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HomeMy WebLinkAboutCAFR-2008 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF BROOKLYN CENTER, MINNESOTA Cornelius L. Boganey City Manager Prepared By: FINANCE DIVISION DEPARTMENT OF FISCAL & SUPPORT SERVICES Daniel Jordet Director Clara Hilger Assistant Finance Director FOR THE YEAR ENDED DECEMBER 31, 2008 (Member of Government Finance Officers Association of the United States and Canada) Table of Contents INTRODUCTORY SECTION Letter of Transmittal 1 Principal Officials 6 Organizational Chart 7 Certificate of Achievement 8 FINANCIAL SECTION Independent Auditor’s Report 9 Management’s Discussion and Analysis 11 Basic Financial Statements: Statement of Net Assets 21 Statement of Activities 22 Governmental Funds Balance Sheet 26 Statement of Revenues, Expenditures, and Changes in Fund Balances 30 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Net Activities 33 Proprietary Funds Statement of Net Assets 34 Statement of Revenues, Expenses, and Changes in Fund Net Assets 36 Statement of Cash Flows 38 Notes to the Financial Statements 41 Required Supplementary Information: Budgetary Comparison Schedule-General Fund 75 Budgetary Comparison Schedule-Tax Increment District No. 3 80 Schedule of Funding Progress – Other Post Employment Benefits 81 Note to Required Supplementary Information 82 Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds Combining Balance Sheet 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 85 Combining Balance Sheet-Nonmajor Special Revenue Funds 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances-Nonmajor Special Revenue Funds 90 i FINANCIAL SECTION (Continued) Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual: Special Revenue Fund-Housing and Redevelopment Authority 92 Special Revenue Fund-Economic Development Authority 93 Special Revenue Fund-Earle Brown Tax Increment District 94 Special Revenue Fund-Tax Increment District No. 4 95 Special Revenue Fund-Police Drug Forfeiture 96 Special Revenue Fund-Community Development Block Grant 97 Special Revenue Fund-City Initiatives Grant 98 Combining Balance Sheet-Nonmajor Debt Service Funds 100 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances-Nonmajor Debt Service Funds 101 Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual: Debt Service Fund-G.O. Improvement Bonds 102 Debt Service Fund-General Obligation Bonds 103 Debt Service Fund-Tax Increment Bonds 104 Combining Balance Sheet-Nonmajor Capital Project Funds 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances-Nonmajor Capital Project Funds 107 Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual: Capital Project Fund-Infrastructure Construction 110 Capital Project Fund-Capital Improvements 111 Capital Project Fund-Municipal State Aid for Construction 112 Capital Project Fund-Earle Brown Heritage Center Improvements 113 Capital Project Fund-Street Reconstruction 114 Capital Project Fund-Technology 115 Nonmajor Enterprise Funds Combining Statement of Net Assets 118 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 119 Combining Statement of Cash Flows 120 Internal Service Funds Combining Statement of Net Assets 122 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 123 Combining Statement of Cash Flows 124 ii STATISTICAL SECTION (unaudited) Net Assets by Component 126 Changes in Net Assets 127 Governmental Activities Tax Revenue by Source 131 Fund Balances – Governmental Funds 132 Changes in Fund Balances – Governmental Funds 134 Assessed Tax Capacity and Estimated Actual Value of Taxable Property 136 Property Tax Rates – Direct and Overlapping Governments 138 Principal Property Taxpayers 140 Property Tax Levies and Collections 141 Ratios of Outstanding Debt by Type 142 Ratios of General Bonded Debt Outstanding 143 Computation of Direct and Overlapping Debt 144 Legal Debt Information 145 Pledged Revenue Coverage 146 Demographic and Economic Statistics 148 Principal Employers 149 Full Time City Government Positions by Function 150 Operating Indicators by Function 151 Capital Asset Statistics by Function 152 iii iv City of Brooklyn Center A Millennium Community June 1, 2009 Honorable Mayor and Members of the City Council City of Brooklyn Center Transmitted herewith is the Comprehensive Annual Financial Report of the City of Brooklyn Center for the fiscal year ended December 31, 2008. Management of the City of Brooklyn Center assumes full responsibility for the completeness and reliability of the information contained in this report based on the current system of internal control. Minnesota Statutes and City Charter Section 7.12 require that the financial statements of the City of Brooklyn Center be audited annually by the State Auditor or a certified public accountant selected by the City Council. These financial statements have been audited by Malloy, Montague, Karnowski, Radosevich, & Co., P.A. (MMKR). Their report is included in the financial section of this report. In addition, MMKR is required to issue an opinion on the City’s management and accounting for grant funds from the federal government. This “Single Audit” opinion, when included, is designed to meet the monitoring needs of federal grantor agencies. That report is not required for 2008 as the City received less than $ 500,000 in total federal grants. Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. Management’s Discussion and Analysis complements this letter of transmittal and should be read in conjunction with it. Profile of the City of Brooklyn Center The City of Brooklyn Center was incorporated in 1911 and is located in northern Hennepin County. The City has operated under the council-manager form of government since the adoption of the City Charter in 1966. The governing body is comprised of the Mayor and four Council Members elected at large. All members serve four-year terms with two of the Council Members standing for election during each national election year cycle. The Mayor and Council Members hire a City Manager who runs the daily operations of the City. The City of Brooklyn Center provides a full range of municipal services to its citizens. These include police and fire protection services, zoning and code enforcement, 6301 Shingle Creek Parkway Recreation and Community Center Phone & TDD Number Brooklyn Center, MN 55430-2199 (763) 569-3400 City Hall and TDD Number (763) 569-3300 FAX (763) 569-3434 FAX (763) 569-3494 www.cityofbrooklyncenter.org municipal planning, parks, recreation activities, construction and maintenance of streets, provision of water, wastewater collection and treatment, stormwater collection and treatment, and street lighting. Community and economic development are facilitated through the Housing and Redevelopment Authority and the Economic Development Authority. The Boards of those two organizations are comprised of the Mayor and members of the City Council. The City also has internal departments providing human resources, engineering, financial management and information technology support to these various functions. The City operates a conference and meeting facility at the Earle Brown Heritage Center, two municipal liquor stores, and Centerbrook, a nine-hole executive golf course. Financial planning and control for the City of Brooklyn Center is based on the Annual Operating Budget and the multi-year Capital Improvement Program. Under Minnesota Statutes, a preliminary property tax levy must be adopted no later than September 15 of each year for the ensuing year’s collection. This establishes a maximum levy that may subsequently be lowered but not raised. A ceiling is established from time to time on that levy by the Minnesota Legislature. The ceiling is normally exclusive of levies for debt service and referendum approved levies. Effective establishment of this levy requires that a preliminary budget be prepared. The City Manager prepares such a budget each summer and presents it to the City Council in August, prior to the consideration of the preliminary tax levy. In addition, the City Council reviews the recommended rates and charges for utility funds and other operations on an annual basis as part of the budget process. Citizens receive a notice of taxes proposed for their individual properties in November based on the preliminary levies established by all taxing districts. Following the receipt of this notice citizens are invited to public hearings known as Truth in Taxation hearings in each jurisdiction. The City’s hearing includes information about the budget, the property tax levy and the priorities of the City Council for the coming year as made evident by the budget allocations. Public comment is heard and considered at this hearing. The final property tax levy is adopted at a subsequent meeting. This forms the basis for the budget preparation and presentation framework. In addition, a Capital Improvement Program is reviewed and revised during the budget process each year. This includes projects for which the City may issue debt and/or assess portions of the cost to adjacent or benefited property owners. Because there are limited funds available each year and the City does not wish to issue excessive amounts of debt, these projects must be reviewed and reprioritized as the Capital Improvement Program is developed each year. Economic Condition and Outlook The City of Brooklyn Center is a northern suburb of the Twin Cities metropolitan area, adjacent to the City of Minneapolis and located 10 miles from its downtown area. The 2 City is wholly within Hennepin County and covers an area of about 8.5 square miles. The Mississippi River forms the City’s eastern boundary. The City experienced its most rapid growth from 1950 to 1970 when the City’s population grew from 4,300 to its peak of 35,173. The 2000 Census data for the City was 29,172, a slight increase from the 1990 Census data of 28,887. The number of housing units has remained stable at 11,430 units; there were 11,704 housing units in 1990. As in most mature, first-ring suburbs there is a slight trend toward conversion of single family homes to rental properties. The total estimated market value of real and personal property within the City increased 2.66% in 2008 over 2007, 5.13% in 2007 over 2006, and 6.39% in 2006 over 2005. Industrial values posted the largest gains going up nearly 7.6%. Multi-family and personal property values increased slightly from 2007 to 2008. However, the trend for increased value in the housing market reversed dramatically in 2008 and will be reflected in lower property values for residential homes for the foreseeable future. Residential foreclosures and vacant properties were another facet of the economic outlook for the City in 2008. 477 or 5.78% of non-apartment residential properties in Brooklyn Center went to Sheriff’s Sale during 2008 with 179 of those properties still in the redemption period as of December 31, 2008. Vacant residential properties as of December 31, 2008 numbered 293, 3.55% of the City’s non-apartment residential housing. Commercial/industrial properties account for 33.4% of the City’s taxable net tax capacity in 2008, an increase of 3.2% over 2007. Major transportation routes in and through the City, including Interstates 94 and 694, and State Highways 100 and 252, have provided a continued impetus for development of a strong commercial tax base in the City along these corridors. Factors Affecting Financial Condition Major Events of 2008 and Local Economy Brooklyn Center is a mature, developed first ring suburb of Minneapolis that is working to revitalize itself. With its affordable housing, excellent schools, beautiful parks, and convenient transportation access it has the potential to continue to be a vibrant community for many years to come. There are no large, undeveloped tracts of land in Brooklyn Center and no potential for annexation of additional undeveloped land. Therefore, the revitalization of Brooklyn Center is proceeding on three tracks: replacement and renewal of the commercial areas of the City; reconstruction and enhancement of its streets, utilities, and parks; and the revitalization of neighborhoods. 3 Redevelopment continued to be the key to commercial and industrial tax base growth. The City has acquired three adjacent business properties at the intersection of Highway 100 and Interstate 94. The buildings on the sites were demolished and Phase I environmental assessments prepared. This created a 14 acre redevelopment site. Preparations for development of 140,000 square feet of Class A office space and an adjacent parking structure on 8 acres of the site are ongoing and construction is expected to begin in the fall of 2009. th A 14 acre redevelopment site at the intersection of Logan and 57 Avenues has encountered delays because of environmental clean-up of contaminants from a dry cleaning establishment. The extent of the contamination has been established and remediation is underway. Study of this issue is expected to be completed early in 2009 with remediation work continuing into 2010. The City’s “Opportunity Site” continues to be a focus for redevelopment efforts. The City’s acquisition of a former automobile dealership site and an adjacent bar/restaurant site present an opportunity to combine parcels with adjacent properties to create redevelopment opportunities along County Road 10 and Highway 100. The hospitality industry contributes a significant amount to Brooklyn Center’s economy. Lodging tax provided over $ 320,000 for 2008 fiscal year operations. Construction continued in 2008 on a new 260 bed hotel facility adjacent to the City’s Earle Brown Heritage Center conference facility. The new hotel will be completed in 2009. Infrastructure and Transportation As part of a planned replacement of the aging infrastructure, the City continued the program for street and utility improvements by reconstructing the Maranatha neighborhood streets and the Northway Drive neighborhood in 2008. When streets are reconstructed in this program, aging water, sanitary and storm sewer infrastructure is also repaired or replaced. These improvements are funded by general obligation improvement bonds supported with special assessments against benefited properties, and funds from the capital projects funds and utility enterprise funds. About one twenty-fifth of the City’s streets and utilities are reconstructed each year. It is expected that this will be an ongoing process. The current Capital Improvements Plan reflects the reconstruction of all city streets and utilities by 2021. An additional benefit of these neighborhood projects has been the increased activity by residents in the maintaining and cleaning up of their properties following reconstruction projects. Development of utility rate models has improved the City’s ability to generate cash flow and schedule improvements to the water and sewer systems. Separate funds for street lighting and stormwater drainage have also helped control and prioritize infrastructure improvements and operations in these areas. 4 Cash Management The City of Brooklyn Center receives interest on all funds deposited by the City in its bank and investment accounts. During 2008, funds were invested in various certificates of deposit, treasury securities and mortgage back securities considered acceptable risks under the investment limitations of Minnesota Statutes 118A. At the close of the fiscal year this portfolio earned interest at rates ranging from 2.95% to 4.30% annually. In addition, the City invests in the 4M funds sponsored by the League of Minnesota Cities. 2008 saw a decrease in the rate of interest paid by the 4M funds, from 4.70% at the beginning of the year to 0.75% at the end of the year. While the return on the investment is significantly lower for 4M and 4MPlus the advantage of using these funds is liquidity. Treasury management seeks a balance between the availability of cash and investment for maximum return without undue risk of public funds. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Brooklyn Center for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2007. The City was first awarded this certificate in 1966 and has received a total of 26 certificates, including the certificate awarded for the 2007 report. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. They must satisfy both accounting principles generally accepted in the United States and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. It is expected that the 2008 report conforms to Certificate of Achievement Program requirements. It will be submitted to the GFOA to determine its eligibility for another certificate. Acknowledgements The preparation and publication of this report would not have been possible without the efficient work of the Finance staff, especially Clara Hilger, Assistant Finance Director. We would like to acknowledge all staff that contributed their efforts to the Finance operations in 2008. We would also like to thank the Mayor and City Council for their support in promoting and maintaining the highest standards of professionalism and management of the City of Brooklyn Center. Respectfully Submitted, Cornelius L. Boganey Daniel Jordet City Manager Director of Fiscal & Support Services 5 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL OFFICIALS December 31, 2008 NamePositionTerm of OfficeTerm Expires ELECTED OFFICIALS Tim WillsonMayorFour YearsDecember 31, 2010 Kay LasmanCouncil MemberFour YearsDecember 31, 2008 Mary O'ConnorCouncil MemberFour YearsDecember 31, 2008 Dan RyanCouncil MemberFour YearsDecember 31, 2010 Mark YelichCouncil MemberFour YearsDecember 31, 2010 APPOINTED OFFICIALS Cornelius L. BoganeyCity ManagerAppointed Charles LeFevreCity AttorneyContractual Appointee Sharon KnutsonCity ClerkAppointed Scott BechtholdPolice ChiefAppointed Steve LillehaugDirector of Public Works/City EngineerAppointed Lee GatlinFire ChiefAppointed James GlasoeCommunity Activities, Recreation and Services DirectorAppointed Gary EitelCommunity Development DirectorAppointed Daniel JordetDirector of Fiscal and Support ServicesAppointed 6 7 8 INDEPENDENT AUDITOR’S REPORT To the City Council and Residents City of Brooklyn Center, 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 Brooklyn Center (the City) as of and for the year ended December 31, 2008, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 at December 31, 2008, and the respective changes in financial position and cash flows, where applicable thereof, for the year then ended, in conformity with accounting principles generally accepted in the United States of America. As described in Note 5 of the notes to basic financial statements, the City has implemented Governmental Accounting Standards Board Statement No. 45, “Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions,” during the year ended December 31, 2008. In accordance with Government Auditing Standards, we have also issued a report dated May 26, 2009 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. This report is an integral part of an audit performed in accordance withGovernment Auditing Standards and should be considered in assessing the results of our audit. (continued) 9 10 MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Brooklyn Center (the City), we offer readers of the City of Brooklyn Center’s Comprehensive Annual Financial Report (CAFR) this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2008. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1 through 5 of this CAFR. Financial Highlights The assets of the City exceeded liabilities by a 4.5 to 1 margin at the close of the most recent fiscal year. Current assets exceed current liabilities by a 9 to 1 margin. The $ 117,004,392 of net assets includes cash and investments, streets, buildings, equipment, land and other City assets. Of this amount, $ 12,160,027 is classified as unrestricted net assets which 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. The City’s total net assets increased by $ 2,441,307 or 2.1% from 2007 to 2008. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $ 32,547,730. Of this total amount, $ 33,119,083, or 102% is designated or reserved through legal restrictions and City Council authorization. At the end of the current fiscal year the general fund balance of $ 7,743,438 included $ 890 reserved for prepaid items, $ 21,105 reserved for inventories, and $ 7,721,443 designated for cash flow purposes. The City’s total outstanding debt increased by $ 4,115,000 during the current fiscal year, from $ 25,410,000 to $ 29,525,000. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This CAFR also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements . The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a consolidated financial statement. The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, community services, recreation and economic development. The business-type activities of the City include water and sewer, street lighting, liquor operations, golf course, convention center, storm drainage and recycling. 