7.5. SR 06-04-2007
REQUEST FOR ACTION
To
Ci Council
Agenda Section
Administration
Item Description
Presentation of Comprehensive Annual Financial Report for the
Year Ended December 31, 2006
Meeting Date
une 4, 2007
Item Number
7.5.
Prepared by
Tim Simon, Finance Director
Reviewed by
Lori ohnson, Ci Administrator
Reviewed by
Action Requested
City Council is asked to review and accept the Comprehensive Annual Financial Report for the City of
Elk River for year ended December 31, 2006.
Backiround/Discussion
Andrew Berg of Abdo, Eick, & Meyers will present the City's 2006 Comprehensive Annual Financial
Report (CAFR) along with staff. 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 City 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 April 17, 2007. We will also go over the Federal
Financial Award Programs report as the City had expended enough federal awards to require a single
audit for the year ended December 31, 2006.
The following are some highlighted areas of the CAFR and corresponding page numbers.
Transmittal letter - page 1
Independent Auditor's report - page 9
Management's Discussion and Analysis - page 11
Budget and Actual (General Fund) - page 25
Enterprise Funds - page 26
Statistical Section - page 78
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, 2006
. Federal Financial Award Programs
. City of Elk River Management Letter
. Elk River Fire Department Relief Association Financial Statements and Supplementary
Information
. Elk River Fire Relief Management Letter
S: \Council\ Tim \2006Auditpresentation.doc
Action
Follow Up
Motion by_
Second by _
Vote
S: \Council\ Tim \2006Auditpresentation.doc
ANNU
FINANCIAL
For The Year Ended December 3"'
CITY OF ELK RIVER, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Year Ended Decetnber 31, 2006
Prepared by the Finance Departtnent
CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2006
Page No.
I. INTRODUCTORY SECTION
Letter of Transmittal
Certificate of Achievement
Organizational Chart
Elected and Appointed Officials
1
6
7
8
II. FINANCIAL SECTION
Independent Auditor's Report
Management's Discussion and Analysis
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets
Statement of Activities
Fund Financial Statements:
Balance Sheet - Governmental Funds
Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Assets
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities
Statement of Revenues, Expenditures, and Changes in
Fund Balances - Budget and Actual - General Fund
Statement of Net Assets - Proprietary Funds
Statement of Revenues, Expenses, and Changes in
Fund Net Assets - Proprietary Funds
Statement of Cash Flows - Proprietary Funds
Statement of Fiduciary Net Assets - Developer
Escrow Agency Fund
9
11
19
20
21
22
23
24
25
26
28
30
34
Notes to Financial Statements
35
Combining and Individual Fund Statements and Schedules:
Nonmajor Governmental Funds:
Combining Balance Sheet - Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances - Nonmajor Governmental Funds
58
59
Nonmajor Special Revenue Funds:
Subcombining Balance Sheet - Nonmajor Special Revenue Funds
Schedule of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Special Revenue Funds
60
64
CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2006
Page No.
Special Revenue Funds:
Schedules of Revenues, Expenditures, and Changes in
Fund Balances - Budget and Actual:
Library Maintenance
Ice Arena
Pinewood Golf Course
Landfill
Economic Development Authority
68
69
70
71
72
Nonmajor Debt Service Funds:
Subcombining Balance Sheet - Nonmajor Debt Service Funds
Schedule of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Debt Service Funds
73
74
Nonmajor Capital Projects Funds:
Subcombining Balance Sheet - Nonmajor Capital Projects Funds
Schedule of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Capital Projects Funds
75
76
Statement of Changes in Assets and Liabilities -
Developer Escrow Agency Fund
77
III. STATISTICAL SECTION (UNAUDITED)
Net Assets by Component
Changes in Net Assets
Fund Balances of Governmental Funds
Changes is Fund Balances of Governmental Funds
Tax Capacity, Market Value and Estimated Actual Value of Taxable Property
Property Tax Rates
Principal Taxpayers
Property Tax Levies and Collections
Ratios of Outstanding Debt by Type
Ratios of General Bonded Debt Outstanding
Computation of Direct and Overlapping Debt
Legal Debt Margin Information
Pledged-Revenue Coverage
Demographic and Economic Statistics
Principal Employers
Full- Time Equivalent Employees by Function
Operating Indicators by Function
Capital Asset Statistics by Function
78
79
81
83
85
87
88
89
90
92
93
94
96
98
99
100
101
102
INTRODUCTORY SECTION
June 4, 2007
Honorable Mayor Klinzing, 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 31,2006, 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.
The CAFR is presented in three sections: Introductory, Financial, and Statistical. The Introductory
section includes this transmittal letter, the City's organizational chart, and a list of City officials. The
Financial section includes the Independent Auditor's Report, Management's Discussion and Analysis
(MD&A), government wide and fund financial statements, notes to the financial statements, and the
combining statements and individual fund statements. The Statistical section includes selected financial,
economic, and demographic information generally presented on a multi-year basis.
Generally accepted accounting principles require that management provide a narrative introduction
overview and analysis to accompany the basic financial statements in the form ofMD&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 is rapidly
growing and will not reach full development in the near future. The current population is 22,500.
Population at full build out is estimated to be approximately 40,000. Urban services are available to
approximately one-third of the land area in the City. In 2006, approximately 200 acres of expansion of
the urban services district were completed, and about the same amount is estimated for 2007, so part of
the City will develop without city water and sewer service.
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 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 25as 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.
Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is considered
from the broader perspective of the specific environment within which the City of Elk River operates.
Local economy.
The local economy has slowed as evidenced by building permits with a construction
value of $95,843,791 being issued in 2006. This is a 35 percent decrease from 2005. New commercial,
industrial, and institutional building accounted for $33,428,485 of new value with an additional
$14,803,121 in additions and remodeling and residential construction of $47,612,185 made up the
balance. The number of housing units added declined from 344 in 2005 to 250 in 2006. The average
2
value of new homes increased to $213,522. Single family homes accounted for 150 of the new housing
units compared to 195 built in 2005.
In 2006, two new industrial businesses (Quality Label and United Healthcare Services, Inc.) located or
started construction in Elk River adding 35 new jobs and estimated market value totaling $15,742,100.
During 2005, the City opened a 35 acre business park known as Northstar Business Park and three lots are
currently available. The City has started to have discussions about a new business park on the City
owned property southeast of town.
The downtown revitalization project that the Elk River Housing and Redevelopment Authority (HRA) has
been spearheading is now underway. A total of approximately $25,000,000 in redevelopment is
occurring in the historic downtown district. A City park is being constructed downtown to compliment
the new development. Two new buildings will consist of a combination of both for sale and rental
housing and commercial units, with some housing overlooking the Mississippi River. The Bank of Elk
River is undergoing a major expansion to its main office that is located adjacent to the two new buildings.
The City approved tax abatement in the amount of $300,000 for this major expansion of the Bank. In
addition, the HRA is reviewing other areas of downtown and beginning initial planning to allow for
future redevelopment. In late 2006, a taskforce was assembled for the preparation of a comprehensive
downtown redevelopment plan.
The City started construction on a new 16,000 square foot library which is planned to be completed in fall
of 2007. The building will be LEED certified. LEED certified buildings are built to the highest standards
of energy efficiency and environmental sustainability. The Elk River Library will incorporate energy
saving systems such as geothermal heating and cooling, natural lighting and photovoltaic dimmer
switches. In addition, the citizens of the City approved to have the City begin design/construction of a
YMCA building which will be leased by the YMCA through a lease agreement with the Economic
Development Authority. Details of this project are currently underway with construction expected to start
in the fall of 2007. Also in 2006, the City started the discussions of beginning the next phase of the
wastewater treatment plant expansion which includes a mercury removal system, U.V. system upgrade,
and other necessary upgrades.
Industrial and commercial development has been very strong and is expected to remain strong; however,
residential development has slowed considerably. There are approximately 800 residential lots available
with more lots becoming available in 2007. The City is currently preparing to open a new business park
with lots being available in 2008.
Long-term financial planning.
In 2006, City Council approved completing a Land Use Financial
Management Plan. This Plan builds on the Financial Management Plan and tax analysis study completed
in 2005. The Land Use Financial Management Plan will focus mainly on undeveloped property with the
goal of determining what type of development needs to occur in order to provide enough tax base to
support the City’s demand for services when fully developed. The Council has been diligent in
maintaining a level tax rate. This study will provide the information needed to develop in a manner that
will sustain or expand City services while keeping the tax rate stable. Department heads will be
estimating staff additions, service levels, and capital needs for the next ten years as part of this process.
The Financial Management Plan completed in 2005 indicated that, based on the estimated tax base, the
cost of current services inflated over time, and projected capital expenditures, the City could continue to
offer existing services while keeping the tax rate stable with only minor fluctuations. This additional
study will provide the community development department vital information to assist in properly zoning
undeveloped areas of the City to maximize the tax base. Further, the study will evaluate the financial
feasibility of expanding the sewer system to property that will be available for development after gravel
3
mining is complete, which is expected to start occurring to a small degree in the next five years and
continue over several decades. The Land Use Financial Management Plan will be discussed at future City
Council work sessions.
Unreserved, undesignated fund balance in the general fund (41.5 percent of next year’s budgeted general
fund expenditures) falls within the policy guidelines set by the Council for budgetary and planning
purposes (minimum of 40 percent). Following the close of the general ledger and review of the financial
management plan fund balance policy, the council at its discretion decides which funds to allocate the
remaining balance.
Cash management policies and practices.
The City just completed a five-year cash needs analysis to
forecast future revenues/expenditures to closely align with investment maturities to maximize interest
earnings and cash needs of the City. Cash available during the year was invested in demand deposits,
certificates of deposits, United States government and agency securities, and commercial paper as
authorized by the City’s investment policy.
The City also participates in a Local Government Investment Pool (4M Fund). This fund is a pool of
funds belonging to participating local governments. This is a highly liquid fund which investments in
commercial paper and United States government and agency securities. The City keeps a reserve balance
in this fund to finance daily cash flow needs in order to avoid calling an investment early.
All idle cash is maintained in an investment pool on a combined basis where all funds with a cash balance
participate in the investment pool. The Economic Development Authority, water and electric funds do
not participate in the investment pool. The water and electric funds are invested by the Elk River
Municipal Utilities.
The City’s investment policy states that the safety and liquidity of the portfolio are more important than
the return on investment. The City’s policy closely follows all of the Minnesota State Statutes governing
the investment of municipal funds.
Risk management.
The City of Elk River strives to limit both its liability risk and insurance costs in all
areas and has been successful in both limiting risk and keeping premium costs reasonable. This is done
by continually evaluating safety programs, maintaining adequate deductibles, maintaining correct
property and equipment schedules, and working with the City’s insurance agent and underwriters to
initiate programs to achieve those goals. The City maintains an emergency/insurance reserve fund for the
purpose of funding insurance deductibles, promoting safety programs through our Safety Committee, and
providing safety training to all employees. However, the City does not self insure and does not intend to
self insure at any time in the future. The City’s Safety Coordinator and the Safety Committee are
responsible for training all employees in the City’s safety policies to protect the City’s employees from
work related injuries and to help reduce work related insurance claims. The results of this can be seen
through the very low experience modification factor applied to our worker’s compensation insurance.
4
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, 2005. This was the seventeenth 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.
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.
Respectfully submitted,
Timothy Simon, MBA
Finance Director
5
CITY OF ELK RIVER
ORGANIZATIONAL CHART
Mayor &
City Council
Boards &
Commissions
City
City Attorney
Administrator
Finance &
Police
Admin. Services
Community
Fire
Development
Parks &
Public Works
Recreation
7
CITY OF ELK RIVER, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
YEAR ENDED DECEMBER 31, 2006
Term Expires
CITY COUNCIL
December 31,
Stephanie Klinzing Mayor 2006
John Dietz Council member 2006
Larry Farber Council member 2008
Jerry Gumphrey Council member 2008
Paul Motin Council member 2006
APPOINTED PERSONNEL
Lori Johnson City Administrator/Finance Director
Scott Clark Community Development Director
William Maertz Parks & Recreation Director
Jeff Beahen Police Chief
Bruce West Fire Chief
Philip Hals Street Superintendent
Terry Maurer City Engineer
8
FINANCIAL SECTION
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 31, 2006. 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 pages1 - 5 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 $189,380,638 (net
assets). Of this amount, $42,067,362 (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 $13,761,649, which is primarily due to contribution of capital assets.
As of the close of the current fiscal year, the City of Elk River’s governmental funds reported combined ending fund
balances of $27,957,749.
SpecialDebtCapital
GeneralRevenueServiceProjectsTotal
Reserved$ 7,716,612-$$2,262,414$ 9,979,026-$
Designated4,816,3863,384,806 8,543,898-16,745,090
Undesignated 1,685,958- (452,325)-1,233,633
$4,816,386$12,787,376$2,262,414$8,091,573$27,957,749
The City of Elk River’s total long-term liabilities increased $698,310 during the current fiscal year, from $36,427,227 to
$37,125,537.
BeginningEnding
BalanceAdditionsReductionsBalance
Governmental activities:
Bonds payable$ 3,657,00019,977,701$ $(6,627,867)$17,006,834
Capital leases 2,332,694- (423,969)1,908,725
Compensated absences 481,096 282,173(260,075)503,194
Total governmental activities20,458,797 6,271,867(7,311,911)19,418,753
Business-type activities:
Bonds payable13,135,000 3,595,000(2,405,000)14,325,000
Notes payable2,538,226 661,000(132,406)3,066,820
Compensated absences295,204 320,298(300,538)314,964
Total business-type activities15,968,430 4,576,298(2,837,944)17,706,784
Total City long-term liabilities$ 10,848,16536,427,227$$(10,149,855)$37,125,537
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City of Elk River’s basic financial statements.
The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund
financial statements, and 3) notes to the financial statements. This report also contains other supplemental information in
addition to the basic financial statements themselves.
11
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City of Elk
River’s finances, in a manner similar to a private-sector business.
