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2004 Audit4 /rt To the Honorable Mayor and Members of the City Council City of Monticello 505 Walnut Street, Suite 1 Monticello, MN 55362 LarsonAlleri ~~,~;,1et. CPAs, Consultants & Advisors www.larsonallen.com In planning and performing our audit of the financial statements of City of Monticello for the year ended December 31, 2004, we considered its internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control. However, we noted certain matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect City of Monticello's ability to initiate, record, process, and report financial data consistent with the assertions of management in the financial statements. REPORTABLE CONDITIONS: SEGREGATION OF DUTIES "Ideal" segregation of duties dictates that those who have access to cash, either on the receipts side of the transaction or the disbursements side of the transaction, should not be able to access the accounting records to record transactions or make journal entries. Due to the limited number of office personnel within several city departments, segregation of the accounting functions necessary to ensure ideal internal accounting control is not in place. This is not unusual in operations the size of Monticello. The City did make policy and procedure changes in 2004 that did improve the internal control situation; however, the City's management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in one or a few individuals is not desirable from an accounting point of view. Management should continue to provide oversight in this area to ensure that the internal control policies and procedures are adhered to. L ~ ,ity of Monticello age 2 of 3 SEGREGATION OF DUTIES -LIQUOR STORE Due to the limited number of office personnel at the City of Monticello Liquor Store (HI-WAY LIQUORS), segregation of the accounting functions necessary to ensure adequate internal accounting control is not in place. Two employees have the ability to operate the cash register, void a transaction, "Z" out the cash register, prepare the deposit, and physically make the deposit. This also is not unusual in operations the size of the City of Monticello; however, the City's management should again be constantly aware of this condition and realize that the concentration of duties and responsibilities in one or a few individuals is not desirable from an accounting point of view. We recommend the City of Monticello's management be aware of the lack of segregation of duties within the Liquor Store functions and provide oversight procedures to ensure that the internal control polices and procedures are being implemented by staff. CONTROLS OVER LIQUOR STORE OPERATIONS During our audit of the liquor store we noted on that on numerous occasions differences existed between the cash register "Z" tapes and the daily reconciliations. Also on numerous occasions employees had to void transactions. Void cash register slips were simply thrown away or not retained, and no review took place. In addition the council did not formally approve the increase of the change fund at the liquor store to $4,400. Typically, controls over the liquor store require that differences existing between the cash register "Z" tapes and the daily reconciliations be investigated. Voided transactions should be retained and reviewed daily, and the Council should approve any increases to the change fund. Management is in the process of modifying the policies and procedures in place to improve the internal controls at the Liquor Store. We recommend that the City review its Liquor store reporting controls and implement procedures to ensure that differences are investigated between the cash register and the daily reconciliations, that voided transactions are retained and reviewed, and that increases or decreases in the change fund be approved by the council. MATERIAL WEAKNESSES INCLUDED IN THE REPORTABLE CONDITIONS ABOVE A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of internal control would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, none of the reportable conditions described above is believed to be a material weakness. a ,'ty of Monticello Fge 3 of 3 OTHER ITEMS FOR CONSIDERATION: UNCLAIMED PROPERTY Included on the City's original bank reconciliation at December 31, 2004 were several checks identified as being outstanding for more than three years. Minnesota Statute 345.38 provides that any intangible personal property held for an owner, by a political subdivision of the State, is presumed abandoned if it has remained unclaimed by the owner for more than three years. Minnesota statute 345.41-.43 details the reporting requirements for unclaimed property and its payment to the State Department of Commerce. The City did remove the checks from its bank reconciliation, segregated the funds, and is in the process of determining the steps needed to turn over the unclaimed funds to the State Department of Commerce. We recommend the City implement a policy to follow up on stale checks and that checks still outstanding after three years be remitted to the State Department of Commerce. This report is intended solely for the information and use of City Council, management, and others within the administration, and is not intended to be and should not be used by anyone other than these specified parties. CARSON, ALLEN, WEISHAIR & CO., LLP Monticello, Minnesota June 20, 2005 CITY OF MONTICELLO, MINNESOTA FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION YEAR ENDED DECEMBER 31, 2004 CITY OF MONTICELLO, MINNESOTA TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2004 INTRODUCTORY SECTION OFFICIAL DIRECTORY 1 FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 2 REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS 4 BASIC FINANCIAL STATEMENTS STATEMENT OF NET ASSETS 12 STATEMENT OF ACTIVITIES 13 BALANCE SHEET 15 RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS 17 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE 18 RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMANTAL FUNDS TO STATEMENT OF ACTIVITIES 20 PROPRIETARY FUNDS STATEMENT OF NET ASSETS 21 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS 23 STATEMENT OF CASH FLOWS 25 NOTES TO FINANCIAL STATEMENTS 27 r '~ 1 [7 fl 1 CITY OF MONTICELLO, MINNESOTA TABLE OF CONTENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2004 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET TO ACTUAL 47 SPECIAL REVENUE FUND COMMUNITY CENTER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET TO ACTUAL 52 CAPITAL OUTLAY REVOLVING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET TO ACTUAL 53 SANITARY SEWER ACCESS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET TO ACTUAL 54 COMBINING FINANCIAL STATEMENTS COMBINING BALANCE SHEET 55 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE 59 STATISTICAL SECTION (UNAUDITED) BONDED INDEBTEDNESS -GENERAL OBLIGATION BONDS 63 BONDED INDEBTEDNESS -GENERAL OBLIGATION SPECIAL ASSESSMENT BONDS 64 BONDED INDEBTEDNESS -GENERAL OBLIGATION TAX INCREMENT BONDS 66 BONDED INDEBTEDNESS -GENERAL OBLIGATION NOTE - PROJECT 93-14C WASTEWATER TREATMENT 67 BONDED INDEBTEDNESS -PUBLIC PROJECT REVENUE BONDS 68 CONTRACT FOR DEED 69 TAX LEVIES TO RETIRE BONDED INDEBTEDNESS 70 OTHER REPORTS SECTION REPORT ON MINNESOTA LEGAL COMPLIANCE 72 INTRODUCTORY SECTION CITY OF MONTICELLO, MONTICELLO, MINNESOTA CAPITAL ASSETS-GOVERNMENTAL FUNDS 31-Dec-04 2002 2003 2004 CAPITAL ASSETS 33,595,831 35,680,953 39,841,337 (TOTAL CAPITAL ASSETS $100,000,000 $90,000,000 $80,000,000 $70,000,000 fY $60,000,000 g J G $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 2002 2003 2004 YEAR ~-CAPITAL ASSETS Page 7 CITY OF MONTICELLO, MONTICELLO, MINNESOTA YEAR END CASH AND INVESTMENT BALANCES -ALL GOVERNMENTAL AND BUSINESS TYPE FUNDS 31-Dec-04 YEAR CASH AND INVESTMENTS 2002 26,704,607 2003 27,974,438 2004 29,868,693 YEAR-END CASH AND INVESTMENT BALANCES -ALL GOVERNMENTAL FUNDS $30,500,000 $30,000,000 ~ $29,500,000 E $29,000,000 ~ $28,500,000 c ~ $28,000,000 ~ $27,500,000 $27,000,000 U $26,500,000 iu $26,000,000 $25,500,000 $25, 000,000 2002 2003 2004 Year Page 2 CITY OF MONTICELLO, MONTICELLO, MINNESOTA TOTAL NET ASSETS -GOVERNMENT-WIDE FINANCIAL STATEMENTS 31-Dec-04 Net Assets 2003 70,654,694 2004 81,997,715 TOTAL NET ASSETS PER GOVERNMENT-WIDE FINANCIAL STATEMENTS $100,000,000 $90,000,000 $80,000,000 $70,000,000 ~ d Q $60,000,000 ++ Z $50,000,000 O ~ $40,000,000 $30,000,000 $20,000,000 $10,000,000 ,4 2003 2004 Year Page 6 CITY OF MONTICELLO, MONTICELLO, MINNESOTA MONTHS EXPENDITURES IN FUND BALANCE GENERAL FUND 31-Dec-04 YEAR MONTHS 2002 12.62 2003 10.41 2004 8.30 MONTHS OF EXPENDITURES IN FUND BALANCE ~ 14 Q 12 10 m N v~ c c ~ ~ u. tL g c ~ m c a~ a~ ~ E ~' E s v ~ c ~ ~ O x C9 W 0 4 c 0 2 0 Year Page 1 2002 2003 2004 CITY OF MONTICELLO, MONTICELLO, MINNESOTA TOTAL DEBT RELATED LIABILITIES 31-Dec-04 2002 2003 2004 G.O.BONDS 24,218,289 24,708,364 21,691,825 REVENUE BONDS 7,345,000 7,305,000 7,170,000 CONTRACT FOR DEED - - 2,185,222 TOTAL DEBT 31,563,289 32,013,364 31,047,047 TOTAL DEBT RELATED LIABILITIES $24,500,000 $22,500,000 -- _ _ __ - -------- -- --- $20, 500, 000 --- --- __ __ __ _ __- - -- - - - 18 500 00 ---- - $ , ,0 -------- - $16 500 000 ------ - , , -- ----- -- 14 500 000 - -- cA Q~ , , $ $12 500 000 -------- --- ------ J ~ , , 10 00 000 --- - , $ ,5 ------- --- ---- $8,500,000 - - ------ _ _.---------- $6,500,000 ---- ---___._.-- 500 000 $4 --- --- - , , --------- --- 2 500 000 ------ -- $ , , ------ - $500,000 2002 2003 2004 YEAR ~~G.O.BONDS (REVENUE BONDS'tCONTRACT FOR DEED Page 8 CITY OF MONTICELLO, MONTICELLO, MINNESOTA MONTHS EXPENDITURES IN FUND BALANCE ALL GOVERNMENTAL FUNDS 31-Dec-04 YEAR MONTHS 2002 10.32 2003 10.00 2004 9.26 MONTHS OF EXPENDITURES IN FUND BALANCE ALL GOVERNMENTAL FUNDS 12 Q 10 c~ c m m v~ 8 c c ~ ~ ~ ~ .C ~ ... ~ ~ 6 -~--MONTHS ~ E c v c ~ a~ a W C9 4 0 L 0 2 0 2002 2003 2004 Year Page 1 CITY OF MONTICELLO, MONTICELLO, MINNESOTA REVENUES -GENERAL FUND DECEMBER 31, 2004 Taxes and Specials Licenses and Permits intergovernmental Charges for Services Miscellaneous Total 2004 2003 $ 4,063,028 3,777,084 797,458 689,421 267,725 457,147 487,672 588,802 445,537 634,434 $ 6,061,420 6,146,888 Revenues -General Funds j $4,500,000 ~_ _..~._..~_.._....~ _._~_____ ~__._.__~.~ $4,000,000 __ -__-_-- - -- ----___-_--_____ ~ N $3,500,000 _-_ _ _- - - __ ___ ~ $3,000,000 --- ~ $2,500,000 -- -- --- _--- --- ----- ®2004 ~' ~ $2, 000, 000 -- ---- - ----- _--- - ----- -- ------- ^ 2003 $1,500,000 -- - ------ -- . _ --- ---- -- ~ $1,000,000 - ------ ------- _--- $500,000 ___----- --- --------- $- ~~ a~a oJ~ ~°~ `yc~ ~ ~~~ Gr REVENUE TYPES Page 4 CITY OF MONTICELLO, MONTICELLO, MINNESOTA EXPENDITURES -GENERAL FUND DECEMBER 31, 2004 2004 2003 General Government 1,584,510 1,348,264 Public Safety 1,388,060 1,274,389 Highways and Streets 2,157,056 2,069,796 Sanitation 410,768 384,228 Culture and Recreation 636,091 757,623 Economic Development 70,008 64,739 Capital Outlay 366,174 - Total 6,612,667 5,899,039 ----- Expenditures • General Fund 2,500,000 __.__.._.__..w_.~__..__.__.®...~_.._.__..__ ~_ __.._...... ~ 2,000,000 -- -- --- ____ ------- _-_--- ---- 1,500,000 - _ _- ----.-_- -_-__ _ __-_-_-- ~ ®2004 ~ ^ 2003 ~ ~ 1,000,000 - -- ---- ----- - ---- -~ ~----------- 500, 000 - - - - ------ --------- ~ ~ ~c G G~~ ~,.~r GJ`,~c Goy°c~ Expenditure Functions Page 5 CITY OF MONTICELLO, MONTICELLO, MINNESOTA REVENUES -GOVERNMENTAL FUNDS DECEMBER 31, 2004 Taxes and Specials Licenses and Permits Intergovernmental Charges for Services Refunds and Reimburs Interest on Investments Miscellaneous Total 2004 2003 $ 9,769,165 8,501,975 797,458 689,421 689,891 1,377,269 3,223,012 2,817,941 e - 245,935 728,274 668,643 1,979,075 1,819,108 $ 17,186,875 $16,120,292 Revenues -Governmental Funds $12, 000, 000 ~ $10, 000, 000 --- ----- 0 000 ~ , $8,00 ---- '~ -_ - -- ----- ®2004 $6,000,000 - O p --- - _- - ^ 2003 $4,000,000 -- $2,000,000 $- 5Q Q ~ aka ~~a 6 ~a+~~ ~~~~y ~~~~`~ ~~G ~a 5 ~y ~5 J5 ~ ~~ ~~ ~~ o G aya `~~~ ~J~ Q-~ REVENUE TYPES Page 4 CITY OF MONTICELLO, MONTICELLO, MINNESOTA EXPENDITURES -GOVERNMENTAL FUNDS DECEMBER 31, 2004 General Government Public Safety Highways and Streets Sanitation Culture and Recreation Economic Development Capital Outlay Principal Interest 2004 2003 1,656,207 1,417,481 1,608,652 1,274,389 2,332,202 2,469,523 410,768 384,228 2,395,015 2,179,429 969,229 1,039,230 2,649,316 4,903,521 4,096,539 2,167,925 1,460,183 1,418,375 17,578,111 17,254,101 Expenditures -Governmental Funds 6,000,000 5,000,000 4,000,000 `-° 3,000,000 0 0 2,000,000 1,000,000 °c'` °a~ 0~5 \oc o~ ~'~ a~ o`a Q a~5 aka `G~° GaQ ~ ~ e F ~G Expenditure Functions a~ 5~ u`Q °~° Q~~~ \~~. -- ®2004 ^ 2003 Page 5 CITY OF MONTICELLO, MINNESOTA OFFICIAL DIRECTORY DECEMBER 31, 2004 Elected Officials Mayor Council Member Council Member Council Member Council Member Appointed Officials Administrator and Clerk-Treasurer Term Expires Clint Herbst December 31, 2006 Wayne Mayer December 31, 2008 Glen Posusta December 31, 2006 Tom Perrault December 31, 2008 Brian Stumpf December 31, 2006 Rick Wolfsteller (1) n FINANCIAL SECTION Lars~nAllen" INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and City Council City of Monticello, Minnesota We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Monticello, Minnesota as of and for the year ended December 31, 2004, 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 of Monticello, Minnesota management. Our responsibility is to express opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in atl material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Monticello, Minnesota as of December 31, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The management's discussion and analysis and budgetary comparison information as listed in the table of contents are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. (2) Page 2 ' Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Monticello, Minnesota basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial ' statements. The combining and individual nonmajor fund financial statements have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a ' whole. The introductory section and statistical tables have not been subjected to the auditing procedures in the audit of the basic financial statements and, accordingly, we express no opinion on them. ' l.,~ARSd3N, ,I4LI.