2012 Monticello Annual Comprehensive Financial Report
INTRODUCTORY SECTION
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June 26, 2013
To the Honorable Mayor,
Members of the City Council,
and Citizens of Monticello, Minnesota
I am pleased to present the Comprehensive Annual Financial Report (CAFR) of the City of Monticello,
Minnesota (the City) for the fiscal year ended December 31, 2012. Responsibility for both the accuracy
of the data and the completeness and fairness of the presentation, including all disclosures, rests with the
City. To the best of our knowledge and belief, the enclosed data is accurate, in all material respects, and
is reported in a manner designed to present fairly the financial position and results of operations of the
various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the
City’s financial activities have been included.
Management assumes full responsibility for the completeness and reliability of the information contained
in this report, based upon a comprehensive framework of internal control that it has established for this
purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to
provide reasonable, rather than absolute, assurance that the financial statements are free of any material
misstatements.
The City’s financial statements have been audited by Malloy, Montague, Karnowski, Radosevich & Co.,
P.A. (MMKR), a firm of licensed certified public accountants. The goal of the independent audit was to
provide reasonable assurance that the financial statements of the City for the fiscal year ended
December 31, 2012 are free of material misstatements. The independent audit involved examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. The independent auditor concluded, based upon the audit, that there was
a reasonable basis for rendering an unqualified opinion that the City’s financial statements for the fiscal
year ended December 31, 2012, are fairly presented in conformity with accounting principles generally
accepted in the United States of America. The independent auditor’s report is presented as the first
component of the financial section of this report.
The preparation of this CAFR is a requirement of state law. Also, the CAFR is required by the bond
rating agencies before they will rate the City’s bonds. The report can be used by the City Council and the
citizens of the City to gain a better understanding of the financial condition of the City.
Accounting principles generally accepted in the United States of America require that management
provide a narrative introduction, overview, and analysis to accompany the basic financial statements in
the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to
complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found
immediately following the report of the auditors.
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PROFILE OF THE CITY
The City is situated in a prime location on Interstate 94 between Minneapolis/St. Paul and the City of
St. Cloud. The City has experienced tremendous growth within the last 15 years in the residential,
commercial, office, and retail sectors. The City is a rapidly growing, free-standing urban fringe
community encompassing approximately 5,000 acres and a population nearing 13,000. The City is home
to one of Minnesota’s two nuclear power plants, both owned by Xcel Energy Inc. (NYSE: XEL). With a
small carbon footprint, the Xcel plant is also the City’s largest employer and property taxpayer.
Additionally, Monticello’s business friendly environment provides a home for Cargill Kitchen Solutions.
The privately-owned, agri-giant is the City’s largest customer of water and sewage utility services.
The City was founded by second-generation Americans who migrated west in the mid 1800s. Early
settlers found the gently sloping banks and shallow river levels of the Mississippi River made a logical
place for a river crossing. Founded in 1856, the City grew quickly during the early settlement years and
then leveled to a population of about 1,300. It was this original settlement that became the core city and
survives today as downtown Monticello.
The City operates under the “Optional Plan A” form of government as defined in Minnesota Statutes.
Under this plan, the government of the City is directed by a City Council composed of an elected mayor
and four elected council members. The City Council exercises legislative authority and determines all
matters of policy. The City Council appoints personnel responsible for the proper administration of all
affairs relating to the City. Council members serve four-year terms, with two members elected every
two years. The mayor is elected for a two-year term. The mayor and members of the City Council are
elected at large.
The City provides a full range of services: the construction and maintenance of streets and other
infrastructure; snow removal; park maintenance; recreational and cultural activities; water, sewer, surface
water, garbage, and recycling systems; community development, building inspection, planning, police,
fire, and liquor store operations; a city-run fiber optic system and community center; and general
government operations, including administration, finance/accounting, information systems, community
information, and general government buildings.
The City Council is required to adopt a final budget by late December for the subsequent year. The
budget is prepared by fund, function (e.g. public works), and department (e.g. streets and alleys).
Transfers of appropriations between funds require the approval of the City Council. The legal level of
budgetary control is the department level in the General Fund and fund level in all other funds. Budget
amendments require City Council approval.
FINANCIAL PLANNING AND THE LOCAL ECONOMY
The City is recovering slowly from recent economic woes that have affected other communities in Wright
County and throughout the state of Minnesota. The nuclear power plant provides the City with a
relatively stable tax and employment base. During the economic downturn, new commercial
development came to virtual standstill and today growth remains anemic. However, the City lost very
few of its local businesses, although some reduced their workforce and scaled back operations. The rapid
residential growth starting nearly a decade ago has slowed significantly but the City was not hit with a
large number of foreclosed homes.
In the past, the state of Minnesota has reduced local government aid (LGA) and the market value
homestead credit (MVHC) to cities and counties as a way to balance its own budget. Since the City does
not receive LGA, the City’s finances are relatively insulated from the state’s budget problems. In 2012,
the state eliminated the MVHC and replaced it with a Market Value Exclusion program, which the City
incorporated into its 2012 budget. The new program shifted more of the tax burden to nonresidential
property taxpayers.
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The economy and housing market has also affected city revenues for building permits. The City issued
1,199 building permits in 2004 with a total valuation of $62,300,360. In 2012, the City issued
656 permits with a total valuation of $12,798,374. Inquiries, fielded by the Building Department, indicate
2013 residential housing permits (new) will likely surpass 2012 totals.
Fortunately, the City does not rely on the state as a major funding source (LGA). In addition, the City has
budgeted conservatively over the years, resulting in very modest growth in the property tax levy. To
assist external stakeholders, the City is exploring various ways to better represent its financial position,
such as the elimination of all interfund loans/receivables in 2012. Other initiatives include consolidating
funds with similar purposes, distributing unallocated expenses and aggregating similar costs for
distribution as single amounts to each budget unit (IT Services – Internal Services Fund) in 2013.
