Total expenditures
and transfers$11,863,772$11,402,596$11,577,689100.0 %$504
A graphical presentation of 2008,2009and 2010expenditures and transfers follows:
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
200820092010
General government Public safety Public works Other
City of Elk River
May 12, 2011
Page 9
Special Revenue Funds
A summary of the special revenue fund balances (deficits) is shown below:
Fund Balances (Deficits)
December 31,
Increase
Fund
20102009(Decrease)
Nonmajor
Library$423,356$409,323$14,033
Ice Arena6,74339,417(32,674)
Pinewood Golf Course---
Senior Citizen Account9,0039,817(814)
Landfill1,707,1051,864,525(157,420)
Revolving Loan1,110,693902,266208,427
DTED Grant/Loan679,137662,49416,643
Development Fund615,929445,545170,384
Emergency/Insurance Reserve434,170553,414(119,244)
Drug Forfeiture Reserve660-660
YMCA Grant1,342,5641,575,885(233,321)
Economic Development Authority1,377,5611,167,563209,998
EDA DTED Loan-214,340(214,340)
Total$7,706,921$7,844,589$(137,668)
City of Elk River
May 12, 2011
Page 10
Debt Service Funds
Debt service funds are a type of governmental fund to account for the accumulation of resources for the payment of interest
and principal on debt (other than enterprise fund debt).
Debt service funds may have one or a combination of the following revenue sources pledged to retire debt as follows:
Property taxes - Primarily for general City benefit projects such as parks and municipal buildings. Property taxes
may also be used to fund special assessment bonds which are not fully assessed.
Tax increments - Pledged exclusively for tax increment/economic development districts.
Capitalized interest portion of bond proceeds - After the sale of bonds, the project may not produce revenue (tax
increments or special assessments) for a period of one to two years. Bonds are issued with this timing difference
considered in the form of capitalized interest.
Special assessments - Charges to benefited properties for various improvements.
In addition to the above pledged assets, other funding sources may be received by Debt Service funds as follows:
Residual project proceeds from the related capital projects fund
Investment earnings
State or federal grants
Transfers from other funds
City of Elk River
May 12, 2011
Page 11
All debt service funds with the total assets and debt remaining to be paid are shown below:
Cash andFinal
TemporaryTotal BondsMaturity
Debt Service Fund
InvestmentsAssetsOutstandingDate
Improvement Bonds$858,942$2,055,699
2003A G.O. Improvement Bonds$330,00002/01/14
2005A G.O. Improvement Bonds660,00002/01/16
2007C G.O. Improvement Bonds2,470,00002/01/18
2010A G.O. Capital Improvement Bonds6,105,00002/01/23
Government Building Bonds700,222739,377
1996C G.O. Ice Arena Bonds540,00012/01/13
2006C G.O. Capital Improvement Bonds2,910,00002/01/27
Equipment Certificates94,248105,299
2006B G.O. Equipment Certificates87,40002/01/11
MPFA Loan-421
State-Aid Road Bonds1,477,00008/20/13
TIF Bonds--
2000A G.O. Tax Increment Bonds375,00002/01/15
YMCA Bonds369,590380,585
2007D EDA G.O. Bonds10,000,00002/01/33
2008A EDA G.O. Bonds1,510,00002/01/15
Total Debt Service Funds$2,023,002$3,281,381$26,464,400
A summary of non-enterprise fund bonds outstanding relative to market value andpopulation follows:
Bonds
Ratio of
TaxablePayable inLess
Net Debt
MarketDebt ServiceAmount
to Market
FiscalPopulationValueFundsAvailableNetNet Debt
Value
Year(1)(2)(3)(4)Debtper Capita
201022,974$ 2,137,539,600$26,464,400$24,406,725 %1.1$1,062
$ 2,057,675
200923,6332,250,901,90028,384,4732,484,20325,900,2701.21,096
200823,8882,200,817,14029,278,9792,792,61426,486,3651.21,109
200723,1872,012,917,40028,740,3502,212,63926,527,7111.31,144
200622,5501,786,411,90013,786,8342,262,41411,524,4200.6511
(1)Provided by City
(2)Provided by County
(3)Bonds reported in Debt Service funds
(4)Available fund balance in the Debt Service funds
City of Elk River
May 12, 2011
Page 12
Capital Projects Funds
The fund balances of all capital projects funds are summarized below:
Fund Balances
December 31,
Increase
Capital Projects Fund
20102009(Decrease)
Major
Improvement Projects$4,431,050$4,120,068$310,982
Nonmajor
Capital Reserve1,290,6751,324,205(33,530)
Equipment Replacement1,003,4071,060,387(56,980)
Park Dedication(691,159)(684,938)(6,221)
Park Improvements181,970109,11072,860
Government Buildings3,478,8972,627,408851,489
GRE Reserve1,256,876643,251613,625
Street Improvement5,112,5975,220,214(107,617)
Tax Increment Financing Districts(320,661)(408,713)88,052
Total nonmajor11,312,6029,890,9241,421,678
Total$15,743,652$14,010,992$1,732,660
The City has multiple individual projects that make up the funds presented above. The City should continue to monitor each
individual project. The Tax Increment Financing Districts fundand Park Dedication fund have a deficit fund balance at the
end of the year. The deficits are primarily due to the recording of the liabilities that will be eliminated by future revenues or
park development. Council should continue to review planned project sources for these funds and consider whether they will
be available within a sufficient timeframe to cover current activity.
City of Elk River
May 12, 2011
Page 13
Enterprise Funds
The activities of the Enterprise funds include the municipal liquor, garbage, sewer, water and electric. The electric and water
operations, under the direction of the Utilities Commission, are included in the financial statements since Council has the
ultimate oversight responsibility for their operations.
Municipal Liquor Fund
The following is a summary of operations in the Municipal Liquor fund for the past three years:
200820092010
PercentPercentPercent
TotalTotalTotal
Sales$6,209,322 %100.0$6,076,245 %100.0$5,948,986 %100.0
Cost of sales(4,421,064)(71.2)(4,354,597)(71.7)(4,273,029)(71.8)
Gross profit1,788,25828.81,721,64828.31,675,95728.2
Operating revenues4,3350.14,7270.14,6400.1
Operating expenses(995,100)(16.0)(975,400)(16.1)(954,037)(16.0)
Operating income797,49312.9750,97512.3726,56012.3
Nonoperating
revenues76,2771.237,1480.63,5310.1
Transfers out(471,548)(7.6)(400,500)(6.6)(341,415)(5.7)
Change in net assets$402,222 %6.5$387,623 %6.3$388,676 %6.7
Cash and investments$3,400,274$3,826,409$4,122,226
Bonds payable$1,075,000$980,000$880,000
Municipal Liquor Fund Operations Summary
$7,000,000
$6,000,000
28.8%
28.3%
28.2%
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
200820092010
SalesGross profitOperating incomeCash and investment
Sales, gross profit and operating income all decreased for the thirdconsecutive year. Change in net assets was
comparable to prior yearas a result of a decrease in transfers out. The gross profit percent of the City remains above the
state-wide average. Also, the City’s operating income percent is above the statewide averages.
City of Elk River
May 12, 2011
Page 14
The Office of the State Auditor annually publishes a report analyzing the operation of municipal liquor stores in the
State. The most recent year of published information is for the year ended December 31, 2009. The statewide averages
for all operations are summarized below.