~Iti1, Vlt1~lS~tAllr~ ~ C4#, LLP ' Monticello, Minnesota June 20, 2005 ' (3) ' REQUIRED SUPPLEMENTARY INFORMATION CITY OF MONTICELLO, MINNESOTA ' MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2004 MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the Annual Financial Report of the City of Monticello (the City) is intended to present a discussion and analysis of the City's financial performance during the fiscal year ended December 31, 2004. This analysis focuses on current year activities and should be read in ' conjunction with the City's basic financial statements following this section. Financial Highlights ' Assets of the City exceeded liabilities by $82 million. Of this amount, $40.7 million may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. ' For the current fiscal year, total governmental fund revenues including other financing sources, exceeded expenditures for the year by $3.0 million. ' The City's governmental funds reported combined ending fund balances of $27.9 million. Of this total amount, approximately 49% is available for spending at the City's discretion. ' At the end of the current fiscal year, unreserved fund balance for the general fund was $4.6 million, or 69% of the total general fund expenditures of $6.6 million. ' Report Layout In addition to the management's discussion and analysis (MD&A), the report consists of government-wide statements, fund financial statements, notes to the financial statements, ' combining schedules of non-major funds and supplementary information. The first several statements are highly condensed and present agovernment-wide view of the City's finances. Within this summary, all City operations are categorized and reported as either governmental or ' business-type activities. Governmental activities include basis services such as police, fire, building inspection, public works, parks and recreation, library, community development and general government administration. The business-type activities include water, sewer, liquor ' and cemetery activities. These government-wide statements are designed to be more corporate-like in that all activities are consolidated into a total for the City. (4) LO MINNESOTA ' CITY OF MONTICEL , MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2004 ' MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Statement of Net Assets and Statement of Activities ' The Statement of Net Assets focuses on resources available for future operations. In basic terms, this statement presents a snapshot view of the assets the community owns, the liabilities it owes and the net difference. The net difference is further separated into amounts restricted ' for specific purposes and identifies unrestricted amounts. The Statement of Activities focuses on gross and net cost of City programs and the extent to ' which such programs rely upon general tax and other revenues to support them. The statement summarizes and simplifies the users analysis to determine the extent to which programs are self-supporting and/or subsidized by general revenues. These two statements report the City's net assets and the changes in them. Over time, , increases or decreases in the City's net assets are one indicator of whether the City's financial health is improving or deteriorating. You will need to consider other non-financial factors, , however, to assess the overall health of the City of Monticello. Fund Financial Statements ' Fund Financial Statements focus separately on major governmental funds and proprietary funds. Governmental funds statements allow the more traditional presentation of financial statements. Most of the City of Monticello's basic services are reported in governmental funds. ' Governmental funds focus on how money flows into and out of these funds and the balances left at year end that are available for spending. The governmental fund statements provide a detailed short term view of the City's general government operations and the basic services it provides. ' Statements for the City's proprietary funds follow the governmental funds and include net assets, revenue, expenses and changes in net assets, and cash flow. ' Notes to the Financial Statements The Notes to the Financial Statements provide additional disclosures required by governmental ' accounting standards and provide information to assist the reader in understanding the City's financial condition. Other Information ' Readers desiring additional information on non-major funds can fit it in the combining statements of non-major funds section of this report. Completing the financial section of the , report are schedules on capital assets and other financial schedules. (5) ' CITY OF MONTICELLO, MINNESOTA ' MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2004 ' MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) ' Statement of Net Assets A condensed version of the Statement of Net Assets at December 31, 2004 follows: ' Table A-1 The City's Net Assets Governmental Activities Business-type Activities Total 2004 2003 2004 2003 2004 2003 Current and Other Assets $ 41,779,914 $ 34,848,344 $ 4,441,103 $ 3,988,209 $ 46,221,017 $ 38,836,553 Capital and Non-Current Assets 39,841,337 35,680,953 32,355,086 31,222,333 72,196,423 66,903,286 Total Assets 81,621,251 70,529,297 36,796,189 35,210,542 118,417,440 105,739,839 ' Current Liabilities 5,366,628 3,013,746 184,257 262,122 5,550,885 3,275,868 Long Term Liabilities 30,868,840 31,809,277 30,868,840 31,809,277 Total Liabilities 36,235,468 34,823,023 184,257 262,122 36,419,725 35,085,145 ' Net Assets Invested in Capital Assets Net of Related Debt 8,972,497 3,871,676 32,355,086 31,222,333 41,327,583 35,094,009 Unrestricted 36,413,286 31,834,598 4,256,846 3,726,087 40,670,132 35,560,685 t Total Net Assets $ 45,385,783 $ 35,706,274 $ 36,611,932 $ 34,948,420 $ 81,997,715 $ 70,654,694 Governmental Activities The net assets of the City's governmental activities increased from the previous year due to significant infrastructure improvements and additions. A significant part of this increase was related to the 2"d phase of the Core Street Reconstruction program. This reconstruction ' program will ultimately, over the next four to five years, replace a majority of the City's aging street improvements that were nearing their useful life. Additional infrastructure improvements included numerous public projects and private projects for various residential and commercial developments such as Prairie Ponds, Sunset Ponds, Carlisle Village and TimberRidge III along with improvements such as new Hwy 25 traffic signals. ~ Business-Type Activities The net assets of our business-type activities also increased during 2004. The utility funds continue to invest in capital assets to accommodate the growth of the City in various new subdivisions and also to maintain an aging infrastructure system. Some of the most significant improvements made this year include infrastructure replacements in conjunction with the Core Street Phase II Project and various new utility constructions in new development areas, along with Storm Sewer and Watermain trunk line crossings of Interstate Hwy 94. (6) CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS ' YEAR ENDED DECEMBER 31, 2004 ' MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) A condensed version of the Statement of Activities follows: ' Table A-2 Change in Net Assets Govemmentel Business-type Total % Acti iti ' Total Total % v es Activities Total % 2004 2003 Change 2004 2003 Change 2004 2003 Change Revenues Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contribuiions renerel Revenues Property Taxes Unrestricted State Aid Investment Earnings Other Total Revenues Expenses General Government Public Safety Highways and Streets Sanitation Culture and Recrea8an Economic Development Debt Service Liquor Cemetery Water Sewer Total Expenses Changes in Ne[ Assets Before Special Items end Transfers Transfers Change in Net Assets Beginning Net Assets Ending Net Assets $ 4,459,422 $ 4,238,242 5.2% $ 4,948,958 $ 5,050,163 337,688 723,422 -53.3% - - 4,059,034 4,990,023 -18.7% 1,303,527 1,925,800 7,670,666 7,209,560 6.4% - - 99,667 41,105 142.5% - - 728,274 668,643 8.9% 125,245 107,144 2,860,728 1,013,854 182.2% 23,770 22,073 20,215,479 18,884,849 7.0% 6,401,500 7,105,180 -2.0% $ 9,408,380 $ 9,288,405 1.3% 0.0% 337,688 723,422 -53.3% -32.3°/ 5,362,561 6,915,823 -22.5% 0.0% 7,670,666 7,209,560 6.4°k 0.0% 99,667 41,105 142.5% 16.9% 853,519 775,787 10.0% 7.7% 2,884,498 1,035,927 178.4°k 26,616,979 25,990,029 1,528,281 1,424,617 7.3% - - 0.0% 1,528,281 1,424,617 1,649,090 1,320,415 24.9% - - 0.0% 1,649,090 1,320,415 436,413 4,499,844 -90.3 % - - 0.0°~ 438,413 4,499,844 410,768 384,228 0.0% - - 0.0% 410,768 384,228 2,798,883 2,668,411 4.9% - - 0.0% 2,798,683 2,668,411 969,229 1,039,230 -6.7% - - 0.0% 969,229 1,039,230 1,414,737 1,435,317 -1.4% _ - 0.0% 1,414,737 1,435,317 _ - 0.0°~ 3,083,062 3,007,837 2.4°h 3,083,062 3,007,837 _ - 0.0% 32,275 22,337 30.8% 32,275 22,337 - 0.0% 865,379 851,826 1.6% 865,379 851,826 0.0% 2,083,841 2,010,134 3.5% 2,083,841 2,010,134 401 209 9 772 062 12 6,064,557 5,892,134 15,273,958 18,664,196 , , , , 11,006,078 6,112,787 336,943 1,213,046 11,343,021 7,325,833 (1,326,569) 130,000 -1120.4% 1,326,569 (130,000) -1120.4% - 9,679,509 6,242,787 55.1% 1,663,512 1,083,046 53.6% 11,343,021 7,325,833 35,706,274 29,463,487 21.2% 34,948,420 33,865,374 3.2% 70,654,694 63,328,861 $ 45,385,783 $ 35,706,274 $ 36,611,932 $34,948,420 $ 81,997,715 $ 70,654,694 (7) 7.3°k ' 24.9% -90.3% 6.9% ' 4.9% -6.7% -1.4°k 2.5 % 44.5% ' 1.6% 3.7% w~ CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2004 ' MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Governmental Activities Figure A-3 Sources of City's Revenues for Fiscal 2004 ® Other ^ Investment Earnings 4% ^ Property Taxe 38% ^ Charges for Services 22% ^ Operating Grants and Contributions 2% Capital Grants and Contributions 20% ' Revenues for the City's Governmental Activities increased by $1.3 million, or 7.0%. The major components of this increase are explained as follows: Charges for services revenue increased $221,000 or 5.2%. This increase was mainly due to an increase in fees collected for utility fee charges from new developments of $566,000 and increasing user fees at the Community Center of $14,000. The net increase in revenue is also reflected by a decrease in revenue from inspection fees collected by $96,000, a reduction in ' pathway fee charges of $75,000 and a lower collection of sewer and water fee collections by $150,000. ' The City's property tax revenues increased $461,000 or 6.4%. Part of this increase was due to the elimination of homestead and agricultural credit aid from the State of Minnesota, and the subsequent levy to replace those funds. ' The City's miscellaneous revenues increased substantially due to additional land sales of City owned property totaling over $1.3 million. Special assessment revenue for the City increased $806,000 or 62% over the previous year. This was mainly due to additional projects being completed and assessed along with prepayments of assessments. ($) TA , CITY OF MONTICELLO, MINNESO MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2004 ' MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Governmental Activities (Continued) ' Intergovernmental revenue decreased $687,000 primarily due to $160,000 less in state aid for highway projects from MnDOT, $215,000 less in economic development cleanup grant reimbursements, $22,000 less in State Aid for the Heartland Bus program. In addition, the City received a $290,000 economic development grant from the Department of Trade and Economic ' Development in 2003 that was not applied for in 2004. Expenses -The City expenses for governmental activities decreased by over $3.5 million or ' 27%. Decreases in capital project expenditures totaling $2.8 million along with lower bond proceeds of $700,000 compared to pervious year account for the change payments. ' Business-T a Activities The City's business-type revenues decreased by over $700,000 or 11 %, primarily due to decreased revenue from Grants and Contributions that related to settlement proceeds from a ' WWTP litigation issue that were received in the previous year. Business-type expenses increased from previous year by $144,000 due in part to general ' personal services increases for all propietary fund operations of $86,000 with the balance of the increase related to general operational increases. Financial Analysis of the Citv's Funds ' The general fund -The City's general fund balance was reduced by $617,000 for 2004. The decrease was the result of expenditure increases above budgeted revenue in areas of Planning and Zoning professional services of $190,000, Audit and accounting fee increases of $26,000, ' Fire Department expenses of $60,000, Building Inspection costs increase of $37,000, An Ice Arena contribution of $75,000 and additional expenses related to engineering professional fees of $750,000. Most of the professional consultant fees for engineering and planning will be ' reimbursed by projects or developers in the future. Community Center Fund -The increase in the Community Center Fund balance was the ' result of additional revenue generated through membership fee increases and higher ad valorem tax revenues. Sanitary Sewer Access Fund -Increases due to increased revenue in the trunk fund fees ' charged to developments, and reductions in captial projects initiated during the year. Capital Project Funds - The fund resources decreased due to capital project expenditures. , Capital Outlay Fund - the fund balance increase relates to substanitial increase in sale of land roceeds received by the city in 2004 of $1.3 million and with the pruchase of Industrial. park ' p property for $3.0 million that's considered land held for resale for economic development pruposes. ~9) , CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2004 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) General Budgetary Highlights The City