5.5. SR 06-02-2008REQUEST FOR ACTION
__
To __
Item Number
Cit<r Council ~.5.
Agenda Section Meeting Date Prepared by
Administration Tune ~, 2008 Tim Snnon, Fnzance Director
Item Description Reviewed by
Presentation of Comprehensive Annual Financial Report far the Lori Johnson, CitT Admitustrator
Year Ended December 31, 2007 Reviewed by
Action Requested
City Council is asked to review and accept the Comprehensive Annual [~inancial Report for die City of
Elh 12irer for year ended December 31, 2007.
Background/Discussion
Andrew Berg of Abdo, hack, & Meyers will present a powerpoint presentation of the City's 2007
Comprehensive 1\nnual Financial Report (CAFR) along with staff. "1'he presentation on the CAFR will
review the general fund activity, some of the special revenue funds, az2d all of the en[erprise funds. I\-Iuch
of this infotmstion is summarized in the City of hall; River 1blanagement Lcttcr. The Fire Relief report
will be briefly- discussed as a formal presentation was made at die quartcily board meeting earlier today
(tune 2}. The CAFR will be available on the City's website shortly after this Council meeting.
"1'hc fr~llowing are Borne highlighted areas of rbc CAFR and corresponding page numbers.
Transtnitral letter -page 1
Independent Auditor's report -page 8
flanagement's Discussion and iynalvsis -page 10
Budget and Act~ral (General Fund) -page 28
E.ntnrprisc Ftmds -page 30
SL<~usdcal Section -page '8
Financial Impact
None
Attachments
The following items have been dlsttibuted to the Vlayor and Co~mcil
• 2007 Audit Powerpoint Presentation
• Comprehensive Amiual Financial Report for the year ended December 31, 2007
• Report On_Vlinnesota Legal Compliance
• City of Elk River l~lanagcment Letter
• N~lk River Fire Department Relief Association Financial Statements and Supplementary
Information
• Rlk 12iver Fire Relief Dlanagcmcnt Letter
Actiion \iofioa by Second by Vote _
Follow Up _
~ City of Elk River
2007 Audit
Abdo, Eick & Meyers, LLP
Presented by Andrew Berg
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2007 Audit Results
• Our Responsibility and Audit Opinion
• Audit Findings
- Vo audit findings to be reported
- M1~ legal compliance - no findings
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1 CITY OF ELK RIVER, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
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For the Year Ended December 31, 2007
' PREPARED BY THE FINANCE DEPARTMENT
' Member of Government Finance Officers Association
t of the United States and Canada
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CITY OF ELK RIVER, MINNESO"I'A
TABLE OF CONTENTS
DECEMBER 31, 2007
' L INTRODUCTORY SECTION
Letter of Transmittal
Certificate of Achievement
' Organizational Chart
Elected and Appointed Officials
Paee No.
' II. FINANCIAL SECTION
Independent Auditor's Report 8
Management's Discussion and Analysis 10
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 19
Statement of Activities 20
Fund Financial Statements:
Balance Sheet -Governmental Funds 22
Reconciliation of the Govemmental Funds Balance Sheet to
the Statement of Net Assets
24
Statement of Revenues, Expenditures, and Changes in
Fund Balances -Governmental Funds 25
Reconciliation ofthe Statement of Revenues, Expenditures, and
' Changes in Fund Balances of Govemmental Funds to the
Statement of Activities 27
Statement of Revenues, Expenditures, and Changes in
t Pund Balance -Budget and Actual -General Fund 28
Statement of Revenues, Expenditures, and Changes in
Fund Balance -Budget and Actual -Library Fund 29
Statement of Net Assets -Proprietary Funds 30
Statement of Revenues, Expenses, and Changes in
Fund Net Assets -Proprietary Funds 32
Statement of Cash Flows -Proprietary Funds 34
' Statement of Fiduciary Net Assets -Developer
Escrow Agency Fund 38
' Notes to Financial Statements 39
Combining and Individual Fund Statements and Schedules:
Nonmajor Governmental Funds:
' Combining Balance Sheet -Nonmajor Governmental Funds 63
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances -Nonmajor Govemmental Funds 64
'
Nomnajor Special Revenue Funds:
Subcombining Balance Sheet -Nonmajor Special Revenue Funds 65
Schedule of Revenues, Expenditures, and Changes in
Fand Balances -Nonmajor Special Revenue Funds 68
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CITY OF ELK RIVER, MINNESOTA
TABLE OF CONTENTS
DECEMBER 31, 2007
Paee No.
Special Revenue Funds: '
Schedules of Revenues, Expenditures, and Changes in
Fund Balance -Budget and Actual:
Ice Arena 71
Pinewood Golf Course
72 '
Landfill 73
Economic Development Authority 74 '
Nonmajor Debt Service Funds:
Subcombining Balance Sheet - Nonmajor Debt Service Funds 75
Schedule of Revenues, Expenditures, and Changes in ,
Fund Balances - Nonntajor Debt Service Funds 76
Statement of Changes in Assets and Liabilities -
Developer Escrow Agency Fund
77 ,
III. STATISTICAL SECTION (UNAUDITED)
Net Assets by Component 78
Changes in Net Assets 79
Fund Balances of Governmental Funds
81 '
Changes is Fund Balances of Governmental Funds 83
Electric Sales gg
Principal Electric Customers g6 '
Tax Capacity, Market Value and Estimated Actual Value of Taxable Property 87
Property Tax Rates g9
Principal Taxpayers 90
Property Tax Levies and Collections
91 '
Ratios of Outstanding Debt by Type 92
Ratios of General Bonded Debt Outstanding 94 -
Computation of Dtrect and Overlapping Debt 95
Legal Debt Margin Information 96
Pledged-Revenue Coverage 98
Demographic and Economic Statistics 100
Principal Employers
101 '
Full-Time Equivalent Employees by Function 102
Operating Indicators by Function
Capital Asset Statistics by Function 103
104 '
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' INTRODUCTORY SECTION
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t June 2, 2008
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 3l, 2007, is hereby submitted. Minnesota Statc 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 auditors report is included in the
financial section of this report.
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This report was prepared by the City's Finance Department and responsibility for both the completeness
and accuracy of this data, as well as the fairness of this presentation including all enclosures, rests with
the City. To the best of my knowledge and belief, the enclosed data are accurate in all material respects
and are recorded in a manner designed to present fairly the financial position and the results of operations
of the various funds of the City. To provide a reasonable basis for making these representations,
management of the City has established a comprehensive internal control framework that is designed to
both protect the City's assets from loss, theft, or misuse, and to compile sufficient reliable information
for the preparation of these financial statements in accordance with generally accepted accounting
principles (GAAP). Internal accounting controls are designed to provide reasonable but not absolute
assurance regarding the safeguarding of the City's assets against loss, theft, or misuse, and ensuring that
adequate financial records are maintained for preparing financial statements, and maintaining
accountability for assets. The development of an appropriate internal control system requires estimates
and judgments by management to ensure that the costs do not exceed the benefits of the system. The
City of Elk River's internal control structure is designed so that the estimated costs of control do not
exceed the benefits.
Generally accepted accounting principles require that management provide a narrative introduction
overview and analysis to accompany the basic financial statements in the form of MD&A. This letter of
transmittal is designed to compliment the MD&A and should be read in conjunction with it. The City of
Elk River's MD&A can be found immediately following the report of the independent auditors.
Profile of the Government
The City of Elk River was originally incorporated in 1880 and consolidated with Elk River Township in
] 978 to form a city of 44 square miles. The City of F.lk 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 approximately
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22,750. 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.
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 28 as part of the basic financial statements for the governmental funds. For other governmental
funds with appropriated annual budgets this comparison is presented in the governmental fund subsection
of this report.
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 a decrease in building permits with a
construction value of $67,308,652 being issued in 2007. Phis is a 30 percent decrease from 2006. New
commercial, industrial, and institutional building accounted for $41,513,858 of new value, and. an
additional $4,781,156 in additions and remodeling and $21,013,638 in residential construction make up
the balance. The number of housing units added declined from 250 in 2006 to 113 in 2007. The average
value of new homes decreased to $176,316. Single family homes accounted for 101 of the new housing
units compared to 150 built in 2006.
In 2007, the City approved a tax abatement agreement for a major expansion of Metal Craft Machine &
Engineering, Inc. adding 20 new jobs and estimated market value totaling $4,871,500. Target completed
and United Healthcare Services, Inc. started new industrial business with a market value totaling $35
million. During 2005, the City opened a 35 acre business park known as Northstar Business Park and all
lots sold except three lots that are still available with an anticipated closing on one of the three remaining
lots early in 2008. The City and Economic Development Authority completed a market study and
established a vision for a new business park on the City owned property in the southeastern part of town
by the Northstar Commuter depot. Marketing has started for an anchor tenant for the business park. The
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' business park will be complemented by the Northstar Commuter rail line that will run from Minneapolis
to Big Lake with a stop in the City of Elk River. Funding for the Northstar Commuter rail line has been
secured and construction is anticipated to be completed in 2009.
' The downtown revitalization project that the Elk River Housing and Redevelopment Authority (I-IRA)
has been leading is now completed. Two new buildings consisting of both for sale and rental housing and
' commercial units, with some housing overlooking the Mississippi River, have been completed. In
addition, The Bank of Elk River completed a major expansion to its main office that is located adjacent
to the two new buildings and a City park has been constructed downtown to complement the new
development that has occurred. These projects added nearly X21 million of new market value.
The City completed construction on a new 16,000 square foot library, which the City is applying for
Gold LEED certification. LEED certified buildings are built to the highest standards of energy efficiency
' and environmental sustainability. The Elk River Library incorporated energy saving systems such as
geothermal heating and cooling, natural lighting and photovoltaic dimmer switches. In addition, the
citizens of the City approved the construction of a 55,488 square foot recreation facility which will be
' leased by the YMCA through a lease agreement with the Economic Development Authority.
Construction is expected to be completed in the fall of 2008. Also in 2007, the City awarded a contract to
begin 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 stable and is expected to remain stable; however,
1 residential development has slowed considerably. There are approximately 700 residential lots available
in the City of Elk River with potential for more lots becoming available in 2008.
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Long-term financial planning. In 2007, City Council reviewed the completed 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 focused 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 provides the information needed to develop in a manner that will
sustain or expand City services while keeping the tax rate stable. Department heads estimated staff
additions, service levels, and capital needs for the next ten years as part of this process. This Land Use
Financial Management Plan will provide the community development department vital information to
assist in properly zoning undeveloped areas of the City to maximize the tax base.
Unreserved, designated fund balance in the general fund (42.8 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 fiscal year 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. 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 constantly reviews the anticipated cash flow
needs and continually revises the five year estimates.
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 invests 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.
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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 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
azeas 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 anemergency/insurance reserve fund for the
purpose of funding insurance deductibles, promoting safety programs through our Safety Committee, and
providing safety training to al] 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.
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, 20D6. This was the eighteenth 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
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~ Certificate of
~ Achievement
for Excellence
in Financial
Reporting
' Presented to
~ City of Elk River
' Minnesota
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2006
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Associarion of the United States and Canada to
government uniu and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and fmancial reporting.
P o~rx Fay,
~ umnasr~rrts
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`°""°" President
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fy~f~i~
' Executive Dtrector
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CITY OF ELK RIVER
ORGANIZATIONAL CHART
City Clerk • Planning • Police Admin • Fire Admin • Recreation • Building Maint. • Water
Admin Services • Econ. Develop. • Patrol • Fire Inspections • Park Maint. • Engineering • Electric
Cable TV • Building Safety • Investigations • Fire Prevention • Sr. Center • Streets
HR/Payroll • Environmental • Support Svcs. • Emerg. Mgmt. • Ice Arena • Equip. Services
Finance • Reserves • Golf Course • Sewer
Info. Tech. • Library
Liquor
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CITY OF ELK RIVER, \1INNESOTA
ELECTED AND APPOINTED OFFICIALS
YEAR ENDED DECEMBER 31, 2007
CITY COUNCIL
Stephanie Klinzing
Nicholas Zerwas
Larry Farber
Jerry Gumphrey
Pau] Motin
Mayor
Council member
Council member
Council member
Council member
APPOINTED PERSONNEL
Lori Johnson
Timothy Simon
Vacant
Jeff Beahen
Bruce West
William Maertz
Terry Maurer
Term Expires
December 31,
2010
2010
2008
2008
2010
CiTy Administrator
Finance Director
Community Development Director
Police Chief
Pire Chief
Parks & Recreation Director
Public Works Director
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FINANCIAL SECTION
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ABDO
EICK &
r • y~~L~
Cert~d Rtbdic AccoantanGS & ConsulGtN.s
Grandview Square
5201 Eden Avenue
Suite 370
Edina, MN 55436
INDEPENDENT .AUDITOR' S REPORT
Honorable Mayor and Council
City of Elk River, Minnesota
W e have audited the accompanying financial statements of the govemmental activities, the business-type activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Elk River,
Minnesota (the City), as of and for the year ended December 31, 2007, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our
responsibility is to express opinions on these financial statcments based on our audit.
' We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require [hat we plan and perform the audit to obtain rcasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
' the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe [hat our audit provides a reasonable
basis for our opinions.
' In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of
the govemmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and
the aggregate remaining fund information of the City as of December 31, 2007, and the respective changesrn financial position
' and cash flows, where applicable, thereof and the budgetary comparison for the Genera] and Library Funds for the year then ended
in conformity with accounting principles generally accepted in the United States of America.
The Management's Discussion and Analysis is not a required part of the basic financial statements but is supplementary
information required by accounting principles generally accepted in the tinned States of America. We have applied certain
limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the supplementary information. However, we did not audit the information and express no opinion on it.
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952.83.1.9090 Fos 952,835.3261
www.aemepas.com
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Page Two
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's
basic financial statements. The introductory section, combining and individual fund financial statements, and statistical section
are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and
individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairty stated in al] material respects in relation to the financial statements taken as a
whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the
basic financial statements and, accordingly, we express no opinion on them.
March 13, 2008
Minneapolis, Minnesota
952.835.9090 Fax 952.835.32(1
www.aemcpas.com
9
~G'uJr. ~r ZCi°
ABDO, EICK & MEYERS, LLP
CertiJled Pa~blic Accountants
!~
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, 2007. We encourage readers to
consider the information presented here in conjunction with the additional information that we have furnished in our letter
of transmittal, which can be found on pages 1 - 4 of this report.
Financial Highlights
The assets of the City of Elk River exceeded its liabilities at the close of the most recent fiscal year by $195,072,365 (net
assets). Of this amount, S43,158,011 (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 55,691,727.
As ofthe close of the currenEfisca] year, the City of Elk River's governmental funds reported combined ending fund
balances of $32,834,718.
Special Debt Capital
General Revenue Service Projects Total
' Reserved $ 5,938
Designated 5,346,066 $ 6,357,793
3,062,889 $ 2,212;639 $ 5,883,231
9,179,236 $ 14,459,601
17,588,191
Undesignated - 786,926 - - 786,92b
$ 5,352,004 $ 10,207,608 $ 2,212,639 $ 15,062,467 $ 32,834,7]8
' The City of Elk River's total long-term liabil ities increased $13,6 73,201 during the current fiscal year, from $37,125,537 Co
$50,798,738.
Beginning Ending
Balance Additions Reductions Balance
Governmental activities:
Bonds payable $ 17,006,834 $ 13,390,500 $ (1,656,934) $ 28,740,350
Capital leases 1,908,725 325,000 (110,633) 2,123,092
Compensated absences 503,194 372,246 (322,062) 553,378
Total govemmental activities 19 418,753 74,087.746 f2,D89,679) 31,416,820
Business-type activities:
Bonds payable
Notes payable 74,325,000
3,066,820 2,875,OOD (1,045,000)
(187,766) ]6,155,000
2;879,054
Compensated absences 314,964 249,498 (216,598) 347,864
Totalbusiness-typeactivities 17,706,784 3,]24,498 (1,449,364) 19,381,918
Total City long-term (iabilities $ 37,125,537 $ 17,212,244 $ (3,539.043) $ 50,798,738
'
Overview of the Financial Statements
' This discussion and analysis are intended to serve as an introducti on to the City o f Elk River's basic financial statements.
The City's basic financial statemenCS comprise three components: 1) government -wide financial statements, 2) fund
financial statements, and 3) notes to the finan cial statements. Thi s report also co ntains other supplem ental information in
addition to the basic financial statemenCS Che mselves.
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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 aprivate-sector business. '
The statement of net assets presents information on afl 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 (govemmenta] activities) from other functions that are intended to
recover all or a significant portion of their costs through user tees 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 fnancial statements include not only the Ciry 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 - 21 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 govemment, ,
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: govetmental 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 govemment-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 govemmenta] fund
statement of revenues, expenditures, and changes in fund balances provide a reconciliation Yo facilitate this comparison ,
between governmental funds and governmental activities.
The City of Elk River maintains six individual major governmental funds, Infonrtation is presented separately in the '
govemmenta] fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund
balances for the General fund, Library, Improvement Bonds, Street Improvement, Improvement Projects and YMCA.
Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data For each
of these nonmajor govemmenta] 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 22 - 29 of this report.
11
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 30 - 37 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefrt of parties outside the government
' Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not
available to support the City of Elk River's own program. The accounting used for fiduciary funds is much like that used
for proprietary funds.
' The basic fiduciary fund fmancial statements can be found on page 38 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 39 - 62 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 63 - 77 of this report.
' Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. [n the case of
the City of Elk River, assets exceeded liabilities by $195,072,365 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 Ciry 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 Crom other sources, since the capita( assets
themselves cannot be used to liquidate these liabilities.
' City of Elk River Net Assets -
' Governmental Business-type
Activities Activities Total
2007 2006 2007 2006 2007 2006
Current and other assets $44,306,116 $36,041,853 $20,956,777 $16,779,125 $65,262,893 $52,820,978
' Capital assets 109,598,670 101,371,669 78,732,486 76,302,549 188,331,156 178,174,218
Total assets 153,904,786 137,413,52? 99,689,263 93,581,674 253,594,049 230,995,196
Long-term liabilities
outstanding 31,416,820 19,4]8,753 19,38!,918 17,706,784 5Q798,738 37,125,537
Other liabilities 5,363,608 2,529,808 2,359,338 1,959,213 7,722,946 4,489,02]
' Totai liabilities 36,78Q,428 21,948,561 21,74 1,256 19,665,997 58,521,684 41,614,558
Invested in capital assets
net of related debt 85,293,459 82,663,610 59,698,432 59,41Q729 144,99],891 142,074,339
Restricted 6,189,063 4,793,037 733,400 445,900 6,922,463 5,238,937
Unrestricted 25,641,836 28,008,314 17,516,175 14,059,048 43,]58,011 42,067,362
Total net assets $117,124,358 $115,46496L $77,948,007 $73,915,677 $195,072,365 $189,38Q638
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An additional portion of the City of Elk River's net assets (4 percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets ($4
3,158,011) maybe
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 balance s in all three catego ries of net
assets, both for the City as a whole, as well as For its separate governmental and business-type activities. ,
Governmental activities. Governmental activities account for 60°/o of the City of Elk River's net assets. Th e total
increase in net asset for governmental activities is $1,659,397 accounting for 29% of the total growth in ^eC assets for the '
City. Key elements of this increase are as follows:
City ar Elk River Changes in Net Assets '
Governmental -usiness-type
Activities Aotivities Total
2007 2006 2007 2006
2007
2006 '
Revenues:
Program revenues:
Charges Cor services $ 3,068,386 $ 4,510,676 $ 30,677,015 $ 27,279,987 $ 33,745 401 $ 31,790,663
Operating grants and contributions 362,313 387,584 295,081 504,168
657,394
891,752 '
Capital grants and contributions 4,174,427 8,117,D32 1,99fi,fi36 4,297,666 6,171,063 12,414,698
General revenues:
Property taxes 10,639,525 9,545,805 - - 10,639,525 9,545,805 '
Grants and contributions not
reshic[ed to specific programs 2,395,665 2,577,700 - - 2,395,665 2,577,700
Unrestricted investment earnings (,465,401 1,151,144 64D,876 589,210 2,106,277 1,740,354
Gain on disposal orcapital assets 23,213 28 450 - 2,108
23,213
3QSSR '
Total revenues 22,128.930 26,318,391 33,609,60R 32,673,139 55,73R,538 58,991,530
Expenses:
General government 2,732,697 2,560,2 L3 - -
2,732,697
2,560213 '
Public safety 5,924,093 5,606,438 - - 5;924,093 5,606,438
Public works 6,527,565 6,169,030 - - 6,527,565 6,169,030
Culture and recreation 3,598,695 2,859,058 - - 3,598,695 2,859,058
Economic development 1,001,829 631,437 - - 1,001,829 631,437
]merest on long-term debt 952,082 764,725 - - 952,082 764,725
Municipal liquor - - 5,302,012 5,202,500 5,302,012 5,202,500
Garbage - - 1,114,137 1,094,788
1,114,133
1,094,788 '
Sewer - - 1,788,890 1,724,147 1,788,890 1,724,147
Water - - 2,344,158 2,1!2,477 2,344,158 2,t12,477-
Eleciric - - 18,574,266 16,081,812 18,574,266 16,D81,812
Total expenses 20,736,961 18,59Q901 29,123,459 26,215,724 49,860,420 44.806,625
Increase in net assets
before transfers 1391,969 7,727,490 4,486,149 6,457,415 5,878,1 IR 14,184,905
Transfer of capital assets (511,412) - 511,412 - -
Transfers 778,840 908,826 (778,840) (908,826) - -
Change in net assets 1,659,397 8,636,316 4,218,721 5,548,589 5,878,118 14,]&4,905
Ne[assets-beginning ]15,464,961 106,828,645 73,915,677 68.790,344 189,3&0,638 175,618,989
Prior period adjus[meut - - (186,391) (423,256)
(18fi,391)
(423,256) '
Net assets -beginning, as restated 115,464,961 106,828,645 73.729,286 68,367,088 189,194,247 175.195,733
Net assets-ending $ 117,124,758 $ ]]5,464,961 $ 77,948.007 $ 73,915,677 $ 195,072,365 $ L89,380,638
• A substantial decrease in building and development related revenues due [o the downtown in the housing
market accounts primarily for the decrease in charges for services and developer contributions to '
infrastructure reported in capital grants and contributions.
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• The City adopted a $933,000 increase in the property tax levy For 2007.
• Investment income increased $314,257 due to market rate conditions.
• For the most par[, increases in expenses were due to normal inflationary increases and growth in the demand
for services.
Below are specific graphs which provide comparisons of the governmental activities revenues and expenditures.
Expenses and Program Revenues -Governmental Activities
$7,000,000
$6,000,000
$5,000,000
$4,UDO,D00
$3,000.000
$?,DOg000
$1,000,000
$-
Genaal eavernmcn[ ['~blic safety PuAlic works QiLRae and );conamic Lrterest on longterm
recrcatfon developmrnt debt
^Revenue ^ Expense
Revenues by Source -Governmental Activities
Gain on disposal of
capital assets
0.1U% 'transfers
'Cax increment 1.19
a,___
^'~°-°es far servires
13.7U
)pcrating grants and
contributions
1.62
Capital grants' and
co ntrihntions
Property taxes
4351 % 18.64
nts and contribntions
__ restricted m specific
programs
10.70 %
14
Onrestric~d investment
earning
6.54
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Business-type activities. Business-type activities increased the City of Elk River's net assets by $4,032,330, which
accounts for 71 percent of the total growth in the net assets of the City. Key elements of this increase are as follows:
• Charges for services for business-type activities totaled $30,677,D 15. The electric utility accounts for 65% of the
total. Overall charges for services increased $3,397,028 or 12% when compared to 2006. This increase was due
mainly to customer growth and rate increases.
• As a result of the decrease in construction this year, connection fees were down $338,884 and contributed
infrastructure was down $1,450,734.
• Investment income increased by $51,666 due to market rate conditions.
• The increase in operating expenses resulted primarily from the increase in purchased power for the electric utility
of $1,917,6 19 or 19 percent and the remaining increase was due to normal intlationazy increases.
Below are graphs showing the business-type activities revenue and expense comparisons.
Expenses and Program Revenues -Business-type Activities
$20,000,000
$15,OOQ000
$10,D00,000
$s,DOa,DDD
$-
Municipalliquor Gazbage Sewzr Water );lectrie
^ Revenue ^ Expense
Revenues by Source -Business-type Activities
Unrestricted
investment earni
1.91 %
Capital grants and
contributions
5.94%
Operating grants and
contributions
0.88
Charges for services
91.27°/n
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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
$32;834,7] 8. Approximately 56% of this total amount ($18,375,117) constitutes unreserved fund balance, which is
available for spending at the City's discretion. The remainder of fund balance ($14,459,601) is reserved to indicate that it is
not available for new spending because it has already been committed to provide for 1) debt service ($2,212,639), 2) capita]
equipmenUprojects ($9,709,191), 3) landfill mitigation ($1,93>,921), or 4) a variety of other restricted purposes {$601,850).
The General fund is the chief operating fund of the City of Elk River. The total fund balance of the Genera] fund increased
by $535,6]8 during the current year, Key factors are as follows:
• Licenses and permitfees exceeded budget by $117,000 resulting from a large industrial building project started in
2007.
• Intergovernmental revenues are over budget due to higher than anticipated police aid received from the state.
• An increase in refunds and reimbursements for aiding the DNR in the northern Minnesota wildfires and shared
building costs amibutable to Elk River Municipal Utilities.
• Expenditures were under budget by 5342,830 due to personnel vacancies and sound fiscal control by city
departments.
• Increased transfers out funded the operations of the ice arena and golf course.
The Library fund decreased by $2,627,861, due to the construction of a new library, The Improvement Bonds fiord
decreased by $41,959, which is due to a reduction in tax levy needed to pay debt service requirements. The Street
Improvements fund increased by $718,782, due primarily to prepaid special assessments and increased interest income.
The Improvement Projects fund increased $391,872, due to prepaid special assessments and the payment of state-aid street
funds. The YMCA fund increased $5,883,231, due to unspent bond proceeds issued to fund the construction of a recreation
facility.
Proprietary funds. The City of Ells 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 - $3,369,255, Garbage - $253,998, Sewer -
S6,906,568, Water - $2,610,533, and Electric - S4,375,821. Alf 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 5124,150. The revenue and
expenditure budgets were amended to reflect increased interest income due to market rate conditions and expenditure
increases in the public safety category was due to increased activity and demand for services and the purchase of capital
equipment.
Capital Asset antl 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, 2007, amounts to $188,331,156 (net of accumulated depreciation). This investment in capital assets includes
land, buildings, improvements, equipment and infrastructure. The total increase in the City of Elk River's invest in capital
assets for the current year was 6 percent (a 9 percent increase for governmental activities and a 3 percent increase for
' business-type activities).
Major capital asset events during the current fiscal year included the following:
• $4,58Q448 for the completion of a library and construction on a recreation facility had reached $4,179,788 as of
the end of the current fiscal year.
• $1,335,392 in park acquisition and park improvements.
• Street reconstruction projects in residential developments added $3,730,907 to construction in progress as of [he
' end of the current year.
• Additions of system improvements for Sewer - $590,720, Water - S 1,077,955 and Electric - $4,280,338.
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City of Elk River Capital Assets
(Net of
Depreciation) '
Govern mental Business -n-pe
Activities
Activities
Total '
2007 2006 2007 2006 2007 2006
Land $ 36,646,309 $ 36,59],200 $ 1,446,090 $ 1,446,090 $ 38,092,399 $ 38,037,290
Construction in progress 8,304,502 3,168,482 2,178,964 1,184,497 10,483,466 4,752,979
Buildings 17,973,686 14,494,586 9,422,623 9,866,625 27,396,309 24,361,211
Other improvements 2,795,468 2,003,718 - - 2,795,468 2,003,718
Equipment 3,715,564 3,521,841 27),060 321,690 3,990,624 3,843,531
Infrastructure 40,163,]41 41,591,842 65,409749 63,583647 105,572,890 108,175,0.89
Total $ 109,598.670 $ 101,371,669 $ 78,732,486 $ 76,802,549 $ 188,331.156 $ 178,174,218
Additional information on the City's capital assets can be found in Note 3D on pages 49 - 51 of this report. '
Long-term debt. At the end of the current fiscal year, the City had total long-term debt outstanding of $50,798,738, an
increase of $13,673,201 from 2006. General obligation improvement bonds ($13,220,000) were issued to finance the '
construction of a library and a recreation facility. General obligation revenue bonds ($17,355,000) were used to finance the
construction of an ice arena, a liquor store, and sewer, water and electric systems. Lease revenue bonds ($7,730,000) were
used to finance the construction of a public safety/city hall facility. Special assessment bonds ($4,825,000) financed
improvement projects within the City and are assessed to the benefiting properties. Tax increment bonds ($675,000) t
financed the City's economic development program. Certificates of indebtedness ($1,090,350) financed capital equipment
purchases.
Additional long-term debt in the amount of $2,123,092 is for capital leases, $2,879,054 is for notes payable and $901,242 is ,
for compensated absences.
City of Elk River Outstanding Debt ,
Gove mmental Business-type
Activities Activities To tal
2007 2006 2007 2006 2007 2006
Bonds payable:
G.O. bonds $ 13,220,000 $ 3,220,000 S - $ - $ 13,22Q000 $ 3,220,000
G.O. revenue bonds 1,200,000 ],430,000 16,li5,000 14,200,000 17,355,000 15,630,000
Leaserevenuebonds 7,730,000 8,265,000 - - 7,730,000 8,265,000
Special assessment bonds 4,825,000 2,130,000 - - 4,825,000 2,f3QDOD
Tax increment bonds
675;000
827,500
- -
675,000
827,500 '
Certificates of indebtedness ],090,350 1,134,334 - 125,000 1,090,350 1,259,334
Total bonds payable 28,740,350 17,006,834 16,155,000 14,325,000 44,895,350 31,331,834
Capital leases 2,123,092 1,908,725 - - 2,123,092 1,908,725
Notes payable - - 2,879,054 3,066;820 2,879,054 3,066,820
Compensated absences 553,378 503,194 347,854 314,964 90].242 8]8,158
Total $ 31,416,820 $ 19,418,753 $ 19,381,918 $ ]7,706,784 $ 50,798,738 $ 37,125,537
The City maintains a bond rat ing of Aa3 from Moody's for general obligation debt. '
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State statutes limit the amount of general obligation debt a Minnesota city may issue to 2% of total Estimated Taxable
' Market Value. "fhe current debt ]imitation for the City of Elk River is $40,258,438. Only $16,930,291 of the City's net
outstanding debt is counted within the statutory limitation.
' Additional information on the City of Elk River's long-term debt can be found in Note 3G on pages 53 - 57 of this report.