Off Sale
200720082009
PercentPercentPercent
of Sales of Sales of Sales
Sales100.0%100.0%100.0%
Cost of sales74.975.274.9
Gross profit25.124.825.1
Operating expenses17.217.217.0
Operating income7.97.68.1
Nonoperating revenue0.80.30.0
Income before transfers8.7%7.9%8.1%
Source: Analysis of Municipal Liquor Store Operations, for the year ended December 31, 2009
Published by the Minnesota Office of the State Auditor
City of Elk River
May 12, 2011
Page 15
Garbage Fund
The following is a summary of operations in the Garbage fund for the past three years:
200820092010
PercentPercentPercent
TotalTotalTotal
Operating revenues$1,183,132 %100.0$1,287,894 %100.0$1,385,337 %100.0
Operating expenses1,166,70998.61,256,17797.51,331,51496.1
Operating income16,4231.431,7172.553,8233.9
Nonoperating revenues11,0550.96,7830.55,0410.4
Transfers in37,8833.225,6392.058,4574.2
Change in net assets$65,361 %5.5$64,139 %5.0$117,321 %8.5
Cash and investments$308,640$363,322$467,670
Garbage Fund Operations Summary
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
200820092010
Operating revenuesOperating expensesOperating incomeChange in net assetsCash and investments
The expenses of this fund are mainly contracted services that are generally fixed in amount and relate to the number of
users. As a result, it is not necessary to carry a large cash reserve. The current level appears adequate. Cash has
increased each of the last three years.Changes in net assets increased significantly from the prior two years as a result of
increased operating income and transfers in.
City of Elk River
May 12, 2011
Page 16
Sewer Fund
The following is a summary of operations in the Sewer fund for the past three years:
200820092010
PercentPercentPercent
TotalTotalTotal
Operating revenues$1,511,165 %100.0$1,504,785 %100.0$1,483,120 %100.0
Operating expenses1,798,778 119.01,736,383 115.41,922,183 129.6
Operating loss(287,613)(19.0)(231,598)(15.4)(439,063)(29.6)
Nonoperating revenues491,35732.5129,4618.6249,25316.8
Capital contributions -- --(1,724)(0.1)
Transfers out(56,000)(3.7)(65,000)(4.3)(65,000)(4.4)
Change in net assets$147,744 %9.8$(167,137) %(11.1)$(256,534) %(17.3)
Cash and investments$3,837,262$3,954,869$4,550,144
Bonds payable$1,375,000$1,225,000$1,065,000
Sewer Fund Operations Summary
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
$(1,000,000)
200820092010
Operating revenuesOperating expensesOperating lossChange in net assetsCash and investments
The cash balance remains strong relative to operations. The nonoperating revenue is made up mainly of connection fees.
These connection fees ultimately provide for current debt service and future expansion of the system. There have been
operating losses for the past sevenyears. Depreciation expense was $993,042 in 2010, which is included in the operating
expenses. We recommend the City annually evaluate rates to ensure revenues are covering costs.
City of Elk River
May 12, 2011
Page 17
Water Fund
The following is a summary of operations in the Water fund for the past three years:
200820092010
PercentPercentPercent
TotalTotalTotal
Operating revenues$2,139,046 %100.0$2,206,429 %100.0$1,896,086 %100.0
Operating expenses2,160,261101.02,059,43093.31,945,059102.6
Operating income (loss)(21,215)(1.0)146,9996.7(48,973)(2.6)
Nonoperating revenues
(expenses)(4,047)(0.2)(61,060)(2.8)97,7385.2
Capital contributions -- --304,77516.1
Transfers in -- --17,9140.9
Transfers out(20,000)(0.9)(20,000)(0.9)(25,000)(1.3)
Change in net assets$(45,262) %(2.1)$65,939 %3.0$346,454 %18.3
Cash and investments$1,935,458$2,500,960$2,793,142
Bonds payable$5,031,250$4,605,000$4,092,899
Water Fund Operations Summary
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
$(500,000)
200820092010
Operating revenuesOperating expensesOperating lossChange in net assetsCash and investments
For more information, see separately issued Elk River MunicipalUtilities report.
City of Elk River
May 12, 2011
Page 18
Electric Fund
A comparison of the past three year’s Electric fund operations is as follows:
200820092010
PercentPercentPercent
TotalTotalTotal
Operating revenues$22,941,903 %100.0$24,227,743 %100.0$26,727,801 %100.0
Operating expenses21,604,91094.222,926,75994.625,162,19194.1
Operating income1,336,9935.81,300,9845.41,565,6105.9
Nonoperating revenues
(expenses)249,0221.1(146,352)(0.6)(90,195)(0.3)
Transfers in -- --53,7410.2
Transfers out(540,636)(2.4)(585,141)(2.4)(657,086)(2.5)
Change in net assets$1,045,379 %4.5$569,491 %2.4$872,070 %3.3
Cash and investments$4,633,052$6,091,320$7,311,517
Bonds and notes payable$10,555,744$10,049,646$9,376,915
Electric Fund Operations Summary
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-
200820092010
Operating revenuesOperating expensesOperating incomeChange in net assetsCash and investments
For more information, see separately issued Elk River Municipal Utilities report.
City of Elk River
May 12, 2011
Page 19
Ratio Analysis
The following captures a few ratios from the City’s financial statements that give some additional information for trend and peer
group analysis. The peer group average is derived from information available on the website of the Office of the State Auditor.
nd
class (population 20,000 – 100,000). The majority of these ratios
Different peer group averages are used for Cities of the 2
facilitate the use of economic resources focus and accrual basis of accounting at the government-wide level. A combination of
liquidity(ability to pay its most immediate obligations), solvency (ability to pay its long-term obligations), funding (comparison
of financial amounts and economic indicators to measure changes in financial capacity over time) and common-size (comparison
of financial data with other cities regardless of size) ratios are shown below. Comparative data for the peer group is unavailable
for 2010.
Ratio
CalculationSource2007200820092010
Debt to assetsTotal liabilities/total assetsGovernment-wide
23.1%22.9%22.0%20.0%
23%23%22%N/A
Debt service coverageNet cash provided by operations/Enterprise funds433.4%338.6%372.4%349.9%
enterprise fund debt payments247%218%320%N/A
Debt per capitaBonded debt/populationGovernment-wide$2,152$2,190$2,066$1,890
$1,485$1,464$1,426N/A
*$2,101$2,114$2,076N/A
Taxes per capitaTax revenues/populationGovernment-wide
$459$514$523$537
$408$430$428N/A
Current expenditures per capitaGovernmental fund currentGovernmental funds
$677$686$616$621
expenditures/population$620$593$573N/A
Capital expenditures per capitaGovernmental fund capitalGovernmental funds
$552$435$193$82
outlay/population$435$304$235N/A
Capital assets % left to Net capital assets/Government-wide
74.2%73.5%71.1%68.5%
depreciate - Governmentalgross capital assets69%68%67%N/A
Capital assets % left to Net capital assets/Government-wide67.9%66.4%63.8%61.1%
depreciate - Business-typegross capital assets64%63%63%N/A
Represents the City of Elk River
Peer Group ratio
* This represents peer group with populations from 10,000-20,000
Debt-to-Assets Leverage Ratio (Solvency Ratio)
The debt-to-assets leverage ratio is a comparison of a city’s total liabilities to its total assets or the percentage of total assets that
are provided by creditors. It indicates the degree to which the City’s assets are financed through borrowings and other long-term
obligations (i.e. a ratio of 50 percent would indicate halfof the assets are financedwith outstanding debt).
