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HomeMy WebLinkAboutCAFR-2009 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF BROOKLYNCENTER, 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, 2009 37 (Member of Government Finance Officers Association of the United States and Canada) This page is blank -T 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 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: Nonmaj or Governmental Funds Combining Balance Sheet 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 85 Combining Balance Sheet - Nonmaj or 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 - Community Development Block Grant 96 Special Revenue Fund -City Initiatives Grant 97 Combining Balance Sheet - Nonmajor Debt Service Funds 100 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmaj or 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 -Tax Increment Bonds 103 Debt Service Fund - General Obligation Bonds 104 Combining Balance Sheet - Nonmaj or Capital Project Funds 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmaj or Capital Project Funds 108 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 Nonmaj or 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 128 Governmental Activities Tax Revenue by Source 135 Fund Balances — Governmental Funds 136 Changes in Fund Balances — Governmental Funds 138 Assessed Tax Capacity and Estimated Actual Value of Taxable Property 140 Property Tax Rates — Direct and Overlapping Governments 142 Principal Property Taxpayers 144 Property Tax Levies and Collections 145 Ratios of Outstanding Debt by Type 146 Ratios of General Bonded Debt Outstanding 147 Computation of Direct and Overlapping Debt 148 Legal Debt Information 149 Pledged Revenue Coverage 150 Demographic and Economic Statistics 152 Principal Employers 153 Full Time City Government Positions by Function 154 Operating Indicators by Function 155 Capital Asset Statistics by Function 156 iii mj" This page has been left blank intentionally. iv City of Brooklyn Center A Millennium Community June 1, 2010 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, 2009. 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. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. 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 2009 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. It 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 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. 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.cityojbrooklyncenter.org 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 provides a full range of municipal services to its citizens. These include police and fire protection services, zoning and code enforcement, 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 a Housing and Redevelopment Authority and an 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 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 and the resulting operational budgets for the ensuing fiscal year are adopted at a subsequent meeting. 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 each year. 2 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. 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. The State Demographer estimates the population for Brooklyn Center at 30,330 as of April, 2008. The number of housing units has decreased from 11,704 in 1990 to an estimated 11 units in 2008. 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 decreased 9.28% for 2009 valuations. Residential housing, which makes up 55.07% of the overall tax base, decreased 12.80% in value while the commercial and industrial portions of the tax base decreased 0.13% and 1.63% respectively. Values in all portions of the tax base are expected to drop in the foreseeable future. However, the proportionate makeup of the property tax base will remain relatively stable. Therefore, property tax burden is not expected to shift significantly between classifications of property. Residential foreclosures and vacant properties were another facet of the economic outlook for the City in 2009. 305 or 3.65% of non - apartment residential properties in the City went to Sheriff's Sale during 2009 with 52 of those properties still in the redemption period as of December 31, 2009. Vacant residential properties as of that same date numbered 183, 2.22% of the City's non - apartment residential housing. 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. 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. The hospitality industry contributes a significant amount to Brooklyn Center's economy. Lodging tax provided over $ 310,000 for 2009 fiscal year operations. A new 260 bed Embassy Suites hotel facility opened in 2009. It is immediately adjacent to the City's Earle Brown Heritage Center conference facility and will complement the conference facility operations. 3 The State of Minnesota has provided significant funding to local governments through the Local Government Aid (LGA) and Market Value Homestead Credit (MVHC) programs over the past three decades. Deficit funding projections at the State level have affected the distribution of LGA and MVHC negatively. In 2009, the City lost $ 463,502 or about 31% of its certified LGA funding during the fiscal year through unallotment. Consequently, the City was forced to amend its operating budget in April of 2009 to reflect the loss of LGA and to rebalance the operating budget. Long Term Financial Planning As part of a planned replacement of the aging infrastructure, the City continued the program for street and utility improvements by reconstructing the Aldrich Avenue neighborhood streets and Shingle Creek Drive in 2009. 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 w i l l be an ongoing process. The Capital Improvements Plan projects completion of the reconstruction of the streets and utilities in the entire community 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 plan and generate cash flow for the scheduled 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. Major Initiatives Redevelopment continues 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 summer of 2010. 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. Grants have been obtained to implement the remediation on 4 the property and in the surrounding neighborhood. Redevelopment proposals are being solicited for the site. The City's "Opportunity Site" continues to be a focus for redevelopment efforts. The City's acquisition and clearing of a former automobile dealership site presents an opportunity to combine parcels with adjacent properties to create redevelopment opportunities along County Road 10 and Highway 100. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Brooklyn Center for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2008. The City was first awarded this certificate in 1966. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. The CAFR must satisfy both accounting principles generally accepted in the United States and applicable federal, state and local legal requirements. A Certificate of Achievement is valid for a period of one year. It is expected that the 2009 report conforms to Certificate of Achievement Program requirements. It will be submitted to the GFOA to determine its eligibility for another certificate. 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 2009. 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, F Cornelius L. B ganey Dani rdet City Manager Director of Fiscal &Support Services s CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL OFFICIALS December 31, 2009 Name Position Term of Office Term Expires ELECTED OFFICIALS Tim Willson Mayor Four Years December 31, 2010 Kay Lasman Council Member Four Years December 31, 2012 Tim Roche Council Member Four Years December 31, 2012 Dan Ryan Council Member Four Years December 31, 2010 Mark Yelich Council Member Four Years December 31, 2010 APPOINTED OFFICIALS Cornelius L. Boganey City Manager Appointed Charles LeFevre City Attorney Contractual Appointee Sharon Knutson City Clerk Appointed Vickie Schleuning Assistant City Manager /Building and Community Standards Director Appointed Scott Bechthold Police Chief Appointed Steve Lillehaug Director of Public Works /City Engineer Appointed Lee Gatlin Fire Chief Appointed James Glasoe Community Activities, Recreation and Services Director Appointed Gary Eitel Business and Decvelopment Director Appointed Daniel Jordet Director of Fiscal and Support Services Appointed 6 City of Brooklyn Center Organization 2009 Electorate City Council Advisory Commissions Administration City Attorney City Manager • Human Resources/Payroll • Communications • Information Technology • Elections • Licenses • City Clerk J Public Works Police Department Community Activities, BuildinL and Community • Engineering •Patrol Recreation, and Services Standards • Street Maintenance • Investigation • Community Programs • Building Inspections • Sanitary Sewer • Crime Prevention • Recreation Programs • Code Enforcement • Central Garage • Community Programs • Community Center • Storm Sewer • Support Services • Government Buildings • Water Department • Golf Course • Park Maintenance • Earle Brown Heritage Center Fire Department Fiscal and Support Services Business and Development • Fire Prevention • Accounting • Economic Development • Fire Suppression • Audit • Housing & Redevelopment • Emergency Preparedness • Utility Billing Authority • Risk Management • Planning and Zoning • Liquor Stores • Assessing Certificate of Achievement for Excellence in Financial Reporting Presented to City of Brookly Center Minnesota For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2008 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ��e off ti OFTM �s � nxo " 9 UW N LOWORATgH v� SQL a nti �6' President Executive Director 8 PRINCIPALS Kcnnerh W. Malloy, CPA M T�"��&��o�u�,CBA Thomas 8^Kxmn°ski, CKA Paul, A.Badosevich, CPA C E RllF% PUBLIC »0UiamJ. Lauer, CPA A C C O U N T'A N T S J=cs[LEic6on, CPA Aaron J. Nielsen, CPA Victoria LBoUuka, CPA INDEPENDENT AUDITOR'S REPORT To the City Council and Residents City of Brookl Center, Minnesota Wc have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund"ondthcqggrcgoicrcmnoiningfundinfbnno1ionofthcChvof8rookknCcnicr (the City) as of and for the year ended [)cccmnbcr 31" 2009" which coUecih/c|v comprise the Chv"y basic financial statements as listed in the iob|c of contents. These financial statements are the responsibility of the Chv"y 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 hy the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain rcoyonob|c assurance about whether the financial statements are free of mnoicdo] misstatement. An audit includes consideration of internal control over financial reporting as oboyiy for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing on opinion on the effectiveness of the Chv"y internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessi the accounting princi used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Wc believe that our audit provides o reasonable basis for our opinions. In our opinion" the financial statements referred to above present fairly, in all mnoicrio| rcypcciy" the respective financial position of the governmental ociivbicy" the business-type activities, each major fund" and the aggregate remaining fund information of the City as o[ December 3l" 2009" and the rcspcoih/c changes in financial position and cash flon'y" where applicable thcrcof for the year then ended, in conformity with accounting princi generally accepted in the lJnbcd 8ioicy of America. ln accordance with Government A uditing Standards, ne have also iy sued o report dated May 27"2OlOon our considerat of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, conirooiy" 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 on opinion on the internal control over financial repor or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards and should bc considered inassessi the results of our audit. (continued) Ma(]oy. Mo"c=guc, K=r"o°sk/, Ro6"s=.Ic6 & Co , P.A. The Management's Discussion and Analysis and required supplementary information, as listed in the table of contents, is not a required part of the basic financial statements, but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management, regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund statements and schedules, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. ]] -16 ct t i p �A rV �i rnd , �1 6:s e.44 C / Co May 27, 2010 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, 2009. 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 Hi2hli2hts • The assets of the City exceeded liabilities by a 4.9 to 1 margin at the close of the most recent fiscal year. Current assets exceed current liabilities by an 8 to 1 margin. The $ 117,794,399 of net assets includes cash and investments, streets, buildings, equipment, land and other City assets. Of this amount, $ 13,762,927 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 $ 790,007 or 0.675% from 2008 to 2009. • As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $ 30,235,846. Of this total amount, $ 31,048,915, or 103% is designated or reserved through legal restrictions and City Council authorization. • At the end of the current fiscal year the general fund balance of $ 8,530,005 included $ 1,774 reserved for committed contracts, $ 25,719 reserved for inventories, $ 500 reserved for prepaid items, and $ 8,502,012 designated for cash flow purposes. • The City's total outstanding debt decreased by $ 4,140,000 during the current fiscal year, from $ 29,525,000 to $ 25,3 85,000. 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, the Tax Increment 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 nonmaj or governmental funds, nonmaj or enterprise 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 $ 117,794,399 at the close of the most recent fiscal year. The largest portion of the City's net assets ($ 75,003,481 or 64 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 Governmental Activities Business -type Activities Total 2009 2008 2009 2008 2009 2008 Current and other assets $ 55,797,109 $ 57,191,433 $ 9,783,325 $ 11,315,279 $ 65,580,434 $ 68,506,712 Capital assets 40,296,371 39,386,221 42,297,110 42,572,362 82,593,481 81,958,583 Total assets 96,093,480 96,577,654 52,080,435 53,887,641 148,173,915 150,465,295 Long -term liabilities outstanding 22,312,824 26,500,403 - - 22,312,824 26,500,403 Other liabilities 7,119,011 6,112,138 947,681 848,362 8,066,692 6,960,500 Total liabilities 29,431,835 32,612,541 947,681 848,362 30,379,516 33,460,903 Net assets Invested in capital assets, net of related debt 33,550,664 31,423,905 42,297,110 42,572,360 75,003,481 72,993,581 Restricted 29,027,991 31,850,784 - - 29,027,991 31,850,784 Unrestricted 4,082,990 690,424 8,835,644 10,466,919 13,762,927 12,160,027 Total net assets $ 66,661,645 $ 63,965,113 $ 51,132,754 $ 53,039,279 $ 117,794,399 $ 117,004,392 As of the close of the current year, there is $ 844,293 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 ($ 13,762,927) 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. Current assets decreased in the governmental activities primarily due to the additional costs to prepare redevelopment property for sale. In addition, the City postponed issuing debt to fund the 2009 construction projects. Funds on hand and interfund borrowing were used to pay for the projects until the debt is issued. 