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HomeMy WebLinkAboutCAFR-2005 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF BROOKLYN CENTER, MINNESOTA Michael J. McCauley 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, 2005 (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 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of the Governmental Funds to the Statement of Net Activities 31 Proprietary Funds Statement of Net Assets 32 Statement of Revenues, Expenses, and Changes in Fund Net Assets 34 Statement of Cash Flows 36 Notes to the Financial Statements 39 Required Supplementary Information: Budgetary Comparison Schedule-General Fund 71 Budgetary Comparison Schedule-Earle Brown Tax Increment District 77 Budgetary Comparison Schedule-Tax Increment District No. 3 78 Note A on Budgetary Compliance 79 Combining and Individual Fund Statements: Nonmajor Governmental Funds Combining Balance Sheet 82 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 83 Subcombining Balance Sheet-Nonmajor Special Revenue Funds 86 Subcombining Statement of Revenues, Expenditures and Changes in Fund Balances-Nonmajor Special Revenue Funds 88 i Statement of Revenues, Expenditures, and Changes in Fund Balances-Budget and Actual: Special Revenue Fund-Housing and Redevelopment Authority 90 Special Revenue Fund-Economic Development Authority 91 Special Revenue Fund-Tax Increment District No. 4 92 Special Revenue Fund-Police Drug Forfeiture 93 Special Revenue Fund-Community Development Block Grant 94 Special Revenue Fund-City Initiatives Grant 95 Subcombining Balance Sheet-Nonmajor Debt Service Funds 98 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances-Nonmajor Debt Service Funds 99 Subcombining Balance Sheet-Nonmajor Capital Project Funds 102 Subcombining Statement of Revenues, Expenditures, and Changes in Fund Balances-Nonmajor Capital Project Funds 104 Nonmajor Enterprise Funds Subcombining Statement of Net Assets 108 Subcombining Statement of Revenues, Expenses and Changes in Fund Net Assets 109 Subcombining Statement of Cash Flows 110 Internal Service Funds Subcombining Statement of Net Assets 112 Subcombining Statement of Revenues, Expenses and Changes in Fund Net Assets 113 Subcombining Statement of Cash Flows 114 STATISTICAL SECTION (unaudited) Government-wide Expenses by Function 116 Government-wide Revenues 118 General Governmental Expenditures by Function 120 General Governmental Revenues and Other Financing Sources by Source 122 Special Assessment Billings and Collections 123 Computation of Legal Debt Margin 124 Ratio of Annual Debt Service Expenditures for General Bonded Debt to General Fund Expenditures 125 Miscellaneous Statistical Data 126 Tax Levies and Tax Collections 128 Assessed Value and Estimated Market Value of All Taxable Property 130 Direct and Overlapping Tax Rates 132 Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt per Capita 134 Computation of Direct and Overlapping Debt 135 Principal Taxpayers 136 Property Value and Construction 137 Demographic Statistics 138 Schedule of Revenue Bond Coverage 139 Schedule of Insurance Coverage 140 ii City of Brooklyn Center A Millennium Community May 22, 2006 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, 2005. 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 HLB Tautges Redpath, Ltd. Their report is included in the financial section of this report. In addition, HLB Tautges Redpath 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 was not required in 2005 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 9 hole executive golf course. Financial planning and control for the City of Brooklyn Center is based on the Annual Budget and the five-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 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. 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 7.51 % in 2005 over 2004, 7.55% in 2004 over 2003, and 9.2% in 2003 over 2002. Residential values posted the largest gains going up over 10% in total. Commercial/industrial values are stable for the 2004 to 2005 period. 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 and adjacent to these corridors. Commercial/industrial properties made 35% of the City’s taxable net tax capacity in 2005, holding steady with the 35% in 2004. This moderates the recent shift of tax burden from commercial/industrial to residential with the phasing out of the limited market value law. The largest commercial property in the City is Brookdale Mall, a 1,093,931 square-foot regional shopping center. Brookdale was redeemed from foreclosure in 2005 but its future remains tentative. Factors Affecting Financial Condition Major Events of 2005 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; replacement and enhancement of its aging streets, utilities, and parks; and the reinvigoration of neighborhoods. Redevelopment continued to be the key to commercial and industrial tax base growth. In 2005 the City acquired the Hmong-American Shopping Center at the intersection of th Highway 100 and 57 Avenue. Tenants in the Center were relocated and the buildings were demolished. Environmental cleanup of various substances was completed. Standards were established for redevelopment of the property into a mixed use commercial and residential project. Proposals will be taken for the project in 2006 with construction expected to be completed in 2007 or 2008. The City’s “Opportunity Site” Task Force prepared a long term vision to guide redevelopment in that area. The Luther Group acquired an old Mazda dealership at Brooklyn Boulevard and Interstate 494. Private revitalization of this property will enhance the revitalization efforts made th by the City and Hennepin County at 69 Avenue and Brooklyn Boulevard. As part of a planned replacement of the aging infrastructure, the City continued the program for street and utility improvements by reconstructing the Lions Park South neighborhood streets in 2005. 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, an operating transfer from the general fund, 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. The hospitality industry contributes a significant amount to Brooklyn Center’s economy. Lodging tax provided over $ 350,000 for 2005 fiscal year operations. Plans for a hotel to adjacent to the City-owned Earle Brown Heritage Center facility are under consideration. The project has been delayed by litigation over the provision of public assistance to the hotel developer. Subsequent to the 2005 fiscal year-end, this litigation was resolved and the City has been cleared by the courts to proceed with the plan. Infrastructure and Transportation Shingle Creek Parkway, a major intra-city corridor for commercial and industrial traffic, was reconstructed from John Martin Drive to Interstate 94 during 2005. In addition, Summit Drive was reconstructed as part of the same project. These two streets form some of the core access to the “Opportunity Site” and should make the area more viable and attractive. In addition a deteriorated bridge deck was repaired on the Freeway Boulevard Bridge as part of the 2005 Capital Projects program. Park infrastructure was enhanced with the repaving of the Palmer Lake Trail system. This 3.2 mile circuit around Palmer Lake is maintained by both Brooklyn Center and Brooklyn Park within each respective City. The Brooklyn Center repaving completes a project begun along the Shingle Creek Trail in 2003 using federal grant funds. 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 2005 daily funds were moved to a “sweep” account paying interest on overnight deposits. The rate on this daily sweep rose during 2005 from just under 1.75% per year to a rate at the end of the year in excess of 3.00% per year. This result was negotiated between the city and the bank in exchange for a slightly higher balance being maintained in the operating account. 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 invests in the 4M and 4MPlus funds sponsored by the League of Minnesota Cities. 2005 saw a substantial increase in the rate of interest paid by the 4M and 4MPlus funds in 2005, from a low of 1.77% to a high of 3.92% 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 2005. 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, Michael J. McCauley Daniel Jordet City Manager Director of Fiscal & Support Services CITY OF BROOKLYN CENTER, MINNESOTA PRINCIPAL OFFICIALS December 31, 2005 NamePositionTerm of OfficeTerm Expires ELECTED OFFICIALS Myrna KragnessMayorFour YearsDecember 31, 2006 Kathleen CarmodyCouncil MemberFour YearsDecember 31, 2006 Kay LasmanCouncil MemberFour YearsDecember 31, 2008 Diane NiesenCouncil MemberFour YearsDecember 31, 2006 Mary O'ConnorCouncil MemberFour YearsDecember 31, 2008 APPOINTED OFFICIALS Michael J. McCauleyCity ManagerAppointed Curt BoganeyAssistant City ManagerAppointed Charles LeFevreCity AttorneyContractual Appointee Sharon KnutsonCity ClerkAppointed Scott BechtholdPolice ChiefAppointed Todd BlomstromDirector of Public Works/City EngineerAppointed Ronald BomanFire ChiefAppointed James GlasoeCommunity Activities, Recreation & Services DirectorAppointed Brad HoffmanCommunity Development DirectorAppointed Daniel JordetDirector of Fiscal & Support ServicesAppointed MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Brooklyn Center, we offer readers of the City of Brooklyn Center’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2005. 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 report. Financial Highlights The assets of the City exceeded its liabilities at the close of the most recent fiscal year. The $ 103,189,266 of net assets includes cash and investments, streets, buildings, equipment, land and other City assets. (See Page 13) Of this amount, $13,881,634 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 $ 4,636,208 from 2004 to 2005. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $ 40,471,856. Of this total amount, $ 33,272,528, or 82% is designated or reserved through legal restrictions and City Council authorization. At the end of the current fiscal year the general fund balance of $ 7,294,951 included $ 11,080 reserved and $ 7,283,871 designated. The City’s total outstanding debt decreased by $ 10,045,000 during the current fiscal year, from $ 39,410,000 to $ 29,365,000. 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 comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report 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 private-sector business. 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 of Brooklyn Center include general government, public safety, public works, community services, recreation and economic development. The business-type activities Management’s Discussion and Analysis of the City include water and sewer, street lighting, liquor operations, golf course, convention center, storm drainage and recycling/refuse. The government-wide financial statements can be found on pages 21 through 23 of this report. 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 spend- able 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 change 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, the Earle Brown TIF District special revenue fund, TIF District No. 3 special revenue fund, the Special Assessment Bonds debt service fund and the Infrastructure Construction capital projects 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 report. The basic governmental fund financial statements can be found on pages 26 through 30 of this report. 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 the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the municipal liquor, golf course, Earle Brown Heritage Center, water, sanitary sewer, and storm drainage 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 32 through 37 of this report. Management’s Discussion and Analysis 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 39 through 70 of this report. 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 and special revenue funds. A budgetary comparison statement has been provided for major funds to demonstrate compliance with this budget. Required supplementary information can be found on pages 71 through 79 of this report. 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 can be found on pages 82 through 114 of this report. 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 $ 103,189,266 at the close of the most recent fiscal year. The largest portion of the City's net assets ($ 59,980,704 or 58 percent) reflects its investment in capital assets (e.g. land, infrastructure, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. CITY'S NET ASSETS Governmental ActivitiesBusiness-type ActivitiesTotal 200520042005200420052004 Current and other assets53,189,844$ 63,573,375$ 8,008,437$ 7,948,797$ 61,198,281$ 71,522,172$ Capital assets39,190,090 34,583,271 37,988,441 36,359,095 77,178,531 70,942,366 Total assets92,379,934 98,156,646 45,996,878 44,307,892 138,376,812 142,464,538 Long-term liabilities outstanding28,583,307 30,913,581 - - 28,583,307 30,913,581 Other liabilities5,683,658 11,956,320 920,581 1,041,579 6,604,239 12,997,899 Total liabilities34,266,965 42,869,901 920,581 1,041,579 35,187,546 43,911,480 Net assets: Invested in capital assets, net of related debt21,992,263 12,648,271 37,988,441 36,129,095 59,980,704 48,777,366 Restricted29,326,928 39,412,423 - - 29,326,928 39,412,423 Unrestricted6,793,778 3,226,051 7,087,856 7,137,218 13,881,634 10,363,269 Total net assets58,112,969$ 55,286,745$ 45,076,297$ 43,266,313$ 103,189,266$ 98,553,058$ A portion of the of the City of Brooklyn Center’s net assets represents resources that are subject to external restrictions on how they may be used. These restrictions include debt payment from assessments collected, grants received from outside sources and tax increments collected for qualified projects The remaining balance of unrestricted net assets ($ 13,881,634) may be used to meet the City's ongoing obligations. At the end of the current fiscal year, the City of Brooklyn Center 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 situation held true for the prior fiscal year. Management’s Discussion and Analysis Current assets decreased significantly in the governmental activities due to the crossover of advance refunding bonds in both the General Obligation and Tax Increment bonds. Similarly, other liabilities fell with the payment on the refunded bonds. This carries through also to the restricted net assets decrease in the governmental activities. Capital assets in the Business-type activities increased due to the completion of three utility construction projects and the commencement of construction on four new projects. Governmental Activities Government activities resulted in an increase of the City's net assets by $ 2,826,224, while the overall increase totaled $ 4,636,208. Key elements of the increase are as follows: CITY’S CHANGES IN NET ASSETS Governmental ActivitiesBusiness-type ActivitiesTotal 200520042005200420052004 Revenues: Program revenues: Charges for services2,051,692$ 1,644,583$ 9,753,171$ 9,067,849$ 11,804,863$ 10,712,432$ Operating grants and contributions795,633 933,104 - - 795,633 933,104 Capital grants and contributions2,398,345 2,423,411 - - 2,398,345 2,423,411 General revenues: Property taxes11,288,883 11,015,069 - - 11,288,883 11,015,069 Other taxes5,589,479 5,327,180 - - 5,589,479 5,327,180 Grants and contributions not restricted to specific programs577,548 923,374 - - 577,548 923,374 Gain on sale of assets31,880 29,202 - - 31,880 29,202 Unrestricted investment earnings1,272,409 491,524 199,876 102,696 1,472,285 594,220 Other- 660,218 - 117,864 - 778,082 Total revenues24,005,869 23,447,665 9,953,047 9,288,409 33,958,916 32,736,074 Expenses: General government2,970,364 2,725,137 - - 2,970,364 2,725,137 Public safety7,848,160 7,538,277 - - 7,848,160 7,538,277 Public works3,856,992 2,482,819 - - 3,856,992 2,482,819 - - 86,043 67,324 Community services86,043 67,324 Parks and Recreation2,305,047 2,255,231 - - 2,305,047 2,255,231 Economic development1,217,294 1,683,025 - - 1,217,294 1,683,025 Nondepartmental- (450,415) - - - (450,415) Interest on long-term debt1,349,852 1,268,649 - - 1,349,852 1,268,649 Municipal liquor- - 978,743 939,244 978,743 939,244 Golf course- - 273,024 271,127 273,024 271,127 E. Brown Heritage Center- - 2,262,359 2,180,229 2,262,359 2,180,229 Recycling and refuse- - 254,661 222,821 254,661 222,821 Water utility- - 1,795,759 1,533,923 1,795,759 1,533,923 Sanitary sewer- - 2,808,644 2,310,645 2,808,644 2,310,645 Storm drainage- - 1,102,672 756,593 1,102,672 756,593 Street light utility- - 213,094 165,651 213,094 165,651 Total expenses19,633,752 17,570,047 9,688,956 8,380,233 29,322,708 25,950,280 Increase in net assets before transfers4,372,117 5,877,618 264,091 908,176 4,636,208 6,785,794 Transfers(1,545,893) 2,004,810 1,545,893 (2,004,810) - - Change in net assets2,826,224 7,882,428 1,809,984 (1,096,634) 4,636,208 6,785,794 Net assets - January 155,286,745 47,404,317 43,266,313 44,362,947 98,553,058 91,767,264 Net assets - December 3158,112,969$ 55,286,745$ 45,076,297$ 43,266,313$ 103,189,266$ 98,553,058$ Management’s Discussion and Analysis In the Governmental Activities, operating grants decreased due to fewer recreation and public safety grant requests made. Total taxes increased by $ 536,113 because of increased property tax levy. Unrestricted investment earnings produced an additional $ 780,885 in revenue due to an upward trend in interest rates, additional cash on hand during the year from the $ 17,245,000 TIF Bond sale in 2004 and gains in market valuation of investments. Expenses in public works increased due to a more active construction season in 2005. Lower economic development expenses were due the capitalization of the costs associated with a major tax increment project. Transfers out in 2005 were for construction projects contributed to the utility funds. Below are specific graphs which provide comparisons of the governmental activities revenues and expenses: Governmental Activities - 2005 Revenues Unrestricted investment Other revenues earnings 3% 5% Court fines 1% Charges for services Other taxes 7% 6% Operating grants and contributions 3% Capital grants and contributions Property taxes and tax 10% increments 65% Governmental Activities - 2005 Expenses Interest on long-term Economic development debt 6.2% 6.9% Parks and recreation 11.7% General government 15.1% Community services 0.4% Public works 19.6% Public safety 40.0% Management’s Discussion and Analysis Business-type activities Business-type activities increased net assets by $ 1,809,984. Below are graphs showing the business-type activities revenue and expense comparisons: Business-Type Activities - 2005 Revenues Unrestricted investment earnings 2.0% Net Charges for services 98.0% Business-Type Activities - 2005 Expenses Heritage Center Sewer 25.9% 32.3% Storm Drainage 12.7% Water Non-Major Enterprise Golf Course 20.6% 5.4% 3.1% Charges for services in the business-type activities were up due to increases in rates in the utility funds and an increase in activity in the Municipal Liquor and Earle Brown Heritage Center funds. There is a corresponding increase in expenses in these same funds due to the increase in activity and costs to provide the services. 