MAJOR INITIATIVES
The City has two major ongoing initiatives and one new initiative for 2012. The first ongoing initiative is
the revitalization of its historic downtown. The downtown is the oldest part of the City and many of the
buildings are in need of maintenance. In addition, the amount of traffic on State Highway 25 and
County Road 75 makes both vehicle and pedestrian traffic difficult to move from one area of the
downtown to another. Because of these issues, a number of the store fronts are unoccupied. To address
these issues, the City completed an Embracing Downtown Monticello initiative with the goal to identify
needed improvements and enhancements, which will once again make the downtown area a vibrant
shopping and resident destination. The challenge moving forward will be the implementation of the plan
and creating development opportunities within the downtown area for new and existing businesses.
The other ongoing initiative is the joint purchase with Wright County of Bertram Chain of Lakes
properties. The City and Wright County have already purchased 649 acres of the 1,200 acre site. The
1,200 acre site includes four pristine lakes and woodlands, which when purchased will become a regional
park. Wright County and the City have obtained matching grant funds from the state to purchase
additional acreage in 2013.
INTERNAL CONTROL
The management of the City is responsible for establishing and maintaining internal control designed to
ensure that the assets of the City are protected from loss, theft, or misuse and that adequate accounting
data is compiled to allow for the preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America. The City’s internal controls are designed
to provide reasonable, but not absolute assurance that these objectives are met. The concept of reasonable
assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived, and
2) the valuation of cost and benefit requires estimates and judgments by management. The City’s internal
controls are subject to periodic evaluation by management and the Finance Department staff of the City.
BUDGETING CONTROLS
In addition, the City maintains budgetary controls. The objective of these budgetary controls is to assure
compliance with legal provisions embodied in the annual appropriated budget approved by the City
Council. Activities of the General Fund are included in the annual appropriated budget. The level of
budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount)
is established by department within the General Fund. The City Council also adopts a five-year Capital
Improvement Program as a financial planning document for its capital project and enterprise funds. As
demonstrated by the statements and schedules included in the financial section of this report, the City
continues to meet its responsibility for sound financial management.
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ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City for its CAFR for the fiscal
year ended December 31, 2011. This was the second year that the City has achieved this prestigious
award. In order to be awarded a Certificate of Achievement, the City had to publish an easily readable
and efficiently organized CAFR. This report must satisfy both accounting principles generally accepted
in the United States of America and applicable legal requirements.
A certificate of Achievement is valid for a period of one year only. We believe that our current CAFR
continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the
GFOA to determine its eligibility for another certificate.
The 2012 CAFR meets the highest professional standards and was prepared in a timely and cost effective
manner. The preparation of this report would not have been possible without the efficient and dedicated
service of the entire staff of the finance department, especially Assistant Finance Director, Angie
McIntire, and through the helpful guidance and assistance from our auditing firm, MMKR. I wish to
express my appreciation to all members of the department who assisted and contributed to the preparation
of this report. Credit also must be given to the mayor, City Council, and city administrator for their
unfailing support for maintaining the highest standards of professionalism in the management of the
City’s finances.
Respectfully submitted,
Wayne W. Oberg, MBA, CPA
Finance Director
FINANCIAL SECTION
CITY OF MONTICELLO
Management’s Discussion and Analysis
Year Ended December 31, 2012
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As management of the City of Monticello, Minnesota (the City), we offer the readers of these financial
statements this narrative overview and analysis of the City’s financial activities for the fiscal year ended
December 31, 2012.
FINANCIAL HIGHLIGHTS
The assets of the City exceeded its liabilities at year-end by $110,064,647 (net position). Of this amount,
$32,761,153 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and
creditors.
As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $35,532,056, a decrease of $2,541,494 (including the prior period adjustment) from the prior
year. Nonspendable, restricted, committed, and assigned uses of fund balance totaled $32,395,929,
leaving an unassigned fund balance of $3,136,127.
At the end of the current fiscal year, unassigned fund balance for the General Fund was $3,136,127, or
48.2 percent, of total General Fund expenditures for 2012. The City targets 45 percent of next year’s
expenditure budget as the optimum fund balance level, providing a reserve for cash flow during the first
six months of each subsequent year until property tax receipts are released from the county treasurer’s
office and distributed to the local levels of government. The state auditor recommends that local
governments maintain an unrestricted fund balance of approximately 35–50 percent of operating revenues
or no less than five months of operating expenditures for the General Fund. The General Fund’s heavy
dependence on property tax revenues validates the 45 percent target. (Minnesota Office of the State
Auditor: Statement of Position – Fund Balances for Local Governments Based on GASB Statement
No. 54, 2010–1003 Revised July 2012)
The City’s total long-term liabilities decreased by $5,225,635 (7.3 percent) during 2012. Principal
payments made on outstanding debt totaled $5,260,000. No new debt was issued in 2012.
OVERVIEW OF THE FINANCIAL STATEMENTS
Management’s Discussion and Analysis (MD&A) is intended to serve as an introduction to the City’s
basic financial statements, which are comprised of three components: 1) government-wide financial
statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also
contains other supplementary information in addition to the basic financial statements.
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Government-Wide Financial Statements – The government-wide financial statements are designed to
provide readers with a broad overview of the City’s finances, in a manner similar to private sector
businesses.
The Statement of Net Position presents information on all of the City’s assets and liabilities, with the
difference between the two reported as net position. Over time, increases or decreases in net position may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City’s net position changed during the
most recent fiscal year. All changes in net position are reported as soon as the underlying event giving
rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods
(delinquent taxes and special assessments).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenue (governmental activities) from other functions that are
intended to recover all or a significant portion of their costs through user fees and charges (business-type
activities). The governmental activities provided by the City include general government, public safety,
public works, sanitation, culture and recreation, and economic development. Business-type activities
include water, sewage, liquor, cemetery, and fiber optics activities.
