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HomeMy WebLinkAboutCAFR-2007 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF BROOKLYN CENTER, MINNESOTA Cornelius L. Boganey City Manager Prepared By: FINANCE DIVISION DEPARTMENT OF FISCAL & SUPPORT SERVICES Daniel Jordet Director Clara Hilger Assistant Finance Director FOR THE YEAR ENDED DECEMBER 31, 2007 (Member of Government Finance Officers Association of the United States and Canada) Table of Contents INTRODUCTORY SECTION Letter of Transmittal 1 Principal Officials 6 Organizational Chart 7 FINANCIAL SECTION Independent Auditor’s Report 9 Management’s Discussion and Analysis 11 Basic Financial Statements: Statement of Net Assets 21 Statement of Activities 22 Governmental Funds Balance Sheet 26 Statement of Revenues, Expenditures, and Changes in Fund Balances 30 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Net Activities 33 Proprietary Funds Statement of Net Assets 34 Statement of Revenues, Expenses, and Changes in Fund Net Assets 36 Statement of Cash Flows 38 Notes to the Financial Statements 41 Required Supplementary Information: Budgetary Comparison Schedule-General Fund 71 Budgetary Comparison Schedule-Tax Increment District No. 3 77 Note to Required Supplementary Information 78 Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds Combining Balance Sheet 80 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 81 Combining Balance Sheet-Nonmajor Special Revenue Funds 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances-Nonmajor Special Revenue Funds 86 i FINANCIAL SECTION (Continued) Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual: Special Revenue Fund-Housing and Redevelopment Authority 88 Special Revenue Fund-Economic Development Authority 89 Special Revenue Fund-Earle Brown Tax Increment District 90 Special Revenue Fund-Tax Increment District No. 4 91 Special Revenue Fund-Police Drug Forfeiture 92 Special Revenue Fund-Community Development Block Grant 93 Special Revenue Fund-City Initiatives Grant 94 Combining Balance Sheet-Nonmajor Debt Service Funds 96 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances-Nonmajor Debt Service Funds 97 Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual: Debt Service Fund-G.O. Improvement Bonds 98 Debt Service Fund-General Obligation Bonds 99 Debt Service Fund-Tax Increment Bonds 100 Combining Balance Sheet-Nonmajor Capital Project Funds 102 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances-Nonmajor Capital Project Funds 104 Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual: Capital Project Fund-Infrastructure Construction 106 Capital Project Fund-Capital Improvements 107 Capital Project Fund-Municipal State Aid for Construction 108 Capital Project Fund-Earle Brown Heritage Center Improvements 109 Capital Project Fund-Street Reconstruction 110 Capital Project Fund-Technology 111 Nonmajor Enterprise Funds Combining Statement of Net Assets 114 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 115 Combining Statement of Cash Flows 116 Internal Service 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 ii STATISTICAL SECTION (unaudited) Net Assets by Component 122 Changes in Net Assets 123 Governmental Activities Tax Revenue by Source 127 Fund Balances – Governmental Funds 128 Changes in Fund Balances – Governmental Funds 130 Assessed Tax Capacity and Estimated Actual Value of Taxable Property 132 Property Tax Rates – Direct and Overlapping Governments 134 Principal Property Taxpayers 136 Property Tax Levies and Collections 137 Ratios of Outstanding Debt by Type 138 Ratios of General Bonded Debt Outstanding 139 Computation of Direct and Overlapping Debt 140 Legal Debt Information 141 Pledged Revenue Coverage 142 Demographic and Economic Statistics 144 Principal Employers 145 Full Time City Government Positions by Function 146 Operating Indicators by Function 147 Capital Asset Statistics by Function 148 iii iv City of Brooklyn Center A Millennium Community May 27, 2008 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, 2007. Management of the City of Brooklyn Center assumes full responsibility for the completeness and reliability of the information contained in this report based on the current system of internal control. Minnesota Statutes and City Charter Section 7.12 require that the financial statements of the City of Brooklyn Center be audited annually by the State Auditor or a certified public accountant selected by the City Council. These financial statements have been audited by Malloy, Montague, Karnowski, Radosevich, & Co., P.A. (MMKR). Their report is included in the financial section of this report. In addition, MMKR is required to issue an opinion on the City’s management and accounting for grant funds from the federal government. This “Single Audit” opinion, when included, is designed to meet the monitoring needs of federal grantor agencies. That report is not required for 2007 as the City received less than $ 500,000 in total federal grants. Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. Management’s Discussion and Analysis complements this letter of transmittal and should be read in conjunction with it. Profile of the City of Brooklyn Center The City of Brooklyn Center was incorporated in 1911 and is located in northern Hennepin County. The City has operated under the council-manager form of government since the adoption of the City Charter in 1966. The governing body is comprised of the Mayor and four Council Members elected at large. All members serve four-year terms with two of the Council Members standing for election during each national election year cycle. The Mayor and Council Members hire a City Manager who runs the daily operations of the City. The City of Brooklyn Center provides a full range of municipal services to its citizens. These include police and fire protection services, zoning enforcement, municipal 6301 Shingle Creek Parkway Recreation and Community Center Phone & TDD Number Brooklyn Center, MN 55430-2199 (763) 569-3400 City Hall and TDD Number (763) 569-3300 FAX (763) 569-3434 FAX (763) 569-3494 www.cityofbrooklyncenter.org planning, parks and 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 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. Effective establishment of this levy requires that a preliminary budget be prepared. The City Manager prepares such a budget each summer and presents it to the City Council in August, prior to the consideration of the preliminary tax levy. In addition, the City Council reviews the recommended rates and charges for utility funds and other operations on an annual basis as part of the budget process. Citizens receive a notice of taxes proposed for their individual properties in November based on the preliminary levies established by all taxing districts. Following the receipt of this notice citizens are invited to public hearings known as Truth in Taxation hearings in each jurisdiction. The City’s hearing includes information about the budget, the property tax levy and the priorities of the City Council for the coming year as made evident by the budget allocations. Public comment is heard and considered at this hearing. The final property tax levy is adopted at a subsequent meeting. This forms the basis for the budget preparation and presentation framework. In addition, a Capital Improvement Program is reviewed and revised during the budget process each year. This includes projects for which the City must issue debt and/or assess portions of the cost to adjacent or benefited property owners. Because there are limited funds available each year and the City does not wish to issue excessive amounts of debt, these projects must be reviewed and reprioritized as the Capital Improvement Program is developed each year. Economic Condition and Outlook The City of Brooklyn Center is a northern suburb of the Twin Cities metropolitan area, adjacent to the City of Minneapolis and located 10 miles from its downtown area. The 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. 2 The City experienced its most rapid growth from 1950 to 1970 when the City’s population grew from 4,300 to its peak of 35,173. The 2000 Census data for the City was 29,172, a slight increase from the 1990 Census data of 28,887. The number of housing units has remained stable at 11,430 units; there were 11,704 housing units in 1990. As in most mature, first-ring suburbs there is a slight trend toward conversion of single family homes to rental properties. The total estimated market value of real and personal property within the City increased 5.13% in 2007 over 2006, 6.39% in 2006 over 2005, and 7.51% in 2005 over 2004. Industrial values posted the largest gains going up nearly 15%. Multi-family and personal property values declined slightly from 2006 to 2007. Demand for starter homes has continued to drive up values of residential property in the City. 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. Commercial/industrial properties account for 30% of the City’s taxable net tax capacity in 2007, declining from the 31% in 2006. This reflects final tax court decisions on the Brookdale Center Mall properties lowering their values substantially. Brookdale Center, a 1,093,931 square-foot regional shopping center, is the largest commercial property in the City. Factors Affecting Financial Condition Major Events of 2007 and Local Economy Brooklyn Center is a mature, developed suburb 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 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 reinvigoration of neighborhoods. Redevelopment continued to be the key to commercial and industrial tax base growth. The City has acquired three adjacent business properties at the intersection of Highway 100 and Interstate 94. The buildings on the sites were demolished and Phase I environmental assessments prepared. This created a 14 acre redevelopment site. Negotiations are underway to develop 140,000 square feet of Class A office space and an adjacent parking structure on 8 acres of the site. The former Hmong-American Shopping Center has encountered delays because of environmental clean-up of contaminants for a dry cleaning shop. The extent of the contamination has been determined and a remediation plan is underway.The issue is expected to be resolved by the fourth quarter of 2008. 3 The City’s “Opportunity Site” continues to be a focus for redevelopment efforts. The City’s acquisition of a former car dealership site presents an opportunity to combine its parcel with adjacent properties to create a large redevelopment project site along County Road 10 and Highway 100. The hospitality industry contributes a significant amount to Brooklyn Center’s economy. Lodging tax provided over $ 370,000 for 2007 fiscal year operations. While one outdated hotel facility was acquired by the City and demolished for redevelopment, construction began at a different site on a new 260 bed hotel facility adjacent to the City’s Earle Brown Heritage Center conference facility. The new hotel will be connected to the conference facility by an enclosed walkway. Completion of the new facility is expected in 2009. Infrastructure and Transportation As part of a planned replacement of the aging infrastructure, the City continued the program for street and utility improvements by reconstructing the Riverwood Area neighborhood streets in 2007. While streets are replaced, aging water, sanitary and storm sewer infrastructure is also repaired or replaced. These improvements are funded by general obligation improvement bonds supported with special assessments against benefited properties, and funds from the capital projects funds and utility enterprise funds. About one twenty-fifth of the City’s streets and utilities are reconstructed each year. It is expected that this will be a perpetual process, since at the end of twenty-five years it will be necessary to begin anew with the streets that were done first. Another benefit of these neighborhood projects has been the increased interest by residents in the maintenance and cleanup of their individual properties through paint, landscaping and structural repairs. Development of utility rate models has improved the City’s ability to generate cash flow and schedule improvements to the water and sewer systems. Separate funds for street lighting and stormwater drainage have also helped control and prioritize infrastructure improvements and operations in these areas. Cash Management The City of Brooklyn Center receives interest on all funds deposited by the City in its bank and investment accounts. During 2007 daily funds were moved to a “sweep” account paying interest on overnight deposits. The rate on this daily sweep declined during 2007 from 4.5% to a rate at the end of the year of 3.375%. The proceeds of this daily investment offset the banking fees charged by the City’s main bank, Wells Fargo. Other funds were invested in various treasury securities and mortgage back securities considered acceptable risks under the “prudent person” investment limitations of Minnesota Statutes. Longer term investments will have a slightly higher rate of interest compared to the overnight “sweep” rates of liquid cash. In addition, the City 4 invests in the 4M and 4MPlus funds sponsored by the League of Minnesota Cities. 2007 saw a decrease in the rate of interest paid by the 4M and 4MPlus funds, from 5.00% to 4.70% at the end of the year. These accounts pay a return higher than liquid cash but lower than treasuries and mortgage backed securities. The advantage of using these funds is liquidity. Treasury management requires a balance between the availability of cash and investment to obtain the highest return without undue risk of public assets. Acknowledgements This report has been prepared following the guidelines recommended by the Government Finance Officers Association of the United States and Canada. These guidelines assure that presentation of information on the city’s financial condition conforms substantially to the high standards of public financial reporting, including generally accepted accounting principles promulgated by the Government Accounting Standards Board. 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 2007. We would also like to thank the Mayor and City Council for their support in promoting and maintaining the highest standards of professionalism and management of the City of Brooklyn Center. Respectfully Submitted, Cornelius L. Boganey Daniel Jordet City Manager Director of Fiscal & Support Services 5 CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL OFFICIALS December 31, 2007 Name Position Term of Office Term Expires ELECTED OFFICIALS Tim Willson MayorFourYears December 31,2010 Kay Lasman Council Member Four Years December 31, 2008 Mary O’Connor Council MemberFour Years December 31, 2008 Dan Ryan Council Member Four Years December 31, 2010 Mark Yellich 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 Scott Bechthold Police Chief Appointed Todd Blomstrom Director of Public Works/City Engineer Appointed Lee Gatlin Fire Chief Appointed James Glasoe Community Activities, Recreation and Services Director Appointed Gary Eitel Community Development Director Appointed Daniel Jordet Director of Fiscal and Support Services Appointed 6 7 8 INDEPENDENT AUDITOR’S REPORT To the City Council and Residents City of Brooklyn Center, Minnesota We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Brooklyn Center (the City) as of and for the year ended December 31, 2007, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City at December 31, 2007, and the respective changes in financial position and cash flows, where applicable thereof, for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated May 27, 2008, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. This report is an integral part of an audit performed in accordance withGovernment Auditing Standards and should be considered in assessing the results of our audit. 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. (continued) 9 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 financial 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 nonmajor fund financial 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. May 27, 2008 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, 2007. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1 through 5 of this CAFR. Financial Highlights The assets of the City exceeded liabilities by a 4.5 to 1 margin at the close of the most recent fiscal year. Current assets exceed current liabilities by a 10 to 1 margin. The $ 110,892,406 of net assets includes cash and investments, streets, buildings, equipment, land and other City assets. Of this amount, $ 18,834,997 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 $ 4,903,220 or 4.6% from 2006 to 2007. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $ 34,435,588. Of this total amount, $ 35,970,536, or 104% is designated or reserved through legal restrictions and City Council authorization. At the end of the current fiscal year the general fund balance of $ 7,942,414 included $ 700 reserved for prepaid items and $ 7,941,714 designated for cash flow purposes. The City’s total outstanding debt decreased by $ 2,540,000 during the current fiscal year, from $ 27,950,000 to $ 25,410,000. Overview of the Financial Statements The discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This CAFR also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements . The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a consolidated financial statement. The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, community services, recreation and economic development. The business-type activities of the City include water and sewer, street lighting, liquor operations, golf course, convention center, storm drainage and recycling. 11 Management’s Discussion and Analysis The government-wide financial statements can be found on pages 21 through 23 of this CAFR. Fund Financial statements . A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental funds . Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resource, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statement. By doing so, readers may better understand the long-term impact of the City's near-term financial decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains nineteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General fund, Tax Increment District No. 3 special revenue fund, the G.O. Improvement Bonds debt service fund, and the Infrastructure Construction capital project fund, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this CAFR. The basic governmental fund financial statements can be found on pages 26 through 33 of this CAFR. Proprietary funds . The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the governmental-wide financial statements. The City uses enterprise funds to account for its municipal liquor, golf course, Earle Brown Heritage Center, water, sanitary sewer, storm drainage, recycling/refuse, and street lighting operations. Internal service funds are an accounting device to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds for its central garage, employee retirement, and compensated absences. Because all of these services predominantly benefit governmental rather than business-type functions, they have been included within the governmental activities in the government-wide financial statements. Proprietary funds provide similar information to the government-wide financial statements but in more detail. The proprietary fund financial statements provide separate information for the municipal liquor, golf course, Earle Brown Heritage Center, water utility, sanitary sewer utility, and storm drainage utility operations, each of which are considered to be major funds of the City. Conversely, all internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 34 through 39 of this CAFR. Notes to the financial statements . The notes provide additional information that is essential to a full understanding of the data provided in the government–wide and fund financial statements. The notes to the financial statements can be found on pages 41 through 69 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 adopts an annual appropriated budget for its general, special revenue, debt service, and capital project funds. A 12 Management’s Discussion and Analysis 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 71 through 78 of this CAFR. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information on budgetary comparisons. Combining and individual fund statements and schedules can be found on pages 80 through 120 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 $ 110,892,406 at the close of the most recent fiscal year. The largest portion of the City's net assets ($ 70,318,894 or 63 percent) reflects its investment in capital assets (e.g. land, infrastructure, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY'S NET ASSETS All 2006 comparative balances are net of the adjustments described in Note 3.D. on page 51 of this CAFR. As of the close of the current year, there is $ 928,588 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 ($ 18,834,997) 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 has postponed issuing debt to fund the 2007 construction 13 Management’s Discussion and Analysis projects. Funds on hand and interfund borrowing were used to pay for the projects until the debt is issued. Capital assets increased due to new capitalized assets exceeding depreciation on existing assets for the year. Total liabilities decreased due to regularly scheduled payments on outstanding bonds. 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 increased due to higher per unit fees charged in 2007 on utility services and a conscious effort to minimize direct costs to provide services in those activities. The decrease in due to other governments explains the decrease in other liabilities. At the end of 2006, the City had a multi-year liability payable, which was paid in 2007. Governmental Activities Governmental activities resulted in an increase of the City's net assets by $ 3,212,038, while the increase in total net assets was $ 4,903,220. Key elements of the changes are as follows: CITY’S CHANGES IN NET ASSETS 14 Management’s Discussion and Analysis In the Governmental Activities, Capital grants and contributions increased due to additional state aid money received for road construction. Total taxes increased by $ 545,000 because of higher taxes levied and because excess tax increment collected in prior years was returned to the County and redistributed. Grants and contributions not restricted increased due to the State’s adjustment of an aid allocation calculation resulting in the City receiving more general aid. Final costs for cleanup of a prior year storm and road maintenance costs that are not capitalized account for the increase in public works expenses. Economic development expenses increased with the purchase and preparation of additional land for redevelopment purposes. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Governmental Activities -2007 Revenues Other revenues Unrestricted investment 5.4% earnings 7.4% Other taxes 2.8% Charges for services 11.0% Operating grants and contribtutions 3.3% Capital grants and Property taxes and tax contributions increments 10.6% 59.5% Governmental Activities -2007 Expenses Economic development Interest on long-term 18.4% debt 5.2% General government 13.7% Parks and recreation 12.3% Community services 0.3% Public works Public safety 12.6% 37.5% 15 Management’s Discussion and Analysis Business-type activities Business-type activities increased net assets by $ 1,691,182. Below are graphs showing the business-type activities revenue and expense comparisons: Business-type Activities -2007 Revenues Unrestricted investment earnings 3.6% Net charges for services 96.4% Business-type Activities -2007 Expenses Storm drainage utility Non-major enterprise 11.2% 4.5% Municipal liquor 10.4% Sanitary sewer utility 29.3% Golf course 3.1% Earle Brown Heritage Center Water utility 24.3% 17.2% Charges for services in the business-type activities were higher in 2007 than in 2006 due to an increase in fees charged on utility services and increased sales in the municipal liquor and Earle Brown Heritage Center operations. Expenses decreased in 2007 because in 2006, the City had a large amount due to the Metropolitan Council Environmental Services for sanitary sewer charges for 2006 and prior. This amount was owed due to a clerical error on the part of the Metropolitan Council. An expense was recorded in 2006 for the expected amount due and was carried forward as a liability at 2006 year end. These charges were paid in 2007 when a settlement was reached between the Metropolitan Council and the City. A transfer of the general aid received in the Governmental Activities was used for a portion of that payment. 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 $ 34,435,588. Approximately 33% of this amount, $ 11,289,385, 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) $ 6,724,500 to provide for debt service, 2) $ 792,488 for advances to other funds, 3) $ 518,138 for committed contracts, 4) $ 19,932 for prepaid items, and 5) $ 3,234,327 for statutory housing obligation. The unreserved fund balance of $ 23,146,203 includes designations of 1) $ 7,941,714 for general fund working capital, 2) $ 11,648,792 for economic development, and 3) $ 5,090,675 for capital improvements. The deficit balance of $ 1,534,948 is undesignated and unreserved. The general fund is the primary operating fund of the City. At the end of the current fiscal year, total fund balance reached $ 7,942,414, 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 54% of total general fund expenditures for 2007. The fund balance of the City’s general fund increased by $ 433,224 in 2007. This increase was due to the distribution of prior years’ taxes when the City decertified a tax increment district, and an increase in intergovernmental aid provided by the State of Minnesota. The Tax Increment District No. 3 fund had a total fund balance of $ 12,642,688 at the end of 2007. The net decrease in the fund balance was $ 8,084,983. In 2004, the City issued $ 17,245,000 in tax increment bonds, the proceeds of which must be spent in the Tax Increment District No. 3 fund. The decrease in 2007 represents the final year of expenditures for the acquisition and development of properties within the district. The remaining bond proceeds of $ 2,534,809 were transferred to the Tax Increment Bonds debt service fund, as required by the bond covenants. The G.O. Improvement Bonds fund had a fund balance of $ 3,026,385 at the end of 2007, all of which was reserved for debt service. The net decrease in fund balance for 2007 was $ 71,842, which was due to the use of collections in previous years to pay bond principal and interest as programmed. The fund balance of the Infrastructure Construction fund at the end of 2007 had a deficit of $ 1,290,428. This represents a decrease from 2006 of $ 771,129. This decrease is due to the City postponing the issuance of improvement debt until 2008 to fund projects substantially complete in 2007. 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 - $ 1,593,847, golf course - $ (741,600), Earle Brown Heritage Center - $ 1,025,631, water utility - $ 2,820,808, sanitary sewer utility - $ 3,380,600 and storm drainage utility - $ 1,708,117. The increases (decreases) in net assets for the major enterprise funds were: municipal liquor $ 258,549, golf course $ (58,073), Earle Brown Heritage Center $ (439,548), water utility $ 424,734, sanitary sewer utility $ 920,348, and storm drainage utility $ 573,328. General Fund Budgetary Highlights During the year, there were no amendments to the General Fund budget appropriations. Actual revenues and other financing sources exceeded the budget by $ 943,639. The major contributors to this additional revenue were distribution of prior years’ taxes from a decertified a tax increment district, an increase in intergovernmental aid provided by the State of Minnesota, and higher than expected investment earnings. Actual expenditures and other financing uses were higher than budgeted for the year by $ 510,415. This results 17 Management’s Discussion and Analysis from transfer of a portion of the additional intergovernmental aid provided by the State to the Sanitary Sewer Utility fund to pay the prior year’s sewer charges, an increase in personal services paid in public safety due to staff turnover, and higher than anticipated replacement charges paid to the Central Garage internal service fund. Capital Asset and Debt Administration Capital assets . The City’s investment in capital assets for governmental and business type activities as of December 31, 2007 totals $ 78,473,894 (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 2006 to 2007 was 4.9 percent (11.2 percent increase for governmental activities and a 0.4 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 $ 4,047,713. Three infrastructure reconstruction projects were begun and substantially completed during the 2007. These projects account for $ 6,318,714 in construction-in-progress at the end of the year. Construction on a new park building started in 2007, accounting for an additional $ 50,949 in construction-in-progress at the end of the year. CITY'S CAPITAL ASSETS (net of depreciation) Additional information on the City’s capital assets can be found in Note 4.C. on pages 54 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 $ 25,410,000, all of which is backed by the full faith and credit of the government. Of the total outstanding debt, $ 3,875,000 is general obligation bonds payable from directly levied property tax, $ 17,255,000 is tax increment bonds payable with the collected proceeds of tax increment projects and $ 4,280,000 is improvement bonds payable from special assessment levies against individual properties adjacent to the improvements. Additional long-term liabilities include $ 1,023,706 for compensated absences. This is the accumulated vacation and vested sick leave not used by employees at the end of 2007. 18 Management’s Discussion and Analysis CITY’S OUTSTANDING DEBT General Obligation Bonds, General Obligation Tax Increment Bonds, General Obligation Improvement Bonds, and Compensated Absences The City’s total bonded debt decreased by $ 2,540,000 during the current fiscal year due to scheduled debt retirement. No bonds were issued in 2007. The City maintains an A1 rating from Moody's on all issues. State statutes limit the amount of general obligation debt a Minnesota city may issue to 2% of total Estimated Market Value. The current debt limitation for the City is $ 42,259,958. Only $ 3,875,000 of the City's outstanding debt is counted within the statutory limitation representing about 9.2 percent of the total limit. Additional information on the City’s long-term debt can be found in Note 4.F. on pages 58 through 61 of this CAFR. Economic Factors and Next Year’s Budget and Rates The unemployment rate for the City is 5.6 percent at the end of the current fiscal year, which is an increase from the rate of 4.6 percent a year ago. This compares to the State’s average unemployment rate of 4.9 percent and the national average of 4.8 percent. Redevelopment of the Central Business District and other commercial properties continues and will yield net growth in tax base and stability in tax base through mixed use development goals. Utility rates have been subjected to rigorous study and projected into a 15 year model to allow for system maintenance, technology changes and capital repair and replacements while moderating annual rate adjustments. All of these factors were considered in the preparation of the City’s budget for the 2008 fiscal year. During the year, unreserved fund balance in the general fund increased by $ 433,224. 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 2007 budget year. Residential water rates were increased by 7.2 percent, sanitary sewer by 2.8 percent, storm drainage by 8.5 percent and street lights by 8.4 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. 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. 19 20 CITY OF BROOKLYN CENTER, MINNESOTA Statement 1 STATEMENT OF NET ASSETS December 31, 2007 Business-Type Governmenta l ASSETS ActivitiesActivitiesTotal $40,375,161$ 8,470,048$48,845,209 Cash and investment s Receivables: Accounts248,781 1,989,2662,238,047 Taxes549,508 -549,508 Special assessments3,363,260 461,4473,824,707 Internal balances968,829 (968,829)- Due from other government785,637 -785,637 s Prepaid expenses19,932 181,928201,860 Inventories59,647 557,928617,575 Assets held for resale6,785,629 6,785,629- Restricted assets: Cash and investment161,000 -161,000 s Capital assets: ondepreciable7,505,828 5,491,63512,997,463 N Depreciable30,501,174 34,975,25765,476,431 Total assets91,324,386 51,158,680142,483,066 LIABILITIES Accounts payable466,814 206,697673,511 ccrue saares an wages, ,, Accruedsalariesandwages34335244968388320 Adlid34335244968388320 Due to other governments64,149 69,569 133,718 Contracts payable272,605 173,356445,961 Deposits payable2,225 220,940223,165 Accrued interest payable461,686 -461,686 Unearned revenue21,205 131,006152,211 Liabilities payable from restricted assets: Deposits payable161,000 -161,000 Compensated absences payable: Due within one yea102,350 -102,350 r Due in more than one yea921,356 -921,356 r Health insurance liability: 101,500 -101,500 Due within one yea r -2,415,882 2,415,882 Due in more than one yea r Bonds payable: Due within one yea -2,610,000 2,610,000 r Due in more than one yea22,800,000 22,800,000- r Total liabilities30,744,124 846,53631,590,660 NET ASSETS Invested in capital assets, net of related debt30,780,590 40,466,89270,318,894 Restricted for: Debt service8,662,597 8,662,597- Tax increment purposes13,075,918 13,075,918- Unrestricted8,061,157 9,845,25218,834,997 Total net assets$60,580,262$ 50,312,144$110,892,406 The accompanying notes are an integral part of these financial statements.The accompanying notes are an integral part of these financial statements. 21 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF ACTIVITIES For the Year Ended December 31, 2007 Charges Fo r FUNCTIONS/PROGRAMS ExpensesServices Primary government: Government activities: $2,953,328$902,734 General governmen t Public safet8,051,836847,307 y Public works2,704,435 241,035 Community service 74,389- s Parks and recreation2,624,897692,781 Economic developmen3,966,90849,498 t Interest on long-term deb1,127,276- t Total government activities21,503,0692,733,355 Business-type activities: Municipal liquor1,037,4271,362,093 Golf course313,794252,738 Earle Brown Heritage Center2,431,7192,168,033 Recycling and refus 245,256257,300 e Street light utilit 234,230191,659 y Water utilit1,716,4972,063,930 y Sanitary sewer utilit2,930,0163,274,678 y Storm drainage utilit1,123,6361,412,548 y Total business-type activities10,002,04811,013,506 Total primary governmen$31,505,117$13,746,861 t The accompanying notes are an integral part of these financial statements. 