HomeMy WebLinkAbout2006 06-05 CCP Joint Work Session with Financial Commission AGENDA
CITY COUNCIL FINANCIAL COMMISSION JO1NT WORK SESSION
June 5, 2006
6:30 P.M.
City Hall Council Chambers
1. Presentation by Auditor of 2005 Audit of Comprehensive Annual Financial
Report
2. Miscellaneous
3. Adjourn
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Tautges Redpath, Ltd.
Certified Public Accountants and Consultants
REPORT ON COMPLIANCE WITH MlNNESOTA
LEGAL COMPLIANCE AUDIT GUIDE FOR LOCAL GOVERNMENT
To the Honorable Mayor and
Members of the City Council
City of Brooklyn Center, Minnesota
We have audited the financial statements of the City of Brooklyn Center, Minnesota, as of
and for the year ended December 31, 2005, and have issued our report thereon dated
Apri16, 2006.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the provisions of the Minnesota Legal Compliance Audit Guide
for Local Govemment promulgated by the State Auditor pursuant to Minnesota Statutes
Section 6.65. Accordingly, the audit included such tests of the accounting records and such
other auditing procedures we considered necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers seven main
categories of compliance to be tested: contracting and bidding, deposits and investments,
conflicts of interest, public indebtedness, claims and disbursements, miscellaneous
provisions, and tax increment financing. Our study included all of the listed categories.
The results of our tests indicate that for the items tested, the City of Brooklyn Center,
Minnesota complied with the material terms and conditions of applicable legal provisions,
except as described in this report.
This report is intended solely for the information and use of the City of Brooklyn Center,
Minnesota's City council and management and is not intended to be and should not be used
by anyone other than these speci�ed parties.
ln� r��
HLB TAUTGES REDPATH, LTD.
White Bear Lake, Minnesota
Apri16, 2006
4810 White Bear Parkway White Bear Lake, Minnesota 55110 651 426 7000 651 426 5004 Fax www.hlbtr.com
i 1303 South Frontage Road Suite 13 Hastings. Minnesota 55033 651 480 4990 651 426 5004 Fax
HLB Tautges Redpath, Ltd. is a member of International, a world-witle organization of accounting firms and business advisors.
Report on Compliance with Minnesota Legal Compliance
Audit Guide for Local Government
Page 2
FINDING 2005-1
Criteria: Minnesota Statute 471.70 requires the principal accounting office of each
municipality reported, on or before February l of each year, to report the total amount of
outstanding obligations to the County Auditor. Minnesota Statute 471.70 reads in part as
follows:
471.70 Reporting of obligations by cities, towns, school districts, and bodies corporate
and politic_
On or before February first each year, it shall be the duty of the principal accounting
officer of each municipality to report to the auditor of each county in which such municipality
is situate, the total amount of outstanding obligations, and the purpose for which issued as of
December 31 of the preceding year. Such report shall be kept by the auditor of each county in
a suitable record. On March first each year, it shall be the duty of the auditor of each county
to make report to the state auditor of such obligations as reported to the county auditor by the
principal accounting o�cer of the municipality, together with the amount and character of all
outstanding obligations issued by the county.
Condition: The City filed the required form on February 10, 2006.
Effect: The effect of noncompliance is not determinable.
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Tautges Redpath, Ltd.
Certifietl Public Accountants and Consultants
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and
Members of the City Council
City of Brooklyn Center, Minnesota
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the City of
Brooklyn Center, Minnesota, as of and for the year ended December 31, 2005 which
collectively comprise the City of Brooklyn Center, Minnesota's basic financial statements,
and have issued our report thereon dated Apri16, 2006. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States.
Internat Control Over Financial Reporting
In planning and performing our audit, we considered the City of Brooklyn Center,
Minnesota's internal control over financial reporting in order to deternune our auditing
procedures for the purpose of expressing our opinions on the �nancial statements and not to
provide an opinion on the internal control over financial reporting. However, we noted
certain matters involving the internal control over financial reporting and its operation that
we consider to be reportable conditions. Reportable conditions involve matters coming to
our attention relating to significant de�ciencies in the design or operation of the internal
control over financial reporting that, in our judgment, could adversely affect the City of
Brooklyn Center, Minnesota's ability to record, process, summarize and report financial data
consistent with the assertions of management in the financial statements. Reportable
conditions are described below.
Journal Entries. Journal entries are prepared and recorded to update the general ledger. The
entries are made for items such as recording depreciation, interfund transfers and making
adjustments that may result from bank reconciliations. The preparation and recording of
journal entries is not subject to a review and approval process. We recommend the City
consider establishing a review and approval process, such as review and approval of journal
entries that exceed a pre-determined dollar threshold.
4810 White Bear Parkway White Bear Lake, Minnesota 55110 651 426 7000 651 426 5004 Fax www.hlbtr.com
1303 South Frontage Road Suite 13 Hastings, Minnesota 55033 651 480 4990 651 426 5004 Fax
HLB Tautges Retlpath, Ltd. is a member of International, a world-wide organization of accounting firms and business advisors.
Report on Internal Control over Financial Reporting
and on Compliance and Other Matters
Page 2
Utilitv Billin� Adiustments. Each month, adjustments to utility accounts are made. These
adjustments are for a variety of reasons such as abating penalties, correcting usage and other
items. The utility clerk has authority to make these adjustments. A record of these
adjustments is maintained in an adjustment book. However, the adjustments are not
reviewed and approved. We recommend the City consider establishing procedures to
provide for periodic review and approval of adjustments to customer accounts, such as
requiring approval for adjustments that exceed a pre-detemuned dollar threshold.
Golf Course Z Taves. Golf course deposits are prepared by golf course staff and a
spreadsheet summarizing the deposit is forwarded to finance. However, the cash register Z
ta s are retained b the olf cou w for an inde endent verification of
Pe Y g
rse, which does not allo
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the deposit amount by finance staff. We recommend the cash register Z tapes be forwarded
to the finance department.
Water Consumption. The quarterly water billing for residential customers is based on
consumption. The City's method of obtaining consumption is from meter readings by the
customer. There is no procedure requiring periodic verification of residential meter readings.
Without periodic verification, there is a potential of under reported usage to occur and not be
detected in a timely manner. We recommend the City consider establishing procedures to
periodically verify residential meter readings.
Investment Policv. Section V.l of the City's investment policy identifies permissible
investments under the policy, all of which are allowed by State Statute. Section V.l.a.
authorizes the purchase of securities that are direct obligations or are guaranteed or insured
issues of the United States, its agencies, its instrumentalities, or organizations. Section V.2.
of the City's investment policy prohibits the purchase of mortgage-backed securities, even if
insured by a federal agency. During 2005, five mortgage-backed securities (FHLMC's and
FNMA's) were purchased. These securities were purchased on March 31, 2005, all of which
matured by year end.
LiQUOr Inventorv Adiustments. The City maintains a perpetual inventory of its liquor store
inventory. Periodically, City staff perform test counts of the actual inventory on hand and
compare these counts to the perpetual inventory records. During 2005, these test counts
resulted in a negative adjustment to inventory of $13,451 for Store #l. We recommend
strengthening procedures by considering the following:
1) Have employees from Store #2 perform test counts at Store #1 and have employees
from Store #1 perform test counts at Store #2.
Report on Internal Control over Financial Reporting
and on Compliance and Other Matters
Page 3
2) 1'1ot allowing vendors distributors to leave until a manager can verify all product
invoiced has been delivered. Have a manager do this procedure for everything
delivered instead of a part-time employee.
3) Consider requiring the stores to track breakage separately from other adjustments.
4) Perform counts more frequently, which could possibly reduce errors or large
adjustments. Have a different employee double check any items that don't match the
inventory system. Be more attentive when splitting 12-packs into 6-packs or
transferring inventory from one store to another.
A material weakness is a reportable condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low level the risk that
misstatements caused by error or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. Our consideration of
the internal control over financial reporting would not necessarily disclose all matters in the
internal control that might be reportable conditions and, accordingly, would not necessarily
disclose all reportable conditions that are also considered to be material weaknesses.
However, we believe none of the reportable conditions described above are material
weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Brooklyn Center,
Minnesota's financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements,
noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an
opinion. The results of our tests disclosed no instances of noncompliance or other matters
that are required to be reported under Govemment Auditing Standards.
This report is intended solely for the information and use of the City of Brooklyn Center,
Minnesota's management and City council and is not intended to be and should not be used
by anyone other than these specified parties.
%�r��
HLB TAUTGES REDPATH, LTD.
White Bear Lake, Minnesota
April 6, 2006
CITY OF BROOKLYN CENTER, MINNESOTA
AUDIT MANAGEMENT LETTER
December 31, 2005
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Tautges Redpath, Ltd.
Certified Public Accountants and Consultants
To the Honorable Mayor and
Members of the City Council
City of Brooklyn Center, Minnesota
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We have completed the 2005 audit of the City of Brooklyn Center and have issued our
report thereon. Our Independent Auditor's Report is included in the City's Comprehensive
Annual Financial Report. This Audit Management Letter provides a summary of audit results
along with comparisons and trend analysis of financial data.
Thank you for the opportunity to serve the City. We are available to discuss this report
with you.
fj�
HLB TAUTGES REDPATH, LTD.
White Beaz Lake, Minnesota
April 28, 2006
4810 White Bear Parkway White Bear Lake, Minnesota 55110 651 426 7000 651 426 5004 Fax www.hlbtr.com
1303 South Frontage Roatl Suite 13 Hastings, Minnesota 55033 651 480 4990 651 426 5004 Fax
HLB Tautges Redpaih, Ltd. is a member of International, a wodd-witle organization of acwunting firms and business advisors.
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Audit Management Letter
Report Summary
REPORT SUMMARY
Several reports are issued in conjunction with the audit. A brief summary is as follows:
Required Reports
Comprehensive Annual Financial Financial statements Unqualified (clean) opinion
Report (CAFR) Footnotes on the basic financial
Supnlemental information statements
Report on Internal Control Over Internal controls over financial Six re ortable conditions in
P
Financial Reporting and on reporting internal control
Compliance and Other Matters Compliance with laws, No findings of
regulations, contracts and noncompliance with laws,
grants regulations, contracts and
g
rants
State Legal Compliance Report Results of testing certain One finding of
provisions of Minnesota noncompliance
Statutes
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Audit Management Letter
Financial Statement Analysis
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FINANCIAL STATEMENT ANALYSIS
Summarv of Financial Activitv
City financial statements have become a complex document that can be difficult to
navigate through. Presented below is a concise summary of 2005 financial activity by fund:
Increase Fund Bala�e
(Decrease) in (Deficit)
TransFers Fund Balance/ Net Assets
Fund Revenue Excendiw�es (Ne0 Net Assets 17I31/OS Commenis
Genenl $14,109.7.58 $13,180,530 (5603,726) $325,502 $7,294,951 Property tax revenue exceeded budget by $SSO,OW i
Special Revenue:
Housing and Redevelopment Autlwrity 257,126 (256,538) 588 588
E.._._....:_Deve]opmentAuthoriry 6(,102 213.494 256.538 109,146 1,597,274
Fark Brown 77F Distrin 862,961 42,496 269,127 1,089,592 (768,902)
77F Distria No. 3 4,178,68] 4,938,714 p,446,70q (2,?A6,734) 23,664,938 Fund balarce includw unspent 2004D bond
proceeds of 3 t2.16i,173
77F Distria No. 4 259.5.34 243,242 16,292 ]04,473
Police Dntg Forfeiture 30.R74 17,177 13,697 38,405 j
CDBG 13 5tM) 13,499 1 1
City IniUatives Grant 2] 6.691 203337 �.152 20,506 156,490
Debt Serviae:
General Obliga0on Bonds 1.125.0.51 5,974,398 (4.R49.347) 1,054.230 1997B bonds puid off S5.4U5,000
Tax Increment Bcx�ds 21.971 3.R70.718 1,15 ],.SOI (2,G97.246) 1995A bonds paid off S2,'730.000
SpecialAssessmentBonds 1,125.014 1,2Q7.285 (52,271) 3.104377
Cspital Pivjects:
CapitalReserveE...:,.,;,..,,, 34,110 374.000 (339,890) 1.W6,371
Capital Im,.:_ �:..._...s 63.085 310.074 I23.8W p23,189) 1.678.294
Municipal Stare Aid for Conswaion 866,093 1,293,812 (427,719) 170,654 Includes the following pmjecls: Shingk Creek
Pkwy ($],IU3000)
InRastmcture Conshuction 458,687 1.835.507 (7,376,8?A) (899,125) Inclucles the Pollowing pmjects: Northport
($28I,000): Lions Park South (5763,W0);
engineering services (5300,000)
Eade Bmwn Heritage Center Imp. 63,799 249,964 67,000 Q 19,165) 2,283
SueetReconstrucuon 707,279 940,961 SSS,WO 321,318 1,847,209 ReceivedtronsferfromGrneralfundofSSSS,OOD+02
Technology 169,594 360,5?A 68.847 Q22,079) 419,34i
Enterprise:
MunicipalLiquor 1,I17,064 934,1?A (125,000) 57,940 1,216,163
Golf Course 258,709 262,691 (3,982) 963,563
Earle Brown Heritage Center 1,996,739 2,230,181 (67,OOD) (300,442) 8,685,761
Recycling and Refuse 235586 254,667 p 9,075) 67,369
Sueet l.ight Utllity 2] 8,077 213,094 4,983 121,771
WaterUtitity 2,.503A32 1,745712 757,320 ]0,725,703
Sanitary Sewer 3.57$G61 2,801,380 71'7,281 ll.242.343
StormDrainage 1,783,072 1,093,085 689,987 12,233,6.50
Intcrnal Service:
Cemral Gawge 1,338.8U7 1.220,847 117.960 6.922,521
g Redrerten[ 40,434 605.193 (564,759) (582,438)
EE Compensated Absences 23.285 47,5�0 (24,585)
Total $3'7,723.376 546.678.566 SO ($8,955.190) $92.06&562
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Audit Management Letter
Financial Statement Ana/ysis
Statement of Activities
One of the financial statement presentations required by GASB 34 is the Statement of
Activities. This schedule presents the net cost of providing service (program expenses minus
program revenues). This "net cost" figure represents the extent that general revenues are
needed to fund program expenses.
Pro�ram Revenues Ne[ (Expense) Revenue aod
Operating Capital ChanQes in Net Assets
Program Charges For Grants and Grants and Governmental Business-Type
ProQrams Expenses Services Convibutions Contriburions Acuvities Acrivities Total
��t r�1�'4il��kwiy iq rni�a'�,
���Y����
Governmental activities:
Generalgovemment $2,970,364 $297,511 $60,000 ($2,612,853) ($2
Public safety 7,848,160 1,026,736 6ll,8861� �(6,209,538) (6,209,538)
Public works 3,856,992 9,66] 90,000 2,328,345 (1,428,986) (1,428,986)
Community services 86,043 (86,043) (86,043)
Pazks and recreation 2,305,047 651,851 79,827 ]0,000 (1,533,369) (1,533,369)
Economicdevelopment 1,217,294 35,933 13,920 (1,167,441) (1,167,441}
Interest on lond term debt 1,349,852 (1,349,852) (1,349,852)
Total govemmental acuvities 19,633,752 2,051,692 795,633 2,398,345 p4,388,082) 0 (14,388,082)
Business-type activities:
Municipalliquor 978,743 1,099,172 120,429 120,429
Golf course 273,024 256,276 (16,748) (16,748)
Earle Brown Heritage Center 2,262,359 1,85'I,46] (404,898) (404,898)
Recycling and refuse 254,661 235,160 (19,501) (19,501)
Street light utiliry 213,094 214,669 1,575 1,575
Wateruulity 1,795,759 1,825,521 29,762 29,762
Sanitary sewer 2,808,644 2,966,222 157,578 157,578
Stormdrainage 1,102,672 1,298,690 196,018 196,018
Total business-type activities 9.688,956 9,753,171 0 0 0 64,215 64,215
Total $29,322,708 $11,804,863 $795,633 $2,398,345 (14,388,082) 64,215 (14,323,867)
General revenues:
General property ta�ces 11,288,883 11,288,883
Tax increments 4,216,246 4,216,246
Franchise fees 662,614 662,614
I.odging ta�:es 710,619 710,619
Grants and convibutions not
res[ricted [o specific programs 577,548 577,548
Unrestricted investment eamings 1,272,409 199,876 1,472,285
Gaio on sale of capital assets 31,880 31,880
Other
Transfers (1,545,893) 1,545,893
Total general revenues and hansfers 17,214,306 1,745,769 18,96Q075
Change in net assets 2,826,224 1,809,984 4,636,208
Net assets beginning 55,286,745 43,266,313 98,553,058
Net assets ending $58,ll2,969 $45,076,297 $103,189,266
Includes General, Special Revenue, Deb[ Service and Capital Project Funds.
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Audit Management Letter
Financial Statement Analysis
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Tax ncrements
A summary of t� increment activity is as follows:
2005 Activity
Delinquent Delinquent
TIF Receivable 2005 2005 Receivable
District Name 12/31/2004 Levy Collections 12/3U2005
1 Brookwood Housing $1,151 $186,601 ($177,763} $9,989
2 Earle Brown Farm 96,348 567,209 (663,557)
3 TIF #3 Redevelopment 643,088 3,216,749 (3,593,679) 266,158
4 France Avenue Business Park 259,544 (259,544)
Total $740,587 $4,230,103 ($4,694,543) $276,147
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Audit Management Letter
Financial Statement Analysis
Interfund Pavables/Receivables
The City had the following interfund advances at December 31, 2005:
Fund Receivable Payable
Economic Development Authority $5,837
Sanitary Sewer $5,837
Tax Increment No. 3 Fund 1,21 I,846
Earle Brown TIF Fund 1,211,846
Special Assessment Bonds 69,502
Water Utility 26,845
Infrastructure Construction 42,657
Capital Improvements Fund 800,000
Golf Course Fund 800,000
Capital Improvements Fund 482,611
Infrastructure Construction 482,611
Total $2,569,796 $2,569,796
The interfund loan to the Earle Brown TIF Fund has existed since 1987. During 2004,
the City established a formal repayment plan by the adoption of resolution 2004-91.
The interfund loan to the golf course was established in 1998. The loan is interest free
and has annual payments of $55,000 to $65,000 through 2017. For 2005 the amount paid
down on the loan was $50,000.
The interfund loan to the Infrastructure Construction Fund is to cover a cash overdraft.
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Audit Management Letter
General Fund
GENERAL FUND I
The fund balance of the General Fund increased by $325,502 in 2005 as follows: j
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Budget Actuai Variance
Revenue $13,391,078 $14,109,758 $718,680
Expenditures 14,129,537 13,934,6 5 194,922
Increase (decrease) before other financing sources (uses) (738,459} 175,143 913,602
Other financing sources (uses}:
Administrative services reimbursed 808,459 754,085 (54,374)
Transfers to other funds (70,000) (603,726) (533,726)
Total other financing sources (uses) 738,459 150,359 (588,100)
Increase in General Fund $0 325,502 $325,502
Fund balance January 1, 2005 6,969,449
Fund balance December 31, 2005 $7,294,951
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Significant budget variances consisted of the following:
Revenue:
Property taxes $554,000
Lodging tax 70,000
Charges for services 102,000
All other (7,320)
Total revenue $718,680
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Audit Management Letter
Genera/ Fund
The City's December 31, 2005 fund balance was $7,294,951. The City's General Fund
balance has been as follows for the past five years:
$9,000,000
General Fund Balance
$8,00O,OOQ
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2
$1,000,000
$0
2001 2002 2003 2004 2005
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Audit Management Letter
General Fund
A summary of General Fund balance for the past three years is as follows:
General Fund Balance
Component 12/31/2003 12/31/2004 12l31/2005
Reserved for advances to other funds $105,074 $lO5,Q74
Designated for working capital 6,031,077 6,862,871 7,283,871
Subtotal 6,136,151 6,967,945 7,283,871
Reserved for prepaids 5,309 1,504 11,080
Undesignated 1,875,620 i
Total
$8,017,080 $6,969,449 $7,294,951
Working Capital Reserve
The working capital reserve was amended in 2004 by resolution 2004-189. The current
policy recommends a cash flow reserve of between 50 and 52 percent of the next year's j
expenditure budget. At December 31, 2005, the reserve of $7,283,871 is 52°l0 of the 2006
General Fund budget.
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Audit Management Letter
Special Revenue Funds
SPECIAL REVENUE FUNDS
Special Revenue Funds are a classification of funds to account for activities segregated
by City policy, Federal or State statutes for specific purposes. The City maintained eight
Special Revenue Funds during 2005.
Housin� and Redevelonment Authoritv Fund
The HRA has authority to levy an ad valorem property t� for housing and
redevelopment purposes. The HRA Fund accounts for property tax levies. A summary of
financial activity is as follows:
Housing and Redevelopment Authority
2003 2004 2005
Revenue and other sources:
Property taxes $207,854 $223,523 $257,126
Expenditures and other uses:
Transfer to EDA 207,854 223,523 256,538
Net change in fund balance 0 0 588
Fund balance January 1
Fund balance Decemher 31 $0 $0 $588
Pursuant to MS 469.033, the HRA's levy limit is an amount equal to 0.0144°Io of
t�able market value.
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Audit Management Letter
Special Revenue Funds
Economic Develonment Authoritv Fund
The EDA Fund accounts for the operation of the EDA. A summary of financial activity
is as follows:
Economic Development Authority
2003 2004 2005
Revenue and other sources:
Property taxes $36
Intergovernmental 188,495 54,273 420
Investment earnings 20,276 19,721 41,051
Reimbursements 257,986
Other 89,002 24,631
Sale of capital assets 73,175
Transfer from HRA 207,854 223,523 256,538
Total revenue and other sources 578,838 555,503 322,640
Expenditures and other uses:
Personal services 124,580 118,632 99,001 y
Supplies 2,962 475 595
Services and other charges 235,876 143,888 113,898
Purchase of land 293,145
Total expenditures and other uses 363,418 556,140 213,494
Net change in fund balance 215,420 (637) 109,146
Fnnd balance January 1 1,273,346 1,488,766 1,488,128
Fund balance December 31 $1,488,766 $1,488,129 $1,597
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Audit Management Letter
Special Revenue Funds
TIF District No. 2- Earle Brown TIF Fund
The Earle Brown TIF Fund accounts for TIF No. 1(Brookwood Housing) and TIF No.
2(Earle Brown Farm). A summary of financial activity is as follows:
Earle Brown TIF
2003 2004 2005
Revenne and other sources:
Tax increment $833,553 $725,544 $845,868
Investment earnings 4,503 7,982 17,093
Transfer from Tax Increment Bonds Debt Service Fund 269,127
Total revenue and other sources 838,056 733,526 1,132,088
Expenditures and other uses:
Personat services 18,235 22,170 14,728
Interest 26,420
Services and other charges 11,314 8,482 27,768
Transfer to Tax Increment Bonds Debt Service Fund 653,000 876,000
Total expenditures and other uses 708,969 906,652 42,496
Net change in fund balance 129,087 (173,126) 1,089,592
Fund balance (deficit) January 1 (1,814,455) (1,685,368) (1,858,494)
Fund balance (deficit) December 31 ($1,685,368) ($1,858,494} ($768,902)
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The fund deficit is financed by an interfund loan from TIF No. 3 Fund.