of Monticello Council did not make any revisions to the City's original budget document during year 2004. In total, the general fund revenues were $113,000 more than budgeted due to additional state aid for fire relief retirement funds, additional development cost reimbursements for inspection fees and an increase in building permit fees. Expenditures within the general fund were also more than budgeted by $1,093,000 including a fund transfer. Capital Assets At December 31, 2004, the City of Monticello had $72.2 million invested in capital assets including fire and public works equipment, park and recreation facilities, buildings, roads, sewer, water and storm sewer utilities. The City of Monticello's fiscal 2005 capital budget calls for another $25.8 million in capital projects and equipment expenditures. Land Construction in Progress Infrastructure Buildings Improvements Other than Buildings Machinery, Equipment and Vehicles Less: Accumulated Depreciation Total Table A-7 The Cites Capital Assets Governmental Business-type Activities Percent Activities Percent Toil Percent 2004 2003 Change 2004 2003 Change 2004 2003 Chan e $ 3,840,918 $ 3,977,918 -3.4% $ 1,209,580 $ 1,207,387 0.2% $ 5,050,498 $ 5,185,305 -2.6% 3,441,816 369,858 830.6% 1,430,733 951,198 50.4% 4,872,549 1,321,056 268.8% 30,733,889 28,142,813 9.2% 26,576,813 24,141,600 10.1% 57,310,702 52,284,413 9.6% 13,203,486 13,273,486 -0.5% 5,271,220 5,271,220 0.0% 18,474,706 18,544,706 -0.4% 2,497,824 2,359,297 5.9% 17,791,252 17,806,356 -0.1% 20,289,076 20,165,653 0.6% 2,809,947 2,466,172 13.9% 1,184,468 1,184,468 0.0% 3,994,415 3,650,640 9.4% (16,686,543) (14,908,591) 11.9% (21,108,980) (19,339,896) 9.1% (37,795,523) (34,248,487) 10.4% $ 39,841,337 $ 35,680,953 11.7% $ 32,355,086 $ 31,222,333 3.6% $ 72,196,423 $ 66,903,286 7.9% Additional information on the City's Capital Assets can be found in the notes to the Financial Statements. (10) CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2004 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) Long Term Debt At year end, the City of Monticello had $31.0 million in bonds and notes outstanding compared to $32.0 million in 2003. Payments of $4.1 million, new debt issues of $2.2 million on a Contract for Deed for the purchase of Industrial Park Land and $900,000 refinanced tax increment debt make up the changes from prior year. GOVERNMENTAL ACTIVITIES General Obligation Bonds General Obligation Tax Increment Bonds Special Assessment Bonds WWTP Note Public Project Revenue Contract For Deed Total Percentage 2004 2003 Change $ 2,420,000 $ 2,535,000 -4.5% 1,100,000 2,360,000 -53.4% 6,715,000 7,760,000 -13.5% 11,456,825 12,053,364 -4.9% 7,170,000 7,305,000 2,185,222 - 0.0% $ 31,047,047 $ 32,013,364 -3.0% Economic Factors and Next Years Budget The City of Monticello considered many factors when setting the fiscal year 2005 budget, rates and fees that will be charged for business type activities. With the City's property tax levy for 2005 being kept at the same dollar amount as prior years levy, the overall Tax Capacity Rate was reduced from 62.452 to 58.651, over a 6% decrease from prior year. The City's continued growth in new residential and commercial developments coupled with the city's desire to keep spending levels close to prior years accounts for the reduced tax rate for most taxpayers. The market values and resulting tax capacity values are projected to be up by an estimated 6.4% again in the coming year. The City Council will continue to be monitoring the level services it provides to stay within the City's financial resources for future budget years. Financial Contact The City's financial statements are designed to provide our citizens, customers, and creditors with a general overview of the City of Monticello's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City of Monticello Finance Department at 505 Walnut Street, Suite 1, Monticello, MN 55362. (11) C! i~ BASIC FINANCIAL STATEMENTS CITY OF MONTICELLO, MINNESOTA STATEMENT OF NET ASSETS DECEMBER 31, 2004 (WITH COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2003) Totals Governmental Business-type ' ASSETS Activities Activities 2004 2003 CURRENT ASSETS Cash-and Investments $ 26,428,221 $ 3,440,472 $ 29,868,693 $ 27,974,438 Accounts Receivable 312,815 430,434 743,249 719,194 Due from Other Governments - - - 249,617 Special Assessments Receivable 8,917,848 - 8,917,848 7,401,384 ' Inventory 555,975 555,975 599,027 Prepaid Items 58,491 14,222 72,713 61,816 Land Held for Resale 4,581,682 - 4,581,682 411,354 Loans Receivable 1,343,672 _ 1,343,672 1,272,890 Bond Issuance Costs 137,185 137,185 146,833 Capital Assets Land and Construction in Progress 7,282,734 2,640,313 9,923,047 6,506,361 ' Other Capital Assets, Net of Depreciation 32,558,603 29,714,773 62,273,376 60,396,925 Total Assets 81,621,251 36,796,189 118,417,440 105,739,839 ' LIABILITIES CURRENT LIABILITIES Accounts Payable 551,217 17,447 568,664 354,804 ' Escrow Deposits 2,925,548 664 2,926,212 719,956 Other Accrued Liabilities 437,260 142,614 579,874 597,219 Accrued Interest Payable 544,912 - 544,912 625,886 Due to Other Governments 51,949 5,971 57,920 267,092 ' Contracts Payable 855,742 14,862 870,604 710,911 Deferred Revenue - 2,699 2,699 - Long-Term Liabilities Due within One Year 1,911,126 1,911,126 4,096,539 ' Due in More than One Year 28,957,714 = 28,957,714 27,712,738 Total Liabilities 36,235,468 184,257 36,419,725 35,085,145 ' NET ASSETS Invested in Capital Assets, net of Related Debt 8,972,497 32,355,086 41,327,583 35,094,009 ' Unrestricted 36,413,286 4,256,846 40,670,132 35,560,685 TOTAL NET ASSETS $ 45,385,783 $ 36,611,932 $ 81,997,715 $ 70,654,694 7 See accompanying Notes to Financial Statements. (12) CITY OF MONTICELLO, MINNESOTA STATEMENT OF ACTIVITIES YEAR END DECEMBER 31, 2004 ' (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, 2003) Program Revenues pera ing api a ran s Charges for Grants and and , Functions/Programs Expenses Services Contributions Contributions Primary government: , Governmental Activities General Government $ 1,528,281 $ 629,942 $ 11,885 $ 9,040 Public Safety 1,649,090 889,041 135,926 986 Public Works 438,413 2,085,478 150,381 4,000,313 ' Culture and Recreation 2,798,883 756,359 - 48,695 Sanitation 410,768 98,602 13,262 - Economic Development 969,229 - 26,234 - ' Debt Service 1,414,737 - - - Total Governmental Acti vities 9,209,401 4,459,422 337,688 4,059,034 Business-Type Activities ' Liquor 3,083,062 3,412,809 - - Cemetery 32,275 32,141 - - Water 865,379 585,699 - 684,775 Sewer 2,083,841 918,309 - 618,752 , Total Business-Type Activities 6,064,557 4,948,958 - 1,303,527 Total $ 15,273,958 $ 9,408,380 $ 337,688 $ 5,362,561 ' General Revenues Taxes ' Property Taxes, Levied for General Purpose Grants and Contributions not Restricted to Specific Programs Unrestricted Investment Earnings Sale of Land ' Rental Miscellaneous Transfers , Extraordinary Item -Lawsuit Settlement Total General Revenues, Special Items, and Transfers Change in Net Assets ' Net Assets -Beginning of Year NET ASSETS -END OF YEAR , ii See accompanying Notes to Financial Statements. (13) ' ' Totals Governmental Business-type Activities Activities 2004 2003 ' $ (877,414) $ - $ (877,414) (372,193) (623,137) - (623,137) (455,760) 5,797,759 = 5,797,759 1,732,613 ' (1,993,829) (1,993,829) (1,768,833) (298,904) - (298,904) (261,178) ' (942,995) 414 737) (1 - - (942,995) (1,414,737) (259,707) (1,435,317) , , (353,257) - (353,257) (2,820,375) ' 329,747 329,747 358,463 = (134) (134) 39,277 - 405,095 405,095 635,680 (546,780) (546,780) 50,409 187,928 187,928 1,083,829 (353,257) 187,928 (165,329) (1,736,546) ' ' 7,670,666 7,670,666 7,209,560 99,667 _ 99,667 41,105 728,274 125,245 853,519 775,787 ' 1,329,059 - 1,329,059 180,917 14,509 23,770 38,279 40,961 1,517,160 - 1,517,160 40,000 (1,326,569) 1,326,569 _ - ' 774,049 10,032,766 1,475,584 11,508,350 9,062,379 ' 9,679,509 35,706,274 1,663,512 34,948,420 11,343,021 70,654,694 7,325,833 63,328,861 $ 45,385,783 $ 36,611,932 $ 81,997,715 $ 70,654,694 1 ' (14) CITY OF MONTICELLO, MINNESOTA GOVERNMENTAL FUNDS BALANCE SHEET DECEMBER. 31, 2004 (WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2003) ASSETS AND OTHER DEBITS Cash and Investments Accounts Receivable Due from Other Governmental Units Due from Other Funds Special Assessments Receivable Delinquent Deferred Prepaid Items Loans Receivable Land Held for Resale TOTAL ASSETS Capital Community Outlay General Center Revolving $ 6,493,418 $ 142,777 $ 2,087,460 140,131 14,651 65,728 323,126 - - 8,405 - 34,021 409 - 572,148 41,820 16,493 - 152,352 - - - - 4,225,145 $ 7,159,661 $ 173,921 $ 6,984,502 LIABILITIES AND FUND BALANCES Liabilities Cash Deficiency Accounts Payable Escrow Deposits Other Accrued Liabilities Contracts Payable Due to Other Governmental Units Due to Other Funds Deferred Revenue Total Liabilities Fund Balances Reserved Reserved for Non-Current Loans Receivable Reserved for Debt Retirement Reserved for Prepaid Insurance Reserved for Fixed Assets Held for Resale Unreserved Designated Designated for Subsequent Year's Expenditures Designated for Contingencies Undesignated Reported in General Fund Special Revenue Funds Capital Projects Funds Total Equity and Other Credits TOTAL LIABILITIES AND FUND BALANCES $ - $ - ~ 207,741 38,852 11,647 1,723,075 - 1,202,473 398,947 30,120 - - - 147,975 50,840 - - 8,814 2,271 606,169 2,389,417 71,243 1,968,264 152,352 - - 41,820 16,493 - - - 4,225,145 2,759,807 - - 551,961 - - 1,264,304 - - - 86,185 791,093 4,770,244 102,678 5,016,238 $ 7,159,661 $ 173,921 $ 6,984,502 See accompanying Notes to Financial Statements. (15) r t Other ' Sanitary Debt Capital Governmental Total Govern mental Funds Sewer Access Service Project Funds 2004 2003 $ 3,879,087 $ 8,343,791 $ 693,869 $ 4,787,819 $ 26,428,221 $ 26,039,813 ' 56,663 11,444 1,200 22,998 312,815 270,596 _ _ _ _ - 249,617 ' _ _ _ _ 323,126 139, 366 8,189 257,202 - 30,775 338,592 266,175 1,496,205 4,420,509 - 2,089,985 8,579,256 7,135,209 ' 178 58,491 50,229 = = _ 1,191,320 1,343,672 1,272,890 - 356,537 - - 4,581,682 411,354 ' 440 144 $ 13 389 483 $ 695 069 123 075 $ 8 $ 41 965 855 $ 35 835 249 $ 5, , , , , , , , , , , $ _ $ _ $ _ $ _ $ - 994,372 ' 38,797 - 161,136 93,044 551,217 256,481 _ _ _ 2,925,548 719,956 - - - 8,193 437,260 448,282 628,878 78,889 855,742 696,049 = = 1,109 51,949 267,092 - - - 323,126 323,126 139,366 1,504,394 4,677,711 - 2,120,760 8,920,119 7,401,743 ' 1,543,191 4,677,711 790,014 2,625,121 14,064,961 10,923,341 ' - - - 1,191,320 1,343,672 1,272,890 - 8,355,235 - - 8,355,235 8,728,734 ' - 178 58,491 50,229 = 356,537 = 4,581,682 483,254 ' - - - - 2,759,807 2,457,442 - - - - 551,961 498,559 ' - - - - 1,264,304 2,160,935 3,896,953 - - 4,306,456 9,080,687 7,999,547 - - (94,945) - (94,945) 1,260,318 3,896,953 8,711,772 (94,945) 5,497,954 27,900,894 24,911,908 $ 5,440,144 $ 13,389,483 $ 695,069 $ 8,123,075 $__41,965,855 $ 35,835,249 (16) CITY OF MONTICELLO, MINNESOTA ' GOVERNMENTAL FUNDS RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS ' DECEMBER 31, 2004 (WITH COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2003) ' 2004 2003 Total Fund Balances for Governmental Funds $ 27,900,894 $ 24,911,908 Total net assets reported for govemmental activities in the statement of net assets ' is different because: Capital assets used in govemmental funds are not financial resources and therefore are not reported ' in the funds. Those assets consist of: Land 3,840,918 3,977,918 ' Construction in progress Buildings, Net of $2,193,106 Accumulated Depreciation 3,441,816 11,010,380 369,858 11,234,430 Office Equipment and Furniture, Net of $75,794 Accumulated Depreciation 154,671 154,444 VehiGes, Net of $987,647 Accumulated Depreciation 600,437 488,017 ' Machinery and Shop Equipment, Net of $475,336 Accumulated Depreciation 516,062 509,013 Improvements, Net of $1,716,763 Accumulated Depreciation 781,061 761,690 Infrastructure, Net of $11,237,897 Accumulated Depreciation 19,495,992 18,185,583 ' Some of the City's property taxes and special assessments will be collected after year-end, but are not available soon enough to pay for the current period's expenditures, and therefore are reported as deferred revenue in the governmental funds. 