22 Statement 2 Program Revenueset (Expense) Revenue and Changes in Net Assets N OperatingCapitalPrimary Governmen t Grants anGrants anGovernmentaBusiness-Type ddl ContributionsContributionsActivitiesActivitiesTotal $ -$ -$(2,050,594)$ -$(2,050,594) 662,511 -(6,542,018) -(6,542,018) 97,876 2,646,320280,796 -280,796 - -(74,389) -(74,389) - -(1,932,116) -(1,932,116) 58,602 -(3,858,808) -(3,858,808) - -(1,127,276) -(1,127,276) 818,989 2,646,320(15,304,405) -(15,304,405) - --324,666324,666 - --(61,056)(61,056) - --(263,686)(263,686) - --(12,044)(12,044) - -- 42,57142,571 - --347,433347,433 - --344,662344,662 - --288,912288,912 - --1,011,4581,011,458 $ 818,989$ 2,646,320(15,304,405)1,011,458(14,292,947) General revenues: Property taxes12,200,575 -12,200,575 Tax increments2,677,630 -2,677,630 Lodging taxes706,930 -706,930 Grants and contributions not restricted to specific programs1,263,753 -1,263,753 1,852,117406,6542,258,771 Unrestricted investment earning s Gain on disposal of capital asset88,508 -88,508 Transfers(273,070)273,070- Total general revenues and transfers18,516,443679,72419,196,167 Change in net assets3,212,0381,691,1824,903,220 et assets - beginning, as previously state 46,221,81459,883,983 106,105,797 Nd Prior period adjustment(2,515,759)2,399,148(116,611) et assets - beginning, restate 48,620,96257,368,224 105,989,186 Nd et assets - ending$60,580,262$50,312,144$110,892,406 N 23 24 FUND FINANCIAL STATEMENTS 25 CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2007 Tax Incremen t GeneralDistrict No. 3 ASSETS Cash and investment$8,317,017$12,754,462 s Receivables: Accounts56,929- Current taxes96,9386,464 Delinquent taxes349,8979,143 Special assessments-- 24,82829,765 Due from other government s Interfund receivable-- Prepaid items700- Inventories26,604- Advances to other funds-- Asset held for resale-6,748,629 Restricted assets: Cash and investments-performance deposit161,000- s Total assets9,033,913 19,548,463 LIABILITIESANDFUNDBALANCES LIABILITIESANDFUNDBALANCES Liabilities: Accounts payable239,93761,122 Accrued salaries and wages326,828621 Due to other governments3,75253,270 Contracts payable-32,990 Deposits payable2,225- Interfund payable-- Deferred revenue357,7576,757,772 Liabilities payable from restricted assets: Deposits payable161,000- Total liabilities1,091,4996,905,775 Fund balances: Reserved: Advances from other funds-- Committed contracts-- Debt service-- Prepaid items700- Statutory housing obligatio 3,234,327- n Unreserved: Designated, reported in: General Fun -7,941,714 d Special Revenue Funds- 9,408,361 Capital Project Funds- - Undesignated, reported in: Special Revenue Funds-- Capital Project Funds-- Total fund balances7,942,41412,642,688 Total liabilities and fund balances$9,033,913$19,548,463 The accompanying notes are an integral part of these financial statements.The accompanying notes are an integral part of these financial statements. 26 Statement 3 Page 1 of 2 Othe r G.O. ImprovemenInfrastructureonmajoTotal tNr GovernmentaGovernmenta BondsConstructio nll $ 3,018,165$-$9,449,221$33,538,865 -17,545165,846240,320 258-9,195112,855 16,910-60,703436,653 2,345,6211,017,639-3,363,260 --731,044785,637 --1,054,5631,054,563 --19,23219,932 ---26,604 --792,488792,488 --37,0006,785,629 ---161,000 5,380,9541,035,18412,319,29247,317,806 -17,32575,325393,709 --9,994337,443 --7,12764,149 -238,3461,269272,605 ---2,225 -1,054,563-1,054,563 2,354,5691,015,378111,04810,596,524 ---161,000 2,354,5692,325,612204,76312,882,218 --792,488792,488 -334,218183,920518,138 3,026,385-3,698,1156,724,500 --19,23219,932 ---3,234,327 ---7,941,714 --2,240,40111,648,762 --5,090,6755,090,675 --89,69889,698 -(1,624,646)-(1,624,646) 3,026,385(1,290,428)12,114,52934,435,588 $1,035,184$12,319,292$47,317,806 $5,380,954 27 CITY OF BROOKLYN CENTER, MINNESOTAStatement 3 Page 2 of 2 BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2007 Fund balance - governmental funds is different from net assets - governmental activities because : Total fund balances (Statement 3)$34,435,588 Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds.34,362,356 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds.10,575,319 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.(25,871,686) 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.7,078,685 et assets of governmental activities (Statement 1)$60,580,262 N 28 29 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2007 Tax Incremen t GeneralDistrict No. 3 REVENUES Property taxes$11,088,016$- Tax increments-1,707,470 Franchise fees-- Lodging taxes706,930- Special assessments-- Licenses and permits673,156- 58,6021,797,631 Intergovernmenta l Charges for services693,300- Fines and forfeits291,423- Investment earnings (net of market value adjustment256,581737,462 ) Miscellaneous81,88447,390 Total revenues15,588,9212,550,924 EXPENDITURES Current: General governmen -2,870,943 t Public safet -7,352,905 y Public works1,967,385- Community service74,389- s Parks and recreation2,271,093- Economic developmen335,7295,023,461 t ondepartmental354,848- N Administrative services reimbursemen(744,590)- t Capital outlay: General governmen112,283- t Public safet6,569- y Public works-- Parks and recreation22,420- 1,179,136- Economic developmen t Debt service: Principal retirement-- Interest-- Fiscal agent fees-- Total expenditures14,623,9746,202,597 Revenues over (under) expenditures964,947(3,651,673) OTHER FINANCING SOURCES (USES) Transfers in-- Transfers out(531,723)(4,433,310) -- Return excess tax increment to Count y Total other financing sources (uses)(531,723) (4,433,310) et increase (decrease) in fund balances433,224(8,084,983) N Fund balances - January 17,509,19020,727,671 Fund balances - December 31$7,942,414$12,642,688 The accompanying notes are an integral part of these financial statements. 30 Statement 4 Othe r G.O. ImprovemenInfrastructureonmajoTotal tNr GovernmentaGovernmenta BondsConstructio nll $ -2,140$$1,004,203$12,094,359 --1,020,1672,727,637 --658,620658,620 ---706,930 882,121482,292-1,364,413 ---673,156 --1,315,5123,171,745 --12,436705,736 ---291,423 117,381-408,0791,519,503 -35,286239,860404,420 1,001,642517,5784,658,87724,317,942 --80,2452,951,188 --197,5297,550,434 -74,536268,9252,310,846 ---74,389 --43,0062,314,099 --300,1415,659,331 ---354,848 ---(744,590) -112,283 -- ---6,569 -1,975,0781,178,0893,153,167 --50,94973,369 ---1,179,136 900,000-1,886,0762,786,076 162,486-971,9261,134,412 10,998-1,89812,896 1,073,4842,049,6144,978,78428,928,453 (71,842)(1,532,036)(319,907)(4,610,511) -760,9075,120,3505,881,257 --(1,053,596)(6,018,629) --(529,138)(529,138) -760,9073,537,616(666,510) (71,842)(771,129)3,217,709(5,277,021) 3,098,227(519,299)8,896,82039,712,609 $ 3,026,385$(1,290,428)$12,114,529$34,435,588 31 32 CITY OF BROOKLYN CENTER, MINNESOTA Statement 5 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2007 Amounts reported for governmental activities in the statement of activities are different because: et changes in fund balances - total governmental funds (Statement 4$(5,277,021) N) Governmental funds report capital outlays as expenditures. However, in the statement o f activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.2,737,094 Revenues in the statement of activities that do not provide current financial resources are no t reported as revenues in the funds.2,766,100 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consume s the current financial resources of governmental funds. Neither transaction, however, ha s any effect on net assets. This amount is the net effect of these differences in the treatmen t of long-term debt and related items.2,540,000 Internal service funds are used by management to charge the cost of certain activities to individual funds. This amount is net revenue attributable to governmental activities.425,833 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.20,032 Change in net assets of governmental activities (Statement 2 $3,212,038 ) 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, 2007 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr ASSETS Current assets: Cash and cash equivalents$1,199,465$ 50,970$1,151,030 Receivables: Accounts - ne -9,357 306,830 t Special assessments- -- Prepaid items21,988 -4,668 Inventories508,450 2,58830,820 Total current assets1,739,260 53,5581,493,348 oncurrent assets: N Capital assets: Lan 1,390,402- 1,493,300 d Land improvement 40,258- 327,830 s Buildings and structures192,771 487,94611,039,134 Machinery and equipmen 11,160111,167 195,529 t Mains and lines- -- Construction in progress- -- Total capital assets303,938 1,929,76613,055,793 Less: Allowance for depreciatio (267,044)(229,301) (6,313,397) n et capital assets 1,662,72274,637 6,742,396 N Total assets1,813,897 1,716,2808,235,744 LIABILITIES Current liabilities: Accounts payable83,412 1,16836,010 Accrued salaries payable12,471 1,48716,937 Due to other governments49,084 1519,574 Contracts payable- -173,356 Deposits payable- -220,240 Unearned revenue446 -1,600 Advances from other funds- 792,488- Compensated absences payable-curren -- - t -- - Accrued health insurance liability-curren t Total current liabilities145,413 795,158467,717 oncurrent liabilities: N -- - Compensated absences payable-long-ter m -- - Accrued health insurance liability-long-ter m Total noncurrent liabilities- -- Total liabilities145,413 795,158467,717 NET ASSETS Invested in capital assets74,637 1,662,7226,742,396 Unrestricted1,593,847 (741,600)1,025,631 Total net assets$1,668,484$ 921,122$7,768,027 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds et assets of business-type activitie Ns The accompanying notes are an integral part of these financial statements. 34 Statement 6 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r Storm DrainageonmajoTotalInternalTotal WaterSanitary Sewe rNr UtilitUtilitUtilitEnterpriseEnterpriseServiceProprietary yyy $ 2,464,1162,068,788$ 1,380,820$ $154,859$8,470,048$ 6,836,296$15,306,344 460,294 771,418 332,084109,2831,989,266 8,4611,997,727 459,133 2,083 231 461,447- 461,447- 500 154,772- 181,928- 181,928- 16,070 -- 557,928- 33,043590,971 3,004,785 3,392,389 1,713,135264,14211,660,617 6,877,80018,538,417 23,093 3,389 287,158 3,197,342- 3,197,342- - -- 368,088- 166,108534,196 3,033,212 2,705,423- 17,458,486- 17,458,486- 128,668 179,130- 625,654- 7,089,6897,715,343 15,946,152 14,322,663 18,301,381 48,570,196- 48,570,196- 576,662 434,687 1,282,944 2,294,293- 2,294,293- 7,255,79779,769,856 19,707,787 17,645,292 19,871,483 72,514,059- (11,062,475) (8,591,385) (5,583,565) (32,047,167)- (3,611,151)(35,658,318) 8,645,312 9,053,907 14,287,918 40,466,892- 3,644,64644,111,538 11,650,097 12,446,296 16,001,053264,14252,127,509 10,522,44662,649,955 43,829 8,857 3,46929,952206,697 73,105279,802 9,592 2,932 1,549-44,968 5,90950,877 896 ---69,569-69,569 - -- 173,356- 173,356- 700 -- 220,940- 220,940- 128,960 -- 131,006- 131,006- - -- 792,488- 792,488- - ---- 102,350102,350 - ---- 101,500101,500 183,97711,789 5,01829,9521,639,024 282,8641,921,888 - ---- 921,356921,356 - --- 2,415,882- 2,415,882 - --- 3,337,238- 3,337,238 183,977 11,789 5,01829,9521,639,024 3,620,1025,259,126 8,645,312 9,053,907 14,287,918 40,466,892- 3,644,64644,111,538 2,820,808 3,380,600 1,708,117234,19010,021,5933,257,69813,279,291 $11,466,120$ 12,434,507$ 15,996,035$234,19050,488,485$ 6,902,344$57,390,829 (176,341) $50,312,144 The accompanying notes are an integral part of these financial statements. 35 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2007 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr OPERATING REVENUES Sales and user fees$5,474,634$ 252,620$4,325,296 Cost of sales4,125,816 -2,162,075 Total operating revenues1,348,818 252,6202,163,221 OPERATING EXPENSES Personal services529,966 139,344909,332 Supplies24,279 44,718142,428 Other services157,556 76,455534,008 Insurance11,527 6,60048,179 Utilities36,669 19,969220,430 Ren -245,407 - t Depreciation26,359 27,170577,535 Total operating expenses1,031,763 314,2562,431,912 Operating income (loss)317,055 (61,636)(268,691) NONOPERATING REVENUES (EXPENSES) Intergovernmenta -- - l Investment earning 3,44553,219 54,331 s Special assessments- -- Gain (loss) on sale of capital asset- -- Other revenue13,275 1184,812 Total nonoperating revenues (expenses)66,494 3,56359,143 Income (loss) before contributions and transfers383,549 (58,073)(209,548) Capital contributions- -- Transfers in- -- Transfers out(125,000) -(230,000) Change in net assets258,549 (58,073)(439,548) et assets - January 1, as previously state1,409,935 979,1958,207,575 Nd Prior period adjustment- -- et assets - January 1, restated1,409,935 979,1958,207,575 N et assets - December 31$1,668,484$ 7,768,027921,122$ N Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business-type activities (Statement 2) The accompanying notes are an integral part of these financial statements. 36 Statement 7 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r Storm DrainageonmajoTotalInternalTotal WaterSanitary Sewe rNr UtilitUtilitUtilitEnterpriseEnterpriseServiceProprietary yyy $ 2,039,679$ 3,272,528$ 1,412,548$478,106$17,255,411$ 1,553,635$18,809,046 - -- 6,287,891- 6,287,891- 2,039,679 3,272,528 1,412,548478,10610,967,520 1,553,63512,521,155 425,869 169,781 85,786 2,260,078- 499,1362,759,214 156,404 16,262 9,6271,042394,760 392,966787,726 385,303 2,179,409 291,957277,7993,902,487 148,0534,050,540 12,589 5,329 2,7803,08190,085 55,102145,187 151,237 35,572 167,037-630,914 1,870632,784 - -- 245,407- 245,407- 586,462 525,655 734,525 2,477,706- 529,8933,007,599 1,717,864 2,932,008 1,124,675448,95910,001,437 1,627,02011,628,457 321,815 340,520 287,87329,147966,083 (73,385)892,698 - ---- 9,8429,842 78,668 115,955 92,2988,738406,654 332,414739,068 18,695 166--18,861 -18,861 - ---- 88,50888,508 5,556 1,984-1,38027,125 10,38437,509 102,919 118,105 92,29810,118452,640 441,148893,788 424,734 458,625 380,17139,2651,418,723 367,7631,786,486 - 193,157- 193,157- 193,157- 461,723- - 461,723- 57,459519,182 - --(26,810)(381,810) (381,810)- 424,734 920,348 573,32812,4551,691,793 425,2222,117,015 11,041,386 11,514,159 13,023,559221,73546,397,544 6,477,12252,874,666 - 2,399,148- 2,399,148- 2,399,148- 11,041,386 11,514,159 15,422,707221,73548,796,692 6,477,12255,273,814 $ 11,466,120$ 12,434,507$ 15,996,035$234,190$50,488,485$ 6,902,344$57,390,829 (611) $1,691,182 37 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2007 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users$5,473,017$ 4,219,457252,620$ - Receipts from interfund services provided - - Payments to suppliers(4,637,244) (148,086)(3,129,685) Payments to employee (139,027)(527,273) (909,140) s Miscellaneous revenue 118 13,275 4,812 et cash flows provided (used) by operating activities (34,375) N 321,775 185,444 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in- - - Transfers out(125,000) (230,000)- Special assessments- - - et cash flows provided (used) by noncapital financing activities(125,000) (230,000)- N CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets- - - Proceeds from sale of assets- - - et cash flows provided (used) by capital and related financing activities- N - - CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 3,445 53,219 54,331 et increase (decrease) in cash and cash equivalents (30,930) N 249,994 9,775 Cash and cash equivalents - January 1 81,900 949,471 1,141,255 Cash and cash equivalents - December 31$1,199,465$ 50,970$1,151,030 Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) $317,055$ (61,636)$(268,691) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation 27,170 26,359 577,535 Changes in assets and liabilities: (Increase) decrease in receivables(1,578) (83,269)- (Increase) decrease in inventories (803)(3,719) 2,762 (Increase) decrease in prepaid expenses(556)- 831 Increase (decrease) in payables(38,196) 459(42,247) Increase (decrease) in accrued expenses 317 2,693 192 Increase (decrease) in deferred revenue(39)- - Other nonoperating income 118 13,275 4,812 Total adjustments 27,261 4,720 454,135 et cash flows provided (used) by operating activities$321,775$ (34,375)$185,444 N Noncash financing activities: Capital contributions$-$-$- Gain on sale of assets- - - The accompanying notes are an integral part of these financial statements. 38 Statement 8 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r Storm DrainageonmajoTotalInternalTotal WaterSanitary Sewe rNr UtilitUtilitUtilitEnterpriseEnterpriseServiceProprietary yyy $ 1,966,196$ 3,411,210$ 1,413,605$485,334$17,221,439$ 17,221,439-$ - --- 1,560,256- 1,560,256 (703,222) (2,846,679) (302,502)(421,450)(12,188,868) (620,433)(12,809,301) (423,676) (170,587) (85,590) (2,255,293)- (476,067)(2,731,360) 5,556 1,984-1,38027,125 20,22647,351 844,854 395,928 1,025,51365,2642,804,403 483,9823,288,385 461,723- - 461,723- 57,459519,182 - --(26,810)(381,810) (381,810)- (89,582) 426--(89,156) (89,156)- (89,582) 462,149-(26,810)(9,243) 57,45948,216 (576,661) (436,649) (1,090,487) (2,103,797)- (1,619,325)(3,723,122) - ---- 93,41093,410 (1,525,915)(3,629,712) (576,661) (436,649) (1,090,487) (2,103,797)- 78,668 115,955 92,2988,738406,654 332,414739,068 257,279 537,383 27,32447,1921,098,017 (652,060)445,957 1,811,509 1,926,733 1,353,496107,6677,372,031 7,488,35614,860,387 $ 2,068,788$ 2,464,116$ 1,380,820$154,859$8,470,048$ 6,836,296$15,306,344 $ 321,815$ 340,520$ 287,873$29,147$966,083$ (73,385)$892,698 586,462 525,655 734,525 2,477,706- 529,8933,007,599 (80,274) 138,682 1,0577,228(18,154) 6,310(11,844) 2,579 ---819 (3,073)(2,254) - (4,922)--(4,647) -(4,647) 382 (605,185) 1,86227,509(655,416) (19,369)(674,785) 2,193 (806) 196-4,785 23,38028,165 6,141 ---6,102 -6,102 -1,38027,125 20,22647,351 5,5561,984 523,039 55,408 737,64036,1171,838,320 557,3672,395,687 $ 844,854$ 395,928$ 1,025,513$65,264$2,804,403$ 483,982$3,288,385 $ -$ 193,157-$ $-$ - - --- 88,508 39 40 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 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, 2007 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, 2007 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (Continued) The government reports the following major governmental funds: The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Tax Increment District No. 3 Special Revenue Fund has the authority to collect tax increments which are used for various redevelopment projects within the City and for debt service payments of bonds which were issued for the same purpose. TheG. O. Improvement Bonds Debt Service Fund is used to account for the accumulation of resources for the payment of improvement bonds. These bonds were sold to finance certain public improvements such as residential streets and storm sewers or the provision of services which are to be paid for wholly or in part from special assessments levied against benefited property. TheInfrastructure Construction Capital Project Fund was established to account for the resources and expenditures required for the acquisition and construction of capital facilities or improvements financed wholly or in part by special assessments levied against benefited properties. The government reports the following major enterprise funds: TheMunicipal Liquor Fund accounts for the operations of the City’s municipal off-sale liquor stores. TheGolf Course Fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by the City. TheEarle Brown Heritage Center Fund accounts for the operation of a convention center. The Earle Brown Heritage Center is a pioneer farmstead that has been historically preserved and restored as a modern multipurpose facility. Its convention center can host conferences, trade shows, and concerts. TheWater Utility Fund accounts for the pumping, treatment and distribution of water to customers. Administration, wells, water storage, and distribution are included. The Sanitary Sewer Utility Fund accounts for the collection and pumping of sanitary sewage through a system of sewer lines and lift stations. Sewage is treated by the Metropolitan Council Environmental Services whose fees represent about 62% of this fund’s expenses. TheStorm Drainage Utility Fund accounts for the collection and treatment of surface runoff water that does not require sanitary wastewater treatment. It incorporates not only the storm sewer collection system, but also structures such as holding ponds and facilities to improve water quality. Fees are based upon the quantity of water running off a property and vary with both size and absorption characteristics of the parcel. 