11 Management’s Discussion and Analysis The government-wide financial statements can be found on pages 21 through 23 of this CAFR. Fund Financial statements . A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental funds . Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resource, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statement. By doing so, readers may better understand the long-term impact of the City's near-term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains nineteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General fund, Tax Increment District No. 3 special revenue fund, the G.O. Improvement Bonds debt service fund, and the Infrastructure Construction capital project fund, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this CAFR. The basic governmental fund financial statements can be found on pages 26 through 33 of this CAFR. Proprietary funds . The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the governmental-wide financial statements. The City uses enterprise funds to account for its municipal liquor, golf course, Earle Brown Heritage Center, water, sanitary sewer, storm drainage, recycling/refuse, and street lighting operations. Internal service funds are an accounting device to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds for its central garage, employee retirement, and compensated absences. Because all of these services predominantly benefit governmental rather than business-type functions, they have been included within the governmental activities in the government-wide financial statements. Proprietary funds provide similar information to the government-wide financial statements but in more detail. The proprietary fund financial statements provide separate information for the municipal liquor, golf course, Earle Brown Heritage Center, water utility, sanitary sewer utility, and storm drainage utility operations, each of which are considered to be major funds of the City. Conversely, all internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 34 through 39 of this CAFR. Notes to the financial statements . The notes provide additional information that is essential to a full understanding of the data provided in the government–wide and fund financial statements. The notes to the financial statements can be found on pages 41 through 73 of this CAFR. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information on budgetary compliance for its major funds. The City 12 Management’s Discussion and Analysis adopts an annual appropriated budget for its general, special revenue, debt service, and capital project funds. A budgetary comparison statement has been provided for the general and major special revenue fund to demonstrate compliance with this budget. These can be found on pages 75 through 80 of this CAFR. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information on budgetary comparisons. Combining and individual fund statements and schedules can be found on pages 84 through 124 of this CAFR. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indictor of a government's financial position. In the case of the City, assets exceeded liabilities by $ 117,004,392 at the close of the most recent fiscal year. The largest portion of the City's net assets ($ 72,993,581 or 62 percent) reflects its investment in capital assets (e.g. land, infrastructure, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY'S NET ASSETS All 2007 comparative balances are net of the adjustments described in Note 3.D. and Note 3.E. on page 52 of this CAFR. As of the close of the current year, there is $ 1,002,684 in G.O. Improvement bond debt included in the Long- term liabilities outstanding reported in the Governmental Activities that was issued to finance capital assets reported in the Business-type Activities. This amount is not used to reduce Invested in capital assets net of related debt in the Governmental Activities. Neither does it reduce Invested in capital Assets of the Business- type Activities. However, it does reduce the Invested in capital assets, net of related debt in the total column. A portion of the of the City’s net assets represents resources that are subject to external restrictions on how they may be used. These restrictions include debt payment from assessments and taxes collected, and tax increments collected for qualified projects. The remaining balance of unrestricted net assets ($ 12,160,027) may be used to meet the City's ongoing obligations. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same was true for the prior fiscal year. 13 Management’s Discussion and Analysis Current assets increased in the governmental activities primarily due to the issuance of bonds, the proceeds of which are to be used for redevelopment within the City. Total liabilities increased with the issuance of two new bond issues in 2008. The increase in restricted net assets can be attributed to the acquisition of redevelopment property. Current assets in the business-type activities increased due to higher per unit fees charged in 2008 on utility services and a conscious effort to minimize direct costs to provide services in those activities. Governmental Activities Governmental activities resulted in a decrease of the City's net assets by ($ 285,828), while the increase in total net assets was $ 2,441,307. Key elements of the changes are as follows: CITY’S CHANGES IN NET ASSETS 14 Management’s Discussion and Analysis In the Governmental Activities, Operating grants and contributions increased due to the award of a federal grant for police officers. Total taxes increased by $ 400,000 because of higher taxes levied. Grants and contributions not restricted decreased due to the State’s unallotment of the second half of the City’s general aid awarded for 2008. General government expenses increased due to increased legal fees for the CenterPointe lawsuit, increased utility costs, and building repairs. Public safety expenses increased due to increased costs for utilities and motor fuels. Public works expenses decreased due to lower equipment repairs and replacement costs. Parks and recreation expenses increased due to increased utility costs for the Community Center and Pool as well as building repairs. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Governmental Activities -2008Revenues Other revenues Unrestricted investment 2.8% earnings Other taxes 3.8% 14.7% Charges for services 11.6% Operating grants and contribtutions 4.2% Capital grants and Property taxes and tax contributions increments 11.2% 51.7% Governmental Activities -2008Expenses Economic development Interest on long-term 16.4% debt 5.0% General government Parks and recreation 15.4% 12.8% Community services 0.3% Public works 11.5% Public safety 38.6% 15 Management’s Discussion and Analysis Business-type activities Business-type activities increased net assets by $ 2,727,135. Below are graphs showing the business-type activities revenue and expense comparisons: Business-type Activities -2008Revenues Unrestricted investment earnings 2.2% Net charges for services 97.8% Business-type Activities -2008Expenses Storm drainage utility Non-major enterprise 11.3% 4.4% Municipal liquor 11.0% Sanitary sewer utility 29.4% Golf course 3.1% Earle Brown Heritage Center Water utility 23.4% 17.4% Expenses increased in 2008 in Municipal Liquor due to an increase in full time staff. Street light utility expenses decreased due to replacement of some standard streetlight fixtures with decorative light fixtures. 16 Management’s Discussion and Analysis Financial Analysis of the Government's Funds Governmental Funds . The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as useful measure of a government’s net resources available at the end of the fiscal year. At the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $ 32,547,730. Approximately 31% of this amount, $ 10,019,663, is reserved (restricted in its use) because it has already been committed to specific uses by outside influences or action of the City Council; 1) $ 5,187,263 to provide for debt service, 2) $ 792,488 for advances to other funds, 3) $ 489,928 for committed contracts, 4) $ 8,644 for prepaid items, 5) $ 21,105 for inventories, and 6) $ 3,520,235 for statutory housing obligation. The unreserved fund balance of $ 23,099,420 includes designations of 1) $ 7,721,443 for general fund working capital, 2) $ 10,391,989 for economic development, and 3) $ 4,985,988 for capital improvements. The remaining deficit balance of $ 571,353 is undesignated and unreserved. The general fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance reached $ 7,743,438, all of which was either reserved or designated. As a measure of the general fund’s liquidity, it may be useful to compare total fund balance to total fund expenditures. Total fund balance represents 51% of total general fund expenditures for 2008. The fund balance of the City’s general fund decreased by $ 198,976 in 2008. This decrease was due to a $ 540,000 unallotment of intergovernmental aid provided by the State of Minnesota late in the fiscal year. The Tax Increment District No. 3 fund had a total fund balance of $ 10,882,132 at the end of 2008. The net decrease in the fund balance was $ 1,760,556. The majority of this decrease was the net result of the issuance of $ 4,335,000 in bonds and the purchase of property for redevelopment of $ 6,475,000. The G.O. Improvement Bonds fund had a fund balance of $ 2,793,086 at the end of 2008, all of which was reserved for debt service. The net decrease in fund balance for 2008 was $ 233,299, which was due to the use of collections in previous years to pay bond principal and interest as programmed. The fund balance of the Infrastructure Construction fund at the end of 2008 had a deficit of $ 276,982. This represents a reduction from the 2007 deficit of $ 1,013,446. This reduction is the result of the City issuing improvement debt for the special assessment portion of both the 2007 and 2008 projects. Proprietary funds . The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The unrestricted net assets in the respective major proprietary funds are the municipal liquor fund - $ 1,890,998, golf course - $ (786,181), Earle Brown Heritage Center - $ 964,893, water utility - $ 2,987,184, sanitary sewer utility - $ 3,167,259 and storm drainage utility - $ 2,295,241. The increases (decreases) in net assets for the major enterprise funds were: municipal liquor $ 270,720, golf course $ (46,446), Earle Brown Heritage Center $ (313,440), water utility $ 280,452, sanitary sewer utility $ 328,974, and storm drainage utility $ 1,904,082. General Fund Budgetary Highlights During the year, there were no amendments to the General Fund budget appropriations. Budget exceeded actual revenues and other financing sources by $ 491,692. The major contributor to this was the unallotment of aids by the State in December 2008. Actual expenditures and other financing uses were lower than budgeted for the year by $ 292,716. This resulted from the reduction of the amounts paid to the internal service fund for compensated absences balances at the end of the year, eliminating the budgeted transfer of money to the Technology Fund, reduction of the transfers to the Central Garage Fund for vehicle replacement that was budgeted, and a conscientious effort to reduce expenditures due to the cuts in state aid. 17 Management’s Discussion and Analysis It is anticipated that the unallotment of state aid that occurred in 2008 will increase in amount over the next two fiscal years. This will adversely affect the operations of the General Fund requiring reprioritization of General Fund programs and procedures. The City Council is, subsequent to the 2008 year end reports, preparing for further reductions in state aid for the 2009 and 2010 fiscal years. Capital Asset and Debt Administration Capital assets . The City’s investment in capital assets for governmental and business type activities as of December 31, 2008 totals $ 81,958,581 (net of accumulated depreciation). This investment in capital assets includes land, buildings, infrastructure, machinery and equipment. The total increase in the City’s investment in capital assets from 2007 to 2008 was 4.4 percent (3.6 percent increase for governmental activities and a 5.2 percent increase for business-type activities). Major capital asset events during the year included the following: Two major infrastructure reconstruction projects were completed during the year, with a final cost of $ 5,062,157. Two infrastructure reconstruction projects were begun and substantially completed during the 2008. These projects account for $ 5,839,511 in construction-in-progress at the end of the year. CITY'S CAPITAL ASSETS (net of depreciation) Additional information on the City’s capital assets can be found in Note 4.C. on pages 55 through 57 of this CAFR. Long-term debt . At the end of the current fiscal year, the City had long-term bonded debt outstanding of $ 29,525,000, all of which is backed by the full faith and credit of the government. Of the total outstanding debt, $ 3,275,000 is general obligation bonds payable from directly levied property tax, $ 20,560,000 is tax increment bonds payable with the collected proceeds of tax increment projects and $ 5,690,000 is improvement bonds payable from special assessment levies against individual properties adjacent to the improvements. Additional long-term liabilities include $ 1,075,953 for compensated absences, the accumulated vacation and vested sick leave not used by employees at the end of 2008, and $ 147,045 for net OPEB obligation related to health insurance costs paid by and for retirees. 18 Management’s Discussion and Analysis CITY’S OUTSTANDING DEBT General Obligation Bonds, General Obligation Tax Increment Bonds, General Obligation Improvement Bonds, and Compensated Absences The City’s total bonded debt increased by $ 4,115,000 during the current fiscal year due to the net result of the issuance of two bonds, $ 4,335,000 of general obligation tax increment bonds and $ 2,390,000 of general obligation improvement bonds and the scheduled payment of bond obligations. The City maintains an A1 rating from Moody's on all issues. State statutes limit the amount of general obligation debt a Minnesota city may issue to 3% of total Estimated Market Value. The current debt limitation for the City is $ 65,676,378. Only $ 2,076,766 of the City's net outstanding debt is counted within the statutory limitation representing about 3.2 percent of the total limit. Additional information on the City’s long-term debt can be found in Note 4.F. on pages 60 through 62 of this CAFR. Economic Factors and Next Year’s Budget and Rates The unemployment rate for the City is 5.6 percent at the end of the 2008 fiscal year, which is an increase from the rate of 4.6 percent a year ago. This compares to the State’s average unemployment rate of 4.9 percent and the national average of 4.8 percent. Redevelopment of the Central Business District and other commercial properties continues and will yield net growth in tax base and stability in tax base through mixed use development goals. Utility rates have been subjected to rigorous study and projected into a 15 year model to allow for system maintenance, technology changes and capital repair and replacements while moderating annual rate adjustments. All of these factors were considered in the preparation of the City’s budget for the 2009 fiscal year. During the year, unreserved fund balance in the general fund decreased by $ 198,976. Policy requirements for working capital in the General Fund will be reexamined in light of the expected significant cutbacks of state aid to the Fund in future years. Water, sanitary sewer, storm, and street light utility rates were increased for the 2008 budget year. Residential water rates were increased by 5.0 percent, sanitary sewer by 2.5 percent, storm drainage by 7.2 percent and street lights by 4.9 percent. These increases were necessary to ensure that the municipal utilities be self- supporting through revenue, as required by the City charter. These rates along with future projected rate increases are reviewed annually to ensure compliance with the requirements of the charter. 19 Management’s Discussion and Analysis Requests for information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Fiscal and Support Services, City of Brooklyn Center, 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430. 20 CITY OF BROOKLYN CENTER, MINNESOTA Statement 1 STATEMENT OF NET ASSETS December 31, 2008 GovernmentaBusiness-Type l ASSETS ActivitiesActivitiesTotal Cash and investment$38,384,706$ 8,742,598$47,127,304 s Receivables: Accounts262,208 2,059,8152,322,023 Taxes653,986 -653,986 Special assessments4,176,429 562,2324,738,661 Internal balances876,128 (876,128)- Due from other government869,254 -869,254 s Prepaid expenses8,644 192,120200,764 Inventories46,449 634,644681,093 Assets held for resale11,805,629 11,805,629- Restricted assets: Cash and investment108,000 -108,000 s Capital assets: ondepreciable8,236,134 6,367,00714,603,141 N Depreciable31,150,087 36,205,35367,355,440 Total assets96,577,654 53,887,641150,465,295 LIABILITIES Accounts payable408,208 223,609631,817 Accrued salaries and wages447,908 66,529514,437 ueo oer governmens, ,, Duetoothergovernments64896705073539 Dttht64896705073539 Contracts payable359,167 147,338 506,505 Deposits payable875 232,354233,229 Accrued interest payable515,994 -515,994 Unearned revenue17,902 111,482129,384 Liabilities payable from restricted assets: Deposits payable108,000 -108,000 Compensated absences payable: Due within one yea107,595 -107,595 r Due in more than one yea968,358 -968,358 r et OPEB obligation: N Due in more than one yea147,045 -147,045 r Bonds payable: Due within one yea -4,140,000 4,140,000 r Due in more than one yea25,385,000 25,385,000- r Total liabilities32,612,541 848,36233,460,903 NET ASSETS Invested in capital assets, net of related debt31,423,905 42,572,36072,993,581 Restricted for: Debt service8,772,819 8,772,819- Tax increment purposes23,077,965 23,077,965- Unrestricted690,424 10,466,91912,160,027 Total net assets$63,965,113$ 53,039,279$117,004,392 The accompanying notes are an integral part of these financial statements.The accompanying notes are an integral part of these financial statements. 21 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF ACTIVITIES For the Year Ended December 31, 2008 Charges Fo r FUNCTIONS/PROGRAMS ExpensesServices Primary government: Government activities: General governmen$3,498,767$1,115,038 t Public safet8,760,880780,080 y Public works2,596,754 127,489 Community service 72,893- s Parks and recreation2,910,825754,079 Economic developmen3,713,34024,435 t Interest on long-term deb1,125,712- t Total government activities22,679,1712,801,121 Business-type activities: Municipal liquor1,125,5171,492,644 Golf course304,832253,824 Earle Brown Heritage Center2,403,6761,959,628 Recycling and refus 259,774265,983 e Street light utilit 250,260182,402 y Water utilit1,783,2752,003,633 y Sanitary sewer utilit3,018,4183,264,649 y Storm drainage utilit1,162,9571,553,236 y Total business-type activities10,247,06011,037,648 Total primary governmen$32,926,231$13,838,769 t The accompanying notes are an integral part of these financial statements. 