The statement of net assets presents information on all of the City of Elk 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 financial position of the City of Elk River is improving or deteriorating.
The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal
year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of
the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only
result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City of 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 financial 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 19 - 20 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 finance-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 financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as
well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to
compare the information presented for governmental funds with similar information presented for governmental activities
in the government-wide financial statements. By doing so, readers may better understand the long-term impact by the
government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The City of Elk River maintains four 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, Park Dedication, Improvement Bonds and Capital 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 with this budget.
The basic governmental fund financial statements can be found on pages 21 - 25 of this report.
12
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 26 - 33 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 financial statements can be found on page 34 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 financial statements. The notes to the financial statements can be found on
pages 35 -57 of this report.
Other Information.
The combining statements referred to earlier in connection with nonmajor governmental funds and
internal service funds are presented immediately following the notes to financial statements. Combining and individual
fund statements and schedules can be found on pages 58 - 77of this report.
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of
the City of Elk River, assets exceeded liabilities by $189,380,638 at the close of the most recent fiscal year.
By far, the largest portion of the City of Elk River’s net assets (75 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.
13
An additional portion of the City of Elk River’s net assets (3 percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets ($42,067,362) may be used to meet
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 increased the City of Elk River’s net assets by $8,636,316. Key elements of this increase are as
follows:
14
Below are specific graphs which provide comparisons of the governmental activities revenues and expenditures.
Expenses and Program Revenues - Governmental Activities
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
General governmentPublic safetyPublic worksCulture andEconomicInterest on long-term
recreationdevelopmentdebt
RevenueExpense
Revenues by Source - Governmental Activities
Gain on disposal of capital
assets
Transfers
0.10%
3.34%
Charges for services
Tax increment
16.57%
2.90%
Operating grants and
contributions
Property taxes
1.42%
32.16%
Capital grants and
contributions
29.81%
Unrestricted investment
earnings
Grants and contributions
4.23%
not restricted to specific
programs
9.47%
15
Business-type activities
Business-type activities increased the City of Elk River’s net assets by $5,548,589. Below are graphs showing the
business-type activities revenue and expense comparisons.
Expenses and Program Revenues - Business-type Activities
$20,000,000
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$-
Municipal liquorGarbageSewerWaterElectric
RevenueExpense
Revenues by Source - Business-type Activities
Unrestricted
investment earnings
1.80%
Charges for services
83.50%
Capital grants and
contributions
13.15%
Operating grants and
contributions
1.54%
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, unreserved fund balance may serve as a useful measure of a government’s net resources available for
spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of
$27,957,749. Approximately 64% of this total amount ($17,978,723) constitutes unreserved fund balance, which is
available for spending at the City’s discretion. The remainder of fund balance ($9,979,026) is reserved to indicate that it is
not available for new spending because it has already been committed to provide for 1) debt service ($2,262,414), 2) capital
equipment/projects ($5,602,916), 3) landfill mitigation ($1,950,625), or 4) a variety of other restricted purposes ($163,071).
The General fund is the chief operating fund of the City of Elk River. The total fund balance of the General fund increased
by $215,005 in 2006, which was primarily due to increased revenues collected for licenses and permits, charges for services
and interest income. In addition, expenditures were under budget due primarily to personnel vacancies.
The Park Dedication fund decreased by $1,332,006, due to the acquisition of a golf course and park land. The
Improvement Bonds fund decreased by $4,338,873, which is due to the early redemption of several bond issues. The
Capital Projects fund increased by $384,897, due primarily to transfers in of closed improvement bond funds.
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 - $2,674,926, Garbage - $184,426, Sewer -
$5,619,169, Water - $2,446,495, and Electric - $3,134,032. All proprietary funds had increases in net assets.
General Fund Budgetary Highlights
Differences between the original budget and the final budget for the General fund amounted to $339,650. The revenue and
expenditure budgets were amended to reflect increased revenues in licenses and permits, charges for services, and interest
income and expenditure increases in the public safety category was due to increased activity and demand for services and
the purchase of a public safety records management system.
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, 2006, amounts to $178,174,218 (net of accumulated depreciation). This investment in capital assets includes
land, buildings, improvements, equipment and infrastructure.
Additional information on the City’s capital assets can be found in Note 3C on pages 45 - 47 of this report.
17
Long-term debt
. At the end of the current fiscal year, the City had total long-term debt outstanding of $37,125,537, an
increase of $698,310 from 2005. General obligation capital improvement bonds ($3,220,000) were issued to finance the
construction of a library. General obligation revenue bonds ($15,630,000) were used to finance the construction of an ice
arena, a liquor store, and sewer, water and electric systems. Lease revenue bonds ($8,265,000) were used to finance the
construction of a public safety/city hall facility. Special assessment bonds ($2,130,000) financed improvement projects
within the City and are assessed to the benefiting properties. Tax increment bonds ($827,500) financed the City’s
economic development program. Certificates of indebtedness ($1,259,334) financed capital equipment purchases.
Additional long-term debt in the amount of $1,908,725 is for capital leases, $3,066,820 is for notes payable and $818,158 is
for compensated absences.
The City maintains a bond rating of A1 from Moody’s for general obligation debt.
State statutes limit the amount of general obligation debt a Minnesota city may issue to 2% of total Estimated Taxable
Market Value. The current debt limitation for the City of Elk River is $35,728,238. Only $12,121,019 of the City’s net
outstanding debt is counted within the statutory limitation.
Additional information on the City of Elk River’s long-term debt can be found in Note 3F on pages 49 - 53 of this report.
Economic Factors and Next Year’s Budget
The City of Elk River estimates that the demand for city services will continue to grow at a level similar to last year due to
population growth. This was taken into consideration in preparation of the City’s 2007 budget. The property tax levy is set
annually and is adjusted as necessary to fund the additional cost of providing services related to the City’s growth and the
addition of new programs. Charges for services are evaluated each year and adjusted if warranted. The City expects to
keep the tax rate consistent in upcoming years.
Requests for Information
This financial report is designed to provide a general overview of the City of Elk River’s finances for all those with an
interest in the City’s finances. Questions concerning any of the information provided in this report or requests for
additional financial information should be addressed to City of Elk River, Attn: Finance Director, 13065 Orono Pkwy, Elk
River, Minnesota 55330 or by calling (763) 635-1000.
18
BASIC FINANCIAL STATEMENTS
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF NET ASSETS
DECEMBER 31, 2006
Primary Government
GovernmentalBusiness-typeComponent
ActivitiesActivitiesTotalUnit - HRA
ASSETS
Cash and investments$ 27,879,096$ 12,122,459$ 40,001,555$ 171,932
Restricted cash and investments - 445,900 445,900 -
Cash with fiscal agent 538,007 - 538,007 -
Receivables (net):
Interest 135,727 95,517 231,244 -
Taxes 415,397 - 415,397 10,527
Accounts 698,413 1,781,269 2,479,682 1,012
Special assessments 5,327,725 - 5,327,725 -
Notes 559,290 - 559,290 400,000
Due from other governments 215,753 23,523 239,276 -
Due from primary government - - - 355,052
Internal balances 215,246 (215,246) - -
Inventories - 2,246,561 2,246,561 -
Prepaid items 57,199 59,953 117,152 -
Deferred charges - 219,189 219,189 -
Property held for resale - - - 720,000
Capital assets:
Nondepreciable 39,759,682 3,030,587 42,790,269 -
Depreciable (net) 61,611,987 73,771,962 135,383,949 -
Total assets 137,413,522 93,581,674 230,995,196 1,658,523
LIABILITIES
Accounts payable 1,255,278 1,605,787 2,861,065 3,353
Salaries payable 132,875 25,951 158,826 975
Due to other governments 187,322 88,449 275,771 -
Due to component unit 355,052 - 355,052 -
Accrued interest payable 228,457 237,977 466,434 -
Unearned revenue 370,824 1,049 371,873 -
Non-current liabilities:
Due within one year 2,091,095 1,441,628 3,532,723 43,964
Due in more than one year 17,327,658 16,265,156 33,592,814 460,036
Total liabilities 21,948,561 19,665,997 41,614,558 508,328
NET ASSETS
Invested in capital assets,
net of related debt 82,663,610 59,410,729 142,074,339 -
Restricted for:
Debt service 2,842,412 445,900 3,288,312 -
Landfill mitigation 1,950,625 - 1,950,625 -
Unrestricted 28,008,314 14,059,048 42,067,362 1,150,195
Total net assets$115,464,961$73,915,677$189,380,638$1,150,195
The notes to the financial statements are an integral part of this statement.
19
20
21
CITY OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET ASSETS
DECEMBER 31, 2006
FUND BALANCE - TOTAL GOVERNMENTAL FUNDS$27,957,749
Amounts reported for governmental activities in the statement of net assets are different because:
1.Capital assets used in governmental activities are not current financial resources
and therefore are not reported in the governmental funds:
Governmental capital assets$135,145,821
Less accumulated depreciation(33,774,152)101,371,669
2.Deferred revenue in governmental funds is susceptible to full accrual on the
government-wide statements.5,782,753
3.Long-term liabilities are not payable with current financial resources and are
therefore not reported in the governmental funds:
Bonds payable(17,006,834)
Capital leases(1,908,725)
Accrued interest payable(228,457)
Compensated absences(503,194)(19,647,210)
NET ASSETS OF GOVERNMENTAL ACTIVITIES$115,464,961
The notes to the financial statements are an integral part of this statement.
22
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2006
OtherTotal
GeneralParkImprovementCapitalGovernmentalGovernmental
FundDedicationBondsProjectsFundsFunds
REVENUES
General property taxes$ 6,903,177$ -$ 223,593$ 167,454$ 2,235,549$ 9,529,773
Licenses and permits 1,207,368 - - - - 1,207,368
Intergovernmental revenue 1,379,289 1,211,358 10,546 103,321 1,438,423 4,142,937
Charges for services 845,305 472,960 - 48,131 1,119,068 2,485,464
Fines and forfeits 150,401 - - - 24,754 175,155
Special assessments - - 999,232 402,803 164,845 1,566,880
Interest 217,751 52,259 52,080 183,851 645,203 1,151,144
Miscellaneous
Landfill host fee - - - - 1,124,748 1,124,748
Refunds and reimbursements 53,033 - - 700 909,583 963,316
Other 4,519 10,190 - - 453,069 467,778
Total revenues 10,760,843 1,746,767 1,285,451 906,260 8,115,242 22,814,563
EXPENDITURES
Current:
General government 2,173,614 - - - 77,497 2,251,111
Public safety 4,873,270 - - - 68,436 4,941,706
Public works 1,505,213 - - - 1,033,445 2,538,658
Culture and recreation 1,340,026 370,350 - - 895,485 2,605,861
Economic development - - - - 627,467 627,467
Debt service:
Principal - 395,000 4,475,000 - 2,181,836 7,051,836
Interest and service charges - 107,404 198,650 - 575,458 881,512
Bond issuance costs - - - - 28,392 28,392
Capital outlay:
General government 53,636 - - - - 53,636
Public safety 240,172 - - - 342,779 582,951
Public works 78,687 - - - 447,760 526,447
Culture and recreation 25,388 4,776,019 - - 1,126,083 5,927,490
Infrastructure/development projects - - - 1,059,377 2,579,981 3,639,358
Total expenditures 10,290,006 5,648,773 4,673,650 1,059,377 9,984,619 31,656,425
Revenues over (under) expenditures 470,837 (3,902,006) (3,388,199) (153,117) (1,869,377) (8,841,862)
OTHER FINANCING SOURCES (USES)
Transfers in 432,686 390,000 434,833 1,385,507 3,280,448 5,923,474
Transfers out (688,518) - (1,385,507) (847,493) (2,093,130) (5,014,648)
Issuance of debt - - - - 3,657,000 3,657,000
Discount on debt issued - - - - (29,252) (29,252)
Capital leases issued - 2,180,000 - - 152,694 2,332,694
Sale of capital assets - - - - 17,439 17,439
Total other financing sources (uses) (255,832) 2,570,000 (950,674) 538,014 4,985,199 6,886,707
Net change in fund balances 215,005 (1,332,006) (4,338,873) 384,897 3,115,822 (1,955,155)
Fund balances - January 1 4,601,381 1,600,029 5,093,448 4,058,724 14,559,322 29,912,904
Fund balances - December 31$ 4,816,386$ 268,023$ 754,575$ 4,443,621$17,675,144$27,957,749
The notes to the financial statements are an integral part of this statement.
23
CITY OF ELK RIVER, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2006
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS$(1,955,155)
Amounts reported for governmental activities in the statement of activities are different because:
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 $10,305,281
Depreciation expense (4,340,529) 5,964,752
2.The net effect of various miscellaneous transactions involving capital assets
including donations and disposals, which increase net assets.
Donations 3,289,162
Disposals (198,002)
Depreciation on disposals 160,515 3,251,675
3.Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the governmental funds.
General property taxes 16,031
Special assessments 117,374
Notes receivable 84,807 218,212
4.The issuance of long-term debt provides current financial resources to governmental
funds, while the repayment of the principal of long-term debt consumes the current
financial resources of governmental funds. Neither transaction, however, has any
effect on net assets. This amount is the net effect of these differences in the
treatment of long-term debt and related items.
Issuance of long-term debt (5,989,694)
Repayment of principal of long-term debt 7,051,836 1,062,142
5.Some expenses reported in the statement of activities do not require use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
Accrued interest payable 116,788
Compensated absences (22,098) 94,690
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES$ 8,636,316
The notes to the financial statements are an integral part of this statement.