43 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 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, 2007 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES D. CASH AND INVESTMENTS (Continued) The City’s investment policy authorizes the City to invest in the following: a) Securities that are direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of congress, including governmental bills, notes, bonds and other securities. b) Commercial paper issued by U.S. corporations or their Canadian subsidiaries that is rated in the highest quality by at least two nationally recognized rating agencies and matures in 270 days or less. c) Time deposits that are fully insured by the Federal Deposit Insurance Corporation or bankers acceptances of U.S. banks. d) Repurchase agreements and reverse repurchase agreements with financial institutions identified by Minnesota Statutes Chapter 118A. e) Securities lending agreements may be entered into with financial institutions identified by Minnesota Statutes Chapter 118A. f) Minnesota joint powers investment trusts may be entered into with trusts identified by Minnesota Statutes Chapter 118A g) Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of short term securities permitted by Minnesota Statutes 118A. h) Bonds of the City of Brooklyn Center issued in prior years, may be redeemed at current market price, which may include a premium, prior to maturing using surplus funds of the debt service fund set up for that issue. Investments are reported at fair value, based on quoted market prices as of the balance sheet date. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment earnings. Investment income on commingled funds is allocated monthly, based on month-end balances. E. RECEIVABLES AND PAYABLES During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. Short-term interfund loans are classified as “interfund receivable/payable.” All short-term interfund receivables and payables at December 31, 2007 are planned to be eliminated in 2008. Long-term interfund loans are classified as “advances to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable financial resources. The City expects to make full collection of all trade and property tax receivables, so no allowance is considered necessary. 45 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES E. RECEIVABLES AND PAYABLES (Continued) Property tax levies are submitted to the County in December each year. The County allocates these levies across taxable properties in the City based on valuations certified in the prior year. The County collects these levies and distributes the City’s proceeds in June and December of the fiscal year. These taxes are reported as general revenues in the government-wide financial statements in the year levied. Unpaid taxes at December 31 become liens on the respective property and are classified as delinquent receivables and are fully offset by deferred revenue in the fund financial statements. F. INVENTORIES AND PREPAID ITEMS Inventories in the governmental funds are reported using the consumption method and valued at cost, using the first in/first out (FIFO) method. Inventories in the proprietary funds are valued at cost, using the weighted average method in the Municipal Liquor and Earle Brown Heritage Center Funds and the FIFO method in all other funds. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. G. CAPITAL ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost in excess of the amounts below and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Infrastructure $ 250,000 Buildings and Building Improvements 50,000 Land Improvements 25,000 Heavy Equipment 25,000 Furniture and furnishings 10,000 Motorized vehicles 10,000 Technology equipment 10,000 The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. For the year ended December 31, 2007 no interest was capitalized in connection with construction in progress. 46 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 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 Machinery and equipment 5-15 years H. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation and vested sick leave pay is accrued in the Public Employee Compensated Absences fund. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. In accordance with the provisions of Statement of Government Accounting Standards No. 16, Accounting for Compensated Absences, a liability is recognized for that portion of accumulating sick leave benefits that is vested, or expected to vest, as severance pay. I. LONG TERM OBLIGATIONS In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. J. FUND EQUITY Fund equity in the fund financial statements is classified as fund balance for governmental funds and net assets for proprietary funds. Fund equity in the government-wide financial statements is classified as net assets for both governmental and business-type activities. Fund balance – Generally, fund balance represents the difference between current assets and current liabilities. The City reserves those portions of fund balance which are legally segregated for a specific future use or which do not represent available, spendable resources and are therefore not available for general appropriation or expenditure. Unreserved fund balance indicates that portion of fund balance that is available for appropriation in future periods. Designations are management’s intent to set aside these resources for specific purposes. 47 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 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 these standards may have on future financial statements has not been determined at this time. Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefit Plans other than Pension Plans. This statement, which the City will be required to adopt in 2008, provides guidance on all aspects of postemployment benefit reporting by employers. The City has not yet assessed the impact of the adoption of Statement No. 45 on its financial statements. Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligation. This statement provides guidance on how to calculate and report the costs and obligations associated with pollution cleanup efforts. The provisions of this statement are effective for financial statements for periods beginning after December 31, 2007. 48 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 2 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that “Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this $ 2,737,094 difference are as follows: Another element of that reconciliation states that “Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.” The details of this $ 2,766,100 difference are as follows: 49 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 2 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ANT THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES (Continued) Another element of that reconciliation states that “The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of principal of the long- term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets.” The details of this $ 2,540,000 difference are as follows: Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States for all governmental funds. All annual appropriations lapse at fiscal year end. In August, the City Manager submits to the City Council proposed operating budgets for the fiscal year commencing the following January. The proposed general fund budget and preliminary tax levy must be certified to the County prior to September 15. The Council holds public hearings on the certified budget and levy and must submit a final levy to the County prior to the end of December. The appropriated budget is prepared by fund and department. The City Council must authorize any transfer of budgeted amounts between departments or funds. Transfers of budgeted amounts within departments in the General Fund must be authorized by the City Manager. The legal level of budgetary control is the department level for the General Fund and the fund level for all other governmental funds. There were no material supplemental budgetary appropriations during the year. 50 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended December 31, 2007 expenditures exceeded appropriations in the following General Fund departments and special revenue funds: 51 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 3 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued) C. DEFICIT FUND EQUITY Deficit fund equity exists at December 31, 2007 in the following funds: The deficits are being funded through internal borrowing and will be repaid from construction transfers from utility funds, future bond issuance, investment earnings, and internal transfers. D. PRIOR PERIOD ADJUSTMENTS FUND STATEMENTS In 2007, curb and gutter infrastructure capital assets were moved from the general capital assets to the Storm Drainage Enterprise Fund. The beginning value of net assets in this Storm Drainage fund was increased by $ 2,399,148, which includes $ 116,611 in construction in progress and $ 2,282,537 net book value of those assets previously completed. GOVERNMENT-WIDE STATEMENTS In 2006, a contribution from the Storm Drainage Utility Fund to an infrastructure construction project was included twice in the calculation of construction in progress in the Governmental Activities. This amount was removed in 2007 decreasing beginning Net Assets in the Governmental Activities by $ 116,611. In 2007, curb and gutter infrastructure capital assets were moved from the Governmental Activities to the Business-Type Activities. Beginning Net Assets in the Governmental Activities was reduced and beginning Net Assets in the Business-Type Activities was increased by $ 2,282,537, the net book value of these assets, to reflect this change. 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. 52 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS (Continued) Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. At year-end, the City’s carrying value amount of deposits was $ 712,025 composed of bank balances of $ 552,669. All balances were covered by federal depository insurance or by perfected collateral held by the Federal Reserve Bank. As of December 31, 2007 the City had the following investments and maturities: 53 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS (Continued) Interest rate risk – The City’s investment policy requires interest earnings remain stable and predictable through at least the next budget cycle and that at least 50% of the investment portfolio remain for two or more years with known interest rates. The policy also states that the portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably expected. Credit risk – The City’s investment policy restricts investment instruments to those authorized by Minnesota Statutes §118A. The policy also requires that any counterparty in investment transactions be pre-qualified and approved by the City Council and that the portfolio be diversified to limit potential losses on individual securities. As of December 31, 2007 the City’s investment in FNMA and 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. 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, 2007 are as follows: Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: 54 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS B. RECEIVABLES (Continued) The City has leased a portion of the police second floor expansion area to the Local Government Information Systems Association (LOGIS) as a backup computer facility. The lease has a term of six years, commencing on August 1, 2005, and calls for monthly lease payments based on the square-footage. Lease revenue for the year ended December 31, 2007 was $ 8,694. Future minimum lease payments are as $ 8,694 annually through 2010 and $ 5,072 for 2011. C. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2007 was as follows: 55 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS C. CAPITAL ASSETS (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: 56 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS C. CAPITAL ASSETS (Continued) CONSTRUCTION COMMITMENTS At December 31, 2007 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: D. INTERFUND BALANCES AND TRANSFERS Individual fund interfund receivable and payable balances at December 31, 2007 are as follows: The $792,488 advance between the Golf Course and Capital Improvements funds is not expected to be eliminated within one year of December 31, 2007. 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. 57 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS D. INTERFUND BALANCES AND TRANSFERS (Continued) Interfund transfers: 58 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 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 2007, the transfer from the General Fund to the Technology Fund is used to fund the ongoing needs of the City’s information technology requirements. The transfer from the General Fund to the Sanitary Sewer Utility Fund was made to offset an unanticipated charge for sewer treatment services. Transfers from the Tax Increment District No. 3 fund to the Tax Increment Bonds fund were made to transfer unspent bond proceeds to the debt service fund, as required by the bond covenants, in addition to paying the 2007 debt service requirements for the bonds. The $ 57,459 from the City Initiatives Grant fund to the Central Garage fund was made to move funds that were specifically donated for the purchase of fire engines. Transfers from the Municipal State Aid and Street Light Utility funds to the Infrastructure Construction Fund were used to fund certain street construction projects. E. OPERATING LEASES The City leases space for its municipal liquor stores. The leases are both ten-year leases and began in 2000 and 2003. Both leases have options for a ten-year extension. The leases provide for a minimum monthly base rent payment, plus a pro-rata share of common area expenses. Additional lease payments are required if agreed-upon revenue thresholds are attained. These leases may be cancelled at the City’s option if the City ceases liquor operations. Total rental expense under the lease agreements for the year ended December 31, 2007 was $ 242,801. Future minimum base rent payments under the current agreements are as follows: 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, 2007 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG-TERM DEBT (Continued) As of December 31, 2007 the long-term debt of the financial reporting entity consisted of the following: GOVERNMENTAL ACTIVITIES All long-term bonded indebtedness outstanding at December 31, 2007 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, 2007 were $ 9,143; delinquent special assessments in the governmental funds at December 31, 2007 were $ 44,419, which is included in the special assessments receivable balance of $ 3,363,260. The G.O. Improvement Bonds were issued to finance the construction and replacement of street and storm drainage capital assets. Of the $ 4,280,000 outstanding at December 31, 2007 the amounts applicable to street and storm capital assets is $ 3,351,412 and $ 928,588, respectively. 60 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG-TERM DEBT GOVERNMENTAL ACTIVITIES (Continued) Annual debt service requirements to maturity for long-term debt are as follows: CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2007 was as follows: Compensated absences are liquidated by the Public Employees Compensated Absences Fund. 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. 61 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS F. LONG-TERM DEBT CONDUIT DEBT OBLIGATIONS (Continued) As of December 31, 2007 there were three series of fixed rate Multifamily Housing Revenue Refunding bonds, one Housing Revenue Development Refinancing Note, one series of Variable Rate Demand Refunding Industrial Revenue Bonds, two Healthcare Revenue Notes, and four Senior Housing Development Revenue Notes outstanding. The aggregate amount of conduit debt obligations at December 31, 2007 is $ 31,224,291. G. FUND EQUITY Net assets reported in the government-wide statement of net assets at December 31, 2007 include the following: Related debt for governmental activities capital assets includes $ 3,875,000 in General Obligation Bonds and $ 3,351,412 in G.O. Improvement Bonds, the amount issued to finance the street portion of construction projects. The remaining $ 928,588 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, 2007 Note 4 DETAILED NOTES ON ALL FUNDS G. FUND EQUITY (Continued) Governmental fund balances reported on the fund financial statements as of December 31, 2007 include the following: 63 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 4 DETAILED NOTES ON ALL FUNDS G. FUND EQUITY (Continued) 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. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three years. 64 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 5 OTHER INFORMATION (Continued) B. EMPLOYEE RETIREMENT PLANS 1. DEFINED BENEFIT PENSION PLAN PLAN DESCRIPTION All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing, multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statute, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF and PEPFF. That report may be obtained by writing to PERA, 60 Empire Drive Suite 200, St. Paul, Minnesota, 55103-2088 or by calling 651-296-7460 or 800-652- 9026. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Coordinated Plan members are required to contribute 5.75% of their annual covered salary. PEPFF members are required to contribute 7.80% of their annual covered salary. The City is required to contribute the following percentages of annual covered payroll: 6.25% for Coordinated Plan PERF members and 11.70% for PEPFF members. The City’s contributions to the Public Employees Retirement Fund for the years ending December 31, 2007, 2006, and 2005 were $ 392,528, $ 363,334, and $ 326,886, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2007, 2006, and 2005 were $ 374,495, $ 318,913, and $ 274,868, 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, 2007 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 2006 were $ 161,019 of which all was from the State of Minnesota. The actuarially determined contribution based on an actuarial valuation performed at January 1, 2005 was $ 39,597, which represents funding for normal cost of $ 79,135 and amortization of the excess over the actuarial accrued liability of ($ 39,538). Actual contributions have continued at higher levels to allow for a transition to a defined contribution plan in the future. These higher payments are irrevocable and do not affect the level of future City contributions, nor do they constitute an asset of the City. The City’s $ 161,019 contribution to the Association in 2006 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, 2007 Note 5 OTHER INFORMATION B. EMPLOYEE RETIREMENT PLANS 2. PENSION PLAN – BROOKLYN CENTER FIRE DEPARTMENT RELIEF ASSOCIATION (Continued) The information below is the most recent data available. THREE YEAR TREND INFORMATION SCHEDULE OF FUNDING PROGRESS 67 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 5 OTHER INFORMATION (Continued) C. 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 the years 1997 and 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. D. 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. E. 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. A schedule of the notes outstanding at December 31, 2007 is as follows: 68 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 5 OTHER INFORMATION (Continued) F. POST-EMPLOYMENT HEALTH CARE BENEFITS The City has provided post-employee health care benefits, as per the requirements of the City Council resolution, for certain retirees and their dependents since 1986. Full time employees have the option of retaining membership in the City’s health insurance plan for which the City will pay the single person premium until such time as the retiree is eligible for Medicare coverage or at age 65, whichever is sooner. If the retiree desires to continue family coverage, the additional cost for family coverage shall be paid by the retiree to the City. There are two methods whereby an employee can qualify under this program. First, the employee, on the date of his/her retirement, must meet eligibility requirements for a full retirement annuity under PERA without reduction of benefits because of age, disability, or any other reason for reduction. In addition, the employee must have been employed full time by the City for the last ten consecutive years prior to the effective date of retirement. Additionally, employees who are retiring after twenty-five years of consecutive service with the City and are eligible to receive a pension from PERA shall have the option of retaining membership in the City’s health insurance plan for which the employee will pay the premium until such time as the retiree is eligible to receive a full-retirement annuity under PERA or PEPFF. At that time, the City will pay the single-person premium until such time as the retiree is eligible for Medicare coverage or at age 65, whichever is sooner. Employees participate in this program on a voluntary basis. As of December 31, 2007, 13 employees currently participate in this program. The cost of City paid health care premiums for the years ended December 31, 2007 was $ 86,708. Fund liabilities are paid on a pay-as- you-go basis with investment earnings of the Fund. The $ 2,517,382 recorded as a liability is not an actuarially determined amount, but the City’s best estimate of the future liability. 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 2007 financial statements of the City is $ 368,195 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 2007 health and life insurance costs paid by the City was $ 1,135,055. Complete financial statements may be obtained from Stanton Group located at 3405 Annapolis Lane, Plymouth, Minnesota 55447. 69 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2007 Note 5 OTHER INFORMATION G. JOINT VENTURES AND JOINTLY GOVERNED ORGANIZATIONS (Continued) 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. H. SUBSEQUENT EVENT In January 2008, the EDA sold the property at 6300 Earle Brown Drive to Brooklyn Hotel Partners for $1. The property had been removed from the Earle Brown Tax Increment District in October 2006. In February 2008, the EDA approved a development agreement and real estate option agreement with the U.S. General Services Administration for the property at 1501 Freeway Blvd. At December 31, 2007 this property is reported as Assets held for resale in Tax Increment District No. 3 at a net realizable value of $ 2,526,829. In April 2008, the City purchased the property at 2500 County Road 10 from 1277 LLC for $ 6,475,243 for redevelopment. This property will be recorded in the Tax Increment District No. 3 fund as Assets held for resale at cost, not to exceed net realizable value, until the property is sold. In April 2008, the City sold $4,335,000 in Tax Increment Financing Bonds, the proceeds of which will be used to finance the acquisition, demolition, clearance, and site preparation in target redevelopment areas within the City’s Tax Increment District No. 3. 70 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 1 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2007 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s REVENUES Taxes: Property taxes10,720,993$$10,720,993$ 10,498,537$(222,456) Market value homestead credit-- 573,464573,464 Penalties and interest-- 16,01516,015 Lodging ta650,000650,000 706,93056,930 x Total taxes11,370,99311,370,993 11,794,946423,953 Licenses and permits: Liquor and beer licenses114,800114,800 68,504(46,296) Building permits285,000285,000 333,71548,715 Mechanical permits60,00060,000 58,031(1,969) Sewer and water permits1,0001,000 1,921921 Plumbing permits30,00030,000 25,041(4,959) Garbage licenses3,1503,150 3,120(30) Taxicab licenses100100 -(100) Mechanical licenses4,2004,200 5,9181,718 Service station licenses2,4552,455 1,915(540) Vehicle dealer licenses1,5001,500 1,688188 Bowling licenses720720 720- Cigarette licenses3,0003,000 2,288(712) Sign permits2,0002,000 5,0403,040 Rental dwelling license226,308226,308 115,512(110,796) s Amusement license 1,3451,345 1,040 (305) s Electrical Permits30,000 30,000 38,735 8,735 ROW permits1,0001,000 50(950) Miscellaneous licenses and permits4,8654,865 9,9185,053 Total licenses and permits771,443771,443 673,156(98,287) Intergovernmental: Federal: Other federal grants-- 1,6461,646 State: Local government ai767,665767,665 1,229,388461,723 d Police pension aid280,000280,000 306,75326,753 PERA aid34,36534,365 34,365- Fireperson pension aid150,000150,000 139,441(10,559) Police training-- 17,68717,687 Local: Miscellaneous grants58,00058,000 68,35110,351 Total intergovernmental1,290,0301,290,030 1,797,631507,601 Charges for services: General government charges31,04031,040 37,4266,386 Public safety charges13,50013,500 24,82811,328 Recreation fees293,601293,601 296,4312,830 Community Center fee332,650332,650 334,6151,965 s Total charges for services670,791670,791 693,30022,509 71 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 2 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2007 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Revenues (continued): Fines and forfeits240,000$ 240,000$ 291,423$ 51,423$ Miscellaneous: Investment earnings (net of market value change156,015156,015 256,581100,566 ) Othe45,100 81,88445,100 36,784 r Total miscellaneous201,115201,115 338,465137,350 Total revenues14,544,37214,544,372 15,588,9211,044,549 EXPENDITURES General government: Mayor and council: Current: Personal services50,82950,829 47,3263,503 Materials and supplies1,2001,200 1,862(662) Services and other charges77,25077,250 71,7325,518 Total mayor and council129,279129,279 120,9208,359 Administrative (Manager, Clerk, HR) offices: Current: Personal services501,058501,058 453,68647,372 Materials and supplies6,8506,850 5,6891,161 Services and other charges29,12529,125 36,765(7,640) Total administrative office537,033537,033 496,14040,893 Elections and voter registration: Current: Personal services56,74656,746 58,749(2,003) Materials and supplies1,0001,000 -1,000 Services and other charges28,90028,900 3,73325,167 Total elections and voter registration86,64686,646 62,48224,164 Assessor's office: Current: Personal services249,824249,824 242,1867,638 Materials and supplies2,3752,375 2,118257 Services and other charges39,91239,912 40,795(883) 285,0997,012 Total assessor's office292,111292,111 Finance: Current: Personal services477,017477,017 447,49529,522 Materials and supplies4,0004,000 5,023(1,023) Services and other charges12,30012,300 9,0483,252 Total finance493,317493,317 461,56631,751 72 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 3 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2007 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Expenditures: General government (continued): Legal: Current: Services and other charges335,000$ 335,000$ 373,757$ (38,757)$ Government buildings: Current: Personal services272,443 272,443 242,209 30,234 Materials and supplies51,70051,700 71,628(19,928) Services and other charges307,718307,718 407,719(100,001) Total current631,861631,861 721,556(89,695) Capital outla107,532107,532 112,283(4,751) y Total government buildings739,393739,393 833,839(94,446) Information technology: Current: Personal services185,938185,938 187,119(1,181) Materials and supplies14,10014,100 10,7783,322 Services and other charges170,510170,510 151,52618,984 Total information technolog370,548370,548 349,42321,125 y Total general governmen 2,983,3272,983,327 2,983,226 101 t Public safety: Police protection: Current: Personal services4,821,8584,821,858 4,876,333(54,475) Materials and supplies105,972109,172 98,36310,809 Services and other charges864,872861,672 861,813(141) Total current5,792,7025,792,702 5,836,509(43,807) 7,3747,374 6,569 805 Capital outla y Total police protection5,800,0765,800,076 5,843,078(43,002) Fire protection: Current: Personal services521,954521,954 521,653301 Materials and supplies99,60099,600 81,04818,552 Services and other charges238,301238,301 269,311(31,010) Total fire protection859,855859,855 872,012(12,157) Protective inspection: Current: Personal services437,027437,027 479,209(42,182) Materials and supplies4,0504,050 10,185(6,135) Services and other charges122,759122,759 101,82820,931 Total protective inspection563,836563,836 591,222(27,386) 73 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 4 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2007 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Expenditures: Public safety (continued): Emergency preparedness: Current: Personal services56,547$ 56,547$ 48,782$ 7,765$ Materials and supplies2,4002,400 4941,906 Services and other charges6,0656,065 3,8862,179 Total emergency preparedness65,01265,012 53,16211,850 Total public safety7,288,7797,288,779 7,359,474(70,695) Public works: Engineering department: Current: Personal services486,645486,645 533,907(47,262) Materials and supplies9,3759,375 9,904(529) Services and other charges41,35941,359 40,0891,270 Total current537,379537,379 583,900(46,521) Capital outla 2,0002,000 - 2,000 y Total engineering department539,379539,379 583,900(44,521) Street department: Current: Personal services741,016741,016 714,39026,626 Materials and supplies137,250137,250 105,26731,983 Services and other charges501,502501,502 563,828(62,326) Total street department1,379,7681,379,768 1,383,485(3,717) Total public works1,919,1471,919,147 1,967,385(48,238) Community services: Social services: Current: Services and other charges80,95180,951 74,3896,562 Parks and recreation: Administration: Current: Personal services494,220494,220 513,420(19,200) Materials and supplies10,80010,800 13,200(2,400) Services and other charges59,29059,290 51,3027,988 Total current564,310564,310 577,922(13,612) Capital outla 1,2001,200 - 1,200 y Total administration565,510565,510 577,922(12,412) 74 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 5 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2007 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Expenditures: Parks and recreation (continued): Adult programs: Current: Personal services60,533$ 60,533$ 42,594$ 17,939$ Materials and supplies15,75015,750 17,088(1,338) Cost of good sold to public20,20020,200 21,174(974) Services and other charges91,08091,080 124,165(33,085) Total adult programs187,563187,563 205,021(17,458) Teen programs: Current: Personal services3,4623,462 4,453(991) Materials and supplies600600 51783 Total teen programs4,0624,062 4,970(908) Youth programs: Current: Personal services36,66436,664 38,977(2,313) Materials and supplies9,1259,125 9,707(582) Services and other charges150150 -150 Total youth programs45,93945,939 48,684(2,745) General programs: Current: Personal services5,6045,604 4,0511,553 Materials and supplies7070 -70 Services and other charges8,0008,000 13,080(5,080) Total general programs13,67413,674 17,131(3,457) Community center: Current: Personal services418,225418,225 432,702(14,477) Materials and supplies22,60022,600 6,56216,038 Services and other charges66,27563,275 79,661(16,386) Total current507,100504,100 518,925(14,825) Capital outla17,500 12,88320,500 7,617 y Total community cente524,600524,600 531,808(7,208) r Park maintenance: Current: Personal services534,473534,473 529,1995,274 Materials and supplies61,47561,475 60,0961,379 Services and other charges284,401284,401 309,145(24,744) Total current880,349880,349 898,440(18,091) 9,8009,800 9,537 263 Capital outla y Total park maintenance890,149890,149 907,977(17,828) Total parks and recreation2,231,4972,231,497 2,293,513(62,016) 75 CITY OF BROOKLYN CENTER, MINNESOTA Statement 9 REQUIRED SUPPLEMENTARY INFORMATION Page 6 of 6 BUDGETARY COMPARISON SCHEDULE - GENERAL FUND For the Year Ended December 31, 2007 Variance wit h Final Budget - Budgeted AmountsActualPositive OriginalFinalAmount(Negative) s Expenditures (continued): Economic development: Convention bureau: Current: Services and other charges308,750$ 308,750$ 335,729$ (26,979)$ ondepartmental: N Expenditures not charged to departments: Current: Personal services59,63159,631 53,4326,199 Materials and supplies18,50018,500 18,910(410) Services and other charges429,290429,290 282,506146,784 Total nondepartmental507,421507,421 354,848152,573 Total expenditures15,319,87215,319,872 15,368,564(48,692) Revenues over (under) expenditures(775,500)(775,500) 220,357995,857 OTHER FINANCING SOURCES (USES) Transfers in - administrative services reimburse845,500845,500 744,590(100,910) d Transfers to other funds(70,000)(70,000) (531,723)(461,723) Total other financing sources (uses)775,500775,500 212,867(562,633) et increase (decrease) in fund balance$-$- 433,224$433,224 N Fund balance - January 1 7,509,190 Fund balance - December 31$ 7,942,414 76 CITY OF BROOKLYN CENTER, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - TAX INCREMENT DISTRICT NO. 3 For the Year Ended December 31, 2007 Variance wit h Final Budget - Budgeted AmountsPositive OriginalFinalActual(Negative) REVENUES Taxes: Tax increments2,200,100$$2,200,100$ 1,701,717$(498,383) Market value homestead credit-- 5,7535,753 Intergovernmenta -- 58,602 58,602 l Investment earnings (net of market value adjustment320,000320,000 737,462417,462 ) Miscellaneous-- 47,39047,390 Total revenues2,520,1002,520,100 2,550,92430,824 EXPENDITURES Current: Economic development: Personal services-- 37,574(37,574) Supplies-- 368(368) Services and other charges187,500187,500 4,985,519(4,798,019) Capital outlay: Economic developmen -- 1,179,136 (1,179,136) t Total expenditures187,500187,500 6,202,597(6,015,097) Revenues over (under) expenditures2,332,6002,332,600 (3,651,673)(5,984,273) OTHER FINANCING SOURCES (USES) Transfers out(1,918,455)(1,918,455) (4,433,310)(2,514,855) et increase (decrease) in fund balance$414,145$414,145 (8,084,983)$(8,499,128) N Fund balance - January 1 20,727,671 Fund balance - December 31$ 12,642,688 77 CITY OF BROOKLYN CENTER, MINNESOTA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2007 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: 78 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). 