Economic Factors and Next Year's Budget
' The City of Elk River estimates that the demand for city services will grow aC a slower ]eve] as in prior years due to the
anticipated slow down in building permits issued. This was taken into consideration in preparation of the City's 2008
budget. The property tax levy is set annually and is adjusted as necessary to fund the cost of providing services to our
' citizens and customers. Charges for services are evaluated each year and adjusted if warranted. The City expects to keep
the tax rate consistent in upcoming years.
Requests for Information
' 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 Rivcr, Attn: Finance Director, 13065 Orono Pkwy, Elk
River, Minnesota 55330 or by calling (763) 635-1000.
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BASIC FINANCIAL STATEMENTS
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ASSETS
Cash and investments
Restricted cash and investments
Cash with fiscal agent
Receivables (net):
Interest
Taxes
Accounts
Special assessments
Notes
Due from other governments
Due from primary government
Internal balances
Inventories
Prepaid items
Deferred charges
Property held for resale
Capital assets:
Nondepreeinble
Depreciable (neQ
Total assets
LIABILITIES
' Accounts payable
Salaries payable
Due to other governments
Due Co component unit
' Accrued interest payable
Unearned revenue
' Non-current liabilities:
Due within one year
Due in more Yhan one year
T'otalliabilities
NET ASSETS
Invested in capital assets,
net of related debt
Restricted for:
Debt service
Landfill mitigation
Unrestricted
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF NET ASSETS
DECEMBER 31, 2007
Primary Government
Governmental Business-type Component
Activities Activities Total Unit - HRA
$ 35,890,077 $ 15,058,986 $ 50,949,063 $ 340,789
- 733,400 733,400 -
334,092 - 334,092 -
231,125 139,118 370,243 -
539,377 - 539,377 13,602
762,]4] 2,155,381 2,917,522 -
6,084,845 - 6,084,845 -
489,135 - 489,135 400,000
61,076 38,435 99,511 -
- - 426,572
(198,467) 198,467 - -
- 2,264,559 2,264,559 -
112,7li 124,518 237,233 -
- 243,913 243,913 -
- - - 720,000
44,9>0,811 3,625,054 48,575,865 -
64,647,859 75,107,432 139,755,291 -
153,904,786 99,689 ?63 253,594,049 1,900,963
3,814,036 1,968,048 5,782,084 1,544
163,868 45,599 209,467 714
154,826 75,795 230,621 -
426,572 - 426,572 -
385,092 268,652 653,744 12,651.
419,214 1,244 420,458 -
2,147,202 1,72Q,43D 3,867,632 91,925
29,269,618 17,661,488 4b,931,106 368,111
36,780,428 21,741,256 58,521,684 474,945
85,293,459 59,698,432 144,991,891 -
4,253,142 733,400 4,986,542 -
1,935,921 - 1,935;921 -
25,641,836 17,516,175 43,158,011 1,426,01.8
$ 117,124,358 $ 77,948,007 $ 195,072,365 $ 1,426,018
' Total net assets
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fhe notes to the financial statements are an integral part of this statement.
19
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF
ACTIVITIES '
FO R THE YEAR ENDED DECEMBER 31, 2007
Operating Capital
Charges for Grants and Grants and ,
Expenses Services Contributions Contributions
Functions/Proerams
Primary Government:
Governmental Activities: '
General government $ 2,732,697 $ 283,D03 $ 2,820 $ -
Publicsafety 5,924,093 1,533,699 263,255 6,230
Public works
6,527,565
76,117 49,048
4,063,441 '
Culture and recreation 3,598,695 1,083,081 47,190 104;756
Economic development 1,001,829 92,486 - -
InteresC on long-term debt 952,082 - _
Total governmental activities
20,736,961
3,068,386 362,313
4,174,427 '
Business-type Activities:
Municipalliquar
5;302,012
6,043,088 -
- '
Garbage 1,114,133 1,139,763 7,210 -
Sewer 1,788,890 ],454,219 - 989,412
Water 2,344,158 2,144,622 - 639,042 '
Electric 18,574,266 19,895,323 287,87] 368,182
Total business-type activities 29,123,459 30,677,015 295,081 1,996,636
Total primary government $ 49,860,420 $ 33,745,401 $ b57,394 $ 6,171,063 '
Component Unit:
Housing and Redevelopment Authority
$ 176,027
$ 181
399 $ -
$ - ,
,
General revenues: '
Property taxes:
Levies for general purposes
Levies for debt service
Tax increments '
Grants and contributions not restricted
Unrestricted investment earnings
Gain on disposal of capital assets '
Transfers of capital assets
Transfers
Total general revenues and transfers ,
Change in net assets
Net assets -beginning '
Prior period adjustment
Net assets -beginning, as restated ,
Net assets -ending
The notes to the financial statements are an integral part of this statement.
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Net (Expense) Revenue and Changes in NeY Assets
Primary Government
Governmental Business=Pype Component
Activities Activities Tota] Unit-HRA
$ (2,446,874) $ - $ (2,446,874) $ -
(4,12D,909) - (4,]20,909) -
(2,338,959) - (2,338,959) -
(2,363,668) - (2,363,668) -
(9D9,343) - (909,343) -
(952,082) - (952,082) -
(13,131,835) - (13,131,835) -
- 741,076 741,076 -
- 32,840 32,840 -
- 654,741 654,741 -
- 439,506 439,506 -
- 1,977,110 1,977,110 -
- 3,845,273 3,845,273 -
(13,131,835) 3,845,273 (9,286,562) -
8,590,341 - 8,590,341 253;434
1,154,589 - 1,154,589 -
894,595 - 894,595 -
2,395,665 - 2,395,665 10,927
1,465,40] 640,876 2,106,277 6,090
23,213 - 23,213 -
(511,412) 511,412 - -
778,840 (778,840) - -
14,791,232 373,448 15;164,680 270,451
1,659,397 4,218,721 5,878,118 275,823
115,464,961 73,915,677 189,380,638 1,150,195
- (186,391) (186,391) -
ll5,464,961 73,729,286 189,194,247 1,150,195
$ 117,124358 $ 77,948,007 $ 195,072,365 $ 1,426,018
21
J
CITY OF ELK RIVER, MINNESOTA
GOVERNMENTAL FUNDS
BALANCE SHEET
DECEMBER 31, 2007
ASSETS
Cash and investments
Cash with fiscal agent
Receivables:
Interest
Taxes
Accounts
Special assessments
Notes
Due from other governments
Due from other funds
Due from component unit
Prepaid items
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Salaries payable
Due to other governments
Due to other funds
Due to component unit
Deferred revenue
Total liabilities
Fund balances:
Reserved for:
Debt service
Capital equipmenu'projects
Landfill mitigation
Notes
Prepaid items
Unreserved reported in:
Designated:
General fund, for working capital
Special revenue funds, for working capital
Special revenue funds, for future debt requirements
Capital projects funds, for capital projects
Undesignated:
Special revenue funds
Total fund balances
Total liabilities and fund balances
General Improvement
Fund Library Bonds
$ 5,318,853 $ 612,179 $ 686,388
54,910 2,600 5,779
442;745 7,113 5,203
19,592 - -
- - 2,408,892
22,808 - -
57,574 - -
3,018 - -
5,938 - -
$ 5,925,438 $ 621,892 $ 3,106,262
$ 191,775 $ 344,001 $ -
153,937 307 -
227,722 3,796 2,393,646
573,434 348,104 2,393,646
- - 712,616
5,938 - -
5,346,066 - -
- 273,788 -
L
L
L~
5,352,004 273,788 712,6]6
$ 5,925,438 $ 62],892 $ 3,106,262
The notes to the financial statements are an integral part of this statement.
22 '
1
Sheet Improvement
Improvements Projects YMCA
$ 5,786,826 $ 3,024,645 $ 8,743,994
49,294
1,252
21,040
1,337,109
191,555
25,424
5,655
2,333,980
Other
Governmental
Funds
$ 11,717,192
334,092
93,118
77,409
721,509
4,864
489,135
38,268
368,402
Total
Governmental
Funds
$ 35,890,077
334,092
231,125
539,377
762,141
6,084,845
489,135
61,076
617,531
- - - - 3,018
- - - 106,777 ] 12,715
$ 7,387,076 $ 5,389,704 $ 8,743,994 $ 13,950,766 $ 45,125,132
$ 310,453 $ 8,998 S 2,860,763 $ 98,046 $ 3,814,036
- - - 9,624 163,868
- - - 154,826 154,826
- - - 815,998 Si5,998
- - - 429,590 429,590
1,331,809 2,231,289 - 723,834 6,912,096
1,642,262 2,240,287 2,860,763 2,231.918 ]2,290,414
- - - 1,500,023 2,212,639
- - 5,883,231 3,825,960 9,709,191
- - - 1,935,921 1,935,921
- - - 489,135 489,135
- - - 106,777 112,715
- - - - 5,346,066
- - - 2,514,101 2,787,889
- - - 275,000 275,D00
5,744,814 3;149,417 - 285,005 9,!79,236
- - - 786,926 786,926
5,744,814 3,149,417 5,883,231 11,718,848 32,834,7]8
$ 7,387,076 $ 5,389,704 $ 8,743,994 $ 13,950,766 $ 45,125,132
23
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1
CITY OF ELK RIVER, MINNESOTA
' RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET ASSETS
DECEMBER 31, 2007
FiJND BALANCE -TOTAL GOVERNMENTAL FUNDS
' Amounts reported for governmental activities in the statement of net assets arc different because:
t. Capital assets used in governmental activities are not current financial resources
and therefore are not reported in the governmental funds:
Governmental capital assets
Less accumulated depreciation
2. Deferred revenue in governmental funds is susceptible to full accrual on the
government-wide statements.
3. Long-term liabilities are no[ payable with current financial resources and are
therefore no[ reported in the governmental funds:
' Bonds payable
Capital leases
Accrued interest payable
Compensated absences
NET ASSETS OF GOVERNMENTAL ACTIV[TIES
CI
' The notes to the financial statements are an integral pats of this statement.
24
$147,744,271
(38,145,601)
$ 32;834,718
09,598,670
6,492,882
(28,740,350)
(2,123,092)
(385,092)
(553,378) (31,801,9]2)
$117,124,358
J
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES 1 N FUND BAL ANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEbIBER 31, 2007
General Improvement
Fund
Library
Bonds '
REVENUES
Property taxes $ 7,900,155 $ 141,680 $ 84,097
Licenses and permits gg7 708 _
Intergovernmental revenue 1,369,707 6,225 3,556
Charges for services 749.698 - -
Fines and forfeits ]48,904 - -
Specia] assessments - - 231,539 ,
Interest 234,780 78,025 25,336
Misce]laneous
Landfill host fee
_
Refunds and reimbursements 76,560 _
- _
- '
Other 7 372 - -
Total revenues ] 1,474.914 225,930 344,828
EXPENDITURES '
Current:
General government 2,377,897 - -
Public safety 5,084,372 - - '
Public works 1,750,821 - _
Culture a~td recreation 1,496,202 59,082 -
Economic development _ _ -
Debt service:
Principal - - 395,000
Interest and service charges - - 65,604
Bond issuance costs _ _ -
Capital outlay: ,
General govemment 5,488 - -
Pu61ic safety 131
906 - -
,
Public works 187,734
-
- '
Culture and recreation 76,150 3,843,312 -
Infrastructure,~deve(opment projects _ _ _
Total expenditures 11,110,570 3,902,394 460,604
Excess (deficiency) of revenues over (under) expenditures 364,344 (3,676,464) (115,776)
OTHER FINANCING SOURCES (USES)
Transfers in 441,803
941,723
108,817 '
Transfers out (270,529) (8L,188) (35,000
)
Issuance of debt
Discount on debt issued _ _ _ '
Capital leases issued _ _ -
Sale of capita] assets - 188,068 -
Total otherfinancing sources (uses) 171,274 1,048,603 73,817
Net change in fiord balances 535,618 (2,627,861) (41,959)
Fund ba]ances - January l 4.816,386 2,901,649 754,571
Fund balances -December 3 ] $ 5,352.004 $ 273.788 $ 712,616
'
The notes to the financial statements are an Integra] part of this statement.
25
Other To[al
Street Improvement Governmental Govemmental
' Improvements Projects YMCA Funds Funds
$ 78,666 5 96,715 $ - $ 2,330,352 $ 10,571,695
- - - - 987,708
' 1,26Q851 209,929 123,237 2,973,505
32,859 = 1.003,537 1,786,094
- - - 7,503 156,407
954,320 723,436 - - 1,909,595
291,666 163,025 63,019 609,550 1,465,401
141,579 - - 802,280 943,859
S,D40 17,053 = 27,403 126,056
' 467,894 475,266
2,672,122 1,243,017 63,019 5,371,756 27395,586
- - - 72,825 2,450:722
- 2,580 - 22,419 5,109,371
2,167,339 1!1,123 140,836 4,170,119
- - 810,438 1,020:959 3,386,681
- - - 573,446 573,446
- - - 1,372,617 1,767,617
- - - 729,843 795,447
28,274 = 78,694 - 106,968
12,4b0 17,948
- 309,428 - 179,926 621,260
- - - 33,529 221,263
3,242,060 862,467 8,023,989
2,981,896 506,017 - 430,650 3,918,563
8,177,509 929,148 4,]31,192 5,451,977 31,163,394
(2
505
387) 313
869 4
068
173 80
22! 9
76
0
,
, , (
,
,
) (
,
) (
,
7,8
8)
' 1,376,061 326,556 - 1,590,297 4,785,257
(1,240,011) (549,053) - (1,83Q636) (4,006,417)
3,09QOD0 300.500 ]0,000,000 - 13,390,500
(1,881) - (48,596) - (50,477)
325,000 325,000
- - - ]2,846 200,914
3,324,169 78,003 9,951,404 97,507 14,644,777
' 718
782 391
872 5
883
23
, , ,
,
1 17,286 4,876,9b9
5,026,032 2,757,545 - 11,701,562 27,957,749
$ 5,744,814 $ 3,149.417 $ 5.883,231 $ ]1,718,848 $ 32,834,718
I
26
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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, 2007
' NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS $ 4,876,969
Amounts reported for governmental activities in the statement of activities are different because:
]. Govemmental funds report capital outlays as expenditures. However, in the
statement of activities [he 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.
Capita] outlay 513,393,095
Depreciation expense (4,703,450) 8,689,645
2. The net effect of various miscellaneous transactions involving capital asset's
including donations and disposals, which increase net assets.
r i
D
sposals (794,645)
Depreciation on disposals 332,001 (462,644)
' 3. Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the governmental funds.
' Property taxes 67,830
Special assessments 651,171
Notes receivable (8,872) 710,129
' 4. The issuance of loner term debt provides current financial resources to governmental
lunds, while the repayment of the principal of long-term debt consumes the current
financial resom~ces 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 tong-term debt and related items.
Issuance oflong-term debt (13,715,500)
Repayment of principal of long-term debt 1,767,617 (11,947,883)
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 (156,635)
Compensated absences (50,184) (206,819)
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 1,659,397
u
' The notes to the financial statements are an integral pan of this statement.
27
CFPY OF ELK RIVER, MINNESOTA
GENERAL FUND
STATF,M1IENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENllED DECEMBER 31, 2007
REVENUES
Property taxes
Licenses and permits
Intergovernmental revenue
Chazges for services
Fines
Interest income
Miscellaneous revenue
Refunds and reimbursements
Other
Total revenues
EXPENDITURES
CurrenC
General government
Public safcry
Public works
Culture and recreation
Capital outlay:
General government
Public safety
Public works
Culture and recreation
Tota] expenditures
Excess (deficiency) of revenues
over (under) expenditures
OTFIER FINANCING SOURCES (USES)
Transfers in
Transfers out
Tota] other financing sources (uses)
Ne[ change in fund balance
Fund balance -January I
Fund balance -December 31
L7
The notes to the financial statements are an integral part of this statement. '
Budget Variance with
Original Final Actua] Finaf Budget
$ 8,263,000 $ 7,923,000 $ 7,900,185 $ (22,815)
870,700 87Q,7D0 987,708 117,008
970,150 1,310,150 1,169,707 59,557
798,700 798,700 749,698 (49,002)
159,500 759,500 148,904 (1Q596)
IOO,D00 225,OOD 234,780 9,780
25,500 42,000 76,560 34,560
6,700 6,70D 7,372 67Z
1 ],194,250 11,335,750 11,474,914 139,164
2,587,750 2,5]2,750 2,377,897 134,853
5,069,250 5,161,600 5,084,372 77,228
1,849,350 1,849,3 i0 1,750,821 98,529
1,510,250 1,51 Q 250 1,496,202 14,048
16,D00 16,000 5,488 10,512
1 D8,7D0 133,600 131,906 1,694
192,650 192,650 187,734 4,916
77,200 77,20D 76.]SD 1,050
11,411,150 11,4S,4UD 11,110,570 342,830
(216,900) (117,65D) 364,344 481,994
411,500 436,400 44],803 5,403
(194,600) (194,600) (270,529) (75,929)
216,900 24],800 171,274 (70,526)
- 124,150 535,6!8 411,468
1
1
4,816,386 4,816,386 0.,8]6386 -
$ 4,816.386 S 4,940.536 $ 5,352AD4 $ 411,468
28 '
1
1
1
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CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -LIBRARY FUND
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FL7ND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2007
REVENUES
Property taxes
Intergovernmental revenue
Charges for services
Interest income
Miscellaneous revenue
Landfill host fee
Total revenues
EXPENDITURES
Culture and recreation:
Current
Capital outlay
"Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
'Transfers out
Sale of capital assets
Total other financing sources (uses)
Nct change in fund balance
Fund balance - 7anuarv 1
Fund balance -December 37
Budget Vaziance with
Original Final Actua] Final Budget
$ 150,000 S 150,000 $ 141,680 $ (8,320)
- - 6,225 6,225
5,400 5,400 - (5,400)
S,OOD S,OOD 78,025 73,025
90,000 - - -
250,400 160,400 225,930 65,530
62,800 62.800 59,082 3,718
- - 3,843,372 (3,843,312)
62,800 62,800 3,902,394 (3,839,194)
187,600 97,600 (3,676,464) (3,774,064)
- - 941,723 941,723
- - (81,188) (8L,I88)
- - 188,068 ] 88,068
- - 1,048,603 1,048,603
187,600 97,600 (2,627,861) (2,7ti,461)
2.901,649 2,901,649 2,901,649 -
$ 3,089,249 $ 2,999,249 $ 273,788 $ (2,725A61)
' 'The notes to the financial statements are an integral part of this statement.
29
CITY OF ELK RNER, MINNESOTA '
STATEMENT OF NE"I ASSETS
PROPRIETARY A-UNDS
DECEMBER 31, 20U7
'
Municipal Liquor Garbage
Curtent Yeaz Prior Year Current Yeaz Prior Year
ASSETS
Curren[ assets: ,
Cash and investments $ 2,977,703 $ 2,277,746 $ 242,528 S 192,402
Restricted cash and investments - _ -
Receivab(es:
Interest
25,090
11.801
1,958
997 ,
Accounts 2,323 1,566 15,204 12,165
Due from other governments _ - - -
Due from other funds - - 86,667 93,848
Inventories
853,901
856,147
-
- '
Prepaid items 6,300 4,500 -
Total current assets 3,865,317 3,15 1,760 346,357 299,412
Noncurrent assets: '
Deferred charges 2,930 3,345
Capital assets:
Nondepreciable 823,761 823,761 - -
Depreciable
3,269,095
3,269,095
-
- ,
Accumula[ed depreciation (1,090,072) (952,285) -
Total capita] assets 3,002,784 3,14Q571
To[at noncurrent assets 3,005 714 3,143,916 - -
Total assets 6,871,03] 6,295,676 346,357 299,4(2
LIABILITIES
Curtent liabilities:
Aowun[s payable 420,521 406,471 92,217 114,875
Salaries payable 12,414 8,901 142 111
Due to other governments _ _
Due to other funds = _ '
Deferred revenue 1,244 ],049 - -
Accrued interest 21,563 22,500 - -
Compensated absences payable - eturen[ 22,860 22,602 - -
Notes payable -current
_
-
-
_ ,
Bonds payable-current 75,000 50.000
To[a( current liabilities 553,602 511,523 92.359 114,986
Noncurrent liabilities:
Compensated absences payable 20,390 ] 8,b56 - -
No[es payable - _ _ -
Bonds payable ],075,000 1,150,000 -
Total noncurtent liabilities
1,095390
1.168 656 '
Total liabilities 1,648,992 1,680, U9 92,359 114.986
NET ASSETS '
Invested in capital assets, net of related debt 1,852,784 (,940,571 - -
Restricted for debt service - - _ -
llnrestric[ed 3,369,255 2,674,926 253,998 184,426
Total net assets
$ 5 222,039
$ 4,615,497
$ 253,998 S
184,426 '
The notes to the Financial statements aze nn integral part of this statement. 1
30 '
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~~
Sewer Water Electric Toeal
Current Year Prior Year Current Ycaz Prior Yeaz Current Year Prior Year Current Yeaz
$ 6,638,09E $ 5,537,681 $ 2,394,387 $ 2,519,224 $ 2,806,277 $ 1,595,406 $ 15,058,986
- - - - 733,400 445,900 733,400
55,932 29,885 38,352 33,947 17,786 18,887 139,]18
- - 232,331 98,029 1,905,523 1,669,509 2,155,381
- - - - 38,435 23,523 38,435
294,31] 116,132 128,850 114,440 - - 509,828
- ~ - 26,887 42,995 1,383,771 1,347,419 2,264,559
- - 4,737 2,935 113,481 52,518 124,518
6,988,334 5,683,698 2,825,544 2,311,570 6,998,673 5,153.162 21,024,225
21,212 23,836 79708 87,416 140,063 104,592 243,913
755,572 411,095 258,560 11,000 1,787,]61 1,784,731 3,625,054
32,650,673 32,404,430 30,374,845 29,544,450 45,981,181 41,703,273 112,275,794
(11,]66,833) (10 314 182) (7,102,272) (6,103,330) (17,809,185) (15,779,489) (37,168,362)
22,239.412 22,501,343 23,531, L33 23,452,120 29,959,157 27,708,5]5 78,732,486
22,260.624 22,525,179 23,610,841 23,539,536 30,099,220 27,813,]07 78,976399
29,248,958 28,208,877 26,436,385 26,351,106 37,097,893 32,966,269 700,000.624
57,673 41,085 112,853 47,207 1,284,784 996,149 1,968,048
7,047 6,027 3,215 1,140 22,781 9,772 45,599
- - - - 75,795 88,449 75,795
- - 15,046 240,500 296,315 299,166 31],361
- - - - - - ],244
22,432 24,]82 91,408 99,485 133,249 91,810 268,652
7,029 1Q,S15 45,870 47,411 137,611 142,232 2]3,370
- - - - 177,060 173,868 177,060
145,000 140,000 790,000 425,000 320,000 430,000 1,330,000
239,181 221809 1,058,392 860,743 2,447,595 2,ti 1,446 4,39 L,129
8,797 6,556 26,327 ]6,748 78,980 50,244 134,494
- - - - 2,701.994 2,892.952 2,701,994
1,375,000 1,520.000 4,521,250 5,311.250 7,853,750 5,298.750 14.825,000
1,383,797 1,526,556 4,547,577 5,327,998 10,634,724 8.241,946 17,66],488
1,622,978 1748,365 5.605 969 6,188,741 13.082.319 1Q473,392 22,052,617
20,719,4f2 20,841,343 18,219,883 17,715,870 1.8,906,353 18,912,945 59,698,432
- - - - 733,400 445,900 733,400
6,906,565 5619,169 2,610,533 2,446,495 4,375,821 3,134032 17,516,175
$ 27,625,980 8 26,46Q572 S 20,830,476 $ 20,162,365 S 24,015,574 $ 22,492,877 $ 77,948,007
31
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF RE
VE.Nli ES, EXPENSES, AND CHANGES IN Fli
ND NET ASSETS ,
PROPRIETARY FUNDS
YEAR ENDEll DECEMBER 31, 2007
Municipal Liquor Gazbage
Cutrent Year Prior Year Current Yeaz Prior Year
Sales and cost of sales: '
Sales $ 6,036,756 $ 5,897,950 $ - $ -
Costofsales (4,318,304) (4,233,42D)
Gross profit 1,718,452 1,664,530 - - '
Operating revenues:
User charges - - 1,127,270 7,096,991
Delinquency collections
- -
1D,576
9,273 ,
Other 6,332 8,818 9,127 9.795
Total operating revenues 6,332 8,818 1,146,973 1,116,063
Operating expenses:
Personal services 563,896 527,531 9,776 5,207
Supplies 13,]11 23,589 433 2,167
Purchased power - - _ _
Other service charges
216,562 226,792
1,103,924
1.087,414 ,
Depreciation 137,787 141,254 - -
Totaloperatiugexpenses 931,356 919.166 1,114,133 1094,788
Operating income (toss) 793,428 754, ] 82 32.840 21,275
~Ionopera[ing revenues (expenses):
Connection chages - - - -
Interest income
133,166 85,526
9,872
5,695 ,
Miscellazteous revenue - - - -
Interestexpense (51,938) (49,500) - -
Bond issuance costs (414) (414) - -
Gain (loss) on sale of capital assets
- -
-
- ,
Total nonoperating revenues (expenses) 80,814 35,612 9,872 5,695
Income before contributions and transfers 874,242 789,794 42,7]2 26,970 ,
Capital contributions - - - -
Transfersin - - 26,860 47,667 -
Transfers out (267,700) (233,300) -
Change in net assets 606,542 556,494 69,572 74,637
Total net assets - January L 4,615,497 4,059,003 784,426 109,789
Prior period adjustments -
Tota]net assets, restated-Sanuary] 4,615,497 4,059,003 184.426 109,789 '
Total net assets -December 31 $ 5,222,039 $ 4,615,497 $ 253,998 $ 184,426
1
The notes [o [he financial statements are an integral part of [his statement. ,
32 '
C
Sewer Water Electric Total
Curtest Year Prior Year Current Year Prior Year Current Year Prior Year Current Yeaz
$ $
- - ~ - $ - 5 - $ - S 6,036,756
- - (4,318,304)
- - 1,718,452
1,442,546 ],350,922 2,113,166 1,70.9,932 19,360,520 16,663,589 24,043,502
- - 29,194 20,887 228,780 165,768 268,550
11.673 1,725 2,262 306,023 314,128 335,417
(,454219 1,352,647 2,144,622 1,770,819 19,895,323 17143,485 24,647,469
395,937 341,620 406,983 392,172 ],431,756 ],288,942 2,808,348
135,402 69,OD1 240,382 201,843 125,993 143,180 St5,321
- - - - 72,176,034 ]0,258,515 ]2,176,034
347,686 394,050 543,981 475,973 2,609,555 2,627,417 4,821;708
' 852,651 849,818 921,450 790.451 1,92Q,797 1,561,096 3,832,685
1,731,676 1,654,489 2,112,796 1,860.439 18,264.135 15,879,150 24,li4,096
(277,457) (301,842) 31826 (89,620} 1,631,188 1,264,335 2,2]1,825
989,412 978,235 627,774 87D,160 368,182 475,857 1,985,368
316,012 280:2D8 44,340 63,320 137,486 li4,461 640,876
' 192,506 287,871 301,867 287,871
(54,590) (66,631) (223,654) (244,388) (296,136) (200,309) (626,3]8)
(2,624) (3,027) (7,708) (7,650) (11,180) (2,353) (21,926)
- - - (2,815) 2,108 (2,815)
1,248,210 1,188,785 440,752 873.948 483.408 731,631 2,263,056
970,753 88fi,943 472,578 784,328 2,1]4,596 1,995,96fi 4,474,881
' 229
711 1
134 -
, ,
.740 292,965 838,674 - - 522,680
.
- - - - - - 26,860
(35 000) (272,175) (20,000) (3 L,018) (483 000) (420,000) (805,700)
1
165
468 1
749
508
,
, ,
, 745,543 1,591,984 1,631,596 1,575,966 4,218,721
26,460,512 24,711,004 20,162,365 18,570,381 22,492,877 21,340,167 73,915,677
(77,492) (108,899) (423,256) (]86,391)
26,460,512 24,711004 20,084.873 18,570,381 22,383,978 20,916,911 73
729
286
,
,
$ 22625,980 $ 26,460 512 $ 20.830,416 $ 20,162,365 $ 24,015,574 $ 22,492,877 8 77,948,007
33
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
PEAR ENDED DECEMBER 31, 2007
Municipal Liquor Gar bage
Current Year Prior Year Curren[ Year Prior Year
CASH FLOWS FROM OPERATING ACTIV ITIES
Receipts from customers and users
$ 6,036.]94 $ 5,899,490
$ (,141,988
$ 1,099,675 '
Other opcra[ing cash receipts 6,332 8,818 9,127 9,795
Payments to suppliers (4,533,481) (4,550,0.41) (1,127,015) (1,05755)
Payments to employees (558,391) (522,764) (9,745) (5,127)
Net cash provided by operating activities 950,654 835,103 14,355 47,088
CASH FLOWS FROM NOKCAPITAL
FINANCING ACTIVITIES
Transfers from other funds - - 26,860 47,667
Transfers to other funds (267,700) (233,300) - -
Decreasc (increase) in due from other funds - - - .