Debt Service Coverage Ratio (Solvency Ratio)
The debt coverage ratio is a comparison of cash generated by operations to total debt service payments (principal and interest) of
enterprise funds. This ratio indicates if there are sufficient cash flows from operations to meet debt service obligations. Except
in cases where other nonoperating revenues (i.e. taxes, assessments, transfers from other funds, etc.) are used to fund debt service
payments, an acceptable ratio would be above 100 percent.
City of Elk River
May 12, 2011
Page 20
Bonded Debt per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total bonded debt by the population of the city and represents the amount of
bonded debt obligation for each citizen of the city at the end of the year. The higher the amount, the more resources are needed in
the future to retire these obligations through taxes, assessments or user fees.
Taxes per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total taxrevenues by the population of the city and represents the amount of taxes
for each citizen of the city for the year. The higher this amount is, the more reliant the city is on taxes to fund its operations.
Current Expenditures per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total current governmental expenditures by the population of the City and
represents the amount of governmental expenditures for each citizen of the City during the year. Since this is generally based on
ongoing expenditures, we would expect consistent annual per capita results.
Capital Expenditures per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total governmental capital outlay expenditures by the population of the Cityand
represents the amount of capital expenditures for each citizen of the City during the year. Since projects are not always recurring,
the per capita amount will fluctuate from year to year.
Capital Assets Percentage (Common-size Ratio)
This percentage represents the percent of governmental or business-type capital assets that are left to be depreciated. The lower
this percentage, the older the city’s capital assets are and may need major repairs or replacements in the near future. A higher
percentage may indicate newer assets being constructed or purchased and may coincide with higher debt ratios or bonded debt per
capita.
City of Elk River
May 12, 2011
Page 21
Future Accounting Standard Changes
GASB Statement No. 59 – Financial Instruments Omnibus
Summary
The objective of this Statementis to update and improve existing standards regarding financial reporting and disclosure
requirements of certain financial instruments and external investment pools for which significant issues have been identified
in practice. This Statement provides forthe following amendments:
Statement 31 is clarified to indicate that a 2a7-like pool, as described in Statement 31, is an external investment pool
that operates in conformity with the Securities and Exchange Commission's (SEC) Rule 2a7 as promulgated under
the Investment Company Act of 1940, as amended.
Statement No. 40, Deposit and Investment Risk Disclosures, is amended to indicate that interest rate risk
information should be disclosed only for debt investment pools—such as bond mutual funds and external bond
investment pools—that do not meet the requirements to be reported as a 2a7-like pool.
The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2010. Earlier
application is encouraged.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve financial reporting by providing more complete information, by improving
consistency of measurements, and by providing clarifications of existing standards. Emphasizing the applicability of SEC
requirements to 2a7-like external investment pools provides practitioners with improved guidance. Finally, limiting interest
rate risk disclosures for investments in mutual funds, external investment pools, and other pooled investments to debt
investment pools provides better guidance regarding the applicability of interest rate risk disclosures.
* * * * *
This report is intended solely for the information and use of Council, management, and the Minnesota Office of the State Auditor
and is not intended and should not be used by anyone other than those specified parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting
records andrelated data. The comments and recommendations in the report are purely constructive in nature, and should be read
in this context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us atyour
convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended
to us by your staff.
May 12, 2011 ABDO, EICK & MEYERS, LLP
Certified Public Accountants
Minneapolis,Minnesota
CITY OF ELK RIVER
ELK RIVER, MINNESOTA
OTHERREQUIREDREPORTS
FOR THE YEAR ENDED
DECEMBER 31, 2010
CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2010
Page No.
OTHER REQUIRED REPORTS
Report on Minnesota Legal Compliance1
REPORT ON MINNESOTALEGAL COMPLIANCE
Honorable Mayor and Council
City of Elk River, Minnesota
We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented
component unit, each major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota (the City), as
of and for the year ended December 31, 2010which collectively comprise the City’s basic financial statements as listed in the
table of contents and have issued our report thereon dated May 12, 2011.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
Minnesota Legal Compliance Audit Guide for Local Government,
provisions of the promulgated by the Minnesota Office of the
State Auditor pursuant to Minnesota statute 6.65.Accordingly, the audit included such tests of the accounting records and such
other auditing procedures as we considered necessary in the circumstances.
Minnesota Legal Compliance Audit Guide for Local Government
The covers seven main categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, tax
increment financing, and miscellaneous provisions.Our study included all of the listed categories.
The results of our tests indicate that for the items tested, the City complied with the material terms and conditions of applicable
legal provisions.
This report is intended solely for the information and use of the Council, management and the Minnesota Office of the State
Auditor and is not intended to be and should not be used by anyone other than these specified parties.
May 12, 2011ABDO, EICK & MEYERS, LLP
Certified Public Accountants
Minneapolis, Minnesota
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ELK RIVER FIRE DEPARTMENT
RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
FINANCIAL STATEMENTS
AND
REQUIRED SUPPLEMENTARY INFORMATION
YEARSENDED
DECEMBER 31, 2010AND2009
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2010
Page No.
INTRODUCTORY SECTION
Organization5
FINANCIAL SECTION
Independent Auditor’s Report9
Management’s Discussion and Analysis13
Basic Financial Statements
Governmental Fund
General Fund
Balance Sheets18
Statements of Revenues, Expenditures and Changes in Fund Balances 19
Fiduciary Funds
Special Pension Trust Fund
Statements of Fiduciary Net Assets20
Statements of Changes in Fiduciary Net Assets21
Notes to Financial Statements23
SUPPLEMENTARY INFORMATION
Schedule of Funding Progress33
Schedule of Employer Contribution33
Notes to Required Supplementary Information33
COMPLIANCE SECTION
Report on MinnesotaLegal Compliance37
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INTRODUCTORY SECTION
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEARS ENDED
DECEMBER 31, 2010AND2009
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
ORGANIZATION
YEAR ENDED DECEMBER 31, 2010
Board of Trustees
NameTitle
Scott SchmittPresident
Dave KingVice President
Robert PearsonSecretary
Chad PetersonTreasurer
Rich CzechTrustee
Keith ThorsonTrustee
Ex-Officio Trustees
NameTitle
Stephanie KlinzingMayor
Tim SimonFinance Director
T. John CunninghamFire Chief
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FINANCIAL SECTION
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER,MINNESOTA
YEARS ENDED
DECEMBER 31, 2010AND2009
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INDEPENDENT AUDITOR’S REPORT
Board of Trustees
Elk River Fire Relief Association
Elk River, Minnesota
We have audited the accompanying financial statements ofthegovernmental andfiduciary activitiesof the Elk River Fire Relief
Association(the Association)as ofand for the years December 31, 2010and 2009, which collectively comprise the Association’s
basic financial statements as listed in the table of contents.These financial statements are the responsibility of the Association’s
management.Our responsibility is to express an opinion on the financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America.Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements.An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable
basis for our opinions.
In our opinion, the financial statements referred to above present fairly,in all material respects, the financial position of the
governmental and fiduciary activities of the Association as of December 31, 2010and the results of its operations for the years
then ended in conformity with accounting principles generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis
starting on page13be presented to supplement the basic financial statements.Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting forplacing the basic financial statements in an appropriate operational, economic, or historical context.We
have applied certain limited procedures, to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America which, consisted of inquiries of management about the methods of preparing
the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements.We do not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to expressan
opinion or provide any assurance.