It is anticipated by management that future t� increment collections will be sufficient
to repay the interfund loans.
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Audit Management Letter
Special Revenue Funds
TIF District No. 3 Fund
A summary of financial activity is as follows:
TIF No. 3
2003 2004 2005
Revenue and other sources:
Tax increment $2,308,605 $2,880,586 $3,576,209
Investment earnings 81,399 127,140 591,169
Miscellaneous 11,303
Bonds issued 17,245,000
Total revenue and other sources 2,390,004 20,252,726 4,178,681
Expenditures and other uses:
Personal services 28,010 74,606
Interest 2p,000
Services and other charges 531,549 500,344 1,388,300
Land acquisition 3,475,808
Transfer to Tvc Increment Bonds Debt Service Fund 548,000 1,446,701
Total expenditures and other uses 1,127,559 500,344 6,385,415
Net change in fund balance 1,262,445 19,752,382 (2,206,734)
Fund balance January 1 4,856,845 6,119,290 25,871,672
Fund balance December 31 $6,119,290 $25,871,672 $23,664,938
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Audit Management Letter
Special Revenue Funds
Services and other charges for 2005 include the following:
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$421,423 Demolition costs
113,998 Property ta�ces
352,093 Relocation costs
500,786 Professional services and other
$1,388,300 Total
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The obligations of this TIF District are shown below:
Balance
Bond/Note 12/31/OS
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Taacable T� Increment Refunding Bonds of 2004B $2,470,000
I Taxable Ta�c Increment Bonds of 2004D 16,835,000
Total $19,305,000
The 2004D Bonds were issued to finance the redevelopment activities related to TIF
No. 3.
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Audit Management Letter
Special Revenue Funds
TIF District No. 4 Fund
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A summary of financial activity is as follows:
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TIF No. 4
2003 2004 2005
Revenue and other sources:
Tax increment $246,968 $227,930 $258,611
Investment earnings 130 923
Total revenue and other sources 246,968 228,060 259,534
Expenditures and other uses:
Personal services 3,118 387 2,842
Services and other charges 13,819 14,745 3,211
Debt service principal 188,488 231,512 237,189
Total expenditures and other uses 205,425 246,644 243,242
Net change in fund balance 41,543 (18,584} 16,292
Fund balance January 1 65,222 106,765 88,181
Fund balance December 31 $106,765 $88,181 $104,473
Services and other charges for 2005 consist primarily of Twin Lakes Business Park TIF
Note repayment. The obligations of this TIF District include the following:
Balance
12/31/OS f
Twin Lake Business Park TIF Note $1,975,166
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The TIF note is a limited obligation and repayment is based solely on tax increments
received. The City has pledged 97.5% of t� increments collected to the payment of the note.
Interest on the note is at 8%.
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Audit Management Letter
Special Revenue Funds
Citv Initiatives Grant Fund
The City Initiatives Grant Fund accounts for donations received from outside parties. A
summary of financial activity is as follows:
City Initiatives Grant
2003 2004 2005
Revenue and other sources:
Intergovernmental $370,800 $288,830 $133,617
Charges for services 9,481
Investment earnings 2,532 3,469 3,250
Other 109,006 83,179 70,343
Transfer from TIF #3 and Technology Funds 27,226
Total revenue and other sources 482,338 375,478 243,917
Expenditures and other uses:
Personal services 52,347 108,268 84,774
Supplies 212,808 190,849 12,712
Services and other charges 123,836 47,775 105,851
Transfer to General Fund 20,074
Total expenditures and other uses 388,991 346,892 223,411
Net change in fund balance 93,347 28,586 20,506
Fund balance January 1 14,051 107,398 135,984
Fund balance December 31 $107,398 $135,984 $156,490
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Audit Management Letter
Debt Service Funds
DEBT SERVICE FUNDS
Debt Service Funds are a type of governmental fund to account for the accumulation of
resources for the payment of interest and principal on debt (other than Enterprise Fund debt).
Current governmental reporting standards do not provide for the matching of long-term
debt with its related financing sources. Although this information can be found in the City's
CAFR, it is located in several separate sections of the CAFR. The following schedule
extracts information from sections of the 2005 Comprehensive Annual Financial Report to
provide an overview analysis of long-term debt and its related funding.
Assets P1edQed for Debt Retirement 12/31/2005 Scheduled Final
Fund Deferred Outstanding Property Mamrity
Fund Description Balance Revenue� Totals Principal Ta7:es Date
Tax Increment Debr.
Taxable Tax Increment Refunding Bonds
of 2004B (TIF 3} $2,470,000 $2 02l01/I1
Taxable Tax Increment Bonds of 2004D (TIF 3) 16,835,000 26,134,802 02/Ol/20
Tota] tax increment debt 0 0 0 19,305,000 28,601,150
Specia] Assessment Debt:
Improvement Bonds of 1995 71,692 4,341 76,033 90,000 02/Ol/06
Improvement Bonds of 1996 510,385 49,144 559,529 315,000 118,830 OZ/Ol/07
Improvement Bonds of 1997 159,893 130,142 290,035 300,000 02/Ol/08
Improvement Bonds of 1998 337,216 175,632 512,848 400,000 02/Ol/09
Improvement Bonds of 1999 378,706 442,337 821,043 770,000 OZ/Ol/10
Improvement Bonds of 2000 522,487 205,604 728,091 420,000 OZ/01/11
Improvement Bonds of 2001 385,246 222,172 607,418 485,000 02/01l12
Improvement Bonds of 2003 294,863 603,542 898,405 930,000 02/Ol/13
Improvement Bonds of 2004C 443,889 558,462 1,002,351 1,010,000 OZ/Ol/15
Total special assessment debt 3,104,377 2,391,376 5,495,753 4,720,000 118,830
General Obligation Debt:
Refunding State-Aid Street Bonds 295,000 04/Ol/06
Police and Fire Building Bonds of 2004A 1,054,230 18,114 1,072,344 5,045,000 4,531,351 02lO1/13
Total general obligation debt 1,054,230 18,114 1,072,344 5,340,000 4,531,351
Total All Debt Service Funds $4,158,607 $2,409,490 $6,568,097 $29,365,000 $33,251,331
Future tax increment amounts subject to valuation and tax capacity rate fluctuations.
Deferred revenue primarily consists of uncollected specia] assessments. 1
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Audit Management Letter
Capital Projects Funds
CAPITAL PROJECTS FUNDS
The fund balances of the Capital Projects Funds were as follows at December 31, 2004
and 2005:
Fund Balance
December 31, Increase/
Fund 2004 2005 (Decrease)
Capital Reserve Emergency $1,346,261 $1,006,371 ($339,890)
CapitalImprovements 1,801,483 1,678,294 (123,189)
Municipal State Aid for Construction 598,373 170,654 (427,719)
Infrastructure Construction 477,695 (899,125) (1) (1,376,820)
Earle Brown Heritage Center Improvements 121,448 2,283 (119,165)
Street Reconstruction 1,525,891 1,847,209 321,318
Technology 541,424 419,345 (122,079)
Totals $6,412,575 $4,225,031 ($2,187,544)
(1)Deficit to be funded by combined bond issuance of the 2005 and 2006 projects.
Audit Management Letter
Capital Projects Funds
Canital Reserve Emer�encv Fund
The Capital Reserve Emergency Fund was established to account for monies held in
reserve for catastrophic losses or unforeseen capital items.
Financial activity for the past three years is as follows:
Capital Reserve Emergency Fund
2003 2004 2005
Revenue and other sources:
Investment earnings $31,439 $9,688 $34,110
Expenditures and other uses:
Personal services 24,356 66,571
Materials and supplies 3,502
Services and other charges 303,927
Total expenditures and other uses 24,356 0 374,000
Net change in fund balance 7,083 9,688 (339,890)
Fund balance January 1 1,329,490 1,336,573 1,346,261
Fund balance December 31 $1,336,573 $1,346,261 $1,006,371
The 2005 expenditures are clean-up and repair costs related to the September storm.
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Audit Management Letter
Capital Projects Funds
Cauital Imarovements Fund
The Capital Improvements Fund was established to provide funds for major capital
outlays.
Financial activity for the past three years is as follows:
Capital Improvements
2003 2004 2005
Revenue and other sources:
Intergovernmentat $10,000
Investment earnings 13,494 9,336 28,448
Other 126,308 122,910 24,637
CFL grant 106,200
Transfer from General Fund 225,000 75,000
i Transfer from Liquor Fund 125,000 125,000
Total revenue and other sources 364,802 538,446 188,085
Expenditures and other uses:
Project costs 368,047 494,693 310,074
I Transfer to General Fund 1,200
Total expenditures and other uses 368,047 494,693 311,274
Net change in fund balance (3,245) 43,753 (123,189)
Fund balance Januazy 1 1,760,975 1,757,730 1,801,483
Fund balance December 31 4
$1,757,730 $1,801,483 $1,678,29
I Tl�is fund provided an interfund loan of $1.1 million to the Golf Course Fund for its
origmal development. The balance of the loan was $804,000 at December 31, 2005.
Audit Management Letter
Capital Projects Funds
A summary by project is as follows:
2005
Proiect Expenditures
Grandview Pazk Tennis Court (2004-16) $4,000
Grandview Hockey Rink Lighting (2004-18) 13,235
Grandview Miscellaneous Improvements (2004-19) 64,289
Northport (2004-Q1, 02) 11,094
Shingle Creek Patkway (2004-14) 205,921 i
Lions Park South (2005-01, 02) 3,850 I
Other 7,685
Total $310,074
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Audit Management Letter
Capital Projects Funds
MuniciAal State Aid for Construction Fund
The Municipal State Aid for Construction Fund was established to account for the state
allotment of asoline taY collections. Transactions for the ast three ears have been as
g P Y
follows:
Municipal State Aid for Construction
2003 2004 2005
Revenue and other sources:
MSA construction $145,387 $604,510 $764,1 I7
MSA maintenance 90,000 90,000
Investment earnings 72 3,543 11,976
Other revenue 3,555
Total revenue and other sources 145,459 701,608 866,093
Expenditures and other uses:
Project costs 335,609 1,293,812
Transfer to Infrastructure Fund 533,816
Total expenditures and other uses 335,609 533,816 1,293,812
Net change in fund balance (190,150) 167,792 (427,719)
Fund balance January 1 620,731 430,581 598,373
Fund balance December 31 $430,581 $598,373 $170,654
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Audit Management Letter
Capital Proiecfs Funds
A summary by project is as follows:
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2005
Project Expenditures
63rd/Brooklyn Boulevard signal $18,278
Shingle Creek Parkway (2004-14) 1,103,000
2005 Street sealcoating (2005-07) 32,400
Freeway Boulevard bridge deck 119,180
Other 20,954
Total $1,293,812
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Audit Management Letter
Capital Projects Funds
Infrastructure Construction Fund
The Infrastructure Construction Fund was established to account for improvements
financed by special assessments. The financial transactions of this fund for the past three
years have been as follows:
Infrastructure Construction Fund
2003 2004 2005
Revenues and other sources:
Special assessments $79,207 $140,982 $354,776
Intergovernmental 332,182 378,147 73,473
Investment earnings 10,934 98 3,314
Other 24,554 32,569 27,124
Bond proceeds 1,196,140 1,Q02,286
Transfer from General Fund 480,000 375,000
Transfer from MSA Construction Fund 533,816
Transfer from Water Utility Fund 631,440
Transfer from Sanitary Sewer Fund 555,614
Transfer from Storm Drainage Fund 441,756
Transfer from Street Light Utility Fund 51,000
Total revenues and other sources 2,123,017 4,142,708 458,687
Expenditures and other uses:
Project costs 1,445,887 3,894,192 1,835,507
Net change in fund balance 677,130 248,516 (1,376,820)
Fund balance January 1 (447,951) 229,179 477,695
Fund balance December 31 $229,179 $477,695 ($899,125)
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Audit Management Letter
Capital Projects Funds
A summary by project is as follows:
2004 2005 i
Project Expenditures Expenditures
River Interceptor (99-11) $188,474 j
Garden City Central Improvement (00-01) 499
Southwest Area Improvements (02-01) 9,275
France Avenue Relocation (02-04) 310,872
Garden City South Improvement (02-OS) 1,000 i
Happy Hollow Improvements (03-01, 02, 03, 04) 264,887
Northport Improvements (04-01, 02, 03, 04) 2,560,483 281,235 f
Misc. Concrete Repair (03-14) 11,322 1
Shingle Creek Parkway (04-12, 13, 14) 359,042 264,948
Lions Park South (2005-01, 02, 03, 04) 768,880
73rd Avenue North (2004-06} 93,111
Engineering services 300,000
Other 188,338 127,333
Total $3,894,192 $1,835,507
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Audit Management Letter
Capital Projects Funds
Earle Brown Heritage Center Improvements Fund
This fund was established to account for monies set aside for future improvements. The
financial transactions of this fund in the past two years have been as follows:
2004 2005
Revenue and other sources:
Investment earnings $2,741 $3,799
Other services 60,000
Transfers from Earle Browne Heritage Center 200,000 67,000
Tota1 revenue and other sources 202,741 130,799
Expenditures and other uses:
Capital maintenance and repairs 89,456 249,964
Net change in fund balance 113,285 (119,165)
Fund balance January 1 8,163 121,448
Fund balance December 31 $121,448 $2,283
A summary by project is as follows:
2005
Project Expenditures
Shingle Creek Parkway $117,366
Optical fiber installation project 23,515
Dishwasher replacement 93,370
September 21 storm repairs 15,713
Total $249,964
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Audit Management Letter
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Capital Projects Funds
Street Reconstruction Fund
This fund was established to account for the collection and use of franchise fees.
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Financial transactions for the past three years is as follows:
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2003 2004 2005
Revenue and other sources: 1
Investment eamings $252 $9,457 $44,665
Franchise fees 612,079 662,614
Transfer from General Fund 183,639 620,464 555,000
Transfer from Liquor Fund 100,000
Total revenue and other sources 283,891 1,242,000 1,262,279
Expenditures and other uses 940,961
Net change in fund balance 283,891 1,242,000 321,318
Fund balance January 1 283,891 1,525,891
Fund balance December 31 $283,891 $1,525,891 $1,847,204
A summary by project is as follows:
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2005
Project Expenditures
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Shingle Creek Parkway (2004-14) $77,538
Lions Park South (2005-01) 431,8ll
Twin Lake Avenue (2005-OS) 431,612
Total $940,961
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Audit Management Letter
Capital Projects Funds
Technologv Fund
This fund was established in 2003 to account for funds set aside for technology
improvements or major technology renovations/replacements. Financial transactions for the
past three years is as follows:
2003 2004 2005
Revenue and other sources:
Investment earnings $4,868 $9,994
Other 23,000 159,600
Transfer from General Fund 275,000 295,000 70,000
Total revenue and other sources 275,000 322,868 239,594
Expenditures and other uses:
Capital outlay 56,444 360,520
Transfer to Cities Initiatives Grant Fund 1,153
Total expenditures and other uses 0 56,444 361,673
Net change in fund balance 275,000 266,424 (122,079)
Fund balance January 1 275,000 541,424
Fund balance December 31 $275,000 $541,424 $419,345
Capital outlay far 2005 consisted of:
Fiber optic network $35,825
800 Mhz radio system 324,695
Total $360,520
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Audit Management Letter
Enterprise Funds
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ENTERPRISE FUNDS
j The City maintains eight Enterprise Funds as follows:
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I Municipal Liquor
Golf Caurse
Earle Brown Heritage Center
Recycling and Refuse
Street Light Utility
Water Utility
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Sanitary Sewer
Storm Drainage
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Audit Management Letter
Enterprise Funds
Municinal Liquor Fund
The financial activity of this fund for the past three years has been as follows:
Municipal Liquor
2003 2004 2005
Amount Percent Amount Percent Amount Percent
Sales $3,407,990 100.0% $4,026,679 100.0°k $4,6]0,091 100.0°k
Cost of sales (2,554,637) (75.0%) (3,035,621) (75.4%) (3,518,185) (76.3%)
Gross mazgin 853,353 25.0% 991,058 24.6� 1,091,906 23.7°k
Operaling expenses:
Personal services 381,227 112� 45'7,919 11.4% 457,170 9.9�
Supplies 25,669 0.8� 39,100 1.0°k 14,286 03%
Other services 116,784 3.4% 139,727 3.5% 150,665 33%
Insurance 6,997 0.2% 11,176 0.3% 9,796 0.2%
Utilities ]2,636 0.4% 27,066 0.7% 32,812 0.7%
Rent 144,499 4.2% 228,632 5.7% 235,174 5.1%
Depreciation 35,580 1.0% 35,624 0.9% 34,221 0.7%
Total operating expense 723,392 212% 939,244 23.5% 934,124 20.2%
Operating income 129,961 3.8% 51,814 1.1% 157,782 3.5%
Other income (expense) net 22,072 0.6% 12,857 0.3% 25,158 0.5%
Transfer to Capital Projects Fund (100,000) (2.9%) (125,000) (3.1%) (125,000) (2.7%)
Change in net assets $52,033 1.5% ($60,329) (1.7%) $57,940 1.3%
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Audit Management Letter
Enterprise Funds
The cash flow of this fund has been as follows:
2003 2004 2005
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Net cash from operating activities $279,607 ($251,812) $249,504
Less purchase of capital assets (50,932)
Subtotal 279,607 (302,744) 249,504 i
Transfer to Capital Improvements Fund (100,000) (125,000) (125,000) 1
Investment earnings 14,956 9,209 17,892
Net increase in cash and cash equivalents $194,563 ($418,535) $142,396 a
Cash balance at December 31 $996,556 $578,021 $720,417
The primary reason for use of cash is an increase in inventory of $277,000 with the opening of Store #2.
Comnarison With Other Municival Liauor Stores
The Office of the State Auditor (OSA) annually publishes "An Analysis of Minnesota
Municipal Liquor Store Operations. The most recent report available is for 2004. The
following analysis compares Brooklyn Center's liquor operations with those reported in the
OSA report.
There are twenty-one metro area cities that operate off-sale only operations. The City of
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Brooklyn Center ranks 9th in sales among 21 metro area cities.
It should be noted that the following comparisons are strictly a comparison of amounts
reported. There are a number of factors that affect operating results that are not included in
this comparison. These factors include the mix of product sold, philosophy regarding sales
techniques such as high volume/lower margin, demographics and location.
Audit Management Letter
Enterprise Funds
Gross Mar�in Anaivsis
Gross margin measures the sales less the direct cost of products sold. A
comparison to state averages for Minnesota municipal off-sale operations is as follows:
Cost of Gross Margin State
Sales Sales Amount Percent Average�
1999 $3,560,613 $2,694,622 $865,991 243% 23.6%
2000 3,584,829 2,734,318 850,511 23.7% 23.8%
2001 3,552,152 2,696,042 856,110 24.1% 24.0%
2002 3,435,556 2,593,765 841,791 24.5% 24.4%
2003 3,407,990 2,554,637 853,353 25.0% 23.9%
2004 4,026,679 3,035,621 991,058 24.6% 24.1%
2005 4,610,091 3,518,185 1,091,906 23.7% Not available
���Source: Minnesota Office of the State Auditor Metropolitan Area Off-Sale Operations
Overatin� Expenses
Operating expenses for the past several years have been as follows:
Percent of Sales
Year Amount City State Average
1999 $632,638 17.7% 16.2%
2000 696,830 19.5% 16.5%
2001 643,452 18.1% 16.6%
2002 689,603 19.9% 16.2%
2003 723,392 21.2% 17.7%
2004 939,244 23.3% 17.9%
2005 934,124 203% Not available
The City of Brooklyn Center does not compare favorably with State averages for
operating expenses.
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Audit Management Letter
Enterprise Funds
Golf Course Fund
The financiai activity of this fund for the past three years has been as follows:
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Golf Course
2003 2004 2005
Operating revenue:
Sa1es $294,149 $284,992 $256,268
Operating expenses.
Personal services 126,866 131,383 127,010
Supplies 19,501 15,616 18,069
Other services 88,494 73,313 68,297
Insurance 8,002 7,721 6,836
Utilities 17,208 15,123 14,591
Depreciation 27,912 27,971 27,888
Total expenses 287,983 271,127 262,691
Operating income (loss) $6,166 $13,865 ($6,423)
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The cash flow of this fund has been as follows:
2003 2004 2005
Net cash from operating activities $38,292 $44,770 $21,046
Less repayment of interfund loan (15,000) (35,000) (50,000)
Subtotal 23,292 9,770 (28,954)
Investment earnings 1,048 1,379 2,433
Net increase (decrease) in cash and cash equivalents $24,340 $11,149 ($26,521)
Cash balance at December 31 $61,621 $72,770 $46,249 i
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Enterprise Funds
Earle Brown Herita�e Center Fund
The financial activity of this fund for the past three years has been as follows:
Earl Brown Heritage Center
2003 2004 2005
Amount Percent Amount Percent Amount Percent
Sales $3,393,810 ]00.0% $3,565,197 100.0% $3,717,131 100.0%
Cost of sales (1,644,608) (48.5%) (1,889,930) (53.0%) (1,864,620) (50.2%)
Gross margin 1,749,202 51.5% 1,675,267 47.0% 1,852,511 49.8%
Operating expenses:
Personal services 812,146 23.9% 819,068 23.0% 813,074 21.9%
Supplies 90,368 2.7% 129,728 3.6% 121,420 33%
Other services 340,303 10.0% 366,421 103% 380,724 10.2%
Insurance 30,672 0.9% 32,649 0.9% 34,325 0.9%
Utilities 157,339 4.6% 170,658 4.8% 193,049 5.2%
Rent 104,776 3.1% 93,062 2.6% 119,325 3.2%
Depreciation 571,632 16.8% 568,643 15.9% 568,264 15.3%
Total operating expense 2,107,236 62.0% 2,180,229 61.1% 2,230,181 60.0%
Operatingincome(loss) (358,034) (10.5%) (504,962) (141%) (377,670) (10.2%)
Other income (expense) net 11,631 0.3% 58,366 1.6% 144,228 3.9%
Transfer to other funds 0.0% (200,000) (5.6%) (67,000) (1.8%)
Change in net assets ($346,403) (10.2%) ($646,596) (18.1%} ($300,442) (8.1%)
The cash flow of this fund has been as follows:
2003 2004 2005
Net cash from operating activities $171,524 $127,818 $301,970
Investment earnings 17,376 13,485 30,195
Transfer to EBHC Improvements Fund (200,000) (67,000)
Net increase (decrease) in cash and cash equivalents $188,900 ($58,697) $265,165
Cash and investment balance at December 31 $855,429 $796,733 $1,061,898
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Audit Management Letter
Enterprise Funds
Recvcling and Refuse Fund
The �nancial activity of this fund for the past three years has been as follows:
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Recycling and Refuse
2003 2004 2005
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Operating revenue $212,271 $214,347 $235,586
Operating expenses:
Other services 223,504 221,443 252,998
Insurance 175 1,378 1,663
Total operating expenses 223,679 222,821 254,661
Operating income (loss) ($11,408} ($8,474) ($19,075)
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Audit Management Letter
Enterprise Funds
Water Utilitv Fund
The financial activity of this fund for the past three years has been as follows:
Water Utility
2003 2004 2005
Operating revenue $1,530,592 $1,583,450 $1,636,097
Operating expenses:
Depreciation 648,115 588,767 588,503
Alt other 991,576 945,156 1,157,209
Total operating expenses 1,639,691 1,533,923 1,745,712
Operating income (loss) (109,099) 49,527 (109,615)
Nonoperating revenues (expenses):
Income 46,717 32,636 235,494
Capital construction 631,441
Transfers net (631,441)
Total nonoperating revenues (expenses) 46,717 (598,805) 866,935
Change in net assets ($62,382) ($549,278) $757,320
As shown above, the water utility reported a transfer out in 2004 of $631,441 and capital
contributions in 2005 of $631,441. This is the result of the entire project being accounted for
in a capital project fund. The water utility portion of the project was $631,441. Upon project
completion, the utility portion of the asset was then "contributed" back to the Water Utility
Fund.