24
CITY OF ELK RIVER, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2006
Budget
Variancewith
OriginalFinalActualFinal Budget
REVENUES
General property taxes$ 7,220,500$ 6,897,500$ 6,903,177$ 5,677
Licenses and permits 870,700 1,170,700 1,207,368 36,668
Intergovernmental revenue 998,650 1,321,650 1,379,289 57,639
Charges for services 710,350 763,350 845,305 81,955
Fines 159,500 159,500 150,401 (9,099)
Interest income 50,000 160,000 217,751 57,751
Miscellaneous revenue
Refunds and reimbursements 25,500 25,500 53,033 27,533
Other 6,700 6,700 4,519 (2,181)
Total revenues 10,041,900 10,504,900 10,760,843 255,943
EXPENDITURES
Current:
General government 2,506,750 2,473,150 2,173,614 299,536
Public safety 4,753,500 4,824,150 4,873,270 (49,120)
Public works 1,536,550 1,531,350 1,505,213 26,137
Culture and recreation 1,269,750 1,269,750 1,340,026 (70,276)
Capital outlay:
General government 50,550 60,150 53,636 6,514
Public safety 201,700 233,400 240,172 (6,772)
Public works 107,000 87,200 78,687 8,513
Culture and recreation 25,600 25,600 25,388 212
Total expenditures 10,451,400 10,504,750 10,290,006 214,744
Revenues over (under) expenditures (409,500) 150 470,837 470,687
OTHER FINANCING SOURCES (USES)
Transfers in 554,650 509,650 432,686 (76,964)
Transfers out (145,150) (170,150) (688,518) (518,368)
Total other financing sources (uses) 409,500 339,500 (255,832) (595,332)
Net increase in fund balance - 339,650 215,005 (124,645)
Fund balance - January 1 4,601,381 4,601,381 4,601,381 -
Fund balance - December 31$4,601,381$4,941,031$ 4,816,386$(124,645)
The notes to the financial statements are an integral part of this statement.
25
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
DECEMBER 31, 2006
Municipal LiquorGarbage
Current YearPrior YearCurrent YearPrior Year
ASSETS
Current assets:
Cash and investments$ 2,277,746$ 1,681,215$ 192,402$ 92,631
Restricted cash and investments - - - -
Cash with fiscal agent - - - -
Receivables:
Interest 11,801 5,770 997 318
Accounts 1,566 2,613 12,165 9,464
Due from other governments - - - -
Due from other funds - - 93,848 89,956
Inventories 856,147 801,734 - -
Prepaid items 4,500 4,514 - -
Total current assets 3,151,760 2,495,846 299,412 192,369
Noncurrent assets:
Deferred charges 3,345 3,758 - -
Capital assets:
Nondepreciable 823,761 823,761 - -
Depreciable 3,269,095 3,242,829 - -
Accumulated depreciation (952,285) (811,031) - -
Total capital assets 3,140,571 3,255,559 - -
Total noncurrent assets 3,143,916 3,259,317 - -
Total assets 6,295,676 5,755,163 299,412 192,369
LIABILITIES
Current liabilities:
Accounts payable 406,471 418,712 114,875 82,549
Salaries payable 8,901 9,287 111 31
Due to other governments - - - -
Due to other funds - - - -
Deferred revenue 1,049 556 - -
Accrued interest 22,500 31,500 - -
Compensated absences payable - current 22,602 20,216 - -
Notes payable - current - - - -
Bonds payable - current 50,000 - - -
Total current liabilities 511,523 480,271 114,986 82,580
Noncurrent liabilities:
Compensated absences payable 18,656 15,889 - -
Notes payable - - - -
Bonds payable 1,150,000 1,200,000 - -
Total noncurrent liabilities 1,168,656 1,215,889 - -
Total liabilities 1,680,179 1,696,160 114,986 82,580
NET ASSETS
Invested in capital assets, net of related debt 1,940,571 2,055,559 - -
Restricted for debt service - - - -
Unrestricted 2,674,926 2,003,444 184,426 109,789
Total net assets$ 4,615,497$ 4,059,003$ 184,426$ 109,789
The notes to the financial statements are an integral part of this statement.
26
SewerWaterElectricTotal
Current YearPrior YearCurrent YearPrior YearCurrent YearPrior YearCurrent Year
$ 5,537,681$ 5,759,869$ 2,519,224$ 1,754,023$ 1,595,406$ 1,921,433$ 12,122,459
- - - - 445,900 95,000 445,900
- 1,633,679 - - - -
-
29,885 19,742 33,947 32,977 18,887 25,351 95,517
- 4,455 98,029 223,699 1,669,509 1,509,318 1,781,269
- - - - 23,523 - 23,523
116,132 107,312 114,440 - - - 324,420
- - 42,995 28,544 1,347,419 938,912 2,246,561
- - 2,935 7,667 52,518 55,855 59,953
5,683,698 7,525,057 2,811,570 2,046,910 5,153,162 4,545,869 17,099,602
23,836 26,461 87,416 95,066 104,592 21,150 219,189
411,095 1,340,537 11,000 11,000 1,784,731 383,897 3,030,587
32,404,430 29,049,979 29,544,450 28,125,688 41,703,273 36,788,875 106,921,248
(10,314,182) (9,464,364) (6,103,330) (5,312,000) (15,779,489) (13,928,871) (33,149,286)
22,501,343 20,926,152 23,452,120 22,824,688 27,708,515 23,243,901 76,802,549
22,525,179 20,952,613 23,539,536 22,919,754 27,813,107 23,265,051 77,021,738
28,208,877 28,477,670 26,351,106 24,966,664 32,966,269 27,810,920 94,121,340
41,085 263,244 47,207 68,327 996,149 975,088 1,605,787
6,027 4,822 1,140 1,441 9,772 8,749 25,951
- - - - 88,449 81,958 88,449
- - 240,500 14,940 299,166 264,217 539,666
- - - - - -
1,049
24,182 72,381 99,485 104,605 91,810 41,605 237,977
10,515 8,731 47,411 20,487 142,232 61,461 222,760
- - - - 173,868 127,272 173,868
140,000 1,750,000 425,000 410,000 430,000 245,000 1,045,000
221,809 2,099,178 860,743 619,800 2,231,446 1,805,350 3,940,507
6,556 7,488 16,748 40,233 50,244 120,699 92,204
- - - - 2,892,952 2,410,954 2,892,952
1,520,000 1,660,000 5,311,250 5,736,250 5,298,750 2,133,750 13,280,000
1,526,556 1,667,488 5,327,998 5,776,483 8,241,946 4,665,403 16,265,156
1,748,365 3,766,666 6,188,741 6,396,283 10,473,392 6,470,753 20,205,663
20,841,343 17,516,152 17,715,870 16,678,438 18,912,945 18,326,925 59,410,729
- - - - 445,900 95,000 445,900
5,619,169 7,194,852 2,446,495 1,891,943 3,134,032 2,918,242 14,059,048
$ 26,460,512$ 24,711,004$ 20,162,365$ 18,570,381$ 22,492,877$ 21,340,167$ 73,915,677
27
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2006
Municipal LiquorGarbage
Current YearPrior YearCurrent YearPrior Year
Sales and cost of sales:
Sales$5,897,950$4,801,541$-$-
Cost of sales(4,233,420)(3,505,709)--
Gross profit
1,664,5301,295,832--
Operating revenues:
User charges--1,096,9951,048,655
Delinquency collections--9,2737,098
Other8,8184,5209,7959,255
Total operating revenues
8,8184,5201,116,0631,065,008
Operating expenses:
Personal services527,531430,3645,2077,611
Supplies23,58970,7112,16744
Purchased power----
Other service charges226,792156,4411,087,4141,039,824
Depreciation141,254139,907--
Total operating expenses
919,166797,4231,094,7881,047,479
Operating income (loss)
754,182502,92921,27517,529
Nonoperating revenues (expenses):
Connection charges----
Interest income85,52649,2875,6952,235
Miscellaneous revenue----
Interest expense(49,500)(41,541)--
Bond issuance costs(414)(242)--
Gain (loss) on sale of capital assets----
Total nonoperating revenues (expenses)
35,6127,5045,6952,235
Income before contributions and transfers789,794510,43326,97019,764
Capital contributions----
Transfers in--47,6673,480
Transfers out(233,300)(233,300)--
Change in net assets556,494277,13374,63723,244
Total net assets - January 14,059,0033,781,870109,78986,545
Prior period adjustments----
Total net assets, restated - January 14,059,0033,781,870109,78986,545
Total net assets - December 31$4,615,497$4,059,003$184,426$109,789
The notes to the financial statements are an integral part of this statement.
28
SewerWaterElectricTotal
Current YearPrior YearCurrent YearPrior YearCurrent YearPrior Year
Current Year
$-$-$-$-$-$-$5,897,950
------(4,233,420)
------1,664,530
1,350,9221,250,2221,749,9321,347,54216,663,58915,426,33020,861,438
--20,88715,360165,768150,599195,928
1,72511,631--314,128294,110334,466
1,352,6471,261,8531,770,8191,362,90217,143,48515,871,03921,391,832
341,620303,247392,172356,5661,288,9421,160,6272,555,472
69,00165,996201,843192,549143,180134,818439,780
----10,258,5159,739,50010,258,515
394,050327,342475,973488,9202,627,4172,187,3724,811,646
849,818767,400790,451790,4541,561,0961,553,6633,342,619
1,654,4891,463,9851,860,4391,828,48915,879,15014,775,98021,408,032
(301,842)(202,132)(89,620)(465,587)1,264,3351,095,0591,648,330
978,2351,167,045870,160852,518475,857545,3532,324,252
280,208147,21463,32075,685154,46131,502589,210
--192,5062,234301,86784,401494,373
(66,631)(130,661)(244,388)(263,234)(200,309)(101,007)(560,828)
(3,027)(20,281)(7,650)(7,705)(2,353)(2,350)(13,444)
-(14,426)--2,108(1,000)2,108
1,188,7851,148,891873,948659,498731,631556,8992,835,671
886,943946,759784,328193,9111,995,9661,651,9584,484,001
1,134,740556,429838,674533,038--1,973,414
------47,667
(272,175)(33,030)(31,018)(25,739)(420,000)(388,927)(956,493)
1,749,5081,470,1581,591,984701,2101,575,9661,263,0315,548,589
24,711,00423,240,84618,570,38117,869,17121,340,16720,077,13668,790,344
----(423,256)-(423,256)
24,711,00423,240,84618,570,38117,869,17120,916,91120,077,13668,367,088
$26,460,512$24,711,004$20,162,365$18,570,381$22,492,877$21,340,167$73,915,677
29
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2006
Municipal LiquorGarbage
Current YearPrior YearCurrent YearPrior Year
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users$ 5,899,490$ 4,801,197$ 1,099,675$ 1,048,024
Other operating cash receipts 8,818 4,520 9,795 9,255
Payments to suppliers (4,550,441) (4,073,944) (1,057,255) (1,041,013)
Payments to employees (522,764) (340,037) (5,127) (6,361)
Net cash provided by operating activities 835,103 391,736 47,088 9,905
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers from other funds - - 47,667 3,480
Transfers to other funds (233,300) (233,300) - -
Decrease in due from other funds - - - -
Increase (decrease) in due to other funds - - - -
Increase in due to other governments - - - -
Net cash provided (used) by
noncapital financing activities (233,300) (233,300) 47,667 3,480
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition of capital assets (26,266) (1,654,871) - -
Principal paid on capital debt - (480,000) - -
Proceeds of revenue bonds - 1,196,000 - -
Interest paid on capital debt (58,501) (22,741) - -
Principal paid on promissory note - - - -
Proceeds of promissory note - - - -
Proceeds from sale of capital assets - - - -
Net cash provided (used) by
capital and related financing activities (84,767) (961,612) - -
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 79,495 47,034 5,016 2,012
Net increase (decrease) in cash and cash equivalents 596,531 (756,142) 99,771 15,397
Cash and cash equivalents, January 1 1,681,215 2,437,357 92,631 77,234
Cash and cash equivalents, December 31$ 2,277,746$ 1,681,215$ 192,402$ 92,631
Reconciliation of cash and cash equivalents
to the balance sheet:
Cash and investments$ 2,277,746$ 1,681,215$ 192,402$ 92,631
Restricted cash and investments - - - -
Cash with fiscal agent - - - -
Total cash and cash equivalents$ 2,277,746$ 1,681,215$ 192,402$ 92,631
The notes to the financial statements are an integral part of this statement.
30
Continued
SewerWaterElectric
Total
Current YearPrior YearCurrent YearPrior YearCurrent YearPrior YearCurrent Year
$ 2,324,792$ 2,405,326$ 2,766,649$ 2,116,983$ 17,459,151$ 15,907,498$ 29,549,757
1,725 11,631 192,506 2,234 278,344 378,511 491,188
(685,210) (300,413) (759,941) (719,628) (13,579,763) (12,241,664) (20,632,610)
(339,563) (240,608) (337,748) (316,540) (1,111,061) (985,296) (2,316,263)
1,301,744 1,875,936 1,861,466 1,083,049 3,046,671 3,059,049 7,092,072
- - - - - - 47,667
(272,175) (33,030) (31,018) (25,739) (420,000) (388,927) (956,493)
- - (114,440) - - 4,084 (114,440)
- - 225,560 8,822 34,949 (52,182) 260,509
- - - - 6,491 61,398 6,491
(272,175) (33,030) 80,102 (16,917) (378,560) (375,627) (756,266)
(1,290,269) (1,211,165) (579,209) (482,343) (6,446,859) (2,668,078) (8,342,603)
(1,750,000) (115,000) (410,000) (388,750) (245,000) (166,250) (2,405,000)
- 1,635,796 - - 3,509,206 - 3,509,206
(115,232) (101,736) (249,508) (257,282) (150,104) (104,018) (573,345)
- - - - (132,406) (124,919) (132,406)
- - - - 661,000 - 661,000
- 54,607 - - - - -
(3,155,501) 262,502 (1,238,717) (1,128,375) (2,804,163) (3,063,265) (7,283,148)
270,065 134,261 62,350 76,827 160,925 34,420 577,851
(1,855,867) 2,239,669 765,201 14,584 24,873 (345,423) (369,491)
7,393,548 5,153,879 1,754,023 1,739,439 2,016,433 2,361,856 12,937,850
$ 5,537,681$ 7,393,548$ 2,519,224$ 1,754,023$ 2,041,306$ 2,016,433$ 12,568,359
$ 5,537,681$ 5,759,869$ 2,519,224$1,754,023$1,595,406$ 1,921,433$12,122,459
95,000445,900
- ---445,900
- 1,633,679--- --
$ 5,537,681$ 7,393,548$ 2,519,224$ 1,754,023$ 2,041,306$ 2,016,433$ 12,568,359
31
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2006
Municipal LiquorGarbage
Current YearPrior YearCurrent YearPrior Year
Reconciliation of operating income (loss) to net cash
provided (used) by operating activities:
Operating income (loss)$ 754,182$ 502,929$ 21,275$ 17,529
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:
Other revenue related to operations - - - -
Depreciation expense 141,254 139,907 - -
(Increase) decrease in assets:
Accounts receivable 1,047 (900) (2,701) (1,722)
Due from other funds - - (3,892) (6,007)
Due from other goverments - - - -
Inventories (54,413) (316,329) - -
Prepaid items 14 (437) - -
Increase (decrease) in:
Accounts payable (12,241) 58,359 32,326 190
Salaries payable (386) 3,237 80 (85)
Deferred revenue 493 556 - -
Compensated absences payable 5,153 4,414 - -
Net cash provided by operating activities$ 835,103$ 391,736$ 47,088$ 9,905
Noncash capital and related financing activities:
Amortization of bond issuance costs$ 414$ 242$ -$ -
Prior period adjustment to accumulated depreciation - - - -
Discount on bonds issued - - - -
Assets purchased on account - - - -
Disposal of capital assets - 15,967 - -
Contribution of capital assets from developers - - - -
The notes to the financial statements are an integral part of this statement.