Increase (decrease) in due to other funds - - -
Net cash provided (used) by '
noneapi[el financing activities (267,700) (233,300) 26,860 47.667
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES '
Acquisition of capital assets - (26,266) - -
Principal paid on capital debt (50,000) - - -
Proceeds of revenue bonds -
Interest paid on capital debt
(52,874) (58,501)
-
- ,
Principal paid on promissory note - - - -
Pmceeds of promissory note - -
Net cash used by capita]
and related financing activities
(102,874) (84,767)
- ,
CASH FLOWS FROM [WESTING ACTIVITIES
Interest revived 119,877 79,495 8,911 5016
Ne[inerease (decrease) m cash and cash equivalents 699,957 596,531 50,126 99,77]
Cash and cash equivalents, January 1 2,277,746 1,681,2 f 5 192,402 92,631 '
Cash and cash equivalents, December 3 ] $ 2.977.703 $ 2.277,746 $ 242,528 $ 192,402
Reconciliation oP cash and cash equivalents ,
to the statemenf of net assets:
Cash end investments $ 2,977,703 $ 2,277,746 $ 242,528 $ 192,0.02 ,
Resuieted cash and invesunen[s -
Total cash and cash equivalents $ 2,977,703 $ 2,277,746 $ 242,528 $ 192,0.02
The note to the financial statements are an integral part of [his statement. '
34 '
i
Continued
' Sewer Wa[er Electric Total
Current Ycar Prior Year Current Year Prior Year Current Year Prior Year Current Year
$ 2,253,779 $ 2,324,792 $ 2,643,094 $ 2,766,649 $ 20,046,628 $ 17,459,151 $ 32,121,683
L1,673 1,725 192,506 306,829 278,344 333,96f
(466,500) (685,2]0) (816,799) (759,941) (15,096,D42) (13,573,272) (22,039,837)
{396,162) (339,563) (338,769) (337,748) (1,173,531) (1,111,061) (2,476,598)
' 1,402,790 1,301,744 1,487,526 1.861,466 4,083,884 3.053,162 7,939,209
(35,000) (272,175 2D,000- - 26,860
( ) (31,018) (483,000) (42QD00) (805,700)
- - (14,410) (114,440) - - (14,410)
- - (225,454) 225,560 (2,85]) 34,949 (228,305)
(35
000) (272
]75) (259
864) 80
102 (485
851 385
051
, , , , ,
) (
,
) (1,021,555)
(361,005) (1,290,269) (735,703) (579,209) (4,194,135) (6,<146,859) (5,290,843)
(140,000) (1,750,000) (425,000) (410,000) (430,000) (245,000) (1,045,000)
- 2,828,349 3,509,206 2,828,349
' (56,340) (115,232) (231,731) (249,508) (254,697) (150,104) (595,642)
(187,766) Q32,406) (187,766)
- 661,000
(557,345) (3,155,SD 1) (1,392,434) (1,238,717) (2,238,249) (2,804,163) (4,290,902)
289,965 270,065 39,935 62,350 138,587 160,925 597,275
]
f OQ
410 (1
855
867) (124
837) 765
20E 1
498
371 24
8
,
, ,
, , , ,
, ,
73 3,224,027
5,537 681 7,393,548 2,519,224 1,754,023 2,04],306 2,016,433 12,568,359
$ 6
638
091 $ 5
537
68E $ 2
394
387 $ 2
519
224 $
,
, ,
, ,
, ,
, 3,539,677 $ 2,041,306 S 15,792,386
$ 6,fi3R,091 $ 5,537,681 $ 2,394,387 $ 2,519,224 $ 2,806277 $ 1,595,406 $ 15,058,986
- - - - 733,400 445,900 733
400
' $ 6
638
091 $ 5
537
681 $ 2 ,
,
, ,
, ,394,387 $ 2,519,224 $ 3,539,677 $ 2,041,306 $ LS 792,386
1
35
1
CITY OF ELK RIVER, MINNESOTA
STATEhIENT OF CASK FLOWS
PROPRIETARY FUNDS
YEAR ENDED DECEMBER 31, 2007
Reconciliation of operating income (loss) to net cash
provided 6y operating activities:
Operating income (fuss)
Adjustments to reconcile operating income (loss) [o
net cash provided by operating activities:
Other revenue related to operations
Depreciation expense
(Increase) decrease in assets:
Accounts receivable
Due from other funds
Due from other govenmen[s
Invenmries
Prepaid items
Increase (decrease)im
Accounts payable
Salaries payable
Due to other governments
Deferred revenue
Compensated absences payable
Net cash provided by operating activities
Noncash capital and related financing activities
Municip al Liquor Gazbage
Current Ycar Prior Year Current Year Prior Year
$ 793,428 $ 754,182 $ 32,840 $ 21,275
137,787 14],254 - -
(757) 1,047 (3,039) (2,701)
- 7,181 (3,892)
2,246 (54,413) - -
(lsoo> 14 - _
14,050 Q2,24 L) (22,658) 32,326
3,513 (386) 31 80
195 493 - -
1,992 5,]53 -
$ 950,654 $ 83i 103 $ 14,355 $ 47,088
Amortization of bond issuance costs $ 414 $ 4 ]4 $ - $ -
Priorperiod adjustment [o accumulated depreciation - _ _ _
Discount on bonds issued _ _ _
Assets purchased on account _ _
-isposal of capital assets _
Contribtt[ion of capita] assets _ _
The notes [o [he financial statements are an integral part of this statement.
36
1
1
1
i
Sewer Water Electric Totat
Current Year Prior Year Cuacnt Yeaz Prior Year Curren[ Yeaz Prior Year Current Year
$ (277,457) $ (301,842) $ 31,826 $ (89620) $ 1,631,188 $ 1,264,335 $ 2,211,825
989,412 978,235 627,774 1,062,666 656,053 777,724 2,273,239
852,651 849,8]8 921,410 790,451 1,920,797 1,561,096 3,832,685
- 4,455 Q34,302) 125,670 (236,014) (160,191) (374,112)
(178,179) (8,820) - - - - (170,998)
- - - - (14,912) (23,523) (]4,912)
- - 16,108 Q4,411) (36,352) (408,507) (17,998)
- - (1,802) 4,732 (60,963) 3,337 (64,561)
16,588 (222,159) 16,359 (21,120) (99,617 21,061 223,956
1,020 1205 2,075 (301) 13,009 1,023 19,648
- - - - (12,614) 6,491 (12,654)
- - - - ]91
(1,245) 812 8,038 3439 24.115 10,316 32,900
$ ],402,79D $ ],301,744 $ 7,487,526 $ 1,861,466 $ 4,083,884 S 3,053.162 $ 7,939,209
$ 2,624 $ 3,027 $ 7,708 5 7,650 $ 11,L80 $ 2,353 $ 21,926
- - 77,492 - 108,899 423,256 186,391
- - - - 46,611 85,794 46,651
- - 49,187 - 89,019 - ]38,306
- - - - (2,815) 2,108 (2,811)
229,711 1,134,740 292,965 838,674 - - 522,680
37
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF FIDUCIARY NET ASSETS
DEVELOPER ESCROW AGENCY FUND
DECEMBER 31, 2007
ASSETS
Cash
Accounts receivable
Total assets
LIABILITY
Accounts payable
Refundable deposits payable
Total liabilities
Agency
Fund
$ 180,3!1
25,044
$ 205,355
$ 5,104
200,25 ]
$ 205,355
The notes to the financial statements are an integral par[ of this statement.
38
1
u
i
LJ
1
1
1
u
LJ
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
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 al] 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 F,lk 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 al] 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. 7"he 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 (I) the ability of the primary government to impose its will on that organization or
(2) the potential for the organization to provide specific benefits tq 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 poiicies 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 Housntg and Redevelopment Authority (HRA) is a separate legal entity created for the purpose of providing
redevelopment within the government's jurisdiction. The boazd 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 Ells River, 13065
Orono Pkwy, Elk River.
B. Government-Wide and Fund Financial Statements
The governmenC-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.
39
CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 20Q7
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 I) 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 capita] 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 govemment-wide financial statements are reported using the economic resources measurement focus and the accmal
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 al]
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 mcasurement 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.
P '
roperty taxes, franchise taxes, licenses, and interest associated with the current fiscal period are al] 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 '
govemment.
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 accmal 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 Che 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.
40 '
1
1
1
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
The government reports the following major governmental funds:
The Ceneral 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 Library special revenue fund accounts for any library maintenance cost which are not paid by the Great River
Regional Library System and for the construction of a new library.
The Improvement 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.
The Street Improvements capital projects fund is used to account for the construction of street improvement
projects throughout the City.
The Improvement Projects capital projects fund is used [o account for the construction of various improvements
within the City.
The YtY1CA capital projects fund is used to account for the construction of a new recreation facility which will be
leased by the YMCA.
The government reports the following major proprietary funds:
The !Llunlcipal Liquor fund accounts for the operations of the City's off-sale ]iyuor stores.
The Carbage fund accounts for the activities of the City's garbage collection and recycling program.
The Sewer fund accounts for the activities of the City's sanitary sewer treatment system.
The Water,fund accounts for the activities ofthe City's water distribution system.
The Electric fund accounts for the activities of the City's electric distribution system
Additionally, the government reports the following fund types:
The Developer Escrow agency fund is used to account for resources received from developers for the payment of
expenses incurred by the City for private development projects. The Developer Escrow agency fund is omitted
from the government-wide financial statements, and is included separately within Che statement of fiduciary net
assets.
Private-sector standards of accounting and fmancial reporting issued prior to December 1, ] 989, generally are followed
in both the government-wide and proprietary fund fmancial statements to the extent that those standards do not conflict
with or contradict guidance of the Govemmenta] 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 fallow subsequent private-sector guidance.
As a general rule, the effect of interfund activity has been eliminated from government-wide fmancial statements.
Exceptions to this general rule are charges between the City's sewer, water and electric functions and various other
functions of the government. Elimination of these charges would distort the direct costs and program revenues reported
for the various functions concerned.
41
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -CONTINUED
Amounts reported as program revenues include i) chazges 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 al] taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and ,
expenses generally result from providing services and producing and delivering goods in connection with a proprietary
fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds are charges to
customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. Afl 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
I. Deposits and Investments '
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments '
with original maturities of three months or less from the date of acquisition.
Cash balances from all funds are combined and invested to the extent available in authorized investments. Earnings
from such investments aze 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, NIN 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 payablos are classified as "due from other funds" or "due to other funds" on
the balance sheets of the fund Snancia] statements. Any residual balances outstanding between the governmental
activities and business-type activities aze reported in the goverrunent-wide financial statements as "internal balances." '
Property Taxes
"fhe City Council annually adopts a tax levy and certifies it to the County in December each yeaz for collection the '
following yeaz. 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 aze made to the Ciry Yhree times a year, in
January, July and December. '
Taxes payable on homestead property, as defined by Minnesota statutes, are partially reduced by a mazket 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 yeaz.
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.
42 '
' CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2007
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 uneollectibles 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 Che Ciry 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 Citv 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 Co businesses is offset by deferred revenue.
' Deferred revenue in governmental activities is susceptible to full accrual on the goverrunent-wide statements.
3. Inventories and Prepaid Items
For the proprietary funds, inventories are valued at cost, which approximates market, using the first-in, first-out
(FIFO) method. Inventories are recorded as an expense when sold or consumed rather than when purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in
both government-wide and fund financial statements.
4. Restricted Assets
The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond
issues. They will be used for future debt service.
' S. 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 govermnent-
wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of
mare than 5,000 and an estimated useful life in excess of rivo 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), Che 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 aze 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.
43
1
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS '
DECEMBER 31, 2007
Note l: 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:
1
Assets Years
Buildings and improvements ]0 - 40
Other park improvements 10 - 20
Machinery and equipment 3 - 20 ,
Public domain infrastructure I S - 50
System infrastructure 4 - 50
6 e
. 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 (iability 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 [he 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 capita] assets, net of accumulated depreciation '
reduced by and outstanding debt amibutable to acquire capital assets.
b. Restricted net assets -Consist of net assets restricted when there are ]imitations imposed on their use '
through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
44 '
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2007
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.
Nate 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 Genera] fund and the Library, Ice Arena, Pinewood Golf Course, Landfill and
Economic Development Authority special revenue funds. Project-length financial plans are adopted for all capita]
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 originalty adopted or
as amended by Council approved supplemental appropriations and budget transfers. Supplemental budgetary
' appropriations increased $124, I50 due mainly to increased interest income.
B. Excess of Expenditures Over Appropriations
' For the year ended December 31, 2007, expenditures exceeded appropriations in the Library fund by $3,839;594, due to
fhe construction of a new library, and the Pinewood Golf Course fund by $67,714. These over expenditures were funded
by available fund balance and transfers.
C. Deficit Fuud Equity
The Park Dedica[ion fund had a deficit fund balance of $303,949. The fund deficit is expected to be covered with future
fund revenues.
45
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS '
DECEMBER 31, 2007
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 al] City deposits be protected by insurance,
surety bond, or collateral. The mazket value of collateral pledged must equal 110% of the deposits not covered by
insurance or bonds. Authorized collateral includes the legal investments as prescribed by Minnesota statutes, as well as ,
certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that
securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that
furnishing the collateral
' '
At year end, the City
s carrying amount of deposits was $5,797,325 and the bank balance was 56,039,232. 1'he bank
balance was covered by federal depository insurance totaling $4,941,000 and the remaining balance was covered by
securities held by the pledging financial institution's agent in the City's name. ,
The carrying amount of deposits for the HRA, a discretely presented component unit, was 534Q,789 and the bank
balance was $340,789. The bank balance was covered by federal depository insurance and 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 Stale of Minnesota or any of its municipalities. '
d. Bankers acceptances of United States Banks eligible for purchase by Che 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 race 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, 20D7 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 Co an investment will not fulfill its
obligations. State law limits investments in commercial paper that is rated m the highest quality category by aY ,
least two nationally recognized rating agencies. The City's investment policy does not further limit the ratings
of their investments.
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CITY OF ELK RIVER, MINNE5OTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
• Concentration risk -Concentration risk is the risk of loss attributed to the magnitude of an investment in a
single issuer. The City does not have a formal policy that limits the amount of investments in a single issuer.
As of December 31, 2007, more than 5% of the City's investments were held in the following U.S. Agencies:
Federal Home Loan Bank (29%), Federal National Mortgage Association (18%), and Federal Home Loan
Mortgage Corporation (10%).
• Interest rate risk - In accordance with its investment policy, the City diversifies its investment portfolio to
eliminate the risk of loss resulting from the over-concentration of assets in a specific maturity. The maturities
selected shall provide for stability of income and reasonable liquidity.
The Minnesota Municipal Money Market Fund (4M Fund) is an external investment pool allowable under Minnesota
Statutes and regulated by the Board of Directors of the League of Minnesota Cities. The 4M Fund is a customized cash
management and investment program for Minnesota public funds designed to address the daily and long term investment
needs of Minnesota cities and other municipal entities. The 4M Fund is an unrated 2a7-like pool and the fair value of the
position in the pool is the same as [he value of pool shazes.
As of December 31, 2007, the City had the following investments that are insured or registered, or securities held by the
Ciry or its agent in Che City's name.
Fair Value
Credit Segmented and
Qualityi Time Carrying
Types of Invcsnnents Ratings (1) Distribution (2) Amount
Pooled investments:
Minnesota Municipal Money Market Fund N/A Less than 6 months $ 7,953,177
von-pooled investments
U.S. Government Securities AAA Less than 6 months 3,584,715
AAA b to 12 months 8,202,410
AAA Ito 5 years 6,184,830
AAA More than 5 years 9,763,138
Total L.S. Government Securities 27,735,093
Commercial Paper PI Less than 9 months 6,673,024
Negotiable CD's N/A Less than 6 months 2,650,000
6 to 12 months 1,367,088
Total negotiable CD's 4,017,088
Money Market Funds N/A Less than 6 months 16.509
Total investments 46,394,891
Deposits 5,797,325
Cash on hand 4,650
Total cash and investments $ 52,196,866
(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.
47
CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED '
Cash and investments are presented in the financial statements as follows:
Primary Component '
Government Uni[-HRA
Statement of Net Assets
Cash and investments $ 50,949,063 $ 340,789
Restricted cash and investments 733,40D - '
Cash with fiscal agent 334,092 -
Statement of Fiduciary Nct Assets
Cash and investments 180,311 -
Total $ 52
L96
866 $ '
,
,
340,789
B. Notes Receivable
The City has made several business subsidy loans to local businesses, some of which were funded with grant proceeds
received frotn the State of Minnesota. The terms of repayment vary with each loan and will be repaid over a period of
five yeazs. Under the terms of the grant agreement, a portion of the grant will be returned to the State of Minnesota and
the City retains the remainder of the grant repayments. At December 31, 2007, notes receivable of $412,050 and
$77,085 are outstanding in the Revolving Loan and FDA DTED Loan funds, respectively.
In 2006, the HRA issued a loan To a developer to assist in the financing of a housing development for The benefit of low '
and moderate income residents which was funded with state grant proceeds. Repayment of the loan is deferred for 30
years, payable in one lump sum at an interest rate of one percent.
C
Deferred Revenue i
.
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 yeY earned. At the end of the current fiscal year, the various components
of deferred revenue and unearned revenue reported in the governmental funds were as follows:
Unavailable Unearned
Delinquent property taxes receivable:
General fund $ 227,7?Z $ -
Library Fund 3,796 -
Improvement bonds fund 3,137
Street Lnprovements fund 749 -
[mprovement projects fund 3,298
Nonmajor funds 42,532 -
Delinquent special assessments'. '
Improvement bonds fund 3,930 -
Strect improvements fund 6,387 -
Improvement projects fund 6,208
Special assessments no[ yet due' '
Improvement bands fund 7,386,579
Stmct improvements fund ],324,673 -
Improvemevt projects fuvd 3,221,783 -
Nonmajor funds q,g6q '
Notes receivable not vet due:
Nonmajor funds 257,224 -
Unearned park dedication credits: '
Nonmajor funds - 418,333
Unearned miscellaneous fees'
Nonmajor FUnds ggl
Total $ 6.493,852 $ 419.214 '
48 '
' CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
D. Capital Assets
' In accordance with GASB Statement No.
government-wide statement of net assets. 34, the City has reported all capital assets including infrastructure in the
Capital asset activity for the year ended December 31, 2007 was as follows:
' Beginning Ending
Primary Government Balance Additions Deletions Balance
Governmental activities:
' Capital assets not being depreciated:
Land $ 36,591,200 $ 506,184 $ (451,075) $ 36,646;309
Construction in progress 3,768,482 8,004,652 (2,868,632) 8,304.502
Total capital assets
not being depreciated 39,759,682 8,510,836 (3,3]9,707) 44,95Q,811
Capita] assets being depreciated:
' Buildings 19,552,881 4,439,878 - 23,992,7>9
Other improvements 3,012,807 1,058,049 4,07Q,856
Equipment 7,9]9,200 965,150 (271,360) 8,672,990
Infrastruchtre 64,901,251 1.287,814 (132,210) 66,056,855
' Total capita] assets
being depreciated 95,386,139 7.750,891 (343,570) 102.793,460
Less accumulated depreciation for:
' Buildings 5,058,295 960,778 6,019,073
Other improvements 1,009,089 266,299 - 1,275,388
Equipment 4,397,359 759,858 (199,791) 4,957,426
Infrastructure 23,309,409 2,716,575 (132,210) 25,893,714
Total accumulateddepreciatioo 33,774,152 4,703,450 (332.OOt) 38,145,601
Total capital assets
being depreciated, net 61,61].987 3,047,441 (11,569) 64,647.859
Governmental activities
capital assets, net $ 101.371.669 $ 11,558,277 $(3,331,276) $ 109,598,670
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CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 '
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED '
Beginning Ending
Primary Government Balance Reclassification Additions Deletions Balance
'
Business-type activities:
Capital assets not being depreciated:
Land $ 1,446,090 $ - $ - $ - $ 1,446,090
Construction in progress
1,584,497 -
594,467 -
2.178,964 '
Total capital assets
not being depreciated 3,030,587 - 594,467 - 3,625,054
Capital assets being depreciated: '
Buildings 15,251,292 - 22,000 - 15,273,292
Equipment 4,425,089 - 152,334 - 4,577,423
Collection and distribution
87,244,867 -
5,180,212 -
92,425,079 '
Total capital assets
being depreciated 106,921,248 - 5,354,546 - ]12,275,794
Less accumulated depreciation for: '
Buildings 5,384,667 - 466,002 - 5.850,669
Equipment 2,620,548 33,278 316,200 - 2,970,026
Collection attd distribution 25,i44,D71 153,113 3,050,483 - 28,347,667
Total accumulated depreciation
33,149,286 186,391
3,832,685
37,168,362 '
Total capital assets
being depreciated, net 73,771962 (186.391) 1,521,861 - 75,107,432
Business-type activities
capital assets, net $ 76,802 549 $ (186,391) $ 2,116,328 $ $ 78,732,486
'
Depreciation expense was charged to functions/programs of the primary govemment as follows:
Governmental activities: '
Genera] government $ 278 773
Public safety 770,898
Public works 2,966,427
Culture and recreation
687,35? '
Total depreciation expense - governmental activities $ 4,703,450 '
Business-type activities:
Municipal liquor $ 137
787
Sewer ,
852,651
Water 921,4>0
Electric 1,920,797
Total de
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a
on expense -business-type activities $ 3,832,685
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Construction commitments
At December 31, 2007, the City had construction project contracts in progess. The commitments related to the
remaining contract balances are summarized as follows:
Project
YMCA
2007 Street Improvements
Spent Remaining
to date Commitment
$ 4,179,788 $ 8,055,796
3;662,196 862,785
$ 7,841,984 $ 8,918,581
Total
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E. Interfund Receivables, Payables,and Transfers
The composition of interfund balances as of December 31, 2007 is as follows:
Due to/from other fiords:
Receivable Fund Payable Pund Amount
General
General
Genera]
Street improvements
Garbage
Sewer
Sewer
Water
Nonmajor governmental funds
Nonmajor governmental funds
Nonmajor govemmental funds
Total
Electric $ 39,043
Water 13,014
Nonmajor governmental funds 5,517
Nonmajor governmental funds 191,555
Electric 86,667
Electric ] 22,511
Nonmajor governmental funds ]71,800
Nonnmajor governmental funds 128,850
Electric 48,094
Water 2,032
Nonmajor govemmental funds 318,276
$ 1,127359
The interfund receivable and payable balances result mainly from the distribution of utility collections and the
lending/borrowing arcangements between funds.
S]
CITY OF ELK RIVER, ;MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Interfund transfers:
Govemmental funds: Transfer In Transfer Out
Major funds -
General $ 441,803 $ 270,529
Library 941,723 81,188
Improvement bonds 108,817 35,000
Street improvements 1,376,061 1,240,011
Improvement projects 326,556 549,053
Nonmajor funds 1,590,297 1,83Q636
Total governmental funds 4,785,257 4,006.417
Proprietary funds
Municipal liquor - 267,700
Garbage 26,860 -
Sewer - 35,000
Water - 20,000
Electric - 483,000
Total proprietary funds 26,860 805,700
Tota] $ 4,812.117 $ 4,812,117
Interfund transfers are used to I) 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.
F. Leases
The City has entered into several lease agreements as lessee for financing the acquisition of a golf course, golf course
equipment and also for the acquisition of park property. 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.
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The assets acquired through capital leases are as follows:
Asset:
Land
Equipment
Less: Accumulated depreciation
Total
Govemmental
Activities
$ 2,586,725
152,694
(122,155)
$ 2,617,264
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
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,
2007, were as follows:
Year Ending Dec. 31
2008
2009
2010
2011
2012
2013
Total minimum lease payments
Less: amount representing interest
Present value of minimum lease payments
G. Long-term Debt
Governmental
Activities
$ 219,592
301,344
246,543
183,908
90,000
1,590,000
2,631,387
(508,295)
$ 2,123,092
Long-term debt obligations outstanding at year end are summarized as follows:
PRIMARY GOVERNMENT
GOVERNMENTAL ACTIVITIES:
General Obligation Bands:
2D06C G.O. Capital Improvement Bonds
2007D EllA G.O. Bands
Total general obligation bonds
Genera] Obligation Revenue Bonds:
I994C G.O. S[orm Sewer Revenue Bonds
1996C G.O.Icc Arena Bonds
To[al general obligation revenue bonds
Lease Revenue Bonds:
1997 City Hall and Law Enforcement
Facility Revenue Refimding Bonds
2002A Public Safety Building Lease
Revenue Bonds
Total lease revenue bonds
Special Assessment Bonds:
1998A G.O. Improvement Bonds
2003A G.D. Improvement Bonds
2005A G.O. Improvement Bonds
20D7C G.O. Improvement Bands
Tots] special assessment bonds
Issue Maturity Interest Authorized Payable
Date Dale Rate and Issued 12/31/07
12/14/2006 2/1/2027 3.80.4.05% $ 3,22D,DD0 $ 3,220,000
11/8/2007 2/1/2033 3.80-4.30% 10,000,000 L0,000,000
13, 220, 000 l3, 220, 000
6/1!1994 12/1/2009 5.40-5.80% 1,080;000 205,000
8/1/1996 12/1/20]3 5.70% 2;]00,000 995,000
3,180,000 1,200,000
12/1/]997 2/]/2011 4,75-5. 00% 2,295,000 915,000
9/1/2002 2/1/2023 2.00-4. 85% B,000,ODO 6,815,000
1Q295,000 7,730,000
12/1/1998 2/1/2009 3.55-4. 30% 1,375,000 145,000
12/9/2003 2/1/2014 2.00-4. 00% 1,255,000 620,000
6/14/2005 2/1/2016 2.75-3. 70% 1,070,000 970,000
6/26/2007 2/1/2D 18 4. DD% 3,090,000 3,090,000
6,790,000 4,825,000
53
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
Issue
PRIMARY GOVERNMEN'P Date
Tax Increment Bonds
2000A G.O. Tax Increment Bonds
2000D G.O. Tax Increment Refunding Bonds
Tota] general obligation tax increment bonds
Certificates of ]ndebtedness:
2005ll G.O. Equipment Certificates
2006B G.O. Equipment Certificates
2007B G.O. Equipment Certificates
Total equipment certificates
Total bonded indebtedness
Capital teases
Compensated absences payable
Total govemmen[al activities indebtedness
BUSINESS-TYPE ACTIVITIES:
General Obligation Revenue Bonds:
19988 G.O. Water Revenue Bonds
2DOlA G.O. Water Revenue Bonds
20028 City Half Expansion Revenue Bonds
20038 G.O. Water Revenue Bonds
2004A Electric Revenue bonds
2005B G.O. Sewer Revenue Refunding Bonds
2005C Liquor Revenue Bonds
2006A Electric Revenue Bonds
2007A Electric Revenue Bonds
Total banded indebtedness
Promissory note
Compensated absences payable
Total business-type activities indebtedness
Total City indebtedness
COMPONENT UNIT
Contract for deed
Maturity
Date
Interest Authorized Payable
Rate and Issued 12/31/07
11/1/20D0 2/1/2015 4.45-5.30% $ 800,000 $ 565,000
ti/1/2000 2/1/2007 6.70-7.40% 510,000 110,000
1,310,000 675,000
bil/2005 2/1/2010 3.90%" 645,ODD 440,250
6/1/2006 2/1/201] 3.80% 437,000 349,600
6/1/2007 2/1/2010 5.20% 300,500 300,500
1,382,500 1,090,350
36,177,500 28,740,350
1/15/2006 4/6/2013 5.00-6.00°/" 2,657,694 2,123,092
- 553,378
$ 38,835.194 $ 31,416,820
]2/1/]998 2/i/2014 4.1OS .00% $ 820,000 $ 450,D00
IO/11200] 2/1/2022 2.50-4 .90% 3,590,000 3,020,000
9/1/2002 2/7/2023 3.00-5 .00% 1,695,000 1,465,000
12/9/2003 2/1/2014 2.00-3 .70% 1,995,000 1,475,000
8/1/2004 2/1/2015 3.00-4 .25% 940,000 785,000
6/14/2005 2/ll2016 3.00-4 .00% 1,660,000 1,520,000
6/IY2005 2/1/2015 4 .50% 1,200,000 1,150,000
3/2/2006 8i 1'2021 3.15-4 .00% 3,595,000 3,415,000
3/28/2007 2/1/2022 4. 00% 2,875,000 2,875,000
18,370,000 76,155,000
03/19/02 12/31/23 "/0 3,521,000 2,879,054
- 347,864
$ 21,891,000 $ 19,381,918
$ 60,726,194 $ 50,798,738
12/28/2006 1/15/2012
6.00% $ 504.000 $ 46Q,036
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 3t, 2007
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Annua] debt servi ce requirements to maturity for long-term obligations are as follows:
Primary Government -Governmental Activities
G.O. Bonds G.O. Revenue Bonds Lease Revenue Bonds
Principal Interest Principal Interest Principal Interest
2008 $ 85,000 $ 423,789 $ 245,000 $ 68,505 $ 56Q,DOD $ 323,815
2009 110,000 53Q,664 255,000 14,540 585,000 300,744
2010 ]15,000 526,389 160,000 39,900 615,000 275,730
2011 120,000 521,924 170,000 3D,780 480,000 252,888
2012 125,000 517,269 180,000 21,090 360,000 236,145
2013-2017 1,485,000 2,48Q324 190,000 10;830 2,975,000 1,194,888
20IR-2022 3,(10,000 2,002,099 - - 2,155,000 212,360
2023 - 2027 3,835,000 1,310,389 - -
2028 - 2032 3,445,000 552,496 - - - -
2U33 790,000 16,985 - - - -
Total $ 13220.000 $ 8,882,328 $ 1,200,000 $ 2?5.645 $ 7,730000 $ 2,796,570
P rimary Government-Gov ernmental Activities
Special Assessment Bonds Tax Increment Bonds Cerfi(ice2s oPindebtedness
Principal Interest Principal Interest Principal Interest
2008 $ 270,000 $ 190,319 S 170,000 $ 31,362 $ 334,317 $ 41,558
2009 585.000 163,195 65,000 23,902 334,317 24,701
2010 510,000 143,011 65,000 20,766 334,316 10,448
20ll 505,000 124,185 70,000 17,458 87,400 1,661
2012 5D5,000 105,223 70,000 13,975 - -
2013-2017 2,140,000 254,352 235,000 18,752 - -
2018 - 2022 310,000 6,200 - - - -
'Coto( S 4,825,000 $ 986,485 $ 675,000 $ 126,215 $ 1,090,350 $ 78.368
Primary Government -Business-Type Activities Component U nit
G.O. Revenue Bands Notes Payable Contract for deed
Principal Interest Principal ]nterest Principal Interest
2008 $ 1,330,000 $ 627,928 S 177,060 $ - $ 91,925 $ 26,244
2009 935,000 586,510 177,348 - 97,523 20.645
2010 1, 145,D00 549,275 179,328 - 103,462 14,707
2011 1,23Q,000 505,295 182,436 - ]09,763 8,406
2012 1,290,000 457,350 183,444 - 57,363 1,721
2013 - 2017 5,308000 1,412,103 956,952 - - _
2018 - 2022 4,790,000 593,979 1,022,486 - - -
2023 - 2027 135,000 3,375 - - -
Total $ ]6,155,D00 $ 4775815 $ 2.879.D54 $ 460,036 71,723
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CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED '
Long-term liability activity far the year ended Dec ember 31, 2007 was as Follows:
Beginning Ending Due Within '
PRIMARY GOVERNMENT Balance Additions Reductions Balance One Year
GOVERNMENTAL ACTIVITIES :
Bonds payable:
General obligation bonds
$ 3,220,000
$ 10,000,000
$ -
$ 13,220,000
$ 85,000 '
G.O. revenue bonds 1,430,000 - (230,000) 1,200,000 245,000
Lease revenue bonds 8,265,000 (535,000) 7,730,000 560,000
Special assessment bonds
2,130,000
3,090,000
(395,000)
4,825,000
270,000 ,
Tax increment bonds 827,500 - (152,500) 675,000 ]70,000
Certificates of indebtedness 1,134,334 300,500 (344,484) 1,090,350 334,317
Total bonds payable 17,006,834 13,390,500 (1,656,984) 28,740,350 1,664,317 '
Capital leases 1,908,725 325,000 (110,633) 2,123,092 193,300
Compensated absences 503,194 372,246 (322,062) 553,378 289.585
Governmental activiTy
long-term liabilites $ 19,418,753 $ 14,087,746 $(2,089,679) $ 31,416,820 $ 2,147,202
BUSINESS-TYPE ACTIVITIES:
Bands payable ,
G.O. revenue bonds $ 14,200,000 $ 2,875,000 $ (920,000) $ 16,155,000 $ 1,330,000
Certificates of indebtedness 125,000 - (125,000) - -
Total bonds payable
14,325,000
2,875,000
(1,045,000)
16,155,000
1,33Q000 '
Notes payable 3,066,820 - (187,766) 2,879,054 177,060
Compensated absences 314,964 249,498 (216,598) 347,864 213,370
Business-type activity '
long-term liabilities $ 17,706,784 $ 3,124,498 $(1,449.364) $ 19,381,918 $ 1,720,430
Total primary government ,
long-term liabilities $ 37.125.537 $ 17,212,244 $(3,539.0431 $ 50,798,738 $ 3,867,632
COMPONENT UNIT
Contract for deed $ 504,000 $ $ (43,964) $ 460,036 $ 91.925
'
For the governmental activities, bo nds payable can be summarized in the following cat egories:
The general obligation bonds were used to construct a library and finance the construction of a recreation facility. '
The recreation facility will be leased to the YMCA, which has pledged to pay one-third of the $10,000,000 bonds in
addition to a $2,000;000 grant awarded by the county. The bonds are genera] 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.