22 Statement 2 Program Revenueset (Expense) Revenue and Changes in Net Assets N OperatingCapitalPrimary Governmen t Grants anGrants anGovernmentaBusiness-Type ddl ContributionsContributionsActivitiesActivitiesTotal $ 100$ -$(2,383,629)$ -$(2,383,629) 776,508 -(7,204,292) -(7,204,292) 90,000 2,706,056326,791 -326,791 - -(72,893) -(72,893) - -(2,156,746) -(2,156,746) 137,276 -(3,551,629) -(3,551,629) - -(1,125,712) -(1,125,712) 1,003,884 2,706,056(16,168,110) -(16,168,110) - --367,127367,127 - --(51,008)(51,008) - --(444,048)(444,048) - -- (6,209)(6,209) - -- 67,85867,858 - --220,358220,358 - --246,231246,231 - --390,279390,279 - --790,588790,588 $ 1,003,884$ 2,706,056(16,168,110)790,588(15,377,522) General revenues: Property taxes12,458,724 -12,458,724 Tax increments2,912,773 -2,912,773 Lodging taxes619,962 -619,962 Grants and contributions not restricted to specific programs607,073 -607,073 Unrestricted investment earning 243,322903,939 1,147,261 s Gain on disposal of capital asset73,036 -73,036 Transfers(1,693,225)1,693,225- Total general revenues and transfers15,882,2821,936,54717,818,829 Change in net assets(285,828)2,727,1352,441,307 et assets - beginning, as previously state 50,312,14460,580,262 110,892,406 Nd Prior period adjustment1,153,297 -1,153,297 Change in accounting principle2,517,382 -2,517,382 et assets - beginning, restate 50,312,14464,250,941 114,563,085 Nd et assets - ending$63,965,113$53,039,279$117,004,392 N 23 24 FUND FINANCIAL STATEMENTS 25 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2008 Tax Incremen t GeneralDistrict No. 3 ASSETS Cash and investment$8,178,381$10,746,426 s Receivables: Accounts81,800- Current taxes108,1662,728 Delinquent taxes401,52527,320 Special assessments-- Due from other government40,992144,810 s Interfund receivable-- Prepaid items890- Inventories21,105- Advances to other funds-- Asset held for resale-11,018,629 Restricted assets: Cash and investments-performance deposit108,000- s Total assets8,940,859 21,939,913 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable254,99311,832 Accrued salaries and wages425,539- Due to other funds-- Due to other governments6,489- Contracts payable-- Deposits payable875- Interfund payable-- Deferred revenue401,52511,045,949 Liabilities payable from restricted assets: Deposits payable108,000- Total liabilities1,197,42111,057,781 Fund balances: Reserved: Advances to other funds-- Committed contracts-- Debt service-- Inventories21,105- Prepaid items890- 3,520,235- Statutory housing obligatio n Unreserved: Designated, reported in: General Fun -7,721,443 d Special Revenue Funds- 7,361,897 Capital Project Funds- - Undesignated, reported in: Special Revenue Funds-- Capital Project Funds-- Total fund balances7,743,43810,882,132 Total liabilities and fund balances$8,940,859$21,939,913 The accompanying notes are an integral part of these financial statements. 26 Statement 3 Page 1 of 2 Othe r G.O. ImprovemenInfrastructureonmajoTotal tNr BondsConstructioGovernmentaGovernmenta nll $ 2,807,597$82,119$9,967,528$31,782,051 -6,418159,196247,414 116-33,334144,344 16,036-64,761509,642 4,050,704125,725-4,176,429 --683,452869,254 --11,11511,115 --7,7548,644 ---21,105 --792,488792,488 --787,00011,805,629 ---108,000 6,874,453214,26212,506,62850,476,115 29,3249,51371,774377,436 --13,020438,559 --135,000135,000 ---6,489 -359,167-359,167 ---875 --11,11511,115 4,052,043122,564869,66316,491,744 ---108,000 4,081,367491,2441,100,57217,928,385 --792,488792,488 -426,12563,803489,928 2,793,086-2,394,1775,187,263 ---21,105 --7,7548,644 ---3,520,235 ---7,721,443 --3,030,09210,391,989 --4,985,9884,985,988 --131,754131,754 -(703,107)-(703,107) 2,793,086(276,982)11,406,05632,547,730 $ 6,874,453$214,262$12,506,628$50,476,115 27 CITY OF BROOKLYN CENTER, MINNESOTAStatement 3 Page 2 of 2 BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2008 Fund balance - governmental funds is different from net assets - governmental activities because : Total fund balances (Statement 3)$32,547,730 Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds.35,631,036 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds.16,473,842 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.(30,040,994) Internal service funds are used by management to charge the cost of certain activities to individual funds. The assets and liabilities are included in the governmental statement of net assets.9,353,499 et assets of governmental activities (Statement 1)$63,965,113 N 28 29 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2008 Tax Incremen t GeneralDistrict No. 3 REVENUES Property taxes$11,375,539$- Tax increments-1,906,053 Franchise fees-- Lodging taxes619,962- Special assessments-- Licenses and permits643,736- Intergovernmenta 115,0461,112,272 l Charges for services749,001- Fines and forfeits302,986- Investment earnings (net of market value adjustment149,484272,709 ) Miscellaneous74,16412,500 Total revenues15,027,1442,306,308 EXPENDITURES Current: General governmen -3,308,211 t Public safet -7,763,370 y Public works1,969,958- Community service72,893- s Parks and recreation2,311,735- Economic developmen296,3327,051,514 t ondepartmental301,396- N Administrative services reimbursemen(802,775)- t Capital outlay: General governmen -- t Public works-- Parks and recreation-- Economic developmen 45,171- t Debt service: Principal retirement-- Interest-- Fiscal agent fees-- Bond issuance costs-33,818 Total expenditures15,221,1207,130,503 Revenues over (under) expenditures(193,976)(4,824,195) OTHER FINANCING SOURCES (USES) Issuance of debt-4,335,000 Discount on issuance of deb (28,178)- t Premium on issuance of deb -- t Transfers in-- Transfers out(5,000)(1,243,183) Total other financing sources (uses)(5,000)3,063,639 et increase (decrease) in fund balances(198,976)(1,760,556) N Fund balances - January 17,942,41412,642,688 Fund balances - December 31$7,743,438$10,882,132 The accompanying notes are an integral part of these financial statements. 30 Statement 4 Othe r G.O. ImprovemenInfrastructureonmajoTotal tNr BondsConstructioGovernmentaGovernmenta nll $ -606$$1,027,769$12,403,914 --988,5422,894,595 --643,934643,934 ---619,962 816,192472,956-1,289,148 ---643,736 --984,2422,211,560 --12,403761,404 ---302,986 61,133-250,551733,877 -42,159320,238449,061 877,931515,1154,227,67922,954,177 --266,9363,575,147 --285,1598,048,529 -55,754114,1522,139,864 ---72,893 --97,5562,409,291 --318,4737,666,319 ---301,396 ---(802,775) --362,442362,442 -2,617,1441,337,9973,955,141 --168,249168,249 ---45,171 980,000-1,904,9532,884,953 145,121-915,0441,060,165 8,987-2,25211,239 28,574--62,392 1,162,6822,672,8985,773,21331,960,416 (284,751)(2,157,783)(1,545,534)(9,006,239) 50,0682,339,932-6,725,000 ---(28,178) 1,384--1,384 -831,2971,138,2361,969,533 --(301,175)(1,549,358) 51,4523,171,229837,0617,118,381 (233,299)1,013,446(708,473)(1,887,858) 3,026,385(1,290,428)12,114,52934,435,588 $ 2,793,086$(276,982)$11,406,056$32,547,730 31 32 CITY OF BROOKLYN CENTER, MINNESOTA Statement 5 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURESM AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2008 Amounts reported for governmental activities in the statement of activities are different because: et changes in fund balances - total governmental funds (Statement 4$(1,887,858) N) Governmental funds report capital outlays as expenditures. However, in the statement o f activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.865,383 Revenues in the statement of activities that do not provide current financial resources are no t reported as revenues in the funds.5,148,523 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consume s the current financial resources of governmental funds. Neither transaction, however, ha s any effect on net assets. This amount is the net effect of these differences in the treatmen t of long-term debt and related items.(4,115,000) Internal service funds are used by management to charge the cost of certain activities to individual funds. This amount is net revenue attributable to governmental activities.(242,568) Accrued interest reported in the statement of activities does not require the use of current financial resources and, therefore, is not reported as expenditures in governmental funds.(54,308) Change in net assets of governmental activities (Statement 2$(285,828) ) The accompanying notes are an integral part of these financial statements. 33 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF FUND NET ASSETS PROPRIETARY FUNDS December 31, 2008 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr ASSETS Current assets: Cash and cash equivalents$1,318,525$ 8,645$1,153,340 Receivables: Accounts - ne -7,780 262,111 t Special assessments- -- Due from other funds135,000 -- Interfund receivable- -- Prepaid items22,906 -4,987 Inventories594,385 1,99731,231 Total current assets2,078,596 10,6421,451,669 oncurrent assets: N Capital assets: Lan 1,390,402- 1,493,300 d Land improvement 65,637- 327,830 s Buildings and structures192,771 487,94611,267,201 Machinery and equipmen 11,160111,167 293,878 t Street lights- -- Mains and lines- -- Construction in progress- -- Total capital assets303,938 1,955,14513,382,209 Less: Allowance for depreciatio (294,288)(255,732) (6,892,515) n et capital assets 1,660,85748,206 6,489,694 N Total assets2,126,802 1,671,4997,941,363 LIABILITIES Current liabilities: Accounts payable118,122 2,29567,418 Accrued salaries payable18,888 2,01125,535 Due to other governments50,074 2914,631 Interfund payable- -- Contracts payable- -147,338 Deposits payable- -230,254 Unearned revenue514 -1,600 Advances from other funds- 792,488- Compensated absences payable-curren -- - t Total current liabilities187,598 796,823486,776 oncurrent liabilities: N Compensated absences payable-long-ter -- - m et OPEB obligation- -- N Total noncurrent liabilities- -- Total liabilities187,598 796,823486,776 NET ASSETS Invested in capital assets48,206 1,660,8576,489,694 Unrestricted1,890,998 (786,181)964,893 Total net assets$1,939,204$ 874,676$7,454,587 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds et assets of business-type activitie Ns The accompanying notes are an integral part of these financial statements. 34 Statement 6 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r WaterSanitary SeweStorm DrainageonmajoTotalInternalTotal rNr UtilitUtilitUtilitEnterpriseEnterpriseServiceProprietary yyy $ 2,191,3022,068,255$ 1,929,535$ $72,996$8,742,598$ 6,602,655$15,345,253 493,372 819,675 364,834112,0432,059,815 14,7942,074,609 560,178 1,823 231 562,232- 562,232- - -- 135,000- 135,000- - - 4,354-4,354 -4,354 500 163,727- 192,120- 192,120- 7,031 -- 634,644- 25,344659,988 3,129,336 3,176,527 2,298,954185,03912,330,763 6,642,79318,973,556 20,734 3,389 287,158 3,194,983- 3,194,983- - -- 393,467- 166,108559,575 3,033,212 2,705,423- 17,686,553- 17,686,553- 128,668 179,130- 724,003- 7,388,7318,112,734 - --83,54083,540 -83,540 16,511,055 14,669,683 20,745,425 51,926,163- 51,926,163- 739,522 1,183,531 919,394329,5773,172,024 3,172,024- 20,433,191 18,741,156 21,951,977413,11777,180,733 7,554,83984,735,572 (11,673,803) (9,144,934) (6,347,101) (34,608,373)- (3,799,654)(38,408,027) 8,759,388 9,596,222 15,604,876413,11742,572,360 3,755,18546,327,545 11,888,724 12,772,749 17,903,830598,15654,903,123 10,397,97865,301,101 14,794 4,796 1,66414,520223,609 30,772254,381 13,574 4,472 2,049-66,529 9,34975,878 2,316 ---67,050 -67,050 - --4,3544,354 -4,354 - -- 147,338- 147,338- 2,100 -- 232,354- 232,354- 109,368-- 111,482- 111,482- - -- 792,488- 792,488- - ---- 107,595107,595 142,152 9,268 3,71318,8741,645,204 147,7161,792,920 -----968,358968,358 - ---- 147,045147,045 - --- 1,115,403- 1,115,403 142,152 9,268 3,71318,8741,645,204 1,263,1192,908,323 8,759,388 9,596,222 15,604,876413,11742,572,360 3,755,18546,327,545 2,987,184 3,167,259 2,295,241166,16510,685,559 5,379,67416,065,233 $ 11,746,572$ 12,763,481$ 17,900,117$579,28253,257,919$ 9,134,859$62,392,778 (218,640) $53,039,279 35 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2008 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr OPERATING REVENUES Sales and user fees$5,484,529$ 253,824$3,831,972 Cost of sales3,997,698 -1,875,280 Total operating revenues1,486,831 253,8241,956,692 OPERATING EXPENSES Personal services597,687 146,453894,062 Supplies23,836 20,606123,906 Other services176,419 80,488526,185 Insurance11,514 6,05651,588 Utilities41,030 20,293221,067 Ren -243,925 - t Depreciation26,431 27,244579,118 Total operating expenses1,120,842 301,1402,395,926 Operating income (loss)365,989 (47,316)(439,234) NONOPERATING REVENUES (EXPENSES) Intergovernmenta -- - l Investment earning 87033,918 31,443 s Special assessments- -- Gain (loss) on sale of capital asset- -- Other revenue5,813 -2,936 Total nonoperating revenues (expenses)39,731 87034,379 Income (loss) before contributions and transfers405,720 (46,446)(404,855) Capital contributions- -326,415 Transfers out(135,000) -(235,000) Change in net assets270,720 (46,446)(313,440) et assets - January 1, as previously reported1,668,484 921,1227,768,027 N Change in accounting principle- -- et assets - January 11,668,484 7,768,027921,122 N et assets - December 31$1,939,204$ 7,454,587874,676$ N Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business-type activities (Statement 2) The accompanying notes are an integral part of these financial statements. 36 Statement 7 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r WaterSanitary SeweStorm DrainageonmajoTotalInternalTotal rNr UtilitUtilitUtilitEnterpriseEnterpriseServiceProprietary yyy $ 1,967,534$ 3,264,115$ 1,553,036$510,034$16,865,044$ 1,490,179$18,355,223 - -- 5,872,978- 5,872,978- 1,967,534 3,264,115 1,553,036510,03410,992,066 1,490,17912,482,245 449,506 175,905 79,710 2,343,323- 729,6553,072,978 138,465 18,691 13,1741,004339,682 486,940826,622 407,076 2,218,759 296,203285,5323,990,662 152,8764,143,538 12,598 5,202 2,6182,74392,319 53,120145,439 157,055 35,093 159,106-633,644 1,879635,523 - -- 243,925- 243,925- 611,328 553,549 763,536 2,561,206- 631,2503,192,456 1,776,028 3,007,199 1,155,241448,38510,204,761 2,055,72012,260,481 191,506 256,916 397,79561,649787,305 (565,541)221,764 - ---- 10,77010,770 52,847 71,524 48,6794,041243,322 170,062413,384 33,939 147--34,086 -34,086 - ---- 73,03673,036 2,160 387 200-11,496 26,80638,302 88,946 72,05848,8794,041288,904280,674569,578 280,452 328,974 446,67465,6901,076,209 (284,867)791,342 - 1,457,408- 329,5772,113,400 2,113,400- - --(50,175)(420,175) (420,175)- 280,452 328,974 1,904,082345,0922,769,434 (284,867)2,484,567 11,466,120 12,434,507 15,996,035234,19050,488,485 6,902,34457,390,829 - --- 2,517,382- 2,517,382 11,466,120 12,434,507 15,996,035234,19050,488,485 9,419,72659,908,211 $ 11,746,572$ 12,763,481$ 17,900,117$579,282$53,257,919$ 9,134,859$62,392,778 (42,299) $2,727,135 37 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2008 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users$ 253,8245,486,174$ 3,886,705$ Receipts from interfund services provided--- Payments to suppliers(4,545,575) (125,711)(2,798,310) Payments to employee(591,270) (145,929)(885,464) s Miscellaneous revenue5,813-2,936 et cash flows provided (used) by operating activities355,142 (17,816)205,867 N CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers out(135,000) (235,000)- Special assessments--- Interfund receivable(135,000)-- Interfund payable--- et cash flows provided (used) by noncapital financing activities(270,000) (235,000)- N CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (25,379)- - Proceeds from sale of assets--- et cash flows provided (used) by capital and related financing activities (25,379)- - N CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments33,918 87031,443 et increase (decrease) in cash and cash equivalents119,060 (42,325)2,310 N Cash and cash equivalents - January 11,199,465 50,9701,151,030 Cash and cash equivalents - December 31$1,318,525$ 8,645$1,153,340 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) $365,989$ (47,316)$(439,234) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation26,431 27,244579,118 Changes in assets and liabilities: (Increase) decrease in receivables1,577 44,719- (Increase) decrease in inventories(85,935) 590(411) (Increase) decrease in prepaid expenses(918)-(319) Increase (decrease) in payables35,700 1,14210,460 Increase (decrease) in accrued expenses6,417 5248,598 Increase (decrease) in deferred revenue68-- Other nonoperating income5,813-2,936 Total adjustments(10,847) 29,500645,101 et cash flows provided (used) by operating activities$355,142$ (17,816)$205,867 N Noncash financing activities: Capital contributions$-$ 326,416-$ Gain on sale of assets--- The accompanying notes are an integral part of these financial statements. 38 Statement 8 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r WaterSanitary SeweStorm DrainageonmajoTotalInternalTotal rNr UtilitUtilitUtilitEnterpriseEnterpriseServiceProprietary yyy $ 1,916,264$ 3,215,858$ 1,520,286$507,274$16,786,385$ 16,786,385-$ - --- 1,483,757- 1,483,757 (733,770) (2,290,761) (313,800)(463,817)(11,271,744) (729,448)(12,001,192) (445,524) (174,365) (79,210) (2,321,762)- (526,834)(2,848,596) 2,160 387 200-11,496 37,57649,072 739,130 751,119 1,127,47643,4573,204,375 265,0513,469,426 - --(50,175)(420,175) (420,175)- (67,106) 407--(66,699) (66,699)- - - (4,354) (139,354)- (139,354)- - --4,3544,354 -4,354 (67,106) 407 (4,354)(45,821)(621,874) (621,874)- (725,404) (1,095,864) (623,086)(83,540)(2,553,273) (792,282)(3,345,555) - ---- 123,528123,528 (725,404) (1,095,864) (623,086)(83,540)(2,553,273) (668,754)(3,222,027) 52,847 71,524 48,6794,041243,322 170,062413,384 (533) (272,814) 548,715(81,863)272,550 (233,641)38,909 2,068,788 2,464,116 1,380,820154,8598,470,048 6,836,29615,306,344 $2,068,255$2,191,302$ 1,929,535$72,996$8,742,598$ 6,602,655$15,345,253 $ 191,506$ 256,916$ 397,795$61,649$787,305$ (565,541)$221,764 611,328 553,549 763,536 2,561,206- 631,2503,192,456 (33,078) (48,257) (32,750)(2,760)(70,549) (6,333)(76,882) 9,039 ---(76,717) 7,700(69,017) - (8,955)--(10,192) (10,192)- (26,215) (4,061) (1,805)(15,432)(211) (42,333)(42,544) 3,982 1,540 500-21,561 202,732224,293 (19,592)---(19,524) (19,524)- 2,160 387 200-11,496 37,57649,072 547,624 494,203 729,681(18,192)2,417,070 830,5923,247,662 $ 739,130$ 751,119$ 1,127,476$43,457$3,204,375$ 265,051$3,469,426 $ -$ 1,457,408-$$329,577$- - --- 73,036 39 40 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 The City of Brooklyn Center was incorporated in 1911 and has operated under a Council/Manager form of government since the adoption of the City charter in 1966. The governing body consists of a mayor and four City Council members elected at-large to serve four-year staggered terms. The City provides a full range of municipal services to its citizens, including public safety (police and fire protection), highways and streets, parks and recreation, public improvements, planning and inspections, economic development, sanitary and storm sewer, water, and general administrative services. Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards Board (GASB). The City also applies Financial Accounting Standards Board (FASB) statements and interpretations issued prior to December 1, 1989 to its governmental and business-type activities at the government-wide financial reporting level and to its proprietary funds at the fund reporting level, provided they do not conflict with or contradict GASB pronouncements. The City’s significant accounting policies are described below. A. REPORTING ENTITY The City includes all funds, organizations, institutions, agencies, departments, boards, and offices that are not legally separate from the City. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the basic financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit if it appoints a voting majority of the organization’s governing body and is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. Blended component units, although legally separate, are, in substance, part of the government’s operations. A blended component unit is reported as if it were a fund of the City throughout the year. It is included at both the government-wide and fund financial reporting levels. A description of the City’s blended component units follows: City of Brooklyn Center Housing and Redevelopment Authority (HRA) - The City Council serves as the Board of Directors for the HRA. The Council reviews and approves the tax levy and all expenditures for the HRA. The HRA is reported as a Special Revenue Fund. The HRA does not issue separate financial statements. Financial information may be obtained at the City’s offices. City of Brooklyn Center Economic Development Authority (EDA) – The governing board for the EDA is the City Council. The council reviews and approves major community development improvement activities. City general obligation tax increment financing bonds are issued to finance EDA activities. The EDA is reported in the Economic Development Authority, Earle Brown TIF District, TIF District No. 3, TIF District No. 4, and the Community Development Block Grant Special Revenue Funds; the Tax Increment Bonds Debt Service Fund; the Earle Brown Heritage Center Improvements Capital Project Fund; and the Earle Brown Heritage Center Enterprise Fund. The EDA does not issue separate financial statements. Financial information may be obtained at the City’s offices. 41 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B.GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business-type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business-type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments 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. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due. Property taxes, special assessments, intergovernmental revenues, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. 