The government-wide financial statements include not only the City itself (known as the primary
government), but also the Economic Development Authority (EDA). The EDA is a legally separate entity
which functions, in essence, as a department of the City, to provide redevelopment assistance through the
administration of various programs. Therefore, the EDA has been included as an integral part of the
City’s financial statements.
COMPONENTS OF
THE ANNUAL FINANCIAL REPORT
Management’s
Discussion and
Analysis
Basic
Financial
Statements
Required
Supplementary
Information
Government-wide
Financial
Statements
Fund
Financial
Statements
Notes to the
Financial
Statements
Summary Detail
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Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All of the funds of the City can be divided into two categories: governmental funds
and proprietary funds.
Governmental Funds – Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as the balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a government’s near-term
financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental funds Balance Sheet and Statement of Revenue, Expenditures, and
Changes in Fund Balances provide a reconciliation to facilitate the comparison between governmental
funds and governmental activities.
The City maintains several individual governmental funds. Information is presented separately in the
governmental funds Balance Sheet and in the governmental funds Statement of Revenue, Expenditures,
and Changes in Fund Balances for the General Fund, Community Center Special Revenue Fund, EDA
Special Revenue Fund, Debt Service Fund, Capital Outlay Revolving Capital Projects Fund, Sanitary
Sewer Access Capital Projects Fund, and Capital Projects Fund, all of which are considered to be major
funds. Data from the remaining governmental funds are combined into a single, aggregated presentation.
Individual fund data for each of these nonmajor governmental funds is provided in the form of combining
statements elsewhere in this report.
The City adopts an annual budget for its General Fund and major special revenue funds. A budgetary
comparison schedule has been provided for the General Fund and major special revenue funds to
demonstrate compliance with the adopted budgets.
Proprietary Funds – The City maintains five enterprise funds which are considered proprietary funds.
Enterprise funds are used to report the same functions presented as business-type activities in the
government-wide financial statements. The City uses enterprise funds to account for its water and sewage
service operations, liquor sales operation, cemetery maintenance, and fiber optics operation.
Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information for each of the
enterprise operations.
Notes to Basic Financial Statements – The notes to basic financial statements provide additional
information that is essential to obtaining a full understanding of the data provided in the government-wide
and fund financial statements.
Other Information – Additional information on nonmajor funds can be found in the supplemental
information section of this report.
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GOVERNMENT-WIDE FINANCIAL ANALYSIS
City of Monticello’s Net Position
201220112012201120122011
Current and other assets51,481,636$ 55,638,978$ 12,584,729$ 12,031,983$ 64,066,365$ 67,670,961$
Capital assets68,510,937 71,241,717 46,904,623 47,232,257 115,415,560 118,473,974
Total assets119,992,573 126,880,695 59,489,352 59,264,240 179,481,925 186,144,935
Long-term liabilities 39,551,731 44,714,165 26,683,265 26,746,466 66,234,996 71,460,631
Other liabilities1,735,682 2,271,285 1,446,600 566,028 3,182,282 2,837,313
Total liabilities41,287,413 46,985,450 28,129,865 27,312,494 69,417,278 74,297,944
Net position
Net investment in
capital assets40,525,009 38,242,040 23,698,091 25,031,043 64,223,100 63,273,083
Restricted13,061,044 16,894,936 19,350 19,350 13,080,394 16,914,286
Unrestricted25,119,107 24,758,269 7,642,046 6,901,353 32,761,153 31,659,622
Total net position78,705,160$ 79,895,245$ 31,359,487$ 31,951,746$ 110,064,647$ 111,846,991$
Governmental ActivitiesBusiness-Type ActivitiesTotal
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. The City’s assets exceeded its liabilities by $110,064,647 at the end of 2012.
A portion of the City’s net position (58.4 percent) reflects its investment in capital assets (e.g. land,
buildings, machinery and equipment, and infrastructure) less any related outstanding debt used to acquire
those assets. The City uses these capital assets to provide services to citizens; consequently, these assets
are not available for future spending. Although the City’s investment in its capital assets is reported net
of related debt, it should be noted that the resources needed to repay this debt must be provided from
other resources, since the capital assets themselves cannot be used to liquidate these liabilities.
A portion of the City’s net position (29.8 percent) reflects its unrestricted net assets which may be used to
meet the City’s ongoing obligations to citizens and creditors.
At the end of 2012, the City was able to report positive balances in all three categories of net assets, both for
the government as a whole and for its separate governmental and business-type activities.
Governmental Activities – Total net position in the City’s governmental activities decreased from the
previous year as the result of capital contributions and transfers to business-type activities totaling
$2,420,489. The decline in restricted net position is related to the collections on special assessments for
debt service in calendar year 2012.
Business-Type Activities – The shifts in net investment in capital assets and unrestricted net position in
the City’s business-type activities during 2012 are mainly related to depreciation on capital assets and
transfers from governmental activities in fiscal 2012.
