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2006 Monticello Annual Financial ReportCITY OF MONTICELLO, MINNESOTA FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31, 2006 MINTICF LLt City of Monticello CITY OF MONTICELLO, MINNESOTA TABLE OF CONTENTS YEAR ENDED DECEMBER 31, 2006 INTRODUCTORY SECTION OFFICIAL DIRECTORY 1 FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 2 REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS 4 BASIC FINANCIAL STATEMENTS GOVERNMENT -WIDE FINANCIAL STATEMENTS STATEMENT OF NET ASSETS 13 STATEMENT OF ACTIVITIES 14 FUND FINANCIAL STATEMENTS BALANCE SHEET - GOVERNMENTAL FUNDS 15 RECONCILATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS - GOVERNMENTAL ACTIVITIES 17 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS 18 RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF THE GOVERNMANTAL FUNDS TO THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES 20 STATEMENT OF NET ASSETS - PROPRIETARY FUNDS 21 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - PROPRIETARY FUNDS 23 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS 25 NOTES TO FINANCIAL STATEMENTS 27 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD &A BUDGETARY COMPARISON SCHEDULE - GENERAL FUND 50 BUDGETARY COMPARISON SCHEDULE - COMMUNITY CENTER FUND 55 BUDGETARY COMPARISON SCHEDULE - CAPITAL OUTLAY REVOLVING FUND 56 BUDGETARY COMPARISON SCHEDULE - SANITARY SEWER ACCESS FUND 57 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 58 CITY OF MONTICELLO, MINNESOTA TABLE OF CONTENTS (CONTINUED) YEAR ENDED DECEMBER 31, 2006 FINANCIAL SECTION (CONTINUED) COMBINING FINANCIAL STATEMENTS COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS 59 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS 63 STATISTICAL SECTION (UNAUDITED) BOND INDEBTEDNESS - GENERAL OBLIGATION BONDS 67 BOND INDEBTEDNESS - GENERAL OBLIGATION SPECIAL ASSESSMENT BONDS 68 BOND INDEBTEDNESS - GENERAL OBLIGATION TAX INCREMENT BONDS 70 BOND INDEBTEDNESS - GENERAL OBLIGATION NOTE - PROJECT 93 -14 WASTEWATER TREATMENT 71 BOND INDEBTEDNESS - PUBLIC PROJECT REVENUE BONDS 72 BOND INDEBTEDNESS - CONTRACT FOR DEED 73 BOND INDEBTEDNESS - TAX LEVIES TO RETIRE BONDED INDEBTEDNESS 74 OTHER REPORT SECTION REPORT ON MINNESOTA LEGAL COMPLIANCE 76 INTRODUCTORY SECTION Elected Officials Mayor Council Member Council Member Council Member Council Member CITY OF MONTICELLO, MINNESOTA OFFICIAL DIRECTORY DECEMBER 31, 2006 Name Clint Herbst Wayne Mayer Glen Posusta Tom Perrault Brian Stumpf Appointed Officials Administrator Jeff O'Neill Director of Finance and Administrative Services Rick Wolfsteller (1) Term Expires December 31, 2006 December 31, 2008 December 31, 2006 December 31, 2008 December 31, 2006 FINANCIAL SECTION LarsonAllen 111.1. CPAs, Consutmncs & Advisors w .larsonallenxonn INDEPENDENT AUDITORS' REPORT 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, 2006, 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's management. Our responsibility is to express opinions on these financial statements based on our audit. The prior year summarized comparative information has been derived from the City's 2005 financial statements and, in our report dated May 31, 2006, we expressed unqualified opinions on the respective financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Monticello as of December 31, 2006, and the respective changes in financial position and where applicable cash flows, 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 schedules, as listed in the table of contents, are not a requried 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) LarwoAllen 1 -1,1' is n member of Nexia International, a worldwide network of independent accounting and consulriog firms. Honorable Mayor and City Council City of Monticello; Minnesota Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Monticello's basic financial statements, The combining nonmajor fund financial statements and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining 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 statistical section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. St. Cloud, Minnesota May 9, 2007 (3) LarsonAllen LLP THIS PAGE LEFT BLANK INTENTIONALLY REQUIRED SUPPLEMENTARY INFORMATION CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 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, 2.006. 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 s Assets of the City exceeded liabilities by $105.1 million. Of this amount, $62.4 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 expenditures and other financing uses exceeded revenues including other financing sources, for the year by $11.1 million. ♦ The City's governmental funds reported combined ending fund balances of $36.5 million. Of this total amount, approximately 49.5% 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 $5.0 million, or 77% of the total general fund expenditures of $6.5 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 nonmajor funds and statistical information. The first several statements are highly condensed and present a government -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) CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 Statement of Net Assets and Statement of Activities The Statement of Net Assets (page 13) 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 (page 14) 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 (pages 15 to 26) 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 (pages 27 to 49) 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 nonmajor funds can find it in the combining statements of nonmajor 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, 2006 Statement of Net Assets A condensed version of the Statement of Net Assets at December 31, 2006 follows: Current and Other Assets Capital and Noncurrent Assets Total Assets Current Liabilities Long -Term Liabilities Total Liabilities Net Assets Invested in Capital Assets Net of Related Debt Unrestricted Total Net Assets Current and Other Assets Capital and Noncurrent Assets Total Assets Current Liabilities Net Assets Invested in Capital Assets Net of Related Debt Unrestricted Total Net Assets Current and Other Assets Capital and Noncurrent Assets Total Assets Current Liabilities Long -Term Liabilities Total Liabilities Net Assets Invested in Capital Assets Net of Related Debt Unrestricted Total Net Assets (6) Governmental Activities 2006 2005 $ 59,789,175. $ 60,238,192 61,480,506 52,529,709 121,269,681 112, 767, 9 01 8,861,064 7,769,647 48,449,246 52,852,172 57,310,310 60,621,819 7,009,622 7,009,622 56,949,749 45,136,460 $ 63,959,371 $ 52,146,082 Business -Tvoe Activities 2006 2005 $ 6,041,817 $ 5,019,709 35,749,380 35,077,391 41,791,197 40,097,100 603,950 279,218 35,749,380 35,077,391 5,437,867 4,740,491 57,914,260 $ 41,187,247 $ 39,817,882 Total 2006 2005 $ 65,830,992 $ 65,257,901 97,229,686 87,607,100 163,060, 878 152,865,001 9,465,014 8,048,865 48,449,246 52,852,172 57,914,260 60,901,037 42,759,002 42,087,013 62,387,616 49,876,951 $105,146,618 $ 91,963,964 CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 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 portion of the increase was related to the 1 -94 Interchange project. Continuation of the City's Reconstruction Program, now in its fourth phase, also added to the upgraded infrastructure. Additional improvements to the city's infrastructure included re- alignment of Otter Creek Road, Extension of School Blvd. West, and Extension of Chelsea Road West. Business -Type Activities The net assets of our business -type activities also increased during 2006. 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 IV Project, various new utility constructions in new development areas, an Interstate 94 sewer line crossing, and a one million gallon water tower project. (7) CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 Business -Type Activities (Continued) A condensed version of the Statement of Activities is as follows: Expenses Governmental Activities Business -Type Activities Total 2006 2005 2006 2005 2006 2005 Revenues 1,907,352 Public Safety 2,856,573 1,551,098 - - Proaram Revenues 11551,098 Highways and Streets 5,318,865 5;990,719 - Charges for Services $ 4,455,657 $ 5,425,225 $ 5,433,855 $ 5,244,748 $ 9,889,512 $ 10,669,973 Operating Grants and Contributions 281,531 361,420 - - . 281,531 381,420 Capital Grants and Contributions 12,153,185 2,135,687 2,188,675 4,310,691 14,341,860 6,446,378 General Revenues - Debt Service 2,378,871 1,733,933 - - Property Taxes 7,253,560 7,476,106 - - 7,253,560 7,476,106 Unrestricted State Aid 130,D00 200,000 - - 130,000 200,000 Investment Earnings 2,093,877 985,497 334,623 89,987 2,428,500. 1,075,484 Other 4,619,629 2,799,703 27,100 (25,576) 4,646,729 2,774,127 Total Revenues 30,987,439 19,403,638 7,984,253 9,619,850 38,971,692 29,023,488 Expenses General Government 3,639,497 1,907,352 - - 3,639,497 1,907,352 Public Safety 2,856,573 1,551,098 - - 2,856,573 11551,098 Highways and Streets 5,318,865 5;990,719 - 51318,865 5,990,719 Sanitation 474,045 492,446 - - 474,045 492,446 Culture and Recreation 2,694,970 2,210,729 - 2,694,970 2,210,729 Economic Development 2,061,331 657,258 - 2,061,331 657,268 Debt Service 2,378,871 1,733,933 - - 2,378,871 1,733,933 Liquor - - 3,265,082 3,172,741 3,285,082 3,172,741 Cemetery - - 71,044 33,717 71,044 33,717 Water - - 913,638 939,449 913,638 939,449 Sewer - - 2,095,124 2,017,993 2,095,124 2,017,993 Total Expenses 19,424,152 14,543,535 6,364,888 6,163,900 25,789,040 20,707,435 Changes in Net Assets Before Special Items and Transfers 11,563,287 4,860,103 1,619,365 3,455,950 13,182,652 8,316,053 Transfers 250,000 250,000 (250,000) .