42 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (Continued) The government reports the following major governmental funds: The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Tax Increment District No. 3 Special Revenue Fund has the authority to collect tax increments which are used for various redevelopment projects within the City and for debt service payments of bonds which were issued for the same purpose. TheG. O. Improvement Bonds Debt Service Fund is used to account for the accumulation of resources for the payment of improvement bonds. These bonds were sold to finance certain public improvements such as residential streets and storm sewers or the provision of services which are to be paid for wholly or in part from special assessments levied against benefited property. TheInfrastructure Construction Capital Project Fund was established to account for the resources and expenditures required for the acquisition and construction of capital facilities or improvements financed wholly or in part by special assessments levied against benefited properties. The government reports the following major enterprise funds: TheMunicipal Liquor Fund accounts for the operations of the City’s municipal off-sale liquor stores. TheGolf Course Fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by the City. TheEarle Brown Heritage Center Fund accounts for the operation of a convention center. The Earle Brown Heritage Center is a pioneer farmstead that has been historically preserved and restored as a modern multipurpose facility. Its convention center can host conferences, trade shows, and concerts. TheWater Utility Fund accounts for the pumping, treatment and distribution of water to customers. Administration, wells, water storage, and distribution are included. The Sanitary Sewer Utility Fund accounts for the collection and pumping of sanitary sewage through a system of sewer lines and lift stations. Sewage is treated by the Metropolitan Council Environmental Services whose fees represent about 64% of this fund’s expenses. TheStorm Drainage Utility Fund accounts for the collection and treatment of surface runoff water that does not require sanitary wastewater treatment. It incorporates not only the storm sewer collection system, but also structures such as holding ponds and facilities to improve water quality. Fees are based upon the quantity of water running off a property and vary with both size and absorption characteristics of the parcel. 43 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (Continued) Additionally, the government reports the following fund type: Internal Service Funds account for compensated absences, health care insurance benefits and central garage services provided to other departments of the City on a cost reimbursement basis. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. CASH AND INVESTMENTS The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All of the cash and investments allocated to the proprietary funds have original maturities of 90 days or less. 44 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. CASH AND INVESTMENTS (Continued) The City’s investment policy authorizes the City to invest in the following: a) Securities that are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of congress, including governmental bills, notes, bonds and other securities. b) Commercial paper issued by U.S. corporations or their Canadian subsidiaries that is rated in the highest quality by at least two nationally recognized rating agencies and matures in 270 days or less. c) Time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of U.S. banks. d) Repurchase agreements and reverse repurchase agreements with financial institutions identified by Minnesota Statutes Chapter 118A. e) Securities lending agreements may be entered into with financial institutions identified by Minnesota Statutes Chapter 118A. f) Minnesota joint powers investment trusts may be entered into with trusts identified by Minnesota Statutes Chapter 118A g) Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of short term securities permitted by Minnesota Statutes 118A. h) Bonds of the City of Brooklyn Center issued in prior years, may be redeemed at current market price, which may include a premium, prior to maturing using surplus funds of the debt service fund set up for that issue. Investments are reported at fair value, based on quoted market prices as of the balance sheet date. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment earnings. Investment income on commingled funds is allocated monthly, based on month-end balances. E. RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as “interfund receivable/payable.” All short- term interfund receivables and payables at December 31, 2008 are planned to be eliminated in 2009. Long- term interfund loans are classified as “advances to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable financial resources. The City expects to make full collection of all trade and property tax receivables, so no allowance is considered necessary. 45 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES E. RECEIVABLES AND PAYABLES (Continued) Property tax levies are submitted to the County in December each year. The County allocates these levies across taxable properties in the City based on valuations certified in the prior year. The County collects these levies and distributes the City’s proceeds in June and December of the fiscal year. These taxes are reported as general revenues in the government-wide financial statements in the year levied. Unpaid taxes at December 31 become liens on the respective property and are classified as delinquent receivables and are fully offset by deferred revenue in the fund financial statements. F. INVENTORIES AND PREPAID ITEMS Inventories in the governmental funds are reported using the consumption method and valued at cost, using the first in/first out (FIFO) method. Inventories in the proprietary funds are valued at cost, using the weighted average method in the Municipal Liquor and Earle Brown Heritage Center Funds and the FIFO method in all other funds. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. G. CAPITAL ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost in excess of the amounts in the table below and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Infrastructure $ 250,000 Buildings and Building Improvements 50,000 Land Improvements 25,000 Heavy Equipment 25,000 Furniture and furnishings 10,000 Motorized vehicles 10,000 Technology equipment 10,000 The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 2008 no interest was capitalized in connection with construction in progress. 46 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES G. CAPITAL ASSETS (Continued) Capital assets of the City, as well as the component units, are depreciated using the straight line method over the following estimated useful lives: Land improvements 25 years Buildings and structures 25 years Water and sewer mains and lines, wells and storage tanks, sewer lift stations 25 years Infrastructure 25 years Street and traffic light systems 15 years Machinery and equipment 5-15 years H. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation and vested sick leave pay is accrued in the Public Employee Compensated Absences fund. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, a liability is recognized for that portion of accumulating sick leave benefits that is vested, or expected to vest, as severance pay. I. LONG TERM OBLIGATIONS In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. J. FUND EQUITY Fund equity in the fund financial statements is classified as fund balance for governmental funds and net assets for proprietary funds. Fund equity in the government-wide financial statements is classified as net assets for both governmental and business-type activities. Fund balance – Generally, fund balance represents the difference between current assets and current liabilities. The City reserves those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and are therefore not available for general appropriation or expenditure. Unreserved fund balance indicates that portion of fund balance that is available for appropriation in future periods. Designations are management’s intent to set aside these resources for specific purposes. 47 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES J. FUND EQUITY (Continued) Net assets – Net assets represent the difference between assets and liabilities. Net assets, invested in capital assets net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any bonds used for the acquisition, construction, or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through constitutional provisions or enabling legislation, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. All other net assets are reported as unrestricted. When both restricted and unrestricted resources are available for an allowable use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. K. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues and 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/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. L. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates. M. NEW ACCOUNTING PRONOUNCEMENTS The Governmental Accounting Standards Board (GASB) recently approved the following statements which were not implemented in these financial statements. The effect of these standards may have on future financial statements has not been determined at this time. Statement No. 51, Accounts and Financial Reporting for Intangible Assets. This statement establishes accounting and financial reporting requirements for intangible assets including easements, water rights, timber rights, patents, trademarks and computer software. The provisions of this statement are effective for financial statements for periods beginning after June 15, 2009. 48 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 2 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this $ 865,383 difference are as follows: Another element of that reconciliation states that “Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.” The details of this $ 5,148,523 difference are as follows: 49 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 2 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ANT THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES (Continued) Another element of that reconciliation states that “The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of principal of the long- term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets.” The details of this $ 4,115,000 difference are as follows: Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States for all governmental funds, except for the Capital Reserve Emergency Fund. All annual appropriations lapse at fiscal year end. In August, the City Manager submits to the City Council proposed operating budgets for the fiscal year commencing the following January. The proposed general fund budget and preliminary tax levy must be certified to the County prior to September 15. The Council holds public hearings on the certified budget and levy and must submit a final levy to the County prior to the end of December. The appropriated budget is prepared by fund and department. The City Council must authorize any transfer of budgeted amounts between departments or funds. Transfers of budgeted amounts within departments in the General Fund must be authorized by the City Manager. The legal level of budgetary control is the department level for the General Fund and the fund level for all other governmental funds. There were no material supplemental budgetary appropriations during the year. 50 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended December 31, 2008 expenditures exceeded appropriations in the following General Fund departments and special revenue funds: C. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2008 in the following funds: The deficits are being funded through internal borrowing and will be repaid from construction transfers from utility funds, future bond issuance, investment earnings, and internal transfers. 51 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) D. CHANGES IN ACCOUNTING PRINCIPLE FUND AND GOVERNMENT-WIDE STATEMENTS In 2008, the City prospectively implemented the requirements of a new accounting pronouncement, GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. Prior to 2008, the City reported a liability for other postemployment benefits other than pensions (OPEB) based on the City’s best estimate of the future liability. At December 31, 2007, that liability was $ 2,517,382. Under GASB Statement No. 45, the only liability reported is the Net Pension Obligation, which is the difference between the annual required contribution as actuarially determined and the City’s actual contribution (see Note 5.C.). The accrued health insurance liability was decreased and the beginning net assets were increased by $ 2,517,382. E. PRIOR PERIOD ADJUSTMENTS GOVERNMENT-WIDE STATEMENTS In 2008, land held for resale was removed from the capital assets in the Governmental Activities. A portion of the land was sold and the remaining portion was added as land held for resale in the Governmental Activities column on the Statement of Net Assets. Beginning Net Assets was decreased by the value of the land removed from capital assets, $ 1,077,766. Beginning Net Assets was increased by the value of the land that was reclassified as land held for resale, $ 750,000. In 2008, a thorough inventory of land owned by the City and its blended component units revealed several parcels not included in the capital assets in the Governmental Activities. Beginning net assets in the Governmental Activities was increased by $ 2,481,992, the total purchase price for all parcels. In addition, several capital assets were reclassified from Land to Land improvements. Beginning Net Assets was reduced by the accumulated depreciation of $ 1,000,929. The net effect of the change in accounting principle and prior period adjustments is summarized below: 52 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the City Council. All such depositories are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. At year-end, the City’s carrying value amount of deposits was $ 354,920 composed of bank balances of $ 506,050. All balances were covered by federal depository insurance or by perfected collateral held by the Federal Reserve Bank. As of December 31, 2008 the City had the following investments and maturities: 53 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS (Continued) Interest rate risk – The City’s investment policy requires interest earnings remain stable and predictable through at least the next budget cycle and that at least 50% of the investment portfolio remain for two or more years with known interest rates. The policy also states that the portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably expected. Credit risk – The City’s investment policy restricts investment instruments to those authorized by Minnesota Statutes §118A. The policy also requires that any counterparty in investment transactions be pre-qualified and approved by the City Council and that the portfolio be diversified to limit potential losses on individual securities. As of December 31, 2008 the City’s investment in FHLB, FNMA and FHLMC notes were all rated AAA by Moody’s Investor Service. The City’s external investment pool is with 4M which is regulated by Minnesota Statutes and the Board of Directors of the League of Minnesota Cities. The 4M fund is an unrated 2a7-like pool and the fair value of the position in the pool is the same as the value of the pool shares. – The City’s investment policy requires that the investment portfolio be Concentration of credit risk diversified to minimize potential losses on individual securities. Custodial credit risk – The City’s investment policy requires that securities purchased from any bank or dealer be placed with an independent third party for custodial safekeeping. All of the City’s investments were held in an institutional trust under contract with the City for safekeeping services. B. RECEIVABLES Significant receivable balances not expected to be collected within one year of December 31, 2008 are as follows: Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: 54 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS B. RECEIVABLES (Continued) The City has leased a portion of the police second floor expansion area to the Local Government Information Systems Association (LOGIS) as a backup computer facility. The lease has a term of six years, commencing on August 1, 2005, and calls for monthly lease payments based on the square-footage. Lease revenue for the year ended December 31, 2008 was $ 9,302. Future minimum lease payments are as $ 9,091 annually through 2010 and $ 5,303 for 2011. C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2008 was as follows: During 2008, assets valued at $1,224,308 were transferred from Governmental Activities construction in progress to Business-Type activities mains and lines. 55 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS C. CAPITAL ASSETS (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: 56 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS C. CAPITAL ASSETS (Continued) CONSTRUCTION COMMITMENTS At December 31, 2008 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: D. INTERFUND BALANCES AND TRANSFERS Individual fund interfund receivable and payable balances at December 31, 2008 are as follows: Due fromDue to FundOther FundsOther Funds Major Funds: Municipal Liquor$ 135,000$ - Nonmajor Funds: Capital Improvements - 135,000 Total$ 135,000$ 135,000 The $135,000 between the Municipal Liquor and Capital Improvement Funds is expected to be eliminated within one year of December 31, 2008. Advances to Advances From FundOther FundsOther Funds Major Funds: Golf Course$ -$ 792,488 Nonmajor Funds: Capital Improvements 792,488 - $ 792,488$ 792,488 The $792,488 advance between the Golf Course and Capital Improvements funds is not expected to be eliminated within one year of December 31, 2008. 57 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS D. INTERFUND BALANCES AND TRANSFERS (Continued) Interfund payables/receivables are representative of lending/borrowing arrangements to cover deficit cash balances at the end of the fiscal year. Balance will be paid with transfers from other funds, collections of outstanding receivables, and the issuance of bonds to finance completed infrastructure projects. Interfund transfers: 58 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS D. INTERFUND BALANCES AND TRANSFERS (Continued) Interfund transfers allow the City to allocate financial resources to the funds that receive benefit from services provided by another fund or to provide additional capital and infrastructure funding. In addition, interfund transfers are occasionally authorized to allow redistribution of resources between funds for the most efficient use of funds. In 2008, the transfer from the General Fund to the City Initiatives Grant Fund is to provide the funding authorized by the City Council for the Centennial Celebration to be held in 2011. Transfers from the Tax Increment District No. 3 fund to the Tax Increment Bonds fund were made to pay the 2008 debt service requirements for the bonds. The transfer from the Street Light Utility fund to the Infrastructure Construction Fund was used to fund certain street construction projects. E. OPERATING LEASES The City leases space for its municipal liquor stores. The leases are both ten-year leases and began in 2000 and 2003. Both leases have options for a ten-year extension. The leases provide for a minimum monthly base rent payment, plus a pro-rata share of common area expenses. Additional lease payments are required if agreed-upon revenue thresholds are attained. These leases may be cancelled at the City’s option if the City ceases liquor operations. Total rental expense under the lease agreements for the year ended December 31, 2008 was $ 243,925. Future minimum base rent payments under the current agreements are as follows: 59 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS (Continued) F. LONG-TERM DEBT The City issues general obligation bonds to provide funds for the construction of major capital facilities, construction of infrastructure, and economic development and redevelopment. General obligation bonds have been issued for governmental activities. As of December 31, 2008 the long-term debt of the financial reporting entity consisted of the following: GOVERNMENTAL ACTIVITIES All long-term bonded indebtedness outstanding at December 31, 2008 is backed by the full faith and credit of the City, including improvement and tax increment bond issues. Bonds in the governmental activities will be retired by future property tax levies, tax increments or special assessments accumulated in the specific debt services funds. In the event that a deficiency exists because of unpaid or delinquent tax increments or special assessments at the time a debt service payment is due, the City must provide resources to cover the deficiency until other resources are available. Delinquent tax increments in the governmental funds at December 31, 2008 were $ 27,320; delinquent special assessments in the governmental funds at December 31, 2008 were $ 56,064, which is included in the special assessments receivable balance of $ 4,176,429. 