13 Management's Discussion and Analysis Capital assets increased due to new capitalized assets exceeding depreciation on existing assets for the year. Total liabilities decreased due to the payment of principal and interest payments on bonded debt as scheduled. The decrease in restricted net assets can be attributed to costs associated with the acquisition of redevelopment property in excess of the estimated net realizable value of that property. Current assets in the business -type activities decreased due to the costs associated with the project to install auto -read meters in all properties on the City's water system. The cost of this project was approximately $ 2,300,000 in 2009. It is expected that these current assets will be replenished with the sale of utility revenue bonds early in the 2010 fiscal year. Total liabilities increased due to contracts payable for the relocation of a watermain. Unrestricted net assets decreased due to the cash payments for the auto -read meter project. Governmental Activities Governmental activities resulted in an increase of the City's net assets by $ 2,696,532, while the increase in total net assets was $ 790,007. Key elements of the changes are as follows: CITY'S CHANGES IN NET ASSETS Governmental Activities Business -type Activities Total 2009 2008 2009 2008 2009 2008 Revenues Program revenues: Charges for services $ 3,104,292 $ 2,801,121 $ 10,939,435 $ 11,037,648 $ 14,043,727 $ 13,838,769 Operating grants and contributions 1,034,905 1,003,884 - - 1,034,905 1,003,884 Capital grants and contributions 1,566,224 2,706,056 - - 1,566,224 2,706,056 General revenues: Property taxes 12,899,250 12,458,724 - - 12,899,250 12,458,724 Other taxes 4,207,448 3,532,735 - - 4,207,448 3,532,735 Grants and contributions not restricted to specific programs 1,019,990 607,073 - - 1,019,990 607,073 Unrestricted investment earnings 309,715 903,939 87,499 243,322 397,214 1,147,261 Gain on sale of assets 40,632 73,036 - - 40,632 73,036 Total revenues 24,182,456 24,086,568 11,026,934 11,280,970 35,209,390 35,367,538 Expenses: General government 3,653,956 3,498,767 - - 3,653,956 3,498,767 Public safety 9,036,176 8,760,880 - - 9,036,176 8,760,880 Public works 2,687,980 2,596,754 - - 2,687,980 2,596,754 Community services 71,519 72,893 - - 71,519 72,893 Parks and recreation 2,773,528 2,910,825 - - 2,773,528 2,910,825 Economic development 2,151,916 3,713,340 - - 2,151,916 3,713,340 Interest on long -term debt 1,143,546 1,125,712 - - 1,143,546 1,125,712 Municipal liquor - - 1,249,946 1,125,517 1,249,946 1,125,517 Golf course - - 323,340 304,832 323,340 304,832 Earle Brown Heritage Center - - 2,363,085 2,403,676 2,363,085 2,403,676 Recycling and refuse - - 276,058 265,983 276,058 265,983 Street light utility - - 220,020 182,402 220,020 182,402 Water utility - - 3,448,819 1,783,275 3,448,819 1,783,275 Sanitary sewer utility - - 3,736,989 3,018,418 3,736,989 3,018,418 Storm drainage utility - - 1,282,505 1,162,957 1,282,505 1,162,957 Total expenses 21,518,621 22,679,171 12,900,762 10,247,060 34,419,383 32,926,231 Increase in net assets before transfers 2,663,835 1,407,397 (1,873,828) 1,033,910 790,007 2,441,307 Transfers 32,697 (1,693,225) (32,697) 1,693,225 - - Change in net assets 2,696,532 (285,828) (1,906,525) 2,727,135 790,007 2,441,307 Net assets - January 1 63,965,113 64,250,941 53,039,279 50,312,144 117,004,392 114,563,085 Net as sets - December 31 $ 66,661,645 $ 63,965,113 $ 51,132,754 $ 53,039,279 $ 117,794,399 $ 117,004,392 14 Management's Discussion and Analysis In the Governmental Activities, charges for services increased due to additional activities performed by public safety in the area of code enforcement and the registration of vacant properties within the City. Non - restricted grants and contributions increased due to an increase in the general aid received from the State. Unrestricted investment earnings decreased due to the sharp decline in rates earned on investments in 2009 in comparison to those earned in 2008 and in prior years. Public safety expenses increased due to the added activities performed in the area of code enforcement and the registration of vacant properties in the City. Economic development expenses decreased due to the purchase of a large parcel of property for redevelopment in 2008 compared to three smaller properties in 2009. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Governmental Activities - 2009 Revenues Other revenues 4.4% Unrestricted investment Other taxes earnings 1 /o 17.4% .3 Charges for services 12.8% Operating grants and contribtutions = 4.3% Capital grants and contributions Property taxes andtax 6.5% increments 53.3% Governmental Activities - 2009 Expenses Economic development Interest on long-term 10.0% debt 5.3% Parks and recreatio 12.9% General government Community services 17.0% 0.3% JL Public works 12.5% Public safety 42.0% 15 Management's Discussion and Analysis Business -type activities Business -type activities decreased net assets by $ 1,906,525. Below are graphs showing the business -type activities revenue and expense comparisons: Business -type Activities - 2009 Revenues Unrestricted investment earnings 0.8% Net charges for services 99.2% Business -type Activities - 2009 Expenses Storm drainage utility 9.9% on -major enterprise 3.9% unicip al liquor Sanitary sewerutility 9.7% 29.0% = Golf course - _ — 2.5% arle Brown Heritage Center 18.3% Water utility 26.7% Water Utility and Sanitary Sewer Utility expenses increased due to the costs associated with the replacement of the water meters in 2009. 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 $ 30,235,846. Approximately 29% of this amount, $ 8,724,317, 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) $ 4,258,770 to provide for debt service, 2) $ 792,488 for advances to other funds, 3) $ 734,675 for committed contracts, 4) $ 500 for prepaid items, 5) $ 25,719 for inventories, and 6) $ 2,912,165 for statutory housing obligation. The unreserved fund balance of $ 21,511,529 includes designations of 1) $ 8,502,012 for general fund working capital, 2) $ 9,237,685 for economic development, and 3) $ 4,584,901 for capital improvements. The remaining deficit balance of $ 813,069 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 $ 8,530,005, 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 55% of total general fund expenditures for 2009. The fund balance of the City's general fund increased by $ 786,567 in 2009. This increase was due to the budget amendment adopted by the City Council in April 2009 which reduced the budget in anticipation of reductions in intergovernmental aid provided by the State of Minnesota. The actual reductions in intergovernmental aid were smaller than anticipated. In addition, several positions were not filled in 2009 in anticipation of the reductions from the State. The Tax Increment District No. 3 fund had a total fund balance of $ 8,175,431 at the end of 2009. The net decrease in the fund balance was $ 2,706,701. This decrease was due to the expenditure of bond proceeds received in 2008 and expenditures for demolition and utility service relocation on properties purchased by the EDA and held for resale. The G.O. Improvement Bonds fund had a fund balance of $ 3,054,056 at the end of 2009, all of which was reserved for debt service. The net increase in fund balance for 2009 was $ 260,970, which was due to the collections of assessments exceeding the scheduled bond principal and interest payments. The Tax Increment Bonds Fund had a fund balance of $ 0 at the end of 2009. The net decrease in the fund balance for 2009 was $ 1,195,943. This decrease was due to principal and interest payments as programmed. The fund balance of the Infrastructure Construction fund at the end of 2009 had a deficit of $ 606,621. This represents a decrease from the 2008 deficit of $ 276,982. This reduction is due to the City postponing the issuance of improvement debt until 2010 to fund projects substantially complete in 2009. 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 - $ 1,953,304, golf course - $ (827,360), Earle Brown Heritage Center - $ 673,900, water utility - $ 1,734,532, sanitary sewer utility - $ 2,904,658 and storm drainage utility - $ 2,464,664. The increases (decreases) in net assets for the major enterprise funds were: municipal liquor $ 35,948, golf course $ (69,364), Earle Brown Heritage Center $ (801,806), water utility $ (1,109,707), sanitary sewer utility $ (3 84,06 1), and storm drainage utility $ 440,475. General Fund Budgetary Highlights During the year, the City Council reduced the appropriations in the General Fund budget by approximately $ 600,000. This amendment was made in anticipation of cuts in financial aids from the State in 2009. Actual 17 Management's Discussion and Analysis revenues and other financing sources exceeded the amended budget by $ 271,152. The major contributors to this were actual financial aids from the State exceeding the amended budget amount and an increase in charges for services in the area of code enforcement activities. Actual expenditures and other financing uses were lower than the amended budget for the year by $ 515,415. This resulted from several positions left unoccupied during 2009, lower than expected expenditures in the Fire Department, Street Maintenance department, and Protective Inspection, and a conscientious effort to reduce expenditures due to the cuts in state aid. It is anticipated that mid -term reductions of state financial aid that occurred in 2008 and 2009 will continue to occur during the foreseeable future. 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 2009 year end reports, preparing for further reductions in state financial aid for the 2010 fiscal year. Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for governmental and business type activities as of December 31, 2009 totals $ 82,593,481 (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 2008 to 2009 was 0.8 percent (2.3 percent increase for governmental activities and a 0.1 percent decrease 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 $ 5,312,659. • Two infrastructure reconstruction projects were begun and substantially completed during the 2009. These projects account for $ 6,990,169 in construction -in- progress at the end of the year. CITY'S CAPITAL ASSETS (net of depreciation) Governmental Activities Business -type Activities Total 2009 2008 2009 2008 2009 2008 Land $ 3,537,473 $ 3,537,473 $ 3,194,983 $ 3,194,983 $ 6,732,456 $ 6,732,456 Construction in progress 4,155,434 4,698,661 2,990,969 3,172,024 7,146,403 7,870,685 Land improvements - - 222,586 237,237 222,586 237,237 Other park improvements 874,595 977,549 - - 874,595 977,549 Buildings and structures 10,779,881 11,458,306 6,186,552 6,912,871 16,966,433 18,371,177 Departmental equipment 3,968,016 3,794,288 187,424 225,853 4,155,440 4,020,141 Streets 16,980,972 14,919,944 - - 16,980,972 14,919,944 Street light systems - - 77,974 83,540 77,974 83,540 Mains and lines - - 29,436,622 28,745,854 29,436,622 28,745,854 Total $ 40,296,371 $ 39,386,221 $ 42,297,110 $ 42,572,362 $ 82,593,481 $ 81,958,583 Additional information on the City's capital assets can be found in Note 4.C. on pages 55 through 56 of this CAFR. Long -term debt. At the end of the current fiscal year, the City had long -term bonded debt outstanding of $ 25,3 85,000, all of which is backed by the full faith and credit of the government. Of the total outstanding debt, $ 2,665,000 is general obligation bonds payable from directly levied property tax, $ 17,795,000 is tax increment bonds payable with the collected proceeds of tax increment projects and $ 4,925,000 is improvement bonds payable from special assessment levies against individual properties adjacent to the improvements. Additional long -term liabilities include $ 1,091,553 for compensated absences, the accumulated vacation and vested sick leave not used by employees at the end of 2009, and $ 290,426 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, Compensated Absences, and OPEB Governmental Activities 2009 2008 General obligation bonds $ 2 0500 $ 3,275 General obligation tax increment bonds 17 20,560 General obligation improvement bonds 4,925 5 Compensated absences 1,091 1 Net OPEB obligation 290 147,045 Total $ 26 $ 30,747,998 The City's total bonded debt decreased by $ 4,140,000 during the current fiscal year due to the net result of the scheduled payments of bond obligations. The City maintained an Al rating from Moody's on all issues throughout the 2009 fiscal year. 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 $ 62,625,534. Only $ 1,460,286 of the City's net outstanding debt is counted within the statutory limitation representing about 2.3 percent of the total limit. Additional information on the City's long -term debt can be found in Note 4.F. on pages 59 through 62 of this CAFR. Economic Factors and Next Year's Budget and Rates • The unemployment rate for the City is 8.6 percent at the end of the 2009 fiscal year, which is an increase from the rate of 7.6 percent a year ago. This compares to the State's average unemployment rate of 7.4 percent and the national average of 9.7 percent. • Redevelopment of the Opportunity Site /Central Business District and other commercial properties will yield net growth in tax base and stability in tax base through mixed use development goals. • Acquisition of strategic properties by the Economic Development Authority of the City will allow redevelopment of those properties to provide both tax base growth and job growth. • Utility rates have been projected into a rolling 15 year model to allow for funding of 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 2010 fiscal year. During the year, unreserved fund balance in the general fund increased by $ 786,567. This amount will be added to the fund balance level to stay within the City's policy of maintaining 50 to 52 percent of the ensuing year's budgeted General Fund operations. Water, sanitary sewer, storm, and street light utility rates were increased for the 2009 budget year. Residential water rates were increased by 3.2 percent, sanitary sewer by 1.0 percent, storm drainage by 3.0 percent, recycling by 3.0 percent, and street lights by 2.2 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 OF NET ASSETS Statement 1 December 31, 2009 Governmental Business -Type ASSETS Activities Activities Total Cash and investments $ 36 $ 7 $ 44 Receivables: Accounts 297 1 2 Taxes 661 - 661 Special assessments 3 493 4 Internal balances 1 (1 - Due from other governments 951 2 953 Prepaid expenses 500 230 231 Inventories 52 700 753 Assets held for resale 12 - 12 Restricted assets: Cash and investments 88 - 88 Capital assets: Nondepreciable 7 6 13 Depreciable 32 36,111,158 68 Total assets 96 52 148 LIABILITIES Accounts payable 514 154 669 Accrued salaries and wages 437 74 511 Due to other governments 4 71 75 Contracts payable 1 273 1 Deposits payable 1 228 230 Accrued interest payable 460 - 460 Unearned revenue 7 144 152 Liabilities payable from restricted assets: Deposits payable 88 - 88 Compensated absences payable: Due within one year 109 - 109 Due in more than one year 982 - 982 Net OPEB obligation: Due in more than one year 290 - 290 Bonds payable: Due within one year 4 - 4 Due in more than one year 21 - 21 Total liabilities 29 947 30 NET ASSETS Invested in capital assets, net of related debt 33 42 75 Restricted for: Debt service 6 - 6 Tax increment purposes 22 - 22 Unrestricted 4 8 13 Total net assets $ 66 $ 51 $ 117 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, 2009 Charges For FUNCTIONS/PROGRAMS Expenses Services Primary government: Government activities: General government $ 3 $ 1 Public safety 9 1 Public works 2 26 Community services 71 - Parks and recreation 2 740 Economic development 2 445 Interest on long -term debt 1 - Total government activities 21 3 Business -type activities: Municipal liquor 1 1 Golf course 323 249 Earle Brown Heritage Center 2 1 Recycling and refuse 276 267 Street light utility 220 253 Water utility 3 2 Sanitary sewer utility 3 3 Storm drainage utility 1 1 Total business -type activities 12 10 Total primary government $ 34,419,3 83 $ 14 The accompanying notes are an integral part of these financial statements. 22 Statement 2 Program Revenues Net (Expense) Revenue and Changes in Net Assets Operating Capital Primary Government Grants and Grants and Governmental Business -Type Contributions Contributions Activities Activities Total $ 34 $ - $ (2 $ - $ (2 883 - (6 - (6 90 1 (1 - (1 - - (71,519) - (71,519) 26 - (2 - (2 - - (2 - (2 - - (1 - (1 1 1 (15,813,200) - (15,813,200) - - - 280 280 - - - (73,938) (73,938) - - - (63 7,227) (63 7,227) - - - (8 (8 - - - 33 33 - - - (1 (1 - - - (421,263) (421,263) - - - 295 295 - - - (1 (1 $ 1 $ 1 (15,813,200) (1 (17,774,527) General revenues: Property taxes 12 - 12 Tax increments 3 - 3 Lodging taxes 591 - 591 Grants and contributions not restricted to specific programs 1 - 1 Unrestricted investment earnings 309 87 397 Gain on disposal of capital asset 40 - 40 Transfers 32 (32,697) - Total general revenues and transfers 18 54 18 Change in net assets 2 (1 790 Net assets - beginning 63 53 117 Net assets - ending $ 66 $ 51 $ 117 The accompanying notes are an integral part of these financial statements. 23 m E7 This page has been left blank intentionally. 