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 for spending 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 $ 40,471,856. Approximately 13% of this amount $ 5,161,898 is reserved because it has already been committed 1) to provide for debt service ($ 4,158,607), 2) for advances ($ 800,000), 3) for committed contracts ($192,211) and 4) for prepaid items ($ 11,080). The unreserved fund balance of $ 35,309,958 includes designations for 1) general fund working capital ($ 7,283,871), 2) housing development and bonding covenants ($ 14,904,741), and 3) capital improvements ($ 4,324,156). The balance is undesignated and unreserved ($ 7,199,328). The general fund is the chief operating fund of the City. At the end of the current fiscal year, total fund balance reached $ 7,294,951, all of which was either reserved or designated. As a measure of the general fund’s liquidity, it may be useful to compare total fund balance to total fund expenditures. Total fund balance represents 55% of total general fund expenditures. The fund balance of the City’s general fund increased by $ 325,502 in 2005. This increase was primarily due to higher than expected collections of current and delinquent property taxes. The Earle Brown TIF District fund had a fund deficit of ($ 768,902) at the end of 2005. This compares to a fund deficit of ($ 1,858,494) at the end of 2004. The net increase in fund balance during the current year in the Earle Brown TIF District was $ 1,089,592. This increase was due to the collection of delinquent taxes and the transfer of funds from the Tax Increment Financing Bonds fund. This transfer consisted of the funds remaining after the 1991A and 1992A Tax Increment Bond issues had been paid. The TIF District No. 3 fund had a total fund balance of $23,664,938 at the end of 2005. The net decrease in the fund balance was $ 2,206,734. In 2004, the City issued $ 17,245,000 in tax increment bonds, the proceeds of which will be spent in the TIF District No. 3 fund. The decrease of $2,206,734 represents the first of three years expenditures for the acquisition and development of properties within the district. The remaining bond proceeds are carried as of December 31, 2005, as designations of fund balance for statutory housing obligation of $ 2,737,568 and redevelopment projects of $ 12,167,173, totaling $14,904,741. The Special Assessment Bonds fund had a fund balance of $3,104,377 at the end of 2005, all of which was reserved for debt service. The net decrease in fund balance for 2005 was $82,271, which was due to the use of collections in previous years to pay current bond payments. The fund balance of the Infrastructure Construction fund at the end of 2005 was a deficit of ($ 899,125). This represents a decrease from 2004 of $ 1,376,820. This decrease is due to the City postponing the issuance of improvement debt to fund projects substantially completed in 2005. 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 - $ 1,088,808, golf course - $ (753,499), Earle Brown Heritage Center - $ 828,331, water utility - $ 2,160,742, sanitary sewer - $ 2,418,890 and storm drainage - $ 1,335,470. The increases (decreases) in net assets for the major enterprise funds were: municipal liquor $ 57,940, golf course $ (3,982), Earle Brown Heritage Center $ (300,442), water utility $ 757,320, sanitary sewer $ 777,281, and storm drainage $ 689,987. Management’s Discussion and Analysis 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 $ 685,580, the majority of which was due to higher than expected collections of current and delinquent property taxes and an increase in lodging tax collected. Actual expenditures and other financing uses were higher than budgeted for the year. The City took the opportunity to reallocate funds for infrastructure maintenance and transferred $ 555,000 to the capital projects to fund future needs. Capital Asset and Debt Administration Capital assets . The City’s investment in capital assets for its governmental and business type activities as of December 31, 2005, amounts to $ 77,178,531 (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 was 8.8 percent (13.3 percent increase for governmental activities and a 4.5 percent increase for business-type activities). Major capital asset events during the year included the following: Two reconstruction projects in existing neighborhoods were completed during the year, with a final cost of $ 3,296,000. Three reconstruction projects were begun and substantially completed during the 2005. These projects account for $ 5,360,850 in construction in progress at the end of the year. A major redevelopment project in Tax Increment District No. 3 was begun during the year. Land was purchased and prepared for re-sale; construction in progress for this project as of the close of the year had reached $ 4,589,000. CITY'S CAPITAL ASSETS (net of depreciation) Governmental ActivitiesBusiness-type ActivitiesTotal 200520042005200420052004 Land3,203,904$ 3,203,904$ 3,197,342$ 3,197,342$ 6,401,246$ 6,401,246$ Land improvements- - 272,937 287,292 272,937 287,292 Construction in progress7,962,052 3,731,004 2,110,290 - 10,072,342 3,731,004 Buildings and structures12,726,162 13,381,007 9,218,052 10,060,390 21,944,214 23,441,397 Departmental equipment2,060,357 2,204,854 217,817 147,259 2,278,174 2,352,113 Other park improvements1,115,450 1,058,974 - - 1,115,450 1,058,974 Streets12,122,165 11,003,528 - - 12,122,165 11,003,528 Mains and lines- - 22,972,003 22,666,812 22,972,003 22,666,812 Total39,190,090$ 34,583,271$ 37,988,441$36,359,095$77,178,531$ 70,942,366$ Additional information on the City’s capital assets can be found in Note 5 on pages 56 through 57 of this report. Long-term debt . At the end of the current fiscal year, the City had long-term bonded debt outstanding of $ 29,365,000, all of which is backed by the full faith and credit of the government. Of the total outstanding, $ 5,340,000 is general obligation bonds, $ 19,305,000 is tax increment bonds and $ 4,720,000 is improvement bonds. Additional long-term liabilities include $ 919,113 for compensated absences. This is the accumulated vacation and sick leave available but not used by employees at the end of 2005. Management’s Discussion and Analysis City’s Outstanding Debt General Obligation Bonds, General Obligation Improvement Bonds, General Obligation Tax Increment Bonds, General Obligation Revenue Bonds, and Compensated Absences Governmental ActivitiesBusiness-type ActivitiesTotal 200520042005200420052003 General obligation bonds5,340,000$ 11,025,000$ -$ -$ 5,340,000$ 11,025,000$ General obligation tax increment bonds19,305,000 22,445,000 - - 19,305,000 22,445,000 General obligation imporovement bonds4,720,000 5,710,000 - - 4,720,000 5,710,000 General obligation revenue bonds- - - 230,000 - 230,000 Compensated absences919,113 857,305 - - 919,113 857,305 Total30,284,113$ 40,037,305$ -$ 230,000$ 30,284,113$ 40,267,305$ The City’s total bonded debt decreased by $ 10,045 000 during the current fiscal year. The key factor in this decrease was the repurchase of $4,910,000 of the G.O. Police and Fire Building Bonds of 1997B and $2,370,000 of the G.O. Tax Increment Bonds of 1995A with proceeds from the refunding bonds issued in 2004. No new bonds were issued by the City in 2005. 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 $ 38,899,920. Only $ 5,045,000 of the City's outstanding debt is counted within the statutory limitation amounting to about 13% of the total limit. Additional information on the City’s long-term debt can be found in Note 7 on pages 58 through 60 of this report. Economic Factors and Next Year’s Budget and Rates The unemployment rate for the City is 4.8 percent at the end of the current fiscal year, which is a decrease from the rate of 5.7 percent a year ago. This compares to the State’s average unemployment rate of 4.0 percent and the national average of 5.1 percent. Redevelopment of the Central Business District is underway and will yield net growth in tax base and stability in tax base through mixed use development goals. Utility rates, which have increased greatly in the past two budget cycles, are expected to stabilize. All of these factors were considered in the preparation of the City’s budget for the 2006 fiscal year. During the year, unreserved fund balance in the general fund rose by $ 325,502. This amount will be added to the fund balance level to stay within the City’s policy of maintaining at least 50 percent, and no more than 52%, of the next year’s budgeted General Fund operations. Water, sanitary sewer, recycling and refuse, and street light utility rates were increased for the 2005 budget year. Residential water rates were increased by 5.9 percent, sanitary sewer and street light by 2.8 percent, and recycling and refuse by 9.3 percent. These increases were necessary to ensure that the municipal utilities be self-supporting through revenue, as required by the City charter. These rates are reviewed annually to ensure compliance with the requirements of the charter. Management’s Discussion and Analysis Requests for information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Fiscal and Support Services, City of Brooklyn Center, 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430. CITY OF BROOKLYN CENTER, MINNESOTA Statement 1 STATEMENT OF NET ASSETS December 31, 2005 GovernmentalBusiness-Type Assets: ActivitiesActivitiesTotal Cash and investments47,865,745$ 6,310,906$ 54,176,651$ Receivables: Accounts274,852 1,618,577 1,893,429 Taxes541,819 - 541,819 Special assessments3,194,805 324,258 3,519,063 Internal balances1,012,708 (1,012,708) - Due from other governments169,200 14,933 184,133 Prepaid expenses11,080 154,629 165,709 Inventories - at cost31,435 597,842 629,277 Restricted assets: Cash and investments88,200 - 88,200 Capital assets: Nondepreciable11,165,956 5,307,632 16,473,588 Depreciable28,024,134 32,680,809 60,704,943 Total assets92,379,934 45,996,878 138,376,812 Liabilities: Accounts payable593,907 272,058 865,965 Contracts payable347,174 152,633 499,807 Due to other governments73,309 58,420 131,729 Deposits payable- 264,110 264,110 Accrued salaries and wages262,271 36,474 298,745 Accrued interest payable517,827 - 517,827 Unearned revenue6,857 136,886 143,743 Liabilities payable from restricted assets: Deposits payable88,200 - 88,200 Compensated absences payable: Due within one year919,113 - 919,113 Health insurance liability: 2,093,307 Due in more than one year2,093,307 - Bonds payable: Due within one year2,875,000 - 2,875,000 Due in more than one year26,490,000 - 26,490,000 Total liabilities34,266,965 920,581 35,187,546 Net assets: Invested in capital assets, net of related debt21,992,263 37,988,441 59,980,704 Restricted for: Debt service6,050,271 - 6,050,271 Tax increment purposes23,276,657 - 23,276,657 Unrestricted6,793,778 7,087,856 13,881,634 Total net assets58,112,969$ 45,076,297$ 103,189,266$ The accompanying notes are an integral part of these financial statements. CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF ACTIVITIES For the Year Ended December 31, 2005 Charges For Functions/Programs ExpensesServices Primary government: Government activities: General government2,970,364$ 297,511$ Public safety7,848,160 1,026,736 Public works3,856,992 9,661 Community services86,043 - Parks and recreation2,305,047 681,851 Economic development1,217,294 35,933 Interest on long-term debt1,349,852 - Total government activities19,633,752 2,051,692 Business-type activities: Municipal liquor978,743 1,099,172 Golf course 256,276273,024 Earle Brown Heritage Center2,262,359 1,857,461 Recycling and refuse254,661 235,160 Street light utility213,094 214,669 Water utility1,795,759 1,825,521 Sanitary sewer2,808,644 2,966,222 Storm drainage1,102,672 1,298,690 Total business-type activities9,688,956 9,753,171 Total primary governmen$ 11,804,86329,322,708$ t The accompanying notes are an integral part of these financial statements. Statement 2 Net (Expense) Revenue and Program RevenuesChanges in Net Assets OperatingCapital Primary Government Grants andGrants andGovernmentalBusiness-Type ContributionsContributionsActivitiesActivitiesTotal $ 60,000-$ (2,612,853)$ -$ (2,612,853)$ -611,886 (6,209,538) - (6,209,538) 2,328,34590,000 (1,428,986) - (1,428,986) -- (86,043) - (86,043) 10,00079,827 (1,533,369) - (1,533,369) -13,920 (1,167,441) - (1,167,441) -- (1,349,852) - (1,349,852) 2,398,345795,633 (14,388,082) - (14,388,082) -- - 120,429 120,429 -- - (16,748) (16,748) -- - (404,898) (404,898) -- - (19,501) (19,501) -- - 1,575 1,575 -- - 29,762 29,762 -- - 157,578 157,578 -- - 196,018 196,018 -- - 64,215 64,215 $ 2,398,345795,633$ (14,388,082) 64,215 (14,323,867) General revenues: Property taxes11,288,883 - 11,288,883 Tax increments4,216,246 - 4,216,246 Franchise fees662,614 - 662,614 Lodging taxes710,619 - 710,619 Grants and contributions not restricted to specific programs577,548 - 577,548 Unrestricted investment earnings1,272,409 199,876 1,472,285 Gain on disposal of capital asset31,880 - 31,880 Transfers(1,545,893) 1,545,893 - Total general revenues and transfers17,214,306 1,745,769 18,960,075 Change in net assets2,826,224 1,809,984 4,636,208 Net assets - beginning55,286,745 43,266,313 98,553,058 et assets - ending58,112,969$ 45,076,297$ 103,189,266$ N FUND FINANCIAL STATEMENTS CITY OF BROOKLYN CENTER, MINNESOTA BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2005 Earle Brown TIF AssetsGeneralDistric t Cash and investment$ 441,7297,677,491$ s Receivables: Accounts -56,120 Current taxes 1,40324,171 Delinquent taxes183,715 9,989 Special assessments -- Due from other funds -- Due from other government -32,185 s Interfund receivable -- Prepaid expenses -11,080 Advances to other funds -- Restricted assets: Cash and investments - performance deposit -88,200 s Total assets8,072,962 453,121 Liabilities and Fund Balances Liabilities: Accounts payable249,395 - Contracts payable -- Due to other funds 1,211,846- Due to other governments1,345 - Interfund payable -- Accrued salaries and wages248,500 188 Deferred revenue190,571 9,989 Liabilities payable from restricted assets: Deposits payable88,200 - Total liabilities778,011 1,222,023 Fund balances: Reserved: Prepaid items -11,080 Loan receivable -- Debt service -- Committed contracts- - Unreserved: Designated, reported in: -7,283,871 General Fun d Special Revenue Funds- - Capital Project Funds- - Undesignated, reported in: Special Revenue Funds- (768,902) Capital Project Funds- - Total fund balances7,294,951 (768,902) Total liabilities and fund balances8,072,962$ 453,121$ Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds. Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the Internal service funds are used by management to charge the cost of certain activities to individual funds. The assets and liabilities et assets of governmental activities N The accompanying notes are an integral part of these financial statements. Statement 3 TIFSpecialOthe r DistricAssessmenInfrastructureonmajoTotal ttNr o. 3BondsConstructioGovernmentaGovernmenta Nnll $ 3,026,36422,628,114$ -$ 6,651,548$ 40,425,246$ -- 4,594 205,147 265,861 3118,775 - 3,162 37,822 13,671266,159 - 30,463 503,997 2,385,905- 808,900 - 3,194,805 69,5021,211,846 - 5,837 1,287,185 -- - 137,015 169,200 -- - 482,611 482,611 -- - - 11,080 -- - 800,000 800,000 -- - - 88,200 5,495,75324,114,894 813,494 8,315,783 47,266,007 -116,060 69,723 123,955 559,133 -- 270,408 76,766 347,174 -- 42,657 - 1,254,503 -67,447 - 4,517 73,309 -- 482,611 - 482,611 -290 2,991 4,465 256,434 2,391,376266,159 844,229 30,463 3,732,787 -- - - 88,200 2,391,376449,956 1,712,619 240,166 6,794,151 -- - - 11,080 -- - 800,000 800,000 3,104,377- - 1,054,230 4,158,607 -- 192,211 - 192,211 -- - - 7,283,871 -14,904,741 - 1,597,862 16,502,603 -- - 4,324,156 4,324,156 -8,760,197 - 299,369 8,290,664 -- (1,091,336) - (1,091,336) 3,104,37723,664,938 (899,125) 8,075,617 40,471,856 $ 5,495,75324,114,894$ 813,494$ 8,315,783$ 37,277,601 3,725,930 funds.(29,882,827) are included in the governmental statement of net assets.6,520,409 $58,112,969 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2005 Earle Brown TIF GeneralDistric t Revenues: Property taxes10,418,177$ -$ Tax increments 845,868- Franchise fees -- Lodging taxes -710,619 Special assessments -- Licenses and permits675,530 - Intergovernmenta -1,135,644 l Charges for services721,054 - Fines and forfeits253,748 - Investment earnings (net of market value adjustment 17,093151,612 ) Miscellaneous -43,374 Total revenues14,109,758 862,961 Expenditures: Current: General governmen -2,586,993 t Public safet -6,858,812 y Public works1,630,972 - Community service -86,043 s Parks and recreation2,059,283 - Economic developmen 42,496337,575 t ondepartmental315,355 - N Administrative services reimbursemen -(754,085) t Capital outlay: General governmen -6,008 t -35,600 Public safet y Public works -15,123 Parks and recreation2,851 - -- Economic developmen t Debt service: Principal retirement -- Interest -- Fiscal agent fees -- Total expenditures13,180,530 42,496 Revenues over (under) expenditures929,228 820,465 Other financing sources (uses): Transfers in 269,12721,274 Transfers out -(625,000) Refunded bonds redeemed- - Total other financing sources (uses)(603,726) 269,127 et increase (decrease) in fund balances325,502 1,089,592 N Fund balances - January 16,969,449 (1,858,494) Fund balances - December 317,294,951$ (768,902)$ The accompanying notes are an integral part of these financial statements. Statement 4 TIFSpecialOthe r DistricAssessmenInfrastructureonmajoTotal ttNr o. 3BondsConstructioGovernmentaGovernmenta Nnll $ 186,678-$ -$ 1,036,322$ 11,641,177$ -3,576,209 - 258,611 4,680,688 -- - 662,614 662,614 -- - - 710,619 871,879- 354,776 - 1,226,655 -- - - 675,530 -- 73,473 1,308,914 2,518,031 -- 24,040 9,481 754,575 -- - - 253,748 66,457591,169 3,314 248,789 1,078,434 -11,303 3,084 370,078 427,839 1,125,0144,178,681 458,687 3,894,809 24,629,910 -- - - 2,586,993 -- - 155,716 7,014,528 -- 192,155 374,000 2,197,127 -- - - 86,043 -- - 61,847 2,121,130 -1,462,906 - 233,046 2,076,023 -- - - 315,355 -- - - (754,085) -- - 610,484 616,492 -- - 2,951 38,551 -- 1,642,244 2,544,847 4,202,214 -- - - 2,851 -3,475,808 - - 3,475,808 990,000- - 1,782,189 2,772,189 197,760- - 1,016,991 1,214,751 19,525- 1,108 3,125 23,758 1,207,2854,938,714 1,835,507 6,785,196 27,989,728 (82,271)(760,033) (1,376,820) (2,890,387) (3,359,818) -- - 2,521,392 2,811,793 -(1,446,701) - (548,092) (2,619,793) -- - (7,280,000) (7,280,000) (7,088,000) -(1,446,701) - (5,306,700) (82,271)(2,206,734) (1,376,820) (8,197,087) (10,447,818) 3,186,64825,871,672 477,695 16,272,704 50,919,674 $ 3,104,37723,664,938$ (899,125)$ 8,075,617$ 40,471,856$ 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, 2005 Amounts reported for governmental activities in the statement of activities are different because: et changes in fund balances - total governmental funds (Statement 4$(10,447,818) 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.4,737,637 Revenues in the statement of activities that do not provide current financial resources are no t reported as revenues in the funds.(849,896) 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.9,815,000 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.(317,356) 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.(111,343) Change in net assets of governmental activities (Statement 2 $2,826,224 ) The accompanying notes are an integral part of these financial statements. CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2005 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr Assets Current assets: Cash and cash equivalents720,417$ 46,249$ 1,061,898$ Accounts receivable - ne -7,780 170,781 t Special assessments receivable- - - Due from other government -- 14,933 s Prepaid items20,594 - 3,989 Inventories - at cost554,300 1,788 24,398 Total current assets1,303,091 48,037 1,275,999 oncurrent assets: N Capital assets: Lan 1,390,402- 1,493,300 d Land improvement 40,258- 327,830 s Buildings and structures192,771 487,946 11,091,389 Machinery and equipmen 11,160111,167 154,627 t Mains and lines- - - Construction in progress- - - Total capital assets303,938 1,929,766 13,067,146 Less: Allowance for depreciatio (212,704)(176,583) (5,209,716) n et capital assets127,355 1,717,062 7,857,430 N Total assets1,430,446 1,765,099 9,133,429 Liabilities Current liabilities: Accounts payable159,109 137 54,907 Contracts payable- - 103,276 Due to other funds- - - Due to other governments45,303 6 12,474 Deposits payable- - 261,210 Accrued salaries payable9,551 1,393 14,201 Deferred revenue320 - 1,600 Advances from other funds- 800,000 - Compensated absences payable - - - Total current liabilities214,283 801,536 447,668 oncurrent liabilities: N -- - Accrued health insurance liabilit y Total liabilities214,283 801,536 447,668 et assets N Invested in capital assets, net of related debt127,355 1,717,062 7,857,430 Unrestricted1,088,808 (753,499) 828,331 Total net assets1,216,163$ 963,563$ 8,685,761$ 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. Statement 6 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r StoronmajoTotalInternalTotal WaterSanitar ymNr UtilitSeweDrainageEnterpriseEnterpriseServiceProprietary yr $ 1,597,2831,718,178$ 1,060,877$ 106,004$ 6,310,906$ 7,440,499$ 13,751,405$ 728,036321,502 282,687 107,791 1,618,577 8,991 1,627,568 2,604321,384 270 - 324,258 - 324,258 -- - - 14,933 - 14,933 129,546500 - - 154,629 - 154,629 -17,356 - - 597,842 31,435 629,277 2,457,4692,378,920 1,343,834 213,795 9,021,145 7,480,925 16,502,070 3,38923,093 287,158 - 3,197,342 - 3,197,342 -- - - 368,088 - 368,088 2,623,6913,365,558 - - 17,761,355 - 17,761,355 179,130128,668 - - 584,752 5,909,532 6,494,284 13,006,10714,347,148 12,421,310 - 39,774,565 - 39,774,565 508,587828,358 773,345 - 2,110,290 - 2,110,290 16,320,90418,692,825 13,481,813 - 63,796,392 5,909,532 69,705,924 (7,497,451)(10,127,864) (2,583,633) - (25,807,951) (3,997,043) (29,804,994) 8,823,4538,564,961 10,898,180 - 37,988,441 1,912,489 39,900,930 11,280,92210,943,881 12,242,014 213,795 47,009,586 9,393,414 56,403,000 4,43421,691 7,125 24,655 272,058 34,774 306,832 25,76623,591 - - 152,633 - 152,633 5,83726,845 - - 32,682 - 32,682 -637 - - 58,420 - 58,420 -2,900 - - 264,110 - 264,110 2,5427,548 1,239 - 36,474 5,837 42,311 -134,966 - - 136,886 - 136,886 -- - - 800,000 - 800,000 - - - - 919,113 919,113 - 38,579218,178 8,364 24,655 1,753,263 959,724 2,712,987 -- - - - 2,093,307 2,093,307 38,579218,178 8,364 24,655 1,753,263 3,053,031 4,806,294 8,823,4538,564,961 10,898,180 - 37,988,441 1,912,489 39,900,930 2,418,8902,160,742 1,335,470 189,140 7,267,882 4,427,894 11,695,776 $ 11,242,34310,725,703$ 12,233,650$ 189,140$ 45,256,323 6,340,383$ 51,596,706$ (180,026) $45,076,297 CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2005 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr Operating revenues: Sales and user fees4,610,091$ 256,268$ 3,717,131$ Cost of sales3,518,185 - 1,864,620 Total operating revenues1,091,906 256,268 1,852,511 Operating expenses: Personal services457,170 127,010 813,074 Supplies14,286 18,069 121,420 Other services150,665 68,297 380,724 Insurance9,796 6,836 34,325 Utilities32,812 14,591 193,049 Ren -235,174 119,325 t Depreciation34,221 27,888 568,264 Total operating expenses934,124 262,691 2,230,181 Operating income (loss)157,782 (6,423) (377,670) onoperating revenues (expenses): N Investment earning 2,43317,892 30,195 s Special assessments- - - Gain (loss) on sale of capital asset- - - Other revenue7,266 8 4,950 Interest and fiscal agent fees- - - Total nonoperating revenues (expenses)25,158 2,441 35,145 Income (loss) before contributions and transfers182,940 (3,982) (342,525) Contributions and Transfers: Capital Contributions- - 109,083 Transfer to Capital Project Funds(125,000) - (67,000) Change in net assets57,940 (3,982) (300,442) et assets - January 1 1,158,223 967,545 8,986,203 N et assets - December 311,216,163$ 963,563$ 8,685,761$ N The accompanying notes are an integral part of these financial statements. Statement 7 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r StoronmajoTotalInternalTotal WaterSanitar ymNr UtilitSeweDrainageEnterpriseEnterpriseServiceProprietary yr $ 2,965,5391,636,097$ 1,293,841$ 449,829$ 14,928,796$ 1,171,447$ 16,100,243$ -- - - 5,382,805 - 5,382,805 2,965,5391,636,097 1,293,841 449,829 9,545,991 1,171,447 10,717,438 140,190375,754 55,863 - 1,969,061 898,273 2,867,334 13,693154,942 6,655 515 329,580 326,618 656,198 2,141,067490,494 496,604 314,903 4,042,754 111,120 4,153,874 4,8039,930 1,336 2,790 69,816 40,954 110,770 27,807126,089 - 149,547 543,895 2,675 546,570 -- - - 354,499 - 354,499 473,820588,503 526,142 - 2,218,838 494,270 2,713,108 2,801,3801,745,712 1,086,600 467,755 9,528,443 1,873,910 11,402,353 164,159(109,615) 207,241 (17,926) 17,548 (702,463) (684,915) 56,82546,071 42,626 3,834 199,876 193,975 393,851 683189,306 4,849 - 194,838 - 194,838 -- - - - 31,880 31,880 -118 - - 12,342 5,224 17,566 -- (6,485) - (6,485) - (6,485) 57,508235,495 40,990 3,834 400,571 231,079 631,650 221,667125,880 248,231 (14,092) 418,119 (471,384) (53,265) 555,614631,440 441,756 - 1,737,893 - 1,737,893 -- - - (192,000) - (192,000) 777,281757,320 689,987 (14,092) 1,964,012 (471,384) 1,492,628 10,465,0629,968,383 11,543,663 203,232 43,292,311 6,811,767 50,104,078 $ 11,242,34310,725,703$ 12,233,650$ 189,140$ 45,256,323$ 6,340,383$ 51,596,706$ CITY OF BROOKLYN CENTER, MINNESOTA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2005 Major MunicipalGolfEarle Brown LiquoCourseHeritage Cente rr Cash flows from operating activities: Receipts from customers and users4,610,476$ 256,268$ 3,858,202$ Receipts from interfund services provided- - - Payments to suppliers(3,912,865) (108,682) (2,750,685) Payments to employee (126,548)(455,373) (810,497) s Miscellaneous revenue7,266 8 4,950 et cash flows from operating activities249,504 21,046 301,970 N Cash flows from noncapital financing activities: Principal repayments on advance- (50,000) - Transfers out(125,000) - (67,000) Special assessments- - - Interfund payable- - - et cash flows from noncapital financing activitie (50,000)(125,000) (67,000) Ns Cash flows from capital and related financing activities: Acquisition and construction of capital assets- - - Principal paid on revenue bonds- - - Interest paid on revenue bonds- - - Proceeds from sale of assets- - - et cash flows from capital and related financial activities- - - N Cash flows from investing activities: Interest on investments17,892 2,433 30,195 et increase (decrease) in cash and cash equivalents142,396 (26,521) 265,165 N Cash and cash equivalents - January 1578,021 72,770 796,733 Cash and cash equivalents - December 31720,417$ 46,249$ 1,061,898$ Reconciliation of operating income to net cash rovided (used) by operating activities: p Operating income (loss) 157,782$ (6,423)$ (377,670)$ Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation34,221 27,888 568,264 Changes in assets and liabilities: Decrease (increase) in receivables210 - 89,601 Decrease (increase) in inventories(1,611) (73) 10,391 Decrease (increase) in prepaid expenses204 - 7,969 Increase (decrease) in payables49,460 (816) (107,388) Increase (decrease) in accrued expenses1,797 462 2,577 Increase (decrease) in deferred revenue175 - 103,276 Other nonoperating income7,266 8 4,950 Total adjustments91,722 27,469 679,640 et cash provided by operating activities249,504$ 21,046$ 301,970$ N The accompanying notes are an integral part of these financial statements. Statement 8 Business-Type ActivitiesGovernmenta l EnterpriseOtheActivities- r StoronmajoTotalInternalTotal WaterSanitar ymNr UtilitSeweDrainageEnterpriseEnterpriseServiceProprietary yr $ 2,888,7751,664,068$ 1,272,930$ 440,047$ 14,990,766$ -$ 14,990,766$ -- - - - 1,177,784 1,177,784 (2,175,693)(742,067) (507,169) (455,834) (10,652,995) (502,855) (11,155,850) (139,582)(374,148) (54,624) - (1,960,772) (292,713) (2,253,485) -118 - - 12,342 5,224 17,566 573,500547,971 711,137 (15,787) 2,389,341 387,440 2,776,781 -- - - (50,000) - (50,000) -- - - (192,000) - (192,000) 943137,495 8,597 - 147,035 - 147,035 5,83726,845 - - 32,682 - 32,682 6,780164,340 8,597 - (62,283) - (62,283) (508,588)(828,358) (773,344) - (2,110,290) (378,917) (2,489,207) -- (230,000) - (230,000) - (230,000) -- (6,485) - (6,485) - (6,485) -- - - - 47,345 47,345 (508,588)(828,358) (1,009,829) - (2,346,775) (331,572) (2,678,347) 56,82546,071 42,626 3,834 199,876 193,975 393,851 128,517(69,976) (247,469) (11,953) 180,159 249,843 430,002 1,468,7661,788,154 1,308,346 117,957 6,130,747 7,190,656 13,321,403 $ 1,597,2831,718,178$ 1,060,877$ 106,004$ 6,310,906$ 7,440,499$ 13,751,405$ $ 164,159(109,615)$ 207,241$ (17,926)$ 17,548$ (702,463)$ (684,915)$ 473,820588,503 526,142 - 2,218,838 494,270 2,713,108 (76,764)24,221 (20,911) (9,781) 6,576 2,896 9,472 -10,492 - - 19,199 (3,315) 15,884 (2,337)- - - 5,836 - 5,836 14,01431,796 (2,574) 11,920 (3,588) (18,173) (21,761) 6081,606 1,239 - 8,289 609,001 617,290 -850 - - 104,301 - 104,301 -118 - - 12,342 5,224 17,566 409,341657,586 503,896 2,139 2,371,793 1,089,903 3,461,696 $ 573,500547,971$ 711,137$ (15,787)$ 2,389,341$ 387,440$ 2,776,781$ CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Brooklyn Center, Minnesota (the City) was formed and operates pursuant to applicable Minnesota laws and statutes. The governing body consists of a mayor and four City Council members elected at-large to serve four-year staggered terms. A. FINANCIAL REPORTING ENTITY As required by accounting principles generally accepted in the United States of America, the City’s financial statements include all funds and departments of the City and the City’s component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. BLENDED COMPONENT UNITS Blended component units, although legally separate, are in substance, part of the government’s operations; data from these units are combined with data of the primary government. These additional units are the Economic Development Authority (EDA) and the Housing and Redevelopment Authority (HRA) in and for the City of Brooklyn Center. The governing board for each Authority is the City Council. The Council reviews and approves the HRA tax levy and the City provides major community development financing for EDA and HRA activities. Debts issued for EDA and HRA activities are City general obligations. Although the EDA and HRA are legally separate from the City, they are reported as part of the City because the governing boards are the same. Complete financial statements for the EDA and HRA may be obtained at the City offices located at 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430 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 2005 financial statements of the City is $543,601 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. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 LOGIS Insurance Group This group provides cooperative purchasing of health and life insurance benefits for approximately 45 governmental entities. The total of 2005 health and life insurance costs paid by the City was $870,546. Complete financial statements may be obtained from Stanton Group located at 3405 Annapolis Lane, Plymouth, Minnesota 55447. OTHER 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 15b for disclosures relating to the pension plan operated by the Association.) The City’s portion of the costs of the Association’s pension benefits is included in the General Fund under public safety. Complete financial statements for the Association may be obtained at the City offices located at 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430. 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 of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. 