(250,000) - Change in Net Assets 11,813,287 5,110,103 1,369,365 3,205,950 13,182,652 8,316,053 Net Assets - Beginning of Year 52,146, 08374 47,035,981 39,817,882 36,611,932 91,963,966 83,647,913 Net Assets - End of Year - $ 63,959,1 $ 52,146,084 $ 41,187,247 $ 39,817,882 $ 105,146;618 $ 91,963,966 (8) CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 Governmental Activities Figure A -3 Sources of City's Revenues for Fiscal 2006 ®Other 4 Charges for 0 Investment 15 %o Services Earnings 14% M Operating 7% Grants and Contributions ■ Unrestricted State Aid 0% 0 Capital Grants O Property and Taxes Contributions 23% 40% Revenues for the City's Governmental Activities increased by $11.6 million, or 59.7 %. The major components of this increase are explained as follows: ♦ The City's property tax revenues decreased $225,000 as a result of a lower tax levy. ♦ Capital Grants and Contributions increased by $10 million or 469 %. This increase was due to recognizing Special Assessment revenues of $8 million and the recognizing of a $2 million receivable from Wright County for the 1 -94 Interchange Project. ♦ Charges for services decreased by $970,000 or 17.8 %. This decrease was primarily due to a reduction in Sanitary Sewer Access Fees collected of $784,000, a reduction in Storm Sewer Access Fees of $508,000, and a reduction in Water Access Fees of $221,000 due to a decrease in new developments. Increases in Community Center Membership Fees of $131, $106,000 make up the major portions of the changes. ♦ Investment earnings increased by $1.1 million, primarily adjustment at December 31, 2006. (9) 000 and inspection fees increase of due to recognizing market value CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 Governmental Activities (Continued) Special assessment revenue for the City decreased $1.3 million, or 40 %, over the previous year because of fewer projects being constructed in new developments that would have had sewer, water, or storm sewer trunk charges assessed. License and permit fees were also down by $200,000, or 20 %. Inter - government revenue increased by $563,000 as the result of State Aid received for highway projects. Expenses — The City expenses for governmental activities increased by $4.9 million or 33 %. The increase is primarily due to Increased maintenance projects for highways and streets. In regards to debt service payments, debt expenditures were $644,000 more than the previous year. Business -Type Activities The City's business -type operating revenues increased by over $189,000, or 36 %, primarily due to increased sales from the liquor stare operation of $79,000 and additional revenue from sewer and water charges of $114,000. Contribution of Capital Assets decreased by $2.1 million due to a decrease in sewer and water utilities construction. Business -type expenses increased from previous year by approximately $165,000 due to increased costs of merchandise at the liquor store of $117,000, $59,000 in other liquor expenses increases, $78,000 additional sewer operating costs, and $38,000 in increased cemetery costs. Financial Analysis of the City's Funds The General Fund —The change in the City's general fund balance was $295,656 for 2006. Community Center Fund — The increase in the Community Center Fund balance was the result of additional revenue generated through membership fee increases. Sanitary Sewer Access Fund — The Sanitary Sewer Access Fund decreased by $1.6 million due to previous bond proceeds revenue being used for various construction projects. Capital Project Funds — The fund resources decreased in the current year primarily from previous proceeds from the sale of bonds being used for completion of various public improvement projects. Housing and Redevelopment Authority — This is a new major fund in 2006. Expenditures increased by $1.4 million as the result of a increase in HRA Land Held for Resale and improvements to the land before being sold. (t 0) CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 General Budgetary Highlights The City of Monticello Council did not make any revisions to the City's original budget document during 2006. In total; the general fund revenues were approximately $267,000 less than budgeted due to lower tax collections than levied, resulting in a budget variance of $192,000, and a decrease in Licenses and Permits of $60,000. Expenditures within the general fund were less than budgeted by approximately $402,000, resulting in an excess of revenue over expenditures of $134,000. Capital Assets At December 31, 2006, the City of Monticello had $97.2 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 2007 capital budget calls for another $10.5 million in capital projects and equipment expenditures, with $8.2 million of this amount tentatively scheduled for Waste Water Treatment Plant improvements. Land Construction in progress Infrastructure Buildings Improvements other than buildings Machinery, Equipment, and Vehicles Less: Accumulated Depreciation Total Governmental Business -Type Activities Activities. Total 2006 2005 2006 2005 2006 2005 $ 6,363,420 $ 6,084,918 $ 1,209,580 $ 1,209,580 $ 7,573,000 $ 7,294,498 20,523,835 12,513,141 5,845,433 4,507,456 26,369,268 17,020,597 35,043,517 33,513,517 28,510,509 27,736,251 63,554,026 61,249,768 13,018,486 13,018,486 5,156,471 5,156,471 18,174,957 18,174,957 4,015,218 3,044,913 17,828,867 17,791,202 21,844,085 - 20,836,115 3,139,200 3,080,142 1,313,180 1,259,049 4,452,380 4,339,191 (20,623,170) (18,725,408) (24,114,660) (22,582,618) (44,737,830) (41,308,026) $ 61,480,506 $ 52,529,709- $ 35,749,380 $ 35,077,391 $ 97,229,886 $ 87,607,100 Additional information on the City's capital assets can be found in the notes to the financial statements. (11) CITY OF MONTICELLO, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2006 Lana -Term Debt At year -end, the City of Monticello had $50.9 million in bonds and notes outstanding compared to $54.3 million in 2005. Payments of $3.4 million make up the changes from the prior year. GOVERNMENTAL ACTIVITIES General Obligation Bonds General Obligation Tax Increment Bonds Special Assessment Bonds WWTP Note Public Project Revenue Contract For Deed Total 2006 2005 $ 2,210,000 $ 2,420,000 810,000 1 970,000 30,255,000 31,065,000 10,188,973 10,835,699 6,650,000 6,910,000 764,293 2,085,222 $ 50,878,266 $ 54,285,921 Economic Factors and Next Years Budget The City of Monticello considered many factors when setting the fiscal year 2007 budget, rates and fees that will be charged for business -type activities. With the City Council's decision to reduce the previous year's tax levy by $250,000, new revenue sources were enacted. An electric Utility Franchise Fee of 3% was established that is expected to generate $280,000. Sewer and water user fees were increased by 15% to be used to fund operational costs for their departments that were previously covered by the General Fund. Finally, Reserve Funds of $295,000 from the General Fund and $457,000 from Enterprise Funds were included to balance the budget. The City's property tax levy for 2007 will amount to $6.5 million, $250,000 less than 2006. 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. (12) THIS PAGE LEFT BLANK INTENTIONALLY. BASIC FINANCIAL STATEMENTS GOVERNMENT -WIDE FINANCIAL STATEMENTS CITY OF MONTICELLO, MINNESOTA STATEMENT OF NET ASSETS DECEMBER 31, 2006 (WITH COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2005) ASSETS CURRENTASSETS Cash and Investments Accounts Receivable Due from Other Governments Loans Receivable Land Held for Resale Prepaid Items Deferred Bond Issuance Cost Inventory Special Assessments Receivable Capital Assets Not Being Depreciated Land Construction in Progress Capital Assets Being Depreciated (Net) Buildings Office Equipment and Furniture Vehicles Machinery and Shop Equipment Improvements Other than Building Infrastructure Total Assets I�Ia\:11YIYYI�9 CURRENT LIABILITIES Accounts Payable Due to Other Governments Other Accrued Liabilities Contracts Payable Accrued Interest Payable Deferred Revenue Escrow Deposits Contract for Deed - Due Within One year General Obligation Bonds Payable - Due Within One Year Compensated Absences Payable Due in More Than One Year Contract for Deed - Due in More Than One Year General Obligation Bonds Payable - Due Within More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Unrestricted TOTAL NET ASSETS See accompanying Notes to the Financial Statements. Totals Governmental Business-Type Activities Activities 2006 2005 31,569,318 $ 4,901,337 $ 36,470,655 $ 49,724,417 374,624 536,801 911,425 772,298 2,018,563 - 2,018,563 - 1,512,228 - 1,512,228 1,634,579 7,525,180 - 7,525,180 4,277,948 110,157 21,705 131,862 83,748 170,328 - 170,328 192,598 - 581,974 581,974 56B,107 16,508,777 - 16,508,777 8,004,206 6,363,420 1,209,580 7,573,000 7,294,498 .20,523,835 5,845,433 26,369,268 17,020,597 10,162,201 2,976,117 13,138,318 13,636,144 157,885 48,066 - 205,951 216,300 596,326 23,939 620,265 648,418 392,326 127,275 519,601 626,799 2,086,335 8,387,732 10,476,067 9,998,976 21,196,178 17,131,238 38,327,416 38,165,368 121,269,681 - 41,791,197 163,060,878 152,865,001 857,809 387,643 1,245,452 775,764 244,479 52,197 296,676 75,053 69,607 123,050 192,657 236,190 1,114,671 - - 1,114,671 1,261,089 907,705 - - - 907,705 901,768 - 40,531 40,531 17,170 2,278,411 529 2,278,940 2,387,091 100,000 - 100,000 100,000 3,288,382 - 3,288,382 2,294,740 392,824 - 392,824 371,679 664,293 - 664,293 1,985,222 47,392,129 - 47,392,129 50,495,271 57,310,310 603,950 57,914,260 60,901,037 7,009,622 56,949,749 35,749,380 5,437,867 42,759,002 62,387,616 42,087,013 49,876,951 $ 63,959,371 $ 41,187,247 $ 105,146,618 $ 91,963,964 (13) F � O N d) N W W T ZF-M F U J 0 J LL U! w0W �- U . ❑ Z W 05Q L {),I UN¢ a � r C N d 3 C d co m v J G 7 m a i N ro m U G C w O z C c a U m m �n v P ;='- n F a r p> m �f1 n m N � O O O m 0 a ' m N W m C a m m V O W h n V V h V N N W O O N O n b m M W '� N W W m N M n W . h W N W n W r W M O M m r W , y ¢ h m m W c 3 okra m M CV if1 N M m N n W C O m n h OD N M (O E N W N N M V n m N O n V M n H M M N M N W J E 0 ow N J J J lU W V O W (O m v_ r; m M M V M N N co O � V N r V V V �- 0 r !• V r h N N N' M r tf Cj Vj to a3 O. m n N N' V V n N O O N CD m 7 (Cl M R N v r M N Q V a (O ER SA 1� Ih W N . m ' ' W O O n m 0 0 (O n V m m W O 0 I: n n 0 O h M h 0 W W m 1� C N (q s C! N M h m l l� n Lq O m m W O O N O M N m N m M V n M M M M m m M V V M m W m Va m M M M N W r m 7 r lN(1 CMp Q O � � m ' 7 m n O M cn0 [p [p W 'O 7 N OMi uMi o m m W V c .n m .- r cD M r M � �i N r N V r r m U E 0 a N Noci V N N w W U It m M m d r N N m +� r C7 0 a U N b) d3 U _ F W N O W n f0 n (O m m M N N N wm V n W M M T O M W M b m W N O M W N N N W N N a N d r - r d' r M L6 6i O > m O LL ir Q O) 0 U c Z c Z W N M M O M N m V N V W O C U W N m h W n V M n V IN CO O m M M N m V CD c m m V O N -O c O C N 0 y IA O1 M (P W m V V W r V r O m M m r V m > O ¢ C p N O C l6 i. F W e MM. -mmm�N mmnm W _J 0 y (O m W V O M V m O N h iN ul t6 w N N N m N M (M O N 0 Q N W F- C9 Cco cc ;E 3 N Z W Z i N ro m U G C w O z C c a U m m �n v !7 N � C a Q U C O N N N b ,? E O '� N N U E N N C U W E a , y ¢ 'm a c 3 okra D o O T Tm > > m 0 m ° N � �, E ~ � 0 T H m N J E 0 N � N J J J lU U C "a� o(7an.Ucn (7 lu � m co O � V IL` i N ro m U G C w O z C c a U m m �n v FUND FINANCIAL STATEMENTS CITY OF MONTICELLO, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2006 (WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2005) ASSETS Cash and Investments Special Assessments Receivable Delinquent Deferred Accounts Receivable Due from Other Governmental Units Loans Receivable Due from Other Funds Land Held for Resale Prepaid Items TOTALASSETS LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Other Accrued Liabilities Contracts Payable Due to Other Governmental Units Due to Other Funds Deferred Revenue Escrow Deposits Total Liabilities FUND BALANCES Reserved Noncurrent Loans Receivable Debt Retirement Prepaid Items Assets Held for Resale Unreserved, Designated Subsequent Year's Expenditures Contingencies Unreserved, Undesignated Reported in: General Fund Special Revenue Funds Capital Projects Funds Total Equity and Other Credits Housing and Community Capital Redevelopment General Center Outlay Revolving Authority $ 6,940,443 $ 328,210 $ 1,460,175 $ 1,138,498 8,293 38,151 $ 32,370 2,442 - 758,438 13,907 306,483 14,180 1,387 1,182 18,563 - - - 319,283 - 20,000 557,488 - - - - - 