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Audit Management Letter
Enterprise Funds
The cash flow of this fund has been as follows:
2003 2004 2005
Net cash from operating activities $628,197 $537,570 $547,971
Less purchase of capital assets (309,930) (34,751) (828,358)
Less debt service
Subtotai 318,267 502,819 (280,387)
Investment earnings 31,180 26 46,071
Special assessments 137,495
Interfund payable 26,845
Transfer to Infrastructure Construction Fund (631,440)
Net increase (decrease) in cash and cash equivalents $349,447 ($102,601) ($69,976) j
Cash balance at December 31 $1,890,755 $1,788 $1,718,178
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Audit Management Letter
Enterprise Funds
5anitarv Sewer Fund
The financial activity of this fund for the past three years has been as follows:
Sanitary Sewer Fund
2003 2004 2005
Operating revenve $2,870,109 $2,833,836 $2,965,539
Operating expenses 2,556,224 2,310,645 2,801,380
Operating income (loss) 313,885 523,191 164,159
Nonoperating revenues (expenses):
Income 77,355 97,220 57,508
Capital contributions 555,614
Transfers (555,614)
Change in net assets $391,240 $64,797 $777,281
As shown above, the sanitary sewer utility reported a transfer out in 2004 of $555,614
and capital contributions in 2005 of $555,614. This is the result of the entire project being
accounted for in a capital project fund. The sanitary sewer utility portion of the project was
$555,614. Upon project completion, the utility portion of the asset was then "contributed"
back to the Sanitary Sewer Fund.
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Audit Management Letter
Enterprise Funds
The cash flow of this fund has been as follows:
2003 2004 2005 t
Net cash from operating activities $848,185 $998,130 $573,500
Less purchase of capital assets (416,742) (142,840) (508,588)
Subtotal 431,443 855,290 64,912
Investment earnings 26,473 28,990 56,825
Special assessments 943
Interfund payable 5,837
Transfer to Infrastructure Construction Fund (555,614)
Net increase (decrease} in cash and cash equivalents $457,916 $328,666 $128,517
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Cash balance at December 31 $1,140,100 $1,468,766 $1,597,283
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Audit Management Letter
Enterprise Funds
Storm Drainage Fund
The financial activity of this fund for the past three years has been as follows:
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Storm Drainage
2003 2004 2005
Operating revenues:
User fees $1,264,512 $1,276,778 $1,293,841
Special assessments 112,254 554 4,849
Other 26,363
Investmentearnings 10,237 20,658 42,626
Total operating revenues 1,413,366 1,297,990 1,34I,316
Operating expenses:
Personal services 55,863
i Supplies 3,861 1,917 6,655
Other services 290,369 225,729 496,604
Insurance 1 292 1 32 1 336
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Depreciation 513,608 527,619 526,142
Interest 25,835 9,054 6,485
Total operating expenses 834,965 765,647 1,093,085
Capital contributions 441,756
Transfers out (441,755)
Change in net assets $578,401 $90,588 $689,987
As shown above, the storm drainage utility reported a transfer out in 2004 of $441,756
and capital contributions in 2005 of $441,756. This is the result of the entire project being
accounted for in a capital project fund. The storm drainage utility portion of the project was
$441,756. Upon project completion, the utility portion of the asset was then "contributed"
back to the Storm Drainage Fund.
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Audit Management Letter
Enterprise Funds
The cash flow of this fund has been as follows:
2003 2004 2005
Net cash from operating activities $1,115,712 $1,044,422 $711,137
Less purchase of capital assets (323,343) (773,344)
Less debt service (235,835) (229,055) (236,485)
Subtotal 556,534 815,367 (298,692)
Investment earnings 14,321 20,658 42,626
Special assessments 8,597
Transfer to Infrastructure Construction Fund (441,755)
Net increase (decrease) in cash and cash equivalents $570,855 $394,270 ($247,469)
Cash balance at December 31 $914,076 $1,308,346 $1,060,877
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Street Li�ht Utilitv Fund
The financial activity is as follows:
J
Street Light Utility Fund
2003 2004 2005
Operating revenues:
User fees $200,224 $208,121 $214,669
Other 8,060
Investment earnings 1,035 1,974 3,408
Total operating revenues 209,319 210,095 218,077
Operating expenses:
Other services 146,504 165,651 213,094
Transfers (51,000)
Change in net assets $62,815 ($6,556) $4,983
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Audit Management Letter
Internal Service Funds
INTERNAL SERVICE FUNDS
Internal Service Funds are used to account for the financing on a cost reimbursement
basis of goods or services provided by one department to another departznent within the City.
During 2005, the City maintained the following Internal Service Funds:
Internal Service Funds
Cash and Investment Balance
December 31,
Fund 2003 2004 2005
Compensated Absences $795,418 $881,890 $919,113
Retirement (Post Employment
Insurance Benefits) 1,564,375 1,529,053 1,505,579
Central Garage 4,541,395 4,779,713 5,015,807
Total $6,901,188 $7,190,656 $7,440,499
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Audit Management Letter
Audit Committee Letter
AUDIT COMMITTEE LETTER
We have audited the financial statements of the City of Brooklyn Center, Minnesota, for the
year ended December 31, 2005, and have issued our report thereon dated April 6, 20Q6.
Professional standards require that we provide you with the following information related to our
audit.
Our Responsibility under U.S. Generally Accepted Auditing Standards
As stated in our engagement letter dated October 14, 2005, our responsibility, as described
by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute,
assurance that the financial statements are free of material misstatement and are fairly presented
in accordance with U.S. generally accepted accounting principles. Because an audit is designed
to provide reasonable, but not absolute assurance and because we did not perform a detailed
examination of all transactions, there is a risk that material misstatements may exist and not be
detected by us.
As part of our audit, we considered the internal control of the City of Brooklyn Center.
Such considerations were solely for the purpose of deternuning our audit procedures and not to
provide any assurance concerning such internal control.
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Significant Accounting Policies
Management is responsible for the selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
apprapriateness of accounting policies and their application. The significant accounting policies
used by the City of Brooklyn Center, Minnesota are described in Note 1 to the financial
statements. For 2005, the City of Brooklyn Center, Minnesota adopted GASB No. 40, related to
cash and investments, which revised footnote disclosures. We noted no transactions entered into
by the City of Brooklyn Center, Minnesota during the year that were both significant and
unusual, and of which, under professional standards, we are required to inform you, or
transactions for which there is a lack of authoritative guidance or consensus.
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Audit Management Letter
Audit Committee Letter
Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by
management and are based on management's knowledge and experience about past and current
events and assumptions about future events. Certain accounting estimates are particularly
sensitive because of their significance to the financial statements and because of the possibility
that future events affecting them may differ significantly from those expected. The most
sensitive estimate affecting the financial statements were as follows:
Denreciation expense. Management's estimate of depreciation expense is based on the
estimated useful lives of assets. We evaluated the key factors and assumptions used to
develop depreciation expense in deternuning that it is reasonable in relation to the
financial statements taken as a whole.
Health insurance liabilitv. Managements estimate of health insurance liability is based
on eligible participants, estimated future health insurance premiums, and estimated
retirement dates. We evaluated the key features and assumptions used to develop health
insurance liabilities in deternuning that it is reasonable in relation to the financial
statements taken as a whole.
Audit Adjustments
For purposes of this letter, professional standards define an audit adjustment as a proposed
correction of the financial statements that, in our judgment, may not have been detected except
through our auditing procedures. An audit adjustment may or may not indicate matters that could
have a significant effect on the City of Brooklyn Center, Minnesota's financial reporting process
(that is, cause future financial statements to be materially misstated). We proposed, and
management recorded, an adjustment of the amount of prepaid expenses. That adjustment was
necessary to properly reflect the expense of MCES sewage treatment costs. We also proposed,
and management recorded, other adjustments that generally were for routine year-end accruals
and for isolated errors. In addition, management represented to us that uncorrected
misstatements are immaterial, both individually and in the aggregate, to the financial statements
taken as a whole. Those misstatements are as follows:
a. Not reporting an estimate allowance for uncollectible property taxes in the amount of
$20,500.
b. Recognizing a gain on the trade-in of a capital asset in the amount of $16,400 rather
than reducing the value of the new asset acquired.
c. Liquor inventory per the financial statements exceeded the amount per the liquor
inventory system by $11,200.
d. The City maintains a perpetual inventory system related to liquor inventory. Audit test
counts indicate inventory is overstated by approximately $11,000.
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Audit Management Letter
Audit Committee Letter
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management
as a matter, whether or not resolved to our satisfaction, concerning a financial accounting,
reporting, or auditing matter that could be significant to the financial statements or the auditor's
report. We are pleased to report that no such disagreements arose during the course of our audit.
Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing
and accounting matters, similar to obtaining a"second opinion" on certain situations. If a
consultation involves application of an accounting pnnciple to the government unit s financial
statements or a determination of the type of auditor's opinion that may be expressed on those
statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such
consultations with other accountants.
Issues Di
scussed Prior to Retention of Independent Auditors
We generally discuss a variety of matters, including the application of accounting principles
and auditing standards, with management each year prior to retention as the City of Brooklyn j
Center, Minnesota's auditors. However, these discussions occurred in the normal course of our
professional relationship and our responses were not a condition to our retention.
Difficulties Encountered in Performing the Audit ti
We encountered no difficulties in dealing with management in performing our audit.
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Closinq
This information is intended solely for the information and use of those who have
responsibility for oversight of financial reporting process and management of the City of
Brooklyn Center, Minnesota and is not intended to be and should not be used by anyone other
than these specified parties.
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Clt of Brook__. n Center
y y
Comprehensive Annual Financial
Report
for the year ended December 31, 2005
I
COMPREHENSIVE ANNUAL FINANCIAL REPORT
OF THE
CITY OF BROOKLYN CENTER,
MINNESOTA
Michael J. McCauley
City Manager
Prepared By:
FINANCE DIVISION
DEPARTM�NT OF FISCAL SUPPORT SERVICES
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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)
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Table of Contents
INTRODUCTORY SECTION
Letter of Transmittal i
Principal Officials 6
Organizational Chart
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 Balance 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
Stateinent of Revenues, Expenses, and Changes in Fund Net Assets �4
Statement of Cash Flows
Notes to the Financial Statements 39
Reauired SuDplementarv Information:
Budgetary Comparison Schedule-General Fund 1
Budgetary Comparison Schedule-Earle Brown Tax Increment District 77
Budgetary Comparison Schedule-Tax Increment District No. 3 78
Note A on Budgetary Compliance 79
Combinin� 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 g8
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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 9
Special Revenue Fund-Community Development Block Grant 94
und-Ci Initiatives Grant 95
Special Revenue F ty
Subcombining Balance Sheet-Nonmajor Debt Service Funds 98
Subcombining Statement of Revenues, Expenditures, and Changes in Fund
Balances-Nonmajor Debt Service Funds 99
Subcombinin Balance Sheet-Nonma'or Ca ital Pro'ect Funds 102
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Subcombining Statement of Revenues, Expenditures, and Changes in Fund
Balances-Nonmajor Capital Project Funds 104
Nonmajor Enterprise Funds
Subcombinin Statement of Net Assets 108
g
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 12g
Assessed Value and Estimated Market Value of All Taxable Property 130
Direct and Overlapping Tax Rates 1�2
Ratio of Net Bonded Debt to Assessed Value and Net Bonded Debt per Capita 134
Coinputation of Direct and Overlapping Debt 13
Principal TaKpayers 136
Property Value and Construction 137
Demographic Statistics 138
Schedule of Revenue Bond Coverage 139
Schedule of Insurance Coverage 140
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City of Brooklyn Center
A Millennium Community
May 22, 2006
Honorable Mayor and Members of the City Council
City of Brookiyn 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. Managements 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
5 6301 Shingle Creeh Parkway Recreation and Community Center Phone TDD Number
Brooklyn Center, MN 55430-2199 (763) 569-3400
City Hall 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
n resources
'nternal de artments rovidin huma
Authority. The City also has i p p 9
nt and information technolo s
u ort to these
various
engineermg, financial manageme 9Y PP
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
of each ear
preliminary property tax levy must be adopted no later than September 15 y
le that ma
for the ensuing year s collection.
This establishes a maximum vy Y
le re uires a
subsequently be lowered but not raised.
Effective establishment of this vy q
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
lic hearin s known as Truth
in
the receipt of this notice citizens are invited to pub g
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 Ciry 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.
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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 Ciry
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
Maior 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.
x base rowth.
tinued to
be th
e ke to comm
ercial and industrial ta g
Redevelopment con Y
In 2005 the City acquired the Hmong-American Shopping Center at the intersection of
th nue. Tenants in the Center were relocated and the buildings
Highway 100 and 57 Ave
was com let
ed.
i hed. Environmental cleanu of various substances p
demol s
were P
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
3
494. Private revitalization of this property will enhance the revitalization efforts made
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 Transnortation
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.
4
Cash Manaaement
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 fiquid cash. In addition, the City
invests in the 4M and 4MPIus funds sponsored by the League of Minnesota Cities. 2005
saw a substantial increase in the rate of interest paid by the 4M and 4MPIus funds in
2005, from a low of 1.77% to a high of 3.9Z% 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.
Acknowledaements
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.
I Respeg�lly Sub ed,
Michael cCaule Daniel ]ordet
City Manager Director of Fiscal Support Services
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CITY OF BROOKLYN CENTER, MINNESOTA
PRINCIPAL OFFICIALS
December 31, 2005
Name Position Term of Office Term Expires
ELECTED OFFICIALS
Myma Kragness Mayor Four Years December 31, 2006
Kathleen Carmody Council Member Four Years December 31, 2006
Kay Lasman Council Member Four Years December 31, 2008
Diane Niesen Council Member Four Years December 31, 2006
Mary O'Connor Council Member Four Years December 31, 2008
APPOINTED OFFICIALS
Michael J. McCauley City Manager Appointed
Curt Boganey Assistant City Manager Appointed
Charles LeFevre City Attorney Contractual Appointee
Sharon Knutson City Clerk Appointed
Scott Bechthold Police Chief Appointed
Todd Blomstrom Director of Public Works/City Engineer Appointed
Ronald Boman Fire Chief Appointed
James Glasoe Community Activities, Recreation Services Director Appointed
Brad Hoffman Community Development Director Appointed
Daniel Jordet Director of Fiscal Support Services Appointed
6
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City of Brooklyn Center Organization
2005
Electorate I
City Council Advisory Commissions I
Administration
City Attorney City Manager Human Resources
Communications
Information Technology
Etections
Licenses
City Clerk
I I
Public Works Police Department Community Activities, Enterprise
Engineering Patrol Recreation. and Services Liquor Stores
Street Maintenance Investigation Earle Brown Heritage Center
Sanitary Sewer Crime Prevention Community Programs
Central Garage Community Programs Recreation Programs
Storm Sewer Support Services Community Center
Water Department Dispatch Government Buildings
Park Maintenance Golf Course
Fire Deaartment Fiscal and Supaort Services Communitv Develoament
Fire Prevention Accounting Inspections
Fire Suppression Audit Economic Development
Emergency Preparedness Utility Billing Housing Redevelopment Authority
Risk Management Zoning
Assessing Planning
This page has been /eft b/ank intentiona//y.
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Tautges Redpath, Ltd.
Certifietl Public Accountants and Consultants
IlVDEPENDENT AUDITOR S REPORT
To the Honorable Mayor and
Members of the City Council
City of Brooklyn Center, Minnesota
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of
the City of Brooklyn Center, Minnesota, as of and for the year ended December 31, 2005
which collectively comprise the City of Brooklyn Center, Minnesota's basic financial
statements as listed in the table of contents. These financial statements are the responsibility
of the City of Brooklyn Center, Minnesota's management. Our responsibility is to express
opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditin Standards issued b the Com troller General of the United States.
S Y P
Those standards require that we plan and perform the audit to obtain reasonable assurance
I ahout whether the financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the City of Brooklyn Center, Minnesota's internal control
over financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
I statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonabl� basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in a11 material
respects, the respective financial position of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of
Brooklyn Center, Minnesota, as of December 31, 2005, and the respective changes in
financial position and cash flows, where applicable, thereof for the year then ended in
confornut with accountin r' i 1 ta e erica.
y g p mc p es generally accepted in the Umted S t s of Am
4810 White B r P rkw 42 5004 F x www.hibtr.com
I ea a ay White Bear Lake, Minnesota 55110 651 426 7000 651 6 a
1303 South Fronta e Roatl uite 1 Hastin s 651 4 90 651 426 5004 Fax
g S 3 g, Minnesota 55033 480 9
HLB Tautges Redpath, Ltd. is a member of Intemational, a worid-wide organization of accounting firm9and business advisors.
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In accordance with Government Auditing Standards, we have also issued our report dated
Apri16, 2006 on our consideration of the City of Brooklyn Center, Minnesota's internal
control over financial reporting and on our tests of its compliance with certain provisions of
laws, regulations, contracts and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing and not to provide an opinion on the intemal
control over financial reporting or on compliance. That report is an integral part of an audit
perFormed in accordance with Government Auditing Standards and should be considered in
conjunction with this report in considering the results of our audit.
The Management's Discussion and Analysis and the budgetary comparison information as
listed in the table of contents, are not a required part of the basic financial statements but are
supplementary information required accounting principles generally accepted in the United
States of America. We have applied certain limited procedures, which consisted principally
of inquiries of management regarding the methods of ineasurement and presentation of the
required supplementary information. However, we did not audit the information and express
no opinion on it.
Our audit was conducted for the u ose of formin o inions on the financial statements that
P iP g P
collectively comprise the City of Brooklyn Center, Minnesota's basic financial statements.
The introductory section, combining and individual nonmajor fund financial statements and
schedules and statistical tables are presented for purposes of additional analysis and are not a
required part of the basic financial statements. The combining and individual fund
statements have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole. The introductory section and statistical
section have not been subjected to the auditing procedures applied in the audit of the basic
financial sta.tements and, accordingly, we express no opinion on them.
/���z,
HLB TAUTGES REDPATH, LTD. i
White Bear Lake, Minnesota
Apri16, 2006
lo
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 Hi�hli�hts
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, $13,881,634 is classified as unrestricted net assets
which may be used to meet the government's ongoing obligations to citizens and creditors in
I accordance with the City's fund designations and fiscal policies.
The City's total net assets increased by 4,636,208 from 2004 to 2005.
As of the close of the current fiscal yeaz, the City's governmental funds reported combined ending
fund balances of 40,471,856. Of this total amount, 33,272,528, or 82% is designated or reserved
through legal restrictions and City Council authorization.
At the end of the current fiscal year the general fund balance of 7,294,951 included 11,080
reserved and 7,283,871 designated.
The Ci 's total outstandin debt decreased b$ 10 045 000 durin the current fiscal ear, from
Y
tY Y g
g
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) govemment-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 tinancial 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 reiated 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 (govemmental 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 govemment, public
safety, public works, communiTy services, recreation and economic development. The business-type activities
I1
i
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.
i
Fund Financial statements. A fund is a grouping of related accounts that is used to maintain contro) 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.
i
Governmental funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the govemment-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 neaz-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 govemmental fund statement of revenues, expenditures, and change in fund balances provide a i
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 govemmental 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 Ciiy uses enterprise funds to account for its municipal liquor, goif 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.
12
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 govemmental 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 Analvsis
As noted earlier, net assets may serve over time as a useful indictor of a govemment's financial position. In the
case of the City, assets exceeded liabilities by 103,189,266 at the close of the most recent fiscai year.
The largest portion of the City's net assets 59,480,704 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
GovemmentalActivities Business-typeActivities Total
2005 2004 2005 2004 2005 2004
Currentand otherassets 53,189,844 63,5�3,375 8,008,437 7,948,797 61,198,28] 71,522,172
Capital assets 39,190,090 34,583,271 37,988,441 36,359,095 77,178,531 7Q942,366
Total assets 92,379,934 98,156,646 45,996,878 44,307,892 138,376,812 142,464,538
L.ong-term liabilities
outstanding 28,583,307 30,913,581 28,583,307 30,913,581
Other liabilities 5,683,658 11,956,320 92Q581 1,041,579 6,604,239 12,997,899
Totalliabilities 34,266,965 42,869,901 92Q58] 1,041,574 35,187,546 43,911,480
Net assets:
Invested in capital assets,
net ofrelated debt 21,992,263 12,648,271 37,988,441 36,129,095 59,980,704 48,777,366
Restricted 29,326,928 39,412,423 29,326,928 39,412,423
Unrestricted 6,793,778 3,226,051 7,087,856 7,137,218 13,881,634 10,363,269
Total net assets 58,112,969 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 yeaz, 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.