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 business-type activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or business-type activity. 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. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 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 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 compensated absences and 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. 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. TheEarle Brown TIF District Special Revenue 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 of bonds which were issued for the same purpose. The TIF 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. TheSpecial Assessment Bonds Debt Service Fund is used to account for the accumulation of resources for the payment of special assessment 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. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 TheInfrastructure Construction Capital Projects 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 proprietary funds: The Municipal Liquor Fund accounts for the operations of the City’s municipal off-sale liquor stores. The Golf Course Fund accounts for operations of Centerbrook Golf Course, a 9 hole executive golf course owned by the City. The Earle Brown Heritage Center Fund accounts for the operation of a convention center. The Earle Brown Heritage Center is a pioneer farmstead that has been historically preserved and restored as a modern multipurpose facility. Its convention center can host conferences, trade shows, and concerts seating 1,000 people in either banquet or theater style. The facility hosts many meetings, parties, weddings and receptions. The Water Utility Fund accounts for the pumping, treatment and distribution of water to customers. Administration, wells, water storage, and distribution are included. The Sanitary Sewer 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 77% of this fund’s expenses. The Storm Drainage Fund accounts for the collection and treatment of surface runoff water not requiring 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. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary-fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private -sector guidance. 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, are similarly treated when they involve other funds of the City of Brooklyn Center. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 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. 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 municipal liquor, golf course, Earl Brown Heritage Center, water utility, sanitary sewer, storm drainage and street light enterprise funds are charges to customers for sales and services. Operating expenses for enterprise 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. 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. D.BUDGETS The City Charter grants the City Council full authority over the financial affairs of the City. The City Manager is charged with the responsibility of preparing the estimates of the annual budget and the enforcement of the provisions of the budget as specified in the City Charter. Upon adoption of the annual budget resolution by the Council, it becomes the formal appropriation budget for City operations. All budget adjustments must be approved by the Council. Budgets for the General and Special Revenue Funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Budgeted expenditure appropriations lapse at year end. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the appropriation, is not employed by the City because it is, at present, not considered necessary to assure effective budgetary control or to facilitate effective cash management. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 LEGAL COMPLIANCE BUDGETS The City follows these procedures establishing the budgetary data reflected in the financial statements: 1.In August, the City Manager submits to the City Council proposed operating budgets for the fiscal year commencing the following January. The operating budgets include expenditures and the means of financing them. 2.The County mails individual property tax notices showing the taxes that would result from the proposed budgets of all taxing units to each property owner in November. 3.Public hearings are conducted to obtain taxpayer comments. 4.The budgets are legally enacted with the passage of resolutions by the City Council in the month of December. 5.The City Council must authorize any transfer of budgeted amounts between departments within the General Fund. A transfer of budgeted amounts within individual departments must be authorized by the City Manager. 6.Supplemental appropriations during the year may only be made by the City Council. These amounts must be financed by funds from a contingency reserve set up in the General Fund or by additional revenues. 7.All budget amounts lapse at the end of the year to the extent they have not been expended or re-encumbered by City Council directive in the following fiscal year. 8.Formal budgetary integration is employed as a management control device during the year for all governmental funds with the exception of Debt Service Funds and Capital Project Funds. Formal budgetary integration is not employed for Debt Service Funds because effective budgetary control is alternatively achieved through general obligation bond indenture provisions. Budgetary control for Capital Projects Funds is accomplished through the use of project controls and project-length budgets. 9.Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for all governmental funds except for the project-length Capital Projects Funds and Debt Service Funds. 10.Budgetary control is maintained at the department level for the General Fund and at the fund level for all other governmental funds that adopt annual budgets. 11.Budgeted amounts are as originally adopted, or as amended by the City Council. Individual and aggregate amendments were not material in relation to the original appropriations. BUDGET VARIANCES For the year ended December 31, 2005 expenditures exceeded appropriations in the Earle Brown Tax Increment District fund by $ 7,496, the Tax Increment District No. 3 fund by $ $5,526,809, the Housing and Redevelopment Authority fund by $ 5,243, the Tax Increment District No. 4 fund by $ 233,242, and the City Initiatives Grant fund by $ 89,005. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 E. CASH AND INVESTMENTS Cash balances from all funds are combined and invested to the extent available in certificates of deposit, U.S. government securities and other securities authorized by State Statute. Investment income is allocated to the respective funds on the basis of applicable cash balance participation by each fund. Investments are stated at fair value, based upon quoted market prices as of the balance sheet date. Investment income is accrued at the balance sheet date. The City provides temporary advances to funds that have insufficient cash balances by means of an advance from another fund shown as interfund receivables in the advancing fund, and an interfund payable in the fund with the deficit, until adequate resources are received. These interfund balances are eliminated on the government-wide financial statements. For purposes of the statement of cash flows 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. Therefore the entire balance in the Proprietary Funds are considered cash equivalents. F. 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 receivables/payables.” All short-term interfund receivables and payables at December 31, 2005 are planned to be eliminated in 2006. Long-term interfund loans are classified as “interfund loan receivable/payable.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Property taxes and special assessments have been reported net of estimated uncollectible accounts. (See Note 1 G and I) Because utility bills are considered liens on property, no estimated uncollectible amounts are established. Uncollectible amounts are not material for other receivables and have not been reported. G. PROPERTY TAX REVENUE RECOGNITION The City Council annually adopts a tax levy and certifies it to the County in December (levy/assessment date) of each year for collection in the following year. The County is responsible for billing and collecting all property taxes for itself, the City, the local School District and other taxing authorities. Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. Real property taxes are payable (by property owners) on May 15 and October 15 of each calendar year. Personal property taxes are payable by taxpayers on February 28 and June 30 of each year. These taxes are collected by the County and remitted to the City on or before July 7 and December 2 of the same year. Delinquent collections for November and December are received the following January. The City has no ability to enforce payment of property taxes by property owners. The County possesses this authority. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes property tax revenue in the period for which the taxes were levied. Uncollectible property taxes are not material and have not been reported. GOVERNMENTAL FUND FINANCIAL STATEMENTS The City recognizes property tax revenue when it becomes both measurable and available to finance expenditures of the current period. In practice, current and delinquent taxes and State credits received by the City in July, December and January are recognized as revenue for the current year. Taxes collected by the County by December 31 (remitted to the City the following January) are classified as current taxes receivable. The portions of delinquent taxes not collected by the City in January are classified as delinquent and fully offset by deferred revenue because they are not available to finance current expenditures. H. MARKET VALUE HOMESTEAD CREDIT Property taxes on residential, agricultural or resort homestead property (as defined by State Statutes) are partially reduced by market value homestead credit (MVHC). This credit is paid to the City by the State in lieu of taxes levied against homestead property. The State remits this credit through installments each year. The credit is recognized as revenue by the City at the time of collection. The City has recorded this with property tax revenue. I. SPECIAL ASSESSMENT REVENUE RECOGNITION Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay assessments in full without interest or prepayment penalties. Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go delinquent, the property is subject to tax forfeit sale. Proceeds of sales from tax forfeit properties are allocated first to the County’s costs of administering all tax forfeit properties. Pursuant to State Statutes, a property shall be subject to a tax forfeit sale after three years unless it is homestead, agricultural or seasonal recreational land in which event the property is subject to such sale after five years. GOVERNMENT-WIDE FINANCIAL STATEMENTS The City recognizes special assessment revenue in the period that the assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 GOVERNMENTAL FUND FINANCIAL STATEMENTS Revenue from special assessments is recognized by the City when it becomes measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special assessments received by the City are recognized as revenue for the current year. Special assessments that are collected by the County by December 31 (remitted to the City the following January) are also recognized as revenue for the current year. All remaining delinquent, deferred and special deferred assessments receivable in governmental funds are completely offset by deferred revenues. J. INVENTORIES GOVERNMENTAL FUNDS The primary government does not maintain material amounts of inventory within the governmental funds. Inventories of governmental funds are recorded as expenditures when purchased rather than when consumed. PROPRIETARY FUNDS Inventories in the proprietary funds are valued at cost, using the weighted average method in the Municipal Liquor Fund and the first-in/first-out (FIFO) method in the other proprietary funds. The costs of supplies are recorded as expenditures when purchased. K. PREPAID ITEMS 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. L. 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 as shown 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. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 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, 2005 no interest was capitalized in connection with construction in progress. Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight line method over the following estimated useful lives: M. COMPENSATED ABSENCES It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay is accrued in the internal service fund financial statements. 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, liability is recognized for that portion of accumulating sick leave benefits that is vested, or expected to vest, as severance pay. N. 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. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 O. FUND EQUITY In the fund financial statements, governmental funds report reservations of fund balance for amounts not appropriable for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of financial resources. P. 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. Interfund loans are reported as an interfund loan receivable or payable which offsets the movement of cash between funds. All other interfund transactions are reported as transfers. Q. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. Note 2 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A.EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balance – total governmental funds and net assets – governmental activities as reported in the government-wide statement of net assets. Elements of that reconciliation are detailed as follows: CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 BEXPLANATION 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 $ 4,737,637 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 ($849,896) difference are as follows: General property taxes deferred revenue: At December 31, 2004(580,140)$ At December 31, 2005227,849 Tax increment taxes deferred revenue: At December 31, 2004(740,587) At December 31, 2005276,148 Special assessments deferred revenue: At December 31, 2004(3,218,741) At December 31, 20053,185,575 Other deferred revenues: At December 31, 2004(36,360) At December 31, 200536,360 Net adjustments to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities(849,896)$ CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 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 $9,815,000 difference are as follows: Note 3 DEPOSITS AND INVESTMENTS DEPOSITS In accordance with Minnesota Statutes, the City maintains deposits at only those depository banks authorized by the City Council. All such depositories are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. At year-end, the City’s carrying value amount of deposits was $437,400 composed of bank balances of $509,658. All balances were covered by federal depository insurance or by perfected collateral held by the City’s agent in the City’s name. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 INVESTMENTS 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 with financial institutions identified by Minnesota Statutes Chapter 118A. f) Minnesota joint powers investment trusts with financial institutions 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. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 As of December 31, 2005, the City had the following investments and maturities: 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. – At December 31, 2005, the City’s investment in the FNMA and FHLB notes were all Credit risk rated AAA by Moody’s Investors Service. The City’s external investment pool is with 4M which is regulated by Minnesota Statutes and the Board of Directors of the League if 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 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 by Wells Fargo Institutional Trust, under contract with the City for safekeeping services. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 5 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2005 was as follows: CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Depreciation expense was charged to functions/programs of the primary government as follows: CONSTRUCTION COMMITMENTS At December 31, 2005 the City had construction project contracts in progress. The commitments related to remaining contract balances are summarized as follows: Note 6 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. In addition, they requires additional lease payments 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 years CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 ended December 31, 2005 and 2004 was $235,174 and $228,444, respectively. Future minimum rent payments under the current agreements are as follows: Note 7 LONG-TERM DEBT The City issues general obligation bonds and equipment certificates to provide funds for the acquisition and construction of major capital facilities. The reporting entity’s long-term debt is segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. GOVERNMENTAL ACTIVITIES As of December 31, 2005 the long-term debt of the financial reporting entity consisted of the following: CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Annual debt service requirements to maturity for long-term debt are as follows: CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 CHANGE IN LONG-TERM LIABILITIES Long-term liability activity for the year ended December 31, 2005 was as follows: Compensated absences are liquidated by the Internal Service Fund. All long-term bonded indebtedness outstanding at December 31, 2005 is backed by the full faith and credit of the City, including improvement and revenue bond issues. Delinquent assessments receivable at December 31, 2005 totaled $81,042. Note 8 CONDUIT DEBT OBLIGATIONS From time to time, the City has issued Housing Revenue Bonds and Industrial Revenue Bonds or Notes to provide assistance to qualified private sector entities for the acquisition and construction of housing, industrial, or commercial facilities deemed to be in the public interest. The bonds or notes are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. The City has no obligation of its assets or of its general tax base for the repayment of any of these bonds or notes. Accordingly, the bonds or notes are not reported as liabilities in the accompanying financial statements. Upon final redemption of the bonds or notes, ownership of the property transfers to the private sector entity served by the bond or note issue. As of December 31, 2005 there were three series of fixed rate Multifamily Housing Revenue Refunding bonds outstanding, one Housing Revenue Development Refinancing Note outstanding, one series of Variable Rate Demand Refunding Industrial Revenue Bonds outstanding, two Healthcare Revenue Notes outstanding, and four Senior Housing Development Revenue Notes outstanding. The aggregate amount of conduit debt obligations at December 31, 2005 is $ 32,616,436. In addition, one series of First Mortgage Elderly Housing Revenue Bonds, a $ 2,980,000 obligation, was outstanding at December 31, 2005 but was defeased by proceeds of the Senior Housing Development Revenue Notes and subsequently paid in full on February 1, 2006. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 9 RESERVED/DESIGNATED FUND EQUITY Fund balances and retained earnings in the various funds have been reserved or designated for the following purposes: CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 10 INTERFUND RECEIVABLES/PAYABLES, LOANS AND TRANSFERS Individual fund interfund receivable and payable balances at December 31, 2005 are as follows: The $1,200,000 between TIF District No. 3 and the Earle Brown TIF District and the $800,000 advance are not expected to be eliminated within one year of December 31, 2005. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Interfund transfers: 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 2005, transfers from the General Fund to nonmajor governmental funds such as the Street Reconstruction and Technology Funds allowed excess fund General Fund balance to be put to use in ways that would reduce the need for taxes or other sources of public funds in the nonmajor funds. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 11 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Brooklyn Center’s legal debt margin for 2005 and 2004 is computed as follows: Note 12 DEFICIT FUND BALANCES A deficit fund balance exists at December 31, 2005 in the following fund: The deficits are being funded through internal borrowing and will be repaid from future surplus tax increments, construction transfers from utility funds and investment earnings. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 Note 13 CONTINGENCIES, SUBSEQUENT EVENTS AND COMMITMENTS A.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 1991, 1992, 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. B. 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. C. FEDERAL AND STATE FUNDS Amounts received or receivable from federal and state agencies are subject to agency audit and adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of funds which may be disallowed by the agencies cannot be determined at this time although the City expects such amounts, if any, to be immaterial. D. TAX INCREMENT DISTRICTS The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has indicated that they are not aware of any instances of noncompliance which would have a material effect on the financial statements. E. PROGRAM COMPLIANCE Federal program activities are subject to financial and compliance regulation. To the extent that any expenditures are disallowed or other compliance features are not met, a liability to the respective grantor agency could result. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 F. GRANTS The City approved grants in the amount of $500,000 to Boca Limited Partnership. The grant requires repayment if certain requirements are not met. In turn, the City would be required to return the funds to Hennepin County. G. CONTINGENT LIABILITY The City entered into two limited tax increment notes with developers whereby the City shall pay the developers the lesser of the scheduled payment or available tax increment. Whether a payment will occur and if so, the amount of the payment(s) are uncertain since all payments are dependent on the City receiving tax increment from the developer’s project. As such, this liability has not been recorded in the financial statements. A schedule of the notes outstanding at December 31, 2005 is as follows: H. TAX COURT APPEALS Appeals on the valuation of properties in and around the Brookdale Center regional retail complex have been filed in Tax Court for taxes payable in 2004 and 2005 by the owners of the affected parcels. These appeals have not been ruled upon as of the date of these financial statements. Any liability on the part of the City as a result of the Tax Court decision would come from the TIF District No. 3 Fund. No liability or reservation of assets has yet been designated in that Fund. Note 14 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 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 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. Note 15 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 (Note 15A) 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, 2005, 13 employees currently participate in this program. The cost of City paid health care premiums for the years ended December 31, 2005 and 2004 was $60,467 and $58,465, respectively. Fund liabilities are paid on a pay-as-you-go basis with investment earnings of the Fund. The $2,093,307 recorded as a liability is not an actuarially determined amount, but the City’s best estimate of the future liability. Note 16 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. STATEWIDE- PERA 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 CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 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. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. 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 #200, St. Paul, Minnesota, 55103-2088 or by calling (651)296-7460 or 1-800-652- 9026. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 5.10%, respectively, of their annual covered salary. PEPFF members are required to contribute 6.20% of their annual covered salary. The City is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members, 5.53% for Coordinated Plan PERF members, and 9.30% for PEPFF members. The City’s contributions to the Public Employees Retirement Fund for the years ending December 31, 2005, 2004 and 2003 were $328,318, $223,220, and $309,237, respectively. The City’s contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2005, 2004 and 2003 were $ 276,262, $257,234 and $255,923, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by state statute. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 B. 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 retirement system to provide a retirement plan (the Plan) to volunteer firefighters of the City who are members of the Association. The Association issues a financial report which is available at City offices. FUNDING POLICY AND ANNUAL PENSION COST 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 2004 were $ 158,991, of which nothing was levied by the City of Brooklyn Center and all $ 158,991 was from the State of Minnesota. The actuarially determined contribution based on an actuarial valuation performed at January 1, 2004 was $ 79,135, which represents funding for normal cost of $ 79,135 and administration of zero. 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. They do not constitute an asset of the City. The information below is the most recent data available. CITY OF BROOKLYN CENTER, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2005 THREE-YEAR TREND INFORMATION SCHEDULE OF FUNDING PROGRESS RELATED PARTY INVESTMENTS As of December 31, 2005 the Association held no securities issued by the City or other related parties. 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, 2005 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Revenues: Taxes: Property taxes and market value homestead credit9,823,541$ 9,823,541$ 10,378,151$ 554,610$ Penalties and interest- - 40,026 40,026 Lodging tax640,000 640,000 710,619 70,619 Total taxes10,463,541 10,463,541 11,128,796 665,255 Licenses and permits: Liquor and beer109,400 109,400 120,412 11,012 Building permits350,000 350,000 272,482 (77,518) Mechanical permits55,000 55,000 71,668 16,668 Sewer and water permits1,000 1,000 2,908 1,908 Plumbing permits40,000 40,000 29,258 (10,742) Garbage licenses3,100 3,100 2,910 (190) Taxicab licenses1,500 1,500 117 (1,383) Mechanical licenses6,800 6,800 6,445 (355) Pawn shop licenses3,000 3,000 - (3,000) Service station licenses2,800 2,800 2,644 (156) Vehicle dealer licenses1,500 1,500 1,500 - Bowling licenses720 720 - (720) Cigarette licenses4,300 4,300 3,153 (1,147) Sign permits3,000 3,000 3,908 908 Rental dwelling licenses79,200 79,200 100,836 21,636 Amusement licenses2,000 2,000 1,215 (785) Electrical Permits15,000 15,000 48,694 33,694 ROW permits3,000 3,000 - (3,000) Miscellaneous business license7,000 7,000 7,380 380 Total licenses and permits688,320 688,320 675,530 (12,790) Intergovernmental: State: Local government aid542,522 542,522 543,183 661 Police pension aid255,000 255,000 288,183 33,183 PERA aid34,365 34,365 34,365 - Fireperson pension aid125,000 125,000 154,346 29,346 Police training- - 15,157 15,157 E-911 phone service15,000 15,000 31,833 16,833 Street maintenance aid90,000 90,000 - (90,000) Miscellaneous grants50,000 50,000 68,577 18,577 Total intergovernmental1,111,887 1,111,887 1,135,644 23,757 Charges for services: General government charges26,150 26,150 47,131 20,981 Public safety charges14,450 14,450 42,076 27,626 Recreation fees268,480 268,480 310,641 42,161 Community Center fees310,000 310,000 321,206 11,206 Total charges for services619,080 619,080 721,054 101,974 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, 2005 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Revenues (continued): Fines and forfeits225,000$ 225,000$ 253,748$ 28,748$ Miscellaneous: Investment earnings (net of market value change)150,000 150,000 151,612 1,612 Other133,250 133,250 43,374 (89,876) Total miscellaneous283,250 283,250 194,986 (88,264) Total revenues13,391,078 13,391,078 14,109,758 718,680 Expenditures: General government: Mayor and council: Current: Personal services50,989 50,989 51,109 (120) Materials and supplies- - 46 (46) Services and other charges78,308 78,308 85,365 (7,057) Total mayor and council129,297 129,297 136,520 (7,223) Administrative (Manager, Clerk, HR) offices: Current: Personal services461,924 461,924 459,023 2,901 Materials and supplies3,800 3,800 2,782 1,018 Services and other charges30,200 30,200 23,398 6,802 Total administrative office495,924 495,924 485,203 10,721 Elections and voter registration: Current: Personal services55,470 55,470 43,837 11,633 Materials and supplies1,000 1,000 - 1,000 Services and other charges31,075 31,075 4,431 26,644 87,545 48,268 39,277 Total elections and voter registration87,545 Assessor's office: Current: Personal services225,294 225,294 219,800 5,494 Materials and supplies3,700 3,700 3,741 (41) Services and other charges41,419 41,419 40,922 497 Total assessor's office270,413 270,413 264,463 5,950 Finance: Current: Personal services420,963 420,963 376,254 44,709 Materials and supplies5,100 5,100 4,857 243 Services and other charges12,500 12,500 20,668 (8,168) Total finance438,563 438,563 401,779 36,784 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, 2005 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Expenditures: General government (continued): Legal: Current: Services and other charges265,000$ 265,000$ 320,628$ (55,628)$ Government buildings: Current: Personal services249,379 249,379 199,885 49,494 Materials and supplies52,200 52,200 41,638 10,562 Services and other charges273,426 273,426 373,525 (100,099) Total current575,005 575,005 615,048 (40,043) Capital outlay9,900 9,900 6,008 3,892 Total government buildings584,905 584,905 621,056 (36,151) Information technology: Current: Personal services167,021 167,021 165,436 1,585 Materials and supplies11,000 11,000 12,773 (1,773) Services and other charges159,642 159,642 136,875 22,767 Total information technology337,663 337,663 315,084 22,579 Total general government2,609,310 2,609,310 2,593,001 16,309 Public safety: Police protection: Current: Personal services4,636,211 4,636,211 4,520,156 116,055 Materials and supplies99,757 99,757 81,115 18,642 Services and other charges884,096 884,096 973,272 (89,176) Total current5,620,064 5,620,064 5,574,543 45,521 Capital outlay16,600 16,600 11,886 4,714 Total police protection5,636,664 5,636,664 5,586,429 50,235 Fire protection: Current: Personal services434,162 434,162 470,070 (35,908) Materials and supplies48,000 48,000 44,207 3,793 Services and other charges214,781 214,781 236,994 (22,213) Total current696,943 696,943 751,271 (54,328) Capital outlay25,000 25,000 23,714 1,286 Total fire protection721,943 721,943 774,985 (53,042) 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, 2005 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Expenditures: Public safety (continued): Protective inspection: Current: Personal services405,997$ 405,997$ 394,875$ 11,122$ Materials and supplies2,600 2,600 186 2,414 Services and other charges71,469 71,469 84,227 (12,758) Total protective inspection480,066 480,066 479,288 778 Emergency preparedness: Current: Personal services52,135 52,135 48,194 3,941 Materials and supplies2,400 2,400 673 1,727 Services and other charges9,760 9,760 4,843 4,917 Total emergency preparedness64,295 64,295 53,710 10,585 Total public safety6,902,968 6,902,968 6,894,412 8,556 Public works: Engineering department: Current: Personal services440,686 440,686 316,246 124,440 Materials and supplies8,320 8,320 13,163 (4,843) Services and other charges41,705 41,705 38,771 2,934 Total current490,711 490,711 368,180 122,531 Capital outlay5,200 5,200 15,123 (9,923) Total engineering department495,911 495,911 383,303 112,608 Street department: Current: Personal services612,481 612,481 665,080 (52,599) Materials and supplies125,050 125,050 113,217 11,833 Services and other charges474,980 474,980 484,495 (9,515) Total street department1,212,511 1,212,511 1,262,792 (50,281) Total public works1,708,422 1,708,422 1,646,095 62,327 Community services: Social services: Current: Services and other charges79,790 79,790 86,043 (6,253) 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, 2005 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Expenditures (continued): Parks and recreation: Administration: Current: Personal services457,705$ 457,705$ 435,530$ 22,175$ Materials and supplies12,500 12,500 9,324 3,176 Services and other charges53,900 53,900 53,726 174 Total current524,105 524,105 498,580 25,525 Capital outlay2,000 2,000 - 2,000 Total administration526,105 526,105 498,580 27,525 Adult programs: Current: Personal services51,170 51,170 54,168 (2,998) Materials and supplies12,684 12,684 13,724 (1,040) Cost of good sold to public19,421 19,421 20,632 (1,211) Services and other charges76,257 76,257 89,875 (13,618) Total adult programs159,532 159,532 178,399 (18,867) Teen programs Current: Personal services3,000 3,000 4,049 (1,049) Materials and supplies500 500 420 80 Total teen programs3,500 3,500 4,469 (969) Youth programs: Current: Personal services32,446 32,446 32,356 90 Materials and