6,528,123 640,520 B6,536 23,319 i25 2,272,557 $ 8,239,531 $ 365,709 $ 8,786,274 $ 1,800,325 $ 355,010 $ 22,837 $ 32,370 $ ,134,214 47,606 13,907 - 7,908 2,975 - 69,946 54,542 83,958 4,675 _ - - - 188,548 57,512 3,005 796,590 - 2,272,557 5,854 - - 2,819,618 50,278 898,906 385,212 319,283 - - 20,000 86,536 23,319 - - 6,528,123 640,520 5,014,094 - - - - 292,112 1,359,245 754,593 5,419,913 315,431 7,887,368 1,415,113 TOTAL LIABILITIES AND FUND BALANCES $ 8,239,531 $ 365,709 $ 8,786,274 $ 1,800,325 See accompanying Notes to the Financial Statements. (15) Other Sanitary Debt Capital Governmental Total Governmental Funds Sewer Access Service Projects Funds 2006 2005 $ 7,049,816 $ 9,184,453 $ - $ 5,467,723 $ 31,569,318 $ 45,762,495 28,954 321,145 121,342 517,885 480,668 1,125,997 11,781,346 - 2,322,669 15,990,892 7,523,538 13,691 8,253 800 28,648 374,624 297,991 - 2,000,000 - - 2,018,563 - - - 1,172,945 1,512,228 1,634,579 1,154,951 14,124,399 - - 557,488 236,934 356,537 - 7,525,180 4,277,948 - - - 177 110,157 68,375 - - $ 8,218,458 $ 23,651,734 $ 800 $ 9,113,504 $ 60,176,335 $_ 60,282,528 - 9,170,798 $ 4,253 $ $ 297,712 $ 11,413 $ 857,809 $ 671,244 - - 186 69,607 86,138 984,758 2,450 1,114,671 1,261,089 154,762 1,084 244,479 68,261 - 368,940 - 557,488 236,934 1,154,951 14,124,399 - .2,444,011 16,580,468 8,006,060 2,278;411 2,386,407 1,159,204 147124,399 1,806,172 2,459,144 23,702,933 12,716,133 - - 1,172,945 1,512,228 1,634,579 9,170,798 - 9,170,798 9,162,548 - 177 110,032 68,375 356,537 - 7,525,180 4,277,948 2,759,807 551,961 - - 5,014,094 1,424,096 7,059,254 5,481,238 14, 946,442 18, 425,893 (1,805,372) - (1,805,372) 9,261,188 7,059,254 9,527,335 (1,805,372) 6,654,360 36,473,402 47,566,395 $ 8,218,458 $ 23,651,734 $ 800 $ 9,113,504 $ 60,176,335 $ 60,282,528 (16) THIS PAGE LEFT BLANK INTENTIONALLY. CITY OF MONTICELLO, MINNESOTA GOVERNMENTAL FUNDS RECONCILATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS - GOVERNMENTAL ACTIVITIES DECEMBER 31, 2006 Total Fund Balances for Governmental Funds $ 36,473,402 Total net assets reported for governmental activities in the statement of net assets Is different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. Those assets consist of: Land - 6,363,420 Construction in Progress - 20,523,835 Buildings, Net of $2,193,106 Accumulated Depreciation 10,162,201 Office Equipment and Furniture, Net of $75,794 Accumulated Depreciation 157,885 Vehicles, Net of $987,647 Accumulated Depreciation 596,326 Machinery and Shop Equipment, Net of $475,336 Accumulated Depreciation 392,326 Improvements, Net of $1,716,763 Accumulated Depreciation 2,088,335 Infrastructure, Net of $11,237,897 Accumulated Depreciation 21,196,178 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. _ 18,580,468 Interest on long -term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Accrued interest for general obligation bonds is included in the statement of net assets. (907,705) -Long -term liabilities that pettain 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 activities: General Obligation Bonds Payable (50,113,973) Contract For Deed Payable - (764,293) Deferred Bond Issuance Cost 170,328 Unamortized Bond Premium - (566,538) Compensated Absences (392,824) Total Net Assets of Governmental Activities $ 63,959,371 See accompanying Notes to the Financial Statements. (17) CITY OF MONTICELLO, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, 2005) REVENUE General Property Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Earnings Miscellaneous Total Revenue EXPENDITURES Current General Government Public Safety Public W orks Sanitation Culture and Recreation Economic Development Capital Outlay General Government Public Safety Public Works Culture and Recreation Debt Service Principal Interest and Fiscal Charges Total Expenditures Revenue Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Proceeds from Sale of Bonds Premium on Bonds Issued Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES Fund Balance - Beginning of Year FUND BALANCE - END OF YEAR 1,320,929 - - - 101,029 6,519,143 1,383,005 1,319,546 3,388,823 390,000 494,642 2,940,838 (2,527,711) 667 250,000 213,380 2,613,283 (95,145) (669,950) (1,833,136) (169,725) (94,478) (419,950) (1,619,756) Housing and 295,522 Community Capital Redevelopment General Center Outlay Revolving Authority $ 4,520,275 $ 870,762 $ 1,498 $ 791,812 - - 121,721 - 758,718 - 283,597 - 130,000 641,448 982,255 - 1,750 - - - 301,431 23,152 50,538 69,300 401,924 1,478 3,956,627 - 6,909,143 1,877,647 4,260,384 861,112 1,732,046 - 1,527,354 - 1,232,736 1,832,815 - - 474,045 - - - 624,780 1,324,360 - - 87,523 - - 1,966,865 5,614 6,100 - 56,776 - 86,810 172,090 58,645 - Revenue Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Proceeds from Sale of Bonds Premium on Bonds Issued Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES Fund Balance - Beginning of Year FUND BALANCE - END OF YEAR 1,320,929 - - - 101,029 6,519,143 1,383,005 1,319,546 3,388,823 390,000 494,642 2,940,838 (2,527,711) 667 250,000 213,380 2,613,283 (95,145) (669,950) (1,833,136) (169,725) (94,478) (419,950) (1,619,756) 2,443,558 295,522 74,692 1,321,082 (84,153) 5,124,391 240,739 6,566,286 1,499,266 $ 5,419,913 $ 315,431 $ 7,887,368 $ 1,415,113 See accompanying Notes to the Financial Statements. (18) (19) Other Sanitary Debt Capital Governmental Total Governmental Funds Sewer Access Service Projects Funds 2006 2005 $ - $ 505,804 $ $ 563,409 $ 7,253,560 $ 7,476,106 324,337 863,397 697,064 2,006,519 3,341,537 - - - 758,718 956,300 - 523,479 937,076 373,929 794,259 378,909 2,796,871 4.014,956 - - - 1,750 4,000 494,549 378,953 344,167 431,787 2,093,877 985,497 - 198,518 6,113 4,564,660 3,165,372 1,613,145 1,748,154 542,685 2,600,761 20,413,031 20,317,697 11,670 1,743,716 1,544,446 - 2,760,090 1,666,869 1,761,770 259 3,594,844 4,635,519 - - 474,045 492,446 322,076 2,271,216 2,361,302 1,667 2,056,055 637,777 - 5,614 32,705 - - 6,100 - 12,688,930 - 12,832,516 11,996,071 - - - 230,735 108,964 2,086,726 3,407,655 1,911,126 - 2,272,409 - 2,373,438 1,426,367 1,761,770 4,359,135 12,688,930 335,672 31,756,024 26,813,592 (148,625) (2,610,981) (12,146,245) 2,265,089 (11,342,993) (6,495,895) 2,619,231 2,471,602 13,209 8,181,372 4,128,010 (1,452,171) - (1,391,917) (2,319,328) (7,931,372) (3,878,010) 25,150,000 - - - 761,396 (1,452,171) 2,619,231 1,079,685 (2,306,119) 250,000 26,161,396 (1,600,796) 8,250 (11,066,560) (41,030) (11,092,993) 19,665,501 8,660,050 9,519;085 9,261,188 6,695,390 47,566,395 27,900,894 $ 7,059,254 $ 9,527,335 $ (1,805,372) $ 6,654,360 $ 36,473,402 $ 47,566,395 (19) THIS PAGE LEFT BLANK INTENTIONALLY. CITY OF MONTICELLO, MINNESOTA RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS TO THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES YEAR ENDED DECEMBER 31, 2006 Net Change in Fund Balance -Total Governmental Funds $ (11,092,993) 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 assets changed: Captial Asset Acquisitions and Disposals 13,051,926 Loss on Disposal of Capital Assets (1,850,754) Depreciation Expense (2,250,378) The governmental 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: Repayment of Bond Principal 2,086,726 Repayment of Contract for Deed 1,320,929 Change in Accrued Interest Expense for General Obligation Bonds (5,937) Amortization of Bond Issuance Costs (22,270) Amortization of Bond Premium 22,774 Change in Compensated Absences (21,145) Delinquent and deferred propertytaxes 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 governmental funds. Change in Deferred Revenue for Special Assessments 10,574,409 Change in Net Assets of Governmental Activities $ 11,813,287 See accompanying Notes to the Financial Statements. (20) CITY OF MONTICELLO, MINNESOTA STATEMENT OF NET ASSETS PROPRIETARY FUNDS DECEMBER 31, 2006 (WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2005) ASSETS CURRENT ASSETS Cash and Cash Equivalents Accounts Receivable Due From Other Funds Inventory Prepaid Items Total Current Assets CAPITAL ASSETS Land Buildings Office Equipment and Furniture Vehicles Machinery and Shop Equipment Improvements Other Than Buildings Infrastructure Construction in Progress Total Capital Assets Less: Allowance for Depreciation Total Capital Assets, Net Total Assets LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable Other Accrued Liabilities Due to Other Governments Due to Other Funds Deferred Revenue Escrow Deposits Total Liabilities NET ASSETS NET ASSETS Invested in Capital Assets Unreserved Total Net Assets See accompanying Notes to the Financial Statements. (21) Water Sewer 1,665,907 $ 1,754,209 259,265 271,140 7,304 6,015 1,932,476 2,031,364 208,143 848,445 16,695 81,553 166,267 51,951 13,917,826 3,492,183 18,782,063 (6,248,782) 12,533,281 14,465,757 12,406 38,071 17,206 975,937 3,570,119 41,019 479,613 427,834 17,609,984 14,592,681 2,353,252 40,050,439 (17,482,411) 22,568,028 24,599,392 237,221 881 404 38,059 106,642 238,506 12,533,281 1,825,834 $ 14,359,115 22,568,028 1,792,858 $ 24,360,886 Totals Liquor Cemetery 2006 2005 $ 1,438,079 $ 43,142 $ 4,901,337 $ 3,961,922 5,946 450 536,801 474,307 - - - 44 581,974 581,974 568,107 8,386 - 21,705 15,373 2,034,385 43,592 6,041,817 5,019,753 5,600 19,900 1,209,580 1,209,580 737,907 - 5,156,471 5,156,471 36,949 - 93,663 93,663 $ 2,335,343 $ - 561,166 545,813 64,251 - 658,352 619,573 81,040 85,891 17,828,866 17,791,202 - - 28,510,507 27,736,251 - - 5,845,435 4,507,456 925,747 105,791 59,864,040 57,660,009 (367,587) (15,880) (24,114,660) (22,582,618) 558,160 89,911 35,749,380 35,077,391 2,592,545 133,503 41,791,197 40,097,144 136,416 1,600 387,643 104,520 84,098 - 123,050 150,052 34,587 52,197 6,792 - - 44 1,572 40,531 17,170 529 - 529 684 257,202 1,600 603,950 279,262 558,160 89,911 35,749,380 35,060,221 1,777,183 41,992 5,437,867 4,757,661 $ 2,335,343 $ 131,903 $ 41,187,247 $ 39,817,882 (22) CITY OF MONTICELLO, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE TOTALS AS OF DECEMBER 31, 2005) OPERATING REVENUES Sales Costs of Goods Sold Charges for Services Total Operating Revenues OPERATING EXPENSES Personal Services Telephone Utilities Supplies and Materials Repairs and Maintenance Depreciation Insurance Professional fees Advertising Miscellaneous Total Operating Expenses Net Income (Loss) from Operations OTHER INCOME (EXPENSE) Interest Income (Expense) Contributions of Capital Assets Rental Income Total Other Income (Expense) Net Income (Loss) before Operating Transfers OPERATING TRANSFERS Gain (Loss) on Sale of Capital Assets Transfer Out Total Operating Transfers CHANGE IN NET ASSETS Net Assets - Beginning of Year NET ASSETS - END OF YEAR See accompanying Notes to the Financial Statements. (23) Water Sewer 742,146 742,146 183,737 1,076 90,622 111,535 5,369 447,833 7,354 4,016 1,043,208 1,043,208 110,193 2,005 4,775 23,609 31,606 1,010,800 21,862 864,756 62,096 25,518 913,638 2,095,124 (171,492) (1,051,916) 104,902 123,428 1,601,341 549,671 - 27,100 1,706,243 700,199 1,534,751 (351,717) 1,534,751 (351,717) 12,824,364 24,712,603 $ 14,359,115 $ 24,360,886 (24) Totals Liquor Cemetery 2006 2005 $ 3,619,236 $ $ 3,619,236 $ 3,540,572 (2,667,929) (2,667,929) (2,614,197) - 29,265 1,814,619 1,704,176 951,307 29,265 2,765,926 2,630,551 417,633 6,246 717,809 620,450 3,807 - 6,888 8,038 22,228 - 117,625 101,954 15,827 700 151,671 173,872 7,662 44,637 72,994 56,003 2,055 1,516,691 1,518,580 14,117 - 43,333 48,407 12,480 23,103 904,355 805,470 1,812 - 1,812 2,272 65,584 38,940 192,138 197,666 617,153 71,044 3,696,959 3,549,703 334,154 (41,779) (931,033) (919,152) 100,871 5,422 334,623 89,987 - 37,663 2,188,675 4,310,691 - 27,100 21,730 100,871 43,085 2,550,398 4,422,408 435,025 1,306 1,619,365 3,503,256 - - - (47,306) (250,000) (250,000) (250,000) (250,000) (250,000) (297,306) 185,025 1,306 1,369,365 3,205,950 2,150,318 130,597 39,817,882 36,611,932 $ 2,335,343 $ 131,903 $ 41,187,247 $39,817,882 (24) CITY OF MONTICELLO, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, 2005) Water CASH FLOWS FROM OPERATING ACTIVITIES Cash Receipts from Customers $ 703,167 Cash Paid to Suppliers (260,405) Cash Paid to Employees (179,612) Net Cash Flaws from Operating Activities 263,150 CASH FLOWS FROM NONCAPITAL FINANCIAL ACTIVITIES Rental Receipts Transfers Out Proceeds from Sale of Capital Assets Net Cash Flows Provided (Used) by Noncapital Financing Activities CASH FLOWS FROM CAPITAL RELATED FINANCING ACTIVITIES Purchases of Capital Assets CASH FLOWS FROM INVESTING ACTIVITIES Interest Received on Investments 104,902 Net Increase (Decrease) in Cash and Cash Equivalents 368,052 Cash and Cash Equivalents - Beginning of Year 1,297,855 CASH AND CASH EQUIVALENTS - END OF YEAR $ 1,665,907 CASH FLOWS FROM OPERATING ACTIVITIES Operating Income (Loss) $ (171,492) Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 447,833 Loss on Disposal of Capital Assets - Changes in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (37,502) (Increase) Decrease in Due from Other Funds 14 (Increase) Decrease in Inventory - (increase) Decrease in Prepaid Expenses (1,491) Increase (Decrease) in Accounts Payable (13,012) Increase (Decrease) in Accrued Expenses 4,125 Increase (Decrease) in Contracts Payable - Increase (Decrease) in Due to Other Governments 10,874 Increase (Decrease) in Due to Other Funds - Increase (Decrease) in Deferred Revenue 24,001 Increase (Decrease) in Escrow Deposits (200) Net Cash Provided by Operating Activities $ 263,150 NONCASH TRANSACTIONS Contributions of Capital Assets $ 1,601,341 See accompanying Notes to the Financial Statements. (25) Totals Sewer Liquor Cemetery 2006 2005 $ 1- ,017,277 $ 934,018 $ 28,815 $ 2,683,277 $ 2,753,259 (807,934) 19,913 (62,343) (1,110,769) (1,502,964) (110,470) (448,461) (6,268) (744,811) (613,012) 98,873 505,470 (39,796) 827,697 637,283 27,100 - (250,000) 27,100 (250,000) 27,100 21,729 (250,000) (250,000) 22,500 (222,900) (205,771) (49) 123,424 100,871 5,421 334,618 89,987 249,397 356,341 (34,375) 939,415 521,450 1,504,812 1,081,738 77,517 3,961,922 3,440,472 $ 1,754,209 $ 1,438,079 $ 43,142 $ 4,901,337 $ 3,961,922 $ (1,051,916) $ 334,154 $ (41,779) $ (931,033) $ (919,152) 1,010,800 56,003 2,055 1,516,691- 1,518,580 - 50 (23,765) (777) (450) (62,494) (43,873) 30 - - 44 (44) - (13,867) (13,867) (12,132) (2,196) (2,645) - (6,332) (1,151) 165,793 129,942 400 283,123 87,073 (277) (30,828) (22) (27,002) 7,438 - - - - (14,862) 404 34,127 - 45,405 821 - (44) - (44) 44 (640) - 23,361 14,471 - 45 - (155) 20 $ 98,873 $ 505,470 $ (39,796) $ 827,697 $ 637,283 $ 549,671 $ - $ 37,663 $ 2,188,675 $ 4,310,691 (26) THIS PAGE LEFT BLANK INTENTIONALLY. NOTES TO FINANCIAL STATEMENTS CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 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). Governments are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements. Although the City has the option to apply FASB pronouncements issued after that date to its business -type activities and enterprise funds, the City has chosen not to do so. 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 a nonprofit 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: 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. (27) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 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 blended component unit. Separate statements for each fund category -- governmental and proprietary 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 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. Comparative Data Summarized comparative data for the prior year has been presented only for certain sections of the accompanying financial statements, in order to provide an understanding of the changes in the City's financial position and operations. (2s) NOTE 1 CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 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 fund is used to account for the revenues and expenditures related to the community center. Capital Outlay Revolving Fund The capital outlay revolving fund is used to account for revenues and expenses related to capital outlay. Housing and Redevelopment Authority The housing and redevelopment authority fund is used to account for revenues and expenses related to the blended component unit. 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 Proiects 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 Utility Funds These funds are used to account for the provisions of water services to the City's residents. Sewer Utility Funds These funds are used to account for the provisions of 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. (29) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE t SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basic Financial Statements (Continued) Major Proprietary Funds (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 and proprietary funds 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 distinquish 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, Capital Outlay Revolving, 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, 2006 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Legal Compliance — 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, Bankers' 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, 2006 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. Assessments remitted to the City the following January 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, 2006 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 ReceivableslPavables 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, 2006 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. 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 five 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 ten years of employment, all employees accrue one half of the unused sick leave, times the hourly rate at the time of giving notice. Long -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 balance 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, 2006 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. 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 The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the statement of net assets and the balance sheet as "Cash and Investments." In accordance with Minnesota Statutes the City maintains deposits at financial institutions which are authorized by the City Council. Custodial Credit Risk — Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned to it. The City does not have a specific deposit policy for custodial credit risk but rather follows Minnesota Statutes for deposits. Minnesota Statutes require that all 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 corporate surety bonds. Authorized collateral include: U.S. government treasury bills, notes, or bonds; issues of a U,S, government agency; general obligations of a state or local government rated "A" or better; revenue obligations of a state or local government rated "AA" or better; irrevocable standby letter of credit issued by a Federal Home Loan Bank; and time deposits insured by a federal agency. Minnesota Statutes require securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or at an account at a trust departments of a commercial bank or other financial institution not owned or controlled by the depository. The City's bank deposits of $2,520,936 at December 31, 2006 were fully insured or collateralized. (35) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) Investments The City may also invest idle funds as authorized by Minnesota Statutes as follows: • Direct obligations or obligations guaranteed by the United States or its agencies. • Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, is rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a finial maturity of thirteen months or less. • General obligations rated "A" or better; revenue obligations rated "AA" or better. • General obligations of the Minnesota Housing Finance Agency rate "A" or better. • Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System. • Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality category by a least two nationally recognized rating agencies, and maturing in 270 days or less. • Guaranteed investment contracts guaranteed by United States commercial banks or domestic branches of foreign banks or United States insurance companies if similar debt obligations of the issuer or the collateral pledged by the issuer is in the top two rating categories. • Repurchase or reverse purchase agreement and securities lending agreements financial institutions qualified as a "depository" by the government entity, 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, or certain Minnesota securities broker- dealers. Investments Held with Brokers Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City's investment policy directs the City to manage its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by. timing cash flows from maturities to meet cash requirements for ongoing operations. Information about the sensitivity of the fair values of the City's investments to market interest rate risk fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: (36) 12 Months 13 to 24 25 to 60 More than Type Total or Less Months Months 60 Months U.S. Government Securities $ 28,849,436 $ 196,681 $ $ 5,235,097 $ 23,415,658 Negotiable Certificates of Deposits 1,434,140 95,000 482,396 856,744 - Money Market 3,652,854 3,652,854 - - 4M Fund 292,852 292,852 - - $ 34,229,282 $ 4,239;387 $ 482,396 $ 6,091,841 $ 23,415,658 (36) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) Investments (Continued) Investments Held with Brokers (Continued) Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City's investment policy does not further limit the types of investments the City can purchase beyond those types authorized by statute. The following chart summarizes year -end ratings for the City's investments as rated by Moody's Investors Service: The Minnesota Municipal Money Market Fund (4M -Fund) Trust is a common law trust organized in accordance with the Minnesota Joint Powers Act, which invests only in investment instruments allowable under Minnesota Statutes as described on the previous page. Its