56 '
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2007
Note 3: DETAILED NOTES ON ALL FUNDS -CONTINUED
' 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 genera] 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, Che bonds are general obligations ofthe City and are backed by its full
faith and credit.
' The certificates of indebtedness are used to finance the purchase of capital equipment. The certificates are general
obligations backed by the full faith and credit of the City.
For the governmental activities, compensated absences are generally liquidated through the Genera] 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 tnance the purchase of equipment. The bonds
' and certificates are payable from net revenues of the beneficing enterprise fund but are backed by the full faith and credit
of the City. The City also issued a promissory noCe 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.
' The HRA entered into a contract for deed for the purchase of property for subsequent resale for redevelopment purposes.
' 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 govemmental 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). "I'he 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.
' S7
CITY OF ELK RIVER, MINNESOTA '
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007
Note 4: OTHER INFORMATION -CONTINUED ,
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 yeazs from the date of sale of each
individual area.
During 2DD7 and 2006, the Utilities paid 5546,086 and $31,510, respectively, under this agreement, including $36,747 '
and $31,510 in 2007 and 2006, respectively, for loss of revenues. All amounts paid aze included in property and
equipment.
D. Pension Plans
I. Public Employees Retirement Association
a. Plan Description '
Al] 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 Statures, 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 alt 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.
58 '
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 3t, 2007
Note 4: OTHER INFORMATION -CONTINUED
There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime
annuity that ceases upon Che death of Che retiree-no survivor annuity is payable. There are also various types
' ofjoint and survivor annuity options available which will be payable overjoint lives.
Members may also leave Cheir 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
t 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 PEAF 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.
' 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 5.7>%, respectively, of their annual covered salary in 2007. Contribution
rates in the Coordinated Plan will increase in 2008 to 6.00%. PEPFF members were required to contribute
' 7.8% of their annual covered salary in 2007. That rate will increase to 8.6% in 2008. The City of Elk River is
required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF
members, 6.25% for Coordinated Plan PERF members, and 11.7% for PEPFF members. Employer contribution
rates for the Coordinated Plan and PEPFF will increase to 6.5% and 12.9% respectively effective January 1,
2008. The City's contributions to the Public Employees Retirement Fund for the years ending December 3l,
2007, 2006, and 2005 were $466,348, $414,895, $368,213, respectively. The City's contributions to the Public
Employees Police & Fire Fund for the yeazs ending December 31, 2007, 2006, and 2005 were $259,059,
' $214,037, $180,763, 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 deftned benefit
retirement system (PEAS) 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 7971 (Chapter 261 as amended by Chapter SD9 of Minnesota Statutes 1980).
' The Fire Relief Association issues a publicly available £mancial report that includes financial statements and
required supplementary information. The report may be obtained by writing to the Elk River Fire Department
t Relief Association, 13073 Orono Parkway, Elk River, MN 55330.
' S9
'
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 '
Note 4: OTHER INFORMATION -CONTINUED '
b. Funding Policy
The fmancial requirements of the Special fund are determined in accordance with Section 69.772 of the '
Minnesota Statutes, which requires the payment of pension benefits in a lump sum or optionally in annual
installments. The Association is comprised of volunteers and therefore members have no contribution
requirements. During the year, The City recognized as revenue and as an expenditure on-behalf payments of
$129,223 made by the State of Minnesota for the Fire Relief Association. The following summarizes the City's '
annual pension cost and other related information For the current year:
Annual pension cost $129,223
Contributions made:
City (voluntary) $29,800 ,
State aid $129,223
Actuarial valuation dace 12/31/07 ,
Actuarial cost method Entry age normal
Amortization method Level dollar closed ,
Remaining amortization period:
Normal cost 20 years '
Prior service cost 5 years
Asset valuation method Market ,
Actuarial assumptions:
Investment rate of return 5%
Projected salaryincreases N/A
Inflation rate N,~A '
Cost of living adjustment None
Three-Year Trend Information
Annual Percentage Net
Year Pension of APC Pension
Endine Cost APC) Contributed * Obli a~ tion
12/31/05 $ 136,429 121% $ -
l2/31/06 148,455 120% -
]2/3]/07 129,223 123% -
* The City has made excess voluntary contributions which may not be used to offset '
actuarially required amounts, resulting in a percentage of APC contributed over 100%.
The excess contributions will be used for future benefits
. '
1
60 '
CITY OF ELK RIVER, MLNNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2007
Note 4: OTHER INFORMATION -CONTINUED
' R
i d S
l
I
f
i
S
h
d
l
f F
di
equ re
upn
ementarv
n
ormat
on -
c
e
u
e o
un
ng 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
12/31/05 $ 1,886,585 $ 1,781,082 105.9% $ 105,503 $ 4,000
12/31/06
12/3]/07 2,092,351 1,823,195 114.8
2
420
742 2
110
264 114
7 269,156
310
478 4,175
4
450
,
,
,
,
. , ,
' E. Segment Information
The City maintains five ent
water and electric utilities.
' information is already inclu
changes in net assets balanc
' F. Conduit Debt Obligations
erprise funds that account for the municipal liquor operations, gazbage collections, and sewer,
The CiTy' considers each of its enterprise funds to be a segment. Since the required segment
ded in the City's proprietary funds' balance sheet and statement of revenues, expenses, and
e, this information has not been repeated in the notes to the basic financial statements.
From time to time, the City has issued revenue bonds to provide financial assistance to private-sector entities for the
' acquisition and construction of industrial and commercial, multi-family and educational facilities deemed to be in the
public interest. I'he bonds are secured by the property frnanced 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 repotted as liabilities in the accompanying financial statements.
As of December 31, 2007, there were three series of revenue bonds outstanding, with an aggregate principal payable
amount of $12, 858,105.
G. Prior Period Adjustment
' During the year ended December 31, 2007, the City recorded prior period adjustments in the Water and F,lectric funds
for $77,492 and $108,899, respectively. An adjustment is required for the December 31, 2006 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, 2006 net asset balance as restated:
Net assets -December 31, 2006 $73,915,677
' Prior period adjustment - reclass accumulated depreciation (186.391)
Total net assets as restated -January 1, 2007 $73 729,286
' 61
CITY OF ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS '
DECEMBER 31, 2007
Note 4: OTHER INFORMATION -CONTINUED ,
H. Subsequent Events
On February 20, 2008, the City issued $2,000,000 Genera] Obligation Bonds and $3,085,000 General Obligation Water '
Revenue Refunding Bonds. The $2,000,000 General Obligation Bonds will be used to finance the construction of a
recreation facility which will be leased to the YMCA. The YMCA has pledged to pay one third of the debt service on
the bonds. The interest rate on the bonds was 3.375 percent and the maturity date is February 1, 2015. '
On March 1, 2008, a portion of the $3,085,000 General Obligation Water Revenue Refunding Bands were used to
redeem the 2009 through 2014 maturities of the $820,000 General Obligation Water Revenue Bonds, Series 1998B. The
remaining net proceeds will be used for the callable portion of the 53,590,000 General Obligation Water Revenue Bonds, '
Series 2001 A (bonds maturing in years 2011 and 2D22) to be redeemed on February 1, 2010. The City will continue to
pay, as due, principal and interest on the Series 2001A Bonds at [he rates and amounts specified to the call date. The
refunded bonds will be called and paid by the escrow account. The new refunding bonds have an average coupon rate of '
3.264 percent and will mature on February t, 2022. The net cash flow savings is calculated at $177,178.
C
!I
I~
LJ
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62 '
1
1
1
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, genera] lonb term debt
principal, interest and other related costs.
Capital Projects - TIF Districts
Tax Increment Financing Districts fund is used to account for administrative and development costs associated with
the various tax ineremeot financing projects.
CITY OF ELK RIVER, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
DECEMBER 31, 2007
ASSETS
Cash and investments
Cash with fiscal agent
Receivables:
Interest
Taxes
Accounts
Special assessments
Notes
Due from other governments
Due from other funds
Prepaid items
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Salaries payable
Due to other governments
Due to other funds
Due to component unit
Deferred revenue
Total liabilities
Fund balances:
Reserved for:
Debt service
Capital projects
Landfill mitigation
Notes
Prepaid items
Unreserved:
Designated for:
Working capital
Future debt requirements
Capital projects
Undesignated
Total fund balances
Total liabilities and fund balances
Special Deb[
Revenue Service
Funds Funds
$ 9,162,347 $ (,135,855
- 334,D92
Capital Total Nonmajor
Projects - Governmental
TIF Districts Funds
$ 1,418,990 $ 11,717,192
334,092
73,130 8,049 11,939 93,118
19,780 57,343 286 77,409
72],509 - - 721,509
4,864 - - 4,864
489,135 - - 489,135
38,268 - - 38,268
368,402 - - 368,402
106,777 - - 106,777
$ 10,984,212 $ 1,535,339 S 1,431,215 $ ]3,95D,766
$ 94,679 $ 3,367 $ - $ 98,046
9,624 - - 9,624
154,826 - - ]54,826
99,378 - 716,620 815,998
- - 429,59D 429,590
691,885 31,949 - 723,834
1,050,392 35,316 1,146,310 2,231,918
- 1,500,023 - 1,500,023
3,825,960 - - 3,825,960
1,935,921 - - 1,935,921
489,135 - - 489,135
106,777 - - 1D6,777
2,514,(01 - - 2,514,101
275,000 - - 275,000
- - 285,005 285,005
786,926 - - 786,926
9,933,820 1,500,023 285,005 11,718,848
$ 10,984,2]2 $ 1,535,339 $ 1,431,215 $ ]3,950,766
63
1
i
t
1
CITY OF ELK RIVER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NONMAJOA GOVERNMENTAL FUNDS
YEAR ENDED DECEMBER 31, 2UU7
Special Debt Capital Total Nonmajor
Revenue Service Projects- Govemmcntal
Funds Funds TIF Districts Funds
REVENUES
Property taxes $ 368,971 $ 1,135,950 $ 825,431 $ 2,330,352
Intergovemmenta] revenue 76,917 46,320 - 123,237
Charges for services 1,003,537 - - 1,003,537
Fines and forfeits 7,503 - - 7,503
Interest income 495,621 49,877 64,052 609,550
Miscellaneous revenue
Landfill host fee 802,280 - - 802,280
Rzfund.+' and reimbursements 24,303 - 3,100 27,403
Other 467;894 - - 467,894
Total revenues 3,247,026 1,232,147 892,583 5,371,756
EXPENDITURES
Current:
General government 72,825 - - 72,825
Public safety 22,419 - - 22,419
Public works 140,836 - - 140,836
Culture and recreation 1,020,959 - - 1,020,959
Economic development 201 485 - 371,961 573,446
Debt service;
Principal !!0,634 1,261,983 - 1,372,617
Interest and service charges 125,340 604,503 - 729,843
Capital outlay:
General govemmenl 12,460 - - 12,460
Public safety 179,926 - - 179,926
Public works 33,529 - - 33,529
Culture and recreation 862,0.67 - - 862,467
[nfrastmcture/development projects - - 430,650 430,650
Total expenditures 2,782,880 1,866,486 802,611 5,451,977
Excess of revenues aver (under)expendimres 464,146 (634,339) 89,972 (80,221)
OTHER FINANCING SOURCES (USES)
Transfers in 793,828 743,987 SZ,482 1,590,297
Transfers ouf (1,547,727) (117,464) (165,445) (1,830,636)
Capital teases issued 325,000 - - 325,000
Sale of oapital assets 12,846 - - ]2,846
Tote! other financing sources (uses) (416,053) 626,523 (112,963) 97507
Vet change in fund balances 48,093 (7,816) (22,991) 17,286
Fund balances -January ! 9,885,727 1,507,839 307,996 71,70],562
Fund balances -December 31 5 9.933,820 $ 1,500,023 $ 285,005 $ 11,718,848
64
This page has been left blank intentionally
0
I~
1
1
1
1
1
NONMAJOR SPECIAL REVENUE FUNDS
' 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.
Park Dedication -This fund accounts for park dedication fees from developers and expenditures f'or park land
acquisitions and park capital improvements.
Landfill -This fund was established to segregate solid waste surcharge revenues to be used far 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.
Capita] 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.
Emereenc~~ilnsurance 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 I-Ia(l.
' 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 Yax levy authorized to help
encourage development in the City.
EDA DTED Loan -This fund was established to account for the Depamnent of Trade and Economic Development
' grant repayments of the Economic Development Authority (EDA) which are used to fund economic development
projects.
u
CITY OF F,LK RIVER, MINNESOTA
SUBCOMBINIA"G BAL9NCE SHEET
NONMAdOR SPECIAL REVENUE FUNDS
DECEMBER 3l, 2007
Senior
Pinewood Citizen Park
Ice Arena GoIFCourse Account Dedication Landfi-
ASSETS
Cash and investments $ - $ 14,866 $ 15,788 S 118,720 $ ],459,930
Receivables:
Interest - - 133 1,000 ]2,387
Taxes
Accounts 161,190 374 - - 3,553
Special assessments _ _ _
Notes
Duc from other governments - - - 5,836 -
Due from other funds _ _ - _ _
Prepaid items _ _ _ _
Total assets $ 161,190 $ 15,240 $ 15,921 $ 125,556 $ 1,475,870
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 34;1 ] 9 $ 12,748 $ 657 $ 1 1,172 $ 17,972
Salazies payable 5,892 1611 - - 1051
Due to other govcmments _ _ - _ _
Due to other funds 93,861 - _ ,
Deferred revenue - 881 - 418.333 -
To[a] liabilities 133,872 15,240 657 429,505 19,023
Fund balances (deficit):
Reserved for:
Capital projects _ _ _
Landfill mitigation - - - - 1,456,847
Notes
Prepaid items - _ _ -
Unrescrved:
Designated for:
Working capital _ _ _ _
Future deb[ requirements _ _
Undesignated 37,318 - ]5;364 (303;949) -
Total fund balances (deficit) 27,318 - L5,264 (303,949) 1,456,847
Total Liabilities and fund balances $ 761,190 $ 15,240 5 15,931 $ 125,556 $ 1,475,870
65
Continued
1
Landfill Capital Emergency/ Government Drug
C onstruction Revolving DIED De velopment Outlay Insurance Buildings Forteimre
Debris Loan Grant/Loan Fund Reserve Reserve Reserve Reserve
$ 633,428 $ 955,541 $ 133,874 $ 89,947 $ 2,]99,366 $ 467,5]2 $ L,644,587 $ 4,727
5,337 8,051 ],128 851 19,322 3,939 16,380 40
- - - 928 - - - -
- 50,000 - 169,739 - - 336,663 -
4,864
-
412,050 i = - - -
- - - - 32,247 - - 185
224,415 ]35,861 8,126
' - - -
106,777 - -
$ 638,761 $ 1,425,642 $ 135,002 $ 485,880 $ 2,391,660 $ 586,354 S 1,997,620 $ <1,952
1
$ - $ 2,643 $ - $ - 5 10,277 5 3,996 5 346 $ 304
- 154,826 - - - - - -
- 257,224 - 474 4,864 - - -
- 414,693 - 474 15,141 3,996 346 304
1
' -
479,074 598;899 135,002 485;406 - - 1,722,274 -
alz,oso
- - - - - 106,777 - -
- - - - 2,376,519 - - 4,648
' -
159,691 - _ _ _ -
475:581 275,000 =
638,765 1,01Q949 135,002 486,406 2,376,619 582,358 1,997,274 4,648
$ 638
765 $ 1
426
642 $ 135
D02 $ 485
880 $ 391
2
660 $ 586
354 $ 1
997
620 $ 4
952
, ,
, , , ,
, , ,
, ,
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CITY OF ELK RIVER, MINNESO"fA
SUBCOMBININC BALANCE SHEET
NONMAJOR SPF,CIAL REVENUE FllN-S
DECEMBER 31, 2DD7
ASSETS
Cash and investments
Receivables:
Imeres[
Taxes
Accounts
Special assessments
Notes
Due from other governments
Due from other funds
Prepaid items
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Salaries payable
Due to other govemments
Due to other funds
Deferred revenue
Total liabilities
Fund balances:
Reserved For:
Capital projects
Landfill mitigation
Notes
Prepaid items
Unreserved:
Designated for:
Working capital
Future deb[ requirements
Undesignated
Total fund balances
Total liabilities and fund balances
Severance Economic Total Nonmajor
Pay NSP/RDF Development EDA DIED Special Revenue
Reserve Reserve Authority Loan Funds
$ 131,823 $ 409,570 $ 747,333 $ 135,335 $ 9,162,347
hill 3,45] - - 73,130
- - ]8,852 - 19,780
- - - - 72!,509
- - - - 4,864
- - - 77,085 489,]35
- - - - 38268
- - - - 368,40?
- - - - ]06,777
$ 132,934 $ 413,D2f $ 766,185 $ 212,420 $ ]0,980.,212
$ - $
$ 445 $ - $ 94,679
1,070 - 9,624
- - 154,826
5,517 - 99.378
10,109 - 69],885
17,141 - 1,050,392
132,934
- 413,021
132,934 413,021
S 132,934 $ 413,021
749,044 135,335 3,825,960
- - 1:935,921
- 77,085 489,135
- - 106,777
- - ~,514,I01
- - z7s,ooo
- - 786,926
749,044 212,420 9,933,820
$ 766,185 $ 2f2,420 $ ]0,984,212
67
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CITY DF ELK RIVER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES 1N FUND BALANCES
NONMAJOR SPECIAL RF,VF.NUE FUNDS
YEAH ENDED DECEIDIBER 31, 20177
Senior
Pinewood Citizen Park
Ice Arena Golf Course Account Dedica[iou Landfill
REVENUES
Property to-ixes $ _ $ _ S _ $ S _
Intergovemmental revenue - - - 1,836 -
Chargesforservices 71Q6R6 177,695 2,255 ]04,151 -
Fines and forfeits _ _ _ - -
lnteres[income - - 806 15,114 75.379
Miscellaneous
Landfill host fee _ _ _ _
Refunds and reimbursements _ _ _ - _
Other 30,374 2] 7,380 30,245 -
Totalrevenues 741,060 177,716 IQ,441 ]55,346 75,379
EXPENDITURES
Current
Genera] govemmcn[ _ _ _ _ _
Public safety _ - - _
Pubic works - - - - 102,0.76
Culture and recreation 622,562 267,Oft0 9,274 114,391 -
Econamic development _ _ _ _ _
Uebt service:
Principal - 34,634 - 76,000 -
Interest - - - 125,340 -
Capital outlay:
General govemmen[ _ _ - _ -
Public safety _ _ - _ _
Public works - _ _ _
Culture and recreation - - - 862,467 -
Totalexpenditures 622,562 301914 9,274 1,178,198 102,476
Excess of revenues over (under)expendi[ures 118,498 (123,998) 1,167 (1,022,852) (27,097)
OTHER FINANCING SOURCES (USES)
Transfers in 89,431 123,998 - ]25,880 -
Transfersout (199,410) - - - (61,860)
Capital leases issued - - - 325,000 -
Sale of capital assets _ - _ _ _
To[a] ocher fnaneing sources (uses) (109,979) 123,998 - 450,880 (61,860)
Net change in fund balances 8,519 - 1,167 (571,972) (88,957)
Fund balances-Januaryl 18,799 - 14,097 268,023 1,545,804
Fund balances (deficit) -December 3 ] $ 27,318 $ - $ 15,264 $ (303,949) $ 1,456,847
68
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Continued
LandPll Capital Emergency/ Cmvernmen[ Drug
Construction Revolving DTED Development Outlay Insurance Buildings Porfziture
Debris Loan GranV'Loan Fund Reserve Reserve Reserve Reserve
~ - $ - 5 - $ zl,ota $ - g - ~ - ~ -
- - - 849 48,888 6,230 - -
- 250 - 5,000 - - - -
- - - - - - - 7,503
3 L,533 46,584 6,653 ]5,541 129,714 25,413 90,958 353
- - - - - - 802,280 -
- - - - - 24,303 - -
- 46,459 - 43,049 24,500 - - -
3L,533 93,293 6,653 85,453 203,102 55,946 893,238 7,856
- - - - 2,141 67,184 3,500 -
- - - - 13,593 - - 8,826
- - - - 38,360 - - -
- - - - 3,342 - 4;31D -
- 25,607 - 38,286 - - - -
- - - - - 12,460 - -
- - - - 179,926 - - -
- - - - 18,458 - 15,071 -
- 25,607 - 38,286 255,820 79,644 22,881 8,826
31,533 67,686 6,653 47,167 (52,778) (23,698) 870,357 (970)
- - - - 378,000 - 76,519 -
_ ~ - (4$,000) (641,OOD) - (375,723) (5,403)
- - - - ]2,846 - - -
- - - (45,000) (250,154) - (299;204) (5,403)
31,533 67,686 6,653 2,167 (302,872) (23,698) 571,153 (6,373)
607,232 943,263 128,349 483;239 2,679,391 606,056 1,426.121 11,021
$ 638,765 $ 1,010,949 $ L35,002 $ 485;406 $ 2,376,5]9 $ 582,358 $ ],997,274 $ 4,648
69
CITY OP ELK RIVER, MINNESOTA
[NING STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONM.4JOR SPECIAL RE4~NUE FUNDS
YEAR ENDED DECEMBER 31, 2007
Severance Economic Total Nonmajor
Pay NSP/RDF Development EDA DTED Specia] Revenue
Reserve Reserve Authority Loan Funds
REVENUES
Property taxes $ - $ - $ 30.7,917 $ - $ 368,971
Intergovemmen[al revenue - - 15;1 ] 4 - 76,917
Chazges far services - - 3,500 - ],003,537
Fines and Forfeits - - - - 7,503
Interest income 6,563 23,772 25,383 1,855 495,621
Miscellaneous
Landfill host fee - - - - 802,280
Refunds and reimbursements - - - - 24,303
Other - 285,866 - - 467,894
Total revenues 6,563 309,638 391.954 1,855 3,247,026
EXPENDITURES
Current:
General government - - - - 72 825
Public safety - - - - 22,419
Public works _ -
-
-
140,836
Culture and recreation - - - - 1,020,959
Economic development - - 137,592 - 201,485
Deb[ service:
Principal - - - - IIQ,634
Interest _ -
-
-
125.340
Capital outlay:
General govemment - - - - 12,460
Public safety _ _ - - 179 926
Public works _
-
-
-
33,529
Culture and recreation - - - - 862,467
Total expenditures - - (37,592 - 2,782,880
Excess of revenues over expenditures 6,563 309,638 254,362 1,855 464,146
OTHER FINANCING SOURCES (USES)
Transfers in
-
-
-
-
793,828
Transfers out - (202,331) (17,000) - (],547,727)
Capital ]eases issued - - - - 325,000
Sale of capital assets - - - - 12,846
Total other financing sources (uses) - (202,331) (17,000) - (416,053)
Net change in fund balances 6,563 107,307 237,362 1,855 48,093
Fttnd balances -January 1 126,371 305,714 511,682 21Q,565 9,885,727
Fund balances -December 3 ] $ 132,934 $ 413,021 $ 749,044 $ 212,420 S 9,933,820
7D
i
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -ICE ARENA FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 2007
REVENUES
Charges for services
Miscellaneous revenue
Vending machines
Other
Tota] revenues
EXPENDITURES
Culture and recreation:
Current
Excess of revenues over expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Tota] other financing sources (uses)
Net change in fund balance
Fund balance -January 1
Fund balance -December 31
Budget Variance with
Original Final Actual Final Budget
$ 700,000 $ 700,000 $ 710,686 $ 10,686
35,400 35,400 14,151 (16,249)
3,000 3,000 11,223 8,223
738,400 738,400 741,060 2,660
645,750 655,25D 622,562 32,688
92,650 83,150 118,498 35,348
L06,750 116,250 89,431 (26,819)
(199,400) (199,400) (199,41 D) (10)
(92,650) (83,]50) (109,979) (26,829)
$ - $ - 8,519 S 8519
18,799
$ 27,318
71
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -PINEWOOD GOLF COURSE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACFUAL
YEAR ENDED DF,CEMBER 31, 2007
REVENUES
Charges for services
Miscellaneous revenue
Total revenues
EXPENDITURES
Culture and recreation:
Current
Debt service:
Principal
Total expenditures
Excess of revenues under expenditures
OTHER FINANCING SOURCES
Transfers in
Net change in fund balance
Fund balance -January 1
Fund balance -December 31
Budget Variance with
Original Final Actual Final Budget
$ 212,750 $ 212,750 $ 177,695 $ (35,D55)
- - 21 21
212,750 212,750 177,716 (35,034)
234,000 234,000 267,080 (33,080)
- - 34,634 (34,634)
234,D00 234,000 3D 1,714 (67,714)
(zl,zsD) (zl,zsD) (123,99s) (1DZ,74a)
21,250 21,250 ]23,998 102,748
$ $ - $ -
$ -
72
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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, 2007
Budget Variance with
Original Final Actual Final Budget
REVENUES
Interest income $ 30,000 S 30,000 $ 75,379 $ 45,379
EXPENDITURES
Public works:
Current 201;050 201,D6U 102,476 98,574
Excess of revenues under expenditures (171,050) (171,050} (27,097) (53,195)
OTHER FINANCING USES
Transfers out (60,000) (60,000) (61,860) (1,860)
Net change in fund balance
Fund balance - Jamiary 1
Fund balance -December 31
$ (231,050) S (231,050)
(88,957) $ (5,065)
1,545,804
$ 1,456,847
73
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUND -ECONOMIC DEVELOPMENT AUTHORITY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGE'P AND ACTUAL
YEAR ENDED DF,CEMBER 31, 2007
REVENUES
Property taxes
Intergovernmental revenue
Charges for services
Interest income
Total revenues
EXPENDITURES
Current:
Economic development
Excess of revenues over expenditures
OTHER FINANCING USES
Transfers out
Net change in fund balance
Fund balance -January 1
Fund ba]ance -December 31
Budget
Original Fina]
$ 340,100 $ 340,100
3,500 3,500
3,300 3,300
346,900 346,900
215,700
13 ] ,200
215,700
131,200
(17,000)
(17,000)
$ u4.zoo $ ]]4,zoo
Actual
$ 347,957
]5,114
3,500
25,383
391,954
137,592
254,362
(17,000)
Variance with
Final Budget
$ 7,857
15, 114
22,083
45,054
78,108
123, ] 62
237,362 $ 123,162
511,682
$ 749,044
74
1
NONMAJOR DEBT SERVICE FUNDS
' Government Buildinz Binds -This fund is used to account for the accumulation of resources and payment
of principal and interest to finance the construction of city facilities.
Equipment Certificates -This fund is used to account for the accumulation of resources and payment of
' principal and interest to finance the purchase of public safety and street and other equipment as authorized
by Minnesota Statutes.
' 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.
CITY OF ELK RIVER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAdOR DEB"I SERVICE FUNDS
DECEMBER 31, 2007
Government Storm Sewer Tota] Nonmajor
Building Equipment Revenue Debt Service
Bonds Certificates TIF Bonds Bonds Funds
ASSETS
Cash and investments $ 682,926 $ 256,659 $ 128,907 $ 67,363 $ 1,]35,855
Cash with fiscal agent 334,092 - - - 334,092
Receivables:
Interest 5,490 2,033 - 526 8,049
Taxes 32,588 18,753 - 6,002 57,343
Total assets $ 1,055,096 $ 277,445 $ ]28,907 $ 73,891 $ 1,535,339
LIABILI71E5 AND FUND BALANCES
Liabilities:
Accounts payable $ 2,920 $ - $ - $ 447 $ 3,367
Deferred revenue 18,174 10,442 - 3,333 31,949
Total liabilities 21,094 ]0,442 - 3,780 35,316
Fund balances:
Reserved fur debt service 1,034,002 267,003 128,907 70,111 1,500,023
Tota] ]iabi(ities and Pond balances $ 1,055,096 $ 277,445 $ 128,907 $ 73,89] $ ],35,339
75
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CITY OF ELK RIVER, MINNESOTA
SCHEDULE OF REVENUES, EXPF.ND[TURES, AND CHANGE51N FUND BALANCES
NONMA.IOR DEBT SERVICE FUNDS
YEAR ENDED DECEMBER 31, 2007
REVENUES
Property taxes
hrtergovcmmcntal revenue
Interest income
Total revenues
EXPENDITURES
Debt service:
Principal
Interest and service chazges
Total expenditures
Excess of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources (uses)
Ne[ change in fund balances
Fund balances -January 1
Fund balances -December 31
Government Storm Sewer To[a] Nonmajor
Building Equipment Revenue Debt Service
Bonds Certificates TIF Bonds Bonds Funds
$ 605,159 $ 349,488 $ 69,164 $ ]12,139 $ 1,135,950
26,272 15,157 - 4,891 46,320
39,607 2,9]6 3,18] 4,173 49,877
67],038 367,561 72,345 121,203 1,232,147
67QD00 344,483 L52,500 95,000 1,261,983
502,423 39,124 45,399 17,557 604,503
L,172,423 383,607 197,899 112,557 1,866,486
(501,385) (16,046) (125,554) 8,646 (634,339)
578,329 213 165,445 - 743,987
(76,5 L9) - (40,945) - (117,464)
501,810 213 124.500 - 626,523
425 Q5,833) (1,054) 8,646 (7,8]6)
1,033,577 282;836 129,961 61,465 1,507,839
$ 1,034,002 $ 267,003 $ 128,907 $ 70,111 $ 1,500,023
76
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AGENCY FUNDS
' Agoncy 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.