13
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 resiricted net assets decrease in the
governmental activities. j
i
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 i
totaled 4,636,208. Key elements of the increase are as follows:
CITY'S CHANGES IN NET ASSETS
Govenvr�ental Activities Business-tyoe Activities Total
2005 2004 2005 2004 2005 2004
Revenues:
Program revenues:
Charges for services 2,051,692 1,644,583 9,753,171 9,067,849 11,804,863 10,712,432 I
Operating gants and i
contributions 795,633 933,104 795,633 933,104
Capital gants and i
contributions 2,398,345 2,423,411 2,398,345 2,423,411 i
Generalrevenues:
Property taxes 11,288,883 11,015,069 11,288,883 11,015,069
Othertaxes 5,589,479 5,327,180 5,589,479 5,327,180
Grants and contributions
not restricted to
specific programs 577,548 923,374 577,548 923,374
Gain on sale of assets 31,880 29,202 31,880 29,202
Unrestricted investment
earnings 1,272,409 491,524 199,876 102,696 1,472,285 594,220
Other 660,218 117,864 778,082
Toralrevenues 24,005,869 23,447,665 9,953,047 9,2$8,409 33,958,916 32,736,074
Expenses:
General govemment 2,970,364 2,725,137 2,970,364 2,725,137
Pubiicsafety 7,848,160 7,538,277 7,848,160 7,538,277
Public works 3,856,992 2,482,819 3,856,992 2,482,819
Cornmunity services 86,043 67,324 86,043 67,324
Pazks and RecreaYion 2,305,047 2,255,231 2,305,047 2,255,231
Economic development 1,217,294 1,683,025 1,217,294 1,683,025
Nondepartmental (450,41 (450,415)
Interest on long-term debt 1,349,852 1,268,649 1,349,852 1,268,649
Municipalliquor 978,743 939,244 978,743 939,244
Golfcourse 273,024 271,127 273,024 271,127
E.BrownHeritageCenter 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
Sanitarysewer 2,808,644 2,31Q645 2,808,644 2,310,645
Storm drainage 1,102,672 '756,593 1,102,672 756,593
Street light utiliry 213,094 165,651 213,094 165,651
Total expenses 19,633,752 17,57Q047 9,688,956 8,380,233 29,322,708 25,950,280
Increase in net assets
before h 4,372,117 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) i
Change in net assets 2,826,224 7,882,428 1,809,984 (1,096,634) 4,636,208 6,785,794
Net assets January 1 55,286,745 47,404,317 43,266,313 44,362,947 98,553,058 91,767,264
Net assets December 31 58,112,969 55,286,745 45,076,297 43,266,313 103,189,266 98,553,058
14
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 consm►ction 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 eamings
Court fines 3% 5%
Other taxes l
Charges for services
6% 7%
Operating grants and
u contributions
3%
r ^�a
`;6��
Capital grants and
conVibutions
Property taxes and tax 10%
increments
65%
Governmental Activities 2005 Expenses
Economic development �terest on long-term
6 2% debt
6.9%
Parks and recreation
I1.7%
General govemment
15.1%
Communiry services�
0.4%
Public works�
19.6%
�Public safety
40.0%
15
Management's Discussion and Analysis
Business-tvne activities
a hs showin the business- e
'ncreased net assets b$ 1 809 984. Below are g tYP
Business e activities i ST P
typ Y
activities revenue and expense comparisons:
Business-Type Activities 2005 Revenues
Unrestricted investrnent
eamings
2.0%
Net Charges for services
98.0%
Business-Type Activities 2005 Expenses
Heritage Center Sewer
25.9% r323%
I
Storm Drainage��
12.7%
Non-Major Enterprise Water
5.4% Golf Course 20.6%
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.
I
16
i
Management's Discussion and Analysis
Financial Analvsis 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 particulaz, unreserved fund balance may serve as useful measure of a govemment's
net resources availabie for spending at the end of the fiscal year.
At the end of the current fiscal year, tha City's govemmental 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). T'he 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 expenditares.
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 $82,271, which was due to the use of
collections in previous years to pay current bond payments.
The fund balance of the Infrastructure Construction fund at the end of 2005 was a deficit of 899,125). This
represents a decrease from 2004 of 1,376,820. This decrease is due to the City postponing the issuance of
improvement debt to fund projects substantially completed in 2005.
Proprietary funds. The City's proprietary funds provide the same type of information found in the
govemment-wide financial statements, but in more detail.
The unrestricted net assets in the respective major proprietary funds are the municipal liquor fund 1,088,808,
golf course -$(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.
]7
i
Management's Discussion and Analysis
General Fund Bud¢etarv Hi�hli�hts
During the yeaz, 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 properiy 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 i
needs.
Capital Asset and Debt Administration
Capital assets. The City's investment in capital assets for its governmentai and business type activities as of
December 31, 2005, amounts to 77,178,531 (net of accumulated depreciatian). 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 I
increase for business-type activities).
Major capital asset events during the year included the following:
i
Two reconstruction projects in existing neighborhoods were completed during the year, with a final cost
of 3,296,000.
'ects
Three reconstruction projects were begun and substantially completed durmg the 2005. These pro�
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 Activities Business-type Acrivities Total
2005 2004 2005 2004 2005 2004
Land 3,203 3,203,904 3,147,342 3,197,342 6,401,246 6,401,246
Land impmvements 272,937 287,292 272,937 287,292
Consmiction in progress 7,962,052 3,731,004 2,110,290 10,072,342 3,731,004
Buildingsandsti 12,726,162 13,381,007 9,218,052 10,060,390 21,944,214 23,441,397
Departmental equiprnent 2,060,357 2,204,854 217,817 147,259 2,278,174 2,352,113
Other park impmvements 1,115,450 1,058,974 1,115,450 1,058,974
Streets 12,122,165 11,003,528 12,122,165 11,003,528
Mains and lines 22,972,003 22,666,812 22,972,003 22,666,812
Total $39,190,090 $34,583,271 $37,988,441 $36,359,095 77,178,531 7Q942,366
Additional information on the City's capital assets can be found in Note 5 on pages 56 through 57 of this report.
n- r onded debt outstandin of
Lo te m debt. At the end of the current fiscal ear the Ci had lon -term b
g Y n' g g
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.
18
Management's Discussion and Analysis
City's Outstanding Debt
General Obligation Sonds, General Obligation Improvement Bonds, General Obligation Tax Increment
Bonds, General Obligation Revenue Bonds, and Compensated Absences
Govemmenta] Activities Business-type Activities Total
2005 2004 2005 2004 2005 2003
General obligation bonds 5,340,000 $11,025,000 5,340,000 11,025,000
General obligation tax
increment bonds 19,305,000 22,445,000 19,305,000 22,445,000
General obligation
imporove�nt bonds 4,720,000 5,710,000 4,720,000 5,710,000
General obligation revenue bonds 230,000 230,000
Cornpensatedabsences 919,113 857,305 919,113 857,305
Total $3Q284,113 $40,037,305 23Q000 3Q284,113 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 997B 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
Mazket 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 BudEet a�nd Rates
The une
mployment 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 93 percent. These increases were necessary to ensure that the municipal utilities be
I self-supporting through revenue, as required by the City charter. These rates aze reviewed annually to ensure
compliance with the requirements of the charter.
19
I
Management's Discussion and Analysis
Reauests for information
This financial report is designed to provide a general overview of the City's finances for all those with an
interest in the government's finances. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to the Director of Fiscal and Support Services,
City of Brooklyn Center, 6301 Shingle Creek Parkway, Brooklyn Center, Minnesota 55430.
20
C
CITY OF BROOKLYN CENTER, MINNESOTA
STAT'EMENT OF NET ASSETS Statement 1
December 31, 2005
Governmental Business-Type
Assets: Activities Activities Total
Cash and investments 47,865,745 6,310,906 54,176,651
Receivables:
Accounts 274,852 1,618,577 1,893,429
Taxes 541,819 541,819
Special assessments 3,194,805 324,258 3,519,063
Internal balances 1,012,708 (1,012,708)
Due from other governments 169,200 14,933 184,133
Prepaid expenses 11,080 154,629 165,709
Inventories at cost 31,435 597,842 629,277
Restricted assets:
Cash and investments 88,200 88,200
Capital assets:
Nondepreciable 11,165,956 5,307,632 16,473,588
Depreciable 28,024,134 32,680,809 60,704,943
Total assets 92,379,934 45,996,878 138,376,812
Lia6ilities:
Accounts payable 593,907 272,058 865,965
Contracts payable 347,174 152,633 499,807
Due to other governments 73,309 58,420 131,729
Deposits payable 264,110 264,110
Accrued salaries and wages 262,271 36,474 298,745
Accrued interest payable 517,827 517,827
Unearned revenue 6,857 136,886 143,�43
Liabilities payable from restricted assets:
Deposits payable 88,200 88,200
Compensated absences payable:
Due within one year 919,113 919,113
Health insurance liability:
Due in more than one year 2,093,307 2,093,307
Bonds payable:
Due within one year 2,875,000 2,875,000
Due in more than one year 26,490,000 26,490,000
Totalliabilities 34,266,965 920,581 35,I87,546
Net assets:
Invested in capital assets, net of related debt 21,992,263 37,988,441 59,980,704
Restricted for:
Debt service 6,050,271 6,050,271
Tax increment purposes 23,276,657 23,276,657
Unrestricted 6,793,778 7,087,856 13,881,634
Total net assets 58,112,969 45,076,297 103,189,266
The accompanying notes are an integral part of these financial statements.
21
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF ACTIVITIES i
For the Year Ended December 31, 2005
f�
i
Charges For
Functions/Pro�rams Expenses Services
I
Primary govemment:
Government activities:
General government 2,970,364 297,51
Public safety 7,848,160 1,026,736
Public works 3,856,992 9,661
Community services 86,043
Parks and recreation 2,305,04'7 681,851
Economic development 1,217,294 35,933
Interest on long-term debt 1,349,852
Total government activities 19,633,752 2,051,692
Business-type activities:
Municipai liquor 978,743 1,099,172
Golf course 273,024 256,276
Earle Brown Heritage Center 2,262,359 1,857,461
Recycling and refuse 254,661 235,160
Street light utility 213,094 214,669
Water utility 1,795,759 1,825,521
Sanitary sewer 2,808,644 2,966,222
Storm drainage 1,102,672 1,298,690
Total business-rype activities 9,688,956 9,753,171
Total primary government 29,322,708 11,804,863
i
The accomparrying notes are an integral part of these financial statements.
22
i
Statement 2
Net (Expense) Revenue and
Program Revenues Changes in Net Assets
Operating Capital Primary Government
Grants and Grants and Governmental Business-Type
Contributions Contributions Activities Activities Total
60,000 (2,612,853) (2,612,853)
611,886 (6,209,538) (6,209,538)
90,000 2,328,345 (1,428,986) (1,428,986)
(86,043) (86,043)
79,827 10,000 (1,533,369) (1,533,369)
13,920 (1,167,441) (1,167,44
(1,349,852} (1,349,852)
795,633 2,398,345 (14,388,082) (]4,388,082)
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
795,633 2,398,345 (14,388,082) 64,215 (14,323,867)
General revenues:
Property taaces 11,288,883 11,288,883
Tax increments 4,216,246 4,216,246
Franchise fees 662,614 662,614
Lodging taxes 710,619 710,619
Grants and contributions not
restricted to specific programs 577,548 577,548
Unrestricted investment earnings 1,272,409 199,876 1,472,285
Gain on disposal of capital asset 31,880 31,880
Transfers (1,545,893) 1,545,893
Tota) general revenues and transfers 17,214,306 1,745,769 18,960,075
Change in net assets 2,826,224 1,809,984 4,636,208
Net assets beginning 55,286,745 43,266,313 98,553,058
Net assets ending 58,112,969 45,076,297 103,189,266
23
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FUND FINANCIAL STATEMENTS
25
CITY OF BROOKLYN CENTER, MINNESOTA
BALANCESHEET
GOVERNMENTAL FUNDS
December 31, 2005
Earle Brown
TIF
Assets General District
Cash and investments 7,677,491 441,729
Receivables:
Accounts 56,120
Cunent taxes 24, l 71 1,403
Delinquent taxes 183,715 9,989
Special assessments
Due from other funds
Due from other governments 32,185
Interfund receivable
Prepaid expenses 11,080
Advances to other funds
Restr'scted assets:
Cash and investments performance deposits 88,200
Total assets 8,072,962 453,12]
i
Liabilities and Fund Balances
Liabilities:
Accounts payable 249,395
Contracts payable
Due to other funds 1,211,846
Due to other governments 1,345
Interfund payable
Accrued salaries and wages 248,500 1 g8
Deferred revenue 190,571 9,989
Liabilities payable from restricted assets:
Deposits payable 88,200
Total I iabilities 778,011 ,222,023
Fund balances:
Reserved:
Prepaid items 11,080
Loan receivable
Debt service
Committed contracts
Unreserved:
Designated, reported in:
General Fund 7,283,871
Special Revenue Funds
Capital Project Funds
Undesignated, reported in:
Special Revenue Funds (768,902) I
Capital Project Funds
Total fund balances 7,294,951 (768,902)
Total liabilities and fund balances 8,072,962 453,121
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, aze 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
Net assets of governmental activities
The accompanying notes are an integral part of these financial statements.
26 i
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Statement 3
TIF Special Other
District Assessment Infrastructure Nonmajor Total
No.3 Bonds Construction Governmental Governmental
22,628,114 3,026,364 6,651,548 40,425,246
4,594 205,147 265,861
8, 775 311 3,162 37,822
266,159 13,671 30,463 503,997
2,385,905 808,900 3,194, 805
1,211,846 69,502 5,837 1,287,185
137,015 169,200
482,611 482,611
11,080
800,000 800,000
88,200
Z4,114,894 5,495,753 813,494 8,315,783 47,266,007
116,060 69,723 123,955 559, I 33
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
266,159 2,391,376 844,229 30,463 3,732,787
88,200
449,956 2,391,376 1,712,619 240,166 6,794,151
11,080
800,000 800,000
3,104,377 1,054,230 4,15 8,607
192,211 l 92,21 l
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)
23,664,93 8 3,104,377 (899,125) 8,075,617 40,471, 856
24,114,894 5,495,753 813,494 8,315,783
3'7,277,601
3,725,930
funds. (29,882,827)
are inciuded in the governmental statement of net assets. 6,520,409
58,112,969
27
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF REVENLTES, EXPENDI'TURES, AND
CHANGES IN FUND BALANCES
RNMENTAL FUNDS
GOVE
For the Year Ended December 31, 2005
Earle Brown
'I'IF
General District
Revenues:
Property taxes 10,418,177
Tax increments 845,868
Franchise fees
Lodging taxes 710,619
Special assessments
Licenses and permits 675,530
Intergovernmental 1,135,644
Charges for services 721,054
Fines and forfeits 253,748
Investment earnings (net of market value adjustment) 151,612 17,093
Miscellaneous 43,3'I4
Total revenues 14,109,758 862,961
Expenditures:
Current:
General government 2,586,993
Public safety 6,858,812
Public works 1,630,972
Community services 86,043
Parks and recreation 2,059,283
Economic development 337,575 42,496
Nondepartmental 315,355
Administrative services reimbursement (754,085)
Capital outlay:
General government 6,008
Public safety 35,600
Public works 15,123
Parks and recreation 2,851
Economic development
Debt service:
Principal retirement
Interest
Fiscal agent fees
Total expenditures 13,180,530 42,496
Revenues over (under) expenditures 929,228 820,465
Other financing sources (uses):
Transfers in 21,274 269,127
Transfers out (625,000)
Refunded bonds redeemed
Total other financing sources (uses) (603,726) 269,127
Net increase (decrease) in fund balances 325,502 1,089,592
Fund balances January 1 6,969,449 (1,858,494)
Fund balances December 31 7,294,951 (768,902)
The accompanying notes are an integral part of these f nancial statements.
28
Statement 4
TIF Special Other
District Assessment Infrastructure Nonmajor Total
No.3 Bonds Construction Governmental Govemmental
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
591,169 66,457 3,314 248,789 1,078,434
11,303 3,084 370,078 427,839
4,178,681 1,125,014 458,687 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, l 89 2,772,189
197,760 1,016,991 1,214,751
19,525 1,108 3,125 23,758
4,938,714 1,207,285 1,835,507 6,785,196 27,989,728
(760,033) (82,271) (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)
(1,446,701) (5,306,700) (7,088,000)
(2,206,734) (82,271} (1,376,820) (8,197,087) (10,447,818)
25,871,672 3,186,648 477,695 16,272,704 50,919,674
23,664,938 3,104,377 (899,125) 8,075,617 40,471,856
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CITY OF BROOKLYN CENTER, MINNESOTA
RECONCILIATION OF TI-iE STATEMENT OP REVENLTES, Statement 5
EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO TI� STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2005
Amounts reported for governmental activities in the statement of activities are different because:
Net changes in fund balances total governmental funds (Statement 4) (10,447,818)
Governmental funds report capital outlays as expenditures. However, in the statement of
activities the cost of those assets is allocated over their estimated useful lives and reported
as depreciation expense. This is the amount by which capital outlays exceeded depreciation
in the current period. 4,737,637
Revenues in the statement of activities that do not provide current financial resources are not
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 consumes
the current financial resources of governmental funds. Neither transaction, however, has
any effect on net assets. This amount is the net effect of these differences in the treatment
of long-term debt and related items. 9,815,000
Intemal 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)
Chan e in net assets of ovemmental activities Statement 2 2,826,224
g
g
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The accomparrying notes are an integral part of these financial statements.
31
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CITY OF BROOKLYN CENTER, MINNESOTA I
STATEMENT OF NET ASSETS r
PROPRIETARY FUNDS
December 31, 2005
i
Major
Municipal Golf Earle Brown
Liquor Course Heritage Center
Assets
Current assets:
Cash and cash equivalents 720,417 46,249 1,061,898
Accounts receivable net 7,780 170,781
Special assessments receivable
Due from other governments 14,933 i
Prepaid items 20,594 3,989
Inventories at cost 554,300 1,788 24,398
Total current assets 1,303,091 48,037 1,275,999
Noncurrent assets:
Capital assets:
Land 1,390,402 1,493,300
Land improvements 40,258 327,830
Buildings and structures 192,771 487,946 11,091,389
Machinery and equipment 111,167 11,160 154,627
Mains and lines
Construction in progress
Total capital assets 303,938 1,929,766 13,067,146
Less: Allowance for depreciation (176,583) (212,704) (5,209,716)
Net capital assets 127,355 1,717,062 7,857,430
Total assets 1,430,446 1,765,099 9,133,429
Liabilities
Current liabilities:
Accounts payable 159,109 137 54,907
Contracts payable 103,276
Due to other funds
Due to other governments 45,303 6 12,474
Deposits payable 261,210
Accrued salaries payable 9,551 1,393 14,20]
Deferred revenue 320 1,600
Advances from other funds 800,000
Compensated absences payable
Total current liabilities 214,283 801,536 447,668
Noncurrent liabilities:
Accrued health insurance liability
Totalliabilities 214,283 801,536 44�,668
Net assets
Invested in capital assets, net of related debt 127,355 1,717,062 7,857,430
Unrestricted 1,088,808 (753,499) 828,331
Total net assets 1,216,163 963,563 8,685,761
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds
Net assets of business-type activities
r
The accompanying notes are an integral part of these financial statements.
32
Statement 6
Business-Type Activities Governmental
Enterprise Other Activities-
Water Sanitary Storm Nonmajor Total Internal Total
Utility Sewer Drainage Enterprise Enterprise Service Proprietary
1,718,178 1,597,283 1,060,877 106,004 6,310,906 7,440,499 13,751,405
321,502 728,036 282,687 107,791 1,618,577 8,991 1,627,568
321,384 2,604 270 324,258 324,258
14,933 14,933
500 129,546 154,629 154,629
17,356 597,842 31,435 629,277
2,378,920 2,457,469 1,343,834 213,795 9,021,145 7,480,925 16,502,070
23,093 3,389 287,158 3,197,342 3,197,342
368,088 368,088
3,365,558 2,623,691 17,761,355 17,761,355
128,668 179,130 584,752 5,909,532 6,494,284
14,347,148 13,006,107 12,421,310 39,774,565 39,774,565
828,358 508,587 773,345 2,110,290 2,110,290
18,692,825 16,320,904 13,481,813 63,796,392 5,909,532 69,705,924
(10,127,864) (7,497,451) (2,583,633) (25,807,951) (3,99'7,043) (29,804,994)
8,564,961 8,823,453 10,898,180 37,988,441 1,912,489 39,900,930
10,943,881 11,280,922 12,242,014 213,795 47,009,586 9,393,414 56,403,000
21,691 4,434 7,125 24,655 272,058 34,774 306,832
23,591 25,766 152,633 152,633
26,845 5,837 32,682 32,682
637 58,420 58,420
2,900 264,110 264,110
7,548 2,542 1,239 36,474 5,837 42,3] l
134,966 136,886 136,886
800,000 800,000
919,113 919,113
218,178 38,579 8,364 24,655 1,753,263 959,724 2,712,987
2,093,307 2,093,307
218,178 38,579 8,364 24,655 1,753,263 3,053,031 4,806,294
8,564,961 8,823,453 10,898,180 37,988,441 1,912,489 39,900,930
2 160 742 2 418 890 1 335 470 189,140 7,267,882 4,427,894 11,695,776
1U,725,703 11,242,343 12,233,650 189,140 45,256,323 6,340,383 51,596,706
(180,026)
45,076,297
33
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
Municipal Golf Earle Brown
Liquor Course Heritage Center
Operating revenues:
Sales and user fees 4,610,091 256,268 3,717,131
Cost of sales 3,518,185 1,864,620
Total operating revenues 1,091,906 256,268 1,852,Sll
Operating expenses:
Personal services 457,170 127,010 813,074
Supplies 14,286 18,069 121,420
Other services 150,665 68,297 380,724
Insurance 9,796 6,836 34,325
Utilities 32,812 14,591 193,049
Rent 235,174 119,325
Depreciation 34,221 27,888 568,264
Total operating expenses 934,124 262,691 2,230,181
Operating income (loss) 157,782 (6,423) (377,670)
Nonoperating revenues (expenses):
Investment eamings 17,892 2,433 30,195
Special assessments
Gain (loss) on sale of capital asset
Other revenue 7,266 8 4,950
Interest and fiscal agent fees
Total nonoperating revenues (expenses) 25,158 2,441 35,145
Income (loss) before contributions and transfers 182,940 (3,982) (342,525)
Contributions and Transfers:
Capital Contributions 109,083
Transfer to Capital Project Funds (125,000) (67,000)
Change in net assets 57,940 (3,982) (300,442)
Net assets January 1 1,158,223 967,545 8,986,203
Net assets December 31 1,216,163 963,563 8,685,761
The accompanying notes are an integral part of these financial statements.