8,920,119 7,401,743 ' Interest on long-term debt is not accrued in govemmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is included in the statement of net assets. (544,912) (625,886) Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and therefore are not reported as fund liabilities. All liabilities -both current and long-term -are reported in the statement of net assets. Balances at year-end are: Bonds and Contract for Deed payable (31,047,047) (32,013,364) Unamortized Discounts and Bond Issuance costs 315,392 350,920 t T l Net Assets of Governmental Activities ota $ 45,385,783 $ 35,706,274 1 n See accompanying Notes to Financial Statements. t (17) CITY OF MONTICELLO, MINNESOTA GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, 2003) REVENUE General Property Taxes Licenses and Permits Intergovernmental Special Assessments Charges for Services Investment Earnings Refunds and Reimbursements Miscellaneous Total Revenue EXPENDITURES Current General Government Public Safety Public Works Sanitation Culture and Recreation Economic Development Capital Outlay Public Safety Public Works Capital Projects Culture and Recreation Debt Service Principal Interest and Fiscal Charges Total Expenditures Revenue Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfer In Operating Transfer Out Bond/Contract to Deed Proceeds Total Other Financing Sources (Uses) Net Increase (Decrease) in Fund Balance Fund Balance -Beginning of Year FUND BALANCE -END OF YEAR See accompanying Notes to the Financial Statements. Community Capital General Center Outlay Revolving $ 4,063,028 $ 985,611 $ 1,905 797,458 - - 267,725 - - _ - 138, 910 487,672 744,521 - - - 68,268 445,537 33,837 1,438,055 6,061,420 1,763,969 1,647,138 1,584,510 1,388,060 - 220,592 2,157,056 - - 410, 768 - - 636,091 1,234,081 - 70,008 - - 20,118 - - 209,277 - 162,326 136,779 87,783 - 6,612,667 1,321,864 382,918 (551,247) 442,105 1,264,220 158,000 296,846 1,145,929 (223,886) (662,455) (700,000) _ - 2,185,222 (65,886) (365,609) 2,631,151 (617,133) 76,496 3,895,371 5,387,377 26,182 1,120,867 $ 4,770,244 $ 102,678 $ 5,016,238 (18) ' Other Sanitary Debt Capital Governmental Total Governmental Funds Sewer Access Service Project Funds 2004 2003 ' $ - $ 1,165,567 $ - $ 1,454,555 $ 7,670,666 7,209,560 - - - - 797,458 689,421 - - 276,674 145,492 689,891 1,377,269 ' 225,302 1,488,073 246,214 2,098,499 1,292,415 1,509,509 - - 481,310 3,223,012 2,817,941 117,254 242,478 78,316 221,958 728,274 668,643 ' - - - 245,935 = = 5,890 55,756 1,979,075 1,819,108 1,852,065 2,896,118 360,880 2,605,285 17,186,875 16,120,292 = = = 71,697 1,656,207 1,417,481 ' 1,608,652 1,274,389 61,920 - - 113,226 2,332,202 2,469,523 - - - - 410,768 384,228 ' 524,843 2,395,015 2,179,429 = = = 899,221 969,229 1,039,230 ' 20,118 ~ = = = 371,603 = - - 2,033,033 - 2,033,033 4,873,914 ' - - - - 224,562 29,607 - 4,096,539 - - 4,096,539 2,167,925 - 1,460,183 - - 1,460,183 1,418, 375 ' 61 920 556 722 5 033 033 2 987 1 608 17 578 111 17 254 101 , , , , , , , , , , , 1,790,145 (2,660,604) (1,672,153) 996,298 (391,236) (1,133,809) 182,640 1,785,254 2,212,547 78,319 5,859,535 4,496,120 (500,000) (443,149) (1,895,657) (1,184,388) (5,609,535) (4,366,120) 945,000 3,130,222 2,420,000 (317,360) 2,287,105 316,890 (1,106,069) 3,380,222 2,550,000 ' 1,472,785 (373,499) (1,355,263) (109,771) 2,988,986 1,416,191 2,424,168 9,085,271 1,260,318 5,607,725 24,911,908 23,495,717 ' $ 3,896,953 $ 8,711,772 $ (94,945) $ 5,497,954 $ 27,900,894 $ 24,911,908 ' (19) CITY OF MONTICELLO, MINNESOTA RECONCILIATION OF ' STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS TO STATEMENT OF ACTIVIT IES ' YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEM BER 31, 2003) 2004 2003 ' Net Change in Fund Balance-Total Govemmental Funds $ 2,988,986 $ 1,416,191 Amounts reported for governmental activities in the statement of activities are different because: ' Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded ' depreciation in the current period. 7 Fixed Asset Acquisitions and Disposals 4,538,606 4,057,22 Loss on Disposal of Capital Assets (86,849) - Developers Contribution 1,679,579 - Depreciation Expense (1,970,952) (1,972,106) The govemmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Also, govemmental funds report the effect of issuance costs, premiums and discounts when debt is first issued, whereas these amounts are deferred and ' amortized in the statement of activities. Interest is recognized as an expenditure in the govemmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues, regardless of when it is due. The net effect of these differences in the ' treatment of general obligation bonds and related items is as follows: General Obligation Bond Proceeds (3,130,222) (2,420,000) Bond discount 2,439 30,250 Bond issuance costs 18,723 26,696 ' Repayment of Bond Principal 4,096,539 2,167,925 Change in accrued Interest Expense for General Obligation Bonds 80,974 (17,677) Amortization of bond issuance costs (28,371) (27,785) ' Amortization of Bond Discount (28,319) (28,426) Delinquent and deferred property taxes and special assessments receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period's ' expenditures, and therefore are deferred in the govemmental funds. Change in Deferred Revenue for Special Assessments 1,518,376 3,010,492 Change in Net Assets of Govemmental Activities 9,679,509 6,242,787 See accompanying Notes to the Financial Statements. (20) CITY OF MONTICELLO, MINNESOTA PROPRIETARY FUNDS STATEMENT OF NET ASSETS DECEMBER 31, 2004 (WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2003) ASSETS Liquor Cemetery CURRENT ASSETS Cash and Cash Equivalents $ 885,831 $ 73,760 Accounts Receivable 4,346 - Inventory 555,975 - Prepaid Items 3,941 - rrent Assets l C T t 1,450,093 73,760 u o a FIXED ASSETS Land, Buildings, Infrastructure and Improvements 824,547 68,177 Equipment 101,150 - Construction in Progress - - Total Fixed Assets 925,697 68,177 Less: Allowance for Depreciation (255,580) (11,896) d Assets t Fi N 670,117 56,281 xe e TOTAL ASSETS $ 2,120,210 $ 130,041 LIABILITIES AND FUND BALANCE CURRENT LIABILITIES Accounts Payable $ 2,934 $ 400 Escrow Deposits 514 - Other Accrued Liabilities 107,952 12 Contracts Payable - - Due to Other Governments 572 - Deferred Revenue 2,699 - Total Liabilities 114,671 412 NET ASSETS NET ASSETS Invested in Capital Assets, Net of Related Debt 667,418. 56,281 Unreserved 1,338,121 73,348 TOTAL NET ASSETS $ 2,005,539 $ 129,629 See accompanying Notes to the Financial Statements. (21) ' Totals Water Sewer 2004 2003 $ 1,079,023 $ 1,401,858 $ 3,440,472 $ 2,928,997 188,015 238,073 430,434 448,598 - - 555,975 599,027 ' 6,491 3,790 14,222 11,587 1,273,529 1,643,721 4,441,103 3,988,209 ' 13,895,286 36,588,851 51,376,861 48,426,563 161,027 394,295 656,472 1,184,468 786,020 644,712 1,430,732 951,198 14,842,333 37,627,858 53,464,065 50,562,229 (5,339,027) (15,502,476) (21,108,979) (19,339,896) 9,503,306 22,125,382 32,355,086 31,222,333 ' $ 10,776,835 $ 23,769,103 $ 36,796,189 $35,210,542 ' $ 9,667 $ 4,446 $ 17,447 $ 98,323 150 - 664 - ' 33,713 937 142,614 148,937 14,862 14,862 14,862 5,399 - 5,971 - - - 2,699 - ' 63,791 5,383 184,257 262,122 9,503,306 22,125,382 32,352,387 31,222,333 1,209,738 1,638,338 4,259,545 3,726,087 $ 10,713,044 $ 23,763,720 $ 36,611,932 $34,948,420 (22) CITY OF MONTICELLO, MINNESOTA PROPRIETARY FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2003) Liquor Cemetery OPERATING REVENUES Sales $ 3,412,809 $ - Costs of Goods Sold 2,535,281 - Charges for Services - 32,141 Total Gross Profit and Operating Revenue 877,528 32,141 OPERATING EXPENSES Personal Services 347,437 5,695 Telephone 4,359 - Utilities 18,616 - Supplies and Materials 22,668 1,087 Repairs and Maintenance 16,663 - Depreciation 56,003 1,929 Insurance 13,746 Professional Fees 7,619 22,802 Advertising 6,281 - Miscellaneous 54,389 762 Total Operating Expenses 547,781 32,275 Net Income (Loss) from Operations 329,747 (134) OTHER INCOME (EXPENSE) Interest Income (Expense) 36,470 2,818 Contributions of Capital Assets - Rental Income - - Total Other Income (Expense) 36,470 2,818 Net Income (Loss) before Operating Transfers 366,217 2,684 OPERATING TRANSFERS Transfer In - - Transfer Out (250,000) - erating Transfers Total O (250,000) - p NET INCOME 116,217 2,684 Net Assets -Beginning of Year 1,889,322 126,945 Prior Period Adjustment - Restated Net Assets -January 1 1,889,322 126,945 NET ASSETS -END OF YEAR $ 2,005,539 $ 129,629 See accompanying Notes to the Financial Statements. (23) 1 1 ' Totals Water Sewer 2004 2003 ' $ - $ - $ 3,412,809 $3,366,300 - - 2,535,281 2,506,669 585,699 918,309 1,536,149 1,683,863 585,699 918,309 2,413,677 2,543,494 ' 146,196 93,472 592,800 506,923 1,928 2,041 8,328 8,211 72, 515 11,123 102,254 83,168 121,836 15,655 161,246 151,946 5,445 22,108 22,045 416,775 1,294,376 1,769,083 1,757,822 12,646 23,972 50,364 45,491 ' 38,633 622,603 691,657 700,669 - - 6,281 8,057 54,850 15,154 125,155 101,133 ' 865,379 2,083,841 3,529,276 3,385,465 (279,680) (1,165,532) (1,115,599) (841,971) 36,290 49,667 125,245 107,144 1,813,284 1,066,812 2,880,096 1,925,800 23,770 23,770 22,073 1,849,574 1,140,249 3,029,111 2,055,017 1,569,894 (25,283) 1,913,512 1,213,046 1,569,894 - - 70,000 - (250,000) (200,000) - {250,000) (130,000) (25,283) 1,663,512 1,083,046 9,143,150 23,789,003 34,948,420 26,383,336 - - - 7,482,038 9,143,150 23,789,003 34,948,420 33,865,374 $ 10,713,044 $ 23,763,720 $ 36,611,932 $34,948,420 (24) CITY OF MONTICELLO, MINNESOTA PROPRIETARY FUND , STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, 2003) CASH FLOWS FROM OPERATING ACTIVITIES Cash Receipts from Customers Cash Paid to Suppliers ' Cash Paid to Employees Net Cash Provided by Operating Activities , CASH FLOWS FROM NONCAPITAL FINANCIAL ACTIVITIES Rental Receipts Transfers Out ' Transfers In Net Cash Provided by (Used) in Noncapital Financing Activities CASH FLOWS FROM CAPITAL RELATED FINANCING ACTIVITIES ' Capital Expenditures Equipment Building and improvements ' Net Cash (Used) by Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES , Interest Received on Investments Net Increase in Cash and Cash Equivalents ' Cash and Cash Equivalents -Beginning of Year Cash and Cash Equivalents -End of Year ' CASH FLOWS FROM OPERATING ACTIVITIES Operating Income (Loss) ' Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation Changes in Assets and Liabilities: ' (Increase) Decrease in Accounts Receivables (Increase) Decrease in Inventory (Increase) Decrease in Prepaid Expenses ' Increase (Decrease) in Accounts Payable Increase (Decrease) in Escrow Deposits Increase (Decrease) in Accrued Expenses Increase (Decrease) in Contracts Payable ' Increase (Decrease) in Due to Other Governments Increase (Decrease) in Deferred Revenue Net Cash Provided by Operating Activities Noncash Transactions Developer Installed Utilities ' See accompanying Notes to Financial Statements. (25) ' Totals Liquor Cemetery Water Sewer 2004 2003 $ 877,294 $ 32,141 $ 593,527 $ 931,578 $ 2,434,540 4,890,274 (136,002) (24,332) (328,061) (712,822) (1,201,217) (3,789,351) (351,081) (5,683) (147,889) (94,470) (599,123) (377,200) 390,211 2,126 117,577 124,286 634,200 723,723 ' - - - 23,770 23,770 22,073 ' (250,000) = = = (250,000) (200,000) 70,000 (250,000) - - 23,770 (226,230) (107,927) = - (21,740) = (21,740) (13,550) ' - (347,967) - - (21,740) - (21,740) (361,517) 36,470 2,818 36,290 49,667 125,245 107,144 ' 176,681 4,944 132,127 197,723 511,475 361,423 709,150 68,816 939,914 1,211,117 2,928,997 2,567,574 ' $ 885,831 $ 73,760 $ 1,072,041 $ 1,408,840 $ 3,440,472 $ 2,928,997 ' $ 329,747 $ (134) $ (279,680) $ (1,165,532) $ (1,115,599) $ (841,971) 56,003 1,929 416,775 1,294,376 1,769,083 1,757,822 I (2,933) - 7,828 13,269 18,164 (84,000) 43,052 - - - 43,052 (46,152) (548) - (1,788) (299) (2,635) 803 ' (35,251) 319 (29,414) (16,530) (80,876) 15,299 514 - 150 - 664 - (3,644) 12 (1,693) (998) (6,323) (14,517) 13,933 572 - 5,399 - 5,971 - 2,699 - - - 2,699 (77,494) $ 390,211 $ 2,126 $ 117,577 $ 124,286 $ 634,200 $ 723,723 ' $ - $ - $ 1,813,284 $ 1,066,812 $ 2,880,096 $ 1,925,800 (26) NOTES TO FINANCIAL STATEMENTS CITY OF MONTICELLO, MINNESOTA ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ' The basic financial statements of the City of Monticello have been prepared in conformity with U.S. generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies: Financial Reporting Entity As required by generally accepted accounting principles, these financial statements ' include the City of Monticello (the primary government) and its component units. A component unit is a legally separate entity for which the primary government is financially accountable, or for which the exclusion of the component unit would render ' the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit include whether or not the primary government appoints the voting majority of the ' potential component unit's board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. ' The Housing and Redevelopment authority (HRA) is fiscally dependent upon the City of Monticello, and its governing body consists of City council members. Therefore, the HRA is included as a component unit of the City. The HRA's financial data has been ' blended with that of the City (i.e. reported as though its funds were funds of the City) and reported as a special revenue fund. Entities excluded from the financial statements: Monticello Volunteer Fire Relief Association (Association) ' The Association is organized as anon-profit organization by its members to provide pension and other benefits to such members in accordance with Minnesota statutes. The Association's Board of Directors is elected by the membership of the Association. All funding is obtained in accordance with Minnesota statutes whereby state aids flow to the Association and tax levies are determined by the Association and reviewed by the City. The Association pays benefits directly to its members. i Basic Financial Statements ' Government-Wide Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) display information about the primary government and its ' component units. These statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. 