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City of Monticello’s Changes in Net Position
201220112012201120122011
Revenues
Program revenues
Charges for services2,366,138$ 2,502,380$ 6,137,984$ 5,574,010$ 8,504,122$ 8,076,390$
Operating grants and contributions252,784 253,127 – – 252,784 253,127
Capital grants and contributions1,841,915 2,083,511 – – 1,841,915 2,083,511
General revenues
Property taxes8,746,348 8,451,149 – – 8,746,348 8,451,149
Franchise taxes339,518 341,362 – – 339,518 341,362
General grants and aids38,618 19,359 – – 38,618 19,359
Investment earnings767,722 1,467,780 264,589 495,484 1,032,311 1,963,264
Gain on sale of assets11,575 – – – 11,575 –
Other540,272 354,501 100,687 1,555,509 640,959 1,910,010
Total revenues14,904,890 15,473,169 6,503,260 7,625,003 21,408,150 23,098,172
Expenses
General government2,103,737 2,111,710 – – 2,103,737 2,111,710
Public safety1,819,378 1,788,595 – – 1,819,378 1,788,595
Public works5,045,729 4,838,544 – – 5,045,729 4,838,544
Sanitation500,037 495,693 – – 500,037 495,693
Culture and recreation2,693,598 1,724,348 – – 2,693,598 1,724,348
Economic development 803,594 1,199,936 – – 803,594 1,199,936
Interest and fiscal charges1,298,869 1,248,716 – – 1,298,869 1,248,716
Water– – 1,118,789 1,167,572 1,118,789 1,167,572
Sewage– – 2,480,657 2,340,555 2,480,657 2,340,555
Liquor– – 662,002 658,999 662,002 658,999
Cemetery– – 26,132 28,849 26,132 28,849
Fiber optics– – 5,228,428 5,702,480 5,228,428 5,702,480
Total expenses14,264,942 13,407,542 9,516,008 9,898,455 23,780,950 23,305,997
Increase in net position
before transfers639,948 2,065,627 (3,012,748) (2,273,452) (2,372,800) (207,825)
Transfers(2,420,489) 713,655 2,420,489 (713,655) – –
Change in net position(1,780,541) 2,779,282 (592,259) (2,987,107) (2,372,800) (207,825)
Net position –
Beginning of year, as previously reported 79,895,245 77,115,963 31,951,746 34,938,853 111,846,991 112,054,816
Prior period adjustment590,456 – – – 590,456 –
Beginning of year, as restated80,485,701 77,115,963 31,951,746 34,938,853 112,437,447 112,054,816
Net position – end of year78,705,160$ 79,895,245$ 31,359,487$ 31,951,746$ 110,064,647$ 111,846,991$
TotalGovernmental ActivitiesBusiness-Type Activities
The City’s net position decreased in fiscal 2012 by $1,782,344 (including the prior period adjustment). This
decrease was the result of continued declining operations of the City’s Fiber Optics Fund in 2012, which
includes interest expense of $1,848,137 in this fund.
In fiscal 2012, the City reported a prior period adjustment of $590,456 for payments on developer
deposits that were expensed in prior periods rather than charged against the current liability.
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GOVERNMENTAL ACTIVITIES – REVENUES
Revenues by Source – Governmental Activities
General Grants
and Aids
<1%
Charges for
Services
16%
Investment
Earnings
5%
Operating Grants
and Contributions
2%
Other
4%
Capital Grants and
Contributions
12%
Franchise Taxes
2%
Property Taxes
59%
Revenues for the City’s governmental activities decreased by $568,279, or 3.7 percent. The major
components of this decrease are explained as follows:
Capital grants and contributions decreased by $241,596, or 11.6 percent. This decrease was
due to the City special assessing property owners less for their share of the 2012 Street
Reconstruction Project and other improvement projects due to size and type of project
compared to 2011 projects.
Charges for services decreased by $136,242, or 5.4 percent. This increase was primarily due
to increases in both licensing transactions and state-approved licensing fees.
Investment earnings decreased by $700,058, or 47.7 percent. Slower appreciation in values
on long-term investments, lower yields on new investments, and lower investible assets
contributed to the decrease.
Property taxes increased $295,199, or 3.5 percent. This increase resulted from a higher tax
levy, better current year collection rates, and better delinquent tax collections.
Expenses – City expenses for governmental activities increased by $857,400, or 6.4 percent. This increase
is primarily due to increases in culture and recreation and public works activity in fiscal 2012.
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BUSINESS-TYPE ACTIVITIES
Revenues by Source – Business-Type Activities
Charges for
Services
94%
Other
2%
Investment
Earnings
4%
Business-type activities decreased the City’s net position by ($592,259). The rates for each city utility
service operated as enterprise funds are reviewed annually and adjusted by City Council action. This
assures that operating revenues are independently sufficient to cover their own operating expenses and
provide for their own capital equipment replacement needs. Capital grants and contributions may be
required for future facility replacement needs as current and future projected rates may be insufficient for
their ultimate replacement.
The City’s business-type charges for services increased by $563,974, or 10.1 percent, primarily due to the
water and sewage rate increases in 2012. Additionally, thirsty lawns helped push up water consumption by
approximately 90 million gallons over the prior year.
Compared with the prior year, business-type activity investment earnings decreased because of slower
appreciation in values on long-term investments, lower yields on new investments, and lower investible
assets. Liquor Fund transfers out to liquidate interfund loans resulted in lower investible assets.
Business-type activities other general revenues decreased $1,454,822, mainly due to a legal settlement in
fiscal 2011.
Business-type expenses decreased from the previous year by $382,447 due to conservation efforts to
decrease expenses in all funds and lower start-up and professional expenses in the Fiber Optics Fund.
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FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds – The focus of the City’s governmental funds is to provide information on near-term
receipts, uses, and balances of spendable resources. Such information is useful in assessing the City’s
financing requirements. In particular, unassigned fund balance may serve as a useful measure of a
government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $35,532,056, a decrease of $2,541,494 (including prior period adjustment) from the prior
year. Of this total amount, $3,136,127 is unassigned fund balance. The remainder of the fund balance is
nonspendable, restricted, or assigned for a variety of purposes.