32
SewerWaterElectric
Total
Current YearPrior YearCurrent YearPrior YearCurrent YearPrior YearCurrent Year
$ (301,842)$ (202,132)$ (89,620)$ (465,587)$ 1,264,335$ 1,095,059$ 1,648,330
978,235 1,167,045 1,062,666 854,752 777,724 625,670 2,818,625
849,818 767,400 790,451 790,454 1,561,096 1,553,663 3,342,619
4,455 (3,593) 125,670 (98,437) (160,191) (210,700) (31,720)
(8,820) (8,348) - - - - (12,712)
- - - - (23,523) - (23,523)
- - (14,451) (736) (408,507) (74,287) (477,371)
- - 4,732 (875) 3,337 (28,544) 8,083
(222,159) 152,297 (21,120) 2,621 21,061 93,096 (202,133)
1,205 1,291 (301) (599) 1,023 723 1,621
- - - - - - 493
852 1,976 3,439 1,456 10,316 4,369 19,760
$ 1,301,744$ 1,875,936$ 1,861,466$ 1,083,049$ 3,046,671$ 3,059,049$ 7,092,072
$ 3,027$ 20,281$ 7,650$ 7,705$ 2,353$ 2,350$ 13,444
- - - - 423,256 - 423,256
- - - - 85,794 - 85,794
- - - 41,105 - - -
- 139,013 - - 2,108 (1,000) 2,108
1,134,740 556,429 838,674 533,038 - - 1,973,414
33
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF FIDUCIARY NET ASSETS
DEVELOPER ESCROW AGENCY FUND
DECEMBER 31, 2006
Agency
Fund
ASSETS
Cash$ 182,800
Accounts receivable 39,181
Total assets$ 221,981
LIABILITY
Accounts payable$ 18,276
Refundable deposits payable 203,705
Total liabilities$ 221,981
The notes to the financial statements are an integral part of this statement.
34
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
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 Public 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 may be 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 or
(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. Separate financial statements for the HRA may be obtained at the City of Elk River, 13065
Orono Pkwy, Elk River.
B.Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets)
report information on all of the nonfiduciary activities of the primary government and its component units. For the most
part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally
are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely
to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from
certain legally separate component units for which the primary government is financially accountable.
35
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
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 are offset
by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.
Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, 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 financial statements.
C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses
are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met. The City’s only fiduciary funds are agency 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 financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the 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.
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special
assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the
current period. All other revenue items are considered to be measurable and available only when cash is received by the
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.
36
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
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 financial resources of the general
government, except those required to be accounted for in another fund.
The Park Dedication special revenue fund accounts for park dedication fees from developers and expenditures for
park land acquisitions and park capital improvements.
TheImprovement Bonds debt service fund accounts for the resources accumulated and payments made for
principal and interest on long-term general obligation special assessment debt. The proceeds were used to finance
various street, water, sewer and storm sewer improvements.
TheCapital Projects fund is used to account for various improvement projects that are financed by the City.
The government reports the following major proprietary funds:
TheMunicipal Liquor fund accounts for the operations of the City’s off-sale liquor stores.
TheGarbage fund accounts for the activities of the City’s garbage collection and recycling program.
TheSewer fund accounts for the activities of the City’s sanitary sewer treatment system.
TheWater fund accounts for the activities of the City’s water distribution system.
TheElectric fund accounts for the activities of the City’s electric distribution system
Additionally, the government reports the following fund types:
TheDeveloper 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 financial reporting issued prior to December 1, 1989, generally are followed
in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict
with or contradict guidance of 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 financial 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.
37
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
D.Assets, Liabilities, and Net Assets or Equity
1. Deposits and Investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments
with original maturities of three months or less from the date of acquisition.
Cash balances from all funds are 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. Financial statements of the Minnesota Municipal
Money Market fund can be obtained by contacting Voyageur Asset Management at 100 South Fifth Street, Suite
2300, Minneapolis, MN 55402-1240.
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.
38
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Accounts Receivable
Accounts receivable include amounts billed for services provided before year end. 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. No substantial losses from present receivable balances are anticipated.
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 financial 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. Under terms of the grant
agreement, a portion of the original grant will be returned to the State of Minnesota and is reported as a due to other
governments liability. The portion of the notes receivable loaned to businesses 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 proprietary funds, inventories are valued at cost, which approximates market, based on physical counts.
Inventories are recorded as an expense when 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 financial 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.
39
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING 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.
Employees can also accrue an unlimited amount of unused sick leave. Employees with five or more years of service
are entitled to receive severance pay equal to a percentage of unused sick pay ranging from 15-25 percent based on
years of service, up to a maximum of 240 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. Bond premiums and discounts, as well as issuance costs,
are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective
interest method.
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 Equity
In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not
available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of
fund balance represent tentative management plans that are subject to change.
9. Net Assets
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 and 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.
40
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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 Maintenance, Ice Arena, 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.
On or before July 1 of each year, all 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 increased $339,650 due mainly to increased collections of license and permit revenues and interest
income.
B.Excess of Expenditures Over Appropriations
For the year ended December 31, 2006, expenditures exceeded appropriations in the Library fund by $814,215 and the
Pinewood Golf Course fund by $222,202. These over expenditures were funded by the issuance of debt and operating
transfers.
C.Deficit Fund Equity
The Improvement Projects fund had a deficit fund balance of $452,325. The fund deficit is expected to be covered with
future fund revenues.
41
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
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 110% of the deposits not covered by
insurance or bonds (140% in the case of mortgage notes pledged). 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 $4,351,292 and the bank balance was $5,467,624. The bank
balance was covered by federal depository insurance totaling $566,107 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 $171,932 and the bank
balance was $173,200. The bank balance was covered by federal depository insurance totaling $100,000 and the
remaining balance was covered by securities held by the pledging financial institution’s agent in the HRA’s name.
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, 2006 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 - At year end, more than 5 percent of the City’s investment portfolio included securities held
with Rhineland Funding of $3,478,062. The City’s investment policy does not allow for the undue
concentration of investments with one broker or financial institution, or any one type of instrument.
42
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Interest rate risk - In accordance with its investment policy, the City diversifies its investment portfolio to
eliminate the risk of loss resulting from the over-concentration of assets in a specific maturity. The maturities
selected shall provide for stability of income and reasonable liquidity.
As of December 31, 2006, the City had the following investments that are insured or registered, or securities held by the
City or its agent in the City’s name.
Fair Value
CreditSegmentedand
Quality/TimeCarrying
Types of Investments
Ratings (1)Distribution (2)Amount
Pooled investments:
Minnesota Municipal Money Market FundN/ALess than 6 months4,703,377$
Total pooled investments4,703,377
Non-pooled investments:
U.S. Government SecuritiesAAALess than 6 months1,538,107
AAA6 to 12 months2,298,133
AAA1 to 5 years4,506,718
AAAMore than 5 years5,746,698
Total U.S. Government Securities14,089,656
Commercial PaperP1Less than 6 months16,623,345
Negotiable CD'sN/ALess than 6 months1,345,967
Money Market FundsN/ALess than 6 months49,935
Total non-pooled investments32,108,903
Total investments36,812,280
Deposits4,351,292
Cash on hand4,690
Total cash and investments$41,168,262
(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable.
43
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Cash and investments are presented in the financial statements as follows:
PrimaryComponent
GovernmentUnit - HRA
Statement of Net Assets
Cash and investments$ 40,001,555$ 171,932
Restricted cash and investments 445,900 -
Cash with fiscal agent 538,007 -
Statement of Fiduciary Net Assets
Cash and investments 182,800 -
Total$ 41,168,262$ 171,932
B.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:
UnavailableUnearned
Delinquent property taxes receivable:
General fund$ 167,467$ -
Improvement bonds fund 4,832
-
Capital projects fund 4,750
-
Nonmajor funds 36,354
-
Delinquent special assessments:
Improvement bonds fund 1,474
-
Capital projects fund 9,880
-
Special assessments not yet due:
Improvement bonds fund 775,600
-
Capital projects fund4,450,408
-
Nonmajor funds 65,892
-
Notes receivable not yet due:
Nonmajor funds 266,096
-
Unearned park dedication credits:
Park dedication fund 364,100-
Unearned miscellaneous fees:
Nonmajor funds - 6,724
Total 5,782,753$$ 370,824
44
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
C.Capital Assets
In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure in the
government-wide statement of net assets. Capital asset activity for the year ended December 31, 2006 was as follows:
BeinninEndin
ggg
BalanceAdditionsDeletionsBalance
Primary Government
Governmental activities:
Caital assets not bein dereciated:
pgp
Land$ 5,101,23331,489,967$$ 36,591,200-$
Construction in roress2,432,0023,168,482 3,168,4822,432,002
pg()
Total ca
pital assets
not bein dereciated33,921,9698,269,715 39,759,6822,432,002
gp()
Caital assets bein dereciated:
pgp
Buildins18,944,355 608,526 19,552,881-
g
Other improvements2,214,482 798,325 3,012,807-
Equipment7,021,4191,095,783(198,002)7,919,200
Infrastructure59,647,1555,254,096 64,901,251-
Total caital assets
p
bein dereciated87,827,4117,756,730198,00295,386,139
gp()
Less accumulated depreciation for:
Buildings4,240,471 817,824 5,058,295-
Other improvements831,443 177,646 1,009,089-
Euiment3,909,222 648,652160,5154,397,359
qp()
Infrastructure20,613,0022,696,407 23,309,409-
Total accumulated depreciation29,594,1384,340,529(160,515)33,774,152
Total capital assets
being depreciated, net58,233,2733,416,201(37,487)61,611,987
Governmental activities
capital assets, net$ 11,685,91692,155,242$$(2,469,489)$101,371,669
45
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
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$283,433
Public safety695,038
Public works2,925,224
Culture and recreation436,834
Total depreciation expense - governmental activities$4,340,529
Business-type activities:
Municipal liquor$141,254
Sewer849,818
Water790,451
Electric1,561,096
Total depreciation expense - business-type activities$3,342,619
46
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Construction commitments
At December 31, 2006, the City had construction project contracts in progress. The commitments related to the
remaining contract balances are summarized as follows:
SpentRemaining
Projectto dateCommitment
Library$ 914,431$2,960,590
Rivers Edge Commons Park 476,019409,742
Highland Road 1,478,18282,353
Total$2,868,632$3,452,685
D.Interfund Receivables, Payables, and Transfers
The composition of interfund balances as of December 31, 2006 is as follows:
Due to/from other funds:
Receivable Fund
Payable FundAmount
GeneralElectric$48,717
GeneralNonmajor governmental funds11,994
GarbageElectric93,848
SewerElectric116,132
WaterCapital projects114,440
Nonmajor governmental fundsWater240,500
Nonmajor governmental fundsElectric40,469
Nonmajor governmental fundsNonmajor governmental funds1,019,232
Total$1,685,332
The interfund receivable and payable balances result mainly from the distribution of utility collections and the
lending/borrowing arrangements to cover deficit cash balances at the end of the year.
47
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Interfund transfers:
Governmental funds:Transfer InTransfer Out
Major funds -
General$432,686$688,518
Park dedication390,000-
Improvement bonds434,8331,385,507
Capital projects1,385,507847,493
Nonmajor funds3,280,4482,093,130
Total governmental funds5,923,4745,014,648
Proprietary funds:
Municipal liquor 233,300-
Garbage47,667-
Sewer 272,175-
Water-31,018
Electric 420,000-
Total proprietary funds47,667956,493
Total$5,971,141$5,971,141
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 funds as principal and interest
payments come due, and 3) close completed bond and project funds.
E.Leases
The City has entered into several lease agreements as lessee for financing the acquisition of a golf course and golf course
equipment with a down payment of $328,969 and also for the acquisition of park property with a down payment of
$19,000. The lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at
the present value of their future minimum lease payments as of the inception date
The assets acquired through capital leases are as follows:
Governmental
Asset:Activities
Land$ 2,180,000
Equipment 152,694
Less: Accumulated depreciation (15,269)
Total$ 2,317,425
48
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
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,
2006, were as follows:
Governmental
Year Ending Dec. 31Activities
2007$ 216,157
2008 1,621,977
2009 117,798
2010 67,063
2011 7,080
Total minimum lease payments 2,030,075
Less: amount representing interest (121,350)
Present value of minimum lease payments1,908,725$
F.Long-term Debt
The City issues general obligation bonds and equipment certificates to provide funds for the acquisition and construction
of major capital facilities. The reporting entity’s long-term debt is segregated between the amounts to be repaid from
governmental activities and amounts to be repaid from business-type activities.