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 to external parties for support. t (27) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS ' DECEMBER 31, 2004 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basic Financial Statements (Continued) ' Government-Wide Statements (Continued) In the government-wide statement of net assets, both the governmental and , business-type activities columns: (a) are presented on a consolidated basis by column; and (b) are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and ' obligations. The City's net assets are reported in three parts: (1) invested in capital assets, net of related debt; (2) restricted net assets; and (3) unrestricted net assets. The statement of activities demonstrates the degree to which the direct expenses of ' each function of the City's governmental activities and different business-type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Program revenues include: (1) fees, , fines, and charges paid by the recipients of goods, services, or privileges provided by a given function or activity; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. ' Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements ' The fund financial statements provide information about the City's funds, including its fiduciary funds and blended component unit. Separate statements for each fund ' category--governmental, proprietary, and fiduciary--are presented. The emphasis of governmental and proprietary fund financial statements is on major individual governmental and enterprise funds, with each displayed as separate columns in the fund financial statements. All remaining governmental and enterprise funds are , aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from ' exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or incidental activities. (28) CITY OF MONTICELLO, MINNESOTA ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 ' NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ' Basic Financial Statements (Continued) Major Governmental Funds ' The City reports the following major governmental funds: General Fund ' The general fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. ' Community Center Fund The community center funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. ' Capital Outlay Revolving Fund The capital outlay revolving fund is used to account for revenues and expenses related to capital outlay. ' Sanitary Sewer Access Fund The sanitary sewer access fund is used to account for revenues and expenses ' related to sanitary sewer connections. Debt Service Fund ' Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. ' Capital Projects Fund Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those ' financed by proprietary funds and trust funds). Major Propietary Funds ' The City reports the following proprietary funds: Water and Sewer Utility Funds These funds are used to account for the provisions of water and sewer services to the City's residents. ' Liquor Fund The liquor fund is used to account for the operations of the City's liquor store. ~2s~ CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS ' DECEMBER 31, 2004 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basic Financial Statements (Continued) ' Cemetery Fund The cemetery fund is used to account for the operations of the City's cemetery. ' Measurement Focus and Basis of Accounting The government-wide, proprietary fund, and fiduciary fund financial statements are ' reported using the economic resources measurement focus 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. Property taxes are ' recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. ' 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. The City considers ' all revenues to be available if they are collected within 60 days after the end of the current period. Property and other taxes, licenses, and interest are all considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is ' incurred, except for principal and interest on general long-term debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent that they have matured. Proceeds of general long-term debt and acquisitions ' under capital leases are reported as other financing sources. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. ' Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues generally result from providing services or delivering goods ' in connection with the proprietary fund's principal ongoing operations. Operating expenses include the cost of sales and providing the service, administrative expenses and depreciation. All other income and expenses are reported as nonoperating items. ' Budgets Budgets are adopted on a basis consistent with U.S. generally accepted accounting ' principles. Annual appropriated budgets are adopted for the General Fund, the Community Center, the Capital Outlay Revolving Fund, the Sanitary Sewer Access Fund, and the Debt Service Fund. ' Budgeted amounts are reported as originally adopted, or as amended by the City Council. Individual amendments were not material in relation to the original appropriations, which were adjusted. Budgeted expenditure appropriations lapse at ' year end. (30) ' CITY OF MONTICELLO, MINNESOTA ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 ' NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ' Legal ComQliance -Budgets The city follows these procedures in establishing the budgetary data reflected in the financial statements: ' 1. Prior to September 1, the city administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments, and the final tax levy and budget are adopted. 3. The City Administrator is authorized to transfer budgeted amounts between ' departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council. ' 4. Formal budgetary integration is employed as a management control device during the year for the general fund, special revenue funds and enterprise funds. Formal budgetary integration is not employed for the capital projects and debt ' service funds. 5. Budgets are adopted on a basis consistent with generally accepted accounting principles. Budgeted amounts are as originally adopted, or as amended by the City Council. ' Cash and Investments Cash balances from all funds are combined and invested to the extent available in certificates of deposit and other allowable investments. Earnings from investments are allocated to the respective funds on the basis of applicable cash balance participation by ' each fund. For purposes of the statements of cash flows, all highly liquid investments with a ' maturity of three months or less when purchased are considered to be cash equivalents. State and local ordinances authorize the city to invest (short-term and long-term) in ' certificates of deposit (considered deposits for risk categorization purposes), U.S. Treasury obligations, U.S. agency issues, high-grade commercial paper, banker's acceptances, repurchase agreements and certain corporate bonds. ' Short-term highly liquid debt instruments (including commercial paper, banker's acceptances and U.S. Treasury and Agency obligations) purchased with a remaining maturity of one year or less are reported at amortized cost. Other investments are reported at fair value. (31) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS , DECEMBER 31, 2004 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ' Property Tax Credits Property taxes on homestead property (as defined by State Statutes) are partially reduced by property tax credits. These credits are paid to the City by the State in lieu of taxes levied against homestead property. The State remits these credits through , installments each year. These credits are recognized as revenue by the City at the time of collection. Property Tax Revenue Recognition ' Property tax levies are set by the City Council in December of each year, and are certified to the County Auditor for collection in the following year. In Minnesota, counties ' act as collection agents for all property taxes. Such taxes become a lien on property on January 1 and are recorded as receivables by the City at that date. Real property taxes may be paid by taxpayers in two equal installments on May 15 and October 15. Personal ' property taxes may be paid on February 28 and June 30. The County provides tax settlements to cities and other taxing districts three times a year. Within the governmental fund financial statements, the City recognizes property tax , revenue when it becomes both measurable and available to finance expenditures of the current period. The portion of delinquent taxes not collected by the City in January is fully offset by deferred revenue because it is not available to finance current ' expenditures. Deferred revenue in governmental activities is susceptible to full accrual on the government-wide statements. Special Assessment Revenue Recognition ' Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. , These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future installments without interest ' or prepayment penalties. Within the fund financial statements, the revenue from special assessments is ' recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. ' Special assessments are collected by the County and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments ' receivable in governmental funding are completely offset by deferred revenues. Deferred revenue in governmental activities is susceptible to full accrual on the government-wide and proprietary fund statements. (32) ' CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Special Assessment Revenue Recognition (Continued) Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties and expenses of sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. Inventories Inventories are valued at lower of cost (average cost) or market. Short-Term Interfund Receivables/Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables are classified as "due from other funds" or "due to other funds" on the balance sheets of the fund financial statements. Land Held For Resale These assets are recorded in the governmental fund which purchased them at the lower of cost or market. Fund balance is reserved in an amount equal to the land's carrying value as the related funds are not available for appropriation. Capital Assets Capital assets are capitalized at historical cost, estimated historical cost, or in the case of contributions, at their estimated fair market value at the time received. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are recorded in the entity-wide statements, but are not reported in the fund financial statements. Capital assets are depreciated using the straight-line method over their estimated useful lives. Since surplus assets are generally sold for an immaterial amount when declared as no longer needed for City purposes, no salvage value is taken into consideration for depreciation purposes. Useful lives vary from 10 to 40 years for Infrastructure, 5 to 20 years for Vehicles and Office Furniture and Equipment, 12 to 40 years for Buildings, and 10 to 20 years for improvements. Capital assets not being depreciated include land and construction in progress. Property, plant and equipment used by proprietary funds are stated at cost or estimated historical cost. Contributed fixed assets are recorded at estimated fair market value at the time received. Net interest costs are capitalized on projects during the construction period. (33) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS ' DECEMBER 31, 2004 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ' Compensated Absences ' City employees earn vacation days based upon the number of completed years of service. The City compensates employees for unused vacation upon termination of employment. Accordingly, the expenditure for vacation is recognized when it is earned. ' Employees are entitled to paid sick leave at various rates for each month of full-time service. Full-time employees who resign or leave city employment voluntarily and in good standing, after giving proper notice, shall be compensated for up to 50 days of ' unused sick leave under the following guidelines: For union employees, one fourth of the unused sick leave times the hourly rate at the time of giving notice is paid. After 5 years of non-union employment, one fourth of the ' unused sick leave times the hourly rate at the time of giving notice is paid. After 10 years of employment, all employees accrue one half of the unused sick leave, , times the hourly rate at the time of giving notice. The City has elected to record the compensated absences in the fund level statements , as other accrued expenses. Loner-Term Obligations ' In the entity-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line , method. Bond issue costs, if material, are reported as deferred assets and amortized over the term of the related debt using the straight-line method. In the governmental fund financial statements, bond premiums and discounts, as well as bond issue costs are recognized during the current period. The face amount of the debt issue is reported as on other financing source. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing , uses. Issue costs are reported as debt service expenditures. Fund Balance ' In the governmental fund financial statements, reservations of fund balance represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of , financial resources. Interfund Transactions , Quasi-external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as ' expenditures/expenses in the reimbursing fund and as reductions of expenditures or expenses in the fund that is reimbursed. (34) ' CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Interfund Transactions (Continued) All other interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. All Interfund transactions are eliminated except for activity between governmental activities and business-type activities for presentation in the entity-wide statements of net assets and statements of activities. NOTE 2 DEPOSITS AND INVESTMENTS Deposits In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described below 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. The carrying amount of the City's deposits with financial institutions was $1,416,885 and the bank balance was $1,764,239, of which the total amount was collateralized by securities held by the City's agent in the City's name. Investments Minnesota Statutes authorize the City to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its ' instrumentalities, or organizations created by an act of congress, excluding mortgage-backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax-exempt securities, or repurchase or reverse repurchase _ agreements. ~ c) General obligations of the State of Minnesota or any of its municipalities. (35) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) Investments (Continued) d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; certain Minnesota securities broker-dealers; or, a bank qualified as a depositor. Cash and Investment balances as of December 31, 2004 are as follows: Custodial Credit Custodial Credit Carrying and Risk Category 1 Risk Category 2 Fair Value U.S. Government & Governmental Agency Securities Marketable Certificates of Deposit Money Market Funds $ 23,146,965 $ - $ 23,146,965 2,156,419 - 2,156,419 3,140,224 - 3,140,224 Total Investments Deposits Cash on hand Total Investments, Deposits and Cash on Hand Cash and Investments Total Cash and Investments $ 28,443,608 $ - 28,443,608 1,416,885 8,200 $ 29,868,693 $ 29,868,693 $ 29,868,693 The City's investments are categorized above to give an indication of the level of custodial credit risk assumed at year-end. Category 1 includes investments that are insured or registered or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured or unregistered investments for which the securities are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty or by its trust department or agent but not in the City's name. (36) 1 i J CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 3 LONG-TERM RECEIVABLES The City maintains a revolving loan program to support economic development. Outstanding loans as of December 31, 2004 were as follows. Balance at