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Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Association’s basic financial statements as a whole.The introductory section and supplementary information listed in the table of
contents is presented for the purposes of additional analysis and is not a required part of the basic financial statements.The
supplementary information is the responsibility of management and were derived from and relate directly to the underlying
accounting and other records used to prepare the financial statements.The information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other additional procedures in accordance with auditing
standards generally accepted in the United States of America.In our opinion, the information is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.The introductory section has not been subjected to the
auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it.
May 2, 2011ABDO, EICK & MEYERS, LLP
Certified Public Accountants
Minneapolis, Minnesota
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Management’s Discussion and Analysis(Unaudited)
The discussion and analysis of the Elk River Fire Relief Association’s (the Association) financial performance provides an
overview of the financialactivities and funding conditions for the fiscal years ended December 31, 2010and 2009.
Using the Annual Report
The financial statements, which reflect the activities of the Special Pension Trust (the Plan), are reported in the Statements of
Fiduciary Net Assets (see page 20) and the Statements of Changes in Fiduciary Net Assets (see page 21).These statements are
presented on a full accrual basis and reflect all trust activities as incurred.The financial statements also include activities of the
General Fund, which is primarily used to account for the fund raising activities of the Association.
Financial Highlights
The Plan’s net assets decreased by $34,982(or 1.6percent)as a result of the fiscalyear’s activities.
The contributions from the State increased $4,231.
Net investment income decreased $263,339(or 59.8percent).
Accrued pension liability decreased $152,741(or 6.0percent).
The General Fund balance increased $473(or 221.0percent).The fund balance of the General Fund is $687at year end.
Plan Highlights
The Plan’s investment income was lowerthan last year and contributions from the StateincreasedandtheCity remained
consistent. The Plan’s funding level increased from 87.2percent to 91.4percent.
Plan Net Assets
December 31,
20102009Change
Cash and cash equivalents$60,476$175,801$(115,325)
Investments2,127,3512,047,62979,722
Receivables
State of Minnesota3,0001,0002,000
Total restricted net assets2,190,8272,224,430(33,603)
Accounts payable1,379-1,379
Net assets held in trust for pension benefits$2,189,448$2,224,430$(34,982)
For the current fiscal year 2010there is a net decreaseof $34,982from the previous fiscal year 2009. The previous fiscal year
2009had anet increase of $528,074from fiscal year 2008.
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Changes in Plan Net Assets
The following comparative summary of the changes in netassets reflects the activities of the Plan:
December 31
20102009Change
Revenues
Contributions$131,255$127,024$4,231
Net investment income 177,140440,479(263,339)
Total revenues308,395567,503(259,108)
Expenditures343,37739,429303,948
Change in net assets(34,982)528,074(563,056)
Net assets - January 12,224,4301,696,356528,074
Net assets - December 31$2,189,448$2,224,430$(34,982)
The Association’s funding policy provided for contributions from the State of Minnesota (the State) and the City of Elk Riverin
amounts sufficient to accumulate assets to pay benefits when due.The annual contributions are the sumof the normal cost, the
State contribution payment and the provision for administrative expenses.
Plan Membership
The following table reflects the Association’s Plan membership as of the beginning and ending of the year:
December 31,
Increase
20102009(Decrease)
Active participants
Vested
Fully912(3)
Partially23221
Non-vested (less than 5 years of service)651
Deferred Members 541
Total Membership4343-
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Funding Status
The amount of the total accrued pension liability is based on a standardized measurement established by the Governmental
Accounting Standards Board (GASB) that, with some exceptions, must be used by the relief associations for financial statement
presentations. This standardized measurement is based on Minnesota statute 69.772. This pension valuation method reflects the
present value of estimated pension benefits that will be paid in future years as a result of service years performed by the members
of the Association. A standardized measure of the accrued pension liability was adopted by GASB to enable the readers of relief
association financial statements to (a) assess the relief association’s funding status on a going-concern basis, (b) assess progress
being made in accumulating sufficient assets to pay benefits when due, and (c) make comparisons among relief associations.
Because the standardized measure is used only for disclosure purposes by the Association, the measurement is independent of an
actuarial computation made to determine contributions to the Association.The following represents the percentage funded trend
for the last six years.
Funding
Percentage
YearAssetsLiabilities
2005$1,886,585$1,781,082 %105.9
20062,092,3511,823,195114.8
20072,420,7422,110,264114.7
20081,696,3562,392,35370.9
20092,224,4302,550,80887.2
20102,190,8272,398,06791.4
Prior Six Years Funding Process
$3,000,000
$2,550,808
$2,392,353
114.7%
$2,398,067
$2,500,000
114.8%
$1,781,082
$2,000,000
$2,110,264
87.2%
91.4%
$1,823,195
105.9%
$1,500,000
70.9%
$1,000,000
$500,000
$-
200520062007200820092010
AssetsLiabilities
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Asset Allocation
The following table and graph indicates the asset allocation for December 31, 2010and 2009.
December 31,
20102009
Cash and CD's$60,4762.8 %$175,8017.9 %
Broker money market217,4429.94530.1
State Board of Investments--1,018,96745.8
Exchange traded funds496,33422.7--
Domestic stock631,13928.8--
Mutual funds782,43635.81,028,20946.2
Total cash and investments$2,187,827 %100.0$2,223,430 %100.0
2010 Asset Allocation
Deposits
Broker money market
2.8%
Mutual Funds
9.9%
35.8%
Exchange traded funds
22.7%
Domestic stock
28.8%
Investment Activities
Investment income is vital to the Plan’s current and continued financial stability. Therefore, the Board of Trustees has a fiduciary
responsibility to act prudently when making Plan investment decisions. Portfolio performance is reviewed quarterly by the Board
of Trustees. The Association also has an active Investment Committee to broaden its attention to asset allocation and fund returns.
Economic Factors
The primary function of the pension trust is to (a) appropriately award and pay benefits and (b) manage investments.The
opportunity available considering various investment choices is invaluable in the asset allocation and money manager oversight.
Contacting the Plan’s Financial Management
The financial report is designed to provide citizens, taxpayers, plan participants and the marketplace’s credit analysis withan
overview of the Plan’s finances and the prudent exercise of the Board’s oversight. If you have any questions regarding this report
or need additional financial information, please contact the Elk River Fire Relief Association, 13065 Orono Parkway, Elk River,
Minnesota 55330.