C'
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I~
CITY OF ELK RIVER, MINNESOTA
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
DEVELOPER ESCROW AGENCY FUND
YEAR ENDED DECEMBER 31, 2007
ASSETS
Cash
Accounts receivable
Total assets
LIABILITIES
Accounts payable
Refundable deposits payable
Total liabilities
Beginning Ending
Balance Additions Deductions Balance
$ 182,800 $ 265,873 $ 268,362 $ 180,311
39,181 86,421 100,558 25,044
$ 221,981 $ 352,294 $ 368,920 $ 205,355
$ 18,276 $ 259,556 $ 272,728 $ 5,104
203,705 267,022 270,476 200,251
$ 221,981 $ 526,578 $ 543,204 $ 205,355
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.
Contents Page
'
Financial Trends 78
These schedules contain trend information to help the reader understand how
' the city's fnancial performance and well-being have changed over time.
Revenue Capacity 85
These schedules contain information to help the reader assess the city's mast
significant local revenue sources; electric sales and property taxes.
' Debt Capacity 92
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 100
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 102
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 iuformatiou in these schedules is derived from the comprehensive
annual financial reports for the relevant year.
C[TY OF ELK 121VER, MINNESOTA
VET ASSET S BY COMPONENT
' LAST FIVE FISCAL YEARS
(accrual basis of accounting)
'
Fiscal Year
2003 2004 2005 2006 2007
Governmental activities
' Invested in capital assets, net of related deb[ $ 56,003,997 $ 67,061,167 $ 73,150,00.1 $ 82,663,6]0 $ 85,293,459
Restricted 8,383,884 IQ963,518 12,410,832 4,802,808 6,189,063
Unrestricted 22,441,594 19,452,247 21,267,772 27,998,543 25,60.1,836
' Total governmental activities net assets $ 86,829,475 $ 97,476,932 $ lOfi,828,645 $ i 15,464,961 $ 117.124,358
Business-type activities
Invested in capital assets, net of related deht $ 46,341,983 $ 52,377,687 $ 54,577,074 $ 59,410,729 $ 59,698,432
' Restricted 1,947,067 2,191,066 2,256,419 445,900 733,400
Unrestricted 11,224.115 10,480 815 ]1,956,851 ]4,059,048 L7,516, L75
Total business-type activities net assets $ 59,513, 165 $ 65.055.568 $ 68,790,344 $ 73,915,677 $ 77,948,007
' Primary government
Invested in capital assets, net of related debt $ 102,345,980 $ 119,438,854 $ 127,727,115 $ 142,074,339 5 (44,991,891
Restricted 10,330,951 13,160,584 14,667,251 5,248,708 6,922,463
Unrestricted 33,665,709 29 933.062 33,224,623 42 057,59] 43, LSR,OII
7ota1 primary government net assets $ 146
342640 $ 162
532
500 $ 175
618
989 $ 189
380
638 .$ 195
072
365
, ,
, ,
, ,
. ,
,
u
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Note: Net assets aze not available for years prior to 2003.
78
i~
CiCY OF ELK R[VER, MINNESOTA
CHANGES IN NET ASSETS
LAST FIVE FISCAL YEARS
(accrual basis of accounting)
Fiscal Year
2003 2004 2005 2006 2007
F,zpenses
Governmental activities:
General government $ 3,290,711 $ 2,440,200 $ 2,503,826 $ 2,560,213 $ 2,732,697
Public safety 4,229,1D9 4,988,424 5,255,974 5,606,438 5,924,093
Public works
3,737,678
4,277,07]
4,281,725
6,169,030
6,527,565 '
Cultme and recreation 1,747,322 2,058,882 2,535,955 2,859,058 3,598,695
Economic development 549,149 912,698 938,]64 631,437 1,001,829
Interest on long-term debt 1,050,823 936,Si5 881,D01 764,725 952,082
Tota] govemmentat activities expenses
10.,604,792
15 613,790
16396,645
18,590,901
20,736,96] ,
Business-type ac[ivities~
Municipal Liquor 3,621,087 3,760,]56 4,344,915 5,202,500 5,302,012
Garbage
884,532
953,432
1,047,479
1,094,788
1,I 14,133 '
Sewer ],406,713 1,464,409 1,629,353 1,724,147 1,788,890
Water 1,773,217 1,809,128 2.099,428 2,112,477 2,344,158
Electric 11,929,596 13,338,580 14,88D 337 ]6,081,812 18,574,266
Tota]business-type activities expenses 19,555,145 21,325,705 24,D01,512 26,2]5,724 29,123,459
Total primary government expenses $ 34,]59,937 $ 36,939,495 $ 40,398,157 $ 44,806,625 $ 49,860,420
Program Revenues
Govemmental activities: '
Charges for services:
General government $ 194,246 $ 308,78( $ 288,032 S 246,541 $ 283,OD3
Pubtic safety 1,897,883 1,956,967 2,050,437 2,403,601 1,533,699 ,
Public works 148,904 226,907 28D,533 6]7,099 76,117
Culture and recreation 729,932 812,401 877,789 1,065,218 1,083,081
Economic development 71,379 96,396 379,002 178,217 92,486
Operating grants and contributions
487,560
427,513
480,649
387,584
362,313 '
Capital grants and contributions 6,064,49] 11,879,536 7,573,752 8.117,032 4,174,427
l otal governmental activities program revenues 9,594,395 ]5,708,501 11,930,244 13,015,292 7,6D5,126
Business-type activities: '
Charges for services:
Municipal Liquor 4,156,276 4,345,702 4,806,06E 5,906,768 6,043,088
Garbage 820,278 973,176 ],D55,753 1,106,268 1,139,763
Sewer
1,808,817
2,365,262
1,261,853
1,352,647
1,454,2]9 ,
Water 1,807,334 2,095,018 1,365,136 ],770,819 2,144,622
Electric 13,774,777 14,765,479 15,955,440 17,!43,485 ]9,895,323
Operating grants and contributions
Capital grants and contributions 10,530
1,053,994 8,615
3,028,454 9,255
3,654,383 504,168
4,297,666 295,OR t
L,996.636 '
Tom] business-type activities program revenues 23,432,D06 27,58],706 28,107,881 32,081,821 32,968,732
Total primary government program revenues $ 33,026,401 $ 43.290,207 $ 40,03 ft,125 $ 45,097,113 $ 40,573,858
Ne[ (expense)/revenue '
Governmentat activities $ (S,OIQ397) $ 94,7]1 $ (4,466,40]) $ (5,575,609) $(13,131,835)
Business-type activities 3,876,861 6,256,001 4,1D6,369 5,866,097 3,845,273
Total primary government net expense $ (I, 133,536) $ 6,35Q7(2 $ (360,032) $ 29D.488 $ (9,286,562)
'
79 ,
Fiscal Year
2003 2004 2005 2006 2D07
General Revenues and Other Changes in Yet Assets
Governmental activities:
Property[axes $ 5,830,468 $ 6,425;933 $ 7,569,13] $ 8,754,923 $ 9,744,930
1'ax increment 682,855 734,] 15 768,397 790,882 894,595
Unrestricted grants and contributions 2,237,750 2,14],]52 2;427,605 2,577,700 2,391,665
' Investmentearnings
Miscellaneous 3D4,237 375,550
9,180 758,612
326,853 1,151,144
2$45D 1,465.401
23,213
Transfers of capita] assets (511,412)
Transfers 639,924 866,816 677,516 908,826 778,840
"Fotal governmental activities 9,695,234 10,552,746 12,528,114 14,211,925 14,79],232
Business-type activitaes
Investment earnings 155,802 153,218 305,923 589,210 64D,876
' Miscellaneous
Transfers of capital assets - - - 2,108 -
511,412
Transfers (639,924) (866,816) (677,516) (908,826) (778,840)
Total business-type activities (484,122) (713,598) (371,593) (317,508) 373,0.48
Total primary government $ 9,211,112 $ 9,839,148 $ 12, L56,521 $ 13,894.4 L7 $ 15,J 64,680
Change in Net Assets
Governmental activities $ 4,684,837 $ 1Q,647,457 $ 8,061,713 $ 8,636,316 $ 1,659,397
Busincss-type activities 3,392,739 5,542,403 3,734,776 5,548,589 4,218,721
'Dotal primary government S 8,077.576 $ ] 6,189,860 $ 11,796 489 $ 14,184,905 $ 5,878,118
'
Note: Changes in net assets are not available For years prior [0 2003.
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CITY OF ELK RIVER, MINNESOTA
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modifted accrual basis of accounting)
General fund
Reserved
Unreserved
Total General fund
All other governmental funds
Reserved
Unreserved, reported in:
Special revenue funds
Capital projects funds
Tota] all other governmental funds
Fiscal Year
1998 1999 2000 2001
$ - $ 51,000 $ - $ 1,268
1,973,208 2,261,880 2,695.612 3,060,907
$ 1,973,208 $ 2,312,880 $ 2,695,612 $ 3,062,175
$ 6;346,623 $ 7,594,575 $ 8,527,474 $ 7,046,474
4,555,966 4,610,213 6,439,607 8,772,346
579,088 543,945 480,466 (29,358)
$ 11,481,677 $ 12,748,733 $ 15,447,547 $ 15,789,462
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0
II
Fiscal Year
2002 2003 2004 2005 2006 2007
' $ 1,268 $ 348,026 $ 115,746 $ 210,298 $ - $ 5,938
3,189,321 3,384,D23 3,851,634 4,391,083 4,816,386 5,346,066
' $ 3,190,$89 $ 3,732,049 $ 3,967,380 $ 4,601,381 $ 4,816,386 $ 5,352,004
$ 14,272,266 $ 12,598,358 $11,570,003 $ ] 1,475,837 $ 9,979,026 $14,453,663
2,219,157 3,742,244 4,597,195 5,453,06] 5,070,764 3,849,815
8,133,831 4,585,550 $,401,(L2 8,382,625 8,091,573 9,179,236
$ 24,625,254 $20,926,152 $21,568,310 $25,311,523 $23,]41,363 $27,482,714
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1
CITY OF ELK RIVER, MINNESOTA
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS '
LAST TEN FISCAL YEARS
(modified accrual basis of accounting) '
Revenues
Property taxes
Licenses and permits
Intergovernmental revenue
Charges for services
Fines and forfeits
Special assessments
Interest
Miscellaneous
Total revenues
Expenditures
General government
Public safety
Public works
Culture and recreation
Economic development
Capital outlay
Debt service
Principal
Interest and service charges
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses)
Transfers in
Transfers out
Proceeds of long-term debt
Payment to refunded bond escrow agent
Discount on long term debt issued
Capital leases issued
Sale ofcapita] assets
Total other financing sources (uses)
Net change in fund balances
Debt service as a percentage of
noncapitalexpenditures'
Fiscal Year '
1998 1999 2000 2001
$ 3,607,810 S 3,916,590 $ 4,232,545 $ 5,067,317
540,826 511,306 749,888 989,052
1,997,619 2,360.153 4,969,056 1,687,430
899,788 953,496 1,]29,834 1,503,350
115, 753
117, 614
1 19,421
89,22 I '
1,825,335 2,070,961 2,395,473 2,598,484
577,934 491,608 1,007,444 766,599
1,916,396 2,386 298 3,657,258 3,018,207
11,481 461 12,808,026 18,260,919 15,719,660
1,155,809 1,185,907 1,337,745 L592,D27
2,796,509 2,806,627 3,129,669 3,389,370
982,102 980,714 935,650 1,427,274
859,515 903,364 1,102,577 1,133;090
323,256 264,484 357,299 339,660
4,103,775 8,739,415 8,]52,240 3,103,306
],403,619 1,611,592 1,669;624 2,203,112
912,141 930,671 1,048,545 949,235
12,536.726
17,422,774
17,733,349
14,137,074 '
(1,055,265) (4,614,748) 527,570 1,582,586
1,849,667 1,958,829
(1,397,565) (979,258)
],477,424 6,39>,045
- (!,153,140)
],291,949 2,250,518
(830,378) (1,556,626)
3,647,233 202,000
(1,554,828) (1,770,000)
1,929,526 6,221,476 2,553,976 (874,108)
$ 874,261 $ 1,606,728 $ 3;081,546 $ 708,478
t
' Debt service percentages are not available prior to 2003.
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Fiscal Year
2002 2003 2004 2005 2006 2007
$ 5,462,585
7]5,852
3,978,999
1,743,948
734,840
2,049,519
612,224
$ 6,507,578
1,143,612
2,141,277
2,042,391
19Q,91 I
2,433,939
304,237
$ 7,118,568 $ 8,283,983 $ 9,529,773 $ 10,571,695
1,249,844 1,240,336 1,207,368 987,708
1,544,485 1,979,405 4,142,937 2,973,505
2,381,670 2,571,767 2,485,464 1,786,094
164,800 190,062 175,155 156,407
2,375,902 3,414,090 1,566,880 ],909,595
375,548 758,612 1,151,144 1,46>,401
1,799,736 2,004,286 2,555,842 1,545,18]
17,010,553 20,442,541 22,814,563 21,395,586
2,409,430 2,159,373
17, 107,397 16.923,318
2,200,458 2,265,779 2,161,356 2;204,626 2,25],111 2,450,722
3,583,232 4,145,996 4,L63,345 4,649,010 4,941,706 5,109,371
1,429,018
1,325,118 1,814,818
1,635,806 1,850,281
1,655,298 2,192,336
2,088,50> 2,538,658
2,605,861 4,170,119
3,386,681
312,387 649,463 703,591 785,584 627,467 573,446
6,704,948 8,389,740 2,997,b96 4,191,817 10,729,882 12,803,023
1,948,275 2,355,800 2,494,483 2,174,266 7,051,836 1,767,617
794,511 1,102,548 965,984 881,305 909,904 902,415
18,297.947 22,359,950 16,992,034 19,167,449 31,656,42> 31,163,394
(1,190,550) (5,436,632) 18,519 1,275,092 (8,841,862) (9,767,808)
1
' 2,578,131
(2,119,863) 4,654,396
(4,003,800) 4,666,581
(3,799,765) 2,888,975
(2,211,459) 5,923,474
(5,014,648) 4,785,257
(4,006,417)
9,696,488 1,612,100 331,000 1,715,000 3,657,000 13,390,500
- (5,566) - (8,560) (29,252) (50,477)
2,332.694 325,000
- 34,562 9,180 718,166 17,439 200,914
10,154,756 2,291,692 1,206,996 3,102,122 6,886,707 14,644,777
$ 8,964,206 $ (3,144,940) $ ],225,515 $ 4,377,214 $ (1,955,155) $ 4,876,969
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25.3% 24.1% 21.0% 37.1% 15.1°/a
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CITY OF ELK RIVER, MINNESOTA
ELECTRIC SALES
LAST TEN FISCAL YEARS
Fiscal Number of Total
Year Customers KWh's Sold Billings
1998 5,751 109,987,312 $ 7,629,885
1999 5,818 ]15,658,128 7,988,138
2000 6,152 124,098,851 8,525,161
2001 6, 547 137,6 ] 7, 611 9,330,341
2002 6,750 ]49,787,670 10,629,091
2003 7,376 161,852,054 11,679,055
2004 7,907 165,595,414 12,736,439
2005 8,306 182.515,644 14,219,289
2006 8,562 194,975,530 15,494,068
2007 8,945 211,298,886 17,704,210
Source: Elk River Municipal Utilities
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CITY OF ELK RIVER, MINNESOTA
PRINCIPAL ELEC'PRIC CUSTOMERS
DECEMBER 31, 211117
2007
Customer
Data Center
E & O Too]
Jerry's Enterprises
Menards'
Coborns
Sherburne County
Tescom
All Tool
Elk River Senior High
Vanderberg Ir High
Shiely
TOTAL
Percentage
Total KWh 'total of Total
Sold Billings Billings
8.359,162 $ 769,857 4.35%
5,299,600 222,956 1.26%
5,123,520 216,190 1.22%
3,910,400 164,360 0.93%
3,531,800 148,444 0.84%
2,862,880 120,462 0.68%
2,189,160 92,203 0.52%
1,992,000 84,109 0.45%
1,791,300 75,558 0.43%
],683,300 '! 1,288 0.40%
36,743,122 $ 1.965,427 11,11%
2000
Percentage
TotalKWh Total of Total
Sold Billings Billings
$
3,457,200 124, 795 1.46%
4,097,880 148,014 7.74%
3,077,160 1 l 1, l 14 1.30%
3,52 8,720 127,370 1.49°
2,153,280 69,950 0.82%
2,698,380 97,A78 1.14%
2,422,560 87.548 ].03%
1,319,880 47,852 056%
1,244,800 45,149 0.53%
1,959,780 70,888 0.83°
25,959.640 $ 930,157 10.90%
Source: Elk River Municipal Uti]ities
Note: Giformation on principal electric customers was not available for year ] 998. 2000 was the eazliest year information was available,
so was used in [his schedule For comparison purposes.
86
CITY OF ELK RIVER, MINNESOTA
TAX CAPACITY, ivIARKET VALUE AND ESTI:VIATEll ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Tax capacity
Rea] property
Residential
Commercial
Personal property
Total tax capacity
Tax increment
Taxable tax capacity
Total tax capacity rate
Taxable market value
Real property
Residential
Commercial
Personal property
Taxable market value
Estimated actual value
of taxable property
Taxable market value as a percentage
of estimated actual value
]998 1999 2000 2001
$ 6,051,171 $ 6,339,482 $ 6,878,156 $ 7,981,635
6,298,739 5,996,754 6,2]0,730 6,669,140
294,552 269,243 261,248 255,557
12,644,462 12,605,479 13,350,134 14,906,332
{261 339) (229,853) (141,898) (338,069)
$ 12,383,123 $ 12,375,626 $ 13,208,236 $ 14,568,263
26.255% 29.324% 30.248% 30.596%
$ 435,456,320 $ 486,267.580 $ 530,109,100 $ 602,632,678
202,911,850 218,125,510 239,438,499 256,929.400
7,548,300 7,878,100 7,870,100 7,628,000
$ 645,916,470 $ 712271,190 $ 777,417,699 $ 867,190,078
$ 732,331,599 $ 804,826,203 $ 883,478,873 $ 985,576,523
88.20% 88.50% 88.00% 87.99'%
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.
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2002
2003
2004
2005 2006 2007
$ 7,339,T 6 $ 8,476,233 S 9,978,963 $ 11,994,024 S 14,D91,457 $ 15,906,373
4,622,229 5,258,501 5,4D8,829 5,844,504 6,422,635 7,260,538
203,919 258,501 215,581 237,262 246,741 281,606
12,165,884 13,993,235 15,603,373 18,075,790 2D,760,833 23,448,517
(426,854) {588,732) (608,609) (654,325) (675,049) (786,795)
$ 11,739,030 $ 13,404,503 $ 14,994,764 $ 17,421,465 $ 20,085,784 $ 22,661,722
43.600% 44.614% 4.1.782% 43.763% 43.929% 43.056%
$ 711,908,700 $ 832,141,600 $ 981,551,900 $ 1,182,648,740 $ 1,398,616,327 $ !,575,878,313
274,651,700 309,775,40D 318,14D;D38 345,605,410 375,3D1,273 422,720,587
10.347,400 13,112;SD0 10,934,000 12,020,800 12,494,300 14,318,500
$ 996,907,800 $ 1,155,029,800 $ 1,310,625,938 $ 1;540,274,950 $ 1,786,411,900 $ 2.012,917.400
$ 1,145,691,994 $ 1,382,785,926 $ 1,567,581,D17 $ 1,805,774,228 S 2,109,366,764 $ 2,262,479,345
87.01% 83.53% 83.61% 85.30% 84.69% 88.97°/a
88
CITY OF ELK RIVER, MINNESOTA
PROPERTY TAX RATES
D[RECT AND OVERLAPPING' GOVERNMENTS
LA5T TEN FISCAL YEARS
City of Efk River
Piscal Debt
Year Operating Service Total
1998 23.877 2.378 26.255
1999 26.891 2.433 29.324
2000 27.770 2.538 30.248
2001 28.929 1.667 30.596
2002 39.214 4.386 43.600
2003 37.223 7.391 44.614
2D04 35.861 7.921 43.782
20D5 36.713 7.OSD 43.763
2006 37.179 6.750 43.929
2D07 37.743 5.313 43.056
Overlap ping Rates Total
School District Direct &
Referendum Special Overlapping
County Operating Mkt. Value Districts Rates
27.235 56.539 0.051 1.475 1!1.555
30.265 59.88fi 0.136 1.655 12!.266
31.468 56.027 0.1 ] 1 1.705 119.559
32.341 63.870 D.203 1.737 128.747
47.577 45.969 0.082 t 2.653 142.881
46.277 4L352 0.076 2.696 ]35.015
44.405 30.853 0.154 3.574 122.768
42.028 32.848 0.148 5.349 124.136
41.555 35.950 O.liS 4.056 125.645
40.720 33.208 0.144 3.905 121.033
Source: Sherburne County Auditor/Treasurer
Overlapping rates are those of local and county governments that apply to property owners within the Ciry of Elk River.
Not al] overlapping rates apply to all Cily of Elk River property owners (e. g., the rates for ;pedal districts apply only to the
proportion of the city's property owners whose property is located within the geographic boundaries of the special district.
~ In 2002 taz rates for cities and counties increased significantly due to reductions in state aids and in class rates used to
calculate net tax capacity values.
' As a result of property tax reform measures enacted in 2001, tax rates for school districts for 2002 are substantially less than
the comparable figures from prior years.
89
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CITY OF ELK RNER, MINNESOTA
PRINCIPAL TAXPAYERS
DECEMBER 31, 2007
2007
Taxpayer
United Power Association
NRG F'nergy
Walmart Slores
Bradley Operating L.P.
Phoenix Enterprises
Menazds, [nc
Home Depot
CenterPoint Energy
B & G Realty, Inc.
Target Corp.
Tescom Corporation
Scherer LTD Partnership
Evans Meadows Apts.
Alltool Manufacturing
Connexus Energy
TOTAL
Percentage
Net Tax of To[al Net
Capacity Rank Tax Capacity
$ 596,514 1 2.54%
297,786 2 L27
28],648 3 1.20
182,479 4 0.78
147,883 5 0.63
144,050 6 0.61
138,340 7 0.59
124,832 8 0.53
118,162 9 0.50
117,416 ]0 0.50
.p G,14J.l lV J.LJ/O
Source: Sherburne County Assessor
90
1998
Percentage
Net Tax of Total Net
Capaciri Rank Tax Capacity
$ 908,S1D 1 7.62%
484,19D 2 4.06
426,681 3 3.58
264,222 4 2.22
179,770 5 1.51
178,128 6 1.49
122,482 7 1.03
117,314 8 0.98
117,182 9 0.98
96,560 10 0.81
$ 2,895,839 2428%
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CITY OF ELK RIVER, MINNESOTA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Collected within the
Fiscal Year of the Lery
Fiscal Total Year's Percentage
Year Tax Levy` Amount of Levy
1998 $ 3,251,109 $ 3,188,831 98.08%
1999 3,629,214 3,577,934 98.59
2000 3,995,469 3,922,043 98.16
2001 4,457,247 4,402,150 98.76
2002 4,754,431 4,690,876 98.66
2003 5,594,944 5,513,105 98.54
2004 6,160;102 6,051,358 98.23
2005 7,224,669 7,078,832 97.98
2006 8,429,836 8,249,039 97.86
2007 9,354,375 9,133,690 97.64
Collections in Total Collections to Date
Subsequent Percentage
Years Amount of Levy
$ 60,060 $ 3,248,891 99.93%
32,230 3,610,164 99.48
70,985 3,993,D28 99.94
53,781 4,455,931 99.97
54,156 4,745,032 99.80
64,104 5,577,209 99.68
97,650 6,149,008 99.82
127,557 7,206,389 99.75
135,112 8;384,151 99.46
- 9;133,690 97.64
Total tax ]ery for years 2002-2007 does not include Market Value Homestead Credit received from the State.
91
CITY OF ELK RIVER, MINNESOTA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAS T TEN FISCAL YEARS
Governmental Activities
General
Permanent '
Fiscal General Obligation Lease Special Improvement Tax
Year Obligation Revenue Reveuue Assessment Revolving Increment
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 '
200] - 4,530,000 2,]25,000 8,535,000 1,840,000 1,560,000
2002
2003 -
- 2,230,000
2,045,000 9,950,000 7,450,000
9,765,000 7,520,000 1,575,000
1,305,000 1,477,500
1,352,500 '
2004 - 1,850,000 9,285,000 6,460,000 1,020,000 1,116,000
2005 - 1,645,000 8,785,000 6,605,000 935,000 972,500
2006
3,220,000
1,430,000
8,265,000 2,130,000
-
827,500 '
2007 13,220,000 ~ 1,200,000 7,730,000 4,825,000 - 675,000
Note: Details regarding the city's outstanding debt can be found in the notes to the fmancia] statements. '
~ See the Schedule of'Demographic and Economic Statistics on page 100 for personal income and population data.
z 2007 includes $] QOOO,D00 in debt for a recreation facility which the YMCA has pledged to pay one-third of the debt. '
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Governmental Activities Business-Type Activities
Total
Certificates of Revenue Certificates of Notes Primary Per
Indebtedness Other Bonds Indebtedness Payable Government Capita`
' $ 700,675 $ 315,628 $ 7,795,000 $ - $ - $ 24,431;303 $ 1,555
645,425 502,336 7,362,500 - - 28,131,761 1,701
612,450 376,478 6,872,500 = = 30,292,928 1,842
559,925 242,935 9,945,000 29,337,860 1,688
661,650 ]48,808 11,050,000 500,000 2,854,536 37,897,494 2,096
' 612,950 47,976 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
1,035,20] - 12,885.000 250,000 2,538,226 35,650,927 1,654
' 1,134,334 1,908,725 14,200,000 125,000 3,066,820 36,307,379 1,614
1,090,350 2,123,092 ]6,155,000 2,879,054 49,897,498 2,193
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93
CITY OF ELK RIVER, MINNESOTA
RATIOS OF GENERAL B ONDED DEBT OU TSTANDING
LAST TEN FISCAL YEARS
Less
Amount
Percentage
Net '
General in Debt Net of Net Bonded Bonded
Fiscal Bonded Service Bonded Debt to Tax Debt per
Year Debt Funds Debt Capaeity~ Capita
1998 $ 700,675 $ 241,900 $ 458,775 3.70% $ 29.20
1999 645,425 282,300 363,125 2.93% 21.95 '
2000 612,450 328,605 283,845 2.15% 17.26
2001 559,925 199,967 359,958 2.47% 20.71 '
2002 8,66],650 584,853 8,076,797 66.39% 446.68
2D03 8,612,950 704,885 7,908,D65 56.51% 421.58 ,
2004 8,420,967 791,375 7,629,592 48.90°/a 376.96
2005 8,455,201 813,832 7,641,369 43.86% 354.62
2006 11,474,334 860,393 10,613,941 52.84% 471.73
2007 17,792,017 861,726 16,930,291 74.71% 744.19
Note: Details regarding the city's outstanding debt can be found in the notes to the financial '
statements.
Only includes debt supported by tax levy. '
z See the Schedule of Tax Capacity, Market Value and Estimated Actual Value of Taxable
Property on page 87-88 for property value data.
Population data can be found in the Schedule of Demographic and Economic Statistics on page 100. '
94 t
CITY OF ELK RIVER,IVIINNESOTA
COMPtiTATION OF DIRECT AND OVERLAPPING DEBT
DECEMBER 31, 2U07
Percent
' of Debt City's
Outstanding Applicable Share
Debt to City' of Debt
Duect Debt:
' City of Elk River $ 49,897,496 100.00% $ 49,897,496
Overlapping Debt:
' Sherburne County 34,760,000 25.64 8,912,673
SchoolDistrictlt728 182,911,922 35.48 64,893,126
Total overlapping debt 217.671,922 73,805,798
'1'otaldirectand overlapping debt $ 267,569,418 $ 123,703,294
Debt Ratios:
' Ratio of debt per capita (22,75D population) $5,438
Ratios of dcbt to estimated taxable market value of $2,262,479,345 5.47%
' Sotu~ce: 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.
'phis 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 FIowever, Yhis does not imply that every taxpayer is a resident, and therefore
responsible for repaying the debt of each overlapping government.
' ~ The percentage of overlapping debt applicable is estimated using taxable market property values.
Applicable percentages were estimated by determining the portion of the county's and school
' disri~ict's taxable market value that is within the city's boundazies and dividing it by the county's
and school district's Cota] taxable market value.
' 96
CITY OF ELK RIVER, MINNESOTA
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
Debt limit
Bonds
Reserves
Total net debt applicable to limit
Legal debt margin
Total net debt applicable to the
limit as a percentage of debt limit
1998 1999 2000 2001
$ 12,918,329 $ 14,245,424 $ li,548,354 $ 17,343,802
700,675 645,425 612,450 559,925
241,900 282,300 328,605 199,967
458,775 363,125 283,845 359
958
,
$ 12,459,554 S 13,882,299 S 15,264,509 $ 16,983,844
3.55% 2.55% 1.83% 2.08%
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.
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20D2 2D03 200A 2005 2006 2007
$ 19,938,156 $ 23,100,596 S 26,212,519 $ 30,805,499 $ 35,728,238 $ 40,258,348
10,3~6,65D 10,307,90 10,060,967 10,040,201 13,124,334 17,792,017
717,180 837,754 925,148 950,793 1,003,315 861,726
9,639,470 9,470,196 9;135,819 9,089,408 12,121,019 16,930,291
$ 10,298,686 $ 13,630,400 S 17.076,700 $ 21,',16;091 $ 23,607,219 $ 23,328;057
4835% 41.00°,/a 34.85%a 29.51% 33.93°/a 42.05%
Legal lle6t margin Calculation for Riscal Year 2007
Estimated taxable market valuc $ 2,012,917,400
Debt limit {2% of market value) $ 40,258.348
Debt applicable to limit:
G.O. equipment certificates
2002 Iease revenue bonds
G.O. capital improvement bonds
G.O. EDA bonds
Less: Cash and investments in related
debt service funds
Total net debt applicable to limit
Legal debt margin
97
1,090;350
6,815,000
3,220;000
6,666,667
(861,726)
16,93Q,291
$ 2;,328,057
CITY OF ELK RIVER, NIINNESOTA
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
Revenue Bonds'
Net
Fiscal Gross Operating Revenue Debt Service
Year Revenue Expenses' Available Principal Interest Coverage
1998 $ 11,185,465 S 7,255,594 $ 3,929,871 $ 385,000 $ 408,168 4.95
1999 12,272,861 7,798,108 4,474,753 432,500 411,969 5.30
2000 13,579,218 8,699,897 4,879,321 490,000 395,299 5.51
2001 14,455,781 9,562,295 4,893,486 517,500 368,819 5.52
2002 15,434,083 10,904,432 4,529,651 590,000 463,726 4.30
2003 16,432,764 12,708,022 3,724,742 615,000 486,296 3.38
2004 17,656,784 13,760,051 3,896,733 2,445,000 513,878 1.32
2005 19,791,626 15,615,453 4,176,173 1,150,000 485,777 2.55
2006 21,940,299 16,970,625 4,969,674 2,405,000 573,34> 1.67
2007 25,212,616 19,212,200 6,000,416 1,045,000 595,642 3.66
Note: Details regarding the government's outstanding debt can be found in the notes to the f nancial statements.