December 31, 2004 In February of 1998, a loan of $87,500 was made to a local business. The loan requires monthly interest only payments at 6.5% through March 2000. Beginning in April 2000, the loan requires monthly payments of $1,716, including interest at 6.5%. $27,887 of the loan has been forgiven. $ ' In June of 2000, a loan of $500,000 was made to a local business. The loan requires 83 monthly payments of $5,098, including interest at 4% and a balloon payment of $177,773, including interest 4% on June 1, 2007. This loan is funded by a Federal Community Development Block Grant. In July of 2002, a loan of $105,000 was made to a local business. The loan requires 178 monthly payments of $950, including interest at 7%. In September of 2002, a loan of $30,000 was made to a local business. The loan requires 59 monthly payments of $194, including interest at 4.75% and a balloon payment of $25,131, including interest of 4.75% on September 1, 2006. In March of 2003, a loan of $200,000 was made to a local business. The loan requires 60 monthly payments of $1,084, including interest of 2.75% and a balloon payment of $160,151 including interest of 2.75% on March 1, 2008. In April of 2003, a loan of $290,000 was made to a local business. The loan requires 54 monthly payments of $1,607, starting October 1, 2003, including interest at 2.75% and a balloon payment of $238,369, including interest of 2.75% on April 1, 2008. In April of 2003, a loan of $55,000 was made to a local business. The loan requires 120 monthly payments of $525, including interest of 2.75% In December 31, 2003, a loan of $74,763 was made to a local business.. The loan requires 120 monthly payments of $849, including interest at 6.50%. In May 30, 2004, a loan of $350,000 was made to a local business. The loan requires 59 monthly payments of $1,483 and a final balloon payment of $294,731, including interest at 2.0%. Total Long-Term Receivables 8,903 301,582 89,440 27,036 185,892 277,390 46, 850 62,912 343,667 $ 1,343,672 (37) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 4 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2004 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital Assets, Not Being Depreciated Land $ 3,977,918 $ 51,200 $ (188,200) $ 3,840,918 Construction in progress 369,858 3,822,967 (751,009) 3,441,816 Total Capital Assets, Not Being Depreciated 4,347,776 3,874,167 (939,209) 7,282,734 Capital Assets, Being Depreciated Buildings 13,273,486 185,000 (255,000) 13,203,486 Office Equipment and Fumiture 215,709 37,823 (23,067) 230,465 Vehicles 1,362,082 226,002 - 1,588,084 Machinery and Shop Equipment 888,381 103,017 - 991,398 Other 2,359,297 152,681 (14,154) 2,497,824 Infrastructure 28,142,813 2,591,076 - 30,733,889 Total Capital Assets, Being Depreciated 46,241,768 3,295,599 (292,221) 49,245,146 Accumulated Depreciation for Buildings (2,039,056) (341,050) 187,000 (2,193,106) Office Equipment and Fumiture (61,264) (14,530) - (75,794) Vehicles (874,065) (113,582) - (987,647) Machinery and Shop Equipment (379,368) (95,968) - (475,336) Other (1,597,607) (125,156) 6,000 (1,716,763) Infrastructure (9,957,231) (1,280,666) - (11,237,897) Total Accumulated Depreciation (14,908,591) (1,970,952) 193,000 (16,686,543) Total Capital Assets, Being Depreciated, Net 31,333,177 1,324,647 (99,221) 32,558,603 Govemmental Activities Capital Assets, Net $ 35,680,953 $ 5,198,814 $ (1,038,430) $ 39,841,337 Depreciation expense was charged to governmental functions as foll ows: Governmental Activities: General Government $ 13,025 Public Safety 45,495 Public Works 1,485,887 Parks, Culture and Recreation 426,545 Total Depreciation Expense, Governmental Activities 1,970,952 (38) CITY OF MONTICELLO, MINNESOTA ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 ' NOTE 4 CAPITAL ASSETS (CONTINUED) Beginning Transfers/ Transfers/ Ending Balance Additions Disposals Balance Business Activities: ' Capital Assets, Not Being Depreciated Land $ 1,207,387 $ 2,193 _ $ $ 1,209,580 Construction in progress 951,198 1,430,733 (951,198) 1,430,733 Total Capital Assets, Not Being Depreciated 2,158,585 1,432,926 (951,198) 2,640,313 Capital Assets, Being Depreciated Buildings 5,271,220 - - 5,271,220 Office Equipment and Fumiture 36,899 - - 36,899 ' Vehicles 527,996 527,996 Machinery and Shop Equipment 619,573 - - 619,573 Other 17,806,356 - (15,104) 17,791,252 Infrastructure 24,141,600 2,435,213 - 26,576,813 Total Capital Assets, Being Depreciated 48,403,644 2,435,213 (15,104) 50,823,753 ' Accumulated Depreciation for Buildings (1,731,905) (166,908) _ (1,898,813) Office Equipment and Furniture (9,047) (7,390) - (16,437) Vehicles (487,204) (9,911) ~ (497,115) ' Machinery and Shop Equipment (471,563) (25,016) (496,579) Other (7,884,715) (709,226) 13,594 (8,580,347) Infrastructure (8,755,462) (864,227) - (9,619,689) • Total Accumulated Depreciation (19,339,896) (1,782,678) 13,594 (21,108,980) Total Capital Assets, Being Depreciated, Net 29,063,748 652,535 (1,510) 29,714,773 Business Activities ' Capital Assets, Net $ 31,222,333 $ 2,085,461 $ (952,708) $ 32,355,086 ii ' (39) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 5 CITY INDEBTEDNESS City indebtedness at December 31, 2004 is composed of the following: Initial Net Amount Maturity Interest Outstanding Description Issued Date Rate Principal General Obligation Bonds: 19986 Refunding Bonds $ 515,000 Feb. 2004 2003A GO Improvement Bonds 2,420,000 Feb. 2015 Total General Obligation Bonds 2,935,000 General Obligation Tax Increment Bonds: 1985 Tax Increment Bonds 1989A Tax Increment Bonds 2000 Temporary Tax Increment Bonds 2004A Tax Increment Bonds Total General Obligation Tax Increment Bonds Special Assessments Bonds: 1994A Refunding Bonds 1997A Improvement Bonds 1999 Improvement Bonds 2000A Improvement Bonds 20008 Improvement Bonds 2002 Improvement Bonds Total Special Assessment Bonds General Obligation Notes: Project 93-14C Wastewater Treatment Note Public Project Revenue Bonds 2000A Contract for Deed $ 350,000 Feb. 2006 260,000 Feb. 2007 2,150,000 July 2004 945,000 Feb. 2013 3,705,000 $ 965,000 Feb. 2004 1,575,000 Feb. 2004 3,000,000 Feb. 2010 2,015,000 Feb. 2016 1,645,000 Feb. 2011 2,420,000 Feb. 2014 11,620,000 $ 14,700,000 Aug. 2018 $ 7,555,000 Feb. 2015 $ 2,185,222 Dec. 2009 3.9982% $ - 3.7144% 2,420,000 2,420,000 8.2983% $ 70,000 7.2532% 85,000 5.5000% - 4.6600% 945,000 1,100,000 4.23120% $ - 4.39050% - 4.14690% 1,845,000 5.38260% 1,590,000 4.99900% 1,015,000 3.66820% 2,265,000 6,715,000 4.08000% $ 11,456,825 6.26800% $ 7,170,000 6.00000% $ 2,185,222 The following is a schedule of changes in City indebtedness for the year ended t December 31, 2004: General Obligation Bonds Bond Discount General Obligation Note Special Assessment Debt with Governmental Commitments General Obligation Tax Increment Bonds Public Project Revenue Bonds Contract For Deed Total Payable Beginning End of Due within of Year Additions Payments Year one year $ 2,535,000 $ - $ 115,000 $ 2,420,000 $ - (204,087) (2,439) (28,319) (178,207) 12,053,364 - 596,539 11,456,825 621,126 7,760,000 - 1,045,000 6,715,000 800,000 2,360,000 945,000 2,205,000 1,100,000 130,000 7,305,000 - 135,000 7,170,000 260,000 - 2,185,222 - 2,185,222 100,000 $ 31,809,277 $ 3,127,783 $ 4,068,220 $ 30,868,840 $ 1,911,126 ~~ ~.! (40) ' CITY OF MONTICELLO, MINNESOTA ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 ' NOTE 5 CITY INDEBTEDNESS (CONTINUED) ' Minimum annual principal and interest payments required to retire long-term debt, are as follows. ' General Long-Term Debt Years Principal Interest Totals ' 2005 $ 1,911,126 $ 1,420,720 $ 3,331,846 2006 2,186,726 1,336,378 3,523,104 2007 2,378,382 1,245,222 3,623,604 2008 2,451,136 1,146,067 3,597,203 2009 4,215,256 1,017,883 5,233,139 2010-2014 12,447,089 2,791,308 15,238,397 2015-2018 5,457,332 421,361 5,878,693 ' Totals $ 31,047,047 $ 9,378,939 $ 61,543,076 ' From time to time, the City has issued Industrial Revenue Bonds and other similar type Revenue Bonds to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the ' public interest. The Bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City, the State nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. The issues are as follows: Original Issue Date Commercial Business Term Type Amount Balance ' 04/01/88 Clow Stamping 22 yrs Ind. Dev. Rev. Bonds $ 950,000 $ 415,000 12/23/85 Raindance Partnership 25 yrs Comm. Dev. Rev. Bonds 1,075,000 650,602 G (41) 1 CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS ' DECEMBER 31, 2004 NOTE 6 DEFINED BENEFIT PENSION PLANS -STATEWIDE ' Plan Description ' All full-time and certain part-time employees of the City of Monticello are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). The PERA administers the Public Employees ' Retirement Fund (PERF) which is acost-sharing, multiple-employer retirement plan. This plan is established and administered in accordance with Minn. Stat. Chapters. 353 and 356. ' Public Employee Retirement Fund members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All ' police officers, firefighters and peace officers who qualify for membership by statute are covered by the Public Employees Police and Fire Fund. d fi b ers, an ts to mem The PERA provides retirement benefits as well as disability bene benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The 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 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 fora Basic Plan member is 2.2 percent of average salary for each of the first ten years of ' service and 2.7 percent for each year thereafter. For the Coordinated Plan member, the annuity accrual rate is 1.2 percent of average salary for each of the first the years and 1.7 percent for each successive year. Using 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 the Public Employees Police and Fire Fund members, the annuity accrual rate is three percent of average salary for each year of service. For Public Employee Retirement Fund members whose annuity is calculated using ' Method 1, and all Public Employees Police and Fire Fund members, a full annuity is available when age plus years of service equal 90. A reduced retirement annuity is also available to eligible members seeking early retirement. L (42) ' CITY OF MONTICELLO, MINNESOTA ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 ' NOTE 6 DEFINED BENEFIT PENSION PLANS -STATEWIDE (CONTINUED) 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. The PERA issues a publicly available financial report that includes financial statements and required supplementary information for Public Employee Retirement Fund and the ' Public Employees Police and Fire Fund. That report may be obtained on the web at 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. ' Funding Policy Pension benefits are funded from member and employer contributions and income from ' the investment of fund assets. Minn. Stat. Ch... 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. Public Employees Retirement Fund Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 5.10% respectively, of their annual covered salary. Public Police and Fire Fund members are required to contribute 6.20% of there annual covered salary. The City is required to ' contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members, and 5.53% for Coordinated Plan PERF members. The City's ' contributions to the Public Employees Retirement Fund for the years ending December 31, 2004, 2003, and 2002 were $129,637, $115,039, and $107,146, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. ' City of Monticello Fire Relief Association ' Plan Description The City contributes to the City of Monticello Fire Relief Association (Association), a single employer retirement system that acts as a common investment manager and ' administrator for the City's firefighters. All active members of the fire department are members of the Association. Upon approval by the Board of Trustees, lump sum retirement benefits are either paid or deferred as follows: 1. Benefits accrue and vest to members based on $2,175 per year of active service in ' the fire department and Association with 100% vesting at twenty years. 2. There is no maximum retirement benefit. 