investments are valued at amortized cost, which approximates fair value in accordance with Rule 2a -7 of the Investment Company Act of 1940. The amortized cost method of valuation values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of instruments. The Minnesota Municipal Money Market Trust Fund does not have its own credit rating. MBIA, Inc., who administers the Minnesota Municipal Money Market Fund Trust holds an organization credit rating of Aa2. Concentration of Credit Risk The City places no limit on the amount that it may invest in any one issuer. More than 5 percent of the City's investments are in Federal Home Loan Association and Federal National Mortgage Association. These investments are 44.62% and 30.17°/x, respectively, of the City's total investments. (37) Credit Type Quality Rating Amount U.S. Government Securities AAA $ 28,252,594 U.S. Government Securities Not Rated 596,842 Negotiable Certificates of Deposits Not Rated 1,434,140 Money Market Not Rated 3,652,854 4M Fund Not Rated 292,852 Total $ 34,229,282 The Minnesota Municipal Money Market Fund (4M -Fund) Trust is a common law trust organized in accordance with the Minnesota Joint Powers Act, which invests only in investment instruments allowable under Minnesota Statutes as described on the previous page. Its investments are valued at amortized cost, which approximates fair value in accordance with Rule 2a -7 of the Investment Company Act of 1940. The amortized cost method of valuation values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of instruments. The Minnesota Municipal Money Market Trust Fund does not have its own credit rating. MBIA, Inc., who administers the Minnesota Municipal Money Market Fund Trust holds an organization credit rating of Aa2. Concentration of Credit Risk The City places no limit on the amount that it may invest in any one issuer. More than 5 percent of the City's investments are in Federal Home Loan Association and Federal National Mortgage Association. These investments are 44.62% and 30.17°/x, respectively, of the City's total investments. (37) NOTE 3 CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 LONG -TERM RECEIVABLES The City maintains a revolving loan program to support economic development. Outstanding loans as of December 31, 2006 were as follows: 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 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 60 monthly payments of $1,483, including interest at 2.0 %. In April of 2005, a loan of $200,000 was made to a local business. The loan requires 240 monthly payments of $1,433, including interest at 6.0 %. In November of 2005, a loan of $200,000 was made to a local business. The loan requires 240 monthly payments of $1,160, including interest at 3.5 %. Total Long -Term Receivables (38) Balance at December 31, 2006 $ 199,496 78,441 169,668 253,461 36,564 49,926 321,386 190,916 192,372 $ 1,492,230 CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 4 CAPITAL ASSETS Governmental Activities Capital asset activity for the year ended December 31, 2006 was as follows: Governmental Activities: Capital Assets, Not Being Depreciated Land Construction in Progress Total Capital Assets, Not Being Depreciated Capital Assets, Being Depreciated Buildings Office Equipment and Furniture Vehicles Machinery and Shop Equipment Improvements Other than Buildings Infrastructure Total Capital Assets, Being Depreciated Accumulated Depreciation for Buildings Office Equipment and Furniture Vehicles Machinery and Shop Equipment Improvements Other than Buildings Infrastructure Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Governmental Activities Capital Assets, Net Beginning $ 7,823 Public Safety 88,090 Ending Balance Increases Decreases Reclassifications Balance $ 6,084,918 $ 303,902 $ (25,400) $ $ 6,363,420 12,513,141 22,523,163 (14,512,469) 20,523,835 18,598,059 22,827,065 (14,537,869) 26,887,255 13,018,486 - 13,018,486 241,703 26,887 (5,289) 263,301 1,748,887 245,712 (125,690) (15,353) 1,853,556 1,089,552 61,574 (128,783) 1,022,343 3,044,913 1,048,485 (78,180) 4,015,218 33,513,517 3,354,672 (1,824,672) 35,043,517 52,657,058 4,737,330 (2,162,614) (15,353) 55,216,421 (2,521,542) (334,743) - (2,856,285) (92,201) (18,504) 5,289 - (105,416) (1,137,771) (155,943) 21,131 15,353 (1,257,230) (566,565) (93,552) 30,100 - (630,017) (1,826,461) (132,315) 31,893 (1,926,883) (12,580,868) (1,515,321) 248,850 - (13,847,339) (18,725,408) (2,250,378) 337,263 15,353 (20,623,170) 33,931,650 2,486,952 (1,825,351) - 34,593,251 $ 52,529,709 $ 25,314,017 $ (16,363,220) $ - $ 61,480,506 Depreciation expense was charged to governmental functions as follows: Governmental Activities: General Government $ 7,823 Public Safety 88,090 Public Works 1,737,189 Parks, Culture and Recreation 417,276 Total Depreciation Expense, Governmental Activities $ 2,250,378 (39) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 4 CAPITAL ASSETS (CONTINUED) Business -Type Activities Capital asset activity for the year ended December 31, 2006 was as follows: (18,732) (508,510) Beginning Transfers/ Transfers/ Ending (430,457) Balance Additions Disposals Reclassifications Balance Business Activities: Capital Assets, Not Being Depreciated Land $ 1,209,580 $ - $ $ $ 1,209,580 Construction in Progress 4,507,456. 5,846,699 (4,508,722) - 5,845,433 Total Capital Assets, Not Being Depreciated 5,717,036 5,846,699 (4,508,722) - 7,055,013 Capital Assets, Being Depreciated Buildings Office Equipment and Furniture Vehicles Machinery and Shop Equipment Improvements Other than Buildings Infrastructure Total Capital Assets, Being Depreciated Accumulated Depreciation for Buildings Office Equipment and Furniture Vehicles Machinery and Shop Equipment Improvements Other than Buildings Infrastructure Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Business Activities Capital Assets, Net 5,156,471 93,663 545,813 - 619,573 38,778 17,791,203 37,664 27,736,252 774,257 51,942,975 850,699 (2,017,271) (163,083) (26,865) (18,732) (508,510) (13,364) (515,761) (15,315) (9,010,678) (430,457) (10,503,531) (875,740) (22,582,616) (1,516,691) 29,360,359 (665,992) 5,156,471 - 93,663 15,353 561,166 - 658,351 - 17,828,867 - 28,510,509 15,353 52,809,027 (2,180,354) (45,597) (15,353) (537,227) (531,076) (9,441,135) (11,379,271) (15,353) {24,114,660) 28,694,367 $ 35,077,395 $ 5,180,707 $ (4,508,722) $ - $ 35,749,380 Depreciation expense was charged to business functions as follows: Business -Type Activities: Water Sewer Liquor Cemetery Total Depreciation Expense, Business -Type Activities (40) $ 447,833 1,010,800 56,003 2,055 1,516,691 CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 5 INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS 1. Due To /From Other Fund Receivable Fund Payable Fund Amount Reason Major Governmental Funds General Capital Projects $ 368,940 Housing and Redevelopment Authority 188,548 Total Due to General Fund $ 557,488 Operating Funds 2. Interfund Transfers 88,645 Share of Project Costs Interfund transfers for the year ended December 31, 2006, consisted of the following: Share of Project Costs Amount Description Major Governmental Funds Sewer Access Fund 47,387 Transfers to General Fund from Storm Sewer Access Fund 499,168 Environmental Clean -up Fund $ 667 Close the Fund Transfers to Housing and Redevelopment Authority from Total Transfer to Capital Projects Fund 2,471,602 Capital Outlay Revolving Fund 1,228,075 Share of AVR Land Sale Capital Projects Fund 1,385,208 Share of AVR Land Sale Total Transfers to Housing and Redevelopment Authority 2,613,283 Transfer to Community Center Fund from Liquor Fund 250,000 Annual Contribution Transfers to Capital Outlay Revolving Fund from Sewer Access Fund 193,720 Share of Project Cost Storm Sewer Access Fund 1,570 Share of Project Cost Water Access Fund 18,090 Share of Project Cost Total Transfer to Capital Outlay Revolving Fund 213,380 Transfers to Debt Services Fund from Housing and Redevelopment Authority 169,725 Transfer of Debt Payments Community Center Fund 669,950 Transfer of Debt Payments Sewer Access Fund 1,211,064 Transfer of Debt Payments Storm Sewer Access Fund 258,821 Transfer of Debt Payments Water Access Fund 309,671 Transfer of Debt Payments Total Transfers to Debt Service Fund 2,619,231 Transfer to Capital Projects Fund from General Fund 88,645 Share of Project Costs City Street Reconstruction Fund 1,151,493 Share of Project Costs Capital Outlay Revolving Fund 605,061 Share of Project Costs Sewer Access Fund 47,387 Share of Project Costs Storm Sewer Access Fund 499,168 Share of Project Costs Water Access Fund 79,848 Share of Project Costs Total Transfer to Capital Projects Fund 2,471,602 Total Transfers to Major Funds 8,168,163 (41) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 5 INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (CONTINUED) 2. Interfund Transfers (Continued) Transfers to Nonmajor Governmental Funds Transfer to Orderly Annexation Fund from General Fund Transfer to Storm Sewer Access Fund from Capital Projects fund Total Transfers to Nonmajor Governmental Funds Totallnterfund Transfers NOTE 6 OPERATING LEASES Amount Description $ 6,500 Annexation Costs 6,709 Share of Project Costs 13,209 $ 8,181,372 The City leases several pieces of office equipment under noncancelable operating leases. Total costs for such leases were $51,447 for the year ended December 31, 2006, including costs for maintenance and copies. The future minimum lease payments for these leases are as follows: Year Ending December 31, Amount 2007 $ 33,711 2008 33,711 2009 19,062 2010 17,730 2011 4,435 Total $ 108,649 (42) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 7 CITY INDEBTEDNESS City indebtedness at December 31, 2006 is composed of the following: Initial Net Amount Maturity Interest Outstanding Description Issued Date Rate Principal General Obligation Bonds: 2003A GO Improvement Bonds $ 2,420,000 Feb. 2015 3.71% $ 2,210,000 General Obligation Tax Increment Bonds: 1989A Tax Increment Bonds $ 260,000 Feb. 2007 7.25% $ 30,000 2004A Tax Increment Bonds 945,000 Feb. 2013 4.66% 780,000 Total General Obligation Tax Increment Bonds $ 1,555,000 $ 810,000 Special Assessments Bonds: 1999 Improvement Bonds $ 3,000,000 Feb. 2010 4.15% $ 1,250,000 2000A Improvement Bonds 2,015,000 Feb. 2016 5.38% 1,300,000 2000B Improvement Bonds 1,645,000 Feb. 2011 5.00% 725,000 2002 Improvement Bonds 2,420,000 Feb. 2014 3.67% 1,830,000 2005 Improvement Bonds 25,150,000 Feb.2023 6.00% 25,150,000 Total Special Assessment Bonds $ 34,230,000 $ 30,255,000 General Obligation Notes: Project 93 -14C Wastewater Treatment Note $ 14,700,000 Aug. 2018 4.08% $ 10,188,973 Public Project Revenue Bonds 2000A $ 7,555,000 Feb. 2015 6.27% $ 6,650,000 Contract for Deed $ 2,185,222 Dec. 2009 6.00% $ 764,293 (43) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 7 CITY INDEBTEDNESS (CONTINUED) The following is a schedule of changes in City indebtedness for the year ended December 31, 2006: General Obligation Bonds Bond Premium (Discount) General Obligation Note Special Assessment Debt with