~ Includes Liquor, Sewer, Water and Electric revenue bonds
z Gross revenue excludes interest income, connection fees and miscellaneous revenues
' Expenses exclude depreciation, interest on bands and miscellaneous expenses
98
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Special Assessment Sonds
Special
Assessment Debt Service
Collections Principal Interest
$ 1,511,651 S 490,000 $ 392,370
1,695,197 785,000- 441,852
1,803,081 865,000 607,361
1,757,048 1;320,000 488,592
1,607.767 1,085,000 370,770
1,705,463 1,185,000 321,911
1,901,427 1,060,000 297,840
1,123,407 925,000 264,999
999,232 4,475,000 198,650
231,839 395,000 64,339
Coverage
1.71
1.38
1.22
0.97
t.la
1.t3
1.40
0.94
0.21
0.50
99
CITY OF ELK RIVER, MINNESOTA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Personal
Fiscal Income Per Capi[a Median School Unemployment
Year Popolation' (in thousands) Income Age3 Enrollment' Rates
1998 15,714 S 381,630 $ 24,286 29 9,377 2.5%
1999 16,542 405,395 24,507 29 9,687 2.7%
2000 16,447 420,994 25,597 32 10,002 3.2%
2001 17,380 456,677 26,276 32 10,587 3.9%
2002 18,082 470,096 25,998 32 11,100 5.1%
2003 18,758 489,284 26,084 32 11,257 5.8%
2004 20,240 553,301 27,337 32 11,749 5.D%
2005 21,548 593,216 27,530 32 12,259 4.7%
2006 22,550 na na 32 12,735 4.4%
2007 22,750 na na 32 13,058 S.6%
Data Sources
' State Demographer, " -City of Elk River estimate
~ Bureau of Economic Analysis
s US Census Bureau
School Dish~ict
MN Dept. of Employment and F,,conomic Development
na -not available
100
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CITY OF ELK RIVER, MINNESOTA
' PRINCIPAL EMPLOYERS
CLRRENT YEAR AND NINE YEARS A6O
2007 1998
Percentage Percentage
' of Total City of Total City
Emulover Employees Rank Employment Employees Rank Employment
Independent School District 728 633 I 5.84% 655 1 8.22%
Sherburne County 600 2 5.53% 30D 4 3.77°
Walmart 450 3 4.15% - - _
Great River Energy 438 4 4.04% 425 2 5.34°,;,
Guardian Angels of Elk River 355 5 3.27% 236 6 29C%
Cub Foods 250 6 2.31% 180 9 2.26%
City of Ell<River 205 7 1.89% 184 8 2.31°
Tescom Corporation
Targer 200 8 1.84%
i79 9 1.65°/ 331
200 3
7 4.16%
2.51°
Menards 1G4 10 1.51% 150 10 1.88°
Coborns Food and Drug - - - 150 t0 1.83%
Alltool Manufacturing - - - 250 5 3.14%
1
Source: Minnesota Department of E mployment and Economic Development
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]Ol
Emrction
General government
Public safety
Police
Officers
Civilians
Fire
Pire administration
Paid on-call volunteers
Building
Environmental
Public works
Culture and recreation
N Economic dcvelopmenr
Municipal liquor
Sewer
Water
Electric
Total
CITY OF ELK RIVER, MINNESOTA
FULL-TIME EQUIVALENT' EMPLOYEES BY FUNCTION
LAST TEN EISCAL YEARS
1995 1999 2000 2001 2002 2003
12.0 13.0 15.0 15.0 ]8.5 iG.S
2004 2005 2000 2007
2tS 25.0 25,0 24.3
24.0 25.0 2C.0 26.0 26.0 27.0 28.0 29.0 29.0 30.0
7.0 8.0 7.0 7.0 7.0 7.0 8.U 8.0 9.0 20
1.0 LO 2.0 2.0 29 2.0 2.0 3.0 3.0 3.5
34.0 34.0 34.0 34.0 35.0 35.0 35.0 38.0 39.0 39.0
8.0 8.0 8.0 9.D 9.0 9.0 10.0 9.5 9.5 9.5
LO 2.0 2.0 2.0
13.0 13.0 14.0 15.5 16.5 16.5 12.5 ' 13.5 13.5 15.0
3.0 4.5 55 5.5 9.0 9.3 13.8' f6.8 20.5 20.8
1.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
5.0 5.0 4.0 4.0 59 S.0 S.0 8.0 8.0 8.0
4.0 4.D 4.0 4.0 4.0 4.0 4.0 5.0 5.0 (.0
3.0 3.0 3.0 3.D 3.0 4.0 5.0 5.0 5.0 C.0
19.0 20,0 22.0 24.0 26.0 26.0 29.0 29.0 29.0 30.0
134.0 140.5 146.5 151.0 163.0 163.3 176.8 193.8 199.8 205.1
Source: City of EI(< River F[nance -epartment
'Phe StreetslParks deparm~ent was split in 2004 to the Street Maintenance and Park Maintenance deparnnents.
Fmrntiml
Planning
Land use applications
Police
Police calls
An'CSCS
1 IrC
Fire calls
Building/env ironmen to I
Permits issued
Valuatimr of permits
(rhmrsands oFdollars)
Public works
o Street sweeping (hours)
w Snowplowing (hours)
Pquipment repair (hours)
Culture and recreation
2ecrealion parlicipanls
[ce arena usage (hours')
Golf rounds
Sewer
Average daily treannen[ flow
(thousands of gal Ions)
Water
New connections
Average daily consumption
(thousands of gal Ions)
Electric
New connections
Average daily consumption
(drousands ofKWh's)
CITY OF ELK RI V ER, MINNESOTA
OPCRATING INDICATORS 6Y FUSCTION
LAST TES FISCAL YEARS
l+iscul Year
1998 J999 2000 2001 2002 2003 2004 2005 2006 2007
133 140 132 131 141 133 147 142 104 85
L7,492 L6,415 20,055 17,40.0 18,349 L8,250 78,129 19,431 18,494 L9,277
1,756 1,114 1,155 L,075 1,035 888 9L6 990 955 68?
402 356 984 347 406 426 450 486 451 436
2,523 2;248 2,7 L0 2,867 2,667 4,476 0.,068 3,845 4,388 2,382
557,400 $46,211 $72,064 $91,222 $58,893 $97,101 5120,729 $147,413 $ 95,844 $ 67,309
L,184 L,696 L,168 L,6ll ],008 1,096 1,312 1,144 1,192 627
1,792 2,752 2,776 3,474 2,560 2,808 2,610 2,640 1,648 4,380
3,520 3,864 3,768 3,163 4,933 5,448 5,600 5,700 5,660 6,440
1 781 6,629 8,390 9,106 8,164 7,557 L0,232 10,537 10,633 L4,104
3,581 3,339 3,390 3,965 4,11,2 3,683 3,78A 4,187 4,266 4,188
10,000 1Q970
754 780 ffi4 947 L,OAL 1,08? L,1 L4 1,L80 1,163 1,190
UO 2L4 L89 ]79 t98 306 911 250 243 93
t,lGO 1,357 L583 1,864 1,758 1,936 L,784 1,934 2,226 2,394
224 367 353 428 203 394 53L 601 323 379
313 328 347 379 410 443 454 500 534 579
Sources: Various city depaiTments
note: 'Chc golf course was purchaszd in 3006.
Ctl'Y OE ELK RIVER, MINNESOTA
CAPITAL ASSET STATISTICS I3Y FUNCTION
LAST TEN F[SCAL YEARS
Functimi
Public safety
Police:
Stations
Patrol emits
Fire Stations
Rihlic works
Streets (miles)
o Culture and recreation
~ Par)ys
Parks acreage
Sewer
Sanitary sewers (miles)
Lift stations
Maximum daily treatment capacity
(thousands of gallons)
Water
Maximum daily capacity
(thousands of gallons)
Electric
Generating facilities
Fiscal Year
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
t 1 1 1 1 ( 1 1 1 1
10 10 10 l0 10 10 10 11 I1 11
1 I 1 1 1 2 2 2 2 2
84 90 100 126 131 138 145 ISO 1S1 151
24 27 30 31 37 39 40 40 44 44
669 70S 740 769 847 872 883 898 927 964
41 43 49 53 61 63 67 70 73 78
14 (5 16 16 19 19 l9 20 21 21
1,600 1,600 1,600 1,600 1,600 1,600 1,600 2,200 2,200 2,200
S,2S6 6,696 6,696 6,696 6,696 6,696 6,696 6,900 8,100 8,100
4 4 4 4 S 5 S S 6 6
Sources: Various city depauments
Note: No capital asset indicators are available for the general government function.
~ ~ ~ ~ ~ ~ ~ ~
CITY OF ELK RIVER
ELK RIVER. MNNESOTA
REPORT ON MINNESOTA LEGAL COMPLIANCE
YF,AR ENDED
DECEMBER 31; 2007
~~~~ABDO
''~~EJI~C'jK~&R ~'
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i;ertr~e~~l FuGdic LcnuriYaiats ~~ Gun.vullunla~
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w~ t,E/hC~K~&~C
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Certified Public Accountants & Consultants
Grandv[ca'Square
5201 Eden Avevue
Suite 370
Edina. h1!\ 5543G
REPORT ON M WNESOTA LEGAL COMPLIANCE
Honorable Mayor and Council
City of Ells River, Minnesota
We have audited the financial statements ofthe governmental activities, the business-type activities, the aggregate discretely
presented component units, each major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota
(the City), as of and for the year ended December 31, 2007 which collectively comprise the City's basic financial statements as
listed in the table of contents.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
provisions of the Minnesota Legal Compliance Audit Caeide for Local Government, promulgated by the Minnesota Office of the
State Auditor pursuant to Minnesota statute 6.65. Accordingly, the audit included such tests of the accounting reeords and such
other auditing procedures as we considered necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Goven~ment covers seven tnain categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, tax
increment financing, and miscellaneous provisions. Our study included all of the listed categories.
The results of our tests indicate that for the items tested, the City complied with the material terms and conditions of applicable
legal provisions.
This report is intended solely for the information and use of the Council, management and the Minnesota Office of the State
Auditor and is not intended to be and should not be used by anyone other than these specifcd parties.
March 13, 2008
Minneapolis, Minnesota
ABDO; EICK & MEN RS, LLP
Ceri fed Public Accountants
952.835.9090 Fax 952.835.3261
www.aemcpas.com
CITY OF ELK RIVER
ELK RIVER, MINNESOTA
MANAGEMENT i,ETTER
YEAR ENDED
DECEMBER 31, 2007
~ABDO
~EICK~& ''
-.'_ lYJ_I '~ 1 Jul W LLP
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Ger~tif«d Jkblic lrr~unlan(.v h Uonstxllrenls
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ABDO
EICK ~
-I ~~ ~1VJJ~ 1 l~l W LLY
Cert~~d Pu6dic Accvunt¢rnts & Consultants
March 13, 2008
Grandview Square
5201 Edcn Acenur
5uile 370
Edina. VIA 55436
Honorable Mayor and Cowucil
City of Elk River, Minnesota
We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely
presented component units, each major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota
(the City) for the year ended December 31, 2007 and have issued our report thereon dated March 13, 2008. Professional
standards require that we provide you with the following information related to our audit.
Our Responsibility Under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express opinions about whether
the financial statements prepared by management with your oversight are fairly presented, in al] material respects, in conformity
with accounting priuciples generally accepted in the United States of America. Our audit of the financial statements does not
relieve you or management of your responsibilities.
' Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that the financial statements
are free of material misstatement. As part of our audit, we considered the internal control over financial reporting of the City.
Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning
such internal control. We are responsible for communicating significant matters related to the audit that are, in our professional
jade vent, relevant to your responsibilities in overseeing the financial reporing process. However, we are not required to design
procedures specifically to identify such matters.
Significant Audit Findings
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and
would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or
material weaknesses.
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal
course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a
control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record,
process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a
remote likelihood that a misstatement of ttre City's 'financial statements that is more than inconsequential will not be prevented or
detected by the City's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that result in more than a remote
likelihood that a material misstatement of the financial statements will not be prevented or detected by the City's internal control.
We noted no matters nwolving the internal control over Financial reporting or compliance and its operation that we consider to be
material weaknesses.
1 952.895 X090 • F7.x 9.32.835.3261
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City of Elk River
'.19arch 13, 2008
Page 2
Compliance
' As part of obtaining reasonable assurance about whether the financial statements are frea of material misstatement, we performed
tests of compliance with certain provisions of laws, regulations, contracts and grants. However', the objective of our tests was noY
to provide an opinion on compliance with such provisions. W e noted no instances of noncompliance with Minnesota statutes.
Planned Scope and Timing of the Audit
We performed the audit according to the plarmed scope and timing.
~~ Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terns of our
engagement letter, we will advise management about the appropriateness of accounting policies and tlteir application. The
sib rif3cant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies
were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by
the Ciry doting the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that
have been recognized in the financial statement in a different period than when the transaction occurred.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management's
knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates ar
particularly sensitive because of their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most significant estimate affecting the financial statements w
depreciation on capita] assets.
Management's estimate of depreciation is based on estimated useful lives of the assets. We evaluated the key factors and
' assumptions used to develop depreciation in determining that it is reasonable in relation to the financial statements taken as a
whole.
' The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are
particularly sensitive because of their significance to financial statement users.
DifSculties Encountered in Performing the Audif
We encountered no significant difficulties in dealing with management in performing and completing our audit.
1
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952.835.9090 F x 9.13.835.:1261
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Corrected and Uncorrected Misstatematts
City of Elk River
March 13, 2008
Page 3
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than tltose
that are trivial, and communicate them to the appropriate level of management. Management has con-ected all such misstatements.
In total we prepared 3 journal entries, all of which were considered audit adjustments. These entries are necessary fo adjust
balances to the proper year end amounts.
Adjusting Journal Entries JE # 1
Allocate MV credit -identified by aem, prepared by client
101-000.000-3322 MV Credit
211-000.000-1010 Cash
245-000.000-1010 Cash
312-ODD.000-1010 Cash
331-ODD.000-IOIU Cash
333-000.000-1010 Cash
340-000.000-1010 Cash
401-000.000-1010 Cash
404-000.000-1010 Cash
101-000.000-1010 Cash
211-000.000-3322 MV Credit
24s-000.000-3322 MV Credit
312-000.000-3322 MV Credit
331-000.000-3322 MV Credit
333-000.000-3322 MV Credit
340-000.000-3322 MV Credit
401-000.000-3322 my credit
404-000.000-3322 MV Credit
Total
Adjustin¢ Jmirnal Entries JE # 2
To record additional AP
924-800.801-4319 Other Professional Services
924-800.801-4623 Bond Issuance Costs
924-000.000-2020 Accounts Payable
924-800.801-4319 Othcr Yrofessional Services
Total
Adjusting Journal Entries JE # 3
' To record additional prepaid expense
603-000.000-li50 Prepaid Expenses
603-910.912-4361 Insurance
603-915.912-4361 Insurance
Total
952.ft3i.9090 Fax 953.835.3261
~,~~w.aemcpas.cum
Debit Credit
$ 61,881
6,225
849
3,SS6
4,891
26,272
I5, li7
809
4,122
$ 61,881
6,225
849
3,ss6
4,89 ]
26,272
15,157
809
4,122
$ 123,762 $ 123,162
$ 25,000
25,000
$ 25,000
zs,ooo
$ 50,000 $ 50,000
$ 6,300
$ 4.450
1,850
$ 6,300 S 6,300
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City of Elk River
Ma~~ch 13, 2008
Page 4
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to
our satisfaction, concerning a financial accounting, reporting or auditing matter that could be significant to the financial statements
or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
R'e have requested certain representations from management that are included in the management representations letter dated
March 13, 2008.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to
obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's
financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional
standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accountnrg principles and auditing standards, with
management prior to retention as the City's auditors. However, these discussions occurred in the normal course of our
professional relationship and our responses were not a condition to our retention.
9.12.835.9090 Fax 952.835.32fi1
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Citv of Elk Aiver
March 13, 2008
Page 5
Financial Position and Results of Operations
Our principal observations and recommendations are summarized on the following pages. These recommendations resulted from
our observations made in connection with our audit ofthe City's financial statements for the year ended December 31, 2007.
(;eneral Fund
The General fund is used to account for resources traditionally associated with government, which are not required legally or
by sound principal management to be accom7ted for in another fund. The General fund balance increased $535,618 from
2006. The fund balance of $5,352,004 is 43 percent of the 2008 budgeted expenditures. We reco~mnend the fund balance be
maintained at a level sufficient to fund operations until the major revenue sources are received in June. We feel a reserve of
approximately 40 to 50 percent of pla7med expenditures and transfers out is adequate to meet working capital and small
emergency needs.
Minnesota cities must maintain substantial amounts of fund balance in order to meet their Liquidity and workiog capital needs
as an operating entity. That is because a substantial portion ofyour revenue sources (taxes and intergovernmental revenues)
are received in the last two months of each six-month cycle.
The Minnesota Office of the State Auditor has classified cities' unreserved fund balance levels relative to expenditures as
1 follows:
Percent of Months
Planned
Expenditures Expenditures
on hand
F,xtremely low Under 20% Under 2.5
Low 21 - 34 25 - 4
Acceptable 35 - 50 4 - 6
Moderately high 51 - 64 6 - 7
High 65 - 100 8 - 12
Very high 100 - 150 12 - 18
Exh~emely high Above 150 Above 18
I The State Auditor does group all General, special revenue funds of the government when making this calculation where our
calculation is based only on the General fund. 'the Office of the State Auditor (the OSA) has issued a Statement of Position
relating to fund balance stating "a local government should identify fund balance separately between reserved and unreserved
' fund balance. The local government may assign and report some or all of the fund balance as designated and undesignated."
We recommend local governments adopt a formal policy on the level of unreserved fund balance YhaY should be maintained in
the General and special revenue funds. This helps address citizen concerns as to the use of fund balance and tax levels.
952.835.9090 Fax 952.835.3267
www.aemepas.com
A table summarizing the General fund balance in relation to the following years' budget follows:
Fund General
Balance Budget Fund
Year December 31 Year Budget
2002 $ 3,190,589 20f13 S 7,687,900
2003 3,732,049 2004 7,875,400
2004 3,967,380 2005 9,366,600
2005 4,601,331 2006 (0,596,550
2006 4,816,386 2007 11,648,000
2007 5,352,004 2008 L,493,450
Fund Balanec as a Pcrccnt of Next Year's Budget
$14, 000,000
512,000,000
S 10,000,000
58,000,000
$6,000,000
s4,ooo,ooo
$2,000,000
$-
City of Elk River
March 13, 2008
Pagc G
Percent
of rued
Balance to
Budgct
4L5 °ia
47.a
42.4
43.4
41.3
42.8
$12,493,450
S] 1,64x,000
$]0,596,550
$9,366,600
$7,687,900 $7,875,400
4z.x°i°
43.4% 4I.3°io
47.4°r6 42.4°i°
41.5%
2002 2003 2004 2005 2006 2007 2008
~~Achial fund Balances (Budget
952.8369090 Prix 951.II35.3261
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• Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. These
would include capital outlay replacement, lawsuits acrd other items. An adequate fund balance will provide the
financing needed for such expenditures.
' The purposes and benefits of a General fund balance are as follows:
' Purposes and SeneLts
• Expenditures are incurred somewhat evenly throughout Lhe year. However, currently, property tax and state aid
revenues are not received until the second half of the year. An adequate fund balance will provide the cash flow
required to finance the General fund expenditures until these revenue sources are received.
• The City is vulnerable Yo legislative actions at the State and Federal level. The State continually adjusts the local
government aid and property tax credit formulas. We also have seen the State mandate levy limits for cities over
2,500 in population. An adequate fund balance will provide a temporary buffer against those aid adjustments or levy
limits.
• A strong fund balance will assist the Cit)~ in obtaining, maintaining or improving its bond rating. The result will be
better interest rates in fuh~re bond sales.
The 2007 operations are sununarized as follows:
Revenues
Expenditures
~I]
1
Excess (deficiency) of revenues
over (under) expenditures
Other financing sources (uses)
Transfers ni
Transfers out
Total other financing sources (uses)
net change in fund balances
Fund balances, January 1
Fund balances, December 31
Some of the line items with significant variances are highlighted below:
Final
Budgeted Actual
Amounts Amounts
City of Elk River
March 13, 2008
Page 7
Variance with
Final Budget -
Positive
(negative)
$ 11,335,750 $ 11,474,914 $ 139,164
11,453,400 11,110,570 342,830
(117,650) 364,344 481,994
436,400 441,803 >,403
(194,600) (270,529) (75,929)
241,800 171,274 (70,526)
124,150 535,618 411.,468
4,816,386 4,816,386 -
$ 4,940,536 $ 5,352,004 $ 411,468
• The City received $117,008 in licenses and permits more than anticipated.
• The general govenunent department expenditures were $134,853 under budget.
952.835.9090 Fax 902.835.3261
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• i City of Efk River
March 13, 2008
' w I Page 8
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`~
A comparison between 2005, 2DD 6 and 2007 revenues and trap s'f ers is presented below:
' Percent of
Source 2005 2006 2007 Total
General property taxes $ 5,72],248 $ 6,903,177 $ 7,900,185 663
Licenses and permits t,24Q336 1,207,368 987,708 8.3
Intergovermental 1,353,246 1,379,289 1369,707 1 LS
Charges for services 994,653 345,305 749,698 63
Fines and forfeitures 164,216 150,401 148,904 12
Interest 111,242 217,751 234,780 2.0
Miscellaneous
Transfers in 25,532
493,135 57,552
432,686 83,932
441,803 0.7
3.7
Total revenues and transfers $ L0,103,608 $ ] 1. (93,529 $ 11.916,717 100.0
A graphical presentation of 2005, 2006, and 2007 revenues and t ransfers fo]lows:
$9,000,000
$8;000,000
$7;000,000
$6,000,000
$5,000,000
$4,oao,ooo
$3,000,000
$2,000,000
$1,000,000
$-
zoos zno6 zoos
tGcncra] property lases ~~Licenses and permits ~Intergovcrnmcntal Other
952.835.909(] Fa.r 9.i2.835B261
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~ ~ City of F,lk River
March t3, 2008
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A comparison between 2005, 2006 and 20 07 expenditures and trans fers is presented below:
Percent of
Program 2005 2006 2007 Total
General government S 2,055,050 $ 2,173,614 $ 2,377,597 20.8
Public safety 4,451;843 4,873,270 5,084,372 44.8
Yublic works 1,407,269 1,505,213 1,750,821 15.4
Culhtreandrecreation
Capital outlay 1,284,211
]2Q332 1,340,026
397,883 1.496,202
401,278 l3.]
3.5
'transfers out 150,902 688,518 270,529 2.4
Total expendihtres and transfers $ 9,469,607 $ 10.978,524 $ 11,381,099 100.0 "/o
A Graphical presentation of 2005, 2006 an d 2007 expenditures and transfers follows:
$fi,000,000
Ss,000,000
$4,000,000
$3,000,000
$2,000,000
r
$~,ooo,ooo
$_
zoos
2006 2007
'~~General government ~~Public safety ~~Public works Other
~~
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City of Elk River
March 13, 2008
Page ] 0
Special Revenue Funds
A summary of the special revenue fiord balances (deficits) is shown below:
Fund
Major
Librarv
Nonmajor
Ice Arena
Senior Citizen Account
Park Dedication
Landfill
Landfill Construction Debris
Revolving Loan
DTED Grant/Loan
Development Fund
Capital Outlay Reserve
Emergency/Insurance Reserve
Gavemment Buildnngs Reserve
Drug Forfeiture Reserve
Severance Pay Reserve
NSP/RDF Reserve
Economic Development Authority
EDA DTED Loan
Totat nonmajor
Total
9,885,727
$ 12,787,376
48,093
$ (2,579,768)
Fund Balances (lleficits)
December 31,
2007 2006
Increase
(Decrease)
$ zr.7s8 s z,9o1,649 $ (z,627,s61>
27,318
15,264
(303,949)
] .456, 847
638,765
l,o1g949
135,002
485,406
2,376,519
582,358
1,997,274
4,648
132,934
413,021
749,044
212.420
18;799
14,097
268,023
1,545,804
607,232
943,263
128,349
483,239
2,679,39]
606,056
] ;426,121
11,021
126,371
305,714
511,682
210,565
8,519
1,167
(571,972)
(88,957)
31,533
b7,686
6,653
2,167
(302,872)
(23,698)
571, L53
(6,373)
6,563
107,307
237,362
1,855
9,933,820
$ 10,207.608
Following are the main reasons for some of the change in ending fund balances:
The Park Dedication fund decreased due mainly to capital outlay expenditures and deferred park dedication credits.
The City should review anticipated revenues and consider how it will eliminate this deficit fund balance.
• The Library fund decreased as a result of the Library construction project.
• Capital Outlay Reserve fund decreased mainly due to n'ausfers out of $641,000 as par[ of internally financing a
portion of the Library construction project.
• Government Buildings Reserve fund increased mainly due to landfill host fee revenues.
952.835.9090 Fax 952.835..32fi1
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t , ~ / City of Elk Rivcr
March 13, 2008
' L~~ t, Page 11
Debt Service Funds
' The Debt Service funds are used to account for the resources accumulated to repay bond princ ipal and interest. The resources
generally consist of special assessments levied against benefiting properties, general property t axes or tax incre ments.
Cash and Final
Temporary Tota] Bonds Maturity
Debt Service Fund Investments Assets Outstanding Date
Improvement Bonds S 686,388 $ 3,106,262
1998A G.O. Improvement Bonds $ 145,000 02/O1i09
2003A G.O. Improvement Bonds 620.000 02/01/14
2005A G.O.ImprovemeotBonds 970,000 02/01/76
2007C G.O. Improvement Bonds 3,090,000 D2/O1/IS
Government Building Bonds 1,017,018 1,055;096
1997 City Ha]I and Law Enforcement
Facility Revenue Refianding Bonds 915,000 02/01/11
2002A Public Safety Building Lease
Revenue Bonds 6,8]5,000 02/01/23
1996C G.O. Ice Arena Bonds 995,000 12/01/13
2006C G.O. Capital Improvement Bonds 3,220,000 02/01/27
20070 EDA G.O. Bonds 10,000,000 02/01/33
Equipment Certificates 256,659 277,445
20050 G.O. Equipment Certificates 440,250 02/01/10
2006B G.O. Equipment Certificates 349,600 02/01/11
2007B G.O. Equipment Certificates 300,500 02/01/]2
TIF Bonds ]28,907 128,907
2000ll G.O, Tax Increment Refunding Bo nds 1 ]0;000 02/01/10
2000A G.O. Tax Increment Bonds
Storm Sewer Revenue Bonds
67,363
73,89] 565,000 02/01/15
1994C G_O.Sturm Sewer Revenue Bonds 205,000 ]2/01/09
Total Debt Service Funds $ 2.156,335 $ 4,641,601 $ 28,740,350
A summary of non-enterprise fund bonds outs tanding relative to market value and population follows:
Bonds
"Paxable Payable in Less Ratio of
Market llebt Service Amount Nct Debt
Fiscal Population Value Funds Available Net to Market Net Debt
Year (I) (2) (3) (4) Debt Value per Capita
' 2007 22,750 $2,012,917,400
2006 22,550 1,786,411,900 $ 28,740,350 S 2,212,b39
13,786,834 2,262,414 $ 26,527,711
77,524,420 1.3 %
0.6 $ 1;166
511
2005 21,548 1,540,274,950 19,977,70] 6,595,667 13,382,034 0.9 621
2004 20,240 1,310,625,938 20,436,967 5;879,804 14,557,163 2.9 719
2003 18,758 ],]55,029,800 22,600,450 5,756,402 16,844,048 3.0 898
(I) Provided by Ciry
(2) Provided by County
(3) Bonds reported in Debt Service funds
(4) Available fund balance in the Dcbt Service foods
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City of Ells River
March 13.2008
Page 12
Capital Projects Funds
The fund balances of all capital projects funds are summarized below:
Fund Balances
December 3l, lnerease
Capital Projects Fund 2007 2006 (Decrease)
Major
Street Improvement S 5,744,814 $ 5,026,032 $ 718,782
Improvement Projects 3,149,417 2,757,545 391,872
YMCA 5,883,231 - 5,883,231
Total major 14,777,462 7,783,577 6,993,885
Nomnajor
Tax Increment Financing Dish~icts 285,005 307,996 (22,991)
Total $ 15,062,467 $ 8,091_573 $ 6,970.894
The City has multiple individual projects that make up the funds presented above. The City should continue to monitor each
individual project.
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Enterprise Funds
The activities of the Enterprise funds include the municipal liquor, garbage, sewer, water and electric. The electric and water
operations, under the direction of the l.~tilities Commission, arc included in the financial statements since Council has the
uhimate oversieht responsiUility for their operations.
Municipal Liquor Fund
City of F,Ik River
March 13, 2008
Yage ] 3
The followin, is a summary of operations in the Municipal Liquor fund for the past three years:
2005
2006
2007
Amount Percent Amount Percent Amount Percent
Sales 5 4,801,541 ]00.0 % $ 5.892950 100.0 % S 6,03(i,7~6 100.0 "/n
Cost of salts (3.505,709) (73.0) (4335.420) (71.8) (4,318,304) (71.5)
Giros profit 1 295,832 27.0 1.664,530 282 1,718,452 285
Operali~g re~~enues' 4,720 0.1 8.818 O.I 6,332 0.1
Operating expenses (797,423) (16.6) (919,166) (15.6) (931,356) (15.4)
Operating income 502,929 10.5 754.182 72.7 793,42R 132
Sonopcrating
revenues 7504 0.2 35,612 0.(i 80,814 1.3
Trausfcrs out (233300) (4-9). (233.300] (4.Oj (267,700) (4.4)
Change in net assets S 277,133 5.8 % S 556,494 9.3 "/~ S 606,542 10.1
Cash and investments S ],681,215 S 2.277,746 S 2,977,703
Bonds payable S 1,200.000 S 1.200,000 S 1,150,000
Municipal Liquor Fund Operations Summary
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
D Sales ('Gross profit'("Operating income °'`~""Change in net assets Cash and investment
Safes, gross profit, operating income, and change in ne[ assets all increased each year since 2005.