3. Members retiring with less than ten years of service forfeit their accrued benefits. (43) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 6 DEFINED BENEFIT PENSION PLANS -STATEWIDE (CONTINUED) City of Monticello Fire Relief Association (Continued) Plan Description (Continued) 4. Members who separate from service and have at least ten years of active service and membership but are less than 50 years of age are entitled to a deferred service pension payable upon reaching the age of 50. The Association also provides death benefits, whereby upon approval of application, the beneficiaries of each deceased active member would receive $2,175 per year of service. The City passes through state aids allocated to the plan in accordance with enabling state statutes. Annual Pension Cost and Net Pension Obligation The City's annual pension cost and net pension obligation for the year ended December 31, 2004 is as follows: Annual Required Contribution $ - Interest on Net Pension Obligation - Adjustment to Annual Required Contribution - Annual Pension Cost - Less Contribution Made - Increase (Decrease) in Net Pension Obligation Net Pension Obligaiton Beginning of Year - Net Pension Obligation End of Year $ - The annual required contribution for the current year was determined as part of the December 31, 2004, actuarial valuation using the entry age actuarial cost method. The actuarial assumptions included (a) 5% investment rate of return and (b) age and service retirement was assumed to occur at the age of 50. The assumptions did not include post retirement benefit increases, which are funded by State Statute when granted. Net assets available for benefits exceeded the pension benefit obligation at December 31, 2004, 2003, and 2002. Three-Year Trend Information Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation 2004 2003 2002 100% 100% 100% i 1 0 l (44) ' NOTE 7 CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY Deficit Fund Balances The City has deficit fund balances at December 31, 2004 as follows: Capital Project Fund Special Revenue Funds Orderly Annexation $ (94,945) (59,773) The City intends to fund these deficits through future tax levies, special assessment levies, tax increments, transfers from other funds, and various other sources. Expenditures Over Budget Expenditures Budget Expenditures in Excess of Budget Actual expenditures exceeded 2003 budgets in the following fund: $ 5,743,185 $ 6,612,667 $ 869,482 1,304,345 1,321,864 17,519 General Fund Community Center Fund NOTE 8 INTERFUND RECEIVABLE AND PAYABLES Individual fund receivable and payable balances at December 31, 2004 are as follows: General Fund -Due from HRA Fund $ 263,307 General Fund -Due from Orderly Annexation 59,819 NOTE 9 RISK MANAGEMENT The City participates in the League of Minnesota Cities Insurance Trust (LMCIT) property and liability insurance program, a joint self-insurance plan designed and administered by American Business Risk Services and structured to operate through local insurance agents. Approximately 140 cities currently participate in the program. The City has the following coverages with LMCIT: a basic package of property, inland marine, automotive physical damage and liability; comprehensive general liability; public officials errors and omissions; umbrella liability; boiler and machinery; and workers compensation. The City pays an annual premium to LMCIT, which in turn pays the local agent's commission and pays an administrative fee to American Business Risk Services. The remaining premium is split between LMCIT and its reinsurers. The reinsurers in turn reimburse LMCIT for a corresponding share of each loss. (45) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2004 NOTE 9 RISK MANAGEMENT (CONTINUED) A profit-sharing agreement also provides for a return to LMCIT of a share of the reinsurers' portion of the premium if the loss experience is favorable. To protect against the possibility that LMCIT's share of the losses will exceed its share of the premium, LMCIT also purchases aggregate reinsurance. The loss experience has been favorable the last three years and the City has received a return of part of the premiums paid. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three calendar years. Construction Commitments The City entered into construction contracts for various construction projects started during the year. The following contracts had been entered into and were at various stages of completion at December 31, 2004: Contract 2003-01 C Marvin Rd 2004-06C Core St. #2 2004-19C Hwy 25 Signal 2004-15C Walnut St. Pkng 2004-36C CIBR Expansion 2004-33C Jeff. Commons Pond Totals '` including approved change orders Expenses Contract Amount Recorded to Remaining for Contract Date for Work Uncompleted Amount" Completed Work $ 387,638 $ 325,915 $ 61,723 946,307 851,286 95,021 157, 070 143, 604 13, 466 22,049 13,400 8,649 649,725 66,218 583,507 51,840 48,820 3,020 $ 2,214,629 $ 1,449,243 $ 765,386 (46) ' REQUIRED SUPPLEMENTARY INFORMATION ~'~ CITY OF MONTICELLO, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) Original & Final 2004 Variance from 2003 Budget Actual Final Budget Actual REVENUE General Property Taxes Taxes $ 4,186,597 $ 4,063,028 $ (123,569) $ 3,777,084 Licenses and Permits 678,025 797,458 119,433 689,421 Intergovernmental State Market Value Credit - 10,771 10,771 - Mobile Home Market Value Credit - 15,644 15,644 7,690 Fire Department Aid 63,250 94,969 31,719 73,610 State Police Aid 33,000 40,957 7,957 36,064 State Highway Aid 68,000 72,514 4,514 291,557 RecyGing Incentive 14,000 13,262 (738) 14,377 PERA Aid 6,741 6,741 - 6,741 County/Regional - Other 12,600 12,867 267 27,108 Total lntergovemmental 197,591 267,725 70,134 457,147 Charges for Services Animal Impound Fees 23,000 23,382 382 28,154 Deputy Registrar Fees 245,300 260,575 15,275 275,924 Inspection Fees 55,000 108,866 53,866 204,713 Township Contract 80,215 94,849 14,634 80,011 Total Charges for Services 403,515 487,672 84,157 588,802 Miscellaneous Development Cost Reimbursement 155,418 55,000 (100,418) 274,848 Sale of City Property - 1,050 1,050 85,917 Interest Income 186,240 52,664 (133,576) 37,155 Rents - 14,014 14,014 11,724 Garbage Charge 82,100 91,643 9,543 105,693 Other 58,775 231,166 172,391 119,097 Total Miscellaneous 482,533 445,537 (36,996) 634,434 Total Revenue 5,948,261 6,061,420 113,159 6,146,888 (47) CITY OF MONTICELLO, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGETAND ACTUAL (CONTINUED) YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) EXPENDITURES General Government Mayor and Council Current Personal Services Other Services and Charges Total Mayor and Council Administration Current Personal Services Supplies Other Services and Charges Total Administration Elections Current Personal Services Supplies Other Services and Charges Total Elections Finance Current Personal Services Supplies Other Services and Charges Total Finance Data Processing Audit Legal Assessing Insurance Planning and Zoning Current Personal Services Other Services and Charges Professional Services Total Planning and Zoning Deputy Registrar Current Personal Services Other Services and Charges Capital Outlay Total Deputy Registrar Original & Final 2004 Over (Under) 2003 Budget Actual Budget Actual 27,760 25,425 2,335 25,113 12,450 7,059 5,391 1,743 40,210 32,484 7,726 26,856 254,895 280,818 (25,923) 313,341 300 7,228 (6,928) 139 16,570 31,470 (14,900) 12,006 271,765 319,516 (47,751) 325,486 5,500 5,402 98 - 1,825 2,224 (399) - 1,650 4,313 (2,663) - 8,975 11,939 (2,964) - 181,870 187,528 (5,658) 171,932 2,850 1,507 1,343 1,728 13,425 17,236 (3,811) 12,289 198,145 206,271 (8,126) 185,949 103,175 69,076 34,099 90,471 29,500 55,696 (26,196) 31,905 102,150 105,370 (3,220) 156,510 44,510 39,680 4,830 29,980 88,805 86,571 2,234 82,332 122,330 92,157 30,173 37,433 3,700 3,813 (113) 3,140 78,700 270,140 (191,440) 88,785 204,730 366,110 (161,380) 129,358 177,195 172,358 4,837 155,106 22,275 12,762 9,513 16,738 5,000 - 5,000 9,155 204,470 185,120 19,350 180,999 (48) CITY OF MONTICELLO, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (CONTINUED) YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) Original & Final 2004 Variance from 2003 Budget Actual Final Budget Actual General Govemment (Continued) City Hall Current Personal Services 7,245 3,079 4,166 6,428 Supplies 28,400 13,837 14,563 17,153 Utilities 15,500 16,748 (1,248) 27,720 Professional Services 10,500 7,351 3,149 19,094 Telephone 23,500 20,422 3,078 21,418 Other Services and Charges 46,305 39,698 6,607 25,727 Capital Outlay 20,000 - 20,000 - Total City Hall 151,450 101,135 50,315 117,540 Severance Benefits 28,000 5,542 22,458 (9,122) Total General Govemment 1,475,885 1,584,510 (108,625) 1,348,264 Public Safety National Guard 21,400 9,106 12,294 18,873 Police Current Contractual Services 797,160 801,566 (4,406) 719,377 Fire Department Current Personal Services 142,330 78,851 63,479 140,062 Supplies 29,000 23,434 5,566 32,655 Other Services and Charges 36,500 135,185 (98,685) 38,319 Repairs and Maintenance 26,500 37,417 (10,917) 31,011 Capital Outlay - 20,118 (20,118) - Total Fire Department 234,330 295,005 (60,675) 242,047 Building Inspections Personal Services 188,530 226,118 (37,588) 198,182 Other Services and Charges 27,325 30,254 (2,929) 37,652 Total Building Inspections 215,855 256,372 (40,517) 235,834 Animal Control Current 42,975 42,265 710 39,799 Civil Defense Current Personal Services 10,365 1,042 9,323 430 Other Services and Charges 3,300 2,822 478 4,818 Capital Outlay - - - 13,211 Total Civil Defense 13,665 3,864 9,801 18,459 Total Public Safety 1,325,385 1,408,178 (82,793) 1,274,389 (49) CITY OF MONTICELLO, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (CONTINUED) YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) Public Works Administration and Engineering Current Personal Services Other Services and Charges Professional Service Capital Outlay Total Administration and Engineering Streets Curcent Personal Services Supplies Other Services and Charges Capital Outlay Total Streets Snow and Ice Current Personal Services Supplies Other Services and Charges Total Snow and Ice Inspections Street Lighting-Parking Lots Shop and Garage Total Public Works Original & Final 2004 Variance from 2003 Budget Actual Final Budget Actual 148,130 149,226 (1,096) 144,626 14,350 29,491 (15,141) 35,169 380,000 1,129,248 (749,248) 951,889 5,000 - 5,000 - 547,480 1,307,965 (760,485) 1,131,684 279,740 300,374 (20,634) 289,131 78,000 67,938 10,062 66,316 29,600 9,663 19,937 10,183 190,000 209,277 (19,277) 128,450 577,340 587,252 (9,912) 494,080 43,325 38,844 4,481 41,548 26,750 35,187 (8,437) - 2,500 1,310 1,190 19,545 10,000 7,005 2,995 - 82,575 82,346 229 61,093 131, 790. 118, 009 13, 781 148, 726 109,100 125,489 (16,389) 96,594 135,525 145,272 (9,747) 137,619 1,583,810 2,366,333 (782,523) 2,069,796 (50) CITY OF MONTICELLO, MINNESOTA ' GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ' BUDGET AND ACTUAL (CONTINUED) YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) Original & Final 2004 Variance from 2003 ~ Budget Actual Final Budget Actual Culture and Recreation Parks and Recreation Current Personal Services Supplies Other Services and Charges Capital Outlay Total Parks and Recreation Senior Citizens/Museum Current Personal Services Other Services and Charges Total Senior Citizens/Museum Information Center YMCA/Community Education Ice Arena Total Culture and Recreation Sanitation Current Refuse Collection Economic Development Total Expenditures Excess of Revenue over Expenditures OTHER FINANCING SOURCES (USES) Operating Transfer In Operating Transfer Out Net Increase (Decrease) in Fund Balance Fund Balance -Beginning of Year FUND BALANCE -END OF YEAR 313,100 317,388 (4,288) 284,347 72,400 105,742 (33,342) 82,981 48,700 66,893 (18,193) 47,564 330,000 136,779 193,221 260,113 764,200 626,802 137,398 675,005 1,500 61 1,439 1,500 76,390 40,035 36,355 75,362 77,890 40,096 37,794 76,862 - 32 (32) 296 18,200 30,940 (12,740) 5,460 - 75,000 (75,000) - 860,290 772,870 87,420 757,623 439,930 410,768 29,162 384,228 57,885 70,008 (12,123) 64,739 5,743,185 6,612,667 (869,482) 5,899,039 205,076 (551,247) (756,323) 247,849 90,000 158,000 68,000 395 - (223,886) (223,886) (214,650) 90,000 (65,886) (155,886) - $ 295,076 (617,133) $ (912,209) 33,199 $ 4,770,244 $ 5,387,377 (51) CITY OF MONTICELLO, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY CENTER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) REVENUES Taxes Membership Dues and Fees Miscellaneous Total Revenue EXPENDITURES Culture and Recreation Salaries and Employee Benefits Supplies Professional Services Advertising Repair and Maintenance Insurance Utilities Telephone Equipment and Other Rental Other Capital Outlay Total Expenditures Excess of Revenue over Expenditures OTHER FINANCING SOURCES (USES) Original & Final 2004 Variance from 2003 Budget Actual Final Budget Actual $ 1,018,355 $ 985,611 $ (32,744) 869,925 695,195 744,521 49,326 730,816 3,250 33,837 30,587 870 1,716,800 1,763,969 47,169 1,601,611 672,485 711,825 (39,340) 645,487 153,350 143,103 10,247 160,984 37,100 38,831 (1,731) 48,924 20,500 21,431 (931) 45,584 116,500 104,544 11,956 29,528 51,610 33,508 18,102 41,026 150,000 146,765 3,235 124,715 12,000 10,770 1,230 10,431 19,600 15,962 3,638 15,299 15,450 7,342 8,108 12,814 55,750 87,783 (32,033) 29,607 1,304,345 1,321,864 (17,519) 1,164,399 412,455 442,105 29,650 437,212 Transfers In 250,000 296,846 46,846 214,650 Transfers Out (662,455) (662,455) - (573,225) Total Other Financing Sources (Uses) (412,455) (365,609) 46,846 (358,575) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses $ - 76,496 $ 76,496 78,637 Fund Balance -Beginning of Year FUND BALANCE -END OF YEAR 26,182 $ 102,678 (52,455) $ 26,182 ' C~i 1 (52) ' CITY OF MONTICELLO, MINNESOTA SPECIAL REVENUE FUND - CAPITAL OUTLAY REVOLVING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) Original & Final 2004 Variance from 2003 Budget Actual Final Budget Actual REVENUES Taxes $ - $ 1,905 $ 1,905 124,564 Special Assessments 47,715 138,910 91,195 54,155 Interest Earnings 26,450 68,268 41,818 34,818 Miscellaneous 10,500 1,438,055 1,427,555 159,801 Total Revenue 84,665 1,647,138 1,562,473 373,338 EXPENDITURES Public Works Supplies - 15,692 15,692 - Professional Services - 189,590 189,590 2,094 Other - 15,310 15,310 368 Capital Outlay 206,575 162,326 (44,249) 89,221 Total Expenditures 206,575 382,918 176,343 91,683 Excess of Revenue over Expenditures (121,910) 1,264,220 1,386,130 281,655 OTHER FINANCING SOURCES (USES) Proceeds from Contract for Deed - 2,185,222 - - Transfers In - 1,145,929 1,145,929 23,184 Transfers Out - (700,000) (700,000) (114,175) Total Other Financing Sources (Uses) - 2,631,151 445,929 (90,991) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses $ (121,910) 3,895,371 $ 1,832,059 190,664 Fund Balance -Beginning of Year 1,120,867 930,203 FUND BALANCE - END OF YEAR $ 5,016,238 $ 1,120,867 (53) CITY OF MONTICELLO, MINNESOTA SPECIAL REVENUE FUND SANITARY SEWER ACCESS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) Original & Final 2004 Variance from 2003 Budget Actual Final Budget Actual REVENUES Special Assessments $ 44,055 $ 225,302 $ 181,247 $ 74,857 Hook-up Fees 884,000 1,509,509 625,509 915,486 Interest 81,000 117,254 36,254 117,622 Total Revenue 1,009,055 1,852,065 843,010 1,107,965 EXPENDITURES Public Works Professional Services - 9,332 (9,332) 1,175 Capitallmprovements 205,000 52,588 152,412 125,780 Total Expenditures 205,000 61,920 143,080 126,955 Excess of Revenue Over Expenditures 804,055 1,790,145 986,090 981,010 OTHER FINANCING SOURCES (USES) Transfers In $ - $ 182,640 $ 182,640 Transfers Out - (500,000) (500,000) (1,288,115) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses $ 804,055 Fund Balance -Beginning of Year FUND BALANCE -END OF YEAR 1,472,785 $ 668,730 (307,105) 2,424,168 2,731,273 $ 3,896,953 2,424,168 (54) COMBINING FINANCIAL STATEMENTS CITY OF MONTICELLO, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2004 (WITH COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2003) Orderly Shade Tree Transportation Annexation ASSETS Cash and Investments Accounts Receivable (Net of Allowance for Estimated