Governmental Commitments General Obligation Tax Increment Bonds Public Project Revenue Bonds Contract For Deed Total Payable General Beginning End of Due Within of Year Additions Payments Year One Year $ 2,420,000 $ $ 210,000 $ 2,210,000 $ 215,000 589,312 20,774 568,538 19,636 10,835,699 646,726 10,188,973 673,382 31,065,000 810,000 30,255,000 1,840,000 970,000 160,000 810,000 130,000 6,910,000 260,000 6,650,000 430,000 2,085,222 1,320,929 764,293 100,000 $ 54,875,233 $ $ 3,428,429 $ 51,446,804 $ 3,408,018 Minimum annual principal and interest payments required to retire long -term debt, are as follows: (44) General Long -Term Debt Years nFT`nclw n—T eft Totals 2007 $ 3,388,382 $ 2,245,117 $ 5,633,499 2008 3,881,136 2,082,011 5,963,147 2009 5,289,327 1,883,359 7,172,686 2010 4,865,123 1,629,670 6,494,793 2011 4,996 452 1,397,774 6,394,226 2012 -2016 22,849,307 3,582,859 26,432,166 2017 -2021 4,708,539 539,941 5,248,480 2022 -2023 900,000 38,675 938,675 Totals $50,878,266 $13,399,406 $64,277,672 (44) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 8 DEFINED BENEFIT PENSION PLANS – STATE -WIDE 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 a cost - sharing, multiple- employer retirement plan. This plan is established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan, Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by state statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of step -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salaryfor each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single -life annuity is a lifetime annuity that ceases upon the death of the retiree —no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time of members who leave public service, but before retirement benefits begin. (45) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 8 DEFINED BENEFIT PENSION PLANS — STATE -WIDE (CONTINUED) Plan Description (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 Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members were required to contribute 9.10% and 5.50% respectively, of their annual covered salary in 2006. Contribution rates in the Coordinated Plan will increase in 2007 to 5.75 %. The City of Monticello is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members, and 6.00% for Coordinated Plan PERF members. Employer contribution rates for the Coordinated Plan will increase to 6.25 %, effective January 1, 2007. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2006, 2005, and 2004 were $161,068, $135,315, and $129,637, 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. (46) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 8 DEFINED BENEFIT PENSION PLANS — STATE -WIDE (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 and Net Pension Obligation The City's annual pension cost and net pension obligation to PERS for the year ended December 31, 2006 is as follows: Annual Required Contribution $ 3,000 Interest on Net Pension Obligation - Adjustment to Annual Required Contribution Annual Pension Cost 3,000 Less Contribution Made 3,000 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, 2006, 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 satute when granted. Net assets available for benefits exceeded the pension benefit obligation at December 31, 2005, 2004, and 2003. Three -Year Trend Information Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation (47} 2006 2005 2004 100% 100% 100% CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 9 STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY Deficit Fund Balances The City has deficit fund balances at December 31, 2006 as follows: Captial Projects Fund $(1,805,372) 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 in Excess of Budget Actual expenditures exceeded 2006 budgets in the following funds: Community Center Fund Special Revenue Funds Capital Outlay Revolving Fund Sanitary Sewer Access Fund NOTE 10 RISK MANAGEMENT Budget Expenditures Excess $ 1,374,980 $ 1,383,005 $ 8,025 545,200 1,319,546 774,346 46,500 1,761,770 1,715,270 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. 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. (48) CITY OF MONTICELLO, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006 NOTE 10 RISK MANAGEMENT (CONTINUED) 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. NOTE 11 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, 2006: Expenses Contract Amount Totals $ 12,392,473 $ 11,573,984 $ 818,489 * Including approved change orders (49) Recorded to Remaining for Contract Date for Work Uncompleted Contract Amount* Completed Work 2002 -06C Cedar St. Dundas $ 46,625 $ 33,373 $ 13,252 2004 -01C 1941CSAH 18 Interchange 7,340,193 7,145,257 194,936 2005 -02C School Blvd, Ext 243,758 215,068 28,690 2005 -05C Meadow Oak Ave. 502,954 475,912 27,042 2005 -11C Chelsea Rd. W. Ext. 276,192 272,586 3,606 2006 -01 C 2006 Core St. Project 1,767,202 1,589,391 177,811 2006 -02C Ornamental St. Lighting 846,856 751,555 95,301 2006 -15C Dalton Avenue Extension 1,003,560 735,073 268,487 2006 -18C Otter Creek Ind. Park Grd. 365,133 355,769 9,364 Totals $ 12,392,473 $ 11,573,984 $ 818,489 * Including approved change orders (49) THIS PAGE LEFT BLANK INTENTIONALLY. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD &A CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE GENERALFUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) REVENUE General Property Taxes Licenses and Permits Fines and Forfeitures Intergovernmental State Market Value Credit Mobile Home Market Value Credit Fire Department Aid State Police Aid State Highway Aid Recycling Incentive PERA Aid County /Regional Other Total Intergovernmental Charges for Services Animal Impound Fees Deputy Registrar Fees Inspection Fees Township Contract Other Total Charges for Services Investment Earnings Miscellaneous Development Cost Reimbursement Sale of City Property Rents Garbage Charge Other Total Miscellaneous Total Revenue 2006 Original Final 2006 Variance with 2005 Budget Budget Actual Final Budget Actual $ 4,712,505 $ 4,712,505 $ 4,520,275 $ (192,230) $ 4,315,338 819,025 819,025 758,718 (60,307) 956,300 - - 1,750 1,750 4,000 - - 17,090 17,090 16,962 - - 13,879 13,879 14,828 95,000 95,000 98,518 3,518 94,839 45,000 45,000 43,322 (1,678) 40,368 67,345 67,345 77,449 10,104 67,345 13,000 13,000 9,619 (3,381) 10,201 6,740 6,740 6,741 1 6,741 12,200 12,200 16,979 4,779 32,806 239,285 239,285 283,597 44,312 284,090 24,000 24,000 28,528 4,528 24,002 268,000 268,060 285,811 17,811 277,437 85,000 85,000 268,689 183,689 162,879 45,675 45,675 46,890 1,215 49,906 - - 11,530 11,530 196 422,675 422,675 641,448 218,773 514,420 203,415 203,415 301,431 98,016 310,832 515,000 515,000 51,150 (463,850) 1,763 500 500 _ 237 (263) 33,989 12,615 12,615 61,638 49,023 14,149 91,200 91,200 115,273 24,073 119,310 160,702 160,702 173,626 12,924 200,919 780,017 780,017 401,924 (378,093) 370,130 7,176,922 7,176,922 6,909,143 (267,779) 6,755,110 The Notes to the Required Supplementary information are an Integral Part of this Schedule. (50) CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERALFUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) The Notes to the Required Supplementary Information are an Integral Part of this Schedule. (51) 2006 Original Final Variance with Budget Budget Actual Final Budget Actual EXPENDITURES General Government Mayor and Council Current Personal Services $ 26,955 $ 26,955 $ 26,056 $ 899 $ 26,668 Other Services and Charges 14,500 14,500 12,143 2,357 23,082 Total Mayor and Council 41,455 41,455 38,199 3,256 49,750 Administration Current Personal Services 272,760 272,760 291,117 (18,357) 179,154 Supplies 300 300 264 36 12,215 Other Services and Charges 17,525 17,525 12,211 5,314 12,476 Total Administration 290,585 290,585 303,592 (13,007) 203,845 Elections Current Personal Services 9,730 9,730 6,388 3,342 2,133 Supplies 5,650 5,650 246 5,404 - Other Services and Charges 4,700 4,700 1,523 3,177 170 Total Elections 20,080 20,080 13,771 17,537 2,303 Finance Current Personal Services 225,665 225,665 260,016 (34,351) 189,063 Supplies 1,975 1,975 504 1,471 1,387 Other Services and Charges 18,835 18,835 9,194 9,641 19,183 Total Finance 246,475 246,475 269,714 (23,239) 209,633 Data Processing Current Other Services and Charges 100,040 100,040 90,138 9,902 78,852 Capital Outlay 6,000 6,000 0 6,000 5,523 Total Data Processing 106,040 106,040 90,138 15,902 84,375 Audit 38,900 38,900 42,480 (3,580) 36,851 Legal 66,665 66,665 130,523 (63,858) 83,193 Assessing - 55,625 55,625 55,156 469 50,441 Insurance 101,940 101,940 124,898 (22,958) 95,222 Planning and Zoning Current Personal Services 108,280 108,280 98,971 - 9,309 65,422 Other Services and Charges 5,650 5,650 22,619 (16,969) 8,727 Professional Services 183,800 183,800 191,390 (7,590) 230,386 Total Planning and Zoning 297,730 297,730 312,980 (15,250) 304,535 Deputy Registrar Current Personal Services 197,025 197,025 192,855 4,170 165,398 Other Services and Charges 17,125 17,125 12,427 4,698 15,654 Total Deputy Registrar 214,150 214,150 205,282 8,868 181,052 The Notes to the Required Supplementary Information are an Integral Part of this Schedule. (51) CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERAL FUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) The Notes to the Required Supplementary Intonnation are an Integral Part of this Schedule. (52) 2006 Original Final Variance with 2005 Budget Budget Actual Final Budget Actual EXPENDITURES (CONTINUED) General Government (Continued) City Hall Current Personal Services $ 9,930 $ 9,930 $ 8,616 $ 1,314 $ 6,815 Supplies 19,810 19,810 17,705 2,105 32,924 Utilities 16,200 16,200 21,510 (5,310) 19,476 Professional Services 6,400 6,400 12,023 (5,623) 18,125 Telephone 23,200 23,200 21,953 1,247 22,629 Other Services and Charges 48,170 48,170 60,273 (12,103) 54,258 Capital Outlay - - - - 32,705 Total City Hall 123,710 123,710 142,080 (18,370) 186,932 Severance Benefits 8,500 8,500 8,847 (347) 8,648 Total General Government 1,611,855 1,611,855 1,737,660 (114,577) 1,496,780 Public Safety National Guard 21,485 21,485 24,088 (2,603) 23,857 Police Current Contractual Services 879,000 879,000 880,310 (1,310) 838,632 Fire Department Current Personal Services 81,675 81,675 67,112 14,563 77,826 Supplies 33,800 33,800 23,962 9,838 33,594 Other Services and Charges - 135,355 135,355 133,582 1,773 128,958 Repairs and Maintenance 28,800 28,800 20,555 8,245 29,845 Capital Outlay - - 136 (136) - Total Fire Department 279,630 279,630 245,347 34,283 270,223 Building Inspections Personal Services 289,475 289,475 266,323 23,152 195,925 Other Services and Charges 36,050 36,050 67,708 (31,658) 56,671 Total Building Inspections 325,525 325,525 334,031 (8,506) 252,596 Animal Control 43,700 43,700 48,643 (4,943) 42,224 Civil Defense Current Personal Services 10,420 10,420 - 10,420 32 Other Services and Charges 6,350 6,350 1,035 5,315 644 Total Civil Defense 16,770 16,770 1,035 15,735 676 Total Public Safety 1,566,110 1,566,110 1,533,454 32,656 1,428,208 The Notes to the Required Supplementary Intonnation