34
Statement 7
Business-Type Activities Governmental
Enterprise Other Activities-
Water Sanitary Storm Nonmajor Total Interna] Total
Utility Sewer Drainage Enterprise Enterprise Service Proprieta.ry
1,636,097 2,965,539 1,293,841 449,829 14,928,796 1,171,447 16,100,243
5,382,805 5,382,805
1,636,097 2,965,539 1,293,841 449,829 9,545,991 1,171,447 I0,7I7,438
375,754 140,190 55,863 1,969,061 898,273 2,867,334
154,942 13,693 6,655 515 329,580 326,618 656,198
490,494 2,141,067 496,604 314,903 4,042,754 111,120 4,153,874
9,930 4,803 1,336 2,790 69,816 40,954 110,770
126,089 27,807 149,547 543,895 2,675 546,570
354,499 354,499
588,503 473,820 526,142 2,218,838 494,270 2,713,108
1,745,712 2,801,380 1,086,600 467,755 9,528,443 1,873,910 11,402,353
(109,615) 164,159 207,241 (17,926) 17,548 (702,463) (684,915)
46,071 56,825 42,626 3,834 199,876 193,975 393,851
189,306 683 4,849 194,838 194,838
31,880 31,880
118 12,342 5,224 17,566
(6,485) (6,485) (6,485)
235,495 57,508 40,990 3,834 400,571 231,079 631,650
125,880 221,667 248,231 (14,092) 418,119 (471,384) (53,265)
631,440 555,614 441,756 1,737,893 1,737,893
(192,000) (192,000)
757,320 777,281 689,987 (14,092) 1,964,012 (471,384) 1,492,628
9,968,383 10,465,062 11,543,663 203,232 43,292,311 6,811,767 50,104,078
10,725,703 11,242,343 12,233,650 189,140 45,256,323 6,340,383 51,596,706
35
CITY OF BROOKLYN CENTER, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended December 31, 2005
Major
Municipal Golf Earie Brown
Liquor Course Heritage Center
Cash flows from operating activities:
Receipts from customers and users 4,610,476 256,268 3,858,202
Receipts from interfund services provided
Payments to suppliers (3,912,865) (108,682) (2,750,685)
Payments to employees (455,373) (126,548) (810,497)
Miscellaneous revenue 7,266 8 4,950
Net cash flows from operating activities 249,504 21,046 301,970
Cash flows from noncapital financing activities:
Principal repayments on advance (50,000)
Transfers out (125,000) (67,000)
Special assessments
Interfund payable
Net cash flows from noncapital financing activities (125,000) (50,000) (67,000)
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
Net cash flows from capital and related financial activities
Cash flows from investing activities:
Interest on investments 17,892 2,433 30,195
Net increase (decrease) in cash and cash equivalents 142,396 (26,521) 265,165
Cash and cash equivalents January 1 578,021 72,770 796,733
Cash and cash equivalents December 31 720,417 46,249 1,061,898
Reconciliation of operating income to net cash
provided (used) by operating activities:
Operating income (loss) 157,782 (6,423) (377,670)
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities:
Depreciation 34,221 27,888 568,264
Changes in assets and liabilities:
Decrease (increase) in receivables 210 89,601
Decrease (increase) in inventories (1,611) (73) 10,39]
Decrease (increase) in prepaid expenses 204 7,969
Increase (decrease) in payables 49,460 (816) (107,388)
Increase (decrease) in accrued expenses 1,797 462 2,577
Increase (decrease) in deferred revenue 175 103,276
Other nonoperating income 7,266 8 4,950
Total adjustments 91,722 27,469 679,640
Net cash provided by operating activities 249,504 21,046 301,970
i
The accomparrying notes are an integral part of these financial statements.
36 f
Statement 8
Business-Type Activities Governmental
Enterprise Other Activities-
Water Sanitary Storm Nonmajor Total Internal Total
Utility Sewer Drainage Enterprise Enterprise Service Proprietary
1,664,068 2,888,775 1,272,930 440,047 14,990,766 14,990,766
1,177,784 1,177,784
(742,067) (2,175,693) (507,169) (455,834) (10,652,995) (502,855) (11,155,850)
(374,148) (139,582) (54,624) (1,960,772) (292,713} (2,253,485)
118 12,342 5,224 17,566
547,971 573,500 711,137 (15,787) 2,389,341 387,440 2,776,781
(50,000) (50,000)
�i92,000� (i92,000�
137,495 943 8,597 14�,035 147,035
26,845 5,837 32,682 32,682
164,340 6,780 8,597 (62,283) (62,283)
(828,358) (508,588) (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
(828,358) (508,588) (1,009,829) (2,346,775) (331,572) (2,678,347)
46,071 56,825 42,626 3,834 199,876 193,975 393,851
(69,976) 128,517 (247,469) (11,953) 180,159 249,843 430,002
1,788,154 1,468,766 1,308,346 117,957 6,130,747 7,190,656 13,321,403
1,718,178 1,597,283 1,060,877 106,004 6,310,906 7,440,499 13,751,405
(109,615) 164,159 207,241 (17,926) 17,548 (702,463) (684,915)
588,503 473,820 526,142 2,218,838 494,270 2,713,108
24,221 (76,764) (20,911) (9,781) 6,576 2,896 9,472
10,492 19,199 (3,315) 15,884
(2,337) 5,836 5,836
31,796 14,014 (2,574) 11,920 (3,588) (18,173) (21,761)
1,606 608 1,239 8,289 609,001 617,290
850 104,301 104,301
118 12,342 5,224 17,566
657,586 409,341 503,896 2,139 2,371,793 1,089,903 3,461,696
547,971 573,500 711,137 (15,787) 2,389,341 387,440 2,776,781
37
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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-]arge 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 iJNITS
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 aze 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 ORGAIVIZATIONS
The City has severa( 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 Svstems Association (LOGISI
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
andlor use of services. Complete financial statements for LOGIS may be obtained at the LOGIS
offices located at 5750 Duluth Street, Golden Valley, Minnesota 55422.
39
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
i
I
LOGIS Insurance Groun
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 J
the City was $870,546. Complete financial statements may be obtained from Stanton Group
located at 3405 Annapolis Lane, Plymouth, Minnesota 55447.
OTHER
The Brooklvn Center Fire Denartment 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 i
Statutes. Its board of directors is elected by the membership of the Association and not by the i
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
staxements 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 R
removed from these statements. Governmental activities, which normally are supported by taxes
and intergovernmental revenues, are reported separately from business-rype 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.
i
40
i
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 ta�ces 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 axe 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 ta�ces, 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 f scal 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. Ail 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 govemment, except those required to be accounted for in another
fund.
The Earle 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.
The Special 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.
41
i
I
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
i
The Infrastructure 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 �i
properties.
The government reports the following major proprietary funds: i
The Municipal Liguor 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 I
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.
1
The Sanitary Sewer Fund accounts for the collection and pumping of sanitary sewage
through a system of sewer tines 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 properiy and vary with both
size and absorption characteristics of the pazcel.
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. Govemments also have the option of following subsequent private-
sector guidance for their business-type activities and enterprise funds, subject to this same
limitation. The govemment 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, aze 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.
j
42
i
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Additionally, the government reports the following fund type:
Internal Service Funafs 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.
43
I
I
i
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
S
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 foilowing January. The operating budgets include
expenditures and the means of financing them.
2. The County mails individual property tax notices showing the taaces that would result
from the proposed budgets of all taxing units to each property owner in November.
3. Public hearings aze 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. i
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. i
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 govemmental 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 axe 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 govemmental 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
5 526 809
Tax Increment District fund by 7,496, the Tax Increment District No. 3 fund by
trict No. 4
nd b 5 243 the Tax Increment Dis
the Housin and Redevelo ment Authorit fu
g P Y Y
fund b$ 233 242 and the Ci Initiatives Grant fund by 89,005. 1
Y h'
1
1
1
44
f
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 properly, 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
(]evylassessment date) of each yeaz 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 properiy taxes are payable (by property owners) on May
15 and October 15 of each calendaz year. Personal properly 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 properiy owners. The County possesses this authority.
i
45
I
I
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
r
December 31, 2005 j
1
GOVERNI��NT-WIDE FINANCIAL STATEMENTS,
The City recognizes property tax revenue in the period for which the ta�ces 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, cunent and delinquent taxes and State i
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) aze 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.
L SPECIAL ASSESSMENT REVENUE RECOGNITION `j
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 aze allowed to go delinquent, the property is
subject to tax forfeit sale. Proceeds of sales from ta�c 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.
i
46
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
governmenta.l 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.
Infi�s�vch�e 250,000
Buildings and Building Impmve�rns 50,000
Land Improvements 25,000
Fieavy �Q�p�rn 25,0�
Fumihae and furnishings 10,000
Motorized vehicles 10,000
T�hnology ec{uipment 10,000
47
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
i
E
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
inctuded as part of the capitalized value of the assets constructed. For the yeaz 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:
Paved streets 25 years
Water and sevver mains and lines Y�'s
Buildings and structures Y� I
Water wells and storage tanks 25 Y�s
Sewer lift stations 25 Yeaz's
Machinery and equipmern 3-15 years
Deparhr�ntal equipmern 3 -10 years
M. COMPENSATED ABS
ENCES
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 exaanple, 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 govemmental 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, govemmental 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 i
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.
48
OKLYN CENTER MINNESOTA
CITY OF BRO
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.
initiall made
Transactions that constitute reimbursements to a fund for expenditures/expenses y
er fund are recorded as ex enditures/expenses in the
from it that are properly applicable to anoth p
reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed.
Interfund loans aze 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
I 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:
Bonds payable (29,365,000)
Aacrued irrterest payable (517,82�
Intemal service funds 6,520,409
Capital assets, net of depreciation 37,277,601
Addition of deferred revenues 3,725,930
Net change to net assets gover►unental fimds 17,641,113
49
I
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL
FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES
The governmental fund statement of revenues, expenditures, and changes in fund balances
includes a reconciliation between net changes in fund balances total governmental funds and
changes in net assets of governmental activities as reported in the government-wide statement of
activities. One element of that reconciliation explains that "Governmental funds report capital
outlays as expenditures. However, in the statement of activities the cost of those assets is
allocated over their estimated useful lives and reported as depreciation expense:' The details of
this 4,737,637 difference are as follows:
Capital outlay 6,154,515
Depreciation e�ense (1,416,878) 4
Net adjustmern to increase net changes in fund
balances total govemmental funds to arrive at
changes in net assets of govemmea�tal activities 4,737,637
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, 2005 227,849
Tax increment taxes deferred revenue:
At December 31, 2004 (740,587)
At December 31, 2005 276,148
Special assessments deferred revenue:
At December 31, 2004 (3,218,741)
At December 31, 2005 3,185,575
Other deferred revenues:
At December 31, 2004 (36,360)
At December 31, 2005 36,360
Net adjustments to decrease net changes in fund balances
total governmental funds to arrive at changes in net
assets of governmental activities (849,896)
50
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:
Principal repayrr�nts:
General obligation debt 5,685,000
General improvement bonds 990,000
Tax incremecrt bonds 3,140,000
Net adjustment to increase net changes in fund balances
total goverrunental funds to arrive at changes in net assets
of govemmental activities 9,815,000
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 tiie 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 govemment obiigations. 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. Ail balances were covered by federal depository insurance or by perfected collateral held
by the City's agent in the City's name.
51
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
ress includin
agencies, its instrumentalities, or organizations created by an act of cong g
governmental bills, notes, bonds and other securities.
I 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.
fl 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.
52
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:
Investment Maturities (in Yeazs)
Less
Investment Tyne Fair Value than 1 1-5
Federal Home Loan Bank Notes 829,510 829,510
Federal National Mortgage Ass'n Notes 978,409 978
Extemal investrnent pool 4MFund 27,120,101 27,120,101
28,928,020 27,120,101 1,807,919
Total inveshnents 28,928,020
437,554
Money market funds 24,892,102
Petty cash and change 7,175
54,264,851
Reconciliation to Staiement ofNet Assets (Statemerrt 1):
Cash, cash equivalents, and inveshr�ents 54,176,651
Resh cash and investments 88,200
Total cash and investments 54,264,851
Interest raxe risk The City's investment policy requires interest earnings remain stable and
ent ortfolio
f the investm
ext bud et c cle and that at least 50 /o o P
predictable through at least the n g y
remain for two or more years with known interest rates. The policy also states that the portfolio shall
remain sufficiently liquid to meet all operating requirements that may be reasonably expected.
Credit risk At December 31, 2005, the City's investment in the FNMA and FHLB notes were all
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.
53
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Note 4 RECEIVABLES
Significant receivable balances not expected to be coilected witl�iu one year of December 31, 2005, are as follows:
Major Funds
Earle TIF Special
Brown TIF District Assessment Infrastructure Water Sanitary Nonmajor
General District No.3 Bonds Construction Utility Sewer Funds Total
Delinquent property taxes 45,930 3,420 7,620 56,970
Delinquent tax increment 2,500 66,540 69,040
Special assessments 1,772,750 699,173 57,691 2,343 2,531,957
45,930 2,500 66,540 $1,776,170 699,173 57,691 2,343 7,620 $2,657,967 'I
ed to be available to li uidate liabilities of I
Governmental funds report deferred revenue in connection with receivables for revenues that are uot consider q
the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the
end of the current fiscal year, tl�e various components of deferred revenue and unearned revenue reported in tl�e governmental funds were as follows:
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Unavailable Uneamed Totals
Delinquentproperty taxes receivable (Geueral Fund) 183,714 183,714
Delinquent property taxes receivable (Special Assessment Bonds) 13,671 13,671
Delinquent property taxes receivable (Nonmajor Funds) 30,463 30,463
Delinquent tax increment collections (Earl Brown TIF District) 9,989 9,989
Delinquent tax increment collections (TIF District No. 3) 266,159 266,159
Special assessments not yet due (Special Assessment Bonds) 2,377,705 2,377,705
Special assessments �iot yet due (Infrastructure Constructiou) 807,869 807,869
Fees received but unearned (General Fund) 6,857 6,857
Fees received but unearned (Infrastructure Construction) 36,360 36,360
N Total defemed/unearned revenue for governmental funds 3,725,930 6,857 3,732,787
The City has leased a portion of the police second floor expansion area to LOGIS as a backup computer facility. The lease has a tertn of six years,
commencing on August 1, 2005. The lease calls for monthly lease payments based on the square-footage. Lease revenue for the year ended December
31, 2005, was 3,623. Future minimum lease payments are as follows:
Year Amount
2005 8,694
2006 8,694
2007 8,694
2008 8,694
2009 8,694
2010 8,694
2011 5,072 �I
57,236 I
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CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Note 5 CAPITAL ASSETS
i
Capital asset activity for the year ended December 31, 2005 was as follows:
Beginning Ending
Primary Government Balance Increases Decrease Balance
Govemmental activities: i
Capital assets, not being depreciated: I
Land 3,203,904 3,203,904
Construction in progress 3,731,004 7,931,682 (3,700,634) 7,962,052
Total capital assets, not being depreciated 6,934,908 7,931,682 (3,700,634) 11,165,956
Capital assets, being depreciated:
Buildings and irnprovements 18,693,898 18,693,898
Park improvemenu 2,938,441 172,890 3,111,331
Departmental equipment 6,203,247 394,040 (277,193) 6,320,094 I
Streets 20,288,025 1,735,454 22,023,479
Total capital assets, being depreciated 48,123,611 2,302,384 (277 50,148,802
Less accumulated depreciation for:
Buildings and improvements 5,312,891 654,845 5,967,736
Parkimprovements 1,879,467 ]1b,414 ],995,881
Departmental equipment 3,998,393 523,072 (261,728) 4,259,737
Streets 9,284,497 616,817 9,901,314
Total accumulated depreciation 20,475,248 1,911,148 (261,728) 22,124,668
Total capital assets being depreciated net 27,648,363 391,236 (15,465) 28,024,134
Govemmental activities capital assets net 34,583,271 8,322,918 $(3,716,099) 39,190,090
Beginning Ending
Primary Government Balance Increases Decrease Balance
Business-type activities: i
Capital assets, not being depreciated:
Land 3,197,342 3
Construction in progress 2,110,290 2,110,290
Total capital assets, not being depreciated 3,197,342 2,110,290 5,307,632
Capital assets, being depreciated:
Land improvements 368,088 368,088
Buildings and improvements 17,761,355 17,761,355
Department equipment 475,668 109,083 584,751
Mains and lines 38,145,754 1,628,811 39,774,565
Total capital assets, being depreciated 56,750,865 1,737,894 58,488,759
Less accumulated depreciation for:
Land improvemenu 80,796 14,355 95,151
Buildings and improvements 7,700,965 842,338 8,543,303
Department equipment 328,409 38,525 366,934
Mains and lines 15,478,942 1,323,620 16,802,562
Total accumulated depreciation 23,589,112 2,218,838 25,807,950
Total capital assets being depreciated net 33,161,753 (48Q944) 32,680,809
Business-type activities capital assets net 36,359,095 1,629,34b 37,988,441
56 j
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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:
Governmental activities:
General govemment 82,g�
Public safety 394,228
Public vvorks 684,704
Parks and recreation 255,082
Capital assets held by the govenunents intemal service funds are
charged to the various functions based on theu usage of the assets 494,270
Total depreciation expense govem�ntal activities 1,911,148
Business-type activities:
M�icipal liq�r fund 34,221
Golf course fund 27,888
Earle Brown Heritage Center Fund 568,264
Water utility fund 588,503
Sanitary sewer fund 473,820
Storm drainage fund 526,142
Total depreciation expense business-type activities 2,218,838
CONSTRUCTION COM1vIITMENTS
At December 31, 2005 the City had construction project contracts in progress. The commitments
related to remaining contract balances are summarized as follows:
Contract Remaining
Project Amount Commitment
Shingle Creek Parkway 2,061,177 37,467
Lions Pazk South Neighborhood 2,579,511 15,171
Twin Lake Avenue Nei�borhood 989,987 139,573
3,569,498 192,211
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 cancelied at the City's
option if the City ceases liquor operations. Total rental expense under the lease agreements for the years
57
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
I
ended December 31, 2005 and 2004 was $235,174 and $228,444, respectively. Future minimum rent
payments under the current agreements are as follows:
Total
Year 1Vfinimum
Ending Rents
2006 193,530
2007 193,530
2008 193,530
2009 193,530
2010 136,158
2011 93,360
2012 93,360
2013 93,360
1,190,358
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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 ACTNITIES
As of December 31, 2005 the long-term debt of the financial reporting entity consisted of the
following:
Final
Interest Maturity Original Payable
Rates Date Date Issue 12/31/OS
General Obligation Bonds:
Refunding State-Aid Street Bonds 3.55%-4.00% 12/01/1998 04/Ol/2006 1,585,000 245,000
Police and Fire Building Refunding Bonds 2.00%-335% 12/Ol/2004 02/01/2013 5,045,040 5,045,000
Total General Obligation Bonds 6,63Q000 5,34Q000
G.O. Tax Increment Bonds:
Taxable Tax Increment Refunding Bonds of 2004 2.25%-4.40% 12/01/2004 02lO1/2011 2,470,000 2,470,000
Taxab(e Tax Increment Bonds of 2004 4J5%-5.125% 12lO1/2004 02/Ol/2020 17,245,000 16,835,000 i
Total G.O. Tax Increment Bonds 19,7 5,000 19,305,000
58
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Final
Interest Maturity Original Payable
Rates Date Date Issue 12131/OS
G.O. Improvement Bonds:
1995 Street Improvement Bonds 4.00%-4.90% 11/Ol/1995 02/01/2006 780,000 90,000
996 Street lmprovement Bonds 4.15%-5.10% 11/O1/1995 02/O1/200'7 1,440,000 315,000
1997 Street Improvement Bonds 4.00%-4.65% 12/O1/1997 02/Ol/2008 1,075,000 300,000
1998 Street Improvement Bonds 3.40%-4.20% 12/Ol/1998 02/O1/2009 1,085,000 400,000
1999 Street Improvement Bonds 4.10%-5.00% 12/01/1999 02/01/2010 1,585,000 770,000
2000 Street Improvement Bonds 4.30%-4.95% 12/01/2000 02/Ol/2011 735,000 420,000
2001 Street Improvement Bonds 2.60%-4.40% 12/O1/2001 02/O1/2012 730,000 485,000
2003 Street Improvement Bonds 1.45%-4.D0% O1/O1/2003 02/Ol/2013 1,205,000 930,000
2004 Street Improvement Bonds 2.10°/a3.65% 12/O1/2004 02/O1/2015 1,010,000 1,010,000
Total G.O. Improvement Bonds 9,645,000 4,720,000
Total bonded indebtedness 35,990,000 29,365,000
Compensated absences payable 919,113
Total City indebtedness govemmental activities 35,940,000 30,284,113
Annual debt service requirements to maturity for long debt are as follows:
General Obli�ation Bonds G.O. Tax Increment Bonds G.O. Improvement Bonds
Year Ending Governmental Activities Govemmental Activities Governmenta! Activities
December 31 Principal Interest Principal Interest Principa( Interest
2006 875,000 143,028 1,000,000 887,080 1,000,000 167,286
2007 590,000 124,689 1,050,000 847,237 900,000 129,316
2008 600,000 110,552 1,030,000 804,491 720 96,798
2009 610,000 93,903 1,095,000 759,214 615,000 70,407
2010 640,000 75,153 1,120,000 710,280 A95,000 47,977
2011 640,000 55,632 1,165,000 658,155 340,000 31,111
2012 685,000 34,581 800,000 612,213 270,000 19,234
2013 700,000 11,725 1,240,000 563,763 200,000 10,309
2014 1,305,000 503,319 40,000 4,928
2015 1,380,000 439,550 90,000 1,643
2016 1,450,000 372,338
2017 1,540,000 299,400
2018 1,610,000 220,650
2019 1,720,000 136,325
2020 1,800,000 46,125
Total 5,340,000 649,263 E 19,305,000 7,860,140 4,720,000 579,009
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CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
i
CHANGE IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended December 31, 2005 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Yeaz
Govemmental activities:
Bonds payable:
General obligation bonds $1 ],025,Q00 (5,685,000) 5,340,000 875,000
G.O. Tax increment bonds 22,445,000 (3,140,000) 19,305,000 1,000,000 I
G.O. improvement bonds 5,710,000 (99Q000) 4,72Q000 1,000,000
Total bonds payable 39,180,000 (9,815,000) 29,365,000 2,875,00�
Compensated absences 857,805 96,087 (34,779) 919,113 919,113
Total govemment activity
long-termliabi(ities $40,037,805 96,087 (9,849,774) $3Q284,113 3,794,113
Business-type activities:
Storm sewer revenue bonds 23Q000 (230,000)
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 $81,042.
Note S CONDUIT DEBT OBLIGATIONS
From time to time, the City has issued Housing Revenue Bonds and Industrial Revenue Bonds or Notes to
provide assistance to qualified private sector entities for the acquisition and construction of housing,
industrial, or commercial facilities deemed to be in the public interest. The bonds or notes are secured by
the property financed and are payable solely from payments received on the underlying mortgage loans.
The City has no obligation of its assets or of its general tax base for the repayment of any of these bonds or
notes. Accordingly, the bonds or notes are not reported as liabilities in the accompanying financial
statements. Upon final redemption of the bonds or notes, ownership of the property transfers to the private
sector entity served by the bond or note issue.
As of December 31, 2005 there were three series of fixed rate Multifamily Housing Revenue Refunding
bonds outstanding, one Housing Revenue Development Refinancing Note outstanding, one series of
Variable Rate Demand Refunding Industrial Revenue Bonds outstanding, two Healthcare Revenue Notes
outstanding, and four Senior Housing Development Revenue Notes outstanding. The aggregate amount of
conduit debt obligations at December 31, 2005 is 32,616,436. In addition, one series of First Mortgage
Elderly Housing Revenue Bonds, a$ 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.