Uncollectibles) Due from Other Governmental Units Special Assessments Receivable Delinquent Deferred Prepaid Items Loans Receivable Land Held for Resale TOTAL ASSETS $ 17,436 $ 15,200 $ - 932 2,657 2 - - ~. $ 18,368 $ 17,857 $ 46 LIABILITIES AND FUND BALANCE LIABILITIES Cash Deficiency Accounts Payable Escrow Deposits Accrued Expenses Contracts Payable Due to Other Funds Due to Other Governments Deferred Revenue Total Liabilities FUND BALANCE (DEFICIT) Reserved for Prepaid Items Reserved for Loans Receivable Reserved for Land Held for Resale Unreserved Undesignated Total Fund Balance (Deficit) TOTAL LIABILITIES AND FUND BALANCE $ - $ - $ - 4,409 6,005 - 221 29 - _ - 59,819 4,630 6,034 59,819 _ - 44 13,738 11,823 (59,817) 13,738 11,823 (59,773) $ 18,368 $ 17,857 $ 46 (55) Housing and Economic Central Redevelopment Development Water Minnesota Library Authority Authority Access Initiative $ 14,797 $ 1,083,334 $ 825,816 $ 672,218 $ 2,905 323 1,297 5,000 8,592 - - - - 5,860 - - - - 410,461 - 134 - - - - - - 612,348 - - $ 15,254 $ 1,084,631 $ 1,443,164 $ 1,097,131 $ 2,905 $ - $ - $ 389 61,785 70 7,873 - 263,307 1,109 - 1,568 332,965 - $ - 1,572 - 3,342 - 416,321 - 421,235 - 134 - - - - - - 612,348 - - 13,552 751,666 830,816 675,896 2,905 13,686 751,666 1,443,164 675,896 2,905 $ 15,254 $ 1,084,631 $ 1,443,164 $ 1,097,131 $ 2,905 - $ (56) CITY OF MONTICELLO, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET (CONTINUED) DECEMBER 31, 2004 (WITH COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2003) Economic Storm Recovery Sewer Grant Access ASSETS Cash and Investments Accounts Receivable (Net of Allowance for Estimated Uncollectibles) Due from Other Governmental Units Special Assessments Receivable Delinquent Deferred Prepaid Items Loans Receivable Land Held for Resale TOTAL ASSETS LIABILITIES AND FUND BALANCE Minnesota $ 15,448 $ 1,070,667 $ 316,805 - 17,762 - - 1,011,948 - _ - 578,972 $ 15,448 $ 2,100,377 $ 895,777 LIABILITIES Cash Deficiency Accounts Payable Accrued Expenses Contracts Payable Due to Other Funds Due to Other Governments Deferred Revenue Total Liabilities FUND BALANCE (DEFICIT) Reserved for Prepaid Items Reserved for Loans Receivable Reserved for Land Held for Resale Unreserved Undesignated Total Fund Balance (Deficit) TOTAL LIABILITIES AND FUND BALANCE $ - $ - $ - - 18,884 - - 73,954 - - 1,029,710 - - 1,122,548 - - - 578,972 15,448 977,829 316,805 15,448 977,829 895,777 $ 15,448 $ 2,100,377 $ 895,777 (57) Park City Pathway Streets Environmental Totals Dedication Reconstruction Clean-up 2004 2003 $ 218,596 $ 532,304 $ 2,293 $ 4,787,819 $ 5,036,986 - 4,195 - 22,998 32,100 _ _ _ - 191,980 7,153 - - 30,775 37,854 410,028 257,548 - 2,089,985 762,568 _ _ - 178 134 - - - 1,191,320 1,109,700 $ 635,777 $ 794,047 $ 2,293 $ 8,123,075 $ 7,171,322 $ _ $ _ $ - $ - $ 319,766 - - - 93,044 54,027 - - - 8,193 1,181 1,593 - - 78,889 2,833 - - - 323,126 139,366 _ _ - 1,109 246,002 417,181 257,548 - 2,120,760 800,422 418,774 257,548 - 2,625,121 1,563,597 - - - 178 134 - - - 1,191,320 1,109,700 217,003 536,499 2,293 4,306,456 4,497,891 217,003 536,499 2,293 5,497,954 5,607,725 $ 635,777 $ 794,047 $ 2,293 $ 8,123,075 $ 7,171,322 (58) CITY OF MONTICELLO, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) REVENUES General Property Taxes Intergovernmental Special Assessments Charges for Services Investment Earnings Miscellaneous Total Revenue EXPENDITURES Current General Government Culture and Recreation Public Works Capital Projects Economic Development Total Expenditures Revenue Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Contract to Deed Operating Transfer In Operating Transfer Out Total Other Financing Sources (Uses) Net Increase (Decrease) in Fund Balance Fund Balance (Deficit) -Beginning of Year FUND BALANCE (DEFICIT) -END OF YEAR Orderly Shade Tree Transportation Annexation $ 224 $ - $ 7 - 45,059 169 4,925 8,241 - 1,393 752 - - 5 - 6,542 54,057 176 - 71,697 - 44,875 - - _ - 42,182 44,875 71,697 42,182 (38,333) (17,640) (42,006) (38,333) (17,640) (42,006) 52,071 29,463 (17,767) $ 13,738 $ 11,823 $ (59,773) (59) 0 Housing and Economic Central Redevelopment Development Water Minnesota Library Authority Authority Access Initiative $ 34,242 $ 935,852 $ - $ - $ - - - - 49,339 - 1,002 - 200 253,726 - 180 33,713 50,875 29,501 100 - 50,226 - - 20 35,424 1,019,791 51,075 332,566 120 30,034 - - - - - - - 113,226 - - 594,933 1,848 - (1,100) 30,034 594,933 1,848 113,226 (1,100) 5,390 424,858 49,227 219,340 1,220 - - - 45,719 - - (337,650) - (270,200) - - (337,650) - (224,481) - 5,390 87,208 49,227 (5,141) 1,220 8,296 664,458 1,393,937 681,037 1,685 $ 13,686 $ 751,666 $ 1,443,164 $ 675,896 $ 2,905 (60) n CITY OF MONTICELLO, MINNESOTA NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE (CONTINUED) YEAR ENDED DECEMBER 31, 2004 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2003) REVENUES General Property Taxes Intergovernmental Special Assessments Charges for Services Investment Earnings Miscellaneous Total Revenue EXPENDITURES Current General Government Culture and Recreation Public Works Economic Development Total Expenditures Revenue Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Contract to Deed Operating Transfer In Operating Transfer Out Total Other Financing Sources (Uses) Net Increase (Decrease) in Fund Balance Fund Balance (Deficit) -Beginning of Year FUND BALANCE (DEFICIT) -END OF YEAR Economic Storm Recovery Sewer Minnesota Grant Access Investment $ - $ - $ - - 141,552 - 212,978 - 582 42,988 31,300 5 - - 587 397,518 31,300 - 419,811 - _ - 123 - 419,811 123 587 (22,293) 31,177 - 32,600 - - (76,538) - - (43,938) - 587 (66,231) 31,177 14,861 1,044,060 864,600 $ 15,448 $ 977,829 $ 895,777 (61) C ~ ~ ~ ~ Park City Pathway Streets Environmental Totals Dedication Reconstruction Clean-up 2004 2003 $ - $ 484,230 $ - $ 1,454,555 $ 1,201,675 9,040 65,000 26,224 145,492 598,851 48,694 6,629 - 246,214 240,982 238 - - 481,310 582,837 7,340 22,743 491 221,958 210,411 5,500 - - 55,756 209,954 70,812 578,602 26,715 2,605,285 3,044,710 - - - 71,697 69,217 - - - 113,226 272,772 30,123 - - 524,843 257,931 - - 261,235 899,221 911,891 30,123 - 261,235 1,608,987 1,511,811 40,689 578,602 (234,520) 996,298 1,532,899 - - - 78,319 200,334 - (500,000) - (1,184,388) (1,429,886) - (500,000) - (1,106,069) (1,229,552) 40,689 78,602 (234,520) (109,771) 303,347 176,314 457,897 236,813 5,607,725 5,304,378 $ 217,003 $ 536,499 $ 2,293 $ 5,497,954 $ 5,607,725 (62) STATISTICAL SECTION (UNAUDITED) CITY OF MONTICELLO, MINNESOTA BONDED INDEBTEDNESS - GENERAL OBLIGATION BONDS (UNAUDITED) DECEMBER 31, 2004 General Obligation Improvement Bond Series 2003A Year Payable Principal Interest 2005 $ - $ 79,933 2006 210,000 77,833 2007 215,000 73,045 2008 225,000 67,095 2009 230,000 60,325 2010 235,000 52,999 2011 245,000 44,892 2012 250,000 36,042 2013 260,000 26,605 2014 270,000 16,465 2015 280,000 5,600 Total $ 2,420,000 $ 540,834 Original Amount X2.42 0.000 Average rate of 3.71 44% interest Payment dates February 1 February 1 August 1 (63) CITY OF MONTICELLO, MINNESOTA BONDED INDEBTEDNESS - GENERAL OBLIGATION SPECIAL ASSESSMENT BONDS (UNAUDITED) DECEMBER 31, 2004 General Obligation General Obligation General Obligation Improvement Bond Improvement Bond Improvement Bond Series 1999 Series 2000A Series 20006 Year Payable Principal Interest Principal Interest Principal Interest 2005 295,000 67,630 145,000 79,840 145,000 45,820 2006 300,000 56,175 145,000 72,808 145,000 38,969 2007 305,000 44,301 150,000 65,505 145,000 32,045 2008 310,000 32,078 150,000 57,930 145,000 25,049 2009 315,000 19,499 155,000 50,114 145,000 17,980 2010 320,000 6,560 160,000 41,923 145,000 10,839 2011 - - 160,000 33,443 145,000 3,625 2012 - - 95,000 26,574 - - 2013 - - 100,000 21,235 - - 2014 - - 105,000 15,571 - - 2015 - - 110,000 9,578 - - 2016 - - 115,000 3,249 - - Totals $ 1,845,000 $ 226,243 $ 1,590,000 $ 477,770 $ 1,015,000 $ 174,327 Original Amount $3.000.000 X2.01 5.000 $1.64 5.000 Average Rate of Interest 4.1569% 5.3826% 4.9990% Payment February 1 February 1 Dates February 1 February 1 February 1 February 1 August 1 August 1 August 1 (64) 1 1 1 1 1 1 1 1 1 1 1 1 General Obligation Improvement Bond Series 2002 Total Principal Interest Principal Interest 215,000 72,113 800,000 265,403 220,000 67,378 810,000 235,330 230,000 61,630 830,000 203,481 235,000 54,825 840,000 169,882 245,000 47,079 860,000 134,672 255,000 38,385 880,000 97,707 265,000 28,760 570,000 65,828 275,000 18,362 370,000 44,936 285,000 7,300 385,000 28,535 40,000 800 145,000 16,371 - - 110,000 9,578 - - 115,000 3,249 $ 2,265,000 $ 396,632 $ 6,715,000 $ 1,274,972 3.6682% February 1 February 1 August 1 (65) CITY OF MONTICELLO, MINNESOTA BONDED INDEBTEDNESS - GENERAL OBLIGATION TAX INCREMENT BONDS (UNAUDITED) DECEMBER 31, 2004 General Obligation General Obligation General Obligation Tax Increment Tax Increment Refunding Tax Increment Year Bond of 1985 Bond of 1989A Bond of 2004A Total able Pa Principal Interest Principal Interest Principal Interest Principal Interest y 2005 35,000 4,410 25,000 6,410 70,000 47,969 130,000 58,789 2006 35,000 1,470 30,000 3,982 95,000 41,133 160,000 46,585 2007 - - 30,000 1,328 100,000 37,232 130,000 38,560 2008 105,000 32,870 105,000 32,870 2009 105,000 27,883 105,000 27,883 2010 110,000 22,508 110,000 22,508 2011 115,000 16,739 115,000 16,739 2012 120,000 10,360 120,000 10,360 2013 125,000 3,500 125,000 3,500 70,000 5,880 85,000 11,720 945,000 240,194 1,100,000 257,794 Original Amount ~ $260.000 ~ Average Rate of Interest 8.2893% 7.2532% 4.6600% Payment Dates February 1 February 1 February 1 February 1 February 1 February 1 August 1 August 1 August 1 (66) CITY OF MONTICELLO, MINNESOTA BONDED INDEBTEDNESS - GENERAL OBLIGATION NOTE - PROJECT 93-14C WASTEWATER TREATMENT (UNAUDITED) DECEMBER 31, 2004 Year Payable Principal Interest Total 2005 621,126 461,167 1,082,293 2006 646,726 435,567 1,082,293 2007 673,382 408,911 1,082,293 2008 701,136 381,157 1,082,293 2009 730,034 352,259 1,082,293 2010 760,123 322,169 1, 082, 292 2011 791,452 290,840 1,082,292 2012 824,073 258,219 1,082,292 2013 858,038 224,254 1,082,292 2014 893,403 188,889 1,082,292 2015 930,226 152,067 1,082,293 2016 968,567 113,726 1,082,293 2017 1,008,487 73,806 1,082,293 2018 1,050,052 32,241 1,082,293 Total $ 11,456,825 $ 3,695,272 $ 15,152,097 (67) CITY OF MONTICELLO, MINNESOTA BONDED INDEBTEDNESS - PUBLIC PROJECT REVENUE BONDS (UNAUDITED) DECEMBER 31, 2004 Temporary Public Project Revenue Bonds Year Series 2000A Payable Principal Interest 2005 260,000 424,315 2006 260,000 409,950 2007 430,000 390,112 2008 480,000 363,950 2009 505,000 335,631 2010 530,000 305,875 2011 870,000 263,994 2012 920,000 209,175 2013 950,000 151,906 2014 970,000 92,500 2015 995,000 31,094 $ 7,170,000 $ 2,978,502 Original Amount $7.555.000 Average Rate of Interest 6.268% Payment Dates February 1 February 1 August1 (68) CITY OF MONTICELLO, MINNESOTA CONTRACT FOR DEED (UNAUDITED) DECEMBER 31, 2004 Year Contract For Deed Payable Principal Interest 2005 $ 100,000 $ 131,113 2006 100, 000 131,113 2007 100,000 131,113 2008 100, 000 131,113 2009 1,785,222 107,113 $ 2,185,222 $ 631,565 Original Amount X2.185.222 Average Rate of Interest 6.000% Payment Dates December 31 December 31 (69) CITY OF MONTICELLO, MINNESOTA TAX LEVIES TO RETIRE BONDED INDEBTEDNESS (UNAUDITED) DECEMBER 31, 2004 General General General General Obligation Obligation Obligation Obligation Tax Increment Improvement Improvement Improvement Year of Bond Series Bond Series Refunding Bonds Bond Series Levy Collection 1989A* 1995A 1999 2000A 2004 2005 $ 37,076 $ 165,206 $ 178,900 $ 133,700 2005 2006 34,288 - 180,800 136,300 2006 2007 - - 182,200 133,300 2007 2008 - - 183,300 135,400 2008 2009 - - 184,100 137,100 2009 2010 - - - 133,200 2010 2011 - - - 130,400 2011 2012 - - 130,200 2012 2013 - - - 129,700 2013 2014 - - - 128,800 2014 2015 - - - 127,600 $ 71,364 $ 165,206 $ 909,300 $ 1,455,700 * This tax levy is for tax increment financing projects. The levy has not been made in the past and will only be made in the future if tax increment revenue is insufficient to meet principal and interest payments. Note: The Project 93-14C Wastewater Treatment General Obligation Note requires annual levies of $1,082,293 from 1998 to 2016, and $541,146 in 2017. L (70) General General Obligation Obligation Improvement Improvement Bond Series Bond Series 20008 2002 Total $ 22,500 $ 170,900 $ 708,282 23,400 176,000 550,788 24,200 174,600 514,300 25,000 177,500 521,200 25,700 179,300 526,200 26,300 180,200 339,700 - 180,100 310,500 - 179,400 309,600 - (2,200) 127,500 - - 128,800 - - 127,600 $ 147,100 $ 1,415,800 $ 4,164,470 (71) J i n 7 ii C OTHER REPORTS SECTION G u n Members of the Council ' City of Monticello, Minnesota Lars~:~:jnAllenM REPORT ON MINNESOTA LEGAL COMPLIANCE We have audited the general purpose financial statements of the governmental activities, the business ' type activities, each major fund, and the aggregate remaining fund information which collectively compse the City's baskic financial statement, of the City of Monticello, Minnesota, as of and for the year ended December 31, 2004, and have issued our report thereon dated June 20, 2005. ' 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 Guide for Local Government, promulgated by the State Auditor pursuant to Minnesota Statute 6.65. Accordingly, the audit included ' such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. ' The Minnesota Legal Compliance Audit Guide for Local Government covers six main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements and city miscellaneous provisions. Our study included all of ~ the listed categories. The results of our tests indicate that for the items tested, the City of Monticello, Minnesota, complied ' with the material terms and conditions of applicable legal provisions, except the City did not turn over unclaimed checks to the Department of Commerce. ' This report is intended solely for the information and use of the City of Monticello, Minnesota, management and Office of the State Auditor and is not intended to be and should not be used by -- anyone other than those specified parties. LARSC)N, A~LEN,1iV~15'I•lAIR +8~ ~~., LLP Monticello, Minnesota June 20, 2005 (72)