952.i33o9090 C'ax 95Z.8:SS.:S261
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2005 2006 2007
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City of Elk River
March 13, 2008
Page 14
The Office of the State Auditor annually publishes a report analyzing the operation of municipal liquor stores in the State.
The last most recent year of published information is for the year ended December 31, 2006. The statewide averages for
all operations are smnmarized below.
Off Sale
2004 2005 2006
Percent Percent Percent
of Sales of Sales of Sales
Sales 100.0 °.'° 100.0 % 100.0
Cost of sales 75.5 75.2 753
Gross profit 24.5 24.8 24.7
Operating expenses 16.9 17.0 17.1
Operating income 7.6 7.8 7.6
Nonoperating revenue 03 0.2 0.5
Income before transfers 7.9 % 8.0 % 8.1
Source: Analysis of Municipal Liq uor Store Operations, for the year ended December 31, 2006
Published by Ylre Minnesota Office of the State Auditor
The gross profit percent of the City remains above the stato-wide average by approximatel y 4 percent. Also, the City's
income before transfers as a percen tage of sales for 2006 and 2007 of 93 and 10. I percent , respective ly, were above the
state-wide average.
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City of Elk River
March L3, 2008
Page 15
Garbage Fund
The following is a summary of operations in the Garbage Cund for the past three years
2005 2006 2007
Amount Peeccnt Amount Pcrccnt Amount Percent
Operating revenues $ 1,065,008 lOD.0 % $ ],]16,063 1D0.0 % $ 1,146,973 100.0
Operating expeuses 1,047,479 98.4 1,094,788 98.1 I,l 14,133 97.1
Operating income 17,539 ].6 21,275 1.9 32,840 2.9
Nonoperating revenues 2,235 D? 5.695 0.5 9,873 0.9
Transfers in 3,480 0.3 47,667 4.3 26,860 2.3
Change in net assets $ 23,244 2.1 °/~ $ 74.637 G.7 % $ 69,572 6.1
Cash and investments $ 93,631 $ 192.402 $ 242,528
Uarbage Fund Operations Summary
$1,400,000 -
$1,200,000 -
$1,000,000
$800,000 -
$600,000 -
$400,D00
$200,000 -
$- '
2005 2D06 2007
^ Operating revenues ^ Operating expenses ®Operating income
~ ^ Change in net assets ^ Cash and investments
The expenses of this fiord are mainly contracted services that arc generally fixed in amount and relate to the number of
users. As a result, it is not necessary to carry a large cash reserve. The current level appears adequate. Cash and
operating have increased each of the Last three years.
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City of F,lk River
March 13, 2008
Yage 1 fi
Scwcr Fwtd
'fhc following is a summary of operations in the Sewer fintd for the past three years:
2005 2006 2007
Amount Percent Amount Percent Amount Percent
Operating rcvcmics $ 1,261,853 100.0 % $ 1,352,647 100.0 % S 1,454,219 100.0
Operating expenses 1,463,985 176.0 1.654,489 122.3 1,731,676 119.1
Operating loss {202,]32} (76.0) (301,842) (22.3) (277,457) (19.1)
Nonoperating revenues 1,148,891 91.U 1,]88,785 87.9 1,248,210 85.8
Capital contributions 556,429 44.1 1,134,740 83.9 229,715 15.8
Transfers out (33,030) (2.6) (272,175) 20.1 (35,000) (2.4)
Change in nel assets $ 1,47Q 158 116.5 °/~ $ 1,749508 129.4 % $ 1 165,468 80.7
Cash and investments $ 5.759,869 $ 5,537.681 $ 6.638,091
Bonds payable $ ],660,000 * S 1,660,000 $ 1520 000
* This is repotl net of f 996 Bonds that were refiutding in 2005 and paid from escrow in 2006.
Sewe r Fund O perations Summary
$7,OOO,ODU -
$6,000,000
$5,000,000
$4.000,000
$3,000,000
S2,OOQ,000
S 1,000,000
$-
$(1,000,000)
2005 2006 2007
^ Operating revenues ~ Operating expenses ®Operating (oss O Change in net assets O Cash and investments
The cash balance remains strong relative to operations. The nonoperating revenue is made up mainly of connection fees.
This has been a larse factor in the increase in cash over the last several years. These connection fees ultimately provide
for current debt service and future expansion of the system. There have been operating losses for the past four years.
Depreciation expense was $852,651 in 2007; which is included in the operating expenses. We recommend the City
annually evaluate rates to insure revenues are covering costs.
952.II:359090 Fix 953.835.3561
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City of Elk River
March 13, 2008
Page ] 7
Water Fund
The following is a summary of operatim~s in the Water fund for the past three years:
2005 2006
.Amount Yzrcenl Amount Percent
tom
Amount Pcrccnt
Opcratiug rcvcuucs $ 7.362,902 100.0 '% $ T,77U, 819 100.0 % $ 2,144,622 100.0
Opcrating cxpcuscs 7.828,489 1342 1,860,439 105.1 2.112,796 98.5
Operating income (loss) (465,587) (34.2) (89,620) (5.1) 31,826 ].5
Nonopcrating rcvcuucs 659,498 48.4 873,948 49.4 440,752 20.6
Capital contributions 533,038 39.1 838,674 4Z4 292,965 L39
Teans fore out (25,739) (l .9) (31,018) {1.8) (20,000) (0.9)
Change in net assets S 701,210 51.4 % $ 7.591,984 89.9 % $ 745543 34.9
Cash and investments S 1.754,023 $ 2.579224 S 2,394,387
Bonds payable S 6,146,250 S 5.736.250 _5_ __5,311,250
Water Fund Operations Summary
$3,OOQ000 -
$2,500,000 -
$2,OOQ000 -
$1,500,000
$1,OOQ000
$500,000
$-
S(500,000) -,
$(1.000,000) ~
2005 2006 2007
__ --- _..
^ Operating revenues ~ Operating expenses ®Operallng loss O Change in net assets O Cash and investments
As with the Sewer fund, the cash balance remains sn-ong relative to operations. The nonoperating revenue is made up
mainly of connection fees. 'These connection fees ultimately provide for current debt service and future expansion of the
system. This is the first time in tour years that the Water fund has reported operating income. We recommend the City
annually evaluate rates to insure revenues are covering casts.
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Cii)~ of Elk Rivcr
March 13, 2008
Page 18
Electric Fund
A comparison of the past three year's Electric fund operations is as follows:
2005 2006 2007
Amounl Percent Amount Percent Amount Perecnt
Operating rcvcnucs S li.871,039 100.0 % $ 17,143,485 100.0 % $ 19,895,323 100.0
Operating expenses 14775,980 93.1 15.879,150 92.6 18.264.135 91.R
Operating income 1,D95,059 6.9 1264,335 7.4 1,631,188 8.2
Sonopcratiug rcvcuues 556,899 3.5 731,631 4.3 483,408 2.4
Trans Ccrs out (388,927) (2.5) (420,000) (2.4) (483,000) (2.4)
Change in net assets $ ],263,03L 7.9 % S 1.575,966 93 % S 1,631,596 82
Cash and investments $ 2.016,433 ~ 2,041,306 $ 3,539,677
Bouds payable $ 4,91(1,976 $ 8,795,570 $ 11052.804
Electric Fund Operations Summary
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^ Operating t'evenues ~ Operating expenses ®Operating income O Chance m net assets O Cash and investments
The following table gives an indication of the sources and uses of cash for the past five years:
Cash Provided (Used) By
13eginning Non-capital Capital Ending
Cash Operating Financing Financing Investing Cash
Year Balance Activilics Activities Activities Activities Balance
2007 $ 2,041,306 $ 4,U83,884 R (485,851) $(2,238,249) S 138;587 $ 3,539,677
2006 2,016,433 3,053,162 (385,051) (?804,163) 160,925 2,04L306
2005 2,361;856 3,059,049 (375,627) (3,063,265) 34,420 2,016,433
2004 1,72Q,813 2,917,129 {221,761) (2,076,518) 22,193 2,361,856
2003 2,25Q,971 2,486,997 (277,407) (2,777,275) 37,527 1,720,813
The cash provided by operating activities has remained relatively strong. The sununary above highlights the significant
amount of cash needed each year Por the capital activities of the Gtilities. "['he operations have been able to Cnance the
capital activities for most of the last five years.
9:i2.II3590J0 fux 952.fl35.3361
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Ratio Analysis
City of Elk River
March 13. 2008
Page 19
The following captures a few ratios from the City's financial statements that give some additional information for trend and peer
group analysis. The peer group average consists ofthe average of 14 cities of similar size and population. The majority of these
ratios facilitate the use of economic resources focus and accrual basis of accounting at the government-wide level. A combinatio n
of liquidity (ability to pay its most immediate obligations); solvency (ability to pay its long-term obligations), funding (compariso
of financial amounts and economic indicators to measure changes in financial capacity over time) and common-size (comparison n
of financial data with other cities regardless of size) ratios are shov`~t below. Comparative data for the peer group is unavailable
for 2007.
Ratio Calculation S
r
2004 200y 2006 2 007
ou
ce
Deht to assets 'I'ota] liabilities/total assets Govennnent-wide 19°/ 19% IS %
27'% 26'% 26 % 23
I~'/r\
Debt service coverage Vet cash provided by operations/ Enterprise funds 226'% 392'% 226% 433%
enterprise fund debt payments 210°~6 192°i~ 270 % NA
Debt per capua Bmtded debt/population Government-wide $ 7,652 $ 1,477 ~ I,610 $ 2,193
1.748 4 IJ93 s h2h.i AlA
'I~aaes per capita Tax revenues/population Government-wide $ 354 $ 351 $ 423 $ 46S
S 3P6 5 345 S 393 \/.~
Capital assets %~leftm Net capital assets/ Government-wide 7?°/ 76°/ 75% 74'%
depreciate -Governmental gross capital assets G7 % fi5 % 67°/ A/.4
Capital assets'% Ic1f to Net capitalassets/ Government-wide 72% 70 % 70% 68%
depreciate -Business-type gross capital assets 64 % 64% 64 % M1lA
' Represents the City of Elk River
Peer Graup. which enosists of:
The City of Glaine
The City of Edina
The Cily uF F,Ik River
The City of Faribaulr
The City oT Eridlcv
The City of htver Grove Heights
The Cily of'yixakxiu
The City of Ylaple~wood
7'he City of Vcr+ c3 rip loon
The City of Owatonna
37te Cih~ of Prior Lakc
The City of Richfield
The Ciiy o£ tdoseville
The CiTV of St. I:oois Park
The increase in the debt ratios is due mainly due to the issuance of $1 Q000,000 of bonds related to the YMCA, along with other
bonds issued. The YMCA will being paying 1 /3 ofthe debt payments related to the bonds issued.
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March 13, 2008
~~; Page 20
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Debt-to-Assets Leverage Ratio (Solvency Ratio)
The debt-to-assets ]everaae ratio is a comparison of a citys total liabilities to its total assets or the percentage of total assets that
are provided by creditors. It indicates the degree to which the City's assets are financed through borrowings and other long-Tenn
obligations (i.e. a ratio of 50 percent would indicate half of the assets are financing with outstanding debt).
30°%
28°/u
26%
24%
22%
2\/~~II
I ~°/D
t 6%
14%
274/„ 26"/,~ 26'%
t')"/o
1>°/U
18"/°
23"/0
2004 2005 2006 2007
~~~City ratio ~'~Pcer group average
Debt Service Coverage Ratio (Solvency Ratio)
the debt coverage ratio is a comparison of cash generated by operations to total debt service payments (principal and interest) of
enterprise funds. This ratio indicates if there are sufficient cash flows frotn operations to meet debt service ohligati ons. F,xcept in
cases where other nonoperating revenues (i.e. taxes, assessments, transfers from other funds, etc.) are used to fund debt service
payments, an acceptable ratio would be above 100 percent.
500%
450%
400°io
350%
300`%
250%
200°/0
150%
100%
433%
392%
226"/0 22~1'~0
210'% 210"/"
! 92"/.
2004 2005 2006 2007
City ratio #Peer group average
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Cirv of Clk River
March 13, 2008
Page 2 L
Bonded Debt per Capita (Funding Ratio)
This dollar amount is arrived at by dividin° the total bonded debt by the population oC the city and represents the amount of
bonded debt obligation for each citizen of the city at the end of the year. The higher the amount, the more resources are needed in
the fuhtre to retire these obligations through taxes, assessments or user tees.
S2.500
$2,300
$2,100
$1,900
$1,700
$1,500
$1,300
$1,100
S900
52,193
3L652 Sl,a^,' SL610
S1,lSA 33,193 S1,203
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'~'Cityratio ~~Peer group average'
Taxes per Capita (Funding Ratio)
This dollar amount is arrived at by dividing the total tax revenues by the population of the city and represents the amount of taxes
for each citizen of the city far the year. The higher This amount is, the more reliant the city is on taxes to fund its operations.
$600
$ssn
$5aa
$asa
$aoo
$350
S300
5250
S200
3abs
3azs
5354 $351
5393
5306 53aS
2004 2005 2006 2007
~ii~'City ratio ~~Peer group average
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City of Elk River
March ]3, 2008
Page 22
Capital Assets Percentage (Common-size Ratio)
This percentage represents the percent of governmental or business-type capita] assets that are left to be depreciated. The lower
this percentage, the older the city's capital assets are and may necd major repairs or replacements in the near future. A higher
percentage may indicate newer asseLc being constructed or purchased and may coincide with higher debt ratios or bonded debt per
capita.
Governmental Activities
$2%
80°,'0
78%
76°/a
74°/n
72%
70°.%
68°ia
66°-n
64°.~0
62 io
77°/
76'%
75%
74 °/.
i ~
-~~~~
67`.ii 6 °~~
66%~
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Business-type Activities
74%
72°,%
70°%
6R%
66°io
64°,%
62%
60%
58%
7? %
63'%
70`%
70%
~ ~
64%~
64% 54°/
2004 2005 2006
I~~City ratio ~~Peer group average
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City of Elk River
March 13, 2008
Page 23
Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASH) Statements have been issued and may have an impact on
future City financial statements:
GASB Statement No. 45 - Accounting and Fzhancial Reporting by Employers,/or Post employment Benefzts Ofher Than
Pensions
This statement is effective in three phases based on a government's total amtual revenues in the first fiscal year ending
after June 15, 1999:
Governments that were phase 1 governments for the purpose of implementation of Statement No. 34 -those with
a~mual revenues of $ ] 00 million or more -are required to implement this Statement in financial statements for
periods beginning after December 15, 2006.
• Governments that were phase 2 governments for the purpose of implementation of Statement No. 34 -those with
total annual revenues of $10 million or more but less than $100 milbou -are required to implement this Statement in
financial statements for periods beginnine after December 15, 2007.
• Govennnents that were phase 3 governments for the purpose of implementation of Statement No. 34 -those with
total annual revenues of less than $I O million -are required to implement this Statement in financial statements for
periods beginning after -ecember 15, 2008.
Statement No. 45 gives the following summary, "In addition to pensions, many state and local govermnental employers
provide other post employment benefits (OPEB) as part of the total compensation offered to attract and retain the
services of quali~Iied employees. OPEB includes post employment healthcare, as well as other forms of post employment
benefits (for esauiple, life insurance) when provided separately from a pension plan. This Statement establishes
standards for the measurement, recognition, and display of OPEB expense/expenditures and related liabilities (assets),
note disclosures, and, if applicable, required supplementary information (RSI) fn the financial reports of state and local
governmental employers."
GASH Statement No. 48 -Sales and Pledges of Receivables and Fe¢ure Revenues and lnh~a-F_ntity Transfers of Assets
and Fa¢ure Revenues
This statement was issued September 2006 and is effective for periods beginning after December 15, 2006_ Therefore,
this statement has been implemented for the current financial statements.
This standard provides accounting guidance for when certain transactions-such as the sale of delinquent taxes, certain
mortgages, student loans, or future revenues such as [hose arising from tobacco settlement agreements-should be regarded
as a sale or a collateralized borrowing. The financial reporting question addressed in Statement No. A8 is whether such
transactions should be reported as a sale or collateralized borrowing.
In addition to clarifying guidance on accounting for sales and pledges of receivables and future revenues, Statement No.
48 (1) requires enhanced disclosures pertaining to furore revenues [hat have been pledged or sold; (2) provides guidance
on the sales of receivables and future revenues within the same Financial reporting entity; and (3) provides guidance on
recognizing other assets and liabilities arising from the sale of specific receivables or fuNre revenues.
952.835.9090 Fax 952.835.3261
www.uemcpas.com
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Citv of Elk River
March l3, 2008
Page 24
GASB Statement No. 49 -,4ccourrtit7g and Financial Reporting for Pollutias Remediation Obligations
This statement was issued November 2007 and is effective far periods beginning after December 15, 2007, but liabilities
should be measured at the beginning of 11taY period so that beginning net assets can be restated.
This standard is intended to ensure that certain cost and Ions-term obligations related to pollution clean up not
specifically addressed by current governmental accounting standards will be included in fmancia] reports. The staudards
set forth the key circumstances under which a govemment would be required to report a liability related to pollution
remediation. A govemment would have to determine whether one or more components of a pollution remediation
liability are recognizable if any of the following five obligating events or triggers occurs:
• A govennnent is compelled to take remediation action because pollution creates an inuninenT endangerment to the
public health or welfare or environment, leaving it little or no discretion to avoid remediation action.
• A government is in violation of a pollution prevention-related permit or license.
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• The government is named, or evidence indicates it will be named, by a regulator that has identified the government
as a responsible party ox potentially responsible party for remediation, or as a govemment responsible for sharing
costs.
• A government is named, or evidence indicates that it will be named, in a lawsuit to compel the govemment to
participate in remediation.
• A govemment commences or legally obligates itself to commence clean up activities or monitoring or operation and
maintenance of the remediation effort.
If any ofthe above bullets are meY, the pollution remediation liabilities should be measured at their current value using
the expected cash Ilow technique, which measures the liability as a sum ofprobability-weighted amounts in a rattge of
possible estimated amounts. Expected recoveries from other responsible parties and from insurers reduce the amount of
remediation expense. Statement No. 49 also specifies criteria for capitalization aC some pollution remediation outlays.
This statement more closely aligns the financial reporting requirements for pensions with Those for OPEB and, in doing
so, enhances information disclosed in notes to financial statements or presented as required supplementary information
(RSI) by pension plans and by employers that provide pension benefits. The reporting changes required by this statement
amend applicable note disclosure and RSI requirements of Statement No. 2>, FinanciaL Repotting for Defined Benefit
Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 27 ,Accounting fox Pensions by State and
Local Goverrunental Employers, to conform with requirements of Statement No. 43, Financial Reporting for
Postemployment Benefit Plans Other Than Pension Plans, and 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions. This statement requires defined benefit pension plans and sole and agent
employers present the following information related to cote disclosures:
• Notes to financial statements should disclose the funded status of the plan as of the most recent actuarial valuation
date. Defined benefit pension plans also should disclose actuarial methods and significant assumptions used in the
most recent actuarial valuation in notes to financial statements instead of in notes to RSI.
• If the aggregate actuarial cost method is used to determine the annual required contribution of the employer (ARC),
notes to financial statements should disclose the funded status of the plan, and a schedule of funding progress should
be presented as RSI, using the entry age actuarial cost method. Plans and employers also should disclose that the
purpose of doing so is to provide information that serves as a surrogate for the funded status and funding progress of
the plan.
95?.835.9090 Fax 952.835.3261
www.aemcpus'.cum
1 ! , j ~ City of Elk River
March 13, 2008
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Votes to financial statements should include a reference ]inking the funded status disclosure in the notes to financial
statements to the required schedule of funding progress in RSI.
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mum contr
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on rates.
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• If applicable, notes to financial statements should disclose legal or contractua
addition, if relevant, they should disclose that the maximum contribution rates have not been explicitly taken into
1 consideration in the projection of pension benefits for financial accounting measurement purposes.
• If an actuarial assumption is different for successive years, notes to fnalcial statements should disclose the initial
1 and ultimate rates.
GASB Statement No. 51 -Accounting and Financial Re~ortingfor [ntangible Assets
' This statement was issued in June 2007 and is effective for periods beginning after June ] 5, 2009.
The new standard characterizes an intangible asset as an asset that lacks physical substance, is nonfinancial in nature, and
has an initial useful life extending beyond a single reporting period. Examples of intangible assets include easements,
1 computer sofhvare, water rights, timber rights, patents, and trademarks.
This statement requires that intangible assets be classified as capital assets (except for those explicitly excluded from the
1 scope of the new standard, such as capital ]eases). Relevant authoritative guidance for capital assets should be applied to
these intangible assets. 'The statement provides additional a tidance that specifically addresses the unique nature of
intangible assets, including:
1 Requiring that alt intangible asset be recognized in the statement of net assets only if it is considered identifiable
' • Establishing aspecified-conditions approach to recognizing intangible assets chat are internally generated (for
example, patents and copyrights)
• Providing guidance on reco~tizing internally generated computer software
1
• Establishing specific guidance for the amortization of intangible assets.
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This report is intended solely for the information and use of Council, management, and the Mimnesota Office of Che State Auditor
and is not intended and should not be used by anyone other than those specified parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting
records and related data. 'The comments and reeotxunendations in the report are purely constructive in nature, and should be read
in this context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your
convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended
to us by your staff
March 13, 2008
1 Minneapolis, Minnesota
9.12.835.9090 Fax 952.835.3261
www.aemepas.com
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ABDO, EICK & MEYERS, LLP
Certifred Public Accountants
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ELK RIVER FJRE DEPARTMENT
RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
FINANCIAL STATEMENTS
AND
SUPPLEMENTARY INFORMATION
YEARS ENDED
DF,CEII~IBER 31, 2007 AND 2006
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INTRODUCTORY SF.CTiON
' Organization
e
FINANCIAL SECTION
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MEvTiF.SOTA
TABLE OF CONTENTS
DECEMBER 31, 2007
Page No.
Independent Auditor's Report 2
Managements Discussion and Analysis (llnauditcd) I - V
Individual Fund Statements
Governmental Fund
General Fund
Balance Sheets 3
Statements of Revenues, Expenditures and Changes in Fund Balances 4
Fiduciary Funds
Special Pension Trust Fund
Statements of Fiduciary Net Assets 5
Statements otChanges in Fiduciary Net Assets 6
Notes to Financial Statements 7 - 12
SUPPLEMENTARY INFORMATION
Required Supplementary Information
Schedule of Funding Progress 13
Schedule of Employer Contribution 13
Notes to Reqrured Supplementary Information 13
COMPLIANCE SECTION
Report on Minnesota Legal Compliance 14
Report on Internal Control Over Financial Keporting
Based on an Audit of Financial Statements 15
Schedule of Findings and Responses 16
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INTRODUCTORY SF,CTION
ELK RIVER FIRE llEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESO"IA
YEARS ENDED
DECEMBER 31, 2007 ANll 2006
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
FLK RIVER, MINNESOTA
ORGANIZATION
DECEMBER 31, 20D7
Board of Trustees
Name
Robert Dreissig
Cliff Skogstad
Robert Pearson
Rich Niemela
Scott Schmitt
Keith Thorson
Titlc
President
Vice President
Secretary
Treasurer
Trustee
Trustee
Es-Officio Trustees
Stephanie Klinzing
"Tim Simon
Bruce West
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Mayor
Finance Director
Fire Chief
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FINANCIAL SECTION
ELK RIVER FIRE DEPARTMENT RF_LIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEARS ENDED
DECEMBER 31, 2007 AND 2006
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ABDO
EICK &
/I ~A ~ 1V LL's 1 L'~1 L7 LLP
Ccrt~d Public Account¢nts & Consultants
Grandview Square
5201 Eden Avenue
Suite 37U
Edina, M'_V 55436
IIv~EPENDENT AUDITOR'S REPORT
Board of Trustees
Elk River Fire Relief Association
Elk River, Minnesota
We have audited the accompanying financial statements of the govenunental and fiduciary activities of the Elk River Fire Relief
Association (the Association) as of and for the years December 31, 2007 and 2006, which collectively comprise the Association's
basic financial statements as listed in the table of contents. These financial statements arc the responsibility of the Association's
management Our responsibility is to express an opinion on the financial statements based on our audits.
W e conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit hrcludes examinhrg, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
' management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
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In our opinion; the financial statements referred to above present fairly; in all materia( respects, the financial position of the
govenunental and fiduciary activities of the Association as of December 31, 2007 and 2006, and the results of its operations for
the years then ended in conformity with accounting principles generally accepted in the United States of America.
The management's discussion and analysis on pages I through V is not a required part of the basic financial statements but is
supplementary information required by accotnting principles generally accepted in the United States of America. We have
applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the supplementary information. However we did not audit the information and express no opinion on it.
Our audits were conducted for the purpose of forming opinions on the financial statements that comprise the Association's basic
financial statements. The supplementary information listed in the table of coutsnts is presented for the purposes of additional
analysis but is a required part of the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
(~1~.~4,LL~
ABDO, EICK & MEYERS, LLP
Cerz~ed Public Accountants
May >, 2008
Minneapolis, Minnesota
' 952.8359090 Fax 952.835.3261
www.aemcpas.cem
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1VIanagement's Discussion and Analysis (Unaudited)
The discussion and analysis of the Elk Rivex Fire Relief Association's (the Association) financial performance provides an
overview of the financial activities and funding conditions for the fiscal years ended December 31, 2007 and 2006.
Using the Annual Report
The financial statements, which reflect the activities of the Special Pension Trust (the Plan), are reported in the Statements of
Fiduciary Net Assets (sec page ])and the Statements of Changes in Fiduciary Net Assets (see page 2). These statements are
presented on a full accrual basis and reflect all trust activities as incurred. The financial statements also include activities of the
General Fund, which is primarily used to account for the fund raising activities of the Association.
Financial Highlights
• The Plan's net assets increased by $328,391(or 16 percent) as a result of the fiscal year's activities.
• The contributions from City and State decreased by $18,382.
• Aret investment income decreased by $31,518 fi~om fiscal year 2006.
• The average rate of return decreased from 10 ~7 to 7.66 percent.
• The annual benefit level increased from 54,175 to S4,450.
• In 2007, a General Fund was added and the fiord balance is $6,605.
Plan Highlights
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The Plan's investment income was lower than last year and contributions from the State decreased and the City increased. The
Plan's funding ]eve] decreased from 114.8 percent to 114.7 percent. The fund remains in a reasonably well funded financial
condition.
Cash and cash equivalents
Investments
Keceivables
State of Minnesota
Total restricted net assets
Plan_Vet Assets
December 31,
2007 2006 Change
$ 59,651 S 54,821 $ 4,83D
2,36],09] 2,035,530 325,561
2,000 (2,000)
$ 2,420,742 $ 2,092,351 $ 328,391
For the current fiscal year 2007 there is a net increase of $328,391 from the previous fiscal year 3006. The previous fiscal year
2006 had an increase of $2D5,766 from fiscal year 2005.
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Management Discussion and Analysis -Continued
May ~, 2008
Changes in Plao Net Assets
The following comparative summary of the changes in net assets reflects the activities of the Plan
December 31
2007 2006 Change
Revenues
Contributions S ]59,023 $ 177,405 $ (18,382)
Investment income (net) 172,783 204,301 (31,518)
Other - 37 {37)
Total revenues 331,806 381,743 (49,937)
Expenditures 3,415 175.977 (172,562)
Change in net assets 328,391 205.766 122;625
Net assets-Januaryl 2.092,35] 1,886-585 205,766
Net assets - December 31 $ 2.420,742 S 2,092,351 S 328,391
The Association's funding policy provided for contributions from the State of Minnesota (the State) and the City of Elk River in
amounts sufficient to accumulate assets to pay benefits when due. The am oral contributions are the sum of the n ormal cost, the
State contribution payment and the provision for administrative expenses.
Plan Membership
The following table reflects the Association's Plan membership as of the beginning and ending of the year:
December 31, Increase
2007 2006 (Decrease)
Active participants
Vested
Bully
Partially
Non-vested
Retirees and beneficiaries
' Total Membership
r
7 7 -
23 20 3
9 12 (3)
4 4 -
43 43 -
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Management Discussion and Analysis -Continued
May >, 2008
Funding Status
The amount ofthe total accrued pension liability is based nn a standardized measurement established by the Governmental
Accounting Standards Board (GASB) that, with some exceptions, must be used by the relief associations Cor financial statement
presentations. This standardized measurement is based on Minnesota statute 69.772. This pension valuation method reflecu the
present value of estimated pension bcnc[its that wil( be paid in future years as a result of service years performed by the members
ofthe Association. A standardized measure of the accrued pension liability was adopted by GASB to enable the readers of relief
association financial statements to (a) assess the relief association's fundins status on agoing-concern basis, (b) assess progress
being made in accumulating sufficient assets to pay benefits when due, and (c) make comparisons among relief associations.
Because the standardized measure is used only for disclosure purposes by the Association, the measurement is independent of an
actuarial computation made to determine contributions to the Association. The following represents the percentage funded trend
ii~r the last six years.
Year
2002
2003
2004
2005
2006
2007
Funding
Assets Liabilities Percentage
$ 1,037,180 $ 1,267,510 81.8
1,354,326 1,378,916 93.2
1,646,533 1,664,129 98.9
],886,585 1,781,082 L05.9
2,092,357 1,823,195 114.8
2,42Q742 2,110,264 114.7
Prior Six Y"ears Funding Process
$3,000,000
~zsaa,ooo
Rz,aaa,ooo
$1,500,000
$1,000,000
$500,000
$-
114.7%
I la.s°i°
l o5.9°i°
$1,664,129 S2,11Q,264
$1,378,916
51,781,082 $1,825,195
S1;267,510 98.9%
98.2%
81.8%
2002 2003 2004 2005
-t-Assets s'®""I,iabilities
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2006 2007
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Management Discussion and Analysis - Continued
May 5, 2008
Asset Allocation
The following table and graph indicates the asset allocation for December 31, 2007 and 2006.
December 31,
2007 2006
Cash and CD's $ 59,657 2.5 % $ 54,821 2.6
State Board oflnvesnnents 1;451,670 60.0 2,035,530 97.4
Mutual fiords 909,421 375 - -
Total cash and investments $ 2.420,742 100.0 % $ 2,090,351 100.0
2007 Asset Allocation
DLpO51t5
2.5°/a
Mutual Funds
37.5"/0
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State Board of
Investments
60.0%
Management Discussion and Analysis -Continued
Mav 5, 2008
Investment Activities
O Investment income is vital to the Plan's current and continued fmancial stability. Therefore, the Board of Trustees has a fiduciary
responsibility to act prudently when making Plan investment decisions. Portfolio performance is reviewed quarterly by the Board
of Trustees. The Association also has an active Investment Committee to broaden its attention to asset allocation and fund returns.