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CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Note 9 RESERVED/DESIGNATED FUND EOUITY,
Fund balances and retained earnings in the various funds have been reserved or designated for the
following purposes:
Reserved Fund Equity
Major funds:
General fund:
Prepaid items 11,080
Special Assessment Bonds:
Debt service 3,104,377
Infrastructure Construction:
Committed contracts 192,211
Nonmajor Funds:
Debt service 1,054,230
Advances to other funds 800,000
Total nonmajor funds 1,854,230
Total governmental funds 5,161,89$
DesignatedFundEquity
Major funds:,
General fund:
Working capital 7,283,871
TIF District #3:
Bonding covenants 12,167,173
Statutory housing obligation 2,737,568
Total TIF District #3 14,904,741
Nonmajor Funds:
Economic development 1,597,862
Capital improvements 4,324,I56
Total governmental funds 28,110,630
61
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Note 10 INTERFUND RECENABLES/PAYABLES. LOANS AND TRANSFERS,
Individual fund interfund receivable and payable balances at December 31, 2005 are as follows:
Due from Ihie to
Fund Other Funds Other Funds
Major Funds:
TIF Disirict No. 3 1,211,846
Earle Brown TIF Dishict 1,211,84b
Special Assessment Bonds 69,502
Infiastructure Construction 42,657
Waker iJtility 26,845
Sanitary Sewer Utility 5,837
Non-Major Funds:
Eco�mic Development Authority 5,837
Total 1,287,185 1,287,185
Advances to Advances From
Fund Other Funds Other Funds
Major Funds:
Golf Course 800,000
Non-Major Funds:
Capital Improvements 800,000
800,000 800,000
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.
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CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Interfund transfers:
Transfer In Transfer Out
Govemmental Funds:
Major Funds:
General 21,274 625,0�
Earle Brown TIF District 269,127
TIF District No. 3 1,446,701
Non-Major Funds
Housing and Redevelopment Authority 256,538
Economic Developmerrt Aurhority 256,538
City Initiatives Grant 27,226 20,074
GO TIF Bonds 1,420,628 269,127
City Impmvemerrts 125,000 1,200
Earle Brown Heritage Center Improvements 67,000
Strcet Recor�sh�uction 555,000
Technology 70,000 1,153
Totat govenmental funds 2,811,793 2,619,793
Proprietary Funds:
Major Funds:
Municipal Liquor 125,000
Farle Brown Heritage Center 67,000
Total proprietary funds 192,000
Total 2,811,793 2,811,793
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 Generai 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.
63
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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 payabie
principally from property taxes. The City of Brooklyn Center's legal debt margin for 2005 and 2004 is
computed as follows:
I7ecember 31
2005 2004
Market value (after fiscal disparities) $1,944 $1,959,999,100
i
Debt limit (2%ofMarket Value) $38,899,920 $39,199,982
Am�unt of debt applicable to debt limit:
Total bonded debt $29,365,000 $39,410,000
Less: Improvement bonds (4,720,000) (5,710,000)
State Aid Street Bonds (295,000) (575,000) I
Tax Increment Bonds (19,305,000) (22,445,000)
Utility Revenue Bonds 0 (230,000)
Total debt applicable to debt limit $5,045,000 $10,450,000
L.egal debt margin $33,854,920 $28,749,982
Note 12 DEFICIT FUND BALANCES
A deficit fund balance exists at December 31, 2005 in the following fund:
Unreserved deficit fund balance
Major Funds:
Earie Brown T�' District 757,056
Infrastructure Conshvction 899,125
Unreserved deficit retained eamings
Noiunajor Funds:
Ecnployee Retirement Benefit 582,438
The deficits are being funded through intemal borrowing and will be repaid from future surplus
tax increments, construction transfers from utility funds and investment earnings.
64
CITY O
F BROOKLYN CENTER MINNESO
TA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
Note 13 CONTINGENCIES, SUBSEOUENT 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 determinabie 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 taac 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.
65
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CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
4
1
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 i
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:
Amended
Original 12/31/2005 Interest Maturity
Note Principal Balance Rate Date
Twin L,akes Business Park 2,414,199 1,975,166 8.00%
*No maturity date is set. Payments wi1] continue until the principal is paid, or for 10
yeazs, whichever comes first.
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, properiy, 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 setf-sustaining through member premiums and reinsures through
commercial companies for claims in excess of various amounts. The City retains risk for the deductible
66
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 a8er 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 twen -five ears of consecutive service with the City and are eligible to receive a pension from
tY Y
PERA shall have the option of retaining membership in the City's health insurance plan for which the
em lo ee witl a the remium until such time as the retiree is eligible to receive a full-retirement annuity
P Y PY P
il such time as the
nder PERA or PEPFF. At that time the Ci will a the sin le erson remium unt
u Y g P P
h' P
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 eamings 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
67
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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 reyuired 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 payroil:
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.
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CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
B. PENSION PLAN BROOKLYN CENTER FIRE DEPARTMENT RELIEF
ASSOCIATION
PLAN DESCRIl'TION
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 financia) report which is available at City offices.
FUNDING POLICY AND ANNiJAL 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 irrevocabie and do not affect the leve! of future City
contributions. They do not constitute an asset of the City.
The information below is the most recent data available.
Actuarial valuation date 12J3112004
Actuarial cost method Entry age normal cost method
Amortization method Level dollar amount amortized
on a closed basis
Remaining amortiration period 18 years
Actuarial assumptions:
Investmeirt rate of retwn 7.5% comq�ounded annually
Discourrt rate for obligations 7.50%
Projected salary increases Not applicable
Post retiremerrt benefits None
Inflation rate Not applicable
I 69
i
CITY OF BROOKLYN CENTER, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
I
THREE-YEAR TREND INFORMATION,
i
Three Year Trend Information
,qnnual percentage Net
year Pension of APC Pension
Fa�ding Cost (APC,� Cormibuted Obligation
12/31/2002 118,508 100% I
12I31/2003 124,123 100%
12/31/2004 158,991 100%
1
i
SCHEDULE OF FUNDING PROGRESS,
Assets in j
F�ccess of E
Actuarial Actuarial Actuarial (Unfimdec�
Valuation Value of Accrued Accrued Funded
Date Assets Liability Liability Ratio
12/31/2002 2,540,231 2,478,786 61,445 102.50%
1?J31/2003 3,090,185 2,781,175 309,010 111.00%
1�J31/2004 3,384,104 2,789,250 594,854 121.00%
RELATED PARTY INVESTMENTS
As of December 31, 2005 the Association held no securities issued by the City or other related
parties.
i
I
70
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CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
Statement 9
a elof6
BUDGETARY COMPARISON SCHEDULE GENERAL FUND
P g
e 1 2005
For the Year Ended Decemb r 3,
S
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Revenues:
Taxes:
Property taxes and market value homestead credit 9,823,541 9,823,541 10,378,151 554,610
Penalties and interest 40,026 40,026
Lodging tax 640,000 640,000 710,619 70,619
Total taxes 10,463,541 10,463,541 11,128,796 665,255
Licenses and permits:
Liquor and beer 109,400 109,400 120,412 11,012
Building permits 350,000 350,000 272,482 (77,518)
Mechanical permits 55,000 55,000 71,668 16,668
Sewer and water permits 1,000 1,000 2,908 1,908
10 742
r' 40 000 40 000 29,258
Plumbing pe mits
00 3 100 2 910 (l90)
31
Garbage licenses
Taxicab licenses 1,500 1,500 117 (1,383)
Mechanicallicenses 6,800 6,800 6,445 (355)
Pawn shop licenses 3,000 3,000 (3,000)
Service station licenses 2,800 2,800 2,644 (156)
Vehicle dealer licenses 1,500 1,500 1,500
Bowling licenses 720 720
Cigarette licenses 4,300 4,300 3,153 (1,147)
Sign permits 3,000 3,000 3,908 908
Rental dwelling licenses 79,200 79,200 100,836 21,636
Amusement licenses 2,000 2,000 1,215 (785)
Electrical Permits 15,000 15,000 48,694 33,694
ROW permits 3,000 3,000 (3,000)
Misce(laneous business license
7 000 7 000 7,380 380
Total licenses and permits 688,320 688,320 675,530 (12,790)
IntergovernmentaL•
State:
Local government aid 542,522 542,522 543,183 661
Police pension aid 255,000 255,000 288,183 33,183
PERA aid 34,365 34,365 34,365
Fireperson pension aid 125,000 125,000 154,346 29,346
Police training 15,157 15,157
E-911 phone service 15,000 15,000 31,833 16,833
Street maintenance aid 90,000 90,000 (90,000)
Miscellaneous grants 50,000 50,000 68,577 8,577
Total intergovernmental 1,111,887 1,111,887 1,135,644 23,757
Charges for services:
Generalgovernmentcharges 26,150 26,150 47,131 20,981
Public safety charges 14,450 14,450 42,076 27,626
Recreation fees 268,480 268,480 310,641 42,161
Community Center fees 310,000 310,000 321,206 11,206
Totai charges for services 619,080 619,080 721,054 101,974
71
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION Statement 9
i
BUDGETARY COMPARISON SCHEDULE GENERAL FLJND Page 2 of 6
For the Year Ended December 31, 2005
Variance with
Final Budget i
Budgeted Amounts Actual Positive j
Original Final Amounts (Negative)
Revenues (continued): I
Fines and forfeits 225,000 225,000 253,748 28,748 i
Miscellaneous:
Investment eamings (net of market value change) 150,000 150,000 151,612 1,612
Other 133,250 133,250 43,374 (89,876)
Total miscellaneous 283,250 283,250 194,986 (88,264) i
Total revenues 13,391,078 13,391,078 14,109,758 718,680
Expenditures:
General government:
Mayor and council:
Current:
Personal services 50,989 50,989 51,109 (120)
Materials and supplies 46 (46) j
Services and other charges 78,308 78,308 85,365 ('7,057)
Total mayor and council 129,297 129,297 136,520 (7,223)
Administrative (Manager, Clerk, HR) offices:
Current:
Personal services 461,924 461,924 459,023 2,901
Materials and supplies 3,800 3,800 2,782 1,018
Services and other charges 30,200 30,200 23,398 6,802
Total administrative office 495,924 495,924 485,203 10,721
Elections and voter registration:
Current:
Personal services 55,470 55,470 43,837 11,633
Materials and supplies 1,000 1,000 ],000
Services and other charges 31,075 31,075 4,431 26,644
Total elections and voter registration 87,545 87,545 48,268 39,277
Assessor's office:
Current:
Personal services 225,294 225,294 219,800 5,494
Materials and supplies 3,700 3,700 3,741 (41)
Services and other charges 41,419 41,419 40,922 497
Total assessor's office 270,413 270,413 264,463 5,950
Finance:
Current:
Personal services 420,963 420,963 376,254 44,709
Materials and supplies 5,100 5,100 4,857 243 j
Services and other charges 12,500 12,500 20,668 (8,168) i
Total finance 438,563 438,563 401,779 36,784
72
I
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION Statement 9
BUDGETARY COMPARISON SCHEDULE GENERAL FLTND Page 3 of 6
For the Year Ended December 31, 2005
Variance with
Final Budget
Bud�eted Amounts Actual Positive
Original Final Amounts (Negative)
Expenditures:
General government (continued):
Legal:
Current:
Services and other charges 265,000 265,000 320,628 (55,628)
Government buildings:
Current:
Personal services 249,379 249,379 199,885 49,494
Materials and supplies 52,200 52,200 41,638 10,562
Services and other chazges 273,426 273,426 373,525 (100,099)
Total current 575,005 575,005 615,048 (40,043)
Capital outlay 9,900 9,900 6,008 3,892
Total govemment buildings 584,905 584,905 621,056 (36,151)
Information technology:
Current:
Personal services 167,021 167,021 165,436 1,585
Materials and supplies 11,000 11,000 12,773 (1,773)
Services and other charges 159,642 159,642 136,875 22,767
Total information technology 337,663 337,663 315,084 22,579
Total general govemment 2,609,310 2,609,310 2,593,001 16,309
Public safety:
Police protection:
Current:
Personal services 4,636,211 4,636,211 4,520,156 116,055
Materials and supplies 99,757 99,757 81,115 18,642
Services and other charges 884,096 884,096 973,272 (89,176)
Total current 5,620,064 5,620,064 5,574,543 45,521
Capital outlay 16,600 16,600 11,886 4,714
Total police protection 5,636,664 5,636,664 5,586,429 50,235
Fire protection:
Current:
Personal services 434,162 434,162 470,070 (35,908)
Materials and supplies 48,000 48,000 44,207 3,793
Services and other charges 214,781 214,781 236,994 (22,213)
Total current 696,943 696,943 751,271 (54,328)
Capital outlay 25,000 25,000 23,714 1,286
Total fire protection 721,943 721,943 774,985 (53,042)
73
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION Statement 9
BUDGETARY COMPARISON SCHEDUI,E GENERAL FUND Page 4 of 6
For the Year Ended December 31, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive i
Original Final Amounts (Negative)
Expenditures:
Public safety (continued):
Protective inspection:
Current:
Personal services 405,997 405,997 394,875 11,122
Materials and supplies 2,600 2,600 186 2,414 i
Services and other charges 71,469 71,469 84,227 (12,758)
Total protective inspection 480,066 480,066 479,288 778
Emergency preparedness:
Current
Personal services 52,135 52,135 48,194 3,941
Materials and supplies 2,400 2,400 673 1,727
Services and other charges 9,760 9,760 4,843 4,917
Total emergency preparedness 64,295 64,295 53,710 10,585
Total public safety 6,902,968 6,902,968 6,894,412 8,556
Public works:
Engineering department:
Current:
Personal services 440,686 440,686 316,246 124,440
Materials and supplies 8,320 8,320 13,163 (4,843)
Services and other charges 41,705 41,705 38,771 2,934
Total current 490,711 490,711 368,180 ]22,531
Capital outlay 5,200 5,200 15,123 (9,923)
Total engineering department 495,911 495,911 383,303 1] 2,608
Street deparhnent:
Current:
Personal services 612,481 612,481 665,080 (52,599)
Materials and supplies 125,050 125,050 113,217 11,833
Services and other charges 474,980 474,980 484,495 (9,515)
Total street department 1,212,511 1,212,511 1,262,792 (50,281)
Total public works 1,708,422 1,708,422 1,646,095 62,327
Community services:
Social services:
Current:
Services and other charges 79,790 79,790 86,043 (6,253)
74
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION Statement 9
BUDGETARY COMPARISON SCHEDLTLE GENERAL FLJND Page 5 of 6
For the Year Ended December 31, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Expenditures (continued):
Parks and recreation:
Administration:
Current:
Personal services 457,705 457,705 435,530 22,175
Materials and supplies 12,500 12,500 9,324 3,176
Services and other charges 53,900 53,900 53,726 174
Total current 524,105 524,105 498,580 25,525
Capital outlay 2,000 2,000 2,000
Total administration 526,105 526,105 498,580 27,525
Adult programs:
Current:
Personal services 51,170 52,270 54,168 (2,998)
Materials and supplies 12,684 12,684 13,'724 (1,040)
Cost of good sold to public 19,421 19,421 20,632 (1,211)
Services and other charges 76,257 76,257 89,875 (13,618)
Total adult programs 159,532 159,532 178,399 (18,867)
Teen programs
Current:
Personal services 3,000 3,000 4,049 (1,049)
Materials and supplies 500 500 420 80
Total teen programs 3,500 3,500 4,469 (969)
i Youth programs:
Current:
Personal services 32,446 32,446 32,356 90
Materials and supplies 7,473 7,473 8,925 (1,452)
Total youth programs 39,919 39,919 41,281 (1,362)
General programs:
Current:
Personal services 8,463 8,463 8,104 359
Materials and supplies 75 75 125 (50)
Services and other charges 10,200 10,200 12,504 (2,304)
Total general programs 18,738 18,738 20,733 (1,995)
Community center:
Current:
Personal services 388,072 388,072 369,469 18,603
Materials and supplies 19,150 19,150 22,220 (3,070)
Services and other charges 56,850 56,850 78,697 (21,847)
Total current 464,072 464,072 470,386 (6,314)
Capital outlay 900 900 900
Total community center 464,972 464,972 470,386 (5,414)
75
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION Statement 9
BUDGETARY COMPARISON SCHEDLJLE GENERAL FUND Page 6 of 6
For the Year Ended December 31, 2005
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Fina1 Amounts (Negative)
Expenditures:
Parks and recreation (continued): E
Park maintenance:
Current:
Personal services 537,636 537,636 486,527 5],109
Materials and supplies 56,955 56,955 41,957 14,998
Services and other charges 268,115 268,115 316,951 (48,836)
Total current 862,706 862,706 845,435 17,271
Capital outlay 3,400 3,400 2,851 549
Total park maintenance 866,106 866,106 848,286 17,820
Total parks and recreation 2,078,872 2,078,872 2,062,134 16,738
Economic development:
Convention bureau:
Current:
Services and other charges 304,000 304,000 337,575 (33,575)
Nondepartmental:
Expenditures not charged to departments:
Current:
Personal services 55,470 55,470 50,275 5,195
Materials and supplies 22,500 22,500 19,162 3,338
Services and other charges 368,205 368,205 245,918 122,287
Total nondepartmental 446,175 446,175 315,355 ]30,820
Total expenditures 14,129,537 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 reimbursed 808,459 808,459 754,085 (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 �38,459 150,359 (588,100)
Net increase (decrease) in fund balance 325,502 325,502
Fund balance January 1 6,969,449
Fund balance December 31 7,294,951
C
76
i
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION Statement 10
BUDGETARY COMPARISON SCHEDULE EARLE BROWN TAX INCREMENT DISTRICT
For the Year Ended December 31, 2005
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Tax increments 600,100 600,100 845,868 245,768
Investment earnings (net of market value adjustmenY) 17,093 17,093
Total revenue 600,100 600,100 862,961 262,861
Expenditures:
Current:
Economic development:
Personal services 14,728 (14,728)
Services and other charges 35,000 35,000 27,768 7,232
Total expenditures 35,000 35,000 42,496 (7,496)
Revenues over (under) expenditures 565,100 565,100 820,465 255,365
Other financing sources (uses):
Transfers in 269,127 269,127
Net increase (decrease) in fund balance 565,100 565,100 1,089,592 524,492
Fund balance January 1 (1,858,494)
Fund balance December 31 (768,902)
i
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION Statement 1 l
BUDGETARY COMPARISON SCHEDULE TAX INCREMENT DISTRICT NO. 3
For the Year Ended December 31, 2005
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Ta�c increments 3,167,310 3,167,310 3,576,209 408,899
Investment eamings (net of market value adjustment) 78,000 78,000 591,169 513,169
Miscellaneous 11,303 11,303
Total revenues 3,245,310 3,245,310 4,178,681 933,371
Expenditures:
Current:
Economic development:
Personal services 74,606 (74,606)
Supplies 67 (67)
Services and other charges 284,940 284,940 1,388,233 (1,103,293)
Capital outlay:
Economic development 3,475,80$ (3,475,808)
Total expenditures 284,940 284,940 4,938,714 (4,653,774)
Revenues over (under) expenditures 2,960,370 2,960,370 (760,033) (3,720,403)
Other financing sources (uses):
Transfers out (573,666) (573,666) (1,446,701) (873,035)
Net increase in fund balance 2,386,704 2,386,704 (2,206,734) $(4,593,438)
Fund balance January 1 25,871,672
Fund balance December 31 23,664,938
i
78
CITY OF BROOKLYN CENTER, MINNESOTA
REQUIRED SUPPLEMENTARY 1NFORMATION
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 ievel of the General
Fund. The followin is a listin of General Fund de artments whose ex enditures exceed bud eted a ro riations.
S S p p g PP P
Final Over
Budget Actual Budget
Major Funds:
General Fund:
Mayor and council 129,297 136,520 (7,223)
Legal 265,000 320,628 (55,628)
Government buildings 584,905 621,056 (36,151)
Fire protection 721,943 774,985 (53,042)
Street department 1,212,511 1,262,792 (50,281)
Adult recreation programs 159,532 178,399 (18,867)
Teen recreation programs 3,500 4,469 (969)
Youth recreation programs 39,919 41,281 (1,362)
General recreation programs 18,738 20,733 (1,995)
Community center 464,972 470,386 (5,414)
Convention bureau 304,000 337,575 (33,575)
Special Revenue Funds:
Earle Brown T.I.F. District 35,000 42,496 (7,496)
T.I.F. District 3 284,940 4,938,714 (4,653,774)
79
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I
This a e has been left b/ank intentiona//
P9 Y
so
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).
81
CITY OF BROOKLYN CENTER, MINNESOTA
December 31, 2005 Statement 12
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
Total
Special Debt Capital Nonmajor
Revenue Service Project Governmental
Assets
Cash and investments 1,863,906 1,051,656 3,735,986 6,651,548
Receivabies
Accounts 205,147 205,147
Current taxes 588 2,574 3,162
30,463
Delinquent taxes 12,349 18,114
Due from other funds 5,837 5,837
Due from other governments 43,982 93,033 37,015
Interfund receivable 482,611 482,611
800 000 800,
000
i
Advances to other funds
Total assets 1,926,662 1,072,344 5,316,777 8,315,783
Liabilities and Fund Balances
Liabilities:
Accounts payable 8,100 115,855 123,955
Contracts payable 76,766 76,766
Due to other governrnents 4,517 4,S l 7�
Accrued salaries and wages 4,465 4,465
Deferred revenue 12,349 18,114 30,463
Total liabilities 29,431 18,114 192,621 240,166
Fund balances:
Reserved 1,054,230 800,000 1,854,230
Unreserved:
Designated 1,597,862 4,324,156 5,922,018
Undesignated 299,369 299,369
Total fund balances 1,897,231 1,054,230 5,124,156 8,075,617
Total liabilities and fund balances 1,926,662 1,072,344 5,316,777 8,315,783
82
i
CITY OF BROOKLYN CENTER, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
Statement 13
CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2005
Total
Special Debt Capital Nonmajor
Revenue Service Project Govemmental
Revenues:
Property taxes 257,126 779,196 1,036,322
Tax increments 258,61I 258,611
Franchise fees 662,614 662,614
Intergovernmental 147,537 297,260 864,117 1,308,914
Charges for services 9,481 9,481
Investment earnings (net of market value adjustment) 46,307 69,490 132,992 248,789
Miscellaneous 124,765 1,076 244,237 370,078
Total revenues 843,827 1,147,022 1,903,960 3,894,809
Expenditures:
Current:
Public safety 155,716 155,716
Public works 374,000 374,000
Parks and recreation 61,847 61,847
Economic development 233,046 233,046
Capital outlay:
General government 610,484 610,484
Public safety 2,951 2,951
Public works 2,544,847 2,544,847
Debt service:
Principal retirement 237,189 1,545,000 1,782,189
Interest 1,016,991 1,016,991
Fiscal agent fees 3,125 3,125
Total expenditures 690,749 2,565,116 3,529,331 6,785,196
Revenues over (under) expenditures 153,078 (1,418,094) (1,625,371) (2,890,387)
Other financing sources (uses):
Transfers in 283,764 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 balances 160,230 (7,546,593) (810,724) (8,197,087)
Fund balances January 1 1,737,001 8,600,823 5,934,880 16,272,704
Fund balances December 31 1,897,231 1,054,230 5,124,156 8,075,6U
83
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I
84
I�
NONMAJOR SPECIAL REVENUE FUNDS
The City of Brooklyn Center had the following Special Revenue Funds during the year:
Housins and Redevelonment Authoritv Fund (HRAI This fund has authority to levy an ad
valorem property t� 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 Develonment Authoritv Fund (EDAI This fund was established to account for the
Economic Develo ment Authori EDA of Brookl n Center. The EDA carries out
p tY
Y
develo ment activities• it has authori to o erate an enterprise. The Earle Brown Heritage
P n' P
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 Dru� Forfeiture Fund This fund was established to account for property and/or cash
seized by Police Department personnel.