24 FUND FINANCIAL STATEMENTS 25 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2009 Tax Increment General District No. 3 ASSETS Cash and investments $ 8 $ 8 Receivables: Accounts 74 - Current taxes 103 21 Delinquent taxes 409 41 Special assessments 3 - Due from other funds - - Due from other governments 36 - Interfund receivable - - Prepaid items 500 - Inventories 25 - Advances to other funds - - Asset held for resale - 11 Restricted assets: Cash and investments - performance deposits 88 - Total assets 9 20 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 198 12 Accrued salaries and wages 412 - Due to other funds - - Due to other governments 4 - Contracts payable 15 32 Deposits payable 1 - Interfund payable - - Deferred revenue 420 11 Liabilities payable from restricted assets: Deposits payable 88 - Total liabilities 1 11 Fund balances: Reserved: Advances to other funds - - Committed contracts 1 - Debt service - - Inventories 25 - Prepaid items 500 - Statutory housing obligation - 2 Unreserved: Designated, reported in: General Fund 8 - Special Revenue Funds - 5 Capital Project Funds - - Undesignated, reported in: Special Revenue Funds - - Capital Project Funds - - Total fund balances (deficit) 8 8 Total liabilities and fund balances $ 9 $ 20 The accompanying notes are an integral part of these financial statements. 26 Statement 3 Page I of 2 G.O. Improvement Infrastructure Other Nonmajor Total Bonds Construction Governmental Governmental $ 3 $ - $ 9 $ 29 - 3 166 243 58 - 10 134 14 - 60 526 3 503 - 3 - 659 - 659 - - 914 951 - - 331 331 - - - 500 - - - 25 - - 792 792 - - 787 12 - - - 88 6 1 12 49 - 83 51 346 - - 12 424 - 8 595 604 - - - 4 - 949 153 1 - - - 1 - 231 100 331 3 501 847 16 - - - 88 3 1 1 19 - - 792 792 - 342 390 734 3 - 1 4 - - - 25 - - - 500 - - - 2 - - - 8 - - 3 9 - - 4 4 - - 161 161 - (949,133) (25,807) (974,940) 3 (606,621) 11 30 $ 6 $ 1 $ 12 $ 49 27 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET Statement 3 GOVERNMENTAL FUNDS Page 2 of 2 December 31, 2009 Fund balance - governmental funds is different from net assets - governmental activities because: Total fund balances (Statement 3) $ 30 Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds. 36 Other long -term assets are not available to pay for current- period expenditures and, therefore, are deferred in the funds. 16 Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. (25,845,810) 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 Net assets of governmental activities (Statement 1) $ 66 The accompanying notes are an integral part of these financial statements. 28 m E7 This page has been left blank intentionally. 29 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2009 Tax Increment General District No. 3 REVENUES Property taxes $ 11 $ - Tax increments - 2 Franchise fees - - Lodging taxes 591 - Special assessments 4 - Licenses and permits 616 - Intergovernmental 1 - Charges for services 1,109,171 - Fines and forfeits 340 - Investment earnings (net of market value adjustment) 55 79 Miscellaneous 118 250 Total revenues 16 2 EXPENDITURES Current: General government 3 - Public safety 8 - Public works 1 - Community services 71 - Parks and recreation 2 - Economic development 279 1 Nondepartmental 313 - Administrative services reimbursement (859,456) - Capital outlay: General government - - Public works - - Parks and recreation - - Economic development - 806 Debt service: Principal retirement - - Interest - - Fiscal agent fees - - Total expenditures 15 2 Revenues over (under) expenditures 770 (213,647) OTHER FINANCING SOURCES (USES) Transfers in 100 - Transfers out (84,138) (2 Total other financing sources (uses) 15 (2 Net increase (decrease) in fund balances 786 (2 Fund balances - January 1 7 10 Fund balances - December 31 $ 8 $ 8 The accompanying notes are an integral part of these financial statements. 30 Statement 4 G.O. Improvement Tax Increment Infrastructure Other Nonmaj or Total Bonds Bonds Construction Governmental Governmental $ 299 $ - $ - $ 1 $ 12 - - - 1 3 - - - 656 656 - - - - 591 1 - 175 - 1 - - - - 616 - - - 1 2 - - - 11 1 - - - - 340 23 401 - 88 247 - - 48 203 370 1 401 223 4 24 - - - 706 3 - - - 319 8 - - 43 122 2 - - - - 71 - - - 118 2 - - - 409 2 - - - - 313 - - - - (859,456) - - - 113 113 - - 509 1 1 - - - 34 34 - - - - 806 765 2 - 915 4 166 922 - 93 1 10 1 - 3 15 942 3 553 4 27 254 (3 (329,639) 344 (2 6 2 - 1 3 - - - (504,619) (3 6 2 - 527 550 260 (1 (329,639) 872 (2 2 1 (276,982) 10,210,113 32 $ 3 $ - $ (606,621) $ 11 $ 30 31 m E7 This page has been left blank intentionally. 32 CITY OF BROOKLYN CENTER, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES Statement 5 IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2009 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds (Statement 4) $ (2 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. This is the amount by which capital outlays exceeded depreciation in the current period. 708 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 209 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 consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long -term debt and related items. 4 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. (105,026) 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. 55 Change in net assets of governmental activities (Statement 2) $ 2 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, 2009 Major Municipal Golf Earle Brown Liquor Course Heritage Center ASSETS Current assets: Cash and cash equivalents $ 1 $ - $ 767 Receivables: Accounts - net 7 - 316 Special assessments - - - Due from other funds - - - Due from other governments - - - Interfund receivable - - - Prepaid items 26 - 29 Inventories 635 1 29 Total current assets 2 1 1 Noncurrent assets: Capital assets: Land - 1 1 Land improvements - 65 327 Buildings and structures 192 487 11 Machinery and equipment 111 11 293 Street lights - - - Mains and lines - - - Construction in progress - - - Less: Allowance for depreciation (282,090) (322,473) (7 Net capital assets 21 1 5 Total assets 2 1 7 LIABILITIES Current liabilities: Accounts payable 60 882 40 Accrued salaries payable 21 2 27 Due to other funds - - - Due to other governments 53 - 16 Contracts payable 4 - 155 Deposits payable - - 227 Interfund payable - 33 - Unearned revenue 837 - 1 Advances from other funds - 792 - Compensated absences payable - current - - - Total current liabilities 140 829 468 Noncurrent liabilities: Compensated absences payable- long -term - - - Net OPEB obligation - - - Total noncurrent liabilities - - - Total liabilities 140 829 468 NET ASSETS Invested in capital assets 21 1 5 Unrestricted 1 (827,360) 673 Total net assets $ 1 $ 805 $ 6 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net assets of business -type activities The accompanying notes are an integral part of these financial statements. 34 Statement 6 Business -Type Activities Governmental Enterprise Other Activities - Water Sanitary Sewer Storm Drainage Nonmajor Total Internal Total Utility Utility Utility Enterprise Enterprise Service Proprietary $ 1 $ 1 $ 2 $ 117 $ 7 $ 6 $ 14 337 794 362 111 1 54 1 492 1 231 - 493 - 493 8 - - - 8 - 8 2 - - - 2 - 2 - - 14 - 14 33 47 500 173 - - 230 - 230 33 - - - 700 26 727 2 2 2 229 10 6 17 20 3 287 - 3 - 3 - - - - 393 166 559 3 2 - - 17 - 17 128 179 - - 724 7 8 - - - 83 83 - 83 17 15 21 - 54 - 54 838 492 1 332 2 - 2 (12,269,982) (9 (7 (5 (37,297,548) (3 (41,280,427) 8 9 15 410 42 3 46 10 12,416,911 18 640 53 10 63 22 11 1 17 154 168 323 13 7 3 - 74 12 87 - 13 50 - 64 - 64 1 - - - 71 - 71 107 5 - - 273 - 273 700 - - - 228 - 228 - - - 14 47 - 47 142 - - - 144 - 144 - - - - 792 - 792 - - - - - 109 109 288 37 56 31 1 289 2 - - - - - 982 982 - - - - - 290 290 - - - - - 1 1 288 37 56 31 1 1 3 8 9 15 410 42 3 46 1 2 2 197 9 5 14 $ 10 $ 12 $ 18 $ 608 51 $ 8 $ 60 (265,869) $ 51 35 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2009 Major Municipal Golf Earle Brown Liquor Course Heritage Center OPERATING REVENUES Sales and user fees $ 5 $ 249 $ 3 Cost of sales 4 - 1 Total operating revenues 1 249 1 OPERATING EXPENSES Personal services 634 152 926 Supplies 34 18 109 Other services 230 90 477 Insurance 10 7 47 Utilities 37 21 166 Rent 269 - - Depreciation 26 28 624 Total operating expenses 1 318 2 Operating income (loss) 277 (69,537) (626,928) NONOPERATING REVENUES (EXPENSES) Intergovernmental - - - Investment earnings 15 81 10 Special assessments - - - Gain (loss) on sale of capital asset - - - Other revenue 8 92 646 Total nonoperating revenues (expenses) 23 173 11 Income (loss) before contributions and transfers 301 (69,364) (615,322) Capital contributions - - 113 Transfers in - - - Transfers out (265,490) - (300,000) Change in net assets 35 (69,364) (801,806) Net assets - January 1 1 874 7 Net assets - December 31 $ 1 $ 805 $ 6 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 Activities Governmental Enterprise Other Activities - Water Sanitary Sewer Storm Drainage Nonmajor Total Internal Total Utility Utility Utility Enterprise Enterprise Service Proprietary $ 1 $ 3 $ 1 $ 521 $ 16 $ 1 $ 18 - - - - 5 - 5 1 3 1 521 10 1 12 421 161 66 - 2 752 3 161 8 10 900 343 363 706 2 2 341 314 6 131 6 17 4 2 2 92 44 137 149 33 - 172 580 1 582 - - - - 269 - 269 596 550 858 5 2 654 3 3 3 1 496 12 1 14 (1 (410,106) 299 24 (1 (312,899) (2 - - - - - 15 15 7 25 26 1 87 62 149 42 129 - - 42 - 42 - - - - - 40 40 2 - 200 - 11 26 38 53 26 26 1 142 145 287 (1 (384,061) 326 26 (1 (167,543) (1 301 - 114 3 532 - 532 - - - - - 15 15 - - - - (565,490) - (565,490) (1 (384,061) 440 29 (1 (152,255) (2 11 12 17 579 53 9 62 $ 10 $ 12 $ 18 $ 608 $ 8 $ 60 (47,229) $ (1 37 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2009 Major Municipal Golf Earle Brown Liquor Course Heritage Center CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 5 $ 249 $ 3 Receipts from interfund services provided - - - Payments to suppliers (4 (139,088) (2 Payments to employees (632,532) (152,462) (924,935) Miscellaneous revenue 8 92 646 Net cash flows provided (used) by operating activities 221 (42,148) (97,286) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in - - - Transfers out (265,490) - (300,000) Special assessments - - - Interfund receivable 135 - - Interfund payable - 33 Net cash flows provided (used) by noncapital financing activities (130,490) 33 (300,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets - - - Proceeds from sale of assets - - Net cash flows provided (used) by capital and related financing activities - - - CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 15 81 10 Net increase (decrease) in cash and cash equivalents 106 (8 (386,326) Cash and cash equivalents - January 1 1 8 1 Cash and cash equivalents - December 31 $ 1 $ - $ 767 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) $ 277 $ (69,537) $ (626,928) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 26 28 624 Changes in assets and liabilities: (Increase) decrease in receivables - - (54,111) (Increase) decrease in inventories (40,730) 224 1 (Increase) decrease in prepaid expenses (3 - (24,708) Increase (decrease) in payables (49,472) (1 (19,779) Increase (decrease) in accrued expenses 2 331 1 Increase (decrease) in deferred revenue 323 - - Other nonoperating income 8 92 646 Total adjustments (56,363) 27 529 Net cash flows provided (used) by operating activities $ 221 $ (42,148) $ (97,286) Noncash financing activities: Capital contributions $ - $ - $ 113 Gain on sale of assets - - - The accompanying notes are an integral part of these financial statements. 38 Statement 8 Business -Type Activities Governmental Enterprise Other Activities - Water Sanitary Sewer Storm Drainage Nonmajor Total Internal Total Utility Utility Utility Enterprise Enterprise Service Proprietary $ 2 $ 3 $ 1 $ 521 $ 16 $ - $ 16 - - - - - 1 1 (2 (3 (353,363) (487,719) (13,752,065) (405,560) (14,157,625) (421,914) (159,177) (64,796) - (2 (591,840) (2 2 - 200 - 11 42 54 (592,943) 170 1 33 854 641 1 - - - - - 15 15 - - - - (565,490) - (565,490) 110 390 - - 111 - 111 (8 - (9 - 116 (33,422) 82 - 13 50 9 107 - 107 101 13 40 9 (230,584) (18,134) (248,718) (437,423) (428,648) (1 - (1 (911,922) (2 - - - - - 97 97 (437,423) (428 (1 - (1 (814,722) (2 7 25 26 1 87 62 149 (920,568) (218,836) 213 44 (1 (128,609) (1 2 2 1 72 8 6 15 $ 1 $ 1 $ 2 $ 117 $ 7 $ 6 $ 14 $ (1 $ (410,106) $ 299 $ 24 $ (1 $ (312,899) $ (2 596 550 858 5 2 654 3 153 25 1 256 127 (39,242) 87 (26,949) - - - (66,103) (1 (67,746) - (10,229) - - (38,388) - (38,388) 113 12 284 2 57 137 195 61 2 1 - 8 161 170 32 - - - 33 - 33 2 - 200 - 11 42 54 871 580 861 8 2 954 3 $ (592,943) $ 170 $ 1 $ 33 $ 854 $ 641 $ 1 $ 301 $ - $ 114 $ 3 $ - - - - - 40 39 m E7 This page has been left blank intentionally. 40 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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, 2009 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, 2009 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. The G. 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. The Tax Increment Bonds Debt Service Fund is used to account for the payment of tax increment financing bonds. These bonds were sold to finance the purchase and redevelopment of various redevelopment projects within the City. The Infrastructure 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: The Municipal Liquor Fund accounts for the operations of the City's municipal off -sale liquor stores. The Golf Course Fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by the City. The Earle 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. The Water 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 52% of this fund's expenses. The Storm 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, 2009 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, 2009 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 which 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 bonds, notes, bills, mortgages (excluding high -risk mortgage- backed securities), and other securities. b) State and local securities: 1) Any security which is a general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service. 2) Any security which is a revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating agency. 3) A general obligation of the Minnesota housing finance agency which is a moral obligation of the state of Minnesota and is rated "A" or better by a national bond rating agency. c) 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. d) Time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of U.S. banks. e) Repurchase agreements and reverse repurchase agreements with financial institutions identified by Minnesota Statutes Chapter 118A. f) Securities lending agreements may be entered into with financial institutions identified by Minnesota Statutes Chapter 118A. g) Minnesota joint powers investment trusts may be entered into with trusts identified by Minnesota Statutes Chapter 118A h) 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. i) 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, 2009 are planned to be eliminated in 2010. 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. 45 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES E. RECEIVABLES AND PAYABLES (Continued) All miscellaneous accounts receivable and trade receivables, other than utility, are presented net of an allowance for doubtful accounts. All utility trade receivables are reported at gross because it is the City's policy to certify delinquent account balances as special assessments. The City expects to make full collection of all property tax and special assessment receivables, so no allowance is considered necessary. 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 $ 25000 Buildings and Building Improvements 5000 Land Improvements 2500 Heavy Equipment 2500 Furniture and furnishings 1000 Motorized vehicles 1000 Technology equipment 1000 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, 2009 no interest was capitalized in connection with construction in progress. 46 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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 Employees 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, 2009 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. Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds and clarifies the existing governmental fund type descriptions. The provisions of this statement are effective for periods beginning after June 20, 2010. 