The City’s General Fund balance decreased $932,130 (including prior period adjustment) during the
current fiscal year. Increased property taxes and franchise taxes provided the increase in revenues for
2012. The City transferred out to other funds $2,326,995 from the General Fund in 2012, which was an
increase of $1,598,612. Each of the main activities of the General Fund were completed efficiently and
effectively as authorized within the adopted budget, without fully using reserve balances.
Community Center Special Revenue Fund – The decrease in the Community Center Special Revenue
Fund balance was the result of an increase in expenditures related to 2012 capital projects.
EDA Special Revenue Fund – The EDA Special Revenue Fund in 2012 purchased the Montgomery
Farms property on the southeast corner of the intersection of CSAH 25 and CSAH 75. This purchase in
TIF District 1-22 added approximately $800,000 to the EDA’s land held for resale. TIF District 1-5 was
decertified in 2012 and the remaining cash, approximately $450,000, will be transferred to a capital
projects fund in 2013 for use in extending 7th Street to the west. TIF District 1-19, a housing district,
satisfied its pay-as-you-go obligations in 2012; but it will remain open for future housing projects
elsewhere within the City’s development district.
Debt Service Fund – The main revenue source is the collection of special assessments, with the annual
principal and interest on debt as the main expenditure. Reserves decreased by $687,468 due to increased
transfers out in 2012.
Capital Outlay Revolving Capital Projects Fund – The decrease in fund balance is due to capital
projects and transfers out to other funds in 2012.
Sanitary Sewer Access Capital Projects Fund – The Sanitary Sewer Access Capital Projects Fund
balance decreased by $1,268,872 due to the transfer of funds for the Sanitary Sewer Access Capital
Projects Fund’s share of debt service payments.
Capital Projects Fund – The Capital Projects Fund’s resources increased in the current year primarily
due to the decrease in capital projects completed throughout the year and transfers into this fund in 2012.
Proprietary Funds – The City’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.
Water Fund – Net position increased $673,718 due to an 8.0 percent increase in rates and an increase in
consumption during the year.
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Sewage Fund – Net position increased $685,033; however, the Sewage Fund had an operating loss of
$583,581. The depreciable cost of assets is not fully offset by the sewage rates and, therefore, the Sewage
Fund had an operating loss in fiscal 2012. The sewage rates increased 12.0 percent in 2012, resulting in
an increase in revenues.
Liquor Fund – The City’s liquor operations ended the year with an decrease in net position. The City’s
Liquor Fund had operating net income of $552,916 and transferred $3,500,000 to other funds.
Cemetery Fund – Net position of the Cemetery Fund decreased $5,359 in 2012. The Cemetery Fund
sets its charges and fees at a level to breakeven or to increase slightly.
Fiber Optics Fund – In 2007, the City started its Fiber Optics Project, which installed a fiber optics
system to every premise in the City to provide customers with phone, high-speed internet, and cable
television services as a self-supporting system with competitive pricing. The system began operations in
the spring of 2010 and system construction was essentially complete by the end of 2011. As of
December 31, 2012, the Fiber Optics Fund had bonds payable of $26,445,000. In July 2012, The City
went into technical default on these bonds when it did not make a monthly deposit into a debt service
account as required by bond indenture. Subsequently, the City did not make a scheduled December 2012
interest payment on the bonds.
GENERAL FUND BUDGETARY HIGHLIGHTS
General Fund revenues for 2012 were over budget by $564,950 in total. Property taxes collected were
$275,411 above budget, largely the result of delinquent tax collections. In addition, miscellaneous
revenue was $336,250 over budget mostly due to an increase in insurance claims.
General Fund expenditures for 2012 were $237,730 under budget. Conservative council efforts, spending
for capital outlay being under budget, and vacant positions contributed to the positive budget variance.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets – The City’s investment in capital assets for its governmental and business-type activities
amounts to $115,415,560 as of December 31, 2012, net of accumulated depreciation. This investment in
capital assets includes fire and public works equipment, parks and recreation facilities, buildings, roads,
sewer, water, and storm sewer utilities. This amount represents a net decrease (including additions and
deductions) of $3,058,414 over last year.
-13-
City of Monticello’s Capital Assets
201220112012201120122011
Land10,744,862$ 10,744,862$ 1,751,945$ 1,751,945$ 12,496,807$ 12,496,807$
Construction in progress3,157,351 6,122,163 79,019 14,439 3,236,370 6,136,602
Buildings 13,709,653 13,709,653 6,820,979 6,820,979 20,530,632 20,530,632
Improvements other
than buildings5,675,949 5,173,392 20,182,719 20,182,719 25,858,668 25,356,111
Machinery, equipment,
furniture, and vehicles4,696,280 4,500,651 2,213,237 2,206,787 6,909,517 6,707,438
Infrastructure67,866,415 64,638,749 49,888,186 48,192,665 117,754,601 112,831,414
Less accumulated
depreciation(37,339,573) (33,647,753) (34,031,462) (31,937,277) (71,371,035) (65,585,030)
Net total68,510,937$ 71,241,717$ 46,904,623$ 47,232,257$ 115,415,560$ 118,473,974$
Governmental ActivitiesBusiness-Type ActivitiesTotal
Additional information on the City’s capital assets is located in Note 3 of the notes to basic financial
statements.
Long-Term Debt – At the end of 2012, the City has total bonds outstanding in the amount of
$65,486,000, of which $26,625,000 is special assessment bonds outstanding. The City has pledged
revenue streams from general property taxes; the community center; water and sewer utilities; fiber optics
revenues; and sewer, water, and storm sewer access funds for the principal and interest payments due on
these bonds.