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FINANCIAL STATEMENTS
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEARS ENDED
DECEMBER 31, 2010AND2009
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION, MINNESOTA
ELK RIVER, MINNESOTA
BALANCE SHEETS
GOVERNMENTAL FUND
DECEMBER 31, 2010 AND 2009
General Fund
20102009
ASSETS
Cash and cash equivalents$687$214
FUND BALANCES
Unreserved$687$214
The notes to the financial statements are an integral part of this statement.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION, MINNESOTA
ELK RIVER, MINNESOTA
STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUND
YEARS ENDED DECEMBER 31, 2010 AND 2009
General Fund
20102009
REVENUES
Donations$13,510$9,500
Fundraising events4,9669,497
TOTAL REVENUES18,47618,997
EXPENDITURES
Relief events9,0129,076
Fundraising6,46814,625
Other2,523280
TOTAL EXPENDITURES18,00323,981
NET CHANGE IN FUND BALANCES473(4,984)
FUND BALANCES, JANUARY 12145,198
FUND BALANCES, DECEMBER 31$687$214
The notes to the financial statements are an integral part of this statement.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
STATEMENTS OF FIDUCIARY NET ASSETS
FIDUCIARY FUND
DECEMBER 31, 2010 AND 2009
Special Pension Trust Fund
20102009
ASSETS
Cash and cash equivalents$60,476$175,801
Investments2,127,3512,047,629
Receivables
State of Minnesota3,0001,000
TOTAL ASSETS2,190,8272,224,430
LIABILITIES
Accounts payable1,379-
NET ASSETS
Held in trust for pension benefits$2,189,448$2,224,430
The notes to the financial statements are an integral part of this statement.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
STATEMENTS OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUND
YEARS ENDED DECEMBER 31, 2010 AND 2009
Special Pension Trust Fund
20102009
ADDITIONS
Contributions
State of Minnesota$98,255$96,024
10% supplemental reimbursement3,0001,000
City of Elk River30,00030,000
Interest income51,38423,827
Net appreciation in investments142,240416,652
Less investment fees(16,484)-
TOTAL ADDITIONS308,395567,503
DEDUCTIONS
Pension benefits335,18831,856
Salaries3,2553,175
Professional fees4,3004,025
Bond379358
Miscellaneous25515
TOTAL DEDUCTIONS343,37739,429
CHANGE IN NET ASSETS(34,982)528,074
NET ASSETS, JANUARY 12,224,4301,696,356
NET ASSETS, DECEMBER 31$2,189,448$2,224,430
The notes to the financial statements are an integral part of this statement.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010AND 2009
Note 1:PLAN DESCRIPTION
A.The Financial Reporting Entity
Firefighters of the City of Elk River(the City) are members of the Elk River Fire Relief Association(the
Association).The Association is the administrator of a single-employer defined benefit pension plan (the Plan)
available to firefighters.The Plan was established in 1922 under the provisions of Minnesota Laws 1965,
chapter446 as amended and Minnesota statute, chapters 69 and 424.It is governed by a Board of Trustees made
up of six members elected by the members of the Association for three year terms, and the Mayor, Finance
Directorand Fire Chief, who serve as ex-officio voting members of the Board of Trustees.
For financial reporting purposes, the Association’s financial statements are not included with the City financial
statements because the Association is not a component unit of the City.The Association does not have any
component units.
B.Membership Information
As of December 31, 2010and 2009, membership data related to the Association were:
20102009
Retirees and beneficiaries currently receiving
benefits and terminated employees entitled to
benefits but not yet receiving them54
Active plan participants
Vested
Fully912
Partially2322
Nonvested65
Total4343
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010AND 2009
Note 1:PLAN DESCRIPTION - CONTINUED
C.Pension Benefits
The Association operates under a defined benefit plan.The pension liability is calculated by the number of
active service years multiplied by a set benefit level.The Association’s current level is at $5,091 per active year.
According to the bylaws of the Association and pursuant to Minnesota statute 424A.02, subdivisions 2 and 4,
members who retire with less than 20 years of service and have reached the age of 50 years and have completed
at least five years of active membership are entitled to a reduced servicepension not to exceed the amount
calculated by multiplying the member’s service pension for the completed years of service times the applicable
non-forfeitable percentage of pension as follows:
Completed years Non-forfeitable percentage
of serviceof pension amount
5 40 %
6 44
7 48
8 52
9 56
1060
1164
1268
1372
1476
1580
1684
1788
1892
1996
20 and thereafter100
If a member of the Association shall become totally and permanently disabled, with a service related disability
(injured in the line of duty) to the extent that a physician or surgeon acceptable to the Board shall certify that
such disability will permanently prevent said member from performing said member’s duties in the Department,
the Association shall pay tosuch member the sum of the current pension amount for each year and fractions of a
year that the member has served as an active member of the Department, without regard to minimum or partial
vesting requirements.If a member who has received such a disability pension should subsequently recover and
return to active duty in the Department, any amount paid to said member as a disability pension shall be
deducted from said member’s service pension.
Upon the death of any member of the Association who is in good standing at the time of said member’s death,
the Association shall pay to the surviving spouse, if any, and if there is no surviving spouse, to child or children,
if any, and if no child or children survive, to the estate of such deceased member, the credited sum of said
member’s pension.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010AND 2009
Note 2:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
A.Measurement Focus, Basis of Accounting and Basis of Presentation
current financial resources measurement focus
Governmental fund financial statements are reported using the
modified accrual basis of accounting
and the .Revenues are recognized as soon as they are both measurable and
available
available.Revenues are considered to be when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period.Revenues susceptible to accrual include contributions
from the State of Minnesota and the City of Elk Riverand investment revenue, including interest on deposits and
dividends.Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
economic resources measurement focus
The fiduciary fund financial statements are reported using the and the
accrual basisof accounting
.Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows.Grants and similar items are recognized as revenue as
soon as all eligibility requirements imposed by the provider have been met.
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements.Estimates also affect the reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
B.Description of Fund
The resources of the Association are accounted for in two funds.Each fund is accounted for as an independent
entity.Descriptions of the funds included in this report are:
Major governmental funds:
General fund
The is a governmental fund that accounts for the resources not accounted for in other funds.It
is used for the good and benefit of the Association as determined by Association bylaws.Its resources
consist of fundraising proceeds, investment earnings, and miscellaneous sources.
Fiduciary fund
Theaccounts for assets held by the Association in a trustee capacity for its members.
Fiduciary fund
The is a special pension trust fund for the accumulation of resources to be used for
retirement, dependency and disability annuity payments of appropriate amounts and at appropriate times in
the future. Resources are contributed by the City at amounts determined by law (taxes), and from the two-
percent insurance premium tax and amortization aid from the State of Minnesota.
C.Comparative Data
Comparative data for the prior year have been presented in the accompanying financial statements to provide an
understanding of changes in the Association’s financial position and operations.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010AND 2009
Note 3:DETAILED NOTES ON ACCOUNTS
Deposits and Investments
The Association’s cash and cash equivalents are considered to be demand deposits and short-term investments with
original maturities of three months or less from the date of acquisition.
Deposits
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the Association’s
deposits and investments may not be returned or the Association will not be able to recover collateral securities in the
possession of an outside party.In accordance with Minnesota statutes and as authorized by the Board, the Association
maintains deposits at those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all Association deposits be protected by insurance, surety bond or collateral.The
market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds.
Authorized collateral in lieu of a corporate surety bond includes:
United States government Treasury bills, Treasury notes, Treasury bonds;
Issues of United States government agencies and instrumentalities as quoted by a recognized industry
quotation service available to the government entity;
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;
General obligation securities of a local government with taxing powers may be pledged as collateral against
funds deposited by that same local government entity;
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
Time deposits that are fully insured by any federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the Association.