are an Integral Part of this Schedule. (52) CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERAL FUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) 2006 Original Final Variance with 2005 Budget Budget Actual Final Budget Actual EXPENDITURES (CONTINUED) $ 280,075 Public Works $ 153,964 Administration and Engineering 29,504 Current 23,498 Personal Services $ 252,955 Other Services and Charges 31,000 Professional Service 705,350 Capital Outlay - Total Administration and Engineering 989,305 Streets Current 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 $ 252,955 $ 280,075 $ (27,120) $ 153,964 31,000 29,504 1,496 23,498 705,350 546,711 158,639 - 902,407 989,305 856,290 133,015 1,079,869 364,780 364,780 350,703 70,750 70,750 80,441 17,600 17,800 17,868 197,500 197,500 56,776 650,830 650,830 505,788 49,395 49,395 33,108 26,250 26,250 36,231 2,500 2,500 892 14,077 256,531 (9,691) 77,953 (68) 18,141 140,724 7,916 145,042 360,541 16,287 47,843 (9,981) 23,764 1;608 779 78,145 78,145 70,231 7,914 72,386 151,740 151,740 140,402 11,338- 103,411 164,300 164,300 168,049 (3,749) 121,434 156,515 156,515 148,831 7;684 140,377 2,190,835 2,190,835 1,889,591 301,244 1,878,018 The Notes to the Required Supplementary Information are an Integral Pail of this Schedule. (53) CITY OF MONTICELLO, MINNESOTA BUGETARY COMPARISION SCHEDULE (CONTINUED) GENERALFUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) EXPENDITURES (CONTINUED) Culture and Recreation Parks and Recreation Current Personal Services Supplies Other Services and Charges Capital Outlay Total Parks and Recreation 2006 Original Final Variance with 2005 Budget Budget Actual Final Budget Actual $ 352,425 $ 352,425 $ 301,441 $ 50,984 $ 285,896 134,650 134,650 82,547 52,103 89,982 61,250 61,250 55,948 5,302 59,980 255,000 255,000 172,090 82,910 81,044 803,325 803,325 612,026 191,299 516,902- Senior Citizens /Museum Current Personal Services 1,500 1,500 1,334 166 1,503 Other Services and Charges 88,440 88,440 90,167 (1,727) 84,047 Total Senior Citizens /Museum 89,940 89,940 91,501 (1,561) 85,550 Information Center - - 143 (143) 28 YMCA/Community Education 18,200 18,200 18,200 - 18,200 Ice Arena 75,000 75,000 75,000 - 75,000 Historical Church /School - - - - 199,485 Total Culture and Recreation 986,465 986,465 796,870 189,595 895,165 Sanitation _ Current Refuse Collection 477,785 477,785 474,045 3,740 492,446 Economic Development 76,990 76,990 87,523 (10,533) 73,446 Total Expenditures 6,910,040 6,910,040 6,519,143 402,125 6,264,063 EXCESS OF REVENUES OVER EXPENDITURES 266,882 266,882 390,000 134,346 491,047 OTHER FINANCING SOURCES (USES) Transfer In - - 667 667 - Transfer Out - - (95,145) (95,145) (136,900) Total Other Financing Sources (Uses) - - (94,478) (94,478) (136,900) NET CHANGE IN FUND BALANCES $ 266,882 $ 266,882 295,522 $ 39,868 354,147 Fund Balance - Beginning of Year 5,124,391 4,770,244 FUND BALANCE - END OF YEAR $ 5,419,913 $ 5,124,391 The Notes to the Required Supplementary Information are an Integral Part of this Schedule. (54) CITY OF MONTICELLO, MINNESOTA BUDGETARY COMPARISION SCHEDULE COMMUNITY CENTER FUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) REVENUES Taxes Intergovernmental Membership Dues and Fees Interest Earnings Rent 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 REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES Fund Balance - Beginning of Year FUND BALANCE - END OF YEAR Original Budget Final Budget 2006 Actual Variance with Final Budget 2005 Actual $ 908,895 $ 908,895 $ 870,762 $ (38,133) $ 970,149 40,600 40,600 35,124 5,476 1,311 887,700 887,700 971,183 83,483 840,926 3,000 3,000 23,152 20,152 4,026 - - 11,072 11,072 376 3,500 3,500 1,478 (2,022) 1,628 1,803,095 1,803,095 1,877,647 74,552 1,818,418 758,570 758,570 777,636 (19,066) 727,918 162,170 162,170 170,104 (7,934) 148,002 40,600 40,600 35,124 5,476 44,347 22,000 22,000 20,136 1,864 17,534 20,000 20,000 64,692 (44,692) 20,266 42,790 42,790 23,729 19,061 26,607 174,000 174,000 192,529 (18,529) 187,627 11,000 11,000 9,880 1,120 10,877 7,100 7,100 8,152 (1,052) 16,071 19,700 19,700 22,378 (2,678) 18,188 117,050 117,050 58,645 58,405 27,920 1,374,980 1,374,980 1,383,005 (8,025) 1,245,357 428,115 428,115 494,642 66,527 573,061 250,000 250,000 250,000 .- 250,000 (669,950) (669,950) (669,950) - (685,000) (419,950) (419,950) (419,950) - (435,000) $ 8,165 $ 8,165 74,692 $ 66,527 138,061 240,739 $ 315,431 The Notes to the Required Supplementary Information are an Integral Part of this Schedule. (55) 102,678 $ 240,739 CITY OF MONTICELLO, MINNESOTA BUDGETARY COMPARISION SCHEDULE CAPITAL OUTLAY REVOLVING FUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) REVENUES Taxes Special Assessments Intergovernmental Revenues Interest Earnings Miscellaneous Total Revenue EXPENDITURES Public Works Supplies Professional Services Other Capital Outlay Total Expenditures EXCESS OF REVENUES OVER EXPENDITURE OTHER FINANCING SOURCES (USES) Proceeds from Contract for Deed Transfers in Transfers Out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES Fund Balance - Beginning of Year FUND BALANCE - END OF YEAR Original Final 2006 Variance with 2005 Budget Budget Actual Final Budget Actual $ - $ - $ 1,498 $ 1,498 $ 99,160 90,925 90,925 121,721 30,796 146,030 - 130,000 130,000 - 36,000 36,000 50,538 14,538 51,486 500,000 500,000 3,956,627 3,456,627 1,832,237 626,925 626,925 4,260,384 3,633,459 2,128,913 - - 92 (92) 30,807 50,000 50,000 1,197,861 (1,147,861) 166,661 - - 34,783 (34,783) 41,193 495,200 495,200 86,810 408,390 85,365 545,200 545,200 1,319,546 (774,346) 324,026 81,725 81,725 $ 81,725 $ 81,725 2,940,838 2,859,113 1,804,887 213,380 213,380 - (1,833,136) (1,833,136) (254,839) (1,619,756) (1,619,756) (254,839) 1,321,082 $ 1,239,357 1,550,048 6,566,286 5,016,238 $ 7,887,368 $ 6,566,286 The Notes to the Required Supplementary Information are an Integral Part of this Schedule. (56) CITY OF MONTICELLO, MINNESOTA BUDGETARY COMPARISION SCHEDULE SANITARY SEWER ACCESS FUND YEAR ENDED DECEMBER 31, 2006 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2005) EXPENDITURES Public Works Professional Services Capital Improvements Other Total Expenditures EXCESS OF REVENUES OVER (UNDER) OTHER FINANCING SOURCES (USES) - - 1,704,479 Original Final 2006 Variance with 2005 - - 55,953 Budget Budget Actual Final Budget Actual REVENUES - 766,916 Transfers Out (1,221,490) (1,221,490) (1,452,171) Special Assessments $ 240,641 $ 240,641 $ 324,337 $ 83,696 $ 665,152 Hook -up Fees 1,312,000 1,312,000 794,259 (517,741) 1,542,632 Interest 117,000 117,000 494,549 377,549 136,566 Total Revenue 1,669,641 1,669,641 1,613,145 (56,496) 2,344,350 EXPENDITURES Public Works Professional Services Capital Improvements Other Total Expenditures EXCESS OF REVENUES OVER (UNDER) OTHER FINANCING SOURCES (USES) - - 1,704,479 (1,704,479) 2,684,240 46,500 46,500 1,338 45,162 3,138 - - 55,953 (55,953) 75 46,500 46,500 1,761,770 (1,715,270) 2,687,453 1,623,141 1,623,141 (148,625) (1,771,766) (343,103) Bond Proceeds - - - - 4,700,535 Bond Premium - - - 159,949 Transfers In • - - - 766,916 Transfers Out (1,221,490) (1,221,490) (1,452,171) (230,681) (521,200) Total Other Financing Sources (Uses) (1,221,490) (1,221,490) (1,452,171) (230,681) 5,106,200 NET CHANGE IN FUND BALANCES $ 401,651 $ 401,651 (1,600,796) $ (2,002,447) 4,763,097 -Fund Balance - Beginning of Year 8,660,050 3,896,953 FUND BALANCE - END OF YEAR $ 7,059,254 $ 8,660,050 The Notes to the Required Supplementary Information are an Integral Part of this Schedule. (57) CITY OF MONTICELLO, MINNESOTA NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION DECEMBER 31, 2006 I. BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: a. 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. The City Council adopts the proposed budget as amended and adjusted by the Council and certifies the proposed proptery tax levy to the County Auditor according to Minnesota Statues. b. Public hearings are conducted at the Council's chambers in the Municipal Building. c. On or before December 28, the final budget is legally enacted by Council resolutions and the final property tax levy certified to the County Auditor. d. Management 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. e. The City has legally adopted budgets for the General Fund, certain Special Revenue Funds, and the Debt Service Fund. Expenditures may not legally exceed budgeted appropriations at the total fund level. Monitoring of budgets is maintained at the expenditure category level (i.e., personal services, supplies, charges for services, and capital outlay) within each program. All amounts over budget have been approved by the City Council through the disbursement process. The City is not legally required to adopt an annual budget for the Capital Projects. Project - length financial plans are adopted for the Capital Projects Funds. f. Budgets for the General, certain Special Revenue Funds, and Debt Service Fund are adopted on a basis consistent with generally accepted accounting principals (GAAP). Budgeted amounts are as originally adopted, or as amended by the City Council. All annual appropriations lapse at fiscal year -end. II. EXCESS OF EXPENDITURES OVER APPROPRIATIONS Expenditures exceeded budgeted amounts in the following funds: Budget Expenditures Excess Community Center Fund $ 1,374,980 $ 1,383,005 $ 8,025 Special Revenue Funds Capital Outlay Revolving Fund 545,200 1,319,546 774,346 Sanitary Sewer Access Fund 46,500 1,761,770 1,715,270 The above overages were considered by City management to be the result of necessary expenditures critical to operations and were approved by the Council. These overages were financed by greater than anticipated revenues or the use of fund balance as directed by the City Council. (58) THIS PAGE LEFT BLANK INTENTIONALLY. COMBINING FINANCIAL STATEMENTS CITY OF MONTICELLO, MINNESOTA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2006 (WITH COMPRATIVE AMOUNTS AS OF DECEMBER 31, 2005) ASSETS Cash and Investments Accounts Receivable (Net of Allowance for Estimated Uncoilectibles) Special Assessments Receivable Delinquent Deferred Prepaid Items Loans Receivable Total Assets LIABILITIES AND FUND BALANCES Orderly Shade Tree Transportation Annexation $ 31,269 $ 554 $ 3,411 54 $ 31,823 $ - $ 3,465 LIABILITIES Accounts Payable $ $ $ Escrow Deposits Accrued Expenses 95 Contracts Payable - Due to Other Funds - Due to Other Governments 10 Deferred Revenue - Total Liabilities 105 FUND BALANCE (DEFICIT) Reserved for Prepaid Items - Reserved for Debt Retirement Reserved for Loans Receivable Reserved for Land Held for Resale Unreserved Designated: Recreation Programs Capital improvements - Undesignated 31,718 3,465 Total Fund Balance (Deficit) 31,718 3,465 Total Liabilities and Fund Balances $ 31,823 $ $ 3,465 (59) Economic Central Development Water Minnesota Library Authority Access Initiative $ 10,763 $ 833,418 $ 654,711 $ 3,203 333 - 6,208 - - 17,212 - 332,982 177 _ - - - 719,988 - $ 11,273 $ 1,553,406 $ 1,011,113 $ 3,203 $ $ $ 142 $ 91 1,074 - 350,194 1,165 350,336 177 