60 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG-TERM DEBT GOVERNMENTAL ACTIVITIES (Continued) The G.O. Improvement Bonds were issued to finance the construction and replacement of street and storm drainage capital assets. Of the $ 5,690,000 outstanding at December 31, 2008 the amounts applicable to street and storm capital assets is $ 4,687,316 and $ 1,002,684, respectively. Annual debt service requirements to maturity for long-term debt are as follows: CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2008 was as follows: Compensated absences are liquidated by the Public Employees Compensated Absences Fund. 61 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG-TERM DEBT (Continued) CONDUIT DEBT OBLIGATIONS From time to time, the City has issued Housing Revenue Bonds and Industrial Revenue Bonds or Notes to provide assistance to qualified private sector entities for the acquisition and construction of housing, industrial, or commercial facilities deemed to be in the public interest. The bonds or notes are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. The City has no obligation of its assets or of its general tax base for the repayment of any of these bonds or notes. Accordingly, the bonds or notes are not reported as liabilities in the accompanying financial statements. Upon final redemption of the bonds or notes, ownership of the property transfers to the private sector entity served by the bond or note issue. As of December 31, 2008 there were three series of fixed rate Multifamily Housing Revenue Refunding bonds, one Housing Revenue Development Refinancing Note, one series of Variable Rate Demand Refunding Industrial Revenue Bonds, two Healthcare Revenue Notes, and four Senior Housing Development Revenue Notes outstanding. The aggregate amount of conduit debt obligations at December 31, 2008 is $ 30,566,244. G. FUND EQUITY Net assets reported in the government-wide statement of net assets at December 31, 2008 include the following: Related debt for governmental activities capital assets includes $ 3,275,000 in General Obligation Bonds and $ 4,687,316 in G.O. Improvement Bonds, the amount issued to finance the street portion of construction projects. The remaining $ 1,002,684 of the G.O. Improvement Bonds outstanding was issued to finance the storm drainage portion of construction projects. 62 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS G. FUND EQUITY (Continued) Governmental fund balances reported on the fund financial statements as of December 31, 2008 include the following: 63 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 4 DETAILED NOTES ON ALL FUNDS G. FUND EQUITY (Continued) A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions and natural disasters. Property and casualty insurance is provided through the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool currently operating as a common risk management and insurance program for Minnesota cities: general liability, property, automobile, mobile property and marine, crime, employee dishonesty, boiler, and open meeting law. The City pays an annual insurance premium to the LMCIT for its insurance coverage. The City is subject to supplemental assessments if deemed necessary by the LMCIT. Currently, the LMCIT is self-sustaining through member premiums and reinsures through commercial companies for claims in excess of various amounts. The City retains risk for the deductible portions of the insurance policies. The amount of these deductibles is considered immaterial to the financial statements. Workers’ compensation coverage is provided through a pooled self-insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers’ Compensation Reinsurance Association (WRCA) as required by law. For workers’ compensation, the City is not subject to a deductible. The City’s workers’ compensation is retroactively rated. With this type of coverage, final premiums are determined after loss experience is known. The amount of premium adjustment, if any, is considered immaterial and not recorded until received or paid. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. 64 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION (Continued) B. EMPLOYEE RETIREMENT PLANS 1. DEFINED BENEFIT PENSION PLAN PLAN DESCRIPTION All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing, multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statute, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF and PEPFF. That report may be obtained by writing to PERA, 60 Empire Drive Suite 200, St. Paul, Minnesota, 55103-2088 or by calling 651-296-7460 or 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 Coordinated Plan members are required to contribute 6.00% of their annual covered salary. PEPFF members are required to contribute 8.60% of their annual covered salary. The City is required to contribute the following percentages of annual covered payroll: 6.50% for Coordinated Plan PERF members and 12.90% for PEPFF members. The City’s contributions to the Public Employees Retirement Fund for the years ending December 31, 2008, 2007, and 2006 were $ 428,616, $ 392,528, and $ 363,334, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2008, 2007, and 2006 were $ 444,527, $ 374,495, and $ 318,913, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. 65 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION B. EMPLOYEE RETIREMENT PLANS (Continued) 2. PENSION PLAN – BROOKLYN CENTER FIRE DEPARTMENT RELIEF ASSOCIATION PLAN DESCRIPTION The City contributes to the Brooklyn Center Fire Department Relief Association (the Association) which is the administrator of a single employer, public employee defined benefit retirement system to provide a retirement plan (the Plan) to volunteer firefighters of the City who are members of the Association. The Association is organized and operates under the provisions of Minnesota State Statutes 424A, and provides benefits in accordance with those statutes. The Association provides retirement benefits to members and survivors, upon death of eligible members. Benefits are established by the Association and approved by the City Council under the applicable statutes. The defined retirement benefits are based on a member’s years of service. Vesting begins after the 10th year of service with a 60% benefit increasing to 100% after the 20th year of service. Full benefits are available after 20 years of service by the member and having attained the age of 50. The current benefit available is a lump sum distribution of $ 7,500 per year of service. Vested, terminated members who are entitled to benefits but are not yet receiving them are bound by the provisions in effect at the time of termination of membership. The Association issues a financial report that includes financial statements and required supplementary information for the Brooklyn Center Fire Department Relief Association. That report is available at the City of Brooklyn Center City offices. FUNDING POLICY The City levies property taxes at the direction of and for the benefit of the Plan and passes through state aids allocated to the Plan, all in accordance with enabling State statutes. The minimum tax levy obligation is the financial contribution requirement for the year less anticipated state aids. CONTRIBUTIONS Total contributions to the plan in 2007 were $ 139,441 of which all was from the State of Minnesota. The actuarially determined contribution based on an actuarial valuation performed at January 1, 2007 was $ 59,159, which represents funding for normal cost of $ 98,697 and amortization of the excess over the actuarial accrued liability of ($ 39,538). Actual contributions have continued at higher levels to allow for a transition to a defined contribution plan in the future. These higher payments are irrevocable and do not affect the level of future City contributions, nor do they constitute an asset of the City. The City’s $ 139,441 contribution to the Association in 2007 was recorded as intergovernmental revenue and fire department expenditure in the General Fund. 66 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION B. EMPLOYEE RETIREMENT PLANS 2. PENSION PLAN – BROOKLYN CENTER FIRE DEPARTMENT RELIEF ASSOCIATION (Continued) The information below is the most recent data available. THREE YEAR TREND INFORMATION SCHEDULE OF FUNDING PROGRESS 67 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION (Continued) C. OTHER POST-EMPLOYMENT BENEFITS In 2008, the City prospectively implemented the requirement of a new accounting pronouncement, GASB Statement No. 45, Accounting and Financial Reporting by Employer for Postemployment Benefits Other than Pensions. PLAN DESCRIPTION In addition to providing the pension benefits described in Note 5.B., the City provides postemployment health care benefits for retired employees and police disabled in the line of duty, through a single-employer defined benefit plan administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 subd. 2a. and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. The Plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the Plan. The Plan does not issue a separate report. BENEFITS PROVIDED Retirees The City is required by State Statute to allow retirees to continue participation in the City’s group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Former employees who are receiving, or who have met age and service requirements to receive, an annuity from a Minnesota public pension plan and those receiving a disability benefit from such a plan are immediately eligible to participate in this Plan. Retirees may obtain dependent coverage if the employee received dependent coverage immediately before leaving employment. Covered spouses may continue coverage after the death of a retiree. In addition, the surviving spouse of an active employee may continue coverage in the group health insurance plan after the employee’s death. All health care coverage is provided through the City’s group health insurance plans. The retiree is required to pay the premium as described below: Employees hired before January 1, 1992 with continuous full-time employment Employees who, on the date of their retirement, meet eligibility requirement for a full retirement annuity under PERA or PERA Police without reduction of benefits because of age, disability, or any other reason for reduction shall be eligible for the City to pay 100% of the single-person premium until such time as the retiree is eligible for Medicare or at age 65, whichever is sooner. If the retiree desires to continue coverage in excess of single coverage, the additional cost for the coverage shall be paid to the City on a monthly basis. Employees hired after January 1, 1992 The retiree is required to pay 100% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, they are receiving an implicit rate subsidy (benefit). The coverage levels are the same as those afforded to active employees. 68 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION C. OTHER POST-EMPLOYMENT BENEFITS BENEFITS PROVIDED (Continued) Disabled police and firefighter The City is required to continue to pay the employer’s contribution toward health coverage for police or firefighters disabled in the line of duty per Minnesota Statute 299A.465, until age 65. Dependent coverage is included, if the dependents were covered at the time of the disability. PARTICIPANTS As of the actuarial valuation dated January 1, 2008, participants consisted of: FUNDING POLICY The additional cost of using a blended rate for actives and retirees is currently funded on a pay-as-you-go basis. The City Council may change the funding policy at any time. ANNUAL OPEB COSTS AND NET OPEB OBLIGATION The City’s annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial obligation (or funding excess) over a period not to exceed 30 years. The net OPEB obligation as of December 31, 2008 was calculated as follows: 69 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION C. OTHER POST-EMPLOYMENT BENEFITS ANNUAL OPEB COSTS AND NET OPEB OBLIGATION (Continued) The City first had an actuarial valuation performed for the plan as of January 1, 2008 to determine the funded status of the plan as of that date as well as the employer’s ARC for the fiscal year ended December 31, 2008. The City’s annual OPEB cost (expense) of $ 314,184 was equal to the ARC for the fiscal year, as the transition liability was set to zero as of December 31, 2007. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2008 were as follows: FUNDED STATUS AND FUNDING PROGRESS The City currently has no assets that have been irrevocably deposited into a trust for future benefits; therefore, the actuarial value of assets is zero. The funded status of the plan was as follows: ACTUARIAL ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care cost trend. Amounts determined regarding the funding status of the plan and the annual required contribution of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information that shows whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 70 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION C. OTHER POST-EMPLOYMENT BENEFITS ACTUARIAL ASSUMPTIONS (Continued) Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2008 actuarial valuation, the Projected Unit Credit actuarial cost was used. The actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses) and an initial annual health care cost trend rate of 10.0% reduced by 0.5% each year to arrive at an ultimate health care cost trend rate of 5.0%. The actuarial value of assets as $0. The plans’ unfunded actuarial accrued liability is being amortized using a 5.0% payroll growth rate method over 30 years on a closed basis. The remaining amortization period at December 31, 2008 was 29 years. D. ARBITRAGE REBATE The Tax Reform Act of 1986 requires governmental entities to pay to the federal government income earned on the proceeds from the issuance of debt in excess of interest costs, pending the expenditure of the borrowed funds. This rebate of interest income (known as arbitrage) applies to governmental debt issued after August 31, 1986. The City issued greater than $5 million of bonds in 2004 and therefore is required to rebate excess investment income relating to these issues to the federal government. The extent of the City’s liability for arbitrage rebates on the remaining bond issues is not determinable at this time. However, in the opinion of management, any such liability would be immaterial. E. LITIGATION The City is subject to certain legal claims in the normal course of business. Management does not expect the resolution of these claims will have a material impact on the City’s financial condition or results of operations. F. CONTINGENT LIABILITIES Tax Increment Notes In May 2002, the City entered into two limited tax increment notes with developers whereby the City will pay the developers a percentage of the available tax increment. Whether payments will occur and the amount of the payments is unpredictable since all payments are dependent on the City receiving tax increment revenues from the developer’s project. As such, this liability has not been recorded in the financial statements. Any potential liability ends with the decertification of the tax increment district. 71 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION F. CONTINGENT LIABILITIES (Continued) A schedule of the notes outstanding at December 31, 2008 is as follows: G. JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATIONS The City has several agreements with other entities that provide reduced costs, better service, and additional benefits to the participants. The programs in which the City participates are listed below and amounts recorded within the current year’s financial statements are disclosed. Local Government Information Systems Association (LOGIS) This consortium of approximately 30 government entities provides computerized data processing and support services to its members. LOGIS is legally separate; the City does not appoint a voting majority of its board, and the Consortium is fiscally independent of the City. The total amount recorded within the 2008 financial statements of the City is $ 365,684 for general services and application upgrades provided. Costs were allocated to the various funds based on applications and/or use of services. Complete financial statements for LOGIS may be obtained at the LOGIS offices located at 5750 Duluth Street, Golden Valley, Minnesota 55422. LOGIS Insurance Group This group provides cooperative purchasing of health and life insurance benefits for approximately 45 governmental entities. The total of 2008 health and life insurance costs paid by the City was $ 1,183,456. Complete financial statements may be obtained from Stanton Group located at 3405 Annapolis Lane, Plymouth, Minnesota 55447. The Brooklyn Center Fire Department Relief Association (the Association) The Association is organized as a nonprofit organization, legally separate from the City, by its members to provide pension and other benefits to members in accordance with Minnesota Statutes. Its board of directors is elected by the membership of the Association and not by the City Council. The Association issues its own set of financial statements. All funding is conducted in accordance with applicable Minnesota Statutes, whereby state aids flow to the Association, tax levies are determined by the Association and are only reviewed by the City. The Association pays benefits directly to its members. The Association may certify tax levies to Hennepin County directly if the City does not carry out this function. Because the Association is fiscally independent of the City, the financial information of the Association has not been included within the City’s financial statements. (See Note 5.B.2. for disclosures relating to the pension plan operated by the Association.) Complete financial statements for the Association may be obtained at the City offices located at 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430. 