79 CITY OF BROOKLYN CENTER, MINNESOTA Statement 11 COMBINING BALANCE SHEET ONMAJOR GOVERNMENTAL FUNDS N December 31, 2007 Total SpecialDebtCapitalonmajo Nr RevenueServiceProjectGovernmenta l ASSETS Cash and investment$ 3,691,2092,328,271$ 3,429,741$ 9,449,221$ s Receivables: Accounts-- 165,846165,846 Current taxes2,2896,906 -9,195 Delinquent taxes15,48945,214 -60,703 Due from other government53,003- 678,041731,044 s Interfund receivable- 1,054,563- 1,054,563 Prepaid items19,232- -19,232 Advances to other funds-- 792,488792,488 Assets held for resale37,000- -37,000 Total assets2,455,2843,743,329 6,120,67912,319,292 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable22,998- 52,32775,325 Accrued salaries and wages9,994- -9,994 Due to other governments7,127- -7,127 Contracts payable-- 1,2691,269 Deferred revenue65,83445,214 111,048- Total liabilities105,95345,214 53,596204,763 Fund balances: Reserve19,2323,698,115 976,4084,693,755 d Unreserved: Designate -2,240,401 5,090,675 7,331,076 d Undesignate89,698- -89,698 d Total fund balances2,349,3313,698,115 6,067,08312,114,529 Total liabilities and fund balances$2,455,284$3,743,329$ 6,120,679$12,319,292 80 CITY OF BROOKLYN CENTER, MINNESOTA Statement 12 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR GOVERNMENTAL FUNDS N For the Year Ended December 31, 2007 Total SpecialDebtCapitalonmajo Nr RevenueServiceProjectGovernmenta l REVENUES Property taxes$ 741,464262,739$ -$ 1,004,203$ Tax increments1,020,167- 1,020,167- Franchise fees-- 658,620658,620 Intergovernmenta -126,667 1,188,845 1,315,512 l Charges for services12,436- -12,436 Investment earnings (net of market value adjustment 32,416113,408 262,255 408,079 ) Miscellaneous42,163- 197,697239,860 Total revenues1,577,580773,880 2,307,4174,658,877 EXPENDITURES Current: General governmen-- 80,24580,245 t Public safet -197,529 - 197,529 y Public works-- 268,925268,925 Parks and recreation32,446- 10,56043,006 Economic developmen -300,141 - 300,141 t Capital outlay: Public works- 1,178,089- 1,178,089 Parks and recreation-- 50,94950,949 Debt service: Principal retirement246,0761,640,000 1,886,076- Interest-971,926 971,926- Fiscal agent fees-1,898 -1,898 Total expenditures776,1922,613,824 1,588,7684,978,784 Revenues over (under) expenditures801,388(1,839,944) 718,649(319,907) OTHER FINANCING SOURCES (USES) Transfers in262,0404,433,310 425,0005,120,350 Transfers out(319,499) (734,097)- (1,053,596) Return excess tax increment to Count(529,138)- (529,138)- y Total other financing sources (uses)(586,597)4,433,310 (309,097)3,537,616 et increase (decrease) in fund balances214,7912,593,366 409,5523,217,709 N Fund balances - January 12,134,5401,104,749 5,657,5318,896,820 Fund balances - December 31$2,349,331$3,698,115$ 6,067,083$12,114,529 81 82 NONMAJOR SPECIAL REVENUE FUNDS The City of Brooklyn Center had the following Special Revenue Funds during the year: Housing and Redevelopment Authority Fund (HRA) - This fund has authority to levy an ad valorem property tax for the purpose of conducting housing and redevelopment projects. These projects are accounted for in the EDA Fund; all tax proceeds are transferred to that fund. Economic Development Authority Fund (EDA) - This fund was established to account for the Economic Development Authority (EDA) of Brooklyn Center. The EDA carries out development activities; it has authority to operate an enterprise. The Earle Brown Heritage Center operates under this authority, as well as the tax increment financing activities. The EDA also does redevelopment and housing projects, funded by an ad valorem property tax levy and transfers from the CDBG and HRA funds. Earle Brown Tax Increment District – This fund has the authority to collect tax increments which are used for the historic restoration of the Earle Brown Farm and for debt service payments on bonds which were issued for the same purpose. Tax Increment District No. 4 Fund – This fund has the authority to collect tax increments which are used for various redevelopment projects within the City and for debt service payments of bonds which were issued for the same purpose. Police Drug Forfeiture Fund - This fund was established to account for property and/or cash seized by Police Department personnel. Community Development Block Grant Fund (CDBG) - This fund was established to account for funds received under Title I of the Housing and Community Development Act of 1974. City Initiatives Grant Fund – Revenues and expenditures from grants received from outside entities are accounted for in this fund. Programs include several federal, state, and local public safety grants, and state and local recreation grants. 83 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET ONMAJOR SPECIAL REVENUE FUNDS N December 31, 2007 Housing anEconomic d Developmen Redevelopmen tt AuthoritAuthorit yy ASSETS Cash and investment$ 1,831,552-$ s Receivables: Current taxes2,289- Delinquent taxes15,489- Due from other government -- s Prepaid items -- Asset held for resale -37,000 Total assets17,7781,868,552 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable -13,586 Accrued salaries and wages -3,941 Due to other governments -- Deferred revenue15,48937,000 Total liabilities15,48954,527 Fund balances: Reserved: Prepaid items -- Unreserved: Designated: 2,2891,814,025 Economic developmen t Undesignate -- d Total fund balances2,2891,814,025 Total liabilities and fund balances$17,778$1,868,552 84 Statement 13 Total Earle BrownTaxPoliceCitonmajo yNr Tax IncremenIncremenDrugInitiativesSpecial tt DistricDistrict No. 4ForfeitureGranRevenue tt $ 304,825$ 126,389$-$ 65,505$2,328,271 - -- -2,289 - -- -15,489 - -- 53,00353,003 - -16,213 3,01919,232 - -- -37,000 304,825 126,38916,213121,5272,455,284 - -1,410 8,00222,998 - -- 6,0539,994 7,127 -- -7,127 - -- 13,34565,834 7,127 -1,410 27,400105,953 - -16,213 3,01919,232 297,698 126,389- -2,240,401 - -(1,410) 91,10889,698 297,698 126,38914,803 94,1272,349,331 $ 304,825$ 126,389$16,213$121,527$2,455,284 85 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR SPECIAL REVENUE FUNDS N For the Year Ended December 31, 2007 Housing anEconomicEarle Brown d DevelopmenTax Incremen Redevelopmen ttt AuthoritAuthoritDistric yyt REVENUES Property taxes$ -262,739$ -$ Tax increments- - 743,363 Intergovernmenta- -- l Charges for services- -- Investment earnings (net of marke t value adjustment)- 83,63621,608 Miscellaneous- 2,109- Total revenues262,739 85,745764,971 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-160,212900 Supplies- 2,018- Services and other charges395133,3572,528 Total economic development395295,5873,428 Debt service: Principal- -- Total expenditures395295,5873,428 Revenues over (under) expenditures262,344(209,842)761,543 OTHER FINANCING SOURCES (USES) Transfers in-262,040- Transfers out(262,039) -- - -(529,138) Return excess tax increment to Count y Total other financing sources (uses)(262,039)262,040(529,138) et increase (decrease) in fund balances305 52,198232,405 N Fund balances - January 11,9841,761,82765,293 Fund balances - December 31$2,289$1,814,025$297,698 86 Statement 14 Total TaxPoliceCommunitCitonmajo yyNr IncremenDrugDevelopmenInitiativesSpecial tt District No. 4ForfeitureBlock GrantGranRevenue t $ -$ -$-$ -$262,739 276,804 -- -1,020,167 - --126,667126,667 - -- 12,43612,436 1,010 1,689- 5,465113,408 - 23,778- 16,27642,163 277,814 25,467-160,8441,577,580 - --109,292109,292 - 16,791- 19,84736,638 - 42,782- 8,81751,599 - 59,573-137,956197,529 - -- 5,1405,140 - -- 7,2227,222 - -- 20,08420,084 - -- 32,44632,446 78 -- -161,190 - -- -2,018 653 -- -136,933 731 -- -300,141 246,076 -- -246,076 246,807 59,573-170,402776,192 31,007 (34,106)- (9,558)801,388 - -- -262,040 - -(1)(57,459)(319,499) - -- -(529,138) - -(1)(57,459)(586,597) 31,007 (34,106)(1)(67,017)214,791 95,382 48,9091161,1442,134,540 $ 126,389$ 14,803$-$ 94,127$2,349,331 87 CITY OF BROOKLYN CENTER, MINNESOTA Statement 15 SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Taxes: Property taxes$ 265,000265,000$ $248,833 Market value homestead credit- -13,906 Total revenues265,000 265,000262,739 EXPENDITURES Current: Economic development: Services and other charges- -395 Revenues over (under) expenditures265,000 265,000262,344 OTHER FINANCING SOURCES (USES) Transfers out(265,000) (265,000)(262,039) et increase (decrease) in fund balance$-$ -305 N Fund balance - January 11,984 Fund balance - December 31$2,289 88 CITY OF BROOKLYN CENTER, MINNESOTA Statement 16 SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$18,000$ 18,000$83,636 ) Miscellaneous- -2,109 Total revenues18,000 18,00085,745 EXPENDITURES Current: Economic development: Personal services201,925 201,925160,212 Supplies3,650 3,6502,018 Services and other charges72,212 72,212133,357 Total expenditures277,787 277,787295,587 Revenues over (under) expenditures(259,787) (259,787)(209,842) OTHER FINANCING SOURCES (USES) Transfers in265,000 265,000262,040 et increase (decrease) in fund balance$5,213$ 5,21352,198 N Fund balance - January 11,761,827 Fund balance - December 31$1,814,025 89 CITY OF BROOKLYN CENTER, MINNESOTA Statement 17 SPECIAL REVENUE FUND - EARLE BROWN TAX INCREMENT DISTRICT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Taxes: Tax increments$ 783,200783,200$ $736,236 Market value homestead credit- -7,127 17,00017,000 21,608 Investment earnings (net of market value adjustment ) Total revenue800,200 800,200764,971 EXPENDITURES Current: Economic development: Personal services- -900 Services and other charges35,000 35,0002,528 Total expenditures35,000 35,0003,428 Revenues over (under) expenditures765,200 765,200761,543 OTHER FINANCING SOURCES (USES) Return of excess tax increment to Count -- (529,138) y et increase (decrease) in fund balance$ 765,200765,200$ 232,405 N Fund balance - January 165,293 Fund balance - December 31$297,698 90 CITY OF BROOKLYN CENTER, MINNESOTA Statement 18 SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 4 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Tax increments$238,400$ 238,400$276,804 Investment earnings (net of market value adjustment -- 1,010 ) Total revenues238,400 238,400277,814 EXPENDITURES Current: Economic development: Personal services- -78 Services and other charges- -653 Total economic development- -731 Debt service: Principal238,400 238,400246,076 Total expenditures238,400 238,400246,807 et increase (decrease) in fund balance$-$ -31,007 N Fund balance - January 195,382 Fund balance - December 31$126,389 91 CITY OF BROOKLYN CENTER, MINNESOTA Statement 19 SPECIAL REVENUE FUND - POLICE DRUG FORFEITURE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$1,000$ 1,000$1,689 ) Miscellaneous28,000 28,00023,778 Total revenues29,000 29,00025,467 EXPENDITURES Current: Public safety: Supplies7,500 7,50016,791 Services and other charges8,500 8,50042,782 Total public safety16,000 16,00059,573 Capital outlay: Public safet 13,00013,000 - y Total expenditures29,000 29,00059,573 et increase (decrease) in fund balance$-$ -(34,106) N Fund balance - January 148,909 Fund balance - December 31$14,803 92 CITY OF BROOKLYN CENTER, MINNESOTA Statement 20 SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Intergovernmenta$195,019$ 195,019$- l EXPENDITURES Current: Economic development: Services and other charges195,019 195,019- Revenues over (under) expenditures- -- OTHER FINANCING SOURCES (USES) Transfers out- -(1) et increase (decrease) in fund balance$-$ -(1) N Fund balance - January 11 Fund balance - December 31$- 93 CITY OF BROOKLYN CENTER, MINNESOTA Statement 21 SPECIAL REVENUE FUND - CITY INITIATIVES GRANT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Intergovernmenta$ --$ $126,667 l Charges for services11,187 11,18712,436 Investment earnings (net of market value adjustment2,048 2,0485,465 ) Miscellaneous19,774 19,77416,276 Total revenues33,009 33,009160,844 EXPENDITURES Current: Public safety: Personal services- -109,292 Supplies- -19,847 Services and other charges- -8,817 Total public safety- -137,956 Parks and recreation: Personal services10,075 10,0755,140 Supplies7,145 7,1457,222 Services and other charges23,287 23,28720,084 Total parks and recreation40,507 40,50732,446 Total expenditures40,507 40,507170,402 Revenues over (under) expenditures(7,498)(7,498)(9,558) OTHER FINANCING SOURCES (USES) Transfers out- -(57,459) et increase (decrease) in fund balance$(7,498)$ (7,498)(67,017) N Fund balance - January 1161,144 Fund balance - December 31$94,127 94 NONMAJOR DEBT SERVICE FUNDS The City's Debt Service Funds account for the following types of bonded indebtedness: General Obligation Bonds Fund – This fund is used to account for the accumulation of resources for payment of general obligation bonds and interest thereon. Tax Increment Bonds Fund – This fund is used to account for the payment of tax increment general obligation bonds and interest thereon. These bonds were sold to finance the purchase and redevelopment of various redevelopment projects within the City. Financing for this debt is transferred from the Tax Increment District No. 3 Fund as needed. 95 CITY OF BROOKLYN CENTER, MINNESOTA Statement 22 COMBINING BALANCE SHEET ONMAJOR DEBT SERVICE FUNDS N December 31, 2007 Total GeneralTaxonmajo Nr ObligationIncremenDebt t BondsBondsService ASSETS Cash and investment$ 2,534,8091,156,400$ $3,691,209 s Receivables: Current taxes6,906 -6,906 Delinquent taxes45,214 -45,214 Total assets1,208,520 2,534,8093,743,329 LIABILITIES AND FUND BALANCE Liabilities: Deferred revenue45,214 -45,214 Fund balances: Reserved: Debt service1,163,306 2,534,8093,698,115 Total liabilities and fund balances$1,208,520$ 2,534,809$3,743,329 96 CITY OF BROOKLYN CENTER, MINNESOTA Statement 23 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR DEBT SERVICE FUNDS N For the Year Ended December 31, 2007 Total GeneralTaxonmajo Nr ObligationIncremenDebt t BondsBondsService REVENUES Property taxes$741,464$ -$741,464 Investment earnings (net of market value adjustment -32,416 32,416 ) Total revenues773,880 -773,880 EXPENDITURES Debt service: Principal590,000 1,050,0001,640,000 Interest124,690 847,236971,926 Fiscal agent fees633 1,2651,898 Total expenditures715,323 1,898,5012,613,824 Revenues over (under) expenditures58,557 (1,898,501)(1,839,944) OTHER FINANCING SOURCES (USES) Transfers in- 4,433,3104,433,310 et increase (decrease) in fund balances58,557 2,534,8092,593,366 N Fund balances - January 11,104,749 1,104,749- Fund balances - December 31$1,163,306$ 2,534,809$3,698,115 97 CITY OF BROOKLYN CENTER, MINNESOTA Statement 24 DEBT SERVICE FUND - G.O. IMPROVEMENT BONDS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Property taxes$-$ -$2,140 Special assessments1,145,093 1,145,093882,121 Investment earnings (net of market value adjustment 53,45053,450 117,381 ) Total revenues1,198,543 1,198,5431,001,642 EXPENDITURES Debt service: Principal900,000 900,000900,000 Interest253,801 253,801162,486 Fiscal agent fees13,500 13,50010,998 Total expenditures1,167,301 1,167,3011,073,484 et increase (decrease) in fund balance$31,242$ 31,242(71,842) N Fund balance - January 13,098,227 Fund balance - December 31$3,026,385 98 CITY OF BROOKLYN CENTER, MINNESOTA Statement 25 DEBT SERVICE FUND - GENERAL OBLIGATION BONDS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Property taxes$753,955$ 753,955$741,464 Investment earnings (net of market value adjustment 16,00016,000 32,416 ) Total revenues769,955 769,955773,880 EXPENDITURES Debt service: Principal590,000 590,000590,000 Interest124,690 124,690124,690 Fiscal agent fees1,500 1,500633 Total expenditures716,190 716,190715,323 et increase (decrease) in fund balance$53,765$ 53,76558,557 N Fund balance - January 11,104,749 Fund balance - December 31$1,163,306 99 CITY OF BROOKLYN CENTER, MINNESOTA Statement 26 DEBT SERVICE FUND - TAX INCREMENT BONDS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s EXPENDITURES Debt service: Principal$1,050,000$ 1,050,000$1,050,000 Interest847,236 847,236847,236 Fiscal agent fees3,000 3,0001,265 Total expenditures1,900,236 1,900,2361,898,501 Revenues over (under) expenditures(1,900,236) (1,900,236)(1,898,501) OTHER FINANCING SOURCES (USES) Transfers in1,900,236 1,900,2364,433,310 et increase (decrease) in fund balance$-$ 2,534,809- N Fund balance - January 1- Fund balance - December 31$2,534,809 100 NONMAJOR CAPITAL PROJECT FUNDS The City of Brooklyn Center had the following Capital Project Funds during the year: Capital Reserve Emergency Fund - This fund was established in 1997 to account for monies held in reserve for catastrophic losses or unforeseen capital items. Capital Improvements Fund - This fund was established in 1968 to provide funds, and to account for the expenditure of such funds, for major capital outlays including, but not limited to, construction or acquisition of major permanent facilities having a relatively long life; and/or to reduce debt incurred for capital outlays. The financing sources of the fund include ad valorem taxation, transfers from other funds, issuance of bonds, federal and state grants, and investment earnings. Municipal State Aid Fund - This fund was established to account for the state allotment of gasoline tax collections used for transportation related construction and maintenance projects. Earle Brown Heritage Center Improvements Fund - This fund was established to provide a stable source of funds to pay for periodic capital improvements needed at the facility. Street Reconstruction Fund – This fund accounts for franchise fees collected, which have been dedicated to the reconstruction of the City’s infrastructure. Technology Fund - This fund, established in 2003, accounts for funds set aside for technology improvements or major technology renovations/replacements. 