49
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
50
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Annual debt service requirements to maturity for long-term obligations are as follows:
51
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Long-term liability activity for the year ended December 31, 2006 was as follows:
For the governmental activities, bonds payable can be summarized in the following categories:
The general obligation capital improvement bonds will be used to construct a new library. 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 construction of various drainage projects and expansion of
an indoor ice arena. The bonds are payable from revenues but are backed by the full faith and credit of the City.
The lease revenue bonds were used for the construction of city hall and a public safety building and the expansion of
city hall. The bonds are payable from annual lease payments received by the EDA from the City.
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.
52
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
For the governmental activities, compensated absences are generally liquidated through the General fund.
For the business-type activities, the general obligation revenue bonds are used to finance the acquisition and construction
of major capital facilities and the certificates of indebtedness are used to finance the purchase of equipment. The bonds
and certificates 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.
Note 4: OTHER INFORMATION
A.Risk Management
The City is exposed to various risks of loss related to torts; theft of damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters 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 (IBNRs). 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 may be 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 financial
statements.
C. Territorial Acquisition Agreement
The Utilities has entered into an agreement to transfer ownership 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 of ten years from the date of sale of each
individual area.
During 2006 and 2005, the Utilities paid $31,510 and $324,824, respectively, under this agreement, including $31,510
and $19,039 in 2006 and 2005, respectively, for loss of revenues. All amounts paid are included in property and
equipment.
53
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 4: OTHER INFORMATION - CONTINUED
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 Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which
are cost-sharing, multiple-employer retirement plans. These plans are established and administered in
accordance with Minnesota Statutes, Chapters 353 and 356.
PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are
covered by Social Security and Basic Plan members are not. All new members must participate in the
Coordinated Plan. 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 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 PERF 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 equal 90. 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.
There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime
annuity that ceases upon the death of the retiree—no survivor annuity is payable. There are also various types
of joint and survivor annuity options available which will be payable over joint lives.
Members may also leave their contributions in the fund upon termination of public service in order to qualify
for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who
leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to
active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them
yet are bound by the provisions in effect at the time they last terminated their public service.
PERA issues a publicly available financial report that includes financial statements and required supplementary
information for PERF and PEPFF. That report may be obtained on the internet at www.mnpera.org, 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.
54
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 4: OTHER INFORMATION - CONTINUED
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. PERF Basic Plan members and Coordinated Plan members are
required to contribute 9.10% and 5.50%, respectively, of their annual covered salary in 2006. Contribution
rates in the Coordinated Plan will increase in 2007 to 5.75%. PEPFF members were required to contribute
7.0% of their annual covered salary in 2006. That rate will increase to 7.8% in 2007. The City of Elk River is
required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF
members, 6.0% for Coordinated Plan PERF members, and 10.5% for PEPFF members. Employer contribution
rates for the Coordinated Plan and PEPFF will increase to 6.25% and 11.7% respectively effective January 1,
2007. The City's contributions to the Public Employees Retirement Fund for the years ending December 31,
2006, 2005, and 2004 were $414,895, $368,213 and $314,861, respectively. The City's contributions to the
Public Employees Police & Fire Fund for the years ending December 31, 2006, 2005, and 2004 were $214,037,
$180,763 and $169,689, respectively. The City's contributions were equal to the contractually required
contributions for each year as set by state statute.
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 financial 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 financial requirements of the Special fund are determined in accordance with Section 69.772 of the
Minnesota Statutes, which requires the payment of pension benefits in a lump sum or optionally in annual
installments. The Association is comprised of volunteers and therefore members have no contribution
requirements. The following summarizes the City’s annual pension cost and other related information for the
current year:
Annual pension cost $148,455
Contributions made:
City (voluntary) $28,950
State aid $148,455
Actuarial valuation date 12/31/06
Actuarial cost method Entry age normal
Amortization method Level dollar closed
55
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 4: OTHER INFORMATION - CONTINUED
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 adjustment None
Three-Year Trend Information
Annual Percentage Net
Year Pension of APC Pension
Ending Cost (APC) Contributed Obligation
12/31/04 $147,589 117% $0
12/31/05 136,429 121% 0
12/31/06 148,455 120% 0
Required Supplementary Information – Schedule of Funding Progress
Assets in
Excess of Pension
Actuarial Actuarial Actuarial (Unfunded) Benefit
Valuation Value of Accrued Percentage Accrued Per Year
Date Assets Liabilities Funded Liability of Service
12/31/04 $ 1,646,533 $1,664,129 98.9% $ (17,596) $ 4,000
12/31/05 1,886,585 1,781,082 105.9 105,503 4,000
12/31/06 2,092,351 1,823,195 114.8 269,156 4,175
E. 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.
F. Conduit Debt Obligations
From time to time, the City has issued industrial revenue bonds to provide financial assistance to private-sector entities
for the acquisition and construction of industrial and commercial 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, 2006, there were five series of industrial revenue bonds outstanding, with an estimated aggregate
principal payable amount of $20,400,000.
56
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
Note 4: OTHER INFORMATION - CONTINUED
G. Prior Period Adjustment
An adjustment is required for the December 31, 2005 carry forward (net asset) balance of the business-type activities to
adjust for the reclassification of accumulated depreciation of business-type capital assets. The following schedule
reconciles the December 31, 2005 net asset balance as restated:
Net assets - December 31, 2005 $68,790,344
Prior period adjustment - reclass accumulated depreciation (423,256)
Total net assets as restated - January 1, 2006 $68,367,088
H. Subsequent Events
On March 28, 2007, the City issued $2,875,000 of electric revenue bonds to finance an electric utility project. The
interest rate on the bonds was 4 percent and the maturity date is February 1, 2022.
57
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 finances by proprietary funds.
CITY OF ELK RIVER, MINNESOT
A
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2006
SpecialDebtCapitalTotal Nonmajo
r
RevenueServiceProjectsGovernmental
FundsFundsFunds
Funds
ASSETS
Cash and investments$11,854,478$942,232$4,225,416$17,022,126
Cash with fiscal agen-538,007-538,007
t
Receivables:
Interest40,2334,55024,38669,169
Taxes 17,98251,03273069,744
Accounts676,999-7,724684,723
Special assessments--70,32670,326
Notes559,290--559,290
Due from other government33,578--33,578
s
Due from other funds378,878-921,3231,300,201
Prepaid items57,199--57,199
Total assets$13,618,637$1,535,821$5,249,905$20,404,363
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable$539,287$1,433$227,355$768,075
Salaries payable9,322--9,322
Due to other government187,322--187,322
s
Due to other funds81,187-950,0391,031,226
Due to component uni--358,208358,208
t
Deferred revenue282,16626,54966,351375,066
Total liabilities1,099,28427,9821,601,9532,729,219
Fund balances:
Reserved for:
Debt service-1,507,839-1,507,839
Capital projects5,602,916--5,602,916
Landfill mitigatio1,950,625--1,950,625
n
Notes 105,872--105,872
Prepaid items57,199--57,199
Unreserved:
Designated for:
Working capita2,816,783--2,816,783
l
Future debt requirements300,000--300,000
Capital projects--4,100,2774,100,277
Undesignate1,685,958-(452,325)1,233,633
d
Total fund balances12,519,3531,507,8393,647,95217,675,144
Total liabilities and fund balances$13,618,637$1,535,821$5,249,905$20,404,363
58
CITY OF ELK RIVER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
YEAR ENDED DECEMBER 31, 2006
SpecialDebtCapitalTotal Nonmajo
r
RevenueServiceProjectsGovernmental
FundsFundsFunds
Funds
REVENUES
General property taxes$374,425$1,121,115$ 740,009$2,235,549
Intergovernmental revenu77,58250,0831,310,7581,438,423
e
Charges for services869,068-250,0001,119,068
Fines and forfeits24,754- -24,754
Special assessment--164,845164,845
s
Interest incom373,87140,164231,168645,203
e
Miscellaneous revenue
Landfill host fee956,036-168,7121,124,748
Refunds and reimbursements586,828-322,755909,583
Othe453,069- -453,069
r
Total revenues3,715,6331,211,3623,188,2478,115,242
EXPENDITURES
Current:
General governmen77,497- -77,497
t
Public safet68,436- -68,436
y
Public works279,767-753,6781,033,445
Culture and recreation895,485- -895,485
Economic developmen342,913-284,554627,467
t
Debt service:
Principal28,9692,152,867 -2,181,836
Interest and service charges-575,458 -575,458
Bond issuance costs28,392- -28,392
Capital outlay:
Public safet342,779- -342,779
y
Public works101,182-346,578447,760
Culture and recreation1,043,733- 82,3501,126,083
Infrastructure/development projects--2,579,9812,579,981
Total expenditures3,209,1532,728,3254,047,1419,984,619
Revenues over (under) expenditures 506,480(1,516,963)(858,894)(1,869,377)
OTHER FINANCING SOURCES (USES)
Transfers in940,5841,522,583817,2813,280,448
Transfers out(1,021,794)-(1,071,336)(2,093,130)
Issuance of debt3,220,000-437,0003,657,000
Discount on debt issued(29,252)- -(29,252)
Capital leases152,694- -152,694
Sale of capital assets17,439- -17,439
Total other financing sources (uses)3,279,6711,522,583182,9454,985,199
et change in fund balances 3,786,1515,620(675,949)3,115,822
N
Fund balances - January 18,733,2021,502,2194,323,90114,559,322
Fund balances - December 31$12,519,353$1,507,839$3,647,952$17,675,144
59
NONMAJOR SPECIAL REVENUE FUNDS
Library Maintenance - 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
newly acquired nine-hole golf course which is funded by user fees.
Senior Citizen Special 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.
Landfill Construction Debris - This fund was established to account for the tax collected on construction
debris deposited in the landfill and is to be used for related environmental issues.
Revolving Loan - This fund was established to account for the City's portion of state economic
development 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.
Development Fund - This fund was established to attract businesses to develop within the City’s business
park.
Capital Outlay Reserve - This fund was established to help build reserves for the purchase of capital
equipment. The major source of revenue is from landfill host fees and defeased bond issues.
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.
Government Buildings Reserve - This fund was established to account for the revenues and expenditures of
preliminary studies of the construction of a new City Hall.
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.
Severance Pay Reserve - This fund was established to account for resources earmarked for severance pay
expenditures.
NSP/RDF Reserve - This fund was established to account for revenues received from the license
agreement between the City and Northern States Power.