72 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 5 OTHER INFORMATION (Continued) H. SUBSEQUENT EVENT In March 2009, the City purchased the property at 2545 County Road 10 from Jopaul Properties LLC for $ 677,831 for redevelopment. This property will be recorded in the Tax Increment District No. 3 fund as Assets held for resale at cost, not to exceed net realizable value, until the property is sold. 73 74 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 1 of 5 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2008 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s REVENUES Taxes: Property taxes11,233,679$$11,233,679$ 10,811,528$(422,151) Market value homestead credit-- 543,128543,128 Penalties and interest-- 20,88320,883 Lodging ta665,000665,000 619,962(45,038) x Total taxes11,898,67911,898,679 11,995,50196,822 Licenses and permits: Liquor and beer licenses83,00083,000 76,370(6,630) Building permits300,000300,000 211,462(88,538) Mechanical permits70,00070,000 52,898(17,102) Sewer and water permits1,0001,000 831(169) Plumbing permits30,00030,000 45,76615,766 Garbage licenses3,0703,070 3,030(40) Mechanical licenses3,3003,300 5,9302,630 Service station licenses2,4902,490 2,313(177) Vehicle dealer licenses1,5001,500 1,250(250) Bowling licenses720720 720- Cigarette licenses3,1503,150 3,838688 Sign permits2,5002,500 2,910410 Rental dwelling license175,000175,000 181,5596,559 s Amusement license 1,0001,000 830 (170) s Electrical Permits40,000 40,000 45,306 5,306 ROW permits1,0001,000 4,0803,080 Miscellaneous licenses and permits6,1156,115 4,643(1,472) Total licenses and permits723,845723,845 643,736(80,109) Intergovernmental: Federal: Other federal grants-- 1,7981,798 State: Local government ai 1,113,2431,113,243 572,708 (540,535) d Police pension aid283,000283,000 290,1617,161 PERA aid34,36534,365 34,365- Fireperson pension aid160,000160,000 117,983(42,017) Police training-- 16,42216,422 Local: Miscellaneous grants61,40061,400 78,83517,435 Total intergovernmental1,652,0081,652,008 1,112,272(539,736) Charges for services: General government charges33,12533,125 27,964(5,161) Public safety charges15,60015,600 42,07026,470 Community development fee -- 1,590 1,590 s Recreation fees306,229 306,229 316,564 10,335 Community Center fee339,150339,150 360,81321,663 s Total charges for services694,104694,104 749,00154,897 75 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 2 of 5 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2008 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Revenues (continued): Fines and forfeits248,000$ 248,000$ 302,986$ 54,986$ Miscellaneous: Investment earnings (net of market value change185,000185,000 149,484(35,516) ) Othe97,200 74,16497,200 (23,036) r Total miscellaneous282,200282,200 223,648(58,552) Total revenues15,498,83615,498,836 15,027,144(471,692) EXPENDITURES General government: Mayor and council: Current: Personal services52,86452,864 48,3124,552 Materials and supplies600600 148452 Services and other charges80,83680,836 77,3743,462 Total mayor and council134,300134,300 125,8348,466 Administrative (Manager, Clerk, HR) offices: Current: Personal services617,057617,057 617,686(629) Materials and supplies3,5003,500 1,3302,170 Services and other charges48,67548,675 39,8618,814 Total administrative office669,232669,232 658,87710,355 Elections and voter registration: Current: Personal services61,10761,107 51,8289,279 Materials and supplies3,0003,000 2,608392 Services and other charges35,03635,036 34,872164 Total elections and voter registration99,14399,143 89,3089,835 Assessor's office: Current: Personal services258,218258,218 248,9039,315 Materials and supplies5,1755,175 4,738437 Services and other charges43,99543,995 42,1141,881 295,75511,633 Total assessor's office307,388307,388 Finance: Current: Personal services446,325446,325 434,96911,356 Materials and supplies4,0504,050 3,465585 Services and other charges12,80012,800 10,0342,766 Total finance463,175463,175 448,46814,707 Legal: Current: Services and other charges325,000325,000 461,454(136,454) 76 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 3 of 5 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2008 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Expenditures: General government (continued): Government buildings: Current: Personal services286,514$ 286,514$ 289,388$ (2,874)$ Materials and supplies93,15093,150 89,1034,047 Services and other charges360,521360,521 504,216(143,695) Total government buildings740,185740,185 882,707(142,522) Information technology: Current: Personal services192,815192,815 194,002(1,187) Materials and supplies18,00018,000 8,9189,082 Services and other charges162,952162,952 142,88820,064 Total information technolog373,767373,767 345,80827,959 y Total general governmen 3,112,1903,112,190 3,308,211 (196,021) t Public safety: Police protection: Current: Personal services5,172,9405,172,940 5,151,48621,454 Materials and supplies124,094124,094 111,43812,656 Services and other charges875,067875,067 886,424(11,357) Total police protection6,172,1016,172,101 6,149,34822,753 Fire protection: Current: Personal services551,563551,563 514,82536,738 Materials and supplies85,60085,600 66,83918,761 Services and other charges278,312278,312 237,63140,681 Total fire protection915,475915,475 819,29596,180 Protective inspection: Current: Personal services594,560594,560 563,52831,032 Materials and supplies4,8004,800 2,8371,963 Services and other charges131,858131,858 141,300(9,442) Total protective inspection731,218731,218 707,66523,553 Emergency preparedness: Current: Personal services58,39058,390 61,490(3,100) Materials and supplies22,40022,400 21,2531,147 Services and other charges6,2406,240 4,3191,921 Total emergency preparedness87,03087,030 87,062(32) Total public safety7,905,8247,905,824 7,763,370142,454 77 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 4 of 5 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2008 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Expenditures (continued): Public works: Engineering department: Current: Personal services509,486$ 509,486$ 513,925$ (4,439)$ Materials and supplies6,3406,340 3,5622,778 Services and other charges49,08049,080 53,003(3,923) Total engineering department564,906564,906 570,490(5,584) Street department: Current: Personal services748,458748,458 740,5287,930 Materials and supplies142,300142,300 136,8895,411 Services and other charges553,560553,560 522,05131,509 Total street department1,444,3181,444,318 1,399,46844,850 Total public works2,009,2242,009,224 1,969,95839,266 Community services: Social services: Current: Services and other charges73,01973,019 72,893126 Civic events: Current: Services and other charges5,0005,000 -5,000 Total community service78,019 72,89378,019 5,126 s Parks and recreation: Administration: Current: Personal services512,835171,318 165,5385,780 Materials and supplies12,3001,100 925175 Services and other charges67,2105,790 4,816974 Total administration592,345178,208 171,2796,929 Recreation programs: Current: Personal services93,628435,145 453,553(18,408) Materials and supplies23,12834,328 40,974(6,646) Cost of good sold to public14,04614,046 36,666(22,620) Services and other charges119,550180,970 190,271(9,301) Total adult programs250,352664,489 721,464(56,975) Community center: Current: Personal services436,035436,035 432,6093,426 Materials and supplies36,00036,000 19,22716,773 Services and other charges75,75075,750 95,597(19,847) Total community cente547,785547,785 547,433352 r 78 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 5 of 5 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2008 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Expenditures: Parks and recreation (continued): Park maintenance: Current: Personal services558,003$ 558,003$ 531,061$ 26,942$ Materials and supplies76,69076,690 59,13717,553 Services and other charges297,759297,759 281,36116,398 Total park maintenance932,452932,452 871,55960,893 Total parks and recreation2,322,9342,322,934 2,311,73511,199 Economic development: Convention bureau: Current: Services and other charges315,875315,875 296,33219,543 ondepartmental: N Expenditures not charged to departments: Current: Personal services-- (2,093)2,093 Materials and supplies18,50018,500 20,608(2,108) Services and other charges446,270446,270 278,695167,575 Total nondepartmental464,770464,770 301,396163,374 Total expenditures16,208,83616,208,836 16,023,895184,941 Revenues over (under) expenditures(710,000)(710,000) (996,751)(286,751) OTHER FINANCING SOURCES (USES) Transfers in - administrative services reimburse760,000760,000 802,77542,775 d Transfers from other funds20,00020,000 -(20,000) Transfers to other funds(70,000)(70,000) (5,000)65,000 Total other financing sources (uses)710,000710,000 797,77587,775 et increase (decrease) in fund balance$-$ (198,976)- $(198,976) N Fund balance - January 1 7,942,414 Fund balance - December 31$ 7,743,438 79 CITY OF BROOKLYN CENTER, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - TAX INCREMENT DISTRICT NO. 3 For the Year Ended December 31, 2008 Variance wit h Final Budget - Budgeted AmountsPositive OriginalFinalActual(Negative) REVENUES Taxes: Tax increments1,890,991$$1,890,991$ 1,900,386$9,395 Market value homestead credit-- 5,6675,667 Intergovernmenta -- 115,046 115,046 l Investment earnings (net of market value adjustment400,000400,000 272,709(127,291) ) Miscellaneous-- 12,50012,500 Total revenues2,290,9912,290,991 2,306,30815,317 EXPENDITURES Current: Economic development: Personal services-- 33,002(33,002) Supplies-- 346(346) Services and other charges284,000284,000 7,018,166(6,734,166) Capital outlay: Economic developmen -- 45,171 (45,171) t Debt service: Bond issuance costs- - 33,818 (33,818) Total expenditures284,000284,000 7,130,503(6,846,503) Revenues over (under) expenditures2,006,9912,006,991 (4,824,195)(6,831,186) OTHER FINANCING SOURCES (USES) Issuance of debt- 4,335,000- 4,335,000 Discount on issuance of deb -- (28,178) (28,178) t Transfers out(1,834,491) (1,834,491) (1,243,183) 591,308 Total other financing sources (uses)(1,834,491)(1,834,491) 3,063,6394,898,130 et increase (decrease) in fund balance$172,500$172,500 (1,760,556)$(1,933,056) N Fund balance - January 1 12,642,688 Fund balance - December 31$ 10,882,132 80 CITY OF BROOKLYN CENTER, MINNESOTA Statement 11 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS - OTHER POSTEMPLOYMENT BENEFITS For the Year Ended December 31, 2008 Unfunde d ActuarialActuarialActuarialActuarialUAAL as a ValuationValue ofAccrueAccrueFundeCoveredPercentage of ddd DateAssetsLiability (AALLiability (UAAL)RatioPayrollCovered Payroll ) $ $3,996,1360.00%8,882,315$ 44.99% January 1, 2008$ -3,996,136 Percentage Annuaof Annua ll Fiscal YearOPEBEmployeOPEB Costet OPEB rN EndedCosContributionContributedObligation t December 31, 2008314,184$ $ 167,13953.20%$147,045 The City implemented GASB Statement No. 45 for the year ended December 31, 2008. nformation for prior years is not available. I 81 CITY OF BROOKLYN CENTER, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2008 Note A LEGAL COMPLIANCE – BUDGET The General Fund and Tax Increment District No. 3 Special Revenue Fund budgets are legally adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is the department level for the General Fund and the fund level for all other governmental funds. The following General Fund departments and major special revenue funds had expenditures in excess of budgeted appropriations: 82 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. DEBT SERVICE FUNDS The Debt Service Funds are used to account for the accumulation of resources for, and payment of, interest, principal and related costs on general long-term debt. CAPITAL PROJECT FUNDS The Capital Project Funds account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). 83 CITY OF BROOKLYN CENTER, MINNESOTA Statement 12 COMBINING BALANCE SHEET ONMAJOR GOVERNMENTAL FUNDS N December 31, 2008 Total SpecialDebtCapitalonmajo Nr RevenueServiceProjectGovernmenta l ASSETS Cash and investment$ 2,385,4223,098,821$ 4,483,285$ 9,967,528$ s Receivables: Accounts-- 159,196159,196 Current taxes24,5798,755 -33,334 Delinquent taxes17,25447,507 -64,761 Due from other government72,079- 611,373683,452 s Interfund receivable11,115- -11,115 Prepaid items7,754- -7,754 Advances to other funds-- 792,488792,488 Assets held for resale787,000- 787,000- Total assets4,018,6022,441,684 6,046,34212,506,628 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable2,711- 69,06371,774 Accrued salaries and wages13,020- -13,020 Due to other funds-- 135,000135,000 Interfund payable11,115- -11,115 Deferred revenue822,15647,507 869,663- Total liabilities849,00247,507 204,0631,100,572 Fund balances: Reserve 2,394,1777,754 856,291 3,258,222 d Unreserved: Designate -3,030,092 4,985,988 8,016,080 d Undesignate -131,754 - 131,754 d Total fund balances3,169,6002,394,177 5,842,27911,406,056 Total liabilities and fund balances$4,018,602$2,441,684$ 6,046,342$12,506,628 84 CITY OF BROOKLYN CENTER, MINNESOTA Statement 13 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR GOVERNMENTAL FUNDS N For the Year Ended December 31, 2008 Total SpecialDebtCapitalonmajo Nr RevenueServiceProjectGovernmenta l REVENUES Property taxes$ 727,482300,287$ -$ 1,027,769$ Tax increments988,542- 988,542- Franchise fees-- 643,934643,934 Intergovernmenta -282,869 701,373 984,242 l Charges for services12,403- -12,403 Investment earnings (net of market value adjustment61,57253,815 135,164250,551 ) Miscellaneous93,236- 227,002320,238 Total revenues1,738,909781,297 1,707,4734,227,679 EXPENDITURES Current: General governmen-- 266,936266,936 t Public safet -285,159 - 285,159 y Public works2,575- 111,577114,152 Parks and recreation42,480- 55,07697,556 Economic developmen -318,473 - 318,473 t Capital outlay: General governmen-- 362,442362,442 t Public works- 1,337,997- 1,337,997 Parks and recreation-- 168,249168,249 Debt service: Principal retirement274,9531,630,000 1,904,953- Interest-915,044 915,044- Fiscal agent fees-2,252 -2,252 Total expenditures923,6402,547,296 2,302,2775,773,213 Revenues over (under) expenditures815,269(1,765,999) (594,804)(1,545,534) OTHER FINANCING SOURCES (USES) Transfers in306,175462,061 370,0001,138,236 Transfers out(301,175)- (301,175)- Total other financing sources (uses)5,000462,061 370,000837,061 et increase (decrease) in fund balances820,269(1,303,938) (224,804)(708,473) N Fund balances - January 12,349,3313,698,115 6,067,08312,114,529 Fund balances - December 31$3,169,600$2,394,177$ 5,842,279$11,406,056 85 86 NONMAJOR SPECIAL REVENUE FUNDS The City of Brooklyn Center had the following Special Revenue Funds during the year: Housing and Redevelopment Authority Fund (HRA) - This fund has authority to levy an ad valorem property tax for the purpose of conducting housing and redevelopment projects. These projects are accounted for in the EDA Fund; all tax proceeds are transferred to that fund. Economic Development Authority Fund (EDA) - This fund was established to account for the Economic Development Authority (EDA) of Brooklyn Center. The EDA carries out development activities; it has authority to operate an enterprise. The Earle Brown Heritage Center operates under this authority, as well as the tax increment financing activities. The EDA also does redevelopment and housing projects, funded by an ad valorem property tax levy and transfers from the CDBG and HRA funds. Earle Brown Tax Increment District – This fund has the authority to collect tax increments which are used for the historic restoration of the Earle Brown Farm and for debt service payments on bonds which were issued for the same purpose. Tax Increment District No. 4 Fund – This fund has the authority to collect tax increments which are used for various redevelopment projects within the City and for debt service payments of bonds which were issued for the same purpose. Police Drug Forfeiture Fund - This fund was established to account for property and/or cash seized by Police Department personnel. Community Development Block Grant Fund (CDBG) - This fund was established to account for funds received under Title I of the Housing and Community Development Act of 1974. City Initiatives Grant Fund – Revenues and expenditures from grants received from outside entities are accounted for in this fund. Programs include several federal, state, and local public safety grants, and state and local recreation grants. 87 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET ONMAJOR SPECIAL REVENUE FUNDS N December 31, 2008 Housing anEconomicEarle Brown d RedevelopmenDevelopmenTax Incremen ttt AuthoritAuthoritDistric yyt ASSETS Cash and investment$-$1,875,128$987,944 s Receivables: Current taxes2,718 -21,861 Delinquent taxes17,254 -- Due from other government- -- s Interfund receivable- 11,115- Prepaid items- -- Asset held for resale-787,000- Total assets19,9722,673,2431,009,805 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable- 2,428- Accrued salaries and wages- 6,325- Interfund payable- -- Deferred revenue17,254787,000- Total liabilities17,254795,753- Fund balances: Reserved: Prepaid items- -- Unreserved: Designated: Economic developmen 1,877,4902,718 1,009,805 t Undesignate- -- d Total fund balances2,7181,877,4901,009,805 Total liabilities and fund balances$19,972$2,673,243$1,009,805 88 Statement 14 Total TaxPoliceCommunitCitonmajo yyNr IncremenDrugDevelopmenInitiativesSpecial tt District No. 4ForfeitureBlock GrantGranRevenue t $ 140,079$ 24,881$-$ 70,789$3,098,821 - -- -24,579 - -- -17,254 - -11,115 60,96472,079 - -- -11,115 - 7,754- -7,754 - -- -787,000 140,079 32,63511,115131,7534,018,602 - 266- 172,711 - -- 6,69513,020 - -11,115 -11,115 - -- 17,902822,156 - 26611,115 24,614849,002 - 7,754- -7,754 140,079 -- -3,030,092 - 24,615-107,139131,754 140,079 32,369-107,1393,169,600 $140,079$ 32,635$11,115$131,753$4,018,602 89 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR SPECIAL REVENUE FUNDS N For the Year Ended December 31, 2008 Housing anEconomicEarle Brown d RedevelopmenDevelopmenTax Incremen ttt AuthoritAuthoritDistric yyt REVENUES Property taxes$ -300,287$ -$ Tax increments- - 701,339 Intergovernmenta- -- l Charges for services- -- Investment earnings (net of marke t value adjustment)-45,70713,668 Miscellaneous- 11,935- Total revenues300,287 57,642715,007 EXPENDITURES Current: Public safety: Personal services- -- Supplies- -- Services and other charges- -- Total public safety- -- Public works: Supplies- -- Parks and recreation: Personal services- -- Supplies- -- Services and other charges- -- Total parks and recreation- -- Economic development: Personal services-173,879- Supplies- 1,734- Services and other charges-117,1052,900 Total economic development-292,7182,900 Debt service: Principal- -- Total expenditures-292,7182,900 Revenues over (under) expenditures300,287(235,076)712,107 OTHER FINANCING SOURCES (USES) Transfers in-299,858- Transfers out(299,858) (1,317)- Total other financing sources (uses)(299,858)298,541- et increase (decrease) in fund balances429 63,465712,107 N Fund balances - January 12,2891,814,025297,698 Fund balances - December 31$2,718$1,877,490$1,009,805 90 Statement 15 Total TaxPoliceCommunitCitonmajo yyNr IncremenDrugDevelopmenInitiativesSpecial tt District No. 4ForfeitureBlock GrantGranRevenue t $ -$ -$-$ -$300,287 287,203 -- -988,542 - 85222,230259,787282,869 - -- 12,40312,403 748 199- 1,25061,572 - 38,449- 42,85293,236 287,951 39,50022,230316,2921,738,909 - --240,880240,880 - 5,524- 6,32711,851 - 16,410- 16,01832,428 - 21,934-263,225285,159 - -- 2,5752,575 - -- 6,1166,116 - -- 9,3299,329 - -- 27,03527,035 - -- 42,48042,480 - -- -173,879 - -- -1,734 625 -22,230 -142,860 625 -22,230 -318,473 274,953 -- -274,953 275,578 21,93422,230308,280923,640 12,373 17,566- 8,012815,269 1,317 -- 5,000306,175 - -- -(301,175) 1,317 -- 5,0005,000 13,690 17,566- 13,012820,269 126,389 14,803- 94,1272,349,331 $ 140,079$ 32,369$-$107,139$3,169,600 91 CITY OF BROOKLYN CENTER, MINNESOTA Statement 16 SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Taxes: Property taxes$ 302,191302,191$ $285,625 Market value homestead credit- -14,662 Total revenues302,191 302,191300,287 OTHER FINANCING SOURCES (USES) Transfers out(302,191) (302,191)(299,858) et increase (decrease) in fund balance$-$ -429 N Fund balance - January 12,289 Fund balance - December 31$2,718 92 CITY OF BROOKLYN CENTER, MINNESOTA Statement 17 SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$65,000$ 65,000$45,707 ) Miscellaneous- -11,935 Total revenues65,000 65,00057,642 EXPENDITURES Current: Economic development: Personal services209,691 209,691173,879 Supplies2,750 2,7501,734 Services and other charges111,703 111,703117,105 Total expenditures324,144 324,144292,718 Revenues over (under) expenditures(259,144) (259,144)(235,076) OTHER FINANCING SOURCES (USES) Transfers in302,191 302,191299,858 Transfers out- -(1,317) Total other financing sources (uses)302,191 302,191298,541 et increase (decrease) in fund balance$43,047$ 43,04763,465 N Fund balance - January 11,814,025 Fund balance - December 31$1,877,490 93 CITY OF BROOKLYN CENTER, MINNESOTA Statement 18 SPECIAL REVENUE FUND - EARLE BROWN TAX INCREMENT DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Taxes: Tax increments$ 624,102624,102$ $701,339 Investment earnings (net of market value adjustment5,000 5,00013,668 ) Total revenue629,102 629,102715,007 EXPENDITURES Current: Economic development: Services and other charges22,000 22,0002,900 et increase (decrease) in fund balance$ 607,102607,102$ 712,107 N Fund balance - January 1297,698 Fund balance - December 31$1,009,805 94 CITY OF BROOKLYN CENTER, MINNESOTA Statement 19 SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 4 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Tax increments$271,536$ 271,536$287,203 Investment earnings (net of market value adjustment 300300 748 ) Total revenues271,836 271,836287,951 EXPENDITURES Current: Economic development: Services and other charges- -625 Debt service: Principal249,813 249,813274,953 Total expenditures249,813 249,813275,578 Revenues over (under) expenditures22,023 22,02312,373 OTHER FINANCING SOURCES (USES) Transfers in- -1,317 et increase (decrease) in fund balance$22,023$ 22,02313,690 N Fund balance - January 1126,389 Fund balance - December 31$140,079 95 CITY OF BROOKLYN CENTER, MINNESOTA Statement 20 SPECIAL REVENUE FUND - POLICE DRUG FORFEITURE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Intergovernmenta$ --$ $852 l Investment earnings (net of market value adjustment1,000 1,000199 ) Miscellaneous28,000 28,00038,449 Total revenues29,000 29,00039,500 EXPENDITURES Current: Public safety: Supplies22,000 22,0005,524 Services and other charges7,000 7,00016,410 Total expenditures29,000 29,00021,934 et increase (decrease) in fund balance$-$ -17,566 N Fund balance - January 114,803 Fund balance - December 31$32,369 96 CITY OF BROOKLYN CENTER, MINNESOTA Statement 21 SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Intergovernmenta$193,749$ 193,749$22,230 l EXPENDITURES Current: Economic development: Services and other charges193,749 193,74922,230 et increase (decrease) in fund balance$-$ -- N Fund balance - January 1- Fund balance - December 31$- 97 CITY OF BROOKLYN CENTER, MINNESOTA Statement 22 SPECIAL REVENUE FUND - CITY INITIATIVES GRANT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Intergovernmenta$190,250$ 190,250$259,787 l Charges for services11,578 11,57812,403 Investment earnings (net of market value adjustment -- 1,250 ) Miscellaneous(3,600) (3,600)42,852 Total revenues198,228 198,228316,292 EXPENDITURES Current: Public safety: Personal services246,281 246,281240,880 Supplies- -6,327 Services and other charges- -16,018 Total public safety246,281 246,281263,225 Public works: Supplies- -2,575 Parks and recreation: Personal services4,874 4,8746,116 Supplies10,400 10,4009,329 Services and other charges47,720 47,72027,035 Total parks and recreation62,994 62,99442,480 Total expenditures309,275 309,275308,280 Revenues over (under) expenditures(111,047)(111,047)8,012 OTHER FINANCING SOURCES (USES) Transfers in- -5,000 et increase (decrease) in fund balance$(111,047)$ (111,047)13,012 N Fund balance - January 194,127 Fund balance - December 31$107,139 98 NONMAJOR DEBT SERVICE FUNDS The City's Debt Service Funds account for the following types of bonded indebtedness: General Obligation Bonds Fund – This fund is used to account for the accumulation of resources for payment of general obligation bonds and interest thereon. Tax Increment Bonds Fund – This fund is used to account for the payment of tax increment general obligation bonds and interest thereon. These bonds were sold to finance the purchase and redevelopment of various redevelopment projects within the City. Financing for this debt is transferred from the Tax Increment District No. 3 Fund as needed. 