48 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 2 RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balance — total governmental funds and net assets — governmental activities as reported in the government -wide statement of net assets. One element of that reconciliation explains that "Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $ 25,845,810 difference are as follows: Bonds payable $ 25 Accrued interest payable 460,810 Net adjustment to decrease fund balance - total governmental funds to arrive at net assets - governmental activities $ 25,845,810 Another element of that reconciliation explains that "Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities are included in the governmental statement of net assets." The details of this $ 9,248,473 difference are as follows: Net assets of internal service funds $ 8 Plus: Internal receivable representing charges in excess of cost to business -type activities -prior years 218,640 Plus: Internal reeivable representing charges in excess of cost to business -type activities - current year 47,229 Net adjustment to decrease fund balance - total governmental funds to arrive at net assets - governmental activities $ 9 B. 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 $ 708,856 difference are as follows: Capital outlay $ 2 Net transfers to proprietary funds (532,793) Depreciation expense (1,579,112) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 708,856 49 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 2 RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT -WIDE STATEMENT OF ACTIVITIES (Continued) 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 $ 209,402 difference are as follows: General property taxes deferred revenue: At December 31, 2008 $ (482,321) At December 31, 2009 484,569 Tax increment taxes deferred revenue: At December 31, 2008 (27,320) At December 31, 2009 41,730 Special assessments deferred revenue: At December 31, 2008 (4,158,572) At December 31, 2009 3,622,416 Other deferred revenues: At December 31, 2008 (11,805,629) At December 31, 2009 12,534,529 Net adjustments to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 209,402 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 $ 4,140,000 difference are as follows: Principal repayments: General obligation bonds $ 61000 General obligation improvement bonds 76500 General obligation tax increment bonds 2,765 Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $ 4,140 50 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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 Police Drug Forfeiture and Capital Reserve Emergency Funds. 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, however, reductions in appropriations were made by the City Council in April 2009 in anticipation of reductions in intergovernmental aids from the State of Minnesota. B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended December 31, 2009 expenditures exceeded appropriations in the following General Fund departments and special revenue funds: Final Over Budget Actual Budget Major Funds : General Fund: Administrative $ 689,302 $ 693,183 $ (3,881) Finance 405,138 409 (4,835) Legal 37500 388 (13,772) Government buildings 765,071 826 (61,648) Police protection 6425,868 6,508 (82,274) Engineering 570,916 628 (57,665) Social services 70,819 71,519 (700) Parks and recreation administration 186,293 193 (6,967) Recreation programs 691,161 705 (14,510) Special Revenue Funds: Tax Increment District No. 3 23500 2 (2 Debt Service Funds: G.O. Improvement Bonds 891452 942 (50,596) 51 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS (Continued) Final Over Budget Actual Budget Nonmajor Funds: Special Revenue Funds: Economic Development Authority 363,367 396,658 (33,291) Tax Increment District No. 4 286,484 308,204 (21,720) Debt Service Funds: General Obligation Bonds 705 707,284 (1,881) Capital Project Funds: Capital Improvements 390 491479 (101,479) Municipal State Aid for Construction 125 830,058 (704,658) C. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2009 in the following funds: Unreserved deficit fund balance Major Funds: Infrastructure Construction $ 949,133 Nonmajor Funds: Capital Improvements 25 Unrestricted deficit net assets Major Funds: Golf Course 827,360 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. 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 in Note 1.D., as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be placed in safekeeping in a restricted account at the Federal Reserve bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. 52 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS (Continued) At year -end, the City's carrying value amount of deposits was $ (284,397) composed of bank balances of $0. As of December 31, 2009 the City had the following investments and maturities: Investment Maturities Less than No Investment Type Rating Fair Value 1 year 1 -5 maturity Federal Home Loan Bank Notes AAA $ 3,522,267 $ - $ 3 $ - Negotiable Certificates of Deposit N/A 1,872,752 1,771 101 - External investment pool - 4M Fund N/A 29,152,042 - - 29,152,042 Money market AAA 9,812,446 - - 9,812,446 Total investments 44,359,507 $ 1,771,518 $ 3,623,501 $ 38,964,488 Deposits (284,397) Petty cash and change funds 13 Total cash and investments $ 4408 Reconciliation to Statement of Net Assets (Statement 1): Cash, cash equivalents, and investments 44 Restricted cash and investments 88 Total cash and investments $ 4408,645 N/A -not rated 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, 2009 the City's investment in FHLB 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. 53 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS (Continued) Concentration of credit risk — The City's investment policy requires that the investment portfolio be 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, 2009 are as follows: Major Funds Tax Increment G.O. Sanitary Storm District Improvement Infrastructure Water Sewer Drainage Nonmajor General No.3 Bonds Construction Utility Utility Utility Funds Total Delinquent property taxes $ 102,375 $ - $ 3,570 $ - $ - $ - $ - $ 15,210 $ 121,155 Delinquent taxincrements - 10,435 - - - - - - 10,435 Special assessments 221 - 2,628,647 428,681 140,760 1,302 231 - 3,199,842 $ 102,596 $ 10,435 $ 2,632,217 $ 428,681 $ 140,760 $ 1,302 $ 231 $ 15,210 $ 3,331,432 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: Unavailable Unearned Totals Delinquent property taxes receivable (General Fund) $ 409,492 $ - $ 409,492 Delinquent property taxes receivable (G. O. Improvement Bonds) 14 - 14 Delinquent property taxes receivable (Nonmajor Funds) 60 - 60 Delinquent taxincrement receivable (Tax Increment District No. 3) 41 - 41 Special assessments not yet due (General Fund) 3 - 3 Special assessments not yet due (G. O. Improvement Bonds) 3 - 3 Special assessments not yet due (Infrastructure Construction) 501,130 - 501 Fees received but unearned (General Fund) - 7 7,594 Assets held for resale (Tax Increment District No. 3) 11 - 11,747,529 Assets held for resale (Nonmajor Funds) 78700 - 78700 Total deferred /unearned revenue for governmental funds $ 16 $ 7,594 $ 16 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, 2009 was $ 9,071. Future minimum lease payments are as $ 9,091 annually for 2010 and $ 5,303 for 2011. 54 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 4 DETAILED NOTES ON ALL FUNDS (Continued) C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2009 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental activities Capital assets, not being depreciated: Land $ 3,537,473 $ - $ - $ 3,537,473 Construction in progress 4,698,661 2,287,968 (2,831,195) 4,155,434 Total capital assets, not being depreciated 8,236,134 2,287,968 (2,831,195) 7,692,907 Capital assets, being depreciated: Buildings and improvements 19,410,596 - - 19,410,596 Park improvements 4,498,492 - (85,551) 4,412,941 Departmental equipment 7,811,865 935,168 (550,648) 8,196,385 Streets 25,187,639 2,831,195 - 28,018,834 Total capital assets, being depreciated 56,908,592 3,766,363 (636,199) 60,038,756 Less accumulated depreciation for: Buildings and improvements 7,952,290 678,425 - 8,630,715 Park improvements 3,520,943 102,954 (85,551) 3,538,346 Departmental equipment 4,017,577 704,872 (494,080) 4,228,369 Streets 10,267,695 770,167 - 11,037,862 Total accumulated depreciation 25,758,505 2,256,418 (579,631) 27,435,292 Total capital assets being depreciated -net 31,150,087 1,509,945 (56,568) 32,603,464 Governmental activities capital assets -net $ 39,386,221 $ 3,797,913 $ (2,887,763) $ 40,296,371 Beginning Ending Balance Increases Decreases Balance Business -type activities: Capital assets, not being depreciated: Land $ 3,194,983 $ - $ - $ 3,194,983 Construction in progress 3,172,024 2,300,409 (2,481,464) 2,990,969 Total capital assets, not being depreciated 6,367,007 2,300,409 (2,481,464) 6,185,952 Capital assets, being depreciated: Land improvements 393,467 - - 393,467 Buildings and improvements 17,686,553 113,516 - 17,800,069 Department equipment 724,003 - - 724,003 Street light systems 83,540 - - 83,540 Mains and lines 51,926,163 2,481,464 - 54,407,627 Total capital assets, being depreciated 70,813,726 2,594,980 - 73,408,706 Less accumulated depreciation for: Land improvements 156,230 14,651 - 170,881 Buildings and improvements 10,773,682 839,835 - 11,613,517 Department equipment 498,150 38,429 - 536,579 Street light systems - 5,566 - 5,566 Mains and lines 23,180,309 1,790,696 - 24,971,005 Total accumulated depreciation 34,608,371 2,689,177 - 37,297,548 Total capital assets being depreciated -net 36,205,355 (94,197) - 36,111,158 Business -type activities capital assets - net $ 42,572,362 $ 2,206,212 $ (2,481,464) $ 42,297,110 55 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 4 DETAILED NOTES ON ALL FUNDS C. CAPITAL ASSETS (Continued) Depreciation expense was charged to functions /programs of the primary government as follows: Governmental activities: General government $ 91,559 Public safety 3 86,3 50 Public works 864 Parks and recreation 260 Capital assets held by the governments internal service funds are charged to the various functions based on their usage of the assets 654,060 Total depreciation expense - governmental activities $ 2,256418 Business -type activities: Municipal liquor $ 26,359 Go if course 28 Earle Brown Heritage Center 624,329 Water utility 596,180 Sanitary sewer utility 550 Storm drainage utility 858 Street light utility 5,566 Total depreciation expense - business -type activities $ 2,689,177 CONSTRUCTION COMMITMENTS At December 31, 2009 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: Contract Remaining Project Responsible Fund Amount Commitment Trail rehabilitation General Fund $ 24,566 $ 1,774 Xerxes Avenue and Northway Drive Infrastructure Construction 2,303,330 82,527 Aldrich Neighborhood Infrastructure Construction 2,491,467 36,862 Shingle Creek /69th Ave Improvements Infrastructure Construction 814,158 223,123 Central Park Trails Nonmajor Capital Projects Fund 139,717 IM386 Capital building maintenance for 2009 Nonmajor Capital Projects Fund 202,900 150,694 Telephone and voicemail system Nonmajor Capital Projects Fund 223,200 121,309 Total governmental funds 6 734,675 Centerbrook Watermain Water Utility Fund 109,036 2,033 Total all funds $ 6 $ 736,708 56 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 4 DETAILED NOTES ON ALL FUNDS (Continued) D. INTERFUND BALANCES AND TRANSFERS Individual fund interfund receivable and payable balances at December 31, 2009 are as follows: Due from Due to Fund Other Funds Other Funds Major Funds: Infrastructure Construction $ 659,794 $ 8 Water Utility 074 - Sanitary Sewer Utility - 13 Storm Drainage Utility - 50 Nonmajor Funds: Street Reconstruction - 59505 Total $ 668468 $ 668468 The $ 668,468 between these funds is expected to be eliminated within one year of December 31, 2009. Advances to Advances From Fund Other Funds Other Funds Major Funds: Go If Course $ - $ 792488 Nonmajor Funds: Capital Improvements 792,488 - $ 792 $ 792488 The $792,488 advance between the Golf Course and Capital Improvements funds is not expected to be eliminated within one year of December 31, 2009. Interfund Interfund Fund Receivable Payable Major Funds: Infrastructure Construction $ - $ 231,615 Go if Course - 33 Storm Drainage Utility 14,337 - Nonmajor Funds: Economic Development Authority 10000 - Community Development Block Grant - 10000 Street Reconstruction 231,615 - Recycling and Refuse - 14 Central Garage 33422 - $ 379,374 $ 379 57 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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: Transfer In Transfer Out Governmental Funds: Major Funds: General $ 100 $ 84 Tax Increment District No. 3 - 2 GO Improvement Bonds 6,349 - Tax Increment Bonds 2493,054 - Nonmajor Funds: Housing and Redevelopment Authority - 382,325 Economic Development Authority 382,325 657 Earle Brown Tax Increment District 657 - Community Development Block Grant - 10000 City Initiatives Grant 500 15,288 Capital Improvements 274,628 - Earle Brown Heritage Center Improvements 30000 - Street Reconstruction - 6 Technology 70 - Total govenmental funds 3 3 Proprietary Funds: Major Funds: Municipal Liquor - 265 Earle Brown Heritage Center - 300 Nonmajor Funds: Central Garage 15 - Total proprietary funds 15 565 Total all funds $ 3 $ 3 Governmental Business -Type Activities Activities Reconciliation to Government -Wide Statement of Activities: Net Transfers -Fund Statements $ 550,202 $ (550,202) Internal Service Fund Transfer 15,288 (15,288) Capital Asset Transfers (532,793) 532,793 Total Transfers - Government -Wide Statement of Activities $ 32 $ (32,697) 58 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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 2009, 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 2009 debt service requirements for the bonds. The transfer from the Community Development Block Grant fund to the General fund was made to transfer federal grant money received to pay for housing inspection and code enforcement costs. E. OPERATING LEASES The City leases space for its municipal liquor stores. The leases are ten -year leases and began in 2000 and 2003, and have options for a ten -year extension. In January 2009, the City amended the lease that began in 2000 to include additional space to be used for warehouse storage. 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, 2009 was $ 269,969. Future minimum base rent payments under the current agreements are as follows: Total Year Minimum Ending Rents 2010 $ 144 2011 93 2012 93 2013 93 $ 424,121 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. 59 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG -TERM DEBT (Continued) As of December 31, 2009 the long -term debt of the financial reporting entity consisted of the following: GOVERNMENTAL ACTIVITIES Final Interest Maturity Original Payable Rates Date Date Issue 12/31/09 General Obligation Bonds: Police and Fire Building Refunding Bonds 2.00 % -3.35% 12/01/2004 02/01/2013 $ 5,045,000 $ 2,665,000 Total General Obligation Bonds 5,045,000 2,665,000 G.O. Tax Increment Bonds: Taxable Tax Increment Refunding Bonds of 2004 2.25 % -4.40% 12/01/2004 02/01/2011 2,470,000 820,000 Taxable Tax Increment Bonds of 2004 4.75 % - 5.125% 12/01/2004 02/01/2020 17,245,000 14,310,000 Taxable Tax Increment Bonds of 2008 3.00 % -5.30% 05/01/2008 02/01/2018 4,335,000 2,665,000 Total G.O. Tax Increment Bonds 24,050,000 17,795,000 G.O. Improvement Bonds : 1999 Improvement Bonds 4.10 % -5.00% 12/01/1999 02/01/2010 1,585,000 150,000 2000 Improvement Bonds 4.30 % -4.95% 12/01/2000 02/01/2011 735,000 130,000 2001 Improvement Bonds 2.60 % -4.40% 12/01/2001 02/01/2012 730,000 195,000 2003 Improvement Bonds 1.45 % -4.00% 01/01/2003 02/01/2013 1,205,000 440,000 2004 Improvement Bonds 2.10 % -3.65% 12/01/2004 02/01/2015 1,010,000 570,000 2006 Improvement Bonds 3.55 % -3.80% 12/01/2006 02/01/2017 1,460,000 1,050,000 2008 Improvement Bonds 3.25 % -4.25% 12/15/2008 02/01/2019 2,390,000 2,390,000 Total G.O. Improvement Bonds 9,115,000 4,925,000 Total - bonded indebtedness $ 38,210,000 25,385,000 Other Liabilities Compensated absences payable 1,091,553 Net OPEB obligation 290,426 Total - other liabilities 1,381,979 Total City indebtedness -governmental activities $ 26,766,979 All long -term bonded indebtedness outstanding at December 31, 2009 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, 2009 were $ 41,730; delinquent special assessments in the governmental funds at December 31, 2009 were $ 62,180, which is included in the special assessments receivable balance of $ 3,636,391. 