Following is a summary of the deposits covered by FDIC insurance at December 31, 2010:
Fund
BookBank
General$687$687
Special pension trust60,47660,476
Total$61,163$61,163
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010AND 2009
Note 3:DETAILED NOTES ON ACCOUNTS - CONTINUED
Following is a summary of the deposits covered by FDIC insurance at December 31, 2009:
Fund
BookBank
General$214$214
Special pension trust175,801175,801
Total$176,015$176,015
Investments
At year end, the Associationhad the following investments that are insured or registered, or securities held by the
Association or its agent in the Association’s name:
Fair Value and
CreditConcentrationSegmented
Carrying Amount
Quality/ofTime
Type of Investment
Ratings (1)Credit RiskDistribution (2)20102009
Pooled investments
State Board of Investments
Common Stock IndexN/AN/Aless than 6 months$-$135,003
Growth ShareN/AN/Aless than 6 months-87,134
International ShareN/AN/Aless than 6 months-115,774
Income ShareN/AN/Aless than 6 months-681,056
Total State Board of Investments-1,018,967
Exchange traded fundsN/AN/AN/A496,334-
Broker money marketN/AN/Aless than 6 months217,442453
Mutual FundsN/AN/AN/A782,4361,028,209
Total pooled investments1,496,2122,047,629
Non-pooled investments
Domestic stockN/AN/AN/A631,139-
Total investments
$ 2,127,351$ 2,047,629
a1.Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk.
2.Interest rate risk is disclosed using the segmented time distribution method.
N/Aindicates not applicable or available.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010AND 2009
Note 3:DETAILED NOTES ON ACCOUNTS - CONTINUED
The Association’s investments are subject to the following risks:
Credit Risk
.Is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk.
Minnesota statutes, section 11A.24, contains a specific list of asset classes available for investment,
including common stocks, bonds, short term securities, real estate, private equity, and resource funds.The
statutes prescribe the maximum percentage of fund assets that may be invested in various asset classes and
contain specific restrictions to ensure the quality of the investments.
Custodial Credit Risk
.The custodial credit risk for investments is the risk that, in the event of the failure of
the counterparty to a transaction, a government will not be able to recover the value of investment or
collateral securities that are in the possession of an outside party.
Concentration of Credit Risk.
Is the risk of loss attributed to the magnitude of a government's investment in
a single issuer.
Interest rate risk.
Is the risk that changes in interest rates will adversely affect the fair value of an
investment.
Investment policy.
The Association has adopted an investment policy with regard to investing the financial assets of
the Association.All assets will be invested in accordance with this policy, Minnesota statutes chapter 69.775 and
written administrative procedures.It shall be the policy of the Association to invest the assets in accordance with the
minimum and maximum range for each asset class as stated below:
MinimumMaximum
Asset ClassPercentagePercentage
Stocks25%75%
Bonds0%50%
Non-Fluctuating Share Value0%10%
Cash0%10%
Note 4:FUNDING STATUS AND PROGRESS
The amount of the total accrued pension liability is based on a standardized measurement established by the
Governmental Accounting Standards Board (GASB) that, with some exceptions, must be used by the reliefassociations
for financial statement presentation.This standardized measurement is based on Minnesota statute 69.772.This
pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a
result of service years performed by the members of the Association.A standardized measure of the accrued pension
liability was adopted by GASB to enable the readers of relief association financial statements to (a) assess the relief
association’s funding status ona going-concern basis, (b) assess progress being made in accumulating sufficient assets
to pay benefits when due, and (c) make comparisons among relief associations.
Because the standardized measure is used only for disclosure purposes by the Association, the measurement is
independent of an actuarial computation made to determine contributions to the Association.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2010AND 2009
Note 5:CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE
The Association’s funding policy provided for contributions from the State and the Cityin amounts sufficient to
accumulate sufficient assets to pay benefits when due.The annual contribution is the sum of the normal cost, the State
contribution payment and the provision for administrative expenses.
TheAssociation is comprised of volunteers; therefore, there are no payroll expenditures or covered payroll percentage
calculations.
A required contribution of $98,255plus an additionalsupplemental benefitamount of$3,000was made by the State in
accordance with Minnesota statute for the year ended December 31, 2010.A required contribution of $96,024plus an
additional supplemental benefit amount of $1,000 wasmade by the State in accordance with Minnesota statute for the
year ended December 31, 2009.Voluntary contributions of $30,000were made by the City for the years ended
December 31, 2010and 2009.
Note 6:RISK MANAGEMENT
The Association is exposed to various risks of loss related to theft of assets for which the Association carried
commercial insurance policies.There were no significant reductions in insurance from the previous year or settlements
in excess of insurance coverage for any part of the past three fiscal years.The Association invests in mutual funds that
are subject to market value fluctuations.
Note: 7: ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
During 2010, the Association received information indicating their tax exempt status may be uncertain. Under FASB
ASC 740-10-50, formerly FIN 48, the Association is required to disclose any uncertain tax position.The Association is
currently operating as a 501(c)4 under IRS code. The Association believes itself to be an affiliate of a governmental
entity thereby exempt from income taxes.The IRS has questioned this basis in other similar organizations and has
revoked other entities tax exempt status. If this were to occur the Relief would be treated as a for profit entity and
subject to business income tax. A tax liability will not be accrued because the amount is not easily estimated and the
Association has not been notified of any non-compliance.Due to other factors such as regulation and support from the
City and State, the Association believes they are still exempt from filing income taxes and is pursuing confirmation of
exemption with IRS. During 2010 no penalties or interest were recorded.
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REQUIRED SUPPLEMENTARY
INFORMATION
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2010
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
REQUIRED SUPPLEMENTARYINFORMATION
DECEMBER 31, 2010
A.Schedule of Funding Progress
Required Supplementary Information
Assets in
Excess of
ActuarialActuarialActuarial(Unfunded)Benefit
Funded
ValuationValue ofAccruedAccruedper Year
Rate
DateAssetsLiabilityLiabilityof Service
12/31/10$2,190,827$2,398,067$(207,240) %91.4$5,091
12/31/092,224,4302,550,808(326,378)87.25,091
12/31/081,696,3562,392,353(695,997)70.95,091
12/31/072,420,7422,110,264310,478114.74,450
12/31/062,092,3511,823,195269,156114.84,175
12/31/051,886,5851,781,082105,503105.94,000
B.Schedule of Employer Contributions
Percentage
Annual
of APC
YearPension
Contributed
EndingCost
12/31/10$131,255100.0 %
12/31/09127,024100.0
12/31/08143,999100.0
12/31/07159,023100.0
12/31/06177,405100.0
12/31/05164,529100.0
C.Notes to Supplementary Information
Valuation date12/31/10
Actuarial cost methodEntry age normal
Amortization methodLevel dollar closed
Remaining amortization period
Normal cost20 years
Prior service cost5 years
Asset valuation methodMarket
Actuarial assumptions
Investment rate of return5%
Projected salary increasesN/A
Inflation rateN/A
Cost of living adjustmentsNone
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COMPLIANCE SECTION
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2010
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REPORT ON MINNESOTA LEGAL COMPLIANCE
Board of Trustees
Elk River Fire Relief Association
Elk River, Minnesota
We have audited the financial statements of the governmental and fiduciary funds of the Elk River Fire Relief Association(the
Association) as of and for the years ended December 31, 2010and 2009, and have issued our report thereon dated,May 2, 2011.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
Minnesota Legal Compliance Audit Guide for Local Government
provisions of the ,promulgated by the Minnesota Office of the
State Auditor pursuant to Minnesota statute 6.65.Accordingly, the audit included such tests of accounting records and such other
auditing procedures as we considered necessary in the circumstances.