99 CITY OF BROOKLYN CENTER, MINNESOTA Statement 23 COMBINING BALANCE SHEET ONMAJOR DEBT SERVICE FUNDS N December 31, 2008 Total GeneralTaxonmajo Nr ObligationIncremenDebt t BondsBondsService ASSETS Cash and investment$ 1,195,9431,189,479$ $2,385,422 s Receivables: Current taxes8,755 -8,755 Delinquent taxes47,507 -47,507 Total assets1,245,741 1,195,9432,441,684 LIABILITIES AND FUND BALANCE Liabilities: Deferred revenue47,507 -47,507 Fund balances: Reserved: Debt service1,198,234 1,195,9432,394,177 Total liabilities and fund balances$1,245,741$ 1,195,943$2,441,684 100 CITY OF BROOKLYN CENTER, MINNESOTA Statement 24 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR DEBT SERVICE FUNDS N For the Year Ended December 31, 2008 Total GeneralTaxonmajo Nr ObligationIncremenDebt t BondsBondsService REVENUES Property taxes$727,482$ -$727,482 Investment earnings (net of market value adjustment 35,06618,74953,815 ) Total revenues746,231 35,066781,297 EXPENDITURES Debt service: Principal600,000 1,030,0001,630,000 Interest110,553 804,491915,044 Fiscal agent fees750 1,5022,252 Total expenditures711,303 1,835,9932,547,296 Revenues over (under) expenditures34,928 (1,800,927)(1,765,999) OTHER FINANCING SOURCES (USES) Transfers in- 462,061462,061 et increase (decrease) in fund balances34,928 (1,338,866)(1,303,938) N Fund balances - January 11,163,306 2,534,8093,698,115 Fund balances - December 31$1,198,234$ 1,195,943$2,394,177 101 CITY OF BROOKLYN CENTER, MINNESOTA Statement 25 DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Property taxes$-$ -$606 Special assessments988,390 988,390816,192 Investment earnings (net of market value adjustment 77,40077,400 61,133 ) Total revenues1,065,790 1,065,790877,931 EXPENDITURES Debt service: Principal980,000 980,000980,000 Interest145,122 145,122145,121 Fiscal agent fees15,850 15,8508,987 Bond issuance fees- -28,574 Total expenditures1,140,972 1,140,9721,162,682 Revenues over (under) expenditures(75,182) (75,182)(284,751) OTHER FINANCING SOURCES (USES) Issuance of debt- -50,068 Premium on issuance of deb -- 1,384 t Total other financing sources (uses)- -51,452 et increase (decrease) in fund balance$(75,182)$ (75,182)(233,299) N Fund balance - January 13,026,385 Fund balance - December 31$2,793,086 102 CITY OF BROOKLYN CENTER, MINNESOTA Statement 26 DEBT SERVICE FUND - GENERAL OBLIGATION BONDS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Property taxes$730,152$ 730,152$727,482 Investment earnings (net of market value adjustment 20,00020,000 18,749 ) Total revenues750,152 750,152746,231 EXPENDITURES Debt service: Principal600,000 600,000600,000 Interest110,551 110,551110,553 Fiscal agent fees1,500 1,500750 Total expenditures712,051 712,051711,303 et increase (decrease) in fund balance$38,101$ 38,10134,928 N Fund balance - January 11,163,306 Fund balance - December 31$1,198,234 103 CITY OF BROOKLYN CENTER, MINNESOTA Statement 27 DEBT SERVICE FUND - TAX INCREMENT BONDS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$ --$ $35,066 ) EXPENDITURES Debt service: Principal$1,030,000$ 1,030,000$1,030,000 Interest804,491 804,491804,491 Fiscal agent fees3,000 3,0001,502 Total expenditures1,837,491 1,837,4911,835,993 Revenues over (under) expenditures(1,837,491) (1,837,491)(1,800,927) OTHER FINANCING SOURCES (USES) Transfers in1,837,491 1,837,491462,061 et increase (decrease) in fund balance$-$ (1,338,866)- N Fund balance - January 12,534,809 Fund balance - December 31$1,195,943 104 NONMAJOR CAPITAL PROJECT FUNDS The City of Brooklyn Center had the following Capital Project Funds during the year: Capital Reserve Emergency Fund - This fund was established in 1997 to account for monies held in reserve for catastrophic losses or unforeseen capital items. Capital Improvements Fund - This fund was established in 1968 to provide funds, and to account for the expenditure of such funds, for major capital outlays including, but not limited to, construction or acquisition of major permanent facilities having a relatively long life; and/or to reduce debt incurred for capital outlays. The financing sources of the fund include ad valorem taxation, transfers from other funds, issuance of bonds, federal and state grants, and investment earnings. Municipal State Aid Fund - This fund was established to account for the state allotment of gasoline tax collections used for transportation related construction and maintenance projects. Earle Brown Heritage Center Improvements Fund - This fund was established to provide a stable source of funds to pay for periodic capital improvements needed at the facility. – This fund accounts for franchise fees collected, which have Street Reconstruction Fund been dedicated to the reconstruction of the City’s infrastructure. Technology Fund - This fund, established in 2003, accounts for funds set aside for technology improvements or major technology renovations/replacements. 105 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET ONMAJOR CAPITAL PROJECT FUNDS N December 31, 2008 Capital ReserveCapital EmergencImprovements y ASSETS Cash and investment$1,427,690$591,981 s Receivables: Accounts -- Due from other government -- s Advances to other funds -792,488 Total assets1,427,6901,384,469 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable -- Due to other funds -135,000 Total liabilities -135,000 Fund balances: Reserved: Advances to other funds -792,488 Committed contracts -- Unreserved: Designated for capital improvements1,427,690456,981 Total fund balances1,427,6901,249,469 Total liabilities and fund balances$1,427,690$1,384,469 106 Statement 28 MunicipalEarle BrownTotal State AiHeritageonmajo dNr foCenteStreetCapital rr ConstructioImprovementsReconstructioTechnologyProjects nn $ 184,281$ 466,299$1,398,617$414,417$4,483,285 - -159,196 -159,196 611,373 -- -611,373 - -- -792,488 795,654 466,2991,557,813414,4176,046,342 724 53,464- 14,87569,063 - -- -135,000 724 53,464- 14,875204,063 - -- -792,488 - -- 63,80363,803 794,930 412,8351,557,813335,7394,985,988 794,930 412,8351,557,813399,5425,842,279 $ 795,654$ 466,299$1,557,813$414,417$6,046,342 107 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR CAPITAL PROJECT FUNDS N For the Year Ended December 31, 2008 Capital ReserveCapital EmergencImprovements y REVENUES Franchise fees$ -$- Intergovernmenta-- l Investment earnings (net of market value adjustment 36,01414,077 ) Miscellaneous 33,24938,420 Total revenues 69,26352,497 EXPENDITURES Current: General government: Supplies -- Services and other charges -86,576 Total general governmen -86,576 t Public works: Supplies -- Services and other charges 21,42723,903 Total public works 21,42723,903 Parks and recreation: Services and other charges -55,076 Capital outla y General governmen -- t Public works -23,975 Parks and recreation -168,249 Total capital outlay -192,224 Total expenditures 21,427357,779 Revenues over (under) expenditures 47,836(305,282) OTHER FINANCING SOURCES (USES) Transfers in -135,000 et increase (decrease) in fund balances 47,836(170,282) N Fund balances - January 11,379,8541,419,751 Fund balances - December 31$1,427,690$1,249,469 108 Statement 29 MunicipalEarle BrownTotal State AiHeritageonmajo dNr foCenteStreetCapital rr ConstructioImprovementsReconstructioTechnologyProjects nn $ -$ -$643,934$ -$643,934 701,373 -- -701,373 19,812 9,95742,606 12,698135,164 - 155,088- 245227,002 721,185 165,045686,540 12,9431,707,473 - -- 42,86942,869 - 62,810- 74,681224,067 - 62,810-117,550266,936 26,249 -- -26,249 26,955 -13,043 -85,328 53,204 -13,043 -111,577 - -- -55,076 - 326,415- 36,027362,442 611,373 -702,649 -1,337,997 - -- -168,249 611,373 326,415702,649 36,0271,868,688 664,577 389,225715,692153,5772,302,277 56,608 (224,180)(29,152)(140,634)(594,804) - 235,000- -370,000 56,608 10,820(29,152)(140,634)(224,804) 738,322 402,0151,586,965540,1766,067,083 $ 794,930$ 412,835$1,557,813$399,542$5,842,279 109 CITY OF BROOKLYN CENTER, MINNESOTA Statement 30 CAPITAL PROJECT FUND - INFRASTRUCTURE CONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Special assessments$400,000$ 400,000$472,956 Miscellaneous30,000 30,00042,159 Total revenues430,000 430,000515,115 EXPENDITURES Current: Public works: Services and other charges- -55,754 Capital outlay: Public works7,550,500 7,550,5002,617,144 Total expenditures7,550,500 7,550,5002,672,898 Revenues over (under) expenditures(7,120,500) (7,120,500)(2,157,783) OTHER FINANCING SOURCES (USES) Issuance of debt2,500,000 2,500,0002,339,932 Transfers in5,515,000 5,515,000831,297 Total other financing sources (uses)8,015,000 8,015,0003,171,229 et increase (decrease) in fund balance$ 894,500894,500$ 1,013,446 N Fund balance - January 1(1,290,428) Fund balance - December 31$(276,982) 110 CITY OF BROOKLYN CENTER, MINNESOTA Statement 31 CAPITAL PROJECT FUND - CAPITAL IMPROVEMENTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$9,522$ 9,522$14,077 ) Miscellaneous15,000 15,00038,420 Total revenues24,522 24,52252,497 EXPENDITURES Current: General government: Services and other charges- -86,576 Public works: Services and other charges17,056 286,55623,903 Parks and recreation: Services and other charges- -55,076 Capital outlay: Public works269,500 -23,975 Parks and recreation- -168,249 Total capital outlay269,500 -192,224 Total expenditures286,556 286,556357,779 Revenues over (under) expenditures(262,034) (262,034)(305,282) OTHER FINANCING SOURCES (USES) Transfers in135,000 135,000135,000 et increase (decrease) in fund balance$(127,034)$ (127,034)(170,282) N Fund balance - January 11,419,751 Fund balance - December 31$1,249,469 111 CITY OF BROOKLYN CENTER, MINNESOTA Statement 32 CAPITAL PROJECT FUND - MUNICIPAL STATE AID FOR CONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Intergovernmenta$814,000$ 814,000$701,373 l Investment earnings (net of market value adjustment 10,00010,000 19,812 ) Total revenues824,000 824,000721,185 EXPENDITURES Current: Public works: Supplies26,900 26,90026,249 Services and other charges33,400 33,40026,955 Total public works60,300 60,30053,204 Capital outlay: Public works817,000 817,000611,373 Total expenditures877,300 877,300664,577 et increase (decrease) in fund balance$(53,300)$ (53,300)56,608 N Fund balance - January 1738,322 Fund balance - December 31$794,930 112 CITY OF BROOKLYN CENTER, MINNESOTA Statement 33 CAPITAL PROJECT FUND - EARLE BROWN HERITAGE CENTER IMPROVEMENTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$ --$ $9,957 ) Miscellaneous- -155,088 Total revenues- -165,045 EXPENDITURES Current: General government: Services and other charges280,000 280,00062,810 Capital outlay: General governmen -- 326,415 t Total expenditures280,000 280,000389,225 Revenues over (under) expenditures(280,000) (280,000)(224,180) OTHER FINANCING SOURCES (USES) Transfers in200,000 200,000235,000 et increase (decrease) in fund balance$(80,000)$ (80,000)10,820 N Fund balance - January 1402,015 Fund balance - December 31$412,835 113 CITY OF BROOKLYN CENTER, MINNESOTA Statement 34 CAPITAL PROJECT FUND - STREET RECONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Franchise fees$660,000$ 660,000$643,934 Investment earnings (net of market value adjustment 50,00050,000 42,606 ) Total revenues710,000 710,000686,540 EXPENDITURES Current: Public works: Services and other charges- -13,043 Capital outlay: Public works1,050,000 1,050,000702,649 Total expenditures1,050,000 1,050,000715,692 et increase (decrease) in fund balance$(340,000)$ (340,000)(29,152) N Fund balance - January 11,586,965 Fund balance - December 31$1,557,813 114 CITY OF BROOKLYN CENTER, MINNESOTA Statement 35 CAPITAL PROJECT FUND - TECHNOLOGY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$9,000$ 9,000$12,698 ) Miscellaneous- -245 Total revenues9,000 9,00012,943 EXPENDITURES Current: General government: Supplies377,617 377,61742,869 Services and other charges- -74,681 Total general governmen377,617 377,617117,550 t Capital outlay: General governmen -- 36,027 t Total expenditures377,617 377,617153,577 Revenues over (under) expenditures(368,617) (368,617)(140,634) OTHER FINANCING SOURCES (USES) Transfers in70,000 70,000- et increase (decrease) in fund balance$(298,617)$ (298,617)(140,634) N Fund balance - January 1540,176 Fund balance - December 31$399,542 115 116 NONMAJOR ENTERPRISE FUNDS The City of Brooklyn Center had the following nonmajor Enterprise Funds during the year: Recycling and Refuse Fund - This fund accounts for the operation of a state-mandated recycling program. Street Light Utility Fund - This fund was created to account for expenses related to streetlights within the City. Benefiting properties are billed for these expenses. 117 CITY OF BROOKLYN CENTER, MINNESOTA Statement 36 COMBINING STATEMENT OF NET ASSETS ONMAJOR ENTERPRISE FUNDS N December 31, 2008 Total Recycling anStreet Lighonmajo dtNr RefuseUtilitEnterprise y ASSETS Current assets: Cash and cash equivalents$-$ 72,996$72,996 Receivables: Accounts - ne 58,39353,650 112,043 t Total current assets53,650 131,389185,039 oncurrent assets: N Capital assets: Street light system 83,540- 83,540 s Construction in progress- 329,577329,577 et capital assets- 413,117413,117 N Total assets53,650 544,506598,156 LIABILITIES Current liabilities: Accounts payable864 13,65614,520 Interfund payable4,354 -4,354 Total liabilities5,218 13,65618,874 NET ASSETS Invested in capital assets- 413,117413,117 Unrestricted48,432 117,733166,165 Total net assets$48,432$ 530,850$579,282 118 CITY OF BROOKLYN CENTER, MINNESOTA Statement 37 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS ONMAJOR ENTERPRISE FUNDS N For the Year Ended December 31, 2008 Total Recycling anStreet Lighonmajo dtNr RefuseUtilitEnterprise y OPERATING REVENUES Sales and user fees$259,774$ 250,260$510,034 OPERATING EXPENSES Supplies89 9151,004 Other services264,313 21,219285,532 Insurance1,581 1,1622,743 Utilities- 159,106159,106 Total operating expenses265,983 182,402448,385 Operating income (loss)(6,209) 67,85861,649 NONOPERATING REVENUES (EXPENSES) Investment earnings (net of market value adjustment 3,938103 4,041 ) Income (loss) before contributions and transfers(6,106) 71,79665,690 Capital contributions- 329,577329,577 Transfers out- (50,175)(50,175) Change in net assets(6,106) 351,198345,092 et assets - January 154,538 179,652234,190 N et assets - December 31$48,432$ 530,850$579,282 N 119 CITY OF BROOKLYN CENTER, MINNESOTA Statement 38 COMBINING STATEMENT OF CASH FLOWS ONMAJOR ENTERPRISE FUNDS N For the Year Ended December 31, 2008 Total Recycling anStreet Lighonmajo dtNr RefuseUtilitEnterprise y CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers$260,343$ 246,931$507,274 Payments to suppliers(265,568) (198,249)(463,817) et cash flows provided (used) by operating activities(5,225)48,68243,457 N CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers out- (50,175)(50,175) Interfund payable4,354 -4,354 et cash flows provided (used) by N noncapital financing activities4,354 (50,175)(45,821) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets- (83,540)(83,540) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments103 3,9384,041 et increase (decrease) in cash and cash equivalents (81,095)(768) (81,863) N Cash and cash equivalents - January 1768 154,091154,859 Cash and cash equivalents - December 31$-$ 72,996$72,996 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $(6,209)$ 67,858$61,649 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Changes in assets and liabilities: (Increase) decrease in receivables569 (3,329)(2,760) Increase (decrease) in payables415 (15,847)(15,432) Total adjustments984 (19,176)(18,192) et cash flows provided (used) by operating activities$(5,225)$ 48,682$43,457 N Noncash financing activities: Capital contributions$-$ 329,577 120 INTERNAL SERVICE FUNDS The City’s Internal Service Funds included in this section are: Central Garage Fund - This fund was established to account for the acquisition and maintenance of all City vehicles and rolling stock equipment. Vehicle and equipment maintenance and repair costs are charged to the departments as incurred. Replacement costs are charged to the departments over the estimated useful life of the vehicles and equipment. Public Employees Retirement Fund - This fund accounts for certain health care insurance benefits for City employees who retire before age 65. Substantially all of the City’s full- time police and fire employees and all other full-time employees hired before July 1, 1989 may be eligible for those benefits from the time they qualify for an unreduced PERA pension until they reach age 65 or become eligible for Medicare. In the event that future costs would exceed earnings, other funds would be charged for the costs associated with their employees. Public Employees Compensated Absences Fund - This fund accounts for payment of unused vacation and sick leave time and the allocation of such costs to user departments. 