60 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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 $ 4,925,000 outstanding at December 31, 2009 the amounts applicable to street and storm capital assets is $ 4,080,707 and $ 844,293, respectively. Annual debt service requirements to maturity for long -term debt are as follows: Governmental Activities Year Ending General Obligation Bonds G.O. Tax Increment Bonds G.O. Improvement Bonds December 31 Principal Interest Principal Interest Principal Interest 2010 $ 640 $ 75,153 $ 2,78500 $ 783,961 $ 92000 $ 16706 2011 640 55,632 1 702 745 136 2012 685 34 92500 651 67000 111,460 2013 700,000 1 1,725 1,365,000 598,107 590,000 88,869 2014 - - 1,43000 532 47500 69,427 2015 -2019 - - 8 1 1 124 2020 - - 1,80000 46,125 - - Total $ 2 $ 177 $ 17 $ 4,835,487 $ 4 $ 698 CHANGE IN LONG -TERM LIABILITIES Long -term liability activity for the year ended December 31, 2009 was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities: Bonds payable: General obligation bonds $ 3,275,000 $ - $ (610,000) $ 2,665,000 $ 640,000 G.O. tax increment bonds 20,560,000 - (2,765,000) 17,795,000 2,785,000 G.O. improvement bonds 5,690,000 - (765,000) 4,925,000 920,000 Total bonds payable 29,525,000 - (4,140,000) 25,385,000 4,345,000 Compensated absences 1,075,953 79,999 (64,399) 1,091,553 109,155 Net OPEB obligation 147,045 311,623 (168,242) 290,426 - Total government activity long -term liabilities $ 30,747,998 $ 391,622 $ (4,372,641) $ 26,766,979 $ 4,454,155 Compensated absences are liquidated by the Public Employees Compensated Absences Fund. 61 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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, 2009 there were two 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, 2009 is $ 29,636,665. G. FUND EQUITY Net assets reported in the government -wide statement of net assets at December 31, 2009 include the following: Governmental activities Invested in capital assets, net of related debt: Land $ 3,537473 Construction in progress 4,155,434 Other capital assets, net of depreciation 3203 Less: related long -term debt outstanding (6,745,707) Total invested in capital assets, net of related debt 33,550 Restricted: Debt service 6,971,845 Tax increment purposes 22,056 Total restricted 29 Unrestricted 402,990 Total governmental activities net assets $ 66,661,645 Related debt for governmental activities capital assets includes $ 2,665,000 in General Obligation Bonds and $ 4,080,707 in G.O. Improvement Bonds, the amount issued to finance the street portion of construction projects. The remaining $ 844,293 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, 2009 Note 4 DETAILED NOTES ON ALL FUNDS G. FUND EQUITY (Continued) Business -type activities Invested in capital assets: Land $ 3,194,983 Construction in progress 2,990,969 Other capital assets, net of depreciation 36,111,158 Total invested in capital assets 42,297,110 Unrestricted 8,835 Total bus Ines s -type activities net as s ets $ 51 Governmental fund balances reported on the fund financial statements as of December 31, 2009 include the following: Reserved Major Funds: General: Committed contracts $ 1,774 Inventories 25,719 Prepaid items 500 Tax Increment District No. 3: Statutory housing obligation 2,912,165 G. O. Improvement Bonds: Debt service 3,054,056 Infrastructue Construction: Committed contracts 342 Nonmajor Funds: Advances to other funds 792488 Committed contracts 390,389 Debt service 1,204,714 Total $ 8,724,317 63 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 4 DETAILED NOTES ON ALL FUNDS G. FUND EQUITY (Continued) Unreserved, designated Major Funds: General: Working capital $ 8,502,012 Tax Increment District No. 3: Economic development 5,263 Nonmajor Funds: Economic development 3,974 Capital improvements 4 Total $ 22,324,598 Unreserved, Undesignated (deficit) Major Funds: Capital Project $ (949,133) Nonmajor Funds: Special Revenue 161,871 Capital Project (25,807) Total $ (813,069) Note 5 OTHER INFORMATION A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions 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. 64 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 5 OTHER INFORMATION A. RISK MANAGEMENT (Continued) 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. 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 9.40% of their annual covered salary. The City is required to contribute the following percentages of annual covered payroll: 6.75% for Coordinated Plan PERF members and 14.10% for PEPFF members. The City's contributions to the Public Employees Retirement Fund for the years ending December 31, 2009, 2008, and 2007 were $ 460,816, $ 428,616, and $ 392,528, respectively. The City's contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2009, 2008, and 2007 were $ 508,226 $ 444,527, and $ 374,495, 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, 2009 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 2008 were $ 117,983 of which all was from the State of Minnesota. The actuarially determined contribution based on an actuarial valuation performed at January 1, 2007 was $ 91,186, which represents funding for normal cost of $ 122,356 and amortization of the excess over the actuarial accrued liability of ($ 31,170). 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 $ 117,983 contribution to the Association in 2008 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, 2009 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. Actuarial valuation date 1/1/2007 Actuarial cost method Entry age normal cost method Amortization method Level dollar amount amortized on a closed basis Remaining amortization period 12 years Asset valuation method fair value Actuarial assumptions: Investment rate of return 6.0% compounded annually Discount rate for obligations 6.00% Projected salary increases Not applicable Post retirement benefits None Inflation rate Not applicable THREE YEAR TREND INFORMATION Three Year Trend Information Annual Percentage Net Year Pension of APC Pension Ending Cost (APC) Contributed Obligation 12/31/2006 $ 161M19 100% $ - 12/31/2007 139,441 100% - 12/31/2008 117,983 100% - SCHEDULE OF FUNDING PROGRESS Assets in Excess of Actuarial Actuarial Actuarial (Unfunded) Valuation Value of Accrued Accrued Funded Date Assets Liability Liab ility Ratio 01/01/2003 $ 2,540,231 $ 2,81307 $ (273,456) 90.3% 01/01/2005 3,38103 2,986,223 395,380 113.2% 01/01/2007 4,024,987 3,713,292 31105 108.4% 67 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 5 OTHER INFORMATION (Continued) C. OTHER POST - EMPLOYMENT BENEFITS 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, 2009 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: Retirees for which the City is paying the single premium 12 Retirees and beneficiaries currently purchasing health insurance through the City 3 Disabled police officers 3 Active employees 147 Total 165 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, 2009 was calculated as follows: Annual required contribution $ 314,184 Interest on net OPEB obligation 6,617 Adjustment to ARC (9,178) Annual OPEB cost 311,623 Employer Contributions Direct 102,650 Indirect Implicit Rate Subsidy 65,592 Increase (decrease) in net OPEB obligation 143,381 Net OPEB obligation, beginning of year 147,045 Net OPEB obligation, end of year $ 290,426 69 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 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, 2009. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 were as follows: Percentage of Fiscal Year Annual OPEB Employer Annual OPEB Cost Net OPEB Ended Cost Contributions Contributed Obligation December 31, 2008 $ 314,184 $ 167,139 53.20% $ 147 December 31, 2009 $ 311 $ 168,242 53.99% $ 290,426 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: Unfunded Actuarial Actuarial Actuarial Actuarial UAAL as a Valuation Value of Accrued Accrued Funded Covered Percentage of Date Assets Liability (AAL) * Liability (UAAL) Ratio Payroll Covered Payroll January 1, 2008 $ - $ 3,996,136 $ 3,996,136 0.00% $ 8,882,315 44.99% * Using projected unit credit actuarial cost method Note - the first OPEB actuarial valuation was conducted as of January 1, 2008. There is no data available prior to the first valuation. 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, 2009 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, 2009 was 28 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, 2009 Note 5 OTHER INFORMATION F. CONTINGENT LIABILITIES (Continued) A schedule of the notes outstanding at December 31, 2009 is as follows: Amended Original 12/31/2009 Interest Maturity Note Principal Balance Rate Date Twin Lakes Business Park $ 2,424,199 $ 1,902,759 8.00% 1/31/2021 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 2009 financial statements of the City is $ 369,094 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 2009 health and life insurance costs paid by the City was $ 1,304,651. Complete financial statements may be obtained from Gallagher Benefit services, Inc. located at 3600 American Blvd West, Bloomington, MN 55431. 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, 2009 Note 5 OTHER INFORMATION (Continued) H. SUBSEQUENT EVENT In March 2010, the City sold $ 2,350,000 in Taxable General Obligation Utility Revenue Bonds (Build America Bonds — Direct Pay), the proceeds of which will be used to reimburse the Water Utility and Sewer Utility Enterprise Funds for costs incurred for the Automatic Meter Read project. In March 2010, the City purchased the property at 4800 71st Avenue N from Edith Hernandez Franco for $206,700. The property will be added to the capital assets in 2010. 73 m E7 This page has been left blank intentionally. 74 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 1 of 5 For the Year Ended December 31, 2009 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes: Property taxes $ 11 $ 11 $ 11 $ (600,160) Market value homestead credit - - 583 583 Penalties and interest 15 15 36 20 Lodging tax 720 720 591 (128,709) Total taxes 12 12 12 (124,634) Special assessments - - 4 4 Licenses and permits: Liquor and beer licenses 72 72 85 13 Building permits 330 330 222 (107,955) Mechanical permits 70 70 46 (23,898) Sewer and water permits 1 1 1 (209) Plumbing permits 40 40 28 (11,906) Garbage licenses 2 2 3 345 Mechanical licenses 5 5 7 2 Service station licenses 2 2 2 190 Vehicle dealer licenses 1 1 1 - Bowling licenses 720 720 720 - Cigarette licenses 2 2 2 - Sign permits 5 5 4 (708) Rental dwelling licenses 135 135 154 19 Amusement licenses 1 1 860 (315) Electrical Permits 50 50 43 (6 ROW permits 3 3 5 2 Miscellaneous licenses and permits 8 8 6 (1 Total licenses and permits 731 731 616 (115,160) Intergovernmental: Federal: Other federal grants - 110 1 (108,683) State: Local government aid 1 776 1 243 Police pension aid 300 300 302 2 PERA aid 34 34 34 - Fireperson pension aid 140 140 97 (42,275) Police training - - 17 17 Local: Miscellaneous grants 64 64 69 5 Total intergovernmental 2 1 1 118 Charges for services: General government charges 34 34 359 324 Public safety charges 19 19 74 55 Community development fees 3 3 12 9 Recreation fees 311 311 296 (15,114) Community Center fees 351 351 365 14 Total charges for services 719 719 1,109,171 389 75 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 2 of 5 For the Year Ended December 31, 2009 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenues (continued): Fines and forfeits $ 296 $ 296 $ 340 $ 44 Miscellaneous: Investment earnings (net of market value change) 185 185 55 (129,136) Other 45 45 118 73 Total miscellaneous 230 230 174 (56,115) Total revenues 16 15 16 261 EXPENDITURES General government: Mayor and council: Current: Personal services 51 51 49 2 Supplies 500 100 699 (599) Services and other charges 81 78 77 1 Total mayor and council 133 130 127 3 Administrative (Manager, Clerk, HR) offices: Current: Personal services 648 646 652 (5 Supplies 8 4 5 (829) Services and other charges 48 38 35 2 Total administrative office 706 689 693 (3 Elections and voter registration: Current: Personal services 62 62 58 4 Supplies 1 1 - 1 Services and other charges 18 18 3 15 Total elections and voter registration 82 82 61 21 Assessor's office: Current: Personal services 267 266 262 3 Supplies 3 2 1 721 Services and other charges 42 41 42 (758) Total assessor's office 313 310 306 3 Finance: Current: Personal services 469 387 392 (5 Supplies 4 2 1 1 Services and other charges 15 15 15 (296) Total finance 489 405 409 (4 Legal: Current: Services and other charges 375 375 388 (13,772) 76 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 3 of 5 For the Year Ended December 31, 2009 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures: General government (continued): Government buildings: Current: Personal services $ 291 $ 290 $ 294 $ (4 Supplies 59 79 89 (10,277) Services and other charges 416 395 442 (47,027) Total government buildings 767 765 826 (61,648) Information technology: Current: Personal services 202 200 200 9 Supplies 5 6 1 4 Services and other charges 158 147 130 17 Total information technology 365 354 332 21 Total general government 3 3,112,311 3 (34,440) Public safety: Police protection: Current: Personal services 5 5 5 (97,583) Supplies 123 107 105 1 Services and other charges 942 893 880 13 Total police protection 6 6 6 (82,274) Fire protection: Current: Personal services 548 548 511 37 Supplies 87 74 42 32 Services and other charges 327 278 231 47 Total fire protection 964 902 785 116 Protective inspection: Current: Personal services 863 838 620 218 Supplies 4 4 11 (6 Services and other charges 126 122 141 (19,005) Total protective inspection 995 966 773 192 Emergency preparedness: Current: Personal services 66 66 60 5 Supplies 21 11 - 11 Services and other charges 7 7 4 2 Total emergency preparedness 95 85 65 19 Total public safety 8 8 8 246 77 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 4 of 5 For the Year Ended December 31, 2009 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures (continued): Public works: Engineering department: Current: Personal services $ 530 $ 527 $ 591 $ (63,988) Supplies 16 7 4 2 Services and other charges 51 35 31 4 Total engineering department 597 570 628 (57,665) Street department: Current: Personal services 785 781 775 6 Supplies 148 113 104 8 Services and other charges 649 552 480 72 Total street department 1 1 1 87 Total public works 2 2 1 30 Community services: Social services: Current: Services and other charges 70 70 71 (700) Civic events: Current: Services and other charges 5 5 - 5 Total community services 75 75 71 4 Parks and recreation: Administration: Current: Personal services 180 179 185 (5 Supplies - - 97 (97) Services and other charges 6 6 7 (1 Total administration 187 186 193 (6 Recreation programs: Current: Personal services 454 446 467 (21,260) Supplies 34 34 32 1 Cost of good sold to public 8 8 7 1 Services and other charges 201 201 197 4 Total recreation programs 698 691 705 (14,510) Community center: Current: Personal services 450 449 441 8 Supplies 31 31 14 17 Services and other charges 82 82 84 (1 Total community center 564 563 539 23 78 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 9 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND Page 5 of 5 For the Year Ended December 31, 2009 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Expenditures: Parks and recreation (continued): Park maintenance: Current: Personal services $ 548 $ 545 $ 562 $ (17,328) Supplies 63 49 41 8 Services and other charges 339 310 301 9 Total park maintenance 950 906 905 1 Total parks and recreation 2 2 2 3 Economic development: Convention bureau: Current: Services and other charges 342 342 279 62 Nondepartmental: Expenditures not charged to departments: Current: Supplies 18 18 24 (6 Services and other charges 482 576 288 288 Total nondepartmental 500 595 313 281 Total expenditures 17 16 16 593 Revenues over (under) expenditures (859,500) (943,714) (88,751) 854 OTHER FINANCING SOURCES (USES) Transfers in - administrative services reimbursed 839 923 859 (64,258) Transfers from other funds 90 90 100 10 Transfers to other funds (70,000) (70 (84,138) (14,138) Total other financing sources (uses) 859 943 875 (68,396) Net increase (decrease) in fund balance $ - $ - 786 $ 786 Fund balance - January 1 7 Fund balance - December 31 $ 8 79 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 10 BUDGETARY COMPARISON SCHEDULE - TAX INCREMENT DISTRICT NO. 3 For the Year Ended December 31, 2009 Variance with Final Budget - Budgeted Amounts Positive Original Final Actual (Negative) REVENUES Taxes: Tax increments $ 2 $ 2 $ 2 $ 252 Market value homestead credit - - 6 6 Investment earnings (net of market value adjustment) 249 249 79 (169,903) Miscellaneous - - 250 250 Total revenues 2 2 2 89 EXPENDITURES Current: Economic development: Personal services - - 2 (2 Services and other charges 235 235 1 (1 Capital outlay: Economic development - - 806 (806,619) Total expenditures 235 235 2 (2 Revenues over (under) expenditures 2 2 (213,647) (2 OTHER FINANCING SOURCES (USES) Transfers out (3 (3 (2 1 Net increase (decrease) in fund balance $ (1 $ (1 (2 $ (1 Fund balance - January 1 10 Fund balance - December 31 $ 8 80 CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION Statement 11 SCHEDULE OF FUNDING PROGRESS - OTHER POSTEMPLOYMENT BENEFITS For the Year Ended December 31, 2009 Unfunded Actuarial Actuarial Actuarial Actuarial UAAL as a Valuation Value of Accrued Accrued Funded Covered Percentage of Date Assets Liability (AAL) Liability (UAAL Ratio Payroll Covered Payroll January 1, 2008 $ - $ 3 $ 3 0.00% $ 8 44.99% Percentage Annual of Annual Fiscal Year OPEB Employer OPEB Cost Net OPEB Ended Cost Contribution Contributed Obligation December 31, 2008 $ 314 $ 167 53.20% $ 147 December 31, 2009 311 168 53.99% 290 The City implemented GASB Statement No. 45 for the year ended December 31, 2008. Information for prior years is not available. 