City of Monticello’s Outstanding Bonds
201220112012201120122011
General obligation bonds8,877,403$ 10,196,903$ 568,597$ 654,097$ 9,446,000$ 10,851,000$
Special assessment bonds26,625,000 29,490,000 – – 26,625,000 29,490,000
Revenue bonds2,970,000 3,960,000 26,445,000 26,445,000 29,415,000 30,405,000
Total38,472,403$ 43,646,903$ 27,013,597$ 27,099,097$ 65,486,000$ 70,746,000$
Total
Governmental
Activities
Business-Type
Activities
The City’s total outstanding bonds decreased by $5,260,000, or approximately 7.4 percent, during 2012.
State statutes limit the amount of general obligation bonds a government entity may issue to 3 percent of
its taxable market value. The current debt limit is $32,796,591, which is significantly in excess of the
City’s outstanding net general obligation bonds of $3,795,000, which is subject to the limitation.
Additional information on the City’s debt is located in Note 4 of the notes to basic financial statements.
-14-
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The City considered many factors when setting the fiscal year 2012 budget, rates, and fees that will be
charged in the business-type activities. The City Council decided to set the tax levy at a level that would
maintain services at prior year levels. The impact on residential property owners from the resulting tax
levy increase of $172,691 was muted by changes in property tax laws. With no more shifts in the tax
burden on the horizon, the City Council adopted a much more conservative approach for 2013. The
City’s property tax levy for 2013 is $7,900,000, which is $50,000 (0.6 percent not 6 percent) more than
2012.
Budgeted 2012 revenues for building permits and other related charges were surpassed by a modest
uptick in construction. Consequently, 2013 budgeted building permit revenue was estimated at the actual
2012 level. For 2012, budgeted sewage and water rates were increased by 10 percent and 8 percent,
respectively. In 2013, both rates were increased by 10 percent to support operations, capital asset
acquisition, and debt service. Finally, the City has not used reserve funds from other funds to balance the
General Fund budget.
REQUESTS FOR INFORMATION
The City’s financial statements are designed to provide our citizens, customers, and creditors with a
general overview of the City’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 No. 1, Monticello, Minnesota 55362.
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l
o
p
m
e
n
t
1,
0
3
9
,
2
3
0
9
6
9
,
2
2
9
6
3
7
,
7
7
7
2
,
0
5
6
,
0
5
5
7
7
2
,
8
5
2
5
2
5
,
7
8
3
8
4
2
,
8
1
9
2
,
6
4
7
,
6
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7
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,
1
9
8
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800,540
Ca
p
i
t
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a
y
4,
9
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3
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5
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1
2
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6
4
9
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3
1
6
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2
,
1
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7
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1
3
,
0
7
4
,
9
6
5
6
,
4
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4
2
1
3
,
5
2
2
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1
9
6
1
,
9
4
6
,
1
5
3
4
,
1
3
8
,
4
5
9
4
,
0
6
7
,
2
5
1
2,829,049
De
b
t
s
e
r
v
i
c
e
Pr
i
n
c
i
p
a
l
2
,
1
6
7
,
9
2
5
4
,
0
9
6
,
5
3
9
1
,
9
1
1
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1
2
6
3
,
4
0
7
,
6
5
5
3
,
3
8
8
,
3
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2
5
,
0
3
7
,
0
2
8
6
,
7
4
9
,
2
9
3
5
,
0
0
1
,
0
0
0
4
,
8
6
0
,
0
0
0
5,174,500
In
t
e
r
e
s
t
a
n
d
p
a
y
i
n
g
a
g
e
n
t
f
e
e
s
1,
4
1
8
,
3
7
5
1
,
4
6
0
,
1
8
3
1
,
4
2
6
,
3
6
7
2
,
3
7
3
,
4
3
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2
,
2
5
6
,
3
1
1
2
,
1
9
2
,
0
6
3
1
,
8
0
1
,
3
9
2
1
,
5
5
3
,
6
6
1
1
,
3
8
3
,
0
9
5
1,290,430
To
t
a
l
e
x
p
e
n
d
i
t
u
r
e
s
1
7
,
2
5
4
,
1
0
1
1
7
,
5
7
8
,
1
1
1
2
6
,
8
1
3
,
5
9
2
3
1
,
7
5
6
,
0
2
4
2
1
,
0
2
5
,
4
2
2
1
9
,
7
0
8
,
7
6
5
2
0
,
6
9
0
,
4
6
0
2
1
,
2
8
4
,
1
5
3
1
9
,
8
6
6
,
7
5
8
18,330,253
Ex
c
e
s
s
o
f
r
e
v
e
n
u
e
s
o
v
e
r
(
u
n
d
e
r
)
e
x
p
e
n
d
i
t
u
r
e
s
(5
0
9
,
4
8
9
)
(
3
9
1
,
2
3
6
)
(
6
,
4
9
5
,
8
9
5
)
(
1
1
,
3
4
2
,
9
9
3
)
(
3
,
0
6
8
,
8
1
6
)
(
3
,
3
1
6
,
0
2
9
)
(
3
,
8
0
2
,
5
8
1
)
(
4
,
7
4
1
,
4
6
9
)
(
3
,
3
3
4
,
9
4
9
)
(2,400,744)
Ot
h
e
r
f
i
n
a
n
c
i
n
g
s
o
u
r
c
e
s
(
u
s
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s
)
Tr
a
n
s
f
e
r
s
i
n
4,
4
9
6
,
1
2
0
5
,
8
5
9
,
5
3
5
4
,
1
2
8
,
0
1
0
8
,
1
8
1
,
3
7
2
5
,
2
0
2
,
0
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1
1
6
,
8
1
8
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0
9
0
1
0
,
1
7
2
,
8
7
8
4
,
6
8
7
,
1
2