Communitv Develonment 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.
Citv 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.
85
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBII�IING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
December 31, 2005
Housing and Economic I
Redevelopment Developrnent
Authority Authority
Assets
I
Cash and investments 1,594,969
Current taxes receivable 588
Delinquent taxes receivable 12,349
Due from other funds 5,837
Due from other governments
Total assets 12,937 1,600,806
Liabilities and Fund Balances
Liabilities:
Accounts payable 2 g 8
Due to other governments
Accrued salaries and wages 3,244
Deferred revenue 12,349
Totalliabilities 12,349 3,532
Fund balances:
Unreserved:
Designated:
Economic development 588 1,597,274
Undesignated
Total fund balances 588 1,597,274
Total liabilities and fund balances 12,937 1,600,806
i
86
I
Statement 14
I
Total
Tax Police Community City Nonmajor
Increment Drug Development Initiatives Special
District No. 4 Forfeiture Block Grant Grant Revenue
104,473 38,422 4,501 221,541 1,863,906
588
12,349
5,837
43,982 43,982
104,473 38,422 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
1,59'7,862
104,473 38,405 1 156,490 299,369
104,473 38,405 1 156,490 1,897,231
104,473 38,422 4,501 165,523 1,926,662
87
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 and Economic
Redevelopment Development
Authority Authority
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 revenues 257,126 66,102
Expenditures:
Current:
Public safety:
Personal services
Supplies
Services and other chazges
Total public safety
Pazks 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 113,848
Total economic development 213,494
Capital outlay:
Public safety
Debt service:
Principal
Total expenditures 213,494
Revenues over (under) expenditures 257,126 (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 batances 588 109,146
Fund balances January 1 1,488,128
Fund balances December 31 588 1,597,274
88 i
Statement 15
Total
Tax Police Community City Nonmajor
Increment Drug Development Initiatives Special
District No. 4 Forfeiture Block Grant Grant Revenue
257,126
258,611 258,611
13,500 133,617 147,537
9,481 9,481
923 1,083 3,250 46,307
29,791 70,343 124,765
259,534 30,874 13,500 216,691 g4�,827
71,400 71,400
8,406 7,321 15,727
5 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
243,242 17,177 13,499 203,337 690,749
16,292 13,697 1 13,354 153,078
27,226 283,764
(20,074) (276,612)
7,152 7,152
16,292 13,697 1 20,506 160,230
88,181 24,708 135,984 l ,737,001
104,473 38,405 1 156,490 1,897,231
89
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND HOUSING AND REDEVELOPMENT AUTHORITY FUND Statement 16
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Budgeted Amounts Actual
Original Final Amounts
Revenues:
Property taxes 251,295 251,295 257,126
Revenues over (under) expenditures 251,295 251,295 257,126
i
Other financing sources (uses):
Transfers out (251,295) (251,295) (256,538)
Net increase in fund balance 588 j
Fund balance January 1
Fund balance December 3l 588
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90
CITY OF BROOKLYN CENTER, MINNESOT
A
SPECIAL REVENUE FUND ECONOMIC DEVELOPMENT AUTHORITY FiJND Statement 17
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Budgeted Amounts Actual
Original Final Amounts
Revenues:
Intergovernmental 420
Investment earnings (net of market value adjustment) 41,051
Miscellaneous 24,631
Total revenues 66,102
Expenditures:
Current:
Economic development:
Personal services 186,294 186,294 99,001
Supplies 2,200 2,200 595
Services and other charges 54,325 54,325 113,898
Total expenditures 242,819 242,819 213,494
Revenues over (under) expenditures (242,819) (242,819) (147,392)
Other financing sources (uses):
Transfers in 251,295 251,295 256,538
Net increase (decrease) in fund balance 8,476 8,476 109,146
Fundbalance-January 1 ��4g8��2g
Fund balance December 31 1,597,274
91
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENiJE FiJND TAX INCREMENT DISTRICT NO. 4 FUND Statement 18
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Budgeted Amounts Actual
Original Final Amounts
Revenues:
Tvc increments 236,400 236,400 258,611
Investment earnings (net of market value adjustment) 923
Total revenues 236,400 236,400 259,534
Expenditures:
Current
I Economic development:
Personal services 2�g42 i
Services and other charges 10,000 10,000 3,211 j
Total economic development 10,000 10,000 6,053
Debt service:
237,189
Principal
243 242
10 000 10,Q00
otal ex enditures
T p
Revenues over (under) expenditures 226,400 226,400 16,292
Fund balance January 1 88,181
Fund balance December 31 104,473
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CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENIIE FLJND POLICE DRUG FORFEITURE FiJND Statement 19
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Budgeted Amounts Actual
Original Final Amounts
Revenues:
Investment earnings (net of market value adjustment) 1,083
Miscellaneous:
Forfeited drug money 25,000 25,000 29,791
Total revenues 25,000 25,000 30,874
Expenditures:
Current:
Public safety:
Supplies 25,000 25,000 8,406
Services and other charges 5,820
Total public safety 25,000 25,000 14,226
Capital outlay:
Public safety 2,951
Total expenditures 25,000 25,000 17,17�
Revenues over (under) expenditures 13,697
Fund balance January 1 24,708
Fund balance December 31 38,405
93
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FiJND COMMtJNITI' DEVELOPMENT BLOCK GRANT FUND Statement 20
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Budgeted Amounts Actual
Original Final Amounts
Revenues:
Intergovernmental:
Federal grants 240,000 240,000 13,500
Expenditures:
Current:
Economic development:
Services and other charges 240,000 240,000 13,499
Revenues over (under) expenditures 1
Fund balance January 1
Fund balance December 31
1
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94
CITY OF BROOKLYN CENTER, MINNESOTA
SPECIAL REVENUE FUND CITY INITIATIVES GRANT FUND Statement 21
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE BUDGET AND ACTUAL
For the Year Ended December 31, 2005
Budgeted Amounts Actual
Original Final Amounts
Revenues:
Intergovernmental 19,000 19,000 133,617
Charges for services 12,580 12,580 9,481
Investment earnings (net of market value adjustment) 3,250
Miscellaneous 37, l 74 37,174 70,343
Total revenues 68,754 68,754 216,691
Expenditures:
Current:
Public safety:
Personal services 61,488 61,488 71,400
Supplies 7,321
Services and other charges 62,769
Total pub(ic safety 61,488 61,488 141,490
Parks and recreation:
Personal services 8,391 8,391 13,374
Supplies 9,070 9,070 5,391
Services and other charges 35,383 35,383 43,082
Total parks and recreation 52,844 52,844 61,847
Total expenditures 114,332 114,332 203,337
Revenues over (under) expenditures (45,578) (45,578) 13,354
Other financing sources (uses):
Transfers in 2�
Transfers out (20,074)
Total other financing sources (uses) 7,152
Net increase (decrease) in fund balance (45,578) (45,578) 20,506
Fund balance January 1 135,984
Fund balance December 31 156,490
95
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96
NONMAJOR DEBT SERVICE FUNDS
The City's Debt Service Funds account for two types of bonded indebtedness:
General Obligation Bonds
Tax Increment Bonds
General Obli�ation 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.
97
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING BALANCE SHEET Statement 22
NONMAJOR DEBT SERVICE FUNDS
December 31, 2005
General
Obligation
Bonds
Assets
Cash and investments 1,051,656
Current ta�ces receivable 2,574 i,
Delinquent taxes receivable 18,114
Total assets 1,072,344
Liabilities and Fund Balance
Liahilities:
Deferred revenue 18,114
Fund balance:
Reserved:
Debt service 1,054,230
Total liabilities and fund balance 1,072,344
98
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CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBII�iING STATEMENT OF REVENUES, EXPENDITURES, AND Statement 23
CHANGES IN FUND BALANCES
NONMAJOR DEBT SERVICE FUNDS
For the Year Ended December 31, 2005
Tota!
General Tax Nonmajor
Obligation Increment Debt
Bonds Bonds Service
Revenues:
Property tax 779,196 779,196
Intergovernmental 297,260 297,260
Investment earnings (net of market value adjustment) 47,875 21,615 69,490
Miscellaneous 720 356 1,076
Total revenues 1,125,051 21,971 1,147,022
Expenditures:
Debt service:
Principal 775,000 770,000 1,545,000
Interest 287,251 729,740 1,016,991
Fiscal agent fees 2,147 978 3,125
Total expenditures 1,064,398 1,500,718 2,565,116
Revenues over (under) expenditures 60,653 (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 1 5,903,577 2,697,246 8,600,823
Fund balances December 31 1,054,230 1,054,230
99
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ioo
NONMAJOR CAPITAL PROJECT FUNDS
The City of Brooklyn Center had the following Capital Project Funds during the
year:
Canital Reserve Emereencv Fund This fund was established in 1997 to account
for monies held in reserve for catastrophic losses or unforeseen capital items.
Canital Imnrovements 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
outla s. The financin sources of the fund include ad valorem taxation, transfers
Y g
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 Herita�e Center Imnrovements 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.
Technolosv Fund This fund, established in 2003, accounts for funds set aside for
technology improvements or major technology renovations/replacements.
lol
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
December 31, 2005
Capital
Reserve Capital
Assets Emergency Improvements
Cash and investments 1,006,371 396,509
Accounts receivable
Due from other overnments
g
Interfund receivable 482,61 I
Advances to other funds 800,000
Total assets 1,006,371 1,679,120
Liabilities and Fund Balances
Liabilities:
Accounts payable g26
Contracts payable
Total liabilities 826
Fund balances:
Reserved:
Advances to other funds 800,000
Unreserved:
Designated for capital improvements 1,006,371 878,294
Total fund balances 1,006,371 1,678,294
Total liabilities and fund balances 1,006,371 1,679,120
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102
Statement 24
Municipal Earle Brown Total
State Aid Heritage Nonmajor
for Center Street Capital
Construction Improvements Reconstruction Technology Projects
98,362 117,193 1,683,214 434,337 3,735,986
392 163,995 40,760 205,147
93,033 93,033
482,611
800,000
191,395 117, 585 1,847,209 475,097 5,316,777
20,741 94,025 263 115,855
21,277 55,489 76,766
20,741 115,302 55,752 192,621
800,000
170,654 2,283 1,847,209 419,345 4,324,156
170,654 2,283 1,847,209 419,345 5,124,156
191,395 117,585 1,847,209 475,097 5,316,777
103
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FLJND BALANCES
NONMAJOR CAPTTAL PR03ECT FUNDS
For the Year Ended December 31, 2005
Capital i
Reserve Capital
Emergency Improvements
Revenues:
Franchise fees
Intergovernmental 10,000
Investment earnings (net of market value adjustment) 34,110 28,448
Miscellaneous 24,637
Total revenues 34,110 63,085
Expenditures:
Current:
Public works:
Personal services 66,571
Materials and supplies 3,502
Services and other charges 303,927
Total ublic works 374,000
P
Capital outiay
General government
Public works 310,074
Total capital outlay 310,074
Total expenditures 374,000 310,074
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)
I Fund balances January 1 1,346,261 1,801,483
Fund balances December 31 1,006,371 1,678,294
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104
Statement 25
Municipal Earle Brown Total
State Aid Heritage Nonmajor
for Center Street Capital
Construction Improvements Reconstruction Technology Projects
662,614 662,614
854,117 864,117
11,976 3,799 44,665 9,994 132,992
60,000 159,600 244,237
866,093 63,799 707,279 169,594 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
1,293,812 249,964 940,961 360,520 3,155,331
1,293,812 249,964 940,961 360,520 3,529,331
(427,719) (186,165) (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 8l 4,647
(42'7,7 9) (119,165) 321,318 (122,079) (810,724)
598,373 121,448 1,525,891 541,424 5,934,880
170,654 2,283 1,847,209 419,345 5,124,156
105
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106
NONMAJOR ENTERPRISE FUNDS
The City of Brooklyn Center had the following nonmajor Enterprise Funds during
the year:
Recvclin� 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 Li�ht Utilitv Fund This fund was created to account for expenses related
to streetlights within the City. Benefiting properties are billed for these expenses.
107
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CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING STATEMENT OF NET ASSETS Statement 26
NONMAJOR ENTERPRISE FUNDS
December 31, 2005
Total
Recycling and Street Light Nonmajor
Refuse Utility Enterprise
Assets j
Cash and cash equivalents 15,068 90,936 106,004
Accounts receivable net 52,669 55,122 107,791
Total assets 67,737 146,058 213,795
Liabilities
Accounts payable 368 24,287 24,655
Net assets
Unreserved 67,369 121,771 189,140
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CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENUES, EXPENSES, AND Statement 27
CHANGES IN FUND NET ASSETS
NONMAJOR ENTERPRISE FUNDS
For the Yeaz Ended December 31, 2005
Total
Recycling and Street Light Nonmajor
Refuse Utility Enterprise
Operating revenues:
Sales and user fees 235,160 214,669 449,829
Operating expenses:
Supplies 132 383 5] 5
Other services 252,866 62,037 314,903
Insurance 1,663 1,127 2,790
Utilities 149,547 149,547
Total operating expenses 254,661 213,094 467,755
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 1 86,444 116,788 203,232
Net assets December 31 67,369 121,771 189,140
109
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING STATEMENT OF CASH FLOWS Statement 28
NONMAJOR ENTERPRISE FUNDS
For the Year Ended December 31, 2005
Total f
Recycling and Street Light Nonmajor i
Refuse Utility Enterprise
Cash flows from operating activities:
Receipts from customers 233,258 206,789 440,047
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 investments 426 3,408 3,834
Net increase in cash and cash equivalents (21,359) 9,406 (l I,953) j
Cash and cash equivalents January 1 36,427 81,530 117,957
Cash and cash equivalents December 31 15,068 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)
110
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 Emnlovees Comnensated Absences Fund This fund accounts for payment
of unused vacation and sick leave time and the allocation of such costs to user
departments.
Public Emnlovees 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 Gara�e 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.
111
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING STATEMENT OF NET ASSETS Statement 29
INTERNAL SERVICE FUNDS
December 31, 2005
Central EE Retirement EE Comp
Garage Benefit Absences Total
Assets
Current assets:
Cash and cash equivalents 5,015,807 1,505,579 919,113 7,440,499
Accounts receivable net 3,701 5,290 8,991
Inventories at cost 31,435 31,435
Total current assets 5,050,943 1,510,869 919,113 7,480,925
Noncurrent assets:
Capital assets:
Machinery and equipment 5,909,532 5,909,532
Less: Allowance for depreciation (3,997,043) (3,997,043)
Net capital assets 1,912,489 1,912,489
Total assets 6,963,432 1,510,869 919,113 9,393,414
Liabilities
Current liabilities:
Accounts payable 34,774 34,774
Accrued salaries payable 5,837 5,g�7
Compensated absences payable 919,113 919,1 l3
Total cunent liabilities 40,611 919,113 959,724
Noncurrent liabilities:
Accrued health insurance liability 2,093,307 2,093,307
Totalliabilities 40,611 2,093,307 919,113 3,053,031
f
Net assets j
Invested in capital assets, net of related debt 1,912,489 1,912,489
Unrestricted 5,010,332 (582,438� 4,427,894
Total net assets 6,922,821 (582,438) 6,340,383
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112
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING STATEMENT OF REVENiJES, EXPENSES, AND Statement 30
CHANGES IN FLJND NET ASSETS
INTERNAL SERVICE FLJNDS
For the Year Ended December 31, 2005
Central EE Retirement EE Comp
Garage Benefit Absences Total
Operating revenues:
Charges for services 1,171,447 1,171,447
Operating expenses:
Personal services 245,210 605,193 47,870 898,273
Supplies 326,618 326,618
Other services 111,120 111,120
Insurance 40,954 40,954
Utilities 2,675 2,675
Depreciation 494,270 494,270
Total operating expenses 1,220,847 605,193 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 assets 31,880 31,880
Otherrevenue 5,224 5,224
Total nonoperating revenues (expenses) 167,360 40,434 23,285 231,079
Change in net assets 117,960 (564,759) (24,585) (471,384)
Net assets January 1 6,804,861 (17,679) 24,585 6,811,767
Net assets December 31 6,922,821 (582,438) 6,340,383
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113
CITY OF BROOKLYN CENTER, MINNESOTA
SUBCOMBINING STATEMENT OF CASH FLOWS Statement 3]
INTERNAL SERVICE FUNDS
For the Yeaz Ended December 31, 2005
I
Central EE Retirement EE Comp
Gazage Benefit Absences Total
Cash flows from operating activities:
Receipts from interfund services provided 1,177,784 1,177,784
Payments to suppliers (502,855) (502,855)
Payments to employees (242,743) (63,908) 13,938 (292,713)
Miscellaneous revenue 5,224 5,224 j
Net cash flows provided (used) by operating activities 437,410 (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 assets 47,345 47,345
Net cash flows provided (used) by capital
and related financing activities (331,572) (331,572) I
Cash flows from investing activities:
Interest on investments 130,256 40,434 23,285 193,975
Net increase in cash and cash equivalents 236,094 (23,474) 37,223 249,843
Cash and cash equivalents January 1 4,779,713 1,529,053 881,890 7,190,656
Cash and cash equivalents December 31 5,015,807 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:
Depreciation 494,270 494,270
Changes in assets and liabilities:
(Increase) decrease in receivables 6,337 (3,441) 2,896
(Increase) decrease in inventories (3,315) (3,315)
Increase (decrease) in payables (18,173) (18,173)
Increase (decrease) in accrued expenses 2,467 544,'126 61,808 609,001
Other nonoperating income 5,224 5,224
Total adjustments 486,810 541,285 61,808 1,089,903
Net cash provided (used) by operating activities 437,410 (63,908) 13,938 387,440
CAPITAL ASSET ADNSTMENTS:
Deletions of machinery and equipment (277,194) (277,194)
Deletions of accumulated depreciation:
machinery and equipment 261,729 261,729
Total capital asset adjustments (15,465) (15,465)
114
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STATISTICAL SECTION
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115
CITY OF BROOKLYN CENTER, MINNESOTA
GOVERNMENT-WIDE EXPENSES BY FUNCTION
Last three fiscal years
(Unaudited)
I
Fiscal General Public Public Community Parks and Economic Non- I
Year* Government Safety Works Services Recreation Development Departmental
2003 2,565,088 7,184,536 3,002,223 225,365 2,169,482 1,759,585 342,142
2004 2,725,137 7,538,277 2,482,819 67,324 2,255,231 1,683,025 333,669
2005 2,970,364 7,848,160 3,856,992 86,043 2,305,047 1,217,294
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*Government-wide expenses are not available for years prior to 2003
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116
Table 1
Interest on E. Brown Other
Long-Term Municipal Golf Heritage Water Sanitary Storm Enterprise
Debt Liquor Course Center Utility Sewer Drainage Funds Total
922,253 724,897 290,990 2,109,166 1,645,955 2,567,032 838,421 370,972 26,718,107
1,268,649 939,244 271,127 2,180,229 1,533,923 2,310,645 756,593 388,472 26,734,364
1,349,852 978,743 273,024 2,262,359 1,795,759 2,808,644 1,102,672 467,755 29,322,708
117
I� CITY OF BROOKLYN CENTER, MINNESOTA
GOVERNMENT-WIDE REVENUES
Last three fiscal years
(Unaudited)
Program Revenues
Charges Operating Capital
Fiscal For Grants and Grants and Property Tax
Year* Services Contributions Contributions Taxes Increments
2003 10,802,128 1,627,020 1,079,134 10,407,613 3,527,881
2004 10,712,432 933,104 2,423,411 11,239,251 3,834,060
2005 11,804,863 795,633 2,398,345 11,288,883 4,216,246
*Government-wide revenues are not available for years prior to 2003
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118
Table 2
General Revenues
Grants and
Contributions
Not Restricted Unrestricted Gain on
Lodging Franchise to Specific Investment Sale of
Taxes Fees Program Earnings Capital Assets Other Total
661,267 1,413,913 508,494 13,976 829,572 30,870,998
656,859 612,079 923,374 491,524 29,202 660,218 32,515,514
662,614 710,619 577,548 1,472,285 31,880 33,958,916
119
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION
Last Ten Fiscal Years
(Unaudited)
Fiscal General Public Public Community I
Yeaz Government Safety Works Services
2 78 442
1 968 780 5 022,324 1,649,5 6
1996
1997 1,992,251 5,089,072 1,868,130 79,800
1998 2,133,829 5,137,108 1,955,108 73,066
2 257 957 5 336,622 1,904,205 83,295
I ]999
'i
2000 2,421,762 5,437,360 2,100,865 95,148
2001 2,504,392 5,660,600 2,142,064 106,034
2002 2,553,426 6,184,663 1,986,692 103,491
2003 2,497,608 6,272,875 1,649,405 91,581
2004 2,585,597 6,642,254 1,679,440 67,324
2005 2,593,001 6,894,412 1,646,095 86,043
Note: Table includes General Fund only.