101 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING BALANCE SHEET ONMAJOR CAPITAL PROJECT FUNDS N December 31, 2007 Capital ReserveCapital EmergencImprovements y ASSETS Cash and investment$1,403,002$635,570 s Receivables: Accounts -1,662 Due from other government -- s Interfund receivable -- Advances to other funds -792,488 Total assets1,403,0021,429,720 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 23,1488,700 Contracts payable -1,269 Total liabilities 23,1489,969 Fund balances: Reserved: Advances to other funds -792,488 Committed contracts -183,920 Unreserved: Designated for capital improvements1,379,854443,343 Total fund balances1,379,8541,419,751 Total liabilities and fund balances$1,403,002$1,429,720 102 Statement 27 MunicipalEarle BrownTotal State AiHeritageonmajo dNr foCenteStreetCapital rr ConstructioImprovementsReconstructioTechnologyProjects nn $ 60,281$ 422,494$368,218$540,176$3,429,741 - -164,184 -165,846 678,041 -- -678,041 - -1,054,563 -1,054,563 - -- -792,488 738,322 422,4941,586,965540,1766,120,679 - 20,479- -52,327 - -- -1,269 - 20,479- -53,596 - -- -792,488 - -- -183,920 738,322 402,0151,586,965540,1765,090,675 738,322 402,0151,586,965540,1766,067,083 $ 738,322$ 422,494$1,586,965$540,176$6,120,679 103 CITY OF BROOKLYN CENTER, MINNESOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ONMAJOR CAPITAL PROJECT FUNDS N For the Year Ended December 31, 2007 Capital ReserveCapital EmergencImprovements y REVENUES Franchise fees$ -$- Intergovernmenta -- l Investment earnings (net of market value adjustment 67,61427,476 ) Miscellaneous169,01928,678 Total revenues236,63356,154 EXPENDITURES Current: General government: Services and other charges -- Public works: Materials and supplies -2,400 Services and other charges183,40922,537 Total public works183,40924,937 Parks and recreation: Services and other charges -10,560 Capital outla y Public works -24,390 Parks and recreation -50,949 Total capital outlay -75,339 Total expenditures183,409110,836 Revenues over (under) expenditures 53,224(54,682) OTHER FINANCING SOURCES (USES) Transfers in -125,000 Transfers out -- Total other financing sources (uses) -125,000 et increase (decrease) in fund balances 53,22470,318 N Fund balances - January 11,326,6301,349,433 Fund balances - December 31$1,379,854$1,419,751 104 Statement 28 MunicipalEarle BrownTotal State AiHeritageonmajo dNr foCenteStreetCapital rr ConstructioImprovementsReconstructioTechnologyProjects nn $ -$ -$658,620$ -$658,620 1,188,845 -- -1,188,845 25,302 16,186102,195 23,482262,255 - -- -197,697 1,214,147 16,186760,815 23,4822,307,417 - 40,508- 39,73780,245 24,681 -- -27,081 35,898 -- -241,844 60,579 -- -268,925 - -- -10,560 - -1,153,699 -1,178,089 - -- -50,949 - -1,153,699 -1,229,038 60,579 40,5081,153,699 39,7371,588,768 1,153,568 (24,322)(392,884)(16,255)718,649 - 230,000- 70,000425,000 (734,097) -- -(734,097) (734,097) 230,000- 70,000(309,097) 419,471 205,678(392,884) 53,745409,552 318,851 196,3371,979,849486,4315,657,531 $ 738,322$ 402,015$1,586,965$540,176$6,067,083 105 CITY OF BROOKLYN CENTER, MINNESOTA Statement 29 CAPITAL PROJECT FUND - INFRASTRUCTURE CONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Special assessments$380,000$ 380,000$482,292 Miscellaneous11,000 11,00035,286 Total revenues391,000 391,000517,578 EXPENDITURES Current: Public works: Services and other charges- -74,536 Capital outlay: Public works7,151,800 7,151,8001,975,078 Total expenditures7,151,800 7,151,8002,049,614 Revenues over (under) expenditures(6,760,800) (6,760,800)(1,532,036) OTHER FINANCING SOURCES (USES) Transfers in5,855,700 5,855,700760,907 et increase (decrease) in fund balance$(905,100)$ (905,100)(771,129) N Fund balance - January 1(519,299) Fund balance - December 31$(1,290,428) 106 CITY OF BROOKLYN CENTER, MINNESOTA Statement 30 CAPITAL PROJECT FUND - CAPITAL IMPROVEMENTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$ --$ $27,476 ) Miscellaneous- -28,678 Total revenues- -56,154 EXPENDITURES Current: Public works: Supplies- -2,400 Services and other charges- -22,537 Total public works- -24,937 Parks and recreation: Services and other charges- -10,560 Capital outlay: Public works215,000 215,00024,390 Parks and recreation- -50,949 Total capital outlay215,000 215,00075,339 Total expenditures215,000 215,000110,836 Revenues over (under) expenditures(215,000) (215,000)(54,682) OTHER FINANCING SOURCES (USES) Transfers in125,000 125,000125,000 et increase (decrease) in fund balance$(90,000)$ (90,000)70,318 N Fund balance - January 11,349,433 Fund balance - December 31$1,419,751 107 CITY OF BROOKLYN CENTER, MINNESOTA Statement 31 CAPITAL PROJECT FUND - MUNICIPAL STATE AID FOR CONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Intergovernmenta$769,342$ 769,342$1,188,845 l Investment earnings (net of market value adjustment 10,00010,000 25,302 ) Total revenues779,342 779,3421,214,147 EXPENDITURES Current: Public works: Supplies22,950 22,95024,681 Services and other charges35,900 35,90035,898 Total public works58,850 58,85060,579 Capital outlay: Public works843,000 843,000- Total expenditures901,850 901,85060,579 Revenues over (under) expenditures(122,508) (122,508)1,153,568 OTHER FINANCING SOURCES (USES) Transfers out- -(734,097) et increase (decrease) in fund balance$(122,508)$ (122,508)419,471 N Fund balance - January 1318,851 Fund balance - December 31$738,322 108 CITY OF BROOKLYN CENTER, MINNESOTA Statement 32 CAPITAL PROJECT FUND - EARLE BROWN HERITAGE CENTER IMPROVEMENTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$6,000$ 6,000$16,186 ) EXPENDITURES Current: General government: Services and other charges179,000 179,00040,508 Revenues over (under) expenditures(173,000) (173,000)(24,322) OTHER FINANCING SOURCES (USES) Transfers in200,000 200,000230,000 et increase (decrease) in fund balance$27,000$ 27,000205,678 N Fund balance - January 1196,337 Fund balance - December 31$402,015 109 CITY OF BROOKLYN CENTER, MINNESOTA Statement 33 CAPITAL PROJECT FUND - STREET RECONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Franchise fees$665,000$ 665,000$658,620 Investment earnings (net of market value adjustment -- 102,195 ) Total revenues665,000 665,000760,815 EXPENDITURES Capital outlay: Public works1,190,500 1,190,5001,153,699 et increase (decrease) in fund balance$(525,500)$ (525,500)(392,884) N Fund balance - January 11,979,849 Fund balance - December 31$1,586,965 110 CITY OF BROOKLYN CENTER, MINNESOTA Statement 34 CAPITAL PROJECT FUND - TECHNOLOGY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2007 Budgeted AmountsActual OriginalFinalAmount s REVENUES Investment earnings (net of market value adjustment$ --$ $23,482 ) EXPENDITURES Current: Public works: Services and other charges149,640 149,64039,737 Revenues over (under) expenditures(149,640) (149,640)(16,255) OTHER FINANCING SOURCES (USES) Transfers in70,000 70,00070,000 et increase (decrease) in fund balance$(79,640)$ (79,640)53,745 N Fund balance - January 1486,431 Fund balance - December 31$540,176 111 112 NONMAJOR ENTERPRISE FUNDS The City of Brooklyn Center had the following nonmajor Enterprise Funds during the year: Recycling and Refuse Fund - This fund accounts for the operation of a state-mandated recycling program. Street Light Utility Fund - This fund was created to account for expenses related to streetlights within the City. Benefiting properties are billed for these expenses. 113 CITY OF BROOKLYN CENTER, MINNESOTA Statement 35 COMBINING STATEMENT OF NET ASSETS ONMAJOR ENTERPRISE FUNDS N December 31, 2007 Total Recycling anStreet Lighonmajo dtNr RefuseUtilitEnterprise y ASSETS Current assets: Cash and cash equivalents$768$ 154,091$154,859 Receivables: Accounts - ne 55,06454,219 109,283 t Total assets54,987 209,155264,142 LIABILITIES Current liabilities: Accounts payable449 29,50329,952 NET ASSETS Unrestricted$54,538$ 179,652$234,190 114 CITY OF BROOKLYN CENTER, MINNESOTA Statement 36 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS ONMAJOR ENTERPRISE FUNDS N For the Year Ended December 31, 2007 Total Recycling anStreet Lighonmajo dtNr RefuseUtilitEnterprise y OPERATING REVENUES Sales and user fees$245,256$ 232,850$478,106 OPERATING EXPENSES Supplies220 8221,042 Other services255,290 22,509277,799 Insurance1,790 1,2913,081 Utilities- 167,037167,037 Total operating expenses257,300 191,659448,959 Operating income (loss)(12,044) 41,19129,147 NONOPERATING REVENUES (EXPENSES) Investment earnings (net of market value adjustment1,069 7,6698,738 ) Other revenue- 1,3801,380 Total nonoperating revenues (expenses)1,069 9,04910,118 Income (loss) before transfers(10,975) 50,24039,265 Transfers out- (26,810)(26,810) Change in net assets(10,975) 23,43012,455 et assets - January 165,513 156,222221,735 N et assets - December 31$54,538$ 179,652$234,190 N 115 CITY OF BROOKLYN CENTER, MINNESOTA Statement 37 COMBINING STATEMENT OF CASH FLOWS ONMAJOR ENTERPRISE FUNDS N For the Year Ended December 31, 2007 Total Recycling anStreet Lighonmajo dtNr RefuseUtilitEnterprise y CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers$251,886$ 233,448$485,334 Payments to suppliers(257,615) (163,835)(421,450) Miscellaneous revenue- 1,3801,380 et cash flows provided (used) by operating activities(5,729) 70,99365,264 N CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers out- (26,810)(26,810) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments1,069 7,6698,738 et increase (decrease) in cash and cash equivalents 51,852(4,660) 47,192 N Cash and cash equivalents - January 15,428 102,239107,667 Cash and cash equivalents - December 31$768$ 154,091$154,859 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $(12,044)$ 41,191$29,147 Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Changes in assets and liabilities: (Increase) decrease in receivables6,630 5987,228 Increase (decrease) in payables(315) 27,82427,509 Other nonoperating income- 1,3801,380 Total adjustments6,315 29,80236,117 et cash flows provided (used) by operating activities$(5,729)$ 70,993$65,264 N 116 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. 117 CITY OF BROOKLYN CENTER, MINNESOTA Statement 38 COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS December 31, 2007 Total CentralEE RetiremenEE CompInternal t AbsencesService GarageBenefi t ASSETS Current assets: Cash and cash equivalents$4,317,413$1,495,177$ 1,023,706$6,836,296 Receivables: Accounts - ne 7347,727 - 8,461 t Inventories33,043- -33,043 Total current assets4,358,1831,495,911 1,023,7066,877,800 oncurrent assets: N Capital assets: Land improvement166,108- 166,108- s Machinery and equipmen -7,089,689 - 7,089,689 t Total capital assets7,255,797- 7,255,797- Less: Allowance for depreciatio(3,611,151)- (3,611,151)- n et capital assets3,644,646- 3,644,646- N Total assets8,002,8291,495,911 1,023,70610,522,446 LIABILITIES Current liabilities: Accounts payable73,105- -73,105 Accrued salaries payable5,909- -5,909 Compensated absences payable-curren -- 102,350 102,350 t Accrued health insurance liability-curren 101,500- - 101,500 t Total current liabilities79,014101,500 102,350282,864 oncurrent liabilities: N Compensated absences payable-long-ter -- 921,356 921,356 m Accrued health insurance liability-long-ter 2,415,882- - 2,415,882 m Total noncurrent liabilities- 2,415,882 921,3563,337,238 Total liabilities79,0142,517,382 1,023,7063,620,102 NET ASSETS Invested in capital assets3,644,646- 3,644,646- Unrestricted4,279,169(1,021,471) 3,257,698- Total net assets$7,923,815$(1,021,471)$ 6,902,344-$ 118 CITY OF BROOKLYN CENTER, MINNESOTA Statement 39 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2007 Total CentralEE RetiremenEE CompInternal t AbsencesService GarageBenefi t OPERATING REVENUES Sales and user fees$1,453,167$-$ 100,468$1,553,635 OEPRATING EXPENSES Personal services301,48250,754 146,900499,136 Supplies392,966- 392,966- Other services148,053- 148,053- Insurance55,102- -55,102 Utilities1,870- -1,870 Depreciation529,893- 529,893- Total operating expenses1,429,36650,754 146,9001,627,020 Operating income (loss)23,801(50,754) (46,432)(73,385) NONOPERATING REVENUES (EXPENSES) Intergovernmenta 9,842- - 9,842 l Investment earnings (net of market value adjustment214,78571,197 46,432332,414 ) Gain (loss) on sale of capital assets88,508- -88,508 Other revenue10,384- -10,384 Total nonoperating revenues (expenses)313,67781,039 46,432441,148 Income (loss) before transfers337,47830,285 367,763- Transfers in57,459- -57,459 Change in net assets394,93730,285 425,222- et assets - January 1 7,528,878(1,051,756) 6,477,122- N et assets - December 31$7,923,815$(1,021,471)$ 6,902,344-$ N 119 CITY OF BROOKLYN CENTER, MINNESOTA Statement 40 COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2007 Total CentralEE RetiremenEE CompInternal t AbsencesService GarageBenefi t CASH FLOWS FROM OPERATING ACTIVITIES Receipts from interfund services provided$1,459,788$-$ 100,468$1,560,256 Payments to suppliers(620,433)- (620,433)- Payments to employee(301,606)(87,019) (87,442)(476,067) s Miscellaneous revenue10,3849,842 -20,226 et cash flows provided (used) by operating activities548,133 (77,177) 13,026 483,982 N CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in57,459- -57,459 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets(1,619,325)- (1,619,325)- Proceeds from sale of capital assets93,410- -93,410 et cash flows provided (used) by capital N and related financing activities(1,525,915)- (1,525,915)- CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments214,78571,197 46,432332,414 et increase (decrease) in cash and cash equivalents(705,538) (5,980) 59,458 (652,060) N Cash and cash equivalents - January 15,022,9511,501,157 964,2487,488,356 Cash and cash equivalents - December 31$4,317,413$1,495,177$ 1,023,706$6,836,296 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $23,801$(50,754)$ (46,432)$(73,385) Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation529,893- 529,893- Changes in assets and liabilities: (Increase) decrease in receivables6,621(311) -6,310 (Increase) decrease in inventories(3,073)- -(3,073) Increase (decrease) in payables(19,369)- -(19,369) Increase (decrease) in accrued expenses(124)(35,954) 59,45823,380 Other nonoperating income10,3849,842 -20,226 Total adjustments524,332(26,423) 59,458557,367 et cash provided (used) by operating activities$548,133$(77,177)$ 13,026$483,982 N Noncash financing activities: Gain on sale of assets$88,508$-$ - 120 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 122 These tables contain trend information to help the reader understand the City’s financial performance by placing it in historical perspective. Revenue Capacity 132 These tables contain information to help the reader assess the City’s most significant “own-source” revenue, property taxes. Debt Capacity 138 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 144 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 146 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. 121 CITY OF BROOKLYN CENTER, MINNESOTA Table 1 ET ASSETS BY COMPONENT N Last five fiscal year s (accrual basis of accounting) (Unaudited) 20032004200520062007 Governmental activities Invested in capital assets, net of related debt$ 14,733,123$12,648,271$25,614,602$ 25,675,447$30,780,590 Restricted 14,853,26039,412,42329,326,928 27,637,46521,738,515 Unrestricted 17,817,9343,226,051652,963 4,055,3128,061,157 Total governmental activities net assets47,404,317$ $55,286,745$55,594,493$ 57,368,224$60,580,262 Business-type activitie s Invested in capital assets$ 37,898,615$36,129,095$38,417,467$ 40,647,644$40,466,892 Unrestricted 6,464,3327,137,2187,087,856 7,973,3189,845,252 Total business-type activities net assets44,362,947$ $43,266,313$45,505,323$ 48,620,962$50,312,144 Primary governmen t Invested in capital assets, net of related debt$ 48,777,36652,631,738$ 64,032,069$ 65,188,021$ 70,318,894$ Restricted14,853,260 39,412,423 29,326,928 27,637,465 21,738,515 Unrestricted 24,282,26610,363,2697,740,819 13,163,70018,834,997 Total primary government net assets91,767,264$ $98,553,058$101,099,816$ 110,892,406105,989,186$ Note: Data for 1998-2002 is not available; the City did not prepare government-wide financial statements on an accrual basis for those years. 122 CITY OF BROOKLYN CENTER, MINNESOTA Table 2 CHANGES IN NET ASSETS - GOVERNMENTAL ACTIVITIES Page 1 of 3 Last five fiscal year s (accrual basis of accounting) (Unaudited) 20032004200520062007 Expenses $ 2,801,4222,649,846$ 2,970,364$ 2,936,638$ 2,953,328$ General governmen t Public safet 7,538,2777,182,321 7,848,160 8,039,356 8,051,836 y Public works2,654,601 1,956,119 3,821,647 2,057,018 2,704,435 Community service 225,36567,32486,043 123,17274,389 s Parks and recreation 2,169,4822,255,2312,305,047 2,565,3642,624,897 Economic developmen 1,683,0251,759,585 3,559,027 2,567,377 3,966,908 t Interest on long-term deb 922,2531,268,6491,349,852 1,184,0171,127,276 t Total expenses 17,563,45317,570,04721,940,140 19,472,94221,503,069 Program Revenues Charges for services: General governmen 227,350927,199960,125 947,613902,734 t Public safet 951,518687,7311,026,736 800,408847,307 y Parks and recreation 624,294618,199681,851 665,332692,781 Other activities 24,55423,5339,234 423,804290,533 Operating grants and contributions 1,627,020933,104855,633 748,888818,989 Capital grants and contributions 1,079,1342,423,4112,398,345 2,208,7512,646,320 oa program revenues ,,,,,, ,,,, Totalprogramrevenues45338705613177593192457947966198664 Ttl45338705613177593192457947966198664 Net revenue/(expense) (13,029,583) (16,008,216)(11,956,870) (13,678,146) (15,304,405) General Revenues and Transfers Taxes: Property 10,407,61310,788,14511,288,883 11,618,48612,200,575 Tax increments 3,527,8814,285,1663,980,518 2,682,8742,677,630 Lodging taxes 661,267656,859710,619 738,776706,930 Unrestricted grants and contributions1,413,913 923,374577,548 702,0301,263,753 Investment earning 426,329491,5241,272,409 1,928,4621,852,117 s Gain on disposal of capital asset 13,97629,20231,880 23,96388,508 Miscellaneous 588,264660,218--- Transfers 100,0002,004,810(1,545,893) 186,675(273,070) Total general revenues and transfers 17,139,24319,839,29816,315,964 17,881,26618,516,443 Change in Net Assets $ 4,109,660$7,882,428$307,748$ 4,203,120$3,212,038 123 CITY OF BROOKLYN CENTER, MINNESOTA Table 2 CHANGES IN NET ASSETS - BUSINESS-TYPE ACTIVITIES Page 2 of 3 Last five fiscal year s (accrual basis of accounting) (Unaudited) 20032004200520062007 Expenses Municipal liquor 724,897939,244978,743 970,2601,037,427 Golf course 290,990271,127273,024 282,418313,794 Earle Brown Heritage Center 2,109,1662,180,2292,262,359 2,439,7092,431,719 Water utilit 222,8211,645,955 1,717,175 1,635,847 1,716,497 y 165,6512,567,032 2,660,706 3,176,426 2,930,016 Sanitary sewe r Storm drainage838,421 1,533,923 899,988 1,097,277 1,123,636 Recycling and refus 223,6792,310,645254,661 245,853257,300 e Street light utilit 147,293756,593213,094 161,219191,659 y Total expenses 8,547,4338,380,2339,259,750 10,009,00910,002,048 Program Revenues Charges for services: Municipal liquor 853,353991,0581,099,172 1,244,7381,362,093 Earle Brown Heritage Center 1,749,2021,675,2671,857,461 2,168,8612,168,033 Water utilit 1,583,4501,530,592 1,825,521 1,906,375 2,063,930 y Sanitary sewe 2,833,8362,870,109 2,966,222 3,186,569 3,274,678 r Storm drainage 1,264,5121,276,7781,298,690 1,323,6071,412,548 Other activities 706,644707,460706,105 714,373732,224 Total program revenues 9,067,8498,974,412 9,753,171 10,544,523 11,013,506 Net revenue/(expense) 426,979687,616493,421 535,5141,011,458 General Revenues and Transfers Investment earning 82,165102,696199,876 337,231406,654 s Othe 241,308117,864--- r Transfers (100,000)(2,004,810)1,545,893 (186,675)273,070 Total general revenues and transfers 223,473(1,784,250)1,745,769 150,556679,724 Change in Net Assets $ 650,452$(1,096,634)$2,239,190$ 686,070$1,691,182 124 CITY OF BROOKLYN CENTER, MINNESOTA Table 2 CHANGES IN NET ASSETS - TOTAL Page 3 of 3 Last five fiscal year s (accrual basis of accounting) (Unaudited) 20032004200520062007 Expenses Governmental activities$ 17,563,453$17,570,047$21,940,140$ 19,472,942$21,503,069 Business-type activitie 8,380,2338,547,433 9,259,750 10,009,009 10,002,048 s Total expenses 26,110,88625,950,28031,199,890 29,481,95131,505,117 Program Revenues Governmental activities 4,533,8705,613,1775,931,924 5,794,7966,198,664 Business-type activitie 9,067,8498,974,412 9,753,171 10,544,523 11,013,506 s Total program revenues 13,508,28214,681,02615,685,095 16,339,31917,212,170 Net revenue/(expense) (12,602,604) (15,514,795)(11,269,254) (13,142,632) (14,292,947) General Revenues and Transfers Governmental activities 17,139,24319,839,29816,315,964 17,881,26618,516,443 Business-type activitie 223,473(1,784,250)1,745,769 150,556679,724 s Total general revenues and transfers 17,362,71618,055,04818,061,733 18,031,82219,196,167 ,,,,,, ,,,, ChangeinNetAssets$4760112$6785794$2546938$4889190$4903220 ChangeinNetAssets$4760112$6785794$2546938$4889190$4903220 Note: Data for 1998-2002 is not available; the City did not prepare government-wide financial statements on an accrual basis for those years. 