supplies7,473 7,473 8,925 (1,452) 39,919 41,281 (1,362) Total youth programs39,919 General programs: Current: Personal services8,463 8,463 8,104 359 Materials and supplies75 75 125 (50) Services and other charges10,200 10,200 12,504 (2,304) Total general programs18,738 18,738 20,733 (1,995) Community center: Current: Personal services388,072 388,072 369,469 18,603 Materials and supplies19,150 19,150 22,220 (3,070) Services and other charges56,850 56,850 78,697 (21,847) Total current464,072 464,072 470,386 (6,314) Capital outlay900 900 - 900 Total community center464,972 464,972 470,386 (5,414) 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, 2005 Variance with Final Budget - Budgeted AmountsActualPositive OriginalFinalAmounts(Negative) Expenditures: Parks and recreation (continued): Park maintenance: Current: Personal services537,636$ 537,636$ 486,527$ 51,109$ Materials and supplies56,955 56,955 41,957 14,998 Services and other charges268,115 268,115 316,951 (48,836) Total current862,706 862,706 845,435 17,271 Capital outlay3,400 3,400 2,851 549 Total park maintenance866,106 866,106 848,286 17,820 Total parks and recreation2,078,872 2,078,872 2,062,134 16,738 Economic development: Convention bureau: Current: Services and other charges304,000 304,000 337,575 (33,575) Nondepartmental: Expenditures not charged to departments: Current: Personal services55,470 55,470 50,275 5,195 Materials and supplies22,500 22,500 19,162 3,338 Services and other charges368,205 368,205 245,918 122,287 Total nondepartmental446,175 446,175 315,355 130,820 Total expenditures14,129,537 14,129,537 13,934,615 194,922 Revenues over (under) expenditures(738,459) (738,459) 175,143 913,602 Other financing sources (uses): Transfers in - administrative services reimbursed808,459 808,459 754,085 (54,374) Transfers from other funds- - 21,274 21,274 Transfers to other funds(70,000) (70,000) (625,000) (555,000) Total other financing sources (uses)738,459 738,459 150,359 (588,100) et increase (decrease) in fund balance-$ -$ 325,502 325,502$ N Fund balance - January 16,969,449 Fund balance - December 317,294,951$ CITY OF BROOKLYN CENTER, MINNESOTA Statement 10 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - EARLE BROWN TAX INCREMENT DISTRICT For the Year Ended December 31, 2005 Variance with Final Budget - Positive Budgeted Amounts OriginalFinalActual(Negative) Revenues: Tax increments600,100$ 600,100$ 845,868$ 245,768$ Investment earnings (net of market value adjustment)- - 17,093 17,093 Total revenue600,100 600,100 862,961 262,861 Expenditures: Current: Economic development: Personal services- - 14,728 (14,728) Services and other charges35,000 35,000 27,768 7,232 Total expenditures35,000 35,000 42,496 (7,496) Revenues over (under) expenditures565,100 565,100 820,465 255,365 Other financing sources (uses): Transfers in- - 269,127 269,127 Net increase (decrease) in fund balance565,100$ 565,100$ 1,089,592 524,492$ Fund balance - January 1(1,858,494) Fund balance - December 31(768,902)$ CITY OF BROOKLYN CENTER, MINNESOTA Statement 11 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE - TAX INCREMENT DISTRICT NO. 3 For the Year Ended December 31, 2005 Variance with Final Budget - Budgeted AmountsPositive OriginalFinalActual(Negative) Revenues: Tax increments3,167,310$ 3,167,310$ 3,576,209$ 408,899$ Investment earnings (net of market value adjustment)78,000 78,000 591,169 513,169 Miscellaneous- - 11,303 11,303 Total revenues3,245,310 3,245,310 4,178,681 933,371 Expenditures: Current: Economic development: Personal services- - 74,606 (74,606) Supplies- - 67 (67) Services and other charges284,940 284,940 1,388,233 (1,103,293) Capital outlay: Economic development- - 3,475,808 (3,475,808) Total expenditures284,940 284,940 4,938,714 (4,653,774) Revenues over (under) expenditures2,960,370 2,960,370 (760,033) (3,720,403) Other financing sources (uses): Transfers out(573,666) (573,666) (1,446,701) (873,035) et increase in fund balance2,386,704$ 2,386,704$ (2,206,734) (4,593,438)$ N Fund balance - January 125,871,672 Fund balance - December 3123,664,938$ CITY OF BROOKLYN CENTER, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE NOTE TO RSI December 31, 2005 Note A LEGAL COMPLIANCE - BUDGETS The General Fund budget is legally adopted on a basis consistent with accounting principals generally accepted in the United States of America. The legal level of budgetary control is at the department level of the General Fund. The following is a listing of General Fund departments whose expenditures exceed budgeted appropriations. FinalOver BudgetActualBudget Major Funds: General Fund: Mayor and council129,297 136,520 (7,223) Legal265,000 320,628 (55,628) Government buildings584,905 621,056 (36,151) Fire protection721,943 774,985 (53,042) Street department1,212,511 1,262,792 (50,281) Adult recreation programs159,532 178,399 (18,867) Teen recreation programs3,500 4,469 (969) Youth recreation programs39,919 41,281 (1,362) General recreation programs18,738 20,733 (1,995) Community center464,972 470,386 (5,414) Convention bureau304,000 337,575 (33,575) Special Revenue Funds: Earle Brown T.I.F. District35,000 42,496 (7,496) T.I.F. District # 3284,940 4,938,714 (4,653,774) 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). CITY OF BROOKLYN CENTER, MINNESOTA Statement 12 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2005 Total SpecialDebtCapitalNonmajor RevenueServiceProjectGovernmental Assets Cash and investments1,863,906$ 1,051,656$ 3,735,986$ 6,651,548$ Receivables: Accounts- - 205,147 205,147 Current taxes588 2,574 - 3,162 Delinquent taxes12,349 18,114 - 30,463 Due from other funds5,837 - - 5,837 Due from other governments43,982 - 93,033 137,015 Interfund receivable- - 482,611 482,611 Advances to other funds- - 800,000 800,000 Total assets1,926,662 1,072,344 5,316,777 8,315,783 Liabilities and Fund Balances Liabilities: Accounts payable8,100 - 115,855 123,955 Contracts payable- - 76,766 76,766 Due to other governments4,517 - - 4,517 Accrued salaries and wages4,465 - - 4,465 Deferred revenue12,349 18,114 - 30,463 Total liabilities29,431 18,114 192,621 240,166 Fund balances: Reserved- 1,054,230 800,000 1,854,230 Unreserved: Designated1,597,862 - 4,324,156 5,922,018 299,369 Undesignated299,369 - - Total fund balances1,897,231 1,054,230 5,124,156 8,075,617 Total liabilities and fund balances1,926,662$ 1,072,344$ 5,316,777$ 8,315,783$ CITY OF BROOKLYN CENTER, MINNESOTA Statement 13 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2005 Total SpecialDebtCapitalNonmajor RevenueServiceProjectGovernmental Revenues: Property taxes257,126$ 779,196$ -$ 1,036,322$ Tax increments258,611 - - 258,611 Franchise fees- - 662,614 662,614 Intergovernmental147,537 297,260 864,117 1,308,914 Charges for services9,481 - - 9,481 Investment earnings (net of market value adjustment)46,307 69,490 132,992 248,789 Miscellaneous124,765 1,076 244,237 370,078 Total revenues843,827 1,147,022 1,903,960 3,894,809 Expenditures: Current: Public safety155,716 - - 155,716 Public works- - 374,000 374,000 Parks and recreation61,847 - - 61,847 Economic development233,046 - - 233,046 Capital outlay: General government- - 610,484 610,484 Public safety2,951 - - 2,951 Public works- - 2,544,847 2,544,847 Debt service: Principal retirement237,189 1,545,000 - 1,782,189 Interest- 1,016,991 - 1,016,991 Fiscal agent fees- 3,125 - 3,125 Total expenditures690,749 2,565,116 3,529,331 6,785,196 Revenues over (under) expenditures153,078 (1,418,094) (1,625,371) (2,890,387) Other financing sources (uses): Transfers in283,764 1,420,628 817,000 2,521,392 Transfers out(276,612) (269,127) (2,353) (548,092) Refunded bonds redeemed- (7,280,000) - (7,280,000) Total other financing sources (uses)7,152 (6,128,499) 814,647 (5,306,700) Net increase (decrease) in fund balances160,230 (7,546,593) (810,724) (8,197,087) Fund balances - January 11,737,001 8,600,823 5,934,880 16,272,704 Fund balances - December 311,897,231$ 1,054,230$ 5,124,156$ 8,075,617$ 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 and a statement of its operations can be found in the enterprise fund section of this report. The EDA also does redevelopment and housing projects, funded by an ad valorem property tax levy and transfers from the CDBG and HRA funds. 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. Transfers are made from this fund to the Economic Development Authority Fund; projects are accounted for in the Economic Development Authority Fund. City Initiatives Grant Fund – Revenues and expenditures from grants received from outside entities are accounted for in this fund. Grant programs for 2003 include several public safety grants, an after school enrichment recreation grant and a local planning assistance grant. CITY OF BROOKLYN CENTER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2005 Housing andEconomic RedevelopmentDevelopment AuthorityAuthority Assets Cash and investments$ 1,594,969-$ Current taxes receivable588 - Delinquent taxes receivable12,349 - Due from other funds 5,837- Due from other governments- - Total assets 1,600,80612,937 Liabilities and Fund Balances Liabilities: Accounts payable 288- Due to other governments- - Accrued salaries and wages- 3,244 Deferred revenue12,349 - Total liabilities12,349 3,532 Fund balances: Unreserved: Designated: Economic development588 1,597,274 Undesignated -- Total fund balances588 1,597,274 Total liabilities and fund balances12,937$ 1,600,806$ Statement 14 Total TaxPoliceCommunityCityNonmajor IncrementDrugDevelopmentInitiativesSpecial District No. 4ForfeitureBlock GrantGrantRevenue $ 38,422104,473$ 4,501$ 121,541$ 1,863,906$ -- - - 588 -- - - 12,349 -- - - 5,837 -- - 43,982 43,982 38,422104,473 4,501 165,523 1,926,662 -- - 7,812 8,100 17- 4,500 - 4,517 -- - 1,221 4,465 -- - - 12,349 17- 4,500 9,033 29,431 -- - - 1,597,862 38,405104,473 1 156,490 299,369 38,405104,473 1 156,490 1,897,231 $ 38,422104,473$ 4,501$ 165,523$ 1,926,662$ CITY OF BROOKLYN CENTER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2005 Housing andEconomic RedevelopmentDevelopment AuthorityAuthority Revenues: Property taxes$ -257,126$ Tax increments -- Intergovernmental 420- Charges for services -- Investment earnings (net of market value adjustment)- 41,051 Miscellaneous 24,631- Total revenues257,126 66,102 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 99,001- Supplies 595- Services and other charges- 113,898 Total economic development- 213,494 Capital outlay: Public safety -- Debt service: Principal -- Total expenditures 213,494- Revenues over (under) expenditures257,126 (147,392) Other financing sources (uses): Transfers in 256,538- Transfers out -(256,538) Total other financing sources (uses)(256,538) 256,538 Net increase in fund balances588 109,146 Fund balances - January 1- 1,488,128 Fund balances - December 31588$ 1,597,274$ Statement 15 Total TaxPoliceCommunityCityNonmajor IncrementDrugDevelopmentInitiativesSpecial District No. 4ForfeitureBlock GrantGrantRevenue $ --$ -$ -$ 257,126$ -258,611 - - 258,611 -- 13,500 133,617 147,537 -- - 9,481 9,481 1,083923 - 3,250 46,307 29,791- - 70,343 124,765 30,874259,534 13,500 216,691 843,827 -- - 71,400 71,400 8,406- - 7,321 15,727 5,820- - 62,769 68,589 14,226- - 141,490 155,716 -- - 13,374 13,374 -- - 5,391 5,391 -- - 43,082 43,082 -- - 61,847 61,847 -2,842 - - 101,843 -- - - 595 -3,211 13,499 - 130,608 -6,053 13,499 - 233,046 2,951- - - 2,951 -237,189 - - 237,189 17,177243,242 13,499 203,337 690,749 13,69716,292 1 13,354 153,078 -- - 27,226 283,764 -- - (20,074) (276,612) -- - 7,152 7,152 13,69716,292 1 20,506 160,230 24,70888,181 - 135,984 1,737,001 $ 38,405104,473$ 1$ 156,490$ 1,897,231$ CITY OF BROOKLYN CENTER, MINNESOTA Statement 16 SPECIAL REVENUE FUND - HOUSING AND REDEVELOPMENT AUTHORITY FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2005 Actual Budgeted Amounts OriginalFinalAmounts Revenues: Property taxes251,295$ 251,295$ 257,126$ Revenues over (under) expenditures251,295 251,295 257,126 Other financing sources (uses): Transfers out(251,295) (251,295) (256,538) Net increase in fund balance-$ -$ 588 Fund balance - January 1 - Fund balance - December 31$588 CITY OF BROOKLYN CENTER, MINNESOTA Statement 17 SPECIAL REVENUE FUND - ECONOMIC DEVELOPMENT AUTHORITY FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2005 Actual Budgeted Amounts OriginalFinalAmounts Revenues: Intergovernmental-$ -$ 420$ Investment earnings (net of market value adjustment)- - 41,051 Miscellaneous- - 24,631 Total revenues- - 66,102 Expenditures: Current: Economic development: Personal services186,294 186,294 99,001 Supplies2,200 2,200 595 Services and other charges54,325 54,325 113,898 Total expenditures242,819 242,819 213,494 Revenues over (under) expenditures(242,819) (242,819) (147,392) Other financing sources (uses): Transfers in251,295 251,295 256,538 Net increase (decrease) in fund balance8,476$ 8,476$ 109,146 Fund balance - January 1 1,488,128 Fund balance - December 31$1,597,274 CITY OF BROOKLYN CENTER, MINNESOTA Statement 18 SPECIAL REVENUE FUND - TAX INCREMENT DISTRICT NO. 4 FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2005 Budgeted AmountsActual OriginalFinalAmounts Revenues: Tax increments236,400$ 236,400$ 258,611$ Investment earnings (net of market value adjustment)- - 923 Total revenues236,400 236,400 259,534 Expenditures: Current: Economic development: Personal services- - 2,842 Services and other charges10,000 10,000 3,211 Total economic development10,000 10,000 6,053 Debt service: Principal- - 237,189 Total expenditures10,000 10,000 243,242 Revenues over (under) expenditures226,400$ 226,400$ 16,292 Fund balance - January 1 88,181 Fund balance - December 31$104,473 CITY OF BROOKLYN CENTER, MINNESOTA Statement 19 SPECIAL REVENUE FUND - POLICE DRUG FORFEITURE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2005 Budgeted AmountsActual OriginalFinalAmounts Revenues: Investment earnings (net of market value adjustment)-$ -$ 1,083$ Miscellaneous: Forfeited drug money25,000 25,000 29,791 Total revenues25,000 25,000 30,874 Expenditures: Current: Public safety: Supplies25,000 25,000 8,406 Services and other charges- - 5,820 Total public safety25,000 25,000 14,226 Capital outlay: Public safety- - 2,951 Total expenditures25,000 25,000 17,177 Revenues over (under) expenditures-$ -$ 13,697 Fund balance - January 1 24,708 Fund balance - December 31$38,405 CITY OF BROOKLYN CENTER, MINNESOTA Statement 20 SPECIAL REVENUE FUND - COMMUNITY DEVELOPMENT BLOCK GRANT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2005 Budgeted AmountsActual OriginalFinalAmounts Revenues: Intergovernmental: Federal grants240,000$ 240,000$ 13,500$ Expenditures: Current: Economic development: Services and other charges240,000 240,000 13,499 Revenues over (under) expenditures-$ -$ 1 Fund balance - January 1 - Fund balance - December 31$1 CITY OF BROOKLYN CENTER, MINNESOTA Statement 21 SPECIAL REVENUE FUND - CITY INITIATIVES GRANT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31, 2005 Budgeted AmountsActual OriginalFinalAmounts Revenues: Intergovernmental19,000$ 19,000$ 133,617$ Charges for services12,580 12,580 9,481 Investment earnings (net of market value adjustment)- - 3,250 Miscellaneous37,174 37,174 70,343 Total revenues68,754 68,754 216,691 Expenditures: Current: Public safety: Personal services61,488 61,488 71,400 Supplies- - 7,321 Services and other charges- - 62,769 Total public safety61,488 61,488 141,490 Parks and recreation: Personal services8,391 8,391 13,374 Supplies9,070 9,070 5,391 Services and other charges35,383 35,383 43,082 Total parks and recreation52,844 52,844 61,847 Total expenditures114,332 114,332 203,337 Revenues over (under) expenditures(45,578)(45,578)13,354 Other financing sources (uses): Transfers in- - 27,226 Transfers out- - (20,074) Total other financing sources (uses)- - 7,152 et increase (decrease) in fund balance(45,578)$ (45,578)$ 20,506 N Fund balance - January 1 135,984 Fund balance - December 31$156,490 NONMAJOR DEBT SERVICE FUNDS The City's Debt Service Funds account for two types of bonded indebtedness: • General Obligation Bonds • Tax Increment Bonds General Obligation Bonds Fund – This fund is used to account for the accumulation of resources for payment of general obligation bonds and interest thereon. Tax Increment Bonds Fund – This fund is used to account for the accumulation of resources for payment of tax increment general obligation bonds and interest thereon. These bonds were sold to finance the purchase and redevelopment of the historic Earle Brown Farm and other various redevelopment projects within the City. CITY OF BROOKLYN CENTER, MINNESOTA Statement 22 SUBCOMBINING BALANCE SHEET NONMAJOR DEBT SERVICE FUNDS December 31, 2005 General Obligation Bonds Assets Cash and investments$ 1,051,656 Current taxes receivable 2,574 Delinquent taxes receivable 18,114 Total assets1,072,344 Liabilities and Fund Balance Liabilities: Deferred revenue 18,114 Fund balance: Reserved: Debt service 1,054,230 Total liabilities and fund balance$1,072,344 CITY OF BROOKLYN