6
5
,
7
1
0
,
8
1
9
9,990,120
Tr
a
n
s
f
e
r
s
o
u
t
(4
,
3
6
6
,
1
2
0
)
(
5
,
6
0
9
,
5
3
5
)
(
3
,
8
7
8
,
0
1
0
)
(
7
,
9
3
1
,
3
7
2
)
(
4
,
2
0
4
,
1
2
2
)
(
1
6
,
4
4
6
,
8
4
5
)
(
9
,
9
2
1
,
7
4
5
)
(
4
,
4
3
1
,
1
5
8
)
(
4
,
9
9
7
,
1
6
4
)
(10,732,901)
De
b
t
i
s
s
u
e
d
2,
4
2
0
,
0
0
0
3
,
1
3
0
,
2
2
2
2
5
,
1
5
0
,
0
0
0
–
5
,
1
3
7
,
9
0
3
1
5
,
4
5
0
,
0
0
0
–
3
,
2
5
5
,
0
0
0
1
0
,
7
3
5
,
0
0
0
–
Pr
e
m
i
u
m
o
n
d
e
b
t
i
s
s
u
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d
–
–
7
6
1
,
3
9
6
–
8
3
,
7
1
0
–
–
–
3
0
1
,
9
1
0
–
(D
i
s
c
o
u
n
t
)
o
n
d
e
b
t
i
s
s
u
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d
–
–
–
–
–
–
–
(
1
9
,
5
3
0
)
– –
Re
f
u
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d
e
d
b
o
n
d
s
r
e
d
e
e
m
e
d
–
–
–
–
–
(
1
5
,
9
0
8
,
5
6
4
)
–
(
8
6
5
,
0
0
0
)
– –
De
f
e
r
r
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d
a
m
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t
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d
g
a
i
n
(
l
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s
s
)
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r
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f
u
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d
i
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g
–
–
–
–
–
(
3
8
4
,
4
3
2
)
–
–
– –
Sa
l
e
o
f
l
a
n
d
h
e
l
d
f
o
r
r
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s
a
l
e
–
–
–
–
(
1
0
3
,
0
8
4
)
7
4
,
6
5
0
–
–
– –
Sa
l
e
o
f
c
a
p
i
t
a
l
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s
s
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t
s
–
–
–
–
3
7
,
5
2
0
2
,
5
7
5
6
2
,
4
9
6
6
7
,
5
6
9
– 11,575
To
t
a
l
o
t
h
e
r
f
i
n
a
n
c
i
n
g
s
o
u
r
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e
s
(
u
s
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s
)
2
,
5
5
0
,
0
0
0
3
,
3
8
0
,
2
2
2
2
6
,
1
6
1
,
3
9
6
2
5
0
,
0
0
0
6
,
1
5
3
,
9
7
8
(
3
9
4
,
5
2
6
)
3
1
3
,
6
2
9
2
,
6
9
4
,
0
0
7
1
1
,
7
5
0
,
5
6
5
(731,206)
Ne
t
c
h
a
n
g
e
i
n
f
u
n
d
b
a
l
a
n
c
e
s
2,
0
4
0
,
5
1
1
$
2
,
9
8
8
,
9
8
6
$
1
9
,
6
6
5
,
5
0
1
$
(
1
1
,
0
9
2
,
9
9
3
)
$
3
,
0
8
5
,
1
6
2
$
(
3
,
7
1
0
,
5
5
5
)
$
(
3
,
4
8
8
,
9
5
2
)
$
(
2
,
0
4
7
,
4
6
2
)
$
8
,
4
1
5
,
6
1
6
$ (3,131,950)$
De
b
t
s
e
r
v
i
c
e
a
s
a
p
e
r
c
e
n
t
a
g
e
o
f
n
o
n
c
a
p
i
t
a
l
e
x
p
e
n
d
i
t
u
r
e
s
29
.
0
%
3
7
.
2
%
2
2
.
7
%
3
0
.
9
%
3
8
.
7
%
4
4
.
7
%
4
5
.
6
%
3
8
.
2
%
3
9
.
5
%
4
1
.
4
%
Fi
s
c
a
l
Y
e
a
r
(M
o
d
i
f
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e
d
A
c
c
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u
a
l
B
a
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s
o
f
A
c
c
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u
n
t
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n
g
)
La
s
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n
F
i
s
c
a
l
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a
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s
Ch
a
n
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F
u
n
d
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a
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a
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n
t
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l
F
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d
s
CI
T
Y
O
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M
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T
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L
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O
7
4
a
n
d
7
5
Total
Ma
r
k
e
t
V
a
l
u
e
65
.
5
5
8
%
7
3
9
,
0
0
7
,
6
0
0
$
1
.
5
%
62
.
4
5
2
8
1
2
,
8
5
5
,
3
0
0
1
.
4
58
.
7
6
0
8
8
2
,
0
3
8
,
3
0
0
1
.
4
51
.
0
4
0
9
9
3
,
6
4
7
,
3
0
0
1
.
4
42
.
6
0
1
1
,
2
4
3
,
4
6
1
,
1
0
0
1
.
3
46
.
9
4
2
1
,
2
8
2
,
4
0
0
,
7
0
0
1
.
3
46
.
1
9
1
1
,
2
4
5
,
4
0
7
,
6
0
0
1
.
4
45
.
8
2
2
1
,
1
8
8
,
2
2
2
,
1
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0
1
.
5
46
.
7
2
9
1
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1
0
6
,
5
4
1
,
4
0
0
1
.
5
49
.
7
7
3
1
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2
1
9
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,
7
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1
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6
Pe
r
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e
n
t
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ge
o
f
T
o
t
a
l
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t
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a
pac
i
t
y V
a
l
u
e
35
.
9
%
6
2
.
5
%
1
.
2
%
0
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4
%
1
0
0
.
0
%
38
.
9
5
9
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3
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0
.
6
1
0
0
.
0
41
.
5
5
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.
7
1
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0
.
0
41
.
8
5
6
.