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
SUBCOMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUND
S
DECEMBER 31, 2006
Senio
r
LibrarPinewooCitizen
yd
MaintenanceIce ArenGolf CoursAccoun
aet
ASSET
S
Cash and investments$3,307,717$-
$ 4,582$ 1 6,010
Receivables:
Interest
753 - - 83
Taxes
3,182 - - -
Account
s
5,149 118,198 - -
Notes
- - - -
Due from other government
s
- - - -
Due from other funds
- - - -
Prepaid items
- - - -
Total assets$3,316,801$118,198
$ 4,582$ 1 6,093
LIABILITIES AND FUND BALANCE
S
Liabilities:
Accounts payabl
e
$ 413,366$ 24,821$ 2,546$ 1,996
Salaries payable
120 5,638 1,278 -
Due to other governments
- - - -
Due to other funds
- 62,974 - -
Deferred revenue
1,666 5,966 758 -
Total liabilities
415,152 99,399 4,582 1,996
Fund balances:
Reserved for:
Capital projects
2,305,569 - - -
Landfill mitigation
- - - -
Notes
- - - -
Prepaid items
- - - -
Unreserved:
Designated for:
Working capital
- - - -
Future debt requirements
- - - -
Undesignated
596,080 18,799 - 14,097
Total fund balances
2,901,649 18,799 - 14,097
Total liabilities and fund balances$3,316,801$118,198
$ 4,582$ 1 6,093
êð
Continue
d
LandfillCapital
ConstructioRevolvinDTEDDevelopmenOutla
ngty
LandfillDebrisLoaGrant/LoaFunReserve
nnd
$ 1,544,097$ 604,102$ 891,198$131,335$59,748$ 2,594,280
8,061 3,1304,618680700 11,439
- ---219 -
884 - 50,000-183,756 12,873
- - 453,418-- -
- ---- 33,284
- ---242,513 97,974
- ---- -
$ 1,553,042$ 607,232$ 1,399,234$132,015$486,936$ 2,749,850
$ 6,414$ -$-$-$3,550$ 70,459
824 ---- -
- - 187,322-- -
- -2,5533,666- -
- - 266,096-147 -
7,238 - 455,9713,6663,697 70,459
- - 943,263128,349483,239 -
1,545,804 404,821--- -
- ---- -
- ---- -
- ---- 2,679,391
- ---- -
- 202,411--- -
1,545,804 607,232 943,263128,349483,239 2,679,391
$ 1,553,042$ 607,232$ 1,399,234$132,015$486,936$ 2,749,850
êï
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUND
S
DECEMBER 31, 2006
EmergencyGovernmenDruSeveranc
/tge
InsurancBuildingsForfeiturePa
ey
ReserveReserveReserveReserve
ASSET
S
Cash and investments
$ 524,766$ 1,115,218$ 14,137$ 1 25,720
Receivables:
Interest
2,719 5,733 90 651
Taxes
- - - -
Account
s
969 305,170 - -
Notes
- - - -
Due from other government
s
- - 294 -
Due from other funds
32,172 - - -
Prepaid items
57,199 - - -
Total assets
$ 617,825$ 1,426,121$ 14,521$ 1 26,371
LIABILITIES AND FUND BALANCE
S
Liabilities:
Accounts payabl$-
e
$ 11,769$ 3,500$ -
Salaries payable
- - - -
Due to other governments
- - - -
Due to other funds
- - - -
Deferred revenue
- - - -
Total liabilities
11,769 - 3,500 -
Fund balances:
Reserved for:
Capital projects
- 1,126,121 - -
Landfill mitigation
- - - -
Notes
- - - -
Prepaid items
57,199 - - -
Unreserved:
Designated for:
Working capital
- - 11,021 1 26,371
Future debt requirements
- 300,000 - -
Undesignated
548,857 - - -
Total fund balances
606,056 1,426,121 11,021 1 26,371
Total liabilities and fund balances
$ 617,825$ 1,426,121$ 14,521$ 1 26,371
êî
EconomiTotal Nonmajo
cr
NSP/RDFDevelopmenEDA DTESpecial Revenue
tD
ReserveAuthoritLoa
ynFunds
$ 304,138$ 515,290$ 102,140$11,854,478
1,576 --40,233
- 14,581-17,982
- --676,999
- - 105,872559,290
- --33,578
- 3,666 2,553378,878
- --57,199
$ 305,714$ 533,537$ 210,565$13,618,637
$ -$ 866$-$539,287
- 1,462-9,322
- --187,322
- 11,994-81,187
- 7,533-282,166
- 21,855-1,099,284
- 511,682 104,6935,602,916
- --1,950,625
- - 105,872105,872
- --57,199
- --2,816,783
- --300,000
305,714 --1,685,958
305,714 511,682 210,56512,519,353
$ 305,714$ 533,537$ 210,565$13,618,637
êí
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCE
S
NONMAJOR SPECIAL REVENUE FUND
S
YEAR ENDED DECEMBER 31, 200
6
Senio
r
LibrarPinewooCitizen
yd
MaintenanceIce ArenGolf CoursAccoun
aet
REVENUE
S
General property taxes$65,967
$ -$ - $ -
Intergovernmental revenu3,081
e
- - -
Charges for services3,150
696,951 157,520 947
Fines and forfeits-
- - -
Interest incom14,572
e
- - 608
Miscellaneous
Landfill host fee112,475
- - -
Refunds and reimbursements-
- - -
Other375
42,840 2,608 6,720
Total revenues 199,620
7 39,791 1 60,128 8,275
EXPENDITURE
S
Current:
General governmen-
t
- - -
Public safet-
y
- - -
Public works-
- - -
Culture and recreation51,736
584,549 245,889 5,030
Economic developmen-
t
- - -
Debt service:
Principal-
- 28,969 -
Bond issuance costs28,392
- - -
Capital outlay:
Public safet-
y
- - -
Public works-
- - -
Culture and recreation856,787
- 152,694 -
Total expenditures 936,915
5 84,549 4 27,552 5,030
Revenues over (under) expenditures (737,295)
155,242 (267,424) 3,245
OTHER FINANCING SOURCES (USES)
Transfers in-
57,514 114,730 -
Transfers out-
(201,820) - -
Issuance of debt 3,220,000
- - -
Discount on debt issued(29,252)
- - -
Capital leases-
- 152,694 -
Sale of capital assets-
- - -
Total other financing sources (uses) 3,190,748 (144,306)
2 67,424 -
Net change in fund balances 2,453,453
10,936 - 3,245
Fund balances - January 1448,196
7,863 - 10,852
Fund balances - December 31$2,901,649
$ 18,799$ -$ 1 4,097
êì
Continue
d
LandfillCapital
ConstructioRevolvinDTEDDevelopmenOutla
ngty
LandfillDebrisLoaGrant/LoaFunReserve
nnd
$ -$ -$-$-$332$ -
5,064 ---158 54,785
- - 500-10,000 -
- ---- -
72,555 26,435 39,1735,64718,109 85,284
- ---- 281,187
- ---- 31,997
- - 77,142-- 37,282
77,619 26,435 116,815 5,647 28,599 490,535
- ---- -
- ---- 28,517
138,935 83,000--- 46,837
- ---- 8,281
- - 150,574-16,892 -
- ---- -
- ---- -
- ---- 7,100
27,949 ---- -
- ---- 34,252
166,884 83,000 150,574 - 16,892 124,987
(89,265) (56,565) (33,759)5,64711,707 365,548
- ---- 764,674
(82,667) --(3,666)(75,435) (18,000)
- ---- -
- ---- -
- ---- -
- ---- 17,439
(82,667) - - (3,666) (75,435) 764,113
(171,932) (56,565) (33,759)1,981(63,728) 1,129,661
1,717,736 663,797 977,022126,368546,967 1,549,730
$ 1,545,804$ 607,232$ 943,263$128,349$483,239$ 2,679,391
êë
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCE
S
NONMAJOR SPECIAL REVENUE FUND
S
YEAR ENDED DECEMBER 31, 200
6
EmergencyGovernmenDruSeveranc
/tge
InsurancBuildingsForfeiturePa
ey
ReserveReserveReserveReserve
REVENUE
S
General property taxes$-
$ -$ -$ -
Intergovernmental revenu-
e
- - -
Charges for services-
- - -
Fines and forfeits-
- 24,754 -
Interest incom43,833
e
24,662 808 5,400
Miscellaneous
Landfill host fee562,374
- - -
Refunds and reimbursements534,126
20,705 - -
Other -
- - -
Total revenues 1,140,333
45,367 25,562 5,400
EXPENDITURE
S
Current:
General governmen14,931
t
62,566 - -
Public safet8,038
y
- 31,881 -
Public works10,995
- - -
Culture and recreation-
- - -
Economic developmen-
t
- - -
Debt service:
Principal-
- - -
Bond issuance costs-
- - -
Capital outlay:
Public safet335,679
y
- - -
Public works73,233
- - -
Culture and recreation-
- - -
Total expenditures 442,876
62,566 31,881 -
Revenues over (under) expenditures 697,457
(17,199) (6,319) 5,400
OTHER FINANCING SOURCES (USES)
Transfers in-
- - -
Transfers out(75,000)
- (3,186) -
Issuance of debt -
- - -
Discount on debt issued-
- - -
Capital leases-
- - -
Sale of capital assets-
- - -
Total other financing sources (uses) (75,000) (3,186)
- -
Net change in fund balances 622,457
(17,199) (9,505) 5,400
Fund balances - January 1803,664
623,255 20,526 1 20,971
Fund balances - December 31$1,426,121
$ 606,056$ 11,021$ 1 26,371
êê
EconomiTotal Nonmajo
cr
NSP/RDFDevelopmenEDA DTESpecial Revenue
tD
ReserveAuthoritLoa
ynFunds
$ -$ 308,126$-$374,425
- 14,494-77,582
- --869,068
- --24,754
22,119 12,242 2,424373,871
- --956,036
- --586,828
280,334 5,768-453,069
302,453 340,630 2,424 3,715,633
- --77,497
- --68,436
- --279,767
- --895,485
- 175,447-342,913
- --28,969
- --28,392
- --342,779
- --101,182
- --1,043,733
- 175,447 - 3,209,153
302,453 165,183 2,424506,480
- 3,666-940,584
(545,020) (17,000)-(1,021,794)
- --3,220,000
- --(29,252)
- --152,694
- --17,439
(545,020) (13,334) - 3,279,671
(242,567) 151,849 2,4243,786,151
548,281 359,833 208,1418,733,202
$ 305,714$ 511,682$ 210,565$12,519,353
êé
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 31, 2006
Budget
Variancewith
OriginalFinalActualFinal Budget
REVENUES
General property taxe$65,967$(3,033)
s
$ 69,000$ 69,000
Intergovernmental revenu3,0813,081
e
- -
Charges for service3,150(2,250)
s
5,400 5,400
Interest incom14,5729,572
e
5,000 5,000
Miscellaneous revenu
e
Landfill host fe112,47522,475
e
90,000 90,000
Othe375375
r
- -
Total revenues199,62030,220
169,400 169,400
EXPENDITURES
Culture and recreation:
51,73610,964
Current
62,700 62,700
856,787(796,787)
Capital outlay
60,000 60,000
Debt service:
28,392(28,392)
Bond issuance costs
- -
Total expenditures936,915(814,215)
122,700 122,700
Revenues over (under) expenditure(737,295)(783,995)
s
46,700 46,700
OTHER FINANCING SOURCES (USES)
Issuance of deb3,220,0003,220,000
t
- -
Discount on debt issue(29,252)(29,252)
d
- -
Total other financing sources (uses)3,190,7483,190,748
- -
Net increase in fund balanc2,453,453$2,406,753
e
$ 46,700$ 46,700
Fund balance - January 1448,196
Fund balance - December 31$2,901,649
êè
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND - ICE ARENA FUN
D
SCHEDULE OF REVENUES, EXPENDITURES AN
D
CHANGES IN FUND BALANCE - BUDGET AND ACTUA
L
YEAR ENDED DECEMBER 31, 2006
Budget
Variance with
OriginalFinalActualFinal Budget
REVENUE
S
Charges for services$ 696,951
$ 680,900$ 680,900$ 16,051
Miscellaneous revenu
e
Vending machines 25,408
35,000 35,000 (9,592)
Other 17,432
2,800 2,800 14,632
Total revenues 739,791
718,700 718,700 21,091
EXPENDITURE
S
Culture and recreation:
Current 584,549
599,200 599,200 14,651
Revenues over expenditures 155,242
119,500 119,500 35,742
OTHER FINANCING SOURCES (USES
)
Transfers in 57,514
79,150 79,150 (21,636)
Transfers out (201,820)
(198,650) (198,650) (3,170)
Total other financing sources (uses) (119,500) (119,500) (144,306) (24,806)
Net increase in fund balance 10,936
$ - $ - $ 10,936
Fund balance - January 1 7,863
Fund balance - December 31$ 18,799
êç
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, 2006
Budget
Variance with
OriginalFinalActualFinal Budget
REVENUES
Charges for service$157,520$(37,980)
s
$ 195,500$ 195,500
Miscellaneous revenu2,6082,608
e
- -
Total revenues160,128(35,372)
195,500 195,500
EXPENDITURES
Culture and recreation:
Curren245,889(40,539)
t
205,350 205,350
Capital outlay152,694(152,694)
- -
Debt service:
Principal28,969(28,969)
- -
Total expenditures427,552(222,202)
205,350 205,350
Revenues over (under) expenditures(9,850)(9,850)(267,424)(257,574)
OTHER FINANCING SOURCES
Transfers i114,730104,880
n
9,850 9,850
Capital leases152,694
- - 152,694
Total other financing sources267,424257,574
9,850 9,850
Net increase in fund balance-$-
$ - $ -
Fund balance - January 1-
Fund balance - December 31$-
éð
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND - LANDFILL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2006
Budget
Variance with
OriginalFinalActualFinal Budget
REVENUES
Intergovernmental revenu$-$-$5,064$5,064
e
Interest incom25,00025,00072,555
e
47,555
Total revenues25,00025,00077,619
52,619
EXPENDITURES
Public works:
Curren199,050199,050138,935
t
60,115
Capital outla--27,949(27,949)
y
Total expenditures199,050199,050166,884
32,166
Revenues over (under) expenditure(174,050)(174,050)(89,265)
s
84,785
OTHER FINANCING USES
Transfers ou(47,500)(47,500)(82,667)(35,167)
t
Net increase (decrease) in fund balance$(221,550)$(221,550)(171,932)$49,618
Fund balance - January 11,717,736
Fund balance - December 31$1,545,804
éï
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, 2006
Budget
Variance with
OriginalFinalActualFinal Budget
REVENUES
General property taxe$307,200$307,200$308,126$926
s
Intergovernmental revenu--14,49414,494
e
Interest incom3,0003,00012,2429,242
e
Miscellaneou15,00015,0005,768(9,232)
s
Total revenues325,200325,200340,63015,430
EXPENDITURES
Current:
Economic developmen280,850280,850175,447105,403
t
Revenues over expenditure44,35044,350165,183120,833
s
OTHER FINANCING SOURCES (USES)
Transfers i20,60020,6003,666(16,934)
n
Transfers ou(17,000)(17,000)(17,000)-
t
Total other financing sources (uses)3,6003,600(13,334)(16,934)
Net increase in fund balance$47,950$47,950151,849$103,899
Fund balance - January 1359,833
Fund balance - December 31$511,682
éî
NONMAJOR DEBT SERVICE FUNDS
Government Building Bonds - This fund is used to account for the accumulation of resources and payment of
principal and interest to finance the construction of a City Hall and Public Safety facility.
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 and street and other equipment as authorized by Minnesota
Statutes.
PIR Bonds - This fund is used to account for the accumulation of resources and payment of principal and interest to
finance public improvements.
Tax Increment Financing Bonds - This fund is used to account for the accumulation of resources and payment of
principal and interest to finance administrative and development costs within the various TIF districts.
Storm Sewer Revenue Bonds - This fund is used to account for the accumulation of resources and payment of
principal and interest to finance repair and construction of various storm drainage projects.
Ice Arena Bonds - This fund is used to account for the accumulation of resources and payment of principal and
interest to finance the construction of the ice arena.
73
74
NONMAJOR CAPITAL PROJECTS FUNDS
Street Improvement - This fund is funded by solid waste surcharge revenues which are set aside to repair road
damage caused by large garbage trucks.
Permanent Improvement Revolving - This fund was used to account for bond proceeds used to finance public
improvements and to account for special assessment collections levied for the improvements.
Equipment Certificates - This fund was established to account for equipment certificate proceeds used to fund
capital equipment purchases as authorized by Minnesota Statutes.
Improvement Projects - This fund is used to account for the construction of various street and utility improvements
within 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.