Source: City Finance Department records
i
I
120
Table 3
Admin. Other
Parks and Economic Non- Services Financial
Recreation Development Departmental Reimbursement Uses Total
2,282,054 201,600 317,148 (611,534) 10,908,340
2,186,686 248,779 311,436 (661,058) 624,637 11,739,733
2,075,180 313,792 312,625 (731,737) 1,427,001 12,695,972
2,132,511 383,927 343,925 (670,390) 1,591,039 13,363,091
2,216,098 397,507 419,789 (795,737) 1,532,238 13,825,030
2,205,018 392,805 372,056 (767,504) 1,661,877 14,277,342
2,026,409 340,659 366,282 (596,541) 1,863,910 14,828,991
2,068,034 316,059 332,608 (607,221) 2,194,655 14,815,604
1,981,998 311,698 333,669 (784,084) 1,465,464 14,283,360
2,062,134 337,575 315,355 (754,085) 625,000 13,805,530
r
121
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL GOVERNMENTAL REVENLJES AND OTHER FINANCING SOURCES BY SOURCE Table 4
Last Ten Fiscal Years
(Unaudited)
General Other
Fiscal Property Licenses Inter- Charges for Court Financing
Year Taxes and Permits governmental Services Fines Miscellaneous Sources Total
1996 $6,120,877 402,000 $3,618,075 839,583 186,761 328,750 100,000 $11,596,046
1997 6,327,890 485,232 3,811,900 757,640 I83,270 458,&31 100,000 12,124,763
1998 7,949,744 549,067 3,875,392 771,614 193,688 425,319 13,764,824
1999 8,219,491 763,960 3,911,480 739,054 205,460 194,353 14,033,798 i
2000 8,'745,172 632,549 4,076,169 779,060 180,676 234,740 14,648,366
2001 8,411,513 788,629 4,135,282 688,453 230,408 697,886 14,952,171
2002 11,257,003 823,996 2,843,629 575,748 278,557 312,303 16,091,236
2003 10,799,074 827,685 1,948,45? 678,875 290,408 358,411 14,902,910
2004 10,025,495 678,077 1,419,210 678,057 254,980 179,910 13,235,729
2005 11,128,796 675,530 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.
122
CITY OF BROOKLYN CENTER, MINNESQTA
SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS Table 5
Last Ten Fiscal Years
(LJnaudited)
Percent
Current Collections Total
Special Percent Collection Collections
Fiscal Assessment of of Prior Total to Current
Year Billings Amount Billings Years Collections Levy
1996 485,019 459,316 94.70% 4,617 463,933 95.65%
1997 498,022 475,080 9539% 2,470 477,550 95.89%
1998 541,477 524,609 96.88%. 24,870 549,479 101.48%
1999 688,691 657,537 95.48% 34,532 692,069 100.49%
2000 900,481 861,888 95.71% 20,620 882,508 98.00%
2001 868,414 787,769 90.71% 20,620 808,389 93.09%
2002 927,799 863,460 93.07% 65,678 929,138 100.14%
2003 1,064,631 1,018,908 95.71% 75,045 1,093,953 102.75%
2004 966,412 920,604 95.26% 44,563 965,167 99.87%
2005 973,344 928,842 95.43% 52,512 981,354 100.82%
123
CITY OF BROOKLYN CENTER, MINNESOTA
Table 6
COMPUTAT'ION OF LEGAL DEBT MARGIN I
I
December 31, 2005
(Unaudited)
December 31,
2005
I
Market Value 1,944,996,000
licable Debt Limit Percenta e
2%
APP g
Debt Limit 38,899,920
Amount of Debt Applicable to Debt Limit:
i
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 Limit 5,045,000 i
Legal Debt Margin 33,854,920
Source: City Finance and Assessing Department records
f
i
124
CITY OF BROOKLYN CENTER, MINNESOTA
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL Table 7
BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES
Last Ten Fisca! Years
(Unaudited)
Total Debt Service
Total General as a Percent
Fiscal Debt Fund of General
Year Principal Interest Service Expenditures Expenditures
1996 5,125,000 1,106,661 6,231,661 10,908,340 57.13%
1997 1,135,000 1,017,128 2,152,128 11,7�9,733 18.33%
1998 1,285,000 1,244,923 2,529,923 12,695,972 19.93%
1999 2,085,000 1,323,609 3,408,609 13,363,091 25.51%
2000 3,970,000 1,282,512 5,252,512 13,825,030 37.99%
2001 2,805,000 1,149,623 3,954,623 14,277,342 27.70%
2002 3,000,000 1,034,139 4,034,139 14,828,991 2720%
2003 3,220,000 905,518 4,125,518 14,815,604 27.85%
2004 3,520,000 881,016 4,401,016 12,817,896 3433%
2005 2,535,000 1,214,752 3,749,752 13,180,530 28.45%
Source: City Finance Department records
Amounts for 1996 are higher because of the defeasance of the Tax Increment Bonds of 1985.
125
CITY OF BROOKLYN CENTER, MINNESOTA
MISCELLANEOUS STATISTICAL DATA Table 8
December 31, 2005 Page 1 of 2
(Unaudited)
i
i
Date of incorporation February 14, 1911
Date of adoption of City Charter November 8, 1966
Date City Charter effective December 8, 1966
Form of government Council-Manager
Fiscal year begins January 1
Area of City 8 1/2 square miles i
Miles of streets:
Ci�, 105.8
County 6.49
State 10.79
Miles of sidewalks 46.2
Miles of trails 21.6
Miles of storm sewers 72
Number of street lights: Owned by NSP g
Owned by City 1,037
City employees as of December 31, 2005:
Authorized regular full-time 150
Temporary or part-time 120
Total 270
Fire protection:
Number of stations 2
Number of full-time employees 1
Number of volunteer firefighters 40
Police protection:
Number of stations 1
Number of sworn police officers 42
Number of other full-time employees 15
Number of part-time employees 8
I26
i
CITY OF BROOKLYN CENTER, MINNESOTA
MISCELLANEOUS STAT'ISTICAL DATA Table 8
December 31, 2005 Page 2 of 2
(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 range 1
Playgrounds 19
Park shelters g
Picnic shelters 10
Ice skating rinks 6
Hockey rinks 5
Softball diamonds 18
Baseball diamonds 5
Tennis courts 14
Basketball courts 19
Football/soccer fields 3
Municipal water plant:
Number of connections 8,890
Average daily consumption in gallons 3,396,293
Peak daily consumption in gallons 8,255,000
Plant capacity gallons per day 17,652,000
Miles of water mains 120
Number of fire hydrants 878
Number of wells 9
Number of elevated reservoirs 3
Storage capacity in gallons 3,000,000
Water rate per thousand gallons $1.070
Municipal sewer plant:
Number of connections 8,804
Miles of sanitary sewer 100.5
Daily disposal capacity in gallons 10,938,240
Number of lift stations 10
Residential rate per quarter $5
Municipal liquor stores (off-sale):
Number of leased stores 2
2005 sales $4,610,091
Elections:
Last general election November 5, 2002
Registered voters 16,676
Votes cast 10,678
Percentage of registered voters voting 64.03%
Last municipal election November 2, 2004
Registered voters 1'7,776
Votes cast 13,803
Percentage of registered voters voting 77.64%
127
CITY OF BROOKLYN CENTER, MINNESOTA
TAX LEVIES AND TAX COLLECTIONS Table 9
Last Ten Fiscal Years
(Unaudited)
Collections Percentage Collections
of Current of Levy of Prior Total Delinquent
Yeaz's Taxes Collected Year's Taxes Collections Delinquent Taxes as
Year Tax During Fiscal During During Total as Percent of Taxes Percent of
Collected Levy Period Fiscal Period Fiscal Period Collections Tax Levy Receivable Tax Levy
1996 $6,495,206 6,358,392 97.89% $(11,917) $6,346,4�5 97J1% 208,862 3.22%
1997 6,746,487 6,626,336 98.22% (57,329) 6,569,007 97.37% 186,089 2.76%
1998 7,686,521 7,643,080 99.43% (51,327) 7,591,753 98.77% 146,907 1.91%
1999 7,896,858 7,824,214 99.08% 30,110 7,854,324 99.46% 165,926 2.10%
2000 8,099,965 8,044,715 9932% 178,306 8,223,021 101.52% 75,070 0.93%
2001 8,420,298 8,119,854 96.43% (36,320) 8,083,534 96.00% 414,608 4.92%
2002 10,442,170 10,232,645 97.99% 219,067 10,451,712 100.09% 329,237 3.15%
2003 10,355,287 10,048,178 97.03% 214,252 10,262,430 99.10% 391,585 3.78%
2004 10,778,957 10,300,458 95.56% 273,794 10,574,252 98.10% 580,140 5.38%
2004 11,319,018 11,139,977 98.42% 460,701 11,600,678 102.49% 227,849 2.01%
Source: City Finance Department Records
Beginning in 2002, current ta�c collections include the market value homestead credit
128
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This page has been left b/ank intentiona//y.
129
CITY OF BROOKLYN CENTER, MINNESOTA
ASSESSED VALUE AND ESTIMATED MARKET VALUE OF ALL TAXABLE PROPERTY
Last Ten Fiscal Years
(Unaudited)
Assessment Year 1996 1997 1998 1999
Population 28,502 28,515 28,535 28,535
Real property:
Tax capacity:
City:
Residential $9,485,333 $9,182,859 $9,309,893 $9,976,862
Nonresidential 12,837,157 11,082,436 10,657,588 11,002,424
Area-wide allocation (586,003) 226,287 537,406 1,504,330
21,736,487 20,491,582 20,504,887 22,483,616
Less taac increment district 1,495,154 1,665,054 2,054,659 2,533,878
Total assessed value 20,241,333 18,826,528 18,450,228 19,949,738
Estimated market value 976,115,400 1,010,170,000 1,085,605,600 1,164,801,300
Personal property:
Assessed value 573,984 502,668 452,849 437,707
Estimated market value 12,477,900 12,566,700 13,006,300 13,053,100
Assessed value as a percent
of estimated market value 2.11% 1.89% 1.72% 1.73%
Per capita valuations:
Assessed value $730 $678 $662 $��4
Estimated market value $34,685 $35,867 $38,501 $41,278
Source: City Assessing Department and Hennepin County records
The Metropolitan Council is the source of population estimates.
130
Table 10
2000 2001 2002 2003 2004 2005
29,172 29,172 29,172 29,185 29,185 29,185
$8,928,738 $8,495,196 $9,362,'788 $10,532,558 $12,177,307 $13,942,981
]4,093,094 9,225,991 9,430,533 9,821,308 9,903,157 9,475,576
746,43 8 635,875 875,145 1,097,596 1,023,618 1,161,174
23,768,270 18,357,062 19,668,466 21,451,462 23,104,082 24,579,731
3,296,624 2,450,218 2,538,825 3,134,417 3,122,665 2,559,620
20,471,646 15,906,844 17,129,641 18,317,045 19,981,417 22,020,111
1,311,055,600 1,475,520,200 1,659,884,400 1,840,115,300 1,944,996,000 2,020,425,900
452,680 262,882 273,072 280,568 294,377 298,953
13,593,500 13,312,100 13,927,600 13,927,600 15,003,100 15,240,200
1.5 8% 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
131
CITY OF BROOKLYN CENTER, MINNESOTA
DIltECT AND OVERLAPPING TAX RATES
Last Ten Fiscal Years
(Unaudited)
Tax Rates in Tax Capacity Rates
School Districts
y No. 286 No. 279 No. 281
Collectible City Earle Brown Osseo Robbinsdale
1997 32.875 56260 62.666 63.757
1998 35.214 51.567 56386 65.350
1999 36.269 59.807 54.337 47.716
2000 34.645 44.356 53.284 48.492
2001 35.996 47.139 56.764 46.678
2002 58.901 26338 30.213 30.092
2003 54.021 49.817 35.042 29.179
2004 52.437 39.892 23.709 34.258 I
2005 51.723 36.159 24.336 29.989
2006 48.069 39.781 21.815 28.489
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132
Table 11
Hennepin
County Total City, School, and County
No. 11 Special No. 286 No. 279 No. 281 Na l 1
Anoka Disiricts Earle Brown Osseo Robbinsdale Anoka
55.588 42.174 131.309 137.715 138.806 130.637
51.824 45.869 132.650 137.469 146.433 132.907
54.856 50.276 146352 140.882 134.261 141.401
51.792 37.679 127.806 136.743 131.942 135.242
52.224 45.803 128.93 8 13 8.583 128.477 134.023
29.082 57.795 143.034 146.788 146.909 145.778
26.941 58364 162.202 147.427 141.564 139.326
21.050 51310 148.397 132.214 142.763 129.555
21.492 48.250 139.436 127.613 133.266 124.769
20.046 48.087 128.866 110.900 117.574 109.131
i
133
CITY OF BROOKLYN CENTER, MINNESOTA
RATIO OF NET BONDED DEBT TO ASSESSED VALLJE AND Table 12
NET BONDED DEBT PER CAPITA
Last Ten Fiscal Years
(Unaudited) I
Less Ratio of
Amounts Net Bonded Net
Tax Gross in Debt Net Debt to Bonded
Fiscal Estimated Capacity Bonded Service Bonded Tax Capacity Debt Per
Year Population Value Debt�'� Fund Debt Value Capita
1996 28,502 20,815,317
1997 28,515 19,329,196 7,900,000 82,056 7,817,944 40.45% 274.17
1998 28,535 18,90�,047 7,900,000 616,778 7,283,222 38.5�% 25524
1999 28,535 20,387,445 7,575,000 725,868 6,849,132 33.59% 240.03
2000 29,172 20,924,326 7,175,000 725,930 6,449,070 30.82% 221.07
2001 29,172 18,357,062 6,760,000 831,651 5,928,349 32.29% 20322
2002 29,172 18,793,321 6,325,000 871,970 5,453,030 29.02% 186.93
2003 29,185 19,066,393 5,875,000 958,509 4,916,491 25.79% 168.46
2004 29,185 20,634,434 10,450,000 5,898,383 4,551,617 22.06% 155.96
2005 29,185 22,374,841 5,045,000 1,054,230 3,990,770 17.84% 136.74
Source: City Finance Department and Hennepin County records
Amount does not include tax increment, state aid street, special assessment, or revenue bonds.
134
j
CITY OF BROOKLYN CENTER, MINNESOTA
COMPUTATION OF DIRECT AND OVERLAPPING DEBT Table 13
December 31, 2005
(Unaudited)
Governmental Unit City's Share
Gross Debt Percent Amount
Direct Debt City of Brooklyn Center $5,045,000 100.00% $5,045,000
Overlapping debt:
School Districts:
No. 11 Anoka 187,372,115 1.60% 2,997,954
No. 279 Osseo 258,270,000 5.15% 13,300,905
No. 281 Robbinsdale 221,100,000 5.00% 11,055,000
No. 286 Earle Brown 30,400,000 100.00% 30,400,000
Metropolitan Council 209,125,000 0.68% 1,422,050
Hennepin County 376,230,000 1.50% 5,643,450
Hennepin Regional RR Authority 46,795,000 1.50% 701,925
Hennepin County Park Reserve District 50,660,000 1.98% 1,003,068
Total overlapping debt 934,310,000 50,225,493
Total iiirect and overlapping debt $939,355,000 $55,270,493
Direct Overlapping
Total Debt Debt
Comnarative Net Debt Ratios Chareeable to Citv
Debt to tax capacity value $22,374,841 247.02% 22.55% 224.47%
Debt to market value $1,944,996,000 2.84% 4.26% 2.58%
Per capita debt, population 29,185 $1,893.80 $172.86 $1,720.94
Source: City Finance Department, Hennepin County, and I.S.D. #11 records.
Includes only general obligation debt which is repaid through property taxes, net of refunded bonds.
135
CITY OF BROOKLYN CENTER, MINNESOTA
PRINCIPAL TAXPAYERS Table 14 i
2005
(Unaudited)
of
Total City
2005 Net Tax Capacity
Taxpayer Type of Business Ta�c Capacity Va1ue
Talisman Brookdale, LLC Shopping Center $952,960 430% I
Target Stores Retail 412,350 1.86%
Regal Cinemas, Inc. Theater 229,250 1.03%
Brookdale Corner, LLC Retail 195,250 0.88%
BCC Associates, LLC Office 191,250 0.86%
i
Hennepin County Hotel Ass'n Hotel 183,250 0.83%
Twin Lake North Apartment 182,900 0.83%
Medtronic Industrial 173,238 0.78%
B.C. Leased Housing Apartment 150,738 0.68%
Sears Roebuck and Co. Department Store 150,220 0.68%
Total Market Value $2,821,406 12.73%
Total City Tax Capacity $22,164,418
Source: City Assessing Department records I
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136
CITY OF BROOKLYN CENTER, MINNESOTA
PROPERTY VALUE AND CONSTRUCTION Table 15
Last Ten Fiscal Years
(Unaudited)
Commercial New Residential
Building Permits Issued Construction Construction Property Value
Estimated
Year Number Cost Value Units Value Commercial Residential Non-Taxable
1996 607 $16,647,400 $12,527,095 18 $1,126,000 284,786,600 703,806,700 $108,473,400
1997 796 18,274,806 10,905,475 3 225,000 287,163,000 '722,917,000 111,226,700
1998 1,482 23,216,525 14,261,800 4 612,900 314,457,700 770,883,400 152,964,200
1999 1,745 44,188,569 10,528,100 7 679,600 333,929,200 832,334,600 155,999,500
2000 1,299 20,450,844 13,254,213 3 311,800 358,293,500 837,022,400 164,002,100
2001 956 63,947,218 10,750,000 4 464,000 367,026,000 970,653,400 65,437,000
2002 976 58,089,510 18,680,014 10 1,335,000 529,390,100 1,130,494,300 163,517,000
2003 886 53,918,257 25,423,800 9 1,370,100 557,643,000 1,251,467,299 169,892,900
2004 792 21,613,050 15,653,457 15 1,616,000 567,637,200 1,377,358,800 225,988,400
2005 1,043 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
137
CITY OF BROOKLYN CENTER, MINNESOTA
DEMOGRAPHIC STATISTICS Tabie 16
Last Ten Fiscal Years
(Unaudited)
I
I
School Enrollments
City Minneapolis No.286
Fiscal Unemployment St. Paul No. 11 No. 279 No. 281 Earle
Year Population Rate C.P.I. Anoka Osseo Robbinsdale Brown
1996 28,502 3.0% 3.1% 39,874 21,664 14,099 1,664
0 2. 40 402 21 992 14 O10 1,746
1997 28,515 23 /0 5 /o
1998 28,535 1.9% 2.0% 40,923 22,028 13,966 1,788
1999 28,535 2.4% 2.2% 40,964 22,171 13,800 1,734
2000 29 172 3.0% 2.6% 41 314 22 017 13,706 1,682
i 2001 29172 3.9% 3.3% 41419 22,041 13,754 1,724
2002 29,172 4.8% 4.2% 41,383 21,824 13,656 1,732
2003 29,185 5.9% 1.7% 41,254 21,698 13,765 1,732
2004 29,185 5.7% 4.4% 41,592 21,620 16,196 1,691
2005 29,185 5.4% 4.4% 41,596 21,792 13,368 l,679
Source: Metropolitan Council
Source: Minnesota Department of Economic SecuriTy; average rate for the past year
Source: U.S. Bureau of Labor
Source: Minnesota Department of Children, Families Learning (Brooklyn Center has parts of these
four Districts within the City)
138
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF REVENLTE BOND COVERAGE Table 17
Last Ten Fiscal Years
(Unaudited)
Net
Non- Net Revenue
Operating Operating Gross Revenue to Debt
Year Revenue Revenue Revenue Expenses��� Available Principal Interest Total Service
Storm Drainaee Fund
000 86 390 196 390 3.39 :l
I996 $822,98Q $47,363 $870,343 $204,969 $665,374 $110,
1997 856,920 130,651 987,571 198,662 788,909 155,000 79,754 234,754 336:1
1998 940,012 916,860 1,856,872 199,694 1,657,178 165,000 72,227 237,227 6.99:]
1999 999,867 1,257,928 2,257,795 156,562 2,101,233 170,000 64,193 234,193 8.97 :l
2000 1,074,619 313,068 1,387,687 154,183 1,233,504 180,000 59,144 239,144 5.16:1
2001 1,129,502 280,740 1,410,242 157,110 1,253,132 190,000 53,166 243,166 S.15:]
2002 1,377,638 435,548 1,813,186 231,741 1,581,445 200,000 36,701 236,701 6.68:1
2003 1,264,512 148,854 1,413,366 295,522 1,117,844 210,000 24,990 234,990 4.76:1
2004 1,276,778 21,212 1,297,990 228,974 1,069,016 220,000 25,835 245,835 4.35:1
2005 1,107,809 47,475 1,155,284 560,457 594,827 230,000 6,210 236,210 2.52:1
Source: City Finance Department records.
Excludes depreciation and interest on bonds.
139
i
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDULE OF INSURANCE COVERAGE Table 18
Effective December 31, 2005 Page 1 of 2
(Unaudited)
Policy Period
Type of Coverage and Details From To Liability Limits
I. Statutorv Liabilitv to Emnlovees
a. Worker's Compensation (participant in the O1/O1/OS 12/31/OS Statutory Limits
League of Minnesota Cities Insurance Trust
Self-Insured Workers' Compensation
Program)
II. Liabilitv 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, wrongfu!
entry or eviction, or invasion of right of privacy.
(c) Broad contractual liability
(d) Products liability
(e) Public officials' liability
(1) Bodily injury 04/Ol/OS 04/O1/06 $1,000,000 occurrence
(2) Property damage 04/O1/OS 04/Ol/06 $1,000,000 occurrence
(3) Personal injury 04/O1/OS 04/O1/06 $1,000,000 occurrence
b. Automobile liability, comprehensive 04/O1/OS 04/O1/06
(1) Bodily injury $1,000,000 occurrence
(2) Property damage $1,000,000 occunence
(3) Uninsured motorist $1,000,000 occurrence
c. Liquor stores' dram shop O1/O1/OS 011O1/06 $1,000,000 occurrence
$1,000,000 annual aggregate
d. Golf Course and Central Park liquor liability O1/O1/OS O1/O1/06 $1,000,000 occurrence
$1,000,000 annual aggregate
e. Personal accident, Volunteers 04/O1/OS 04/01/06 $100,000 accidental death
$100,000 permanent impairment
$400/week short-term disability
$1,000 medical
$SOO,Q00 per accident
140
I
CITY OF BROOKLYN CENTER, MINNESOTA
SCHEDIJLE OF INSURANCE COVERAGE Table 18
Effective December 31, 2003 Page 2 of 2
(Unaudited)
Buildings, Structures,
Policy Period and Contents
Type of Coverage and Details From To (Replacement Cost)
III. Insurance on Citv Pronertv 04/O1/OS 04/O1l06
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 ter►
(1) Civic Center/City Hall $14,937,300
(2) EastFireStation $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 8locations $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 7locations $351,900
(13) Leased Liquor Store BC Liquor #1 $498,000
(14) Leased Liquor Store BC Liquor #2 $500,000
(14) Pedestrian Bridge 121ocations $2,117,295
(15) Picnic Shelters 10 locations $311,745
(16) Earte 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 machinery 04/O1/OS 04/Ol/06 $40,833,515 Boiler Limit
$2,500 deductible
c. Automotive physical damage 04/O1/OS 04/O1/06
(1) Comprehensive ACV $2,500 deductible
(2) Collision ACV $2,500 deductible
IV Criminal Acts
a. Faithful performance blanket position $500,000 per occurrence
b. Money and securities (broad form) Various
c. Depositor's forgery $100,000
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