81 CITY OF BROOKLYN CENTER, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2009 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: Final Over Budget Actual Budget Major Funds: General Fund: Administrative $ 689,302 $ 693,183 $ (3 Finance 405,138 409,973 (4 Legal 37500 388,772 (13,772) Government buildings 765,071 826,719 (61,648) Police protection 6 6,508,142 (82,274) Engineering 570,916 628,581 (57,665) Social services 70,819 71,519 (700) Parks and recreation administration 186,293 193,260 (6,967) Recreation programs 691 705 (14,510) Special Revenue Funds: Tax Increment District No. 3 23500 2M%635 (2,414,635) 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 COMBINING BALANCE SHEET Statement 12 NONMAJOR GOVERNMENTAL FUNDS December 31, 2009 Total Special Debt Capital Nonmaj or Revenue Service Project Governmental ASSETS Cash and investments $ 4 $ 1 $ 4 $ 9 Receivables: Accounts - net - - 166 166 Current taxes 3 7 - 10 Delinquent taxes 18 42 - 60 Due from other governments 143 - 771 914 Interfund receivable 100 - 231 331 Advances to other funds - - 792 792 Assets held for resale 787 - - 787 Total assets 5 1 6 12 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 16 2 32 51 Accrued salaries and wages 12 - - 12 Due to other funds - - 595 595 Contracts payable - - 153 153 Interfund payable 100 - - 100 Deferred revenue 805 42 - 847 Total liabilities 935 44 781 1 Fund balances: Reserved: Advances to other funds - - 792 792 Committed contracts - - 390 390 Debt service - 1 - 1 Unreserved: Designated: Capital improvements - - 4 4 Economic development 3 - - 3 Undesignated 161 - (25,807) 136 Total fund balances 4 1 5 11 Total liabilities and fund balances $ 5 $ 1 $ 6 $ 12 84 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND Statement 13 CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2009 Total Special Debt Capital Nonmaj or Revenue Service Project Governmental REVENUES Property taxes $ 382 $ 705 $ - $ 1 Tax increments 1 - - 1 Franchise fees - - 656 656 Intergovernmental 405 - 839 1 Charges for services 11 - - 11 Investment earnings (net of market value adjustment) 32 7 48 88 Miscellaneous 93 - 109 203 Total revenues 2,170,113 713 1 4 EXPENDITURES Current: General government - - 706 706 Public safety 319 - - 319 Public works - - 122 122 Parks and recreation 59 - 58 118 Economic development 409 - - 409 Capital outlay: General government - - 113 113 Public works - - 1 1 Parks and recreation - - 34 34 Debt service: Principal retirement 305 610 - 915 Interest - 93 - 93 Fiscal agent fees - 3 - 3 Total expenditures 1 707 2 4 Revenues over (under) expenditures 1 6 (738,587) 344 OTHER FINANCING SOURCES (USES) Transfers in 387 - 644 1 Transfers out (498,270) - (6 (504,619) Total other financing sources (uses) (110,288) - 638 527 Net increase (decrease) in fund balances 966 6 (100,308) 872 Fund balances - January 1 3 1 5 10,210,113 Fund balances - December 31 $ 4 $ 1 $ 5 $ 11 85 m E7 This page has been left blank intentionally. 86 NONMAJOR SPECIAL REVENUE FUNDS The City of Brooklyn Center had the following Special Revenue Funds during the year: Housing and Redevelopment Authority Fund (H - 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 (CDBQJ - 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 NONMAJOR SPECIAL REVENUE FUNDS December 31, 2009 Housing and Economic Earle Brown Redevelopment Development Tax Increment Authority Authority District ASSETS Cash and investments $ - $ 1 $ 1 Receivables: Current taxes 3 - - Delinquent taxes 18 - - Due from other governments - - - Interfund receivable - 100 - Asset held for resale - 787 - Total assets 21 2 1 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - 5 3 Accrued salaries and wages - 7 - Interfund payable - - - Deferred revenue 18 787 - Total liabilities 18 799 3 Fund balances: Unreserved: Designated: Economic development 3 1 1 Undesignated - - - Total fund balances 3 1 1 Total liabilities and fund balances $ 21 $ 2 $ 1 88 Statement 14 Total Tax Police Community City Nonmaj or Increment Drug Development Initiatives Special District No. 4 Forfeiture Block Grant Grant Revenue $ 173 $ 37 $ - $ 93 $ 4 - - - - 3 - - - - 18 - - 100 43 143 - - - - 100 - - - - 787 173 37 100 136 5 1 4 - 2 16 - - - 5 12 - - 100 - 100 - - - - 805 1 4 100 7 935 171 - - - 3 - 32 - 129 161 171 32 - 129 4 $ 173 $ 37 $ 100 $ 136 $ 5 89 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2009 Housing and Economic Earle Brown Redevelopment Development Tax Increment Authority Authority District REVENUES Property taxes $ 382 $ - $ - Tax increments - - 905 Intergovernmental - - - Charges for services - - - Investment earnings (net of market value adjustment) - 17 13 Miscellaneous - 195 - Total revenues 382 17 919 EXPENDITURES Current: Public safety: Personal services - - - Supplies - - - Services and other charges - - - Total public safety - - - Parks and recreation: Personal services - - - Supplies - - - Services and other charges - - - Total parks and recreation - - - Economic development: Personal services - 229 - Supplies - 273 - Services and other charges - 167 9 Total economic development - 396 9 Debt service: Principal - - - Total expenditures - 396 9 Revenues over (under) expenditures 382 (379,203) 909 OTHER FINANCING SOURCES (USES) Transfers in - 382 657 Transfers out (382,325) (657) - Total other financing sources (uses) (382,325) 381 657 Net increase (decrease) in fund balances 290 2 910 Fund balances - January 1 2 1 1 Fund balances - December 31 $ 3 $ 1 $ 1 90 Statement 15 Total Tax Police Community City Nonmaj or Increment Drug Development Initiatives Special District No. 4 Forfeiture Block Grant Grant Revenue $ - $ - $ - $ - $ 382 339 - - - 1 - 1 100 304 405 - - - 11 11 320 410 - 752 32 - 49 - 43 93 339 51 100 360 2 - - - 195 195 - 36 - 49 86 - 14 - 23 37 - 50 - 268 319 - - - 3 3 - - - 10 10 - - - 45 45 - - - 59 59 - - - - 229 - - - - 273 2 - - - 179 2 - - - 409 305 - - - 305 308 50 - 327 1 31 251 100 32 1 - - - 5 387 - - ( 100,000) ( 15,288) (498,270) - - ( 100,000) ( 10,288) ( 110,288) 31 251 - 22 966 140 32 - 107 3 $ 171 $ 32 $ - $ 129 $ 4 91 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY Statement 16 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Taxes: Property taxes $ 385 $ 385 $ 362 Market value homestead credit - - 19 Total revenues 385 385 382 OTHER FINANCING SOURCES (USES) Transfers out (385,289) (385,289) (382,325) Net increase (decrease) in fund balance $ - $ - 290 Fund balance - January 1 2 Fund balance - December 31 $ 3 92 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY Statement 17 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment) $ 41 $ 41 $ 17 Miscellaneous - - 195 Total revenues 41 41 17 EXPENDITURES Current: Economic development: Personal services 210 225 229 Supplies 4 4 273 Services and other charges 132 132 167 Total expenditures 347 363 396 Revenues over (under) expenditures (306,815) (322,267) (379,203) OTHER FINANCING SOURCES (USES) Transfers in 385 385 382 Transfers out - - (657) Total other financing sources (uses) 385 385 381 Net increase (decrease) in fund balance $ 78 $ 63 2 Fund balance - January 1 1 Fund balance - December 31 $ 1 93 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - EARLE BROWN TAX INCREMENT DISTRICT Statement 18 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Taxes: Tax increments $ 736 $ 736 $ 905 Investment earnings (net of market value adjustment) 16 16 13 Total revenue 752 752 919 EXPENDITURES Current: Economic development: Services and other charges 16 16 9 Revenues over (under) expenditures 736 736 909 OTHER FINANCING SOURCES (USES) Transfers in - - 657 Net increase (decrease) in fund balance $ 736 $ 736 910 Fund balance - January 1 1 Fund balance - December 31 $ 1 94 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 4 Statement 19 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Tax increments $ 301 $ 301 $ 339 Investment earnings (net of market value adjustment) - - 320 Total revenues 301 3 01, 5 62 339 EXPENDITURES Current: Economic development: Services and other charges - - 2 Debt service: Principal 286 286 305 Total expenditures 286 286 308 Net increase (decrease) in fund balance $ 15 $ 15 31 Fund balance - January 1 140 Fund balance - December 31 $ 171 95 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT Statement 20 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ 193 $ 193 $ 100 EXPENDITURES Current: Economic development: Services and other charges 193 193 - Revenues over (under) expenditures - - 100 OTHER FINANCING SOURCES (USES) Transfers out - - (100 Net increase (decrease) in fund balance Fund balance - January 1 - Fund balance - December 31 $ - 96 CITY OF BROOKLYN CENTER, MINNESOTA SPECIAL REVENUE FUND - CITY INITIATIVES GRANT Statement 21 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ 190 $ 190 $ 304 Charges for services 12 12 11 Investment earnings (net of market value adjustment) - - 752 Miscellaneous 8 8 43 Total revenues 211 211 360 EXPENDITURES Current: Public safety: Personal services 247 247 195 Supplies - - 49 Services and other charges - - 23 Total public safety 247 247 268 Parks and recreation: Personal services 3 3 3 Supplies 9 9 10 Services and other charges 237 237 45 Total parks and recreation 250 250 59 Total expenditures 498 498 327 Revenues over (under) expenditures (286,613) (286,613) 32 OTHER FINANCING SOURCES (USES) Transfers in - - 5 Transfers out - - (15,288) Total other financing sources (uses) - - (10,288) Net increase (decrease) in fund balance $ (286,613) $ (286,613) 22 Fund balance - January 1 107 Fund balance - December 31 $ 129 97 m E7 This page has been left blank intentionally. 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. 99 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET Statement 22 NONMAJOR DEBT SERVICE FUND December 31, 2009 General Obligation Bonds ASSETS Cash and investments $ 1 Receivables: Current taxes 7 Delinquent taxes 42 Total assets 1 LIABILITIES AND FUND BALANCE Liabilities: Accounts payable 2 Deferred revenue 42 Total liabilities 44 Fund balance: Reserved: Debt service 1 Total liabilities and fund balance $ 1 100 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND Statement 23 CHANGES IN FUND BALANCE NONMAJOR DEBT SERVICE FUND For the Year Ended December 31, 2009 General Obligation Bonds REVENUES Property taxes $ 705 Investment earnings (net of market value adjustment) 7 Total revenues 713 EXPENDITURES Debt service: Principal 610 Interest 93 Fiscal agent fees 3 Total expenditures 707 Net increase (decrease) in fund balances 6 Fund balances - January 1 1 Fund balances - December 31 $ 1 101 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS Statement 24 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Property taxes $ - $ - $ 299 Special assessments 850 850 1 Investment earnings (net of market value adjustment) 20 20 23 Total revenues 870 870 1 EXPENDITURES Debt service: Principal 765 765 765 Interest 111 111 166 Fiscal agent fees 15 15 10 Total expenditures 891 891 942 Revenues over (under) expenditures (21,102) (21,102) 254 OTHER FINANCING SOURCES (USES) Transfers in - - 6 Net increase (decrease) in fund balance $ (21,102) $ (21,102) 260 Fund balance - January 1 2 Fund balance - December 31 $ 3 102 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - TAX INCREMENT BONDS Statement 25 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment) $ 24 $ 24 $ 401 EXPENDITURES Debt service: Principal 2 2 2 Interest 1 1 922 Fiscal agent fees 4 4 1 Total expenditures 3 3 3 Revenues over (under) expenditures (3 (3 (3 OTHER FINANCING SOURCES (USES) Transfers in 3 3 2 Net increase (decrease) in fund balance $ 38 $ 38 (1 Fund balance - January 1 1 Fund balance - December 31 $ - 103 CITY OF BROOKLYN CENTER, MINNESOTA DEBT SERVICE FUND - GENERAL OBLIGATION BONDS Statement 26 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Property taxes $ 703 $ 703 $ 705 Investment earnings (net of market value adjustment) 5 5 7 Total revenues 708 708 713 EXPENDITURES Debt service: Principal 610 610 610 Interest 93 93 93 Fiscal agent fees 1 1 3 Total expenditures 705 705 707 Net increase (decrease) in fund balance $ 3 $ 3 6 Fund balance - January 1 1 Fund balance - December 31 $ 1 104 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 proj ects. 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. Street Reconstruction Fund — This fund accounts for franchise fees collected, which have been dedicated to the reconstruction of the City's infrastructure. Technolo,,Q�y 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 NONMAJOR CAPITAL PROJECT FUNDS December 31, 2009 Capital Reserve Capital Emergency Improvements ASSETS Cash and investments $ 1 $ 319 Receivables: Accounts - net - - Due from other governments - - Interfund receivable - - Advances to other funds - 792 Total assets 1 1,111,613 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - 19 Due to other funds - - Contracts payable - 56 Total liabilities - 75 Fund balances: Reserved: Advances to other funds - 792 Committed contracts - 269 Unreserved: Designated for capital improvements 1 - Undesignated - (25,807) Total fund balances 1 1 Total liabilities and fund balances $ 1 $ 1,111,613 106 Statement 27 Municipal Earle Brown Total State Aid Heritage Nonmaj or for Center Street Capital Construction Improvements Reconstruction Technology Projects $ 51 $ 670 $ 1 $ 298 $ 4 - - 166 - 166 771 - - - 771 - - 231 - 231 - - - - 792 823 670 2 298 6 11 - - 1 32 - - 595 - 595 - 30 - 66 153 11 30 595 68 781 - - - - 792 - - - 121 390 811 640 1 109 4 - - - - (25,807) 811 640 1 230 5 $ 823 $ 670 $ 2 $ 298 $ 6 107 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For the Year Ended December 31, 2009 Capital Reserve Capital Emergency Improvements REVENUES Franchise fees $ - $ - Intergovernmental - - Investment earnings (net of market value adjustment) 13 2 Miscellaneous - 188 Total revenues 13 3 EXPENDITURES Current: General government: Supplies - 684 Services and other charges - 391 Total general government - 392 Public works: Supplies - - Services and other charges - 5 Total public works - 5 Parks and recreation: Services and other charges - 58 Capital outlay General government - - Public works - - Parks and recreation - 34 Total capital outlay - 34 Total expenditures - 491 Revenues over (under) expenditures 13 (488,336) OTHER FINANCING SOURCES (USES) Transfers in - 274 Transfers out - - Total other financing sources (uses) - 274 Net increase (decrease) in fund balances 13 (213,708) Fund balances - January 1 1 1 Fund balances - December 31 $ 1 $ 1 108 Statement 28 Municipal Earle Brown Total State Aid Heritage Nonmaj or for Center Street Capital Construction Improvements Reconstruction Technology Projects $ - $ - $ 656 $ - $ 656 839 - - - 839 7 4 17 2 48 - 109 - - 109 846 113 674 2 1 - - - 177 177 - 72 - 65 529 - 72 - 242 706 33 - - - 33 83 - 596 - 89 116 - 596 - 122 - - - - 58 - 113 - - 113 713 - 643 - 1 - - - - 34 713 113 643 - 1 830 186 643 242 2 16 (72,356) 30 (239,179) (738,587) - 300 - 70 644 - - (6 - (6 - 300 (6 70 638 16 227 24 (169,179) (100,308) 794 412 1 399 5 $ 811 $ 640 $ 1 $ 230 $ 5 109 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - INFRASTRUCTURE CONSTRUCTION Statement 29 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Special assessments $ 476 $ 476 $ 175 Miscellaneous 60 60 48 Total revenues 536 536 223 EXPENDITURES Current: Public works: Services and other charges - - 43 Capital outlay: Public works 7 7 509 Total expenditures 7 7 553 Revenues over (under) expenditures (7 (7 (329,639) OTHER FINANCING SOURCES (USES) Transfers in 6 6 - Net increase (decrease) in fund balance $ (1 $ (1 (329,639) Fund balance - January 1 (276,982) Fund balance - December 31 $ (606,621) 110 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - CAPITAL IMPROVEMENTS Statement 30 