CENTER, MINNESOTA Statement 23 SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICE FUNDS For the Year Ended December 31, 2005 Total GeneralTaxNonmajor ObligationIncrementDebt BondsBondsService Revenues: Property tax779,196$ -$ 779,196$ Intergovernmental297,260 - 297,260 Investment earnings (net of market value adjustment)47,875 21,615 69,490 Miscellaneous720 356 1,076 Total revenues1,125,051 21,971 1,147,022 Expenditures: Debt service: Principal775,000 770,000 1,545,000 Interest287,251 729,740 1,016,991 Fiscal agent fees2,147 978 3,125 Total expenditures1,064,398 1,500,718 2,565,116 Revenues over (under) expenditures60,653 (1,478,747) (1,418,094) Other financing sources (uses): Transfers in- 1,420,628 1,420,628 Transfers out- (269,127) (269,127) Refunded bonds redeemed(4,910,000) (2,370,000) (7,280,000) Total other financing sources (uses)(4,910,000) (1,218,499) (6,128,499) Net increase (decrease) in fund balances(4,849,347) (2,697,246) (7,546,593) Fund balances - January 15,903,577 2,697,246 8,600,823 Fund balances - December 311,054,230$ -$ 1,054,230$ 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 for Construction Fund - This fund was established to account for the state allotment of gasoline tax collections used for transportation related construction projects. Earl 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. CITY OF BROOKLYN CENTER, MINNESOTA SUBCOMBINING BALANCE SHEET NONMAJOR CAPITAL PROJECT FUNDS December 31, 2005 Capital ReserveCapital AssetsEmergencyImprovements Cash and investments1,006,371$ 396,509$ Accounts receivable -- Due from other governments- - Interfund receivable 482,611- Advances to other funds- 800,000 Total assets 1,679,1201,006,371 Liabilities and Fund Balances Liabilities: Accounts payable 826- Contracts payable -- Total liabilities 826- Fund balances: Reserved: Advances to other funds- 800,000 Unreserved: Designated for capital improvements1,006,371 878,294 Total fund balances1,006,371 1,678,294 Total liabilities and fund balances1,006,371$ 1,679,120$ Statement 24 MunicipalEarle BrownTotal State AidHeritageNonmajor forCenterStreetCapital ConstructionImprovementsReconstructionTechnologyProjects $ 117,19398,362$ 1,683,214$ 434,337$ 3,735,986$ 392- 163,995 40,760 205,147 -93,033 - - 93,033 -- - - 482,611 -- - - 800,000 117,585191,395 1,847,209 475,097 5,316,777 94,02520,741 - 263 115,855 21,277- - 55,489 76,766 115,30220,741 - 55,752 192,621 -- - - 800,000 2,283170,654 1,847,209 419,345 4,324,156 2,283170,654 1,847,209 419,345 5,124,156 $ 117,585191,395$ 1,847,209$ 475,097$ 5,316,777$ CITY OF BROOKLYN CENTER, MINNESOTA SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR CAPITAL PROJECT FUNDS For the Year Ended December 31, 2005 Capital ReserveCapital EmergencyImprovements Revenues: Franchise fees$ --$ Intergovernmental 10,000- Investment earnings (net of market value adjustment)34,110 28,448 Miscellaneous 24,637- Total revenues34,110 63,085 Expenditures: Current: Public works: Personal services66,571 - Materials and supplies3,502 - Services and other charges303,927 - Total public works374,000 - Capital outlay General government -- Public works 310,074- Total capital outlay- 310,074 Total expenditures374,000 310,074 Revenues over (under) expenditures(339,890) (246,989) Other financing sources (uses): Transfers in 125,000- Transfers out (1,200)- Total other financing sources (uses)- 123,800 Net increase (decrease) in fund balances(339,890) (123,189) Fund balances - January 11,346,261 1,801,483 Fund balances - December 311,006,371$ 1,678,294$ Statement 25 MunicipalEarle BrownTotal State AidHeritageNonmajor forCenterStreetCapital ConstructionImprovementsReconstructionTechnologyProjects $ --$ 662,614$ -$ 662,614$ -854,117 - - 864,117 3,79911,976 44,665 9,994 132,992 60,000- - 159,600 244,237 63,799866,093 707,279 169,594 1,903,960 -- - - 66,571 -- - - 3,502 -- - - 303,927 -- - - 374,000 249,964- - 360,520 610,484 -1,293,812 940,961 - 2,544,847 249,9641,293,812 940,961 360,520 3,155,331 249,9641,293,812 940,961 360,520 3,529,331 (186,165)(427,719) (233,682) (190,926) (1,625,371) 67,000- 555,000 70,000 817,000 -- - (1,153) (2,353) 67,000- 555,000 68,847 814,647 (119,165)(427,719) 321,318 (122,079) (810,724) 121,448598,373 1,525,891 541,424 5,934,880 $ 2,283170,654$ 1,847,209$ 419,345$ 5,124,156$ 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. Expansion into refuse collection will take place only when there is a clear advantage to be achieved by it. 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. CITY OF BROOKLYN CENTER, MINNESOTA Statement 26 SUBCOMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS December 31, 2005 Total Recycling andStreet LightNonmajor RefuseUtilityEnterprise Assets Cash and cash equivalents15,068$ 90,936$ 106,004$ Accounts receivable - net52,669 55,122 107,791 Total assets67,737 146,058 213,795 Liabilities Accounts payable368 24,287 24,655 Net assets Unreserved67,369$ 121,771$ 189,140$ CITY OF BROOKLYN CENTER, MINNESOTA Statement 27 SUBCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2005 Total Recycling andStreet LightNonmajor RefuseUtilityEnterprise Operating revenues: Sales and user fees235,160$ 214,669$ 449,829$ Operating expenses: Supplies132 383 515 Other services252,866 62,037 314,903 Insurance1,663 1,127 2,790 Utilities- 149,547 149,547 Total operating expenses254,661 213,094 467,755 Operating income (loss)(19,501) 1,575 (17,926) Nonoperating revenues (expenses): Investment earnings (net of market value adjustment)426 3,408 3,834 Change in net assets(19,075) 4,983 (14,092) Net assets - January 186,444 116,788 203,232 et assets - December 3167,369$ 121,771$ 189,140$ N CITY OF BROOKLYN CENTER, MINNESOTA Statement 28 SUBCOMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2005 Total Recycling andStreet LightNonmajor RefuseUtilityEnterprise Cash flows from operating activities: Receipts from customers233,258$ 206,789$ 440,047$ Payments to suppliers(255,043) (200,791) (455,834) Net cash flows provided (used) by operating activities(21,785) 5,998 (15,787) Cash flows from investing activities: Interest on investments426 3,408 3,834 Net increase in cash and cash equivalents(21,359) 9,406 (11,953) Cash and cash equivalents - January 136,427 81,530 117,957 Cash and cash equivalents - December 3115,068$ 90,936$ 106,004$ Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) (19,501)$ 1,575$ (17,926)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in assets and liabilities: (Increase) decrease) in receivables(1,902) (7,879) (9,781) Increase (decrease) in payables(382) 12,302 11,920 Total adjustments(2,284) 4,423 2,139 Net cash flows provided (used) by operating activities(21,785)$ 5,998$ (15,787)$ INTERNAL SERVICE FUNDS Internal Service Funds are used to account, on a cost reimbursement basis, for the financing of goods or services provided by one department to other departments of the City. Revenues and expenses in these funds are recognized on the accrual basis of accounting. Revenues are recognized in the accounting period in which they are earned and become measurable. Expenditures are recognized in the accounting period in which they are incurred. The City’s Internal Service Funds included in this section are: 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. 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. 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, repair, and replacement will be provided from rental rates which the Central Garage charges City operating departments for use of the equipment. CITY OF BROOKLYN CENTER, MINNESOTA Statement 29 SUBCOMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS December 31, 2005 CentralEE RetirementEE Comp GarageBenefitAbsencesTotal Assets Current assets: Cash and cash equivalents5,015,807$ 1,505,579$ 919,113$ 7,440,499$ Accounts receivable - net3,701 5,290 - 8,991 Inventories - at cost31,435 - - 31,435 Total current assets5,050,943 1,510,869 919,113 7,480,925 Noncurrent assets: Capital assets: Machinery and equipment5,909,532 - - 5,909,532 Less: Allowance for depreciation(3,997,043) - - (3,997,043) Net capital assets1,912,489 - - 1,912,489 Total assets6,963,432 1,510,869 919,113 9,393,414 Liabilities Current liabilities: Accounts payable34,774 - - 34,774 Accrued salaries payable5,837 - - 5,837 Compensated absences payable - - 919,113 919,113 Total current liabilities40,611 - 919,113 959,724 Noncurrent liabilities: Accrued health insurance liability- 2,093,307 - 2,093,307 Total liabilities40,611 2,093,307 919,113 3,053,031 Net assets Invested in capital assets, net of related debt1,912,489 - - 1,912,489 Unrestricted5,010,332 (582,438) - 4,427,894 Total net assets6,922,821$ (582,438)$ -$ 6,340,383$ CITY OF BROOKLYN CENTER, MINNESOTA Statement 30 SUBCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2005 CentralEE RetirementEE Comp GarageBenefitAbsencesTotal Operating revenues: Charges for services1,171,447$ -$ -$ 1,171,447$ Operating expenses: Personal services245,210 605,193 47,870 898,273 Supplies326,618 - - 326,618 Other services111,120 - - 111,120 Insurance40,954 - - 40,954 Utilities2,675 - - 2,675 Depreciation494,270 - - 494,270 Total operating expenses1,220,847 605,193 47,870 1,873,910 Operating income (loss)(49,400) (605,193) (47,870) (702,463) Nonoperating revenues (expenses): Investment earnings (net of market value adjustment)130,256 40,434 23,285 193,975 Gain (loss) on sale of capital assets31,880 - - 31,880 Other revenue5,224 - - 5,224 Total nonoperating revenues (expenses)167,360 40,434 23,285 231,079 Change in net assets117,960 (564,759) (24,585) (471,384) Net assets - January 1 6,804,861 (17,679) 24,585 6,811,767 et assets - December 316,922,821$ (582,438)$ -$ 6,340,383$ N CITY OF BROOKLYN CENTER, MINNESOTA Statement 31 SUBCOMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2005 CentralEE RetirementEE Comp GarageBenefitAbsencesTotal Cash flows from operating activities: Receipts from interfund services provided1,177,784$ -$ -$ 1,177,784$ Payments to suppliers(502,855) - - (502,855) Payments to employees(242,743) (63,908) 13,938 (292,713) Miscellaneous revenue5,224 - - 5,224 Net cash flows provided (used) by operating activities437,410 (63,908) 13,938 387,440 Cash flows from capital and related financing activities: Acquisition and construction of capital assets(378,917) - - (378,917) Proceeds from sale of capital assets47,345 - - 47,345 Net cash flows provided (used) by capital and related financing activities(331,572) - - (331,572) Cash flows from investing activities: Interest on investments130,256 40,434 23,285 193,975 Net increase in cash and cash equivalents236,094 (23,474) 37,223 249,843 Cash and cash equivalents - January 14,779,713 1,529,053 881,890 7,190,656 Cash and cash equivalents - December 315,015,807$ 1,505,579$ 919,113$ 7,440,499$ Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) (49,400)$ (605,193)$ (47,870)$ (702,463)$ Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation494,270 - - 494,270 Changes in assets and liabilities: (Increase) decrease in receivables6,337 (3,441) - 2,896 (Increase) decrease in inventories(3,315) - - (3,315) Increase (decrease) in payables(18,173) - - (18,173) 609,001 Increase (decrease) in accrued expenses2,467 544,726 61,808 Other nonoperating income5,224 - - 5,224 Total adjustments486,810 541,285 61,808 1,089,903 et cash provided (used) by operating activities437,410$ (63,908)$ 13,938$ 387,440$ N CAPITAL ASSET ADJUSTMENTS: Deletions of machinery and equipment(277,194)$ -$ -$ (277,194)$ Deletions of accumulated depreciation: machinery and equipment261,729- - 261,729 Total capital asset adjustments(15,465)$ -$ -$ (15,465)$ STATISTICAL SECTION CITY OF BROOKLYN CENTER, MINNESOTA GOVERNMENT-WIDE EXPENSES BY FUNCTION Last three fiscal years (Unaudited) FiscalGeneralPublicPublicCommunityParks andEconomicNon- Year*GovernmentSafetyWorksServicesRecreationDevelopmentDepartmental 20032,565,088$ 7,184,536$ 3,002,223$ 225,365$ 2,169,482$ 1,759,585$ 342,142$ 20042,725,137 7,538,277 2,482,819 67,324 2,255,231 1,683,025 333,669 20052,970,364 7,848,160 3,856,992 86,043 2,305,047 1,217,294 - *Government-wide expenses are not available for years prior to 2003 Table 1 Interest onE. BrownOther Long-TermMunicipalGolfHeritageWaterSanitaryStormEnterprise DebtLiquorCourseCenterUtilitySewerDrainageFundsTotal $ 724,897922,253$ 290,990$ 2,109,166$ 1,645,955$ 2,567,032$ 838,421$ 370,972$ 26,718,107$ 939,2441,268,649 271,127 2,180,229 1,533,923 2,310,645 756,593 388,472 26,734,364 978,7431,349,852 273,024 2,262,359 1,795,759 2,808,644 1,102,672 467,755 29,322,708 CITY OF BROOKLYN CENTER, MINNESOTA GOVERNMENT-WIDE REVENUES Last three fiscal years (Unaudited) Program Revenues ChargesOperatingCapital FiscalForGrants andGrants andPropertyTax Year*ServicesContributionsContributionsTaxesIncrements 200310,802,128$ 1,627,020$ 1,079,134$ 10,407,613$ 3,527,881$ 200410,712,432 933,104 2,423,411 11,239,251 3,834,060 200511,804,863 795,633 2,398,345 11,288,883 4,216,246 *Government-wide revenues are not available for years prior to 2003 Table 2 General Revenues Grants and Contributions Not RestrictedUnrestrictedGain on LodgingFranchiseto SpecificInvestmentSale of TaxesFeesProgramEarningsCapital AssetsOtherTotal $ -661,267$ 1,413,913$ 508,494$ 13,976$ 829,572$ 30,870,998$ 612,079656,859 923,374 491,524 29,202 660,218 32,515,514 710,619662,614 577,548 1,472,285 31,880 - 33,958,916 CITY OF BROOKLYN CENTER, MINNESOTA GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION Last Ten Fiscal Years (Unaudited) Fiscal GeneralPublicPublicCommunity YearGovernmentSafetyWorksServices 19961,968,780$ 5,022,324$ 1,649,526$ 78,442$ 19971,992,251 5,089,072 1,868,130 79,800 19982,133,829 5,137,108 1,955,108 73,066 19992,257,957 5,336,622 1,904,205 83,295 20002,421,762 5,437,360 2,100,865 95,148 20012,504,392 5,660,600 2,142,064 106,034 20022,553,426 6,184,663 1,986,692 103,491 20032,497,608 6,272,875 1,649,405 91,581 20042,585,597 6,642,254 1,679,440 67,324 20052,593,001 6,894,412 1,646,095 86,043 Note: Table includes General Fund only. Source: City Finance Department records Table 3 Admin.Other Parks andEconomicNon-ServicesFinancial RecreationDevelopmentDepartmentalReimbursementUsesTotal $ 201,6002,282,054$ 317,148$ (611,534)$ -$ 10,908,340$ 248,7792,186,686 311,436 (661,058) 624,637 11,739,733 313,7922,075,180 312,625 (731,737) 1,427,001 12,695,972 383,9272,132,511 343,925 (670,390) 1,591,039 13,363,091 397,5072,216,098 419,789 (795,737) 1,532,238 13,825,030 392,8052,205,018 372,056 (767,504) 1,661,877 14,277,342 340,6592,026,409 366,282 (596,541) 1,863,910 14,828,991 316,0592,068,034 332,608 (607,221) 2,194,655 14,815,604 311,6981,981,998 333,669 (784,084) 1,465,464 14,283,360 337,5752,062,134 315,355 (754,085) 625,000 13,805,530 CITY OF BROOKLYN CENTER, MINNESOTA Table 4 GENERAL GOVERNMENTAL REVENUES AND OTHER FINANCING SOURCES BY SOURCE Last Ten Fiscal Years (Unaudited) GeneralOther Fiscal PropertyLicensesInter-Charges forCourtFinancing YearTaxesand PermitsgovernmentalServicesFinesMiscellaneousSourcesTotal 19966,120,877$ 402,000$ 3,618,075$ 839,583$ 186,761$ 328,750$ 100,000$ 11,596,046$ 19976,327,890 485,232 3,811,900 757,640 183,270 458,831 100,000 12,124,763 19987,949,744 549,067 3,875,392 771,614 193,688 425,319 - 13,764,824 19998,219,491 763,960 3,911,480 739,054 205,460 194,353 - 14,033,798 20008,745,172 632,549 4,076,169 779,060 180,676 234,740 - 14,648,366 20018,411,513 788,629 4,135,282 688,453 230,408 697,886 - 14,952,171 200211,257,003 823,996 2,843,629 575,748 278,557 312,303 - 16,091,236 200310,799,074 827,685 1,948,457 678,875 290,408 358,411 - 14,902,910 200410,025,495 678,077 1,419,210 678,057 254,980 179,910 - 13,235,729 200511,128,796 675,530 1,135,644 721,054 253,748 194,986 21,274 14,131,032 *State aids were reduced for cities in 2002. Cities were permitted to levy back the aid reductions within specific limitations. Note: Table includes General Fund only. Source: City Finance Department records. CITY OF BROOKLYN CENTER, MINNESOTA Table 5 SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS Last Ten Fiscal Years (Unaudited) Percent Current CollectionsTotal SpecialPercentCollectionCollections FiscalAssessmentofof PriorTotalto Current YearBillingsAmountBillingsYearsCollectionsLevy 1996485,019$ 459,316$ 94.70%4,617$ 463,933$ 95.65% 1997498,022 475,080 95.39%2,470 477,550 95.89% 1998541,477 524,609 96.88%24,870 549,479 101.48% 1999688,691 657,537 95.48%34,532 692,069 100.49% 2000900,481 861,888 95.71%20,620 882,508 98.00% 2001868,414 787,769 90.71%20,620 808,389 93.09% 2002927,799 863,460 93.07%65,678 929,138 100.14% 20031,064,631 1,018,908 95.71%75,045 1,093,953 102.75% 2004966,412 920,604 95.26%44,563 965,167 99.87% 2005973,344 928,842 95.43%52,512 981,354 100.82% CITY OF BROOKLYN CENTER, MINNESOTA Table 6 COMPUTATION OF LEGAL DEBT MARGIN December 31, 2005 (Unaudited) December 31, 2005 Market Value$1,944,996,000 Applicable Debt Limit (Percentage)2% Debt Limit$ 38,899,920 Amount of Debt Applicable to Debt Limit: Total Bonded Debt$ 29,365,000 Less:Special Assessment Bonds (4,720,000) State