125 126 CITY OF BROOKLYN CENTER, MINNESOTA Table 3 GOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE Last five fiscal year s (accrual basis of accounting) (Unaudited) PropertyTaxLodging TaxIncrementsTaxTotal 2003$ 10,407,613$3,527,881$661,267$14,596,761 2004 10,788,1454,285,166656,85915,730,170 2005 11,288,8833,980,518710,61915,980,020 2006 11,618,4862,682,874738,77615,040,136 2007 12,200,5752,677,630706,93015,585,135 Note: Data for 1998-2002 is not available; the City did not prepare government-wide financial statements on an accrual basis for those years. 127 CITY OF BROOKLYN CENTER, MINNESOTA FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 1998199920002001 General Fun d Reserve$105,074$105,074$ 105,074$105,074 d Unreserved7,232,9267,203,633 7,346,9697,328,798 Total general fund$7,338,000$7,308,707$ 7,452,043$7,433,872 All other governmental fund s Reserve$15,282,262$8,313,672$ 7,307,297$7,015,583 d Unreserved, reported in: Special revenue funds470,9441,723,559 1,816,8063,864,347 Capital project funds7,227,4688,884,582 7,308,2935,337,423 Total all other governmental funds$22,980,674$18,921,813$ 16,432,396$16,217,353 128 Table 4 200220032004200520062007 $ 173,353$ 110,383$106,578$11,080$ 500$700 7,756,421 7,906,6976,862,8717,283,871 7,508,6907,941,714 $ 7,929,774$ 8,017,080$6,969,449$7,294,951$ 7,509,190$7,942,414 $ 7,234,260$ 7,509,315$13,230,540$5,150,818$ 5,176,808$11,288,685 4,453,879 6,211,01925,750,17924,853,267 22,862,21111,738,460 1,870,176 2,133,0794,969,5063,232,820 4,164,4003,466,029 $ 13,558,315$ 15,853,413$43,950,225$33,236,905$ 32,203,419$26,493,174 129 CITY OF BROOKLYN CENTER, MINNESOTA CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Last ten fiscal years (modified accrual basis of accounting) (Unaudited) 1998199920002001 Revenues Property taxes$7,562,822$7,740,375$ 8,265,296$7,932,469 Tax increments1,962,2892,902,590 3,196,1083,967,398 Franchise fees-- -- Lodging taxes660,613808,266 836,857826,957 Special assessments1,016,733909,894 1,287,9341,136,454 Licenses and permits549,067763,960 632,549788,629 Intergovernmenta4,936,3438,602,166 7,899,5225,824,513 l Charges for services771,614739,054 779,060688,453 Fines and forfeits193,688205,460 180,676230,408 Investment earning1,732,579609,879 798,2292,082,680 s Miscellaneous439,013168,050 125,012150,369 Total revenues19,824,76123,449,694 24,001,24323,628,330 Expenditures General governmen 2,134,0012,260,415 2,429,1962,504,392 t Public safet5,185,9655,354,413 5,453,1435,672,098 y Public works1,955,1081,904,205 2,100,8652,142,064 Community service 83,29573,066 95,148106,034 s ars an recreaon,,,, ,,,, Parksandrecreation2148201223346523447682392168 Pkdti2148201223346523447682392168 Economic developmen 2,664,904893,522 2,763,0282,365,732 t ondepartmental312,625343,925 419,789372,056 N Administrative services reimbursemen(731,737)(670,390) (795,737)(767,504) t Capital outla6,453,90613,838,702 7,275,6756,558,177 y Debt service Principal1,285,0002,085,000 3,970,0002,805,000 Interest1,244,9231,373,614 1,282,5121,330,162 Other charges40,53713,930 13,4268,931 Total expenditures20,995,11731,485,478 27,351,81325,489,310 Revenues over (under) expenditures(1,170,356)(8,035,784) (3,350,570)(1,860,980) Other financing sources (uses) Issuance of debt2,670,0001,585,000 735,000730,000 -- -- Discount on issuance of deb t Sale of capital assets-2,411,987 194,491572,266 Transfers in3,646,1983,655,433 5,479,1204,124,184 Transfers out(4,071,198)(3,704,790) (5,404,122)(3,798,684) Refunded bonds redeemed-- -- Total other financing sources (uses)2,245,0003,947,630 1,004,4891,627,766 et change in fund balances$1,074,644$(4,088,154)$ (2,346,081)$(233,214) N Debt service as a percentage of noncapital expenditures14.89%14.82%23.05%18.41% 130 Table 5 200220032004200520062007 $ 10,739,847$ 10,268,278$10,598,478$11,641,177$ 11,525,040$12,094,359 3,022,252 3,466,1143,834,0604,680,688 2,664,1442,727,637 - -612,079662,614 658,410658,620 717,176 661,267656,858710,619 738,776706,930 1,190,031 1,232,6821,313,7821,226,655 1,214,5711,364,413 823,996 827,685678,077675,530 722,633673,156 7,039,895 3,479,0823,239,0202,578,031 2,375,6973,171,745 575,748 709,623711,526754,575 722,218705,736 278,557 290,408254,980253,748 256,600291,423 648,423 317,749385,0221,078,434 1,601,7311,519,503 267,717 607,582609,902427,839 477,296404,420 25,303,642 21,860,47022,893,78424,689,910 22,957,11624,317,942 2,553,426 2,475,3232,594,0412,586,993 2,839,1502,951,188 6,255,221 6,620,4817,025,6297,014,528 7,299,8427,550,434 1,814,1072,197,127 1,817,1202,310,846 1,986,6922,114,378 103,491 91,58167,32486,043 123,17274,389 ,, ,,,,,, ,,,, 212541520304021981998212113022121422314099 212541520304021981998212113022121422314099 2,095,545 1,758,2571,006,5502,076,023 1,386,5585,659,331 366,282 331,223333,669315,355 363,967354,848 (596,541) (607,221)(784,084)(754,085) (529,362)(744,590) 9,608,420 1,881,3604,724,2898,335,916 5,918,4724,524,524 3,000,000 3,220,0003,751,5132,772,189 3,127,1462,786,076 1,034,139 905,518881,0161,214,751 1,197,3921,134,412 28,712 26,079126,85823,758 53,22612,896 28,560,802 20,847,38123,522,91027,989,728 25,808,82528,928,453 (3,257,160) 1,013,089(629,126)(3,299,818) (2,851,709)(4,610,511) - 1,205,00025,770,000- 1,460,000- - (8,860)(96,503)- (445)- 474,648 73,175-- -- 4,263,453 3,703,5095,103,6132,811,793 2,784,1165,881,257 (4,063,453) (3,603,509)(3,098,803)(2,619,793) (2,211,209)(6,018,629) (7,280,000) -(529,138) - -- 674,648 1,369,31527,678,307(7,088,000) 2,032,462(666,510) $ (2,582,512)$ 2,382,404$27,049,181$(10,387,818)$ (819,247)$(5,277,021) 16.81%21.88%24.89%18.37%19.14%15.90% 131 CITY OF BROOKLYN CENTER, MINNESOTA ASSESSED TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last ten fiscal years (Unaudited) 1998199920002001 Real Property: Residential$9,182,859$ 9,976,8629,309,893$ $8,928,738 onresidential11,082,43610,657,588 14,093,09411,002,424 N Area-wide allocatio226,287537,406 1,504,330746,438 n Personal property502,668452,849 437,707452,680 Less: Tax increment districts1,665,0542,054,659 2,533,8783,296,624 Total Assessed Tax Capacity19,329,19618,903,077 20,387,44520,924,326 Direct Tax Rate 35.21436.269 34.64535.996 1 Estimated Market Value1,022,736,7001,098,665,9001,177,854,4001,324,649,100 Total Assessed Tax Capacity as a percentage of Estimated Market Value1.89%1.72%1.73%1.58% Beginning in 2002, the State of Minnesota significantly reduced state aids to the City and allowed these amounts to be included 1 in the proptery tax levy. Source: City Assessing Department 132 Table 6 200220032004200520062007 $ 8,495,196$ 9,362,788$10,532,558$12,177,307$ 13,942,981$15,436,568 9,225,991 9,430,5339,775,3529,903,157 9,475,5769,573,405 635,875 875,1451,097,5961,023,618 1,161,1741,624,108 262,882 273,072281,963294,377 298,953283,198 2,450,218 2,538,8253,134,4173,122,665 2,559,6202,463,631 16,169,726 17,402,71318,553,05220,275,794 22,319,06424,453,648 58.901 52.79253.69351.723 48.06945.366 1,488,832,300 1,673,812,000 1,840,115,3001,959,999,1002,035,666,1002,125,686,700 1.09%1.04%1.01%1.03%1.10%1.15% 133 CITY OF BROOKLYN CENTER, MINNESOTA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last ten fiscal years (Unaudited) Overlapping Rates Metro CountDist 11Dist 279Dist 281Dist 286Districts Cit yy 1998 35.214 38.38651.824 51.567 56.386 65.350 5.646 1999 36.998 40.99454.856 59.807 54.337 47.716 6.035 2000 35.369 39.65551.792 44.356 53.284 48.492 6.039 2001 36.740 37.67952.224 47.139 56.784 46.678 5.830 2002 58.901 50.78929.082 26.338 30.092 30.213 3.537 2003 54.021 50.60726.941 49.817 35.042 29.179 3.825 2004 53.693 47.32421.050 39.892 23.709 34.258 3.502 2005 51.723 44.17221.492 36.159 24.336 29.989 3.304 2006 48.069 41.01620.046 39.781 21.815 28.489 2.924 2007 45.366 39.11019.353 36.154 23.758 28.750 2.671 Source: City Assessing Department and Hennepin County Property Tax Services 1 Watershed levy was levied in 2006 in schools districts 279 and 281, and parts of school districts 11 and 286. 134 Table 7 Total Direct and Overlapping Rates OtheDistrict 11District 11DistricDistricDistrict 286District 286 rtt no watershewith watershe279281no watershewith watershe DistrictsWatershed 1 dddd 2.497 - 133.567 - 138.129 147.093 133.310 - 3.247 - 142.130 - 141.611 134.990 147.081 - 3.111 - 135.966 - 137.458 132.666 128.530 - 2.294 - 134.767 - 139.327 129.221 129.682 - 3.844 - 146.153 - 147.163 147.284 143.409 - 5.161 - 140.555 - 148.656 142.793 163.431 - 3.986 - 129.555 - 132.214 142.763 148.397 - 4.078 - 124.769 - 127.613 133.266 139.436 - 4.074 0.073 116.129 116.202 117.971 124.645 135.864 135.937 4.639 - 111.139 - 115.544 120.536 127.940 - 135 CITY OF BROOKLYN CENTER, MINNESOTA Table 8 PRINCIPAL PROPERTY TAXPAYERS Current Year and Nine Years Ago (Unaudited) 20071998 Percentage ofPercentage of et TaxTotal Taxet TaxTotal Tax NN TaxpayerCapacitRanCapacity ValueCapacitRanCapacity Value ykyk Brooks Mall Properties LLC$ 761,93013.12%$867,78324.49% Regal Cinemas, Inc. 238,55020.98% -- Brookdale Corner, LLC 208,05030.85% -- BCC Associates, LLC 199,25040.81% -- Medtronic, Inc. 197,97050.81% -- Twin Lake Nort 176,13860.72% -- h CSM Freeway Airport, LL 166,55070.68% C Wickes Furniture Compan 164,85080.67% -- y argeores ,. TargetStores1548509063% TtSt1548509063% Melrose Gates, LLC 132,838100.54% Dayton-Hudson Corp.--1,006,10215.21% Ryan Construction Co.--581,30433.01% Prudential Insurance Co.--503,18442.60% Lang-Nelso --364,38551.89% n Bradley Real Estate Inc.--342,05061.77% Sears Roebuck and Co.--318,05071.65% First Indrustrial Realty Trus--274,97481.42% t JC Penney's--260,20091.35% AMB Property, LP--181,930100.94% Totals$ 2,400,9769.82%$4,699,96224.32% Source: City Assessing Department 136 137 138 CITY OF BROOKLYN CENTER, MINNESOTA Table 11 RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last ten fiscal years (Unaudited) Percentage of Less: Amount s GeneralAvailable iet GeneralEstimate nNd ObligationDebt ServiceObligationMarket ValuePer BondsFunDebtof PropertyCapita d 1998$ 7,900,000$ 616,778$7,283,2220.71%$255 1999 7,575,000 725,8686,849,1320.62%240 2000 7,175,000 775,9116,399,0890.54%219 2001 6,760,000 831,5885,928,4120.45%203 2002 6,325,000 871,9705,453,0300.37%187 2003 5,875,000 907,7094,967,2910.30%170 2004 10,450,000 5,903,5774,546,4230.25%157 2005 5,045,000 1,054,2303,990,7700.20%142 2006 4,465,000 1,104,7493,360,2510.17%120 2007 3,875,000 1,163,3062,711,6940.13%97 139 CITY OF BROOKLYN CENTER, MINNESOTA Table 12 COMPUTATION OF DIRECT AND OVERLAPPING DEBT as of December 31, 2007 (Unaudited) EstimatedEstimated Share DebtPercentageof Overlapping 1 Governmental UnitOutstandingApplicable Debt Overlapping debt: School Districts: No. 11 Anoka$ 145,170,8671.23%$ 1,785,602 No. 279 Osseo 219,717,5334.77% 10,480,526 No. 281 Robbinsdale 228,408,5925.09% 11,625,997 No. 286 Earle Brown 29,602,743100.00% 29,602,743 Metropolitan Council 118,428,5060.66% 781,628 Hennepin County 468,235,5041.45% 6,789,415 Hennepin Regional RR Authority 44,577,4691.45% 646,373 Hennepin County Park Reserve District 73,402,1051.92% 1,409,320 Total overlapping debt$ 962,654,919 63,121,605 2 City of Brooklyn Center direct debt 2,711,694 Total direct and overlapping debt$65,833,299 Source: City Finance Department, Hennepin County, and Springsted Financial Advisors. 1 The percentage of overlapping debt applicable is estimated using tax capacity values. Applicable percentages were estimated by determining the portion of each entity's tax capacity that is within the City's boundaries and dividing it by that entity's total tax capacity. 2 Includes only general obligation debt which is repaid through property taxes, net of amounts available. 140 CITY OF BROOKLYN CENTER, MINNESOTA Table 13 LEGAL DEBT INFORMATION Last ten fiscal years (Unaudited) Total net debt applicable to the limit Total net debtas a percentage of Debt Limiapplicable to limitLegal debt margidebt limi tnt 1998$ 20,439,994$7,283,222$13,156,77235.63% 1999 21,911,8366,849,13215,062,70431.26% 2000 23,370,2746,399,08916,971,18527.38% 2001 25,381,4005,928,41219,452,98823.36% 2002 27,354,8685,453,03021,901,83819.93% 2003 29,594,6884,967,29124,627,39716.78% 2004 32,503,0964,546,42327,956,67313.99% 2005 36,003,5363,990,77032,012,76611.08% 2006 39,219,0543,360,25135,858,8038.57% 2007 42,259,9582,711,69439,548,2646.42% Legal Debt Margin Calculation for Fiscal Year 2007 Taxable Market Value$2,112,997,900 Debt limit (2% of Taxable Market Value)42,259,958 Debt applicable to limit et general obligation bonds2,711,694 N $39,548,264 Legal debt margi n 141 CITY OF BROOKLYN CENTER, MINNESOTA PLEDGED-REVENUE COVERAGE Last ten fiscal years (Unaudited) Storm Sewer Bonds StorLess:et mN OperatingAvailableDebt Service Sewe r ChargesExpensesRevenuePrincipalInterestCoverage 1998$ 940,012$ 261,202$678,810$165,000$ 75,3902.82 1999 999,867 232,405767,462170,000 67,5583.23 2000 1,074,619 307,389767,230180,000 59,1103.21 2001 1,129,502 327,412802,090190,000 49,9503.34 2002 1,377,638 662,747714,891200,000 40,1002.98 2003 1,264,512 809,130455,382210,000 29,5401.90 2004 1,276,778 756,593520,185220,000 18,2502.18 2005 1,293,841 1,086,600207,241230,000 6,2100.88 ---- - 2006 2006 - 2007 ---- - - 142 Table 14 Special Assessment BondsTax Increment Bonds SpecialTax Debt ServiceIncremenDebt Service Assessmen tt CollectionsPrincipalInterestCoverageCollectionsPrincipalInterestCoverage $ 840,000$ $ 537,698$ 265,000$ 160,918 1.261,962,289$ 715,040 1.26 690,538 405,000 189,790 1.16 2,902,590 1,165,000 662,232 1.59 994,839 535,000 231,972 1.30 3,186,573 1,280,000 595,554 1.70 1,029,378 700,000 252,563 1.08 3,713,349 1,450,000 519,409 1.89 928,559 780,000 249,497 0.90 2,882,577 1,540,000 433,893 1.46 1,153,044 870,000 242,749 1.04 3,142,158 1,645,000 340,413 1.58 1,410,344 1,005,000 218,457 1.15 3,606,130 1,775,000 286,867 1.75 1,058,557 990,000 197,760 0.89 3,576,209 770,000 729,740 2.38 ,, ,, ,.,,,, ,. 1035961100000016728408916099941000000887080085 1035961100000016728408916099941000000887080085 884,261 900,000 162,486 0.83 1,707,470 1,050,000 847,236 0.90 143 CITY OF BROOKLYN CENTER, MINNESOTA Table 15 DEMOGRAPHIC AND ECONOMIC STATISTICS Last ten fiscal years (Unaudited) School Enrollments Per Capitao. 286 N o. 11o. 279o. 281Earle PersonalPersonalUnemploymen tNNN PopulationIncomeIncomeRateAnokOsseoRobbinsdaleBrow an $ 38,2331,090,978,655$ 1998 28,5352.1% 40,923 22,028 1 3,966 1,788 1,143,625,730 1999 28,535 40,0782.4% 40,964 22,171 1 3,800 1,734 1,256,583,900 2000 29,172 43,0753.0% 41,314 22,017 1 3,706 1,682 1,270,876,540 2001 29,180 43,5534.2% 41,419 22,041 1 3,754 1,724 1,280,666,985 2002 29,185 43,8815.2% 41,383 21,824 1 3,656 1,732 1,322,544,942 2003 29,174 45,3335.9% 41,254 21,698 1 3,765 1,732 1,392,849,105 2004 29,005 48,0215.6% 41,592 21,620 1 6,196 1,691 1,394,638,542 2005 28,137 49,5664.8% 41,596 21,792 1 3,368 1,679 **** 2006 27,9014.6% 41,310 22,071 1 3,194 1,705 **** 2007 27,9015.6% 40,656 21,859 1 2,891 1,763 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 144 CITY OF BROOKLYN CENTER, MINNESOTA Table 16 PRINCIPAL EMPLOYERS Current Year and Nine Years Ago (Unaudited) 20071998 Percentage ofPercentage of Total CityTotal City EmployerEmployeesRankEmploymentEmployeesRankEmployment Brookdale Center 113.27%1,900 110.46%1,700 Promeon, Division of Medtronics 29.43%1,350 31.85%300 Graco, Inc. 35.59%800 70.62%100 Independent School District #286 42.12%303 Nations Care Link 51.57%225 Cub Foods 61.19%170 City of Brooklyn Center 71.07%153 21.89%307 Best Buy 81.01%145 Target 90.98%140 TCR Corporation 100.98%140 51.08%175 Hoffman Engineering 41.63%265 Ault, Inc. 60.98%160 Cass Screw Machine Products 80.62%100 Precision, Inc. 90.62%100 Haiwatha Rubber Company 100.52%85 Totals 5,32637.21%3,29220.26% Source: Minnesota Department of Employment and Economic Development 145 CITY OF BROOKLYN CENTER, MINNESOTA Table 17 FULL TIME CITY GOVERNMENT POSITIONS BY FUNCTION Last ten fiscal years (Unaudited) 1998199920002001200220032004200520062007 General governmen t Administrativ e 5.4 6.4 6.4 6.5 6.5 6.5 6.0 6.0 6.0 6.0 Elections 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Finance 7.0 7.0 7.0 7.0 7.0 6.0 6.0 6.0 6.0 6.0 Assesso r 4.0 4.0 4.0 4.0 3.0 3.0 3.0 3.0 3.0 3.0 Government buildings 4.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Information technolog y 1.0 1.0 1.0 1.0 1.0 2.0 2.0 2.0 2.0 2.0 Total general governmen 24.422.4 24.424.523.523.523.023.0 23.023.0 t Public safet y Police Officers 42.042.0 42.042.042.042.042.042.0 42.043.0 Civilians17.0 17.0 17.016.016.015.015.015.0 15.012.0 Fire 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 2.0 2.0 Building inspectio n 4.0 4.0 5.0 5.0 4.0 4.0 4.0 4.0 4.0 4.0 Total public safety 64.064.0 65.064.063.062.062.062.0 63.061.0 Public works Engineerin 10.010.010.08.0 g 9.010.0 7.0 7.0 6.0 6.0 Streets 10.910.9 10.910.911.011.010.09.0 10.010.0 Total public works 20.919.9 20.920.921.019.017.016.0 16.016.0 Parks and recreation Administratio n 5.0 6.0 6.0 6.0 6.0 5.0 6.0 6.0 6.0 6.0 Community cente r 5.0 5.0 5.5 5.5 5.0 5.0 3.0 3.0 3.0 3.0 Park maintenance 10.010.0 10.010.010.010.08.0 8.0 7.0 7.0 Total park and recreation20.0 21.0 21.521.521.020.017.017.0 16.016.0 Economic developmen t 4.6 4.6 4.6 4.5 4.5 4.5 4.0 4.0 4.0 4.0 Municipal liquor 3.0 3.0 4.0 4.0 3.0 3.0 3.0 3.0 3.0 4.0 Golf course 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Earle Brown Heritage Center13.0 13.0 13.013.011.011.011.011.0 11.011.0 Water 4.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.3 5.3 Sanitary sewe r 3.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.3 2.3 Storm sewe r - - - - - - - 1.0 1.4 1.4 Central garage 5.1 5.1 5.1 5.1 5.0 5.0 5.0 5.0 5.0 5.0 Total 160.0164.0166.5165.5160.0156.0150.0150.0151.0150.0 Source: City Annual Budget documents 146 147 148