Economic Factors
The primary function of the pension trust is to (a) appropriately award and pay benefits and (b) tnanage investments. The
opportunity available considering various investment choices is invaluable in the asset allocation and money manager oversight.
f
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Contacting the Plan's Financial Management
The financial report is designed to provide citizens, taxpayers, plan participants and the marketplace's credit analysis with an
overview of the Plan's finances and [he prudent exercise of the Board's oversight. If you have any questions regarding this report
or need additional financial information, please contact the Elk River Fire Relief Association, 13065 Orono Parkway; Llk River,
'.Minnesota 55330.
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FINANCIAL STATEMENTS
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINT~ESOTA
YEARS ENDED
DECEMBER 3I, 2007 AND 20D6
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATIO'_V, MINNESOTA
ELK RIVER, MINNESOTA
BALANCE SHEETS
GOVERNMENTAL FUND
DECEMBER 31.2007
ASSETS
Cash and cash equivalents
FUND BALANCES
Unreserved
S 6,605
$ 6,605
The notes to the financial statements are an integral part of this statement.
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ELK R[VER FIRE DEPARTMENT RELIEF ASSOCIATION, MINNESOTA
ELK RIVER, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUND
YEAR ENDED llECEMBER 31.2007
REVENUES
Donations
Fundraising events
TOTAL REVENUES
EXPEND1TUItES
Relief events
Fundraising
Meetings
Supplies
"DOTAL EXPENllI`LUItES
EXCESS REVENUES OVER EXPENDITURES
FUND BALANCES, JANUARY 1
FUND BALANCES, DECEMBER 31
The notes to the financial statements are an integral part of this statement.
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$ 9,013
9,667
18,680
1.784
9.381
880
30
12,075
6,605
$ 6,605
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
STATEMENTS OF FIDUCIARY NET ASSETS
FIDUCIARY FUND
DECEMBER 31, 2007 AND 2006
ASSETS
Cash and cash equivalents
Investments
Receivables
State of M'mnesota
TOTAL ASSETS
NET ASSETS
Unreserved
Special Pension Trust Fund
2007 2006
$ 59,651 $ 54,821
2,361,091 2,03 530
- 2.000
$ 2.420,742 $ 2,092551
$ 2,420,742 $ 2,092,;51
The notes to the financial statements are an integral part of this statement.
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
STATEMENTS OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUND
YEARS ENDED DECEMBER 31, 2007 AND 2006
REVENUES
Contributions
State oI-Mimresota
10°% supplemental reimbursement
City of Elk River
Investment income
Net appreciation in investments
Other income
TOTAL REVENUES
EXPENDITURES
Pension benefits
Salaries
Professional fees
Bond
Miscellaneous
TOTAL EXPENDITURES
CHANGE IN NET ASSETS
NET ASSETS, JANUARY I
NET ASSETS, DECEMBER 31
The notes to the financial statements are an integral part of this statement.
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Special Pension Trust Fund
2007 2006
$ 129,223 $ 146,455
- 2.000
29,800 28,950
52,2]1 2,954
120,572 201347
- 37
331,806 381,743
- 172,604
2,355 2,280
220 662
750 -
90 43]
3,4li 175,977
328,391 205,766
2,092,351 1,886,585
$ 2,420,742 $ 2,092.351
TFIIS PAGE IS LEFT BLANK
IN"IENTIONALLY
ELK KIVER FIRE DEPARTMENT RELIEF ASSOCIATION
EI,K RIVER. MINNBSOTA
NOTES TO FINANCIAL STATEMENTS
llECEMBER 31, 2007 AND 2006
Note 1: PLAN llESCRIPTION
A. The Financial Reporting Entity
Firefighters of the City of Elk River (tlte City) are members of the Elk River Fire Relief Association (the
Association). The Association is the administrator of asingle-employer defined benefit pension plan (the Plan)
available to fire&ghters. The Plan was established in 1922 under the provisions of Minnesota Laws ] 965,
' chapter 446 as amended and Minnesota statute, chapters 69 and 424. It is governed by a Board of Tmstees
made up of six members elected by the members of the Association for three year terms, and the Mayor, Finance
llirector and Fire Chief, who serve as ex-ofFcio voting members of the Board of Trustees.
For financial reporting purposes, the Association's financial statements are not included with the City financial
statements because the Association is not a component unit of the City. The Association does not have any
component units.
S. Membership Information
' As of December 31, 2007 and 2006, membership data related to the Association were:
2007 2006
Retirees and beueficiaries currently receiving
benefits and terminated employees entitled to
benefits but not yet receiving them 4 4
' Active plan participants
Vested
Fully 7 7
Partially 23 20
Nonvested 9 12
Total 43 43
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ELK RIVER FIRE DEPARTMENT' RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 AND 2006
Note 1: PLAN DESCRIPTION -CONTINUED
C. Pension Benefits
The Association operates under a defined benefit plan. The pension liability is calculated by the number of
active service years multiplied by a set benefit level. The Association's current level is at $4,450 per active
year. According to the bylaws of the Association and pursuant to Mimresota statute 424A.02, subdivisions 2
and 4, members who retire with less than 20 years of service and have reached the aee of 50 years and have
completed at ]east five years of active membership are entitled to a reduced service pension not to exceed the
amount calculated by multiplying the member's scrvice pension for the completed years of service times the
applicable non-forfeitable percentage of pension as follows:
Completed years
of service
9
10
I1
12
13
l4
l5
16
17
18
19
20 and thereafter
Non-forfeitable percentage
_ of pension amount
40%
44
48
52
~6
60
64
68
72
76
80
84
88
92
96
100
If a member ofthe Association shall become totally and permanently disabled, with a service related disability
(injured in the line of duty) to the extent that a physician or surgeon acceptable to the Board shall certify that
such disability will permanently prevent said member from performing said member's duties in the Department,
the Association shall pay to such member the sum of the current pension amount for each year and fractions of a
yeas'that the member has served as an active member of the Department, without regard to minimum or paRial
vesting requircmcnts. If a member who has received such a disability pension should subsequently recover and
return to active duty in the Department, any amount paid to said member as a disability pension shall be
deducted from said member's service pension.
Upon the death of any member of the Association who is in good standing at the time of said member's death,
the Association shall pay to the surviving spouse, if any, and if there is no surviving spouse, to child or children, '
if any, and if no child or children survive, to the estate of such deceased member, the credited sum of said
member's pension.
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ELK RIVER FIRE DEP9RTMENT RELIEF ASSOCIATION
ELK RIVER. MINNESOTA
NOTES TO FINANCIAL STATEMENTS
' DECEMBER 31, 2007 AND 2006
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
A. Measurement Rocus, Basis of Accounting and Rasis of Presentation
Governmental fund financial statements are reported using the current~nancial resources measurement focus
and die 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. Revenues susceptible to accrual include contributions
from the State of Mitmesota and the City of Elk River and investment revenue, including interest on deposits and
dividends. Expenditures generally are recorded when a liability is incurred. as under accmal accounting.
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The fiduciary fund financial statements are reported using the economic resouroes measurementfocus and the
accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as
soon as all eligibility requirements imposed by the provider have been met.
The preparation of financial statements in conforn~ity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
B. Description of Fund
The resources of the Associatiot are accounted for in two funds. Each fund is accounted for as an independent
entity. Descriptions of the funds included in this report are:
Major governmental. funds:
The Genera(fund is a governmental fund that accounts for the resources not accounted for at other funds. It is
used for the good and benefit of the Association as determined by Association bylaws. Its resources consist of
fundraising proceeds, im~estment earnings, and miscellaneous sources.
Fhe Fiduciary fund accounts for assets held by the Association in a trustee capacity for its members
The Fiduciary fuazd is a special pension trust fund for the accumulation of resources to be used for retirement,
dependency and disability annuity payments of appropriate amounts and at appropriate times in the future.
Resources are contributed by the City at amounts determined by law (taxes), and from the two-percent insurance
premium tax and amortization aid from the State of Mitmesota.
C. Comparative Data
Comparative data for the prior year have been presented in the accompanying financial statements to provide an
understanding of changes in the Association's financial position and operations.
' -9-
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINTtESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31.2007 AND 2006
Note 3:
DETAILED NOTES ON ACCOUNTS
Deposits and Investments
Deposits
Custodial credit risk for deposits and hroeshnents is the risk that in the event of a batilc failure, the Association's
deposits may not be returned or the Association will not be able to recover collateral securities in the possession of an
outside party. In accordance with Minnesota statutes and as authorized by the Board of Trustees, the Association
maintains deposits at those depository bank which are members of the Federal Reserve System.
Minnesota statutes require that al] Association deposits be protected by insurance, surety bond, or collateral. The
market value of collateral pledged must equal 110 percenr of the deposits not covered by insurance or bonds.
Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and
certain other State or local government obligations. Minnesota statutes require that securities pledged as collateral be
held in safekeeping by the Association or in a financial instihttion other than that furnishing the collateral.
Following is a summary of the deposits covered by FDIC insurance at December 31, 2007:
Fund
General
Special pension bust
Total
Book Bank
$ 6,605 S 8;151
59,651 59,651
$ 66.256 $ 67.802
Following is a summary of the deposits covered by FDIC insurance at Decetber 31, 2006:
Fund Book Bank
Special pension trust $ 54,827 S 54.821
]0-
e
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1
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCI_ATION
ELK RIVER, MINNESOTA
NOTES TO FINANCIAL STATEMEN"I'S
DECEMBER 31, 2007 AND 2006
Note 3: DETAILED NOTES ON ACCOUNTS -CONTINUED
Investments
Investment policy. The Association has adopted an investment policy with regard to investing the financial assets of
the Association. A11 assets will be invested in accordance with this policy, Minnesota starirtes chapter 69.775 and
written administrative procedures. It shall be the policy of the Association to invest the assets in accordance with the
minimum and maximum range for each asset class as stated below:
Asset Class
Minimum Maximum
Percentage Percentage
Stocks 25% 75%
Bonds 0% 50%
Non-Fluctuating Share Value 0% 10%
Cash 0% 10%
At year end, Lhe Association had the following investments that are insw-ed or registered, or securities held by the
Association or its agent in the Association's name:
Credit Concentration Segmented Fair Value and
Quality/ of Time Carrying Amount
Type of Investment Ratings 7 Credit Risk Distribution (2) 2007 2006
Pooled investments
State Board of Investments
Money Market N/A N/A less than 6 months $ - $ 9,722
Bond Market N/A N/A [ess than 6 months - 216,243
Common Stock Index N/A N/A less than 6 months 274,930 261,464
Grow4h Share N/A N/A less than 6 months 109,322 204,050
International Share N/A N/A less than 6 months 354,725 414;755
Income Share N/A N/A Less than 6 months 713,293 929.296
Total State Board of lnvesnnents 1,451,670 2,035,530
Mutual Punds N/A N/A N/A 909,421 -
Total pooled investments $ 2,361,091 $ 2,035.530
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 tune disn~ibution method.
NrA indicates not applicable or available.
Concentration of credit risk -The Association is required to disclose debt investments greater than 5ve percent of total
investments.
investments are carried at fair value. Investment and dividend income are recognized as revenue when earned.
-11-
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
NOTES TO FINANCLAL STATEMENTS
DECEMBER 31, 2007 AND 2006
Note 4: FUNDING STATUS AND PROGRESS
The amount of the total accrued pension liability is based on a standardized measurement established by the
Governmental Accounting Standards Roard (GASH) that, with some exceptions, must be used by the relief associations
for financial statement presentation. This standardized measurement is based on Minnesota statute 69.772. This
pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a
result of service years performed by the members of the Association. A standardized measure of the accrued pension
liability was adopted by GASH to enable the readers of relief association fmancial statements to (a) assess the relief
association's funding status on a going concern basis, (b) assess prop ess being made in accumulating sufficient assets
to pay benefits when due, and (c) make comparisons among relief associations.
Because the standardized measure is used only for disclosure purposes by the Association, the measurement is
independent of an actuarial computation made to determine contributions to the Association.
Note 5: CONTRIBUTIONS REQUIRE- AND CONTRIBUTIONS MADE
The Association's funding policy provided for contributions from the State and the City in amounts sufficient to
accumulate sufficient assets to pay benefits when dug The amnia] contribution is the sum of the normal cost, the State
contribution payment and the provision for administrative expenses.
The Association is comprised of volunteers; therefore, there are no payrolt expenditures or covered payroll percentage
calculations.
A required contribution of $129,223 was made by the State in accordance with Minnesota statute for the year ended
December 31, 2007. A required contribution of $148,455 including $2,000 of supplemental benefit was made by the
State in accordance with Minnesota statute for the year ended December 31, 2006. Voluntary contributions of $29,800
and $28,950 were made by the City for the years ended December 31, 2007 and 2006, respectively.
Note 6: RISK MANAGEMENT
The Association is exposed to various risks of loss related to theft of assets for which the Association carried
commercial insurance policies. There were no significant reductions in insmrance from the previous year or settlements
in excess of insurance coverage for any part of the past three fiscal years. The Association invests in mutual funds that
are subject to market value fluctuations.
Note 7: SUBSEQUENT EVENT
The Association approved an increase in benefit level effective January 7, 2008 to $5,091.
12-
1
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1
SUPPLEMENTARY INFORMATION
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR F,NDED
DECEMBER 31, 2007
u
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INTENTIONALLY
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ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
REQUIRED SUPPLEMENTARY II~~PORMATION
DECEMBER 37, 2007
A. Schedule of Funding Progress
Assets in
Excess of
Actuarial Actuarial Actuarial (Unfunded)
Valuation Value of Accrued Accrued
Date Assets Liabilirv Liability
12/37/07 $ 2,420,742 $ 2,110,264 $ 310,478
]2/31/06 2,092,351 1,823,195 269,156
12/31/05 1,886,585 1,78],082 105,503
12/31/04 1,646,533 1,664,129 (17,596)
12/31/05 ],354,326 1,378,916 (24,590)
12/31/02 1,037,180 1,267,510 (230,330)
$. Schedule of Employer Contributions
Year
F,nding
12/31 /07
12/3 I /06
12/31/05
12/31/04
12/31 /03
12/31/02
C. Notes [o Supplementary Information
Valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Normal cost
Prior service cost
Asset valuation method
Actuarial assumptions
Investment rate of return
Projected salary increases
Inflation rate
Cost of living adjustments
Funded
114.7
114.8
105.9
98.9
98.2
81.8
Annua]
Required
Contribution
$ 129,223
148,455
136,429
147,589
112,146
88,790
12/31 /07
Entry age normal
Level dollar closed
5%
N/A
N'A
None
Benefit
per Year
of Service
S 4,450
4,175
4,000
4,D00
3,575
3,575
Percentage
of APC
Contributed
123.1
] ] 9.5
12D.6
1 ] 7.0
123.0
126.0
20 years
5 years
Market
-13-
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COMPLIA'_VCE SECTION
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
YEAR ENDED
DECEMBER 31, 2007
1
~' ~ ABDO
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1 ~+ _ lY l1~ 1 Jul W LLY
CertLfied Pr~hlic Account¢nts & Consult¢nts
Grandview Sguaze
5201 Edeu Avenue
Suite 370
Edina, MN 55436
REPORT ON MINNESOTA LEGAL COMPLIANCE
Board of Trustees
Elk River Fire Relief Association
Elk River, Minnesota
We have audited the financial statements of the govenunental and fiduciary fiords of the Ells River Fire Relief Association (the
Association) as of and for the ycar ended December 31, 2007, and have issued our report thereon dated, May 5, 2008.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
provisions of the Minnesota Legal Compliance Audit Guidefrn~ Local Government, promulgated by the Minnesota Office of the
State Auditor pursuant to Minnesota statute 6.b~. Accordingly, the audit included such tests of accounting records and such other
auditing procedures as we considered necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers three main categories of compliance to be tested in
audits of relief associations: deposits and investments, conflicts of interest, and public relief associations. Our study included all
of the listed categories.
The results of our tests indicate that for the items tested, the Association complied with the material terms and conditions of
applicable legal provisions.
This report is intended solely for the information and use of the Board of Trustees, City of Elk River, members, and the Minnesota
Office of the State Auditor; and is not intended to be and should not be used by anyone other than these specified parties.
May 5, 2008
Minneapolis, Minnesota
-14-
(N~, ~¢/~o..~c~~ LLB
ABDO, EICK & MEYERS, LLP
Certified Public Accountants
932.835.9090 Fax 952.8353261
www.aemepas.com
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Certified Public Accountants & Consultants
Grandview Square
5201 Eden Avenue
Suite 370
Edina, M'V 559~R6
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDfF OF FINANCIAL STATEMENTS
' Board of Trustees
Elk River Fire Relief Association
' Elk River, Minnesota
We have audited the financial statements of the governmental and fiduciary foods of the F,lk River Fire Relief Association (the
Association), Elk River, Minnesota for the year ended Decemher 31, 2007, which collectively comprise the Association's basic
' ~6nancial statements and have issued our report thereon dated May 5, 2008. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America
In planning and performing our audit of the financial statements of the Association for the year ended December 31, 2007, we
considered the Association's intemal control over financial reporting as a basis of designing our auditing procedures for the
purpose of expressing our opniion on the financial statements, but not for rile purpose of expressing an opinion on the
effectiveness of the Association's internal control over financial reporting. Accordingly, we do not express an opinion on the
' effectiveness of the Association's internal control over financial reporting.
Our consideration of intemal control was for the limited purpose described in the preceding paraeraph and would not necessarily
identify all deficiencies in internal control that might be significant deficiencies or material weakness. However, as discussed in
the schedule of findings and responses, we identifed certain deficiencies in internal control that we consider to be significant
deficiencies.
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal
cotvse of performing their assigned functions, to prevent or detect misstatements on a timely basis. A sip ificant deficiency is a
control deficiency, or combination of conh~o] deficiencies, that adversely affects the Association's ability to initiate, authorize,
record, process, or report financial data reliably in accordance with generally accepted accounting principles such that dtere is
more than a remote likelihood that a misstatement of the Association's financial statements that is more than inconsequential will
not be prevented or detected by the Association's intemal control. W e consider Ending 2007-1 to be sie tificant deficiency in
internal control over financial reporting.
A material weakness is a significant deficiency, or combination of significant deficiencies, that result in more than a remote
likelihood that a material misstatement of the financial statements will not be prevented or detected by the Association's internal
control We do noY consider finding 20D7-i to be material weaknesses.
' This report is intended solely for the information and use of the Board of Trustees, City of Elk River, members, and the Minnesota
Office of the State Auditor, and is not hrtended to be and should not be used by anyone other than these specified parties.
1 ~,~¢,~~
May 5, 2008 ABDO, SICK & MEYERS, LLP
' Minneapolis, Minnesota Cert fed Public Accountants
-1>-
952.835.9090 Fax 9i2.RR53261
www.acmepas.cem
THIS PAGE IS LEFT BLANK
INTENTIONALLY
Finding
' 2007-1
r
F.LK RIVER FIRE DEPARTMENP RELIEF ASSOCIATION
SCHbDULE OF FINDINGS AND RESPONSES
DECEMBER 31, 2007
Description
Limited Segregation of Duties over Cash Receipts and Disbursements
Condition: During our audit we reviewed procedures over cash disbursements and cash receipts and
found the Association to have limited segregation of duties related to these transaction
cycles.
Criteria: There are four general categories of duties: audtorization, custody, record keeping and
reconciliation. In art ideal system, different employees perform each of these four major
functions. In other words, no one person has control of two or more of these
responsibilities.
Cause: As a result of utilizing basically only are officer for accounting, the Treasurer has control
over check stock, prepu'es the checks, codes the invoices, and also reconciles the bank
account. The Treasurer receives the deposits and takes the deposit to the bank. General
fund disbursement checks require one signature and Special fund disbursements checks
require two signatures.
Effect: The lack of segregation increases the risk of fraud.
Recommendation: While we recoil ize there is not enough staff to eliminate these deficiencies, we believe
the risk can be reduced with increased monitoring. We recomrnend that an individual
other than the Treasurer receive the unopened bank statement and verifying the proper
endorsements, scanning the cancelled checks for any unusual payees or amounts, and
agreeing deposits to the receipt journal It is important that the board is aware of this
condition and monitor al] financial information.
Management Response: The Association has implemented numerous internal controls over the years, including
dual signatures on the special fund checking account and having the entire relief board
review' and approve the check registers and investment transactions. Internal controls are
extremely important to the Association and we will have the President receive the bank
statement on a monthly basis and review the activity.
] 6-
ELK RIVER FIRE DEPARTMENT RELIEF ASSOCIATION
ELK RIVER, MINNESOTA
MANAGEMENT LE'T'TER
YEAR ENDED
DECEMBER 31, 2007
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Certif~~'~ Public /lcconnlal2ls ~~ Cwu~ielCan~s
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Certified Pu6lie Accountants & Consultants
May 5, ?008
Grandnew Square
SSOl Eden Avcnuc
Suite 3'0
Edina, MN 551:36
Board of Trustees and Plan Participants
Elk River Fire Department Relief Association
Elk River. Minnesota
We have audited the financial statements of the Elk River Fh~e Department Relief Association (the Association) for the year
ended December 31, 2007 and have issued our report thereon dated May 5, 2008. Professional standards require that we
provide you with the following information related to our audit.
Our Responsibility under Auditing Standards Generally Accepted in the United States of America
As stated in our engagement letter, our responsibility, as described by professional standards, is to express an opinion about
whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in
conformity with accounting principles generally accepted in the United States of America. Our audit of the financial
statements does not relieve you or management of your responsibilities.
Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute, assurance that flee financial
statements are free of material misstatement. As part of our audit, we considered the internal control of the Association. Such
considerations were solely for the purpose of detem~ining our audit procedures and not to provide any assurance concerning
such internal control. We are responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing The financial reporting process. However, we are not
required to design procedures specifically to identify such matters.
Significant Audit Findings
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding
paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or
material weaknesses. However, as discussed below, we identified certain deficiencies in intcmal control thatvve consider to be
significant deficiencies.
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal
course of performing their assigned functions, to prevent or detect misstatements on a timely basis_ A significant deficiency is
a control deficiency, or a combination of conn-ol deficiencies, that adversely affects the organization's ability to initiate,
authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such
that there is more than a remote likelihood that a misstatement of the organization's financial statements that is more than
inconsequential will not be prevented or detected by the organization's intcmal control We consider the deficiency on the
following page [o be significant deficiency in internal control.
952.II3i9090 Fos 952.83x3261
www.aemcpas.com
t
Elk River Fire Department Relief Association
May 5, 2008
Page 2
Limited Segregation of Duties over Cash Receipts and Disbursements
Condition: During ow audit we reviewed procedures over cash disbwsements and cash receipts
and found the Association to have limited segregation of duties related to these
transaction cycles.
Criteria: There are fow genera] categories of duties: authorization, custody, record keeping
and reconciliation. In an ideal system, different employees perform each of these
four major functions. In other words, no one person has conU'ol of two or more of
these responsibilities.
Cause: As a result of utilizing basically only one officer for accounting the Treasurer has
control over check stock, prepares the checks, codes the invoices, and also reconciles
the bank account. The Treasurer receives the deposits and takes the deposit to the
bank. General fund disbursement checks require one signature and Special fund
disbursements checks require two signatwes.
Effect: The lack of segregation increases the risk of fraud.
Recotnmendation: While we recognize there is not enough staff to eliminate these deficiencies, we
believe the risk can be reduced with increased monitoring. We recommend that an
individual other than the Treasurer receive the unopened bank statement and
verifying the proper endorsements, scanning the cancelled checks for any unusual
payees or amounts, and agreeing deposits to the receipt journal IY is important drat
dre board is aware of this condition and monitor all financial information.
t
[Llanagemenf Response: The Association has implemented numerous internal controls over the years,
including dual signatures on the special fund checking account and having the entire
relief board review and approve the check registers and investment transactions.
Internal controls are extremely important to the Association and we will have the
President receive the bank statement on a monthly basis and review the activity.
A material wealaress is a significant deficiency, or combination of significant deficiencies, that results in more than a remote
Likelihood that a material tisstatement of the financial statements will not be prevented or detected by the entity's internal
confrol. We do not believe that the previous deficiency constitutes material weaknesses.
Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we
performed tests of compliance with certain provisions of laws, regulations, conn'acts and grants. However, the objective of
our tests was not to provide an opinion on compliance with such provisions. We noted no instances of noncompliance with
Minnesota statutes.
952.855.9090 Fax 952.835.3261
www.aert~cpa:.com
e
Ells River Fire Department Relief Association
May 5, ?008
Page 3
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our
engagement Letter, we will advise management about the appropriateness of accounting policies and their application. The
significant accounting policies used by the Association are described in Note I to the financial statements. No new accounting
policies were adopted and the application of existing policies was not changed during the year. We noted no transactions
entered into by the Association durhtg the year for which there is a lack of authoritative guidance or consensus. There are no
significant transactions that have been recognized in the financial statements in a different period than when the transaction
occurred.
Accounting estimates are an integral part of the financial statements prepa~~ed by management and are based on management s
knowledge and experience about past and current events and assunptions about future events. Certain accounting estimates
are particularly sensitive because of their significance to the financial statements and because of the possibility that future
events affecting them may differ significantly fi'om those expected. The most sensitive estimate affecting the financial
statements was the actuarial accrued liability. This is based on the fundvtg formula prescribed by the State of Minnesota. We
evaluated the key factors and assumptions used m develop the estimate in determining that St is reasonable in relation to the
financial statements taken as a whole.
The disclosures in the financial statements are neutral, consistent, and clear.
llifficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Missfatemenfs
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than
those that are trivial, and comtnunicate them to the appropriate level of management. There were no misstatements noted
during the audit
Disagreements with Management
' For purposes of this letter, professional standazds define a disagreement with management as a financial accounting,
reporting, or auditing matter, whether or not resolved to our satisfaction, That could be significant to the financial statements
or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated
May S, ?008.
Management Consultations with Other Independent Accountants
' In some cases, management may decide to consult with other accountants about auditing and accounting matters, similaz to
obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the
Association's financial statements or a determination of the type of auditor's opinion that maybe expressed on those
statements, our professional standards require the consulting accountant to check with us to determine that the consultant has
all the relevant facts. To our knowledge, there were no such consultations with other accountants.
952.835.9090 Fax 952.8353261
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Elk River Fire llepartment Relief Association
May 5, 2008
Page 4
Other Audit Findings or issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the Association's auditors. However, these discussions occurred in the normal
course of our professional relationship and our responses were not a condition to our retention.
Other Matters
Investment Return
A summary of the investment rate of return is summarized below:
Nct Assets
Appreciation Hcld in
(Depreciation) Total Trust for Investment
Investment of Invesnnent Pension Rate of
Year Income Investments Income BeneFits Return
2004 $ 2,159 $ 119,871 $ 122,030 $ 7,646,533 8.13
2005 3,168 75,276 78,444 ],886,585 4.44
2006 2,954 201,347 204,301 2,092,351 ]0.27
2007 52,211 120,572 172,783 2,420,742 7.66
Investment Rate of Return
16.00%
14.00°%
12.00%
1090%
8.00%
6.00%
490%
2.00%
8.13%
10.27%
7.66%
4.44%
2004
953.835.9090 Pay-953.83.S..i2G1
www.ecmcpus.cmn
2005
2006
2007
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Elk River Fire Department Relief Association
Ylav 5, 2008
Page 5
Peer Group Comparisons
The following are two comparisons of statistics that will provide information on how your organization compares with other
fire relief associations az'ound the State. We used averages from approximately 40 fire relief associations with under
$200,000 in assets to several million in assets. "these averages include a 4-year trend of the rate of return u~d a 4-year trend
of funding percentage as compared to averages of the other 40 relief associations.
Year
Averages Calculation ?004 2005 2006 2007
Avera~erateofreNrns Vet investmentiocome/ 8.13'% 4.44ro ID.27% 7.bG%
average net assets a.8;_-'% _~.?~,`i'% ~S0%~ ~/~#
Pcrccntagefunded Netassetsiaceruedliabiliry 9R.40% 105.9{1% L14.80'% 114.'0"/°
7 i1~,~7'7:o i0-t,l}3°/~ b0'R7d`%, V'/.A
Client Name Fire Relief Association
k'ccr'..,a~m;
Rate of Return
The rate of return is calculated by taking the net investment income and dividing i[ by the beginning net assets. This will show
a trend of your returns over a 4-year period and show your perfomtance related to other relief associations.
12.0°r~
10.0%
$.1~~%
8.0%
O.f)%
J. i' ~'c
4.0°io
?004
ysaass.vo~o r°r 9sz.s:ss.:szc,r
~V W 1V.kIC[[IC' f1tlS.C'UCYI
10 2?%
ti ~0''b
?.93°-
4.44"rn
7.66?r°
2005 ?006 ?007
-_-.. _-__-. _- ---__._e p c I
tFirereliefrate--Peer°rou avera°e 'I
i
Elk River Fire Department Relief Association
Mav ~. 2003
Page 6
Funding Percentage
The funding percentage is calculated by taking the Special fund net assets and dividing it by the accrued pension liability.
This graph will show your funding percentage fora 4-year period and compare your percentage to other relief associations.
120.0%
115.0°/n
110.0%
LO5.0%
100.0°/0
95.0°.%
90.0%
tid.8°,~o t14.7"u
1;135°S,
1059°-=0 ~,.~.~~'"~
939%
2004 2005 2006 2007
Fire relief percent'~~Peer group average
Best Practices in Monitoring Investment Results
' The Board has a fiduciary responsibility to it membership related to its assets. in order to communicate relevant information
to member ship, we recommend the fol(owin°:
• Investment performance should he benchmarked and reviewed with membership
o We believe this can easily be addressed by more frequent reporting that uses complete financial information
and appropriate investment benchmarks. With better infot~nation, more timely and prudent investment
decisions can be made. We have provided some table for analysis in this letter. We recommend that the
Board consider other performance measures and develop a strategy to repotY on them.
• Investment policies should be developed and reviewed annually
o We recommend that the Association develop and/or review investment politics. This would mean that the
policies should:
1. Contain enough detail to implement a specific investment strategy
2. Outline the duties and responsibilities of all parties
3. Set forth portfolio diversification, rebalancing and risk guidelines
4. Incorporate specific, measurable investment objectives or benchmarks
We can assist with the implementation of either of these items.
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Elk River Fire Depai1ment Relief Association
May 5, 2008
Page 7
This report is intended solely for the information and use of management, Board of Trustees and Plan Participants and the
Minnesota Office of the State Auditor and is not intended to be and should not be used by anyone other than these speci'[9ed
parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selectad tests of the accounting
records and related data_ The comments and recommendations in the report are purely constructive in nature, and should be
read in this context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your
convenience. oJe wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to us
by your staff.
May 5, 2008
Minneapolis, Minnesota
!__1
953.835.9090 Fax 952.8353261
www.acmepas.com
lMH"'~"4MQ'" v ~~~''~ir
ABDO, EICK & MEYERS, LLP
Certifred Public Accountants