Aid Street Bonds (295,000) Tax Increment Bonds (19,305,000) Total Debt Applicable to Debt Limit5,045,000$ Legal Debt Margin$ 33,854,920 Source: City Finance and Assessing Department records CITY OF BROOKLYN CENTER, MINNESOTA Table 7 RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES Last Ten Fiscal Years (Unaudited) TotalDebt Service TotalGeneralas a Percent FiscalDebtFundof General (1) Principal Year InterestServiceExpendituresExpenditures 19965,125,000$ 1,106,661$ 6,231,661$ 10,908,340$ 57.13% 19971,135,000 1,017,128 2,152,128 11,739,733 18.33% 19981,285,000 1,244,923 2,529,923 12,695,972 19.93% 19992,085,000 1,323,609 3,408,609 13,363,091 25.51% 20003,970,000 1,282,512 5,252,512 13,825,030 37.99% 20012,805,000 1,149,623 3,954,623 14,277,342 27.70% 20023,000,000 1,034,139 4,034,139 14,828,991 27.20% 20033,220,000 905,518 4,125,518 14,815,604 27.85% 20043,520,000 881,016 4,401,016 12,817,896 34.33% 20052,535,000 1,214,752 3,749,752 13,180,530 28.45% Source: City Finance Department records (1) Amounts for 1996 are higher because of the defeasance of the Tax Increment Bonds of 1985. CITY OF BROOKLYN CENTER, MINNESOTA Table 8 MISCELLANEOUS STATISTICAL DATA Page 1 of 2 December 31, 2005 (Unaudited) Date of incorporationFebruary 14, 1911 Date of adoption of City CharterNovember 8, 1966 Date City Charter effectiveDecember 8, 1966 Form of governmentCouncil-Manager Fiscal year beginsJanuary 1 Area of City8 1/2 square miles Miles of streets: City105.8 County6.49 State10.79 Miles of sidewalks46.2 Miles of trails21.6 Miles of storm sewers72 Number of street lights:Owned by NSP858 Owned by City1,037 City employees as of December 31, 2005: Authorized regular full-time150 Temporary or part-time120 Total270 Fire protection: Number of stations2 Number of full-time employees1 Number of volunteer firefighters40 Police protection: Number of stations1 Number of sworn police officers42 Number of other full-time employees15 Number of part-time employees8 CITY OF BROOKLYN CENTER, MINNESOTA Table 8 MISCELLANEOUS STATISTICAL DATA Page 2 of 2 December 31, 2005 (Unaudited) Parks and Recreation: Park property totals 527 acres developed to serve a wide variety of recreational interests. The areas include playlots, playgrounds, playfields, trails, nature areas and an arboretum. Archery range1 Playgrounds19 Park shelters8 Picnic shelters10 Ice skating rinks6 Hockey rinks5 Softball diamonds18 Baseball diamonds5 Tennis courts14 Basketball courts19 Football/soccer fields3 Municipal water plant: Number of connections8,890 Average daily consumption in gallons3,396,293 Peak daily consumption in gallons8,255,000 Plant capacity - gallons per day17,652,000 Miles of water mains120 Number of fire hydrants878 Number of wells9 Number of elevated reservoirs3 Storage capacity in gallons3,000,000 Water rate per thousand gallons$1.070 Municipal sewer plant: Number of connections8,804 Miles of sanitary sewer100.5 Daily disposal capacity in gallons10,938,240 Number of lift stations10 Residential rate per quarter$57.17 Municipal liquor stores (off-sale): Number of leased stores2 2005 sales$4,610,091 Elections: Last general election - November 5, 2002 Registered voters16,676 Votes cast10,678 Percentage of registered voters voting64.03% Last municipal election - November 2, 2004 Registered voters17,776 Votes cast13,803 Percentage of registered voters voting77.64% CITY OF BROOKLYN CENTER, MINNESOTA Table 9 TAX LEVIES AND TAX COLLECTIONS Last Ten Fiscal Years (Unaudited) CollectionsPercentageCollections of Currentof Levyof PriorTotalDelinquent Year's TaxesCollectedYear's TaxesCollectionsDelinquentTaxes as YearTaxDuring FiscalDuringDuringTotalas Percent ofTaxesPercent of (1) Period CollectedLevy Fiscal PeriodFiscal PeriodCollectionsTax LevyReceivableTax Levy 19966,495,206$ 6,358,392$ 97.89%(11,917)$ 6,346,475$ 97.71%208,862$ 3.22% 19976,746,487 6,626,336 98.22%(57,329) 6,569,007 97.37%186,089 2.76% 19987,686,521 7,643,080 99.43%(51,327) 7,591,753 98.77%146,907 1.91% 19997,896,858 7,824,214 99.08%30,110 7,854,324 99.46%165,926 2.10% 20008,099,965 8,044,715 99.32%178,306 8,223,021 101.52%75,070 0.93% 20018,420,298 8,119,854 96.43%(36,320) 8,083,534 96.00%414,608 4.92% 200210,442,170 10,232,645 97.99%219,067 10,451,712 100.09%329,237 3.15% 200310,355,287 10,048,178 97.03%214,252 10,262,430 99.10%391,585 3.78% 200410,778,957 10,300,458 95.56%273,794 10,574,252 98.10%580,140 5.38% 200411,319,018 11,139,977 98.42%460,701 11,600,678 102.49%227,849 2.01% Source: City Finance Department Records (1) Beginning in 2002, current tax collections include the market value homestead credit CITY OF BROOKLYN CENTER, MINNESOTA ASSESSED VALUE AND ESTIMATED MARKET VALUE OF ALL TAXABLE PROPERTY Last Ten Fiscal Years (Unaudited) Assessment Year1996199719981999 (1) Population 28,50228,51528,53528,535 Real property: Tax capacity: City: Residential$9,485,333$9,182,859$9,309,893$9,976,862 Nonresidential12,837,15711,082,43610,657,58811,002,424 Area-wide allocation(586,003)226,287537,4061,504,330 21,736,48720,491,58220,504,88722,483,616 Less tax increment district1,495,1541,665,0542,054,6592,533,878 Total assessed value20,241,33318,826,52818,450,22819,949,738 Estimated market value976,115,4001,010,170,0001,085,605,6001,164,801,300 Personal property: Assessed value573,984502,668452,849437,707 Estimated market value12,477,90012,566,70013,006,30013,053,100 Assessed value as a percent of estimated market value2.11%1.89%1.72%1.73% Per capita valuations: Assessed value$730$678$662$714 Estimated market value$34,685$35,867$38,501$41,278 Source: City Assessing Department and Hennepin County records (1) The Metropolitan Council is the source of population estimates. Table 10 200020012002200320042005 29,17229,17229,17229,18529,18529,185 $8,928,738$8,495,196$9,362,788$10,532,558$12,177,307$13,942,981 14,093,0949,225,9919,430,5339,821,3089,903,1579,475,576 746,438635,875875,1451,097,5961,023,6181,161,174 23,768,27018,357,06219,668,46621,451,46223,104,08224,579,731 3,296,6242,450,2182,538,8253,134,4173,122,6652,559,620 20,471,64615,906,84417,129,64118,317,04519,981,41722,020,111 1,311,055,6001,475,520,2001,659,884,4001,840,115,3001,944,996,0002,020,425,900 452,680262,882273,072280,568294,377298,953 13,593,50013,312,10013,927,60013,927,60015,003,10015,240,200 1.58%1.21%1.03%1.00%1.03%1.09% $717$618$597$697$695$765 $45,408$51,036$57,377$63,078$67,188$69,782 CITY OF BROOKLYN CENTER, MINNESOTA DIRECT AND OVERLAPPING TAX RATES Last Ten Fiscal Years (Unaudited) Tax Rates in Tax Capacity Rates School Districts YearNo. 286No. 279No. 281 CollectibleCityEarle BrownOsseoRobbinsdale 199732.87556.26062.66663.757 199835.21451.56756.38665.350 199936.26959.80754.33747.716 200034.64544.35653.28448.492 200135.99647.13956.76446.678 200258.90126.33830.21330.092 200354.02149.81735.04229.179 200452.43739.89223.70934.258 200551.72336.15924.33629.989 200648.06939.78121.81528.489 Table 11 Hennepin County &Total City, School, and County No. 11SpecialNo. 286No. 279No. 281No. 11 AnokaDistrictsEarle BrownOsseoRobbinsdaleAnoka 55.58842.174131.309137.715138.806130.637 51.82445.869132.650137.469146.433132.907 54.85650.276146.352140.882134.261141.401 51.79237.679127.806136.743131.942135.242 52.22445.803128.938138.583128.477134.023 29.08257.795143.034146.788146.909145.778 26.94158.364162.202147.427141.564139.326 21.05051.310148.397132.214142.763129.555 21.49248.250139.436127.613133.266124.769 20.04648.087128.866110.900117.574109.131 CITY OF BROOKLYN CENTER, MINNESOTA Table 12 RATIO OF NET BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years (Unaudited) LessRatio of AmountsNet BondedNet TaxGrossin DebtNetDebt to Bonded FiscalEstimatedCapacityBondedServiceBondedTax CapacityDebt Per (1) Debt YearPopulationValue FundDebtValueCapita 199628,50220,815,317$ -$ -$ -$ -$ -$ 199728,51519,329,196 7,900,000 82,056 7,817,944 40.45%274.17 199828,53518,903,047 7,900,000 616,778 7,283,222 38.53%255.24 199928,53520,387,445 7,575,000 725,868 6,849,132 33.59%240.03 200029,17220,924,326 7,175,000 725,930 6,449,070 30.82%221.07 200129,17218,357,062 6,760,000 831,651 5,928,349 32.29%203.22 200229,17218,793,321 6,325,000 871,970 5,453,030 29.02%186.93 200329,18519,066,393 5,875,000 958,509 4,916,491 25.79%168.46 200429,18520,634,434 10,450,000 5,898,383 4,551,617 22.06%155.96 200529,18522,374,841 5,045,000 1,054,230 3,990,770 17.84%136.74 Source: City Finance Department and Hennepin County records (1) Amount does not include tax increment, state aid street, special assessment, or revenue bonds. CITY OF BROOKLYN CENTER, MINNESOTA Table 13 COMPUTATION OF DIRECT AND OVERLAPPING DEBT December 31, 2005 (Unaudited) Governmental UnitCity's Share Gross DebtPercentAmount (1) Direct Debt - City of Brooklyn Center $5,045,000100.00%$5,045,000 Overlapping debt: School Districts: No. 11 Anoka187,372,115 1.60%2,997,954 No. 279 Osseo258,270,000 5.15%13,300,905 No. 281 Robbinsdale221,100,000 5.00%11,055,000 No. 286 Earle Brown30,400,000 100.00%30,400,000 Metropolitan Council209,125,000 0.68%1,422,050 Hennepin County376,230,000 1.50%5,643,450 Hennepin Regional RR Authority46,795,000 1.50%701,925 Hennepin County Park Reserve District50,660,000 1.98%1,003,068 Total overlapping debt934,310,00050,225,493 Total direct and overlapping debt$939,355,000$55,270,493 DirectOverlapping TotalDebtDebt Comparative Net Debt Ratios Chargeable to City Debt to tax capacity value$22,374,841247.02%22.55%224.47% Debt to market value$1,944,996,0002.84%0.26%2.58% Per capita debt, population29,185$1,893.80$172.86$1,720.94 Source: City Finance Department, Hennepin County, and I.S.D. #11 records. (1) Includes only general obligation debt which is repaid through property taxes, net of refunded bonds. CITY OF BROOKLYN CENTER, MINNESOTA Table 14 PRINCIPAL TAXPAYERS 2005 (Unaudited) % of Total City 2005 NetTax Capacity TaxpayerType of BusinessTax CapacityValue Talisman Brookdale, LLCShopping Center$952,9604.30% Target StoresRetail412,350 1.86% Regal Cinemas, Inc.Theater229,250 1.03% Brookdale Corner, LLCRetail195,250 0.88% BCC Associates, LLCOffice191,250 0.86% Hennepin County Hotel Ass'nHotel183,250 0.83% Twin Lake NorthApartment182,900 0.83% MedtronicIndustrial173,238 0.78% B.C. Leased HousingApartment150,738 0.68% Sears Roebuck and Co.Department Store150,220 0.68% Total Market Value$2,821,40612.73% Total City Tax Capacity$22,164,418 Source: City Assessing Department records CITY OF BROOKLYN CENTER, MINNESOTA Table 15 PROPERTY VALUE AND CONSTRUCTION Last Ten Fiscal Years (Unaudited) Commercial New Residential Building Permits IssuedConstructionConstructionProperty Value Estimated YearNumberCostValueUnitsValueCommercialResidentialNon-Taxable 199660716,647,400$ 12,527,095$ 181,126,000$ 284,786,600$ 703,806,700$ 108,473,400$ 1997796 18,274,806 10,905,475 3 225,000 287,163,000 722,917,000 111,226,700 19981,482 23,216,525 14,261,800 4 612,900 314,457,700 770,883,400 152,964,200 19991,745 44,188,569 10,528,100 7 679,600 333,929,200 832,334,600 155,999,500 20001,299 20,450,844 13,254,213 3 311,800 358,293,500 837,022,400 164,002,100 2001956 63,947,218 10,750,000 4 464,000 367,026,000 970,653,400 165,437,000 2002976 58,089,510 18,680,014 10 1,335,000 529,390,100 1,130,494,300 163,517,000 2003886 53,918,257 25,423,800 9 1,370,100 557,643,000 1,251,467,299 169,892,900 2004792 21,613,050 15,653,457 15 1,616,000 567,637,200 1,377,358,800 225,988,400 20051,043 19,004,355 29,050,900 *17 2,328,500 551,962,600 1,468,463,300 234,941,300 Source: City Finance, Assessing and Community Development Department records. *Additional $13,517,100 of improvement value from exempt properties included CITY OF BROOKLYN CENTER, MINNESOTA Table 16 DEMOGRAPHIC STATISTICS Last Ten Fiscal Years (Unaudited) (4) School Enrollments CityMinneapolisNo. 286 FiscalUnemploymentSt. PaulNo. 11No. 279No. 281Earle (1)(2)(3) Population RateC.P.I. YearAnokaOsseoRobbinsdaleBrown 199628,5023.0%3.1%39,87421,66414,0991,664 199728,5152.3%2.5%40,40221,99214,0101,746 199828,5351.9%2.0%40,92322,02813,9661,788 199928,5352.4%2.2%40,96422,17113,8001,734 200029,1723.0%2.6%41,31422,01713,7061,682 200129,1723.9%3.3%41,41922,04113,7541,724 200229,1724.8%4.2%41,38321,82413,6561,732 200329,1855.9%1.7%41,25421,69813,7651,732 200429,1855.7%4.4%41,59221,62016,1961,691 200529,1855.4%4.4%41,59621,79213,3681,679 (1) Source: Metropolitan Council (2) Source: Minnesota Department of Economic Security; average rate for the past year (3) Source: U.S. Bureau of Labor (4) Source: Minnesota Department of Children, Families & Learning (Brooklyn Center has parts of these four Districts within the City) CITY OF BROOKLYN CENTER, MINNESOTA Table 17 SCHEDULE OF REVENUE BOND COVERAGE Last Ten Fiscal Years (Unaudited) Net Non-NetRevenue OperatingOperatingGrossRevenueto Debt (1) Expenses YearRevenueRevenueRevenueService AvailablePrincipalInterestTotal Storm Drainage Fund 1996$822,980$47,363$870,343$204,969$665,374$110,000$86,390$196,3903.39:1 1997856,920130,651987,571198,662788,909155,00079,754234,7543.36:1 1998940,012916,8601,856,872199,6941,657,178165,00072,227237,2276.99:1 1999999,8671,257,9282,257,795156,5622,101,233170,00064,193234,1938.97:1 20001,074,619313,0681,387,687154,1831,233,504180,00059,144239,1445.16:1 20011,129,502280,7401,410,242157,1101,253,132190,00053,166243,1665.15:1 20021,377,638435,5481,813,186231,7411,581,445200,00036,701236,7016.68:1 20031,264,512148,8541,413,366295,5221,117,844210,00024,990234,9904.76:1 20041,276,77821,2121,297,990228,9741,069,016220,00025,835245,8354.35:1 20051,107,80947,4751,155,284560,457594,827230,0006,210236,2102.52:1 Source: City Finance Department records. (1) Excludes depreciation and interest on bonds. CITY OF BROOKLYN CENTER, MINNESOTA Table 18 SCHEDULE OF INSURANCE COVERAGE Page 1 of 2 Effective December 31, 2005 (Unaudited) Policy Period Type of Coverage and DetailsFromToLiability Limits I.Statutory Liability to Employees a.Worker's Compensation (participant in the01/01/0512/31/05Statutory Limits League of Minnesota Cities Insurance Trust Self-Insured Workers' Compensation Program) II.Liability to the Public a.Comprehensive general liability includes the following additional coverages: (a) All employees as additional insureds (b) Personal injury coverage to include false arrest, libel, slander, wrongful entry or eviction, or invasion of right of privacy. (c) Broad contractual liability (d) Products liability (e) Public officials' liability (1) Bodily injury04/01/0504/01/06$1,000,000 occurrence (2) Property damage04/01/0504/01/06$1,000,000 occurrence (3) Personal injury04/01/0504/01/06$1,000,000 occurrence b.Automobile liability, comprehensive04/01/0504/01/06 (1) Bodily injury$1,000,000 occurrence (2) Property damage$1,000,000 occurrence (3) Uninsured motorist$1,000,000 occurrence c.Liquor stores' dram shop01/01/0501/01/06$1,000,000 occurrence $1,000,000 annual aggregate d.Golf Course and Central Park liquor liability01/01/0501/01/06$1,000,000 occurrence $1,000,000 annual aggregate e.Personal accident, Volunteers04/01/0504/01/06$100,000 accidental death $100,000 permanent impairment $400/week short-term disability $1,000 medical $500,000 per accident CITY OF BROOKLYN CENTER, MINNESOTA Table 18 SCHEDULE OF INSURANCE COVERAGE Page 2 of 2 Effective December 31, 2003 (Unaudited) Buildings, Structures, Policy Periodand Contents Type of Coverage and DetailsFromTo(Replacement Cost) III.Insurance on City Property 04/01/0504/01/06 a.Public and institutional property, all risk, blanket $58,826,268; $2,500 deductible replacement value on buildings. Annual aggregate limit of $ 1,000,000 on terrorism (1) Civic Center/City Hall$14,937,300 (2) East Fire Station$1,633,550 (3) West Fire Station$3,499,180 (4) Municipal Service Garage$3,589,720 (5) Municipal Garage - Property in the Open$75,460 (6) Elevated Water Towers - 3 locations$4,402,550 (7) Park Shelter Buildings - 9 locations$846,875 (8) Pump Houses - 8 locations$1,189,405 (9) Lift Stations - 9 locations$1,740,725 (10) Meter Station$21,800 (11) Salt Storage Building$543,715 (12) Outdoor lighting systems - 7 locations$351,900 (13) Leased Liquor Store - BC Liquor #1$498,000 (14) Leased Liquor Store - BC Liquor #2$500,000 (14) Pedestrian Bridge - 12 locations$2,117,295 (15) Picnic Shelters - 10 locations$311,745 (16) Earle Brown Heritage Center$11,913,750 (17) Centerbrook Golf Course Club House$440,200 (18) Centerbrook Golf Course - Garage$52,250 (19) Lions Park Concession Stand$45,950 (20) Police Station$5,894,950 (21) Centerbrook Golf Course Maintenance Building$225,000 (22) Centerbrook Golf Course - Storage Building$105,200 (23) Centerbrook Golf Course - Property in the Open$100,000 (24) Parks - Property in the Open$655,775 Liability Limits b.Boiler and machinery04/01/0504/01/06$40,833,515 Boiler Limit $2,500 deductible c.Automotive physical damage04/01/0504/01/06 (1) ComprehensiveACV - $2,500 deductible (2) CollisionACV - $2,500 deductible IVCriminal Acts a.Faithful performance blanket position$500,000 per occurrence b.Money and securities (broad form)Various c.Depositor's forgery$100,000 M I ROY This page has been left blank intentionally. 142