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUNDS
DECEMBER 31, 2006
PermanentTax IncrementTotal Nonmajo
r
StreetImprovemenEquipmentImprovemenFinancingCapital Projects
tt
ImprovemenRevolvinCertificatesProjectsDistricts
tgFunds
ASSETS
Cash and investments$ 2,269,234$834,936$-$ 1,109,732$4,225,416
$ 11,514
Receivables:
Interest 14,3134,326- 5,74724,386
-
Taxes 648-- 82730
-
Accounts 7,724-- -7,724
-
Special assessments -70,326- -70,326
-
Due from other funds 699,446-221,877 -921,323
-
$ 2,991,365$909,588$221,877$ 1,115,561$5,249,905
$ 11,514
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable$ 51,055$-$173,000$ 520$227,355
$ 2,780
Due to other funds --501,202 448,837950,039
-
Due to component unit --- 358,208358,208
-
Deferred revenue 45965,892- -66,351
-
Total liabilities 51,51465,892674,202 807,5651,601,953
2,780
Fund balances (deficit):
Unreserved -
Designated for capital projects 2,939,851843,696- 307,9964,100,277
8,734
Undesignated --(452,325) -(452,325)
-
Total fund balances (deficit) 2,939,851843,696(452,325) 307,9963,647,952
8,734
Total liabilities and fund balances$ 2,991,365$909,588$221,877$ 1,115,561$5,249,905
$ 11,514
75
CITY OF ELK RIVER, MINNESOTA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICIT)
NONMAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED DECEMBER 31, 2006
PermanentTax IncremenTotal Nonmajor
t
StreeImprovemenEquipmenImprovemenFinancinCapital Projects
ttttg
ImprovemenRevolvinCertificateProjectsDistricts
tgsFunds
REVENUES
General property taxe$ 2,438$-$-$ 737,571$740,009
s
$ -
Intergovernmental revenu --1,310,758 -1,310,758
e
-
Charges for services --250,000250,000
-
Special assessments -14,825150,020 -164,845
-
Interest incom 132,08749,683- 45,956231,168
e
3,442
Miscellaneous revenu
e
Landfill host fe 168,712-- -168,712
e
-
Refunds and reimbursements 32,703290,052 -322,755
- -
335,94064,5082,000,830 783,5273,188,247
3,442
EXPENDITURES
Current:
Public works 206,342-544,556 -753,678
2,780
Economic developmen --- 284,554284,554
t
-
Capital outlay:
Public works --- -346,578
346,578
Culture and recreation --- -82,350
82,350
Infrastructure/development project --2,579,981 -2,579,981
s
-
Total expenditures 206,342-3,124,537 284,5544,047,141
431,708
Revenues over (under) expenditure 129,59864,508(1,123,707) 498,973(858,894)
s
(428,266)
OTHER FINANCING SOURCES (USES)
Transfers i --817,281 -817,281
n
-
Transfers ou -(851,564)- (219,772)(1,071,336)
t
-
Issuance of deb --- -437,000
t
437,000
Total other financing sources (uses) -(851,564)817,281 (219,772)182,945
437,000
Net change in fund balances 129,598(787,056)(306,426) 279,201(675,949)
8,734
Fund balances (deficit) - January 1 2,810,2531,630,752(145,899) 28,7954,323,901
-
Fund balances (deficit) - December 31$ 2,939,851$843,696$(452,325)$ 307,996$3,647,952
$ 8,734
76
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.
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
DEVELOPER ESCROW AGENCY FUND
YEAR ENDED DECEMBER 31, 2006
BeginninEnding
g
BalanceAdditionsDeductionsBalance
ASSETS
Cas$587,361$ 685,081
h
$ 280,520$ 182,800
Accounts receivable399,607 454,285
93,859 39,181
Total assets$986,968$1,139,366
$ 374,379$ 221,981
LIABILITIES
Accounts payable$640,429$ 691,023
$ 68,870$ 18,276
Refundable deposits payable657,227 759,031
305,509 203,705
Total liabilities$1,297,656$1,450,054
$ 374,379$ 221,981
77
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.
ContentsPage
Financial Trends 78
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 85
These schedules contain information to help the reader assess the city’s most
significant local revenue source, the property tax.
Debt Capacity 90
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 98
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 100
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.
CITY OF ELK RIVER, MINNESOTA
NET ASSETS BY COMPONENT
LAST FOUR FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2003200420052006
Governmental activities
Invested in capital assets, net of related debt56,003,997$ 67,061,167$ 73,150,041$ 82,663,610$
Restricted8,383,884 10,963,518 12,410,832 4,802,808
Unrestricted22,441,594 19,452,247 21,267,772 27,998,543
Total governmental activities net assets86,829,475$ 97,476,932$ 106,828,645$ 115,464,961$
Business-type activities
Invested in capital assets, net of related debt46,341,983$ 52,377,687$ 54,577,074$ 59,410,729$
Restricted1,947,067 2,197,066 2,256,419 445,900
Unrestricted11,224,115 10,480,815 11,956,851 14,059,048
Total business-type activities net assets59,513,165$ 65,055,568$ 68,790,344$ 73,915,677$
Primary government
Invested in capital assets, net of related debt102,345,980$ 119,438,854$ 127,727,115$ 142,074,339$
Restricted10,330,951 13,160,584 14,667,251 5,248,708
Unrestricted33,665,709 29,933,062 33,224,623 42,057,591
Total primary government net assets146,342,640$ 162,532,500$ 175,618,989$ 189,380,638$
Note: Net assets are not available for years prior to 2003.
78
CITY OF ELK RIVER, MINNESOTA
CHANGES IN NET ASSETS
LAST FOUR FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2003200420052006
Expenses
Governmental activities:
General government3,290,711$ 2,440,200$ 2,503,826$ 2,560,213$
Public safety4,229,109 4,988,424 5,255,974 5,606,438
Public works3,737,678 4,277,071 4,281,725 6,169,030
Culture and recreation1,747,322 2,058,882 2,535,955 2,859,058
Economic development549,149 912,698 938,164 631,437
Interest on long-term debt1,050,823 936,515 881,001 764,725
Total governmental activities expenses14,604,792 15,613,790 16,396,645 18,590,901
Business-type activities:
Municipal Liquor3,621,087 3,760,156 4,344,915 5,202,500
Garbage884,532 953,432 1,047,479 1,094,788
Sewer1,406,713 1,464,409 1,629,353 1,724,147
Water1,713,217 1,809,128 2,099,428 2,112,477
Electric11,929,596 13,338,580 14,880,337 16,081,812
Total business-type activities expenses19,555,145 21,325,705 24,001,512 26,215,724
Total primary government expenses34,159,937$ 36,939,495$ 40,398,157$ 44,806,625$
Program Revenues
Governmental activities:
Charges for services:
General government194,246$ 308,781$ 288,032$ 246,541$
Public safety1,897,883 1,956,967 2,050,437 2,403,601
Public works148,904 226,907 280,583 617,099
Culture and recreation729,932 812,401 877,789 1,065,218
Economic development71,379 96,396 379,002 178,217
Operating grants and contributions487,560 427,513 480,649 387,584
Capital grants and contributions6,064,491 11,879,536 7,573,752 8,117,032
Total governmental activities program revenues9,594,395 15,708,501 11,930,244 13,015,292
Business-type activities:
Charges for services:
Municipal Liquor4,156,276 4,345,702 4,806,061 5,906,768
Garbage820,278 973,176 1,055,753 1,106,268
Sewer1,808,817 2,365,262 1,261,853 1,352,647
Water1,807,334 2,095,018 1,365,136 1,770,819
Electric13,774,777 14,765,479 15,955,440 17,143,485
Operating grants and contributions10,530 8,615 9,255 504,168
Capital grants and contributions1,053,994 3,028,454 3,654,383 4,297,666
Total business-type activities program revenues23,432,006 27,581,706 28,107,881 32,081,821
Total primary government program revenues33,026,401$ 43,290,207$ 40,038,125$ 45,097,113$
Net (expense)/revenue
Governmental activities(5,010,397)$ 94,711$ (4,466,401)$ (5,575,609)$
Business-type activities3,876,861 6,256,001 4,106,369 5,866,097
Total primary government net expense(1,133,536)$ 6,350,712$ (360,032)$ 290,488$
General Revenues and Other Changes in Net Assets
79
Fiscal Year
2003200420052006
Governmental activities:
Property taxes5,830,468$ 6,425,933$ 7,569,131$ 8,754,923$
Tax increment682,855 734,115 768,397 790,882
Unrestricted grants and contributions2,237,750 2,141,152 2,427,605 2,577,700
Investment earnings304,237 375,550 758,612 1,151,144
Miscellaneous- 9,180 326,853 28,450
Transfers639,924 866,816 677,516 908,826
Total governmental activities9,695,234 10,552,746 12,528,114 14,211,925
Business-type activities
Investment earnings155,802 153,218 305,923 589,210
Miscellaneous- - - 2,108
Transfers(639,924) (866,816) (677,516) (908,826)
Total business-type activities(484,122) (713,598) (371,593) (317,508)
Total primary government9,211,112$ 9,839,148$ 12,156,521$ 13,894,417$
Change in Net Assets
Governmental activities4,684,837$ 10,647,457$ 8,061,713$ 8,636,316$
Business-type activities3,392,739 5,542,403 3,734,776 5,548,589
Total primary government8,077,576$ 16,189,860$ 11,796,489$ 14,184,905$
Note: Changes in net assets are not available for years prior to 2003.
80
CITY OF ELK RIVER, MINNESOTA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Fiscal Year
1997199819992000
General fund
Reserved18,543$ -$ 51,000$ -$
Unreserved1,928,3961,973,2082,261,8802,695,612
Total general fund1,946,939$ 1,973,208$ 2,312,880$ 2,695,612$
All other governmental funds
Reserved5,129,541$ 6,346,623$ 7,594,575$ 8,527,474$
Unreserved, reported in:
Special revenue funds3,920,1184,555,9664,610,2136,439,607
Capital projects funds1,432,975579,088543,945480,466
Total all other governmental funds10,482,634$ 11,481,677$ 12,748,733$ 15,447,547$
81
Fiscal Year
200120022003200420052006
$ 1,2681,268$ 348,026$ 115,746$ 210,298$ -$
3,060,9073,189,3213,384,023 3,851,634 4,391,083 4,816,386
$ 3,190,5893,062,175$ 3,732,049$ 3,967,380$ 4,601,381$ 4,816,386$
$ 14,272,2667,046,474$ 12,598,358$ 11,570,003$ 11,475,837$ 9,979,026$
8,772,3462,219,1573,742,244 4,597,195 5,453,061 5,070,764
(29,358)8,133,8314,585,550 5,401,112 8,382,625 8,091,573
$ 24,625,25415,789,462$ 20,926,152$ 21,568,310$ 25,311,523$ 23,141,363$
82
CITY OF ELK RIVER, MINNESOTA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting)
Fiscal Year
1997199819992000
Revenues
General property taxes3,378,076$ 3,607,810$ 3,916,590$ 4,232,545$
Licenses and permits492,321540,826511,306749,888
Intergovernmental revenue2,415,6131,997,6192,360,1534,969,056
Charges for services877,078899,788953,4961,129,834
Fines and forfeits84,221115,753117,614119,421
Special assessments1,826,9051,825,3352,070,9612,395,473
Interest600,422577,934491,6081,007,444
Miscellaneous1,977,8221,916,3962,386,2983,657,258
Total revenues11,652,45811,481,46112,808,02618,260,919
Expenditures
General government1,091,6751,155,8091,185,9071,337,745
Public safety2,424,6122,796,5092,806,6273,129,669
Public works838,555982,102980,714935,650
Culture and recreation993,794859,515903,3641,102,577
Economic development327,158323,256264,484357,299
Capital outlay2,960,1164,103,7758,739,4158,152,240
Debt service
Principal1,891,3601,403,6191,611,5921,669,624
Interest and service charges983,485912,141930,6711,048,545
Total expenditures11,510,75512,536,72617,422,77417,733,349
Excess of revenues
over (under) expenditures141,703(1,055,265)(4,614,748)527,570
Other financing sources (uses)
Transfers in2,622,113 1,849,667 1,958,829 1,291,949
Transfers out(2,166,439) (1,397,565) (979,258) (830,378)
Proceeds of long-term debt3,744,168 1,477,424 6,395,045 3,647,233
Payment to refunded bond escrow agent(2,275,493) - (1,153,140) (1,554,828)
Discount on long-term debt issued- - - -
Capital leases- - - -
Sale of capital assets- - - -
Total other financing sources (uses)1,924,349 1,929,526 6,221,476 2,553,976
et change in fund balances2,066,052$ 874,261$ 1,606,728$ 3,081,546$
N
Debt service as a percentage of
1
noncapital expenditures
1
Debt service percentages are not available prior to 2003.
83
Fiscal Year
200120022003200420052006
$ 5,462,5855,067,317$ 6,507,578$ 7,118,568$ 8,283,983$ 9,529,773$
989,052715,8521,143,6121,249,844 1,240,336 1,207,368
1,687,4303,978,9992,141,2771,544,485 1,979,405 4,142,937
1,503,3501,743,9482,042,3912,381,670 2,571,767 2,485,464
89,221134,840190,911164,800 190,062 175,155
2,598,4842,049,5192,433,9392,375,902 3,414,090 1,566,880
766,599612,224304,237375,548 758,612 1,151,144
3,018,2072,409,4302,159,3731,799,736 2,004,286 2,555,842
15,719,66017,107,39716,923,31817,010,55320,442,54122,814,563
1,592,0272,200,4582,265,7792,161,356 2,204,626 2,251,111
3,389,3703,583,2324,145,9964,163,345 4,649,010 4,941,706
1,427,2741,429,0181,814,8181,850,281 2,192,336 2,538,658
1,133,0901,325,1181,635,8061,655,298 2,088,505 2,605,861
339,660312,387649,463703,591 785,584 627,467
3,103,3066,704,9488,389,7402,997,696 4,191,817 10,729,882
2,203,1121,948,2752,355,8002,494,483 2,174,266 7,051,836
949,235794,5111,102,548965,984 881,305 909,904
14,137,07418,297,94722,359,95016,992,03419,167,44931,656,425
1,582,586(1,190,550)(5,436,632)18,5191,275,092(8,841,862)
2,578,1312,250,518 4,654,396 4,666,581 2,888,975 5,923,474
(2,119,863)(1,556,626) (4,003,800) (3,799,765) (2,211,459) (5,014,648)
9,696,488202,000 1,612,100 331,000 1,715,000 3,657,000
-(1,770,000) - - - -
-- (5,566) - (8,560) (29,252)
-- - - - 2,332,694
-- 34,562 9,180 718,166 17,439
10,154,756(874,108) 2,291,692 1,206,996 3,102,122 6,886,707
$ 8,964,206708,478$ (3,144,940)$ 1,225,515$ 4,377,214$ (1,955,155)$
25.3%24.1%21.0%37.1%
84
CITY OF ELK RIVER, MINNESOTA
TAX CAPACITY, MARKET VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
1997199819992000
Tax capacity
Real property
Residential5,628,875$ 6,051,171$ 6,339,482$ 6,878,156$
Commercial6,303,180 6,298,739 5,996,754 6,210,730
Personal property319,854 294,552 269,243 261,248
Total tax capacity12,251,909 12,644,462 12,605,479 13,350,134
Tax increment(326,877) (261,339) (229,853) (141,898)
Taxable tax capacity11,925,032$ 12,383,123$ 12,375,626$ 13,208,236$
Total tax capacity rate24.683%26.255%29.324%30.248%
Taxable market value
Real property
Residential381,313,906$ 435,456,320$ 486,267,580$ 530,109,100$
Commercial177,082,907 202,911,850 218,125,510 239,438,499
Personal property7,130,200 7,548,300 7,878,100 7,870,100
Taxable market value565,527,013$ 645,916,470$ 712,271,190$ 777,417,699$
Estimated actual value
of taxable property631,169,657$ 732,331,599$ 804,826,203$ 883,478,872$
Taxable market value as a percentage
of estimated actual value89.60%88.20%88.50%88.00%
Source: Sherburne County Assessor
Note: Property in the county is reassessed annually. The county assesses property at approximately 87 percent
of actual value for all types of real and personal property.