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment) $ 10 $ 10 $ 2 Miscellaneous - - 188 Total revenues 10 10 3 EXPENDITURES Current: General government: Supplies - - 684 Services and other charges - - 391 Public works: Services and other charges 390 390 5 Parks and recreation: Services and other charges - - 58 Capital outlay: Parks and recreation - - 34 Total expenditures 390 390 491 Revenues over (under) expenditures (379,700) (379,700) (488,336) OTHER FINANCING SOURCES (USES) Transfers in 135 135 274 Net increase (decrease) in fund balance $ (244,700) $ (244,700) (213,708) Fund balance - January 1 1 Fund balance - December 31 $ 1 111 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - MUNICIPAL STATE AID FOR CONSTRUCTION Statement 31 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Intergovernmental $ 665 $ 665 $ 839 Investment earnings (net of market value adjustment) 20 20 7 Total revenues 685 685 846 EXPENDITURES Current: Public works: Supplies 33 33 33 Services and other charges 91 91 83 Total public works 125 125 116 Capital outlay: Public works - - 713 Total expenditures 125 125 830 Revenues over (under) expenditures 559 559 16 OTHER FINANCING SOURCES (USES) Transfers out (650,000) (650,000) - Net increase (decrease) in fund balance $ (90,400) $ (90,400) 16 Fund balance - January 1 794 Fund balance - December 31 $ 811 112 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - EARLE BROWN HERITAGE CENTER IMPROVEMENTS Statement 32 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment) $ 4 $ 4 $ 4 Miscellaneous - - 109 Total revenues 4 4 113 EXPENDITURES Current: General government: Services and other charges 287 287 72 Capital outlay: General government - - 113 Total expenditures 287 287 186 Revenues over (under) expenditures (283,000) (283,000) (72,356) OTHER FINANCING SOURCES (USES) Transfers in 200 200 300 Net increase (decrease) in fund balance $ (83,000) $ (83,000) 227 Fund balance - January 1 412 Fund balance - December 31 $ 640 113 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - STREET RECONSTRUCTION Statement 33 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Franchise fees $ 680 $ 680 $ 656 Investment earnings (net of market value adjustment) 35 35 17,751 Total revenues 715 715 674 EXPENDITURES Current: Public works: Services and other charges - - 596 Capital outlay: Public works 850 850 643 Total expenditures 850 850 643 Revenues over (under) expenditures (13 5,000) (13 5,000) 30 OTHER FINANCING SOURCES (USES) Transfers out - - (6 Net increase (decrease) in fund balance $ (13 5,000) $ (13 5,000) 24 Fund balance - January 1 1 Fund balance - December 31 $ 1 114 CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL PROJECT FUND - TECHNOLOGY Statement 34 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2009 Budgeted Amounts Actual Original Final Amounts REVENUES Investment earnings (net of market value adjustment) $ 7 $ 7 $ 2 EXPENDITURES Current: General government: Supplies 278 278 177 Services and other charges 67 67 65 Total expenditures 345 345 242 Revenues over (under) expenditures (337,300) (337,300) (239,179) OTHER FINANCING SOURCES (USES) Transfers in 70 70 70 Net increase (decrease) in fund balance $ (267,300) $ (267,300) (169,179) Fund balance - January 1 399 Fund balance - December 31 $ 230 115 m E7 This page has been left blank intentionally. 116 NONMAJOR ENTERPRISE FUNDS The City of Brooklyn Center had the following nonmaj or 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 COMBINING STATEMENT OF NET ASSETS Statement 35 NONMAJOR ENTERPRISE FUNDS December 31, 2009 Total Recycling and Street Light Nonmaj or Refuse Utility Enterprise ASSETS Current assets: Cash and cash equivalents $ - $ 117 $ 117 Receivables: Accounts - net 55 56 111 Total current assets 55 174 229 Noncurrent assets: Capital assets: Street light systems - 83 83 Construction in progress - 332 332 Total capital assets - 416 416 Less: Allowance for depreciation - (5 (5 Net capital assets - 410 410 Total assets 55 585 640 LIABILITIES Current liabilities: Accounts payable 974 16 17 Interfund payable 14 - 14 Total liabilities 15 16 31 NET ASSETS Invested in capital assets - 410 410 Unrestricted 39 158 197 Total net assets $ 39 $ 568 $ 608 118 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES, AND Statement 36 CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2009 Total Recycling and Street Light Nonmaj or Refuse Utility Enterprise OPERATING REVENUES Sales and user fees $ 267 $ 253 $ 521 OPERATING EXPENSES Supplies 61 839 900 Other services 274 40 314 Insurance 1 1 2 Utilities - 172 172 Depreciation - 5 5 Total operating expenses 276 220 496 Operating income (loss) (8 33 24 NONOPERATING REVENUES (EXPENSES) Investment earnings (net of market value adjustment) 25 1 1 Income (loss) before contributions (8 34 26 Capital contributions - 3 3 Change in net assets (8 37 29 Net assets - January 1 48 530 579 Net assets - December 31 $ 39 $ 568 $ 608 119 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS Statement 37 NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2009 Total Recycling and Street Light Nonmaj or Refuse Utility Enterprise CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 265 $ 255 $ 521 Payments to suppliers (275,948) (211,771) (487,719) Net cash flows provided (used) by operating activities (10,008) 43 33 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Interfund payable 9 - 9 CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 25 1 1 Net increase (decrease) in cash and cash equivalents - 44 44 Cash and cash equivalents - January 1 - 72 72 Cash and cash equivalents - December 31 $ - $ 117 $ 117 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (8 $ 33 $ 24 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation - 5 5 Changes in assets and liabilities: (Increase) decrease in receivables (1 1 256 Increase (decrease) in payables 110 2 2 Total adjustments (1 9 8 Net cash flows provided (used) by operating activities $ (10,008) $ 43 $ 33 Noncash financing activities: Capital contributions $ - $ 3 120 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 COMBINING STATEMENT OF NET ASSETS Statement 38 INTERNAL SERVICE FUNDS December 31, 2009 Total Central EE Retirement EE Comp Internal Garage Benefit Absences Service ASSETS Current assets: Cash and cash equivalents $ 4 $ 1 $ 1 $ 6 Receivables: Accounts - net 51 2 - 54 Interfund receivable 33 - - 33 Inventories 26 - - 26 Total current assets 4 1 1 6 Noncurrent assets: Capital assets: Land improvements 166 - - 166 Machinery and equipment 7 - - 7 Total capital assets 7 - - 7 Less: Allowance for depreciation (3 - - (3 Net capital assets 3 - - 3 Total assets 8 1 1 10 LIABILITIES Current liabilities: Accounts payable 168 - - 168 Accrued salaries payable 12 - - 12 Compensated absences payable - current - - 109 109 Total current liabilities 180 - 109 289 Noncurrent liabilities: Compensated absences payable- long -term - - 982 982 Net OPEB obligation - 290 - 290 Total noncurrent liabilities - 290 982 1 Total liabilities 180 290 1 1 NET ASSETS Invested in capital assets 3 - - 3 Unrestricted 3 1 - 5 Total net assets $ 7 $ 1 $ - $ 8 122 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENSES, AND Statement 39 CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2009 Total Central EE Retirement EE Comp Internal Garage Benefit Absences Service OPERATING REVENUES Sales and user fees $ 1 $ 65 $ 197 $ 1 OPERATING EXPENSES Personal services 335 311 105 752 Supplies 363 - - 363 Other services 131 - - 131 Insurance 44 - - 44 Utilities 1 - - 1 Depreciation 654 - - 654 Total operating expenses 1 311 105 1 Operating income (loss) (158,739) (246,027) 91 (312,899) NONOPERATING REVENUES (EXPENSES) Intergovernmental - 15 - 15 Investment earnings (net of market value adjustment) 39 13 9 62 Gain (loss) on sale of capital assets 40 - - 40 Other revenue 26 - - 26 Total nonoperating revenues (expenses) 107 28 9 145 Income (loss) before transfers (51,302) (217,339) 101 (167,543) Transfers in 15 - - 15 Change in net assets (36,014) (217,339) 101 (152,255) Net assets - January 1 7 1 (101,098) 9 Net assets - December 31 $ 7 $ 1 $ - $ 8 123 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF CASH FLOWS Statement 40 INTERNAL SERVICE FUNDS For the Year Ended December 31, 2009 Total Central EE Retirement EE Comp Internal Garage Benefit Absences Service CASH FLOWS FROM OPERATING ACTIVITIES Receipts from interfund services provided $ 1 $ 65 $ 197 $ 1 Payments to suppliers (405,560) - - (405,560) Payments to employees (332,340) (169,852) (89,648) (591,840) Miscellaneous revenue 26 15 - 42 Net cash flows provided (used) by operating activities 623 (88,900) 107 641 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 15 - - 15 Interfund receivable (33,422) - - (33,422) Net cash flows provided (used) by noncapital financing activities (18,134) - - (18,134) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (911,922) - - (911,922) Proceeds from sale of capital assets 97 - - 97 Net cash flows provided (used) by capital and related financing activities (814,722) - - (814,722) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 39 13 9 62 Net increase (decrease) in cash and cash equivalents (169,735) (75,572) 116 (128,609) Cash and cash equivalents - January 1 4 1 974 6 Cash and cash equivalents - December 31 $ 4 $ 1 $ 1 $ 6 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (158,739) $ (246 $ 91 $ (312,899) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 654 - - 654 Changes in assets and liabilities: (Increase) decrease in receivables (37,628) (1 - (39,242) (Increase) decrease in inventories (1 - - (1 Increase (decrease) in payables 137 - - 137 Increase (decrease) in accrued expenses 3 143 15 161 Other nonoperating income 26 15 - 42 Total adjustments 781 157 15 954 Net cash provided (used) by operating activities $ 623 $ (88,900) $ 107 $ 641 Noncash financing activities: Gain on sale of assets $ 40 $ - $ - 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 140 These tables contain information to help the reader assess the City's most significant "own - source " revenue, property taxes. Debt Capacity 146 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 152 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 154 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 CITY OF BROOKLYN CENTER, MINNESOTA NET ASSETS BY COMPONENT Last seven fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Governmental activities Invested in capital assets, net of related debt $ 14 $ 12 $ 25 Restricted 14 39 29 Unrestricted 17 3 652 Total governmental activities net assets $ 47 $ 55 $ 55 Business -type activities Invested in capital assets $ 37 $ 36 $ 38 Unrestricted 6 7 7 Total business -type activities net assets $ 44 $ 43 $ 45 Primary government Invested in capital assets, net of related debt $ 52 $ 48 $ 64 Restricted 14 39 29 Unrestricted 24 10 7 Total primary government net assets $ 91 $ 98 $ 101 Note: Data for 2000 -2002 is not available; the City did not prepare government -wide financial statements on an accrual basis for those years. 126 Table 1 2006 2007 2008 2009 $ 25 $ 31 $ 31 $ 33 27 28 31 29 4 4 690 4 $ 57 $ 64 $ 63 $ 66 $ 40 $ 40 $ 42 $ 42 7 9 10 8 $ 48 $ 50 $ 53 $ 51 $ 65 $ 70 $ 72 $ 75 27 28 31 29 13 15 12 13 $ 105 $ 114 $ 117 $ 117 127 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN NET ASSETS - GOVERNMENTAL ACTIVITIES Last seven fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Expenses General government $ 2 $ 2 $ 2 Public safety 7 7 7 Public works 2 1 3 Community services 225 67 86 Parks and recreation 2 2 2 Economic development 1 1 3 Interest on long -term debt 922 1 1 Total expenses 17 17 21 Program Revenues Charges for services: General government 227 927 960 Public safety 951 687 1 Parks and recreation 624 618 681 Other activities 24 23 9 Operating grants and contributions 1 933 855 Capital grants and contributions 1 2 2 Total program revenues 4 5 5 Net revenue /(expense) (13,029,583) (11,956,870) (16,008,216) General Revenues and Transfers Taxes: Property 10 10 11 Tax increments 3 4 3 Lodging taxes 661 656 710 Unrestricted grants and contributions 1 923 577 Investment earnings 426 491 1 Gain on disposal of capital asset 13 29 31 Miscellaneous 588 660 - Transfers 100 2 (1,545,893) Total general revenues and transfers 17 19 16 Change in Net Assets $ 4 $ 7 $ 307 128 Table 2 Page 1 of 3 2006 2007 2008 2009 $ 2 $ 2 $ 3 $ 3 8 8 8 9 2 2 2 2 123 74 72 71 2 2 2 2 2 3 3 2 1 1 1 1 19 21 22 21 947 902 1 1 800 847 780 1 665 692 754 740 423 290 151 26 748 818 1 1 2 2 2 1 5 6 6 5 (13,678,146) (15,304,405) (16,168,110) (15,813,200) 11 12 12 12 2 2 2 3 738 706 619 591 702 1 607 1 1 1 903 309 23 88 73 40 186 (273,070) (1 32 17 18 15 18 $ 4 $ 3 $ (285,828) $ 2 129 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN NET ASSETS - BUSINESS -TYPE ACTIVITIES Last seven fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Expenses Municipal liquor 724 939 978 Golf course 290 271 273 Earle Brown Heritage Center 2 2 2 Water utility 1 222 1 Sanitary sewer 2 165 2 Storm drainage 838 1 899 Recycling and refuse 223 2 254 Street light utility 147 756 213 Total expenses 8 8 9 Program Revenues Charges for services: Municipal liquor 853 991 1 Earle Brown Heritage Center 1 1 1 Water utility 1 1 1 Sanitary sewer 2 2 2 Storm drainage 1 1 1 Other activities 706 707 706 Total program revenues 8 9 9 Net revenue /(expense) 426 687 493 General Revenues and Transfers Investment earnings 82 102 199 Other 241 117 - Transfers (100,000) (2 1 Total general revenues and transfers 223 (1 1 Change in Net Assets $ 650 $ (1 $ 2 130 Table 2 Page 2 of 3 2006 2007 2008 2009 970 1 1 1 282 313 304 323 2 2 2 2 1 1 1 3 3 2 3 3 1 1 1 1 245 257 265 276 161 191 182 220 10 10 10 12 1 1 1 1 2 2 1 1 1 2 2 2 3 3 3 3 1 1 1 1 714 732 763 770 10 11 11 10 535 1 790 (1 337 406 243 87 (186,675) 273 1 (32,697) 150 679 1 54 $ 686 $ 1 $ 2 $ (1 131 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN NET ASSETS - TOTAL Last seven fiscal years (accrual basis of accounting) (Unaudited) 2003 2004 2005 Expenses Governmental activities $ 17 $ 17 $ 21 Business -type activities 8 8 9 Total expenses 26 25 31 Program Revenues Governmental activities 4 5 5 Business -type activities 8 9 9 Total program revenues 13 14 15 Net revenue /(expense) (12,602,604) (11,269,254) (15,514,795) General Revenues and Transfers Governmental activities 17 19 16 Business -type activities 223 (1 1 Total general revenues and transfers 17 18 18 Change in Net Assets $ 4 $ 6 $ 2 Note: Data for 2000 -2002 is not available; the City did not prepare government -wide financial statements on an accrual basis for those years. 132 Table 2 Page 3 of 3 2006 2007 2008 2009 $ 19 $ 21 $ 22 $ 21 10 10 10 12 29 31 32 34 5 6 6 5 10 11 11 10 16 17 17 16 (13,142,632) (14,292,947) (15,377,522) (17,774,527) 17 18 15 18 150 679 1 54 18 19 17 18 $ 4 $ 4 $ 2 $ 790 133 m E7 This page has been left blank intentionally. 