121 CITY OF BROOKLYN CENTER, MINNESOTA Statement 39 COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS December 31, 2008 Total CentralEE RetiremenEE CompInternal t GarageBenefiAbsencesService t ASSETS Current assets: Cash and cash equivalents$4,180,414$1,447,386$ 974,855$6,602,655 Receivables: Accounts - ne14,149645 -14,794 t Inventories25,344- -25,344 Total current assets4,219,9071,448,031 974,8556,642,793 oncurrent assets: N Capital assets: Land improvement166,108- 166,108- s Machinery and equipmen -7,388,731 - 7,388,731 t Total capital assets7,554,839- 7,554,839- Less: Allowance for depreciatio(3,799,654)- (3,799,654)- n et capital assets3,755,185- 3,755,185- N Total assets7,975,0921,448,031 974,85510,397,978 LIABILITIES Current liabilities: Accounts payable30,772- -30,772 Accrued salaries payable9,349- -9,349 Compensated absences payable-curren -- 107,595 107,595 t Accrued health insurance liability-curren -- - - t Total current liabilities40,121- 107,595147,716 oncurrent liabilities: N Compensated absences payable-long-ter -- 968,358 968,358 m et OPEB Obligation-147,045 147,045- N Total noncurrent liabilities-147,045 968,3581,115,403 Total liabilities40,121147,045 1,075,9531,263,119 NET ASSETS Invested in capital assets3,755,185- 3,755,185- Unrestricted4,179,7861,300,986 (101,098)5,379,674 Total net assets$7,934,971$1,300,986$ (101,098)$9,134,859 122 CITY OF BROOKLYN CENTER, MINNESOTA Statement 40 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2008 Total CentralEE RetiremenEE CompInternal t GarageBenefiAbsencesService t OPERATING REVENUES Sales and user fees$1,399,535$71,112$ 19,532$1,490,179 OEPRATING EXPENSES Personal services269,302314,184 146,169729,655 Supplies486,940- 486,940- Other services152,876- 152,876- Insurance53,120- -53,120 Utilities1,879- -1,879 Depreciation631,250- 631,250- Total operating expenses1,595,367314,184 146,1692,055,720 Operating income (loss)(195,832)(243,072) (126,637)(565,541) NONOPERATING REVENUES (EXPENSES) Intergovernmenta 10,770- - 10,770 l Investment earnings (net of market value adjustment107,14637,377 25,539170,062 ) Gain (loss) on sale of capital assets73,036- -73,036 Other revenue26,806- -26,806 Total nonoperating revenues (expenses)206,98848,147 25,539280,674 Change in net assets11,156(194,925) (101,098)(284,867) et assets - January 1 , as previously reported7,923,815(1,021,471) 6,902,344- N Change in accounting principle 2,517,382- 2,517,382- Net assets - January 1, restated 7,923,815 1,495,911 9,419,726- et assets - December 31$7,934,971$1,300,986$ (101,098)$9,134,859 N 123 CITY OF BROOKLYN CENTER, MINNESOTA Statement 41 COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2008 Total CentralEE RetiremenEE CompInternal t GarageBenefiAbsencesService t CASH FLOWS FROM OPERATING ACTIVITIES Receipts from interfund services provided$1,393,113$71,112$ 19,532$1,483,757 Payments to suppliers(729,448)- (729,448)- Payments to employee(265,862)(167,050)(93,922)(526,834) s Miscellaneous revenue26,80610,770 -37,576 et cash flows provided (used) by operating activities424,609 (85,168) (74,390) 265,051 N CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets(792,282)- (792,282)- Proceeds from sale of capital assets123,528- 123,528- et cash flows provided (used) by capital N and related financing activities(668,754)- (668,754)- CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments107,14637,377 25,539170,062 et increase (decrease) in cash and cash equivalents(136,999) (47,791) (48,851) (233,641) N Cash and cash equivalents - January 14,317,4131,495,177 1,023,7066,836,296 Cash and cash equivalents - December 31$4,180,414$1,447,386$ 974,855$6,602,655 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $(195,832)$(243,072)$ (126,637)$(565,541) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation631,250- 631,250- Changes in assets and liabilities: (Increase) decrease in receivables(6,422)89 -(6,333) (Increase) decrease in inventories7,700- -7,700 Increase (decrease) in payables(42,333)- -(42,333) Increase (decrease) in accrued expenses3,440147,045 52,247202,732 Other nonoperating income26,80610,770 -37,576 Total adjustments620,441157,904 52,247830,592 et cash provided (used) by operating activities$424,609$(85,168)$ (74,390)$265,051 N Noncash financing activities: Gain on sale of assets$73,036$-$ - 124 STATISTICAL SECTION This part of the City of Brooklyn Center’s comprehensive annual financial report presents detailed information as a context for understanding the financial statements, note disclosures, and supplementary information. This section includes information for the primary government, including any blended component units. Contents Page Financial Trends 126 These tables contain trend information to help the reader understand the City’s financial performance by placing it in historical perspective. Revenue Capacity 136 These tables contain information to help the reader assess the City’s most significant “own-source” revenue, property taxes. Debt Capacity 142 These tables present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the City’s ability to issue debt in the future. Demographic and Economic Information 148 These tables offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating Information 150 These tables contain service and infrastructure data to help the reader understand how the City’s financial report relates to the services the City provides and the activities it performs. Sources: unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 125 126 127 128 129 130 CITY OF BROOKLYN CENTER, MINNESOTA Table 3 GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Last six fiscal years (accrual basis of accounting) (Unaudited) PropertyTaxLodging TaxIncrementsTaxTotal 2003$ 10,407,613$3,527,881$661,267$14,596,761 2004 10,788,1454,285,166656,85915,730,170 2005 11,288,8833,980,518710,61915,980,020 2006 11,618,4862,682,874738,77615,040,136 2007 12,200,5752,677,630706,93015,585,135 2008 12,458,7242,912,773619,96215,991,459 Note: Data for 1999-2002 is not available; the City did not prepare government-wide financial statements on an accrual basis for those years 131 CITY OF BROOKLYN CENTER, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 1999200020012002 General Fun d Reserve$105,074$105,074$ 105,074$173,353 d Unreserved7,203,6337,346,969 7,328,7987,756,421 Total general fund$7,308,707$7,452,043$ 7,433,872$7,929,774 All other governmental fund s Reserve$ 7,307,2978,313,672$$ 7,015,583$7,234,260 d Unreserved, reported in: Special revenue funds1,723,5591,816,806 3,864,3474,453,879 Capital project funds8,884,5827,308,293 5,337,4231,870,176 Total all other governmental funds$18,921,813$16,432,396$ 16,217,353$13,558,315 132 Table 4 200320042005200620072008 $ 110,383$ 106,578$11,080$500$ 700$21,995 7,906,697 6,862,8717,283,8717,508,690 7,941,7147,721,443 $ 8,017,080$ 6,969,449$7,294,951$7,509,190$ 7,942,414$7,743,438 $ 7,509,315$ 13,230,540$5,150,818$5,176,808$ 11,288,685$9,997,668 6,211,019 25,750,17924,853,26722,862,211 11,738,46010,523,743 2,133,079 4,969,5063,232,8204,164,400 3,466,0294,282,881 $ 15,853,413$ 43,950,225$33,236,905$32,203,419$ 26,493,174$24,804,292 133 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 1999200020012002 Revenues Property taxes$7,740,375$8,265,296$ 7,932,469$10,739,847 Tax increments2,902,5903,196,108 3,967,3983,022,252 Franchise fees-- -- Lodging taxes808,266836,857 826,957717,176 Special assessments909,8941,287,934 1,136,4541,190,031 Licenses and permits763,960632,549 788,629823,996 Intergovernmenta8,602,1667,899,522 5,824,5137,039,895 l Charges for services739,054779,060 688,453575,748 Fines and forfeits205,460180,676 230,408278,557 Investment earning 798,229609,879 2,082,680 648,423 s Miscellaneous168,050125,012 150,369267,717 Total revenues23,449,69424,001,243 23,628,33025,303,642 Expenditures General governmen2,260,4152,429,196 2,504,3922,553,426 t Public safet5,354,4135,453,143 5,672,0986,255,221 y Public works1,904,2052,100,865 2,142,0641,986,692 Community service 95,14883,295 106,034 103,491 s Parks and recreation2,233,4652,344,768 2,392,1682,125,415 Economic developmen2,664,9042,763,028 2,365,7322,095,545 t ondepartmental343,925419,789 372,056366,282 N Administrative services reimbursemen (795,737)(670,390) (767,504) (596,541) t Capital outla13,838,7027,275,675 6,558,1779,608,420 y Debt service Principal2,085,0003,970,000 2,805,0003,000,000 Interest1,373,6141,282,512 1,330,1621,034,139 Other charges13,93013,426 8,93128,712 Total expenditures31,485,47827,351,813 25,489,31028,560,802 Revenues over (under) expenditures(8,035,784)(3,350,570) (1,860,980)(3,257,160) Other financing sources (uses) Issuance of debt1,585,000735,000 730,000- Discount on issuance of deb-- -- t Premium on issuance of deb-- -- t Sale of capital assets2,411,987194,491 572,266474,648 Transfers in3,655,4335,479,120 4,124,1844,263,453 Transfers out(3,704,790)(5,404,122) (3,798,684)(4,063,453) Refunded bonds redeemed-- -- Total other financing sources (uses)3,947,6301,004,489 1,627,766674,648 et change in fund balances$(4,088,154)$(2,346,081)$ (233,214)$(2,582,512) N Debt service as a percentage of noncapital expenditures14.82%23.05%18.41%16.81% 134 Table 5 200320042005200620072008 $ 10,268,278$ 10,598,478$11,641,177$11,525,040$ 12,094,359$12,403,914 3,466,114 3,834,0604,680,6882,664,144 2,727,6372,894,595 - 612,079662,614658,410 658,620643,934 661,267 656,858710,619738,776 706,930619,962 1,232,682 1,313,7821,226,6551,214,571 1,364,4131,289,148 827,685 678,077675,530722,633 673,156643,736 3,479,082 3,239,0202,578,0312,375,697 3,171,7452,211,560 709,623 711,526754,575722,218 705,736761,404 290,408 254,980253,748256,600 291,423302,986 317,749 385,0221,078,4341,601,731 1,519,503733,877 607,582 609,902427,839477,296 404,420449,061 21,860,470 22,893,78424,689,91022,957,116 24,317,94222,954,177 2,475,323 2,594,0412,586,9932,839,150 2,951,1883,575,147 6,620,481 7,025,6297,014,5287,299,842 7,550,4348,048,529 2,114,3781,814,1072,197,1271,817,120 2,310,8462,139,864 91,581 67,32486,043123,172 74,38972,893 2,030,402 1,981,9982,121,1302,212,142 2,314,0992,409,291 1,758,257 1,006,5502,076,0231,386,558 5,659,3317,666,319 331,223 333,669315,355363,967 354,848301,396 (607,221) (784,084)(754,085)(529,362) (744,590)(802,775) 1,881,360 4,724,2898,335,9165,918,472 4,524,5244,531,003 3,220,000 3,751,5132,772,1893,127,146 2,786,0762,884,953 905,518 881,0161,214,7511,197,392 1,134,4121,060,165 26,079 126,85823,75853,226 12,89673,631 20,847,381 23,522,91027,989,72825,808,825 28,928,45331,960,416 1,013,089 (629,126)(3,299,818)(2,851,709) (4,610,511)(9,006,239) 1,205,000 25,770,000-1,460,000 -6,725,000 (8,860) (96,503)-(445) -(28,178) - ----1,384 73,175 --- -- 3,703,509 5,103,6132,811,7932,784,116 5,881,2571,969,533 (3,603,509) (3,098,803)(2,619,793)(2,211,209) (6,018,629)(1,549,358) - (7,280,000)-- (529,138)- 1,369,315 27,678,307(7,088,000)2,032,462 (666,510)7,118,381 $ 2,382,404$ 27,049,181$(10,387,818)$(819,247)$(5,277,021)$(1,887,858) 21.88%24.89%18.37%19.14%15.90%14.65% 135 CITY OF BROOKLYN CENTER, MINNESOTA ASSESSED TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last ten fiscal years (Unaudited) 1999200020012002 Real Property: Residential$9,309,893$ 8,928,7389,976,862$ $8,495,196 onresidential10,657,58811,002,424 9,225,99114,093,094 N Area-wide allocatio537,4061,504,330 746,438635,875 n Personal property452,849437,707 452,680262,882 Less: Tax increment districts2,054,6592,533,878 3,296,6242,450,218 Total Assessed Tax Capacity18,903,07720,387,445 20,924,32616,169,726 Direct Tax Rate 36.26934.645 35.99658.901 1 Estimated Market Value1,098,665,9001,177,854,4001,324,649,1001,488,832,300 Total Assessed Tax Capacity as a percentage of Estimated Market Value1.72%1.73%1.58%1.09% Beginning in 2002, the State of Minnesota significantly reduced state aids to the City and allowed these amounts to be included 1 in the proptery tax levy. Source: City Assessing Department 136 Table 6 200320042005200620072008 $ 9,362,788$ 10,532,558$12,177,307$13,942,981$ 15,436,568$16,033,784 9,430,533 9,775,3529,903,1579,475,576 9,573,4059,864,552 875,145 1,097,5961,023,6181,161,174 1,624,1082,155,636 273,072 281,963294,377298,953 283,198291,815 2,538,825 3,134,4173,122,6652,559,620 2,463,6312,405,929 17,402,713 18,553,05220,275,79422,319,064 24,453,64825,939,858 52.792 53.69351.72348.069 45.36645.081 1,673,812,000 1,840,115,300 1,959,999,1002,035,666,1002,140,133,6002,197,067,700 1.04%1.01%1.03%1.10%1.14%1.18% 137 CITY OF BROOKLYN CENTER, MINNESOTA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last ten fiscal years (Unaudited) Overlapping Rates Metro CitCountDist 11Dist 279Dist 281Dist 286Districts yy 1999 36.998 40.99454.856 59.807 54.337 47.716 6.035 2000 35.369 39.65551.792 44.356 53.284 48.492 6.039 2001 36.740 37.67952.224 47.139 56.784 46.678 5.830 2002 58.901 50.78929.082 26.338 30.092 30.213 3.537 2003 54.021 50.60726.941 49.817 35.042 29.179 3.825 2004 53.693 47.32421.050 39.892 23.709 34.258 3.502 2005 51.723 44.17221.492 36.159 24.336 29.989 3.304 2006 48.069 41.01620.046 39.781 21.815 28.489 2.924 2007 45.366 39.11019.353 36.154 23.758 28.750 2.671 2008 45.081 38.57116.983 37.519 19.710 27.243 2.562 Source: City Assessing Department and Hennepin County Property Tax Services 1 Watershed levy was levied in 2006 and 2008 in schools districts 279 and 281, and parts of school districts 11 and 286. 138 Table 7 Total Direct and Overlapping Rates OtheDistrict 11District 11DistricDistricDistrict 286District 286 rtt DistrictsWatershed no watershewith watershe279281no watershewith watershe 1 dddd 3.247 - 142.130 - 141.611 134.990 147.081 - 3.111 - 135.966 - 137.458 132.666 128.530 - 2.294 - 134.767 - 139.327 129.221 129.682 - 3.844 - 146.153 - 147.163 147.284 143.409 - 5.161 - 140.555 - 148.656 142.793 163.431 - 3.986 - 129.555 - 132.214 142.763 148.397 - 4.078 - 124.769 - 127.613 133.266 139.436 - 4.074 0.073 116.129 116.202 117.971 124.645 135.864 135.937 4.639 - 111.139 - 115.544 120.536 127.940 - 4.835 0.265 108.032 108.297 111.024 118.557 128.568 128.833 139 CITY OF BROOKLYN CENTER, MINNESOTA Table 8 PRINCIPAL PROPERTY TAXPAYERS Current Year and Nine Years Ago (Unaudited) 20081999 Percentage ofPercentage of et TaxTotal Taxet TaxTotal Tax NN TaxpayerCapacitRanCapacity ValueCapacitRanCapacity Value ykyk Brooks Mall Properties LLC$ 394,29011.52%$867,78324.49% Luther Properties 382,45221.47% -- Regal Cinemas, Inc. 245,75830.95% -- BCC Associates, LLC 223,25040.86% -- CSM Freeway Airport, LL 221,97050.86% -- C Twin Lakes LL 217,80060.84% -- C Brookdale Corner, LLC 209,85070.81% -- Medtronic, Inc. 199,39880.77% -- Twin Lake Nort 175,73890.68%318,05071.65% h Wickes Furniture Compan 171,170100.66% -- y Dayton-Hudson Corp.--1,006,10215.20% Prudential Insurance Co.--503,18432.60% Ryan Construction Co.--581,30443.01% Lang-Nelso--364,38551.88% n Bradley Real Estate Inc.--342,05061.77% First Industrial Realty Trus--274,97481.42% t JC Penney's--260,20091.35% AMB Property, LP--203,046101.05% Totals$ 2,441,6769.41%$4,721,07824.42% Source: City Assessing Department 140 141 142 CITY OF BROOKLYN CENTER, MINNESOTA Table 11 RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last ten fiscal years (Unaudited) Less: AmountPercentage of s GeneralAvailable iet GeneralEstimate nNd ObligationDebt ServiceObligationMarket ValuePer BondsFunDebtof PropertyCapita d 1999$ 7,575,000$ 725,868$6,849,1320.58%$240 2000 7,175,000 775,9116,399,0890.48%219 2001 6,760,000 831,5885,928,4120.40%203 2002 6,325,000 871,9705,453,0300.33%187 2003 5,875,000 907,7094,967,2910.27%170 2004 10,450,000 5,903,5774,546,4230.23%157 2005 5,045,000 1,054,2303,990,7700.20%142 2006 4,465,000 1,104,7493,360,2510.16%120 2007 3,875,000 1,163,3062,711,6940.12%97 2008 3,275,000 1,198,2342,076,7660.09%74 143 CITY OF BROOKLYN CENTER, MINNESOTA Table 12 COMPUTATION OF DIRECT AND OVERLAPPING DEBT as of December 31, 2008 (Unaudited) EstimatedEstimated Share DebtPercentageof Overlapping 1 Governmental UnitOutstandingApplicable Debt Overlapping debt: School Districts: No. 11 Anoka$ 146,832,1997.00%$ 10,278,254 No. 279 Osseo 208,393,2404.42% 9,210,981 No. 281 Robbinsdale 240,892,7964.96% 11,948,283 No. 286 Earle Brown 28,801,021100.00% 28,801,021 Metropolitan Council 137,904,6530.62% 855,009 Hennepin County 501,975,3591.37% 6,877,062 Hennepin Regional RR Authority 43,486,8621.37% 595,770 Hennepin County Park Reserve District 72,794,8151.81% 1,317,586 Total overlapping debt$1,025,855,506 69,883,966 2 City of Brooklyn Center direct debt 2,076,766 Total direct and overlapping debt$71,960,732 Source: City Finance Department, Hennepin County, and Springsted Financial Advisors. 1 The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated by determining the portion of each entity's tax capacity that is within the City's boundaries and dividing it by that entity's total tax capacity. 2 Includes only general obligation debt which is repaid through property taxes, net of amounts available. 144 CITY OF BROOKLYN CENTER, MINNESOTA Table 13 LEGAL DEBT INFORMATION Last ten fiscal years (Unaudited) Total net debt applicable to the limit Total net debtas a percentage of Debt Limiapplicable to limitLegal debt margidebt limi tnt 1999$ 21,911,836$6,849,132$15,062,70431.26% 2000 23,370,2746,399,08916,971,18527.38% 2001 25,381,4005,928,41219,452,98823.36% 2002 27,354,8685,453,03021,901,83819.93% 2003 29,594,6884,967,29124,627,39716.78% 2004 32,503,0964,546,42327,956,67313.99% 2005 36,003,5363,990,77032,012,76611.08% 2006 39,219,0543,360,25135,858,8038.57% 2007 42,259,9582,711,69439,548,2646.42% 2008 65,676,3782,076,76663,599,6123.16% Legal Debt Margin Calculation for Fiscal Year 2008 Taxable Market Value$2,189,212,600 Debt limit (2% of Taxable Market Value)65,676,378 Debt applicable to limit et general obligation bonds2,076,766 N Legal debt margi$63,599,612 n 145 CITY OF BROOKLYN CENTER, MINNESOTA PLEDGED-REVENUE COVERAGE Last ten fiscal years (Unaudited) Storm Sewer Bonds StorLess:et mN SeweOperatingAvailableDebt Service r ChargesExpensesRevenuePrincipalInterestCoverage 1999$ 999,867$ 232,405$767,462$170,000$ 67,5583.23 2000 1,074,619 307,389767,230180,000 59,1103.21 2001 1,129,502 327,412802,090190,000 49,9503.34 2002 1,377,638 662,747714,891200,000 40,1002.98 2003 1,264,512 809,130455,382210,000 29,5401.90 2004 1,276,778 756,593520,185220,000 18,2502.18 2005 1,293,841 1,086,600207,241230,000 6,2100.88 2006 ---- - - 2007 ---- - - 2008 ---- - - 146 Table 14 Special Assessment BondsTax Increment Bonds SpecialTax AssessmenDebt ServiceIncremenDebt Service tt CollectionsPrincipalInterestCoverageCollectionsPrincipalInterestCoverage $ 1,165,000$ 662,232$ $ 690,538$ 405,000$ 189,790 1.162,902,590 1.59 994,839 535,000 231,972 1.30 3,186,573 1,280,000 595,554 1.70 1,029,378 700,000 252,563 1.08 3,713,349 1,450,000 519,409 1.89 928,559 780,000 249,497 0.90 2,882,577 1,540,000 433,893 1.46 1,153,044 870,000 242,749 1.04 3,142,158 1,645,000 340,413 1.58 1,410,344 1,005,000 218,457 1.15 3,606,130 1,775,000 286,867 1.75 1,058,557 990,000 197,760 0.89 3,576,209 770,000 729,740 2.38 1,035,961 1,000,000 167,284 0.89 1,609,994 1,000,000 887,080 0.85 884,261 900,000 162,486 0.83 1,707,470 1,050,000 847,236 0.90 816,798 980,000 145,121 0.73 1,906,053 1,030,000 804,491 1.04 147 CITY OF BROOKLYN CENTER, MINNESOTA Table 15 DEMOGRAPHIC AND ECONOMIC STATISTICS Last ten fiscal years (Unaudited) School Enrollments Per Capitao. 286 N PersonalPersonalUnemploymeno. 11o. 279o. 281Earle tNNN PopulationIncomeIncomeRateAnokOsseoRobbinsdaleBrow an $ 40,0781,143,625,730$ 1999 28,5352.4% 40,964 22,171 1 3,800 1,734 1,255,767,084 2000 29,172 43,0473.0% 41,314 22,017 1 3,706 1,682 1,267,929,360 2001 29,180 43,4524.2% 41,419 22,041 1 3,754 1,724 1,276,318,420 2002 29,185 43,7325.2% 41,383 21,824 1 3,656 1,732 1,316,943,534 2003 29,174 45,1415.9% 41,254 21,698 1 3,765 1,732 1,393,429,205 2004 29,005 48,0415.6% 41,592 21,620 1 6,196 1,691 1,418,442,444 2005 28,137 50,4124.8% 41,596 21,792 1 3,368 1,679 1,476,102,405 2006 27,901 52,9054.6% 41,310 22,071 1 3,194 1,705 **** 2007 27,9015.6% 40,656 21,859 1 2,891 1,763 **** 2008 27,9077.6% 40,152 21,001 1 2,526 2,012 Sources:Population - Metropolitan Council Personal income - Bureau of Economic Analysis Unemployment rate - Minnesota Department of Employment and Economic Development School Enrollments - Minnesota Department of Education ** - personal income data not available for these years 148 CITY OF BROOKLYN CENTER, MINNESOTA Table 16 PRINCIPAL EMPLOYERS Current Year and Nine Years Ago (Unaudited) 20081999 Percentage ofPercentage of Total CityTotal City EmployerEmployeesRankEmploymentEmployeesRankEmployment Brookdale Center 113.65%1,900 110.47%1,700 Promeon, Division of Medtronics 29.70%1,350 31.85%300 Graco, Inc. 35.75%800 70.62%100 Independent School District #286 42.18%303 Nations Care Link 51.62%225 Cub Foods 61.22%170 City of Brooklyn Center 71.10%153 22.16%350 Best Buy 81.04%145 Target 91.01%140 TCR Corporation 101.01%140 51.08%175 Hoffman Engineering 41.66%270 Ault, Inc. 60.99%160 Cass Screw Machine Products 80.77%125 Precision, Inc. 90.62%100 Haiwatha Rubber Company 100.52%85 Totals 5,32638.26%3,36520.73% Source: Minnesota Department of Employment and Economic Development 149 CITY OF BROOKLYN CENTER, MINNESOTA Table 17 FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Last ten fiscal years (Unaudited) 1999200020012002200320042005200620072008 General governmen t Administrativ e 6.4 6.4 6.5 6.5 6.5 6.0 6.0 6.0 6.0 7.0 Elections 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Finance 7.0 7.0 7.0 7.0 6.0 6.0 6.0 6.0 6.0 5.0 Assesso r 4.0 4.0 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Government buildings 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Information technolog y 1.0 1.0 1.0 1.0 2.0 2.0 2.0 2.0 2.0 2.0 Total general governmen 24.424.4 24.523.523.523.023.023.0 23.023.0 t Public safet y Police Officers 42.042.0 42.042.042.042.042.042.0 43.046.0 Civilians17.0 17.0 16.016.015.015.015.015.0 12.012.0 Fire 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0 2.0 2.0 Building inspectio n 4.0 5.0 5.0 4.0 4.0 4.0 4.0 4.0 4.0 6.0 Total public safety 65.064.0 64.063.062.062.062.063.0 61.066.0 Public works Engineerin 10.010.0 10.010.08.0 g 7.0 7.0 6.0 6.0 5.0 Streets 10.910.9 10.911.011.010.09.0 10.0 10.011.0 Total public works 20.920.9 20.921.019.017.016.016.0 16.016.0 Parks and recreation Administratio n 6.0 6.0 6.0 6.0 5.0 6.0 6.0 6.0 6.0 6.0 Community cente r 5.0 5.5 5.5 5.0 5.0 3.0 3.0 3.0 3.0 3.0 Park maintenance 10.010.0 10.010.010.08.0 8.0 7.0 7.0 7.0 Total park and recreation21.0 21.5 21.521.020.017.017.016.0 16.016.0 Economic developmen t 4.6 4.6 4.5 4.5 4.5 4.0 4.0 4.0 4.0 4.0 Municipal liquor 3.0 4.0 4.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 Golf course 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Earle Brown Heritage Center13.0 13.0 13.011.011.011.011.011.0 11.011.0 Water 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.3 5.3 5.3 Sanitary sewe r 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.3 2.3 2.3 Storm sewe r - - - - - - 1.0 1.4 1.4 1.4 Central garage 5.1 5.1 5.1 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Total 164.0166.5165.5160.0156.0150.0150.0151.0150.0155.0 Source: City Annual Budget documents 150 151 152