85
200120022003200420052006
$ 7,339,7367,981,635$ 8,476,233$ 9,978,963$ 11,994,024$ 14,091,457$
4,622,2296,669,140 5,258,501 5,408,829 5,844,504 6,422,635
203,919255,557 258,501 215,581 237,262 246,741
12,165,88414,906,332 13,993,235 15,603,373 18,075,790 20,760,833
(426,854)(338,069) (588,732) (608,609) (654,325) (675,049)
$ 11,739,03014,568,263$ 13,404,503$ 14,994,764$ 17,421,465$ 20,085,784$
30.596%43.600%44.614%43.782%43.763%43.929%
$ 711,908,700602,632,678$ 832,141,600$ 981,551,900$ 1,182,648,740$ 1,398,616,327$
274,651,700256,929,400 309,775,400 318,140,038 345,605,410 375,301,273
10,347,4007,628,000 13,112,800 10,934,000 12,020,800 12,494,300
$ 996,907,800867,190,078$ 1,155,029,800$ 1,310,625,938$ 1,540,274,950$ 1,786,411,900$
$ 1,145,691,994985,576,523$ 1,382,785,926$ 1,567,581,017$ 1,805,774,228$ 2,109,366,764$
87.99%87.01%83.53%83.61%85.30%84.69%
86
87
CITY OF ELK RIVER, MINNESOTA
PRINCIPAL TAXPAYERS
DECEMBER 31, 2006
20061997
Percentage Percentage
Net Taxof Total NetNet Taxof Total Net
TaxpayerCapacityRankTax CapacityCapacityRankTax Capacity
United Power Association493,460$ 1 2.38%1,044,026$ 1 8.52%
NRG Energy282,818 21.36 559,060 24.56
Walmart Stores214,754 31.03
Bradley Operating L.P.173,027 40.83 -
Phoenix Enterprises135,322 50.65
Menards, Inc134,695 60.65 -
Home Depot131,716 70.63 -
CenterPoint Energy117,716 80.57
B & G Realty, Inc.112,498 90.54 142,722 51.16
Target Corp.111,788 100.54 207,378 41.69
Scherer LTD Partnership- -141,152 61.15
Kraus Anderson of Elk River- -370,981 33.03
Alltool Manufacturing- -135,402 81.11
Evans Meadows Apts.- -137,132 71.12
Tescom Corporation- -110,387 100.90
First National Bank- -123,095 91.00
TOTAL1,907,794$ 9.18%2,971,335$ 24.24%
Source: Sherburne County Assessor
88
CITY OF ELK RIVER, MINNESOTA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Collected within the
Collections inFiscal Year of the LevyTotal Collections to Date
FiscalTotalYear'sPercentageSubsequent Percentage
1
YearTax LevyAmountof LevyYearsAmountof Levy
19972,943,309$ 2,900,122$ 98.53%40,657$ 2,940,779$ 99.91%
19983,251,109 3,188,831 98.08 60,060 3,248,891 99.93
19993,629,214 3,577,934 98.59 32,230 3,610,164 99.48
20003,995,469 3,922,043 98.16 70,985 3,993,028 99.94
20014,457,247 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
20035,594,944 5,513,105 98.54 63,431 5,576,536 99.67
20046,160,102 6,051,358 98.23 94,425 6,145,783 99.77
20057,224,669 7,078,832 97.98 115,168 7,194,000 99.58
20068,429,836 8,249,039 97.86 - 8,249,039 97.86
1
Total tax levy for years 2002-2006 does not include Market Value Homestead Credit received from the State.
89
CITY OF ELK RIVER, MINNESOTA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Governmental Activities
General Permanent
FiscalGeneralObligationLeaseSpecialImprovementTax
YearObligationRevenueRevenueAssessmentRevolvingIncrement
1997-$ 3,005,000$ 2,615,000$ 7,395,000$ 1,100,000$ 1,160,000$
1998- 2,865,000 2,555,000 8,280,000 955,000 965,000
1999- 2,720,000 2,430,000 12,665,000 910,000 896,500
2000- 4,860,000 2,295,000 11,625,000 2,015,000 1,636,500
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
20063,220,000 1,430,000 8,265,000 2,130,000 - 827,500
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
1
See the Schedule of Demographic and Economic Statistics on page 98 for personal income and population data.
90
Governmental ActivitiesBusiness-Type Activities
Total
Certificates of RevenueCertificates ofNotesPrimaryPer
Capita
IndebtednessOtherBondsIndebtednessPayableGovernment 1
$ 527,622748,750$ 7,135,000$ -$ -$ 23,686,372$ 1,615$
315,628700,675 7,795,000 - - 24,431,303 1,555
502,336645,425 7,362,500 - - 28,131,761 1,701
376,478612,450 6,872,500 - - 30,292,928 1,842
242,935559,925 9,945,000 - - 29,337,860 1,688
148,808661,650 11,050,000 500,000 2,854,536 37,897,494 2,096
47,976612,950 12,430,000 500,000 2,775,424 38,353,850 2,045
-705,967 11,050,000 375,000 2,663,145 34,525,112 1,706
-1,035,201 12,885,000 250,000 2,538,226 35,650,927 1,654
1,908,7251,134,334 14,200,000 125,000 3,066,820 36,307,379 1,614
91
CITY OF ELK RIVER, MINNESOTA
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
Less
AmountPercentageNet
Generalin DebtNetof Net BondedBonded
FiscalBondedServiceBondedDebt to TaxDebt per
123
YearDebtFundsDebtCapacityCapita
1997748,750$ 189,274$ 559,476$ 4.6938.15$
1998700,675241,900458,7753.7029.20
1999645,425282,300363,1252.9321.95
2000612,450328,605283,8452.1517.26
2001559,925199,967359,9582.4720.71
20028,661,650584,8538,076,79766.39446.68
20038,612,950704,8857,908,06556.51421.58
20048,420,967791,3757,629,59248.90376.96
20058,455,201813,8327,641,36943.86354.62
200611,474,334853,55610,620,77852.88472.03
Note: Details regarding the city's outstanding debt can be found in the notes to the financial
statements.
1
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 85-86 for property value data.
3
Population data can be found in the Schedule of Demographic and Economic Statistics on page 98.
92
CITY OF ELK RIVER, MINNESOTA
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
DECEMBER 31, 2006
Percent
of DebtCity's
OutstandingApplicableShare
1
Debtto Cityof Debt
Direct Debt:
City of Elk River36,307,379$ 100.00%36,307,379$
Overlapping Debt:
Sherburne County24,950,000 25.69 6,408,807
School District #728212,169,171 36.92 78,331,797
Total overlapping debt237,119,171 84,740,604
Total direct and overlapping debt273,426,550$ 121,047,983$
Debt Ratios:
Ratio of debt per capita (22,500 population)$5,380
Ratios of debt to estimated taxable market value of $1,786,411,9006.78%
Source: Sherburne County and School District #728
Note: Overlapping governments are those that coincide, at least in part, with the geographic
boundaries of the city. This schedule estimates the portion of the outstanding debt of those
overlapping governments that is borne by the residents and business of the City of Elk River.
This process recognizes that, when considering the city's ability to issue and repay
long-term debt, the entire debt burden borne by the residents and businesses should be taken
into account. However, this does not imply that every taxpayer is a resident, and therefore
responsible for repaying the debt of each overlapping government.
1
The percentage of overlapping debt applicable is estimated using taxable market property values.
Applicable percentages were estimated by determining the portion of the county's and school
district's taxable market value that is within the city's boundaries and dividing it by the county's
and school district's total taxable market value.
93
CITY OF ELK RIVER, MINNESOTA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
1997199819992000
Debt limit11,311,798$ 12,918,329$ 14,245,424$ 15,548,354$
Bonds748,750 700,675 645,425 612,450
Reserves189,274 241,900 282,300 328,605
Total net debt applicable to limit559,476 458,775 363,125 283,845
Legal debt margin10,752,322$ 12,459,554$ 13,882,299$ 15,264,509$
Total net debt applicable to the
limit as a percentage of debt limit4.95%3.55%2.55%1.83%
Note: Under state law, the City of Elk River's outstanding general obligation debt should not exceed
2 percent of the market value of taxable property. By law, the general obligation debt subject to the
limitation may be offset by amounts set aside for the extinguishment of those obligations.
94
200120022003200420052006
$ 19,938,15617,343,802$ 23,100,596$ 26,212,519$ 30,805,499$ 37,025,396$
10,356,650559,925 10,307,950 10,060,967 10,040,201 13,124,334
717,180199,967 837,754 925,148 950,793 1,003,315
9,639,470359,958 9,470,196 9,135,819 9,089,408 12,121,019
$ 10,298,68616,983,844$ 13,630,400$ 17,076,700$ 21,716,091$ 24,904,377$
2.08%48.35%41.00%34.85%29.51%32.74%
Legal Debt Margin Calculation for Fiscal Year 2006
Estimated taxable market value1,786,411,900$
Debt limit (2% of market value)35,728,238$
Debt applicable to limit:
G.O. equipment certificates1,259,334
2002 lease revenue bonds8,645,000
G.O. capital improvement bonds3,220,000
Less: Cash and investments in related
debt service funds(1,003,315)
Total net debt applicable to limit12,121,019
Legal debt margin23,607,219$
95
CITY OF ELK RIVER, MINNESOTA
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
1
Revenue Bonds
Net
FiscalGrossOperatingRevenueDebt Service
23
YearRevenue ExpensesAvailablePrincipalInterestCoverage
19979,627,607$ 6,232,066$ 3,395,541$ 380,000$ 324,942$ 4.82
199811,185,4657,255,5943,929,871385,000408,1684.95
199912,272,8617,798,1084,474,753432,500411,9695.30
200013,579,2188,699,8974,879,321490,000395,2995.51
200114,455,7819,562,2954,893,486517,500368,8195.52
200215,434,08310,904,4324,529,651590,000463,7264.30
200316,432,76412,708,0223,724,742615,000486,2963.38
200417,656,78413,760,0513,896,7332,445,000513,8781.32
200519,791,62615,615,4534,176,1731,150,000485,7772.55
200621,940,29916,970,6254,969,6742,405,000573,3451.67
Note: Details regarding the government's outstanding debt can be found in the notes to the financial statements.
1
Includes Liquor, Sewer, Water and Electric revenue bonds
2
Gross revenue excludes interest income, connection fees and miscellaneous revenues
3
Expenses exclude depreciation, interest on bonds and miscellaneous expenses
96
Special Assessment Bonds
Special
AssessmentDebt Service
CollectionsPrincipalInterestCoverage
$ 700,0001,221,622$ 375,325$ 1.14
1,511,651490,000392,3701.71
1,695,197785,000441,8521.38
1,803,081865,000607,3611.22
1,757,0481,320,000488,5920.97
1,607,7671,085,000370,7701.10
1,705,4631,185,000321,9111.13
1,901,4271,060,000297,8401.40
1,123,407925,000264,9990.94
999,2324,475,000198,6500.21
97
CITY OF ELK RIVER, MINNESOTA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
FiscalPer CapitaMedianSchoolUnemployment
12345
PopulationIncomeAgeEnrollmentRate
Year
199714,66722,306$ 299,1153.3%
199815,71424,286 299,3772.5%
199916,54224,507 299,6872.7%
200016,44725,597 3210,0023.2%
200117,38026,276 3210,5873.9%
200218,08225,998 3211,1005.1%
200318,75826,084 3211,2575.8%
200420,24027,337 3211,7495.0%
200521,548na 3212,2594.7%
200622,500*na 3212,7355.1%
Data Sources:
1
State Demographer, * - City of Elk River estimate
2
Bureau of Economic Analysis
3
US Census Bureau
4
School District
5
MN Dept. of Employment and Economic Development
na - not available
98
CITY OF ELK RIVER, MINNESOTA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
20061997
Employe
rEmployeesRankEmployeesRank
Independent School District 728 1,50017181
Sherburne County57223024
Great River Energy44944252
Walmart4003- -
Guardian Angels of Elk River31652365
City of Elk River2246- -
Tescom Corporation19573313
Menards1908150 9
Cretex Companies, Inc1859- -
Cub Foods17410200 7
Target- -202 6
Alltool Manufacturing- -1808
Sax Food & Drug- -15010
Source: Minnesota Department of Employment and Economic Development
99
100
101
102