5
1
.
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0
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0
.
0
42
.
8
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.
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43
.
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.
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41
.
8
5
5
.
5
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35
.
4
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.
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.
1
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.
4
1
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0
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0
31
.
9
6
5
.
5
1
.
2
1
.
4
1
0
0
.
0
23
.
6
7
4
.
3
1
.
2
1
.
0
1
0
0
.
0
*
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Not
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1
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20
0
3
23
5
,
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3
20
0
8
4,
6
1
1
,
4
0
3
1
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,
5
3
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,
1
6
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1
9
4
,
4
9
2
20
0
7
20
0
6
19
,
5
7
9
,
6
9
3
20
1
1
20
0
4
20
1
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1
2
19
4
,
8
2
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4
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3
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3
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1
7,
5
0
6
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9
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3
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1
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3
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Wr
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20
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20
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2
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x
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a
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e
5,
1
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3
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5,
8
2
4
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2
3
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9
2
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9
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2
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4
$
4,
5
5
2
,
3
8
0
7,
0
8
5
,
1
0
5
6,
8
2
0
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5
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7
$
14
3
,
4
5
2
Net Tax Percentage of Market Value
To
t
a
l
D
i
r
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c
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p
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p
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d
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20
1
1
1
0
,
8
9
7
,
8
9
8
Capacity as a
Pr
o
p
e
r
t
y
Pe
r
s
o
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a
l
Co
m
m
e
r
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Pr
o
p
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t
y
17
4
,
2
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1
,
2
5
0
5
4
,
8
1
4
56,211
DN
R
t
r
a
n
s
a
c
t
i
o
n
s
N
/
A
N
/
A
N
/
A
5
,
3
0
7
5
,
5
8
0
6
,
0
0
0
6
,
5
0
0
5
,
9
8
2
5
,
6
1
6
5,465
Ga
m
e
/
f
i
s
h
t
r
a
n
s
a
c
t
i
o
n
s
N
/
A
N
/
A
N
/
A
N
/
A
1
6
7
2
3
5
2
5
0
1
5
6
3
2
5
509
De
a
l
e
r
s
h
i
p
s
s
e
r
v
i
c
e
d
N/
A
N
/
A
N
/
A
1
8
1
4
2
1
2
5
3
0
3
4
38
Dr
i
v
e
r
s
l
i
c
e
n
s
e
s
t
r
a
n
s
a
c
t
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o
n
s
N
/
A
N
/
A
N
/
A
N
/
A
N
/
A
N
/
A
4
5
0
6
0
5
5
7
9
814
N/
A
–
N
o
t
A
v
a
i
l
a
b
l
e
MG
–
M
i
l
l
i
o
n
s
o
f
G
a
l
l
o
n
s
No
t
e
:
I
n
d
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c
a
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s
a
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v
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t
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s
.
So
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:
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d
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c
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b
y
F
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c
t
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T
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Ca
l
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f
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e
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k
s
Ca
l
l
s
f
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r
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e
r
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e
(
e
n
g
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n
e
e
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n
g
)
Fi
s
c
a
l
Y
e
a
r
9
9
a
n
d
1
0
0
20
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
Fu
n
c
t
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o
n
Pu
b
l
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s
a
f
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Fi
r
e
Fi
r
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s
t
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t
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s
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n
s
e
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v
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c
e
1
1
1
1
1
1
1
1
1
1
Nu
m
b
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f
v
o
l
u
n
t
e
e
r
s
–
–
3
0
3
0
3
0
3
0
3
0
3
0
3
0
30
Pu
b
l
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c
w
o
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k
s
St
r
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e
t
s
(
m
i
l
e
s
)
–
–
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2
.
4
6
5
.
7
6
7
.
6
6
7
.
6
6
8
.
0
6
8
.
0
6
8
.
0
68.0
Cu
l
t
u
r
e
a
n
d
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c
r
e
a
t
i
o
n
Pa
r
k
s
a
c
r
e
a
g
e
–
–
–
–
–
1
2
0
1
8
0
5
0
9
6
3
5
635
Pa
r
k
s
1
8
1
8
1
8
1
9
1
9
2
0
2
0
2
8
2
8
28
Pa
r
k
b
u
i
l
d
i
n
g
s
9
9
9
9
9
1
0
1
1
1
5
1
5
15
Co
m
m
u
n
i
t
y
c
e
n
t
e
r
(
s
q
u
a
r
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f
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)
8
1
,
0
0
0
8
1
,
0
0
0
8
1
,
0
0
0
8
1
,
0
0
0
8
1
,
0
0
0
8
1
,
0
0
0
8
1
,
0
0
0
8
1
,
0
0
0
8
1
,
0
0
0
81,000
Wa
t
e
r
Fi
r
e
h
y
d
r
a
n
t
s
70
0
7
0
0
7
0
0
7
0
0
7
0
0
7
0
0
7
0
0
7
0
0
7
0
0
700
No
t
e
:
No
c
a
p
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t
a
l
a
s
s
e
t
i
n
d
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c
a
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r
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f
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g
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r
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g
o
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r
n
m
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t
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d
e
c
o
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o
m
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c
d
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o
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m
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n
t
f
u
n
c
t
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o
n
s
So
u
r
c
e
s
:
V
a
r
i
o
u
s
c
i
t
y
d
e
p
a
r
t
m
e
n
t
s
Fi
s
c
a
l
Y
e
a
r
La
s
t
T
e
n
F
i
s
c
a
l
Y
e
a
r
s
Ca
p
i
t
a
l
A
s
s
e
t
S
t
a
t
i
s
t
i
c
s
b
y
F
u
n
c
t
i
o
n
CI
T
Y
O
F
M
O
N
T
I
C
E
L
L
O
1
0
1
a
n
d
1
0
2