Minnesota Legal Compliance Audit Guide for Local Government
The covers three main categories of compliance to be tested in
audits of relief associations: deposits and investments, conflicts of interest, and public relief associations.Our study included all
of the listed categories.
The results of our tests indicate that for the items tested, the Associationcomplied with the material terms and conditions of
applicable legal provisions.
This report is intended solely for the information and use of the Board of Trustees, City ofElk River, members, and the Minnesota
Office of the State Auditor, and is not intended to be and should not be used by anyone other than these specified parties.
May 2, 2011ABDO, EICK & MEYERS, LLP
Certified Public Accountants
Minneapolis, Minnesota
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
MANAGEMENT LETTER
YEAR ENDED
DECEMBER 31, 2010
May 2, 2011
Board of Trustees and Plan Participants
Elk River Fire Department Relief Association
Elk River, Minnesota
We have audited thefinancial statementsof the governmental and fiduciary activitiesof theElk River Fire Department Relief
Association (the Association) for the yearsended December 31, 2010and 2009,and have issued our report thereon datedMay 2,
2011.Professional standards require that we provide you with the following information related to our audit.
Our Responsibility under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express an opinion about
whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in
conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements
does not relieve you or management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements
are free of material misstatement. As part of our audit, we considered the internal control of the Association.Such considerations
were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.
Significant Audit Findings
In planning and performing our audit of the financial statements of the Association for the year ended December 31, 2010, in
accordance with auditing standards generally accepted in the United States of America, we consider the Association’s internal
control over financial reporting (internal control) as a basis for designing ourauditing procedures for the purpose of expressing
our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Association’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the Association’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not necessarily
identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and therefore, there can be
no assurance that all such deficiencies have been identified. However, as discussed below, we identified a deficiency in internal
control that we consider to be a significant deficiency.
A deficiency in internal control exists when the design or operation of a control does not allow management, in the normal course
of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weaknessis a
deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that material misstatement
of the Association’s financial statements will not be prevented, or detected and corrected on a timely basis. We did not identify
any deficiencies in internal control that we consider to be material weaknesses.
A significant deficiencyis a deficiency, or combination of deficiencies, in internal control that is less severe than a material
weakness, yet important enough to meritattention by those charged with governance. We did not identify any deficiencies in
internal control over financial reporting that we consider to be material weaknesses, as defined above.
Elk River Fire Department Relief Association
May 2, 2011
Page 2
Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed
tests of compliance with certain provisions of laws, regulations, contracts and grants.However, the objective of our tests was not
to provide an opinion on compliance with suchprovisions.We noted no instances of noncompliance with Minnesota statutes.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies.The significant accounting policies used
by the Association are described in Note 1 to the financial statements. No new accounting policies were adopted and the
application of existing policies was not changed during the year. We noted no transactions entered into by the Association during
the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the
financial statements in theproper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s
knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are
particularly sensitive because of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most sensitive estimate affecting the financial statements was the
actuarial accrued liability. This is based on the funding formula prescribed by the State of Minnesota. We evaluated the key
factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements
taken as a whole.
The disclosures in the financial statements are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those
that are trivial, and communicate them to the appropriate levelof management. There were no misstatements noted during the
audit
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s
report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated
May 2, 2011.
Elk River Fire Department Relief Association
May 2, 2011
Page 3
Management Consultations with Other IndependentAccountants
In some cases, managementmay decide to consult with other accountants about auditing and accounting matters, similar to
obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the
Association’sfinancial statements or a determination of the type of auditor’s opinion that may be expressed on those statements,
our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the Association’s auditors. However, these discussions occurred in the normal course
of our professional relationship and our responses were not a condition to our retention.
FinancialPosition and Results of Operations
Our principal observations and recommendations are summarized below. These recommendations resulted from our observations
made in connection with our audit of the Association’s financial statements for the year ended December31,2010.
Investment Return
A summary of the investment rate of return is summarized below:
Net Assets
AppreciationTotalHeld in
Investment
(Depreciation)InvestmentTrust for
Rate of
Interestof InvestmentsIncomePension
Return
YearIncomeless fees(loss)Benefits
2005$3,168$75,276$78,444$1,886,5854.4%
20062,954201,347204,3012,092,35110.3
200752,211120,572172,7832,420,7427.7
200832,524(713,435)(680,911)1,696,356(33.1)
200923,827416,652440,4792,224,43022.5
201051,384125,756177,1402,189,4488.0
Investment Rate of Return
40.00%
22.5%
30.00%
20.00%
4.4%
8.0%
10.3% 7.7%
10.00%
-
(10.00%)
(20.00%)
(30.00%)
(40.00%)
(33.1%)
(50.00%)
200520062007200820092010
Elk River Fire Department Relief Association
May 2, 2011
Page 4
Peer Group Comparisons
The following are two comparisons of statistics that will provide information on how your organization compares with other fire
relief associations around the State.We used averages from approximately 40 fire relief associations with under $200,000 in assets
to several million in assets.These averages include a 5-year trend of the rate of return and a 5-year trend of funding percentage as
compared to averages of the other 40 relief associations.
AveragesCalculation20062007200820092010
Average rate of returnsNet investment income/10.3%7.7%(33.1%)22.5%8.0%
average net assets9.4%5.9%(21.9%)14.4%N/A
Percentage fundedNet assets/accrued liability114.8%114.7%70.9%87.2%91.4%
108.8%108.5%83.1%91.0%N/A
Elk River Fire Relief Association
Peer Group
Rate of Return
The rate of return is calculated by taking the net investment income and dividing it by the beginning net assets. This will show a
trend of your returns over a 5-year period and show your performance related to other relief associations.
30.0%
22.5%
20.0%
10.3%
7.7%
8.0%
10.0%
9.4%
14.4%
-
5.9%
(21.9%)
(10.0%)
(20.0%)
(30.0%)
(33.1%)
(40.0%)
20062007200820092010
Fire relief ratePeer group average
Elk River Fire Department Relief Association
May 2, 2011
Page 5
Funding Percentage
The funding percentage is calculated by taking the Special fund net assets and dividing it by the accrued pension liability.This
graph will showyour funding percentage for a 5-year period and compare your percentage to other relief associations.
170.0%
150.0%
114.8%
114.7%
130.0%
110.0%
91.0%
83.1%
108.8%
108.5%
90.0%
91.4%
87.2%
70.0%
70.9%
50.0%
20062007200820092010
Fire relief percentPeer group average
*****
This report is intended solely for the information and use of the Board of Trustees, members and the Minnesota Office of the State
Auditor and is not intended to be and should not be used by anyone other than these specified parties.
The comments and recommendations in the report are purely constructive in nature, and should be read in this context. Our audit
would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records and
related data.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your
convenience.We wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to us by
your staff.