134 CITY OF BROOKLYN CENTER, MINNESOTA GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Table 3 Last seven fiscal years (accrual basis of accounting) (Unaudited) Property Tax Lodging Tax Increments Tax Total 2003 $ 10 $ 3 $ 661 $ 14 2004 10 4 656 15 2005 11 3 710 15 2006 11 2 738 15 2007 12 2 706 15 2008 12 2 619 15 2009 12 3 591 17 Note: Data for 2000 -2002 is not available; the City did not prepare government -wide financial statements on an accrual basis for those years 135 CITY OF BROOKLYN CENTER, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 2000 2001 2002 2003 General Fund Reserved $ 105 $ 105 $ 173 $ 110 Unreserved 7 7 7 7 Total general fund $ 7 $ 7 $ 7 $ 8 All other governmental funds Reserved $ 7 $ 7 $ 7 $ 7 Unreserved, reported in: Special revenue funds 1 3 4 6 Capital project funds 7 5 1 2 Total all other governmental funds $ 16 $ 16 $ 13 $ 15 136 Table 4 2004 2005 2006 2007 2008 2009 $ 106 $ 11 $ 500 $ 700 $ 21 $ 27 6 7 7 7 7 8 $ 6 $ 7 $ 7 $ 7 $ 7 $ 8 $ 13 $ 5 $ 5 $ 11 $ 9 $ 8 25 24 22 11 10 9 4 3 4 3 4 3 $ 43 $ 33 $ 32 $ 26 $ 24 $ 21 137 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 2000 2001 2002 2003 Revenues Property taxes $ 8 $ 7 $ 10 $ 10 Tax increments 3 3 3 3 Franchise fees - - - - Lodging taxes 836 826 717 661 Special assessments 1 1 1 1 Licenses and permits 632 788 823 827 Intergovernmental 7 5 7 3 Charges for services 779 688 575 709 Fines and forfeits 180 230 278 290 Investment earnings 798 2 648 317 Miscellaneous 125 150 267 607 Total revenues 24 23 25 21 Expenditures General government 2 2 2 2 Public safety 5 5 6 6 Public works 2 2 1 2 Community services 95 106 103 91 Parks and recreation 2 2 2 2 Economic development 2 2 2 1 Nondepartmental 419 372 366 331 Administrative services reimbursement (795,737) (767,504) (596,541) (607,221) Capital outlay 7 6 9 1 Debt service Principal 3 2 3 3 Interest 1 1 1 905 Other charges 13 8 28 26 Total expenditures 27 25 28 20 Revenues over (under) expenditures (3 (1 (3 1 Other financing sources (uses) Issuance of debt 735 730 - 1 Discount on issuance of debt - - - (8 Premium on issuance of debt - - - - Sale of capital assets 194 572 474 73 Transfers in 5 4 4 3 Transfers out (5 (3 (4 (3 Refunded bonds redeemed - - - - Total other financing sources (uses) 1 1 674 1 Net change in fund balances $ (2 $ (233,214) $ (2 $ 2 Debt service as a percentage of noncapital expenditures 23.05% 18.41% 16.81% 21.88% 138 Table 5 2004 2005 2006 2007 2008 2009 $ 10 $ 11,641,177 $ 11 $ 12 $ 12 $ 12 3 4 2 2 2 3 612 662 658 658 643 656 656 710 738 706 619 591 1 1 1 1 1 1 678 675 722 673 643 616 3 2 2 3 2 2 711 754 722 705 761 1 254 253 256 291 302 340 385 1 1 1 733 247 609 427 477 404 449 370 22 24 22 24 22 24 2 2 2 2 3 3 7 7 7 7 8 8 1 2 1 2 2 2 67 86 123 74 72 71 1 2 2 2 2 2 1 2 1 5 7 2 333 315 363 354 301 313 (784,084) (754,085) (529,362) (744,590) (802,775) (859,456) 4 8 5 4 4 2 3 2 3 2 2 4 881 1 1 1 1 1 126 23 53 12 73 15 23 27 25 28 31 27 (629,126) (3 (2 (4 (9 (2 25 - 1 - 6 - (96,503) - (445) - (28,178) - - - - - 1 - 5 2 2 5 1 3 (3 (2 (2 (6 (1 (3 - (7 - (529,138) - - 27 (7 2 (666,510) 7 550 $ 27 $ (10,387,818) $ (819,247) $ (5 $ (1 $ (2 24.89% 18.37% 19.14% 15.90% 14.65% 22.92% 139 CITY OF BROOKLYN CENTER, MINNESOTA ASSESSED TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last ten fiscal years (Unaudited) 2000 2001 2002 2003 Real Property: Residential $ 9 $ 8 $ 8 $ 9 Nonresidential 11 14 9 9 Area -wide allocation 1 746 635 875 Personal property 437 452 262 273 Less: Tax increment districts 2 3 2 2 Total Assessed Tax Capacity 20 20 16 17 Direct Tax Rate 1 34.645 35.996 58.901 52.792 Estimated Market Value 1 1 1 1 Total Assessed Tax Capacity as a percentage of Estimated Market Value 1.73% 1.58% 1.09% 1.04% 1 Beginning in 2002, the State of Minnesota significantly reduced state aids to the City and allowed these amounts to be included in the propery tax levy. Source: City Assessing Department 140 Table 6 2004 2005 2006 2007 2008 2009 $ 10 $ 12 $ 13 $ 15 $ 16 $ 14 9 9 9 9 9 10 1 1 1,161,174 1 2 2 281 294 298 283 291 283 3 3 2 2 2 2 18 20 22 24 25 25 53.693 51.723 48.069 45.366 45.081 49.138 1,840,115,300 1 2 2 2 2 1.01% 1.03% 1.10% 1.14% 1.18% 1.21% 141 CITY OF BROOKLYN CENTER, MINNESOTA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last ten fiscal years (Unaudited) Overlapping Rates Metro City 1 County Dist 11 Dist 279 Dist 281 Dist 286 Districts 2000 35.369 39.655 51.792 53.284 48.492 44.356 6.039 2001 36.740 37.679 52.224 56.784 46.678 47.139 5.830 2002 58.901 50.789 29.082 30.092 30.213 26.338 3.537 2003 54.021 50.607 26.941 35.042 29.179 49.817 3.825 2004 53.693 47.324 21.050 23.709 34.258 39.892 3.502 2005 51.723 44.172 21.492 24.336 29.989 36.159 3.304 2006 48.069 41.016 20.046 21.815 28.489 39.781 2.924 2007 45.366 39.110 19.353 23.758 28.750 36.154 2.671 2008 45.081 38.571 16.983 19.710 27.243 37.519 2.562 2009 49.138 40.413 18.263 21.033 27.214 43.163 2.579 Source: City Assessing Department and Hennepin County Property Tax Services 1 The City's direct rate is an operating rate only. z Watershed levy was levied in 2006, 2008, and 2009 in schools districts 279 and 281, and parts of school districts 11 and 286. 142 Table 7 Total Direct and Overlapping Rates Other District 11 District 11 District District District 286 District 286 Districts Watershed L no watershed with watershed 279 281 no watershed with watershed 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 13 5.93 7 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 4.575 0.047 114.968 115.015 117.785 123.966 139.868 139.915 143 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL PROPERTY TAXPAYERS Table 8 Current Year and Nine Years Ago (Unaudited) 2009 2000 Percentage of Percentage of Net Tax Total Tax Net Tax Total Tax Taxpayer Capacity Rank Capacity Value Capacity Rank Capacity Value Luther Properties $ 484 1 1.92% $ - - Twin Lakes LLC 438 2 1.74% - - Brooks Mall Properties LLC 414 3 1.64% 768 1 3.77% Lang- Nelson 280 4 1.11% 504 4 2.47% BCC Associates, LLC 267 5 1.06% - - Regal Cinemas, Inc. 245 6 0.97% - - CSM Corporation 234 7 0.93% 293 7 1.44% Medtronic, Inc. 225 8 0.89% - - Brookdale Corner, LLC 216 9 0.86% 258 9 1.27% Target 165 10 0.66% 693 2 3.40% Prudential Insurance Co. - - 623 3 3.06% Ryan Construction Co. - - 485 5 2.38% Bradley Real Estate Inc. - - 294 6 1.44% Sears - - 270 8 1.33% AMB Property - - 187 10 0.92% Totals $ 2 11.78% $ 4,3 80,226 21.48% Source: City Assessing Department 144 CITY OF BROOKLYN CENTER, MINNESOTA PROPERTY TAX LEVIES AND COLLECTIONS Table 9 Last ten fiscal years (Unaudited) Collected within the Certified Adjusted Fiscal Year of the Levy Collections in Total Collections to Date Property Property Percentage of Subsequent Precentage Tax Levy Adjustments * Tax Levy Amount Adjusted Levy Years Amount to Date 2000 $ 8,100,268 $ (15,259) $ 8 0 5 0 9 $ 8,04402 99.5% $ 40,207 $ 8 0 5 0 9 100.0% 2001 8,420,720 (48,553) 8,372,167 8,132,527 97.1% 239,640 8,372,167 100.0% 2002 10,442,518 (925,619) 9,516,899 9,262 97.3% 254,258 9,516 100.0% 2003 10,355 (828,621) 9 9 97.4% 245 9,525,628 100.0% 2004 10 (806,306) 9,973,115 9,504,581 95.3% 455,728 9,960,309 99.9% 2005 11 (743,712) 10 10 98.4% 157,301 10 99.9% 2006 11,627,768 (674,470) 10 10 92.0% 231,011 10,928,649 94.0% 2007 11,958,743 (590,700) 11,368,043 11,070,387 92.6% 253 11,323,424 94.7% 2008 12,437,093 (577,797) 11,859,296 11,577,739 93.1% 190 11 94.6% 2009 12,893,208 (614,032) 12,279,176 M983,738 92.9% - M983,738 92.9% Source: Hennepin County Property Tax Division * - Adjustments for subsequent abatements. Beginning in 2002, adjustments also include Market Value Homestead Credit. CITY OF BROOKLYN CENTER, MINNESOTA RATIOS OF OUTSTANDING DEBT BY TYPE Table 10 Last ten fiscal years (Unaudited) Business -Type Governmental Activities Activities General Tax Storm Sewer Less: Percentage Obligation Increment Improvement Revenue Total Debt Service Bonded of Personal Per Bonds Bonds Bonds Bonds Debt Fund Balance Debt Income 1 Capita 1 2000 $ 8 $ 9,140,000 $ 6,120,000 $ 1 $ 25,07000 $ 4,73609 $ 20,333,391 1.62% $ 697 2001 8,10500 7,690,000 6,150,000 86000 220500 5,472,514 17,332 1.37% 594 2002 7,42500 6,150,000 5,37000 66000 1905 5,741,191 13 1.09% 475 2003 6,72000 4,50500 5,70500 45000 17,380,000 5,321,277 12 0.92% 416 2004 11,025,000 22,44500 5 230 39 13,230,540 26 1.88% 930 °1 2005 5,340 19 4 - 29,36500 4 25,206,393 1.78% 903 2006 4 18,305 5 - 27,95000 4 23,747,024 1.61% 851 2007 3 17,255 4 - 25 6 1805 1.19% 670 2008 3 20,560 5,690,000 - 29 5,187,263 24 * * 872 2009 2 0 5 0 0 17 4,92500 - 25 4,258,770 21 * * 716 1 - See Table 15, Demographics and Economic Statistics for personal income and population data. * * - personal income data not available for these years CITY OF BROOKLYN CENTER, MINNESOTA RATIOS OF GENERAL BONDED DEBT OUTSTANDING Table 11 Last ten fiscal years (Unaudited) Less: Amounts Percentage of General Available in Net General Estimated Obligation Debt Service Obligation Market Value Per Bonds Fund Debt of Property Capita 2000 $ 7 $ 775 $ 6 0.54% $ 219 2001 6 831 5 0.45% 203 2002 6 871 5 0.37% 187 2003 5 907 4 0.30% 170 2004 10 5 4 0.25% 157 2005 5 1 3 0.20% 142 2006 4 1 3 0.17% 120 2007 3 1 2 0.13% 97 2008 3 1 2 0.09% 74 2009 2 1 1 0.07% 50 147 CITY OF BROOKLYN CENTER, MINNESOTA COMPUTATION OF DIRECT AND OVERLAPPING DEBT Table 12 as of December 31, 2009 (Unaudited) Estimated Estimated Share Debt Percentage of Overlapping Governmental Unit Outstanding Applicable 1 Debt Overlapping debt: School Districts: No. 11 Anoka $ 150 1.40% $ 2 No. 279 Osseo 168 5.10% 8 No. 281 Robbinsdale 181 5.20% 9 No. 286 Brooklyn Center 32 100.00% 32 Metropolitan Council 27 0.70% 189 Metropolitan Transit District 202 0.80% 1 Hennepin County 633 1.60% 10 Hennepin Regional RR Authority 43 1.60% 702 Hennepin County Park Reserve District 80 2.10% 1 Total overlapping debt $ 1 67 City of Brooklyn Center direct debt 2 1 Total direct and overlapping debt $ 68 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. 148 CITY OF BROOKLYN CENTER, MINNESOTA LEGAL DEBT INFORMATION Table 13 Last ten fiscal years (Unaudited) Total net debt applicable to the limit Total net debt as a percentage of Debt Limit applicable to limit Legal debt margin debt limit 2000 $ 23 $ 6 $ 16 27.38% 2001 25 5 19 23.36% 2002 27 5 21 19.93% 2003 29 4 24 16.78% 2004 32 4 27 13.99% 2005 36 3 32 11.08% 2006 39 3 35 8.57% 2007 42 2 39 6.42% 2008 65 2 63 3.16% 2009 62 1 61 2.33% Legal Debt Margin Calculation for Fiscal Year 2009 Taxable Market Value $ 2 Debt limit (3% of Taxable Market Value) 62 Debt applicable to limit Net general obligation bonds 1 Legal debt margin $ 61 149 CITY OF BROOKLYN CENTER, MINNESOTA PLEDGED - REVENUE COVERAGE Last ten fiscal years (Unaudited) Storm Sewer Bonds Storm Less: Net Sewer Operating Available Debt Service Charges Expenses Revenue Principal Interest Coverage 2000 $ 1 $ 307 $ 767 $ 180 $ 59 3.21 2001 1 327 802 190 49 3.34 2002 1 662 714 200 40 2.98 2003 1 809 455 210 29 1.90 2004 1 756 520 220 18 2.18 2005 1 1 207 230 6 0.88 2006 - - - - - - 2007 - - - - - - 2008 - - - - - - 2009 - - - - - - 150 Table 14 Special Assessment Bonds Tax Increment Bonds Special Tax Assessment Debt Service Increment Debt Service Collections Principal Interest Coverage Collections Principal Interest Coverage $ 994 $ 535 $ 231 1.30 $ 3 $ 1 $ 595 1.70 1 700 252 1.08 3 1 519 1.89 928 780 249 0.90 2 1 433 1.46 1 870 242 1.04 3 1 340 1.58 1 1 218 1.15 3 1 286 1.75 1 990 197 0.89 3 770 729 2.38 1 1 167 0.89 1 1 887 0.85 884 900 162 0.83 1 1 847 0.90 816 980 145 0.73 1 1 804 1.04 1 765 166 1.26 2 2 922 0.64 151 CITY OF BROOKLYN CENTER, MINNESOTA DEMOGRAPHIC AND ECONOMIC STATISTICS Table 15 Last ten fiscal years (Unaudited) School Enrollments Per Capita No. 286 Personal Personal Unemployment No. 11 No. 279 No. 281 Brooklyn Population Income Income Rate Anoka Osseo Robbinsdale Center 2000 29 $1 $ 43 3.0% 41 22 13 1 2001 29 1 43 4.2% 41 22 13 1 2002 29 1 43 5.2% 41 21 13 1 2003 29 1 45 5.9% 41 21 13 1 2004 29 1 48 5.6% 41 21 16 1 2005 28 1 50 4.8% 41 21 13 1 2006 27 1 52 4.6% 41 22 13 1 2007 27 1 56 5.6% 40 21 12 1 2008 27 * * * * 7.6% 40 21 12 2 2009 29 ** ** 8.7% 39 20 11 2 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 152 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL EMPLOYERS Table 16 Current Year and Nine Years Ago (Unaudited) 2009 2000 Percentage of Percentage of Total City Total City Employer Employees Rank Employment Employees Rank Employment Brookdale Center 1 1 13.89% 1 1 10.85% Promeon, Division of Medtronics 1 2 9.87% 300 3 1.91% Independent School District #286 300 3 2.19% Cub Foods 160 4 1.17% City of Brooklyn Center 156 5 1.14% 350 2 2.23% Target 140 6 1.02% TCR Corporation 140 7 1.02% 175 5 1.12% Best Buy 100 8 0.73% Kohl's 100 9 0.73% Nations Care Link 100 10 0.73% Hoffman Engineering 270 4 1.72% Ault, Inc. 160 6 1.02% Graco, Inc. 100 7 0.64% Cass Screw Machine Products 125 8 0.80% Precision, Inc. 100 9 0.64% Haiwatha Rubber Company 85 10 0.54% Totals 4 32.51% 3 21.48% Source: Minnesota Department of Employment and Economic Development 153 CITY OF BROOKLYN CENTER, MINNESOTA FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Table 17 Last ten fiscal years (Unaudited) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 General government Administrative 6.4 6.5 6.5 6.5 6.0 6.0 6.0 6.0 7.0 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 6.0 6.0 6.0 6.0 6.0 5.0 5.0 Assessor 4.0 4.0 3.0 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 technology 1.0 1.0 1.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Total general government 24.4 24.5 23.5 23.5 23.0 23.0 23.0 23.0 23.0 23.0 Public safety Police Officers 42.0 42.0 42.0 42.0 42.0 42.0 42.0 43.0 46.0 46.0 Civilians 17.0 16.0 16.0 15.0 15.0 15.0 15.0 12.0 12.0 12.0 Fire 1.0 1.0 1.0 1.0 1.0 1.0 2.0 2.0 2.0 2.0 Building inspection 5.0 5.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 Code enforcement - - - - - - - - 2.0 5.0 Total public safety 65.0 64.0 63.0 62.0 62.0 62.0 63.0 61.0 66.0 69.0 Public works Engineering 10.0 10.0 10.0 8.0 7.0 7.0 6.0 6.0 5.0 6.0 Streets 10.9 10.9 11.0 11.0 10.0 9.0 10.0 10.0 11.0 10.0 Total public works 20.9 20.9 21.0 19.0 17.0 16.0 16.0 16.0 16.0 16.0 Parks and recreation Administration 6.0 6.0 6.0 5.0 6.0 6.0 6.0 6.0 6.0 6.0 Community center 5.5 5.5 5.0 5.0 3.0 3.0 3.0 3.0 3.0 3.0 Park maintenance 10.0 10.0 10.0 10.0 8.0 8.0 7.0 7.0 7.0 7.0 Total park and recreation 21.5 21.5 21.0 20.0 17.0 17.0 16.0 16.0 16.0 16.0 Economic development 4.6 4.5 4.5 4.5 4.0 4.0 4.0 4.0 4.0 4.0 Municipal liquor 4.0 4.0 3.0 3.0 3.0 3.0 3.0 4.0 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 Center 13.0 13.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 Water 5.0 5.0 5.0 5.0 5.0 5.0 5.3 5.3 5.3 5.3 Sanitary sewer 2.0 2.0 2.0 2.0 2.0 2.0 2.3 2.3 2.3 2.3 Storm sewer - - - - - 1.0 1.4 1.4 1.4 1.4 Central garage 5.1 5.1 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Total 166.5 165.5 160.0 156.0 150.0 150.0 151.0 150.0 155.0 158.0 Source: City Annual Budget documents 154 CITY OF BROOKLYN CENTER, MINNESOTA OPERATING INDICATORS BY FUNCTION Table 18 Last ten fiscal years (Unaudited) Function 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Police Violent Crimes 137 133 136 134 165 174 191 210 192 166 Serious Crimes 2,150 2,057 1,915 2,150 1,893 1,951 2,054 1,992 2,049 1,696 Total Calls for Service 23,543 26,501 25,644 25,945 26,328 26,738 28,644 34,185 36,923 44,152 Fire Fires /All other calls 695 658 681 617 545 692 697 677 684 688 Medical calls 299 305 373 331 279 212 326 386 419 538 Fire inspections performed 214 216 133 100 98 45 0 0 106 105 Streets Total miles 105.53 105.53 105.53 105.53 105.53 105.53 105.78 105.78 105.78 105.78 Miles of streets reconstructed 4.20 3.40 7.80 1.90 2.80 4.60 2.50 4.20 4.15 2.64 Parks and recreaton Community Center Admissions 61,836 67,476 42,873 66,427 62,458 59,288 6100 61,022 60,323 61,272 v Acres of park maintained 527 527 527 527 527 527 527 527 527 527 Municipal liquor Number of stores 3 2 1 1 2 2 2 2 2 2 Sales (in thousands) $3,585 $3,552 $3,436 $3,408 $4,027 $4,610 $5,159 $5,475 $5,485 $5,610 Golf course Rounds sold 34,426 29,448 21,072 27,010 22,847 20,780 21,100 1500 1502 14,040 Earle Brown Heritage Center Bookings 813 757 579 572 577 579 611 570 522 421 Functions 2,129 2,145 2,105 1,527 1,734 1,725 1,870 1,720 1,412 1,178 Inn occupancy (average)' 46.70% 23.46% 7.23% 9.53% 8.14% 8.58% 11.55% 8.16% 4.00% 0.00% Water Connections 8,943 8,905 8,934 8,949 8,963 8,938 8,904 8,997 8,986 8,990 Miles of water mains 114.40 114.40 114.62 114.82 114.82 118.25 120.50 121.80 121.80 121.80 Average daily consumption 3,715,142 3,63 8,490 3,127,214 3,723,769 3,551,104 3,697,790 309,903 3,621,122 3,550,126 3,73302 Sanitary sewer Connections 8,774 8,764 8,786 8,798 8,799 804 807 8,793 8,837 8,837 Miles of sanitary sewer 105.51 105.51 105.61 105.61 105.61 105.61 105.61 105.61 105.61 105.61 Source: Various City departments Police indicators for current year are preliminary I- in 2002 the Heritage Center Inn ceased daily occupancy and moved to a retreat concept with an 8 room minimum. In 2009, the Heritage Center Inn ceased operations. CITY OF BROOKLYN CENTER, MINNESOTA CAPITAL ASSET STATISTICS BY FUNCTION Table 19 Last ten fiscal years (Unaudited) Function 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Public safety Police Stations 1 1 1 1 1 1 1 1 1 1 Patrol units Marked squads 10 10 10 7 7 8 8 8 9 9 Other vehicles 16 21 15 13 16 16 16 16 14 18 Fire Stations 1 2 2 2 2 2 2 2 2 2 Fire trucks 7 7 7 7 7 7 7 7 7 7 Public works Streets (miles) 112.35 112.35 112.35 112.35 112.35 112.35 112.60 112.60 112.60 112.60 Heavy duty trucks (snow plows) 10 11 11 12 13 12 13 13 13 13 Parks and recreation Parks acreage 527 527 527 527 527 527 527 527 527 527 Trails (miles) 11.2 11.2 11.2 11.2 11.2 21.6 21.6 21.6 21.6 21.6 Community centers 1 1 1 1 1 1 1 1 1 1 Ground maintenance equipment 18 18 13 13 13 13 13 13 15 15 Other vehicles /equipment 20 21 12 11 14 14 14 14 15 14 Water Water mains (miles) 114.40 114.40 114.62 114.82 114.82 118.25 120.50 121.80 121.80 121.80 Wells 9 9 9 9 9 9 9 9 9 9 Sewer Sanitary sewers (miles) 105.51 105.51 105.61 105.61 105.61 105.61 105.61 105.61 105.61 105.61 Lift Stations 10 10 10 10 10 10 10 10 10 10 Storm sewers (miles) 74.20 74.20 74.20 74.20 74.20 74.20 74.20 74.20 74.20 74.20 Source: City capital asset records