719,988 9,931 833,418 660,777 3,203 10,108 1,553,406 660,777 3,203 $ 11,273 $ 1,553,406 $ 1,011,113 $ 3,203 [m; CITY OF MONTICELLO, MINNESOTA COMBINGING BALANCE SHEET (CONTINUED) NONMAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2006 (WITH COMPRATIVE AMOUNTS AS OF DECEMBER 31, 2005) ASSETS Cash and Investments Accounts Receivable (Net of Allowance for Estimated Uncollectibles) Special Assessments Receivable Delinquent Deferred Prepaid Items Loans Receivable Total Assets LIABILITIES AND FUND BALANCES LIABILITIES 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 Undesignated Total Fund Balance (Deficit) Economic Storm Recovery Sewer Minnesota Grant Access Investment $ 17,485 $ 1,949,154 $ 521,254 11,476 66,410 979,639 452,957 $ 17,485 $ 3,006,679 $ 974,211 $ - $ 9,504 $ 435 1,046, 049 1,055,988 452,957 17,485 1,950,691 521,254 17,485 1,950,691 974,211 Total Liabilities and Fund Balances $ 17,485 $ 3,006,679 $ 974,211 (61) Park City 186 8,902 2,450 Pathway Streets Environmental Totals - Dedication Reconstruction Clean -up 2006 2005 $ 783,194 $ 659,813 $ 48 $ 5,467,723 $ 5,434,826 5,590 4,433 - 28,648 22,334 32,490 5,230 121,342 82,910 558,022 452,026 2,322,669 2,090,488 - - 177 142 - - - 1,172,945 1,297,342 $ 1,379,296 $ 1,121,502. $ 48 $ 9,113,504 $ 8,928,042 $ 1,767 $ 2,015 590,512 457,256 594,294 457,256 $ $ 11,413 $ 10,154 186 8,902 2,450 26,524 - 13,676 1,084 - 2,444,011 2,173,396 2,459,144 2,232,652 177 142 1,172,945 1,297,342 785,002 664,246 48 5,481,238 5,397,906 785,002 664,246 48 6,654,360 6,695,390 $ 1,379,296 $ 1,121,502 $ 48 $ 9,113,504 $ 8,928,042 (62) CITY OF MONTICELLO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2006 (WITH COMPRATIVE ACTUAL AMOUNTS AS OF THE YEAR ENDED DECEMBER 31, 2005) 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) Bond Proceeds Bond Premium Transfer In Transfer Out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES Fund Balance (Deficit) - Beginning of Year FUND BALANCE (DEFICIT) - END OF YEAR (63) Orderly Shade Tree Transportation Annexation $ 28,629 $ 14,762 $ 6,794 - 69 - 1,480 21 1,378 - 6,113 - 31,487 20,965 6,794 - 11,670 24,668 - 322 24,668 11,670 322 6,819 9,295 6,472 6,500 6,500 6,819 - 9,295 12,972 24,899 (9,295) (9,507) $ 31,718 $ - $ 3,465 Economic Central Development Water Minnesota Library Authority Access Initiative $ 35,061 $ - $ - $ - 106,327 120 161,204 368 77,015 66,816 230 35,549 77,015 334,347 230 38,338 - 259 1,345 38,338 1,345 259 - (2,789) 75,670 334,088 230 (407,609) - - (407,609) - (2,789) 75,670 (73,521) 230 12,897 1,477,736 734,298 2,973 $ 10,108 $ 1,553,406 $ 660,777 $ 3,203 (64) CITY OF MONTICELLO, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED) NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2006 (WITH COMPRATIVE ACTUAL AMOUNTS AS OF THE YEAR ENDED DECEMBER 31, 2005) 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) Bond Proceeds Bond Premium Operating Transfer In Operating Transfer Out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES Fund Balance (Deficit) - Beginning of Year FUND BALANCE (DEFICIT) - END OF YEAR (65) Economic Storm Recovery Sewer Minnesota Grant Access Investment - 310,277 - - 182,122 1,254 121,982 50,926 1,254 614,381 50,926 181,172 181,172 - 1,254 433,209 50,926 6,709 (759,559) (752,850) - 1,254 (319,641) 50,926 16,231 2,270,332 923,285 $ 17,485 $ 1,950,691 $ 974,211 Park City Pathway Streets Environmental Totals Dedication Reconstruction Clean -up 2006 2005 $ $ 478,163 $ - $ 563,409 $ 578,571 - 523,410 - 523,479 88,528 159,514 120,946 - 697,064 1,469,225 33,962 - - 378,909 1,116,600 54,955 56,815 48 431,787 154,360 - - - 6,113 - 248,431 1,179,334 48 2,600,761 3,407,284 - - - 11,670 80,371 - - 259 77,964 70,396 7,502 - 322,076 329,744 - - - 1,667 21,745 70,396 7,502 - 335,672 509,824 178,035 1,171,832 48 2,265,089 2,897,460 ' - - - 213,775 - 7;267 - - - 13,209 135,900 - (1,151,493) (667) (2,319,328) (1,306,300) - (1,151,493) (667) (2,306,119) (948,358) 178,035 20,339 (619) (41,030) 1,949,102 606,967 643,907 667 6,695,390 4,746,288 $ 785,002 $ 664,246 $ 48 $ 6,654,360 $ 6,695,390 (66) THIS PAGE LEFT BLANK INTENTIONALLY STATISTICAL SECTION (UNAUDITED) CITY OF MONTICELLO, MINNESOTA BOND INDEBTEDNESS GENERAL OBLIGATION BONDS DECEMBER 31, 2006 (UNAUDITED) Year Pay 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Original Amount Average rate of interest Payment dates General Obligation Improvement Bond Series 2003A Principal Interest $ 215,000 225,000 230,000 235,000 245,000 250,000 $ 73,045 67,095 60,325 52,999 44,892 36,042 260,000 26,605 270,000 16,465 280,000 5,600 $ 2,210,000 $ 383,068 2 h2Q Q00 3.7144% February 1 February 1 August 1 (67) CITY OF MONTICELLO, MINNESOTA BOND INDEBTEDNESS GENERAL OBLIGATION SPECIAL ASSESSMENT BONDS DECEMBER 31, 2006 (UNAUDITED) 2019 2020 2021 2022 2023 Totals Original Amount Average Rate of Interest Payment Dates $ 1,250,000 $ 102,438 $ 1,300,000 $ 325,122 $ • 725,000 $ 89,538 83.000.000 4.1569% February 1 February 1 February 1 August (68) $2.015.000 5.3826% February 1 February 1 August 1 4.9990% February 1 August 1 General Obligation General Obligation General Obligation Improvement Bond Improvement Bond Improvement Bond Series 1999B Series 2000A Series 20008 Year Payable Principal Interest Principal Interest Principal Interest 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 2017 - - - - - - 2018 - - - - - - - 2019 2020 2021 2022 2023 Totals Original Amount Average Rate of Interest Payment Dates $ 1,250,000 $ 102,438 $ 1,300,000 $ 325,122 $ • 725,000 $ 89,538 83.000.000 4.1569% February 1 February 1 February 1 August (68) $2.015.000 5.3826% February 1 February 1 August 1 4.9990% February 1 August 1 General Obligation General Obligation 440,000 460,000 28,900 9,775 Improvement Bond Improvement Bond $ 30,255,000 $ 7,801,571 Series 2002 Series 2005A Total Principal Interest Principal Interest Principal Interest $ 230,000 $ 61,630 $ 1,010,000 $ 1,085,150 $ 1,840,000 $ 1,288,631 235,000 54,825 1,430,000 1,027,200 2,270,000 1,197,082 245,000 47,079 2,295,000 938,731 3,155,000 1,073,403 255,000 38,385 2,350,000 828,412 3,230,000 926,119 265,000 28,760 2,405,000 715,481 2,975,000 781,309 275,000 18,362 2,450,000 603,238 2,820,000 648,174 285,000 7,300 2,520,000 491,413 2,905,000 519,948 40,000 800 2,575,000 383,212 2,720,000 399,583 - - 2,255,000 286,613 2,365,000 296,191 - - 2,310,000 195,313 2,425,000 198,562 - - 705,000 135,013 705,000 135,013 - - 730,000 105,400 730,000 105,400 390,000 81,600 390,000 81,600 405,000 64,706 405,000 64,706 420,000 47,175 420,000 47,175 440,000 - - 460,000 28,900 9,775 440,000 460,000 28,900 9,775 $ 1,830,000 $ 257,141 $ 25,150,000 $ 7,027,332 $ 30,255,000 $ 7,801,571 3.6682% 42500% February 1 February 1 February 1 February 1 August 1 August 1 (69) CITY OF MONTICELLO, MINNESOTA BONDINDEBTEDNESS GENERAL OBLIGATION TAX INCREMENT BONDS DECEMBER 31, 2006 (UNAUDITED) 2010 2011 2012 2013 Totals Original Amount Average Rate oflnterest Payment Dates - 110,000 General Obligation General Obligation 22,508 - 115,000 16,739 Tax Increment Refunding Tax Increment - 120,000 10,360 Year Bond of 1989A Bond of 2004A Total 125,000 Payable Principal Interest Principal Interest Principal Interest 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 2011 2012 2013 Totals Original Amount Average Rate oflnterest Payment Dates - 110,000 22,508 110,000 22,508 - 115,000 16,739 115,000 16,739 - 120,000 10,360 120,000 10,360 - - 125,000 3,500 125,000 3,500 $ 30,000 -V 1,328 $780,000 $151,092 $810,000 $152,420 9_ #X64 7.2532% 4.6600% February 1 February 1 February 1 February 1 August 1 August 1 (70) CITY OF MONTICELLO, MINNESOTA BONDINDEBTEDNESS GENERAL OBLIGATION NOTE — PROJECT 93 -14 WASTEWATER TREATMENT DECEMBER 31, 2006 (UNAUDITED) Year Payable Principal Interest Total 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 $ 10,188,973 $ 2,798,538 $ 12,987,511 (71) CITY OF MONTICELLO, MINNESOTA BONDINDESTEDNESS PUBLIC PROJECT REVENUE BONDS DECEMBER 39, 2006 (UNAUDITED) Year Payable Temporary Public Project Revenue Bonds Series 2000A Principal Interest 2007 $ 430,060 $ 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 950,000 151,905 2014 970,000 92,500 2015 995,000 31,094 Total $ 6,650,000 $ 2,144,236 Original Amount 7.555.000 Average Rate of Interest 6.268% Payment Dates February 1 February 1 August 1 (72) CITY OF MONTICELLO, MINNESOTA BONDINDEBTEDNESS CONTRACT FOR DEED DECEMBER 31, 2006 (UNAUDITED) Year Contract For Deed Payable Principal Interest 2007 $ 100,000 $ 45,858 2008 100,000 39,857 2009 564,293 33,858 Total $ 764,293 $ 119,573 Original Amount $2 185.222 Average Rate of Interest 6.000% Payment Dates December 31 December 31 (73) CITY OF MONTICELLO, MINNESOTA BOND INDEBTED NESS TAX LEVIES TO RETIRE BONDED INDEBTEDNESS DECEMBER 31, 2006 (UNAUDITED) * 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. (74) General General General General Obligation Obligation Obligation Obligation Improvement Improvement Improvement Improvement Year of Refunding Bonds Bond Series Bond Series Bond Series Levy Collection 1999 2000A 20008 2002 2006 2007 $ 182,200 $ 133,300 $ 24,200 $ 174,600 2007 2008 183,300 135,400 25,000 177,500 2008 2009 184,100 137,100 25,700 179,300 2009 2010 - 133,200 26,300 180,200 2010 2011 130,400 180,100 2011 2012 130,200 - 179,400 2012 2013 129,700 - (2,200) 2013 2014 - 128,800 - 2014 2015 - 127,600 - 2015 2016 - 2016 2017 - - 2017 2018 - - 2018 2019 - - 2019 2020 - - 2020 2021 - 2021 2022 - - - Total $ 549,600 $ 1,185,700 $ 101,200 $ 1,068,900 * 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. (74) General 2,290,400 Obligation 1,357,300 Improvement 2,160,800 Bond Series 2005A Total $ 1,159,800 $ 1,674,100 2,061,600 2,582,800 2,003,900 2,530,100 1,950,700 2,290,400 1,046,800 1,357,300 1,851,200 2,160,800 1,794,400 1,921, 900 1,367,600 1,496,400 1,329,600 1,457,200 854,200 854,200 851,000 851,000 479,900 479,900 478,300 478,300 476,100 476,100 478,300 478,300 479,600 479,600 $ 18,663,000 $ 21,568,400 (75) THIS PAGE LEFT BLANK INTENTIONALLY. OTHER REPORT SECTION Lars *nAlleri 1.1.1' CPAs, Consultants & Advisors w .larsonallen.com REPORT ON MINNESOTA LEGAL COMPLIANCE Honorable Mayor and Members of the City Council City of Monticello, Minnesota We have audited the basic financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information which collectively compose the City's basic financial statements, of the City of Monticello, Minnesota, as of and for the year ended December 31, 2006, and have issued our report thereon dated May 9, 2007. 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 seven main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, tax increment financing, and city and county 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 for a disbursement that did not appear to serve a public purpose and the retention of voided checks. 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. LarsonAilen LLP St. Cloud, Minnesota May 9, 2007 (76) l.,sonA len LLP is a mcnber of Nesia Inarnmional, a worldwide ncmark ofWcprndcnraccomving and eonsolting firms. THIS PAGE LEFT BLANK INTENTIONALLY.