May 2, 2011ABDO, EICK & MEYERS, LLP
Certified Public Accountants
Minneapolis, Minnesota
City of Elk River
2010 Audit
Abdo, Eick& Meyers, LLP
Presented by Andrew Berg
2010 Audit Results
•Audit Opinion –unqualified or “clean”
•No audit findings
•No Minnesota Legal compliance findings
•Audit went smooth and as planned
Accounting Standards
•GASB 54
–Fund Balance Reporting and Governmental Fund Type
Definitions
•Clearer, more structured fund balance classifications
•Clarify definitions of existing governmental fund types
–Early implementation for 2010
General Fund Ending Fund Balance as a
percent of Budget
$14,000,000
$12,572,000
$12,500,050
$11,975,550
$12,096,150
$11,648,000
$12,000,000
$10,000,000
$10,596,550
$8,000,000
$6,000,000
48.1%
48.3%
42.6%
43.3%
$4,000,000
41.3%
43.4%
$2,000,000
$-
2005200620072008200920102011
Actual Fund BalancesBudget
2010 General Fund Operations
Final
Budgeted ActualVariance with
AmountsAmountsFinal Budget
Revenues$ 11,322,161$ 11,147,455$ (174,706)
Expenditures 11,682,100 11,197,352 484,748
Deficiency of revenues
under expenditures (359,939) (49,897) 310,042
Other financing sources (uses)
Transfers in 596,100 596,100 -
Transfers out (414,050) (380,337) 33,713
Total other financing sources (uses) 182,050 215,763 33,713
Net change in fund balances (177,889) 165,866 343,755
Fund balances, January 1 5,840,599 5,840,599 -
Fund balances, December 31$ 5,662,710$ 6,006,465$ 343,755
General Fund Revenue by Source
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$-
200820092010
Taxes Intergovernmental Charges for services Other
General Fund Expenditures by Program
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
200820092010
General government Public safety Public works Other
Special Revenue Fund
Fund Balances (Deficits)
December 31,
Increase
Fund
20102009(Decrease)
Nonmajor
Library$ 423,356 $ 409,323 $ 14,033
Ice Arena 6,743 39,417 (32,674)
Pinewood Golf Course - - -
Senior Citizen Account 9,003 9,817 (814)
Landfill 1,707,105 1,864,525 (157,420)
Revolving Loan 1,110,693 902,266 208,427
DTED Grant/Loan 679,137 662,494 16,643
Development Fund 615,929 445,545 170,384
Emergency/Insurance Reserve 434,170 553,414 (119,244)
Drug Forfeiture Reserve 660 - 660
YMCA Grant 1,342,564 1,575,885 (233,321)
Economic Development Authority 1,377,561 1,167,563 209,998
EDA DTED Loan - 214,340 (214,340)
Total$ 7,706,921$ 7,844,589$ (137,668)
Debt Service Fund
Cash andFinal
TemporaryTotal BondsMaturity
Debt Service Fund
InvestmentsAssetsOutstandingDate
Improvement Bonds$ 858,942 $ 2,055,699
2003A G.O. Improvement Bonds$ 330,000 02/01/14
2005A G.O. Improvement Bonds 660,000 02/01/16
2007C G.O. Improvement Bonds 2,470,000 02/01/18
2010A G.O. Capital Improvement Bonds 6,105,000 02/01/23
Government Building Bonds 700,222 739,377
1996C G.O. Ice Arena Bonds 540,000 12/01/13
2006C G.O. Capital Improvement Bonds 2,910,000 02/01/27
Equipment Certificates 94,248 105,299
2006B G.O. Equipment Certificates 87,400 02/01/11
MPFA Loan - 421
State-Aid Road Bonds 1,477,000 08/20/13
TIF Bonds - -
2000A G.O. Tax Increment Bonds 375,000 02/01/15
YMCA Bonds 369,590 380,585
2007D EDA G.O. Bonds 10,000,000 02/01/33
2008A EDA G.O. Bonds 1,510,000 02/01/15
Total Debt Service Funds$ 2,023,002 $ 3,281,381 $ 26,464,400
Capital Projects Fund
Fund Balances
December 31,
Increase
Capital Projects Fund
20102009(Decrease)
Major
Improvement Projects$ 4,431,050 $ 4,120,068 $ 310,982
Nonmajor
Capital Reserve 1,290,675 1,324,205 (33,530)
Equipment Replacement 1,003,407 1,060,387 (56,980)
Park Dedication (691,159) (684,938) (6,221)
Park Improvements 181,970 109,110 72,860
Government Buildings 3,478,897 2,627,408 851,489
GRE Reserve 1,256,876 643,251 613,625
Street Improvement 5,112,597 5,220,214 (107,617)
Tax Increment Financing Districts (320,661) (408,713) 88,052
Total nonmajor 11,312,602 9,890,924 1,421,678
Total$ 15,743,652$ 14,010,992$ 1,732,660
Liquor Fund Operations
$7,000,000
$6,000,000
28.8%
28.3%
28.2%
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
200820092010
SalesGross profitOperating incomeCash and investment
Garbage Fund
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
200820092010
Operating revenuesOperating expensesOperating incomeChange in net assetsCash and investments
Sewer Fund
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
$(1,000,000)
200820092010
Operating revenuesOperating expensesOperating lossChange in net assetsCash and investments
Water Fund
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
$(500,000)
200820092010
Operating revenuesOperating expensesOperating lossChange in net assetsCash and investments
Electric Fund
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-
200820092010
Operating revenuesOperating expensesOperating incomeChange in net assetsCash and investments
City of Elk River
RatioCalculationSource2007200820092010
Debt to assetsTotal liabilities/total assetsGovernment-wide23.1%22.9%22.0%20.0%
23%23%22%N/A
Debt service coverageNet cash provided by operations/Enterprise funds433.4%338.6%372.4%349.9%
247%218%320%N/A
enterprise fund debt payments
Debt per capitaBonded debt/populationGovernment-wide$ 2,152 $ 2,190 $ 2,066 $ 1,890
$ 1,485$ 1,464$ 1,426N/A
*$ 2,101$ 2,114$ 2,076N/A
Taxes per capitaTax revenues/populationGovernment-wide$ 459 $ 514 $ 523 $ 537
$ 408$ 430$ 428N/A
Current expenditures per capitaGovernmental fund currentGovernmental funds$ 677 $ 686 $ 616 $ 621
$ 620$ 593$ 573N/A
expenditures/population
Capital expenditures per capitaGovernmental fund capitalGovernmental funds$ 552 $ 435 $ 193 $ 82
$ 435$ 304$ 235N/A
outlay/population
Capital assets % left to Net capital assets/Government-wide74.2%73.5%71.1%68.5%
69%68%67%N/A
depreciate - Governmentalgross capital assets
Capital assets % left to Net capital assets/Government-wide67.9%66.4%63.8%61.1%
64%63%63%N/A
depreciate - Business-typegross capital assets
Represents the City of Elk River
Peer Group ratio
* This represents peer group with populations from 10,000-20,000
Elk River Fire Relief Association
AveragesCalculation20062007200820092010
Average rate of returnsNet investment income/ 10.3% 7.7% (33.1%) 22.5% 8.0%
9.4% 5.9% (21.9%) 14.4%N/A
average net assets
Percentage fundedNet assets/accrued liability 114.8% 114.7% 70.9% 87.2% 91.4%
108.8% 108.5% 83.1% 91.0%N/A
Elk River Fire Relief Association
Peer Group
Rate of Return
30.0%
22.5%
20.0%
10.3%
7.7%
8.0%
10.0%
9.4%
14.4%
-
5.9%
(21.9%)
(10.0%)
(20.0%)
(30.0%)
(33.1%)
(40.0%)
20062007200820092010
Fire relief ratePeer group average
Fund Percentage
170.0%
150.0%
114.8%
114.7%
130.0%
110.0%
91.0%
83.1%
108.8%
108.5%
90.0%
91.4%
87.2%
70.0%
70.9%
50.0%
20062007200820092010
Fire relief percentPeer group average